Two related sightings on Bloomberg, First, Deutsche Bank says it will fall short of its profit targets:
Deutsche Bank AG, Germany’s biggest bank, said the U.S. subprime collapse and slowing economic growth will make it harder to reach a full-year profit goal.
Deutsche Bank fell as much as 2.9 percent in Frankfurt trading after it said further possible asset writedowns and worsening economic conditions would “adversely affect our ability to achieve our pretax profitability objective.”
A top bank analyst sharply lowered her earnings forecast for Citigroup and said she will announce reduced estimates for other firms:
Citigroup Inc.’s first-quarter earnings-per-share estimate was cut to a loss of $1.15 by Oppenheimer & Co. analyst Meredith Whitney, who said she was also cutting estimates for other U.S. banks.
Whitney lowered the earnings-per-share estimate on Citigroup, the largest U.S. bank by assets, from a loss of 28 cents, citing estimates for first-quarter mortgage and collateralized debt obligations-related writedowns, according to a note to investors dated yesterday.
Whitney, 38, correctly predicted two months in advance that Citigroup Inc. would slash its dividend to preserve capital. Her downgrade of Citigroup helped spur selling that erased almost $500 billion in value from the nation’s stock market on Nov 1.
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Good!
I love how the article tries to blame her for the stock market going down. She is about the only one actually doing her job.
Afternoon Reading: The Grassy Knoll of Bear Stearns
http://blogs.wsj.com/deals/2008/…ns/? mod=WSJBlog
People still wonder whether the Federal Reserve and the Treasury forced J.P. Morgan to offer $2 a share. Yves Smith at Naked Capitalism scoffs at the idea that regulators twisted Jamie Dimon’s arm, such a suggestion “is pretty outrageous spin when the government is putting up taxpayer money.” And he makes a pretty good argument as to why he think that wasn’t the case. Smith also endorses an Institutional Risk Analytics article that says that J.P. Morgan isn’t so financially strong after all. (So there).
Does anyone know whether Whitney’s report is publicly available? If so, where?
yves, can you comment on the following CR post related to TED and LIBOR and inverted yields (please)
As some may recall, there is an inversion in short-term T-bills, i.e, between the 2 and 3 year; however, the 3 year was discontinued last fall, but remains in circulation nonetheless. Thus, when looking at TED with a geometric substitution of The LIBOR versus the historic “normalcy” of the 3 year inflation trend, IMHO, there is a distortion of rate reality:
The 2 year bond rate is @ 1.72
The 3 year bond rate is @ 1.60
Three-month sterling LIBOR, the interest rate off which our mortgages and most other loans are priced, has risen to 6%, its highest level since December 28.
Re: Initially, the TED spread was the difference between the interest rate for the three month U.S. Treasuries contract and three month Eurodollars contract as represented by the London Inter Bank Offered Rate (LIBOR). However, since the Chicago Mercantile Exchange dropped the T-bill futures, the TED spread is now calculated as the difference between the T-bill interest rate and LIBOR. The TED spread is a measure of liquidity and shows the flow of dollars into and out of the United States.
Another 3:15 rally off the bottom…must be all the good news
I’m hearing that the FED is now rejecting some collateral as worthless for its new credit facilities (TSLF and PDCF) —-
copies of the U. S. Constitution