Why?

Shares of Citigroup are up another 3% on Monday, flowing Friday's better than 8% rise. My overriding question is why? Investors seem pleased that the banking and financial services giant lost less than Wll Street expected. The Street has not gotten anything right on the bank stocks all year so why being worng about Citigroup is a cause for optimism escapes me. The fact of the matter is that the report was simply awful. Is the fact that a company that has lost over $40 billion in the last year ONLY lost an additional $2.5 billion really a bullish case for its stocks? Look at some of the "highlights" of Friday's earnings report:

Revenues, down 29%
Expenses up 9% year over year
$4.4 billion in Credit losses
Loan Loss provision increased $2.5 billion
Third straight losing quarter
Increased credit card losses
Increased auto loan losses
Total assets down $99 billion

At least one large shareholder was skeptical of the results. One of the largest unions in the united sates, the American federation of State, County and Municipal Employees urged the bank to just give up and break the company up into separate division. The union sent charman Win Bischoff a letter stating that the bank was too large and unwieldy to over see and should be split up.
Speaking of Bischoff, he told investors over the weekend that he thought housing prices in the US and Britain could continue to fall for the next two years. This is unfortunate as a continued housing decline is going to continue to wreak havoc on his bank's balance sheet until they stabilize. He also told the BBC in the interview that he thought the credit crunch would last 2009.

If Citigroup's chairman does not think it is going to get better, why does Wall Street?

by Tim Melvin |  07/21/08  |  Stocks: C,