Market Bounces
Stocks jumped today with the largest gain in many months. Financial stocks, especially banks, lead the way. Citibank said it was profitable for the first two months of 2009, and that was the headline impetus.
Bond interest rates rose again, and the Dollar gained also.
Oil and gasoline fell slightly.
Gold fell again, and is now below $900/ounce. Gold continues to be a “buy.”
In the news today…..
Citigroup was profitable the first two months of 2009. The large rise in Citi stock prices was caused by short covering (buying back existing short positions) and a technically oversold stock market condition (sort of like a coiled spring ready to push back.)
So, are stocks ready for a long rise in the positive direction???
I don’t think so as the credit markets have been tightening recently as measured by the key credit spreads (like Libor). Also, even though Citigroup was profitable, it doesn’t change its “toxic securities” holdings one iota – and these provide the negative drag on the share values.
Here are the last numbers:
Dow Jones 30 Industrial – 6926 (up 379 points)
10 Year Treasury Bond – 2.98% (up 0.10%)
Euro – $1.2679
Gold – $896 (down $22)
Oil – $45.71 (down $1.36)
Gasoline – $1.30 (down $0.04)
I have two thoughts.
The market was oversold on the technicals so a 5% bounce up isn’t too unusual. However, the market is only back to where it was on Wednesday last week. Is this really a big rally?
Also, Citigroup’s profitability results from counting “profits” but not loses on hundreds of billions of dollars on illiquid, depreciated “assets” on the books and in off the balance sheet SIVs.
If the market crashes, then I could see Pandit being sued for his comments today. He’s looking at fines and maybe jail time for manipulated stock prices.
Hi David,
it would be nice to have some of these scumbags get kicked in the pants.
Tom