A rally long pending..

A rally that was long pending. A positive news from Citi initiated the uptrend even before the market opened. In a internal memo, Vikram Pandit said that the company is profitable through the first two months of 2009 and is having its best quarter-to-date performance since the third quarter of 2007. That initiated the rally, and it did rally strong for the day. Midday, Ben's comments about the economic recovery IF the banks are stabilized added to the optimism of the investors.  

That raises the question about the credibility in Pandit's statement. Well, Citi might be well capitalized and be profitable for the first two months of the Q, but it does not guarantee a equally good last month of the quarter.  Fitch's Prime Credit Card Delinquency Index measures credit card debt more than 60 days late through January, and it surged to a record 4.04% in the most recent month, trumping the 3.75% record set in the previous month. This might as well weigh on the credit card losses of Citi. My take, Citi over the next 2-3 days (this week has no major economic data releases, though US trade data is slated for release on Friday), would trade at the same levels ... but as the earnings date near (in APr) it would fall back to dollar menu.. :) 

Well, as I write this,trade data from China is out, and well, not a good news. The trade gap narrowed to $4.8 billion, about an eighth of the amount (Not a typo,, it is one eighth) in the previous month. Exports tumbled 25.7 percent from a year earlier. Imports fell 24.1 percent. The median estimates in a Bloomberg News survey of 16 economists were for a $28.3 billion trade surplus, a 1 percent decline in exports and a 22.5 percent drop in imports.  The corresponding eport drop in Jan was 17.5% and the imports fell  by 43%. There is not hope that the exports figure would improve any time soon. And the imports are very much dependent upon the success of the stimulus plan. The fact that about one third of the goods manufactured in China are exported, and these siginificant drop in exports signals the extent of decline in global economies. 

On the economic front, Jan wholesale trade data came in lower, though not enought to meet with the forecast.  January's inventory levels fell 0.7%, versus the consensus outlook for a fall of 1.0% (which is bad). Even worse if the difference between the sales drop and the inventories drop. Sales dropped 2.9% from December levels, and nose-dived by 15.4% from the prior year period. The sales-to-inventory ratio expanded to 1.3. 

http://1.bp.blogspot.com/_Et4TQ-a0gGU/Sbak1hSSdAI/AAAAAAAABks/pUTcIn8H9Do/s1600-h/sales_inventories_chart.PNG

http://1.bp.blogspot.com/_Et4TQ-a0gGU/Sbak1hSSdAI/AAAAAAAABks/pUTcIn8H9Do/s1600-h/sales_inventories_chart.PNG

High-tech manufacturing company United Technologies Corp. said Tuesday it will issue 11,600 layoffs this year due to the deteriorating global economic outlook. A ray of hope that AT&T Inc. plans to invest up to $18 billion and create 3,000 jobs nationwide this year, to keep pace with demand for wireless, broadband and video services.

An interesting article on Semantic Search. A technology that might provide an alternative to Google.. http://www.informationweek.com/news/internet/search/showArticle.jhtml?articleID=215801388&subSection=News

Quote of the day:  If the banks become stable, the economy may turn. - Ben Bernanke. 

Yes,, infact a BIG IF!!! :) 

Song: Mother - Pink Floyd (They were playing this song on the radio today monring on my way to office :) :) ) 

Mood: "If I keep my eyes closed, would the crap around me disappear!"