The latest moved by the federal reserves to use US$1 Trillion to buy up US banks toxic assets. This is a move to free up those assets that is basically pulling them down.Sound foolish to most but it is actually a very positive move. They use the funds from US Govt Bonds to finance this expensive exercise which by the way the major holders of this bonds are the Chinese Govt.This will affect the value of the US Dollars as seen immediatly after the fed announcment Euro/USD depreciated close t0 8% within a week.

Ok now lets let me explain how it will positively affect this economy directly by buying all this assets.Bank will be free from all this risk, which means they can start lending money to companies or individual either to finance a house or buy a car.When people are able to secure this loanit will have a chain reaction property market will stabalise this risky Toxic assets as long the US Govt have the financial muscle to hold this stock this assets will eventually apreciate that is their HUGE BET.

My view is that USD will continue to depreciate as they have to print lots of money to save the economy.

Euro/USD

My 1st target is achieved at $1.36 after this moved now i will be looking for EURUSD to try the $1.47 resistance level.

Citigroup

My recomendation to buy this stock like an option in my previous blog is now even more attractive as we now know that

1) It will not be nationalize

2) Getting detox by the us govt of all those toxic assets

3) By laying off 50000 jobs .

4) By controlling those exorbitant pay+bonus of their executive .

5) Competitor banks collapes which they have less competitors for the same lucrative PIE.

After all this points you can all add up and come to your own conclusion.


Kev Tian

Analysis Disclaimer & Risk Warning
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

With the world's economies in chaos how do we invest in this uncertain times? That is the million $ question. 

Manage your investments by keeping  tab on your investments,  you may not understand all of it but at least you know the general direction it is heading to (Growth) you may not know the route to your distination but you must at least have the general direction right which is PROFIT.

The rule of thumb in investment is sell during a bull market and buy in a bear market . When there is a bear market like now everything is falling so when should we buy to position ourself with a good investment? there will always be a dramatic fall that will catch everybody offguard.

One great example is Citigroup at the high it's stock was trading in the region of US$50 now it has plummeted  to around US$3.The last time when it was in crisis during the 1990s it traded around the low of US$16. When it fall this time everyone feels that below $25 will be a good price but to their horror it has reached an unbelieveble price of $3.

My first question is what is the downside at this moment? Will the goverment let it fail after pumping BILLIONS of dollars to save them? The risk is if they file for chapter 11 i would lose us$3 per share.

what is the upside with Citigroup after cutting cost by laying off about 50000 employees that will improve their balance sheet, after dumping all that Toxic investment in the credit market and how about downsizing their top executive paychecks .All this measure will definately have a positive impact on this company.The sky is the limit on the upside.

So the bottom line is now i know the downside which if it collapes and $3 per share risk and the upside if it does not collapes around $25-50 per share.So my risk reward ratio is GREAT, now the question is time when will it recover? It will take time but it will recover if all this measure is in place.

Now my next question i need to ask myself am i going to hold this stock for the long term(3-5years) to acheive this goal?Do i have the finanacial strength to hold my investment?

I must have enough liquid cash on hand aproximatly 20-30% against my total asset to support my investment.Even if i have made a great investment i may not see it materialize as i may not have that holding power.

During this crisis comes huge opportunity the question is who can ride out this storm is it you?

By Kelvin Tian

[email protected]

By DAMIAN PALETTA, DAVID ENRICH and DAN FITZPATRICK The White House tried to knock down speculation that the government is preparing to nationalize several large U.S. banks, but some bankers complained that the Obama administration needs to act even more aggressively to shore up confidence in battered financial institutions.

Robert Gibbs, a White House spokesman, said Friday afternoon that the month-old Obama administration "continues to strongly believe that a privately held banking system is the correct way to go."

The comments reversed a broader decline by U.S. stocks that at one point pushed the Dow Jones Industrial Average close to 1997 levels. Still, the Dow finished down 100.28 points, or 1.3%, to 7365.67, a new low for the current bear market. Friday's decline left the Dow with its worst weekly drop in four months.

In another sign of flagging investor confidence, gold topped $1,000 an ounce Friday, its highest price in nearly a year.

Among banks with huge exposure to souring loans and the recession, Citigroup Inc. tumbled 22%, while Bank of America Corp. slipped 3.6%.

Friday's slide subtracted 4.9% from the combined capitalization of the eight financial institutions that were the first to get capital infusions from the government. Among them, Wells Fargo & Co. fell 9.2%, and J.P. Morgan Chase & Co. was down 3.4%.

The broad declines show that investors are struggling to sort out the impact of the government's moves already to expand its role in the banking system. Those steps include owning preferred stakes that now exceed the value of all the privately held common shares in some banks. Federal officials are weighing whether to change their ownership into securities that could be converted to common stock, essentially giving the government control of some of the nation's largest financial institutions.

Friday's tumult underscored deepening worries that months of unprecedented efforts by the Bush and Obama administrations to backstop nearly every corner of the U.S. banking system may not be enough to prevent the nationalization of some of the most wounded institutions.

More Memo from Bank of America's Ken Lewis
Top government officials remain highly resistant to the idea of nationalizing banks, fearing that it could prolong or even worsen the financial crisis. In addition, some Obama administration officials believe the government wouldn't be able to sufficiently manage nationalized banks. A federal takeover of even a few institutions also could make it harder to attract private capital, since such investors would worry that the government might eventually dilute or wipe out their stakes.

But the White House's insistence that it isn't interested in nationalizing beleaguered banks continues to be muddied by talk in Washington that the move might be inevitable. Friday's swoon in financial stocks was fueled by Senate Banking Committee Chairman Christopher Dodd (D., Conn.), who said on Bloomberg Television that he is "concerned we may end up having to do that, at least for a short time."

Just two weeks ago, Sen. Dodd publicly dismissed speculation that the U.S. could soon nationalize Bank of America. The Charlotte, N.C., bank now has a stock-market capitalization of $19.02 billion, or less than half of the $45 billion in taxpayer-funded capital received by Bank of America since October.

Increasingly Exasperated Inside Citigroup, bank executives are growing increasingly exasperated with what they view as the Obama administration's failure to state even more explicitly that nationalization isn't imminent and that "stress tests" announced as part of the latest financial-rescue package aren't a guise for government takeovers that likely would make their common shares worthless. The tests, expected to begin next week, will be required for any bank with more than $100 billion in deposits. Government takeovers likely would make common shares of those banks worthless.

"They've got to make a statement against nationalization," said one person familiar with Citigroup's thinking. The Obama administration's rhetoric so far amounts to "destructive ambiguity," this person said.

In a statement Friday afternoon, Citigroup said its capital base remains "very strong." "We continue to focus and make progress on reducing the assets on our balance sheet, reducing expenses and streamlining our business for future profitable growth," the New York company added.

Kenneth Lewis, the chairman and chief executive of Bank of America, insisted in a memo to employees that there is no need to nationalize the bank. "We see no reason why a company that is profitable with strong levels of capital and liquidity and that continues to lend actively should be considered for nationalization," Mr. Lewis said. "Speculation about nationalization is based on a lack of understanding of our bank's financial position as well as a lack of appreciation for the adverse ramifications for our customers and the economy."

No More Help Mr. Lewis added that Bank of America "does not need any further assistance today" and likely "will not need any further assistance in the future. I believe our company has more than enough capital, liquidity and earnings power to make it through this downturn on our own from here on out."

In recent days, Bank of America executives have been prodding administration officials to do something to bolster flagging confidence in U.S. financial institutions. "I think the banks have strenuously told the administration they are letting events get beyond them and they need to come out and make a definitive statement," said a person close to the bank.

The White House's comments appeared to mollify Bank of America. "I would say it's a very significant statement and an important clarification about the administration's policy direction," spokesman James Mahoney said.

One huge challenge for the Obama administration is that its assurances are colliding with rising unemployment, costly home foreclosures, tight credit markets and the steep drop in consumer spending. The U.S. banking industry is expected to record a quarterly loss in the fourth quarter for the first time since 1990.

The financial conditions of many banks are continuing to weaken, especially at those with large portfolios of credit-card loans and commercial real-estate loans that are being hit increasingly hard by the recession.

Even private-equity investors, well-known for scooping up assets that are considered to be undervalued, are wary about pouring money into the sector due to ongoing uncertainty about the government's role in financial institutions. "There has to be some level of stability and confidence in what the playing field is going to look like in order to make a reasonable investment decision," says John Stein, president of FSI Group Inc., which invests in small financial-services companies.

Treasury Secretary Timothy Geithner recently announced plans to pump more capital into banks and try to jumpstart credit markets, but government officials haven't quelled fears about the state of the banking sector. Analysts expect that roughly 1,000 banks might fail over the next three to five years.

As a practical matter, Citigroup's vast international scope would further complicate any U.S. government nationalization scheme. In Mexico, for example, where Citigroup controls the nation's No. 2 bank by assets, a law restricts outside governments from owning more than 10% of a domestic bank.

Achilles Heel While plunging bank-stock prices are putting more pressure on the Obama administration, they don't have a direct impact on a bank's overall financial health. A bank's Achilles heel is deposits, and any exodus would trigger a funding crisis that forces the government to take drastic action, possibly by seizing the bank.

Increased deposit-insurance limits by the Federal Deposit Insurance Corp. have soothed some jitters among bank customers, but the heightened specter of nationalization could cause some to flee just to avoid the possibility of hassles in the case of a government takeover.

Citigroup executives on Friday were closely monitoring the bank's liquidity position, but officials said they hadn't detected any alarming outflows. At Bank of America, deposit balances are up "significantly" so far this year, a spokesman said.

—Robin Sidel, Sudeep Reddy and Deborah Solomon contributed to this article. Write to Damian Paletta at [email protected], David Enrich at [email protected] and Dan Fitzpatrick at [email protected]

Hi something interesting about citigroup and Bank of america..Gone in 60 Days: Citi and Bank of America Won’t Live to See May
Thursday, February 19, 2009 16:21

Citigroup (C) and Bank of America (BAC) won’t live to see May. The government will take them over within the next 60 days. The announcement may come as soon as tomorrow evening.

If there’s one thing our readers know, it’s that ChartingStocks.net has made some bold calls in the past which seemed controversial and highly unlikely at the time. Our January 2007 post warned of the coming stock market crash at a time when the market was making new all time highs. In February 2007 we warned about the breakdown of the brokerage stocks and singled out Bear Stearns (Trading at $160), Merrill Lynch (Trading at $87), and Morgan Stanley (Trading at 78). In September 2007, we warned of a selloff in the coming weeks. The market peak and decline began 4 weeks later.

We’re going to make another bold prediction. Bank of America and Citigroup won’t live to see May. The two banks will be nationalized in the coming weeks, and we think that the announcement can come as soon as tomorrow evening (Friday evenings are when major bank announcements and failures occur).


The US government has already committed half a trillion dollars to these two firms which is more than 10 times the amount it would cost to buy and control both companies. The market doesn’t believe that $500 billion is enough to save these companies.
All the kings horses and all the kings men can’t  put humpty dumpty back together again.

Today both banks made fresh new lows with Citi closing at $2.51 and Bank of America closing at $3.93. The 1 year charts below show the short term price movements. You should understand that when a bank stock’s chart looks like this, even a HEALTHY bank would be in trouble. Nobody wants their deposits tied up in a company that trades at $2. The outflows of deposits from Bank of America and Citi must be catastrophic.

The stock charts and potential run on these banks are not the only basis for our opinion. The media can be an excellent investing tool if you know how to decipher the news. We don’t watch the news for the information, we watch if for THE LIE.

We play close attention to air time given to so-called “Experts” and the way the media spins the information. If you know that our mainstream media is simply a licensed PR firm for the US government, you can get vital information which you can use in trading. Always ask yourself - What opinion are they trying to insert? What are they selling? What’s the underlying agenda?

The government uses the media to float policy before the public so it can digest it. By the time the government takes the action, most people not only anticipate it but are even asking for it.

In the past two weeks there have been countless debates, op-ed’s, and even opinion polls regarding bank nationalization. The popular opinion among the establishments “Experts” is that nationalizing the banks may be the only way. Even Alan Greenspan, a LIBERTARIAN, recently said that it would be a good idea.  It’s coming folks! It’s what the establishment wants. (Sidenote: They may not actually use the word nationalization, even if thats exactly what they do)

Below is the long term view of BAC and C. These stocks have made multi decade lows. Other stock charts which looked similar to these were Fannie Mae, Freddie Mac, Lehman, Bear Stearns.

What happens to the shareholder? We can only speculate that the deal would look something like the takeover of Fannie and Freddie. We believe that the common and preferred shareholders will be wiped out while the bondholders MAY be protected.