Bank of America Archive

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Bank of America Shares Basing For Upswing in Price?

By
king1
– February 1, 2011
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By Relmor Demitrius

There are certain times in a stocks trading cycle where you start thinking about buying on pullbacks, expecting a nice rally to come.  As with shares of Bank of America (NYSE:BAC), this appears to be one of those times.  The stock has recently pulled back from its near term high of $15.31 and indicators are once again turning neutral to bullish.  Let us take a look at the chart posted below.

I have posted the MACD indicator.  It is now going from down to neutral, a sign a stock is stabilizing.  The weekly MACD has already been and still is bullish.  Also, it has been 5 days now since on this current retrace the stock has received a new low.  Flat price trading is indication of accumulation and a big move up or down would be expected. 

Down?  Not likely looking at the general trend medium term.  Stock market is making new 52 week highs almost weekly now and certain fundamental aspects of the banking industry have already bottomed a long time ago now. 

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10

Citigroup (NYSE:C) Still Can’t Totally Get Stink off of Itself

By
Andrew Montero
– October 29, 2010
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Citigroup (NYSE:C) is trading above the $4 mark once again, after recently beating earnings estimates reporting income of 2.2 billion or .07 cents a share, which is interesting given Citigroup was recently mentioned, along with Bank of America (NYSE:BAC) and others, as being among a group of financial institutions that are plagued by mortgage risk.  Citigroup could face heavy legal challenges related to their handling of underwriting mortgages and foreclosing on homeowners.   The company did report improvements in retail banking business in both North and South America. Citicorp revenues were also up in Latin America and Asia.

The company was also contacting Citibank credit card customers and offering them an option headed into the end of August in order to clean up their financials some.  Unfortunately for the consumer the choice was not much of a choice at all.  Many consumers who had no outstanding issues with their Citi credit cards or their payment history were given the choice of either freezing their accounts to keep them open, for 6 months and making payments over and above the minimum, or were given the option of closing their account if they did not agree by Aug 30th.  This led to the ability to report that net credit losses declined for the fifth consecutive quarter reflecting continued improvement across consumer portfolios (of course, it was an improvement, many consumers were prohibited from even using their credit cards and were forced to pay down their balances or at the minimum not add to their debt or the company’s exposure to it).  This is an example of the abusive systemic issues that have yet to be fully addressed in the Banking industry.

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6

Citigroup (NYSE:C) is a Diamond in The Rough

By
Andrew Montero
– May 28, 2010
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Citigroup (NYSE:C) is slowly ascending once again, which is interesting given Citigroup was recently mentioned, along with Bank of America (NYSE:BAC) and Deutsche Bank (NYSE:DB), as being among a group of financial institutions that shed debt just before quarter’s end to disguise levels of risk. The companies have been lowering their net borrowing in the repo market by an average of 41% at the end of each of the last 10 quarters, according to Fed Reserve data. This points out the systemic issues that have yet to be fully addressed in the Banking industry; as extensive use of repos was what allowed Lehman to improve its risk appearance quarter after quarter before that firm was forced into bankruptcy in September of 2008.

An upgrade from Oppenheimer in which they raised their outlook on Citigroup to outperform may also have contributed to the sudden momentum in Citigroup shares. Oppenheimer sees Citigroup shares trading below book value of $4.09 or so. Reducing short term borrowing ahead of the end of a quarter does not appear to be illegal at present, but the Securities and Exchange Commission is reviewing and considering new rules that would require increased disclosure of such practices, according to a recent report in the Wall Street Journal.  The repurchase market, more commonly known as the repo market; where banks put up securities as collateral to get quick access to funds, is one of the riskiest ways to borrowing because it is so short term. If sudden panic were created for some reason and markets seized up, banks that rely too heavily on this particular market transaction could suddenly find themselves in a funding crisis, such as what happened with Bear Stearns and Lehman Brothers during the 2008 financial market collapse. Citigroup stock may also be rising from a report in the Financial Times that said that the Qatar Investment Authority is strongly considering buying some of the U.S. Treasury’s 27% stake in Citigroup.

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7

Understanding the Market Boom/Bust Cycle (NYSE:IBM, NYSE:BAC, NYSE:C)

By
king1
– February 13, 2010
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By Relmor Demitrius -

The year 2008 proved to be a very educational one for the average investor.  Due to the stock market downtrend, bank failures, and emergency FED meetings galore, we learned some interesting diction during this economic downturn.  Stagflation, inflation, deflation, recession, depression, V shaped corrections, W shaped corrections, FED rates, LIBOR rates, and what the hell is a CDO?  What is the boom/bust cycle?  What are cyclical stocks?  Value stocks?  All these concepts and words were being thrown around by so called “experts” on every news TV show to every financial bog and newspaper in the country.  The amount of half truths, misinformation, and just plain fear mongering was staggering.  I think as time has passed, and a clear mind can now be used to refocus on some of these past events, terms, and concepts.  We can use this to better understand where to put your money a year from now, or even tomorrow.  But first, you have to understand the animal.

At the core of all of this is having a basic understanding of the economic and monetary rules that are applicable to today’s world.  At the very core, the first concept that must be understood is what is fiat currency, the current monetary system we are using today.

Fiat currency is a currency that is backed by nothing, and measurable only to other currencies.  This is where the term “floating currency” comes from, which means it is only “floating” in apparent value up or down in comparison to other currencies currently backed by nothing.  The Euro, Yuan, Ruble, and most major foreign currencies are indeed backed by nothing but a promise.  In effect they are not assets, they are simply a way to pay debt.  Since we live in a world of debt, they should always have a use, however.  In 1941, with the creation of the Taft-Hartley Act, which Nixon revoked, we were on a limited gold standard.  When the U.S. dollar was implemented as the worlds reserve currency, we promised that an exchange for gold would always be possible.  Well in August of 1971, Nixon said, No more.  The dollar can no longer be redeemed for gold.  Costly war expenses, innovations in modern banking, and other factors lead to a huge influx in the money supply.  There soon simply wasn’t going to be enough gold to give out, if so demanded.

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2

Citigroup Stronger, Yet Still Shows Signs of Weakness Overall

By
Andrew Montero
– December 21, 2009
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Citigroup (NYSE:C) is getting  close to a deal with the U.S. government to begin repaying at least part of the $20 billion it borrowed under the Troubled Asset Relief Program (TARP), according to reports. Under the deal’s terms, Citigroup would sell over $10 billion in common stock to help it repay the funds it borrowed last year. The money also would allow the New York-based bank to exit a program giving it government protection from losses on more than $300 billion worth of assets. Citi is hoping the Treasury Department will begin selling its 34% stake in the company, which was acquired as part of a $45 billion investment in the bank.

Citi is attempting to sell $20.5 billion in stock and debt to repay the government. It only has to pay back $20 billion to the government from TARP funds it received because the remaining $25 billion was converted into a 34 percent ownership stake in the bank earlier this year. The government has plans to sell that entire stake which has risen in value by more than 20 percent since it was issued during the next year. The loss sharing agreement will also end as part of the plan. After repaying the funds, Citi will no longer face heavy restrictions from the government, including ceilings and heavy scrutiny on executive pay and dividends. However, the repayment comes at a heavy cost to shareholders. Raising the new capital will significantly dilute current shareholders’ stake in the company. Citi and Wells Fargo (NYSE:WFC) are the only two large Banking institutions that have not finalized plans to repay TARP funds. Bank of America (NYSE:BAC) repaid its $45 billion tab earlier this month.

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