By now I'm sure everyone has heard about the Citigroup internal memo that was leaked to the media which sparked a huge rally in the financials. I'm also sure most are aware this was both intentional and misleading. Pandit warned that market volatility in March could alter the results. I can't wait to see what is being excluded in these financials.
There were a few noteworthy things surrounding this memo. First it issued forward looking statements and disclosed material information about their financial status without first filing an 8-K with the SEC (hat tip Yves). Secondly it was an internal memo aimed at boosting investor confidence? Lastly, this memo came after a weekend meeting between Citi, Federal Reserve, Treasury, FDIC and the Comptroller. Nice. Some poor retail investor is buying up shares of banks thinking the worst is behind us.
On a different note, I got a chuckle when I heard the administration now saying the stimulus will create 1 million FEWER jobs than originally expected due to the deteriorating economy since the stimulus was crafted. How could it be that things changed so drastically in a few short weeks? This is nothing more than setting the stage for another stimulus package. Those 1 million jobs never existed in the stimulus to begin with, and you know this.
I do not support this, but if I were the Plunge Protection Team I would jam the futures at 740. This would guarantee a big rally in the financials. That way they can raise capital in the "6 month window". The Fed is just trying to find someone to take these losses and they will do whatever it takes to misrepresent. Once the intervention wears off the bank stocks go right back to where they were. Bernanke knows the economy isn't going to recover later this year and you can expect him to become more downbeat once he gets his foot in the door for the next round of bailouts.
