More Trouble in The Financial Sector and the Number One Stock to Short is…

by Florida's #1 Mortgage Planner on December 13, 2007

Bank of America came out saying it will set aside $3.3B to cover losses in the fourth quarter.  The CEO, Ken Lewis said “While we do not make a practice of forecasting quarterly earnings, I think you certainly can assume results will again be quite disappointing.” That’s gotta hurt.

B of A started what other banks decided to follow up with.  A slew of losses being shown across the board with Wachovia setting aside around $1.0B and PNC around $1.5B.  Washington Mutual is around $1.6B.  Others have issued warnings as well.

The most interesting announcement yesterday is that from Morgan Stanley.  They came out and said the #1 stock to SHORT is none other than Citigroup.  Their analysts are saying Citi will try all kinds of methods from spinning off units to selling funky securities, all of which will dilute shareholder value.

I think it goes without saying that any attempt by the Fed to prevent failure is not working, at least not enough.  Throwing money at the problem (yesterday’s Fed announcement) moved the markets temporarily, but when reality set in, investors saw through the Fed’s attempts.

The reality is that the markets need to work through the issues and move on, but the beatings to the financial companies will continue, at least into the first quarter, if not beyond.

Leave a Comment