Posted on 03/20/2008 10:13:12 AM PDT by TigerLikesRooster
The Great Unwind has begun, Citigroup warns
Avoid leveraged companies, countries and consumers, bank's strategists say
By Alistair Barr, MarketWatch
Last update: 9:51 p.m. EDT March 19, 2008
SAN FRANCISCO (MarketWatch) -- The Great Unwind has begun, Citigroup Inc. strategists warned on Wednesday. As markets and economies de-leverage across the globe, investors should avoid companies and countries that have grown to rely too much on borrowed money, they said. That means favoring public-equity markets over hedge funds, private-equity and real estate, while leaning toward emerging market countries and away from developed nations like the U.S., the bank's global equity strategy team advised.
Within equity markets, the financial-services should be avoided because it's still over-leveraged, while other companies have stronger balance sheets, the strategists said.
"Steady growth, low inflation and rock-bottom interest rates encouraged economic and financial participants across the world economy to gear up over the past few years," Robert Buckland and his colleagues on Citi's global strategy team wrote in a note to clients. "Easy money encouraged many to buy a bigger house, a bigger car or a bigger speculative position."
(Excerpt) Read more at marketwatch.com ...
Ping!
Good post. Thanks.
Dang, hedge funds are collapsing. See what happens when Chelsea Clinton takes a leave of absence? America just can’t survive with 2 of the smartest women in the world distracted like this, I hope the campaign ends before everything collapses.
How much would I bet that if one of the Bush or Cheney daughters worked in a hedge fund dominated by Republican donors we would be seeing non-stop stories about how hedge funds are the fountain of all evil and are causing the imminent meltdown of the entire world economy?
However, I'll pass on the advice of a bank that's been losing $10 Billion/week for the past few months.
Don't forget that John Edwards has now been able to go back to devoting much of his time to screwing average Americans through his "let me learn about business and poverty" position at Fortress Capital. I wonder how many foreclosures he's approved since he dropped out of the primary race.
Gold drop hammers commodity producers ~~ gold off more than $90 an ounce over two days,....
Citi said that??? If it had been said in a courthouse, the next step would have been for the judge to dismiss the jury with thanks for their service and move straight into the sentencing phase. That's usually what happens after a confession, anyway.
Just want to say thanks for the informative posts.
Looks like most of the US money is coming to Europe, Switzerland, Singapore, Japan.
A tip of the cap to Citi’s global atrategy group for telling us to avoid banking stocks ... like Citi. Having tried everything else first and reached the brink of disaster, Citi is evidently trying candor.
Many European banks taking it in the shorts thanks to our Democrat-led easy mortgage money policy. Bet they’re pissed.
For later.
You are spot-on.
The `Financial Locusts' Are on the Defensive
Indeed. Let's look at this article "from scratch":
investors should avoid companies and countries that have grown to rely too much on borrowed money
Citibank
Within equity markets, the financial-services should be avoided because it's still over-leveraged
Citibank
"But now, any behavior that relied upon continued access to easy money is being dramatically reassessed," they added. "Leveraged banks must lend less, leveraged consumers must consume less, leveraged companies must acquire or invest less, and leveraged speculators must speculate less."
"Leveraged banks" = Citibank
Financial-services companies are the most vulnerable to this reduction of borrowed money across the globe, they said.
Citibank
Now the sector is geared 40 to 1 on average, according to Citi's European bank research team. "The banks have a long way to go," the strategists said. "We would continue to avoid the sector while they are de-leveraging."
Citibank
Has anybody on Wall Street ever issued an "AVOID!" recommendation, even in code, on their own company?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.