Pitguru Financials Review for oct 18, 2010

By PitGuru Frank LaMantia

Citigroup earned $2.15 billion compared to a loss of $3.24 billion last year at this time. It is still owned by the government but shares are being sold back slowly. Currently the government owns about 12% of the company and wants to be free of the company by year end 2011. Bad loans are down 30% for the past quarter to $7.66 billion which could mean consumers may be getting control of personal finances. (1)

This trader mentioned that buyout and mergers may jump this quarter. Not every company is struggling and when one company falls another takes its place. Survival of the fittest has been how Wall Street worked over the past 100 years. But since 2007 government aid, bailouts, and the too big to fail attitude has changed this motto. Northeast Utilities is purchasing New England Energy for $4 billion in stock and St Jude Medical is buying AGA Medical Holdings for $20.80 per share. The company is also taking over $220 million of debt but is taking over a rival company. (2) (3)

Industrial production was announced down -0.2% and was forecasted to be up 0.1%. Capacity Utilization came in as expected at 74.7%. Tuesday housing starts and building permits are both forecast to come in at 550k. On Wednesday Mortgage Applications which came in at 14.6% at the last announcement will be released; along with Crude Inventories. Many will be looking at Thursday’s initial jobless claims which are forecast to be 450k. Also leading indicators will be released and expected to be around 0.3%. (4)

Apple will be announcing earnings after the close which could propel the market overnight. IBM is also a name that one should be watching to see if the markets will take kindly to the numbers. This week earnings and language used by the Fed could give a more clear direction on where this market is headed. Obviously, the market is stagnant at technical levels previously discussed.

1 http://finance.yahoo.com/news/Citigroup-earns-215-billion-apf-1301075638.html?x=0&sec=topStories&pos=main&asset=&ccode=
2 http://www.cnbc.com/id/39718420
3 http://www.cnbc.com/id/39719414
4 http://biz.yahoo.com/c/e.html