The financial sector of the U.S. economy has had nearly a year to address the problems that exacerbated the crisis last fall. But many observers think that the banks haven’t done enough, and that another round of trouble may be developing for the sector. I will outline some of those concerns and then suggest some ways to use options to profit if there is indeed another shoe to drop in banking. The Thesis The primary obstacle facing large banks is…
Monday, March 9, 2009
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Citigroup (C) and Bank of America (BAC) are both trading at less than 90% of their peak value, and for several good reasons, not least of which is the possibility than on any given Monday, shareholders may find themselves holding worthless shares. An article this weekend in Barron’s (“Banking’s Evil Twins? Not Exactly“) claims that BAC is the stronger of the two, and that it may thrive where C doesn’t. However, it’s not at all clear from…
Saturday, September 20, 2008
Each week, Barron’s publishes something called the “Citigroup Panic/Euphoria Model.” Long worthy of derision, this particular metric looked most ridiculous back in October 2007 when, just as equity markets were topping, the Citigroup model just barely – finally – drifted up from the “panic” zone to give a neutral reading of zero. Starting in January 2008, the model began to register more dramatic swings, and we noted back in April that since the model seemed to have been significantly…
Wednesday, August 19, 2009
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