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Daily Market Update – March 27, 2014 (9:30 AM) It’s not often that I end the day being upset about things, but I’m still seething about yesterday afternoon’s news that Citigroup failed its banking stress test. It’s not that I have a large position in Citigroup. It’s just a position, really no different from others in terms of overall proportion. I usually have either one, two or three lots of any stock and generally fairly well balanced, other than for speculative kind of positions, which are under-represented. In this case, I have two lots of shares and was expecting that one would be assigned this Friday. That seems much less likely right now. That wasn’t supposed to happen and I doubt that any apologists will step forward with anything to say other than it was pretty inexcusable, given that they had the precise guidelines of what needed to be done. It was bad enough that nearly everybody else passed the test and started to immediately announce share buy backs and raised dividends. But what was really bad was that this stress test was the equivalent of an open book test. How do you fail one of those? While unwritten, there was a sort of social contract between investors that these “too big too fail banks” would pass their imposed stress tests and get back to their usual dividends and efforts to keep stock prices higher, through buy backs. In turn, investors bought shares. Vikram Pandit, the previous CEO of CItigroup, was said to have been fired after not passing the previous stress test and criticized for not having been a “banking guy,” as he came from the hedge fund world. His replacement, Michael Corbat, was known as a no nonsense guy with a reputation of delivering troubled banks to health. Maybe not so much this time, although there’s still 30 days to appeal the decision. Or, there’s always next time. I probably wouldn’t advise using that in their next ad campaign. This morning doesn’t hold much promise for moving the market higher and Citigroup isn’t helping things. With less positions looking as if they may be assigned this week ke It seems to simply be looking for direction. I’m content to let it try and find its way and sit back while it goes through those efforts. At least in a couple of weeks an entirely new earnings season will be ready to begin and then we’ll have something a little more tangible to be basing decisions upon, rather than the vacuum of the past few days.
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