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Citigroup (NYSE:C) CEO Vikram Pandit is about to
cash in. All he has to do is match analysts earnings estimates for 2011
and 2012, and he could receive as much as $42 million in
compensation.
Now, pre-tax income for 2011 and 2012 could total
nearly $47 billion. At that rate, Pandit’s compensation is literally a
drop in the bucket.
But let’s not forget too that Pandit presided over
$29 billion in losses from bad mortgage deals. And that figure doesn’t
include shareholder losses from a devastated stock price and canceled
dividends.
I will also remind readers that the majority of
current earnings are coming from loan loss reserves being brought back to
the positive column of the balance sheet. That may make the numbers look
better, but it also has the potential to backfire if Citi suffers more
asset price impairment.
As far as Citi goes, there’s no real way to know
what kind of risk the bank is still sitting on. Changes in accounting
rules have allowed the banks to reclassify assets that might otherwise be
considered toxic.
*****For me, I prefer strong regional banks that
didn’t go overboard in mortgage lending from geographic areas that are
growing. Common sense would tell us that a regional bank in
Nevada or
Florida might have
problems because the housing market in those areas is still a
mess.
But there are regions where the housing bubble
never over-inflated and, therefore, never popped. Some of these regional
banks never took TARP funds and have consistently paid strong
dividends.
I just recommended two such banks to my
High Yield
Wealth readers. If you’re interested in a couple
regional banks paying 4.5% and 3.1% dividends, click
HERE.
*****Economic data came in better than expected
this morning. New unemployment claims dropped sharply after the recent
surprise jump higher. Leading indicators and the Philadelphia Fed
manufacturing survey also cmae in strong.
And it’s as if the financial markets anticipated
that the recent indicators showing weaker economic growth would reverse
and we’d see good numbers today.
TradeMaster Daily Stock Alerts’ Jason Cimpl is calling the
recent move lower a bear trap. This morning he told his readers:
As long as support is held by the bulls this
week, the chances are high that not only will SPX test 1358 again, but it
is likely headed to new highs following the would be bear trap on
Monday/Tuesday.
A bear trap starts when a stock blows through
a support zone. The break of support causes more traders to sell and also
to sell short. But at this point sellers are the weak hands – they just
do not know it. Savvy buyers are actually pouring into the stock. Then,
the stock quickly reverses and moves higher. The increased buying
pressure takes the stock back above lost support. And in the process also
causes those who went short to cover. That covering raises the stock
again and gets the attention of momentum traders who proceed to bid it up
even higher.
A near perfect bear trap occurred in oil this
week as it fell to $95. Oil needed to hold $97, but it moved sharply
lower when that support was lost – and the trap was set. In the same day
oil rallied back up to $97 and the following day (yesterday) rallied back
to $100.
Jason recently released his Top 10 trades for May.
And if the stock market does indeed move higher from here, there’s no
doubt you’ll find some big winners from his Top 10 list. This special
report comes with detailed charts, analysis and price targets. It’s free
too, and when you get your copy, you’ll also start getting Jason’s daily
analysis courtesy of
TradeMaster Market Forecast. You can get Jason’s Top 10 Stocks for May right here.