back to normal

Now that Citigroup has successfully persuaded the government to give its TARP funds back to the government, there must be a sense that all danger in the large banking industry has been eliminated to the largest extent possible. Yeah, right. Citigroup is still losing money! We are right back to 2008.

The main reason for this rush to payment is the executive pay issue. Citigroup wants to get away from the government pay umbrella.

They didn't expand lending. They didn't expand staff to handle the glut of foreclosures.

They did find money for bonuses though.

There will be a lot of pats on the back on this one. But it will mostly be from bankers and politicians that collectively have let us down.

Step on up Citi

So now Citi is trying to pay back the government its remaining 20 billion dollars of US Government TARP aid. They plan to do this by issuing out more stock.

Now, since the government owns one third of the bank's common shares, wouldn't a new issue of shares hurt that investment? The government needs to play hardball on this and not let that sale happen.

This is simply a reactionary plan.Citi is simply jealous that Bank of America was allowed to pay back their debt. But I'm sure the government will roll over. Seems like they are good at that when it comes to the banks.

Bank of America

I am troubled by the news today that Bank of America will be allowed to pay back the full amount of TARP bailout money it owes to the government. The reason why I am troubled by this is that the bank is doing this solely because it cannot seem to find a CEO that is willing to accept the government's pay restrictions. The fact that the government is allowing this shows that the banks are still in solid control and that the government still does not have principles for this policy.

Does this put the bank back in failure risk? I will have to check the balance sheet and the effect this move will have on it. I believe that this will have a terrible effect on the ability for consumers to get a loan. The bank will be tighter than ever with loans because they will have to be. In the meantime they will pay ridiculous amounts to their executives.

This allowance by the government clearly shows that the banks are still in control. They knew that Bank of America was having trouble finding a new CEO. Allowing this will shrink loans given out to consumers. Once again the government is putting us at risk. Now maybe Bank of America can pay this back and continue giving out loans. That most certainly can be the truth. But this situation is showing more clearly how the government is mismanaging the program.

overcharges

There has been some movement on the overdraft legislation front. Bowing from pressure from consumer groups and Congress, the federal reserve announced yesterday that a new rule will go into effect July 1 2010 that limits banks from charging overdraft fees to those customers who approve them to do so. A story (below) in the Huffington Post follows up with more detail.

http://www.huffingtonpost.com/2009/11/12/overdraft-fees-require-cu_n_355442.html

Call your Congressman and tell them how you support this upcoming rule!It might make them further understand what is really going on!

New Yorker article

Hey

I read an article from The New Yorker that covered the financial situation. I enjoyed the detail and specifics covered. I think the article gives the reader a better understanding into what was going on. The article was written by James Stewart. I follow his article in StreetMoney.

Now since a subscription is required, I cannot post the site here. But here is the abstract that they provide. I strongly suggest that you read this article. If you do not like the New Yorker past this article or cannot afford the subscription, there is always the library.

Enjoy.

Vanity Fair article on Paulson

Hey

I recently read a very informative article about Henry Paulson in this month's Vanity Fair. The author, Todd Purnum, was able to get sort of a play by play during his term as Secretary of The Treasury. The article was also able to shine a light Paulson's take on the job, why he took the job, and what he was going through during the crisis. The article has enough detail to engage the reader but not too much to bore the non financial individual. Congratulations to Todd Purdum on writing this. I hope you enjoy!

investor - speculator

I think that there isn't much of a difference. In our long run, it is all speculation. So don't let other media outlets fool you when they discuss what "investors" are doing.

Goldman's Monopoly

Hey

With CIT failing, does Goldman have any competitors of scale?

Bank of America...literally

Hey

It was recently reported in a story from Bloomberg Magazine that Blackrock has been given a lot of the management contracts for the bank bailout.

The conspiricy theorist in me wonders whether this was because of the fact that Bank of America took on Merrill Lynch. I would have thought that JP Morgan or Goldman Sachs would have been a better fit.

Anyway, I think this is a positive area of revenue and profits overall for Bank of America as they figure out the Merrill Lynch mess.

Dislosure - I do not own any of the stocks mentioned in this story at this time.

Call selling blog

Hey

I have moved the call selling blog to Call Selling Blog. This is where info on trades from the call selling account will be located.

Peace

6 weeks to go, in black so far

Hey everyone

The open trade is currently positioned to end with a profit. The stock price rallied past the call price earlier in the week and finished the week above the call price. The call price has increased its time value (in dollar terms) by sixty percent since the trade was made meaning there is an increased level of interest in the company's stock. The call's expiration is due in six weeks or 30 trading days.

The company was positively covered by CNBC and the call options being traded were mentioned by a writer from Optionsmonster (link with story will be shown after trade is over.) I found the article through Yahoo Finance.


In the meantime, another deposit has been made to the account. Currently the trading account will be able to handle double the activity in four months. This will be one month shorter than it took for the previous set up to take. It is important to keep these deposits coming as it will assist in the accounts growth through new deposits, interest, and trade revenue.

As always, I do not fully divulge information on open trades until they are done. When the trade ends, I will give out the rest of the details (stock name, price purchased, call purchased, news on company/ETF, chart info) that sort of thing. Please feel free to ask me questions and I will answer them the best I can without endangering the trade.

First trade entry

Alright! First trade entered!

I made the trade on May 27. I have purchased 100 shares of stock and sold an out of the money (but closest to the money) July call (fifty cents away.) The premium received from the call (after transaction costs) equaled 5% of the stock. The chart of the stock is in a recovery mode since the spring thrashing.

I made this purchase for several reasons. The chart of the stock is showing major support at this level. The company came out with a positive surprise last quarter and guidance for next quarter was positive. The stock has room to move up without being called away right away. The difference between the call price and the stock price also allows a decent profit after transaction costs if reached. The call premium received allows continued growth in capital for the account.

As always, I do not fully divulge information on trades until they are done. At that point, I will give out the rest of the details (stock name, price purchased, call purchased, chart info) that sort of thing. Please feel free to ask me questions and I will answer them the best I can without endangering the trade.

In business

Hey everyone

The covered call account has reached its capital requirements and is now in business. Now to find the first trade! Thanks to Optionsxpress for partnering!

certainty is king

As I watch the earnings, economic numbers, and other factors come in today, the idea of certainty in regards to analysis came across my mind.

The idea that an analyst understands his field is only shown through his/her ability to correctly and consistently forecast his/her numbers. I will be looking at analysts in different fields and hopefully find some analysts that are consistently close to actual numbers.

Bank of Black Rock America?

Hey

I just read a story in the New York Times talking about Black Rock's role with managing government programs and private funds during the bailout. As you will read, Bank of America OWNS 47% of Black Rock! I'm thinking the likely hood that Bank of America will survive is pretty good because of this.

today's thoughts

How is it a surprise to the "experts" that consumer spending is low when employment has continued to go down? Until employment changes, this economy will at best be in neutral.

There needs to continue the effort to create new jobs through the green economy. That will get the non degree holding work force of america back to work. Without this major investment, I am not positive on this economy at all.

Where else can investment dollars go to grow the economy? Let me know.

apr 24 news

Hey everyone

Another deposit was made to the covered call account. The project is still looking to start with July options with a slight possibility of June options being available to trade. It is looking like June 5th will be the absolute earliest time that the program will start.

It is nice to know that there is a light at the end of this tunnel in the next two to three months. When the account was started three months ago, I didn't realize how long six months felt after knowing what I want to do. But I realized that the risk level of the strategy dictated that enough capital has to be there to ensure profits from the trading. It also provided an opportunity to test out the strategy. By waiting until the capital levels are correct, the level of risk in the account has been eliminated.

Covered Call Account

Currently I am funding covered call account. The strategy provides a consistent income on a monthly basis. This strategy will provide a step level type income as the more options we will be able to sell, the more income we will be able to produce. The expectation is that the revenue curve will be shaped in an exponential curve. I will be able to implement the strategy in about 10 weeks. I am looking to the July options as a start to the account.

Keep you posted!

bailout for purchasing???

Hey everyone

I just came across a story that is talking about Citigroup dumping its brokerage business to Morgan Stanley for two to three billion. I am loving the way the government has absolutely no control over how the TARP funds are being used. Great job! With the fact that consumers take up 70% of the economy, isn't it great we will barely see any of that money?

This week should be very interesting. Quarterly reports come out, last week of Bush presidency (ie free reign for the banks), and developments on Mr. Madoff.