Non-Farm Payrolls Linkfest

The ACTUAL employment report directly from the Bureau of Labor Statistics: Employment Situation Summary

Accrued Interest: They’re digging in the wrong place!
The Big Picture: NonFarm Payroll -80,000, Negative NFP Expectations
Blog for Trading Success: More of the Same?
Calculated Risk: Jobs: Nonfarm Payrolss Decline 80,000 in March
The Mess That Greenspan Made: Economy loses 80,000 jobs in March, Unemployment Claims Surge
Mish's: Unemployment Soars, Jobs Collapse
Paper Economy: Envisioning Employment: Employment Situation March 2008
The Slope of Hope: Embracing Bad News
Sudden Debt: It’s The Jobs, Stupid
Toro’s Running of the Bulls: Jobless Claims

The Dollar Smile Theory, Overbought Euro

Euro Falls Against Dollar, Yen on Surprise Retail Sales Decline: “The euro fell against the dollar and the yen after retail sales unexpectedly dropped and Bayerische Landesbank reported 4.3 billion euros ($6.7 billion) in writedowns from the collapse of the subprime-mortgage market.

The euro weakened versus all of the most-actively traded currencies after a European Union report showed retail sales declined 0.5 percent in February, pointing to a slowdown in the region and adding to pressure for interest-rate cuts. BayernLB's writedown was double its previous estimate and the biggest of any German state bank.”

A couple of the German banks in particular have been ‘taken out, and shot.’ Somehow UK banks, who REALLY got into the real estate lending mess both at home and abroad, have managed to mysteriously avoid really significant write downs. Sure, Northern Rock imploded. But that was unrelated. That was due to the sudden inability to re-finance short term debt. There has to be more toxic waste out there in the Euro area banks.

“The decline in European retail sales reversed the previous month's increase, data from the EU statistics bureau in Luxembourg showed. The region's biggest economy, Germany, registered a 1.6 percent drop. The ECB has room to lower interest rates because economic growth is slowing “sharply,” the International Monetary Fund said yesterday.”

“Munich-based BayernLB said profit fell to 175 million euros last year from 989 million euros in 2006. The losses from the credit-market slump bring total writedowns at Germany's state- owned banks to more than 11 billion euros.

The British pound and euro declined against the dollar after Goldman, Sachs Group Inc. lowered earnings outlooks for U.K. banks.”

BayernLB Reports Record EU4.3 Billion in Writedowns (Update1): “Bayerische Landesbank reported 4.3 billion euros ($6.7 billion) in writedowns from the subprime- market collapse, double its previous estimate and the biggest of any German state bank.”

The global ‘decoupling’ argument is a dead. I’ve argued this before:

The Global ‘Decoupling Theory’ is Garbage
Global Decoupling Theory, Correlation Contagion
World Recession and the Perfect Short Squeeze

“This is evidence that Germany is finally starting to feel the effects of the U.S. slowdown and credit crunch, putting the euro under pressure. Euro-dollar is now in a broad topping-out process. The region's common currency will fall to $1.50 by the end of the second quarter.” –Ian Stannard, a currency strategist at BNP Paribas

“The euro is poised to fall significantly. A slowdown in the U.S. will eventually filter through to Europe. The ECB will be forced to cut.” -Akira Takei, Mizuho Asset Management Co.

In anticipation of the world finally starting to catch on that this mess isn’t just a U.S. problem, I’ve spent the week selling the EUR:USD cross and selling the CAD against the JPY.

Related Posts:
The Dollar Smile Theory
Commodities Unravel, Confidence Collapses

Really Scary Fed Charts: APRIL

Ok, it’s time for that monthly installment of REALLY SCARY FED CHARTS.

All data is sourced DIRECTLY from the Federal Reserve Bank of St. Louis.

Things have NOT improved. Start at the top, click on the charts and work your way down. This time around I’ve gone with more pictures and less words. There really isn’t much to say except for, “Oh SHIT.”

To all INFLATIONISTS: I’ve almost ALL these charts are for you. Each MASSIVE write down is the DESTRUCTION of credit and money. Since these write downs go straight to the bottom line, this results in the MASSIVE de-leveraging of these HIGHLY leveraged corporations. Because they ALL have to de-leverage at the same time, risky assets (from simple equities, to real estate) all find themselves CONTINUOUSLY OFFERED, with NO SUSTAINED BID. This is DEFLATIONARY.

Also, for the last time: The Fed is NOT printing money. Nor will it. The current liquidity injections are NOT inflationary, as they are TEMPORARY and nothing more than SWAPS of one illiquid (toxic mortgage derivatives) asset for one liquid (U.S. government debt) asset.

To all BOTTOM CALLERS: The last chart is for you. We may be DEEP into the RESIDENTIAL real estate mess, but we’re only JUST GETTING STARTED in the COMMERCIAL real estate mess. Banks hold far more CRE (Commercial Real Estate) loans than they ever did Residential Real Estate.

Still want to buy financials for the LONG TERM? (Buying the short covering bounces is different.)

Calculated Risk on CRE:
Recession: CRE and PCE
FDIC Stresses Importance of CRE Concentrations
WSJ on CRE Slowdown
Fed’s Kohn on CRE
Goldman: CRE Prices May Fall 25%

Really Scary Fed Chart Posts:
Really Scary Fed Charts: MARCH
Fed CHANGES Really Scary Fed Charts
Really Scary Fed Charts, Why Bernanke Will Furiously Cut

World Recession and the Perfect Short Squeeze

Yesterday’s MASSIVE rally will reveal itself to have been nothing but a cruel April Fools joke. I say it here and now. Let me explain:

It was the first day of the new quarter and therefore, NEW money was deployed. While this wasn’t the primary driver, keep this in mind.

Both UBS (UBS) and Lehman (LEH) announced new capital infusions. Now this is where it gets interesting. In both cases the capital is being raised in a very specific way.

But first some background: When large speculators, such as hedge funds, find an ailing company that has the very real possibility of becoming financially impaired they naturally start to short the COMMON shares. As the COMMON shares get HAMMERED DOWN and time passes, more and more information about the company’s financial situation gradually becomes public knowledge. This means that even the companies bonds start to loss value. Those same large specs might even start BUYING them for CENTS on the DOLLAR.

Now what? The large spec has a big fat UNREALIZED profit. Buying the shares back would be counter productive as the shares would LIFT on the sudden demand and reduction of supply. Since the company is really in financial distress, the large spec now approaches the company and financial intermediaries and expresses their interest in ‘supporting’ the company. The bankers get giddy with excitement and arrange for a secondary offering of COMMON shares which the large spec subscribes too. The large spec buys the shares, thereby covering their shorts. The firm gets fresh capital and increases its odds of survival. Existing shareholders get DILUTED. The large spec also makes money on the bonds as the risk of default suddenly drops.

See. SHORT SELLERS aren’t actually pure EVIL. They serve a legitimate purpose. This actually works and works well because existing longs may not be interested in adding to their long exposure and FRESH, NEW longs may be hard to come by.

In the case of UBS and Lehman, the money was raised from those NOT SHORT common. There went the ‘OUT’ for the shorts and BANG, there is your short squeeze.

Lehman reps actually came out and explained it on CNBC yesterday. Cramer did the same for UBS. He even giggled about it.

To make things worse, the financial community appears to have gotten together and made both UBS and Lehman ‘hard to borrow’. Suddenly those who were short were told they MUST cover.

If you’re long, you can decide if you want your shares to be available to be borrowed or not. Some well placed phone calls to some hedgies and friends that were long common, and suddenly the shares available to be borrowed DISAPPEARED.

There you go. Toss in some FRESH money on the first of the quarter and you’ve got your low volume super-spike. This is how you engineer the perfect short squeeze.

IMF Cuts Global Forecast on Worst Crisis Since 1930s (Update2): “The International Monetary Fund cut its forecast for global growth this year and said there's a 25 percent chance of a world recession, citing the worst financial crisis in the U.S. since the Great Depression.

The world economy will expand 3.7 percent in 2008, the slowest pace since 2002. In January the fund projected growth of 4.1 percent.”

The IMF is SLOW and LATE. They cut growth LAST and LEAST. For them to say there is a 25% change of a WORLD RECESSION, is something to take VERY seriously. This is a very careful and conservative organization.

“The reduction is the third by the Washington-based lender since last July, when it predicted the world economy would cope with the U.S. credit squeeze and grow 5.2 percent this year.

The IMF gave a 25 percent chance that global growth will drop to 3 percent or less in 2008 and 2009, a pace the fund described as equivalent to a world recession. The last time that happened was in 2001.”

I would put the odds of a WORLD RECESSION at greater than 50%. EASILY. You can’t have a GLOBAL CREDIT BUBBLE ,a GLOBAL ECONOMY and GLOBAL PROSPERITY without the flip side: GLOBAL RECESSION.

“The fund lowered its forecast for U.S. economic growth to 0.5 percent this year, according to the document, below a 1.5 percent prediction made in January. The world's biggest economy will expand 0.6 percent in 2009, it said.

The euro region will expand 1.3 percent in 2008, the document said, down from the fund's 1.6 percent projection in January.”

It’s amazing how easily people forget this. Sure, everybody is happy pumping money into EMERGING ECONOMIES and COMMODITIES on the GLOBAL GROWTH story. But they conveniently ignore the implications of slowing growth in the U.S., the EU and Japan. When the single largest economic bloc of CONSUMERS simultaneously slows, all the export economies around the globe have to stall out.

“Japan's economy, the world's second largest, will grow 1.4 percent in 2008, less than the 1.5 percent the IMF predicted in January, according to the statement. China will grow 9.3 percent this year, slower than the 10 percent projection made in January, the statement said.

The Asian Development Bank today lowered its forecasts for Asia, and said central banks in the region would pursue policies to quell inflation rather than spur economic growth. The World Bank earlier this week also warned of the threat of rising energy and food prices.

Asia excluding Japan is predicted to expand 7.6 percent this year, less than a September estimate of 8.2 percent, the Manila- based ADB said in a report today.”

ADB Cuts Asia's Growth Forecasts, Warns of Inflation (Update1): “The Asian Development Bank lowered its economic growth forecasts for the region as a global slowdown weighs on exports and expansions in China and India cool.

Asia excluding Japan is predicted to expand 7.6 percent this year, less than a September estimate of 8.2 percent, the Manila-based institution said in a report today. The economies grew 8.7 percent in 2007, the fastest clip in almost two decades.”

The global ‘decoupling’ argument is a dead. I’ve argued this before:

The Global ‘Decoupling Theory’ is Garbage
Global Decoupling Theory, Correlation Contagion

Consumers that make $3k to $9k a year and have a HIGH savings rate, are not going to behave the same as consumers that make $21k to $37k a year and spend as if they make $50k - $100k a year. You can’t just SWAP one out for the other and say, “Ta da! Carry on! This party is just getting started!”

“Although developing Asia is now exporting more to other emerging economies, this is unlikely to compensate fully for losses in the much larger, more established markets. Market penetration of Asian suppliers in China's final goods markets is limited, and strong growth in China will provide only a limited cushion against the downturn.”

Related Headlines:
UBS, Lehman Raisings May Signal Rout Is Nearing End (Update4)

Watch The EAST Buy The West For CENTS On The DOLLAR

Those of you who are going out there BOTTOM FISHING in equities generally, but FINANCIALS specifically should really really stop watching BubbleVision (CNBC).

Banks Face Biggest Crisis in 30 Years, Report Says (Update2): “Credit market turmoil poses the most severe crisis for banks in 30 years, surpassing Black Monday in 1987, the Asia currency crisis and the burst of the dot-com bubble, Morgan Stanley and Oliver Wyman said in a joint report.”

You see, it’s not just about the WRITEDOWNS. When they stop, when they are done, it is NOT business as usual. The massive writedowns are just one factor in this complex mess. Future REVENUES and future PROFITS will be much much diminished for YEARS to come.

“Revenue from investment banking may drop 20 percent in 2008 before a further $75 billion in markdowns, analysts led by Huw van Steenis said in a note to clients today. Six quarters of earnings will have been erased by writedowns and falling revenue by this month, rivaling the collapse of the junk bond market at the end of the 1980s that put Drexel Burnham Lambert Inc. out of business, the report said.

Banks' revenue from their credit businesses may drop as much as 60 percent, the analysts said and the firms will have to provide more transparency to investors who buy their loans. At the same time, regulators will push the industry to retain more capital as a cushion, hurting banks' return on equity in the long-term, the group added.”

The entire financial system is desperately raising capital to REPLACE lost capital. They are obviously NOT keeping pace. Capital is currently being destroyed FASTER than it is being replaced. That means balance sheets will continue to SHRINK… and SIGNIFICANTLY so. This will result in a cycle of CREDIT TIGHTENING, whether the Fed likes it or not.

Translation: INVESTMENT BANKING revenues will suffer massively. CREDIT businesses will suffer just as massively. Not only will the top line suffer, but the bottom line as well as COMPETITION for the remaining crumbs heats up.

“Banks' earnings have been hit for the past three quarters by the turmoil in the credit markets, the report said. In total, the crisis may last for eight to 10 quarters, exceeding the six- quarter duration of the Asia crisis and bailout of LTCM in 1997- 8, and the seven-quarter fallout from the bursting of the dot- com bubble, the report said.

Investment-banking revenue has also stalled as the pace of takeovers and initial public offerings declined in the first quarter of 2008. Writedowns and losses on subprime-infected assets have already cost the world's biggest financial institutions about $230 billion since the start of 2007.

Zurich-based UBS AG today posted an additional $19 billion of writedowns and said it would seek $15.1 billion in a rights offering to replenish capital. Deutsche Bank AG, Germany's biggest bank, also said today it expects to book about 2.5 billion euros ($3.9 billion) in writedowns for the quarter.

Separately, Merril Lynch and Citigroup had their first-quarter earnings estimates cut by Goldman Sachs Group Inc., which said the two banks may post $14 billion in writedowns on assets linked to collateralized debt obligations.”

The GREAT GLOBAL DE-LEVERAGING has only just BEGUN. So much of the excess must still be unwound. Sure there will be bounces. Some of them will be quite large, violent and quick. This action is a dream for nimble traders to be sure, but dangerous for those looking to establish more permanent LONGS at the BOTTOM. We are not there yet. Bottoms are ground out and built over time. Wait for the frustrating, range bound trading that lasts a year or more. THAT will be the bottom.

“Banks are also finding their cost of capital increasing relative to other investment-grade companies, as traditional sources of money like Structured Investment Vehicles exit the market, the report said. Banks are also struggling to offload loans, leaving leverage ratios high, it said.”

UBS Says Ospel Resigns After Writedowns Lead to Loss (Update5): “UBS AG, battered by the biggest writedowns from the collapse of the U.S. subprime mortgage market, reported a 12 billion-franc ($11.9 billion) first-quarter loss and said Chairman Marcel Ospel will step down.

The bank will seek 15 billion francs in a rights offer to replenish capital, on top of 13 billion francs already raised from investors in Singapore and the Middle East. UBS will write down $19 billion on debt securities, bringing the total to almost $38 billion since the third quarter of 2007. Zurich-based UBS also said today it will cut jobs at the investment bank.”

UBS is currently up pre-market. Talk out there is that these writedowns indicate that the WORST of the banking crisis is now behind us. This is of course WISHFUL THINKING. The market has also taken the capital raising EFFORTS by UBS as a good sign. Emphasis is on EFFORTS, because they have yet to raise that capital and the COST OF CAPITAL will be HUGELY important.

“Standard & Poor's cut UBS's long-term counterparty credit rating by one level to AA- and said it may lower the rating further after the “risk management lapses, earnings volatility, and need for new capital.”

The bank's Tier 1 capital ratio, a key measure of solvency, will rise to about 10.7 percent after the rights offer, UBS said. Without the capital increase, the ratio would have fallen to about 7 percent, the bank said.

UBS, with about 2.3 trillion francs in private-banking assets, said clients in Switzerland withdrew funds in the first quarter. The Swiss redemptions were offset elsewhere and net investments were “slightly positive,” Chief Executive Officer Marcel Rohner said on a conference call today.”

IF these attempts fail, Tier 1 capital ratios will be dangerously low and capital flight will accelerate as clients close accounts. This is DO or DIE for UBS.

Lehman Attempts to Soothe Investors With Stock Sale (Update2): “Lehman Brothers Holdings Inc., the fourth-largest U.S. securities firm, is seeking to raise at least $3 billion from a share sale after speculation it's short of capital drove the stock down 42 percent this year.

Lehman is offering 3 million convertible preferred shares in a sale that will be “an endorsement of our balance sheet by investors,” Chief Financial Officer Erin Callan said in an interview yesterday. Demand was three times greater than the amount on sale as of late yesterday, according to a person familiar with the deal who declined to be identified before it ends today.”

Lehman too is attempting to raise capital. My question is this: If EVERYBODY in the financial industry got whacked recently and THEREFORE needs to raise capital simultaneously, who are they going to get it from? I believe there really is only one answer: SOVEREIGN WEALTH FUNDS.

Watch the EAST buy the WEST for CENTS on the DOLLAR.

Well played. Just well played.

Related Headlines:
Leveraged Loans Fall by Record as Bank Losses Deepen (Update1)
Deutsche Bank to Write Down Record 2.5 Billion Euros (Update4)
Merrill, Citigroup Estimates Cut by Goldman on CDOs (Update1)
Dollar Advances Most in Almost Two Weeks as UBS Seeks Capital

Related Posts:
The Fed is Almost out of Ammo, Citigroup and UBS Too

Financial Ninja Favs: March

In case you missed them, here are YOUR favorite Financial Ninja posts for the month of March:

1) Really Scary Fed Charts: March
2) The Fed is Almost Out of Ammo, Citigroup and UBS Too
3) Commodities Unravel, Confidence Collapses
4) Parabolic Commodities: The End is in Sight
5) Massive De-leveraging Slams Commodities

As far as the Really Scary Fed Charts post goes, it will be updated as soon as the March numbers are out. The situation clearly hasn't improved. The Fed has taken the TAF (Term Auction Facility) and added the TSLF (Term Securities Lending Facility) and the PDCF (Primary Dealers Credit Facility) to its bag of DESPERATE tricks.

In March we saw the first results of both the TSLF and the PDCF. The market really didn't know how to interpret the results, and so basically IGNORED them.

Treasuries Decline on Weaker Demand at Treasury, Fed Auctions: "At the New York Fed's $75 billion auction, through which primary dealers could borrow Treasuries for 28 days, bids totaled 1.15 times the amount offered, indicating financial firms' need for the relative safety of U.S. debt is waning. Notes declined earlier as demand at the government's $18 billion sale of five-year notes was the lowest since April 2006."

Some thought that WEAK demand was GOOD. It meant there was no DIRE NEED for additional liquidity. Others saw the WEAK demand as BAD. It meant the broker dealers didn't have any more good AND unencumbered assets. Honestly, NOBODY knows.

This month the emphasis has clearly shifted towards COMMODITIES, the last FEVERISH hope of the Bull. Cracks have appeared in the story as one commodity after another PEELED AWAY from record highs after going PARABOLIC. (If you haven't yet figured out that PARABOLIC = THE END, the market WILL land the worst kind of ninja style drop kick on your account shortly.) While it may be too early to make the call, I've already put money on it: The COMMODITY BULL IS DEAD.

This is my first and only Blog. I must say, I am impressed with the results and responses. I have learned from YOU readers who post comments and send me informative emails. Thank you. Much appreciated.

I got this Blog organized in August 2007 and received 486 Visits and 1340 Page Views. This month 25 253 Visits resulted in 69 817 Page Views. I am more than pleased with such a great response.

I enjoy writing this Blog immensely. Thank you all for you time and interest.

The Fed is Almost Out of Ammo, Citigroup and UBS Too

`Don't Be Cruel' Stocks Show Short Covering Deceives (Update1): “Gains in financial, property and consumer companies suggest the advance of the past three weeks is being fueled in part by short sellers locking in profits by purchasing shares to return to lenders, a false buy signal during temporary rallies in November and January. Stocks may repeat that pattern and fall to the lowest levels of the year amid forecasts for four straight quarters of declining profits and worsening bank credit losses.”

That’s exactly what I’ve been saying. Rallies are nothing but BOUNCES. Strength is to be SOLD.

The Bear trend is firmly in place. See:

Short Entry Zones Were Damn Near Perfect
Short Covering on Bear, Goldie, Lehman, Fannie and Freddie

Charts for the Big Bounce

“Short interest climbed to 4.2 percent of the total shares listed on the New York Stock Exchange as of March 14, the highest since at least 1931, according to Harrison, New York-based research firm Bespoke Investment Group LLC.

The 100 most-shorted stocks outstripped the S&P 500's 6.3 percent rise from March 10 to its high last week by 3.8 percentage points.”

That simply means that the MOST shorted names also had the GREATEST rises. It does NOT mean that the FUNDAMENTALS have changed for these firms or that they WON’T fall to new lows.

“Fannie Mae, the biggest provider of money for U.S. home loans, has climbed 31 percent since March 10. Short interest in the Washington-based company rose to 77.9 million shares as of March 14, Bloomberg data show. That's the highest since at least September 1991. Fannie Mae surged 28 percent during the advance that began in November and climbed 10 percent during the January rally. The gains evaporated each time.”

They will evaporate again… and again. For a SEVERAL YEARS as the RECESSION runs its course.

The high short interest is NOT a contrarian buy signal. The financial system is in a REAL SERIOUS CRISIS. The smart money knows this because it is responsible for it.

“I don't see any sustained long-term buy interest. Some of the rallies we may have seen short-term were short- covering and some dead-cat bounces on stocks that had really gotten taken apart.” -Uri Landesman, ING International Growth Opportunities Fund.

“These rallies in here are short covering.They're not being driven by the fundamentals.” -Peter Sorrentino, a senior portfolio manager at Huntington Asset Management.

Trichet, King May Support Fed as Ammunition Runs Low (Update1): “Federal Reserve Chairman Ben S. Bernanke has so far shouldered most of the burden of saving the global economy and financial markets. He may be about to get more help.

With the credit crisis entering its ninth month, Bank of England Governor Mervyn King and European Central Bank President Jean-Claude Trichet are on the verge of new steps to spur lending and increase liquidity, say economists at Lloyds TSB Group Plc and Royal Bank of Scotland Group Plc. Interest-rate cuts may be next if the crisis persists.”

Oh dear god! THE GREAT GLOBAL MONETARY EASING is yet to come? I thought we just came off ‘the great global monetary easing’ and that THAT is exactly what got us into this mess in the first place! Correct me if I’m wrong, but wasn’t it absurdly low REAL rates that literally forced the entire financial system to REACH FOR YIELD? That is to say to leverage up using derivatives in a vain attempt to turn something yielding 2% or 6% into something closer to 9%? Wasn’t it the super cheap and EASY access to credit by both individuals and corporations that lead to runaway SPECULATION in hard assets such as REAL ESTATE?

Instead of allowing for an orderly and DESERVED unwinding, de-leveraging and general deflation of this mania, the major Central Banks of the world propose to co-ordinate a new round of monetary EASING? Brilliant. Just brilliant.

“The Fed chairman needs all the help he can get. In addition to lowering interest rates at the fastest pace in two decades, Bernanke has committed as much as 60 percent of the $700 billion in Treasury securities on his balance sheet to expand lending. The Fed has also offered a $29 billion loan against illiquid securities to assist the buyout of failing securities firm.”

The Fed has almost run out of ammo. Much like George Soros on Black Wednesday, when he ‘broke the Bank of England’, global capitalists are damn near close to breaking the Fed. 60% has been committed and it doesn’t seem to be working. Another push and things could unravle quickly...

“By following the Fed's moves to take illiquid securities as collateral and ease credit terms, King and Trichet would confront the same concern Bernanke, 54, already faces: that they're exposing their balance sheets, and ultimately taxpayers, to potential losses on private-sector securities.”

It is truly humorous that the Socialists across the pond are the one’s considering taking the ‘laissez faire’ approach while the CHAMPIONS of Capitalism over here are pounding the table for mass intervention.

“U.K. banks are sitting on cash and refusing to pass on the central bank's rate cuts to customers, pushing mortgage rates to the highest level in more than seven years and further weighing down a housing market that's already the worst in 18 years.”

That’s perfectly rational behavior. The banks can’t trust each other because they can’t trust each others balance sheets. Nobody knows where the dead bodies are because nobody has marked to market FULLY. Mark to model is still the STANDARD and the Fed is making it worse:

SEC Openly Invites Corporations To Lie: “Under SFAS 157, it is appropriate for you to consider actual market prices, or observable inputs, even when the market is less liquid than historical market volumes, unless those prices are the result of a forced liquidation or distress sale. Only when actual market prices, or relevant observable inputs, are not available is it appropriate for you to use unobservable inputs which reflect your assumptions of what market participants would use in pricing the asset or liability.”

Translation: IF MARKET PRICES ARE TOO LOW, IGNORE THEM.

That is NOT going to make the banks stop hoarding cash. We ALL need to know who is bust and who is not.

“We're inching closer to the great global monetary easing.” -Joachim Fels, co-chief economist at Morgan Stanley in London.

“Putting illiquid mortgage-backed securities onto the central bank's balance sheet will transfer a lot of the risk associated with these instruments.” -Christine Li, an economist at Moody's Economy.com.

Citigroup Separates Credit-Card Business in Banking Overhaul: “Citigroup Inc., battling to restore profit after a record loss, will set up an independent credit- card unit and overhaul consumer banking along geographical lines.”

These are the first signs of the pending dismantling of Citigroup. First, Citigroup will re-organize internally by creating new fiefdoms within the org chart. Second, these units will them be spun off and sold outright to other industry players or IPO’d as separate branded entities. Citigroup, the financial giant is no more.

Citigroup (C) has wiped out 10 years of gains in a couple of months and is now at support from mid 2002. Failure here, which seems more and more likely, will result in a test of the 1998 'Asian Cris' low around $11.00.

You don't need to have a vivid imagination to picture what the carnage in the broader equity markets would look like should that occur.

UBS Falls on Concern Bank May Have to Raise Capital (Update2): “UBS AG, Switzerland's largest bank, dropped as much as 4.8 percent in Swiss trading on concern it may have to raise capital because of more subprime-related losses.

The bank should raise 15 billion francs to cushion potential writedowns of as much as $21 billion this year, Merrill Lynch & Co. analysts including Derek De Vries said in a note to investors today. UBS may announce $11 billion of first-quarter markdowns as early as this week, the analysts said.

UBS (UBS) currently has enough funds to withstand $16 billion of writedowns, said the analysts, who predict the bank will eliminate its dividend for 2008. "

UBS has undone over 4 years of gains in a couple of months, dropping into 'the box'. UBS is now stuck below formidable resistance around the $28 and $25 area. Supp can be found around the $20 and $18 area. Best case scenario: Expect UBS to trade within that range for some YEARS as common shareholders are DILUTED into OBLIVION.

Related Headlines:
Bernanke May Run Low on ‘Ammunition’ for Loans, Rates (Update 1)

Related Posts:
Citigroup Raises 47.5 Billion
Banks Agree on Super SIV