Yesterday was clearly another rout. All industries were beaten down led by oils. The banking system was crumbling and even the most pristine companies saw their stocks decline. Dell ended the day by beating expected earnings and rose after the close. That may have been the bright spot of the day.
Citigroup was a highlight yesterday as its stock closed down at 4.39. This bank has been in a tailspin for over a year now and reality is finally sitting in. Two of the biggest issues facing the deleveraging of our economy is Citi and the auto makers. It looks like Citi is now preparing to either sell some assets or sell the whole company. Perhaps Goldman Sachs can get out of its own funk by merging with Citi's branch network.
As for the auto manufacturers, the Government may finally be getting it right. There seems to be a movement toward pushing General Motors into a prepackaged bankruptcy with Government financial assistance. This is the right approach and will be the best long-term solution.
The sale of Citigroup and the deleveraging of GM are another set of Tea Leaves that the markets need to right themselves. We are still in times of great volatility and it certainly feels like the world is coming to an end but the cleaning up of the massive excess in this country will take time. The next month might bring us closer to those goals.
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