Citigroup, the troubled U.S. banking giant, is today reporting a profit for the first two months of this year, the first since 2007, with significantly increased revenues. And this, believe it or not, is driving up markets.
Read the fine print!
The "profits" being reported are before provisions for "credit losses, writedowns and additions to loan-loss reserves". In other words, they are not profits at all. Further, those of you not battling significant memory issues might recall that this is the same Citigroup that the U.S. government bailed out to the tune of $45 billion, holds a 36% stake in and is offering to buy tens if not hundreds of billions of toxic assets from. Yet their share price is poised to slip below a dollar.
Yet Bloomberg's headline reads U.S. Stock Futures Rally as Citigroup's Profit Outlook Drives Banks Higher. This isn't reporting, it's cheerleading. It points to a willingness by the business press to trade integrity for the smallest scrap of good news. In other words it smells like desperation.
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