Citigroup (NYSE: C) is considering putting all or part of the company up for sale. It is easy to say that the reason is the drop in its share price or a loss of customer confidence. It may not be that simple. The bank's stock has dropped as low as $4.39 yesterday. Five trading days before that, they were over $10.
Across the Atlantic, Barclays (NYSE: BCS), one of the world's largest banks, is trying to raise just over $10 billion to replenish is capital base. Next Monday, shareholders vote on whether or not to authorize the plan. Some observers believe that the firm will lose the vote and its finances will be pushed into in limbo. According toThe Wall Street Journal, "If Barclays loses the vote, it could face a challenging time in raising capital." Much of the money is already lined up to come from Qatar and Abu Dhabi
Citi's board of directors may believe that their company could face a similar trial. There is no clear indication that the Treasury will put more money into the bank, although it might do that if Citi appeared to be in a liquidity crisis. But, the cost of that cash might be the bank's independence. The federal government might insist on a deal like the one the Fed has with AiG (NYSE: AIG) which nearly wiped out common shareholders. If Citi decides to go to the market for money, it may struggle to be successful
There is no question. Citigroup is watching the Barclays shareholder vote and knows that the outcome is far from guaranteed to be in the UK bank's favor.
TheStreet.com's Jim Cramer says this trade has worked all week, but it's a shaky play on the fundamentals.
It's a stubborn market. We sit here and marvel that Barclays (NYSE: BCS) (Cramer's Take) or Mitsubishi (NYSE: MTU) (Cramer's Take) need to raise money when three weeks ago we thought they were going to inherit the earth because they didn't lose money. We liked them because we stubbornly believed they were better.
We thought that Prudential (NYSE: PRU) (Cramer's Take) was The Rock; now it is The Rock like the guy who makes a lot of movies -- not all of them good. Lincoln National (NYSE: LNC) (Cramer's Take) was perceived to be much higher quality than MetLife (NYSE: MET) (Cramer's Take), but that's wrong. The idea that the Hartford (NYSE: HIG) (Cramer's Take) would be in trouble, as it has always been not in trouble, is amazing to us.
We stubbornly cling to the ones that we thought were good until we hear that they need a bailout. Then we turn on them like they were never good or like they are going to go bankrupt.
Keefe Bruyette upgraded shares of Colonial Bancgroup (NYSE: CNB) to Outperform from Market Perform on valuation following the recent weakness and believes the company will be eligible to receive TARP funds. Morgan Stanley believes the company's valuation adequately reflects risk to the loan portfolio; the firm raised shares to Equal Weight from Underweight.
Merrill upgraded Ericsson (NASDAQ: ERIC) and ASML Holding (NASDAQ: ASML) to Buy from Underperform and believes their valuation reflects the worst-case for bad news.
Oppenheimer upgraded Trimble Navigation to Outperform from Perform on valuation as they believe the company's long-term growth story is intact.
Celestica (NYSE: CLS) was upgraded to Sector Outperformer from Sector Performer at CIBC.
KeyCorp (NYSE: KEY) was added to Goldman's Conviction Buy List.
UBS cut Barclays (NYSE: BCS) to Neutral from Buy as they believe capital raises could negatively impact earnings and that the dividend is likely to be cut.
JP Morgan downgraded Discovery Holdings (NASDAQ: DISCA) to Underweight from Neutral based on valuation and the deteriorating economic outlook.
Friedman Billings downgraded shares of Janus Capital (NYSE: JNS) to Underperform from Market Perform and lowered its target to $7 from $23 as they see further risk to the downside following the company's weaker-than-expected results.
LKQ Corp (NASDAQ: LKQX) was cut to Sector Perform from Outperform at RBC Capital.
Affymetrix (NASDAQ: AFFX) was lowered to Sell from Hold at Deutsche Bank.
RightNow Tech (NASDAQ: RNOW) was downgraded at Baird to Neutral from Outperform.
I am the Global Editor at MoneyShow.com and each week I interview an investing expert. This week, I spoke with John Snowden, contributor to The IRS Report newsletter, who says the British economy will slide deeper into recession and the markets will move lower, too.
Q. What is your outlook for Great Britain's economy in the next 12 months?
A. We are on the cusp of a recession, but we have yet to feel the real crunch from a retailing viewpoint. The forthcoming all-important Christmas trading period will give more of a guideline by [the middle or end of] January. There is as yet no real sign of confidence returning, which would suggest we are in for a long haul. Borrowings are at an all-time high and will probably double again next year. This may mean higher taxes as well as labor unrest which would be detrimental for the economy.
Lower oil prices do help and commodity prices are falling, and will start to be reflected in government statistics by early next year. Hence, economy fears are turning towards deflation rather than inflation
Q: So, at what point do you expect to see actual recession in the UK?
A: My guess is that Christmas festivities may distort the reality, but I am sure that by February 2009, we in the UK will be feeling the full weight of recession.
The federal government is considering backing all bank deposits and guaranteeing huge amount of bank dept. Depositors are withdrawing money from financial companies at an alarming rate.
According toThe Wall Street Journal, "If the two moves come to fruition they would mark the government's most extensive intervention yet in the financial system."
"If" is a big problem. Many banks and brokerage stocks are selling off at the rate of 10% to 20% a day. Barclays (NYSE: BCS) opened down over 20% in London trading.
Governments are allowing the collapse of financial markets to get well out ahead of solutions. If that continues, confidence in the banking system could falter further and lending could be shut down completely.
If the Treasury and Fed do not act over the weekend, next week could be unspeakably tough.
Douglas A. McIntyre is an editor at 247wallst.com.
This post is part of a series in which TheStockAdvisors.com asked financial experts to name their top stock pick if McCain or if Obama wins the election.
"McCain, a friend of Wall Street, would encourage investing through tax breaks, which ultimately means more profits for Barclays (NYSE: BCS), the British bank that has acquired Lehman Brothers' U.S. investment banking assets," notes Vivian Lewis in her Global Investing.
"Barclays is now investing hugely in the business of U.S. investing, having picked up the investment banking and asset management businesses of Lehman.
"Barclays got a bargain, cherry picking the bits of Lehman worth the most, including the HQ building in NY. It was required by British regulators to immediately issue a program for financing the acquisition to reassure markets worried about capital sufficiency.
"The new assets will beef up Barclays' U.S. presence (and its U.S. risk). The British bank already is a major player in the issuance of Exchange Traded Funds, a cheap and popular 21st century investment mode.
"Adding Lehman to the pot will further boost its prowess in this special part of fund management. Then too, the international connection will probably result in new business in managing money for other investors like high-net worth individuals.
This post is part of a series in which TheStockAdvisors.com asked financial experts to name their top stock pick if McCain or if Obama wins the election.
Which stocks would benefit from a victory by either Senator John McCain or Senator Barack Obama? To help investors sort through the sectors and stocks best positioned to benefit in a post-election environment, we posed this question to some of the nation's leading financial newsletter advisors.
Importantly, this is not a partisan report; each participating advisor has provided a favorite stock for both candidates, focused not on political preferences but unbiased stock analysis. Below we feature those stocks and ETFs that the advisors believe will be the winners depending on which candidate prevails.
If not for the collapse of Washington Mutual (NYSE: WM) this week, I would probably not have posted this saga so soon after last Monday's report. However, since I was a shareholder of WaMu and thought there was value in it when I posted Chasing Value: Are you watching WaMu? I felt it was time to take my lumps.
I cannot go on ranting and raving about the failures and deceptions of others without making sure that I am forthright and transparent myself. I did post Chasing Value: Not -- WaMu one week later - ouch! but now WaMu is toast and so is some of my money.
Since I posted Serious Money: Tempting fate with 10 financials, the results of buying into the following pool of financial stocks at a time when the "hate 'em" factor was at a peak, with each passing day investors have found something more to hate.
The portfolio is losing 4.8% to date, not counting dividends. Some of my colleagues thought it was way too early to get back into the financial sector; seems that way now, and one read me the riot act for reporting the story so soon on MBIA Inc. (NYSE: MBI) being up substantially.
U.S. stock futures edged lower Wednesday morning after the government announced late Tuesday it would help save AIG. Investors may be relieved with the action on AIG and even the Federal Reserve decision not to move Tuesday, leaving room for a future rate cut, there are still big concerns about the state of financial markets. Investors today will also get data from on building permits and housing starts for the month of August. Oil rebounded today ahead of inventory report to over $93 a barrel.
The Federal Reserve said late Tuesday that it would to lend $85 billionAmerican International Group (NYSE: AIG), taking a 79.9% stake in the company. AIG shares are still sinking 30% in pre-market trading.
Meanwhile, as the government refused to help Lehman Brothers (NYSE:LEH) and the company filed for Chapter 11 Monday, Barclays PLC (NYSE: BCS) said it would buy Lehman's banking and capital markets business for $250 million. Barclays walked away from the deal a few days ago, perhaps waiting for a better price, in what many say BAC should have done with Merrill. BCS shares are up over 5% in pre-market trading, LEH's down over 25%.
Morgan Stanley (NYSE: MS) reported its quarterly earnings early to calm investors, posting better-than expected results. It seems the last two major independent investment houses, Morgan and Goldman Sachs (NYSE: GS), which also reported earning Tuesday, both posted third-quarter profits despite continued chaos in the financial markets.
J.P. Morgan Chase (NYSE: JPM) is reportedly in advanced talks to make a bid for Washington Mutual (NYSE: WM).
U.S. stock futures were lower this morning, indicating stocks could start the day with losses, a day after the worst session in years. While Goldman Sachs is set to release results, many eyes will focus on the Federal Reserve as it meets Tuesday. The market is betting on a rate cut soon, although perhaps not this meeting. Meanwhile, the Labor Department will release August Consumer Price Index. As global stock markets followed Wall Street's lead with losses of their own, oil prices took another dip to about $92 a barrel.
Goldman Sachs (NYSE: GS), one of the few independent brokers left after Lehman's demise and one that is now mentioned as a possible "next" will release its fiscal third-quarter earnings before the bell. Goldman's troubles have not been as deep as other financial companies, but no one expects Goldman to have stellar earnings.
And as expected, American International Group Inc. (NYSE: AIG) was hit by a wave of downgrades by credit-rating agencies. The new ratings are all still considered investment grade,but this only adds to the pressure on AIG as it seeks billions of dollars to strengthen its balance sheet. AIG stocks is sinking another 42% in pre-market trading.
Standard & Poor's also downgraded Washington Mutual (NYSE: WM)'s credit rating to junk status, citing the deteriorating housing market. WaMu shares are slipping yet another 15% in pre-market trading.
Staying with financials problems, General Electric Co. (NYSE: GE) shares hit a five and half year low on concern over its financial arm.
Many overseas stock markets were down 5%. The Nikkei fell 5% to 11,610. Shares in some large financial companies were down over 10%. The Hang Seng fell 5.4% to 18,305. The Shanghai Composite was off 4.5%.
In Europe, most markets were down almost 2% early in their sessions. Barclays (NYSE:BCS) opened down almost 5%.
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If not for the collapse of 
U.S. stock futures edged lower Wednesday morning after the government announced late Tuesday it would help save AIG. Investors may be relieved with the action on AIG and even the Federal Reserve decision 
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Cramer on BloggingStocks: A troika of opportunity and trouble 
