The Bottom For Banks?
Bank stocks stopped the slaughter and mounted a dramatic rebound Thursday with Morgan Stanley rising and Citigroup paring its losses. Can these financial giants regain their footing or is there more carnage to come?
CNBC’s Charlie Gasparino told Fast Money that he thinks Citigroup (C) hasn’t bottomed. The bank is suffering from a lack of transparency and a leadership void. Both those issues need to be resolved for Citi to recover, he said. The market hates not knowing what’s on a company’s books, and it’s next to impossible to tell what is coming from the nation’s largest bank. To make matters worse, “the management at Citigroup is horrible,” as Gasparino put it. The bank needs to stabilize its leadership and put in a “real manager” to right the ship, he said.
The reason why Morgan Stanley (MS) closed up even after taking a $2.5 billion write-down is because investors are confident in that company and its management, according to Gasparino.
The bottom line? The big banks aren’t in danger of going insolvent. But no one knows if these toxic mortgage-backed securities and high-end derivative markets are going to be around in the future. That uncertainty, coupled with a lack of transparency from Citi and others, has led to nothing short of a panic in the financials.
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Trader disclosure: On Nov. 8, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (CSCO); Najarian Owns (BHP) Options, (C) Options, (GS) Options, (GOOG) Options, (VMW) Options, Najarian Owns (XLF) Options, (YHOO) Options; Finerman's Firm And Finerman Own (GS); Finerman's Firm Owns (BEAS), (KSS), (WMT); Finerman's Firm Owns (BIIB) Options; Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm Owns S&P Puts; Finerman's Firm Is Short (MDY), (IYR), (IWM), (SPY), (LEH), (MBI); Finerman's Firm Is Short (MER) And Owns (MER) Puts; Finerman's Firm Owns (PLCE), (YHOO), (MSFT); Seygem Asset Management Owns (CSCO), (CCJ), (EEM), (GLD), (MSFT), (SWC), (YHOO), (GFA), (F), (AAPL), (INTC), Gazprom