Batting Clean-Up: Citigroup

Earnings will likely drive the banking sector again Friday. Citigroup reports Friday before the bell with analysts expecting another quarterly loss amid a tough credit climate.

Citi shares sold off about 3% in after-hours trading following Merrill Lynch's earnings report.

“Citigroup will probably be talking about their mortgage exposure just like Merrill Lynch did on Thursday,” says Sanford Bernstein analyst Brad Hintz on Fast Money. That's what you should expect to hear.

Hintz doesn’t see any reason to get involved with the brokers or the big money center banks. “I think they have quite a way to go before they’ve cleaned their balance sheets.”

In case you’re wondering Hintz has an outperform on Morgan Stanley but says that’s relative to the sector. He feels Morgan's exposure to mortgage debt is less than its peers.

Bottom line: Don’t confuse a short covering rally in the banks for a full recovery. The structural problems that face the financials services group will likely continue for some time.

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Trader disclosure: On July 17, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (WMT), (GS), (MSFT), (HAS); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Najarian Owns (AAPL), (CHK), (TSO), (XLF); Najarian Owns (ANR) Puts; Najarian Owns (CSCO) Calls, (MER) Calls, (SLB) Calls, (YHOO) Calls, (UYG) Calls; Finerman Owns (GS); Finerman's Firm Owns (MSFT), (NOK), (TSO), (SUN), (VLO), (AXP), (MRK); Finerman's Firm Is Long SPX Index puts; Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM)

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Hintz Owns (MS), (CME), (ETFC), (RJ), (AMTD); Accounts Over Which Bernstein And/Or Affiliates Exercise Discretion Own More Than 1% Of (GS), (LEH), (MER), (MS); Bernstein Is A Market Maker In (SCHW); (GS), (LEH), (MER), (MS), (SCHW) Are Or In Past 12 Months Were Non-Investment Banking Clients Of Bernstein; An Affiliate Of Bernstein Received Non-Investment Banking Compensation From (GS), (LEH), (MER), (MS), (SCHW)