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Citi Earnings — The Real Disappontment

Citi was down 4 percent pre-open, with a 4 cent headline on earnings and 8 cents expected, was a disappointment. Even S&P futures dropped about 3 points when the results came out. After the open, Citi shares continued to drop.

Expenses were higher than expected, and core trading came in lower than expected. In fact both debt and equity trading were down 30 percent, according to traders, which is not good coming on the heels of JPM's good results. One bright spot: credit continues to improve. Still, it is overall weak results, particularly relative to JPMorgan .

It was especially disappointing because Citi, like most banks, set aside much less to cover potential loan losses. Banks aren't supposed to miss right now, as they have those reserve releases.

Then there's the technical factor: everyone piled in in the last few weeks, especially as it got thru $5.00 last week.

So right now it is 1 for 2 in bank earnings: JPM a win, Citi a miss. Bank of America reports Friday, Goldman Sachs and Wells Fargo tomorrow. All of those companies were also trading up in anticipation of strong results...and hopes of hearing of dividend increases. Citi is not what they want to hear.

Then there's Delta , which also disappointed the Street with a $0.19 earnings number, when consensus was $0.26. While business is clearly improving (they lost $0.24 in the same period a year ago), and passenger unit revenue (PRASM), a key metric, did increase 8 pecent, any miss is sure to be scrutinized.

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