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A Demonstration of Wall Street Narrative Versus Reality

Citigroup reported earnings on Friday and of course the financial media ran with the “good” news:

Citigroup shares surge on profit beat, core business strengthReuters

Citigroup provides upside surprise and stock rally while Wells Fargo missesMarketwatch

Citi beats estimates as trading strength offsets drop in dealmakingFinancial Times

Needless to say, the usual suspects created a “narrative” to justify motivating the retail suckers to buy shares in Citigroup and other banks (via CNBC):

Crossmark’s Bob Doll doused some reality on this report on the Big Bubblevision, CNBC:

The narrative by some is destroyed by the reality and facts stated by others. The usual analysts and bubblevision touts promoted an almost endless stream of “it’s not so bad” and “this could be a buy” etc.

The truth is in the stock charts however, and first up is the one year chart for Citi:

And the numbers do not lie. This looks more like a short covering bear market rally in what is still a $5 equity.

For a much more long term perspective that provides the reality check, here is a daily chart trading starting in January 2007:

There is the reality for all to see. Citi is still trading at only 10% of its reverse stock split adjusted all time high. Despite the bank’s massive size, international footprint, and “good” earnings report on Friday, it is still a shell of its former self. In fact the reality will not hit the earnings until the next two quarters as emerging markets which are cratering parallel to Europe will hit their bottom line.

As we all travel through this earnings season together, remember there is the “narrative” versus “reality.” It’s the individual’s choice to invest their hard earned money and trust the storytellers versus the facts. Good luck.

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