It was March 10th when Vikram Pandit told us that Citi was profitable for the first two months of the year and the S&P’s are up 28% from the March 9th close. After better than expected earnings from WFC, GS and JPM, Citi gave us details today of their earnings beat. What is clear from all 4 is that capital markets activity, commodity/currency/fixed income trading that benefited from volatile markets and kitchen sink accounting on the part of Wachovia/WFC all helped to provide us with the positive surprises.
What hasn’t changed though is the continued deterioration in credit quality in a variety of areas and one should not extrapolate too much the Q1 #’s into Q2. The $ is higher for a 4th day vs the Euro and is at one month high due to uncertainty of where the ECB goes from here since they don’t want to cut rates much more. The irony is that their lack of QE should be good for the Euro. UoM confidence is out today.