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Michael Mayo *** look out below!

Einstein

Well-known member
Citigroup may have to write down about $10 billion in deferred tax assets in the fourth-quarter, according to CLSA banking analyst Michael Mayo, sending the shares down over 5 percent.

Citigroup has not yet commented on Mayo's analysis.

Mayo disclosed his expectation that more writedowns were ahead in a conference call Friday. In the wake of this disclosure, shares of banking stocks, including Citigroup, were trading lower.

Deferred tax assets can be used to offset future gains. However, if over time, a company does not have gains to offset, the value of the deferred tax assets must be written down.

Mayo estimates the $10 billion writedown would be equal to about 25 percent of Citigroup's existing $38 billion in deferred tax assets, and about 10 percent of Citigroup's tangible equity.

According to Mayo, Citigroup may be able to offset a portion of the expected write down with other gains.

http://www.cnbc.com/id/33552566


the moral to the story:

stay away from leveraged domino derivatives if you don't understand them.
 

Einstein

Well-known member
here he is before the market rally started:

He is particularly worried about $7 trillion in bank loans covering mortgage, consumer and commercial real estate that the public private partnership doesn't begin to fix.


http://www.cnbc.com/id/30066933
 
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