TSG Stock Market Letter – Credit crisis deepens

Dear Trader,

My apologies for sending this out late. I got
snowbound at Whistler Mountain on Sunday. Not a
bad place to be snowbound but it did make it
impossible to send this out till late..

Week Ending November 30, 2007

Topics Discussed This Week:

* Relief rally fueled by high hopes?
* Leaders tick higher again
* Earnings weakness continues
* … Dear Trader,

My apologies for sending this out late. I got
snowbound at Whistler Mountain on Sunday. Not a
bad place to be snowbound but it did make it
impossible to send this out till late..

Week Ending November 30, 2007

Topics Discussed This Week:

* Relief rally fueled by high hopes?
* Leaders tick higher again
* Earnings weakness continues
* Home price declines accelerate…
* As existing home sales fall and inventories rise
* New home sales revised downward
* Tip of the mortgage iceberg?
* Summing up the stock surge

After losing 237 points on the Dow Monday, stocks rallied on
the news Tuesday that Citigroup agreed to a $7.5 billion cash
infusion from an Abu Dhabi group in the form of a high-yield
11% convertible debenture. Not only is this rate 150 basis-
points above average junk bond rates, it is almost double
the rate it pays bond holders and as BMO portfolio manager
Norman Levine opined on Bloomberg Tuesday, it is more than
most of us have to pay on unsecured lines of credit. In
Levine’s opinion said, that an institution like Citigroup
made this deal is a negative not a positive. It also shows
the mounting costs Citi faces to maintain both their dividend
and first-tier bank status.

But the deal raises serious questions. First, why would the
largest U.S. bank by assets have to go to Abu Dhabi and pay
higher than junk bond rates?

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http://tradesystemguru.com/content/blogcategory/34/68/
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TO read this week’s INTERMARKET letter tomorrow, go to
http://tradesystemguru.com/content/blogcategory/35/69/
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