solarbird | rocketshot

Good morning.

Stocks are surging across the board - the TSX up 3%, major US indices up 5%ish - on a combination of a long-overdue bear-market snapback rally, Fed chair Ben Bernanke's strongly-stated assurances that large banks will not be allowed to fail no matter what, and "modifications" being considered to accounting rules , which would effectively allow banks to list assets as having more value than they actually currently do.

Citigroup CEO Vickram Pandit says that his firm is both profitable and undervalued, assuming you of course ignore, as Marketwatch puts it, "four separate government interventions at a cost or commitment of close to $400 billion and a dilution of existing shareholders." And that's also if you ignore this juicy tidbit:

Citibank, Bank of America , HSBC Bank USA , Wells Fargo Bank and J.P. Morgan Chase reported that their "current" net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31 . Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days.

Karl notes that with all the Level 3 bullshit and off-balance-sheet financial statements manipulation, we have no way to actually judge any claim of profit.

The usual notes apply: 1. Don't stand in the way of this. 2. A sustained bear market rally would have some legs, enough to get you confident that the bear is dead and then whipsaw around and eat. your. brains, but 3. They're very good opportunities if you're lucky and careful. (Me, I don't play this game. But I know people who do.) Good luck.