The government says it is starting to sell off $2.2 billion in trust preferred shares it holds in Citigroup, another move to recoup the costs incurred in the $700 billion financial bailout.

The Treasury Department says it will start the sales Wednesday with the amount sold to be determined by market conditions.

The $2.2 billion in trust preferred shares were received by the government as part of Treasury’s agreement in January 2009 to share potential losses on a pool of $301 billion of assets held by Citigroup.

What they’re not saying is how much the taxpayers will have lost when losses on the $301 billion in loans is actually accounted for.  It almost certainly going to be some large multiple of the money they ‘make’ on  the sale of shares.

Don’t expect any headlines on that score.

Walgreen’s beat quarterly estimates with August quarter results of $0.49 versus $0.44 . Analysts had been looking for flat year-over-year results.

WAG has surged by 10.7% through 11:40 this morning.

It’s too late to play WAG but not to jump in with the sale of some January 2012 LEAP puts on CVS which is likely to be seeing the same business climate but is on a calendar reporting year.

CVS is up about 3% in sympathy but still looks extremely cheap at $31.50 at 11.6x the current year estimate of $2.71 and 10.5x the 2011 view. Both these estimates are subject to upward revision after seeing the WAG numbers.

I just sold some CVS Jan. 2012 $30 puts for $3.80 /share giving me a $26.20 break-even and a 16.8% margin of safety from the current quote of $31.50.

The bid on the Jan. 2012 $25 puts is still above $2 as I’m writing.

Disclosure: Author is long CVS shares and short CVS and WAG options.

BusinessWeek magazine declared the Death of Equities pre-1980 with the DJIA around 800.

 While the market didn’t finish bottoming until August of 1982 the long-term results look pretty good in retrospect. Today’s similar ‘avoid equities’ mentality is likely to show the same type of gains for those with a reasonable time horizon.

Back then it was inflation people were focusing on. Today it’s unemployment and stagflation/deflation. I still believe America will survive and prosper despite the horrendous decision making coming out of Washington.

Calif. Inmate Gets More Time to Choose Execution Method

SAN FRANCISCO (Sept. 25) — A judge has given a death row inmate another day to choose his execution method.

Albert Greenwood Brown has until noon Sunday to decide between a lethal injection of one drug or the three-drug cocktail California has used in its last 12 executions.

U.S. District Court Judge Jeremy Fogel extended the deadline late Saturday after denying Brown’s second request to reconsider his ruling authorizing the execution Wednesday.

Fogel said he would cancel the execution if prison officials refused a request for a one-drug execution.

Published: Sunday, September 26, 2010