Adding confusion to an already chaotic situation, the gov may convert up to $25B in Citigroup (C) loans to preferred stock with an 8% div. This would have the immediate effect of boosting the equity base for Citi (C) & they could potentially seek more bailout funds. The markets responded with a strong, DUHHH!! Citi now has a 1 handle & could be delisted if the stock price goes below 1. But then again, it's a Dow stock. Nobody knows what's going on, but Citi is clearly very desperate. Below is their chart for JUST the last year:
Citigroup (C) --- 1 year
On the dreary Citi news, S&P 500 FINANCIALS INDEX is down (96 is the low, reached last week):
| Value 105.12 | Change -4.10 | % Change -3.7% |
Somewhat related, Following on the news yesterday about the rising number of bank (primarily smaller) failures, FDIC is raising the fees to banks along with an emergency extra fee. Their insurance fund has dropped to lowest level in 25 years & they estimate $65B will be needed for the next 5 years to handle more failures. Ugh!
- Government could own up to 36 percent of Citigroup- AP
- FDIC raising fees on banks, adds emergency fee- AP
The Alerian MLP Index was flat at 188 (as shown in the Yahoo widget on the right) while REITs & junk bonds were soft. VIX rose 1.
No great surprise that the US economy shrank at an annualized rate of 6.2% in Q4, the worst performance in 26 years. Worse, there is no indication that this decline will end anytime soon. Following thru, the US business activity shrank in Feb for the 5th straight month. The Institute for Supply Management said its business barometer increased to 34.2 (less than forecasts), up modestly from 33.3 in the prior month (the lowest reading since March 1982). Readings below 50 signal contraction.
•U.S. Economy Shrank 6.2% in Fourth Quarter, Weakest Performance Since 1982
•U.S. Business Activity Contracts for Fifth Straight Month, ISM Index Shows
This is what 1T look like:
1,000,000,000,0000
It's a new term being bandied about. Now the only question whether the number in front should be 1 or 2 or 3, whatever. This number was barely heard of just a few weeks ago. Now its used in everyday discussions. When gov people throw this number around, it's scary!
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