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Originally posted by twilightzone
Guys, could you please explain shortly what is going on?
First the markets plunged, raiding down fast and furious.
Last week brought recovery.
Now they are falling again…
What is the long term trend? What was the reason for these changes? And what is the forecast - should we expect things to go better or worse in near future?
I would really appreciate balanced & professional opinion, not another doom and gloom or hurray-optimism theories…
Originally posted by Hx3_1963
Getting Citi this morning was a major pain...
Citigroup share trading halted
Thu Mar 19, 2009 7:37am EDT
NEW YORK (Reuters) - Trading in shares of Citigroup Inc (C.N) was halted on Thursday pending news on the company, according to the Nasdaq Trader website.
Citigroup was last traded at $3.42 per share before the market opened, up 11 percent from its Wednesday closing price of $3.08.
Another way to stick the us citizen...talk the gov into trading perfered stock fer common...then dilute it...
Citi shares flip over bonds, files for reverse split
NEW YORK (MarketWatch) -- Shares of Citigroup Inc. reversed course dramatically Thursday afternoon, falling 12% after news that the firm issued $3 billion in bonds backed by credit-card receivables and eligible for government financing.
Citi had risen by about 20% earlier after it filed a registration statement with the Securities and Exchange Commission to seek shareholder approval to convert preferred shares into common stock under its previously announced plan to build capital.
The company said in a Securities and Exchange Commission filing Thursday that it has reached definitive agreements with private preferred shareholders to convert $12.5 billion of the securities into common shares.
In midday trading, Citi's shares reversed earlier gains and were lately down more than 12% to $2.70.
If all the shares are converted, along with up to $25 billion of preferreds the U.S. government has agreed to convert, current common shareholders would be diluted by about 75%, and the government's stake would reach about 36%.
Citi first announced the plan in late February, and said it hopes it will convert about $52.5 billion of preferred shares into common shares.
The bank said it hopes to launch the exchange offer in early April, subject to regulatory approval. Citi also said it is asking for approval to execute a reverse stock split of its common stock.
In its filing, Citi also said it is seeking permission for a reverse stock split, but did not provide further details.
Reverse Stock Split
What Does Reverse Stock Split Mean?
A reduction in the number of a corporation's shares outstanding that increases the par value of its stock or its earnings per share. The market value of the total number of shares (market capitalization) remains the same. Investopedia explains Reverse Stock Split
For example, a 1-for-2 reverse split means you get half as many shares, but at twice the price. It's usually a bad sign if a company is forced to reverse split - firms do it to make their stock look more valuable when, in fact, nothing has changed. A company may also do a reverse split to avoid being delisted.
More Info on Link...
U.N. panel says world should ditch dollar
LUXEMBOURG (Reuters) - A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.
Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.
Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.
"It is a good moment to move to a shared reserve currency," he said.
Central banks hold their reserves in a variety of currencies and gold, but the dollar has dominated as the most convincing store of value -- though its rate has wavered in recent years as the United States ran up huge twin budget and external deficits.
Some analysts said news of the U.N. panel's recommendation extended dollar losses because it fed into concerns about the future of the greenback as the main global reserve currency, raising the chances of central bank sales of dollar holdings.
"Speculation that major central banks would begin rebalancing their FX reserves has risen since the intensification of the dollar's slide between 2002 and mid-2008," CMC Markets said in a note.
Russia is also planning to propose the creation of a new reserve currency, to be issued by international financial institutions, at the April G20 meeting, according to the text of its proposals published on Monday.
It has significantly reduced the dollar's share in its own reserves in recent years.
Short-covering may not be enough to maintain rally
NEW YORK (MarketWatch) -- Some of the recent rally in the market's most beaten-down stocks, such as financials, may be the result of investors covering short positions, raising questions about the long-term endurance of the move higher.
"I think particularly with the big rally in financials, we're seeing a lot of short covering," said Ken Tower, market strategist at Quantitative Analysis Services. "Fundamentals haven't changed enough for financials to really generate that much enthusiasm."
Investors who short a stock are essentially betting that its price will fall -- borrowing shares and then selling them back at the lower price.
The difference is the short seller's profit. But if the price rises, as has been the case with many financial stocks this month, they are forced to "cover" their positions by buying shares.
S&P May Downgrade AmEx
Standard & Poor's Ratings Services warned it may downgrade the credit ratings of American Express Co. and its units, reflecting economic pressures that led the company to disclose rising write-offs Monday.
Credit- and charge-card companies have come under pressure as consumers pay back less of their outstanding balances each month, setting the stage for deeper pain for issuers.
The ratings firm on Thursday cited mounting unemployment as a key problem for American Express, which would suffer as cash-strapped consumers held back from making payments. S&P sees unemployment reaching double-digits on a percentage basis next year.
Those broader economic issues have been exacerbated by American Express' aggressive growth strategy in credit cards from 2004 through 2007, said S&P, which currently has its long-term rating at A. That drive to expand has caused the company's asset quality to deteriorate faster than median levels for the industry, a marked change from the assumption that American Express would continue to lead its peers in that area.
On Monday, American Express disclosed that write-offs for its $30 billion of loans rose to 8.7% in February and 8.3% in January, from 7.5% in December. That echoed a Fitch Ratings report that indicated American Express cardholders paid down 22.2% of their balances in February, down from 22.4% a month earlier.
S&P said it will reassess potential credit losses as the recession appears worse than when it downgraded American Express in December.
Rating Agencys gone wild...no one can escape this carnage...
Standard & Poor's Ratings downgrades 3M Co. to AA- on higher leverage - Update
(RTTNews) - Wednesday, Standard & Poor's Ratings Services lowered St. Paul, Minn.-based 3M Co. (MMM: News )'s corporate credit and senior unsecured ratings to 'AA-' from 'AA'. At the same time, S&P affirmed the 'A-1+' short-term credit rating. The outlook is stable.
With the recent issuance of about $1.7 billion of debt, which increased liquidity, and significant growth in its tax-adjusted unfunded pension liabilities, the company's total debt to EBITDA (earnings before interest, taxes, depreciation and amortization) rose to 1.4x at year-end 2008 versus 0.8x in the previous year.
Standard & Poor's credit analyst Philip Schrank said, "The downgrade reflects a decline in still very strong debt-protection measures as a result of the weakened global economic environment that has trimmed EBITDA levels along with rising debt levels."
"We do not expect any material deleveraging over the near term, given the very difficult global economic outlook, which will continue to pressure profits, and the company's limited debt maturity schedule." Schrank noted.
Originally posted by Hx3_1963
Rating Agencys gone wild...no one can escape this carnage...
...Sure...this will do the trick...everyone will line up around the corner to get in on this...
CME Group, Citadel Said to Lack Credit-Default Swap Customers
March 19 (Bloomberg) -- CME Group Inc. and Citadel Investment Group LLC, partners in a plan to guarantee credit- default swaps that gained U.S approval last week, have no customers lined up who want to clear the trades, according to people familiar with the situation.
While the CME Group and Citadel system, known as CMDX, is ready to process trades into Chicago-based CME Group’s clearinghouse, no users in the market have agreed to use it, said two people who asked not to be named because the information isn’t public.
Intercontinental Exchange Inc., which has a partnership with Goldman Sachs Group Inc., JPMorgan Chase & Co. and seven other banks, is the first to clear trades in the $27 trillion market, gaining an edge over CME Group, the world’s largest futures market, and Chicago-based Citadel, a $13 billion hedge fund. Atlanta-based Intercontinental said it cleared $7.15 billion in credit-default swaps last week, the first time the contracts have been processed by a clearinghouse.
“The banks now have their preferred solution in Intercontinental, so CME faces an uphill battle,” said Craig Pirrong, a finance professor at the University of Houston.
CME Group is “in advanced discussions with a wide range of market participants,” and expects to begin clearing “in the coming weeks,” Anita Liskey, managing director for corporate communications at CME Group, said in an e-mailed statement. Citadel spokeswoman Katie Spring referred questions to CME Group.
U.S. and European regulators pushed for credit-default swaps to be guaranteed by clearinghouses after the September bankruptcy of Lehman Brothers Holdings Inc., one of the largest dealers in the market, cost the firm’s trading partners hundreds of millions in losses, according to Moody’s Investor Service.
New York-based American International Group Inc., once the world’s largest insurer, almost collapsed because bets on the contracts backfired, forcing a $173 billion U.S. government rescue.
Clearinghouses stabilize markets by becoming the buyer to every seller and seller to every buyer, reducing the risk of counterparty default. They also collect trade data in one location, making it easier for regulators to keep watch of prices and positions.
Credit-default swaps, which are used to hedge against losses or to speculate on a company’s ability to repay its debt, pay the buyer face value if a borrower defaults in exchange for the underlying securities or the cash equivalent.
Goldman Sachs, JPMorgan, both based in New York, and the other banks backing Intercontinental dominate trading in the credit-default swap market. Banks trading with other banks accounted for 80 percent of all trades in the week ended March 13, according to New York-based Depository Trust & Clearing Corp., which runs a central registry for the market.
“The majority of the trades are still inter-dealer,” said Brian Yelvington, a senior analyst at bond-research firm CreditSights Inc. in New York. As a result, hedge funds and other investors will prefer Intercontinental’s platform, he said.
Intercontinental received its last regulatory approval for its credit-default swap clearing on March 6 and began processing the contracts three days later. CME Group and Citadel got the final regulatory nod a week after Intercontinental.
While New York-based NYSE Euronext has offered clearing of credit-default swaps since December, it said it hasn’t processed a trade. Frankfurt-based Eurex AG, Europe’s largest futures market, and LCH.Clearnet Ltd. in London, Europe’s largest securities clearinghouse, plan to offer clearing in credit- default swaps this year.