*since we the people own CITI, why aren't we getting a cut of the hedge fund profits too
Crisis reaches milestone as U.S. takes 34% stake in Citi
The U.S. government is about to increase its exposure to and influence over Citigroup as it prepares to take a 34% stake in the financial group. The move follows Citigroup's recent completion of a $58 billion share offering. The government will exchange its $25 billion in preferred shares for common stock after nongovernment holders of preferred shares agreed to the conversion. Citigroup CEO Vikram Pandit called the exchange a "milestone," giving the lender additional "financial strength." Financial Times (tiered subscription model) (27 Jul.)
*this is the same Germany who said, "we don't have a US economic crisis"
Germany's consumer sentiment jumps to 14-month high
A consumer indicator from research group GfK that measures Germans' attitude about the future spiked to its highest level in 14 months, as low inflation put consumers at ease about spending. However, Citigroup economist Juergen Michels warned against reading too much into the data. "Over the past few months, consumers have taken advantage of slowing inflation and government programs like the car-scrapping scheme," he said. "If unemployment rises, consumer sentiment will suffer, because consumers will face bigger burdens that will make them feel the financial crisis more keenly." Forbes/Reuters (27 Jul.)
*Chinese business owner who wanted to maybe sell his company was killed by employees who thought he would not consider them. Ooooh. Can't wait to do business and invest in China.
U.S. sees China talks as important to easing friction
The Obama administration does not expect to achieve any breakthroughs during its high-level economic dialogue with the Chinese government this week. Despite that, the very act of the two nations' getting together and talking about their concerns will keep inevitable conflicts from getting out of hand, experts said. "The [Strategic and Economic Dialogue] is all about warm and fuzzy feelings and verbal assurances that China won't switch out of dollars, which they can't do anyway, and assurances that the U.S. and China will do everything they can to fight protectionism," said Michael Pettis, a professor of finance at Peking University. BusinessWeek (7/26)
*I wonder what companies will survive next year. Careful buying corporate bonds.
Corporate bonds rally on upbeat investor mood
Although much attention is focused on the rally in the stock market, corporate bonds also are surging. Investors are optimistic because earnings season has brought indications that the economy is recovering, sparking gains in both stocks and corporate bonds. Some investors are using corporate bonds to hedge their bets or diversify. "If you believe in a V-shaped recovery, then you buy stocks. If you believe we're going to bump along, then you have to go with credit," said Kent Wosepka, chief investment officer of active fixed income at Bank of New York Mellon's Standish Mellon Asset Management. The Wall Street Journal (7/27)