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Citigroup Inc plans to pay back US$20B it owes the government when the bank sees more concrete signs of recovery, Chief Executive Vikram Pandit said on Wednesday. He said Citigroup has plenty of capital to use to pay back the US$20B. The comments were the bank’s most public indication that it is taking concrete steps to repay the money the government injected into Citi starting in October 2008. Sources said earlier this week that Citigroup was talking to regulators about how to repay the funds and was considering issuing US$5B to buy back trust preferred securities held by the government. Trust preferred securities have characteristics of both stocks and bonds. The US gov has injected more than US$45B into Citigroup since last October to stabilize a bank hobbled by bad securities and consumer loans. Read more

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Savvy stock market strategists are seeing the up arrows as the Big Q on the Street is: how much further the Bull can Charge before it stalls and lays down?.
Some traders believe a pullback has got to come and that this week is as good as any for that to happen, because of the low trade volume of trading, but others, many others several strategists say in notes they see stocks moving higher warning the naysayers could be proven wrong, and that this could be the beginning of a new Bull Market and a above average one at that..
Goldman Sachs strategists said they see progress on a number of economic fronts and are now boosting their exposure to cyclical stocks. Laszlo Birinyi says, if you look at history, it looks like the market’s still moving higher.
Citigroup’s Levkovich, chief U.S. equities strategist, said the investment community is “almost shocked” by the near 30 percent rise in the S&P 500 since early March, and that the case is building for a second half of Y 2009 recovery, that many investors are ignoring the fundamentals and following only the technicals in here.

Since early March, financials have risen 74%; cyclical consumer discretionary are + 46%; industrials gained 44%, and materials are up 41%, as the defensive sectors are under-performing. The move higher in the stock market is boosting US consumer confidence. For that reason, the market is seeing much better that average movement higher. A Key factor is that there are many of investors who missed the moves and are sitting with large cash hordes, about US$9.2Trillion.

Laszlo Biriniy says the market’s 53-day gain and 10 percent move above the 50-day moving average are second only to the market’s performance in 1933. He also says in a note that the net advances over the past 10 days are the third strongest in market history, and he makes a case for even more gains.
Brown Brothers Harriman’s Brian Rauscher, a long-time Bear turned Bullish in early March. He was concerned last month that the market could be showing signs of moving too far, too fast. But last Friday when asked does he think the market will go higher. He answered: “May have take a deep breath to get through 900 (a day or so), but this market is moving higher.”

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US banks are looking to capitalize on strong Q-1 results and the end of the government “stress tests” to raise capital and rebuild investor confidence in the battered sector. Goldman Sachs is finalizing a plan to raise billions of dollars in the capital markets, a step that could pave the way for it to repay US$10B in government cash Successfully raising the funds could satisfy what has become an unofficial condition of being allowed to repay government loans, as government officials have told banks that they also need to demonstrate that they have solid investor support. Goldman had around UD$111B of cash and cash-equivalent securities in December 2008 The plans to repay the bail out money soon may be threatening to banks still in need of help, a list that could include Citigroup or Bank of America, as it would draw a distinct line between healthy and unhealthy institutions.

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The S&P 500, since sinking to a 12- year low of 676.53 on March 9 surged 25% as banks from Citigroup Inc. to JP Morgan Chase said they made money in the first two months of 2009 and Treasury Secretary Timothy Geithner announced plans to finance as much as US$1T in purchases of distressed assets from financial firms.

“No matter how you feel about the stimulus package, some of it is going to stick and the economy should stabilize in the second or third quarter,” said Bruce Bittles the Nashville- based chief investment strategist at Robert W. Baird & Co.“If that’s going to happen, the market will sniff it out.”

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Since the World’s credit markets seized up on September 8, 2009 many corporations are either cutting costs, waiting for government bailout money, or preparing for bankruptcy, as banks are reluctant to lend to all but the most credit worthy and then at unconventionally high interest rates.

In the center of the storm lies the US, UK and EU financial industry where it all started.
The US Federal Deposit Insurance Corporation said last week that the nation’s banks and thrifts lost US$32.1B in the Q-4 Y 2008, the first quarterly deficit in 18 yrs, compared with the US$575MM profit in Q-4 Y 2007. The industry’s net income for Y 2008 plunged from US$16.1B to US$10.2 B for the period.

In the US eighteen federally insured banks have failed so far this year. Last year the number was 25, more than the total number of the previous five years, and up from only three in 2007.
Shares of Citigroup Inc., once the most powerful U.S. bank, have fallen below 1 dollar this month. Pummeled by the financial crisis, the group has lost more than 98 % of its value from its peak in October 2007, and is down more than 95 % from a year ago.

The American International Group (AIG), covered almost daily in www.stockpreacher.com’s Stock Talk, reported this month that it lost US$ 61.7B in Q-4 Y 2009, the largest corporate loss in history. AIG has benefited since from more than US$170B in federal rescue funds with more likely needed and to come.

HSBC Holdings PLC, the largest bank in Europe, early this month reported a 70% drop in its Y 2008 profit and said it would cut 6,100 jobs as it closes its consumer loan business in the United States. It also announced that it would cut its dividend and not pay bonuses to top executives.

In the US, the DJIA sank below 6,800 on March 3, its lowest close since May 1997, losing more than 50% from its highest level in October 2007. Since then the S&P 500 has staged a 19.8% rally off of its lows in the same frame.

On March 23 when the markets were surprised by the US government’s latest plan on clearing bad bank assets and a larger-than-expected rise in existing home sales, the three main indexes all surged more than 6.5% on the day.

Some Economists suggest that financial crisis has yet to bottom out, and the real economy continues to slip as the global economic situation deteriorates.

Therefore, stimulus spending, market confidence, financial regulation and free trade will be key issues at the G20 summit of the World’s leading developing and developed economies next week in London.

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U.S. stocks rose about 5 percent on Tuesday after Citigroup said it was profitable in the first two months of 2009 and a key lawmaker said he expects the restoration of the uptick rule. Citigroup’s Chief Executive Vikram Pandit also said in a memo the beleaguered bank was confident about its capital strength. Shares of Citigroup, in which the government recently took a large common equity stake to help shore it up, jumped 35.2 percent to $1.42. Citi’s stock has fallen about 80 percent year to date.

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