Wednesday Pre-Market News (12/07/11): Citi Cutting 4,500 Jobs


Every morning the Street of Walls team puts out an update on market levels, today’s top stories, and active M&A deals.

Today’s Top Stories:

  • Germany Sees Strong Debt Demand: Germany got bids for 8.67 billion euros ($11.6 billion) of five-year notes at an auction today, more than the maximum sales target of 5 billion euros (BBG)
  • Big Catalysts Coming Up: All eyes are on the ECB this Thursday (7:45am ET decision, 8:30amET press conference) and the Leaders Summit Friday
  • Spain’s Problems: the country is considering the creation of a “bad bank” that could wind up costing ~EU100B when all is said and done.  Such a sum could require Madrid to seek assistance from the EFSF
  • Newt Could Upset Romney for GOP: Top Republican and Democratic strategists say they greatly underestimated the potential for a Newt Gingrich comeback and now calculate that he could upset Mitt Romney to become the Republican presidential nominee
  • NY Adjusts Income Tax: the rates for incomes of >$2M will move from 6.85% to 8.82% (although the present rate is 8.97% b/c of a surcharge that is due to expire so technically the rate will be marginally lower).  For incomes of $40-150K, the rate moves from 6.85% to 6.45%
  • Jefferies Update: Fitch says JEF has adequate liquidity to meet market challenges – “JEF has clearly established that it has sufficient liquidity to allow it to navigate what Fitch expects to be a challenging market environment” (Fitch)
  • GE Taking Deposits: GE Capital will start trying to attract retail deposits in ’12 to help make its funding base more stable
  • Hedge Fund Losses: The Bloomberg aggregate hedge-fund index dropped ~1% in Nov, bringing its YTD loss to 3.8% (BBG)
  • Icahn Goes Hostile on CMC: Billionaire investor Carl Icahn intends to put out a tender offer of $1.73 billion for all the outstanding shares of Commercial Metals (NYSE:CMC) at $15 per common share, subject to the company removing its recently placed poison pill
  • Citi Layoff Update: Citigroup’s CEO, Vikram Pandit, spoke today at the 2011 Goldman Sachs U.S. Financial Services Conference and mentioned that he plans to cut 4,500 jobs, which is revised up from previously reported numbers

Economic Calendar:

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  • Wednesday: Consumer Credit
  • Thursday: Initial Jobless Claims, Wholesale Inventories
  • Friday: Trade Balance, U. of Mich Confidence

M&A Watch:

  • Strong week in M&A: Announced M&A volumes declined by 38% to $26.2 billion. 4Q11 volumes are averaging 13% below the 3Q11 average weekly volume

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