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Last Updated:
Apr 24, 2009 - 5:31:05 PM |
Markets News Afternoon: US GDP falls to adjusted 6.2% annual rate in Q4 2008; US government's stake in Citi to rise to 36% - Stock price plunges over 30%
By Finfacts Team
Feb 27, 2009 - 4:42:07 PM
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US gross domestic product (GDP) fell at a seasonally adjusted 6.2% annual rate in October through December, the Commerce Department reported in a new, revised estimate of fourth-quarter GDP. In its original estimate, issued a month ago, the government had reported fourth-quarter 2008 GDP fell 3.8%.
The sharply lower revision reflected adjustments downward of inventory investment, exports and consumer spending.
The 6.2% decline meant the worst quarterly showing for GDP since a 6.4% decrease in first-quarter 1982 GDP.
The sources of weakness were the same as those reported in the advance estimate.
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A sharp downturn in exports
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A continuing decline in consumer spending
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A larger reduction in business investment
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A continuing decline in housing
Imports, which are a subtraction in the calculation of GDP, continued to decline.
Revision
The GDP revision was large. The revision reflected new source data that showed substantially weaker inventory investment and exports than BEA had assumed for the advance estimate. The average revision (without regard to sign) between the advance and preliminary estimate is 0.5 percentage point.
Prices
Prices paid by U.S. residents fell 4.1 percent in the fourth quarter, after rising 4.5 percent in the third quarter.
The decline reflected a large downturn in energy prices. Excluding energy, prices rose 1.5 percent after rising 3.3 percent.
Citigroup has agreed with the US government to convert nearly $27.5 billion in preferred stock sold to private investors and the public and up to $25 billion in preferred stock bought by the government into common stock. The exchange, if fully executed, will leave the government with 36% of the bank's shares. Existing shareholders' stake will be cut to 26%. Shareholders will have to approve much of the common stock issuance.
Additionally, Citigroup's board will soon include a majority of new independent directors, the company said Friday. Chief Executive Vikram Pandit is expected to keep his job under the agreement.
Citi's stock price plunged over 30% in New York.
The Dow Jones Industrial Average is down 80 points or 1.2%, just above 7100 and the 1997 low hit on Mondaty.
The S&P 500 slid 1.4% and the Nasdaq is off 0.5%.
Live US Indices
European stocks are down and the Dow Jones Stoxx 600 has fallen 2.4%.
In Dublin, the ISEQ is down 0.7%.
BoI has fallen 18% to 22 cent.
Disclosure Requirements - Director's Loans
The Financial Regulator has written to all banks incorporated in Ireland and building societies established in Ireland informing them of the following disclosure requirements regarding directors' loans and loans to connected persons of a director*, to be made in their audited annual financial statements:
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the amount owed by the person to whom the loan or agreement was made in respect of principal and interest at the beginning and end of the period covered by the financial statements
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the maximum amount of the liability during the period
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the amount of any unpaid interest, and
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the amount of any provision that has been made in respect of any failure, or anticipated failure, to repay all or part of the loan.
These institutions will also be required to maintain a register of all such loans at their registered offices for review by shareholders.
Under the law, banks and building societies have 21 days from today (27 February 2009) to make representations to the Financial Regulator regarding the proposal.
European Benchmarks
Irish Share Prices
Euribor Rates
Oil
On the New York Mercantile Exchange, oil for April delivery is trading at $43.58 down $1.64 from Thursday's close. In London, Brent crude for April delivery is trading at $45.10 a barrel down $1.41.
Currencies
The euro is trading at $1.2717 and at £0.8911.
For live currency updates, check the right-hand column of the Finfacts home page.
The dollar traded at a record low $1.6038 per euro on July 15th.
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