There has been plenty of news this morning to set the markets tone. Unfortunately, that tone is negative, with futures pointing to a drop at the opening bell.
Citigroup and the Treasury Department announced a deal that would convert up to $27.5 billion in preferred shares held by the U.S. government into common stock. This would give the government control of as much as 36% of the company. In conjunction with this structured move, Citigroup has said it will suspend the payment of dividends on both its common and preferred stock.
In other developments, the U.S. economy shrank in the fourth quarter at an even faster pace than previously estimated as consumer spending plunged, companies cut inventories and exports sank. Gross domestic product (GDP) contracted at a 6.2% annual pace from October through December, more than economists anticipated and the most since 1982. Consumer spending, which comprises about 70% of the economy, declined at the fastest pace in almost three decades.
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