Citi, US $7 billion settlement announcement expected Monday

New York: Citigroup approved to pay $7 billion to resolve a U.S. government examination into shoddy mortgage-backed securities the bank sold in the run-up to the 2008 monetary emergency in a decision set to be announced on Monday, sources said.

The $7 billion includes $4 billion in cash to the U.S. section of Justice, $2.5 billion in customer respite more than $200 million to the central set down indemnity company and just under $300 million to settle probes by five states, said sources recognizable with the discussions.

Spokespeople for the fairness section and the bank declined mention legislature of attorneys universal of New York, Delaware, California, Massachusetts and Illinois, the states said to be concerned, did not instantly return needs for statement. Nor did the FDIC.

The agreement, signed over the weekend, caps months of debate, during which the direction demanded $12 billion and in danger to sue Citigroup, according to the sources.

The deal is planned to be announced on Monday morning when Citigroup executives also will statement second-quarter fallout before the stock market opens in New York, the sources said.

The $7 billion has staggered stock analysts and people inside the bank, who probable Citigroup to resolve the investigations for much less. 

Will the Fed start its famed taper in September?

 
64% of 800 investors polled think it will start this week but weak US data suggest it might not be aggressive.
Two big events this week - the Federal Open Market Committee (FOMC) meeting on Wednesday and RBI's policy review on Friday - will determine which way equity markets head.
Since June, the Federal Reserve has been looking to taper its $85 billion a month bond buying programme. The FOMC's meeting is crucial for emerging markets like India because over the last few years, financial markets have been fuelled by easy liquidity.

Since 2009, $100 billion has flowed into Indian equities. Not surprising, then, that the talk of a possible taper from this month has sent risk assets and commodities into a tailspin.
So, are the taper related fears unfounded or are they real? To begin with, markets have already priced in some tapering from this month. However, if the Fed tapers its bond buying by $10 billion, the impact on financial markets would be negligible.
But if it is higher than $10 billion, markets may roil. According to a Barclays survey, conducted among 800 global investors, 64 per cent of respondents believe tapering will start this week and almost all of them expect it to occur before the end of the year.

Investors now perceive the removal of Fed stimulus will start earlier, the survey says. Forty five per cent expect the Fed to finish their open-ended QE3 programme in second quarter of 2014, while most respondents in our June survey thought it would happen in the fourth quarter of 2014 or later.

Interestingly, most investors believe equities have become less attractive but have shown a slight increase in their preference for emerging markets and commodities from June.

Barclays says: "The perception of key risks has also shifted. Last quarter, a reduction in Fed policy stimulus was seen as the key risk for markets by nearly 40 per cent of survey participants; today, the number is just 26 per cent."
Several economists in the US believe concerns regarding a taper could be premature, as growth data continues to be weak and the Fed does not want "risk off" trades just yet.
Talks of a taper have pushed up interest rates in the US by over 100 basis points and any further increase would impact growth. For starters, it is believed growth has slowed in the third quarter (ended September) from the 2.5 per cent seen in the second quarter. Economic growth bottomed out in the fourth quarter of 2012 when it touched 0.1 per cent. While there is no doubt that growth is picking up, questions remain on how sustainable this would be without the stimulus.

Since the Fed met at the end of July, there have been 21 growth-related data releases. Of the 21 releases, 12 have been below consensus.

New home sales in the US in the month of July have fallen by 13.4 per cent. Bank of America Merrill Lynch says it's a close call but it is still in the December camp when it comes to the Fed's possible tapering.

Rupee crash is BAD news for car buyers

German luxury car maker Mercedes-Benz on Thursday said it will hike prices of its entire model range in India by up to 4.5 per cent from September 1 to partly offset impact of rupee depreciation and higher import duties.
The quantum of price revision will be in the range of 2.5 per cent to 4.5 per cent across the models that the company sells in India.
With the latest price revision, the company's new A-Class 180 CDI luxury compact car will now be priced at Rs 22.05 lakh, an increase of 4 per cent, Mercedes- Benz India said in a statement.
The B-Class 180 CDI model will now be pricier by 4 per cent at Rs 23.50 lakh while the C-Class 200 CGI sedan will now cost Rs 32.25 lakh, an increase of 2.5 per cent, it added.