Markets Await Obama’s Economic Announcement, Bailout Plan for Citigroup Unveiled
- Nov 24, 2008
President-elect Barack Obama plans to name his new economic leadership team today triggering oil prices to rise above $50 a barrel Monday in Asia, according to the Associated Press. Monthly home sales data is also slated for a release today, but stock futures pointed to a higher open on Wall Street today, too, after a sharp rally late on Friday and following a U.S. government plan to rescue embattled Citigroup, Reuters reported. Late on Sunday, the U.S. government unveiled a bailout plan for Citigroup Inc, agreeing to shoulder most of the potential losses on $306 billion of high risk assets, in the latest attempt to restore confidence in the stricken financial system, the Reuters report stated. The government will also inject $20 billion of new capital, on top of $25 billion it just put into the bank, and receive preferred shares with an 8 percent dividend. Citigroup received the latest injection after its shares plunged 60 percent in the last week. The Associated Press reported that over the weekend, Obama’s top aides said he wants the new Congress to approve massive spending and fresh tax cuts in January, probably far distancing a $175 billion campaign proposal, so he can sign it after taking office. Reuters reported that U.S. Treasury Secretary Henry Paulson is considering tapping the second half of the government’s $700 billion financial-industry rescue fund, and rolling out new programs in response to worsening market conditions, the Wall Street Journal said. China Life Insurance Co, the world’s biggest life insurer by market value, is interested in buying Asian assets of American International Group, according to a Reuters report. Two Dallas-area publicly traded REITs – Ashford Hospitality Trust in Dallas and FelCor Lodging Trust in Irving – traded at or below $1 last week as Main Street and Wall Street continue to struggle, according to the Dallas Morning News. So far this year, hotel REIT returns are down 76 percent and all REITs fell 59 percent, the report stated. FelCor shares traded below $1 for the third day in a row Friday, closing at $1.05. The low point was 66 cents Thursday. Shares have fallen 94 percent in the last 52 weeks. Ashford shares fell as low as $1 this week and closed at $1.19 on Friday. Shares have dropped 86 percent in the last 52 weeks.