The US government and Citigroup have finalized their latest deal, which coverts the government’s preferred shares into common stock, further diluting existing shareholders.
Shares in Citi are lower while shares of other banking institutions have dropped as well. While the Citi deal stops well short of full nationalization, a 40% stake plus regulatory oversight gives Uncle Sam plenty of sway in the boardroom.
EUR/USD tends to perform poorly when stocks are under pressure and stocks are under pressure again today. Adding to EUR/USD pressure are reports of large demand for dollars from passive international investment funds for month-end hedging purposes. It is my understanding that if these funds loss a million dollars in market cap, they have to buy the $1 million in the market to bring their books back into balance at the end of the month.
