Good morning! Here’s what you need to know.
Citi fails stress test. The Federal Reserve rejected Citigroup’s capital plan, citing “deficiencies included Citigroup’s ability to project revenue and losses under a stressful scenario for material parts of the firm’s global operations.” Shares are down 5% pre-market.
Births and deaths. The U.S. simultaneously recorded the fewest births since 1998 and most deaths in its history last year. “Americans remain cautious about having babies following the worst recession since the Great Depression, although they are increasingly changing residences again, suggesting growing confidence in the economic recovery,” Bloomberg’s John McCormick wrote.
BofA settles. Bank of America will pay $US9.5 billion to settle mortgage claims with Fannie Mae, Freddie Mac and their federal regulator. Former CEO Ken Lewis was also banned for three years from working for any public company.
Ukraine bailout. The International Monetary Fund said it had agreed on a $US14-18 billion stand-by agreement with Ukraine, a deal that will unlock further credits to reach a total of $US27 billion over the next two years.
Charlotte Mayor booked. The mayor of North Carolina’s largest city resigned Wednesday after prosecutors said he had been arrested on federal public corruption charges that include accepting more than $US48,000 in bribes from undercover FBI agents.
Booming UK retail sales. British consumers crushed expectations in February, lifting retail sales 1.7% month-over-month versus a consensus forecast of 0.5%. The pound was 0.25% higher against the dollar. Meanwhile, French shoppers followed up their Italian counterparts by lifting consumer confidence readings to a two-year high. The INSEE index climbed to 88 from 85, beating expectations for a reading of 85.
Markets. Stocks were mostly up. France’s CAC40 and Germany’s Deutsche Boerse were higher, while the UK FTSE was down. Japan’s Nikkei was up 1%. U.S. futures were higher. Gold and Bitcoin were both lower.
Data. Thursday will be a busy day for data. As usual it kicks off with initial jobless claims at 8:30. They’re expected to come in at 323,000 from 320,000 last week. Later, at 10 a.m. we get pending home sales, which are expected to be up a tick to 0.2%.
GDP. Also at 8:30 we get a Q4 GDP reading, which is expected to hit 2.7%, up from a prior estimate of 2.4%. Core personal consumption expenditures were forecast at 1.3%, unchanged from the prior reading.
Morgan Stanley on biotech. Some have been speaking of a bubble in the sector, but Morgan Stanley’s Morgan Stanley’s Matthew Harrison and Dr. David Friedman believe there remains opportunity in this space. “Major de-risking events leading to new mega blockbusters have transformed the Big 4 Biotechs (Amgen, Biogen, Celgene and Gilead),” they wrote in a new 24-page note to clients. “We expect total group revenues to double from $US175B over the last 5 years to $US335B over the next 5 years and total cash flows to triple from $US31B to $US95B. Investors have rewarded the group with a return ~2.3x the S&P 500 over last 3 years.”