Citigroup's New Direction

Profitability now. That is Citigroup's current new business direction. After repaying $20 billion of government funds and the large amount of credit costs, Pandit believes that the group will stop showing red ink in their books and begin posting favorable numbers in 2010. This will be pushed by their emerging market investments as can be seen from their strategy of being "the local bank of the world".

U.S. Stocks Fall on IBM, Morgan Stanley, China Lending Curbs

The earnings season in the US has so far been lackluster with the reports issued by IBM and Coach Inc. This has brought doubts to some analysts as they are caused to believe that the market is currently too optimistic.

The dollar has appreciated due to the lending curbs in China. With credit being tightened in China, demand for RMB has fallen does causing the dollar to appreciate relatively.

Euro Falls Against Dollar, Greek Bonds Drop on Budget Concern

The euro has depreciated against the dollar in light of the deficit that the Greek government is facing. There are two scenarios that the European Union (EU) is faced with. If they bail out Greece, they would send out a bad signal to other EU members. If they do not, they risk attacks against weaker EU members. Yield premiums for bonds issued by weaker EU members have bee increasing. This is a cause of worry for the ECB.

Euro Falls to Three-Week Low Versus Yen on Greece’s Debt Crisis

The euro has seen a significant depreciation in its value recently. This is due to the uncertainty in the outlook of its currency as Greece is having troubles with its deficit. Although 3-year plans have been drawn to reduce the Greece government's deficit, uncertainty still looms for the country.

The Feds are in no hurry to increase interest rates given the weak economic data posted recently. Therefore, the carry trade carried out using the dollar would continue without disruption and this would see the value of the dollar drop in the medium term.

Wall Street May Reduce Compensation Costs to Avoid More Outcry

Plans have been made by banks to pay more to executives in the form of deferred cash payments and stocks that vest after a certain period of time. With this new arrangement, it is only logical that current year earnings would be higher as the bonus payments are deferred. However, this effect should be short-lived. This new arrangement would also make it harder to interpret income statements given the complexity of accounting for such bonus payments.

Bank Profits Means Stocks at 15% Discount to S&P 500

Many analysts believe that financial stocks are selling at a discount relative to the S&P. This is because many investors are currently shunning equities in this category for fear of a repeat of the past. In terms of price-to-book ratio, financial stocks are relatively cheap currently. However, in order for their value to be truly realized, the fourth quarter earnings will have to be understood in order for the public to come to a conclusion on the current valuation of the financial stocks.

Net interest margins will help in the banks' profits. Thanks to the Feds.

Greece Rejects Bailout Speculation as EU Officials Arrive

Greece's government is trying ways and means to reduce its budget deficit. Currently, the measures that they will take are listed below:

-- Reduction of civil servants bonuses
-- One-time taxes
-- Cutting down on tax evasion

There is some conflicting statements made by the EU members. One member believes that EU will reach into its members' wallets to save Greece, but some believe that this will not be so.

Greece's Finance Minister believes that no help will be needed and that everything is on the right track.