Citigroup

The Mañana approach endorsed by the Spanish government is finally beginning to have its toll on investor confidence and after being contained by the so-called Draghi put, 2y bond yields are up over 20bps for the second consecutive day. The decoupling that is being observed is being driven by yesterday’s downgrade of several Spanish regions by Moody’s, citing deterioration in their liquidity positions. As a result, Spain runs a risk of being forced to raise the size of its regional bailout fund which stands at EUR 18bln, with EUR 17.2bln already tapped, as the latest downgrade will likely put an upward pressure on borrowing costs. Major equity markets in Europe are down close to 1%, led by basic materials and oil & gas sectors, as WTI continues to consolidate below the key USD 90 level, while spot Gold continues to lose its shine and is looking to make a test USD 1700. The second half of the session sees the release of the latest Richmond Fed report, as well as the weekly API report.

• Moody’s Cuts Ratings on Catalonia, Four Other Spanish Regions (Bloomberg)
• And the market top: Billionaire Ross Interested in Buying Spanish Bank Assets (Bloomberg)
• Japan Jojima denies govt seeks $250 bln BOJ asset buying boost (Reuters)
• China hints at move to strengthen Communist rule (Reuters)... well everyone else is doing it
• Euro-Area Bailout Fund Faces Challenge at EU’s Highest Court (Bloomberg)
• Obama, Romney now tied in presidential race: Reuters/Ipsos poll (Reuters)
• Former China Leader Jiang Resurfaces Before Political Transition (Bloomberg)
• Some in Congress look to $55 billion fiscal cliff 'fallback' (Reuters)
• CLOs stage comeback in US (FT)
• TXU Teeters as Firms Reap $528 Million Fees (Bloomberg)
• China’s Factories Losing Pricing Power in Earnings Threat (Bloomberg)

It was just over a month ago that the Chairsatan formalized the incorrect named QE 3, aka the open-ended QEternity, whose purpose, for now, was to increase the Fed's balance sheet by $40 billion/month in new MBS purchases. Well, according to MarketWatch, whose previously unheard of Greg Robb is seemingly vying for the role of Jon Hilsenrath, Ben Shalom is preparing to unveil a number bigger than eternity: " After historic changes last month, Federal Reserve officials this week will discuss a possible expansion of the size of its third round of bond buying and better ways to guide markets about future policy actions." Just because $40 billion per month in new flow is apparently not enough, and because the market is now well below the level it was when "QE 3" was announced.

• Dead Heat for Romney, Obama (WSJ)
• The Cheerful Billionaire Who Thinks Obama's a Socialist (Businessweek)
• "Get to work, Mr. Japanese Chairman": Japan Exports Tumble 10% as Maehara Presses BOJ to Ease (Bloomberg)
• Chinese Investors Fear Chill in Canada (WSJ)
• Rosneft Buys BP’s TNK-BP Stake for $26 Billion in Cash, Shares (Bloomberg)
• Hong Kong Defends Its Currency Peg for First Time Since 2009 (Bloomberg)
• Democrats threaten payroll tax cut consensus (FT)
• Spain's Rajoy gets mixed message in regional votes (Reuters)
• Merkel to warn UK on Europe budget veto (FT)
• Netanyahu says doesn't know of any U.S.-Iran talks (Reuters)... neither does Iran, so near certainty
• Der Kurrency Tsar: ECB’s Knot Backs Schaeuble Call for Stronger EU Budget Power (Bloomberg)
• Fannie Mae Limiting Loans Helps JPMorgan Mortgage Profits (Bloomberg)

• Debt Fuels a Dividend Boom - Firms Collect Payouts, and Investors Get Yield; 'Reminiscent of the Bubble Era' (WSJ)
• Black Monday Echoes With Computers Failing to Restore Confidence (BBG)
• Poll: Obama Leads in Wisconsin, Iowa (WSJ)
• Gold Imports by India Seen Climbing First Time in Six Quarters (BBG)
• Europe pushes ahead towards ECB bank supervision (Reuters)
• ... And fails: Summit fails to agree timetable for aid to failing lenders (FT)
• Toyota Prius Dominates California as State’s No. 1 Model (BBG)
• Italy raises €18bn in huge bond sale (FT)
• Diplomacy inbox fills up as U.N. awaits U.S. presidential vote (Reuters)
• Goldman braced for more revelations (FT)
• China power brokers agree preferred leadership team (Reuters)
• EU, Japan Warn Against New US Swaps Rules (WSJ)
• Why VaR is the most meaningless contraption ever: Morgan Stanley shows the ‘flaky’ side of model (FT)
• Made in France Trumps Consumer Choice in Hollande Jobs Quest (BBG)
• North Korea threatens South over propaganda balloons (Reuters)

• Germany will pay Greek aid (Spiegel)
• Spain Banks Face More Pain as Worst-Case Scenario Turns Real (Bloomberg)
• China’s Growth Continues to Slow (WSJ)
• Executives Lack Confidence in U.S. Competitiveness (WSJ)
• Poor Market Conditions will See 180 Solar Manufacturers Fail by 2015 (OilPrice)
• Wen upbeat on China’s economy (FT)
• Gold remains popular, despite the doubts of economists (Economist)
• Armstrong Stands to Lose $30 Million as Sponsors Flee (Bloomberg)
• IMF urges aid for Italy, Spain but Rome baulking (Reuters)
• EU Summit Highlights Financial Divide (WSJ)
• FOMC Straying on Price Target, Former Fed Officials Say (Bloomberg)
• Putin defiant over weapons sales (FT)

As all eyes and ears (and trigger fingers) are glued to the flashing red headlines from Europe's conditional unconditional OMT/credit-line/backstop/ESM malarkey and Spain's insistence that it doesn't need help yet just wonders what the rules are, Merkel stated - for absolute clarity once again - her views yesterday. As much as no-one wants to hear what the money-lady has to say - preferring instead to live in a world where promises work, FinMin Schaeuble clarified the need for a 'currency commissioner' with sweeping powers to strike down national budgets. This bombshell, as The Telegraph calls it, is really nothing of the sort; as Merkel has already made it clear that there's no money without sacrificing sovereignty. The directness of this statement though does raise questions over just what the ECB is for? Critically, dismissing Van Rompuy's spin that this is a step towards debt-pooling and euro-bills, Schaeuble made it clear that fiscal union meant "more power to police the affairs of debtor states." While the possibility remains of a precautionary line of credit, the Germans stated: "one thing is clear: whatever is requested, it won't be without conditions," and as Citi's Steve Englander noted "It's all down to haggling over the price now."

• Obama takes offensive against Romney in debate rematch (Reuters)
• Obama Says Romney Words Aren’t ‘True’ in Second Debate (Bloomberg)
• Obama takes Romney head-on in debate (FT)
• And another joins the club: Thailand Unexpectedly Cuts Rate as Global Outlook Worsens (Bloomberg)
• PBOC Injects Less Cash (WSJ)
• Japan to Hold Special Cabinet Meeting After Economy Downgraded (Bloomberg)
• Greek Coalition Duo Reject Labour Moves Proposed by Troika (WSJ)
• Opposition wanes to Spanish aid request (FT)
• RBS to Exit U.K. Asset Protection Plan After $4 Billion Fees (Bloomberg)
• Spain Retains Investment Grade Credit Rating From Moody’s (Bloomberg)
• US diplomat asks Japan, ROK to resolve islands spat (China Daily)
• Stagnation not due to austerity, says OBR (FT)

The departure of Vikram Pandit as CEO of Citigroup (C) should come as a relief to the markets, regulators and customers – indeed, just about everybody besides the volatility junkies who like to trade this very liquid, very unstable stock.

While earlier we reported that the under Vikram Pandit the stock price of Citi, net of reverse stock splits, has collapsed by 90%, some have inquired how it is possible that the market cap under Pandit has declined by far, far less, or from about $150 billion when Vikram was appointed to CEO, to a little over $100 billion today. The answer is simple: shares outstanding.

Here is the bottom line. From the day Pandit took control in December 2007 until today, C stock is down 90%.......Even as Pandit has been paid a total of over $260 million during his CEO tenure, even including his famous $1 comp received in 2010. While CEO of Citigroup in 2007, Vikram Pandit earned an annualized compensation of $3,164,320, which included a base salary of $250,000, stocks granted of $2,914,320, and options granted of $0. In 2008, he earned a total compensation of $38,237,437, which included a base salary of $958,333, stocks granted of $28,830,000, and options granted of $8,432,911. In 2009 he received total compensation of $128,751, including base salary of $125,001; In 2010 he received total compensation of $1,00; In 2011 he received total compensation of $14,857,103 including base salary of $1,671,370. Oh, and this number includes the $165 million Pandit received for his low performing hedge fund which was purchased by Citi in 2007, and was closed by Citi a few months later for epic underperformance.

Mr. Corbat most recently served as the CEO of Citi Holdings, Citi's portfolio of non-core businesses and assets. During his tenure running Citi Holdings, Mr. Corbat oversaw the divestiture of more than 40 businesses, including the IPO and sale of Citi's remaining stake in Primerica. Mr. Corbat also successfully restructured Citi's consumer finance and retail partner cards businesses and divested more than $500 billion assets, reducing risk on Citi's balance sheet and freeing up capital to invest in Citi's core banking business. Prior to his appointment to lead Citi Holdings, Mr. Corbat was the CEO of Citi's Global Wealth Management unit, which comprised Smith Barney and the Citi Private Bank. Prior to this, he was a Managing Director and Head of the Global Corporate Bank and Global Commercial Bank at Citi, a role in which he led the firm's efforts to provide best-in-class financial services to top-tier multi-national corporations and financial institutions around the world. Previously, Mr. Corbat was Head of Global Emerging Markets in Markets and Banking, responsible for the origination, trading and sales of emerging markets fixed income debt. He joined Salomon Brothers, a Citi legacy firm, in 1983 in the Fixed Income Sales Department in Atlanta and has worked in New York City and London.

Remember when we said the Citi numbers were a miserable joke? Apparently at least two people (not Jim Cramer who absolutely loved Citi's "hairless" result) were aware of this:

• CITIGROUP NAMES MICHAEL CORBAT AS CEO VIKRAM PANDIT STEPS DOWN
• CITIGROUP PRESIDENT-COO JOHN P. HAVENS ALSO RESIGNS
• CITIGROUP NAMES MICHAEL CORBAT AS CEO VIKRAM PANDIT STEPS DOWN
• CITIGROUP BOARD UNANIMOUSLY ELECTED CORBAT TO CEO
• CITIGROUP SAYS HAVENS HAD BEEN PLANNING TO RETIRE AT YEAR END

And so the rat procession out of the titanic begins.

• Hillary Clinton Accepts Blame for Benghazi (WSJ)
• In Reversal, Cash Leaks Out of China (WSJ)
• Spain Considers EU Credit Line (WSJ)
• China criticizes new EU sanctions on Iran, calls for talks (Reuters)
• Portugal sees third year of recession in 2013 budget (Reuters)
• Greek PM says confident Athens will secure aid tranche (Reuters)
• Fears over US mortgages dominance (FT)
• Fed officials offer divergent views on inflation risks (Reuters)
• China Credit Card Romney Assails Gives Way to Japan (Bloomberg)
• Fed's Williams: Fed Actions Will Improve Growth (WSJ)
• Rothschild Quits Bumi to Fight Bakries’ $1.2 Billion Offer (Bloomberg)

• Hilsenrath Humor du jour: Bernanke Advocates Stronger Currencies (WSJ)
• Auditors want two more years for Greece on deficit (Spiegel)
• More bluster: Schaeuble Rules Out Greek Default as Samaras, Troika Bargain (Bloomberg)
• And even more bluster: De Jager Says Greece Needs to Make Fiscal Reforms Immediately (Bloomberg)
• Global Economy Distress 3.0 Looms as Emerging Markets Falter (Bloomberg)
• Central bank governor stresses inflation control (China Daily)
• Greek Yields Reach Post Debt-Swap Low as Bunds Slip on Schaeuble (Bloomberg)
• Roth and Shapely win Nobel prize for economics (Reuters)
• Fed chief rounds on stimulus critics (FT)
• IMF Board Sees Biggest Power Shift Reshuffle in Two Decades (Bloomberg)
• EU Girds for Summit as Nobel’s Glow Fades on Crisis Response (Bloomberg)
• Japan security environment tougher than ever (Reuters)