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News Analysis for the Investor on March 27, 2014

The IMF has prepared an $18 billion loan for Ukraine and the US GDP was revised upward for the fourth quarter.  Candy Crush IPO's not so sweet and Ronald McDonald is promoting Taco Bell.

| BY Catherine McBreen

Economic growth higher

Fox Business is reporting that US economic growth was a bit higher than previously estimated in the fourth quarter.  The Commerce Department said that gross domestic product expanded at a 2.6 percent rate in the fourth quarter, up from the 2.4 percent rate reported a month ago.  Economists had anticipated a 2.7 percent rate.  The economy expanded at 4.1 percent from July to September of 2013.  Growth in the first quarter is expected to be around 2 percent.  Consumer spending grew at 3.3 percent, a positive number indicating growth in services.  Consumer spending accounts for more than two-thirds of US economic activity and was anticipated to have increased at only 2.6 percent.

 

Fed prevents Citigroup from paying dividends

Citigroup failed to receive approval to reward investors with higher dividends and stock buybacks, according to the Wall Street Journal.  The Fed rejected capital plans from five large banks and approved the plans for 25 as part of its annual “stress test”.    The bank’s stock fell 5.9 percent in after-hours trading.  This was Citi’s second rejection in three years.  Bank executives were surprised by the decision and were actively reaching out to both the Fed and to shareholders.  Citi joins four other banks that did not receive approval including Zions Bancorp, and the US units of HSBC and Royal Bank of Scotland.

 

IMF prepares $18 billion in loans for Ukraine

The IMF announced an agreement to provide up to $18 billion in loans over two years to the interim government in Kiev to prevent the country’s default.  The New York Times indicates that the agreement will hinge on Ukraine’s willingness to allow its currency to float downward, to cut corruption and to reduce huge state subsidies for the consumption of natural gas.  The energy subsidies represent 8 percent of Ukraine’s GDP.  The loan package is expected to unlock additional loans from the US and the European Union that will total $27 billion.  The terms of the deal are less onerous than the loans initially promised to the prior government by Russia.

 

Candy Crush debut not so sweet

Investors failed to jump on the IPO of King Digital Entertainment, the maker of the popular Candy Crush game, which launched on Wednesday.  The Wall Street Journal reports that this was the worst initial public offering of any IPO this year.  Shares fell sharply as soon as they started trading and extended their losses throughout the day.  Shares ended down 15.6 percent at $19.  The company had raised $500 million, selling 22.2 million shares at $22.50 apiece prior to the opening.  Wednesday’s drop erased more than $1 billion in market value.

 

Ronald McDonald promotes Taco Bell

In a new tongue-in-cheek ad campaign to roll out today, Taco Bell gathered 25 real guys named Ronald McDonald and is featuring them in the introduction of Taco Bell’s new breakfast program.  USA Today indicates that the market for breakfast fast food is $50 billion.  McDonald’s is currently the market leader with a 25 percent market share.  The new commercial ends with all 25 of the Ronald McDonalds seated together saying “My name is Ronald McDonald and I love Taco Bell’s new breakfast.”



About the Author


Catherine McBreen



Catherine S. McBreen is President of Millionaire Corner.  McBreen plans and develops content for Millionaire Corner.  Catherine balances editorial content to meet the informational needs of both new and seasoned investors.  She designs special monthly surveys on topical issues affecting the economic environment.

McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law.  She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.

Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences.  She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth.  Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.

McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)

Catherine is the mother of four and is involved in many school and community events.