Citi Consolidates SIVs On Balance Sheet, November CPI Higher Than Expected

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After the close yesterday, Citigroup announced that it will provide a support facility for its Structured Investment Vehicles (SIVs), off balance sheet investment vehicles, which will result in its consolidating their assets and liabilities onto its own balance sheet (C Press Release).

In other news, November CPI came in higher than expected, up .8% from October, while Core CPI, which excludes food and energy, also came in high with a .3% increase.  The CPI is now 4.3% higher than it was 12 months ago and the core is 2.3% higher (BLS November CPI).

The inflation news is bad but the market is trying to decide about the Citigroup news.  Is it good because we now have more transparency about their exposure and are therefore moving towards an alignment between actual exposure and acknowledged exposure?  Or is it bad because this increases their exposure and crimps their capital base?  In other words, is bad news bad news again or is it good news again?

Markets are down (Dow -51, S&P -5, Nasdaq 0), with technology strongest and financials holding up better than the overall market.

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