5 Things You Need to Know to Start Your Day

Good morning. US equities slump, Citigroup pulls out of distressed-debt trading and a Hollywood tie-up could be on the cards — Charlotte Hug [View in browser]( [Bloomberg]( Good morning. US equities slump, Citigroup pulls out of distressed-debt trading and a Hollywood tie-up could be on the cards — [Charlotte Hughes-Morgan](. Equities Rally Stalls  US stocks notched one of their [worst days in months]( yesterday as a pullback got underway to the rally ignited by the Federal Reserve’s dovish pivot last week. The Nasdaq 100 ended the session down 1.5%, the biggest one-day drop in eight weeks and the S&P 500 chalked up its steepest drop since September. Some in the market speculated that [expiring zero-day options]( helped accelerate the selloff as options dealers sold more to rebalance their positions. Overbought conditions in the US also contributed to the selling as gauges of relative strength rose to levels that in the past have accurately predicted declines. This prompted Citigroup strategists to say investors should be ready to [buy the dip](. European stocks [slipped]( this morning, following losses in Asia. Listen to the [Bloomberg Daybreak podcast here]( for more on markets. More Change at Citi Citigroup has decided to exit the [distressed-debt trading]( business, as chief executive Jane Fraser continues the biggest restructuring of the bank in decades. The decision removes one of the key players in distressed-debt markets, and follows a recent decision to get out of [municipal bond]( trading and underwriting. Fraser aims to make Citigroup more efficient and eliminate layers of management within the bank’s workforce after years of repeatedly abandoned or missed targets. Distressed trading can be volatile, with outsized performance one year potentially followed by leaner times. The business at Citigroup outperformed in 2021 before reportedly slowing in subsequent years. The bank also recently dismantled its FX strategy team and has offloaded some[retail-banking units]( outside the US. Hollywood Proposal Warner Bros has held preliminary talks on a[possible merger]( with Paramount Global, a deal that would combine two of the world’s biggest media companies. The firms’ chief executives met in New York this week to discuss a potential tie-up that would unite famous film and TV studios and bring a number of pay-TV and broadcast stations, including HBO and CBS, under the same roof. Both firms have struggled as consumers canceled cable-TV subscriptions in favor of streaming services. Yesterday, Bloomberg also reported that Paramount is in talks to sell its [Black Entertainment Television]( network. A merger of the two Hollywood behemoths would likely face intense scrutiny from competition regulators who have challenged a number of combinations under the Biden Administration. Argentina’s Privatization Push Argentina’s new president Javier Milei took the[first step]( to privatize state-run Argentine companies with a [sweeping decree]( that opens the door for private business to take control of key sectors. Milei, a libertarian who wants to shrink government and deregulate Argentina’s crisis-prone economy, said all state businesses would have their legal structure changed to fully clear the path to privatization. In a televised address, he also set out plans to facilitate exports and end price controls. While Milei can seek to privatize companies by presidential decree, he’s likely to face pushback in congress, where his party is in a minority. His plan comes one week after Economy Minister Luis Caputo announced deep budget cuts and a 54% devaluation of the peso as part of a [shock-therapy]( program designed to put the economy back on track. Coming up... We’ll get the final GDP numbers for the third quarter this morning. There’s also initial jobless claims for the past week as well as the Philadelphia Fed’s business outlook. On the corporate side, Nike and Paychex both report second quarter earnings. We’ll get fourth quarter earnings from Carnival and third quarter earnings from CarMax. What We’ve Been Watching This is what’s caught our eye over the past 24 hours. - Have a look at what [market experts](are forecasting for 2024 - The world’s [best-performing stock]( this year gained almost 600% - Why is Europe’s biggest asset manager[ shorting the pound](? - X suffered its [biggest outage]( since Elon Musk took over - Listen to why so many people got this year’s [economy wrong]( - Read our Big Take on how Wall Street banks are tackling [private credit]( - And John Authers takes a look at some of the [biggest things]( that didn’t happen this year And finally, here's what Joe’s interested in this morning Well, after a furious rally over the last two months, stocks finally had a proper down day yesterday, with both the S&P 500 and the NASDAQ falling by about 1.5%. Typically there isn't that much interesting to say about a selloff like this. Lots of people will talk about how such days are “normal” or how markets were “due” and that maybe investors had gotten a little too excited about pivots and cuts and soft landings and all of that. And maybe that's all true. That being said, the one thing that was at least interesting about yesterday is that rates fell as well. We've been in a pattern for a long time, where stocks and bonds were basically correlated. When Treasuries were selling off hard, stocks would retreat. When Treasuries rallied (as they have since late October), stocks rallied. This makes sense of course. The main concern for the market has been overheating and Fed tightening. Yesterday was different. The 10-year yield was around 3.9% on Tuesday and got below 3.85% on Wednesday. So this selloff, in addition to being significant, was not apparently about some inflation scare or higher rates scare or further tightening scare. Again, it's just one day. Single days happen. But it’s worth watching to see if the stock/bond refund regime shows signs of shifting. Follow Bloomberg's Joe Weisenthal on X [@TheStalwart]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Tell us what you want to see in the Five Things newsletter! Please [take our quick survey here.]( [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. 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