Thursday's Early Headlines
- Pay Czar Appointed, Treasury Outlines Pay Reform. - The Obama administration has appointed Kenneth Feinberg as the new "special master for compensation," giving him broad authority over compensation for senior executives at AIG (AIG) - Get American International Group, Inc. Report, Bank of America (BAC) - Get Bank of America Corp Report, Citigroup (C) - Get Citigroup Inc. Report, General Motors (GMGMQ) , GMAC, Chrysler and Chrysler Financial. Those companies received was has been deemed by the government as "exceptional assistance" from the Troubled Asset Relief Program, or TARP. However, Treasury Secretary Timothy Geithner outlined his push for compensation and corporate governance, issueing voluntary compensation guidelines that tie pay more closely to long-term performance, according to The Wall Street Journal.
- BofA CEO Ken Lewis Set to Testify. - BofA CEO Ken Lewis will testify Thursday before Congress on the bank's acquisition of Merrill Lynch, and is expected to say both the government and BofA were aware that the global financial system was in fragile condition, and Lewis even considered scrapping the transaction because of "significant accelerating losses." However, Treasury and Federal Reserve representatives pressured Lewis to delay any such action, according to Lewis' prepared remarks obtained by Bloomberg. According to a report Wednesday by The Wall Street Journal, Fed Chairman Ben Bernanke and other Fed officials sharply criticized BofA and Lewis in subpoenaed emails.
- Fed Makes $2.7 Billion in First Quarter. - The Fed made almost $2.7 billion in the first quarter on its lending facilities, asset holdings and loans to Bear Stearns and AIG, according to The Wall Street Journal. The Fed had net earnings of $1.2 billion last quarter on loan programs, including overnight loans to banks and investment banks. The central bank earned another $2.1 billion on short-term commercial paper loans and $4.6 billion on its portfolio of assets. It lost a combined $5.2 billion during the quarter on its loans tied to the rescues of Bear Stearns and AIG.
- IEA Sees '09 Oil Demand Slump Moderating. - The International Energy Agency on Thursday forecast that the slump in global oil demand in 2009 would be slightly less severe than previously expected, the organization's first upward revision to its estimates in 10 months as economic indicators suggest the recession may be past its peak.
- Barclays Unit Sale to BlackRock Nears. - BlackRock's (BLK) - Get BlackRock, Inc. Report expected deal to buy Barclays Global Investors from U.K. bank Barclays (BCS) - Get Barclays PLC Sponsored ADR Report is likely to be announced as early as Thursday, The Wall Street Journal reports, citing people close to the matter.
- Dell Looks to Acquisitions. - Michael Dell, the chief executive of the computer maker that bears his name, expects Dell (DELL) - Get Dell Technologies Inc Class C Report to acquire a "significant-sized company" in coming months, The Wall Street Journal reports, citing a person who has spoken with the CEO.
- May Foreclosures Up 18% From Last Year. - RealtyTrac said foreclosure filings in May fell 6% from the previous month, but were up 18% from May 2008. Foreclosure activity in May was the third highest on record, and marked the third straight month where the total number of properties with foreclosure filings exceeded 300,000, a first in the history of our report.
- Auto Suppliers Ask For $10 Billion in Aid. - Two U.S. auto-parts supplier trade groups asked the Treasury Department to provide as much as $10 billion in new aid as the industry struggles with cuts in car production, according to Bloomberg. New aid would expand on $5 billion in Treasury loans and guarantees.
- Thursday's main economic report will be retail sales data for May, which is expected to show a 0.3% rise last month after a surprising 0.4% dip in April. Excluding auto sales, retail sales are expected to have climbed 0.2% last month.
- Aside from the retail sales data, the weekly read on jobless claims will be posted Thursday at 8:30 a.m. EDT, followed by the 10 a.m. EDT release of the April read on business inventories.