Wednesday's Early Headlines
- Citigroup Announces Details of $58 Billion Stock Swap. - Citigroup (C) - Get Report said it has finalized a definitive agreement with the U.S. Government and will now launch its exchange offers for publicly held convertible and non-convertible preferred and trust preferred securities. Citi will convert into common shares approximately $58 billion in aggregate liquidation value of preferred stock and trust preferred securities, which would give the Treasury Department a 34% stake in the bank. Shares of Citi were up nearly 4% in the premarket session.
- White House to Unveil Plans for Executive Compensation. - the Obama administration is ready to issue broad new principles on how to compensate top financial sector executives. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke want to give the Fed, which regulates banks, and the Securities and Exchange Commission, which oversees the financial markets, greater powers to set compensation guidelines across the financial sector.
- Top Court Won't Block Chrysler Sale. - After a short delay, the Supreme Court cleared the way for Chrysler's sale to Fiat. On Monday, Justice Ruth Bader Ginsburg issued a one-sentence order saying the court said it would stay the sale "pending further order of the undersigned or of the court."
- Home Depot Raises Earnings Guidance. - Home Depot (HD) - Get Report lifted its fiscal-year earnings outlook, saying it now expects earnings per share from continuing operations to be flat to down 7% from a year earlier, while adjusted earnings are seen falling 20% to 26%. Home Depot previously said it expected fiscal-year earnings from continuing operations down 7% from last year, and adjusted earnings down 26%.
- House Panel to Subpoena Fed over BofA-Merrill Lynch Deal. - A House of Representatives committee said it would subpoena the Fed to force the central bank to surrender documents regarding its role in Bank of America's (BAC) - Get Report takeover of Merrill Lynch last year, according to Reuters. The subpoena comes two days before Bank of America Chief Executive Ken Lewis is set to testify before the House Oversight Committee, the report said.
- Ford Seeking Loans from Several Governments. - While Ford (F) - Get Report has not accepted any bailout funds from the U.S. government, The Wall Street Journal reports that the automaker is trying to secure hundreds of millions in direct loans and loan guarantees from governments around the world to aid its credit arm and comply with environmental regulations in North and South America, Europe and Australia.
- DOJ Probes Google Book Deal. - The Justice Department has sent requests for information from Google (GOOG) - Get Report and publishers about a deal that would allow the search company to make millions of books available online, according to The Wall Street Journal. The report said the demands from the Justice Department signal it may seek to block or force a renegotiation of a settlement that was reached last year but has yet to be approved in court.
Earnings and Economic News
- Beige Book Highlights Economic Data - The Federal Reserve's latest beige book release will be one of several highlights Wednesday. The beige book report, published by the central bank for the fourth out of eight times this year, summarizes business activity in the Fed's twelve districts. In the last report released in April, five districts noted a moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level.
- Trade Balance Due - The trade balance report for April and the Treasury budget for May are due to be released Wednesday at 8:30 a.m. EDT and 2 p.m. EDT, respectively. Economists expect the trade deficit to expand to $28.7 billion from $27.6 billion in March.
- 10-Year Treasury Note Auction - Several Treasury note auctions are being held this week, with perhaps the most important one scheduled for Wednesday. Investors are hoping a $19 billion auction Wednesday of 10-year notes will be as successful as Tuesday's $35 billion auction of 3-year notes. While Tuesday's sale drew a yield of 1.96%, which was slightly below forecasts, the bid-to-cover ratio for the 3-year notes was a solid 2.82%. Investors are hoping the 10-year note auction will be as successful with foreign investors as Tuesday's auction was. Indirect bidders for 3-year notes, which includes foreign central banks, was 43.8%, better than it has been in previous months.