Wednesday's Early Headlines
- Financial Regulation Overhaul Coming Today. - President Obama will outline his plan for the overhaul of financial market regulation at 12:50 p.m. EDT. The plan would give broad new powers to the Federal Reserve, which would supervise large financial institutions that are considered so big that their failure could undermine America's economy. A new consumer agency, the Consumer Financial Protection Agency, would be created and would assume some banking authority that now rests with the Federal Reserve and the Treasury Department. The Office of Thrift Supervision would be dissolved, according to the plan.
- JPMorgan, Goldman, Morgan Expected to Repay TARP. - Morgan Stanley (MS) - Get Report, Goldman Sachs (GS) - Get Report and JPMorgan Chase (JPM) - Get Report are expected to begin TARP repayments today, according to reports. Goldman and Morgan received $10 billion each in bailout funds, while JPMorgan received $25 billion.
- E*Trade to Sell $400 Million in Stock. - E*Trade (ETFC) - Get Report said it plans to raise $400 million through a common stock offer and exchange more than $1 billion in outstanding debt to help strengthen its capital structure. The proceeds from the offering will provide additional equity capital. E*Trade will also offer to exchange more than $1 billion of new zero-coupon convertible debt for all of its 8% senior notes due 2011 and part of its 12.5% springing lien notes due 2017. Citadel Investment, E*Trade's largest shareholder, will participate in both the stock offer and debt exchange.
- PE Firms Bidding for BofA's First Republic. - Carlyle Group, Blackstone (BX) - Get Report and TPG are leading a group of bidders in talks to buy Bank of America's (BAC) - Get Report First Republic Bank, according to Bloomberg. Bank of America is looking to sell businesses like First Republic to raise capital. The private-equity firms may partner with First Republic Chairman James H. Herbert II, the report said, citing a person familiar with the matter.
- U.K. Plans Regulatory Crackdown on Banks. - The Wall Street Journal reports that U.K. Treasury chief Alistair Darling is planning to warn banks that they will need to improve their governance and hold more capital against losses. Darling plans to lay out the principles driving coming legislation on regulation in a speech to be delivered Wednesday in London's financial district, the paper reported.
- Watson Pharma to Buy Arrow for $1.75 Billion. - Watson Pharmaceuticals (WPI) will acquire drug maker Arrow Group for $1.75 billion in cash and stock. Watson expects the deal to close later this year, and add to its profit in 2010.
- Mattel Analyst Day, Detroit Economic Club Summit. - Mattel (MAT) - Get Report will host an analyst day, while chief executives from Research in Motion( RIMM), Ford (F) - Get Report, Dow Chemical (DOW) - Get Report and Waste Management( WMI) will be present at a summit convened by the Detroit Economic Club.
Earnings and Economic News
- FedEx Posts Quarterly Loss. - FedEx (FDX) - Get Report said it lost $876 million, or $2.82 a share, in its fiscal fourth quarter, compared with a loss of $241 million, or 78 cents a share a year ago. Excluding one-time charges, earnings were 64 cents a share. Revenue fell 20% from a year ago to $7.85 billion. Analysts expected a profit of 51 cents a share on revenue of $8.32 billion, according to Thomson Reuters.
- Consumer Price Index Report Due - At 8:30 a.m. EDT, the Labor Department will release its consumer price index, which they expect will show inflation at the consumer level. Economists expect the headline CPI number to have climbed 0.3% in May and the core number rose only 0.1%, compared to 0.3% in April
- Fed Chairman to Deliver Speech. - Fed Chairman Ben Bernanke will speak at the Operation HOPE Global Financial Literacy Summit on Wednesday, offering comments on community development financial institutions