- Bernanke: Bye, bye recession. Answering questions after a rehashed speech at the Brookings Institute, Bernanke noted that "from a technical perspective the recession is very likely over at this point." It was his most explicit comment to date that the contraction is over, though he acknowledged the economy would continue to feel weak for some time, and that unemployment will likely be slow to come down.
- Adobe closes 'game-changing' deal. Along with reporting earnings yesterday (see details below), Adobe (ADBE) announced it will acquire web-measurement firm Omniture (OMTR) for $1.8B in cash, a 45% premium to Omniture's 30-day average price. Adobe CEO Shantanu Narayen called the deal a 'game-changer' that will let the company create an "end to end platform to transform digital media and advertising." More modestly, Adobe is hoping the deal will help it turn around declining sales. In after hours trading, ADBE -4.15%, OMTR +25.1%. (Read Omniture's press release)
- BNY Mellon settles Russian lawsuit. Bank of New York Mellon (BK) reached an out-of-court settlement with Russia over the government's $22.5B lawsuit. As part of the settlement over a decade-old tax revenue scandal, Russia will receive $14M for trial expenses and get a $4B discounted loan from the bank as an 'act of goodwill.'
- Lawmakers ready to pare gov't stakes. As Citigroup (C) reportedly works towards lowering the government's 34% stake in the bank and raises $5B in government-guaranteed bonds, Republican lawmakers appear equally eager to part ways with the financial albatross. The lawmakers are drafting legislation that would create an independent trust to sell off U.S. ownership in firms where the government holds more than a 15% stake, including in Citigroup, AIG (AIG), General Motors and Chrysler. C +4.4%, AIG +1.9% premarket (7:00 ET).
- SEC takes aim at ratings agencies. Moody's (MCO), Standard & Poor's (MHP) and Fitch Ratings may have to provide increased disclosures and greater accountability for debt analyses following their performances with troubled mortgage securities. In a meeting tomorrow, the SEC is reportedly planning to propose that companies disclose the grades they received on bonds while shopping among ratings agencies, while the agencies may be required to disclose revenue from their biggest clients and could face increased lawsuits from investors.
- Treasury takes steps to avoid debt ceiling. The Treasury is expected to start winding down its temporary Supplementary Financing Program, which sold special short-term securities and placed the proceeds in an account at the Federal Reserve. The program ballooned to $560B last year before falling to $200B for much of 2009, and the Treasury may reduce that to as little as $15B, largely to avoid hitting the $12.1T debt ceiling. As a result, the Fed may have to inject more money into the economy which could make it harder to raise interest rates later.
- IMF plays ref on unwinding gov't support. Reinforcing its role as a referee in the global recovery, the IMF released a paper laying out guidelines for how governments should wind down support of the financial sector. Among its recommendations, the IMF said central banks should be reimbursed by governments for losses on any crisis-related interventions. The paper also suggests the global costs of financial bailouts may be lower than expected because governments announced larger support packages than they actually implemented. (Read the IMF's overview and report (.pdf))
- Lehman feels cheated. In court papers filed yesterday, Lehman Brothers Holdings said Barclays Capital (BCS) received an $8.2B 'windfall profit' in the fire sale of Lehman's U.S. brokerage because 'critical changes' were made to the deal between the time the sale order was signed and the deal actually closed. Lehman is asking the court to amend the deal and a hearing is scheduled for next month.
- Air travel forecasts lose altitude. The International Air Transport Association revised its projections of 2009 industry losses and now expects the total global loss to reach $11B, $2B worse than its previous estimate. 2010 losses are expected to reach $3.8B. The IATA also revised its 2008 loss estimate to $16.8B from $10.4B on changes in goodwill valuation and fuel hedges. "The bottom line of this crisis," said the group, "is larger than the impact of 9/11."
- MBA apps fall. Mortgage applications fell 8.6% from the previous week, MBA reported. The average interest rate on 30-year fixed-rate mortgages rose to 5.08% from 5.02%.
- PPI climbs. The Producer Price Index rose 1.7% in August vs. consensus of +0.8%, with core PPI inching up 0.2% vs. +0.1% consensus. Headline inflation was down 4.3% from the previous year, although core PPI was up 2.3%. Energy prices were up 7.1% from July.
- Retail sales jump on auto purchases. August's retail sales were up 2.7% to $351.4B, better than the expected +1.9%. Ex-auto, sales rose 1.1% vs. +0.4% consensus. A massive increase in auto sales fueled the spike in the headline number, but sales remain 5.3% below August 2008 levels.
- Empire State Mfg improves. The Empire State Manufacturing Survey registered +18.9 in August, better than the consensus of +15, up from +12.1 the month before and the highest since late 2007. The average workweek index, which is considered a strong indicator of future employment trends, rose strongly for a second straight month, climbing 12 points to +6 and marking the first positive reading in a year.
- Inventories fall. Business inventories decreased 1% in July to $1.332T vs. consensus of -0.9%. June's inventories were revised to -1.4% from -1.1%. Inventories are down 11.8% compared to the previous year. Sales were up 0.1% to $978B. The inventories/sales ratio rose to 1.36 from 1.27.
- Consumer confidence dips again. ABC's Consumer Confidence Poll came in at -49, down from -48 for its second straight weekly decline. This week, 43% of Americans feel the economy is getting worse, up 12 points from last month. Only 44% rate their personal finances positively and only 24% think it's a good time to buy things.
Earnings: Tuesday After Close
- Adobe (ADBE): FQ3 EPS of $0.35 beats by $0.01. Revenue of $698M (-21%) vs. $686M. To offer $1.8B for Web consultant Omniture (OMTR). Shares -4.15% AH. (PR)
Asia closed mostly positive, and markets elsewhere are trading up.
- In Asia, Nikkei +0.5% to 10,271. Hang Seng +2.6% to 21,403. Shanghai -1.1% to 3,000. BSE +1.35% to 16,677.
- In Europe at midday, London +1.4%. Paris +1.3%. Frankfurt +0.9%.
- Futures: Dow +0.5%. S&P +0.5%. Nasdaq +0.35%. Crude -0.3% to $70.72. Gold +1.2% to $1,018.50.
Wednesday's Economic Calendar
- 7:00 MBA Mortgage Applications
8:30 Consumer Price Index
8:30 Current Account
9:00 Treasury International Capital
9:15 Industrial Production
10:30 EIA Petroleum Status
1:00 PM NAHB Housing Market Index
- Notable earnings after Wednesday's close: DBRN, ORCL
Seeking Alpha editor Eli Hoffmann contributed to this post.
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