The markets had a good day as all three major indexes were up over 2%, with the Dow up 2.08% to finish at 8472.40.  The NASDAQ and S&P were up 2.08% and 2.14% respectively, closing at 1829.54 and 920.26.  The 10-year saw price climb over a dollar as the yield ended at 3.544%.  Crude oil saw prices rise, settling at $70.23, with August gold also seeing prices head up as the dollar weakens, settling at $939.50. 

American International Group [AIG: 1.46, 0.00 (0.00%)] and the Federal Reserve Board of New York agreed that AIG can repay $25 billion that they owe the New York Reserve through initial public offerings of the two of its international life insurance units.  AIG will put equity from American Life Insurance Co. and American International Assurance Co. into vehicles and receive preferred and common interest in exchange.  AIG will hold the common interest while the New York Fed will receive $25 billion in preferred interest from these two vehicles, there in fact reducing AIG’s debt.  This deal benefited AIG, as it makes it easier to pay back the government debt, while also giving greater independence to American Life Insurance allowing them to maintain the value of the name.  The deal is expected to close in the second half of the year.

Federal Reserve Chairman Ben Bernanke appeared before Congress today and denied allegations that he pressured Bank of America [BAC: 12.35, 0.00 (0.00%)] into buying Merrill Lynch.  He testified that he made no threat to BofA’s CEO Kenneth Lewis or the bank’s board members of the consequences if the deal did not go through.  This testimony comes after Lewis testified earlier this month that former Treasury Secretary Henry Paulson made it clear that if Bank of America did not go through with their promise to acquire Merrill he and the board would have been removed.  Bernanke denied this claim and defended the deal saying that the deal was needed to avoid another shock to the already shaken financial system.  Bank of America received $45 billion in total from the government in the bailout, with $20 billion directly coming from the acquisition of Merrill.

In earnings news, Nike [NKE: 51.28, 0.00 (0.00%)] reported after hours yesterday, announcing earnings of $341.4 million, or $0.70 per share down from the year ago period when they reported earnings of $490.5 million, or $0.98 per share.  Nike missed on both earnings and revenue, as the street expected earnings to be $0.96 per share and revenue to be $4.71 billion as opposed to the reported $4.7 billion.  Future orders fell 12%, with Nike saying that they would have only fallen 5% but were negatively affected by the exchange rate.  Restructuring charges also hurt the Beaverton, Oregon company as it faced a $144.5 million charge that reduced earnings by $0.29 per share.  Gross margins also fell for the shoe maker due to higher manufacturing costs and markdowns, lowering margins from 45.8% to 43.4%.  Some analysts and investors are still bullish Nike as they believe in their innovation and cutting edge technologies.  Nike is down over 3% today as the majority of the market reacted poorly to Nike’s announcement.

Check back tomorrow to Bullish Bankers for another market recap.

- Matt Shannon

Disclosure: None

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