MORNING COFFEE

Headlines

Ben Bernanke was awarded Time Magazines Person of the Year Award

EU ends 10yr Microsoft antitrust battle without fining the company. Microsoft agreed to provide European Windows users with greater choices of web browsers.

Banks get more time on new capital rules. Banks around the globe could get ten years to transition to the new capital rules that take effect in 2012. the Basel Committee on Banking Supervision is expected to issue new proposals to toughen financial regulations, which had raised concerns about banks scrambling to raise capital quickly. The new rules will likely take a broader view on the definition of liquid assets and core capital, while the minimum capital threshold will likely be raised to help buffer against future losses.

Bernanke downplays inflation. High U.S. unemployment and unused manufacturing capacity suggest that there's still plenty of slack in the economy and that inflation will remain low, Fed Chairman Ben Bernanke told a lawmaker in a written statement Tuesday. "I continue to expect slack resources, together with the stability of inflation expectations, to contribute to the maintenance of low inflation in the period ahead." Most economists expect the Fed to keep rates unchanged which will be announced today at 2:15pm.

Geithner said banks are stronger. U.S. Treasury Secretary Geithner said Tuesday that confidence in the financial system is coming back and that private capital will start replacing the government's investment in banks. The government expects to get checks totalling more than $185B in repaid TARP, after Wells Fargo (WFC) said Monday it will repay $25B in bailout money.

Today’s Market

· Futures at 7:00: Dow +0.4% to 10438. S&P +0.5% to 1109.50. Nasdaq+0.6%.

Treasurys showing modest gains ahead of FOMC rate decision.
Crude +0.8% to $71.26. Gold +1% to $1,134.
Euro +0.2% vs. dollar. Yen flat. Pound +0.5%.

· Asia: Nikkei +0.9% to 10177. Hang Seng -0.9% to 21612. Shanghai -0.6% to 3255. BSE +0.2% to 16913.

· Europe at midday: FTSE +0.5% to 5312. CAC +0.8% to 3865. DAX+1.2% to 5881.