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Global Bourses and Commodities up 1-2%

S&P futures were up all morning, global bourses and commodities up 1-2 percent.

Citigroup announced a 1-for-10 reverse stock split (effective after close of trading on May 9). This will reduce the outstanding common shares from 29 billion to 2.9 billion.

They are also planning to pay a dividend of $0.01 beginning in the second quarter (after the split). This is a slight surprise — given the regulatory uncertainty and the shaky state of business, Citi has already said they are unlikely to initiate a dividend and a buyback until 2012.

But it's not like they're being generous — this is like paying a dividend of $0.001 on the current shares (that's a tenth of a cent). Gee, thanks a lot. But it's really more about sentiment, about turning the corner, than it is about yield.

In a way, the reverse stock split is more interesting — for the trading community. As I have chronicled numerous times, there is a whole sub-industry of traders who trade Citi for the rebate...it's a low-priced, high volume stock...that trade will likely now go away, so Citi will trade much less volume. What will rebate traders do? Maybe they'll switch to Sprint .

Elsewhere:

1) AT&T's up 5 percent pre-open, the deal to acquire T-Mobile USA for $39 billion in cash and stock ($25 billion cash, $14 billion in T stock) gives Deutsche Telecom an exit from its U.S. venture and an 8 percent ownership in AT&T. On our air this morning, most of the discussion centered on the regulatory response.

One analyst said it would be "the defining test of the antitrust policy of the Obama administration." AT&T and Verizon will control roughly 70 percent of the wireless market. Still, most analysts predict the deal will go through, with concessions: "We believe a little broadband to the underserved can help this deal go through," Raymond James said."

On the news, Sprint plunges 13 percent pre-open on very heavy volume (already more than ¼ of its normal daily volume). Sprint had reportedly been evaluating a potential bid for T-Mobile.

2) Tiffany rises 6 percent after beating Q4 estimates ($1.44 vs. $1.39 consensus) led by double-digit sales in all key regions around the world. More importantly, guidance for the current year remains strong, despite the impact of the earthquake in Japan (Japan makes up 18 percent of total sales). Full-year earnings are seen between $3.35-$3.45 (above $3.26 consensus) on stronger-than-expected sales growth (up 12 percent-14 percent vs. up 9.5 percent consensus). The jeweler did note that store closings resulting from the earthquake will have a 5 cent hit to earnings this quarter.

3) AIG revealed that its estimate for pre-tax property casualty insurance losses this quarter will be about $1.0 billion. About 70 percent of that amount is attributed to its exposure to damages from the earthquake and tsunami in Japan.

4) Schwab is acquiring online brokerage firm Options Express for $17.91, a 16.8 percent premium. OXPS shareholders will receive 1.02 shares of Schwab stock for each OXPS share.

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