The pain that homeowners and homebuilders are feeling now is a sign that things are going to get better.
The news that housing starts have fallen to their lowest level in 17 years sounds like one more reason to be depressed about the shrinking value of your home. In fact, it's an almost certain sign that the path to a housing recovery is finally in sight.
If prices are going to stabilize, let alone rebound, the United States needs to produce far more first-time home buyers than new houses. That's the only way to tame the glut of "For Sale" signs dotting front yards from the Inland Empire of California to the Gold Coast of Florida.
Builders constructed far more homes from 2002 until 2006 - the peak bubble years - than could possibly be absorbed by the normal growth in households.
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Monday, June 30, 2008
The Declining Dollar
It has been my view expressed in these alerts and elsewhere over the past several months that there will be a currency crisis this summer caused by a plummeting US dollar. Summer of course began a few days ago, so it is reasonable to ask whether my view has changed. It hasn't.
The US dollar is now standing on the edge of the precipice. In fact, it is already peering over the edge as we can see in the following chart of the US Dollar Index.
There are several important observations to make from this chart. First, the dollar is in a major bear market. It peaked at 120.97 on July 5, 2001 and has been declining ever since within the major downtrend channel delineated by the red parallel lines.
Trends do not change unless there is some solid fundamental reason for them to change. There is only one way to strengthen a currency - raise interest rates. The Federal Reserve again failed at its FOMC meeting this past week to raise rates. So the only logical and prudent assumption is that the downtrend in the dollar will continue.
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The US dollar is now standing on the edge of the precipice. In fact, it is already peering over the edge as we can see in the following chart of the US Dollar Index.
There are several important observations to make from this chart. First, the dollar is in a major bear market. It peaked at 120.97 on July 5, 2001 and has been declining ever since within the major downtrend channel delineated by the red parallel lines.
Trends do not change unless there is some solid fundamental reason for them to change. There is only one way to strengthen a currency - raise interest rates. The Federal Reserve again failed at its FOMC meeting this past week to raise rates. So the only logical and prudent assumption is that the downtrend in the dollar will continue.
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Payrolls Probably Fell, Factories Slowed: U.S. Economy Preview
U.S. employers probably cut jobs in June for a sixth consecutive month, while manufacturing contracted at a faster pace, signaling the expansion is still at risk, economists said before reports this week.
Payrolls shrank by 60,000 workers, according to the median estimate of economists surveyed by Bloomberg News before the Labor Department's report on July 3. The unemployment rate may have fallen after jumping last month by the most in two decades.
Mounting job losses, record gasoline prices and tumbling home values have crushed consumer confidence, raising concern that spending will retrench once the lift from the tax rebates fades. Businesses are also purchasing less equipment as fuel costs soar, prompting factories to scale back.
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Payrolls shrank by 60,000 workers, according to the median estimate of economists surveyed by Bloomberg News before the Labor Department's report on July 3. The unemployment rate may have fallen after jumping last month by the most in two decades.
Mounting job losses, record gasoline prices and tumbling home values have crushed consumer confidence, raising concern that spending will retrench once the lift from the tax rebates fades. Businesses are also purchasing less equipment as fuel costs soar, prompting factories to scale back.
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Gas prices rise, July 4 travel down
The number of people traveling over the July 4 weekend expected to decline 1.3% from last year.
Retail gas and diesel prices pushed higher overnight, a daily survey by motorist group AAA showed Sunday. Continued near-record prices are expected to curtail Americans' travel plans during the July 4 holiday weekend.
The national average price for a gallon of regular gas increased seven-tenths of a cent to $4.079 from $4.072 the day before.
According to AAA, 31 states and the District of Columbia are now paying over $4.00 a gallon on average.
Alaska edged out California for the title of highest gas prices in the nation. Drivers there pay $4.611 a gallon on average, while in the golden state, a gallon of regular gasoline averages $4.584.
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Retail gas and diesel prices pushed higher overnight, a daily survey by motorist group AAA showed Sunday. Continued near-record prices are expected to curtail Americans' travel plans during the July 4 holiday weekend.
The national average price for a gallon of regular gas increased seven-tenths of a cent to $4.079 from $4.072 the day before.
According to AAA, 31 states and the District of Columbia are now paying over $4.00 a gallon on average.
Alaska edged out California for the title of highest gas prices in the nation. Drivers there pay $4.611 a gallon on average, while in the golden state, a gallon of regular gasoline averages $4.584.
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Qatar Won't Raise Crude Oil Output as Prices Soar
Qatar doesn't plan to follow Saudi Arabia's lead in increasing crude oil production because supplies are adequate, its oil minister said today.
``I never heard any panic about a shortage of supply, just about the high price,'' Abdullah bin Hamad al-Attiyah told Bloomberg in an interview in Madrid. ``We see in the market there are lots of cargoes.''
Qatar, the third-smallest member of the Organization of Petroleum Exporting Countries, joins oil-producing nations the United Arab Emirates and Kuwait in declining to increase output at a time when record crude oil prices are fueling global inflation and slowing growth.
Saudi Arabia decided to raise its production by 300,000 barrels a day this month and will add a further 200,000 barrels a day in July in a bid to quell prices that have jumped 46 percent this year. Crude oil climbed above $142 a barrel for the first time on June 27, closing at a record $140.21 in New York.
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``I never heard any panic about a shortage of supply, just about the high price,'' Abdullah bin Hamad al-Attiyah told Bloomberg in an interview in Madrid. ``We see in the market there are lots of cargoes.''
Qatar, the third-smallest member of the Organization of Petroleum Exporting Countries, joins oil-producing nations the United Arab Emirates and Kuwait in declining to increase output at a time when record crude oil prices are fueling global inflation and slowing growth.
Saudi Arabia decided to raise its production by 300,000 barrels a day this month and will add a further 200,000 barrels a day in July in a bid to quell prices that have jumped 46 percent this year. Crude oil climbed above $142 a barrel for the first time on June 27, closing at a record $140.21 in New York.
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Saturday, June 28, 2008
Oil Prices Hit Another Record High Above $142
World oil prices surged to fresh record highs above $142 a barrel Friday as Asian share prices plunged. A sell-off in Asia followed Thursday's steep three-percent decline in U.S. stocks. U.S. shares posted mixed results in Friday's afternoon trading.
Some economists say higher oil prices make it harder for companies to make a profit, prompting investors to move their money out of stocks to other investments, driving down share prices.
The spike in oil prices comes after the president of the Organization of Petroleum Exporting Countries said Thursday that he expected crude prices to go as high as $170 a barrel in the next few months.
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Some economists say higher oil prices make it harder for companies to make a profit, prompting investors to move their money out of stocks to other investments, driving down share prices.
The spike in oil prices comes after the president of the Organization of Petroleum Exporting Countries said Thursday that he expected crude prices to go as high as $170 a barrel in the next few months.
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Friday, June 27, 2008
General Electric CEO To Meet With Italian PM Thursday
General Electric Co. (GE) Chief Executive Officer Jeffrey Immelt will meet with Italian Prime Minister Silvio Berlusconi Wednesday, the Italian government said.
In a statement, the government said the meeting would take place at 1600 GMT at the premier's office in Rome, without providing further details.
An Italian government official said the possible sale of GE's iconic appliance business may be one of the topics of discussions, but cautioned he didn't know the details of their agenda.
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In a statement, the government said the meeting would take place at 1600 GMT at the premier's office in Rome, without providing further details.
An Italian government official said the possible sale of GE's iconic appliance business may be one of the topics of discussions, but cautioned he didn't know the details of their agenda.
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InBev May Seek to Oust Anheuser-Busch's Directors
InBev NV, the Belgian brewer trying to take over Anheuser-Busch Cos., said it will seek to oust the U.S. company's board after getting no response to its $46.3 billion bid for two weeks.
InBev plans to ask shareholders to approve new directors for the maker of Budweiser beer, according to a filing today with a court in Wilmington, Delaware. The Leuven, Belgium-based company said in the filing that investors may need to fire the existing board because of St. Louis-based Anheuser-Busch's ``apparent plans to attempt to block the acquisition proposal.''
Before InBev's June 11 proposal, Anheuser-Busch Chief Executive Officer August A. Busch IV told the Belgian brewer that his company wasn't for sale and that ``he and his board are 'committed' to remain independent,''' InBev said in the filing. The brewer may reject the $65-a-share proposal this week, the Wall Street Journal reported yesterday.
U.S. Stocks Plunge To Levels From The Great Depression
U.S. stocks fell sharply Thursday with the blue-chip index enduring its worst June so far since 1930, and plunging to its lowest finish since Sept. 11, 2006, after getting slammed hard as crude soared to new highs and Goldman Sachs disparaged U.S. brokers and advised selling General Motors Corp.
"We're going to move in the opposite direction of oil, and General Motors is going to go out of business, at least according to Goldman Sachs," said Art Hogan, chief market strategist at Jefferies & Co.
The Dow Jones Industrial Average ($INDU) tumbled 358.41 points, or 3%, to 11,453.42, leaving it down nearly 1,200 points, or 9.4%, for the month, with two trading days yet to go. As things stand, the month is the worst June so far since 1930 when the index declined 17.72%.
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"We're going to move in the opposite direction of oil, and General Motors is going to go out of business, at least according to Goldman Sachs," said Art Hogan, chief market strategist at Jefferies & Co.
The Dow Jones Industrial Average ($INDU) tumbled 358.41 points, or 3%, to 11,453.42, leaving it down nearly 1,200 points, or 9.4%, for the month, with two trading days yet to go. As things stand, the month is the worst June so far since 1930 when the index declined 17.72%.
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Foreign central banks boost US debt holdings - Fed
Foreign central banks were net buyers of U.S. Treasury debt and U.S. federal agency debt in the latest week, U.S. Federal Reserve data showed on Thursday.
The Fed said its holdings of Treasury and agency debt kept for overseas central banks rose $13.50 billion in the week ended June 25, to stand at $2.334 trillion.
The breakdown showed overseas central banks bought $2.74 billion in Treasury debt, leaving the total at $1.362 trillion.
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The Fed said its holdings of Treasury and agency debt kept for overseas central banks rose $13.50 billion in the week ended June 25, to stand at $2.334 trillion.
The breakdown showed overseas central banks bought $2.74 billion in Treasury debt, leaving the total at $1.362 trillion.
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Sure Signs Of A Recession
Crude prices rise as the dollar hovers near record low and supply concerns persist. Analysts see $150 a barrel looming.
Oil prices touched a record high above $142 a barrel Friday, before easing a bit, as traders expect the dollar to remain weak and tense geopolitical situations continue to raise concerns about supply disruptions.
At 12:09 p.m. ET, light, sweet crude was up 70 cents to $140.34 a barrel on the New York Mercantile Exchange.
The front-month contract had hit an all-time high of $142.26 in electronic trading earlier.
Currency issues Many analysts say the dollar's decline has been a major driver of oil prices, which have more than doubled in the last year.
The dollar rose slightly against the euro early Friday, but it is still near an all-time low versus the euro zone currency.
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Oil prices touched a record high above $142 a barrel Friday, before easing a bit, as traders expect the dollar to remain weak and tense geopolitical situations continue to raise concerns about supply disruptions.
At 12:09 p.m. ET, light, sweet crude was up 70 cents to $140.34 a barrel on the New York Mercantile Exchange.
The front-month contract had hit an all-time high of $142.26 in electronic trading earlier.
Currency issues Many analysts say the dollar's decline has been a major driver of oil prices, which have more than doubled in the last year.
The dollar rose slightly against the euro early Friday, but it is still near an all-time low versus the euro zone currency.
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Oil hits $140 for the first time
Intraday and settlement records set on $5 surge as comments from OPEC, Libyan officials raise supply and price concerns.
Oil reached $140 a barrel for the first time ever Thursday following reports that Libya may cut production and an OPEC official said crude could hit $170 a barrel this summer.
Meanwhile, the dollar's decline against the euro added further upward price pressure.
"I think this is just a combination of all those" factors, said Mark Waggoner, president of Excel Futures in California.
Light, sweet crude for August delivery ended the trading day at a record settlement of $139.64 a barrel, up $5.09, on the New York Mercantile Exchange - the third-largest single-day jump on a dollar basis in trading history. The previous settlement mark of $138.54 was set June 6, when oil prices jumped a record of $10.75 a barrel.
Just before the close, oil spiked to an intraday record of $140.39 a barrel. The previous trading high of $139.89 was set June 16.
Read Complete StoryThursday, June 26, 2008
Buffett Says He's Concerned About U.S. `Stagflation'
Billionaire investor Warren Buffett says he's concerned about ``stagflation,'' or slowing in the U.S. economy while inflation accelerates.
``We're right in the middle of it right now,'' said Buffett, chairman of Omaha, Nebraska-based Berkshire Hathaway Inc., in an interview on Bloomberg Television today. ``I think the `flation' part will heat up and I think the `stag' part will get worse.''
Buffett, the world's richest person, runs a company with a $72 billion stock portfolio and businesses ranging from candy to corporate jet leasing and insurance. He's said the U.S. housing slump has been a drag on Berkshire's earnings, adding today he's unsure when the economy will recover.
``It's not going to be tomorrow, it's not going to be next month, and may not even be next year,'' said Buffett, 77.
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``We're right in the middle of it right now,'' said Buffett, chairman of Omaha, Nebraska-based Berkshire Hathaway Inc., in an interview on Bloomberg Television today. ``I think the `flation' part will heat up and I think the `stag' part will get worse.''
Buffett, the world's richest person, runs a company with a $72 billion stock portfolio and businesses ranging from candy to corporate jet leasing and insurance. He's said the U.S. housing slump has been a drag on Berkshire's earnings, adding today he's unsure when the economy will recover.
``It's not going to be tomorrow, it's not going to be next month, and may not even be next year,'' said Buffett, 77.
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A Major Victory for Texas
I am pleased to report that last week we received notice that the Texas Department of Transportation will recommend the I-69 Project be developed using existing highway facilities instead of the proposed massive new Trans Texas Corridor/NAFTA Superhighway. According to the Texas Transportation Commissioner, consideration is no longer being given to new corridors and other proposals for a new highway footprint for this project. A major looming threat to property rights and national sovereignty is removed with this encouraging announcement.
Public outcry was cited as the main reason for this decision. I was very impressed to learn that the TxDOT received nearly 28,000 public comments on this matter, and that some 12,000 Texans attended the 47 public hearings held earlier this year. They could not ignore this tsunami of strong public opinion against the proposed plans. I was especially proud of how informed my constituents became on the subject, and how eloquently and respectfully they spoke and conducted themselves, considering how upsetting the plans were for our communities in Texas .
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Public outcry was cited as the main reason for this decision. I was very impressed to learn that the TxDOT received nearly 28,000 public comments on this matter, and that some 12,000 Texans attended the 47 public hearings held earlier this year. They could not ignore this tsunami of strong public opinion against the proposed plans. I was especially proud of how informed my constituents became on the subject, and how eloquently and respectfully they spoke and conducted themselves, considering how upsetting the plans were for our communities in Texas .
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May's Top ETFs Like the Weak Dollar
When reviewing the top 10 rated exchange-traded funds and notes this month, an obvious theme emerges. As the U.S. dollar erodes in value, nine of the 10 funds directly benefit.
The U.S. Dollar Index compares our "greenbacks" to a basket of six major world currencies, and shows that we have lost 11.45% in the last year. Even after fractionally positive months of April and May, the year-to-date loss is 4.98%. The May 31 reports of shrinking industrial production and nonfarm payrolls coincided with CPI inflation running at 4.2% in the United States.
All of the top 10 funds received A+ ratings for the period ending May 31.
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The U.S. Dollar Index compares our "greenbacks" to a basket of six major world currencies, and shows that we have lost 11.45% in the last year. Even after fractionally positive months of April and May, the year-to-date loss is 4.98%. The May 31 reports of shrinking industrial production and nonfarm payrolls coincided with CPI inflation running at 4.2% in the United States.
All of the top 10 funds received A+ ratings for the period ending May 31.
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Now Euro Accepted By Member Countries Of The Asian Clearing Union
Central bank chiefs of the Asian Clearing Union (ACU) have agreed to introduce the Euro alongside the U.S. dollar for settlement of payments among the member countries beginning January, 2009.
The decision was made at the 37th ACU board of directors meeting held in Nay Pyi Taw, administrative capital of Myanmar, on June 17-18, officials said in Dhaka on Sunday.
'The ACU board has agreed in principle to allow Euro as an alternative currency alongside the U.S. dollar from January, 2009 aiming to make the payment system easier,' Bangladesh Bank (BB), the country's central bank, Governor Salehuddin Ahmed told AHN along with a group of reporters in the capital, Dhaka on the day after returning from Myanmar.
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The decision was made at the 37th ACU board of directors meeting held in Nay Pyi Taw, administrative capital of Myanmar, on June 17-18, officials said in Dhaka on Sunday.
'The ACU board has agreed in principle to allow Euro as an alternative currency alongside the U.S. dollar from January, 2009 aiming to make the payment system easier,' Bangladesh Bank (BB), the country's central bank, Governor Salehuddin Ahmed told AHN along with a group of reporters in the capital, Dhaka on the day after returning from Myanmar.
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Wednesday, June 25, 2008
Four years of gains in home prices wiped out
Case-Shiller: Prices fall in all 20 cities in past year; slimmer OFHEO decline
Home prices across 20 major U.S. cities have dropped a record 15.3% in the past year and are now back to where they were in the summer of 2004, according to the Case-Shiller home price index released Tuesday by Standard & Poor's.
Prices in the 20 cities are now down 17.8% from the peak two years ago.
Prices were lower in April than they were a year earlier in all 20 of the major metropolitan areas as tracked by the Case-Shiller index.
Las Vegas, Miami and Phoenix saw the biggest declines, with prices falling by 25% or more in the past year. Prices in 10 cities have fallen by more than 10%.
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Home prices across 20 major U.S. cities have dropped a record 15.3% in the past year and are now back to where they were in the summer of 2004, according to the Case-Shiller home price index released Tuesday by Standard & Poor's.
Prices in the 20 cities are now down 17.8% from the peak two years ago.
Prices were lower in April than they were a year earlier in all 20 of the major metropolitan areas as tracked by the Case-Shiller index.
Las Vegas, Miami and Phoenix saw the biggest declines, with prices falling by 25% or more in the past year. Prices in 10 cities have fallen by more than 10%.
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Consumer confidence tumbles to 16-year low
Conference Board's measure is the fifth lowest ever as consumers fret jobs and the business outlook.
A key measure of consumer confidence dropped in June to the fifth lowest reading ever, as Americans grew more concerned about their jobs and rising food and fuel prices.
The New York-based research group Conference Board said Tuesday that its Consumer Confidence Index dropped to 50.4 from a revised 58.1 in May. The reading was the lowest since
February 1992, when it was 47.3.
Economists had expected the index to decline to 56, according to Briefing.com.
Lynn Franco, director of the Conference Board, said the report is an indication that the economy is "stuck in low gear."
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A key measure of consumer confidence dropped in June to the fifth lowest reading ever, as Americans grew more concerned about their jobs and rising food and fuel prices.
The New York-based research group Conference Board said Tuesday that its Consumer Confidence Index dropped to 50.4 from a revised 58.1 in May. The reading was the lowest since
February 1992, when it was 47.3.
Economists had expected the index to decline to 56, according to Briefing.com.
Lynn Franco, director of the Conference Board, said the report is an indication that the economy is "stuck in low gear."
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Oil Woes Fail to Stir Leadership
Why is Rep. Randy Forbes all alone out there?
Rep. Forbes is an earnest Republican congressman from Virginia who has distinguished himself by calling for a "Manhattan Project" to fully end the U.S.'s dependence on foreign energy within 20 years. The Manhattan Project label harks back to the government's crash project to develop and field a nuclear weapon within just a few years to prevail in World War II.
The implication is that the country's fate is no less at stake now that its economy is being held hostage by a world oil market so out of control that even Saudi Arabia is watching helplessly. The surprise here lies not in Rep. Forbes's proposal, though it is an interesting call for mandated higher auto fuel efficiency and expanded use of biofuels and nuclear and solar power, overseen by a new national science commission and fueled by big cash prizes dangled before scientists to conjure up solutions.Read Complete Story
More Talk Of A Recession
Former Federal Reserve Chairman Alan Greenspan warned on Tuesday the U.S. economy was on the brink of a recession, with the chances of that happening at more than 50 percent.
The U.S. economy has been hit by a credit crisis which began in the sub-prime mortgage market, prompting a series of interest rate cuts to help boost the economy. But price pressures are growing, making more rate cuts unlikely.
Asked if the U.S. economy was in recession, Greenspan said: "We are on the brink."
A quick recovery was unlikely, he said via video link to a conference in Johannesburg. "A rebound at this stage is not something I think is in the immediate outlook," he said.
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The U.S. economy has been hit by a credit crisis which began in the sub-prime mortgage market, prompting a series of interest rate cuts to help boost the economy. But price pressures are growing, making more rate cuts unlikely.
Asked if the U.S. economy was in recession, Greenspan said: "We are on the brink."
A quick recovery was unlikely, he said via video link to a conference in Johannesburg. "A rebound at this stage is not something I think is in the immediate outlook," he said.
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Tuesday, June 24, 2008
Senators seek to block Iraq oil contracts
Schumer and Kerry appeal to Bush administration to stop no-bid deals with big companies until equal royalty distribution is guaranteed.
Two U.S. senators asked the Bush administration Tuesday to stop the Iraqi government from signing imminent no-bid contracts with several U.S. and European oil companies, expressing concern about the distribution of royalties from the deal.
Sen. Charles Schumer, D-N.Y., and Sen. John Kerry, D-Mass., sent a letter to Secretary of State Condoleezza Rice expressing concerns about a contract that the government of Iraq is preparing to sign with Exxon Mobil Corp., (XOM, Fortune 500) Royal Dutch Shell (RDSA), Total SA (TOT), Chevron Corp (CVX, Fortune 500)., BP (BP) and other companies. The contract would let those companies develop Iraq's largest oil fields.
The senators, who released the letter, said they are worried that unfair distribution of oil revenue could inflame the violence between the warring religious and political groups of Iraq.
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Two U.S. senators asked the Bush administration Tuesday to stop the Iraqi government from signing imminent no-bid contracts with several U.S. and European oil companies, expressing concern about the distribution of royalties from the deal.
Sen. Charles Schumer, D-N.Y., and Sen. John Kerry, D-Mass., sent a letter to Secretary of State Condoleezza Rice expressing concerns about a contract that the government of Iraq is preparing to sign with Exxon Mobil Corp., (XOM, Fortune 500) Royal Dutch Shell (RDSA), Total SA (TOT), Chevron Corp (CVX, Fortune 500)., BP (BP) and other companies. The contract would let those companies develop Iraq's largest oil fields.
The senators, who released the letter, said they are worried that unfair distribution of oil revenue could inflame the violence between the warring religious and political groups of Iraq.
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Consumer confidence tumbles to 16-year low
Conference Board's measure is the fifth lowest ever as consumers fret jobs and the business outlook.
A key measure of consumer confidence dropped in June to the fifth lowest reading ever, as Americans grew more concerned about their jobs and more pessimistic about business conditions.
The New York-based Conference Board said Tuesday that its Consumer Confidence Index dropped to 50.4 from a revised 58.1 in May. The reading was the lowest since February 1992, when it was 47.3.
Economists had expected the index to decline to 56, according to Briefing.com.
The Expectations Index - a measure of consumers' economic outlook for the future - hit an all-time low, declining to 41 from 47.3 in May.
The Present Situation Index, which measures how the average consumer feels about the economy right now decreased to 64.5 from 74.2 in May.
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A key measure of consumer confidence dropped in June to the fifth lowest reading ever, as Americans grew more concerned about their jobs and more pessimistic about business conditions.
The New York-based Conference Board said Tuesday that its Consumer Confidence Index dropped to 50.4 from a revised 58.1 in May. The reading was the lowest since February 1992, when it was 47.3.
Economists had expected the index to decline to 56, according to Briefing.com.
The Expectations Index - a measure of consumers' economic outlook for the future - hit an all-time low, declining to 41 from 47.3 in May.
The Present Situation Index, which measures how the average consumer feels about the economy right now decreased to 64.5 from 74.2 in May.
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As the Dollar Falls, Foreign Nationals Shop for U.S. Firms
In addition to iPods, laptops and other consumer goods, U.S. companies increasingly are found on the shopping lists of European, Canadian and other foreign buyers drawn to the United States by the falling U.S. dollar.
In 2007, foreign investors bought stakes in U.S. companies whose businesses range from financial services and real estate to steel making and lighting. Foreign acquisitions totaled a record $414 billion, almost 90 percent more than the previous year and almost 30 percent more than 2000's record, according to Thomson Financial, an economic data and research firm.
The relative weakness of the U.S. dollar creates opportunities for companies in countries with stronger currencies. They can buy U.S. businesses at bargain prices, according to economists.
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In 2007, foreign investors bought stakes in U.S. companies whose businesses range from financial services and real estate to steel making and lighting. Foreign acquisitions totaled a record $414 billion, almost 90 percent more than the previous year and almost 30 percent more than 2000's record, according to Thomson Financial, an economic data and research firm.
The relative weakness of the U.S. dollar creates opportunities for companies in countries with stronger currencies. They can buy U.S. businesses at bargain prices, according to economists.
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Monday, June 23, 2008
What's behind the dollar's decline in value?
Some say it's epochal, others merely cyclical. But part of it boils down to supply and demand: The world is awash in dollars these days.
The dollar has lost a big chunk of its global purchasing power since the end of 2001 -- an average of 37%, as measured by one index that tracks the greenback against other major currencies.
Gauging the decline is easy; explaining why the buck has slumped is much more complicated.
Some theories about the dollar's fall are grand in scale: for example, the concept that the buck's fate is a symptom of a fading U.S. empire.
Other explanations are largely technical, including the idea that currency values are cyclical, and that the dollar's downswing inevitably will give way to an upswing.
On some level, the dollar's shift has to be about basic supply and demand. The price of anything usually will decline if there is an excess of it in the marketplace.
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The dollar has lost a big chunk of its global purchasing power since the end of 2001 -- an average of 37%, as measured by one index that tracks the greenback against other major currencies.
Gauging the decline is easy; explaining why the buck has slumped is much more complicated.
Some theories about the dollar's fall are grand in scale: for example, the concept that the buck's fate is a symptom of a fading U.S. empire.
Other explanations are largely technical, including the idea that currency values are cyclical, and that the dollar's downswing inevitably will give way to an upswing.
On some level, the dollar's shift has to be about basic supply and demand. The price of anything usually will decline if there is an excess of it in the marketplace.
Read Complete Story
Saudi Arabia to boost oil output. Will gas prices fall?
At a rare meeting Sunday, some oil-producing nations tried to stabilize prices – and Western concerns over a recession.
Saudi Arabia will produce more oil – if customers need it – the kingdom's oil minister promised Sunday.
For the remainder of the year "Saudi Arabia is willing to produce additional barrels of crude oil above and beyond the 9.7 million barrels per day which we plan to produce during the month of July," Oil Minister Ali al-Naimi said at a rare meeting of the world's top energy officials in this Red Sea port town.
The unusual gathering was called by the Saudis to draw up a plan of action to address the unprecedented rise of oil prices and to defuse what Saudi officials see as an alarming political backlash against oil-exporting nations.
Mr. Naimi also said Sunday that the kingdom was willing to invest to boost its spare oil production capacity above the current 12.5 million barrels per day planned for the end of 2009, reversing previous statements that the country would not go beyond that figure.
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Saudi Arabia will produce more oil – if customers need it – the kingdom's oil minister promised Sunday.
For the remainder of the year "Saudi Arabia is willing to produce additional barrels of crude oil above and beyond the 9.7 million barrels per day which we plan to produce during the month of July," Oil Minister Ali al-Naimi said at a rare meeting of the world's top energy officials in this Red Sea port town.
The unusual gathering was called by the Saudis to draw up a plan of action to address the unprecedented rise of oil prices and to defuse what Saudi officials see as an alarming political backlash against oil-exporting nations.
Mr. Naimi also said Sunday that the kingdom was willing to invest to boost its spare oil production capacity above the current 12.5 million barrels per day planned for the end of 2009, reversing previous statements that the country would not go beyond that figure.
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Friday, June 20, 2008
Cap gains tax: How high can Obama go?
The candidate faces a tough question: How much can he raise long-term investment tax without sacrificing the revenue - and political support - he needs to fund his programs?
Barack Obama has made one part of his plan for the capital gains tax perfectly clear: He wants to raise the rate above 15% for high-income investors.
But to what level: 20%? 23%? 27%? All Obama has said is that it would be at least 20% and less than 28%.
The choice the presumptive Democratic nominee for president makes will matter to investors and to federal coffers. It's one of the many crucial tax details he and his advisers have yet to settle as they campaign against Republican rival John McCain.
One reason Obama says he wants to raise the rate is to establish more fairness in the tax system. A low rate directly benefits high-income taxpayers the most since they hold more taxable investments than everyone else.
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Barack Obama has made one part of his plan for the capital gains tax perfectly clear: He wants to raise the rate above 15% for high-income investors.
But to what level: 20%? 23%? 27%? All Obama has said is that it would be at least 20% and less than 28%.
The choice the presumptive Democratic nominee for president makes will matter to investors and to federal coffers. It's one of the many crucial tax details he and his advisers have yet to settle as they campaign against Republican rival John McCain.
One reason Obama says he wants to raise the rate is to establish more fairness in the tax system. A low rate directly benefits high-income taxpayers the most since they hold more taxable investments than everyone else.
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Fred Business News - A third of CEOs expect to slash payrolls
Nearly one-third of the country's top executives expect to cut payrolls in the coming months, reflecting fallout from the housing crisis as well as soaring energy prices.
At the same time, a survey by the Business Roundtable, released Wednesday, showed that most executives expect sales and capital investment to remain at current levels or even improve over the next six months.
That's consistent with expectations from the Federal Reserve and other economists who say they think the fragile economy will strengthen later this year and into next year - even as the nation's unemployment rate, a lagging indicator of business health, rises. As in the past, many employers won't want to ramp up hiring until they are sure the economy is really back on a firm footing.
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At the same time, a survey by the Business Roundtable, released Wednesday, showed that most executives expect sales and capital investment to remain at current levels or even improve over the next six months.
That's consistent with expectations from the Federal Reserve and other economists who say they think the fragile economy will strengthen later this year and into next year - even as the nation's unemployment rate, a lagging indicator of business health, rises. As in the past, many employers won't want to ramp up hiring until they are sure the economy is really back on a firm footing.
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WaMu Cuts 1,200 Jobs After Mortgage-Related Losses
Washington Mutual Inc., the biggest U.S. savings and loan, cut 1,200 jobs after losses tied to subprime home mortgages.
The Seattle-based company is eliminating positions in California, Florida, Illinois, Texas and Washington, spokeswoman Darcy Donahoe-Wilmot said today in an interview. The reductions represent 2.7 percent of the lender's 45,883 employees at the end of the first quarter.
Washington Mutual, among the top providers of subprime and adjustable-rate mortgages, racked up $3 billion in losses in the past two quarters, cut its dividend twice and stripped Chief Executive Officer Kerry Killinger of the chairman's position. The company is reducing its home-loan division, while focusing on building its retail business and managing expenses, Donahoe- Wilmot said.
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The Seattle-based company is eliminating positions in California, Florida, Illinois, Texas and Washington, spokeswoman Darcy Donahoe-Wilmot said today in an interview. The reductions represent 2.7 percent of the lender's 45,883 employees at the end of the first quarter.
Washington Mutual, among the top providers of subprime and adjustable-rate mortgages, racked up $3 billion in losses in the past two quarters, cut its dividend twice and stripped Chief Executive Officer Kerry Killinger of the chairman's position. The company is reducing its home-loan division, while focusing on building its retail business and managing expenses, Donahoe- Wilmot said.
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GM Says Almost 19,000 UAW Members Accepted Buyouts
General Motors Corp., in its final tally of union buyouts, said 18,657 United Auto Workers members accepted packages to leave the largest U.S. automaker, clearing the way for hiring lower-paid employees in its home market.
The UAW members, representing about one-quarter of GM's union workforce, will depart by July 1, GM spokesman Tony Sapienza said in an interview. GM has already begun hiring replacement workers who will start at lower wages, part of the national accord approved by the UAW in October.
The new workers start at about half the salary of current employees, helping Detroit-based GM in its efforts to slash costs and restore profit. The automaker has had three straight years of losses and is in the midst of a ninth straight annual U.S. sales decline.
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The UAW members, representing about one-quarter of GM's union workforce, will depart by July 1, GM spokesman Tony Sapienza said in an interview. GM has already begun hiring replacement workers who will start at lower wages, part of the national accord approved by the UAW in October.
The new workers start at about half the salary of current employees, helping Detroit-based GM in its efforts to slash costs and restore profit. The automaker has had three straight years of losses and is in the midst of a ninth straight annual U.S. sales decline.
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Wednesday, June 18, 2008
Obama: NAFTA not so bad after all
The Democratic nominee, in an exclusive interview with Fortune, says he wants free trade "to work for all people."
The general campaign is on, independent voters up for grabs, and Barack Obama is toning down his populist rhetoric - at least when it comes to free trade.
In an interview with Fortune to be featured in the magazine's upcoming issue, the presumptive Democratic nominee suggests he doesn't want to unilaterally blow up NAFTA after all.
"Sometimes during campaigns the rhetoric gets overheated and amplified," he conceded, after I reminded him that he had called NAFTA "devastating" and "a big mistake," despite nonpartisan
studies concluding that the trade zone has had a mild, positive effect on the U.S. economy.
Does that mean his rhetoric was overheated and amplified? "Politicians are always guilty of that, and I don't exempt myself," he answered.
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The general campaign is on, independent voters up for grabs, and Barack Obama is toning down his populist rhetoric - at least when it comes to free trade.
In an interview with Fortune to be featured in the magazine's upcoming issue, the presumptive Democratic nominee suggests he doesn't want to unilaterally blow up NAFTA after all.
"Sometimes during campaigns the rhetoric gets overheated and amplified," he conceded, after I reminded him that he had called NAFTA "devastating" and "a big mistake," despite nonpartisan
studies concluding that the trade zone has had a mild, positive effect on the U.S. economy.
Does that mean his rhetoric was overheated and amplified? "Politicians are always guilty of that, and I don't exempt myself," he answered.
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Ohio homeowners need a hand
U.S. Rep Maxine Waters, head of housing subcommittee, wants foreclosure rescue package by July 4; calls Countrywide exec 'poster child' for housing mess.
Congress must come together on a government rescue package to resolve the nation's foreclosure crisis, which has hit Ohio particularly hard, a leading House Democrat said Monday.
U.S. Rep. Maxine Waters, D-Calif., who chairs the subcommittee on Housing and Community Opportunity, told an audience at Cleveland State University that she hopes the House can negotiate a foreclosure rescue package with the Senate that will reach President Bush's desk by July 4.
Ohio has been particularly vulnerable to subprime lending and its aftereffects, Waters said.
"Because of the challenges it has faced economically over the past number of years with the loss of manufacturing jobs and population from certain parts of the state, Ohio was truly the canary in the coal mine of the foreclosure crisis," Waters said.
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Congress must come together on a government rescue package to resolve the nation's foreclosure crisis, which has hit Ohio particularly hard, a leading House Democrat said Monday.
U.S. Rep. Maxine Waters, D-Calif., who chairs the subcommittee on Housing and Community Opportunity, told an audience at Cleveland State University that she hopes the House can negotiate a foreclosure rescue package with the Senate that will reach President Bush's desk by July 4.
Ohio has been particularly vulnerable to subprime lending and its aftereffects, Waters said.
"Because of the challenges it has faced economically over the past number of years with the loss of manufacturing jobs and population from certain parts of the state, Ohio was truly the canary in the coal mine of the foreclosure crisis," Waters said.
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Forecast predicts slow economy for 18 more months
Housing prices may fall 25% to 30% off their peak
By the time the mortgage crisis is over nationwide, home prices may be 25 percent to 30 percent off their peak, potentially wiping out the value of the home equity of the average mortgage-holder, according to the projections by the UCLA Anderson Forecast.
The ailing housing market, a tight lending environment and rising prices at the gas station and supermarket will result in a sluggish economy for at least 18 more months, according to the forecast being released today.
“The economic outlook through the end of 2009 is decidedly subprime,” said David Shulman, a senior economist at the forecast.
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By the time the mortgage crisis is over nationwide, home prices may be 25 percent to 30 percent off their peak, potentially wiping out the value of the home equity of the average mortgage-holder, according to the projections by the UCLA Anderson Forecast.
The ailing housing market, a tight lending environment and rising prices at the gas station and supermarket will result in a sluggish economy for at least 18 more months, according to the forecast being released today.
“The economic outlook through the end of 2009 is decidedly subprime,” said David Shulman, a senior economist at the forecast.
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China rebukes US for economic ills
In a new twist, Chinese officials who have been getting an earful from Americans on how to run their economy are now openly rebuking the United States for the world's economic ills -- and even dispensing some advice.
From the plummeting US dollar to the American housing market crisis, which have wreaked havoc across the globe, Beijing has been hinting mismanagement on the part of Washington and cautioning about the dangers of keeping markets too open.
The self-confidence of the Chinese, riding on the crest of rapid economic growth on the back of 1.7 trillion dollars in foreign reserves, was highly evident at the bilateral cabinet-level talks that began in Annapolis, Maryland, east of Washington on Tuesday.
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From the plummeting US dollar to the American housing market crisis, which have wreaked havoc across the globe, Beijing has been hinting mismanagement on the part of Washington and cautioning about the dangers of keeping markets too open.
The self-confidence of the Chinese, riding on the crest of rapid economic growth on the back of 1.7 trillion dollars in foreign reserves, was highly evident at the bilateral cabinet-level talks that began in Annapolis, Maryland, east of Washington on Tuesday.
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Recession Causes Dollar To Struggle Against Foreign Currencies
The dollar traded near a one-week low against the euro as investors bet the Federal Reserve will keep interest rates unchanged next week, while the European Central Bank will increase borrowing costs in July.
The U.S. currency was also near its lowest in a week against the yen after reports in the U.S. yesterday showed housing starts fell in May to a 17-year low and industrial production unexpectedly declined. The British pound fell as minutes from the Bank of England's last meeting showed members voted 8-1 to keep rates unchanged.
``Fed watchers are raising doubts that the Fed may not be as aggressive as the market thinks,'' said Antje Praefcke, a Frankfurt-based currency strategist at Commerzbank AG, Germany's second-biggest lender. ``We've also had hawkish comments supporting the euro.''
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The U.S. currency was also near its lowest in a week against the yen after reports in the U.S. yesterday showed housing starts fell in May to a 17-year low and industrial production unexpectedly declined. The British pound fell as minutes from the Bank of England's last meeting showed members voted 8-1 to keep rates unchanged.
``Fed watchers are raising doubts that the Fed may not be as aggressive as the market thinks,'' said Antje Praefcke, a Frankfurt-based currency strategist at Commerzbank AG, Germany's second-biggest lender. ``We've also had hawkish comments supporting the euro.''
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Tuesday, June 17, 2008
Wholesale inflation spikes higher
Labor Department says prices, up a modest 0.2% in April, raced ahead in May at fastest pace in six months.
Wholesale prices bolted ahead in May at the fastest pace in six months as energy and food costs marched higher.
The Labor Department reported Tuesday that its Producer Price Index, which measures the costs of goods before they reach store shelves, shot up 1.4% in May. That was up from a modest 0.2% rise in April and marked the biggest increase since November.
However, stripping out energy and food prices, which can swing widely from month to month, the "core" rate of inflation rose 0.2% in May, an improvement from the prior month's 0.4% increase. That suggested that other prices were fairly well behaved.
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Wholesale prices bolted ahead in May at the fastest pace in six months as energy and food costs marched higher.
The Labor Department reported Tuesday that its Producer Price Index, which measures the costs of goods before they reach store shelves, shot up 1.4% in May. That was up from a modest 0.2% rise in April and marked the biggest increase since November.
However, stripping out energy and food prices, which can swing widely from month to month, the "core" rate of inflation rose 0.2% in May, an improvement from the prior month's 0.4% increase. That suggested that other prices were fairly well behaved.
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Industrial production dips in May
Output at nation's factories falls for second month in a row. Report falls short of economists' predictions.
Industrial production dipped in May, underscoring the strain on factories from the deep housing slump.
The Federal Reserve reported Tuesday that output at the nation's factories, mines and utilities fell 0.2% in May, following a 0.7% decline in April.
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Industrial production dipped in May, underscoring the strain on factories from the deep housing slump.
The Federal Reserve reported Tuesday that output at the nation's factories, mines and utilities fell 0.2% in May, following a 0.7% decline in April.
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New home construction falls in May
Government says the number of single family home starts slipped to a 17-year low.
Initial construction of U.S. homes was slightly lower than expected in May, with the number of single family homes hitting a 17-year low, according to a government report released Friday.
Privately owned housing starts fell 3.3% to a seasonally adjusted annual rate of 975,000 in May from April's revised 1,008,000, according to the Commerce Department.
Economists were expecting housing starts to decline to 980,000 from the originally reported 1,032,000, according to a consensus estimate of economists compiled by Briefing.com.
Michael Larson, real estate analyst at Weiss Research, said Tuesday's report shows "a market that's stuck in the doldrums."
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Initial construction of U.S. homes was slightly lower than expected in May, with the number of single family homes hitting a 17-year low, according to a government report released Friday.
Privately owned housing starts fell 3.3% to a seasonally adjusted annual rate of 975,000 in May from April's revised 1,008,000, according to the Commerce Department.
Economists were expecting housing starts to decline to 980,000 from the originally reported 1,032,000, according to a consensus estimate of economists compiled by Briefing.com.
Michael Larson, real estate analyst at Weiss Research, said Tuesday's report shows "a market that's stuck in the doldrums."
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Perot: “Economic crisis far greater than anything since the Great Depression”
Ross Perot, business leader and former presidential candidate, announced today the launch of “PerotCharts.com,” a public information website that contains objective, factual information about the current economic crisis in America. The site is being launched as an alert and appeal for American citizens to inform themselves about federal government spending. Perot said, “The U.S. national debt reached $9.4 TRILLION on April 30, and it is increasing by more than $1 billion every day. We are leaving our children and grandchildren with debt they cannot possibly pay.”
PerotCharts.com consists of three major components: a video featuring Ross Perot discussing the purpose of the website, a blog where new charts and other information are posted daily for study and comment, and a narrated chart presentation explaining the economic problems our country faces.
The website is not affiliated with any political party or candidate. Most of the data and research for the charts is gathered from official government sources.
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PerotCharts.com consists of three major components: a video featuring Ross Perot discussing the purpose of the website, a blog where new charts and other information are posted daily for study and comment, and a narrated chart presentation explaining the economic problems our country faces.
The website is not affiliated with any political party or candidate. Most of the data and research for the charts is gathered from official government sources.
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Monday, June 16, 2008
The Bubble
Indeed, Pinnacle's party would soon end, along with the nation's housing euphoria. The company has all but disappeared, along with dozens of other mortgage firms, tens of thousands of jobs on Wall Street and the dreams of about 1 million proud new homeowners who lost their houses.
The aftershocks of the housing market's collapse still rumble through the economy, with unemployment rising, companies struggling to obtain financing and the stock market more than 10 percent below its peak last fall. The Federal Reserve has taken unprecedented action to stave off a recession, slashing interest rates and intervening to save a storied Wall Street investment bank. Congress and federal agencies have launched investigations into what happened: wrongdoing by mortgage brokers, lax lending standards by banks, failures by watchdogs.
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The aftershocks of the housing market's collapse still rumble through the economy, with unemployment rising, companies struggling to obtain financing and the stock market more than 10 percent below its peak last fall. The Federal Reserve has taken unprecedented action to stave off a recession, slashing interest rates and intervening to save a storied Wall Street investment bank. Congress and federal agencies have launched investigations into what happened: wrongdoing by mortgage brokers, lax lending standards by banks, failures by watchdogs.
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Canadian banks seen hitting U.S. acquisition trail
Canada's big banks have weathered the credit crunch in relatively good shape and should swoop in to buy some ailing U.S. banks, observers say.
Royal Bank of Canada (RY.TO: Quote, Profile, Research), the country's largest bank, and Bank of Montreal (BMO.TO: Quote, Profile, Research), the fifth largest by market value, are best positioned to make U.S. acquisitions, CIBC World Markets analyst Darko Mihelic said on Friday in a research note entitled "Fish or Cut Bait."
The banks have excess capital to use and relatively clean balance sheets, Mihelic noted.
"Perhaps now is the time to think big," he wrote.
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Royal Bank of Canada (RY.TO: Quote, Profile, Research), the country's largest bank, and Bank of Montreal (BMO.TO: Quote, Profile, Research), the fifth largest by market value, are best positioned to make U.S. acquisitions, CIBC World Markets analyst Darko Mihelic said on Friday in a research note entitled "Fish or Cut Bait."
The banks have excess capital to use and relatively clean balance sheets, Mihelic noted.
"Perhaps now is the time to think big," he wrote.
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Inflation getting 'uglier and uglier'
Surging energy prices help drive annual cost-of-living rate rise to 4.2%.
The cost of living rose in May as consumers were belted by energy costs, the government said Friday.
The Consumer Price Index, a key inflation reading, rose 4.2% through the 12 months ended in May, according to the Labor Department. This compared to an increase of 3.9% during the 12 months ended in April.
For the month of May, overall CPI rose 0.6%, compared to an increase of 0.2% in April. That's the biggest increase since last November, when the overall CPI surged 0.9%. A consensus of analysts interviewed by Briefing.com had projected an increase of 0.5% for May.
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The cost of living rose in May as consumers were belted by energy costs, the government said Friday.
The Consumer Price Index, a key inflation reading, rose 4.2% through the 12 months ended in May, according to the Labor Department. This compared to an increase of 3.9% during the 12 months ended in April.
For the month of May, overall CPI rose 0.6%, compared to an increase of 0.2% in April. That's the biggest increase since last November, when the overall CPI surged 0.9%. A consensus of analysts interviewed by Briefing.com had projected an increase of 0.5% for May.
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Nearly Half of Wall St. Bank Profits Are Gone
Only a year ago, Wall Street reveled in an era of superlatives: record deals, record profit, record pay. But a mere 12 months later, nearly half of the profits that major banks reaped during that age of riches have vanished.
The numbers are staggering. Between early 2004 and mid-2007, a period of unprecedented wealth on Wall Street, seven of the nation’s largest financial companies earned a combined $254 billion in profits.
But since last July, those same banks — Bank of America, Citigroup, JPMorgan Chase, Lehman Brothers, Merrill Lynch, Goldman Sachs and Morgan Stanley — have written down the value of the assets they hold by $107.2 billion, gutting their earnings and share prices. Worldwide, the reckoning totals $380 billion, much of which reflects a plunge in the value of tricky mortgage investments.
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The numbers are staggering. Between early 2004 and mid-2007, a period of unprecedented wealth on Wall Street, seven of the nation’s largest financial companies earned a combined $254 billion in profits.
But since last July, those same banks — Bank of America, Citigroup, JPMorgan Chase, Lehman Brothers, Merrill Lynch, Goldman Sachs and Morgan Stanley — have written down the value of the assets they hold by $107.2 billion, gutting their earnings and share prices. Worldwide, the reckoning totals $380 billion, much of which reflects a plunge in the value of tricky mortgage investments.
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Oil makes sudden $5 surge to record
Crude prices hold steady as traders look ahead to Saudi oil meeting.
Oil prices spiked more than $5 a barrel on Monday to a trading record of $139.89 before pulling back.
Light, sweet crude for July delivery was up $3.66 cents at $138.52 a barrel at 9 a.m. ET. On Friday, oil fell $1.88 to settle at $134.86.
Saudi Arabia, the world's largest oil producer, told U.N. chief Ban Ki-moon over the weekend that it would boost output by 200,000 barrels a day, or by 2%, from June to July. In May, the kingdom raised production by 300,000 barrels a day, but this was ignored by the oil market partly due to strong global demand.
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Oil prices spiked more than $5 a barrel on Monday to a trading record of $139.89 before pulling back.
Light, sweet crude for July delivery was up $3.66 cents at $138.52 a barrel at 9 a.m. ET. On Friday, oil fell $1.88 to settle at $134.86.
Saudi Arabia, the world's largest oil producer, told U.N. chief Ban Ki-moon over the weekend that it would boost output by 200,000 barrels a day, or by 2%, from June to July. In May, the kingdom raised production by 300,000 barrels a day, but this was ignored by the oil market partly due to strong global demand.
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Friday, June 13, 2008
House passes jobless benefits extension
On second try, House extends unemployment benefits beyond the 6-month limit; measure still faces uphill fight to final approval.
A measure to extend unemployment benefits from 26 weeks to 39 weeks passed the House on a second try Thursday but the bill still faces numerous hurdles.
The measure fell three votes short of the two-thirds majority vote needed for approval Wednesday but only a simple majority was needed for passage Thursday.
The measure will help many of the country's 1.6 million job seekers who have been out of work more than six months and have therefore seen their unemployment benefits run out.
Les Tarlton is one of them. He's been out of work since the end of 2003, when the suburban Dallas resident was laid-off by Swedish cell phone maker Ericsson.
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A measure to extend unemployment benefits from 26 weeks to 39 weeks passed the House on a second try Thursday but the bill still faces numerous hurdles.
The measure fell three votes short of the two-thirds majority vote needed for approval Wednesday but only a simple majority was needed for passage Thursday.
The measure will help many of the country's 1.6 million job seekers who have been out of work more than six months and have therefore seen their unemployment benefits run out.
Les Tarlton is one of them. He's been out of work since the end of 2003, when the suburban Dallas resident was laid-off by Swedish cell phone maker Ericsson.
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Inflation getting 'uglier and uglier'
Surging energy prices help drive annual cost-of-living rate rise to 4.2%.
The cost of living rose in May as consumers were belted by energy costs, the government said Friday.
The Consumer Price Index, a key inflation reading, rose 4.2% through the 12 months ended in May, according to the Labor Department. This compared to an increase of 3.9% during the 12 months ended in April.
For the month of May, overall CPI rose 0.6%, compared to an increase of 0.2% in April. That's the biggest increase since last November, when the overall CPI surged 0.9%. A consensus of analysts interviewed by Briefing.com had projected an increase of 0.5% for May.
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The cost of living rose in May as consumers were belted by energy costs, the government said Friday.
The Consumer Price Index, a key inflation reading, rose 4.2% through the 12 months ended in May, according to the Labor Department. This compared to an increase of 3.9% during the 12 months ended in April.
For the month of May, overall CPI rose 0.6%, compared to an increase of 0.2% in April. That's the biggest increase since last November, when the overall CPI surged 0.9%. A consensus of analysts interviewed by Briefing.com had projected an increase of 0.5% for May.
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FORECLOSURES HIT NYC LIKE A BRICK
How big has New York City's foreclosure problem become?
"Two years ago, there were just a few selected ZIP codes where [foreclosures] were bad," says Matthew Haines, the founder of PropertyShark.com, which tracks foreclosures in the five boroughs. "Now there are whole areas - areas that contain 12 or 15 ZIP codes - that are really bad."
With foreclosures hitting the five boroughs hard, even responsible homeowners are going to feel the pinch. Just one foreclosed house can bring down property values on an entire block (see story on next page).
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"Two years ago, there were just a few selected ZIP codes where [foreclosures] were bad," says Matthew Haines, the founder of PropertyShark.com, which tracks foreclosures in the five boroughs. "Now there are whole areas - areas that contain 12 or 15 ZIP codes - that are really bad."
With foreclosures hitting the five boroughs hard, even responsible homeowners are going to feel the pinch. Just one foreclosed house can bring down property values on an entire block (see story on next page).
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Home price drop means $4 trillion in lost capital
No one knows when the credit crisis will end.
But when it does, U.S home prices may have lost a third of their value, high-yield bond valuations will hit levels close to those seen during the last recession, and what may amount to $1 trillion of Wall Street losses may translate into almost $4 trillion of lost access to capital.
That's the view of top credit analysts, who say a U.S. housing decline, sparked last year by subprime mortgage debt defaults, will likely last another two years as a wider group of consumers, including prime borrowers, feel the pinch from a tightening of credit.
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But when it does, U.S home prices may have lost a third of their value, high-yield bond valuations will hit levels close to those seen during the last recession, and what may amount to $1 trillion of Wall Street losses may translate into almost $4 trillion of lost access to capital.
That's the view of top credit analysts, who say a U.S. housing decline, sparked last year by subprime mortgage debt defaults, will likely last another two years as a wider group of consumers, including prime borrowers, feel the pinch from a tightening of credit.
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Report: $4 gas likely through 2009
Tight supply and high demand will keep the price of gasoline at $4 or above through 2009, according to the U.S. Department of Energy.
The Associated Press reported Wednesday that Guy Caruso, head of the Energy Information Administration, told a House hearing that crude oil prices will likely average $126 a barrel in 2009. Gas prices will hit $4.15 a gallon in August, and won't fall much after that, he stated.
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The Associated Press reported Wednesday that Guy Caruso, head of the Energy Information Administration, told a House hearing that crude oil prices will likely average $126 a barrel in 2009. Gas prices will hit $4.15 a gallon in August, and won't fall much after that, he stated.
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Monday, June 9, 2008
Consumer debt jumps $8.9 billion
Personal debt rises as Americans take out more fixed-payment loans.
Americans' personal debt jumped to a more-than-expected $2.6 trillion in April, according to a report from the Federal Reserve released Friday.
The total debt held by individuals rose $8.9 billion from the prior month. Analysts polled by Briefing.com had expected personal debt to increase by only $7 billion.
The category of debt that includes credit cards, referred to as "revolving credit," rose by a mere $300 million, while the category that includes fixed-payment loans, such as student and car loans, jumped $8.7 billion.
The government report excludes mortgages and home equity loans.
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Americans' personal debt jumped to a more-than-expected $2.6 trillion in April, according to a report from the Federal Reserve released Friday.
The total debt held by individuals rose $8.9 billion from the prior month. Analysts polled by Briefing.com had expected personal debt to increase by only $7 billion.
The category of debt that includes credit cards, referred to as "revolving credit," rose by a mere $300 million, while the category that includes fixed-payment loans, such as student and car loans, jumped $8.7 billion.
The government report excludes mortgages and home equity loans.
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U.K. Producer Prices Rise at Fastest Pace Since 1986
U.K. producer prices increased at the quickest pace in two decades in May, increasing the odds the Bank of England will refrain from interest-rate cuts even as the economy veers toward a recession.
Prices charged by factories rose 1.6 percent from April, the Office for National Statistics said in London today. That's the most since comparable records began in 1986 and double the 0.8 percent median forecast of 32 economists in a Bloomberg News survey. From a year earlier, prices rose 8.9 percent.
The pound rose and U.K. two-year notes fell the most in a decade after the report gave the clearest sign to date that manufacturers are passing the burden of record oil costs onto customers. The Bank of England kept its benchmark interest rate unchanged last week after Governor Mervyn King signaled there is little scope to lower borrowing costs as inflation accelerates.
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Prices charged by factories rose 1.6 percent from April, the Office for National Statistics said in London today. That's the most since comparable records began in 1986 and double the 0.8 percent median forecast of 32 economists in a Bloomberg News survey. From a year earlier, prices rose 8.9 percent.
The pound rose and U.K. two-year notes fell the most in a decade after the report gave the clearest sign to date that manufacturers are passing the burden of record oil costs onto customers. The Bank of England kept its benchmark interest rate unchanged last week after Governor Mervyn King signaled there is little scope to lower borrowing costs as inflation accelerates.
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Pending Sales of Existing Homes Unexpectedly Rise
The number of Americans signing contracts to buy existing homes unexpectedly rose as the first national drop in prices since the 1930s lured buyers back into the market in the West, Midwest and South.
The index of pending home resales jumped 6.3 percent in April, the most since 2001, after a 1 percent drop in March, the National Association of Realtors said today in Washington. The March reading was the lowest level since the NAR started keeping records eight years ago.
The figures may be a sign that the glut of 5 million unsold properties may be on the way down, which economists say is a prerequisite for stabilization in the industry. Federal Reserve Chairman Ben S. Bernanke warned last week that the economy will remain in danger of weakening further until housing reaches a bottom
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The index of pending home resales jumped 6.3 percent in April, the most since 2001, after a 1 percent drop in March, the National Association of Realtors said today in Washington. The March reading was the lowest level since the NAR started keeping records eight years ago.
The figures may be a sign that the glut of 5 million unsold properties may be on the way down, which economists say is a prerequisite for stabilization in the industry. Federal Reserve Chairman Ben S. Bernanke warned last week that the economy will remain in danger of weakening further until housing reaches a bottom
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Gas price record reaches $4 a gallon
AAA's daily survey tops the milestone for the first time after a 1.7-cent rise. Lundberg survey nears $4 as well.
Gasoline rose to a milestone mark Sunday as the national average compiled by motorist group AAA reached $4 a gallon for the first time.
In a second survey, the average price came within 0.2 cent of $4 a gallon in the Lundberg Survey, which showed a 20-cent rise in the past three weeks to a new record.
The national average for regular unleaded rose 1.7 cents to $4.005, according the daily measure on the AAA's Web site. That surpassed the previous record of $3.989 set Thursday.
The milestone was expected after a surge in crude oil prices added more than $16 to a barrel of oil over the last 2 trading days. Crude settled at a record $138.54 a barrel Friday, up by $10.75, after setting an all-time intraday high of $139.12.
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Gasoline rose to a milestone mark Sunday as the national average compiled by motorist group AAA reached $4 a gallon for the first time.
In a second survey, the average price came within 0.2 cent of $4 a gallon in the Lundberg Survey, which showed a 20-cent rise in the past three weeks to a new record.
The national average for regular unleaded rose 1.7 cents to $4.005, according the daily measure on the AAA's Web site. That surpassed the previous record of $3.989 set Thursday.
The milestone was expected after a surge in crude oil prices added more than $16 to a barrel of oil over the last 2 trading days. Crude settled at a record $138.54 a barrel Friday, up by $10.75, after setting an all-time intraday high of $139.12.
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Unemployment spike stirs stimulus talk
Democratic leaders in Congress call for new measures to spur economy and help unemployed.
The dismal jobs report on Friday has prompted renewed calls for a second congressional effort to stimulate the economy.
The Labor Department reported that the unemployment rate jumped to 5.5% in May from 5% a month earlier. It was the biggest monthly increase in more than 20 years.
Democratic leaders on Capitol Hill said the report shows that Congress and the Bush administration need to do more to help workers and the unemployed.
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The dismal jobs report on Friday has prompted renewed calls for a second congressional effort to stimulate the economy.
The Labor Department reported that the unemployment rate jumped to 5.5% in May from 5% a month earlier. It was the biggest monthly increase in more than 20 years.
Democratic leaders on Capitol Hill said the report shows that Congress and the Bush administration need to do more to help workers and the unemployed.
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Unemployment pain to continue - index
A new employment trends measure from the Conference Board signals that more months of job losses lie ahead.
Unemployment is likely to continue to rise as companies cut more jobs, according to a new index from a respected business research group released Monday.
The Conference Board's Employment Trends Index (ETI) uses eight widely followed readings on employment and economic activity from both government and industry sources.
The Conference Board said the decline in the index's May reading suggests that the labor market hasn't yet hit bottom. The organization has computed the index readings back 35 years and found that it accurately predicts all turns in the labor market accurately during that period.
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Unemployment is likely to continue to rise as companies cut more jobs, according to a new index from a respected business research group released Monday.
The Conference Board's Employment Trends Index (ETI) uses eight widely followed readings on employment and economic activity from both government and industry sources.
The Conference Board said the decline in the index's May reading suggests that the labor market hasn't yet hit bottom. The organization has computed the index readings back 35 years and found that it accurately predicts all turns in the labor market accurately during that period.
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