On Friday February 11, 2011, 6:14 pm EST
White House: Limit gov't
backing of mortgages
WASHINGTON (AP) -- The
Obama administration is proposing to shrink the government's role in the
mortgage market. The only question is how much -- an issue it's leaving to
Congress.
The administration laid out
three broad options Friday for gradually dissolving the financially teetering
mortgage giants Fannie Mae and Freddie Mac, whose bailouts already have cost
taxpayers $150 billion. All three aim to draw more private money into the
mortgage market, eventually replacing much of the government's support.
Whatever path the
government chooses, it will reverse years of federal policy designed to boost
home ownership. And mortgage rates and costs are all but certain to rise over
time.
The administration's three
options are:
-- No government role,
except for existing agencies like the Federal Housing Administration, which
serves low- and moderate-income borrowers.
-- A government guarantee
of private mortgages triggered only when the market is in trouble.
-- Government insurance for
a targeted range of mortgage investments that already are guaranteed by private
insurers. The government guarantee would kick in only if those private
companies couldn't pay.
By handing the decision to
Congress, the administration sidesteps a complex and politically explosive
issue that already has stirred years of debate. The options have been discussed
for years as well.
Nokia, Microsoft in pact to
rival Apple, Google
HELSINKI (AP) -- Technology
titans Nokia and Microsoft are joining forces to make smart phones in a push to
challenge rivals like Apple and Google, hoping to revive their own fortunes in
a market they have struggled to keep up with.
Nokia Corp., the world's
largest cell phone maker, said Friday it will use Microsoft Corp.'s Windows
Phone software as the main platform for its smart phones in an effort to
recover lost share from Apple's iPhone and Android, Google's software for
phones and tablets.
The move marks a major
strategy shift for Nokia, which has previously equipped devices with its own
open-share software. Analysts said the deal was a bigger win for Microsoft than
Nokia.
Nokia is still the biggest
handset maker but its market share has tumbled from 41 percent in 2008 to 31
percent at the end of 2010.
It has also lost its
innovative edge in the fiercely competitive top-end sector and is virtually
invisible -- with a 3 percent share -- in the world's largest smart phone
market, North America.
Apples' iPhone has set the
standard for today's smart phones and Research In Motion Ltd.'s BlackBerrys
have become the favorite of the corporate set. More recently, Google Inc.'s
Android software has emerged as the choice for phone makers that want to challenge
the iPhone.
Investors return to US
stock funds in January
BOSTON (AP) -- There's
another sign that investors' confidence is returning: Last month they added
money to U.S. stock mutual funds at the fastest clip in seven years. The
year-opening surge also marked the first time in nine months that investors
added more than they withdrew.
All told, investors
deposited a net $21.3 billion to U.S. stock funds in January, the biggest
monthly increase since a net inflow of $23 billion in February 2004, industry
consultant Strategic Insight said Friday.
Last month's surge also
snapped a string of net withdrawals that began in May. The last time there was
a positive inflow of cash into domestic stock funds was April, when a net $11
billion came in.
Investors soon reversed
course after the stock market's May 6 "flash crash" single-day
plunge. Fears about Europe's government debt crisis also peaked that month.
But the stock market has
now risen five consecutive months, and the Standard & Poor's 500 index is
up about 26 percent since Sept. 1. Corporate earnings are approaching record
levels, and most economic indicators suggest the recovery is gaining momentum.
Trade deficit widens to
$40.6 billion in December
WASHINGTON (AP) -- The
trade deficit widened in December as rising oil prices pushed the value of
imports up faster than U.S. exports.
The deficit increased 5.9
percent in December to $40.6 billion, the Commerce Department reported Friday.
U.S. exports of goods and
services rose to $163 billion, a 1.8 percent gain and the best showing since
July 2008. Sales of industrial machinery, civilian aircraft and autos and auto
parts led the export gain.
But imports rose even
faster. A 2.6 percent gain pushed total U.S. imports to $203.5 billion, the
highest level since October 2008. The increase was led by a 16.8 percent rise
in imported oil. The average price for a barrel of imported crude oil climbed
to $79.78 in December, the highest point since crude imports averaged $91.73
per barrel in October 2008.
A widening deficit is bad
for the U.S. economy. When imports outpace exports, more jobs go to overseas
workers than to U.S. workers.
For all of 2010, the U.S.
trade deficit rose to $497.8 billion, a 32.8 percent surge. It was the biggest
annual percentage gain since 2000. In 2009, the deficit had fallen to the
lowest point in eight years as demand for imports plunged.
Mubarak's resignation
revives investor hope
CAIRO (AP) -- President
Hosni Mubarak's resignation offered new hope for a rebound in bruised investor
confidence in Egypt, with the cost of insuring the country's sovereign debt
retreating sharply. Analysts and economists cautioned that other questions
remained, such as the pace of reform and what role the military would play.
Friday's announcement was
made by Vice President Omar Suleiman, who said Mubarak was handing control of
the country over to the military. Mubarak's exit signaled an apparent end to
the nearly three-week crisis, which many had feared would descend into violence
and cripple the country politically and economically.
In an indication of the
easing of investor angst, the country's five-year credit default swaps dropped
24 basis points to 313 basis points, according to CMA data. Meanwhile, the
Market Vectors Egypt Index ETF -- which allows investors to invest in Egyptian
stocks -- was up about 4.3 percent to $18.52. It had reached almost 6.7 percent
within minutes of the resignation announcement.
But plenty of questions
remained about the next steps, and whether the president's resignation would be
enough to appease millions whose demands included the dismantling of his entire
regime.
Kinder Morgan shares jump
in market debut
NEW YORK (AP) -- Another
sign that the IPO market is getting hotter: The pipeline company Kinder Morgan
raised $2.86 billion in the biggest ever initial public offering for a U.S.
company backed by private equity firms.
Kinder Morgan was able to
sell more shares at a higher price than it anticipated. Investors pushed shares
more than 3 percent above their $30 offering price in afternoon trading.
The size of the deal and
the market's positive response are encouraging signals to companies eager to
access the public markets.
Last month Nielsen Holdings
NV's IPO raised $1.9 billion, then a record for a private equity-backed
company.
Kinder Morgan, based in
Houston, moves gas, oil and other fuels through 37,000 miles of pipeline and
180 terminals. Investors hope the company will benefit from increasing
production from newly unlocked natural gas and oil in shale formations across
the U.S.
All of the proceeds from
the offering will go to the owners, Goldman Sachs, Highstar Capital LP, The
Carlyle Group and Riverstone Holdings, which took Kinder private in 2007.
Private equity firms that
bought companies in 2005 and 2006 have been itching to take them public, but
have been waiting for market conditions to improve.
ConocoPhillips boosts
dividend, buybacks
NEW YORK (AP) --
ConocoPhillips said Friday it will reward investors with a 20 percent dividend
increase and a plan to buy back $10 billion of shares.
The Houston oil producer
will pay 66 cents per share on March 1 to shareholders of record on Feb. 22.
The share repurchase plan, if completed, would more than double the amount
spent on buybacks last year. Repurchasing shares takes them off the open market
and pushes remaining shares higher.
Conoco has been aggressive
in rewarding shareholders while transforming its business with the sale of some
oil-producing assets during the past few years. The sales helped Conoco boost
earnings last year nearly threefold to $11.4 billion.
Morningstar Inc. analyst
Allen Good said Conoco wants to make up for poorly timed acquisitions,
including a $35 billion deal for Burlington Resources, that haven't been worth
as much as the company paid.
The company is focusing on
its North American properties and using proceeds from the asset sales to pay
back shareholders. The stock repurchase program is the industry's largest
behind Exxon Mobil Corp., Good said.
Big recall of baby monitors
linked to 2 deaths
WASHINGTON (AP) -- Nearly 2
million Summer Infant video baby monitors were recalled Friday after being
linked to the strangulation deaths of two infants.
The Consumer Product Safety
Commission says the electrical cords on the monitors can be dangerous for
babies if placed too close to their cribs.
According to the
commission, a 10-month-old girl from Washington, D.C., died in March when she
strangled on the cord of a Summer Infant monitor camera that had been placed on
the top of the crib rail. In November, a 6-month-old boy from Conway, S.C.,
strangled in the electrical cord of a baby monitor placed on the changing table
attached to his crib.
CPSC and Summer Infant are
also aware of a 20-month-old boy from Pittsburgh who nearly strangled on a
camera cord that was mounted to the wall in reach of the child.
Moody's downgrades Irish
banks on election worries
LONDON (AP) -- Ratings
agency Moody's downgraded the creditworthiness of six Irish banks on Friday as
politicians nearing a national election argued about when, or whether, the
banks will get a further capital injection.
Moody's Investors Service
cited doubts over whether the banks will get a new cash infusion which was due
at the end of the month. The current government has put off the issue until
after the Feb. 25 election, and the opposition parties most likely to form the
next government oppose further aid for banks.
Ratings for the banks'
unguaranteed senior unsecured debt were cut to junk status for Bank of Ireland,
Allied Irish Banks, EBS Building Society and Irish Life & Permanent. The
long-term unguaranteed senior unsecured debt of Anglo Irish Bank and Irish
Nationwide Building Society, already rated as junk, were downgraded further.
Finance Minister Brian
Lenihan announced on Wednesday that the government would not be putting up to
euro10 billion ($13.6 billion) into the banks before the election, saying that
the outgoing government no longer had a mandate to do so. However, Lenihan said
he would advance the cash if the leaders of the Fine Gael and Labour parties --
which are favored to form the next government -- would formally request that
the money be committed.
Fine Gael and Labour both
say they intend to renegotiate terms of the euro67.5 billion ($92 billion)
bailout the government received from the European Central Bank and
International Monetary Fund last year.
German Bundesbank head to
step down early
BERLIN (AP) -- The head of
Germany's Bundesbank, who was long a favorite to become the European Central
Bank's next president, is stepping down a year early for personal reasons, the
government said Friday.
The government announced
Axel Weber's decision to quit on April 30 after the Bundesbank president met
behind closed doors with Chancellor Angela Merkel and Finance Minister Wolfgang
Schaeuble, following days of confusion over his future.
Merkel and Schaeuble
"took note of this decision with respect for Prof. Weber's personal
reasons," Merkel's spokesman Steffen Seibert said in a brief statement,
adding that a successor would be named next week.
Neither the government nor
the Bundesbank would provide immediate elaboration or discuss Weber's future
plans. A similarly terse Bundesbank statement also cited unspecified personal
reasons.
Neither mentioned the ECB
presidency, for which Weber had never been formally proposed, but recent days'
events had made his candidacy look increasingly unlikely.
Weber, 53, unexpectedly
indicated earlier this week that he may not seek a new eight-year term at the
Bundesbank when his current one expires next year, but otherwise stayed silent
on his future ahead of Friday's meeting.
European leaders will have
to agree on a new president for the ECB, which sets interest rates for the
17-nation eurozone and has been central to fighting its debt crisis, before
Frenchman Jean-Claude Trichet's eight-year term expires at the end of October.
Weber had long been viewed
as a front-runner, along with Bank of Italy governor Mario Draghi.
By The Associated Press
The Dow Jones industrial
average rose 43.97, or 0.4 percent, to 12,273.26, its highest close since June
2008. For the week, the Dow rose 1.5 percent.
The Standard & Poor's
500 index rose 7.28, or 0.6 percent, to 1,329.15. It rose 1.4 percent for the
week. The Nasdaq composite index rose 18.99, or 0.7 percent, to 2,809.44. It
rose 1.4 percent for the week.
Benchmark West Texas
Intermediate crude for March delivery fell $1.15 to settle at $85.58 a barrel
on the New York Mercantile Exchange.
In other Nymex trading for
March contracts, heating oil fell 1.49 cents to settle at $2.6958 per gallon
and gasoline lost less than a penny to settle at $2.4652 per gallon. Natural
gas lost 7.6 cents to settle at $3.910 per 1,000 cubic feet.
In London, Brent crude fell
50 cents to settle at $100.94 a barrel on the ICE Futures Exchange.