On Wednesday February 23, 2011, 6:40 pm
Investors snap up cheap
homes, new buyers miss out
WASHINGTON (AP) -- Home
sales are starting to tick up after the worst year in more than a decade. But
the momentum is coming from cash-rich investors who are scooping up foreclosed
properties at bargain prices, not first-time homebuyers who are critical for a
housing recovery.
The number of first-time
buyers fell last month to the lowest percentage in nearly two years, while
all-cash deals have doubled and now account for one-third of sales.
A record number of
foreclosures have forced home prices down in most markets. The median sales
price for a home fell last month to its lowest level in nearly nine years,
according to the National Association of Realtors.
Lower prices would normally
be good for first-time homebuyers. But tighter lending standards have kept many
from taking advantage of them. With fewer new buyers shopping, potential repeat
buyers are hesitant to put their homes on the market and upgrade.
Cash-only investors are
most interested in properties at risk of foreclosure. They can get those at
bargain-basement prices.
Sales of previously
occupied homes rose slightly in January to a seasonally adjusted annual rate of
5.36 million, the Realtors group said Wednesday. That's up 2.7 percent from
5.22 million in December.
Still, the pace remains far
below the 6 million homes a year that economists say represents a healthy
market. And the number of first-time homebuyers fell to 29 percent of the
market -- the lowest percentage of the market in nearly two years. A more
healthy level of first-time homebuyers is about 40 percent, according to the
trade group.
Oil prices hit $100 per
barrel
NEW YORK (AP) -- Oil prices
hit $100 per barrel for the first time since 2008, driven by growing concerns
about global supplies, as Libya's Moammar Gadhafi continued to lose his grip on
the oil-rich country.
Similar uprisings in
Tunisia and Egypt earlier this month already had markets on edge before
protests escalated in Libya, which has the biggest oil reserves in Africa. The
rebellion widened Wednesday as protesters overwhelmed government buildings and
advanced around Tripoli, the capital.
French oil giant Total said
it started to wind down its oil production in Libya, which produced an average
of 55,000 barrels per day last year. That follows similar moves by other oil
companies working in the country.
Libya's biggest oil
producer, Eni, idled operations that produce 244,000 barrels of oil and gas per
day. Spain's Repsol-YPF and Austrian oil company OMV also suspended operations.
Germany's Wintershall said it suspended operations that produced up to 100,000
barrels of oil per day. Evacuations of oil company employees and their families
continue.
Barclays Capital estimates
that as much as 1 million barrels per day of production has been shut down so
far. In January, Libya produced almost 1.7 million barrels per day of oil and
natural gas liquids, according to the International Energy Agency.
The production losses will
be felt mostly in Europe. Ireland relies on Libya for 23 percent of its oil
imports and 22 percent of Italy's oil imports are from Libya. The U.S. imported
only about 51,000 barrels per day from Libya, less than 1 percent of its total
crude imports.
Troubled banks rise to highest
level in 18 years
WASHINGTON (AP) -- The
number of banks at risk of failing made up nearly 12 percent of all federally
insured banks in the final three months of 2010, the highest level in 18 years.
The Federal Deposit
Insurance Corp. said Wednesday that the number of banks on its confidential
"problem" list rose to 884 in the October-December quarter, up from
860 in the previous quarter. Those are banks rated by examiners as having very
low capital cushions against risk.
Twenty-two banks have failed
so far this year. And more banks are at risk, even as the FDIC reported the
industry's highest earnings as a group since the financial crisis hit three
years ago.
Only a small fraction of
the 7,657 federally insured banks -- about 1.4 percent with assets of more than
$10 billion -- are driving the bulk of the earnings growth. They are the
largest banks, including Bank of America Corp., Citigroup Inc., JPMorgan Chase
& Co. and Wells Fargo & Co.
The big banks accounted for
about $20.6 billion of the industry earnings of $21.7 billion in the fourth
quarter. The total earnings compared with a net loss of $1.8 billion in the
same quarter of 2009. The agency said bank earnings were buoyed in the latest
quarter by reduced charges for soured loans.
Most of the big banks have
recovered with help from federal bailout money and record-low borrowing rates.
On the other side, many smaller banks are struggling.
Last year, 157 U.S. banks
were brought down by the soured economy and mounting loan defaults. That was
the most in one year since 1992, the height of the savings and loan crisis.
They were mostly smaller or regional banks. The failures compare with 25 in
2008 and three in 2007. They cost the federal deposit insurance fund an
estimated $21 billion in 2010.
NY: Wall Street 2010
bonuses estimated at $20.8B
ALBANY, N.Y. (AP) -- Wall
Street paid an estimated $20.8 billion in bonuses to New York City securities
industry employees for 2010, the first full year after the national recession
officially ended, New York state Comptroller Thomas DiNapoli said Wednesday.
The number reflects an
industry shift toward deferred compensation and higher base salaries, DiNapoli
said.
The estimate of bonuses is
down 8 percent from $22.5 billion actually paid in 2009. But it is $500 million
more than DiNapoli's bonus estimate a year ago. Bonuses extended into March and
April last year, beyond the traditional season.
The estimate was about
one-third less than the 2007 bonuses before the financial crisis. In 2008, Wall
Street firms gave out $17.4 billion in bonuses even though that year was one of
its worst.
The comptroller's report
said Wall Street profits of broker-dealer operations of New York Stock Exchange
member firms totaled $27.6 billion in 2010, second only to $61.4 billion in
2009 when the industry benefited from massive federal bailouts and low interest
rates.
Ford to recall 150,000
F-150 pickups over air bags
WASHINGTON (AP) -- Under
government pressure, Ford Motor Co. said Wednesday it will recall nearly
150,000 F-150 pickup trucks to fix air bags that could deploy without warning,
a fraction of the vehicles the government contends should be called back and
repaired.
The recall covers trucks
from the 2005-2006 model years in the United States and Canada for what the
Dearborn, Mich., company calls a "relatively low risk" of the air bag
deploying inadvertently.
The government, however,
has urged Ford to recall 1.3 million F-150s from the 2004-2006 model years,
citing 77 injuries from air bags deploying accidentally. The recall is being
closely watched because Ford's F-Series pickup truck is the best-selling
vehicle in America.
Ford's leaders have made
safety a cornerstone of the company's revitalization, but the truck recall represents
the latest safety issue to confront the automaker.
Ford has recalled more than
600,000 Windstar minivans in the U.S. and Canada since August to fix rear axles
that can corrode and break, an issue still under investigation by the National
Highway Traffic Safety Administration. During the past decade, Ford recalled
more than 10 million vehicles, including the F-Series pickup, to repair a
cruise control switch system that was linked to engine fires.
Apple shareholders nix CEO
succession disclosure
CUPERTINO, Calif. (AP) --
Apple shareholders rejected a proposal Wednesday that called for the company to
disclose a succession plan for its chief executive.
The rejection came a month
after Apple CEO Steve Jobs went on an indefinite medical leave for unspecified
problems -- an absence that could be related to his previous bout with
pancreatic cancer or his 2009 liver transplant. Jobs did not attend the
meeting, which was led by Chief Operating Officer Tim Cook and general counsel
Bruce Sewell.
Apple Inc. announced the
preliminary vote on the nonbinding proposal at its annual shareholders meeting
at the company's Cupertino headquarters. The company did not provide the voting
breakdown.
The Central Laborers'
Pension Fund, which owns 11,484 shares of Apple stock, called for a succession
plan in case Jobs leaves as CEO.
The proposal didn't ask
Apple to name whom it planned to appoint, but it wanted the company to come up
with a three-year plan for changing leadership and an emergency plan. The plan
would be reviewed annually by Apple, and a report on it would be shared with
stockholders.
Like many shareholder
proposals, even if this one passed, it would only have served as a formal
request that Apple share its succession plan, not a requirement.
Bank of England split on
interest rates widens
LONDON (AP) -- Another Bank
of England policy maker has voted for an interest rate rise -- heightening
expectations that the central bank will announce a hike in coming months.
Minutes from February's
Monetary Policy Committee meeting released on Wednesday show that a third
member of the nine-strong grouping has backed a rate rise. The remaining six
members voted to keep rates at the current record low of 0.5 percent.
One of those six also voted
to restart the bank's program of boosting the money supply, or so-called
quantitative easing.
Policy makers have been
increasingly split on the direction of monetary policy following surging
inflation and a shock decline in the economy in the final quarter of last year.
TJX 4Q profit falls 15 pct
with store closings
NEW YORK (AP) -- More
people shopped at TJMaxx, Marshalls and HomeGoods discount stores in the fourth
quarter, but their parent company said its net income fell 15 percent, dragged
down by costs to close its A.J. Wright stores.
The company, which sells
name-brand clothing and home fashions at a discount, said its overall sales
growth is slowing, and it forecast first-quarter performance below analysts'
expectations.
TJX Cos, based in
Framingham, Mass., also said Wednesday that it plans to repurchase $1.2 billion
of its stock this fiscal year and raise its dividend. Its shares fell almost 2
percent.
The retailer reported net
income of $334.4 million for the three months that ended Jan. 29. That compares
with $394.9 million in the same period last year.
Excluding one-time items,
the company posted net income of $1.05 per share, beating the average forecast
from analysts surveyed by FactSet for adjusted earnings of $1.01 per share.
Retailers: Home owners
spending more on renovation
Home owners are starting to
spend more on home-improvement projects despite the weak housing market,
quarterly results from Lowe's Cos. and Home Depot show.
Lowe's said Wednesday its
fourth-quarter profit rose 39 percent as its shoppers spent slightly more per
visit.
The results beat Wall
Street estimates, but Lowe's cautioned that consumers are still holding back
and gave a first-quarter forecast that could miss analyst expectations. Its
shares fell nearly 3 percent in midday trading.
CEO Robert Niblock said in
an interview with The Associated Press that he expects Americans to remain
somewhat cautious throughout 2011, as home prices are expected to bottom near
the end of the year, according to economic forecasts.
The results come as The
National Association of Retailers said rising number of distressed sales forced
home prices down to their lowest level in nearly nine years, a troubling sign
for the struggling housing sector.
On Tuesday, Home Depot
reported strong earnings and revenue growth and raised its earnings outlook.
However muted, the positive
results show home-improvement retailers are seeing signs of life from shoppers
as they take on projects around the house that were delayed during the consumer
spending slowdown and recession.
Insurer WellPoint board
debuts quarterly dividend
INDIANAPOLIS (AP) -- Flush
with cash from a strong finish to 2010, WellPoint Inc. has become the latest
health insurer to announce it will reward shareholders with a sizable payout.
The Indianapolis insurer on
Wednesday unveiled a plan to spend about $400 million this year on its first
cash dividend, even as managed care companies warn that the massive health care
overhaul passed last year by Congress will squeeze their businesses in the
coming years.
Big health insurers used to
offer token annual dividends amounting to only a few cents. But that started to
change when UnitedHealth Group Inc. -- the largest health insurer based on
revenue -- said last spring it would spend about $560 million over 12 months as
it started paying quarterly dividend payments of 12.5 cents per share.
Earlier this month, Aetna
said it will start paying a 15-cent quarterly dividend. Then on Wednesday,
WellPoint's board declared a quarterly cash dividend of 25 cents per share,
payable March 25 to shareholders of record as of March 10.
The steady cash flow from
larger dividends can make a company's stock more attractive to investors. This
is especially true in the managed care sector, where investors have worried
about how companies will be affected by the overhaul.
4 Credit Suisse bankers
charged in tax case
McLEAN, Va. (AP) -- Four
bankers with Zurich-based Credit Suisse Group were indicted Wednesday on
conspiracy charges, accused of helping U.S. taxpayers hide as much as $3
billion in assets from the IRS.
Arrest warrants have been
issued for all four, who are believed to be in Switzerland: Marco Parenti
Adami, Emanuel Agustoni, Michele Bergantino and Roger Schaerer. All are Swiss
citizens except for Adami, who is Italian.
Prosecutors allege in the
indictment that the conspiracy goes back as far as 1953. The indictment alleges
that as of late 2008 Credit Suisse was maintaining thousands of secret accounts
for U.S. customers with as much as $3 billion in assets.
The indictment itself does
not specify the bank as Credit Suisse, but a law enforcement official with
knowledge of the case confirmed the bank's identity to The Associated Press.
The official insisted on anonymity because he was not authorized to speak
publicly on the case.
Public documents
unconnected to the case also identify some of the bankers as Credit Suisse
employees. Credit Suisse itself is not charged in the indictment.
The indictment claims the
bankers discouraged customers from participating in a 2009 amnesty program offered
by the Obama administration, in which U.S. taxpayers could avoid criminal
prosecution if they came forward with information on their secret accounts and
agreed to pay a penalty. ------
By The Associated Press
The Dow Jones industrial
average lost 107.01 points, or 0.9 percent, to 12,105.78. The Dow has fallen
285.47 points, or 2.3 percent, over the past two days. It was the largest drop
since Aug. 12.
The S&P 500 fell 8.04,
or 0.6 percent, to 1,307.40. The Nasdaq composite fell 33.43, or 1.2 percent,
to 2,722.99.
West Texas Intermediate
crude for April delivery jumped $2.68, or 2.8 percent, to settle at $98.10 per
barrel in New York. Earlier in the day, prices hit triple digits for the first
time since Oct. 2, 2008. WTI has soared 18 percent since Valentine's Day.
In London, Brent crude
added $5.47, or 5 percent, to settle at $111.25 per barrel on the ICE Futures
exchange. Brent, which is used to price oil in Asia, Europe and other global
markets, passed the $100 mark on Jan. 31.
In other Nymex trading in
March contracts, heating oil added 11.3 cents to settle at $2.9166 per gallon
and gasoline gained 12.1 cents to settle at $2.8677 per gallon. Natural gas
picked up 2.9 cents to settle at $3.936 per 1,000 cubic feet.