Entries from April 2009 ↓

(Reuters) – Stock futures pointed to a higher start for Wall Street on Thursday ahead of a flurry of results as well as U.S. core personal consumption expenditure, jobless figures and Chicago PMI data.

* At 0901 GMT (5:01 a.m. EDT) futures for the S&P 500 were up 1.7 percent, the Dow Jones futures gained 1.4 percent and the Nasdaq futures were 1.8 percent higher.

* The FTSEurofirst 300 (.FTEU3) index of top European shares was up 1.7 percent at 830.01 points, led by mining stocks, as a wave of European blue-chip earnings gave investors reason for optimism.

* Talks between the U.S. Treasury Department and Chrysler LLC lenders aimed at cutting the automaker's debt and keeping it out of bankruptcy broke down late on Wednesday, the Wall Street Journal reported, citing people familiar with the discussions.

The collapse of talks make it all but certain that Chrysler — 80 percent controlled by private-equity firm Cerberus Capital Management LP (CBS.UL) — will file for bankruptcy, the WSJ said, citing those sources.

* Procter & Gamble (PG.N) is expected to discuss what it is doing to attract cost-conscious shoppers when it reports fiscal third-quarter results. The company's earnings are expected to be unchanged from a year ago at 82 cents per share.

* A sharp drop in oil and gas prices is expected to have halved earnings at Exxon Mobil (XOM.N), the world's largest publicly traded company. According to Reuters Estimates, analysts are expecting Exxon to report earnings of 94 cents per share, down from $2.03 in the same quarter last year.

* Dow Chemical (DOW.N) is expected to shed light on its efforts to sell assets to trim its heavy debt load when it releases quarterly earnings. Analysts expect the company to post a loss of 19 cents per share for the quarter, down from a profit of 99 cents per share a year ago.

* Colgate-Palmolive (CL.N), which has fared better than some rival manufacturers in the recession, is expected to report a rise of 7 cents per share in profit to 97 cents for the first quarter.

* When Motorola (MOT.N) reports earnings investors will be looking for any signs of improvement in its mobile phone division and for forecasts for when management expects it to turn profitable. Wall Street analysts are expecting a loss of 11 cents per share for the quarter.

* NYSE Euronext's (NYX.PA)(NYX.N) first-quarter profit dropped 55 percent, in line with expectations, as the financial crisis took its toll on the exchange group.

* Life insurer MetLife (MET.N) kicks off the first quarter reporting season for large life insurers, in what is seen as the worst ever quarter for the sector. Analysts are expecting it to report that earnings sank to 37 cents per share from $1.52 a year ago.

* Key this quarter at Monster Worldwide (MWW.N) is the performance of its European business. The company is seen slipping to a loss of 10 cents per share from earnings of 24 cents per share a year ago.

* Grocery chain Safeway (SWY.N) reports quarterly results, with Wall Street analysts expecting earnings of 40 cents per share, down 4 cents from a year ago.

* Kellogg Co's (K.N) earnings will be watched by analysts for signs of consumers leaving branded manufactures for lower-priced private-label brands. Kellogg's quarter profit is expected to come in at 79 cents per share, down from 81 cents a year ago.

* Starbucks Corp (SBUX.O) shares fell more than 5 percent in extended trading on Wednesday after the company posted quarterly results.

* Shares in Bank of America (BAC.N) rose nearly 1 percent to $8.75 in extended trading on Wednesday after the bank's chief executive was stripped of his role as chairman.

* At 1230 GMT (8:30 a.m. EDT) the Commerce Department releases March personal income and consumption data. Economists in a Reuters survey expect a fall of 0.2 percent in March income and a 0.1 percent decrease in spending.

* At 1345 GMT (9:45 a.m. EDT), the Institute of Supply Management Chicago releases April index of manufacturing activity. Economists in a Reuters survey forecast a reading of 35.0 in the month compared with 31.4 in March.

* U.S. stocks climbed on Wednesday after grim growth data offered hints of future expansion, a prospect reinforced by the hopeful comments from the Federal Reserve.

The Dow Jones industrial average (.DJI) gained 2.1 percent, the Standard & Poor's 500 Index (.SPX) rose 2.2 percent and the Nasdaq Composite Index (.IXIC) was 2.3 percent higher.

(Reporting by Joanne Frearson; Editing by Greg Mahlich)

Stock futures point to higher Wall Street open

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Time Warner is inching closer to an untangling of what many consider one of the worst mergers in American corporate history.

In a regulatory filing Wednesday, Time Warner said it was nearing a decision to shed America Online and put an end to the travails that began with the merger in 2000 of the two companies, a deal that has resulted in the evaporation of more than $100 billion of shareholder value.

“Although the company’s board of directors has not made any decision, the company currently anticipates that it would initiate a process to spin off one or more parts of the businesses of AOL to Time Warner’s stockholders, in one or a series of transactions,” the company said in the filing.

The announcement, which was not unexpected, came on the same day that the company reported first-quarter earnings, which surpassed Wall Street analysts’ expectations.

The company, which in addition to AOL also owns the Warner Brothers movie studio, the cable networks TNT, TBS, CNN and HBO and the Time Inc. publishing unit, said revenue declined 7 percent to $6.9 billion, when compared with the same period last year.

Revenues from publishing, AOL and Warner Brothers all declined, while revenue at the cable networks, which have been the most durable segment of the media industry during the recession, rose to $2.8 billion, from $2.7 billion.

Net income for the quarter was $661 million, or 55 cents a share, compared with $771 million and 64 cents a share in the previous period. Excluding some items, earnings were 45 cents a share. By this measure, the company beat Wall Street analysts’ expectations of 39 cents a share, according to Reuters Estimates.

At AOL, revenue decreased 23 percent, to $867 million. Subscription revenue fell 27 percent, while advertising fell 20 percent. At the magazine publishing division, which includes Sports Illustrated, Fortune, People and Time, revenue fell 23 percent, mostly because of a 30 percent decrease in advertising.

At Warner Brothers, while revenue dipped 7 percent, operating income increased 10 percent to $308 million, partly because of reduced marketing and advertising costs for movies.

The cable networks unit continued to perform well. Its revenue grew 6 percent, to $2.8 billion, while operating income rose 10 percent.

Time Warner, under Jeffrey L. Bewkes, who became chief executive in December 2007, has become a stripped-down media conglomerate focused on producing content, rather than the delivery of it. This year the company, once the world’s largest media entity, spun off its cable division, Time Warner Cable, into a separate publicly traded company.

Time Warner Is Moving Closer to AOL Spinoff

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“I am choosing to go now to protect the bank. I became the target of attacks which ultimately harmed the company to which I am very attached,” he was quoted as saying.

Bouton said a new chairman would be elected May 6.

The reputation of the Société Générale (FR:GLE: news , chart , profile ) chief took a hit last year from a scandal involving over $6 billion in losses caused by a rogue trader. Bouton later came under criticism over stock options and bonuses issued during the financial crisis.

Societe Generale chief reportedly vows to resign

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Filed at 4:34 a.m. ET

FRANKFURT (AP) — German car maker Daimler AG has reported a first quarter loss of nearly euro1.3 billion ($1.7 billion) as the world economic crisis weighs heavily on demand.

The euro1.29 billion net loss reported Tuesday by Stuttgart-based Daimler contrasts with a net profit of more than euro1.33 billion in the first quarter of 2008.

Sales for the quarter fell 26 percent. They dropped to euro19 billion from euro24 billion a year earlier.

Daimler says it expects a gradual improvement in operating profitability during 2009, but a significant operating loss again in the second quarter.

The company said its Mercedes-Benz cars brand expects positive earnings results in the second half of 2009.

Daimler Reports Loss of $1.7 billion for First Quarter

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As fears grew about a deadly outbreak of swine flu, investors on Monday performed the financial equivalent of washing their hands and donning surgical masks. They bought heavily into drug stocks, spurned the Mexican peso and shied away from pork producers. Broader stock markets trembled in the first half of the day, and gave up moderate gains as investors watched to see how far the cases of swine flu would spread, and whether concerns about a pandemic were exaggerated or legitimate. The rash of cases began in Mexico and has spread to the United States and Canada, and probable infections have been reported from New Zealand to Spain.

Shortly after 1 p.m., the Dow Jones industrial average was 20 points lower while the broader Standard & Poor’s 500-stock index was down slightly, after a week of light losses for the major stock indexes. Markets in Europe and Asia were mixed.

American-traded shares of the European companies GlaxoSmithKline and Roche Holding, which make various prescription flu drugs, were all higher — a sign that investors are betting they will find big new sources of sales as governments worldwide increase their stockpiles of antiviral drugs.

Novavax, an American vaccine maker, soared 75 percent Friday in New York, though it was not clear if that movement reflected anything more than a rush by investors into any stock that might conceivably gain from the epidemic. It rose another 130 percent Monday in early trading.

“We’ve seen these kind of effects with outbreaks before,” Richard Purkiss, a drug sector analyst at Atlantic Securities in London, said. “Generally speaking, you get a rally in stocks that have any kind of links to influenza.” Airline and travel companies fell sharply as the European Union urged Europeans not to travel to the United States, where some 40 cases of swine flu have been confirmed, including eight in New York City, one of the biggest travel hubs and tourist destinations in the country.

Shares of Continental, Delta and the parent companies of American Airlines and United Air Lines were all down by double digits. The huge cruise operator Carnival fell 8 percent on worries about the outbreak’s potential effect on tourism to Mexico and other destinations.

If the outbreak spreads rapidly and nervous travelers decide to stay home, airlines already struggling to endure the economic slump could suffer another leg down during their peak summer months, said Hunter K. Keay, an airline analyst at Stifel Nicolaus. Mr. Keay said he is still more concerned about airlines’ longer-term problems, but said investors seemed shaken up on Monday.

“They’re drawing conclusions that if this outbreak does turn into an epidemic it would have an impact on travel,” he said. Companies that make pork products and slaughter hogs were also hurting. Hormel, the maker of Spam, and the pork producer Smithfield Foods fell after countries including Lebanon, Thailand and Indonesia imposed restrictions on pork imports, raising fears that countries would hastily build trade barriers as they rush to contain the disease.

On Sunday, top American health officials tried to tamp down those fears, reminding people that they cannot contract swine flu by eating pork.

The price of longer-term Treasury debt rose, a sign of more defensive behavior by investors, and a response to an announcement that the Federal Reserve had bought $7 billion in Treasury coupons. The yield on the benchmark 10-year note, which moves in the opposite direction of price, fell to 2.94 percent from nearly 3 percent late Friday.

“The swine flu outbreak is another watershed event for the U.S. treasury market,” Tom DiGaloma, head of United States rates trading at Guggenheim Capital, wrote in a note to investors.

But declines in the United States turned into a rout in Mexico, the epicenter of the outbreak, where more than 100 people have died and more than 1,300 have likely been infected. The Mexican Bolsa stock index dropped more than 3 percent, and shares of Mexican food companies, retailers and transportation companies dropped sharply.

Elsewhere in financial markets, investors pushed shares of General Motors 20 percent higher after the automaker said it needed an additional $11 billion from the government and was prepared to file for bankruptcy if a proposed exchange of debt for equity did not pan out.

General Motors said it was also planning to close more plants and dealerships and eliminate its Pontiac brand as it tries to turn itself around and end quarter after quarter of billion-dollar losses. Shares of Ford, which has not taken any government bailout money, were up 1.6 percent.

David Jolly contributed reporting.

Global Stocks Waver on Flu Concerns

Hot News: World Stocks Tumble as Flu Fears Spread

Bedford, a small town on the Juniata River in southern Pennsylvania’s Allegheny Mountains, has been the manufacturing center for the Cannondale Bicycle Company, the second largest remaining producer of bicycles made in the USA. A worker assembles a bicycle at Cannondale’s plant in Bedford, PennsylvaniaOutwardly things are normal in Bedford. Winter is over, and merchants await the tourist season.Sportsmen have traded in their deer rifles for fishing gear. But there is also industry in Bedford. Over 200 Cannondale bicycles, the pride of Bedford, roll off the line every day at the local factory. Each bike, with its trademark aluminum tubes, is marked “handmade in the USA.” The bikes often retail for more than $1,000 apiece.Cannondale’s Canadian parent, Dorel, has announced it is outsourcing production to Taiwan, and the news has hit Bedford hard.Mike Miller is a painter at the factory. He suspected his job might be shipped to China.”A bunch of us thought this was coming, the way people were acting. Something fishy was going on,” he said.Two thirds of the 300 workers here are losing their jobs, adding to a local unemployment rate already at 13 percent. Miller will be among the first to go. He says his severance package will be one week of additional pay. Dorel made record profits in 2008. It says the move to Asia will save $4 million a year. Jeremiah Johnson left Cannondale last month. He complains about corporate greed.”If you look at the way Dorel has run things in the past, you see that what they do is they buy something, they make it cheaper, and they make it elsewhere,” he said.Dorel denies that it purchased Cannondale last year with the intention of outsourcing production, a process it says was already underway. Some non-manufacturing operations in Bedford will continue.  Bedford residents feel betrayed. Even on a Friday night, as people stock up on beer for the weekend, they share their views about Cannondale.RESIDENT:  “Before it’s all said and done, they’re going to move them all out.”Former employee, Roxanne, used to attach decals to Cannondale frames.”No, we should keep our business in America. We stand together,” she said.At the corner bike shop, customers wonder how many people buy Cannondales because they’re handmade in the USA.CANNONDALE CUSTOMER:  “I think it’s important to a lot of people, especially in this part of the country, knowing that it comes from Bedford, Pennsylvania.”Production will be phased out by the end of the year. CANNONDALE EMPLOYEE: “Unemployment rate is going to skyrocket. People are going to have a hard time getting even fast-food jobs.”Bedford, like dozens of other American towns, will face the challenge of how to create decent jobs in a post-industrial economy.

Major US Bicycle Maker Outsourcing to Asia

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WASHINGTON, April 25 (Xinhua) — Some countries have expressed interest in buying bonds of the International Monetary Fund (IMF), the institution’s managing director Dominique Strauss-Kahn said here Saturday.

“It is interesting for many countries, so we just passed the template of the standard form of the agreement,” Strauss-Kahn told a press briefing at the IMF and World Bank spring meetings.

“I’m sure that this vehicle will be used, provides flexibility,” he said. International Monetary Fund (IMF) Managing-director Dominique Strauss-Kahn speaks in a news conference during the spring IMF-World Bank meeting at Washington, the United States, April 25, 2009. (Xinhua/Zhang Yan)
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He said the board of the IMF was discussing with the different creditors many issues, including the way to implement the bond, the amount of money to be put in, among others.

According to sources close to the matter, the bonds would probably be denominated in an IMF quasi-currency called special drawing rights (SDRs), which the IMF created in 1969 as a way to support its 185 member states. They are allocated according to members’ quotas.

The IMF has been working on a bond offering since at least January as a way to increase the amount of money it has to lend to struggling nations.

In March, the IMF proposed to issue the bonds for the first time in its history, as a way for countries to increase the Fund’s resources and to minimize foreign exchange risks.

Brazilian Finance Minister Guido Mantega said officials from Brazil, China, Russia and India, the so-called BRIC countries, met Friday in Washington to reach a common position on terms they want to see in such a bond. Global financial crisis underscores need for IMF reform

WASHINGTON, April 25 (Xinhua) — As financial ministers and central bank governors from around the world gathered in Washington this weekend for two days of discussions on how to revive the slumping global economy, an issue was brought up again — the reform of the international financial and monetary architecture.

“The IMF (International Monetary Fund) is being given a bigger role in the crisis. But it has hardly reformed,” a press release from the Third World Network (TWN) said here on Saturday. The TWN is an independent non-profit international network of organizations and individuals involved in issues relating to development, Third World and North-South affairs. Full story IMF policy-setting body resolves to restore int’l financial stability

WASHINGTON, April 25 (Xinhua) — The policy-setting body of the International Monetary Fund (IMF) said on Saturday that it will work “collaboratively” to restore international financial stability.

“We restate our resolve to work collaboratively to restore international financial stability and global growth,” says a communiqu

Stock investors are again enjoying gains from international markets, but the extensive damage their portfolios suffered last year seems several continents away from repair. See Weekend Investor.

A car that has always ranked high on the personal favorite list has now decided to go the Fred Frugal route. See Auto Review.

Two mind-numbing fast-paced dramas. Two parallel worlds. One real, one fiction, both deadly. Jack Bauer, mythic hero of “24.” Dying from a deadly bio-pathogen leaked from weapons developed by Starkwood, a rogue mercenary army attacking the presidency, hell-bent on taking over America. The other drama in play: “Hank the Hammer” Paulson, iconic Wall Street hero, a Trojan Horse placed inside Washington by Goldman Sachs as Treasury Secretary in control of America’s $15 trillion economy. Goldman, a modern dynasty with vast financial powers much like those once used by the de’ Medici, Rothschilds and Morgans to control nations. See Paul B. Farrell.

Some of the best places in the country to call home this year are areas where the local economy and the housing market are stable, according to RelocateAmerica.com’s annual list of the top 100 places to live. Topping the list: Tulsa, Okla. See full story.

Investors in actively managed mutual funds the last five years have reason to wonder what they’ve been paying for: A new study from Standard & Poor’s finds that 70% of fund managers who use the S&P 500 as a benchmark for comparison have failed to match the performance of the index over that time. That’s double bad news, given that the index was down 19% in the five years that ended Dec. 31. See Fund Watch.

Don’t panic if you’re trying to refinance and the process is taking longer than you thought: Conforming mortgage rates are likely to stay low for the remainder of the year, according to the Mortgage Bankers Association’s chief economist. See full story.

Michael Burkholder, who has had a Bank of America credit card for the better part of the last decade, said his jaw dropped recently when the interest rate on his card nearly tripled to 14.99% from 5.5%. Welcome to today’s credit-card world, where interest rates and fees can go up, and credit limits and rewards benefits can go down, seemingly at the drop of a hat and with little notice to borrowers — a situation that has consumers fuming and politicians taking notice. See Consumer Watch.

Predatory mortgage lending is coming under fire in Washington, as consumer advocates told lawmakers Thursday that the mortgage market has been inadequately regulated and sensible rules are needed. See full story.

Where can I get more detailed information about reverse mortgages for seniors? We have a house in a “plus 55″ community in California for which we paid $315,000 four years ago. We are told now that it, along with all the other houses in the area, it would sell for about 20% less than what we paid. Would a reverse mortgage work for us? See Realty Q&A.

American drove 2.7% more miles per day on average in February, the highest level since last October in a hopeful sign in the hard-hit gasoline business. Although gross domestic product continues to contract and fewer people drive to work in the face of higher unemployment, cheaper gas appears to be luring more drivers to the road. See full story.

See the week’s Top 10 news and analysis stories.

Personal Finance Daily: The week’s 10 best Personal Finance stories: April 20-24

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DETROIT (Reuters) – Chrysler LLC is making progress in restructuring talks involving the U.S. government and has no plans to file for bankruptcy before its month-end deadline, the automaker told its U.S. dealers on Friday.

Chrysler Vice Chairman Jim Press and sales chief Steve Landry told U.S. dealers on a conference call that the automaker expected talks aimed at clinching an alliance with Italy's Fiat SpA (FIA.MI) to run all the way to an April 30 government-imposed deadline, according to two people who participated in the call.

Press also told dealers that they should stay focused on selling Chrysler vehicles during the last week of the month, traditionally the busiest time for auto sales, and that the dealer inventory is continuing to decline, said the sources, who asked for anonymity because the conference call was confidential.

The conference call came a day after reports that the U.S. automaker was readying a bankruptcy plan, but remained focused on reaching an alliance with Fiat supported by the U.S. government.

(Reporting by Poornima Gupta)

Chrysler tells dealers U.S. talks headed to deadline

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Answer: You have not provided me with nearly enough information with which I need to give you a proper answer. So I took the liberty of running your question by Cyndi Stephenson, who manages the reverse mortgage division at HomeFirst Mortgage Corp., a mortgage brokerage firm in Alexandria, Va.

Stephenson says that if you and she were sitting down together, one-on-one, she would ask you these questions:

Do you have any liens on the property at this time?

How much longer would you plan to stay in this home if you do a reverse mortgage?

Which one of you is 71?

What is the ZIP code for the property?

Is it a single family residence, condominium or a townhouse?

What are your priorities, both long- and short-term?

Do you plan to leave something to your heirs? To charity?

The reverse mortgage specialist also would ask a question she says keeps her awake at night and that is: Do you have long-term-care insurance?

“I do not worry at all about those who plan to live in the home until they pass away, that is exactly what this product is designed to support,” she explains. “What I worry about are those who take out a reverse mortgage, live in their home for maybe three years, then have a stroke or suffer some other disabling illness or injury and need to get moved immediately into an assisted living facility. Especially if they are single.”

In those instances — actually, if you are out of the house for more than 12 consecutive months — the property will need to be sold to repay the mortgage. And that leads to more questions, says Stephenson: “What funds will you have available to get you into the facility? Who will take care of the sale of the home? Do you have long-term-care insurance or a plan to move into a Medicare/Medicaid facility should something happen to you?”

By the way, Stephenson says she studied reverse mortgages up and down, backwards and forward (no pun intended), “for a very long time” before she entered the field. But she never really “got it” until she ran her own reverse mortgage scenario. And she invites readers to see how a reverse mortgage can work out at HomeFirst’s Web site, www.homefirstmortage.com/reverse. Just click on “Scenario for a Reverse Mortgage.” Check out the site.

“When properly applied a reverse mortgage can serve to preserve, protect and, quite possibly, enhance a senior’s estate,” she says. “Although reverse mortgages are not the right answer for all senior homeowners, they are a promising financial tool that all senior homeowners should look into, just as they would any other financial tool available to them.”

A: I cannot recommend a particular lender. But the National Reverse Mortgage Lenders Association maintains an excellent Web site (www.reversemortgage.org) that not only explains everything you need to know about reverse mortgages but also allows consumers to find lenders who offer these loans in their particular state. Visit the reverse mortgage site.

The AARP also has a information on the product (www.aarp.org/revmort). And so does Uncle Sam. Try both the Federal Housing Administration, which insures lenders who make these loans against loss (www.hud.gov/offices/hsg/shf/hecm/remtopten.cfc) , and the Federal Trade Commission (www.ftc.gov/bcp/edu/pubs/consumer/homes/real3/shtm).

The person who inquired about tax relief for his son who lost his escrow money when the settlement company he was using went belly-up should check with a bankruptcy attorney, reader Phil suggests. See previous Realty Q&A.

“If the funds were held in a trust account, as they are generally required to be, the person should be able to get them back from the bankruptcy proceedings,” he writes. “If they were not, a proof of claim should still be filed with the bankruptcy court. There is nothing to be lost by filing the claim.”

Nationally syndicated columnist Lew Sichelman has been covering the housing market for more than 35 years. Because of the volume of mail he receives, he cannot answer individual questions, nor can all questions be answered in this space. Email lsichelman@aol.com

Realty Q&A: What to ask when considering a reverse mortgage

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