Wednesday PM May 27th, 2009
by: Ed Mayberry, May 27, 2009 8:05:16 pm
A real estate group says sales of previously-occupied homes rose modestly from March to April as buyers swooped in to take advantage of prices that were 15.4 per cent below year-ago levels. The National Association of Realtors that home sales rose 2.9 per cent to an annual rate of 4.68 million last month, from a downwardly revised pace of 4.55 million in March. The results slightly beat economists' forecasts. Sales had been expected to rise to an annual pace of 4.66 million units, according to Thomson Reuters. The median sales price plunged to $172,000, down from $201,300 in the same month last year. That was the second-largest drop on record after January, when prices fell 17.5 per cent.
The United Nations is forecasting that the global economy will shrink 2.6 per cent in 2009--a considerably deeper downturn than the 0.5 percent contraction predicted in January. In its mid-year economic forecast, the United Nations said developing countries have been disproportionately hard hit by the global economic crisis. It also said that if current policy measures to stimulate economic growth take hold, a mild recovery could take place in 2010.
A survey of leading economic forecasters is suggesting an end to the recession later this year. The National Association for Business Economics says 90 per cent of those surveyed believe that. NABE President Chris Varvares says unemployment will rise and the recovery will be moderate. About 74 per cent of the forecasters expect the longest recession since World War II to end in the third quarter. Another 19 per cent predict it will come in the final three months of this year. The remaining seven per cent say it'll be in the first quarter of 2010. Economists also say recoveries after financial crises tend to be slower.
General Motors says not enough of its bondholders agreed to swap their debt for company stock, meaning the automaker is almost certainly headed for bankruptcy protection. GM has until Monday to finish restructuring or file for Chapter 11. But the company says its offer to exchange $27 billion in unsecured debt for ten percent of the company's stock had failed. GM has received $19.4 billion in federal loans. The Monday deadline was set by the government and includes debt reduction, labor cost cuts and plant closures. GM has said it needed bondholders representing 90 per cent of its unsecured debt to agree, or it would file for Chapter 11 protection. The Obama administration had said it would only provide GM more funds if bondholders and union workers made concessions. GM got union concessions but the bondholders held out.
The Texas Senate has approved a $2.3 billion supplemental budget to cover unexpected costs in the final months of 2009. The proposal includes $150 million for repairs to the hurricane-ravaged University of Texas Medical Branch at Galveston that was damaged last year during Hurricane Ike. It also contains $11 million for restoration of the Governor's Mansion, burned last year in a fire. The bill includes around $1 billion less than a supplemental budget approved by the House last month. The measure now goes back to the House for consideration. The legislation is different from the main $182 billion budget bill, which is also still pending and covers state spending for the coming two years.
The government says the nation's banks turned a profit in the first quarter, but the number of problem banks jumped to more than 300. The Federal Deposit Insurance Corporation says higher trading revenues at big banks helped the industry earn a $7.6 billion profit in the January-March period, compared with a record loss of $36.9 billion in the fourth quarter. The profit was 61 per cent below the $19.3 billion earned in the year-ago period and followed the first quarterly loss in 18 years. U.S. banks and thrifts set aside $60.9 billion in the first quarter to cover potential loan losses, up from $36.2 billion a year earlier. The number of troubled banks jumped to 305, the highest number since the savings and loan crisis, from 252 in the fourth quarter.
Activists grilled the CEO of ExxonMobil on environmental issues and his compensation package today–but shareholders stood behind management that delivered the biggest profit ever for a U.S. company last year. Shareholders voted down all 11 resolutions at the company's annual meeting. And Chairman and Chief Executive Rex W. Tillerson defended the company's record on climate change, which many scientists blame on burning oil and other fuels. Activists praised rival Chevron for agreeing to track and report the carbon content of its products and challenged Exxon to do the same. Tillerson says Exxon is investing in research by its own scientists and others into climate change. ExxonMobil earned $45.2 billion last year, as oil prices climbed to record highs near $150 a barrel. Exxon's profit began to fall late in the year as oil prices plunged. Despite the worldwide economic slowdown, oil prices have been creeping back up for several weeks.
Bristow Group, which provides helicopter airlift services to offshore oil rigs, says it is buying a minority stake in a Brazilian helicopter and aviation services company. It says the deal will help it capitalize on South America's growing oil business. Houston-based Bristow said it agreed to pay $174 million for a 42.5 per cent stake in Lider Aviacao Holding, which provides helicopter and executive aviation services. At the same time, Bristow is selling five aircraft to Lider for $55 million, reducing its net cash outlay to $119 million. Lider operates 46 helicopters serving the oil and gas industry, representing about half of the oil and gas market in Brazil.
Saudi oil minister Ali Naimi says there is no need for Organization of Petroleum Exporting Countries to reduce production. Naimi's comment reinforces sentiment that OPEC oil ministers will decide at their meeting Thursday to continue pumping oil at present levels. The Saudis account for close to a third of total OPEC production and what they say is usually informal policy for the rest of the twelve-nation group. He told reporters "there's no need to cut production." And he said oil prices would likely reach around $75 a barrel by the end of the year on the back of growing Asian demand.
Kuwait's oil officials say there is no need for OPEC to cut production and that the organization's talks in Vienna will focus on its members complying with quotas. Khaled Boudai, from the country's Supreme Petroleum Council, says a cut would not be justified with oil selling for more than $60 a barrel. His comments were carried by the Kuwait News Agency. He says optimism that the world economy is improving has been raising prices. Mousa Marafi, another council member, says he expected ministers to discuss the need for complying to quotas when they meet Thursday. The cartel which has announced 4.2 million barrels a day of production cuts since September to boost prices that dipped below $35 in March, is expected to keep production unchanged.
Iraq's central government says exports of crude oil from two fields in the country's northern autonomous Kurdish region will begin Sunday. The development marks a bid to resolve a standoff between Kurdish and government authorities in Baghdad over how to manage Iraq's oil resources. A government statement quotes senior oil ministry official Abdul-Karim Elaibi, as saying that about 10,000 barrels a day will be exported from the Tawke and Taq Taq fields as a first step. It says crews are already doing experimental pumping in the fields. The oil will be shipped through a government-owned pipeline to the Turkish Mediterranean port of Ceyhan and revenues will be deposited in a central government-controlled bank account.
A government forecast says that without mandatory limits on greenhouse gases, the amount of heat-trapping carbon dioxide flowing into the atmosphere will increase by nearly 40 per cent by 2030. The Energy Information Administration made this assertion in releasing a long-term forecast. The survey projects world energy consumption growing by 44 per cent over the next two decades. And it says that in the absence of limits on carbon dioxide emissions, much of that increase will continue to come from burning oil and coal. The report said the biggest increases in energy use will come from developing countries such as China and India. Congress is considering limits on greenhouse gases including carbon dioxide.
Treasury Secretary Tim Geithner says organizations doing work in 33 states will receive $1.5 billion in business tax credits funded by federal stimulus money and designed to create and save jobs in areas hit hard by the economic downturn. The new markets tax credit program was established in 2000 and has been responsible for creating an estimated 210,000 construction jobs and 45,000 full-time permanent jobs. Geithner released a list of the new recipients while visiting Project Hope, which provides medical care to the needy in Boston's Roxbury neighborhood. It was a past reward recipient. The tax credits can be a critical piece of financing for real estate development projects and businesses in economically stressed rural and urban communities.
A major health insurer says the government can save big money on health care by sending patients to cheaper, more efficient doctors, reducing hospital visits by the elderly and cutting down on unnecessary care. Those are among 15 suggestions made by UnitedHealth Group, a Minnesota-based health company. UnitedHealth's Simon Stevens said the suggestions could save $540 billion over ten years, mostly through savings for the government's Medicare insurance program for the elderly. The proposals come as Congress and the Obama administration are working on a major health care overhaul aiming to bring down costs and extend coverage to 50 million uninsured Americans.
Governor Rick Perry says the state will invest $250,000 from the Texas Emerging Technology fund in a robotics software company. The money will go to the Agile Planet for commercialization of its Robotlogix universal operating software. Perry said in his announcement that Robotlogix will help jump start the emerging field of robotics and expand Texas' technology sector. Robotlogix is a general purpose operating software that will create the capability for safe human-robot collaboration. Agile planet has partnered with the University of Texas at Austin, Austin Technology Incubator and Austin Community College to develop and market the technology.
The Art Colony Association is making check presentations of $62,000 to 16 Bayou City Art Festival non-profit partners this evening in the Capital One bank lobby on Bering Drive. Over the past 38 years, the Bayou City Art Festival has raised close to $2.5 million for local non-profit organizations and the city of Houston. The Art Colony Association is producer of the festival, which is funded in part by grants from the city and the Houston Arts Alliance.
The RecruitMilitary Career Fair is set for Thursday at Minute Maid Park from 11 a.m. to 3 p.m. Over 300 veterans are expected to attend this free event, which features national, regional and local employers.
Samsung is voluntarily recalling thousands of "jitterbug" cell phones because they may fail to connect to emergency 911 service when out of range, according to federal regulators. The Consumer Product Safety Commission says the recall involves about 160,000 Samsung phones. The agency says the phones could fail to connect to 911 if in a no-service area and it displays an "out of range" message. A Federal Communications Commission rule requires that a wireless phone have the capability to reach a 911 center, even when out of service range. The phone should be able to piggyback off another service provider in the area to get to 911. The company is contacting consumers directly to schedule a free software upgrade. Consumers can call Samsung at 866-304-4980 if they have not already been contacted. The phones were manufactured by Richardson-based Samsung Telecommunications America. They were sold between March 2008 and May 2009 for about $150. The model numbers are: SPH-A110 and SPH-A120 with standard key pads and version BB14 software.
A new Web site aims to become the Internet's hub for the debate over Google's plans to assemble of vast internet library of books. SharedBook is setting up a Web site so the supporters and opponents of Google's digital book project can more easily post their opinions about a legal settlement that will help fulfill or possibly derail the internet search leader's ambitions. The site, www.gbs.sharedbook.com, is set to debut Thursday. Using SharedBook's annotation tools, anyone will be able to comment on the complex settlement and other key court documents in a class-action lawsuit filed four years ago by authors and publishers. New York-based SharedBook plans to turn the discussion into a book.
Texas businessman Ellis Short has become the full owner of Premier League club Sunderland. Sunderland said that Short will assume 100 per cent control of the club from northeast England. Short, a former executive with the Dallas-based private equity group Lone Star Funds, had previously been the club's majority shareholder with a stake of more than 30 per cent. He will complete his buyout of the consortium put together by Chairman Niall Quinn three years ago. Three other Premier League clubs — Manchester United, Liverpool and Aston Villa — are also owned by Americans. Sunderland narrowly escaped relegation this season and is looking for a new manager after the resignation of Ricky Sbragia.