Tuesday PM August 4th, 2009
by: Ed Mayberry, August 4, 2009 10:08:44 pm
The National Association of Realtors says pending home sales rose in June for the fifth straight month, another encouraging sign of life for the embattled U.S. housing market. The realtors group says its pending home sales index rose 3.6 per cent to 94.6, from an upwardly revised reading of 91.3 in May. The results were far better than analysts expected. Economists surveyed by Thomson Reuters expected the index to come in at 91.2. The last time there were five consecutive monthly gains was in July 2003. The report tracks signed contracts to purchase previously owned homes and is considered a barometer for future home sales. Typically there is a one- to two-month lag between a sales contract and a completed deal.
Consumer spending increased in June for the second straight month, even as incomes fell sharply. The Commerce Department says consumers boosted their spending 0.4 per cent, slightly ahead of analysts' estimates. That comes after spending rose 0.1 per cent in May. The department says personal income fell 1.3 per cent after rising by the same amount in May, when incomes were boosted by one-time payments from the Obama administration's stimulus package. Economists expected personal incomes, the fuel for future spending, to fall one per cent. Consumer spending is closely watched because it accounts for about 70 per cent of total U.S. economic activity.
Federal officials have raided two facilities of an environmental waste company in southeast Texas where three workers have died in the last six months. Davilyn Walston, spokeswoman for the U.S. Attorney's Office, said the Houston and Port Arthur facilities of CES Environmental were searched. CES transports and disposes of organic waste. Port Arthur Justice of the Peace Tom Gillam said he began investigating the Port Arthur site of CES after a worker died from inhaling hydrogen sulfide, a gas produced by human and animal waste. Gillam said he alerted federal authorities after he discovered that hydrogen sulfide contributed to two of the three deaths.
CenterPoint Energy is applying for $200 million in federal funding to speed up deployment of smart meters. The funds, requested from the U.S. Department of Energy's portion of the American Recovery and Reinvestment Act of 2009, could speed up by two years a five-year effort to install the meters on 2.2 million homes and businesses. The meters will allow retail electric companies to offer pricing plans that more accurately track the higher cost of power generation during peak afternoon hours. The plans could reward the shifting of usage to off-peak times. Some 45,000 smart meters have already been installed in the Houston area. An official filing is being made tomorrow afternoon at the Port of Houston Authority on East Loop North, attended by Congressman Gene Green.
The Metropolitan Transit Authority is sharing $78 million of federal stimulus funding being distributed to 18 transit agencies. Harris County is receiving $3 million from the American Recovery and Reinvestment Act's Transit Security Grant Program. The funding is to help transit agencies better prepare for terrorism, with personnel, canines and equipment.
Financial losses in the Internet age are forcing the U.S. Postal Service to consider closing or combining nearly 700 facilities. A top postal official says managers will be studying the approximately 3,200 stations and branches across the country. They'll be considering factors such as customer access, impact on workers, real estate values and long-term Postal Service needs. The proposed changes come as people turn increasingly to the Internet to communicate and pay bills. Last year, mail volume fell by 9.5 billion pieces. That loss in volume is expected to nearly triple this year. But, at the same time, population growth and new business mean the post office has to serve 1.2 million new addresses every year. While Congress votes money for free mail delivery for the blind and to offer reduced rates to charities, the post office does not receive taxpayer funds for its operations. The post office says no changes are expected before the end of the current fiscal year on September 30th.
Only 15 per cent of homeowners eligible for the Obama administration's $50 billion loan modification program have been offered help so far. In its first monthly progress report on the plan launched in March, the government describes big disparities among the 38 companies that have signed up. Several loan servicing companies--including American Home Mortgage Servicing and National City Bank--have not modified a single loan. So far, more than 400,000 offers have been extended to 2.7 million eligible borrowers. More than 235,000 borrowers, or nine per cent of that group, have enrolled in three-month trials.
Houston PBS is launching a series of programs on channel 8 this evening to connect viewers with foreclosure prevention resources. The initiative begins with a live, hour-long special this evening at seven called Facing the Mortgage Crisis: A HoustonPBS Town Hall Meeting. KUHT-TV also plans a series of short, informative on-air spots, each one answering frequently-asked questions about home ownership.
White House Energy and Climate Adviser Carol Browner has told automotive, academic and government leaders that fuel efficiency and emissions standards are part of an ongoing commitment to help the industry recover and retool. Browner was part of a panel discussion near Detroit. It focused on advanced vehicle research and development in Michigan. Congressman Gary Peters also participated. The Michigan Democrat has sponsored a bill designed to expand advanced technology passenger and commercial vehicle development. Some panelists talked about raising the federal fuel tax for the first time since 1993. It feeds the U.S. highway trust fund for roads, bridges and other infrastructure projects.
Vice President Joe Biden says the Obama administration's $787 billion stimulus program is meeting its goals in revving up the ailing economy. Biden told reporters that spending by state and local governments increased in the last quarter, as did household incomes, while investments by businesses had contracted less than expected. He also said that home and car sales are rising as well, thanks to government incentive programs. Biden credited the stimulus program for the positive numbers, and said he can say "without reservation" that it is working. The vice president commented after meeting at the White House with members of the administration's economic team.
The Treasury Department says it will need to borrow $406 billion in the current July-to-September quarter, down from its April estimate of $515 billion. The projected borrowing, while significant, also is below the $530 billion it borrowed in the same period in 2008. Treasury officials say the reduced estimate is due to several factors, including large banks repaying $70 billion in bailout money in June. The department also says it expects to provide less assistance to the financial sector and to mortgage giants Fannie Mae and Freddie Mac than previously forecast. The treasury says it expects to borrow $486 billion in the October-December quarter, down from $569 billion in the same period last year.
The White House is turning to the Internet to hit back at a Web posting that claims to show President Barack Obama explaining how his health care reform plans eventually would eliminate private insurance. The three-minute White House video features Linda Douglas, a former network television correspondent and now White House Office of Health Reform communications director, sitting in front of a computer screen showing the Drudge Report Web site. That site carries a series of video clips from another blogger who strings together selected Obama statements on health care to make it appear he wants to eliminate the private health insurance business. In the video Douglas says the site is "taking sentences and phrases out of context, and they're cobbling them together to leave a very false impression."
An Iraqi oil official says oil exports increased in July to the highest level in Iraq since the 2003 U.S.-led invasion. Oil Ministry spokesman Assem Jihad said that exports averaged 2.037 million barrels per day, an increase from 1.925 million barrels in June. Before the invasion, Iraq exported about 2.4 million barrels a day. Jihad says the average price in July was about $60 a barrel. That's down from $64 a barrel in June. Iraq is struggling to boost its oil exports as plummeting prices have forced the country to slash its budget. Oil revenues account for about 95 per cent of Iraq's revenue.
Kuwait's energy minister says he hopes oil prices will stay between $70 and $80 a barrel till the end of the year. Sheik Ahmed al Abdullah al Sabah however says prices should not rise above $100 because this could backfire on producers by lowering demand. He spoke in Rome to the state-owned Kuwait News Agency. Sheik Ahmed said the latest rise in oil prices to just over $70 reflects optimism that the world economy appears to be rebounding from recession. Prices have modestly improved following OPEC's decision to cut production by 4.2 million barrels from September levels. The cartel, of which Kuwait is a key member, will meet in September to review production policy.
Health insurers, unions and other private groups that paid for prescriptions for withdrawn painkiller Vioxx have an agreement with its maker to settle their claims for $80 million. Such third-party payers have filed about 190 claims against drug maker Merck & Co. They said they would not have covered Vioxx had they known about its risks. Merck said in a regulatory filing that the company and the plaintiffs have agreed in principle to settle all outstanding claims. Merck took an $80 million charge for the settlement in the second quarter. The company still faces hundreds of lawsuits over Vioxx. It pulled the blockbuster painkiller from the market in 2004 because it doubled the risk of heart attack and stroke.
The Department of Transportation says U.S. airlines had more late flights in June than in May. The 19 airlines that report monthly on-time data also had more delayed flights during the month than the same time a year ago. DOT reported that Hawaiian Airlines once again had the best on-time performance, while Comair--a subsidiary of Delta Air Lines--had the worst. The most frequent causes for flight delays included airport congestion, equipment problems and weather. The airlines report the causes of delays in broad categories--such as "extreme weather" and "national aviation system delay"--that were created by the airlines, industry groups, travel agents and government officials. Houston-based Continental Airlines has an on-time rate of 80.5 per cent. Dallas-based Southwest Airliens had an on-time rate of 78.1 per cent.
General Motors says it's launched a pilot leasing program, its first after largely doing away with the practice at the height of the credit crisis. GM says lease offers will initially be available on the 2009 Cadillac CTS, Chevrolet Mmalibu and Traverse. For 2010 models, leases will be available on the Cadillac SRX, Buick LaCrosse and Enclave, the GMC Acadia and the Chevrolet Equinox. No security deposit will be required. The pilot is currently planned to run through the end of August. The leases will be offered by U.S. bank. They're part of a pilot program that includes select GM vehicles sold in New York, New Jersey, Connecticut, Michigan and Ohio. The lease on the new Cadillac SRX will be offered by U.S. bank nationally.
A unit of Panasonic will end production of audio speakers and electronic capacitors in Tennessee and move the division headquarters to Texas to be closer to manufacturing operations in Mexico. The Knoxville News Sentinel reported that Knoxville-based Panasonic Electronic Devices Corporation of America is transferring speaker production to Reynosa, Mexico, and snap-in capacitor production to Asian factories. The division headquarters is moving to McAllen, to be nearer the Mexico plant. Company spokesman Clark Brandon said the moves will eliminate 90 jobs in Knoxville, leaving 80 employees in a facility that had more than 700 at its peak in 2002. Tokyo-based parent Panasonic posted a loss for a third straight quarter on Monday.
Radioshack on Thursday gets a new nickname: "The Shack." The Fort Worth-based electronics retailer says customers, associates and investors have long referred to the company as the Shack. Chief Marketing Officer Lee Applbaum says the company "decided to embrace that fact and share it with the world." Radioshack in July announced the addition of T-Mobile to its lineup of wireless carriers in about 4,000 stores. The company also is joining seven-time Tour de France winner Lance Armstrong of Austin to sponsor his new American pro-tour cycling team and work on his fight against cancer. Armstrong, who finished third in this year's tour, is a cancer survivor.
A little prairie grouse could give the wind energy industry big fits. The lesser prairie chicken is close to making the list of threatened or endangered species. If it makes the list, there would be significant restrictions on companies hoping to erect towering, turbine-topped pylons across five states. The region is believed to have some of the nation's best wind energy potential. Scientists believe the prairie chicken population has dropped 80 per cent nationally since 1963. The blame goes to habitat loss and fragmentation, population isolation, drought and changes in land usage. They once numbered about three million across an area that stretches through eastern New Mexico, eastern Colorado, western Kansas, northwest Oklahoma, and in parts of the Texas Panhandle and South Plains. Estimates show their population now at about 30,000. Their habitats lie in areas with plentiful and strong wind resources--where energy companies are anxious to build.
A San Antonio dealership's make-it-rain promotion during the Texas drought could leave some new car buyers with paid-off vehicles. World Car Nissan would pay if it rains at least two inches on Saturday. The time frame is 6 a.m. to 6 p.m. CDT, with the moisture measurement at San Antonio International Airport. A promo says anyone who bought a new 2009 Nissan Altima from the dealer between July 15th and August 1st would qualify to get the car for free if the rainfall total reaches two inches. The extended forecast for San Antonio from the National Weather Service showed less than a 20 per cent chance of showers by Saturday night. KENS-TV reports the dealership has taken out an insurance policy for the promotion.Earnings
Fort Worth homebuilder D.R. Horton's third-quarter results are providing another sign that the battered housing market is limping out of its recession. The company says its losses for the three months ended June 30th shrank from the year-ago period, besting Wall Street estimates. That's as the builder took smaller charges against the falling values of its land and unsold homes. It also saw new home orders jump 22 per cent from the March quarter. Horton said it trimmed its third quarter 2008 loss by 64 per cent to $142.3 million. The builder's quarterly revenue fell by 36 per cent to $914.1 million. However, the figure beat analyst expectations of $792.1 million for the quarter.
Whole Foods Market says its third-quarter profit grew nearly three per cent as sales at the natural and organic grocery chain rose. The results beat forecasts. The Austin-based company said that it earned $35 million, or 25 cents per share, for the quarter. That's up from $34 million in the period a year earlier. Analysts polled by Thomson Financial expected the company to earn revenue of $1.86 billion. Although sales at stores open at least a year slipped slightly, the company's total sales rose two per cent to $1.9 billion, ending a slump of several quarters for the high-end grocer. The recession hit Whole Foods hard as shoppers cut their spending.