Thursday PM April 15th, 2010
by: Ed Mayberry, April 15, 2010 9:04:00 pm
Apache is buying Mariner Energy for $2.7 billion to extend its deepwater projects in the Gulf of Mexico. Apache is offering cash and stock worth about $26.22 per share for Mariner Energy, a premium of 45 percent over Wednesday's closing price. Apache, based in Houston, is also assuming $1.2 billion in debt. Mariner, also based in Houston, has principal operations in the Permian Basin, the Gulf Coast and the Gulf of Mexico. Apache operates in the U.S., Canada, Egypt, the United Kingdom North Sea, Australia and Argentina.
The number of newly laid off people signing up for unemployment benefits rose sharply for the second straight week, suggesting that jobs are still hard to come by even as the economic recovery gains traction. The Labor Department reported this morning that first-time requests for jobless benefits rose by 24,000 last week to a seasonally adjusted 484,000--the highest level since late February. Economists were predicting claims would fall. Still, a government analyst cautioned that the figures were clouded by seasonal adjustment difficulties related to the Easter holiday.
The National Association of Home Builders says its housing market index climbed in April, buoyed by improved sales as homebuyers raced to qualify for tax incentives due to expire this month. The Washington-based trade association said its index rose four points to 19, the highest reading since September. Readings below 50 indicate negative sentiment about the market. The last time the index was above 50 was in April 2006. The report reflects a survey of 417 residential developers nationwide. The reading for current sales conditions jumped five points to 20. The index measuring foot traffic from prospective buyers rose four points to 14, while the index for sales expectations over the next six months inched up one point to 25.
Foreclosures have hit record numbers in the first three months of the year. RealtyTrac says the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. And households facing foreclosure have grown 16 percent in the same period. More houses are scheduled for foreclosure sale than in any quarter going back to at least January 2005. That's when RealtyTrac began reporting the data. Foreclosures began to ease last year as the Obama administration pressured banks to modify home loans for troubled borrowers. Some states enacted foreclosure moratoriums to give homeowners time to catch up on their payments. These factors have helped slow the pace of foreclosures, but now that trend appears to be reversing.
Shares of Continental Airlines and the parent of United Airlines rose after the New York Times reported that the carriers are talking about combining. The newspaper's Dealbook blog cites people briefed on the discussions, who said the talks are in early stages and could still collapse. The news comes a week after reports that United and US Airways have been talking about combining. A spokesperson for United said it doesn't comment on rumors. Continental Airlines, which rejected a combination with United in 2008, also wouldn't comment.
Federal officials have dealt labor unions at American Airlines a setback by refusing to start a 30-day countdown toward possible strikes. The National Mediation Board told management and two unions that they should continue to bargain over new contracts while the board considers the unions' requests to declare a stalemate in negotiations. The unions have been negotiating to update contracts that came up for renewal in 2008. They are making pay demands opposed by American, which says it must control labor costs. The pilots are holding separate negotiations with American, but their union hasn't yet taken steps toward a possible strike.
Southwest Airlines' CEO says his company is reducing its work force and won't be hiring this year as it deals with high jet fuel prices. CEO Gary Kelley says employment is being reduced through attrition. And he says there are no plans to hire this year. After growing rapidly earlier in the decade, Southwest scaled back last year amid the drop in travel. The airline added service to four new cities but reduced flights overall by eliminating many unprofitable ones. Southwest's work force declined by more than two percent last year. Kelly didn't say how many jobs have been eliminated this year. A company spokesman says the figure would be revealed next week, when Southwest reports first-quarter financial results.
Industrial production edged up 0.1 percent in March, lagging expectations despite growth in the key manufacturing sector. The results underscore the uneven but spreading economic recovery. The Federal Reserve reports that manufacturing, the index's largest component, rose 0.9 percent in March, led by gains in durable goods industries. But utilities dropped 6.4 percent after February's snow boosted output. The modest overall gain matches February's result, reflecting a slow but steady upswing in the activity at factories, utilities and mines. But analysts expected a rise of 0.7 percent. The index's consistent gains, however, suggest the economic recovery is durable.
Texans saw an incremental increase in retail gasoline prices this week. The weekly AAA Texas price survey shows the average price of regular unleaded gasoline in Texas is $2.75 per gallon, a penny more than last week. Nationally, that average price is $2.86 per gallon, two cents more than last week. The cheapest gasoline in Texas is in San Antonio, where the average price of regular unleaded gasoline remains unchanged at $2.68 per gallon. The most expensive is in Beaumont, where the average price rose a penny this week to $2.79 per gallon. An auto club statement says crude oil prices topped $87 per barrel this week but still showed some weakness. However, Chinese demand for oil was nearly 30 percent higher in march than the previous March.
The University of Texas System has reversed course and released its last three tax returns. The returns were sought in January by the Austin American-Statesman under the Texas Public Information Act. The UT System asked the State Attorney General's Office on whether the information was public, then withdrew the request and released the returns. The 15-campus UT System is being audited by the Internal Revenue Service. The filings list business income unrelated to the system's educational mission. The system had $23.1 million in such income during the fiscal year that ended August 31st, 2008, such as for rental of the Erwin Center in Austin. Salaries, supplies and other deductions offset the income, with no tax owed. A previous overpayment led the system to claim a $3.3 million refund in 2007 and a $200,000 credit for 2008.
A Republican who has helped shape controversial legislation overhauling financial regulation says he's confident a bipartisan agreement can be found. But Tennessee Senator Bob Corker tells ABC's Good Morning America that both parties must work together to solve problems with the bill. Senate Republican leader Mitch McConnell of Kentucky has condemned it as perpetuating a system of bailouts for large, failing banks and investment houses. Corker urged lawmakers to "tone down the rhetoric a little bit." He said there are loopholes in the Senate version that could be construed as making future bailouts more likely. But Corker also said, "my sense is, Republicans do want to see a regulatory bill of t his type come to fruition."
Despite some tax day rhetoric, Americans are paying lower taxes this year. Don't expect it to last. Congress cut individuals' federal taxes for this year by about $173 billion shortly after President Obama took office, dwarfing the nearly $29 billion in increases by states. In the next few years, however, many can expect to pay more. Some future increases were enacted as part of Obama's health care overhaul. And former President Bush's tax cuts expire in January. Obama and the Democrats want to renew only some of them, thus raising taxes for individuals making more than $200,000 and couples making more than $250,000. As the April 15th federal deadline passes, the debate about future tax increases has Republicans in Congress and conservatives across the country portraying Democrats as tax-and-spend liberals even before any new levies are approved. The discussion also is helping frame the Congressional elections this fall.
The head of the agency that regulates the Post Office is questioning the need to eliminate Saturday mail delivery--even as the postmaster general urges lawmakers to approve that plan. Postmaster General John Potter told the House Oversight and Government Reform Committee that the post office is on the brink of insolvency. Potter says the way Americans communicate has changed dramatically, and the Postal Service has "got to change with it." But Ruth Y. Goldway, who heads the independent Postal Regulatory Commission, said the post office should find new ways to meet the country's needs rather than beginning with the idea of cutting service.
Rates for long-term mortgages dropped this week but still remained above five percent. Mortgage financier Freddie Mac said that the average rate on a 30-year fixed rate mortgage was 5.07 percent this week, down from 5.21 percent a week earlier. Last week's average rate for a 30-year fixed mortgage had been the highest since mid-August, when it was 5.29 percent. Rates had dropped to a record low of 4.71 percent in December, pushed down by a campaign by the Federal Reserve to reduce borrowing costs for consumers. The program ended at the end of March, but the Fed left the door open to reviving the program if the economy weakens. Low rates make mortgages less expensive for homebuyers.
The people in charge of putting out the news are thrilled that technology is giving them new tools for their craft. But the people who run the news business are still searching for ways to slow the erosion of revenue that threatens many media companies. That was the message that came across at the American Society of News Editors annual conference. To cap four days of sessions on everything from e-readers to nonprofit news groups, the organization had a panel of media executives who tried to answer the question, "where do we go from here?" The group noted that even as the Web upends the business models newspapers used to rely on, it has opened up new possibilities for getting content to readers.