Tuesday PM October 26th, 2010
by: Ed Mayberry, October 26, 2010 8:10:00 pm
A monthly survey shows Americans' confidence in the economy rose only slightly in October from September. Worries about the job market are still crimping shoppers' outlook heading into the key holiday shopping season. The Conference Board, a private research group, says that its consumer confidence index rose to 50.2 from a revised 48.6 in September. Economists surveyed by Thomson Reuters were expecting 49.2. It takes a reading of 90 to indicate a healthy economy. That level hasn't been approached since the recession began in December 2007. Economists watch confidence closely because consumer spending accounts for about 70 percent of U.S. economic activity and is critical to a strong rebound.
Home prices are weakening around the country, even in metro areas that were showing strength earlier in the year. The Standard & Poor's/Case-Shiller 20-city home price index fell 0.2 percent in August from July. Fifteen of the cities showed monthly price declines. Prices are expected to drop further in the coming months. The biggest drop was in phoenix. Prices there fell 1.3 percent from a month earlier. Prices in San Francisco and Los Angeles, which had been increasing, both fell in august from July. Detroit, Chicago, Washington, New York and Las Vegas were the only cities to show monthly price increases. The 20-city index has risen 6.7 percent from their April 2009 bottom. But it remains nearly 28 percent below its July 2006 peak.
Two days of hearings are under way in Washington into the safety implications of partnerships between major airlines and smaller carriers. The National Transportation Safety Board is reviewing so-called “code sharing” agreements like the one between Continental Airlines and Colgan Air. It operated a commuter plane that crashed last year near Buffalo, killing 49 passengers and crew members and one person on the ground. Regional airlines now account for half of domestic departures and a quarter of the seats filled with passengers. The last six fatal domestic airline crashes in the U.S. all involved regional airlines. Pilot performance has been cited as a factor in four of those, including the Buffalo crash.
Audit, tax and advisory firm KPMG is being investigated by British regulators over audits it carried out for arms manufacturer BAE Systems. The accountancy and actuarial discipline board says it was looking into commissions paid by BAE and also “professional advice, consultancy and tax work” carried out by KPMG between 1997 and 2007. KPMG says the company doesn't believe there has been any act of misconduct and is cooperating with the inquiry. If found guilty of misconduct, KPMG faces an unlimited fine and the potential banning of executives from the industry. BAE earlier this year agreed to pay record fines totaling around $450 million in Britain and the United States to settle long-running corruption allegations relating to deals in Saudi Arabia and Tanzania.
Executives from three leading oil and gas companies are giving evidence to a panel of British lawmakers considering if the country needs tighter regulation of deepwater drilling. Chevron, France's Total and Danish state-controlled oil and gas group Dong Energy are offering testimony to Parliament's energy and climate change committee. The legislators are investigating the safety implications of the Gulf of Mexico spill in the U.S., and whether the U.K. government was correct in failing to put in place a moratorium on new deepwater drilling in the North Sea. Last month, the then-outgoing BP CEO Tony Hayward told the panel he believed deepwater drilling was safe, and would be necessary to meet demand for oil and gas.
Valero Energy posted a third-quarter profit after reporting a loss in the same period last year. America's largest independent oil refiner earned $292 million for the three months ended September 30th. That compares with a loss of $629 million in the same period last year. Revenue increased 20 percent to $22.21 billion. Analysts had expected revenue of $20.19 billion, according to Thomson Reuters. The San Antonio company said operating profits increased $2.79 per barrel year-over-year, due to higher margins for diesel fuel and higher production volumes.
Consumer Reports magazine says Honda and Toyota still make the most problem-free cars and trucks, but Ford is closing in fast and General Motors has made big improvements in the past year. Consumer Reports is widely used by buyers to judge car and truck reliability. The magazine says it's the third-largest factor used by Americans to pick vehicles, topped only by brand loyalty and recommendations from friends and family. The magazine's 2010 rankings also show gains for Korean automakers Hyundai and Kia and a strong performance from Japan's Suzuki. European automakers generally fared poorly, as did the Jeep, Dodge and Chrysler brands. The magazine is basing its rankings on surveys returned by 960,000 of its subscribers.
German automaker BMW is issuing recalls involving about 150,000 luxury vehicles to fix faulty fuel pumps that could cause vehicles to lose power. One recall involves 130,000 vehicles, including the 2007-2010 335i; 2008-2010 135i, 535i and X6 XDrive35i sports activity coupe; and 2009-2010 Z4 roadster SDrive35i. They have twin-turbo inline six-cylinder engines featuring BMW's direct fuel injection system. The company will replace high-pressure fuel pump and update software. BMW recalled 20,800 2008 X5 sports activity vehicles with inline six-cylinder engines to replace the low-pressure fuel pump. BMW said there have been no reports of accidents or injuries. An ABC News investigation raised questions about the fuel pumps on Tuesday.
Ford's third-quarter net income rose 68 percent as it grabbed a bigger share of the U.S. auto market and buyers paid more for its highly-rated cars and trucks. It was Ford's sixth straight quarterly profit. The automaker says it earned $1.7 billion, beating Wall Street estimates. Ford earned $1 billion in the same quarter a year earlier. Revenues fell three percent to $29 billion. But excluding revenue from Volvo, which was sold, revenues rose. The automaker says it expects to end the year with as much cash as it has debt, a year earlier than it had previously forecast.