Golden Fibonacci

July 28 (Bloomberg) — A gauge of U.S. house prices posted its first monthly gain in three years, providing some solace to consumers shaken by rising joblessness.

The S&P/Case-Shiller home-price index rose 0.5 percent in May from the prior month, the first gain since July 2006 and biggest since May of that year, the group said today in New York. A Conference Board report showed consumer confidence this month fell more than forecast.

Stabilization of the worst housing market since the 1930s and a rebound in stocks may bring an end this quarter to the record slump in household wealth. Even so, Americans are likely to boost savings and limit spending as unemployment is projected to top 10 percent by early 2010, restraining any recovery from the deepest recession in five decades.

“The fact that home prices may be finding some semblance of stability is good news that things are not likely to get worse,” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “Folks are still concerned about their jobs” and “the loss of housing wealth is going to weigh on consumer spending for years to come.” Ream more »

July 27 (Bloomberg) — The Obama administration’s economic leaders assured Chinese counterparts they will rein in a record budget deficit as China underscored its concern about preserving the value of its holdings of Treasuries.

“China has a huge amount of investment in the U.S.” and “we are concerned about the security of our financial assets,” Assistant Finance Minister Zhu Guangyao said in a press briefing at the end of the first of two days of talks in Washington. Treasury Secretary Timothy Geithner said in opening remarks that the U.S. will ensure a “sustainable” deficit by 2013.

In a shift from Bush administration meetings, officials indicated little sign of tension over the value of China’s yuan, which U.S. lawmakers have labeled as artificially cheap and an aid to Chinese exports. That may be because the “best idea is just to keep the yuan-dollar rate stable” given U.S. need for Chinese demand for Treasuries, said Ronald McKinnon, a professor of economics at Stanford University.

“The Chinese are trapped with supporting the value of the dollar,” McKinnon said in a telephone interview from Stanford, California. “If they withdrew from the market, there’s a big appreciation” of the yuan as a result that would send China’s exports down, he said. Ream more »

By Jesse Riseborough and Rebecca Keenan

July 27 (Bloomberg) — Rio Tinto Group is known for playing hardball when negotiating iron-ore prices, prompting Japanese steelmakers to present the company with a faceless doll as a tribute during one round of talks.

“The gift signaled how tough Rio had played the negotiations,” Doug Ritchie, the London-based company’s global head of strategy, said in May. Now Rio faces higher stakes in China, which overtook Japan in 2003 as the world’s biggest buyer of iron ore, and this month arrested four of the company’s executives as annual price talks with Chinese mills stalled.

China, destination for half of the $52 billion global seaborne iron ore trade, has accused four members of Rio’s iron ore team in Shanghai, including Australian Stern Hu, of stealing state secrets. Hu’s detention by Chinese security officials is related to a criminal probe into the talks, Australia’s foreign minister Stephen Smith said this month.

“What they appear to be wanting to do, in classic Stalinist fashion, is discipline the steel industry and intimidate their negotiating partners at the same time,” said Paul Monk, founder and director of Austhink Consulting in Melbourne, and former China analysis head at Australia’s Defence Intelligence Agency. “From a point of view of a state that is trying to establish its credentials in the market economy of the world, it is a really stupid thing to have done.” Ream more »

July 23 (Bloomberg) — U.S. stocks rose, sending the Dow Jones Industrial Average above 9,000 for the first time since January, as EBay Inc., Ford Motor Co. and AT&T Inc. posted better-than-estimated results and home resales increased more than forecast.

EBay rallied 11 percent as its earnings signaled consumers’ appetite for online commerce is starting to recover. Ford jumped 9.4 percent after topping analyst estimates by paring expenses and adding market share. AT&T added 2.6 percent as new customers of Apple Inc.’s iPhone bolstered profit. D.R. Horton Inc. led all 13 stocks in an index of homebuilders higher as sales of existing homes increased for a third straight month.

The Standard & Poor’s 500 Index climbed to the highest level since President Barack Obama was elected on Nov. 4, advancing 2.3 percent to 976.29 at 4:06 p.m. in New York. The Dow gained 188.03 points, or 2.1 percent, to 9,069.29, the highest since the day after Election Day. The Nasdaq Composite Index surged 2.5 percent to 1,973.6 for a 12th straight gain, its longest streak since 1992 and highest level since October. Ream more »

July 23 (Bloomberg) — President Barack Obama has rock-star appeal among the investing class — except in his own country.

The Quarterly Bloomberg Global Poll of financial investors and analysts finds attitudes about the new president in Asia and Europe are overwhelmingly positive. In the U.S., by contrast, they are slightly negative.

In Europe and Asia, 87 percent of respondents say they view Obama positively, compared with just 49 percent in the U.S. His standing among American investors is even lower on economic matters: only a quarter of U.S. poll respondents rate his economic policies as “good” or “excellent,” compared with more than half in Europe and Asia.

Obama’s “stratospheric favorability ratings” outside the U.S. after five months in office are related to attitudes about his predecessor, former President George W. Bush, says J. Ann Selzer, the president of Selzer & Co., a Des Moines, Iowa-based polling firm that conducted the survey. Ream more »

Caterpillar earns fall but company lifts forecast on signs global stimulus is starting to work

• By Daniel Lovering, AP Manufacturing Writer
• On Tuesday July 21, 2009, 6:30 pm EDT

Caterpillar Inc.’s second-quarter profit tumbled on slumping sales of heavy equipment and the cost of staff cuts, but it saw signs that the global economy is starting to stabilize after a prolonged slide.

The company boosted its 2009 profit forecast, citing evidence that government stimulus plans, particularly in China, are beginning to work. The company’s global reach and diverse products — from bulldozers to mining trucks to cargo ship engines — give a snapshot of industrial strength. Ream more »

July 21 (Bloomberg) — Asian stocks advanced as CIT Group Inc. obtained a loan to allow the company to avoid bankruptcy and Goldman Sachs Group Inc. raised its estimate for the U.S. Standard & Poor’s 500 Index on improving earnings.

Macquarie Group Ltd., Australia’s biggest investment bank, added 1.9 percent, while Canon Inc., a Japanese camera maker that gets a third of its sales from the Americas, climbed 2.3 percent. BHP Billiton Ltd., the world’s largest mining company, gained 1.4 percent as oil and metals prices continued to rise.

“CIT’s bridge financing and the target boost to the S&P 500 by Goldman Sachs spurred gains in the U.S. and will feed into the market here today,” said Fumiyuki Nakanishi, a Tokyo- based strategist at SMBC Friend Securities Co. “Confidence is rising that the worst is over for the U.S. economy.” Ream more »

The IPO, slated to take place next year, may raise as much as $8 billion, people familiar with the matter said in May. Deals of that size in Hong Kong have typically yielded their underwriters a total of 2.5 percent of the IPO, and Morgan Stanley, as co-global coordinator, might get about 36 percent of that amount, according to the Fed document. Deutsche Bank AG was selected as AIA’s other global coordinator.

Morgan Stanley is entitled to transaction fees if any of 11 major AIG business units are sold. For instance, if AIG were to sell its American Life Insurance Co. unit for $11 billion, Morgan Stanley would earn about $23 million. Ream more »

July 17 (Bloomberg) — Suicide bombers attacked the Ritz Carlton and JW Marriott hotels in Jakarta, killing eight people and injuring at least 53 in Indonesia’s first terrorist attack in almost four years.

Investigators are still trying to determine which group sent the two bombers to the hotels, national Police Chief Bambang Hendarso Danuri told reporters. There was no immediate statement of responsibility for the attacks.

The blasts at about 7:45 a.m. local time today rocked the buildings in an up-market shopping and business district, ripping the facade off the Ritz, blowing out windows and showering the street with glass and debris. The dead include the New Zealand-born president of cement maker PT Holcim Indonesia. Ream more »