Prices Up, Confidence Down

The seasonally adjusted producer price index for finished goods jumped a sharp 1% in January, after dropping in December by a revised 0.3%. The core PPI, minus volatile food and energy, rose 0.4%—considerably less, but still a worrisome number, twice what analysts had predicted. Perhaps most alarming, for the 12 months ended in January the PPI is up 7.4% on an unadjusted basis, the highest since October, 1981.

Meanwhile, consumer confidence continues to slide, and no doubt price hikes play a role in that. The Conference Board reports that its consumer confidence index in February fell to 75, the lowest in 15 years.

Source: BusinessWeek

Google gets hammered

Shares of the search giant dropped as much as 8% in intraday trading after Internet research provider comScore reported that clicks on Google’s ad-sponsored links dropped 7% in January. Paid clicks were flat on a year-over-year basis. UBS and other firms immediately dropped their price targets for Google stock.

Source: Reuters

Big Blue’s big buyback

IBM, the world’s No. 1 computer-services company, is beginning a new stock buyback program that will total $15 billion, of which $12 billion may be spent this year. The move should boost earnings per share by five cents, the company figures. Last year, IBM bought back $18.8 billion worth of stock. Shares climbed to a four-month high in intraday trading on the news.

Source: Bloomberg

Housing: the drumbeat continues

Three new reports paint an ever-bleaker picture of the housing market. The S&P/Case-Shiller home price index for 20 metropolitan areas fell 9.1% in December from a year earlier, the biggest drop in the index’s 20-year existence. Seasonally adjusted prices for existing homes in the fourth quarter declined 1.3% from the previous three months, the sharpest fall since 1991, said the Office of Federal Housing Enterprise Oversight. And foreclosures nearly doubled in January from a year earlier, reports RealtyTrac.

Source: Bloomberg

Visa’s $17 billion IPO

Credit card operator Visa Inc announced that it would raise $17 billion in an initial public offering, the largest IPO ever in the US, and the second largest in the world. Some of the proceeds will be used to settle pending lawsuits, but most will be used to run the business and buy back stock from Visa’s member companies like bankers JPMorgan Chase and Bank of America. Increased use of credit cards has seen business surge. In the quarter ended Dec 31, revenues were up 76% to $1.49 billion, while profits doubled to $424 million.

Source: Bloomberg.com

U.S. wants promises from foreign sovereign funds

A delegation from the US Treasury department met with two of the world’s largest sovereign wealth funds – the Abu Dhabi Investment Authority and the Government Investment Corp. of Singapore - and urged them not to use their wealth to political advantage. The US is trying to formulate rules about such funds without discouraging them from investing in the U.S. market, which is currently in the doldrums. Such funds have recently bailed out US banks like Citigroup and Merrill Lynch, and even Europe’s UBS AG.

Source: Reuters

Biggest buyout package at Ford

In the biggest,richest buyout package ever offered by the auto industry, Ford Motor Company is offering its workers a one-time cash payment offer of up to $140,000. Ford, which has 54,000 hourly workers, and reduced its workforce by 32,000 over the past two years, would like to cut 8,000 more jobs. The company says this the last companywide offer, after which there could be more layoffs if necessary.

Source: The New York Times

U.S. repeats demand for IMF reform

The U.S. wants to International Monetary Fund to shake up its Executive Board and shareholding structure to accommodate the greater importance of emerging markets. The IMF is already facing pressure to cut $100 million of its budget. If the bank agrees to a reform package quickly enough, Washington will seek approval from the U.S. Congress for the sale of some of the IMF’s gold to help finance its operations.

Source: Financial Times

Boeing vs. Northrop

Boeing and Northrop Grumman are in competition for a $40 billion contract to supply the U.S. Air Force with 179 new refueling tankers. With the defence build-up led by President Bush slowing down, the contract is likely to be the last major aircraft acquisition for a while. Boeing is already the largest provider of refueling tankers to the US, used in both Afghanistan and Iraq. Northrop’s versions are used by Great Britain, Australia and Saudi Arabia. The Pentagon’s Defence Acquisition Board is expected to make a decision today.

Source: BusinessWeek

Sarkozy criticizes SocGen’s Bouton

French president Nicholas Sarkozy criticized Daniel Bouton, the chairman of France’s troubled, second-largest bank, Societe Generale, for not stepping down amidst a “disaster of this magnitude.” SocGen saw $7.3 billion in rogue-trading losses Jan 24, and posted record fourth quarter losses. The bank’s board has urged Bouton to stay, fearing the bank would become a takeover target from France’s top player, Banque Paribas. France’s largest employers’ union supports Bouton’s position, as does Sarkozy’s own Finance Minister, Christine Lagarde, who feels the decision is up to the board.

Source: Reuters