August 10, 2009 Issue Posted July 29, 2009, 4:55PM EST

Executive Summary

null

Homebuilding in Denver: Prices indicate that housing may have hit bottom Rick Wilking/Reuters

null

Housing: Signs of Life

Have home prices finally hit the basement floor, or is this just a pause on the staircase to the subbasement? Even housing bears were impressed by the July 28 report that the Standard & Poor's/Case-Shiller 20-City Composite Home Price Index was basically even from April to May. The seasonally adjusted 0.2% decline was the smallest since February 2007. A day earlier, the Census Bureau said sales of new single-family homes rose a seasonally adjusted 11% from May to June as the supply of unsold homes dropped below 9 months' worth from more than 10. All well and good, but skeptics pointed out that with unemployment heading toward double digits, fresh foreclosures could still overwhelm the market.

—Edited by Harry Maurer & Cristina Linblad

They're Still Not Lending

It's simple: For businesses to grow and the economy to expand, banks have to start making loans. So far, that's not happening, according to The Wall Street Journal on July 27. In analyzing Treasury Dept. data, the paper found the total amount of loans held by 15 large U.S. banks dropped by 2.8% in the second quarter from the first. True, the number of loans at the banks rose in April and May, but that was mostly the result of mortgage refinancings and credit renewals to existing business customers. The banks reviewed by the Journal include Bank of America (BAC), Citigroup (C), Fifth Third Bancorp (FITB), JPMorgan Chase (JPM), and Regions Financial (RF).

—Edited by Harry Maurer & Cristina Linblad

Limits on the Shorts?

The feds once again have the shorts in their sights. The SEC on July 27 proposed new rules governing short-selling, in which traders sell borrowed stock with the aim of buying it back at a lower price. Shorts have been blamed for everything from manipulation of stock prices to causing the financial crisis. At the height of the sell-off, the SEC pushed through ad hoc rules to prevent abuses. Now it's making permanent rules that will help eliminate naked short-selling, the practice of shorting shares without borrowing them first. The commission also proposed guidelines that would require exchanges to publish daily short sale data as well as delayed information on individual trades, moves that could go into effect in a few weeks. Other changes could come after a roundtable for all concerned parties, to be held on Sept. 30. Still no word on whether the SEC will restore the uptick rule, which requires shorts to sell stocks at prices higher than the previous trade. The commission has been pondering that measure since April.

—Edited by Harry Maurer & Cristina Linblad

A Pullback in China

After climbing virtually nonstop to notch a gain of more than 90% this year, the Shanghai Stock Exchange finally took a serious breather on July 29, shedding 5% and leaving many to wonder whether the bubble is beginning to hiss. Meanwhile, across the world in Washington, the U.S. and China wrapped up the two-day Strategic & Economic Dialogue with renewed pledges not to engage in tit-for-tat protectionism. But Beijing's delegation took the opportunity to fret publicly and repeatedly about the U.S. deficit and the necessity to shore up the greenback.

—Edited by Harry Maurer & Cristina Linblad

Oil and Speculators

Oil traders are the bad guys after all—or so the Commodity Futures Trading Commission is expected to claim in August. CFTC Commissioner Bart Chilton told The Wall Street Journal on July 27 that a forthcoming review of spiking oil prices will suggest that speculators play a big role in wild swings. Earlier analysis by the CFTC that blamed supply-and-demand conditions was based on "deeply flawed data," Chilton said. CME Group (CME), which owns the oil futures pit among other commodities trading venues, is worried about calls for what it says is "inappropriate regulation" of such markets. The new report could pump up the pressure for more oversight.

—Edited by Harry Maurer & Cristina Linblad

BofA Shrinks

Available for lease: Vacated bank branches—thousands of them. Looking to cut costs, and with more Americans using the Internet and their cell phones to manage basic banking tasks, Bank of America says it will shrink its network of 6,109 branches over the next three years by an unspecified number, though consultants say a 5% to 10% reduction isn't out of the question. As the housing boom drew would-be homeowners looking for mortgages, the total number of U.S. bank branches doubled, to more than 90,000, between 1990 and 2006.

—Edited by Harry Maurer & Cristina Linblad

Airbus Aftermath?

The lengthy investigation into alleged insider trading at Airbus could be coming in for a landing. Various French media outlets reported on July 29 that the nation's stock-market regulator is recommending millions of dollars in fines on three current and four former executives. They include the sales chief, John Leahy, who may face a $5.1 million penalty, and former CEO Noël Forgeard, who could be slapped with a $7.7 million fine. Both have denied wrongdoing. The stock regulator's inquiry focuses on whether executives sold stock before the company revealed production snafus on the A380.

See "Airbus Execs Could Face Stiff Insider-Trading Fines"

—Edited by Harry Maurer & Cristina Linblad

BW Mall - Sponsored Links

Buy a link now!