Editors: Bloomberg News moves a combined business/general news budget at 13:30 New York time each business day. Graphics and photos can be found at www.bloomberg.com/photos or www.bloomberg.com/newsfeed.
Stories identified with the prefix PUBLISH in the slug have been shaped for newspaper use, and the suffix -TRIM indicates the original version has been shortened. All move times are New York time. Inquiries should be directed to Jon Bixby in content syndication, firstname.lastname@example.org or number for the department is TOP BUSINESS NEWS
Major companies due to report earnings after the 16:00 close of regular trading in New York: MetLife Inc. (MET), Motorola Mobility Holdings Inc. (MMI)
S&P 500 Extends Biggest Monthly Rally Since 1987 on Europe Deal
U.S. stocks rose, extending the biggest monthly rally since 1987 for the Standard & Poor’s 500 Index, as European leaders agreed to expand a bailout fund to $1.4 trillion and American economic growth accelerated. Developing. US-STOCKS-FINAL to move by 17:00. By Rita Nazareth. Also see GLOBAL-MARKETS-WRAP, OIL- MARKET.
Europe Bolsters Crisis-Fighting Tools, Pledging Details to Come
European leaders bolstered their crisis-fighting toolbox with a plan that may generate only limited relief for stressed sovereigns unless it can be fleshed-out within weeks.
“It remains a deal long on intentions and short on details,” said Jens Larsen, chief European economist at RBC Capital Markets in London. “Until we know how the mechanisms will work, it will be hard to judge whether this will be sufficient to entice investors to provide support to European governments.”
Europe’s currency, stocks and bonds rose after 10 hours of talks ended in Brussels with governments boosting the heft of their rescue fund to 1 trillion euros ($1.4 trillion) and persuading bondholders to take 50 percent losses on Greek debt. Measures also included a recapitalization of European banks and a potentially bigger role for the International Monetary Fund in strengthening the bailout fund. 1620. Moved at 11:35. By James G. Neuger and Simon Kennedy. Also see MERKEL-SUMMIT-VICTOR, EUROPE-ASIA-RESCUE, PAPANDREOU-BANKS, EUROPE-BANK-STOCKS-JUMP.
U.S. Economy: Growth Accelerates as Consumers Boost Spending
The U.S. economy grew in the third quarter at the fastest pace in a year as Americans reduced savings to boost purchases and companies stepped up investment in equipment and software.
Gross domestic product, the value of all goods and services produced, rose at a 2.5 percent annual rate, up from 1.3 percent in the prior three months, Commerce Department figures showed today in Washington. Household purchases, the biggest part of the economy, increased at a 2.4 percent pace, more than forecast by economists.
Other data today showed that consumer confidence declined last week as Americans’ views of the economy sank to the since the recession, and the number of contracts to purchase previously owned U.S. homes unexpectedly fell in September. 1260. Moved at 12:25. By Alex Kowalski. Also see ECONOMY- CONSUMER-COMFORT, ECONOMY-PENDING-HOMES.
GRAPHIC: US_ECO_GDP_102711. Graphic shows quarter-over- quarter percentage changes in U.S. gross domestic product over time, breaking out key categories in the latest quarter. Available now in two sizes: 1C X 4.5 in. (45.9 mm X 114.3 mm) and 2C X 4 in. (96 mm X 101.6 mm)
Costco Seen Gaining Holiday Sales as Shoppers Skittish: Retail
Shoppers at stores from Best Buy Co. to Gap Inc. and Toys “R” Us Inc. all said in a recent poll that they’ll spend less this holiday season than last year. Customers plan to buy more at only one chain: Costco Wholesale Corp.
Such may be the story of the 2011 holiday shopping season, in which consumers who splurged last year focus their spending on more practical items amid persistent joblessness and choppy stock markets, said Pam Goodfellow, an analyst at Worthington, Ohio-based BIGresearch, whose consulting arm conducted the survey of 9,000 shoppers at 11 chains. 760. Moved at midnight. By Ashley Lutz.
Apple Converges With Chipotle as Companies With Low-Risk Returns
Investors flustered by the widest swings in the Standard & Poor’s 500 Index in two years may find refuge from the volatility in Apple Inc., Chipotle Mexican Grill Inc. and Ross Stores Inc.
The companies were among 118 in the S&P 500 with positive risk-adjusted returns in the six-month, 12-month, and three- and five-year periods ended last week, according to a Bloomberg data study. Six of the top 10 companies, including AutoZone Inc. and McDonald’s Corp., are tied to the consumer.
A European debt crisis, concern that the U.S. economy may slip back into recession and U.S. politicians’ squabbling over the deficit caused the S&P 500 to move more than 2 percent on 19 trading days last quarter, compared with 1 day the previous quarter. The Chicago Board Options Exchange Volatility Index rose to the highest average during the quarter in two years. 1310. Moved at midnight. By Thomas Black.
Corzine Copying Goldman at MF Sends Stock Down as Bet Fails
Jon Corzine, who won the top job at Goldman Sachs Group Inc. by leading the firm’s fixed-income unit, now says he’s responsible for trading decisions that have almost wiped out the stock-market value of his futures brokerage.
Since Corzine became chairman and chief executive officer of New York-based MF Global Holdings Ltd. in March 2010, he’s increased the firm’s risk and used its own money to trade, including investments in European sovereign debt that have tumbled in value. This week, the firm reported its biggest quarterly loss ever, Moody’s Investors Service cut its rating to one level above junk, shares plummeted 54 percent and 6.25 percent bonds issued in August fell into distressed levels. 1460. Moved at 12:05. By Matthew Leising. Also see MF-FITCH.
Ousted First Solar CEO’s $30 Million Pay Topped Chevron’s Chief
Rob Gillette, who stepped down as chief executive officer of First Solar Inc. this week after boosting panel manufacturing capacity during a slump, may be eligible for an $8.9 million severance package and collected $29.9 million for his initial 15 months on the job.
The world’s biggest maker of thin-film solar panels rewarded Gillette while its shares fell 60 percent from the day he started in October 2009 through Oct. 24, the day before he resigned. Compensation for Gillette, 50, is at least 19 percent more than Chevron Corp. CEO John Watson earned over the same period, when the U.S. energy company’s shares gained 54 percent. 750. Moved at 12:10. By Christopher Martin.
Sony Buys Ericsson’s Stake in Phone Venture for $1.5 Billion
Sony Corp. agreed to buy Ericsson AB’s 50 percent stake in their 10-year-old mobile-phone venture to integrate the smartphone business with its gaming and tablet offerings.
Ericsson will get 1.05 billion euros ($1.5 billion) in cash for its shares in Sony Ericsson Mobile Communications AB, the Stockholm-based company said today. The proceeds from the deal are higher than the book value of Ericsson’s stake. The Swedish company rose 6.1 percent to 70.75 kronor in Stockholm trading. Sony climbed 5.4 percent to 1,650 yen in Tokyo. 980. Moved at 11:55. By Jonathan Browning and Mariko Yasu.
Avon Sinks After Saying SEC Probing Contacts With Analysts
Avon Products Inc., the door-to-door cosmetics merchant, fell the most in almost three years after saying the U.S. Securities and Exchange Commission is investigating the company’s contacts with financial analysts.
The SEC issued a subpoena yesterday seeking documents and information about its interaction with “certain financial analysts and other representatives of the financial community” in 2010 and 2011, New York-based Avon said today in a filing. The SEC also has begun a formal investigation into a previously disclosed probe Avon was conducting at its international operations. The company said it is cooperating with the investigation. 310. Moved at 11:45. By Matt Townsend.
Nintendo Predicts First Annual Loss in 30 Years on Yen, 3DS
Nintendo Co., the world’s largest maker of video-game machines, forecast its first annual loss in at least 30 years after the yen reached a postwar high and the new 3DS console had weaker-than-expected sales. 790. Moved at 6:50. By Naoko Fujimura and Masatsugu Horie.
Exxon Mobil Profit Tops $10 Billion on Crude Oil Price Surge
Exxon Mobil Corp., the world’s largest company by market value, said net income exceeded $10 billion for a third consecutive quarter as rallying crude prices more than made up for the biggest production decline in three years. 500. Moved at 9:20. By Joe Carroll.
Chrysler Reports $212 Million Profit, Boosts Guidance for 2011
Chrysler Group LLC, the U.S. automaker majority owned by Fiat SpA, reported a third-quarter net income of $212 million and boosted its forecast for profit this year.
The profit compares with a net loss of $84 million during the same July through September period last year, the Auburn Hills, Michigan-based automaker said today in a statement. The average estimate of three analysts surveyed by Bloomberg was for net income of $211 million. 890. Moved at 12:25. By Craig Trudell and Tim Higgins.
P&G Quarterly Net Income Falls Amid Higher Commodity Costs
Procter & Gamble Co., the world’s largest consumer-products company, reported a 1.9 percent drop in first-quarter net income as higher costs for raw materials countered price increases and sales gains in emerging markets. 320. Moved at 9:50. By Lauren Coleman-Lochner.
Time Warner Cable Profit Misses Estimates on Subscriber Loss
Time Warner Cable Inc., the second-largest U.S. cable- television operator, reported third-quarter profit that missed analyst’s estimates after losing video subscribers. 440. Moved at 9:45. By Alex Sherman.
Mortgage Rates in U.S. Hold Near Record Lows, Freddie Mac Says
Mortgage rates in the U.S. were little changed, keeping borrowing costs close to the lowest level on record as the housing market stagnates.
The average rate for a 30-year fixed loan declined to 4.10 percent in the week ended today from 4.11 percent, Freddie Mac said in a statement. The average 15-year rate held at 3.38 percent, according to the McLean, Virginia-based mortgage- finance company. 230. Moved at 10:00. By Prashant Gopal.
TOP GENERAL NEWS
Supercommittee Flirts With Failure as November Deadline Nears
The congressional supercommittee seeking a long-term debt- reduction deal remains at an impasse with a deadline near, and the prospect of failure is prompting concern about further downgrades of the nation’s credit rating.
With the committee heading into what may be a make-or-break week for striking a deal over a package of at least $1.2 trillion in U.S. deficit cuts, members are deadlocked over Democrats’ insistence on tax increases, according to committee aides in Washington who spoke on condition of anonymity. 1040. Moved at midnight. By Heidi Przybyla.
U.S. House Votes to Repeal 3% Withholding Rule for Contractors
The House of Representatives today passed by a wide margin a bill to repeal a measure that would have required federal, state and local governments to withhold 3 percent of payments to government contractors starting in 2013.
The 405-16 vote sends the measure to the Senate where lawmakers are still debating how to offset the $11 billion that the repeal would cost the Treasury in forgone revenue over 10 years. The U.S. Chamber of Commerce and other business groups have said the withholding requirement is too onerous and that its repeal is one of the few areas of agreement between President Barack Obama and congressional Republicans. 550. Moved at 12:35. By Steven Sloan.
Employers Say Regulation Rarely Causes Job Loss: BGOV Barometer
Employers who let workers go are less likely than John Boehner or Mitt Romney to blame job-killing government regulations.
The BGOV Barometer shows that employers responsible for mass dismissals of at least 50 people cited regulations or government interference as a reason in less than 1 percent of the cases reported to the U.S. Labor Department over the last 4 ½ years.
In the political fight over how to bring down U.S. unemployment, Republican House Speaker Boehner decries a “regulatory onslaught” that he says is “killing jobs in America.” Former Massachusetts Governor Romney, a front-runner for the Republican presidential nomination, pledges to “initiate the elimination of Obama-era regulations that unduly burden the economy or job creation” starting on his first day in office. 540. Moved at 10:40. By Catherine Dodge. Editors: this story moved earlier and is being made available to newspapers today.
GRAPHICS: BGOV_BAROMETER_102711. Graphic shows that employers responsible for dismissals of at least 50 people cited regulations or government interference as a reason in less than 1 percent of the cases reported to the U.S. Labor Department over the last 4 1/2 years. Size: 2C X 4in. (96.0 mm X 101.6 mm); (BGOV_LOGO_07251. Bloomberg Government logo Size: 1C X 2in. (45.9 mm X 50.8 mm) Available now.
BUSINESS NEWS FEATURES
Billionaire Facing Death Threats Says Egypt Risks Becoming Iran
From his 33rd-floor penthouse apartment with sweeping views of the Nile River, Naguib Sawiris can hear the chants of Friday prayers in the distance. As he sits down to a breakfast of taameya and ful, dishes made from fava beans, demonstrators are gathering in Cairo’s Tahrir Square for a planned protest, this time aimed at stopping military trials of thousands of civilians arrested during the revolution that brought down the regime of President Hosni Mubarak.
Sawiris says his new political party, the Free Egyptians, is backing the demonstration, although he won’t be attending, Bloomberg Markets magazine reports in its December issue.
The death threats started in late June after Sawiris, 57, posted an image on his Twitter account of Mickey Mouse in a beard and Minnie Mouse in a niqab, or full veil. The cartoon, sent to him by a Muslim friend, was titled “Mickey and Minnie after …” - - meaning after Egypt’s November parliamentary elections, in which Islamist parties could win the biggest share of the vote.
Sawiris, the billionaire founder of Orascom Telecom Holding SAE, apologized to his 139,000 Twitter followers, saying he meant no disrespect. That wasn’t enough to prevent a boycott of mobile phone company MobiNil, a joint venture between Orascom and France Telecom SA, which lost 800,000 subscribers in the months following the tweet. 960. Moved at 9:35. By Stephanie Baker and Mahmoud Kassem.
Audi Spurns China Company-Car Role to Rebuild Market Share: Cars
Audi AG’s status as the carmaker of choice for Chinese bureaucrats has emerged as an obstacle in the world’s biggest automobile market as BMW and Mercedes-Benz gain traction with a generation of rich young buyers.
Audi’s share of China’s luxury-car sales has tumbled by 25 percent in less than two years as state agencies and executives tighten budgets and younger buyers seek alternatives to sedans traditionally used by the government. The German automaker supplied an estimated 70 percent of cars used by the government and state-held enterprises during the 1980s.
“Audi is seen as being a bit old-fashioned because of its association as being a government car,” said Shaun Rein, Shanghai-based managing director of China Market Research Group. “Wealthy consumers today want something sexier, more indulgent, which is why BMW and Mercedes have done well.” 900. Moved at 12:00. By Bloomberg News.
-0- Oct/27/2011 17:32 GMT