AC360 Tuesday 8p

Ferry crew members answered questions about why more life rafts were not deployed. Tonight on AC360, the latest from South Korea on the effort to reach victims.
June 1st, 2010
12:36 PM ET

Financial Dispatch: Wall Street punishes BP

Andrew Torgan
CNN Business News Producer

Stock markets all around the globe got their first chance to react to the news that BP’s “top kill” operation last week was a failure.
Stock markets all around the globe got their first chance to react to the news that BP’s “top kill” operation last week was a failure.

Stock markets all around the globe got their first chance to react to the news that BP’s “top kill” operation last week was a failure.

BP's stock sank 12% at the open on Wall Street to around $38 a share. In London, where the former “British Petroleum” is headquartered, the stock tumbled 14%. Overall, BP shares have plummeted nearly 40% since the Deepwater Horizon oil rig exploded in the Gulf of Mexico on April 20.

But BP is not alone. Shares of ExxonMobil are down about 11% and Chevron’s stock is down more than 9%.

Crude oil, by the way, is also down 11% and gasoline prices are off an average of nearly 5% nationwide.

As of Saturday, BP said costs related to the spill began to approach $1 billion. And analysts have thrown out a wide range of estimates - from $4 billion to $25 billion - on how hard the leak will hurt the company's bottom line.

By way of comparison, ExxonMobil paid $3.4 billion in cleanup costs for the Exxon Valdez spill in Alaska - but ultimately only paid $507.5 million for the legal settlement and $500 million in interest payments.

Traders close the books on brutal month

Wall Street likes nothing more than a good maxim, such as “As goes January, so goes the year.” Another popular saying is “Sell in May, go away.”

And sell we did…

FULL POST


Filed under: Andrew Torgan
May 11th, 2010
05:12 PM ET

Financial Dispatch: ‘No smoking gun’ in market meltdown

Investigators are still unclear what caused the Dow's 1,000 point drop last week.
Investigators are still unclear what caused the Dow's 1,000 point drop last week.

Andrew Torgan
CNN Business News Producer

It’s been five days since the Dow plummeted nearly 1,000 points in less than 10 minutes and there is still no concrete answer to the question: “What the heck happened?”

In testimony before a House Financial Services subcommittee looking into last Thursday’s so-called “flash crash,” executives from the nation's major stock exchanges said the plunge was triggered by a combination of unusual factors, but that its ultimate cause remains a mystery.

Eric Noll, executive vice president of the Nasdaq OMX Group, said in prepared remarks that his exchange continues to investigate, “but has at present located no ‘smoking gun’ that single-handedly caused or explains Thursday's events.”

Larry Leibowitz, chief operating officer of NYSE Euronext, said, “Although some of the underlying economic and global financial conditions that influenced this selling activity are known, the exact succession of events and what precipitated them remain unclear.”

FULL POST


Filed under: Andrew Torgan • Economy
May 3rd, 2010
05:03 PM ET

Financial Dispatch: United, Continental Airlines merging

Andrew Torgan
CNN Business News Producer

Get ready to fly the friendly skies of “Uni-tal”…

United Airlines announced today it will merge with Continental Airlines in a deal worth $3.2 billion, creating the world's largest airline.

The combined carrier, which will fly under the United name and Continental logo, would be larger than Delta Air Lines, which became the country's largest airline when it merged with Northwest in 2008. It’s expected to serve nearly 150 million passengers per year and fly to 370 destinations in 59 countries.

So what does all this mean for consumers? Will flights be cut because of the consolidation? Will ticket prices go up?

United and Continental aren't really commenting on much of that at the moment, but generally, flights do get cut when airlines merge.

And of course, it could also lead to higher fares, since decreased competition typically means higher prices. Industry analysts say fares probably won't be affected between major cities, but they could increase for some international flights and for flights into and out of smaller cities, where the carrier would have more pricing control.

Assuming the deal clears antitrust hurdles, the new airline would be based in Chicago, United's home, and its largest hub will be Houston, Continental's base.

United and Continental discussed merging back in 2008, but Continental backed out of the deal. This time around though, United is in a much stronger financial position.

FULL POST


Filed under: Andrew Torgan • Economy • Finance
April 23rd, 2010
03:04 PM ET

Financial Dispatch: Home sales skyrocket

Andrew Torgan
CNN Business News Producer

Sales of new homes shot through the roof last month at the fastest single-month rate in nearly 50 years as buyers snatched up properties before the expiration of an $8,000 tax credit.

New-home sales soared 26.9% in March, snapping a four-month streak of declines, the Census Bureau said.

And on a year-over-year basis, sales jumped 23.8% from March 2009.

New-home sales rose in every region of the U.S. The South saw the biggest jump - up 43.5%, while the Northeast saw sales climb 35.7%. The West and Midwest regions both saw single-digit percentage growth, with the West up 6% and the Midwest up 4%.

This follows a report on Thursday from the National Association of Realtors that showed sales of previously-owned homes - known as “existing home sales” - increased by nearly 7% in March as new home buyers looked to cash in before that tax credit expires on April 30.

FULL POST


Filed under: Andrew Torgan • Economy • Finance • Housing Market
April 13th, 2010
11:30 AM ET

Financial Dispatch: Toyota takes another hit

Andrew Torgan
CNN Financial News Producer

Still stinging from the recall of more than 8 million vehicles worldwide due to safety issues, Toyota is now dealing with yet another blow to its once-stellar reputation.

Consumer Reports has issued a safety warning on Toyota's 2010 Lexus GX 460 SUV because of an increased rollover risk during a turn.

The magazine says it uncovered the problem during routine tests, and is urging car shoppers not to buy the GX 460 until this problem has been remedied.

The special designation given to the GX 460 by Consumer Reports - "Don't Buy: Safety Risk" - is rarely given by the magazine. The last time it was used was in 2001, on the Mitsubishi Montero Limited.

Game over?

Baseball legend and master of malapropisms Yogi Berra famously said, “It ain’t over ‘til it’s over.”

Who knew Yogi was an economist?

The panel of economists responsible for identifying changes in the U.S. business cycle said Monday that it is “premature” to say whether the recession that began in 2007 has ended.

FULL POST


Filed under: Andrew Torgan • Economy • Toyota
April 2nd, 2010
02:10 PM ET

Financial Dispatch: Job growth returns

Andrew Torgan
CNN Financial News Producer

At long last, we received a solid indication today that we’ve turned a corner. The economy had its biggest jump in jobs in three years last month.

The Labor Dept. said the economy gained 162,000 jobs in March, compared to a revised reading of a loss of 14,000 jobs in February. That makes March only the third month since the start of 2008 that employers did not cut payrolls.

But while the news was positive, there were a number of short-term factors that inflated the reading, including an addition of 48,000 by the Census Bureau. March's figure was also given a boost by seasonal factors. For example, February's numbers were dragged lower by temporary job losses related to the string of severe winter storms that crippled much of the Northeast.

FULL POST


Filed under: Andrew Torgan • Economy
March 31st, 2010
04:39 PM ET

Financial Dispatch: Clear as mud

In February, President Obama unveiled the Hardest Hit Fund, which pumped $1.5 billion into state housing agencies.
In February, President Obama unveiled the Hardest Hit Fund, which pumped $1.5 billion into state housing agencies.

Andrew Torgan
CNN Financial News Producer

In the words of every crabby kid wedged in the backseat of a station wagon between a suitcase and his little sister, “Are we there yet?”

Bad news buddy… Dad’s lost and the GPS is busted.

Wall Street this week is a study in hits, misses and rare twists in timing. Readings on income and spending, consumer confidence, housing and a spate of job reports dot the economic calendar, but a clear picture of the economy has yet to emerge.

Consumer confidence, for example, bounced back sharply this month – but only to a level that shows people are just less pessimistic about the economy and the job market.

Those numbers came on the heels of a separate report showing personal spending rose for a fifth straight month in February. As consumer spending accounts for two-thirds of U.S. economic activity, this should be good news, right? Yes, but the increase was so small (0.3%) that’s it’s hardly worth celebrating.

Then we got the latest snapshot of the housing market, which essentially dashed any hopes for a sustained early recovery.

After a five-month run-up in home prices starting last spring, prices have now fallen for four consecutive months, according to the S&P/Case-Shiller Home Price Index. Prices in January were down 0.4% compared with December and have fallen 0.7% from a year ago.

And today, the first of several employment reports hit the wires.

Payroll-processing firm ADP said private-sector employers cut payrolls by 23,000 jobs in March. That was far less than the gain of 40,000 jobs that was expected - although it was the smallest monthly decline since February 2008.

This comes just two days ahead of the government’s official jobs report for March, which is due out Friday morning. The expectation there is for a gain of about 190.000 jobs, which would be the biggest gain in three years.

Friday is also Good Friday and the stock market will be closed, so investors will have to wait until the opening bell Monday to react to the Labor Department’s numbers.

Housing aid on the way for 5 more states

Five more states will receive federal funding to help troubled homeowners avoid foreclosure, the White House announced earlier this week.

Last month, President Obama unveiled the Hardest Hit Fund, which pumped $1.5 billion into state housing agencies in California, Arizona, Florida, Nevada and Michigan. These five were originally identified because they had been hardest hit by the housing bust, with prices declining more than 20%.

Now, an additional $600 million is being doled out to the five states that have the largest number of counties suffering unemployment rates above 12%: North Carolina, Ohio, Oregon, Rhode Island and South Carolina.

The program, which is funded with money from the TARP bank bailout, allows each of the states' agencies to propose foreclosure solutions that address local conditions.

You owe the IRS 99 days of hard work

This year, it's going to take the average American 99 days to earn enough money to pay the IRS. That's one day longer than last year.

"Tax Freedom Day" marks the date that most Americans have earned enough money to pay their federal, state and local taxes, and this year that day arrives on April 9, according to the Tax Foundation's annual calculation, which is based on government tax and income data.

Tax Freedom Day arriving one day later than it did last year means most Americans will have to work that much harder - for more than three months - just to pay their 2010 taxes.

Follow the money… on Twitter: @AndrewTorganCNN


Filed under: Andrew Torgan • Economy • Finance
March 16th, 2010
04:23 PM ET

Financial Dispatch: Fed holds the line

Michael Jackson, who died last year, left behind dozens of unreleased songs.
Michael Jackson, who died last year, left behind dozens of unreleased songs.

Andrew Torgan
CNN Financial News Producer

The Federal Reserve today held its key interest rate steady at near 0% and said rates should stay this low for the foreseeable future.

Central bank policymakers repeated their prediction that economic conditions are likely to result in “exceptionally low levels of the federal funds rate for an extended period.” That promise of an easy-money policy has been in place since March 2009.

It was not a unanimous decision, however, as Kansas City Fed President Thomas Hoenig voted against keeping this language in place for the second straight meeting. He and some Fed critics worry that the central bank could be creating new bubbles in financial markets by keeping rates so low.

Read the Fed’s statement here.

Housing starts drop

Construction of new homes and applications for building permits fell in February, but both readings beat economists' expectations.

Housing starts dropped nearly 6%, but remember that snow storms pounded much of the East Coast last month, putting a damper on new construction projects. And building permits, which are considered a good barometer of future building activity, fell 1.6%.

FULL POST


Filed under: Andrew Torgan • Economy • Finance
March 10th, 2010
05:07 PM ET

Financial Dispatch: Big bank scrapping some fees

 

 Andrew Torgan
CNN Financial News Producer 

Facing a withering crossfire of complaints about excessive fees, Bank of America says that it plans to ditch overdraft fees on debit card purchases this summer. 

The Federal Reserve recently announced new requirements that are slated to go into effect in July, but BofA’s move goes one step further

The Fed's new rules will prevent banks from automatically enrolling customers in overdraft protection programs, which charge fees when consumers spend more than they have in their accounts. More than 75% of banks automatically sign customers up for overdraft programs, according to a study by the FDIC. 

But under BofA's new policy, the bank will deny transactions for customers using their debit cards if they didn't have sufficient funds in their checking accounts to cover the charges.

For customers who attempt to withdraw insufficient funds at one of BofA’s 18,000 ATM machines, the bank will alert them that a $35 overdraft fee will kick in if they continue and ask them to confirm or decline the transaction. 

The new policy kicks in for new Bank of America customers beginning in June, and for existing customers starting in early August. 

Rival bank JPMorgan Chase reduced the maximum number of daily overdraft fees from six to three in January, and says it will implement additional reforms at the end of the month and this summer. 

The Center for Responsible Lending says overdraft fees on debit card and ATM transaction account for about half of all overdraft fees, which total nearly $24 billion annually.

State unemployment picture brightens

A total of 30 states and Washington, D.C., reported rising unemployment rates in January, down from 43 in December.

Jobless rates decreased in nine states, according to the Labor Department's monthly report on state unemployment. Eleven states reported no change.

Twenty-five states posted jobless rates lower than the national unemployment rate of 9.7% in January. Eleven states and Washington, D.C., reported rates higher than the national average, down from 17 states and Washington, D.C. posting rates higher than the national average of 10% in December.

Michigan again had the highest rate of unemployment at 14.3%. Second was Nevada at 13%, followed by Rhode Island at 12.7%. For South Carolina, fourth at 12.6%, and California, fifth at 12.5%, the January jobless rates were record highs.

North Dakota was again the state with the lowest jobless rate, at 4.2%.

Remember Pets.com? Webvan?

It was 10 years ago today that the Nasdaq closed at its all-time high above the 5,000 mark, fueled by dot-com hysteria and a series of moon shot IPOs. Little did we know back then that it was actually “dotterdammerung” - or the “twilight of the dot-coms.”

Today, the Nasdaq closed at less than half that level - 2,358 and change.

So take a trip with CNNMoney.com back to a time when some entrepreneurs believed that shipping a 40lb. bag of dog food or a single pint of ice cream to your front door or would make them millionaires.

It’s a tale of sock puppets, Super Bowl commercials and a seemingly inexhaustible supply of hubris.

Follow the money… on Twitter: @AndrewTorganCNN


Filed under: Andrew Torgan • Finance
March 9th, 2010
03:21 PM ET

Financial Dispatch: Retirement savings down… millionaires up

The Employee Benefit Research Institute attributes the decline in current savings rates to job loss and other economic factors.
The Employee Benefit Research Institute attributes the decline in current savings rates to job loss and other economic factors.

Andrew Torgan
CNN Financial News Producer

The percentage of American workers who say they have less than $10,000 in retirement savings grew to 43% this year, up from 39% in 2009. It’s also the third straight year that number has gone up.

In addition, the percentage of workers who say they have less than $1,000 in retirement savings jumped to 27% from 20% in 2009, according to the Employee Benefit Research Institute's annual Retirement Confidence Survey. Both readings exclude the value of primary homes and defined-benefit pension plans.

The EBRI's research director and co-author of the survey says Americans' attitudes toward retirement have clearly tracked the economy the last couple of years, and attributes the decline in current savings rates to job losses, mortgage problems and the suspension of corporate 401(k) matches in 2009. But he added that the economy isn't entirely to blame.

Other sobering highlights from the survey:

- Only 16% of respondents expressed confidence in their ability to save enough for a comfortable retirement.

- Only 46% of workers have tried to calculate what they need for a comfortable standard of living in retirement

- And 24% of workers said they have postponed their planned retirement age in the past year, up from 14% in 2008.

More millionaires minted

Nest eggs may be declining, but America's millionaires are on the rise again.

A new report from Spectrem Group says U.S. households worth $1 million or more grew to 7.8 million in 2009, up 16% from 2008 - a year when the market’s meltdown thinned the herd.

And the number of ultra high-net-worth households, worth $5 million or more, jumped 17% to 980,000 in 2009.

The report comes one year to the day after the Dow and the S&P 500 closed at 12 year lows in the thick of the financial crisis.

The market’s drop sent the number of millionaires plummeting 27% in 2008, Spectrem said. Even now, the number of millionaires is still well below an all-time high of 9.2 million in 2007.

Employers still skittish on hiring

Most employers are still cautious when it comes to hiring, planning neither to add nor cut jobs from their payrolls this spring, according to a survey released today by staffing firm Manpower.

About 73% of employers surveyed expect no change in their hiring plans from March to June this year.

But there were also signs of improvement in the hiring outlook. Only about 8% of employers said they plan to make cuts, down from 12% in the previous quarter, and 14% a year ago. About 16% of employers said they expect to add to their payrolls, up from 12% last quarter.

Of the 13 industry sectors that Manpower surveys, employers in leisure and hospitality, business services and mining reported the strongest hiring outlooks for the quarter.

Only the government sector reported a negative outlook, with 11% of government employers saying they plan to cut jobs, and 10% saying they plan to hire new staff.

All four regions tracked by Manpower expect modest hiring gains through June. Employers in the Northeast posted the highest hiring outlook, followed by the South and West, and finally, the Midwest.

Complaints about banks surge 42%

The Better Business Bureau is out with its latest survey on consumer complaints, which increased by nearly10% in 2009. That’s works out to nearly 1 million complaints filed by disgruntled customers last year

The cell phone industry received the largest number of complaints in 2009 with 37,477, a 2.1% increase over the previous year. The cable & satellite TV industry ranked second with 32,616 complaints, an 8.7% increase. Rounding out the top three, banks received 29,920 complaints, a 42.3% increase over the previous year.

The BBB says the significant increase in complaints regarding banks coincides with the 140 bank failures we saw in 2009 – the highest number of failures in 17 years.

You can also find an 82-page list at www.bbb.org of the wide variety of goods and services that consumers complained about, including:

- Dune Buggies (eight complaints)

- Magicians (five complaints)

-Glass Blowers (four complaints)

-Square Dance Callers (three complaints)

-Bagels (two complaints)

Follow the money… on Twitter: @AndrewTorganCNN


Filed under: Andrew Torgan • Economy
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