Business News You Need Today: Aug. 2, 2010
Greenspan: Recovery 'On Pause': Former Federal Reserve Chairman Alan Greenspan said over the weekend that the U.S. economy is taking a breather of sorts. "We're in a pause in a recovery, a modest recovery," Greenspan said on NBC's Meet The Press program. So it feels like a "quasi recession." Greenspan, whose low-interest rate policies early last decade helped fuel the mortgage meltdown in 2008, also said Sunday it's possible the economy may enter a second recession, should home prices continue their steady decline. "Home prices, as best we can judge, have really flattened out in the last year," he said. "If home prices stay stable, then I think we will skirt the worst of the housing problem." Greenspan's comments mirror those recently uttered by his successor, Ben Bernanke, who told Congress last week that the economic outlook remains "unusually uncertain."
BP Begins Plugging Well: BP (BP) is moving swiftly with its plan to seal the blown Macondo well that has spewed tens of millions of gallons of oil into the Gulf of Mexico. The oil giant will attempt the first of two methods of "killing" the well Monday night, when engineers plan to pump heavy mud and possibly cement into the capped well. Known as "static kill," the process could take a day or two. Several days later, engineers will begin the more laborious "bottom kill" method, which involves pumping mud and cement through a relief well, drilling for which began in May. Delivering the latest update on BP's static-kill plan Sunday, retired Coast Guard Adm. Thad Allen, the government's point man on the response to the spill, defended a decision to allow BP and its contractors to use large quantities of dispersants to break up the oil, which may themselves present an environmental hazard. After months of missteps and setback, the effort to permanently seal the well finally seems to moving forward, though Allen warned late last week, "We should not be writing any obituary for this event."
Ford Finalizes Volvo Sale: Ford Motor (F) has completed the $1.5 billion sale of its Volvo luxury-car unit to China's Zhejiang Geely Holding Group, the Dearborn, Mich.-based carmaker said Monday. Geely paid $1.3 billion cash and issued a $200 million note for the Swedish carmaker, which has "returned to profits after a successful restructuring," said Ford CEO Alan Mulally in a statement, announcing the sale's completion.
News Corp. Eyes Rangers: News Corp. (NWS) is reportedly weighing a bid for the Texas Rangers. It isn't clear whether the media giant will submit a bid for the bankrupt team at a court auction Wednesday, but the company is said to be leaning toward making an offer, the New York Post reports. Bidding is expected to start at $307 million. The baseball franchise was once owned by a group of investors led by former President George W. Bush.
HSBC's Profit Soars: HSBC Holdings (HBC) started off the bank earnings season with a bang, reporting a $6.76 billion profit during the first six months of the year as its North America unit swung back into the black. A year ago, Europe's biggest bank posted earnings of $3.35 billion. Still, the latest profit was less than analyst expectations, which called for a median $7.22 billion gain, based on seven analysts surveyed by Bloomberg.
BlackBerry Ban in Middle East: More than a million BlackBerry users may have to go without key services in Saudi Arabia and United Arab Emirates after authorities over the weekend stepped up demands on device manufacturer Research In Motion (RIMM) for access to encrypted messages sent over by the smartphones. Because data sent via the BlackBerry's Messenger application is encrypted and sent to offshore servers, it can't be tracked locally, ABC News reports. The UAE said it would suspend BlackBerry Messenger, email and Web browser services starting Oct. 11 until a fix was found, while industry sources said Saudi Arabia had ordered local telecommunications companies to freeze Messenger this month.
Monday Economic Reports: The Institute for Supply Management will release its latest measure of manufacturing activity at 10 a.m. ET. Consensus estimates call for a reading of 54, lower than the 56.2 reported in June, suggesting growth has slowed. An index number of 50 or greater indicates expansion in the manufacturing sector. Also at 10 a.m., the government will report latest data on construction spending for June. Consensus estimates call for a half-point decline for the month. In May, construction spending fell 0.2% after jumping 2.3% in April.
Bag Fee Proves Successful: Spirit Airlines' new fee on carry-on bags may not make customers happy, but the Florida-based airline is claiming success after implementing the novel plan Sunday. The goal of the fee is to reduce the number of bags brought on board, speeding check-in and passenger boarding. A company spokeswoman said Sunday afternoon that the plan was "going well so far."
Housing Market Outlook Bleak: Record low mortgage rates are pushing more Americans to buy homes. But the housing market remains fragile, reports DailyFinance's Nikhil Hutheesing. Sales volume may be up, but prices are not, suggesting consumers are opting for cheaper, smaller homes, many of which are foreclosed properties.
Calcium Poses Health Risk: Calcium supplements are thought to aid in boosting immunity and strengthening bones. But taken alone, without Vitamin D at the same time, may increase risk for heart attack, reports WalletPop's Sarah Coffey. Osteoporosis patients who received the calcium supplements were about 30% more likely to have a heart attack than those who didn't, according to a report published in the British Medical Journal.
Clinton Wedding Fallout: The village of Rhinebeck, N.Y., continues its return to normalcy today, two days after Chelsea Clinton wed Marc Mezvinsky. The publicity caused by the wedding has been a boon for the small Hudson River community, which was swamped by media and celebrity seekers. Local officials welcome not just the economic boost Rhinebeck has seen but the potential for increased future tourism. FoxNews also reports that the buzz caused by the high-profile wedding may help sell the Astor Courts estate where Clinton and Mezvinsky exchanged vows.