Financial life in a big town

SHANGHAI

Shaw Communications, the dominant cable company in Western Canada, said its quarterly net profit rose 20 per cent as it cut costs while pausing to reassess its planned entry into the booming wireless telecoms market.

Shaw, which bought wireless spectrum in 2008 but has lagged others in entering the market, said earnings for the quarter ended Feb. 28 were $167.3 million, or 37 cents a share, on revenue of $1.2 billion.

Both were in line with analyst estimates.

Shaw said it cut 550 jobs in the quarter, including 150 managers, in a restructuring that cost between $25 million and $30 million but should save more than $50 million a year.

The Western Canada-focused company is fighting telecom rival Telus

U.S. stocks were poised to open higher Tuesday, extending gains from the previous session, as concerns about the Libya situation eased.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were higher ahead of the opening bell. Futures measure current index values against perceived future performance.

Despite a slight step back last week, stocks closed out February on an upbeat note — posting their third straight month of gains. Overall, all three major indexes were up nearly 3% during the month, and have risen more than 5% since the beginning of the year.

Stocks have been supported this year by a combination of improving economic news and strong corporate earnings. But some traders are concerned that a jump in energy costs could hurt the economy, as the recent turmoil in the Middle East and North Africa boosts oil prices.

But for now, there’s a sense that the overseas turmoil isn’t as daunting as it was last week, and oil prices might have reached a plateau.

"The markets have had to wrestle with very helpful news on global growth, but very unhelpful news on political developments and oil price movements," said Ken Wattret, economist with BNP Paribas in London.

"The oil prices, having spiked in the initial stages of unrest in Libya, have now gone sideways," Wattret added. "The worry about the consequences of the turmoil in the Middle East spreading has diminished."

Meanwhile, investors are looking ahead to the government’s monthly payroll report on Friday, which will reveal how many jobs were created in February.

Economy: The Institute for Supply Management will release its manufacturing index at 10 a.m. ET. It’s expected to fall slightly to 60.5, which would still indicate expansion in the sector.

Federal Reserve chairman Ben Bernanke is due to give his semi-annual testimony on monetary policy to the Senate Banking Committee.

Treasury Secretary Tim Geithner is scheduled to testify before the House Financial Services Committee on the administration’s plan for reforming America’s housing finance market.

Companies: Ford (F, Fortune 500), General Motors (GM), Toyota (TM) and other automakers release their February sales figures starting at around 10:45 a.m. ET.

World markets: European stocks rose in morning trading. Britain’s FTSE 100 was flat, the DAX in Germany advanced 0.6% and France’s CAC 40 edged higher by 0.3%.

Asian markets ended higher. The Shanghai Composite rose 0.5%, the Hang Seng in Hong Kong added 0.2% and Japan’s Nikkei jumped 1.2%.

Currencies and commodities: The dollar fell against the euro and the British pound, but was firm versus the Japanese yen.

Oil for April delivery gained 85 cents to $97.82 a barrel.

Gold futures for April delivery rose $10.60 to $1,420.50 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 3.45% from 3.43% late Monday.  

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Home prices took a big hit at the end of 2010, even as the rest of the economy gained steam.

National home prices fell 4.1% during the last three months of 2010, compared with 12 months earlier, according to the latest report from the S&P/Case-Shiller home price index, a closely watched indicator of market trends. They were down 1.9% compared with three months earlier.

"Despite improvements in the overall economy, housing continues to drift lower and weaker," said David Blitzer, spokesman for S&P.

And things may get a lot worse, said Robert Shiller, a Yale economist and half of the Case-Shiller team, in a web conference after the report’s release.

"There’s a substantial risk of home prices falling another 15%, 20% or 25% more," he said.

Shiller cited a few reasons for his bearish stance. The government is expected to reduce the presence of Fannie Mae and Freddie Mac in the housing market. These agencies currently provide loan guarantees for about two-thirds of mortgages. If they fade away, private mortgage money will have to fill the gap and the cost of mortgage borrowing will surely rise. That will hurt home prices.

There’s also talk of possibly ending the mortgage interest tax deduction for many homeowners. Meanwhile, the weak economic recovery may be threatened by higher oil prices as a result of turmoil in the Mideast.

At the web conference, Shiller’s index partner Karl Case wasn’t much more optimistic.

"I see [the market] bouncing along the bottom with a slight negative trend," said Case, an economics professor emeritus at Wellesley College.

A widespread drop

On a seasonally adjusted basis, the national index surpassed the low it hit in the first quarter of 2009.

The decline was widespread, with 18 of the 20 large cities covered by a separate S&P/Case-Shiller index recording losses for the year. The only gains were posted by Washington, which was up 4.1%, and San Diego, which saw prices climb 1.7%.

The biggest loser for the year was Detroit, where prices dropped 9.1%.

"We’re really close to being at the bottom again," said S&P’s Maureen Maitland. "Last year’s gains came courtesy of the tax incentives and the market is not holding up on its own."

The impact of homebuyer tax credits ended back last spring, and the two quarters of data since then reflect that. Prices fell steeply during the third quarter, down 3.3%. When the credit was in effect, prices rose consistently, up four out of five quarters starting in the second quarter of 2009.

S&P reported that both the company’s 10- and 20-city indexes also fell month over month. In three cities, Detroit, Cleveland and Las Vegas, home prices have dropped below their January 2000 levels — yes, you’d have to go back to the past millennium to find lower prices there.

Eleven markets, including New York and Chicago, have reached their lowest levels since home prices peaked in 2006 and 2007.

The losses were not unexpected, according to Brad Hunter, chief economist for Metrostudy, a housing market research firm.

"It’s clear now that, going back to last fall, the apparent strength was a false strength," he said. "Now that the tax credits are gone, we’re back to where the training wheels are off, to normal consumer demand."

He expects home prices to decline gradually throughout 2011, with markets picking up only when hiring increases substantially. 

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ABIDJAN

When I was a 20-year-old student, my mom co-signed a $7,000 line of credit for me because the bank wouldn

German business confidence probably eased from a three-and-a-half-year high in November after economic growth slowed from a record pace and Europe’s sovereign debt crisis clouded the outlook.

The Ifo institute will say its business climate index, based on a survey of 7,000 executives, fell to 107.5 from 107.6 in October, which was the highest since May 2007, according to the median of 42 forecasts in Bloomberg News survey. Ifo releases the report at 10 a.m. in Munich today.

German growth slowed to 0.7 percent in the third quarter from a record 2.3 percent in the second as the global recovery stuttered and debt-strapped euro-area nations cut spending, slackening demand for German exports. At the same time, falling unemployment is boosting private consumption in Europe’s largest economy, which the government’s council of economic advisors expects to expand 3.7 percent this year.

“Economic growth is very well balanced at the moment, driven not only by foreign trade but also domestic demand,” said Andreas Scheuerle, an economist at Dekabank in Frankfurt. “However, we’ll see weaker growth around year-end as exports slow down.”

Ifo’s measure of executives’ expectations will decline to 104.7 from 105.1, the survey of economists shows. The gauge of the current situation will probably rise to 110.4 from 110.2. That would be the highest since March 2008.

Stocks Rally

Germany’s benchmark DAX stock index has gained 13 percent this year, compared with a decline of 6 percent in the Euro Stoxx 50 gauge of euro-area equities. German investor confidence rose for the first time in seven months in November as the economy powered ahead of its euro-area neighbors.

Unemployment fell below the three-million mark in October to the lowest in 18 years as companies stepped up hiring to meet foreign demand for goods including cars and machinery, supporting private consumption.

Bayerische Motoren Werke AG and Daimler AG’s Mercedes-Benz, the world’s two largest makers of luxury autos, will shorten Christmas breaks at their factories because of surging demand for new models. “Production capacity is the limiting factor at the moment,” Michael Rebstock, a spokesman for BMW, said in a phone interview this week.

Euro-area governments’ efforts to rein in ballooning budget deficits may still damp German growth. Ireland this week became the second euro nation after Greece to seek a bailout from the European Union and International Monetary Fund, and investors are speculating Portugal could be next.

German factory orders unexpectedly dropped in September, led by a slump in euro-area demand for investment goods, and industrial production also fell.

“Looking forward, we won’t go ahead with the same pace as we had in the second quarter, which was exceptional,” said Juergen Michels, chief euro-area economist at Citigroup Inc. in London. “But it is likely to be decent growth by German standards.”

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Former Toronto stock broker George Georgiou was sentenced to 25 years in prison by a Philadelphia judge on Friday for his role in an international, multi-million dollar stock scam.

Georgiou, 40, was also ordered to pay $55-million in restitution for the fraud, which involved Canada, the U.S. and the Caribbean.

The money mover, who was banned from trading stocks in Canada between 1995 and 2005, had faced a maximum sentence of 165 years after being convicted in February of conspiracy, securities fraud and wire fraud.

His trial heard that he’s connected through business deals to Fercan Developments of Toronto.

Fercan owns the former Molson Brewery on Highway 400 in Barrie, which was the site of a massive marijuana grow-operation.

In Philadelphia, Georgiou was held in custody pending sentencing after he unsuccessfully argued that he should be allowed to live with a Philadelphia priest and be subject to GPS monitoring, at his own expense.

Prosecutors argued that Georgiou is connected to organized crime figures – including some in the GTA - and represents a danger to society payday loans.

Prosecutors cited threats that Georgiou made to one of their witnesses, former stock scammer Kevin Waltzer. Those threats included a statement that Waltzer should "sleep with one eye open" and that it would be easier to "get someone’s legs broken" in New York than it would be in Canada.

Court heard that, at one point, Georgiou suggested a business meeting in a hot tub, so that his comments couldn’t be secretly recorded. The hot tub meeting never took places and his comments were secretly recorded by police.

The prosecution argued that he illegally manipulated the stock values of four companies: Neutron Enterprises Inc., Avicena Group Inc., Northern Ethanol Inc. and Hydrogen Hybrid Technologies Inc.

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Stocks end little changed Thursday, erasing bigger losses after weaker than expected reports on the economy revived worries about growth.

The Dow Jones industrial average (INDU) lost a few points and broke its seven-day winning streak. The S&P 500 (SPX) index ended just above breakeven, and the Nasdaq (COMP) composite lost a few points.

Stocks tumbled through most of the session, but managed to cut losses near the close thanks to a late-session advance in financial and commodity shares.

After the close, Google (GOOG, Fortune 500) reported quarterly earnings that missed forecasts on revenue that beat estimates, sending shares lower in after-hours trading.

JPMorgan’s profit report added to bets that quarterly earnings will hold up despite the slower growing economy. But that wasn’t enough to distract investors from a spate of mixed-to-weaker economic reports, particularly in the aftermath of a big rally over the past week.

"We’re coming off a strong rally over the last few days that was earnings driven," said Kim Caughey, senior equity analyst at Fort Pitt Capital Group. "Today we took a rest from looking at the earnings and took another look at the economy."

On Wednesday, the Federal Reserve lowered its forecast for GDP growth this year. On Thursday, a report showed that weekly jobless claims fell to a two-year low — but continuing claims, a measure of long-term joblessness, rose. Weak reports on manufacturing in the New York and Philadelphia regions added to the jitters.

China also reported strong GDP growth of 10.3% in the second quarter. Still, that fell short of the 11.9% growth recorded in the first quarter.

On Thursday afternoon, the Senate approved the most far-reaching financial reform bill since the 1930s, which President Obama is expected to sign into law next week.

The legislation is designed to limit big banks, protect consumers and prevent the future reoccurrence of financial crises like the one that hit in 2008.

Results: Dow component JPMorgan Chase posted a second-quarter profit of $4.8 billion, or $1.09 per share, trouncing expectations. The bank’s strength in the quarter was due partly to a decline in the number of consumers defaulting on loans. However, JPMorgan’s shares slipped amid the broader market selloff.

"It’s great to have earnings surprises but what we really need to see are companies issuing upbeat forecasts for the second half of the year," she said.

Earnings for the S&P 500 are expected to have risen 28% versus a year ago, according to the latest from earnings tracker Thomson Reuters.

Economy: The number of Americans filing new claims for unemployment last week fell to 429,000, the lowest level since August 2008. Economists surveyed by Briefing.com thought claims would drop to 450,000 from a revised 458,000 in the previous week.

However, the drop in weekly claims was largely a result of seasonal factors. Continuing claims, a measure of Americans who have been receiving benefits for a week or more, rose to 4,681,000 from 4,434,000 in the previous week payday loans with no fax. Economists surveyed by Briefing.com thought claims would fall to 4,400,000.

The NY Fed-Empire Manufacturing survey plunged to 5.08 in July from 19.57 in June, surprising economists who were expecting it to dip to 18.

The Philadelphia Fed index fell to 5.1 in July from 8.0 in June, surprising economists who thought that manufacturing activity would rise to 10.0.

The Producer Price Index (PPI), which measures wholesale inflation, fell 0.5% in June after falling 0.3% in May. Economists thought it would fall 0.1%. The so-called core PPI, which strips out volatile food and energy prices, rose 0.1%. Economists expected it to rise 0.1% after it rose 0.2% last month.

Industrial production rose 0.1% in June after rising 1.3% in May. Economists thought it would hold steady. Capacity utilization held steady at 74.1% in June, versus forecasts for a rise to 74.2%.

On Wednesday, the Federal Reserve lowered its forecast for GDP this year to a range of between 3% and 3.5% versus the previous forecast of a range of 3.2% to 3.7%.

BP: Shares of the beleaguered oil company rallied 7.5% after BP (BP) said that it has managed to temporarily stop the flow of oil into the Gulf of Mexico, nearly three months after the explosion that caused the leak.

Company news: Private-equity firm Carlyle Group is buying vitamin maker NBTY (NTY) in a $3.8 billion cash deal that values NBTY’s shares at $55 per share, a 47% premium above the stock’s closing price Wednesday. Shares gained 43%.

World markets: European markets fell, with Britain’s FTSE 100 down 0.8%, Germany’s DAX off 1% and France’s CAC 40 down 1.4%.

Asian markets ended lower. Japan’s Nikkei fell 0.1%, Hong Kong’s Hang Seng lost 0.2% and the Shanghai Composite fell 1.6%.

Currencies: The euro gained versus the dollar, hitting a two-month high. The dollar fell versus the Japanese yen.

Commodities: U.S. light crude oil for August delivery rose 26 cents to $76.88 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery gained $1.20 to $1,209.50 an ounce.

Bonds: Treasury prices rose, lowering the yield on the 10-year note to 2.98% from 3.05% late Wednesday. Debt prices and yields move in opposite directions.

Market breadth: Breadth was negative. On the New York Stock Exchange, losers beat winners by a narrow margin on volume of 1.12 billion shares. On the Nasdaq, decliners beat advancers 2 to 1 on volume of 1.99 billion shares.

How much of a hit did you take in the recent correction? Are you worried about a bear market? What changes have you made in your portfolio and what changes do you plan on making for the rest of the year? E-mail your story to realstories@cnnmoney.com and you could be featured in an upcoming article. For the CNNMoney.com Comment Policy, click here. 

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RxMedic, a maker of automated pill dispensing systems used in pharmacies, has been purchased by J M Smith, a South Carolina company that provides various products and services to the pharmacy industry.

J M Smith, based in Spartanburg, S.C., closed on its purchase of privately held RxMedic in late May, says RxMedic Senior Director Chris Cox. J M Smith had been one of the investors in the Raleigh company.

RxMedic, incorporated in 2007, sells its pill dispensing systems in North and South Carolina and parts of Virginia, Tennessee and Georgia. Cox said J M Smith’s purchase of the company gives it a better opportunity to grow because it can tap into J M Smith’s national sales and marketing force bad credit payday advance.Cox declined to disclose RxMedic’s revenue. The company’s competition includes Durham-based Parata Systems.

With the sale of the RxMedic, former CEO Alan Winchester has left the company. RxMedic currently employs 15. Cox says all of the remaining employees will be retained by the company and additional workers could be hired for its manufacturing operations in coming months. Cox said the number of workers the company hires depends on sales of the product.

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