The Dow Jones closed down 25 points with a final value of 12,356, on Tuesday, according to the Wall Street Journal. Global markets have been down on Wednesday due to 12% slide in Japanese exports and greater fears about European debt, including Spain and Italy. Oil is trading at below $99/barrel, according to the Associated Press.
OECD raises global economic growth forecasts
The Associated Press just announced that the OECD (Organization for Economic Cooperation and Development) has just released revised economic growth forecasts. Economic growth in the U.S. was increased from an original 2.2% to 2.6% and Europe increased from 1.7% to 2.0%. The Japanese economy was predicted to contract. Overall global economic growth should range from 4.25-4.8%.
New home sales up but still dismal
The Commerce Department reported that new home sales rose in April about 7.3% as reported by the Associated Press. This is the second monthly increase. Approximately 323,000 new homes were sold in April, but average monthly numbers in past years were generally around 700,000. The number of homes sold in April was 23% lower than the same month last year. One of the challenges is that new homes are generally 30% higher than used homes and have a median price of $217,900. There are currently 174,000 new homes on the market, the lowest number since the numbers have been tracked beginning in 1963.
AIG may bring $7.1 billion to Treasury
The government, in conjunction with AIG, will sell 300 million AIG sales at an estimated $29 per share, within the next few weeks. If underwriters exercise an option to purchase an additional 45 million shares, the Treasury may make $7.1 billion. In 2008, the Treasury bailed out AIG with $182 billion. The sale of these shares will reduce the government's ownership of AIG from 92% to 77%, according to the Associated Press.
CFTC brings law suit alleging price manipulation for oil
The CFTC has filed a civil suit against Parnon Energy, Inc, Arcadia Petroleum, Ltd. and Arcadia Energy (Suisse)AS and 2 individual men for manipulation of oil prices during 2008. These companies purchased an unusually large quantity of oil for no particular reason and held it, draining the Oklahoma supply facility for the U.S. Prices increased to over $147 per barrel and then the companies sold the oil, according to the Associated Press.
Coffee prices climb more than gasoline prices
Another commodity that is skyrocketing due to weather related issues is coffee whose prices have climbed 40% in the past year (gasoline prices have only increased 37%). J.M. Smucker Co., who owns Folgers and packages Dunkin Donuts coffee, indicated that it intends to increase prices 11%. Starbucks, according to the Associated Press, will increase prices 17%.
BRIC countries make demands on IMF
In an unusual move, the BRIC countries (Brazil, Russia, India, China) have made a joint statement to the IMF (International Money Fund) indicating that they believe the appointment of a European to head the IMF will undermine the legitimacy of the organization, according to the Financial Times. They are demanding a transparent process for the election of a new head of the organization. The Europeans are already supporting French finance minister, Christine Lagarde.
Russian IPO a reminder of LinkedIn
The New York Timesreports that Russian search engine, Yandex, surged 55% yesterday making it the latest multi-billion IPO.. The company, to be valued at $1.3 billion, is causing experts to question whether this is the beginning of a strong IPO market or just froth left over from the LinkedIn IPO.
Google creates electronic wallet
Google is expected to announce on Thursday how individuals can make purchases, redeem coupons and get loyalty points by waving their smartphone, according to the Wall Street Journal. The technology, known as "near field communication" is powered by Android software and will be described as an electronic wallet. Vendors will need upgraded technology to accept usage at the point of sale.