SEC to Sue Standard and Poors?
The SEC is considering a civil action against Standard and Poors for its 2007 rating of a mortgage debt offering known as a collateralized debt obligation or CDO. The offering was rated AAA. The SEC alleges that these ratings contributed to the 2008 financial crisis, according to the Associated Press. They also allege that the ratings agency has an inherent conflict between selling information to financial institutions and then rating their products and investments. The information being requested from Standard and Poors, who is fully cooperating, is seen as an information request prior to the launching a formal lawsuit against the organization as well as its competitors, Moodys and Fitch.
Dow up 272 points
The stock market jumped on Monday closing up 272 points at 11,043. The result was due to promises of bolder steps from European ministers to fight the debt crisis. According to CNBC, both Asian and European markets are up on Tuesday. Eurocrisis plan beginning to take shape According to the Financial Times, the European Union is planning on taking some bold steps which it hopes to have in place by the time the EU summit occurs in early October. They will put in place powers for an overall eurozone rescue plan. Second, they will expand the tools and funds in their primary funding vehicle. Third, they will further integrate their economies, a very bold and surprising step. It is imperative that all of the AAA rated countries agree to this plan. On Wednesday, Finland will vote on the plan followed by Germany on Thursday. Both of these votes are contentious and critical to the overall success. In total, 17 parliaments must approve the plan. If not, it is feared that the French banks will collapse and there will be a run on the Italian and Spanish bonds, in addition to the Greek default. Stay tuned for more.
Oil production resumes in Libya
Eni, the largest Italian energy producer, has resumed oil production in Libya, as reported by the Associated Press. Eni has opened only 15 wells and is producing 31,900 barrels per day, but hopes to open more wells in the coming weeks. There are fears that many of the fields may be damaged. Libya holds Africa's largest oil reserves and generally receives $40 billion per year for its oil production. This should help the Libyan economy to get back on track.
New home sales at lowest rate on record
Home buying for the six months from March to August reached the lowest rate since the records have been kept, according to a the Commerce Department, reported by the Associated Press. Only 168,000 new homes were sold during that period. A healthy market generally reports sales in excess of 400,000. Sales of previously owned homes was 2.8 million. Generally the re-sale market is over 3.3 million.
Coke to invest more in China than US
Coke's CEO told the Financial Times that it is easier to do business in China and other emerging markets than in the US and future investment will be aimed at these new markets. The CEO told reporters that the US has antiquated tax laws, the environment is not friendly to business, and the political division causes additional frustration for corporations. Coke intends to invest over $4 billion in China over the next 3 years, $3 billion in Russia and similar amounts in Brazil. Investment in North America will be only $1.3 billion.
First class seats are filling up
According to the USA Today, travel in first class or business class seats on the airlines rose 7.5 percent in July compared to a year ago. Ten percent of companies allow their employees to upgrade on US flights. One third allow upgrades to South America and Europe. More than fifty percent allow for upgrades on Asian flights. It is reported that higher end hotels are also seeing a pickup. Revenue per room in luxury hotels rose 16.9 percent in September.