Thursday PM April 24th, 2008
Enron's creditors. Court approval of Citigroup's $1.66 billion settlement was expected after the bank agreed to terms on March 26th. Citigroup was the last remaining defendant in the lawsuit filed in 2003 against 11 worldwide banks and brokerages. Enron Creditors Recovery Corporation alleged that Enron kept creditors in the dark about its financial troubles by using faulty accounting with the help of investment banks. Enron's John Ray says with the all MegaClaims litigation now resolved, the company is closer to completing its work on behalf of creditors. He says collection efforts to date have exceeded original estimates by greater than 225 percent. Enron says the Citigroup settlement brings the total to nearly $20 billion returned to creditors.
Sales of new homes plunged in March to the lowest level in 16-and-a-half years as housing slumped further at the start of the spring sales season. The median price of a new home compared to a year ago fell by the largest amount in nearly four decades. The Commerce Department reported Thursday that sales of new homes dropped by 8.5 percent last month to a seasonally adjusted annual rate of 526,000 units, the slowest sales pace since October 1991. The median price of a home sold in March dropped by 13.3 percent compared to March 2007, the biggest year-over-year price decline since a 14.6 percent plunge in July 1970.
Freddie Mac says mortgage interest rates have been on the rise over the past week. The mortgage company says the average for 30-year fixed-rate mortgages rose to 6.03 percent, up from 5.88 percent. Freddie Macchief economist Frank Nothaft says rates have risen as inflation jitters have become more pronounced. For 15-year fixed-rate mortgages, the average rose to 5.62 percent--up from 5.40 percent last week. One year treasury-indexed adjustable rate mortgages averaged 5.29 percent--up from 5.10 percent last week.
University of Houston economist Barton Smith says higher gasoline prices may be saving Houston's economy. The director of the UH Institute for Regional Forecasting spoke at an economic forecast event sponsored by O'Connor & Associates. Smith said consumers will feel the effects of higher gasoline prices during summer travel and in utility bills.
A stronger dollar is helping bring oil prices down. A U.S. government report showing a buildup in crude supplies is also having a positive impact. Crude for June delivery had fallen 17 cents to $118.13 a barrel in Asian trading in Singapore. But relief isn't showing up yet at the pump. AAA says a gallon of regular gas is averaging $3.56--an increase of three cents from Wednesday. The drop in oil prices comes as the dollar has risen in Asia after making up some ground against the Euro. The stronger currency makes oil less attractive as a hedge against inflation and more expensive to overseas investors. The weak dollar has been a major factor in the recent sharp rise in oil prices.
Gasoline has hit another record high nationwide. But drivers can find a real deal in New Jersey if they're willing to pay a toll. AAA reports the price of gas has jumped three cents in one day to a national average of $3.56 a gallon. However, it's locked in for the moment at $3.17 on the New Jersey Turnpike and Garden State Parkway. Service areas there are regulated by the state. They can charge only three cents above the statewide average, and can change the price only once a week. That'll happen at midnight tonight--when prices will go up by 22 cents. For now, the relatively cheap gas has attracted long lines of drivers from neighboring New York, Connecticut and Pennsylvania. One says, "this is like winning the lottery."
Brazil's largest sugar and ethanol producer says it's signed a deal to buy ExxonMobil's Brazilian distribution and service stations. The deal between Irving-based ExxonMobil and the Brazilian company Cosan is worth $826 million. Cosan says it's buying 100 percent of Esso Brasileira dePetroleo and will assume a debt of $163 million. The Brazilian company says it'll finance part of the acquisition with $310 million recently raised with a private share deal. It said funds raised through the company's initial public offering will not be diverted from its core business of sugar and ethanol. Cosan will buy 1,500 gasoline stations in 20 Brazilian states, making it the nation's fifth-largest chain accounting for approximately seven percent of the nation's total fuel distribution market.
Congress is examining the proposed merger between Delta and Northwest Airlines. House and Senate panels have the proposed agreement on their radar. Officials with the airlines have said the deal is needed to cope with soaring jet fuel costs. But some lawmakers have concerns about the effects of combining the carriers. Creation of the world's largest airline will cost jobs and could decrease competition and result in higher fares. In addition to winning the support of labor, the public and lawmakers, the merger must also clear an antitrust examination by the government.
A bankruptcy court has approved the settlement of the last hold-out in the so-called "MegaClaims" lawsuit filed on behalf of