Oil Prices Hit Four-Month High; BOC Governor Says Economy Recovering; Best Buy Tops Estimates; Mortgage Rates Fall to Record Low; Soros: Commercial Property Prices To Drop 30%; New York Times Cuts Workers, Salaries
- Oil prices hit a new high for the year yesterday (Thursday), soaring $1.57, or 2.98% to settle at $54.34 a barrel on the New York Mercantile Exchange. Prices have risen by nearly 40% since falling as low as $33 a barrel in December
- People's Bank of China Governor Zhou Xiaochuan said yesterday (Thursday) that China’s economy is recovering and will soon be able to act as a “stabilizing force in [the] global economy.” “Facts speak volume,” Zhou wrote, “and demonstrate that compared with other major economies, the Chinese government has taken prompt, decisive and effective policy measures demonstrating its superior system advantage when it comes to making vital policy decisions.
- Best Buy Co., Inc. (BBY) shares rose after the retailer's adjusted results topped Wall Street estimates, and it forecast full-year profit above expectations, Reuters reported. Even though the company posted a 23% drop in quarterly profit, investors cheered the report which showed that despite a recession and rising unemployment, consumers are showing a willingness to buy more than just necessities like food. The company said sales and traffic improved as the quarter progressed as it benefited from the closure of former rival Circuit City (OTC: CCTYQ).
- The U.S. 30-year fixed mortgage rate fell to 4.85%, the lowest on record, as the Fed moves to increase purchases of mortgage-backed bonds by buying $300 billion of Treasuries. The Fed is trying to lower rates by reducing the supply of outstanding mortgage bonds, boosting their price and lowering yields. The government plan would allow banks to reduce the rates on new mortgages and still sell mortgage securities at a profit, Bloomberg reported.
- Billionaire investor George Soros said U.S. commercial real estate will probably drop at least 30% in value, putting further pressure on banks, Bloomberg reported. “It is inevitable…there are already some transactions which reflect and anticipate it, so we know they will drop at least 30%,” Soros said. He also said that the U.S. may face a new round of inflation if credit starts flowing again because of the large increase in the money supply stemming from the Federal Reserve’s purchases of Treasury securities.
- The New York Times Co. (NYT), laid off 100 employees yesterday (Thursday) on the same day rival newspaper The Washington Post Co. (WPO),said it wants to buy out an unspecified number of employees, Reuters reported. The Times also cut salaries for the rest of the year by 5%, and said it might cut newsroom jobs if it cannot get union employees to agree to similar cuts. The news comes as both papers are suffering from a decline in advertising revenue.