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With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
Goldman Goes to Defends Energy Trading; Consumer Confidence Falls on Job Worries; Home Price Erosion Continues to Slow; Congress Works to Ban Incentive Pay, Give Shareholders a Voice on Bonuses; IBM Expands Its Data-Crunching Business;
- Goldman Sachs Group Inc. (NYSE: GS) representatives are yesterday (Tuesday) defended their commodities trading business on Capitol Hill, where regulators may set limits on speculators in the sector. The Commodity Futures Trading Commission (CFTC) said that the energy trading community may have played a major role in the volatility of energy prices over the last few years, and may need to expand its oversight of the practice. "The American people are tired of excessive speculation and bubble economies caused by Wall Street greed," Senator Bernard Sanders, an independent from Vermont, said at the hearing, according to The New York Times. "They are tired of hedge fund managers and firms like Goldman Sachs making a fortune betting that the subprime mortgage market will continue to get worse or that more companies will go bankrupt."
- Consumer confidence in the United States continues to wane: The Conference Board's confidence index fell to 46.6 this month following a 49.3 reading in June. The key factor affecting confidence is unemployment. "Folks are still concerned about their jobs," Mark Vitner, a senior economist at Wells Fargo Securities LLC told Bloomberg News.
- Month-to-month U.S. home prices in May grew 0.5% in May, the first increase in nearly three years according to the Standard & Poor's/Case-Shiller Home Price Indicies. Year-on-year prices continue to decline on the 20-city index, falling 17.1%. "The pace of descent in home price values appears to be slowing," said David M. Blitzer, chairman of the Index Committee at S&P in a prepared statement. "While many indicators are showing signs of life in the U.S. housing market, we should remember that on a year-over-year basis home prices are still down about 17% on average across all metro areas, so we likely do have a way to go before we see sustained home price appreciation."
- In a move that should appease public outrage over Wall Street pay, the U.S. House Financial Services Committee approved legislation that would enable regulators to ban incentive pay at banks and give shareholders a vote on bonuses, Bloomberg News reported. The bill, adopted 40-28 yesterday (Tuesday), would allow agencies such as the Securities and Exchange Commission (SEC) to prohibit compensation that encourages financial companies to take "inappropriate risks." The House of Representatives and Senate must pass the bill before U.S. President Barack Obama signs it into law. The House could vote as soon as Friday.
- International Business Machines Corp. (NYSE: IBM) acquired Chicago-based predictive analytics firm SPSS Inc. (Nasdaq: SPSS) for $1.2 billion in cash, or $50 per share. The deal was valued at 40% above SPSS' closing price of $35.09 on Monday. SPSS' shares soared on the news yesterday (Tuesday), closing at $49.45, up 40.92% or $14.36. The worldwide market for business analytics software will swell to $25 billion this year, growing 4% over 2008, IBM said, citing Interactive Data Corp. (NYSE: IDC) information.
- Viacom Inc. (NYSE: VIA) suffered a 32% drop in its second quarter bottom line, citing a challenging global economy. The media giant's profit fell to $277 million, or 46 cents a share on revenue of $3.29 million for the quarter ended June 30. That compares to a net income of $406 million, or 64 cents a share on revenue of $3.85 billion in the same period last year. The company was encouraged that its premium movie channel, Epix, coming this fall, will appear in the lineup for subscribers of Verizon Communications Inc.'s (NYSE: VZ) FiOS television service. "While we view this as an encouraging sign, we note that Verizon FiOS has a very limited base of TV subscribers," Spencer Wang said in a Reuters report. "We continue to believe securing distribution from larger operators [such as major cable companies] will be challenging."