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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.
Initial Jobless Claims Climb, Continuing Claims Fall; Food Industry Looking to Ease Sugar Imports; Ford to Boost Production Thanks to Cash for Clunkers; Volkswagen Board Approves Merger With Porsche; Fed Demands Plan From CIT; China Backs Off Anti-Porn Software For New Computers; Oil Stays Above $70
- Initial jobless claims rose by to 558,000 for the week ended August 8, up 4,000 from the previous week’s revised figure of 554,000, the Labor Department said yesterday. Continuing claims for the week ended August 1 dropped 141,000 to settle in at 6.20 million, down from the preceding week’s revised 6.34 million. "The good news is that seasonal issues [such as auto plant closings in July] appear to have worked themselves out and an encouraging trend has become visible," Joseph Brusuelas, a director at Moody's Economy.com told CNN Money. Still, Brusuelas was skeptical about the drop in continuing claims because it could reflect the growing number of people who have exhausted their unemployment benefits.
- The Obama administration is feeling pressure from large food companies in the U.S. to ease sugar import curbs, pointing to forecasts for unprecedented sugar shortages that could result in higher retail prices and job losses, Reuters reported. Kraft Foods Inc. (NYSE: KFT), General Mills Inc. (NYSE: GIS) and The Hershey Co. (NYSE: HSY) were among the companies that warned U.S. Department of Agriculture Secretary Tom Vilsack in a letter that “our nation will virtually run out of sugar” if a USDA forecast is accurate. The letter was written a week before the Agriculture Department on Wednesday said the stocks-to-use ratio in the U.S. sugar market for 2009/10 stood at 6.7%, up from 3.4% in last month’s report.
- Ford Motor Co. (NYSE: F) said yesterday (Thursday) that to keep up with the strong demand created by the U.S. governments Car Allowance Rebate System (CARS), better known as “cash for clunkers.” The automaker, the only one in the United States to not receive federal assistance, says it plans on boosting production by another 10,000 units to a total of 495,000 for the current quarter, exceeding production from a year ago by 18%.
- Volkswagen AG’s (OTC ADR: VLKAY) board approved its 3.3 billion euro ($4.7 billion) merger with fellow German automaker Porsche Automobil Holding SE, Dow Jones Newswires . The deal came after Porsche’s attempt to buy Volkswagen backfired, despite its 50% stake in Europe’s largest carmaker. Porsche secured options on another 20%, but ultimately could not bear the brunt of its more than 10 billion euro debt. Once completed, the merger will increase Volkswagen’s operating profit roughly 700 million euros ($1 billion).
- Commercial lender CIT Group Inc. (NYSE: CIT) has been told by the U.S. Federal Reserve that it has 15 days to come up with a capital and liquidity management plan, the company said yesterday (Thursday) in a regulatory filing. The struggling lender may finally yield and declare bankruptcy if various restructuring efforts including a tender offer for $1 billion in notes due on August 17 prove unsuccessful. CIT must also submit a business plan to the Fed outlining how it will improve its financial condition and outline actions to strengthen its management and corporate governance within 75 days. CIT received more than $2 billion in Trouble Assset Relief Program (TARP) funds in December, but was denied additional money last month.
- Chinese officials yesterday (Thursday) abandoned a plan to install anti-pornography software on every computer sold, but will still require Internet cafes, schools and other public places to use the program, The New York Times reported. China’s Industry and Information Technology Minister Li Yizhong said the notion that the program, called the Green Dam/Youth Escort, would be installed on every new computer was “a misunderstanding” generated by poorly written regulations. In June, analysts believed China was moving to censor Google Inc. (Nasdaq: GOOG) to divert attention away from Green Dam.
- Despite tepid U.S. demand, benchmark crude for September delivery rose 36 cents to close yesterday (Thursday) at $70.52 a barrel on the New York Mercantile Exchange (NYMEX), as a weaker dollar pushed investors toward energy commodities, The Associated Press reported. Brent crude prices rose 59 cents to settle at $73.48 a barrel on the ICE Futures exchange in London. "None of the statistics really point to anything happening on the ground in terms of demand," Tim Kloza, publisher and chief oil analyst at Oil Price Information Service told The AP. "It seems like there's very comfortable amounts of crude oil out there."