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.
New Home Sales Rise 9.6%; Homebuilders Buying Lots Again; Thrifts Report First Profit Since 2007; Air Berlin May Cancel 787 Order; German Confidence Increases; Beer Prices Rise; Dollar Tree Beats Wall Street Estimates; Vonage Stock Soars
- The U.S. Commerce Department said yesterday (Wednesday) new home sales surged 9.6% to a seasonally adjusted annual rate of 433,000 in July over the previous month, demonstrating the housing market is slowly making progress. The median sales price was $210,000, down slightly from June's $210,400 and a decline of 11.5% from year-ago levels. Since the market's bottom in January, sales have gained 30%. Still, sales were down 13.4% from July 2008, showing the market is still not back to actual growth. Builders and real estate agents are lobbying Congress to extend an $8,000 tax credit for first-time homebuyers, which expires at the end of November. "The real estate market is really a fragile thing," Tucson, Ariz.-based A.F. Sterling Homes Vice President Randy Agron told The Associated Press. "It's not the right time to take [the tax credit] away."
- After selling off billions in raw land and writing down the value of properties during the last three years, homebuilders are searching bubble markets like Sacramento, Phoenix, Las Vegas and Orlando for deals on ready-to-build lots as they prepare for a rebound. According to the S&P/Case-Shiller Home Indices, prices declined in 20 U.S. cities in June at a slower pace than forecast. The group said the home-price index declined 15.4% from a year earlier, the smallest drop since April 2008. The gauge rose from the prior month by the most in four years. "It's a good time to acquire properties, because you can often find distressed properties at low prices," Bernie Markstein, senior economist for the Washington-based National Association of Home Builders told Bloomberg News.
- The government's Office of Thrift Supervision (OTS) yesterday (Wednesday) said the U.S. thrift industry booked its first profit since 2007, earning a meager $4 million in the second quarter, compared with a revised first-quarter loss of $1.62 billion. But the agency also said the number of "problem" thrifts grew to 40 from 31. The regulatory agencysaid the small profit, the industry's first in two years, was from higher net interest margins, lower provisions for loan losses and higher income from fees. The agency, which largely oversees mortgage lenders, said the numbers reflect the nation's weak job market and a generally weak economic environment. "Despite some encouraging signs, the industry's performance remained uneven,"John Bowman, acting director of the OTS told Reuters, "The bottom line is the industry is not out of the woods yet."
- Air Berlin plc may cancel its order for 25 787 Dreamliner aircraft from The Boeing Co. (NYSE: BA), Aviation Week reported. The repeated delays of the aircraft are "everything but satisfactory," Air Berlin Chief Financial Officer Ulf Huettmeyer said. "It's no fun anymore." The German air carrier plans to make its decision in the next few months, and will base it on aircraft's progress, as well as its own long-distance flight strategy.
- A confidence index that measures sentiment among German business executives rose for a fifth straight month in August, increasing to 90.5 from 87.4 in July, exceeding the median forecast of 89 in a Bloomberg News survey. The index reached a 26-year low of 82.2 in March. The survey of 7,000 executives in Munich was the highest since September last year, suggesting Europe's largest economy will gather strength after stumbling through its worst recession since World War II. Germany's economy expanded by 0.3% in the second quarter as improving global trade boosted demand for exports and the government's $122 billion (85 billion euros) package to stimulate domestic spending started to take effect. "The third quarter has all ingredients for another growth surprise," said Carsten Brzeski, an economist at ING Group N.V. (NYSE ADR: ING) in Brussels.
- Just in time for the start of the college and pro football seasons, brewers in the United States and abroad are about to hike beer prices, pointing to sagging sales volumes and higher commodity costs. "We plan on taking price increases on a majority of volume and in a majority of markets this fall," Anheuser-Busch InBev NV said. "The increase helps cover some input costs." MillerCoors LLC also plans on raising prices as a part of its regular fall increases and are "more in line with catching up with costs and commodity prices rather than the current economic environment," MillerCoors spokesman Julian Green told CNNMoney. Import beers sales like those from Heineken N.V. (OTC ADR: HINKY) and Grupo Modelo S.A. de C.V. (OTC: GPMCF), the latter which distributes Corona Extra, are also feeling the crunch as consumers purchase less expensive beer. While Heineken has already raised prices, Grupo Modelo has refrained from doing so, citing the tough economy.
- Discount retailer Dollar Tree Inc. (Nasdaq: DLTR) saw its profit jump 50% and sales rise 12% as it soundly beat Wall Street expectations. The company reported a net income of $56.9 million, or 63 cents per share for the quarter ended Aug. 1, compared to a net income of $37.6 million, or 42 cents a share a year ago. Analysts polled by Thomson Reuters were expecting the retailer to earn 54 cents a share. Revenue rose to $1.22 billion from $1.09 billion in the same quarter last year, while same-store sales gained 6.8%. Shares of Dollar Tree hit their 52-week high of $51.39 yesterday (Wednesday), before settling at $50.13, an increase of 4.66% or $2.23.
- Shares of Vonage Holdings Corp (NYSE: VG) continued to climb on Wednesday as sentiment grew that the pioneer of VOIP, or voice over Internet protocol, would survive despite earlier skepticism over its business model. After surging 35% in New York trading yesterday (Wednesday), the stock has gained more than 300% in the past week, surprising analysts who say the company still faces stiff competition and weak revenue. The stock now stands above $2 after trading at less than 50 cents a share a week ago. Vanessa Alvarez, analyst at Frost & Sullivan, said Google Inc.'s (NASDAQ: GOOG) new voice application might be renewing interest in VOIP. Vonage was among the first to offer Internet-based calling services to people looking for cheaper alternatives to regular phone lines.