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Consumer Confidence Falls Again; Home Prices Gain for Seventh Month in a Row; Icahn Again Trying to Stop CIT Debt Offer; Obama Reveals $3.4 Billion "Smart Grid" Grant; U.S. Steel Suffers Third Quarterly Loss in a Row; Ford Flourishes in Satisfaction Survey; Old GM Plant to Produce Plug-In Hybrids
The Conference Board's Consumer Confidence Index fell for the second month in a row, dipping to 47.7, compared to 53.4 in September. "Consumers' assessment of present-day conditions has grown less favorable, with labor market conditions playing a major role in this grimmer assessment," said Lynn Franco, director of The Conference Board Consumer Research Center. "The short-term outlook has also grown more negative, as a greater proportion of consumers anticipate business and labor market conditions will worsen in the months ahead. Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays."
The Standard & Poor's/Case-Shiller Home Price Index gained 1.2% sequentially to a seasonally adjusted 144.5 in August, but was down 11.3% year-on-year. "Demand was boosted by investors and tax credits, supply was constrained by foreclosure moratoriums (and) modifications, and (Federal Housing Administration) financing was flowing freely," wrote Deutsche Bank AG (NYSE: DB) analyst Nishu Sood. "This entry level stabilization was real, but it is principally government sponsored and therefore tenuous."
Billionaire investor Carl Icahn is trying to block commercial lender CIT Group Inc.'s (NYSE: CIT) $30 billion debt exchange offer, telling unsecured bondholders he will pay them 60 cents on the dollar if they agree to reject the plan, Bloomberg News reported. In a statement, Icahn says his 30-day tender offer is "assuring them a floor price in the event the notes trade lower." CIT's plan offers 70 to 90 cents on the dollar in the form of new debt plus equity if they agree to the out-of court exchange. CIT is giving bondholders until Nov. 5 to accept the offer, after which the company would enact a prepackaged bankruptcy. Icahn, who says he's CIT's largest shareholder, last week offered the company $6 billion to pull its offer on the table.
With the goal of making the nation's power transmission system more efficient, U.S. President Barack Obama announced a $3.4 billion government grant to support 100 "smart grid" projects, which will be matched by $4.7 billion in private investments. Likening the effort to the ambitious development of the U.S. interstate system 50 years ago, President Obama said grid modernization would lead to a "smarter, stronger and more secure electric grid." The grant is a part of the administration's $787 billion stimulus package.
Pittsburgh-based United States Steel Corp. (NYSE: X) suffered its third-straight quarterly loss amid sagging demand for metal. The company lost $303 million, or $2.11 per share, for the quarter ended Sept. 30. That compares with a profit of $919 million, or $7.79 per share in the same period last year. Chief Executive Officer John Surma was optimistic about the future thanks in part to declining inventories. "We believe that the U.S. and global economies are in the early stages of a gradual recovery, which has been aided by global stimulus policies and may be supported by continued improvement in credit markets and inventory restocking," he said.
Consumer Reports has deemed Ford Motor Co. (NYSE: F) to be the most improved automaker, while ranking Chrysler Group LLCdead last in terms of reliability. The popular consumer magazine says Ford is the only American automaker that is competing with Asian brands such as Toyota Motor Corp. (NYSE ADR: TM). "Ford definitely has closed the gap," Rik Paul of Consumer Reports told Reuters in an interview. "We started seeing that a couple of years ago. We didn't know at that time if it was a fluke or if it was something they were going to be able to maintain. Last year, they were still there and this year, they are still there."
General Motors Corp. (NYSE: GRM) is selling its Wilmington, Del. manufacturing plant to Fisker Automotive Inc., which will make the Karma, a luxury plug-in hybrid electric car there starting in 2012, Reutersreported. Fisker intends to pay $18 million for the 3.2 million square foot property, and expects to produce 75,000 to 100,000 vehicles per year at the plant, which was formerly used to make Pontiacs and Saturns. Roughly 2,000 jobs will be created by the time the facility reaches full capacity in 2014.