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.
GM May Keep Saab After Deal Falls Apart; Third Quarter GDP Revised Down; Home Prices Rise for Fourth Straight Month; European Commission Drops Qualcomm Antitrust Inquiry; Fitch Downgrades Mexico; Bank Rossi Takes Action
General Motors Co.'s board will decide the future of its bankrupt Saab unit, and may shut it after Koenigsegg Group AB canceled a planned acquisition of the Swedish company, a person familiar with the matter told Bloomberg News. GM's board will review Saab's future at a Dec. 1 meeting and directors could opt to keep Saab, as they did when deciding earlier this month to cancel a sale of the Opel brand in Germany. The pullout by Koenigsegg, which said it ran out of time to complete a deal, is the third brand sale to falter since GM's July 10 bankruptcy exit. GM backed out of the Opel sale to a group led by Magna International Inc. (NYSE: MGA), and Penske Automotive Group Inc. (NYSE: PAG) withdrew from a plan to buy Saturn in September.
The U.S. economy grew at a rate of 2.9% in the third quarter, down from the initial estimate of 3.5% the Commerce Department said yesterday (Tuesday). But most analysts said the revised data signaled the anemic economic recovery was intact, noting it was still the fastest pace since the third quarter of 2007. "We are still on the right path and a double-dip (recession) is not on the cards," said Jonathan Basile, an economist at Credit Suisse Group AG (NYSE: CS) told Reuters. The return to growth in the July-September period, after four straight quarters of declining output, probably ended the most painful U.S. recession in 70 years. The economy contracted at a 0.7% rate in the April-June period.
The S&P/Case-Shiller home-price index of 20 U.S. cities showed home prices rose for a fifth straight month in September, pointing to improvement in real estate that's helping the economy emerge from recession. The index rose 0.27% from the month prior on a seasonally adjusted basis, after a 1.13% rise in August. The gauge fell 9.36% from September 2008, more than forecast. Still, it was the smallest year-over-year decline since the end of 2007. Rising home sales have helped stem the slump in property values that precipitated the worst recession since the 1930s. "The reduction of inventories we have seen has helped stabilize prices," said Michael Gregory, a senior economist at BMO Capital Markets in Toronto.
The European Commission shut down antitrust proceedings against Qualcomm Inc. (Nasdaq: QCOM) as big technology companies dropped their four-year old complaints against the U.S. mobile chip supplier. The Commission's decision came as Telefonaktiebolaget LM Ericsson (ADR Nasdaq: ERIC), the world's biggest mobile network equipment maker, and Texas Instruments Inc. (NYSE: TXN), Qualcomm's biggest wireless chip rival, both announced that they were withdrawing their complaints. The move marks the end of the case, which began in October 2005 when six large companies lodged complaints about Qualcomm's licensing practices. The closing of the case means Qualcomm could be in a better position to return more cash to shareholders through share buybacks or a dividend increase. "We believe there was some overhanging concern that the EU could fine Qualcomm," UBS AG USA (NYSE: UBS) analyst Maynard Um told Reuters.
Fitch Ratings Inc. yesterday (Tuesday) downgraded Mexico because of concern over the country's medium-term fiscal outlook and growth potential. Fitch dropped Mexico's rating to triple-B, two notches above non-investment grade, or "junk" status.
Russia's central bank, Bank Rossii, cut its refinancing rate to 9% from 9.5% and reduced the repurchase rate charged on central bank loans to 8% from 8.5%, effective today (Wednesday). It last lowered them by half a percentage point on Oct. 30. "The narrower difference between the levels of domestic and external rates will help stem the ruble's strengthening," the central bank said in a statement.