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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.
House Rethinks Glass-Steagall; Boeing's Dreamliner Finally Lifts Off; Manufacturing, Wholesale Prices Both Rise; Best Buy Beats Street; GE Sees Flat Revenue; Wells Fargo to Pay Back TARP
- The Glass-Steagall Act, which barred banks that took deposits from underwriting securities, is under consideration for reinstatement by the U.S. House of Representatives, according to Majority Leader Steny Hoyer, D-MD. A renewal of the 1933 law “is certainly under discussion” by House members, Hoyer told Bloomberg News in Washington. The Glass-Steagall law was repealed in 1999 to help pave the way for the formation of Citigroup Inc. (NYSE: C) with the $46 billion merger of Citicorp and Travelers Group Inc. Enactment of the law has generated debate about whether it helped spawn reckless lending practices and financial speculation that led to the meltdown of credit markets last year and the $700 billion U.S. bailout of troubled banks, including Citigroup. “As someone who voted to repeal Glass-Steagall, maybe that was a mistake,” Hoyer said.
- Boeing Co.'s (NYSE: BA) much-anticipated Dreamliner airplane took off on its maiden flight into cloudy skies yesterday (Tuesday) after more than two years of delays. The new lightweight carbon and titanium plane, which Boeing has said will save airlines million of dollars in fuel and maintenance costs, has been hampered by production delays five times in the past three years, and the first flight has been postponed six times, testing customers' patience. The flight was witnessed by several thousand Boeing employees, industry VIPs, airplane enthusiasts and reporters, but excitement rippled throughout the aerospace industry. "This really sends the message that this is a real aircraft," Richard Aboulafia, aerospace analyst at research firm Teal Group told Reuters.
- Factories in the United States produced more goods in November than forecast, extending a rebound in manufacturing that will give the world's largest economy a boost into 2010. Industrial production was forecast to increase 0.5%. Last month's jump in producer prices was led by a 6.9% gain in fuel costs, which accounted for about 75% of the overall gain, the Labor Department said. Separately, the U.S. Federal Reserve said yesterday (Tuesday) in Washington. That wholesale prices climbed 1.8% in November, also exceeding the median estimate of economists surveyed by Bloomberg News. Production climbed 0.8%, the fourth gain in the past five months.
- Best Buy Co. Inc. (NYSE: BBY) posted higher earnings for its fiscal third quarter and the largest U.S. consumer electronics retailer increased its full-year financial outlook. Strong sales of laptop PCs, television sets and other electronics helped quarterly earnings to quadruple to 53 cents a share. Results were also driven higher by a lower effective tax rate and the absence of year-earlier charges. However, the company said revenue gains are being driven by lower-profit goods, such as notebook computers and entry-level TV sets, and warned that this quarter's margin would be lower than anticipated as a result, The Wall Street Journal reported.
- General Electric Co. (NYSE: GE) expects total revenue to be flat next year as well, with growth in service revenue offsetting weaker equipment revenue, the world's biggest maker of jet engines and electricity producing turbines said yesterday (Tuesday). "We've positioned the company for solid earnings growth and cash flow growth in the future," said GE chief executive Jeffery Immelt. "When we look at the near term, it's going to take investment, organic investment, to drive growth."
- Wells Fargo & Co. (NYSE: WFC) said yesterday (Tuesday) that it is selling $10.65 billion in stock to help repay a $25 billion bailout received last year from the government's Troubled Asset Relief Program (TARP). The repayment will result in a charge of about $2 billion in the fourth quarter, according to the bank, but it will also cut its annual dividend expense by $1.25 billion. The bulk of the $25 billion in TARP money will be repaid with the bank's $14.6 billion in cash.