Finance Blog number 1

The GOP-controlled House and the Democratic Senate remain at loggerheads over debt legislation that’s required to avoid a first-ever default on U.S. financial obligations as lawmakers and the White House head into the weekend in search of compromise.

Weekend talks follow a week of extraordinary partisanship that was capped by a power play by Senate Democrats killing a GOP-drafted debt limit increase and budget-cutting bill less than two hours after it squeaked through the House bad credit payday advance. Senate Majority Leader Harry Reid set up a test vote for the wee hours of Sunday morning to break a GOP filibuster.

Before then, however, the House was set to even the score by voting Saturday to reject an alternative measure by Reid even the Senate has taken it up.

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The number of people seeking first-time unemployment benefits dropped last week to the lowest level since early April, a sign the job market may be healing after a recent slump.

The Labor Department said Thursday that weekly applications fell 24,000 to a seasonally adjusted 398,000. That’s the first time applications have fallen below 400,000 in 16 weeks. The four-week average, a less volatile measure, dropped to 413,750, the lowest since the week of April 23.

Applications had fallen in February to 375,000, a level that signals healthy job growth. But they then surged to an eight-month high of 478,000 in April and have declined only slowly since then.

Some of the drop likely reflects seasonal volatility. Applications were elevated earlier this month partly because of temporary layoffs in the auto and other manufacturing industries, which are ending. Many auto companies close their factories in early July to prepare for new models.

The drop “is clearly good news,” said Joshua Shapiro, an economist at MFR Inc. Still, “we would prefer to see further data before concluding that the earlier downtrend in claims is being re-established.”

The total number of people receiving benefits, meanwhile, dipped to 3.7 million. That doesn’t include millions of people receiving extended benefits under emergency programs. All told, 7.65 million people received benefits in the week ended July 9.

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Drugmaker Bristol-Myers Squibb Co. said Thursday that its second-quarter profit fell nearly 3 percent due to higher taxes and increased costs for production, marketing and administration. Those were partly offset by a 14 percent jump in sales.

The company, which sells blockbuster blood thinner Plavix, still beat Wall Street expectations, and it increased its earnings-per-share forecast for 2011 by 8 to 10 cents.

New York-based Bristol-Myers said net income was $902 million, or 52 cents per share, down from $927 million, or 53 cents a share, a year earlier. Excluding a total of $69 million in one-time restructuring and licensing charges, it would have made 56 cents per share.

Analysts surveyed by FactSet were expecting, on average, 55 cents per share and revenue of $5.05 billion.

Revenue totaled $5.43 billion, up from $4.77 billion in 2010’s second quarter, on strong increases for most drugs and encouraging initial sales for a new cancer medicine.

“This performance demonstrates the success of our biopharma strategy in delivering short-term results and in positioning the company for the future,” Chief Executive Lamberto Andreotti said in a statement.

The company raised its full-year profit forecast to $2.08 to $2.18 per share, or $2.20 to $2.30 per share excluding one-time items. In January, it gave a forecast of $2 to $2.10 per share, or $2.10 to $2.20 excluding one-time items.

Bristol also confirmed its forecast of $1.95 per share, excluding one-time items, for 2013. That’s the first full year after generic competition starts slashing Plavix revenue.

Andreotti noted the company has had three new products approved in three months: just-launched Yervoy for advanced skin cancer, Nulojix for preventing rejection of transplanted kidneys and Eliquis, an anticlotting drug approved in Europe for preventing dangerous blood clots after knee or hip replacement surgery. Bristol and partner Pfizer Inc. plan to apply for U.S. approval of Eliquis later this year.

Top seller Plavix, which faces generic competition next May, had sales jump by 15 percent to $1.87 billion, and bipolar disorder treatment Abilify rose 12 percent to $706 million. Rheumatoid arthritis drug Orencia, Baraclude for hepatitis B and Sprycel for leukemia were all up by more than 25 percent, for a total of $713 million. Yervoy brought in $95 million.

But blood pressure drugs Avapro and Avalide, hurt by supply problems that have been mostly resolved, saw sales drop 18 percent to $251 million.

The company’s tax rate jumped to 27 percent, from 20.4 percent a year ago, boosting income taxes to $483 million.

For the first six months, Bristol-Myers reported net income of $1.89 billion, or $1.10 per share. That was up 13 percent from $1.67 billion, or 96 cents per share, in the first half of 2010. Revenue was up 9 percent, to $10.45 billion from $9.58 billion.

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Home prices rose for the second straight month in most major U.S. cities and are stabilizing after years of declines. But analysts say the trend in prices hardly signals a rebound for the troubled housing market.

A flurry of spring buyers is helping boost sales. At the same time, millions of foreclosures are in limbo, awaiting the results of a government investigation into improper practices by mortgage lenders. Once that probe is complete, banks will resume seizing homes and prices will likely fall again.

The Standard & Poor’s/Case-Shiller home-price index released Tuesday showed that prices rose in May in 16 of the 20 cities tracked.

Boston, Minneapolis and Washington posted the biggest monthly increases. Prices in Detroit, Las Vegas and Tampa, Fla. Prices _ three cities hit hardest by the housing crisis _ fell to their lowest points since the recession began.

Price declines have been getting smaller through the year. Seasonally adjusted prices have fallen a modest 1.2 percent over the past six months, according to the index. That’s roughly a third of the decline from the previous six months.

But analysts say the weakening job market and the uncertainty over foreclosures could lead to deeper price declines in the second half of the year. They estimate prices will fall another 5 to 10 percent by year’s end.

“The aggregate economy is at a turning point and there is much uncertainty now,” said Robert Shiller, a Yale professor and co-founder of the home-price index.

David M. Blitzer, chairman of S&P’s index committee, said the month-over-month increases in May were attributed to a “seasonal period of stronger demand for houses.” Such increases are expected, he said.

After adjusting for seasonal factors, such as spring buying, prices fell in 11 markets.

“Sustained increases in home prices over several months and better annual results need to be seen before we can confirm a real estate market recovery,” he said.

Over the last 12 months, prices have fallen in 19 of the 20 cities tracked.

Housing remains the weakest part of the economy. High unemployment, larger down payment requirements and tighter credit are preventing many buyers from entering the market. Many who can afford to buy are waiting because they are worried prices have yet to hit bottom.

Foreclosures and short sales _ when a lender agrees to sell for less than what is owed on a mortgage _ made up about 30 percent of all home sales last month, up from about 10 percent in past years. And 1.7 million potential foreclosures are being held up, according to real estate firm CoreLogic, either by backlogged courts or lenders awaiting state and federal probes into troubled foreclosure practices.

At least 10 percent of homeowners are 90 days or more past due on their mortgage payments in nine major U.S. cities, according to CoreLogic. The national average is 7.4 percent.

Most of those areas are well known trouble spots, including Atlanta, Las Vegas, Phoenix, Tampa, Fla., and Riverside, Calif. But others haven’t been as battered, including Chicago, Orlando, Fla., Long Island, N.Y., and Sacramento, Calif. That suggests the weakness in the housing industry is nationwide, economists say.

“We’re just really bouncing along the bottom right now,” said Chris Christopher, senior economist at IHS Global Insight. “Even with the positive news, there’s nothing very meaningful in these reports to show we’re coming back up. It’s just little blips here and there.”

There’s also less demand because the U.S. is seeing a decline in household formation. Fewer people are getting married. More young people are moving back in with their parents. Fewer immigrants are coming to the United States, partly because of the economy and also because of tougher enforcement of immigration laws. And the divorce rate has dropped, which is good for families but means there are fewer buyers.

Before the recession, between 2002 and 2007, roughly 1.3 million households were formed every year, according to U.S. Census data. That figure peaked in 2007 at more than 1.6 million. But since then it has fallen to just 357,000 last year, the lowest level in more than 60 years.

One bright spot in the S&P/Case-Shiller data: Even when adjusted for seasonal factors, month-over-month prices rose in some markets that had been pummeled by slumping sales. Those cities are Chicago, Denver, Miami, Minneapolis and Seattle.

The index measures prices compared with those in January 2000. It then provides a three-month average. The May data is the latest available.

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Asian stock markets fell Monday after U.S. political leaders failed to reach a deal to raise Washington’s debt limit that is crucial to avoiding an impending default.

Oil prices fell below $99 a barrel amid investor concern that the lack of a debt agreement could damage the world’s biggest economy and reduce demand for crude.

Japan’s Nikkei 225 was off 0.8 percent at 10,053.2 points and China’s Shanghai Composite Index slid 2.1 percent to 2,711.37. Hong Kong’s Hang Seng Index lost 0.8 percent to 22,268.28.

Elsewhere, South Korea’s Kospi lost 0.8 percent to 2,152.74 and Australia’s S&P/ASX 200 dropped 1.4 percent to 4,538.50.

“The only thing you can be assured of over the coming hours and days is volatility as the political posturing continues in the U.S.,” said Ben Potter, market strategist for IG Markets, in a report.

U.S. leaders had hoped to strike a deal Sunday to reassure investors. President Barack Obama has insisted on raising revenues, mainly through letting tax cuts for wealthier Americans expire, but Republicans want more spending cuts and have rejected higher taxes.

A default would mean the U.S. government could not pay all its bills starting next month, including interest and principal on Treasury bonds. That would cause shockwaves through the global economy and financial markets.

Many analysts expect U.S. leaders to reach a last-minute deal to raise the government’s $14.3 trillion borrowing limit before an Aug. 2 deadline. But markets are watching anxiously for what tax or spending changes might be part of the settlement.

In China, market heavyweight PetroChina Ltd., Asia’s biggest oil and gas producer, and the country’s biggest commercial lender, Industrial & Commercial Bank of China Ltd., both were off 0.8 percent.

Chinese railway shares fell after this weekend’s deadly bullet train crash in southeastern China. China South Locomotive and Rolling Stock Corp. declined 8.6 percent and China Railway Group was off 7 percent.

The dollar was little changed at 78.45 yen, up slightly from Friday’s 78.43. The euro also was largely unchanged at $1.4366.

Benchmark oil for September delivery was down $1 to $98.87 a barrel in electronic trading on the New York Mercantile Exchange. Crude rose 74 cents to settle at $99.87 on Friday.

In London, Brent crude slid 97 cents to $117.70 per barrel on the ICE Futures exchange.

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A British lawmaker says James Murdoch could be asked to clarify his testimony to a parliamentary committee investigating phone hacking after two former employees challenged his claim he had not seen evidence suggesting eavesdropping went beyond a jailed rogue reporter.

Murdoch’s former legal adviser and an ex-editor say they told Murdoch years ago about an email that suggested the rot at the News of the World was more widespread than previously claimed.

News International said James Murdoch stood by his statement payday advance low fees.

Conservative legislator James Whittingdale, who heads the committee, said Friday that Murdoch could be asked to address the contradiction in writing _ but he would not be recalled before the committee.

James and Rupert Murdoch gave evidence on Tuesday.

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Eurozone leaders are moving closer to signing off on a second bailout for Greece but markets are fretting that any deal that emerges later Thursday may imply a Greek debt default after a plan to slap a tax on banks appears to have been shelved.

Reaching a deal _ it had looked unlikely earlier this week _ became easier after Germany and France agreed on a common position on how to get banks and other investors to share the burden of a second rescue during last-ditch talks in Berlin Wednesday.

The offices of German Chancellor Angela Merkel and French President Nicolas Sarkozy did not release any details on their common plan, but the prime minister of Luxembourg said it was unlikely to include a tax on banks to help pay for the second rescue package.

“I have the impression that there is no agreement on a banking tax,” Jean-Claude Juncker, who as the chairman of the Eurogroup is one of the key officials of the currency union, said as he arrived in Brussels.

Juncker’s comments sparked a bout of euro selling in the markets, as investors now think that any private sector involvement may well mean that the credit rating agencies will consider that Greece will be in default of its debts. By late morning, the euro was 0.8 percent lower at $1.4150, having earlier traded above $1.42.

Juncker conceded that the final deal could well see the agencies slapping a “selective default” rating on the country.

That could trigger fresh financial turmoil, especially if the European Central Bank insists on cutting Greek banks from emergency support, as it threatened to do if the country is considered to be in default.

Leaders have been struggling to find an agreement that makes sure that banks and other private investors help pay for a bailout, without triggering panic on financial markets that the crisis could spread to larger economies like Spain or Italy.

Juncker also said that any deal should include more “flexibility” for the currency union’s bailout fund. Such flexibility is usually shorthand for lower interest and longer maturity for bailout loans as well as wider powers for the fund, such as the ability to buy up distressed bonds.

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Rupert Murdoch said he was the best person to clean up News Corp. Investors agreed.

The company’s stock had its best day since the phone-hacking scandal broke, rising more than 5 percent Tuesday while Murdoch and his son and deputy, James, testified before a committee of the British Parliament in London.

The gains restored about $2.2 billion of the $8.3 billion in market value the company had lost during the furor.

Murdoch, 80, said he was ashamed at revelations that the News of the World, a News Corp. tabloid, had broken into the voicemail of a murdered schoolgirl, potentially interfering with investigators and giving false hope to her family that she was alive.

But Murdoch declined to take personal blame in a crisis that has extended to the top levels of the British police and to the prime minister. Asked whether he was considering resigning as head of News Corp., he said: “No.”

“I feel that people I trusted, I’m not saying who, I don’t know at what level, have let me down,” Murdoch said. “And I think they behaved disgracefully, betrayed the company and me, and it’s for them to pay. I think that frankly, I’m the best person to clean this up.”

News Corp. stock was up all day, with some cable channels in the United States showing its price changing, cent by cent, while Murdoch spoke in London. The stock rose steadily throughout his testimony and closed at $15.79, up 82 cents.

“It became more certain from comments from Rupert that he intends to stay in place. That certainty is something that markets like,” said Laura Martin, an analyst for Needham & Co., an investment banking and asset-management firm.

She gave Murdoch “an A” and James Murdoch, 38, his son and heir apparent, an “an A-plus” for showing a good grasp of facts, appearing contrite and describing how they reacted appropriately when they learned of wrongdoing.

Martin said the succession plan that markets believed was in place, with James assuming the top job in a few years and Chief Operating Officer Chase Carey staying in his role, was now believed to be unchanged.

Late Monday, Thomas Perkins, a News Corp. board member, said top management had the board’s full support. He denied a report that it was considering an immediate change.

News Corp. owns media properties around the world, including Fox television, the 20th Century Fox movie studio, The Wall Street Journal and the New York Post. It closed the News of the World earlier this month.

The company employs 52,000 people around the world. Its stock is still down about 13 percent since the scandal broke, a loss of about $6.1 billion in market value.

At the hearing, British lawmakers pushed for details about the Murdochs’ ties to Prime Minister David Cameron and other members of the British political establishment payday loan lenders in states. They questioned London police about reports that officers took bribes from Murdoch’s journalists.

David Joyce, an analyst with trading firm Miller Tabak & Co., said the father-son pair did a good job distancing themselves from wrongdoing by saying they run a decentralized company and trust their employees.

“I think the stock is up as their apologies point to a desire to salvage the company as-is, and that significant asset sales are not likely,” Joyce said.

Rupert Murdoch also said he had seen no evidence that victims of the Sept. 11, 2001, terrorist attacks had been victims of hacking by his journalists.

“Rupert came across very direct, very clear that this doesn’t touch U.S. soil,” said Jeffrey Logsdon, an analyst for BMO Capital Markets. “So if the scorched earth is going to remain unfortunately somewhere else, that’s a relief.”

Some investors may have bought News Corp. stock because it seems cheap, said Morningstar analyst Michael Corty.

“In the long run, the fundamentals in the business aren’t changed by all these headlines and the scandal,” Corty said. “We think it’s undervalued, but it’s not a screaming buy.”

News Corp. made $2.5 billion on $32.8 billion in revenue in its last fiscal year, putting it in the same league as Time Warner and Disney among the world’s largest media companies. Analysts have valued the company primarily on its money-making TV and movie businesses and have considered newspapers a drag on profits despite Murdoch’s attachment to them.

More than two hours into the hearing, a spectator wearing a plaid shirt walked up to the table where the two Murdochs sat and appeared to hit the elder Murdoch squarely in the face with a paper plate full of shaving cream.

Murdoch’s wife, Wendi Deng, who was sitting behind Murdoch and had touched his elbow occasionally to stop him thumping the desk, lashed out, slapping the man in the face before falling down.

Police quickly took the man away. As he left the room, Deng picked up the plate and hurled it at the man. The panel took a 10-minute recess. When it resumed, the elder Murdoch was without his suit jacket but apparently cleaned up. That’s when he was asked if he was considering resigning over the affair.

News Corp. stock edged up about a percentage point after the incident. Thomas Eagan, an analyst at Collins Stewart, said the attack may have caused investor sentiment to shift “from animosity toward sympathy.”

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Jen McGowan found out she lost her job at IQT Solutions through Facebook.

She was about to share the good news about her newborn niece when she saw that a co-worker had posted an angry message about being terminated.

“We should have at least had some notice so we could’ve pre-planned,” said McGowan, who has worked as a senior support representative with the call centre for five years.

The 34-year-old single mother of two is one of 400 IQT Solutions employees in Oshawa scrambling to make ends meet after being unexpectedly terminated last Friday without pay.

On Monday morning, McGowan along with more than 100 of her former co-workers marched through Oshawa carrying signs saying “Give Us Our Money” and “IQT=No Job, No Food, No Shelter.”

“I’m hoping that IQT will pay us what we’re owed,” said McGowan, noting that some employees are waiting for up to six weeks worth of pay.

IQT Solutions, the U.S.-based call centre, declared bankruptcy last week in Canada and terminated 400 jobs in Oshawa, 100 jobs in Trois-Rivières, Que., and 375 jobs in Laval, Que.

The rally began around 8 a.m. at the Midtown Mall and ended shortly after 10:30 a.m. at city hall in Oshawa.

McGowan said the City of Oshawa and the Ontario Federation of Labour have offered their support as workers continue to fight for their pay.

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When disasters strike, scam artists and opportunists often come out in full force instant payday loan lenders.

It’s an unfortunate combination