U.S. consumer sentiment fell in early November to the weakest in three months amid grim expectations for job and income prospects, a survey showed on Friday.
The Reuters/University of Michigan Surveys of Consumers said its preliminary index of sentiment for November fell to 66.0, the lowest since August, from 70.6 in October. This was well below economists’ median expectation of a reading of 71.0, according to a Reuters poll.
The index of consumer expectations fell to 63.7 in early November from 68.6 in October.
“Confidence tumbled in early November due to the grim financial realities faced by consumers as well as weaker economic prospects for the year ahead — importantly, the decline in confidence was already in place before the announced increase in the unemployment rate to 10 fast payday loan.2 percent on November 6,” the Reuters/University of Michigan Surveys of Consumers statement said.
Within the survey, the 12-month economic outlook index fell to 67, the lowest since April, from 81 in October. The 1-year inflation expectation eased to 2.8 percent from 2.9.
(Reporting by Chris Reese; Editing by Chizu Nomiyama)
American International Group Inc Chief Executive Robert Benmosche said on Wednesday he remains “totally committed” to staying at the company, countering an earlier report that he was considering stepping down.
In a letter to employees obtained by Reuters, Benmosche said he and the company’s board are “frustrated” about restrictions on pay and are in discussions with the U.S. government about them.
AIG, which has received up to $180 billion of federal aid, including more than $80 billion in loans, and is now 80 percent-owned by U.S. taxpayers, posted its second straight quarterly profit last week, helped by a recovery in the value of its investments.
Benmosche said compensation restraints present a “barrier that stands in the way of restoring AIG’s value.”
The Wall Street Journal reported that Benmosche was so frustrated that he told the company’s board last week he was considering stepping down payday cash advance loans. The newspaper cited people familiar with the matter.
The giant insurer’s chief executive said in his letter that he is particularly concerned with the pay of the company’s top 100 executives, which are under the purview of Kenneth Feinberg, the U.S. government’s pay czar.
Benmosche told AIG directors that he was “done” but agreed to think it over when they reacted with shock, the people told the paper.
(Reporting by Steve Eder in New York and Ajay Kamalakaran in Bangalore; editing by Valerie Lee, Andre Grenon, Leslie Gevirtz)
Oil prices rallied Monday amid bets the dollar will continue to depreciate and lingering concerns that Tropical Storm Ida could disrupt production in the Gulf of Mexico.
Crude oil for December delivery jumped $2, or 2.58%, to settle at $79.43 a barrel.
The advance came as the dollar weakened broadly against rival currencies after the G-20 concluded a weekend meeting without publicly addressing the U.S. currency’s ongoing decline.
"Weakness in the dollar is what has everyone buying commodities today," said James Cordier, president of Liberty Trading Group.
The dollar index (DXY), which measures the greenback’s value against a basket of currencies, fell 0.8% to 75.03 from 75.77.
A weaker greenback makes commodities priced in dollars cheaper for buyers in other currencies.
Analysts expect the dollar to fall further given the outlook for exceptionally low interest rates in the United States and the nation’s ever-expanding budget deficit.
Tropical Storm Ida, which was downgraded from hurricane status, is expected to make landfall along the northern Gulf Coast Tuesday morning, according to the National Hurricane Center no credit check payday loans.
British Petroleum (BP) said Sunday that "some precautionary curtailment of production has taken place" in anticipation of the storm. But other energy producers, including Royal Dutch Shell (RDS.A), are not expecting any supply disruptions.
Oil prices have risen from a low of about $34 last December as the global economy has shown signs of improvement, raising speculation that the world’s thirst for energy will rebound.
However, the market has struggled to push prices above this year’s high near $82 a barrel as U.S. inventories of crude oil and gasoline remain at record highs.
Cordier said he expects oil to trade in a range between "the high $70s and the low $80s."
"The weak dollar will keep it from falling, while high inventories keep it from going higher," he said.
AXA Asia Pacific rejected a $10.3 billion bid from parent AXA SA and Australian rival AMP Ltd on Monday, an initial hurdle for the French insurer’s bold ambitions to expand in Asia.
AXA SA, Europe’s second-largest insurer it would raise $3 billion to buy out its Asian assets in a two-stage deal which would see AXA Asia Pacific sold to AMP, then divided on geographical lines with the Australian firm keeping the Australia and New Zealand assets and selling the Asian assets back to AXA SA.
But AXA Asia Pacific’s independent directors rejected the main plank of the deal saying the deal “significantly undervalued” the company.
AXA SA had tried to buy out the minorities in AXA Asia Pacific five years ago but was knocked back.
“They’ve obviously wanted to have at least some of the assets of AXA Asia Pacific for some time. They wanted to do it cheaply before and they’re probably wanting to do it cheaply again,” said Ross Barker, managing director of Australian Foundation Investment Co.
AXA Asia Pacific shares jumped 30 percent on news of the takeover bid, with the market punting on AMP and AXA improving the offer.
AXA SA holds its Asian operations through its stake in Australia-based AXA Asia Pacific Holdings but now wants to own these assets outright, doubling its exposure to Asian life insurance savings, including in China and India.
“The proposal has been received against the backdrop of recent weakness in global financial markets and before the growth of our Asian operations is fully reflected in our profitability,” AXA Asia Pacific Chairman Rick Allert said in a statement.
With the buyout, AMP would buy all of the shares in the Asia Pacific unit, including the parent’s 53 percent stake in a deal worth $10.3 billion, and then sell AXA Asia Pacific’s Asian assets back to the French parent.
“The Asian assets are attractive,” said Mark Daniels, head of Australian equities for Aberdeen Asset Management.
“That’s one of the reasons why you’d hold AXA (Asia Pacific). They’ve got a very good business in Hong Kong and other Asian businesses are coming on track,” Daniels added.
In a separate development, AXA’s 15.6 percent stake in China’s No.4 life insurer, Taikang, attracted foreign and domestic bidders, including Temasek and Blackstone, valuing the holding at more than $1 billion, sources told Reuters.
“A BIT LIGHT”
AMP’s cash-and-shares offer for all of AXA Asia Pacific, the first stage of the deal, implied a bid of A$5.34 per AXA Asia Pacific share, valuing the target firm at A$11.2 billion ($10.3 billion), based on AMP’s closing share price on Friday. AMP is offering a 26 percent premium to AXA’s close on Friday.
AXA’s shares surged 33 percent to close at A$5.70, their highest since the collapse of Lehman Brothers.
At the new GM, the buck now stops with the board.
The surprise decision by General Motors Co to drop a plan supported by Chief Executive Fritz Henderson to sell the company’s Opel unit has raised new questions about the standing of the veteran GM insider after just six months on the job.
“It isn’t clear who is running GM,” said Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland. “They’ve got a problem here.”
Henderson, who joined GM in 1984 and worked his way up as a financial manager, has only been in charge of GM since this spring, when the Obama administration ousted Rick Wagoner and ordered the company to appoint outsiders to its hitherto insider-dominated board.
The reversal on selling Opel to a group led by Canada’s Magna International Inc suggests to some the new directors — including Ed Whitacre, the former AT&T Inc CEO who now serves as GM’s chairman — are not deferring to anyone. Noteven Henderson, who expressed confidence recently the Opel sale would be wrapped up soon.
The sale was controversial from the start.
“My view was always if at the end of this Opel ended up outside GM, that was a strategic mistake,” Mike Jackson, the head of Auto Nation, told the Reuters Auto Summit in Detroit.
John Smith, a GM group vice president and chief negotiator in the Opel restructuring, told reporters on Wednesday that the decision not to sell Opel was debated vigorously within GM advanced payday loan.
“This has been a close call from the very first of the three detailed reviews with our board,” Smith said. “It was a coin toss in August, it was a coin toss in September and a coin toss of a kind in November.”
HENDERSON HAD FAVORED
Henderson, who vowed to shake up the slow-moving culture of the 101-year-old automaker, had argued the Magna deal was the best remaining choice for cash-strapped GM after seven months of painstaking talks with bidders.
He also said in an interview on CNBC in late October that he thought the board supported the move.
So the company’s announcement on Tuesday that the board had decided to abandon the sale left industry watchers wondering whether Henderson was out of the loop — or losing clout.
“What worries me is the indecisiveness,” Ken Lewenza, the head of the Canadian Auto Workers union told the Reuters Auto Summit on Wednesday. “But if at the end of the day it means success for General Motors, it might make sense.”
Henderson was already looking like the odd man out in Detroit, where the other two car companies, Ford and Chrysler, are now run by executives — Alan Mullaly at Ford and Sergio Marchionne at Chrysler — who have spent most of their careers outside the car industry.
The Federal Reserve on Wednesday is expected to reaffirm its intention to keep U.S. interest rates at ultra-low levels for a long time to support the economy, even as signs of recovery accumulate.
The Fed’s policy-setting Federal Open Market Committee resumed a two-day meeting at about 9 a.m. (1400 GMT), a Fed spokesperson said. The Fed will issue a statement around 2:15 p.m. (1915 GMT).
The central bank cut overnight rates close to zero percent last December and it has vowed to keep them there for an “extended period.” While some analysts think the Fed could start to tip-toe away from that pledge, most say it is too soon.
“Once they start removing that, that’s a real sign that they intend, within six months, to start raising rates,” said Deutsche Bank economist Torsten Slok. “But it’s just premature, looking at the economic numbers, to arrive at that conclusion.”
Analysts expect the Fed to nod to modestly encouraging signs suggesting the economy is gaining strength, but still expect a cautious tone on policy.
A private report on Wednesday showing U.S. companies cut payrolls at the slowest pace in more than a year may add to a sense that the economic numbers are moving in the right direction.
The government on Friday is expected to report that the decline in employment is abating, though the jobless rate is forecast to rise to a fresh 26-year-high of 9.9 percent.
ECONOMY’S STAMINA IN DOUBT
Policymakers will need to take into account the economy’s faster-than-expected 3.5 percent annualized growth rate in the third quarter, which effectively signaled the end of the most painful recession since the 1930s.
Suggesting further momentum, data on Monday showed manufacturing activity hit its highest level in 3-1/2 years last month, though a report on Wednesday showed the nation’s vast services sector was growing only modestly.
Improved third-quarter corporate earnings have also fed optimism that the upturn can be sustained next year even after government help has dried up.
In an act underlining rising confidence in the recovery, billionaire investor Warren Buffett on Tuesday said his company, Berkshire Hathaway Inc, agreed to purchase the nation’s largest rail company, saying it is poised to benefit from the recovery.
Fed officials in recent weeks, however, have sent the message that while the outlook has improved, the recovery is likely to be sluggish and needs continuing support.
Unemployment is expected to climb into next year, damping the consumer spending that accounts for around 70 percent of U.S. output. The banking system is still under pressure from loan losses, and credit remains tight.
“We have to think about our exit policy and are looking at it very carefully, but at the moment, that’s not our first order of concern. At the moment, it’s policy accommodation,” Chicago Federal Reserve Bank President Charles Evans, a voter on the Fed’s policy-setting panel, said on October 22.
Oil fell more than 2% Wednesday on worries about demand in the world’s largest fuel consumer after data showed a surprise build in U.S. gasoline inventories and weak U.S. new home sales.
U.S. crude oil inventories rose less than expected last week as imports increased, but gasoline stockpiles logged an unexpected gain of 1.7 million barrels, according to data from the U.S. Energy Information Administration.
"Crude stocks were only up 800,000 but the surprise was gasoline stocks. I think that’s what is keeping the market down," said Dan Flynn, analyst at PFGBEST Research in Chicago.
U.S. crude fell $2.09, or 2.63%, and settled at $77.46 a barrel.
Oil prices came under pressure after data showed sales of new U companies making payday loans.S. homes tumbled unexpectedly in September, the first drop in six months, feeding doubt about an economic recovery.
Oil markets have been watching equities and economic data for signs of a rebound that could lift flagging fuel demand.
U.S. and European equity markets fell after the housing sales data. The U.S. dollar rose on safe-haven demand.
Weaker crude oil prices and slumping margins at refineries knocked quarterly earnings lower at ConocoPhillips (COP, Fortune 500), PetroChina (PCCYF) and Hess Corp., (HES, Fortune 500) all of which reported earnings on Wednesday.
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