Bank of America surprises the Street - CNN

FORTUNE -- Bank of America's (BAC) bottom line is springing back to life. Now it just needs its actual business to follow.

The bank, the nation's second largest by assets, said it earned $653 million in the second quarter. That was down 68% from a year ago. But after factoring out non-operating accounting adjustments, the company's earnings more than doubled from a year ago to $5.4 billion, which was far better than analysts had been expecting. On a per share basis, the company's adjusted earnings were $0.31. Analysts had predicted the company would earn $0.12 a share. Revenue, even after the adjustment, was down 3% from a year ago to $27.3 billion.

The strong operating results seemed to justify the company's huge rise in its stock price this year, which is up 60%. B of A has been one of the best performing stocks in the market this year.

MORE: Bank of America faces hurdles in rentals

Like other banks, B of A was helped by its home loan division, where sales rose 30%. The bank said it made $16 billion in mortgages and home equity loans in the quarter, driven by lower interest rates. The company said 84% of its home loans were to customers were who refinancing. Losses in the division, which is still being hit by foreclosures and defaults, were half of what they were a year ago. The company was also boosted by its Wall Street operations where bond trading was up significantly. Revenue from bond trading more than tripled in the quarter to $4.1 billion from the last three months of the year. The company cut 3,000 full time employees during the quarter, lowering expenses.

Nonetheless, many of Bank of America's other businesses were down or flat for the quarter. Revenue from its consumer and business banking operations fell $1 billion. The company's average deposits were about the same as a year ago. The company overall lending was down from a year ago.

What's more, biggest help to B of A's bottom came not from its own operations, but from an improving ability of its customers to pay their loans, and a rising belief that the bank is on sounder financial footing. The company charged off a third fewer loans than a year ago. What's more, the difference between what the bank had to pay to borrow versus Treasury bond yields dropped dramatically. That drop, called a credit value adjustment, lead to the bank's huge accounting adjustment in the quarter, causing bottom line earnings to fall. Those adjustments had added to earnings in past quarters.

MORE: Goldman Sachs' profit problems

And B of A is still feeling the affects of the housing downturn. The company said it lost $400 million from servicing mortgage loans. What's more, the company added $1.9 billion home equity loans to its tally on loans it expects won't get paid back. Regulators have eyed these loans as a coming problem for banks.

"Our strategy is paying off," said chief executive Brian Moynihan. "With the economy steadily improving and because of the work we have done to strengthen and simplify our company, we saw improved profitability in all of our businesses this quarter compared to the fourth quarter of last year."

Bank of America's stock initially jumped on the earnings news in pre-market trading. But shortly after the market opened, much of those gains disappeared. Recently, Bank of America's shares stood at $9, up less than 1% since the marketed opened on Thursday.

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Bank of America, Morgan Stanley profits plunge but beat estimate - Los Angeles Times

Bank of America reported falling profit, but excluding a one-time accounting charge, its earnings beat estimates. (David Paul Morris / Bloomberg / April 19, 2012)

Income at both Bank of America Corp. and Morgan Stanleytook a tumble in the first quarter, but excluding one-time accounting charges, both banks’ earnings managed to beat analyst expectations.

Both stocks are now trading up. Bank of America roared out of the gate before settling a bit in morning trading, where it is now up 1.3%, or 12 cents, to $9.04 a share. Morgan Stanley also deflated a bit after starting strong, but is still trading up 3.2%, or 57 cents, at $18.23.

Bank of America said its net income fell to $653 million, or 3 cents a share, from $2 billion, or 17 cents a share a year earlier.

But the bank attributed much of the slide to a $4.8-billion charge related to narrower credit spreads. Without the hit, BofA said its profit is up 40% to $3.7 billion, or 31 cents, from $2.6 billion, or 23 cents last year.

Revenue fell 17% to $22.5 billion from $27.1 billion.

PHOTOS: Bank of America voted second worst company in America

But “improving global markets sentiment as the European debt crisis stabilized coupled with favorable news regarding the U.S. economic environment” helped boost BofA’s revenue for its fixed income, currency and commodities (FICC) arm by $432 million.

Overall global trading income spiked to $798 million from a $768-million loss in the fourth quarter, though the amount still trailed last year’s first-quarter $1.39-billion profit.

With credit quality improving, the bank's bad-loan provisions fell 37% to their lowest level since mid-2007, the bank said.

The bank said it extended $102 billion in credit during the quarter, including $66.6 billion in commercial non-real estate loans, $15.2 billion in residential mortgages (84% for refinances) and $4.4 billion in cards for U.S.-based consumers and small businesses.

New credit card accounts were up 19%.

“Our strategy is paying off:?With the economy steadily improving and because of the work we have done to strengthen and simplify our company, we saw improved profitability in all of our businesses this quarter compared to the fourth quarter of last year,” Chief Executive Brian Moynihan said in a statement.

Morgan Stanley, meanwhile, reported revenue dropping to $6.9 billion from $7.6 billion during the same quarter a year earlier due to a similar $2-billion credit spread-related accounting charge.

But without the charge, revenue was up 14% to $8.9 billion from $7.8 billion. Revenue from Morgan Stanley’s investment banking operations soared 33% to $5 billion.

The bank slumped to a loss of $78 million, or 5 cents a share, after earning $984 million, or 51 cents a share a year ago from continuing operations. Profit without the charge was $1.4 billion, or 71 cents a share.

Like Bank of America, Morgan Stanley also said that trading revenue was lifting even though its asset-management business was weak.

"This quarter is further evidence that Morgan Stanley has rebounded from the financial crisis of 2008 and is in a significantly stronger position,” Chief Executive James P. Gorman said in a statement.

Morgan Stanley also said it set aside $4.4 billion for employee compensation and benefits, a 3% increase from last year – including severance for the workers it laid off in January. Each of its more than 62,000 employees gets an average of about $74,000.

Goldman Sachs Group Inc. paid out roughly the same amount – a 16% smaller purse than last year. Each of its more than 32,000 workers will earn an average of $135,000. JP Morgan Chase & Co.’s allowance shrank 12% to $2.9 billion, giving each of its nearly 26,000 workers about $113,000 each.

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GLOBAL MARKETS-Stocks falter on Spain, US data; bonds gain - Reuters

* Stocks ease after tepid U.S. economy data, Treasuries rise

* Oil futures gain on initial reaction to Spain's debt sale

By Herbert Lash

NEW YORK, April 19 (Reuters) - Global stocks fell and government debt rose on Thursday despite solid demand for Spanish bonds as investors remained skeptical about the fiscal soundness of the euro zone and softer-than-expected U.S. economic data damped sentiment.

The pace of factory activity in the U.S. mid-Atlantic region waned in April for the first time in five months, as gauged by the Philadelphia Federal Reserve. The government said the number of Americans claiming unemployment benefits for the first time fell only slightly last week, dampening hopes for a stronger economy.

"We have had a pretty poor round of economic data here. Philly Fed is the second major manufacturing data that has slipped, which is potentially an ominous sign for manufacturing," said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York.

The Dow Jones industrial average was down 30.66 points, or 0.24 percent, at 13,002.09. The Standard & Poor's 500 Index was down 1.81 points, or 0.13 percent, at 1,383.33. The Nasdaq Composite Index was up 7.47 points, or 0.25 percent, at 3,038.92.

In Europe, equity markets extended losses after the weaker-than-expected U.S. economic data.

The pan-European FTSEurofirst 300 was down 0.2 percent at 1,043.97 points. The euro zone-only Euro STOXX 50 fell 1.5 percent to 2,292.95.

The euro tracked a rise in credit default swaps and a widening of yield spreads between safe-haven German bunds and debt issued by weaker countries like Spain and Italy in the euro zone. The yield gap suggested growing nervousness about liquidity in the financial system and sustainability of the region's debt.

"This is all emblematic of the fact that the market remains very nervous about the state of credit in the euro zone," said Boris Schlossberg, director of FX research at GFT Forex in Jersey City.

"Despite the fact that we had a decent Spanish bond auction, there is just basic skepticism not only about the sovereign debt market but also the health of the overall banking system, particularly in Spain."

Spain's Treasury issued 2.5 billion euros in two- and 10-year bonds, at the top end of the targeted amount. Yields on the key 10-year bond were higher, however, reflecting fears that Spain may miss budget deficit targets and about its banking sector.

The euro rebounded after ealier declines, gaining 0.2 percent to $1.314. The dollar was down against a basket of major trading-partner currencies, with the U.S. Dollar Index down 0.05 percent at 79.499.

New claims for unemployment benefits in the United States fell last week, but from an upwardly revised number a week earlier, the U.S. government said on Thursday, leaving new claims at 386,000, above the Reuters consensus forecast of 370,000.

The data could dim hopes of a pick-up in job creation in April after last month's slowdown, but employment growth is unlikely to sharply retreat like last year, said Alan Levenson, chief economist at T. Rowe Price in Baltimore.

"We're seeing a step-wise improvement even if we do get some similarities in the pattern between last year and this year, the pullback in employment growth is going to be more gentle," said Levenson. "We've not sustained the shocks this year that would prompt the kind of prolonged deceleration we had last year."

U.S. Treasuries' prices rose on after the higher-than-forecast new U.S. jobless claims appeared to fortify prospects for accommodative monetary policy in the months ahead.

The benchmark 10-year note rose 5/32 on the news, its yield easing to 1.96 percent.

Crude oil bounced off a two-month low set the previous session after the Spanish bond auction.

Brent June crude gained 63 cents to $118.60 a barrel.

U.S. May crude fell 20 cents to $102.47 a barrel.

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Home sales fall in March, mortgage rates remain low - USA TODAY

WASHINGTON – Americans bought fewer previously owned homes in March, a sober reminder that the housing market remains weak despite mortgage rates that continue to hover near record lows.

By Jae C. Hong, AP

A for-sale sign stands in front of a bank-owned home in Las Vegas (file photo).

By Jae C. Hong, AP

A for-sale sign stands in front of a bank-owned home in Las Vegas (file photo).

The National Association of Realtors said Thursday that home sales fell 2.6% last month to a seasonally adjusted annual rate of 4.48 million. That followed a revised 4.6 million sold in February.

Meantime, the average rate on the 30-year fixed mortgage stayed near its lowest level on record, keeping home-buying and refinancing affordable.

A mild winter may have encouraged more people to buy earlier, essentially stealing sales from March.

Sales fell across most of the country. They were unchanged on a seasonal basis in the Midwest but fell by 1.1% in the South, 1.7% in the Northeast and 7.4% in the West.

The first three months of 2012 made up the best winter for sales in five years. The increase offers some encouragement ahead of the spring-buying season. Still, sales remain far below the 6 million per year that economists equate with healthy markets.

First-time buyers, who are critical to a housing recovery, rose to 33% of all purchases last month. In healthy markets, they make up at least 40%.

The supply of homes on the market fell 1.3% last month to 2.37 million, which could help drive up prices further in the coming months.

One reason is that home foreclosures declined, although they are still high. Homes at risk of foreclosure made up 29% of sales, down from 34% in February. In healthier markets, foreclosures make up less than 10% of sales.

There have been other signs in recent months that the housing market is slowly improving.

Builders are laying plans to construct more homes in 2012 than at any other point in the past 3 1/2 years. More jobs and a better outlook among buyers could also make 2012 the first year since 2008 that construction adds to the U.S. economy.

The unemployment rate has fallen from 9.1% in August to 8.2% last month. Employers added an average of 212,000 jobs a month from January through March.

Mortgage rates are hovering just above record lows. And the median sales price of homes rose for the second straight month in March, to $163,800.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan rose last week to 3.9% from 3.88%. The rate touched 3.87% in February, which was the lowest since long-term mortgages began in the 1950s.

The 30-year loan is the most common financing option for home buyers.

The 15-year mortgage, which is popular with those refinancing, rose to 3.13% from 3.11%, an all-time low.

Cheaper mortgages have done little to boost home sales. Americans bought 2.6% fewer homes in March, according to a separate report released by the National Association of Realtors.

Some would-be buyers are skeptical about purchasing a home with prices still falling. Home appraisals that are higher or lower than the sales price have scuttled some home contracts. And many Americans are struggling with damaged credit and unstable finances.

To calculate the average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.

The average fee for the 30-year loan rose to 0.8 from 0.7. The fee for the 15-year loan was unchanged at 0.7.

For the five-year adjustable loan, the average rate fell to 2.78% from 2.85%. The average fee for the loan was unchanged at 0.7.

The average fee on the one-year adjustable loan ticked up to 2.81% from 2.80%. The average fee was unchanged at 0.6.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.For more information about reprints & permissions, visit our FAQ's. To report corrections and clarifications, contact Standards Editor Brent Jones. For publication consideration in the newspaper, send comments to letters@usatoday.com. Include name, phone number, city and state for verification. To view our corrections, go to corrections.usatoday.com.
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Nokia takes big loss, presses ahead with restructuring - AFP

Nokia takes big loss, presses ahead with restructuringBy Rebecca Libermann (AFP) – 5 hours ago?

HELSINKI — Nokia, the world's biggest mobile phone maker, reported a much worse-than-expected first quarter loss Thursday as it presses ahead with an extensive restructuring of its faltering business.

Nokia issued a profit warning last week but the net loss of 929 million euros ($1.2 billion) in the first quarter of the year was far beyond the loss of 554 million euros expected by analysts polled by Dow Jones Newswires.

Sales fell 30 percent on a 12-month comparison to 7.35 billion euros but this figure was in line with analyst forecasts.

"We are navigating through a significant company transition in an industry environment that continues to evolve and shift quickly," Nokia chief executive Stephen Elop said.

"Over the last year we have made progress on our new strategy but we have faced greater than expected competitive challenges," he said.

The Finnish company is undergoing a major restructuring, phasing out its Symbian smartphones in favour of a partnership with Microsoft that has produced a first line of Lumia smartphones.

Nokia is counting on the new phones to help maintain its ranking as the world's number one but it is operating in a rapidly changing landscape with RiM's Blackberry, Apple's iPhone and handsets running Google's Android platform taking growing bites out of its market share.

Elop said sales of Lumia smartphones in the United States had exceeded expectations but had been disappointing in other markets such as Britain.

In the quarter, Nokia posted an operating loss of 1.34 billion euros, almost double the loss of 731 million euros expected by analysts.

Nokia shares fell a sharp 3.7 percent in late afternoon trade while the broader Helsinki market was up 0.9 percent.

Despite the pressure on Nokia smartphone sales, analyst Ari Hakkarainen at Andalys consultancy said that the early signs of success in the United States were a reason for optimism.

"If they succeed this year with Lumia in the US, it will have a very positive effect, also outside the United States," the analyst said.

But with overall sales still flagging, Nokia announced in a separate statement that Colin Giles, executive vice president of sales and a member of the Nokia leadership team, would leave the company effective June 30.

Nokia said it was restructuring the sales team by removing a layer of management "to ensure greater customer focus" and provide senior executives a "greater visibility into market dynamics."

Pohjola Bank analyst Hannu Rauhala said Nokia had little choice than to stick with its turnaround plan.

"Nokia has chosen this Windows strategy and smart phone so they have got to stay with it to the end ... They are now executing this strategy. It's not complete yet. So we have to wait till the end of this year," Rauhala said.

Nokia said Thursday it was launching the top-of-the-line Lumia 610 in Asia next week in what is to be a crucial test.

On Monday, international ratings agency Moody's downgraded its ratings for Nokia owing to poor prospects for sales.

Copyright ? 2012 AFP. All rights reserved. More ?

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US Stocks Higher Despite Weak Jobs, Housing Data; DJIA Rises 39 - Wall Street Journal

--Stocks trading higher although jobless claims, existing home sales worse than expected

--Europe mostly down; Spain falls on mixed reading of debt auction

--Bank of America, EBay rise on results

NEW YORK (Dow Jones)--U.S. stocks traded higher after a handful of upbeat earnings reports, as investors shrugged off disappointing readings on the domestic jobs and housing markets.

The Dow Jones Industrial Average added 39 points, or 0.3%, to 13072 in mid-morning trade. Standard & Poor's 500-stock index gained 4 points, or 0.3%, to 1389 and the Nasdaq Composite tacked on 25 points, or 0.8% to 3057.

Among the Dow components ...

--Stocks trading higher although jobless claims, existing home sales worse than expected

--Europe mostly down; Spain falls on mixed reading of debt auction

--Bank of America, EBay rise on results

NEW YORK (Dow Jones)--U.S. stocks traded higher after a handful of upbeat earnings reports, as investors shrugged off disappointing readings on the domestic jobs and housing markets.

The Dow Jones Industrial Average added 39 points, or 0.3%, to 13072 in mid-morning trade. Standard & Poor's 500-stock index gained 4 points, or 0.3%, to 1389 and the Nasdaq Composite tacked on 25 points, or 0.8% to 3057.

Among the Dow components ...

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Unemployment-aid requests at 4-month high - MarketWatch

By Jeffry Bartash, MarketWatch

WASHINGTON (MarketWatch) — The number of Americans who filed requests for unemployment insurance last week hovered near a four-month high, defying expectations that applications would begin to recede after a recent spike.

Weekly jobless claims totaled 386,000, seasonally adjusted, in the week ended April 14, the U.S. Labor Department reported Thursday.

Jeannette Neumann and David Weidner talk with Paul Vigna about weekly initial jobless claims slipping by only 2,000. Photo: AP

Claims from two weeks ago were revised up to 388,000 from an initial reading of 380,000. It was the second straight time claims were revised higher by an unusually large amount.

The higher level of claims, along with report showing slower growth among manufacturers, undercut U.S. stocks in Thursday trades. The Dow Jones industrial average was down almost 30 points in recent action.

Economists surveyed by MarketWatch had projected claims would fall to 374,000 in the latest week. The level of claims is a rough gauge of whether layoffs are rising or falling.

The weekly claims data is often hard to decipher in April because of the Easter holiday and spring break, when many school workers such as bus drivers and cafeteria workers are eligible to receive temporary benefits.

Yet the uptick in claims, which touched a four-year low in mid-February, is sharp enough to spark concerns about whether the labor market is losing steam again.

“Initial claims have been appreciably above our forecasts for two weeks and a failure over the next couple of weeks of initial claims to move back toward levels seen earlier this year would make us a little uneasy about our expectations for continued labor market improvement,” said John Ryding of RDQ Economics.

Most economists expect claims to resume a downward drift in upcoming months, but they are watching to see if slower growth in China and a European downturn start to take a bite out of U.S. hiring. A disappointing March employment report has put Wall Street on guard.

Some economists also question the accuracy of the government’s method for seasonally adjusting the data, which is supplied to the Labor Department by the individual states

The average of new claims over the past four weeks, meanwhile, rose by 5,500 to 374,750 — the highest level since late January. The four-week average reduces seasonal volatility in the weekly data and is seen as a more accurate barometer of labor-market trends,

Also Thursday, the Labor Department said continuing claims increased by 26,000 to a seasonally adjusted 3.3 million in the week ended April 7. It was the first increase in six weeks.

Continuing claims, which reflect people already receiving benefits, are handled by the states and typically last six months.

About 6.77 million people received some kind of state or federal benefit in the week ended March 31, down 187,807 from the prior week. Total claims are reported with a two-week lag.

In a separate report Thursday, the Philadelphia Federal Reserve said its survey of manufacturing executives fell to 8.5 in April from 12.5 in March. Although readings above zero indicate growth, not contraction, it was the first decline in six months. Read report on Philly Fed.

Another report showed a decline in the sale of existing homes in March, though the leading economic index rose. Read about home sales here and leading indicators here .

Jeffry Bartash is a reporter for MarketWatch in Washington.

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Human Genome Sciences rejects takeover bid - CNN

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NY Sues Sprint for $300M on Tax Fraud Claims - Fox Business

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Facebook to list shares on Nasdaq - MarketWatch

By Chris Dieterich

--Facebook will list shares on Nasdaq, according to people familiar with the matter

--Nasdaq wins listing for coveted deal among social media companies

--Last year, listings and issuer services brought in about $372 million for Nasdaq OMX

(Adds background on exchange rivalry and more comments throughout.)

NEW YORK -(MarketWatch)- Nasdaq OMX Group Inc. /quotes/zigman/86035/quotes/nls/ndaq NDAQ +1.19% has scored the stock-market listing of Facebook Inc., according to people familiar with the matter, winning one of the most-coveted deals among the new crop of Internet companies and jockeying ahead in the race for social-media IPOs.

Securing Facebook's listing burnishes Nasdaq's reputation as the favored exchange among high-tech companies. The exchange is home to firms such as Apple Inc. /quotes/zigman/68270/quotes/nls/aapl AAPL +1.50% and Google Inc. /quotes/zigman/93888/quotes/nls/goog GOOG -0.45% .

Shares in Menlo Park, Calif.-based Facebook will list on the Nasdaq Stock Market, according to the people familiar with the matter. It will trade under the symbol FB, previous filings said. Facebook is preparing its initial public offering for May, according to people familiar with the matter.

Both the Nasdaq and NYSE Euronext's /quotes/zigman/421745/quotes/nls/nyx NYX -1.26% New York Stock Exchange compete fiercely over listings. Last year, the intensity accelerated amid the wave of Internet IPOs from the likes of LinkedIn Inc. /quotes/zigman/5131883/quotes/nls/lnkd LNKD -0.13% and Groupon Inc. /quotes/zigman/7212269/quotes/nls/grpn GRPN -2.48% .

"This is a strong, substantial win for Nasdaq, and no doubt a momentum builder for future listings," said Richard Repetto, an analyst at Sandler O'Neill & Partners.

Facebook's offering--which could raise $10 billion--is set to be the biggest Internet IPO since Google's in 2004.

"Winning Google further emboldened Nasdaq's reputation as being the exchange of choice for the technology companies," said Jay Frankl, senior managing director at FTI Consulting. "The Facebook listing I've seen as being similar to the Google listing, which had a similar competition between the exchanges, and a similar win for Nasdaq," Frankl said.

Nasdaq's archrival, NYSE Euronext, made gains last year in the technology space, having netted listings from LinkedIn and Pandora Media Inc. /quotes/zigman/5419837/quotes/nls/p P -1.29% and from Chinese social-networking site Renren Inc. /quotes/zigman/5001751/quotes/nls/renn RENN +2.06% . Analysts say winning Facebook would have helped swing the pendulum heavily in the Big Board operator's favor in terms of recruiting future listings and potential transfers.

Last year was big for social-media IPOs, with companies from Angie's List to Zynga launching publicly. In 2012, the host of social-media flotations could include GlamMedia, Kayak Software and LivingSocial.

Companies pay annual fees to list their stock, and exchanges also garner listings-related income from the sale of market data and ancillary services offered to their listed companies. A company can pay as much as $500,000 annually for an NYSE listing fee, while all Nasdaq fees are capped at about $100,000.

When deciding upon which exchange to list, companies often look at the costs as well as the promotional efforts that will help increase visibility. That includes events like the NYSE's or Nasdaq's bell-ringing ceremonies. Exchanges also offer other services for needs such as investor relations.

Last year, listings and issuer services brought in about $372 million for Nasdaq OMX, accounting for about 22% of the company's revenue.

While the Facebook win will grab headlines for Nasdaq, the NYSE continues to lead in the number and value of company debuts.

This year, the NYSE has launched 24 corporate IPOs that together raised $4.9 billion, according to Dealogic. The Nasdaq has been home to 16 offerings totaling $1.3 billion.

The NYSE led last year as well, with deals raising $28 billion, while Nasdaq's corporate IPOs brought in $9.3 billion.

A raising of $10 billion in the planned IPO could value the social network as much as $100 billion, and Facebook's offering is set to top rival Google's as the largest U.S. Internet IPO. Google's 2004 offering set the record by raising $1.9 billion at a valuation of $23 billion.

Among U.S. companies, only Visa Inc. (V), General Motors Co. (GM) and AT&T Wireless have held offerings larger than $10 billion.

Media reports of the Facebook listing juiced Nasdaq's share price on Thursday. The stock closed 1.2% higher. NYSE Euronext, meanwhile, fell 1.3%.

Facebook's announced team of underwriters includes Morgan Stanley (MS), J.P. Morgan Chase & Co. (JPM), Goldman Sachs Group Inc. (GS), Bank of America Merrill Lynch (BAC), Barclays Capital Inc., and Allen & Co. Last month, Facebook added an additional 25 underwriting banks.

Facebook's choice of Nasdaq was earlier reported by CNBC and the New York Times.

--Alexandra Scaggs and Kaitlyn Kiernan contributed to this article.

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NYC auction offering Titanic-related artifacts - Wall Street Journal

NEW YORK — An admission ticket to the launch of the Titanic is among dozens of artifacts heading to a New York City auction on the 100th anniversary of the sinking of the luxury liner.

Bonhams is offering the selection of documents and objects on April 15. That day, in 1912, the Titanic sank on its maiden voyage from Southampton, England, to New York City.

All the artifacts relate to either the crew or the passengers onboard the ship.

The auction house says the launch ticket is the only known example to still have the admittance stub attached. Its pre-sale estimate is $50,000 to $70,000.

Another highlight is an account written by the captain of the Carpathia, which helped rescue survivors. It's expected to fetch up to $120,000.

___

Online: www.bonhams.com

—Copyright 2012 Associated Press
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Death Of Best Buy's Big Box Store? Company Will Shift To New Model, Close 50 ... - Forbes

(Photo credit: Wikipedia)

Best Buy will shift toward mobile sales and smaller stores in an effort to boost sagging revenue and compete with rivals like Amazon and Wal-Mart. Best Buy’s signature big box stores will be dialed back, and 50 will close in 2012, the company said this morning.

The world’s largest consumer-electronics retailer will test the new store models in San Antonio, Texas and St. Paul, Minneapolis. The renovation would reduce store square footage by 20%, and should be finished by next Christmas. Those new so-called “Connected Stores” will focus on selling cell phones, tablet computers and e-readers, as well as service plans not offered by Amazon and Wal-Mart.? Best Buy employees in these new stores are expected to show customers how to connect electronics in the home.

Meanwhile, Best Buy will open another 100 smaller mobile-only stores in fiscal 2013. By 2016, the retailer expects to operate some 600 to 800 mobile-only stores, up from 305 today.

The retailer will make $800 million in cost reductions by fiscal 2015, including some $250 million in the next fiscal year. This will mean $300 million from domestic retail stores. It will also try to trim its corporate structure, cutting 400 positions, to hopefully save another $300 million.

“We intend to invest some of these cost savings into offering new and improved customer experiences and competitive prices — which will help drive revenue,” CEO Brian Dunn says in a statement this morning. “And, over time, we expect some of the savings will fall to the bottom line.”

Best Buy shares tumbled 6.3% to $24.95 in early morning trading today.

Best Buy is locked in a tight race for costumers and has seen sales slip in recent years. Critics have noted that its expansive, attractive stores have essentially become showrooms for online retailers like Amazon: Customers go to Best Buy to see a product, and can quickly use a smartphone to find a cheaper price online. This has led to six straight quarterly declines at stores open at least 14 months, including a 2.4% dip last quarter.

Other rivals include retailers like Target and eBay.

Its first move toward a new mobile-sales emphasis came last fall, buying out U.K.-based Carphone Warhouse’s stake in a joint mobile-store venture for $2.6 billion.

That acquisition, along with a write-off of Best Buy Europe’s goodwill and charges from shuttering 11 U.K. big box stores, weighed on Best Buy’s profit last quarter. It lost $1.7 billion or $4.89 a share.

Excluding those charges, Best Buy easily beat Wall Street expectations. It earned $2.47 per share, a 25% increase from a year ago.

Reach Abram Brown at abrown@forbes.com. Or follow him @abebrown716.

See Also: Why Best Buy Is Going Out Of Business…Gradually

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Some Starbucks customers bugging out over frappuccino ingredient - WAOW

CNN -?An ingredient that makes Starbucks' Strawberry Frappuccino pink has some people seeing red. The grande Starbucks strawberries & creme frappuccino tastes terrific and has a beautiful pink hue -- courtesy of crushed insects.?

A barista at a Starbucks, who's vegan, recently divulged that the strawberries and creme frappuccino is colored- using cochineal extract: the ground-up bodies of cochineal insects, native to South America. The barista then gave that information to a vegan news-site, run by Daelyn Fortney, who says she's shocked. "We were told that the any-way-you-wanted frappuccinos when made with soy milk were completely safe for vegans."A Starbucks spokeswoman says the company never claimed the drink was vegan-friendly. Starbucks didn't want to put anyone on-camera and didn't want anyone filming in its stores but company spokesmen did tell us, they started using cochineal extract to move away from some dyes and other artificial ingredients. They also noted that the extract is FDA-approved and that it would never do anything to harm its customers. ?As for the customers we spoke with. "It is still technically all-natural. It is still probably organic. We use bugs in all sorts of things. I'm not terribly surprised or concerned."After all, bugs have been a staple of nutrition for years, on discovery channel's 'man vs. Wild.' You can just eat them eat them raw.?Starbucks officials also point out, products like juices, made by other companies, have the same insect extract in them.?But according to the World Health Organization, there have been instances where cochineal extract is believed to have caused asthma attacks and allergic reactions.?Renowned nutritionist Katherine Tallmadge also warns of those symptoms however, she says nutritionally it's fine. "But anytime a restaurant puts an ingredient in a food, it should be disclosed," said Tallmadge.Tallmadge says the cups seen by customers should disclose that the strawberry frappuccino has insect extract in it. Right now only the boxes of liquid mixture used by the baristas behind the counters have those labels.?
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Millennial Media soars in IPO - CNN

Dot-com survivor CafePress is one of two tech ventures going public on Thursday.

NEW YORK (CNNMoney) -- Shares of mobile ad Millennial Media company more than doubled in their public debut Thursday.

Millennial (MM) priced its initial public offering at $13 per share, the high end of its range. Shares opened on the New York Stock Exchange on Thursday at $25, and they quickly rose to $27.50 each.

Millennial Media has quickly emerged as a competitor to behemoth rivals Apple (AAPL, Fortune 500) and Google (GOOG, Fortune 500). Facebook, which has dominated in display advertising, has so far ignored the mobile ad sector.

Also on tap for a Thursday IPO is CafePress (PRSS). The company, which prints custom designs on items like T-shirts and mugs, priced its IPO late Wednesday at $19 a share. That was above the $16 to $18 range the company had set previously.

CafePress, which was founded in 1999, will begin trading later Thursday on the tech-heavy Nasdaq.

CafePress and Millennial are just two of 10 companies expected to go public this week. On Wednesday, organic food company Annie's (BNNY) closed 89% higher after pricing at the top of its range.

Two other companies that went public Wednesday also surged. Vocera Communications (VCRA), a maker of health care technology, closed 32% higher, and consumer finance company Regional Management (RM) finished the day up nearly 10%.

Investors appear to have an insatiable appetite for IPOs this year. According to the New York Stock Exchange, the average return for IPOs on their first day of trading this year is 15%.?

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Jobless Claims at Lowest Since 2008 - New York Times

New claims for unemployment benefits fell to a new four-year low in the United States last week, according to a government report. A separate report confirmed the American economy expanded at an annual rate of 3 percent late last year.

Initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 359,000, the lowest level since April 2008, the Labor Department said Thursday.

The report included revisions for claims data from 2007 based on updated seasonal adjustment calculations. New seasonal adjustment factors were also introduced for 2012.

The prior week's figure was revised up to 364,000 from the previously reported 348,000. Economists polled by Reuters had forecast a reading of 350,000 for last week.

The four-week moving average, a better measure of labor market trends, declined 3,500 to 365,000.

A total of 7.153 million people claimed unemployment benefits during the week ended March 10, down 131,488 from the prior week.

The Commerce Department, meanwhile, said the economy expanded as expected in the fourth quarter. while personal income grew at a much faster pace than previously thought, which should help underpin spending this quarter.

Gross domestic product increased at a 3 percent annual rate in the final three months of 2011, the quickest pace since the second quarter of 2010, the Commerce Department said in its final estimate on Thursday, unrevised from last month's estimate.

That was in line with economists' expectations. The economy grew at a 1.8 percent rate in the third quarter.

However, personal income was $13.162 trillion at a seasonally adjusted annual rate, $3.3 billion more than previously reported. Disposable income was $10.6 billion more than previously thought, probably reflecting the strengthening labor market.

Gross domestic income, which measures output from the income side, increased at a 4.4 percent rate - the fastest since the first quarter of 2010 - from a 2.6 percent rise in the third quarter.

The department also said after-tax profits increased at a 1.1 percent rate, slowing from 2.7 percent the prior quarter. The slowdown in profits reflected the increase in wage costs as companies stepped up hiring.

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Eurozone plan to hold €240bn in reserve - Financial Times

? The Financial Times Ltd 2012 FT and 'Financial Times' are trademarks of The Financial Times Ltd.

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Household income trending up, boost for spending - Reuters

Shoppers look at washers and dryers at a Home Depot store in New York, July 29, 2010.

Credit: Reuters/Shannon Stapleton

WASHINGTON | Thu Mar 29, 2012 9:30am EDT

WASHINGTON (Reuters) - Household income grew at a faster pace in the fourth quarter than previously thought, which should help underpin spending this quarter.

The Commerce Department said on Thursday personal income increased to a seasonally adjusted annual rate of $13.162 trillion, $3.3 billion more than reported last month, likely reflecting the strengthening labor market.

Growth in disposable income was $10.6 billion more than previously estimated.

While the government's final estimate left gross domestic product growth at an unrevised 3.0 percent pace last quarter, when measured from the income side, output increased at a 4.4 percent rate.

That was the fastest rise in gross domestic income since the first quarter of 2010 and followed a 2.6 percent rise in the third quarter.

"The data paints a clear picture of an economy that built momentum throughout the course of the year, closing on a high note," said Jim Baird, chief investment strategist for Plante Moran Financial Advisors in Kalamazoo, Michigan.

The department also said after-tax profits increased at a 1.1 percent rate, slowing from 2.7 percent the prior quarter. The slowdown in profits reflects the increase in wage costs as companies step up hiring.

Rising incomes should help to cushion consumer spending against surging gasoline prices. Spending, which accounts for about 70 percent of U.S. economic activity, grew at an unrevised 2.1 percent pace in the fourth quarter.

Other data on Thursday showed initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 359,000, the lowest level since April 2008, the Labor Department said on Thursday.

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Graphic - U.S. jobless claims: link.reuters.com/puf47s

Graphic - U.S. GDP: link.reuters.com/wuf47s

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While the economy grew solidly in the final three months of 2011, momentum has slowed this quarter amid signs of cooling in manufacturing, business spending and a pause in the housing market recovery - even as the labor market strengthens.

Federal Reserve Chairman Ben Bernanke this week said growth needed to accelerate to bring the unemployment rate down further. While he offered no sign that the U.S. central bank would launch a third round of bond purchases or quantitative easing, Bernanke said all options remained on the table.

First-quarter growth is seen around 2 percent, also as the economy loses the boost from restocking by businesses. However, rising gasoline prices are a wild card.

So far there is little sign that consumers have cut back, with auto sales surging in both January and February.

The build-up in business inventories accounted for the bulk of the rise in output in the last quarter. But the final GDP revisions showed a slightly better tone in the overall growth picture.

Business spending was revised up to a 5.2 percent growth rate from 2.8 percent, to account for slightly stronger investment in equipment and software. That offset weaker export growth.

There were also small upward revisions to spending on home building projects. Though home sales stumbled in February, the housing market is slowly recovering and homebuilding is expected to contribute to growth this year for the first time since 2005.

While the rebuilding of inventories added a hefty 1.81 percentage points to GDP in the last quarter, the pace of accumulation was not as fast as previously reported. Business inventories increased $52.2 billion, instead of $54.3 billion.

Excluding inventories, the economy grew at an unrevised 1.1 percent rate. That was a sharp step-down from the prior period's 3.2 percent pace.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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TREASURIES-Bonds rise on jobless data before 7-year sale - Reuters

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BRICS Leaders Seek to Spur Trade, Call for More Global Sway - BusinessWeek

Leaders of the biggest emerging markets agreed on steps to increase lending in local currencies to foster trade, while calling on Western nations to give them more sway in global finance.

The BRICS economies of Brazil, Russia, India, China and South Africa signed an accord to boost credit for trade transactions, according to a joint declaration issued after their summit in New Delhi today. The countries also authorized a study into the feasibility of establishing a multilateral bank for funding projects in the developing world.

“The agreement signed today by development banks of BRICS countries will boost trade among us by offering credit in our local currencies,” Indian Prime Minister Manmohan Singh said at the summit. “A suggestion has been made to set up a BRICS development bank. We have directed our finance ministers to examine the proposal and report back at the next summit.”

The initiatives come as the BRICS group, which accounts for more than 40 percent of the world’s population, seeks greater influence in bodies such as the World Bank to match its rising economic heft. The bloc today called on advanced nations to avoid creating “excessive global liquidity” that hurts emerging markets by stoking swings in capital flows and commodity prices.

“The signature initiatives of more use of local currencies and a new development bank are very much work in progress,” said Madan Sabnavis, chief economist at Mumbai-based Credit Analysis & Research Ltd. “The vision of BRICS as a powerful bloc acting cooperatively with a single voice remains more hope than reality. These countries are too different for that.”

The accord on local-currency lending aims to reduce demand for “fully convertible currencies” for trade and cut transaction costs, the Indian government said.

The BRICS group said it accounted for 15 percent of global trade in 2010, up from 3.6 percent in 1990, and that its share of world gross domestic product rose to almost 25 percent in 2010 from 16 percent in 2000 in purchasing power parity terms, which adjusts for exchange rates.

The study into the BRICS bank builds on a pledge leaders from the five nations made at their meeting in April 2011 in China, when they promised to “strengthen financial cooperation among the BRICS Development Banks.”

Efforts by the emerging world to end the practice of naming World Bank presidents from the U.S. and the head of the International Monetary Fund from Europe have so far failed. The positions should be filled on merit, the BRICS leaders said in today’s declaration, adding the World Bank should give greater priority for meeting development-finance needs.

China’s President Hu Jintao said at the summit that BRICS nations should enhance coordination at the Group of 20 and the United Nations. The world recovery faces challenges, he said.

The summit declaration flagged risks to the global recovery from swings in oil and food prices and Europe’s debt crisis.

The leaders met following a jump of about 28 percent in the price of crude in the past six months, partly on concern that international tensions with Iran may disrupt supplies.

The situation there can’t “be allowed to escalate into conflict,” they said in the communique. The leaders also called for “an immediate end to all violence and violations of human rights” in Syria, where the UN estimates more than 8,000 people have been killed since unrest began a year ago.

Singh hosted Hu, Russian President Dmitry Medvedev, Brazil’s President Dilma Rousseff and South African President Jacob Zuma at the fourth BRICS summit. South Africa has attended since 2011. The term BRIC was coined by Goldman Sachs Asset Management Chairman Jim O’Neill a decade ago to refer to major emerging markets with growth potential.

To contact the reporters on this story: Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net; Ilya Arkhipov in New Delhi at iarkhipov@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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Civil War Raging at Wynn Resorts - Courthouse News Service

?????LAS VEGAS (CN) - Wynn Resorts shareholders say in a derivative complaint that Steve Wynn violated anti-bribery laws by donating $135 million to the University of Macau Development Foundation in exchange for land and casino concessions in the Chinese city.
The federal complaint is the latest salvo in a legal war being waged between Wynn and his former CEO Kazuo Okada. In the new complaint, the Louisiana Municipal Police Employees Retirement System claims Wynn and his board and top officers, including Okada, have wasted corporate assets and violated the Foreign Corrupt Practices Act "from at least 2009 to the present."
"Mr. Wynn has run Wynn Resorts as a personal fiefdom, packing the board with friends who do his personal bidding, and paying key executives exorbitant amounts for their unwavering fealty," the pension fund says in a Prologue to its 43-page complaint.
The pension fund claims that Wynn Macau Ltd.'s $135 million "gift" to the university is suspicious because "the chancellor of the University of Macau is also the head of Macau's government, with ultimate oversight of gaming matters."
The donation "has aroused suspicion that this was not a charitable gift," the complaint states. "Rather, it was an indirect attempt by the board to improperly influence the procurement of a casino license."
Shareholders say it's not Wynn's first lavish gift to the Macau government, that Wynn Macau donated a $10.1 million Ming Dynasty vase to the Macau Museum in December 2006.
"Beyond the donation of $135 million to the University of Macau, Wynn Resorts has admitted in a recently filed litigation that according to its own investigation, Kazuo
Okada ('Okada'), its vice chairman of the board, has, for the past several years, used accounts at Wynn Resorts to attempt to allegedly improperly influence gaming regulators in the Philippines for a casino project. Wynn described Okada's activities as prima facie violations of the FCPA [Foreign Corrupt Practices Act]. Okada could not, however, have used these accounts without the knowledge and approval of the board of Wynn Resorts."
Okada and Wynn are fighting a separate, but related, legal battle according to the complaint: "Okada has now accused the Wynn Resorts Board of improprieties and has alleged that the Board has breached its fiduciary duties to the company. (See Wynn Resorts, Limited v. Okada ... [also in Las Vegas Federal Court]) Okada alleges that in addition to defendants' improper donation to the University of Macau - for which he was the only member of the Wynn Resorts Board to vote against - defendants have also acted in a manner contrary to the best interests of Wynn Resorts by having the company engage in a reckless, improper internal investigation of Okada that was designed to: (1) force Okada out of his role as vice chairman of Wynn Resorts; and (2) allow for the forcible redemption of the nearly 20 percent of common shares in Wynn Resorts controlled by Okada through Aruze USA, Inc. ('Aruze USA') at a substantial 30 percent discount to its true value. According to Okada, the Stephen Wynn (sometimes referred to herein as 'Mr. Wynn')-controlled Board engaged in this behavior to allow Wynn to retain unfettered control of Wynn Resorts, which - following defendant Stephen Wynn's divorce from his wife, defendant Elaine Wynn, and the splitting of their assets - was at risk."
The pension plan claims that Wynn's buyout of Okada-in which Wynn Resorts allegedly bought ought Okada's $2.8 billion stake in the company, with a 10-year promissory note for $1.9 billion-was done so that "by getting rid of Okada, it allows him to maintain virtually absolute control over the company he founded."
Wynn and Okada have been lobbing lawsuits at each other over alleged wrongdoing in the development of the Chinese casino resort, and Okada's investment in a casino development in the Philippines.
"Regardless of who ultimately prevails in the Wynn Resorts boardroom battle, it is the company that has, and will, lose the most," the pension plan claims.
"Allegations of corruption are particularly damaging in the highly regulated casino industry, and the company may be particularly vulnerable since the accusations are being made at a time when U.S. regulators are pursuing a record-breaking number of corruption allegations."
The Louisiana police retirees' system also sued Las Vegas Sands Corp., last year, in Federal Court.
In the new lawsuit, the pension plan wants Wynn Resorts board members to pay unspecified damages, and to block the $135 million donation to the university.Plaintiffs are represented by John Aldrich?

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Glencore agrees C$6.1bn Viterra deal - Financial Times

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Using ETFs to Short the Treasury Market?...Read This First - Forbes

The current yield on the 10-year is 1.0% (a 33% move) lower, even after the run-up in mid- March. You would have lost a lot of money investing based on my belief rates would go higher, and it is possible for rates to go lower still.

This being said there are a lot of people out there who agree with me, and a lot of talk in the trading community about how to profit when interest rates rise. These conversations inevitably turn to the?bond market, and soon after to “inverse”?bond ETFs which are designed to rise in value when interest rates rise (and the price of the bond falls).

While we are certainly not recommending that long term investors?speculate on changes in interest rates, those who are going to speculate on the bond market with inverse ETFs should keep the following in mind:

Duration measures the sensitivity of a bond’s price to a move in interest rates. ?If a bond has a duration of 5 and interest rates move up by 1%, the bond’s value will fall by 5%. ?The farther a bond’s maturity date is in the future, the higher its duration. By buying an ETF with a very high duration, you will not need leverage to turn a modest interest rate move into a big profit or loss. ?You can?learn more about duration here.

While?corporate bonds with high?credit ratings generally follow changes in treasury yields, moves are not always a one to one ratio. Overall economic conditions have a major impact on the spread between Treasuries and corporate bonds. If you think Treasury yields will rise, its best to stick with a Treasury ETF.

If you buy a 3x?leverage ETF (and there are several inverse bond ETFs that offer this), you would expect the ETFs performance to be 3 times the performance of the unleveraged ETF. ?The problem with this assumption is that it only holds true for 1 trading day. ?If you are trying to capture a medium or longer term move in rates, the performance of the leveraged ETF can be drastically different than the 3X’s performance one would expect. ?This is true not only for Bond Market ETFs, but for leveraged ETFs in general.

For these reasons, I am suggesting that those who want short exposure to the bond market use only non-leveraged, high duration, inverse ETFs as a way of playing an increase in Yields. ?Unless you have a view on a specific sector of the bond market, then I also suggest those who want a pure interest rate play stick to inverse treasury bond ETFs.

This ETF provides the inverse performance of the well-known and popular TLT ETF. The duration of the ETF is 17.4 years, which means that a 1.0% move in interest rates should produce a 17% change in the value of the the ETF. The net expense ratio of the ETF is 0.95% however, which is relatively high.

This ETF tracks the NYSE 20 Year Plus Treasury Bond index and has a slightly lower duration of 16.25 years. On the plus side, the next expenses are a bit lower at 0.65%.

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Jefferies 1Q Results Beat the Street, Shares Rise - Fox Business

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US Housing Starts Dip; Permits Near 3 1/2-Year High - CNBC.com

Permits for U.S. homebuilding neared a 3 1/2 year high in February, even as groundbreaking activity slipped, suggesting a nascent recovery in the housing market was still on track.

New building permits surged 5.1 percent to a seasonally adjusted annual rate of 717,000 units last month, the Commerce Department said on Tuesday. It was the highest rate since October 2008 and far exceeded economists' expectations for an advance to a 690,000-unit pace from January's 682,000-unit rate.

Housing starts slipped 1.1 percent to a rate of 698,000 units. January's starts were revised up to a 706,000-unit pace from a previously reported 699,000 unit rate.

Economists polled by Reuters had forecast housing starts little changed at a 700,000-unit rate. Compared to February last year, residential construction was up 34.7 percent, the biggest year-on-year rise since April 2010.

"The data we see now indicates housing activity has stabilized and we could be in the early stages of improvement,'' said Gary Thayer, chief macro strategist at Wells Fargo Securities in St. Louis.

Green shoots are starting to emerge in the housing market, but an oversupply of unsold homes, which is depressing prices, remains a major hurdle, even as sales have picked up in recent months as job growth accelerated.

Residential construction is expected to add to economic growth this year for the first time since 2005. While home building accounts for about 2.5 percent of gross domestic product, it remains a major force in the economy. Economists estimate that for every one house built, about 2.5 jobs are created.

"We are going to see housing (construction) add to GDP in 2012,'' said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Conn. "There is still a glut of existing homes in areas where there are a lot of foreclosures. But the supply of new homes is getting tighter so if there is sustained demand for them we could see construction continue.''

Homebuilder confidence held at a near five-year high in March, a survey showed on Monday, and they were optimistic about sales over the next six months.

Housing starts last month were pulled down by a 9.9 percent drop in the construction of single-family homes — which account for a large portion of the market. Housing starts in the South rose to their highest level since October 2008.

Groundbreaking for multifamily housing projects soared 21.1 percent. This segment is benefiting from rising demand for rental apartments as falling house prices discourage some Americans from owning a home.

Permits to build single-family homes jumped 4.9 percent to a 472,000-unit pace — the highest since April 2010. Permits for multifamily homes increased 5.6 percent to a 245,000-unit rate.

In the Midwest, permits were the highest in almost two years, while in the Northeast, they were at levels last seen in December 2010. Overall home completions increased 6.2 percent to 568,000 units.

Copyright 2012 Thomson Reuters. Click for restrictions.
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Wall Street Down Amid China Worries - Fox Business

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RPT-How to Play It: A dividend strategy with Apple in mind - Reuters

By David K. Randall

NEW YORK, March 19 (Reuters) - Apple isn't the only prominent company that analysts have tagged as a potential source of dividend payouts. Investors can target the sweet spot of reliable income and share price gains by buying companies that are likely to initiate or increase dividends.

With nearly $100 billion in cash on its balance sheet, Apple will initiate a dividend and share buyback that will total $45 billion over three years.

A quarterly dividend of $2.65 per share will begin in July, marking Apple's 's first such payout since 1995.

It's a move that many institutional investors have been expecting. Apple increased its earnings per share by 83 percent in 2011, but its shares traded at price-to-earnings multiples more in line with industries like railroads or grocery stores than innovative technology businesses.

Apple's huge cash pile was one reason for its low P-E, because investors were acting as if shareholders would never see the benefit of that cash.

Here, then, are suggestions on how to build a dividend strategy with Apple in mind:

OTHER TECH COMPANIES

Analysts expect Apple's large technology peers to follow the leader and boost their dividend payouts.

"If anybody can make dividends cool, it's Apple," said Christopher Davis, a fund analyst at Morningstar who covers dividend funds.

With higher-than-average cash levels on their balance sheets and strong brand names, many tech companies look more like classic value companies than the go-go growth stocks of the late 1990s. Those cheap valuations may help these giant tech companies sustain share gains even if the market rally fizzles.

Microsoft pays a dividend with a yield of 2.4 percent, while Cisco Systems pays a dividend yield of 1.6 percent. Higher dividends would make these large-cap technology companies even more attractive to fund managers and other institutional investors, analysts say.

And more dividend initiations could be coming out of Silicon Valley. With Apple set to pay a dividend with a yield of 1.8 percent, Google now becomes one of the largest tech companies that does not offer a payout. The company has some $45 billion in cash and is trading at a price-to-book value of 3.5, well below Apple's 7.1 price-to-book value.

"Digesting the pending acquisition of Motorola Mobility will keep them occupied for now, but longer term Google's core business is a strong cash generator, and a dividend would be one way to put that cash to work," said Daniel Ernst, an analyst at Hudson Square Research in New York.

A technology-focused ETF could be another way to play possible dividend increases in the sector. The $9.5 billion Technology Select SPDR, for example, is top heavy with dividend payers Apple, Microsoft, International Business Machines and AT&T accounting for 41 percent of the fund's assets. Google is the fifth-largest holding at 5.3 percent.

The fund, which costs 18 cents per $100 invested, yields 1.33 percent.

GROWING DIVIDEND FUNDS

The volatility in the stock market last year made dividend strategies increasingly popular. Dividend-focused funds and ETFs collectively had $17.3 billion in inflows last year, despite a broader investor push away from equity funds, according to Morningstar data.

It's a trend that shows few signs of letting up, despite a new risk: the end of low tax rates on dividends. Dividend income tax rules are set to revert to the pre-George W. Bush era, which means dividends will be taxed at ordinary income rates of up to 39.6 percent. The tax is currently 15 percent.

Investors who focus on dividends argue that they are a sign of a strong balance sheet and a proven business model. Classic dividend payers like Johnson & Johnson and Exxon Mobil tend to hold their value during volatile markets because of the payouts, said Linda Duessel, a senior equity strategist at Federated Investors specializing in equity income.

What's more, many blue chip companies pay higher dividends than 10-year Treasurys, which currently yield about 2.4 percent. While these stocks come with more risks than U.S. bonds, their large cash positions are attractive to income-seeking investors.

The $9.6 billion Vanguard Dividend Growth fund is one way to target companies upping their shareholder payouts. It yields 1.9 percent and costs 34 cents per $100 invested. Automatic Data Processing, Occidental Petroleum and PepsiCo are among its largest holdings.

Be prepared for the fund to lag the market during rallies like the current one. The fund is up 7.1 percent so far this year, which is five percentage points behind the broad S&P 500 index.

Its long-term performance is better, however. The fund is up an annualized 5.6 percent over the last 10 years, or 1.7 percentage points above the S&P 500.

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Oil slips below $124 on Strait of Hormuz reassurance - Reuters

1 of 3. A driver pumps petrol into his car at a petrol station in Brussels March 8, 2011.

Credit: Reuters/Yves Herman

By Drazen Jorgic

LONDON | Tue Mar 20, 2012 9:56am EDT

LONDON (Reuters) - Brent crude fell more than $2 to around $123 a barrel on Tuesday as Kuwait said Iran had reassured the Gulf state it would not close the strategically important Strait of Hormuz shipping lane and Saudi Arabia signaled it was ready to increase supply.

A return to pre-war exports from Libya also eased pressure on the market, while a slowdown in Chinese demand and a stronger dollar also weighed.

Brent crude fell $2.29 to $123.42 a barrel at 1337 GMT, while U.S. crude was down $1.71 at $106.38 a barrel.

Sheikh Sabah al-Ahmad al-Sabah, the ruler of Kuwait, said Iran officials had assured his country that Tehran would not close the Strait of Hormuz.

Saudi Arabia, which has said it stands ready to fill in for any gap created by the loss of Iranian oil, late on Monday said it would work to return oil prices to fair levels, according to a state news agency.

Supply concerns were also eased by Libya, where oil exports in April are set to exceed pre-war levels, according to a senior official at its National Oil Corporation.

"We have been seeing articles about increases in Saudi supply offsetting a reduction in Iranian oil since Friday ... I'm surprised the market hasn't reacted until now," said Tony Machacek, an oil futures broker at Jefferies Bache Ltd.

"But now combined with Libya coming back up and running and weak Chinese demand, it is all contributing."

China said on Tuesday it was raising retail gasoline and diesel prices by 6 to 7 percent, the biggest increase in nearly three years, which analysts say could curb demand growth.

"The move might sap demand growth. Higher prices tend to discourage wasteful consumption," said Gordon Kwan, head of energy research at Mirae Asset Management in Hong Kong.

However, any impact is expected to be muted as China's economy continues to grow robustly, albeit at a slower pace.

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FACTBOX-Sanctions imposed on Iran

PDF of Iran reports: link.reuters.com/duf27s

Table of China's fuel price history

China fuel prices vs U.S. crude prices:

here

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SUPPLY GROWS

Exports from Saudi Arabia rose by 143,000 barrels per day (bpd) in January, as the world's leading crude seller boosted sales to the United States. The kingdom pledged to work individually and with other Gulf countries to return oil prices to what it called "fair" levels.

"Up until now, Saudi Arabia has not done much to ease the oil prices ... We have however to consider the risk that the combination of the Vela fixtures and the Saudi cabinet statement could signal a change of policy," said Olivier Jakobs of Petromatrix in a note.

Libya is also ramping up production as it plans to export almost 1.4 million bpd of crude oil in April, exceeding deliveries in February 2011 before the uprising that ousted Muammar Gaddafi.

This boost in global supply has helped eased concerns about the standoff between the West and Iran over Tehran's nuclear programme, which has lifted oil prices this year and kept oil markets on edge.

"Coupled with increased production from other members, OPEC should be able to offset a complete loss of Iran's exports, but doing so would effectively push OPEC spare capacity to zero," analysts at Morgan Stanley said in a report on Tuesday.

Iran has agreed to a new round of talks with the West, but Western sanctions aimed at curtailing Tehran's nuclear ambitions have already hit oil exports.

A ban on Iranian oil set to kick in on July 1 has already driven a 17 percent surge in crude prices this year and could take the market higher when sanctions are enforced.

U.S. commercial crude stockpiles are forecast to have climbed last week on higher imports and lower refinery activity, in line with seasonal patterns, a preliminary Reuters poll of analysts showed on Monday.

The survey of five analysts before weekly industry and government inventory reports for the week to March 16 produced an average forecast of a 2.4 million-barrel increase.

(Additional reporting by Jessica Donati, Francis Kan and Florence Tan; Editing by Mark Potter and Jane Baird)

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Tiffany Profit Trails Analysts&apos; Estimates - BusinessWeek

Tiffany & Co. (TIF), the world’s second- largest luxury jewelry retailer, rose the most in more than six months after forecasting annual profit that beat analysts’ estimates, driven by sales growth in the Americas and Asia.

Tiffany advanced 7.7 percent to $73.96 at 10:06 a.m. in New York, after earlier increasing as much as 8 percent for the biggest intraday gain since Aug. 26. The shares rose 3.7 percent this year before today.

Profit excluding some items will advance to as much as $4.05 a share in the year ending Jan. 31, 2013, the New York- based company said today in a statement. Analysts projected $3.92, the average of 22 estimates compiled by Bloomberg.

Tiffany is benefiting from stock-market gains that have prompted luxury consumers to resume jewelry purchases, a turnabout from January, when the retailer said weak spending from U.S. customers had slowed holiday sales. New designs, such as Paloma Picasso’s Venezia collection introduced in the fall, helped boost fourth-quarter sales 7.8 percent to $1.19 billion.

“Their guidance suggests that business has reaccelerated,” David Schick, an analyst with Stifel Nicolaus & Co. in Baltimore, said today in an interview. “When the financial markets, economic conditions and consumer sentiment improve, people go shopping.”

The company projected annual sales growth of about 10 percent and said most earnings gains will occur in the latter part of 2012. Tiffany plans to add 24 stores this year, including 9 in the Americas and 7 in the Asia-Pacific region. As of Jan. 31, the company operated 247 stores worldwide.

“While it is obviously still quite early in this new fiscal year, we are pleased that worldwide sales growth is tracking in line with our internal expectations,” Chief Executive Officer Michael Kowalski said.

Tiffany said profit in the fourth quarter was hampered by higher product costs and expenses to relocate its New York headquarters.

Fourth-quarter net income fell 1.6 percent to $178.4 million, or $1.39 a share, from $181.2 million, or $1.41, a year earlier, Tiffany said. Analysts projected $1.42, the average of 17 estimates compiled by Bloomberg.

Cie. Financiere Richemont SA (CFR) is the world’s largest luxury jewelry maker.

To contact the reporter on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net;

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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Goldman Sachs cuts staff in annual review process - Reuters

By Lauren Tara LaCapra

Mon Mar 19, 2012 5:31pm EDT

(Reuters) Goldman Sachs Group Inc (GS.N) has begun a new round of staff cuts in its trading and investment banking divisions, three sources familiar with the matter said, a sign of a continued penny-pinching on Wall Street.

The job cuts follow 2,400 positions Goldman eliminated last year, and further reductions are possible as the company continues to reduce costs to raise profitability, the sources said.

The latest round of cuts is part of Goldman's annual culling process in which the company fires employees who miss performance targets or can be replaced with technology or less expensive staff.

It's unclear how many people will be affected by the job eliminations, which began two weeks ago, because different divisions have received different targets, the sources said. While management has formulated an overall plan for cost-cutting, all of the job cuts may not be completed for months, said a source familiar with the matter.

Recent staff reductions have been less drastic than the culling Goldman performed in March 2011, when 5 percent of its trading staff was let go, said the sources, who have either worked at the company or recruited for it, and spoke under condition of anonymity.

Goldman spokesman Michael DuVally declined to comment on the job cuts.

In late 2011, Goldman management targeted $1.4 billion in annual cost savings that would be achieved largely through staff and bonus cuts. When asked on a conference call in January whether the bank might have to do more such trimming this year to meet the goal, Chief Financial Officer David Viniar said "there is a small amount left to go."

The new job cuts are taking place in all of Goldman's four main divisions, including sales and trading, investment banking, wealth management and investing and lending, according to one source familiar with the matter.

Many of the cuts are aimed at traders who can be replaced with new technology, or back-office, technology and operations staff who can be replaced with less expensive employees, the source said. The bank has been pushing aggressively to replace staff in high-cost areas like New York and New Jersey with less costly workers in Salt Lake City, where the company is building a sizable workforce.

Goldman has also been cutting some staff from divisions likely to be affected by new trading restrictions, such as merchant banking.

"In general the whole paradigm of the business is changing," said one source familiar with Goldman's recent job cuts. "As the business is consolidating and the volumes are going down and there's still this regulatory pressure, management is really looking at the new paradigm and seeing how many bodies are absolutely required for the business."

Many Wall Street banks weed out underperformers or costly employees, who are placed on what's known as a "RIF," or reduction-in-force, list. Morgan Stanley (MS.N), for instance, cut 887 financial advisers -- many of whom were not meeting revenue targets -- from its wealth-management business throughout 2011 as part of a broader cost-cutting effort.

Goldman is known to create such lists early in the year and send at-risk employees a signal through low bonuses that are handed out in February. Those who do not get the hint are let go in mid-to-late March.

While Goldman's cuts are part of an annual Wall Street ritual, sources familiar with Goldman's trading business say. Bank management has been issuing aggressive revenue targets that have been difficult to meet, particularly with fewer traders, weak trading volumes and low morale.

One equities trading division at Goldman met revenue targets last year but was still required to cut 10 percent of its staff and reduce bonuses by 25 percent to meet cost targets, according to a source familiar with the desk. The business was required to do even more cutting in recent weeks amid weak trading volumes, even as performance targets have risen.

At a conference last month, Viniar said investors have been complaining that the bank has nearly 11,000 more staffers than it did six years ago, but only generates slightly more revenue.

Goldman's 33,300 employees generated $28.8 billion in revenue and $2.5 billion in profit last year, which amounts to $865,195 in revenue per employee and $75,375 in profit per employee. That represents a 25 percent decline in revenue per worker and a 71 percent decline in profit per worker compared with 2005.

(Reporting By Lauren Tara LaCapra; Editing by Alwyn Scott and Steve Orlofsky)

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Treasury 10-Year Notes Snap Longest Drop Since 2006 - BusinessWeek

Treasuries rose, pushing 10-year note yields down from four month highs, and ending a nine-day decline that was the longest run of losses since 2006, as yields climbed to levels that lured investors.

Yields on the 30-year bond dropped from the highest levels since September before the Federal Reserve buys as much as $2.25 billion of Treasuries maturing from February 2036 to February 2042. China raised fuel prices, sparking concern its domestic growth may slow and boosting demand for U.S. government debt.

“The selling has been overdone,” said Paul Horrmann, a broker at Tradition Asiel Securities Inc., an interdealer broker in New York. “We’re in for a correction. The market has paused as it got closer to the 2.4 percent level.”

Yields on 10-year notes fell three basis points, or 0.03 percentage point, to 2.35 percent at 8:35 a.m. New York time, according to Bloomberg Bond Trader prices. The 2 percent securities maturing in February 2022 rose 8/32, or $2.50 per $1,000 face amount, to 96 30/32. The yields increased yesterday to 2.39 percent, the highest level since Oct. 28.

While 10-year Treasury yields were up 27 basis points last week, they’re still below last year’s high of 3.77 percent and their average of 3.87 percent over the past decade.

The 14-day relative strength index for 10-year yields was 72.2 today, exceeding 70 for a fifth day. A reading above that level indicates to some traders that a gain in the yields may be hard to sustain.

“Yields overshot,” said Will Tseng, who trades Treasuries at Taipei-based Shin Kong Life Insurance Co., which has the equivalent of $52.1 billion in assets. “I will definitely jump in” if yields rise further. Tseng said he is planning to buy 10-year notes at 2.4 percent.

Thirty-year bond yields dropped four basis points to 3.44 percent. They reached 3.49 percent yesterday, the highest level since Sept. 2.

German 10-year bunds rose, with yields dropping two basis points to 2.03 percent. The Stoxx Europe 600 Index fell 0.9 percent, and futures on the Standard & Poor’s 500 Index expiring in June slid 0.6 percent.

Housing starts in the U.S. fell in February from a three- year high, showing the recovery in the residential real estate market will take time to develop.

Builders broke ground on 698,000 homes at an annual rate, in line with the median forecast of economists surveyed by Bloomberg News and down 1.1 percent from a January pace that was stronger than previously reported, Commerce Department figures showed today. Building permits, a proxy for future construction, climbed to the highest level since October 2008.

The Fed raised its assessment of the economy last week while reiterating its plan to keep the target lending rate at virtually zero through at least late 2014.

This month’s sell-off in Treasuries presents opportunities for resuming trades that bet the central bank will stay on hold, Barclays Plc strategists Anshul Pradhan and Vivek Shukla wrote in a report today.

“The market is being too aggressive in pricing in the Fed hiking cycle, and we recommend long positions in the front end of the U.S. rates curve,” they wrote. “We recommend being long two-year notes.” A long is a bet an asset will gain in value.

The two-year note yield, currently at 0.37 percent, will fall to 0.25 percent, the strategists wrote.

Treasuries rose earlier as BHP Billiton Ltd., the world’s largest mining company, said China’s steel production is slowing, underpinning demand for the safest assets.

Treasuries have lost 2.1 percent in 2012 after returning 10 percent last year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds have lost 1.3 percent this year, the indexes show.

Bank of America Merrill Lynch’s MOVE index, which measures price swings based on options, rose yesterday to 92.3 basis points, the highest level this year.

To contact the reporters on this story: Susanne Walker in New York at swalker33@bloomberg.net; Emma Charlton in London at echarlton1@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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ECB: Gloomy on economy, upbeat on euro - CNN

ECB president Mario Draghi said the bank's efforts to avert a credit crunch have been an 'unquestionable success.'

NEW YORK (CNNMoney) -- The European Central Bank offered a slightly more pessimistic outlook for the eurozone economy Thursday and said it expects inflation to rise this year on higher oil prices.

The ECB expects eurozone economic activity in 2012 to range between a decline of 0.5% and an increase of 0.3%. That's worse that August, when the bank projected activity would range between a contraction of 0.4% and growth of 1%.

Inflation in the euro area will likely remain above 2% this year, reflecting higher energy prices and higher taxes, according to the ECB.

The latest projections were issued after a policy meeting at ECB headquarters in Frankfurt, where the bank's governing council voted to hold interest rates steady at 1%, as expected.

During a press conference, ECB president Mario Draghi said this year's two long-term refinancing operations, designed to support European banks struggling to fund themselves, have been an "unquestionable success."

He said the operations, in which the ECB funneled some €1 trillion worth of 3-year loans at ultra-low interest rates into the banking system since December, helped restore confidence in financial markets.

"We see many signs of return of confidence in euro," he said. "The so-called real money investors have, to some extent, come back," he added, pointing to the return of money market funds and improvements in certain bank funding markets.

Draghi said it was mostly German banks that have borrowed relatively small amounts in the second round of lending, which took place earlier this month. This suggests that the money is now closer to the small and medium size businesses that are the main drivers of employment in the eurozone, he said.

But the ECB president also stressed that banks need to do more to strengthen their balance sheets, including retaining earnings, in order to lend more and support the economy.

According to a recent "ad hoc" survey, Draghi said there has been "a modest pick up in credit and bank lending" since the first liquidity operation was conducted in December.

Meanwhile, Draghi urged euro area policy makers not to be "complacent" and push ahead with fiscal consolidation and structural reforms.

"The LTRO had the powerful effect of removing what's called tail risk from the environment," he said. "Now the ball is in the governments' and other actors', especially the banks, court."

Draghi said he was "absolutely confident" that the pact on fiscal discipline that most European Union leaders signed earlier this month will be implemented.

The fiscal compact, which must be written into law by individual euro area governments, is designed to strengthen budgetary discipline to help prevent a future crisis.

Draghi called the agreement a "pillar of trust between countries" and stressed that greater fiscal integration is essential for the future stability of the European Monetary Union.

"I think it's clear that if countries don't release some of their national sovereignty about fiscal policy, there is no way we can be together," said Draghi. "We cannot have one or two countries that pay for everybody else."

Draghi said he could not comment on the potential outcome of a crucial debt restructuring for Greece. But he noted that investors appear to be optimistic that a sufficient number of bondholders will accept the deal, which Greece needs to secure more bailout money and avoid a default.

While investors were concerned about Greece earlier this week, "today they are not nervous and seem to be happy with what's going on, and they certainly know more about what's going on than I do," said Draghi.

Draghi rejected criticism about the relaxation of collateral standards at the ECB, which he said "could be a lot looser."

He also downplayed concerns that the German Bundesbank, which has opposed the ECB's controversial government bond buying program, has been isolated on the bank's governing council.

While he acknowledged that "there is always a difference of views" on the council, he stressed that "it is not only Germany against everybody else."

"I am determined to do the right thing, and to do them together," he said.?

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Greece Confident of Bond Swap Approval - New York Times

LONDON -- As its self-imposed deadline neared, Greece looked set Thursday evening to clinch a landmark debt restructuring deal with its private-sector lenders, clearing the way for the release of bailout funds from Europe and the International Monetary Fund that would save the country from default.

Already, 60 percent of those holding Greek bonds — mostly large European banks and local institutions in Greece — have publicly agreed to swap their old Greek bonds written under local law for a package of new securities, accepting losses of as much as 75 percent in return for more secure bonds that have a greater prospect of actually being paid off.

And as the Thursday night deadline neared, reports suggested that the “voluntary” participation rate could reach 70 percent or higher.

By the terms of the newly revamped Greek bond contracts, a 66 percent participation rate would allow for Athens to invoke collective-action clauses, requiring even the holdouts to take the same losses whether they like it or not.

Given all the twists and turns in the negotiations, something could still go wrong at the last minute, participants said, but most bond investors and government officials were expecting a positive outcome.

“It’s a done deal,” said Hans Humes, the president and chief investment officer of Greylock Capital in New York, whose fund is a member of the committee of banks that negotiated the transaction. “I would not be surprised to see 75 percent.”

Greek officials said the total number of participants in the deal would be announced at 6 a.m. Friday morning, London time. The Greek Finance Ministry had been hoping to announce a 90 percent figure before activating the collective-action clauses, but it is expected to go ahead anyway as long as it reaches the legal threshold.

One remaining wild card in the deal is the €20 billion, or $26.5 billion, of Greek bonds governed by foreign law. These securities have attracted the attention of potential holdouts because they afford better legal protection and provide an easier opportunity for speculators who have bought them at a discount on the open market in hopes of extracting a better deal. Interest in these bonds may be on the wane, though, now that Petros Christodoulou, the head of Greece’s debt management agency, has vowed to wavering bondholders that there will be no sweetheart deals for hold outs.

“We know what money we have and we know what money we don’t have,” he said during a recent interview. “My blood curdles to think what happens if this deal does not get done.”

The Institute of International Finance, the global banking body that has represented private bond holders in the discussion, circulated a confidential memorandum to European leaders recently estimating that a disorderly Greek default and departure from the euro could result in losses to banks, corporations and governments of as much as €1 trillion.

Seen by many as a scare tactic, it nevertheless seems to have had an effect on some of the potential holdouts.

Put in such stark terms, many investors have come to the conclusion that it is better to accept the swap and receive a package of foreign-law Greek bonds and securities from Europe’s rescue fund than to end up with nearly worthless bonds subject to Greek law. The value of Greek 10-year bonds recently hit an all time low of 16 cents on the euro.

“This is the best offer they can make to investors,” said Ioannis Sokos, a bond analyst at BNP Paribas. “Because at the end of the day Greece has no cash.”

Still, many foreign investors believe that even with a successful debt swap, the Greek debt burden will remain untenable, well above the 120 percent of Greece’s gross domestic product that the I.M.F. considers the highest sustainable level. And with the economy still in free fall and the makeup of the next government uncertain, many analysts contend that Athens may have to restructure its debt again within a year or so.

If that proves to be the case, some hedge funds and other investors are talking about the prospects of buying the new foreign-law bonds at rock bottom prices and then fighting Greece in courts outside the country in hopes of earning a handsome profit.

The deal also will leave much of Greece’s debt in the hands of official lenders like the European Central Bank and the I.M.F., which may ultimately face large losses themselves if Greece cannot find a way to manage its finances without further bailouts.

Legal analysts contend that the Greek government’s strategy of emphasizing in such blunt terms the cost of not participating has been a significant factor behind the deal coming together so quickly.

“What is remarkable is the speed with which this has been executed — that is unprecedented,” said Michael Waibel, an expert on sovereign debt law at Cambridge University. “And this very well may have been done by design.”

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Forbes: Spanx inventor is youngest self-made female billionaire - Los Angeles Times

Sara Blakely at the Spanx Fall 2012 Fashion Week on Feb. 13. (Skip Bolen / Getty Images for Spanx)

Spanx inventor Sara Blakely is now a billionaire at 41 years old, making her the youngest woman on the latest Forbes magazine billionaires list to amass that much wealth on her own.

Blakely, the creator and owner of the line of women’s slimming, smoothing undergarments called Spanx, is the youngest self-made woman to make Forbes list – meaning she didn’t inherit or marry into the money.

She's one of several billionaires who appear on the cover of the latest Forbes issue.

According to Forbes, Blakely was 29 when she invested $5,000, her entire life savings, in an attempt to come up with something flattering to wear under her white slacks. She ended up inventing a new line of shaping underwear.

On Thursday, Blakely appeared on "CBS This Morning" and talked about her rise to wealth.

"I've always had that gratitude that I had the opportunity to pursue my potential," she said. "So I think my story says that, when women are given the chance and the opportunity, that we can achieve a lot. We deliver. We can make the world a better place, one butt at a time."

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Household Worth Rises for First Time in 3 Quarters - Bloomberg

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Foreclosure Aid May Help Property Investors Buildings in San Francisco. Photographer: Chip Chipman/Bloomberg

Rows of houses stand in Las Vegas, Nevada. Photographer: Jacob Kepler/Bloomberg

Household wealth in the U.S. climbed from October through December for the first time in three quarters as an increase in stock prices outstripped a decline in home values.

Net worth for households and non-profit groups increased by $1.19 trillion in the fourth quarter, or 2.1 percent from the previous three months, to $58.5 trillion, the Federal Reserve said today in its flow of funds report from Washington. Housing wealth decreased by the most in more than a year.

The Standard & Poor’s 500 Index (SPX), which rose 11 percent in the final three months of 2011, is again climbing this year as the improving job market builds confidence in the expansion. At the same time, the gain in wealth last quarter was less than half the previous period’s slump, indicating households may continue to repair balance sheets hurt by the recession.

“Consumers are generally repairing their balance sheets,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “The performance of the stock market has been a crutch for households. Consumer spending is constrained by the need to pay down debt.”

Since reaching a five-year low of $50.5 trillion in the first quarter of 2009, net worth has improved by $8 trillion. That still leaves it $8.4 trillion below the record high of $66.8 trillion reached in the quarter ended June 2007, six months before the recession began.

The value of household real estate fell by $367.4 billion in the last three months of 2011, the first decrease in three quarters.

Owners’ equity as a share of total household real-estate holdings dropped to 38.4 percent last quarter from 38.9 percent.

The S&P/Case-Shiller national index of home prices decreased 4 percent in the fourth quarter from the same time in 2010, according to figures released Feb. 28. The gauge fell 3.8 percent from the prior three months before seasonal adjustment, and fell 1.7 percent after taking those changes into account.

The value of financial assets, including stocks and pension fund holdings, held by American households increased by $1.46 trillion in the fourth quarter, according to today’s flow of funds data.

The S&P 500 has risen 7.6 percent this year through yesterday amid better-than-estimated economic data and expectations Europe would tame its debt crisis.

Household debt rose at a 0.3 percent annual rate last quarter, the first increase in more than three years, today’s report showed. Mortgage borrowing decreased at a 1.5 percent pace, the 11th consecutive drop. Other forms of consumer credit, including auto and student loans, climbed at a 6.9 percent pace, the biggest gain in at least seven years.

The labor market may help to repair household finances. Payrolls rose by 210,000 in February and the jobless rate held at 8.3 percent, according to the median forecast of economists surveyed by Bloomberg News before a Labor Department report tomorrow.

Company balance sheets are faring better than households, today’s report showed. Businesses had a record $2.23 trillion in cash and other liquid assets at the end of the fourth quarter, up from $2.12 trillion in the prior three months.

Total non-financial debt climbed at a 4.9 percent annual pace last quarter, led by a 13 percent increase by the federal government and a 4.6 percent gain among businesses. State and local government borrowing dropped at a 1 percent pace.

To contact the report on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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