Archive for March, 2011

U.S. Housing Prices Fell Again in January

Housing prices slid in January for the sixth month in a row, putting them barely above the lows reached in the depths of the recession, according to data released Tuesday.

The Standard & Poor’s Case-Shiller Home Price Index for 20 large cities dropped 1 percent from December. The index, which has fallen 31.8 percent from its peak in 2006, is only 1.1 percent above its spring 2009 low.

“The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery,” said David M. Blitzer, chairman of the S.& P. index committee, in a statement.

Mr. Blitzer said there was “no real hope in sight for the near future.”

After appearing to bottom in early 2009, housing prices began fitfully moving up. Much of the impetus was provided by an $8,000 federal tax credit for buyers. Ever since the credit expired last spring, prices have been lagging.

Most housing economists expect prices to fall from 5 to 10 percent by June before beginning a slow recovery. The market seems well on the way to fulfilling those expectations.

Case-Shiller is a three-month moving average, which means it is resistant to quick changes. On a seasonally adjusted basis, January’s drop was 0.2 percent, the same as in December. Prices are down 3.1 percent from their levels a year earlier.

Only two of the 20 cities in the index recorded price increases over the last year: Washington, D.C., and San Diego.

The report capped a run of weak housing reports. Existing home sales were down in February by nearly 10 percent from January, the National Association of Realtors reported last week, much worse than expected.

New home sales in February were 14 percent below forecasts. At an annual rate of 250,000, sales were the lowest since the advent of record-keeping in 1963.

In one hopeful note, the National Association of Realtors said this week that pending home sales rose 2.1 percent in February. Those deals, which will become final in March and April, indicate that sales are unlikely to continue to tumble, which could help stabilize prices.

Read the full article here.

Goldman to Pay Back Buffett

The Federal Reserve has blessed the balance sheet of Goldman Sachs — paving the way for the investment bank to pay back the $5 billion investment that Warren Buffett made at the height of the financial crisis in 2008.

On Friday, the Fed released the results of the second round of stress tests, which assessed the capital levels of the nation’s largest banks. The news sparked a flurry of announcements by big banks that moved to show their financial strength by hiking dividends and revealing share buyback plans.

With the government’s approval, Goldman said it would redeem 50,000 preferred shares held by Berkshire Hathaway, the conglomerate run by Mr. Buffett. The bank will pay $110,000 per share, plus dividends on the investment. It planned to redeem the shares Friday.

Goldman also announced it had the Fed’s permission to repurchase its own stock and potentially increase its annual payout.

In the darkest days of the financial crisis, Mr. Buffett agreed to invest $5 billion in Goldman Sachs, whose stock was suffering amid a general liquidity scare. The deal in September 2008 came at a hefty price, namely a 10 percent annual dividend that amounted to roughly $500,000.

“We are pleased that given our longstanding relationship, Warren Buffett, arguably the world’s most admired and successful investor, has decided to make such a significant investment in Goldman Sachs. We view it as a strong validation of our client franchise and future prospects,” Lloyd C. Blankfein, Goldman’s chief executive, said in 2008. “This investment will further bolster our strong capitalization and liquidity position.”

At the time, Mr. Buffett also picked up warrants, giving Berkshire the right to buy $5 billion of stock with a strike price of $115. With Goldman stock currently trading at $160, Buffett’s profit on the warrants is around $2 billion.

Mr. Buffett has seemed pleased with the investment in Goldman. In his latest annual letter, he lamented that the bank “unfortunately” would soon be able pay off the investment.

“Goldman Sachs has the right to call our preferred on 30 days notice, but has been held back by the Federal Reserve (bless it!), which unfortunately will likely give Goldman the green light before long,” the billionaire investor wrote.

Read the full article here.

Apple’s iPad 2: the final rumor roundup

By Hayley Tsukayama

Speculation is half the fun of a new product launch, and there’s been plenty of it in advance of Apple’s big iPad 2 announcement Wednesday. Here’s a roundup of the latest rumors the morning of the announcement:

The body: The iPad 2 is likely to be sleeker and slimmer than its predecessor, which weighs in at 1.5 pounds. Apple often cuts weight and depth in newer models. Other rumors suggest the new model will have a thinner bezel, as well.

From here, we get into a lot more speculation. Leaks about new iPad cases from third parties — not particularly reliable — have been fueling rumors about what to expect from the exterior of the iPad. Possible features from the rumor grab bag include a bigger speakera slot for an SD card, a Thunderbolt input/output port and a landscape docking port.

There is also some speculation that the iPad may go smaller — as small as 7 inches — to compete with tablets such as the Galaxy Tab and HTC’s planned Flyer. Since Apple chief executive Steve Jobs has made disparaging remarks about smaller tablets, however, this seems extremely unlikely.

Read the rest of the article here.

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