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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (22495)	1/31/2005 11:06:59 AM
From: zonder	Read Replies (1) \| Respond to of 116555

Gee, what a surprise that people don't continue to snatch homes in the air as fast as when interest rates were deeply negative... :-)

To: Knighty Tin who wrote (22495)	1/31/2005 11:13:36 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

SBC and AT&T approve $16bn merger [How many jobs will this cost KT? Mish] By James Politi and Aline van Duyn in New York, and Stephanie Kirchgaessner in Washington Published: January 30 2005 22:35 \| Last updated: January 31 2005 08:24 SBC Communications and AT&T on Monday said they had approved a $16bn merger that will create the largest telecommunications company in the US and end AT&T’s 120-history as an independent company. Under the terms of the deal approved by both boards, shareholders at AT&T will receive stock worth $18.41 a share and a special dividend of $1.30 a share. This means SBC is paying AT&T shareholders a combination of just under $15bn in stock and just over $1bn in cash. David Dorman, AT&T’s chief executive, will become president of the combined group, and join its board along with two other AT&T executives. Edward Whitacre will remain as chairman and chief executive of the new company. SBC said it expected the deal would yield $15bn in synergies, net of the cost to achieve them. [15 billion in synergies huh? how much of that synergy is job cuts? Mish] The transaction is expected to be cash flow positive for the group in 2007 and earnings per share positive positive in 2008. There was discussion about renaming the combined group AT&T, although a decision had not been reached. Mr Whitacre said only: “We value the heritage and strength of the AT&T brand, which is one of the most widely recognized and respected names throughout the world, and it will certainly be a part of the new company’s future.” He added: “Today’s agreement is a huge step forward in our efforts to build a company that will lead an American communications revolution in the 21st century,” said Mr Whitacre. The takeover marks another chapter in the reshaping of the US telecoms industry, a process began early last year when Cingular Wireless, a joint venture between SBC and BellSouth, agreed to buy AT&T Wireless for $41bn. In December, Nextel and Sprint agreed to merge in a $36bn deal. AT&T, an iconic name, has long been considered a potential takeover target, along with MCI Communications, the heir to WorldCom which last year emerged from bankruptcy. The deal is expected to close in the first half of 2006 but will still require regulatory approval. The signs are that Michael Powell, outgoing chairman of Federal Communications Commission, will not raise significant obstacles, but the process may be a long one, particularly at state level. “This is going to be an extremely difficult transaction and one, if approved, that is going to require massive surgery,” said Andy Lipman, an attorney who heads the telecoms group at Swidler Berlin in Washington. Regulators, Mr Lipman said, would most likely focus on three areas: the divestiture of AT&T’s consumer and small business operations in SBC’s territory; the spin-off of some AT&T fibre facilities; and the overlap of AT&T and SBC enterprise customers. “The parties are going to have to craft the message of why this merger is in the public interest and I think that would be a challenging task,” he added. As recently as seven years ago then-FCC chairman Reed Hundt characterised a merger between the groups as “unthinkable”. Since then, however, the industry has undergone rapid change, with traditional telephone companies now competing with wireless and cable companies. SBC and AT&T are expected to point to this intensification of competition as one justification for the deal. That argument is not infallible, however. In its review of Cingular’s acquisition of AT&T Wireless, the FCC order approving the deal pointed out that the loss of AT&T Wireless as a competitor was mitigated by the “limited level” of wireless-wireline competition “at this point in time”. AT&T could also attempt to persuade regulators that a merger was necessary for its financial stability a tactic that one person familiar with the regulatory agency said was not likely to work. “You can’t tell Wall Street you’re doing great and tell the Department of Justice you’re going out of business.” news.ft.com

To: Knighty Tin who wrote (22495)	1/31/2005 11:26:04 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

U.S. Dec. new home sales flat as inventories build Monday, January 31, 2005 3:16:55 PM WASHINGTON (AFX) - Sales of new homes were nearly unchanged in December after a big drop off in November, the Commerce Department reported Monday New home sales increased 0.1 percent to a seasonally adjusted annual rate of 1.098 million units in December from a downwardly revised 1.097 million in November, originally reported as 1.126 million. Sales had peaked at 1.263 million in October The inventory of unsold homes on the market increased by 2.6 percent to 432,000, the highest level in 31 years. The inventory represents a 4.8-month supply at current sales rates, the highest since July 2000 Economists were expecting a bounce back in sales to about 1.18 million in December, according to a survey conducted by MarketWatch In all of 2004, a record 1.183 million new homes were sold, up 8.9 percent from 2003's 1.086 million. It's the fourth year in a row for record new home sales The median price of a new home increased 13.2 percent year-over-year to $222,000 in December. For all of 2004, the median price increased 12.2 percent to $218.900 Most economists expect housing to slow, but not collapse, as the Federal Reserve continues to raise short-term interest rates at a measured pace. Despite five increases in the federal funds rate during the year, however, average mortgage rates have been steady The regional picture was mixed in December, suggesting that weather may have been a factor in sales. While sales in the Midwest jumped by more than 50 percent, sales declined about 16 percent in both the Northeast and South. Sales increased about 6 percent in the West The government cautions that its housing data are particularly prone to sampling and other statistical errors. It can take six months to establish a new trend in home sales. In December, the six-month average sales rate was 1.154 million, down from 1.170 million in November forexstreet.com

To: Knighty Tin who wrote (22495)	1/31/2005 11:32:50 AM
From: mishedlo	Respond to of 116555

Chicago-area business gauge expands for 21st month Monday, January 31, 2005 3:25:54 PM afxpress.com CHICAGO (AFX) - The pace of business expansion in and around Chicago intensified this month, according to the latest Chicago Purchasing Managers index, released Monday. The index reached 62.4 percent this month, up from 61.9 percent in December. The average forecast in a poll of economists by MarketWatch was for a reading of 59.6 percent. The report is a diffusion index, measuring the breadth of activity across companies. Readings over 50 percent indicate that more than half of respondents said business is better or the same. The barometer has been above 50 percent for 21 straight months. All areas showed expansion, including employment, at 52.8 percent. The index for production was at 68.3 percent and for new orders, at 65.8 percent Prices paid remained at an elevated 76.5 percent Order backlogs improved to 53.7 percent while inventories stood at 53.2 percent. Supplier deliveries rose to 58.3 percent