Consumer Spending on the Rise|
The Commerce Department reported on Friday that consumer spending in the U.S.
rose during August, at the highest speed seen in six months. Consumer spending
jumped 0.5% in August, on a seasonally adjusted basis. Personal income rose a
much smaller amount of 0.1% and the U.S. savings rate fell to 3.7% from 4.1% for
the biggest one-month decline in a year. Commerce also forecast a 0.2% rise in
personal income and since personal spending rose faster than income, the savings
rate fell. Inflation as gauged by the core PCE price index rose a scant 0.1% in
August. Over the past 12 months, core PCE has risen 1.6% which is within the
Federal Reserve's preferred zero to 2.0% range. In July, spending was unchanged
at a 0.4% increase. The rise in income, was reduced to 0.1% from 0.3%.
The United States Postal Service will miss a $5.6 billion payment due to the
U.S. Treasury on Sunday. Postmaster General Patrick Donahoe said services will
no be disrupted, but sounded a cautionary note that the mail delivery specialist
has squeezed all of the cost savings within its power. The Postal Service has
been pushing for legislation to allow it to eliminate Saturday mail delivery and
reduce its $5 billion annual payment for future retiree health benefits.
Congress has wrapped up its session until after the November elections with no
postal fix approved.
Tim Cook Chief Executive of Apple Inc. (AAPL) apologized for glitches in the
iPhone Maps application, which was widely criticized by users. "We strive to
make world-class products that deliver the best experience possible to our
customers," Cook said in a letter on Apple's Web site. "With the launch of our
new Maps last week, we fell short on this commitment. We are extremely sorry for
the frustration this has caused our customers." Cook added that Apple customers
"can try alternatives" by downloading other apps such as Bing, MapQuest or even
apps from rival Google Inc. (GOOG) or Nokia Corp. (NOK) "by going to their
websites and creating an icon on your home screen to their web app."
Crown Castle International Corp. (CCI), a cell-tower company, will be purchasing
the rights to about 7,200 of cell phone towers belonging to T-Mobile USA Inc. -
which is owned by Deutsche Telekom AG (DTEGY, DTE.XE) - for $2.4 billion in cash
as the wireless carrier looks to use the funds to upgrade its network. The deal,
which is expected to close in Q4, gives Crown Castle exclusive rights to lease
and operate the T-Mobile USA towers for about 28 years. Crown will have the
option to buy the towers for an additional $2.4 billion after that time. The
efforts began after AT&T Inc. (T), the country's No. 2 wireless carrier behind
Verizon Wireless, dropped its $39 billion bid to buy T-Mobile USA last year in
the face of regulatory opposition. The proceeds from the tower sale are needed
to help T-Mobile upgrade its network to a high-speed technology called LTE. The
agreement comes a little more than a week after T-Mobile USA named a new chief
executive, John Legere.
Bank of America Corp. (BAC) on Friday said it has agreed to settle a related
class action lawsuit for $2.43 billion, as they work to clear up the chaos and
fallout from its 2009 buy of Merrill Lynch. BofA said the litigation charge
related to the settlement, along with debt and other charges, will cut Q3
earnings per share by about 28 cents. "Resolving this litigation removes
uncertainty and risk and is in the best interests of our shareholders," said
Chief Executive Officer Brian Moynihan. "As we work to put these long-standing
issues behind us, our primary focus is on the future and serving our customers
and clients." BofA additionally said they will institute certain new corporate
governance policies as part of the settlement. Judge Kevin Castel in the United
States District Court for the Southern District of New York still needs to
approve the deal, per BofA.
The U.S. Department of Agriculture reported domestic inventories for U.S. corn
and wheat futures at lower-than-expected levels. Soybean futures traded mixed
due to a higher-than-expected inventories figure for the oilseed. The USDA
reported that corn stocks as of September 1 were 988 million bushels, well below
the average analyst forecast of 1.126 billion bushels. The USDA reported stocks
of wheat were 2.104 billion bushels, below the average analyst prediction of
2.281 billion bushels. Soybean inventories as of Sept. 1 were 169 million
bushels, above the average analyst prediction of 132 million bushels.
The University of Michigan-Thomson Reuters consumer-sentiment gauge rose to a
final September reading of 78.3, for the highest reading since May. A
preliminary September reading pegged the sentiment level at 79.2. Richard
Curtin, the survey’s chief economist said, “The improvement was due to a
reduction in their debt levels and an increase in the value of their assets,
primarily because of rising stock prices and home values. Nonetheless, consumers
anticipate a rocky economic road ahead. Small wage increases, rising food
prices, slowly declining joblessness, higher taxes, and an overall economy that
will not expand continuously but suffer some setbacks over the next several
years.” The sentiment gauge covers how consumers view their personal finances as
well as business and buying conditions and averaged about 87 in the year before
the most recent recession. According to the data released Friday, a gauge of
consumer expectations rose to 73.5 in September from 65.1 in August while a
barometer of consumers’ views on current conditions declined to 85.7 from 88.7.
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Sept 28, 2012