US Home Construction Accelerates|
The Commerce Department reported on Wednesday that construction on new U.S.
homes accelerated by 15% during September to an annual rate of 872,000. The
increase marks the highest level seen in more than four years. Building permits,
which is a sign of future demand, also rose to a four-year high, rising 11.6% to
an annual rate of 894,000. Building permits for single-family homes, which
account for nearly three-quarters of the housing market, rose 6.7% to an annual
rate of 545,000 in September. Building permits for multi-dwelling units which is
a more volatile category, rose three times faster. Housing starts in August were
revised up to 758,000 from an original reading of 750,000. Building permits in
August were revised slightly lower to an 801,000 annual rate. During September,
housing starts rose in all regions except the Northeast, with construction
improving in regions in the West and South.
International Business Machines Corp. (IBM), aka 'Big Blue', shares experienced
one of their worst recent performances, down 5% at the end of trading on
Wednesday. IBM reported fiscal Q3 earning $3.82 billion or $3.33 a share, on
revenue of $24.75 billion. During the same period in 2011, earnings came in at
$3.84 billion or $3.19 a share on $26.15 billion in sales. Excluding one-time
items like expenses for retirees, IBM would have earned $3.62 a share. IBM has
missed revenue forecasts for five consecutive quarters. Recommendations remain
in effect for investors to take advantage of any weakness in share price of the
icon on Wall Street.
CME Group Inc. (CME) on Wednesday reported they will pay $126 million in cash
for the Kansas City Board of Trade. The Chicago market operations is recognized
as the leading futures market for hard red winter wheat. CME Group reportedly
will pay a special distribution of excess cash to members of the Kansas City
Board of Trade although the specific amount was not announced. "This transaction
creates significant value for customers and shareholders of both companies," the
Cymer Inc. (CYMI) shares were sharply higher by 50% into late afternoon trading
Wednesday after the maker of semiconductor lithography equipment agreed to a
buyout deal with ASML Holding (ASML). The cash-and-stock transaction is valued
at nearly 1.95 billion euros or about $2.5 billion. The deal gives Cymer
shareholders a premium of nearly 61% over the companies 30-day volume-weighted
average price. Cymer and ASML Holding specialize in extreme ultraviolet
lithography (EUV) which is used to create smaller, more energy efficient chip
products. The deal requires approval from regulators as well as Cymer
shareholders and is expected to close during the first half of 2013.
Apollo Group Inc. (APOL) shares were lower by 22% into the end of the trading
session on Wednesday after the for-profit education provider was hit by
downgrades from several equities analysts following a weak earnings report.
Citing declining enrollment numbers, Apollo announced late Tuesday that its
fiscal Q4 profit fell 60% from 2011. Apollo also trimmed its full-year revenue
outlook to $3.65 billion from $3.8 billion, less than the $4.07 billion analysts
were anticipating. The weak results and lowered outlook overshadowed steep cost
cuts Apollo is putting in place.
The Securities and Exchange Commission on Wednesday, voted 5-0 to float the
roughly 500-page set of proposals for public comment, as required by the 2010
Dodd-Frank financial law. The law mandates greater oversight of previously
unregulated swaps market. The rules require brokerages to set aside specific
money to insulate themselves against losses on their swaps trades as well as to
take steps to protect the money of their swaps customers. Before the rules could
be implemented, the SEC will have to vote on them, for a second time. The rules
basically mirror related proposals floated by the Commodity Futures Trading
Commission and banking regulators to impose capital and margin standards on
swaps dealers. SEC officials said there are technical differences to reflect
distinctions in the market or the types of firms to which the various rules
apply. Unlike banks that deal in swaps, brokerages overseen by the SEC do not
have access to deposits. As a result, its rules place "heavy importance" on
requiring the brokerages to hold as capital "liquid assets that are readily
available in times of crisis," said SEC Chairman Mary Schapiro. The SEC's
proposal would apply to firms dealing in so-called securities-based swaps,
including credit-default swaps that led the government to bailout the insurer
American International Group Inc. (AIG) in 2008. The SEC rules would mandate
that all securities-based swaps dealers post at least $20 million of capital,
plus an additional 8% of the total margin they are required to post for each
individual transaction. The SEC is increasing the capital that the largest
brokerage firms must post to $1 billion from $500 million, in addition to the
swaps rules. While the banking regulators and CFTC floated their original
capital and margin proposals last year, they recently reopened their respective
comment periods The move was partly in light of an international report earlier
this summer that recommended standardized margin requirements of between 2% and
15% of individual trades.
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