(Headlines - scroll down for full stories)
1. Realtors: Home Prices Will Drop Further
2. Fed's Warsh: Inflation 'Uncomfortable'
3. Google at $500 - What Next?
4. India and China to Boost Ties, Trade
1. Realtors: Home Prices Will Drop Further
Homeowners in the U.S. manufacturing heartland and in the retiree and vacation
destination of Florida were hardest hit by drops in home sales in the third
quarter, a trade association report showed Monday.
Prices of single-family existing homes fell from the same period a year earlier
in 45 out of 148 areas surveyed, the National Association of Realtors said.
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The U.S. housing market is weakening after a multi-year boom as higher long-term
interest rates have cooled buyer enthusiasm and inventories of unsold homes have
expanded. U.S. Treasury Secretary Henry Paulson last month called the housing
slowdown a "significant correction," but said it reflects the cooling of an
overheated market to a more sustainable pace.
Median single-family existing home sales prices fell 1.2 percent nationally in
the third quarter, the trade association said.
"With the market in full transition, buyers now have choices and sellers are
more willing to negotiate -- under these circumstances it's no surprise that
overall home prices are slightly below a year ago," said David Lereah, the
Realtors' chief economist.
The Realtors report sales of existing homes while the Commerce Department
gathers data on purchases of freshly built homes.
Some of the largest local drops in median single-family existing house prices in
the July-September period came in areas of the country where manufacturing
activity is in decline.
In Ohio, the median single-family existing house price fell 9.2 percent from the
third quarter of a year ago in Canton, 8.4 percent in Akron, and 6.6 percent in
Toledo.
In Michigan, where U.S. auto makers are reeling from slowing vehicle sales,
median prices fell 10.5 percent from the same period a year ago in Detroit and
6.2 percent in Lansing.
Meanwhile, in Florida house prices dropped 9 percent in the Palm Bay-Melbourne
area, 8 percent in Fort Myers, and 5.6 percent in Miami.
Economists are watching the pace of slowdown in the housing industry carefully
for any signs that declines in house prices, sales or building, are pulling down
other areas of the U.S. economy. So far, Federal Reserve officials say the
retrenchment has mainly been contained to housing.
© 2006 Reuters.
Editor's Note:
2. Fed's Warsh: Inflation 'Uncomfortable'
Though price pressures have eased somewhat compared with the beginning of the
year, inflation remains "uncomfortably elevated," Federal Reserve Governor Kevin
Warsh said Tuesday.
Financial markets project that inflation will continue to come down at a gradual
rate, Warsh said in prepared remarks to a conference at the New York Stock
Exchange, but "there remain, I believe, clear upside risks to that inflation
outlook."
That somewhat hawkish inflation view comes on the heels of surprisingly soft
October inflation reports. Producer prices excluding food and energy fell 0.9
percent last month -- the biggest decline in 13 years -- while core consumer
prices rose a benign 0.1 percent, bringing the year-on-year rate down to 2.7
percent, which remains above the Fed's understood comfort level.
Fed officials, such as St. Louis Fed President William Poole and Chicago Fed
President Michael Moskow, have cautioned in recent days that while the CPI data
were good news, one month doesn't necessarily mark a trend.
On the economic outlook, Warsh said he expects the "sharp pullback" in housing
to restrain overall economic activity into 2007. However, as housing stabilizes
the economy should expand at a pace closer to its long-run potential, Warsh
added, a view consistent with other Fed policy makers.
Echoing recent remarks by Fed Vice Chairman Donald Kohn, Warsh said markets are
showing a "surprising" level of certainty about the future path of growth,
inflation and interest rates.
Warsh noted that, according to futures prices, markets expect 0.50 percentage
points of Fed easing next year from the current 5.25 percent Fed funds rate,
which has been held steady since late June. Though markets are pricing in lower
rates next year, the Fed in its latest policy statement maintained its bias
toward higher rates should inflation persist.
Investors seem "reasonably certain of a benign outcome" for growth and
inflation, Warsh added, but "my own judgmental forecast includes a wider range
of possible outcomes than is implicit in these market-based measures."
Warsh's remarks on the economy and policy are his most substantive since joining
the Fed in February.
© 2006 Associated Press.
Editor's Note:
3. Google at $500 - What Next?
Google Inc.'s stock price surpassed $500 for the first time Tuesday, marking
another milestone in a rapid rise that has catapulted the Internet search leader
into the corporate elite.
Continuing a recent surge driven by Wall Street's high expectations for the
company, Google's shares rose $9.67, or nearly 2 percent, to $504.72 in morning
trading on the Nasdaq Stock Market.
That left Google with a market value of about $154 billion just eight years
after former Stanford University graduate students Larry Page and Sergey Brin
started the business in a Silicon Valley garage.
The Mountain View-based company is now Silicon Valley's most valuable business,
eclipsing the likes of Intel Corp., the world's largest computer chip maker, and
Hewlett-Packard Co., a high-tech pioneer that also famously started in a garage
67 years ago.
Google's remarkable success has minted Page and Brin, both 33, as
multibillionaires along with their hand-picked chief executive, Eric Schmidt.
Hundreds of other Google employees are millionaires because so many investors
want to own a piece of a company that has become the Internet's most powerful
financial force while building a brand so ingrained in society that it has
become part of the English language.
It took slightly more than a year for Google's shares to travel from $400 to
$500 -- the stock's longest journey from one major milestone to the next since
the company priced its initial public offering at $85 in August 2004.
The shares topped $100 on their first day of trading on the Nasdaq Stock Market,
then crossed $200 in less than three months. The stock broke through $300
another seven months later in June 2005 and then breached $400 on Nov. 17 last
year.
The latest spurt of optimism appeared to reflect a belief that Google will
quickly introduce ways to mine more online advertising revenue from its
just-completed $1.65 billion acquisition of YouTube Inc. Google used its stock
to finance the deal.
Google currently has made most of its money selling brief, written ads that are
posted alongside search results and other online content, but management
believes it can mine even bigger profits by expanding into video and delivering
more messages to mobile computing devices.
Management also wants to extend Google's advertising clout beyond the Web. The
company is currently testing a program to place ads in 50 of the nation's
largest newspapers and hopes to begin distributing radio ads by the end of this
year.
Those grand ambitions are one of the reasons that Google shares keep climbing.
The run-up makes Google's stock look fairly expensive by one widely used
barometer known as the price-to-earnings, or p/e, multiple.
Analysts, on average, predict Google will earn $13.70 per share next year,
leaving the company's p/e at about 37. By comparison, the p/e of Microsoft Corp.
-- the world's most prized technology company with a market value of nearly $300
billion -- is about 21, based on analyst's 2007 earnings projections.
Google's relatively high p/e hasn't fazed several analysts who have already
predicted the company's stock price will hit $600 within the next year.
Betting against Google has proven to be foolish so far. In the months leading to
Google's IPO, widespread skepticism about the company's growth prospects
prompted management to discount its desired price, enriching investors who were
able to buy at $85. And just eight months ago, Google shares dropped as low as
$331.55 amid fears that the company's earnings growth might be on the verge of a
dramatic slowdown.
Anyone waiting for a stock split before investing in Google risks being left on
the sidelines. Although most publicly held companies regularly split their stock
to create a lower per-share price that appeals to more Main Street investors,
the proudly unconventional Page and Brin have repeatedly indicated they have no
intention of resorting to that maneuver.
© 2006 Associated Press.
Editor's Note:
4. India and China to Boost Ties, Trade
The leaders of China and India declared Tuesday that cooperation will trump
competition between the Asian giants, saying there is enough room for both to
become global powers and pledging to double trade between the countries by 2010.
Speaking after a summit in New Delhi, Indian Prime Minister Manmohan Singh and
Chinese President Hu Jintao vowed to cement their increasingly closer ties,
which have been marked by lingering suspicions dating back to a 1962 border war
and rivalry over their regional roles.
"There is enough space for the two countries to develop together in a mutually
supportive manner while remaining sensitive to each others' concerns and
aspirations," Singh said.
Despite the optimistic tone, the summit failed to break any new ground,
resulting only in a range of small agreements and the settling of some minor
disputes between the two countries, which with nearly 2.4 billion people account
for a third of humanity.
Not dealt with were the big issues that still divide them -- the presence of the
Dalia Lama and 120,000 Tibetan exiles in India, the border dispute, and China's
role as the main weapons supplier to India's longtime rival, Pakistan.
Still, Indian officials expressed optimism that those issues would be settled in
time and pointed out that both sides had decided 18 months ago -- when they
declared a strategic partnership -- to not be held back by past disputes while
working toward the future.
"It would be a huge strategic gain if we could settle" the border dispute,
Indian Foreign Secretary Shiv Shanker Menon told reporters after the summit.
"But it's not holding up the relationship," he added.
Both leaders said the two countries should work together on regional and
international issues, but were quick to stress other nations should not see such
cooperation as a threat.
"Our two countries need to carry forward our friendship in the long run, work
hand in hand for cooperation and common development and work together to promote
peace and development in Asia and the world at large," Hu said.
Plans were unveiled to double bilateral trade to $40 billion by 2010. Two
decades ago, it was next to nothing.
The two sides also agreed to deepen civilian nuclear cooperation, although with
no firm commitments on the mechanics of such an arrangement, the deal appeared
to be more of a statement of intent than an actual nuclear pact, such as the one
New Delhi has reached with Washington.
Hu's visit was the first by a Chinese president in a decade, and he and Singh
said their countries would intensify efforts to resolve the border disputes that
remain from the 1962 Sino-Indian war. Talks already have been going on for some
25 years.
Relations between the two also have been dogged by the presence in India of the
Dalai Lama and 120,000 exiles from Tibet.
China accuses the Dalai Lama, the exiled spiritual leader of Tibet's Buddhists,
of trying to divide China.
No mention was made of Tibet at the summit and on Tuesday police fanned out
across New Delhi to protect Hu and to prevent protesters embarrassing him.
"Police have imposed a ban on assembly of more than five persons in the areas to
be visited by the Chinese president," New Delhi police spokesman Rajan Bhagat
said.
In Beijing, Chinese Foreign Ministry spokeswoman Jiang Yu condemned recent
protests by Tibetan exiles in New Delhi.
"We think that this is a negative effort made by followers of the Dalai Lama and
an attempt to deceive and confuse public opinion," he said.
Four Tibetan protesters were arrested Monday after holding up posters saying
"Down with China" and "Freedom for Tibet" as Hu's convoy left the airport, said
Dhondhup Dorjee, a spokesman for Tibetan exiles.
More than 1,000 Tibetans, led by Buddhist monks in maroon and yellow robes, held
a protest march in New Delhi hours before Hu arrived. The protesters, their
faces painted in the colors of the Tibetan flag, chanted anti-China slogans and
demanded freedom for Tibet.
After the meeting the two sides signed a series of 13 agreements on economic,
trade, finance, information, energy, science, technology, agriculture and
education ties.
They also agreed to have China open a consulate in the east Indian city of
Calcutta, with India reciprocating in Guangzhou. 2007 was also declared a year
of friendship and tourism between the two countries.
Hu leaves India for Pakistan on Thursday after visiting the Indian cities of
Agra and Mumbai.
© 2006 Associated Press.
Editor's Note:
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