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1. Realtors Spend $40 Million to Boost Sales
2. Fed's Moskow: Economy Will Bounce Back
3. OPEC Chief: Another Cut May Be Needed
4. Kinross Gold Bids $3.1 Billion for Bema
1. Realtors Spend $40 Million to Boost Sales
Desperate times call for desperate measures.
The National Association of Realtors (NAR) is plunking down a cool $40 million
to place full-page ads in the nation's biggest newspapers in order to convince
people the housing market isn't crashing, reports The LA Times.
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"Right now may actually be one of the best times to buy a home," reads the ad,
which ran this past weekend and will run next week as well.
The ad, says The Times, points to "stabilizing prices, still-low interest rates,
a record inventory of homes and recent comments by former Federal Reserve
Chairman Alan Greenspan suggesting the housing market may have bottomed."
"Don't delay," says the ad and tells readers to call the NAR, which represents
1.3 million brokers and agents.
In fact, the most recent economic reports indicate that housing prices are still
falling. New home prices fell at the fastest pace in 35 years while sales for
existing homes fell for the sixth consecutive month in September. In an
environment of falling prices, potential homebuyers tend to sit on the sidelines
while they wait for prices to stabilize.
In addition, Greenspan's remarks aren't all that rosy. Though Greenspan says the
worst may be over, there are still bad times ahead. "This is not the bottom, but
the worst is behind us," Greenspan said about the housing market at a conference
organized by financial services firm Charles Schwab on Monday.
So that prompts MoneyNews to ask, "Was that $40 million well spent?" You be the
judge.
Editor's Note:
2. Fed's Moskow: Economy Will Bounce Back
Michael Moskow, president of the Chicago Federal Reserve Bank, says the economy
should bounce back from its dismal performance in the third quarter, but will
average "somewhat below" a 3 percent real gross domestic product (GDP) growth
rate over the next year.
"My baseline forecast is that GDP growth will pick up from the weak third
quarter and average somewhat below its potential growth rate (3.0% GDP growth)
over the next year or so," Moskow said to the Chicagoland Chamber of Commerce/WBBM
Newsradio 780 annual economic forecast breakfast.
Real GDP growth measured 1.6 percent in the third quarter, the Commerce
Department reported on October 27.
Moskow said the slumping housing sector was a drag on third quarter growth, but
doesn't expect the slump to have a prolonged impact on the growth. That's
because Moskow estimates housing accounts for 5 percent of GDP.
"Home construction is on average only about 5 percent of GDP - that's about the
same as people spend on recreation items such as books, golf clubs, and tickets
to the theater and opera," commented Moskow.
"Currently, we do not see the slowing in housing markets spilling over into a
more prolonged period of weakness in the U.S. economy overall," said Moskow. "On
balance, the 95 percent of the economy outside of housing remains on good
footing."
Moskow will become a voting member of the Federal Open Market Committee next
year. His remarks are good news for those expecting the Fed to cut rates next
year. An economy growing below potential should give the Fed ammunition to cut
rates.
However, Moskow added in a question and answer session that inflation remained a
concern. He said he supports the Fed's pause in action right now, but that
inflation is a bigger risk than an economic slowdown.
"Nonetheless, we have to be vigilant in monitoring these (inflation)
expectations. If they did increase, it would be incumbent on the Federal Reserve
to adjust policy to affirm out commitment to price stability," said Moskow.
Moskow added that he thinks core inflation "will come down somewhat over time."
But he said that there is a risk that core PCE inflation could remain above his
2 percent comfort level "for some time."
Editor's Note:
3. OPEC Chief: Another Cut May Be Needed
OPEC may need to cut oil production further this year to deal with an oversupply
in the market, the cartel's president said Monday.
"When we meet in December we will take a view on it but it looks as if some
further mopping up will be necessary," OPEC chief Edmund Daukoru told reporters.
"The market is clearly oversupplied, clearly oversupplied."
Regarding OPEC's decision last month to cut production effective Nov. 1, Daukoru
said that the effects of the reduced output have yet to be seen, but would be
soon.
Daukoru, who is also Nigeria's oil minister, said it will take "probably into
the middle of the month before you will start to believe us."
The Organization of Petroleum Exporting Countries decided last month at a
meeting in Qatar to curb supplies by 1.2 million barrels a day. It plans to meet
again in December in Nigeria.
He added that OPEC as an organization and Nigeria as an OPEC member were
implementing the cuts. Nigeria is the world's eighth-biggest oil exporter.
Oil prices have tumbled from a mid-July peak above $78 a barrel. On Monday,
light, sweet crude for December delivery dropped 42 cents to $58.72 a barrel in
electronic trading on the New York Mercantile Exchange by midday in Europe.
"I don't know where it should be, but the current price is low," Daukoru said.
Daukoru, who is visiting South Korea to meet government officials and attend an
oil industry conference, also said he couldn't say how much any potential
further production cut might be.
Daukoru also said he couldn't say how much any potential further cut might be.
Regarding the seizure by unidentified gunmen on Thursday of a Briton and an
American working for the Norwegian company Petroleum Geo-Services on Nigeria's
southern coast, Daukoru said he was confident the victims would soon be safely
released.
"Naturally we are concerned that the hostages might come to unintended harm. But
in incident after incident, upon payment of a small amount they let the hostages
go," he said. "This one is no different."
Since the beginning of this year, various militant groups in Nigeria have
attacked oil pipelines and taken expatriate oil workers hostage in violence that
has cut about 25 percent of the country's usual crude output of about 2.5
million barrels daily.
The militants say they are fighting on behalf of an impoverished population for
a greater share of wealth from oil companies and the federal government, which
apportions the revenues among Nigeria's 36 states.
Daukoru repeated his oft-stated view that the unrest in the region is not
political in nature but rather is related to a lack of development, which he
said the government is working to address.
He said "the problems you see now will recede into nothing as the development
effort gains ground."
© 2006 Associated Press.
Editor's Note:
4. Kinross Gold Bids $3.1 Billion for Bema
Kinross Gold Corp. made a friendly takeover bid for fellow Canadian miner, Bema
Gold Corp. Monday in an all-stock deal worth $3.1 billion, the two firms said.
Kinross, the world's eighth largest gold miner, is offering 0.441 of a Kinross
share for every Bema share, which values the offer at C$6.61 a share.
Kinross said that represents a 34 percent premium on the 20-day average price of
Bema's shares on the Toronto Stock Exchange, and will create a new major gold
producer valued at $7.9 billion.
"By combining our assets, operations and expertise, we have dramatically
increased our gold reserve and resource base to more than 50 million ounces,"
Kinross chief executive Tye Burt said in a statement.
Mid-sized producer Bema, which is based in Vancouver, British Columbia, and has
operating mines and projects in Russia, Chile and South Africa, has long been
rumored to be a takeover target. Its Russian Kupol project is regarded as the
biggest drawing card.
Salman Partners analyst Haytham Hodaly said the takeover premium that Kinross
has offered is in line with that paid in the industry in recent deals.
He called the combination of the two firms a "great fit".
"They have synergies with the Refugio project in Chile. They both own half.
Kinross is in the process of exiting Russia, given that its Kubaka project is
winding down. This allows them to maintain their position within Russia and
utilize some of the highly experienced work force that they have there to
possibly develop Kupol," Hodaly said.
Both Kinross and Bema's boards of directors have unanimously approved the
acquisition, the firms said. Bema shareholders will vote on the deal at a
meeting expected to be held in the middle of January 2007.
Trading in shares of Kinross and Bema was halted on the Toronto Stock Exchange
early Monday. Kinross stock closed at C$14.99 in Toronto Friday, while Bema
closed at C$5.40.
Toronto-based Kinross has eight mines in Canada, the United States, Brazil and
Chile. It is in the middle of expanding its Paracatu mine in Brazil, which will
help boost its overall production to between 1.8 million and 1.9 million ounces
by 2009, up from about 1.44 million expected this year.
Under the deal, Bema's chief executive, Clive Johnson, will lead a new company
focused on exploration and development. Kinross will participate as an equity
investor and have a right to joint-venture opportunities in Russia.
© 2006 Reuters
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