Housing Rebound, Apple Cash–Morning Business Memo

Mar 19, 2012 7:23am

The big money story this year is the upside surprise across markets. The economy, stocks, and now bond rates have all moved up more than expected. This week it might be the turn of the long depressing housing market to show fresh signs of life with four new reports coming out this week. While the five-year price slump continues in most parts of the country, new home construction and sales numbers are likely to increase. Builders’ optimism about future projects is up–rising from very low levels.

The Dow Jones industrial index and S&P 500 gained more than 2 per cent last week. Big stocks are up more than 10 percent since the beginning of the year. Treasury yields are moving up, surprising many bond investors. The 10-year Treasury is now around 2.3 percent. Last week’s sell-off was caused by growing signs of stronger economic growth.

The same trend is pushing oil prices up. West Texas crude – traditionally considered the benchmark for US prices – is trading at $107 on global futures markets. The international price of oil accounts for about 55 percent of US gas prices. In its official weekly survey today, the US Energy Department is likely to report another jump for pump prices last week. According to the AAA, prices remain 31 cents higher than a month ago, 28 cents higher than a year ago.

Apple is sitting on a mountain of cash, and plans to tell investors today what it plans to do with it, and many investors are betting on a dividend. At the end of last year Apple had $97.6 billion in cash and securities. The company has scheduled a conference call to explain what it plans to do with that money. A dividend would reward shareholders and open ownership of Apple shares to a wider range of funds. Many value-oriented funds are not allowed to buy stocks that don’t pay dividends.

The head of the giant bond investor PIMCO says in an interview that heavily indebted Portugal is at risk of following Greece’s downhill path. German news magazine Der Spiegel quotes the CEO of the bond mutual fund company as saying that Portugal is likely to need a second bailout package which will cast further doubt on the country’s solvency.

The shipping company UPS says it’s agreed to buy European delivery company TNT. The deal’s worth around $6.8 billion.

Richard Davies Business Correspondent ABC NEWS Radio twitter.com/daviesabc

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