July 9, 2008 - 9:00 pm
Consumer borrowing increases during May
Consumers boosted their borrowing in May, mostly reflecting heavy credit card use to finance their purchases.
The Federal Reserve reported Tuesday that consumer credit increased at an annual rate of 3.6 percent in May, roughly the same pace as logged in the previous month.
The pickup pushed total consumer debt up by $7.8 billion to $2.57 trillion. That was brisker than the $7 billion over-the-month increase economists were expecting.
The increase was led by stronger demand for a category called revolving credit, which is primarily credit cards. Use of revolving credit rose at a 7.1 percent pace in May. In April, consumers cut back on such credit at a 0.5 percent pace.
Alcoa earnings decline but top Street outlook
Alcoa’s second-quarter earnings fell 23.6 percent as higher prices failed to offset costs for raw materials and energy.
The Pittsburgh-based company earned $546 million, or 66 cents per share, for the quarter ended June 30, down from $715 million, or 81 cents per share, a year earlier.
Revenue fell 6.2 percent to $7.6 billion from $8.1 billion.
Results beat Wall Street estimates. Analysts, on average, expected profits of 64 cents per share on revenue of $7.36 billion.
Texas oilman Pickens to start energy ad blitz
Texas oilman T. Boone Pickens said Tuesday he’ll spend $58 million on an ad campaign designed to bring more focus to solving the nation’s energy crisis.
The former wildcatter, who now heads the Dallas-based hedge fund BP Capital Management LP, kicked off the media blitz Tuesday with a news conference in New York.
The ad campaign, which will include television, newspaper and radio advertisements — and a Web presence that includes a Facebook page and a dedicated YouTube channel — is centered around “The Pickens Plan,” which aims to cut U.S. dependence on foreign sources by more than a third over the next decade.
As traders take profits, oil prices drop again
Oil tumbled more than $5 a barrel Tuesday in its second big drop this week, hurling crude back to levels unseen since June 26 as traders wary about the health of the global economy cashed in gains from oil’s recent rally.
Light, sweet crude for August delivery fell $5.33 to settle at $136.04, after earlier slumping as low as $135.14. The decline followed a $3.92 slide on Monday, bringing oil’s two-day drop to more than $9.
The market’s bearish turn this week erases, at least for now, the effect of a rally that pushed prices past $145 in a string of record-setting sessions before the Fourth of July.
Analysts attributed much of the recent sell-off to profit-taking, saying traders were cashing in the previous week’s gains.
Anheuser-Busch calls takeover effort illegal
Anheuser-Busch Cos., the U.S. beer maker being pursued by InBev NV, said the Belgian brewer’s $46.3 billion takeover attempt is illegal and asked a federal court to block the bid.
Anheuser-Busch, the maker of Budweiser, told a court in St. Louis on Monday that InBev is trying to persuade shareholders to support the proposal with false or misleading information, according to court papers.
Tensions have intensified between Leuven, Belgium-based InBev, the world’s largest brewer by sales, and the maker of Budweiser and Bud Light beer, which rejected the $65-a-share bid as inadequate last month.
Siemens AG says it will eliminate 16,750 jobs
Industrial conglomerate Siemens AG said Tuesday it will cut 16,750 jobs, or 4.2 percent of its global work force, to streamline operations and slice nearly $2 billion in costs in the face of a slowing economy.
The Munich-based maker of products ranging from light bulbs and medical equipment to power turbines said the cuts would include 12,600 administrative jobs as well as 4,150 positions involving restructuring projects at its units.
Local men accused of securities violations
Two Southern Nevada men violated securities laws when they promoted a stock for VMT Scientific, a Las Vegas company that claimed to have a device that caused women’s breasts to enlarge without surgery, the Securities and Exchange Commission said Tuesday.
Stephen Roebuck, a Las Vegas broker with CNP Securities, and Daniel Kaiser, chief technical officer of VMT, who lives in Henderson, issued false statements on VMT’s breakthrough product, according to a lawsuit filed by the SEC.
The defendants then sold 9.5 million shares for $1 million through brokerage accounts in the Cayman Islands, Turks and Caicos and Panama in 2005, according to the SEC.
Roebuck agreed to a permanent injunction, disgorgement of profits and a civil penalty that will be set by a federal judge.
The SEC is seeking an injunction against Kaiser.
Amid dearth of data, Treasury prices rise
Treasurys rose Tuesday as investors had little economic data to trade on and instead focused their attention on movements in the stock market.
In late trading, the 10-year note rose 0.16 points to 99.91. Its yield fell to 3.89 percent from 3.91 percent on Monday, according to BGCantor Market Data.
Yields usually move in the opposite direction from prices.
The 30-year long bond rose 0.56 points to 98.25. Its yield fell to 4.48 percent from Thursday’s 4.50 percent.