Chinese Premier Wen Jiabao said the government will focus more on bolstering growth, indicating policies may be loosened further as inflation moderates.
China will
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The U.S. mortgage delinquency rate declined in the first quarter to the lowest level since 2008 as an improving job market and low interest rates helped more borrowers pay their bills.
The share of home loans at least 30 days late dropped to 7.4 percent from 7.58 percent in the previous three months, according to a report today from the Mortgage Bankers Association. The rate peaked at 10.1 percent in the first quarter of 2010 and was last lower in the third quarter of 2008, when it was 6.99 percent.
The free credit score industry has been booming since the recession as a lot of people hit hard times and want to keep an eye on how the recession has affected their credit standing.
Let Greece go: It’s a possibility that’s being considered more and more publicly in Europe.
There have been two and a half years of bailouts, on top of broken promises by Greece to reform. The result: a fifth year of recession and, this week, political chaos. Voters on Sunday favored parties that either oppose the terms of the country’s international bailout or want to renegotiate them. If it cannot get more rescue loans, Greece will go bankrupt and likely have to leave the eurozone, the currency union of 17 countries.
The question confronting leaders in Athens, Berlin and other eurozone capitals could soon be: What would happen if Greece left the euro? How much damage would that do?
Among the possible scenarios:
• GREEK CHAOS: Economists agree that Greece, where unemployment is 21.7 percent, would suffer even more if it left.
So Greeks would try to pull their euros out of their bank accounts — before they could be converted into a new currency worth far less. Owners of Greek stocks would sell. As markets plunged and deposits fled, banks would collapse.
To try to limit the drain, the government would probably have to close the banks while the new currency is introduced. It might also try to prevent people from moving euros out of the country.
Every Greek company that owes money in euros would see those debts grow much heavier. Many would go bankrupt.
• A BOUNCE-BACK: On the plus side, the weaker drachma would make Greek exports cheaper and more competitive and could help the economy start growing payday loans guaranteed no fax. Companies outside Greece might be attracted by the cheaper labor and real estate, encouraging them to move plants there.
Tourism would also get a boost: booking a room on a Greek island, for example, would become much cheaper for foreigners.
• CONTAGION: The great fear, some say, is that if Greece leaves, other troubled eurozone countries might do the same.
“The big danger is financial contagion,” said Dennis Snower, president of the Kiel Institute for the World Economy. “The question would be, what stops the Portuguese from doing something similar?” People might think “just in case, let me get my money out of the bank,” he said.
• MAYBE NOT: Not everyone agrees that a Greek exit would be a disaster. Greece is tiny, and it wouldn’t be a total surprise. The possibility of a euro exit has been hanging over markets since late 2009. Banks outside Greece have had time to write off their Greek investments — and not make any new ones.
“A year ago, I would have said it’s too risky, but the situation has changed,” said Commerzbank’s chief economist, Joerg Kraemer, citing the eurozone fund and ECB loans. “The combined fiscal and monetary shield is much higher than it was a year ago.”
Beauty products maker Coty Inc. is raising its buyout offer for direct-seller Avon Products Inc. by about 6.5 percent to almost $10.7 billion.
Avon, whose brands include Skin-So-Soft, Anew and mark, said Thursday that Coty told it in a letter that it was raising its offer to $24.75 per share from $23.25 per share.
The revised bid is a 15 percent premium to Avon’s Wednesday closing price of $21.60. Avon shares rose 1.3 percent to $21.87 in premarket trading Thursday.
Avon had rejected Coty’s $10 billion offer last month, but Coty has remained interested. It said in the letter to Avon that it wants to look at Avon’s books to confirm estimates and learn more about Avon’s ongoing bribery investigation and litigation.
Coty says it will withdraw its latest bid if it doesn’t receive a response by the close of business Monday.
Coty’s letter indicated Avon has said it is not interested in reviewing any proposal until after newly installed CEO Sherilyn McCoy has completed a review of all of Avon’s business operations.
On Thursday, Avon said its board will consider Coty’s letter in due course.
Founded in 1886, Avon became a fixture in households across the country as its legions of “Avon ladies” went door to door selling makeup to family, friends and acquaintances.
Now, Avon is in transition. McCoy, a long-time Johnson & Johnson executive, has been in place less than a month easy payday loans. She replaced CEO Andrea Jung, who had come under fire for failing to stem the company’s declines and wrap up the bribery investigation, which started in China in 2008 and has spread to other countries.
The company’s profit has shrunk over the past three years. It has frequently missed analysts’ earnings expectations and posted weak sales in some of its largest markets, including Brazil and Russia. Avon said last week that its first-quarter net income fell 82 percent, hurt by a bigger restructuring charge and higher commodity and labor costs.
Rumors of other possible bids for the New York company have been swirling. A media report last week said private equity firm Richmont Holdings is structuring an offer for Avon, but so far nothing has materialized.
Coty is controlled by German holding company Joh. A. Benckiser GmbH, which also operates consumer products company Reckitt Benckiser Group PLC. Reckitt’s brands include Air Wick air freshener and Clearasil skin care products. Benckiser is one of Coty’s financing sources, along with BOT Capital Partners and Berkshire Hathaway Inc.
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Federal Reserve Bank of Richmond President Jeffrey Lacker said the central bank needs to be ready to raise interest rates even if joblessness exceeds 7 percent.
Speaking in an interview today at the Bloomberg Washington Summit hosted by Bloomberg Link, he said the Fed will probably have to raise rates in mid-2013. Adding more monetary stimulus now would raise inflation risks without doing much to boost growth, he said.
Unemployment
The Obama administration’s top environmental official in the oil-rich South and Southwest region has resigned after Republicans targeted him over remarks made two years ago when he used the word “crucify” to describe how he would go after companies violating environmental laws.
In a letter to Environmental Protection Agency Administrator Lisa Jackson sent Sunday, Al Armendariz says he regrets his words and stresses that they do not reflect his work as administrator of the five-state region including Texas, New Mexico, Oklahoma, Arkansas and Louisiana. Armendariz, who holds a doctorate in environmental engineering, apologized last week for his remarks. A senior administration official, speaking on condition of anonymity because of the sensitivity of the subject, told The Associated Press that Armendariz has since received death threats. His resignation was effective Monday, when he informed his senior staff. Sam Coleman, a career official who led the agency’s response to Hurricane Katrina and served as Armendariz’ deputy, took over as acting regional administrator.
“I have come to the conclusion that my continued service will distract you and the agency from its important work,” Armendariz wrote in the letter, which was obtained by the AP.
Republicans in Congress had called for Armendariz’ firing, after Oklahoma Sen. James Inhofe highlighted the May 2010 speech last week as proof of what he refers to as EPA’s assault on energy, particularly the technique of hydraulic fracturing, or fracking.
At a town hall meeting in Washington on Friday, Jackson had said only that she would continue to review the case, calling Armendariz’ words “inflammatory” and “wrong”. President Barack Obama appointed Armendariz in November 2009, at the urging of Texas-based environmental groups. He is one of the few Latinos in senior leadership at the EPA.
The regional administrator’s words “don’t comport with either this administration’s policy on energy, our policy at EPA on environmental enforcement, nor do they comport with our record as well,” Jackson said.
The EPA, perhaps more than any other agency, has found itself in the GOP’s crosshairs over its regulation of the gases blamed for global warming, steps it has taken to limit air pollution from coal-fired power plants, and its increased regulation of fracking, which is responsible for a gas drilling boom. Republicans, including presidential contender Mitt Romney _ who has called for Jackson herself to be fired _ have blamed the agency for high gasoline prices and clamping down on American energy.
Armendariz, who was based in Texas, frequently found himself at odds with the state government and the oil and gas industry, which are often aligned.
The scientist and environmental activist had long been frustrated by the government’s inability to clean up Texas’ notoriously polluted air, and he had called the EPA broken and testified on behalf of activist groups about just how badly the federal and state environmental agencies had botched things guaranteed fast personal loans.
Environmentalists said Monday that it was Armendariz getting crucified for doing his job _ enforcing the law.
“He took bold steps that have been needed for decades to move our state forward,” said Ken Kramer, director of the Lone Star Chapter of the Sierra Club. “The only people who will celebrate his resignation are the polluters who continue to foul Texas air and the politicians who serve those special interests.”
Several disputed contamination cases in Texas in which Armendariz was involved have helped stoke environmental concerns over fracking, a technique in which oil and gas producers inject water, chemicals and sand underground at high pressures to fracture rock so gas can come out.
In one case cited by Republicans, the EPA issued an emergency order in 2010 _ an unprecedented action in Texas _ accusing Range Resources of contaminating an aquifer and giving it 48 hours to provide clean drinking water to residents. Armendariz said he went around the state agency that oversees drilling because it wasn’t responding quickly enough. The order later was withdrawn after a state court ruled evidence that fracking had caused the contamination had been falsified.
“He was flat wrong,” wrote more than two dozen lawmakers in a letter to Jackson sent Friday, calling for Armendariz’ firing. “There was no contamination and his office failed to conduct appropriate or adequate science to support his claims.” The EPA has faced similar criticism for its analysis of potential drinking water contamination from fracking in Pennsylvania and Wyoming.
Armendariz’ speech was made in Dish, a small town northwest of Dallas, where residents’ concerns over the environmental impacts of hydraulic fracturing helped put the issue on the national stage.
Testing, which was urged by the EPA, showed some groundwater contamination and elevated toxic air pollution after operators began using a new method _ a combination of hydraulic fracturing, or fracking, and horizontal drilling _ to extract once out-of-reach gas.
Referring to how the Romans once conquered villages in the Mediterranean, Armendariz said, “They’d go into a little Turkish town somewhere, they’d find the first five guys they saw and they’d crucify them.”
“And so you make examples out of people who are in this case not complying with the law,” he said.” Find people who are not complying with the law and you hit them as hard as you can and make examples of them.”
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Associated Press correspondent Angela K. Brown contributed reporting from Fort Worth, Texas.
Don’t panic yet. The government reported Friday that the economy got off to a tepid start this year, but that doesn’t foreshadow a repeat of the near-standstill that happened in 2011.
“The economy is firmly on a growth trajectory,” said Sung Won Sohn, an economics professor at California State University’s Smith School of Business. “The first-quarter slowdown will be temporary.”
Still, the January-March report was discouraging.
Economists had expected gross domestic product _ the broadest gauge of economic output _ to expand at a 2.5 percent annual rate for the first three months of the year. Instead, the Commerce Department said it was 2.2 percent, mainly because of government budget-cutting and a slowdown in business investment.
And some of the January-March growth, meager as it was, probably came at the expense of the current quarter. An unseasonably warm winter pulled car buyers into showrooms earlier than usual.
The same was true for housing construction. That’s one reason it jumped at a 19 percent pace from January through March.
Economists doubt consumers can keep spending as freely as they did in the first three months of this year: an annual pace that was 2.9 percent faster than in the previous quarter and the fastest in more than a year. They probably can’t afford to. Americans’ after-tax income rose just 0.6 percent in the first three months compared with a year earlier. That was the puniest pay increase in two years.
People spent more in part because they socked away less. The savings rate fell to 3.9 percent of after-tax income. That was down from 4.5 percent. Economists worry that people won’t keep spending more unless their income grows.
Stock prices rose Friday despite the report of weaker growth. David Rosenberg, chief economist at Gluskin Sheff, said investors might have bid up stocks because they think the Federal Reserve is more likely to pursue another round of bond buying to stimulate the economy.
Fed Chairman Ben Bernanke “has created the impression that if the economy stumbles, he’ll be there to hold your hand,” Rosenberg said.
The lackluster first-quarter growth follows government reports that hiring slowed sharply in March and the number of people seeking unemployment benefits reached a three-month high.
With 12.7 million people unemployed, today’s economy needs much faster growth to boost hiring. Growth would have to be roughly 4 percent for a full year to lower the unemployment rate, now 8.2 percent, by 1 percentage point.
In 2011, a series of setbacks struck the economy. Gas prices rose sharply. An earthquake in Japan shuttered factories there and cut off supplies to U.S. manufacturers. A standoff in Washington brought the federal government to the brink of default, rattling investors and consumer confidence. And Europe’s debt crisis threatened to diminish U.S. exports and further spook investors.
The economy slowed to an annual rate of just 0.4 percent in the first quarter of 2011. Unemployment, which had been falling, rose again last summer.
But most economists think the U.S. economy is more resilient this year.
The job market, household finances and businesses are all in better shape than they were a year ago. Supplies are flowing freely. Political bickering has eased. And the fears about Europe have subsided at least temporarily.
“People are less concerned that the eurozone crisis could engulf the whole world,” says Nigel Gault, an economist with IHS Global Insight.
A 55-cent run-up in gasoline prices (to an average $3.83 a gallon) isn’t hurting as much this year. In part, that’s because drivers are getting used to paying more. And families’ finances are sturdier after another year of paying down debts.
In addition, some factors that held back growth in the first quarter aren’t expected to last. Businesses splurged on software and equipment at the end of 2011 because of an expiring tax break. That stole economic activity, in effect, from the first quarter. Companies will probably resume spending again later this year.
And economists say government spending will probably rebound _ or at least stop falling _ because state and local governments are collecting more tax revenue as their economies slowly recover.
“Their budget holes are getting a lot smaller,” says Jay Bryson, global economist for Wells Fargo.
Most of all, the job market is stronger than it was last year. Unemployment has fallen from 9.1 percent in August to 8.2 percent in March. The economy has added nearly 1.9 million jobs over the past year. More hiring is creating more pay and more spending _ a cycle in which hiring and consumer spending reinforce each other and grow.
Economists note that Friday’s report isn’t the final word on first-quarter growth. It is just an initial estimate. The government will revise the figures in May and again in June.
Then in July, the growth figures will be tweaked yet again. That’s when the government will revise its estimates of growth from 2009 through the first quarter of this year.
The picture could look brighter after the revisions. Two months ago, the government revised income and savings for the second half of last year. It showed Americans had earned and saved more than previously thought. That meant they had more money to spend.
Some economists expect a similar revision this year because job gains suggest that incomes might be higher.
This was the 11th quarter since the Great Recession officially ended in June 2009. The fastest rate of economic growth has been 3.9 percent in the first quarter of 2010. Normally, a much bigger bounce would follow a deep recession like the one the United States sank into in December 2007.
When the economy emerged from the recession of 1981-1982, for instance, growth hit an 8 percent annual pace for four straight quarters in 1983 and 1984.
The gross domestic product measures the output of all goods and services produced in the United States, from cars to electricity to manicures. GDP growth drives job creation, pay, corporate profits and stock prices.
As disappointing as the first-quarter numbers were, the U.S. economy still looks a lot stronger than most of the rest of the developed world. It’s expected to grow perhaps 2.5 percent for the full year.
By contrast, Britain’s economy will only grow 0.8 percent and Japan’s about 2 percent, according to forecasts from the International Monetary Fund. Things are even worse in Europe. The 17 countries that use the euro as their currency are expected to see growth shrink 0.3 percent.
“Growth is an increasingly rare commodity in the global economy,” says Jason Conibear of Cambridge Mercantile, which specializes in trading currencies. “But the US has got it.”
Lamborghini could have made a four door sedan instead of an SUV, but that wouldn’t have been cool enough, said the Italian automaker’s chief executive in a telephone interview from Beijing, where the Urus SUV concept vehicle was being unveiled.
Sedans are "less emotional" than SUV’s, Stephan Winkelmann said and, therefore not as good a fit for the maker of extreme performance vehicles. "What we want to build is a real Lamborghini in any market segment we enter," he said.
Still, Lamborghini also wants to create a vehicle that can be used for more than just occasional high-speed drives.
"Today, we are not building cars which are meant to driven on a daily basis from ‘point a’ to ‘point b,’" Winkelmann said, "and this car is exactly that."
Lamborghini’s current line-up consists of two models, the V-12 powered Aventador, available at prices starting at about $375,000, and the V-10 powered Gallardo, which starts at about $180,000 and is available in numerous hard-top and convertible variations.
Gallery: Lamborghini Urus SUV
The Italian automaker has been considering something with broader appeal for years, Winkelmann said. In 2008, Lamborghini showed off a four-door sedan concept vehicle called the Estoque. But he said the global economic crisis put a stop to any further consideration of that vehicle.
Meanwhile, the SUV market has continued to expand, despite higher gas prices, as more sizes and variations of the high-riding vehicles have come to market.
Today, SUVs range from the traditional large truck-based vehicles to very small, sporty models personal loan for poor credit. According to a recent analysis by Ford Motor Co. (, Fortune 500), one in three vehicles sold in the United States last year was some sort of SUV.
"Even outside the U.S., the segment is growing," Winkelmann said.
Should Lamborghini decide to make the Urus available for sale — something Winkelmann said hadn’t been decided yet — it would cost roughly the same as the Gallardo.
Cool cars from the N.Y. auto show
Producing a vehicle like the Urus is "over 95% feasible," Winkelmann said.
Much of the concept SUV is made from expensive, but very lightweight, carbon fiber, and instead of actual side mirrors, it has video cameras.
Currently, Lamborghini sells only about 2,000 cars but is prepared to produce as many of the 3,000 of the Urus SUV alone.
That would still leave the supercar maker selling just 5,000 vehicles a year, a number that wouldn’t endanger the brand’s valued exclusivity, Winkelmann said.
Lamborghini is part of Germany’s Volkswagen Group () which also owns Audi, Bentley and Bugatti. Bentley also unveiled an SUV concept vehicle at an auto show earlier this year.
The 600 horsepower Urus would primarily be intended for on-road use, said Winkelmann, where it would offer strong acceleration and cornering without, perhaps, the top speed of a Lamborghini sports car.
Off road, it would perform about as well as other high-performance luxury crossovers. In other words, it will be able to drive in the mud and on rocks but not all that well.
U.S. investors thought they were buying access to a stock-picking robot named “Marl.” Instead, they paid millions to teenage twin brothers in England who now face civil fraud charges for an alleged penny-stock swindle.
The robot didn’t exist.
The stocks picked were companies that paid hefty fees to Alexander and Thomas Hunter, just 16 when the alleged scheme began in 2007, the Securities and Exchange Commission said Friday. As stock prices jumped, the Hunters’ clients dumped their shares for a profit.
“While touting their supposed breakthrough investment technology on two websites, the Hunters were racking up fees as stock promoters through a third,” said Thomas Sporkin, chief of the SEC’s office of market intelligence, in a statement.
The SEC filed a civil suit against the Hunters, who are now 20, in U.S. District Court in Manhattan Friday.
Officials are asking the court to block the twins from the securities industry and order them to return the money they collected from investors. They are also seeking additional financial penalties.
It all began with a website called daytradingrobot.com, according to a narrative sketched out by the SEC.
The Hunters drew roughly 75,000 investors, who were promised stock tips generated by a sophisticated program. The investors, most of them in the United States, paid at least $1.2 million for newsletters revealing the robot’s insights and a “home version” of the robot software.
“The longer Marl is allowed to run on a computer … The More Advanced He Becomes!” one of the Hunters’ websites crowed, according to the SEC complaint. The Marl “home version” cost an additional $97. For that, investors got a program that grabbed ticker symbols fed in by the Hunters.
The twins collected an additional $1.9 million from companies seeking Marl’s endorsement, the SEC said. On the site equitypromoter.com, Thomas Hunter wrote that his websites attracted thousands of visitors each day, many of whom followed his investing recommendations.
“One email to this list of people rockets a stock price,” the website said, according to the SEC complaint.
In 2008, after they promoted a music publishing company called UOMO Media Inc., its share price doubled to 69 cents. Another round of promotion in 2009 lifted UOMO’s stock to $1.06. UOMO has not traded above a penny since September 2010.
For another promotion, Alexander Hunter purchased 21,000 shares for 16 cents, pumped the price up to 51 cents and sold the shares for a profit of less than $6,000. He videotaped the trading and used the footage to promote the newsletter, the SEC said.
Marl, the fictional robot’s name, was a combination of the names of its supposed creators: Michael Cohen and Carl Williamson. The Hunters claimed that Cohen had developed a Goldman Sachs trading model that generated more than $4 billion in annual trading profits.
Goldman never employed a Michael Cohen for that kind of work, the SEC said.
The Hunters’ skills apparently did not include computer programming. In 2007, they advertised for programmers who could make “a small software program which will appear to the user that once running it is analyzing thousands of penny stocks,” according to the SEC’s complaint.
In a note marked “IMPORTANT,” they added: “This software does not actually find stocks at all. . . . Basically this is almost a `fake’ piece of software and needs to simply appear advanced.”