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April 18, 2005
Consumer, Producer Prices Rose in March
Rising oil costs probably led a jump in consumer and wholesale prices
last month, feeding concern that the economic expansion will slow,
economists said in advance of reports this week, Bloomberg News
reported. The consumer price index likely increased 0.5 percent in
March, the most in five months, after rising 0.4 percent in February,
according to the median forecast in a Bloomberg News survey before the
Labor Department’s report on April 20. The producer price index,
which will be issued April 19, probably rose 0.6 percent, matching the
biggest gain since October.
April Consumer Sentiment Fades to 88.7
U.S. consumer sentiment faded in April on higher gasoline prices, a
weak labor market and sagging stock prices, CBS MarketWatch
reported. The University of Michigan’s consumer sentiment index
fell to 88.7 in mid-April from 92.6 in March, according to reports on
the proprietary research. Economists were expecting a decline to about
91.3. The current conditions index slipped to 103.9 from 108, while the
expectations index fell to 79 from 82.8.
Asbestos Negotiations Continue
Republicans on the Senate Judiciary Committee will reconvene tomorrow
with Judiciary Chairman Arlen Specter (R–Pa.) to discuss their
concerns with the latest draft of asbestos legislation that Specter
circulated last week, CongressDaily reported. Several
conservatives on the panel asked Specter for additional changes, and
Specter agreed to consider those “refinements.” Specter is
trying to craft a bill that will win bipartisan support in the Senate.
His latest draft has the backing of Judiciary ranking member Patrick
Leahy (D–Vt.) as well as some Republicans, including Sen. Mike
DeWine (R–Ohio).
Separately, Reuters reported that labor and business representatives
said on Friday they would keep working with senators to improve a
planned $140 billion asbestos compensation fund, but neither side was
ready to embrace the proposal just yet. The AFL-CIO umbrella labor
organization was the most critical, saying the draft asbestos
legislation had “a number of serious deficiencies that must be
corrected,” despite improvements over previous attempts. The
National Association of Manufacturers said it was
“encouraged” by the proposal for an asbestos fund, which
asbestos defendant companies and insurers would be called on to finance,
but stopped short of an endorsement, the newswire reported.
States Looking to Curb Predatory Mortgage Practices
As the market for subprime mortgages has grown, several states are
exploring how to protect cash-strapped consumers from unscrupulous
credit practices, CongressDaily reported. This year at
least 18 states considered bills reining in unscrupulous mortgage
lending, according to data compiled by the National Conference of State
Legislatures. Several already had predatory mortgage lending measures on
the books, but needed to curb new abusive practices, said Debbie
Goldstein, who tracks state legislation for the Center on Responsible
Lending. “This has been a debate that’s been going on for
six or seven years, but it’s grown tremendously as the market for
sub-prime loans has grown tremendously,” she said, the newswire
reported.
Tower Automotive to Cut 800 Jobs, Close 3 Plants
Bankrupt parts supplier Tower Automotive Inc. on Friday said it would
cut 800 workers, or 6.7 percent of its workforce, by closing three U.S.
plants and cutting back at a fourth to trim excess capacity and costs,
Reuters reported. Tower, which filed for bankruptcy protection in
February, did not disclose how much money it expected to save by making
the cuts, or the possible upfront costs. It was the first major
operational change announcement since the bankruptcy filing, the
newswire reported.
Acela Woes Strain Amtrak’s Finances
The brake problems that sidelined Amtrak’s Acela Express
service threaten to strain Amtrak’s already tight finances while
fanning the debate about how to fund intercity passenger trains in the
United States, the Wall Street Journal reported. Amtrak
pulled the high-speed trains from service early Friday after cracks were
found in disc brakes on the axles of passenger cars. That reduced train
capacity about 20 percent on Amtrak’s busiest route, the Northeast
Corridor from Boston to New York to Washington, D.C., the online
newspaper reported.
Krispy Kreme Seeks Creditor Protection for KremeKo
Krispy Kreme Doughnuts Inc. on Friday said the company with exclusive
rights to open its doughnut shops in most of Canada filed for protection
from its creditors, Reuters reported. In a statement, Krispy Kreme said
KremeKo Inc., in which it has a 40.6 percent stake, filed an application
in Ontario Superior Court to restructure under Canada’s
Companies’ Creditors Arrangement Act. Krispy Kreme has agreed to
provide an unspecified amount of debtor-in-possession financing to fund
the company’s operations throughout the restructuring.
Steelworkers Ask Court for Access to Stelco Books
The United Steelworkers of America filed a court motion on Friday to
try to push Stelco Inc. to consider a financing plan put forward by the
union and Tricap Management Ltd., a Brascan Corp. unit, Reuters
reported. Stelco, currently operating under bankruptcy protection,
rejected the C$1.35 billion ($1 billion) financing plan earlier this
week, within hours of it being offered. The company, which has also
turned down several takeover offers, said it is now set to embark on its
own capital-raising program, and that the Steelworkers and Tricap have
missed their opportunity to present their plan.
GM Expected to Post Steepest Quarterly Loss Since 1992
General Motors Corp. will next week post its steepest quarterly loss
since 1992, when the company neared bankruptcy, with its core automotive
unit expected to lose more than $1 billion, analysts said, Reuters
reported. The Detroit automaker last month slashed its earnings outlook
to a loss of $1.50 per share, down sharply from a previous forecast of
break-even or better. In the year-ago quarter, GM had a profit of $2.25
per share. The earnings warning from the world’s largest
automaker, due to falling sales and rising health-care costs, sent GM
shares down to their lowest levels in more than a decade and spurred
debt ratings agencies to warn that they could downgrade GM’s bond
ratings to “junk” status at any time, the newswire
reported.
Airlines Look to Asian Routes
Large U.S. airlines are looking at routes halfway around the world to
improve their financial condition, Reuters reported. As the industry
struggles with its worst crisis in years, U.S. carriers are focusing on
Asia—mainly China and India—to make up for ballooning losses
on the domestic front.