World financial news

It’s spring, the eternal season of rejuvenation.

And that has some hoping, at last, for a rebirth of the housing market.

It has been a rough two years, with buyers and sellers battered by a wave of foreclosures, tight credit and uncertain job prospects. Government support — in the form of tax credits and federal backing for mortgages — has helped keep sales moving. But now those supports are ending, making this spring a key test of whether the housing market can walk on its own again.

"The next 60 days, they should tell us where we’re going," said Letty Demay, president of the St. Louis Association of Realtors. "Hopefully we’re going to see a good year."

Despite the long, grim slide, there are reasons for optimism: Chief among them is the fact that, for people with cash and confidence in their jobs, it is a good time to buy a house.

Between low prices, rock-bottom interest rates and the tax breaks for first-time homebuyers, housing is as affordable as it has been in years. Prices in St. Louis are back at 2004 levels, according to the Federal Housing Finance Agency, and data tracked by Wells Fargo say the number of St. Louisans who can afford to buy is near 18-year highs.

That is driving a surge of interest this spring. Area real estate agents are busier than they have been in quite some time, Demay said. Phones are ringing. Houses are getting shown.

"I think overall we’ve got a stronger market than we’ve had in the last 18 months," she said.

And while that strength hasn’t yet shown up in sales numbers, which are not yet available for March, it is beginning to show in homes under contract. In the first week of April, the number of pending sales in St. Louis County — homes that are in contract but not yet closed upon — was nearly back to 2008 levels, after plunging 42 percent last year, according to data from Kelsey Cottrell Realty.

The market is strongest at lower price points, where the $8,000 tax credit has more impact and financing is easier to come by. The share of listings under $300,000 that are in contract is actually higher than it was two years ago, said the firm’s co-owner Kevin Cottrell. He said his agents were seeing something they hadn’t in quite some time: homes selling not in weeks, but in days.

"If they’re priced right, they won’t even make it to the weekend," he said.

But some of that strength comes from supports that are soon to be pulled out.

Homes must be in contract by April 30 to qualify for the $8,000 tax credit; and unlike last fall, when it was first set to expire, there is little momentum in Congress for another extension.

Meanwhile, interest rates are widely expected to rise after the Federal Reserve stopped buying mortgage-backed securities at the end of March.

So far, rate increases haven’t happened — Freddie Mac’s average 30-year fixed rate mortgage climbed from 5.08 percent to 5.21 before falling back to 5.07 a week later — but many experts think they will creep up over the next few months if the economy improves. Some predict six percent by year’s end.

That’s still low by historic standards, but over 30 years every 1 percentage point increase adds roughly 10 percent to the cost of the loan.

That, as much as anything, may push more people to buy this spring, Cottrell said, even if they don’t hit the tax credit’s timeline.

"What does your total cost of ownership look like if rates go above 6 percent?" he asked. "It’s really not about the $8,000 credit, it’s about what you’re going to spend to own the thing."

But the recovery is still tentative, and nobody is expecting the market to roar back, especially in the area that most interests sellers: price.

Prices have bounced back a bit in the past six months but are still well off their mid-decade peaks. Median prices in St. Louis have dropped 6.5 percent over the past three years, said David Stiff, chief economist for Fiserv, a financial data firm. He said he expected a roughly 1 percent decline in both 2010 and 2011. It’ll be 2014 before prices fully rebound here, he said.

"Unemployment is still quite high, and that will remain a drag on housing demand," Stiff said. "We’re expecting prices to bottom out at the end of the year. And then I think it’ll be a pretty slow recovery."

Still, he said, the housing market is on the way to recovery. There may be some stops and starts. Sales may drop again after April 30. But a recovery is coming.

"We’re far closer than we have been," Stiff said.

Just how close, we will find out soon.

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Rutgers announced Thursday that the new dean at Rutgers School of Business–Camden will be Jaishankar Ganesh.

Ganesh is associate dean for administration and executive education at the University of Central Florida’s College of Business Administration.

He will take over at Rutgers on Aug. 1 for Mitchell Koza, who is stepping down as dean after three years because he wanted to return to the faculty, a college spokesman said.

Rutgers said Ganesh’s “scholarship focuses on issues of marketing management and international marketing strategy, emphasizing such issues as customer satisfaction, retail patronage behavior, and the cross-national diffusion of products easy pay day loans.”

“Dr. Ganesh is an exceptional administrator and scholar, and an energetic visionary,” Rutgers President Richard L. McCormick said. “I am confident that he will help to advance the Rutgers School of Business–Camden to its rightful place as a premier center for education and business development in our region.”

Ganesh, 45, earned a Ph.D. in marketing and international business and an MBA from the University of Houston.

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From avid to involved to casual, two out of three New York residents consider themselves sports fans and the favorite team in the Empire state is the defending World Series champion Yankees.

A poll released Monday by the Siena College Research Institute finds that a total of 68 percent of residents statewide — 16 percent are “avid” fans, 27 percent are “involved” fans, 25 percent are “casual” fans — while 32 percent are “non-fans.”

At the same time, the cost of attending a sporting event is keeping more and more fans away from stadiums and arenas. Over 50 percent of New Yorkers attend at least one professional sports event each year, but despite 63 percent saying they “love to go,” 88 percent say costs have gotten out of control and 77 percent now prefer watching the game on TV to attending in person.

New York City-area teams are among the highest-priced tickets in all sports while the top major professional sports teams in the Upstate region — Buffalo’s Bills and Sabres — rank among the lowest, respectively, in the National Football League and National Hockey League.

Asked about their favorite team, the Yankees came out of top at 28 percent and another 10 percent described the Yanks as their second favorite. The Yankees received three times the support of their closest rival, the Mets for the single top spot and almost double the overall support when looking at each respondent’s first and second favorite team. Overall, the Yankees are named by 38 percent, the Mets by 20 percent and the New York Giants by 20 percent. Further down the list are the Bills and New York Jets at 8 percent, the Sabres at 4 percent. Also, the Boston Red Sox were at 4 percent, followed by Syracuse University and the Pittsburgh Steelers at 2 percent, and the New York Knicks and Rangers at 1 percent.

The SRI Sports Poll showed that New Yorkers are engaged in athletics as 68 percent of regularly watch or listen to sports, talk about the games with friends or read about sports in newspapers or on the Internet.

“When it comes to sports fanship, actions speak louder than words. When asked whether or not they see themselves as a sports fan, 61 percent say 'yes' and 39 percent say 'no,'" said Dr. Don Levy, SRI’s director. "But, we looked at whether or not New Yorkers watch sports or sports news on television or listened on the radio, surfed the net for sports news, read about sports or talked to friends and family about sports. We found that nearly seven out of every 10 residents walks the walk of a sports fan and for 16 percent of all New Yorkers being a sports fan is a major part of what they do each and every day.”

The SRI New York Sports Poll was conducted March 22-26, 29 by random telephone calls to 876 New York adults.

The survey can be found here.

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A federal grand jury returned indictments against two Roseville residents, charging them with conspiracy to commit copyright infringement.

The indictment alleges that Nicholas Summerlin and Angelica Parson, both 22, sold illegal copies of Adobe Creative Suite Master Collection 3, Microsoft Office 2007, and Rosetta Stone language software. The software had a combined retail value of $561,430.

Both received a cease-and-desist letter from Rosetta Stone, but they allegedly kept selling their pirated software in 330 transactions in 2008 and 2009.

The Computer Crime and Intellectual Property Unit of the Sacramento U.S. Attorney’s office is prosecuting the pair, said a release from Benjamin Wagner, U.S. Attorney in the California Eastern District, based in Sacramento.

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Bank of America Corp. is switching from Fidelity Investments to Hewitt Associates Inc. and Plateau Systems as the Charlotte-based bank’s human-resource service providers, beginning in 2011.

Charlotte-based BofA is currently under contract with Fidelity, which has most of its 2,400 North Carolina employees in the Raleigh-Durham area, for such services. The bank, which ranks No. 5 in Raleigh-Durham market share, says the move will bring cost and operational efficiencies while also providing market-leading technologies to BofA managers and employees.

Under the new agreements, Hewitt will offer human-resources administration, payroll services and health-management administration, as well as information technology. Plateau Systems will provide employee training across BofA’s departments.

Financial terms weren’t disclosed.

Last year, Fidelity cut its investment in its large-client, human-resources administration and payroll-outsourcing business to focus on small and midsized markets. BofA says it evaluated options to continue with its contract with Fidelity but decided to request bids for a new human-resources provider.

Fidelity will continue to administer retirement services for BofA (NYSE:BAC).

Boston-based Fidelity is one of the world’s largest providers of financial services. It offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services.

Illinois-based Hewitt (NYSE:HEW) markets human-resources consulting and outsourcing services. The company has 23,000 workers in more than 30 countries. Last week, it announced plans to add 463 jobs in Charlotte during the next three years. Hewitt has 534 workers in North Carolina. The vast majority of them are in Charlotte.

The new jobs, primarily in HR and information technology, will be added to the company’s leased operations at University Research Park in north Charlotte.

Virginia-based Plateau Systems is a provider of work-force management technologies.

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Pfizer, the world’s largest drug maker, said Wednesday that it paid about $20 million to 4,500 doctors and other medical professionals for consulting and speaking on its behalf in the last six months of 2009, its first public accounting of payments to the people who decide which drugs to recommend. Pfizer also paid $15.3 million to 250 academic medical centers and other research groups for clinical trials in the same period.

Although other pharmaceutical companies have disclosed payments to doctors, Pfizer is the first to disclose pay for trials. The disclosure does not include payments outside the U.S.

Pfizer spokeswoman Kristen E. Neese said most of the disclosures were required by an agreement the company signed in August to settle a federal investigation into the illegal promotion of drugs for off-label uses.

Dr. Freda C. Lewis-Hall, Pfizer’s chief medical officer, characterized the disclosure and website as part of "a march to disclosure" that the company started in 2002.

Pfizer is the fourth major drug company to make such disclosures, following Eli Lilly, Merck and GlaxoSmithKline. All four websites are searchable by the names of doctors or organizations, but all are set up in ways that make it difficult to download and analyze the entire database.

"All of them are welcome, but none of them is a replacement for a single national database," said Allan Coukell, director of the Pew Prescription Project, an initiative of the Pew Charitable Trust.

Beginning in 2012, drug and medical device companies will be required to disclose payments to doctors of more than $10, with the first report available in 2013. The Physician Payment Sunshine Act was passed as part of health care reform. Some states also have disclosure laws.

Neese said the disclosures included elements not required by the federal agreement, such as payments to academic centers and to nurse practitioners and physician assistants.

The reporting also goes beyond the Sunshine Law, Pfizer said, by not imposing a delay of up to four years on financial support for clinical trials. Pfizer plans to report the payments without the delay.

Dr. Marcia Angell, former editor of The New England Journal of Medicine and a writer on conflicts of interest, said, "If they’re doing that — it would amaze me if they did, but if they are — that’s great."

Pfizer’s disclosure met with skepticism from one specialist on conflicts of interest in medicine.

"I think it’s a good thing to do, but I put absolutely no trust in what drug companies voluntarily disclose to the public when those things are unaudited," said Eric G. Campbell, lead author of a 2007 study of physician-industry relationships published in The New England Journal of Medicine.

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China overtook the United States in renewable energy investments for the first time ever in 2009, attracting nearly twice as many dollars and becoming the world’s largest market for clean energy projects.

Renewable energy investments in China - mostly wind farms - totaled $34.6 billion in 2009, according to report released Thursday by the Pew Charitable Trusts and Bloomberg New Energy Finance. In the United States, $18.6 billion was spent.

The report’s authors stressed it was the stable, long-term policies put forth by the Chinese government and easier access to credit that attracted the money, and said the numbers do not bode well for America.

"The United States’ competitive position is at risk in the emerging clean energy economy," Phyllis Cuttino, director of the Pew Environment Group’s Global Warming Campaign, said in a statement.

The report noted that over 700,000 clean energy jobs have been created in the Untied States since 1998, and with so much money being invested in the alternative energy market, this was likely just the beginning.

But with the U.S. losing its dominance in renewable energy, future jobs could be on the line.

Cuttino urged U.S. lawmakers to put a price on carbon dioxide, the main greenhouse gas emitted from burning fossil fuels. A price on carbon would make fossil fuels more expensive and renewables more competitive. She also said the country needs to mandate that utilities buy a certain percent of their power from renewable sources, and create stable, long-term subsidies for renewable energy.

China uses huge amounts of coal to generate electricity and has famously resisted putting a price on carbon dioxide. But the country does have an aggressive mandate that its utilities use more renewable energy.

There are several bills in Congress that would do what Cuttino is seeking but they face considerable resistance from lawmakers and the general public. Opponents either fear the measures would be too costly to the economy, don’t believe renewable energy is ready for prime time, or don’t think global warming is a major problem.

The investment tallies for China and the United States include all private investments in renewable energy projects, as well as money renewable energy firms raised in stock market offerings, venture capital and private equity deals bad credit pay day loans. They do not include government grants or corporate R&D, which in the United States totaled another $7 billion. How much China spent on government support and corporate R&D was not immediately available.

Globally

Worldwide the report said $162 billion was spent on renewable energy, down just 6.6% from the year before. That compares to a 19% drop in investment in the oil and gas industry, according to the report.

In 2010, Bloomberg New Energy Finance is expecting a 25% increase in renewable energy investments to $200 billion.

Asia, with economies that were less severely hit by the recession and easier access to money, saw a 37% increase in investments in 2009. In Europe and America’s harder hit economies and tighter capital markets, investments dropped 16% and 33% respectively.

In relation to the size of its economy, Spain saw the largest investment, 0.71% of its gross domestic product went into clean energy. Spain was followed by the United Kingdom, China and Brazil. The United States ranked 11th.

Most of the money spent on renewable energy is in the form of power projects, wind farms, solar arrays or other things that actually produce electricity. Only a small part is spent on R&D or capitalizing start-up companies.

Yet when it comes to innovation, the United States is still the world’s leader. The country attracted 60% of all venture capital money spent on renewable energy worldwide. Venture capital generally goes to start-up firms that hold the most promise for future technologies.

"We’re very good at creating companies," John Woolard, chief executive at solar power firm BrightSource Energy, said on a conference call discussing the report. "We’re not doing a very good job creating markets."  

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