U.S. Weekly Jobless Claims Drop 6,000; NY Fed Rejects AIG Offer

Arthi Gupta
31 Mar, 2011
New York City

U.S. indexes traded sideways after weekly jobless claims fell 6,000 to 388,000. SunTrust completed repurchase of $3.50 billion of preferred stock under TARP. CarMax quarterly earnings rose boosted by used vehicle unit sales.

[R]9:40 AM New York – U.S. indexes traded sideways after weekly jobless claims fell 6,000 to 388,000. SunTrust completed repurchase of $3.50 billion of preferred stock under TARP. CarMax quarterly earnings rose boosted by used vehicle unit sales.[/R]

Asian markets barring China gained and European indexes traded lower after inflation rose 2.6% and German unemployment dropped to its lowest level since 1992.

Investors focus on the Irish banks’ stress test results scheduled to be released later in the day. The Irish Independent newspaper reported this morning that the Irish government will pump in between €20 billion and €25 billion to its major banks to bolster their finances.

Foreign Minister Moussa Koussa, one of the most senior figures in Qadhafi's government, has fled to Britain, reports said.

Britain's Foreign Office confirmed the defection and said in a statement that Koussa traveled to London “under his own free will.”

Crude oil futures rose $1.04 to $105.31 a barrel on concerns of the ongoing Western powers aggression in Libya.

U.S. Weekly Jobless Claims Drop

First time claims for unemployment benefits in the U.S. showed a modest decrease in the week ended March 26, according to a report released by the Labor Department on Thursday.

The report showed that initial jobless claims fell by 6,000 to 388,000 from the previous week's revised figure of 394,000.

U.S. Monster Employment Index Rises

The Monster employment index for the U.S. increased to 136 in March for the second consecutive month from 129 in February. Online job availability increased across all industry sectors.

SunTrust Banks Repays Treasury

SunTrust Banks, Inc. announced on Wednesday that it completed the repurchase of $3.50 billion of preferred stock held by the United States Treasury under the Troubled Asset Relief Program's Capital Purchase Program.

Separately, KeyCorp, the holding company for KeyBank National Association, said it completed the repurchase of $2.5 billion of preferred stock that it issued to the U.S. Department of the Treasury.

Berkshire Hathaway Executive Resigns

David Sokol, a top executive of Berkshire Hathaway Inc. who was seen as a strong contender to succeed Warren Buffett resigned unexpectedly. Sokol had bought shares of specialty chemical company Lubrizol Corp. shortly before he recommended the company as a takeover target to Buffett. However, Buffett in a letter said he did not think that the purchase was “illegal.”

Berkshire Hathaway, on March 14, announced a deal to acquire Lubrizol for $135 per share or for a total value of about $9.7 billion, including $0.7 billion in net debt.

Microsoft Files Complaint against Google

Microsoft Corp. said that it is filing a formal complaint with the European Commission against search engine provider Google, Inc. on the violation of the European competition law. While Google controls about 95% of the search market in Europe, Microsoft serves about a quarter in the U.S. either through its search service Bing or through its partnership with Yahoo!.

Separately, Google agreed to settle Federal Trade Commission charges that it used deceptive practices and violated consumer privacy when it rolled out its social network 'Google Buzz' last year.

The proposed settlement requires Google to implement a comprehensive privacy program, and calls for regular, independent privacy audits for the next 20 years.

New York Fed Rejects AIG's Offer

The Federal Reserve Bank of New York rejected an offer from American International Group, Inc. to purchase all of the assets in Maiden Lane II LLC. The move is part of AIG's efforts to repay the bailout money it received from the U.S. government.

AIG offered three weeks back to pay $15.7 billion in cash to repurchase a portfolio of residential mortgage backed securities that FRBNY acquired as part of AIG's bailout in 2008. AIG offered to purchase all of the about 800 mortgage securities, reportedly having a face value of $30 billion, owned by MLII in a single transaction.

Earnings Review

Acuity Brands, Inc. ((AYI)), the lighting solutions provider reported second quarter net sales grew 8.5% to $416.1 million from $383.5 million a year ago. Net income for the quarter surged 155% to $19.9 million or 45 cents per diluted share compared to net income of $7.8 million or 17 cents per share in the prior year.

CarMax, Inc. ((KMX)), the retailer of used cars reported fourth quarter net sales and operating revenues increased 23% to $2.25 billion from $1.83 billion in the fourth quarter of last year. Comparable store used unit sales increased 12% for the fourth quarter.

Net earnings increased 18.8% to $89.51 million or 39 cents per diluted share compared to net earnings of $75.36 million or 33 cents per share last year.

PepsiCo, Inc. ((PEP)), the food and beverage giant reiterated it still estimates fiscal year 2011 earnings per share growth of 7% to 8% from core earnings per share of $4.13 billion in 2010.

The Mosaic Company ((MOS)), the fertilizer giant said third quarter net sales rose 28% to $2.21 billion from $1.73 billion in the same quarter last year. Net income in the quarter increased 144% to $542.1 million or $1.21 per share compared to net income of $222.6 million or 50 cents per share for the year-ago quarter.