U.S. Mortgage Activity Rose 4.1%; GE Reaffirms 2012 Outlook

Arthi Gupta
14 Dec, 2011
New York City

The U.S. indexes futures fell and the mortgage and refinancing activity rose 4.1% in the previous week. Coca-Cola agreed to buy half of the equity in a Middle East based beverage business for $980 million. Joy Global quarterly net surged 33%.

[R]8:30 AM New York – The U.S. indexes futures fell and the mortgage and refinancing activity rose 4.1% in the previous week. Coca-Cola agreed to buy half of the equity in a Middle East based beverage business for $980 million. Joy Global quarterly net surged 33%.[/R]

U.S. indexes futures tracked lower world markets after sentiment in European turned cautious after German economic outlook weakened and the euro-zone production growth fell more than estimated.

German economic growth is expected to slow to near halt and may face recessionary conditions in the first half.

Also, investors were jittery after the U.S. Federal Reserve did not announce new stimulus measures and left key lending rate at historic low for three years and near zero.

The Italian Treasury sold €3 billion of five-year bonds at a higher yield of 6.47% compared to 6.29% at the previous auction on November 14. Demand was 1.42 times the amount on offer compared with 1.47 times last month.

Germany sold €4.2 billion of two-year bonds at an average yield of 0.29% compared with 0.39% at the last auction. The bid-to-cover ratio was 1.4 times, up from 1.1 the last time.

U.S. Mortgage Activity Soars

The Mortgage Bankers Association''s seasonally adjusted index of mortgage application activity in the U.S. rose 4.1% in the week ended December 9.

The seasonally adjusted index of refinancing applications surged 9.3%. However, the measure of loan requests for home purchases slumped 8.2%, even as interest rates fell to their lowest in 2011.

Fixed 30-year mortgage rates averaged 4.12%, down from 4.18% the week before.

Coca-Cola, Aujan Ink Deal

Coca-Cola Co. agreed to buy about half of the equity in existing beverage business of Middle East-based beverage company Aujan Industries for $980 million.

Under the terms of the agreement, The Coca-Cola Company will acquire 50% of the Aujan entity that holds the rights to Aujan-owned brands, and 49% of Aujan''s bottling and distribution company. The licensed brand Vimto will remain with the Aujan-managed bottling and distribution company.

The Coca-Cola investment is the largest single investment in consumer goods industry in the Middle East.

Earnings Review

ABM Industries, Inc. ((ABM)), the provider of facility services said fourth quarter revenues rose 20% to $1.08 billion from $901.4 million last year. Net income in the quarter declined 17.4% to $18 million or 33 cents per diluted share compared to net income of $21.8 million or 41 cents per share last year.

First Solar, Inc. ((FSLR)), a manufacturer of solar modules expects earnings per share for 2011 to be in the range of $5.75 to $6 compared to the previous forecast of $6.50 to $7.50 per share.

General Electric Company ((GE)), the industrial conglomerate reaffirmed its total revenues growth in 2012 of 5% on organic growth of 5% to 10% in industrial segment.

Joy Global Inc. ((JOY)), the manufacturer and servicer of mining equipment reported fourth quarter net sales climbed 27.3% percent to $1.34 billion from $1.05 billion in the comparable period. Net income in the quarter surged 33% to $194.99 million or $1.83 per share compared to net income of $146.34 million or $1.39 per share a year earlier.