Rising gas prices aren't lifting big oil stocks (AP)

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New home sales hit 6-month low, prices drop (Reuters)

WASHINGTON (Reuters) – Sales and prices of new single-family U.S. homes fell in August despite historically low mortgage rates, underscoring the difficulties policymakers face in efforts to boost the moribund housing sector.

A stagnant job market and a big overhang of unsold existing homes have combined to keep new home sales on the rocks even as mortgage rates returned to lows not seen since at least the early 1970s.

New home sales slipped 2.3 percent last month to a 295,000 annual rate, a six-month low, the Commerce Department said on Monday. That was in line with analysts' forecasts and did little to allay fears the United States could slip back into recession.

The median sales price also moved lower from the previous month and was 7.7 percent below year-ago levels.

"There's no sign yet that low mortgage rates are helping the housing sector," said Gary Thayer, a strategist at Wells Fargo Advisors in St. Louis, Missouri.

The U.S. Federal Reserve last week unveiled new measures to ease credit further for home buyers, but analysts caution that the level of mortgage rates is not the main hurdle to buying.

Many economists are skeptical attempts to lower rates will help much because millions of Americas owe more on their mortgages than their homes are worth, which can effectively chain them to their properties while also preventing them from refinancing to lower their monthly costs.

Heavy debts taken on during the housing boom in the previous decade are also making consumers cautious to spend.

After economic growth slowed sharply in the first half of the year, the United States looks especially vulnerable to any escalation in the European debt crisis.

The S&P 500 stock index (.SPX) rose despite the poor data as global equities climbed on hopes that Europe was tackling Greece's debt woes.

Euro zone officials are working on ways to magnify the financial firepower of their bailout fund to fight the region's sovereign debt crisis more effectively.

In its monthly report on single-family home sales, the U.S. government raised its estimate for July's sales pace slightly to 302,000 units. Also, the supply of homes available on the market in August dropped to a record low.

Data last week showed new construction of U.S. homes fell in August, dragging on economic growth.

"The housing sector can't get any worse," said Michael Englund, an economist at Action Economics in Boulder, Colorado.

(Additional reporting by Ellen Freilich and Richard Leong in New York; Editing by Neil Stempleman)

(jason.lange@thomsonreuters.com; Tel: +1 202 310 5487; Reuters Messaging: jason.lange.reuters.com@reuters.net))

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How Gas Prices Are Killing My Mortgage, Housing Industry (ContributorNetwork)

COMMENTARY | I know that many people have written, blogged, ranted and screamed about high gas prices. Some have even tried to imply that $4.00 a gallon isn't bad, in terms of inflation and historical percent of gas compared to the household budget. Now let me lay down the cold, frightening truth of what today's gas prices are doing by exposing my own ordeal to public scrutiny. I nearly lost my home. And I won't even go into what my mortgage company was doing to hose me.

I bought my home based on standard mortgage lending processes of applying a mortgage of no more than 33 percent of household income. All was fine and gas was running me about $1.25 to $1.50 a gallon, or $25 to $30 a tank to fill up my truck. That equaled $60 to $90 a week, $240 to $360 a month.

At $3.75 a gallon, my truck costs $82.50 a fill up. Two and a half times each week. $206.00 a week. 4 weeks a month, or $824.00. And that is a serious hit to the monthly household budget. My gas bill is nearly as much as my mortgage, and as far as I can tell, that has never happened. Do the math. High gas prices are literally driving people out of their homes. No pun intended of course. When you buy a house and can afford $360 a month for gas, and then gas goes through the roof to $824 a month and your pay has not gone up in years, it just becomes too much. Add just one family emergency and everything falls apart.

So you default on your home, and many others have no choice but to follow suit. Now, I know that many risky loans were made. But far more loans were based on good math. They just never expected to have to pay nearly $1000.00 a month, a third or more of their salary, just to get to work.

Gas is killing the housing and mortgage industry. Period. I'm just glad that my 401(k) plan invests in gas, because the oil companies are making a killing. Again, no pun intended.

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British house prices rise in June: survey (AFP)

LONDON (AFP) – British house prices rose by 1.2 percent in June from the level in May, data from a major home-loans provider showed on Wednesday.

However they slumped by 3.5 percent in June compared with 12 months earlier, according to figures from mortgage lender Halifax.

"Low interest rates, an increase in the number of people in employment and some tightening in market conditions earlier in the year are likely to have been the main factors behind the recent improvement in price trends," Halifax housing economist Martin Ellis said in a statement.

"The market is, however, likely to continue to face significant headwinds which are expected to constrain housing demand. Low earnings growth, higher taxes and relatively high inflation are all continuing to put pressure on household finances," he added in a statement.

Halifax, which is part of state-rescued Lloyds Banking Group, said the average house price in Britain stood at £163,049 (181,733 euros, $261,147) in June.

The Bank of England is expected to keep its key interest rate at a record low level of 0.50 percent on Thursday and maintain the status quo into next year due to Britain's flagging recovery, according to economists.

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Rising Prices Take Aim at Target's Bullseye (The Motley Fool)

Someone issue an alert to all Target (NYSE: TGT - News) security guards: Rising prices have it out for the retail and food giant, and they could strike at any moment. Actually, scratch that memo; it seems rising prices have already done their dirty work as is evidenced by yesterday's quarterly report.

Off the mark
Just when we thought that we were done with the excuse that rising food and gasoline costs are eating into bottom-line profits, we're dragged back into the reality of $100 oil and food costs at multi-decade highs. Target's quarterly numbers reflected the struggle of this retail powerhouse against rapidly rising input costs.

For the quarter, the company reported a modest 2.2% rise in revenue, to $15.9 billion, and net income was up 2.7%. The company managed to turn that into a 10% jump in per-share profits, to $0.99, from the year-ago period. Although profits sailed past the consensus expectations of $0.94, revenue missed by the mark by roughly $85 million.

Investors responded by promptly browbeating Target's stock to within an inch of its 52-week low on the mixed results. But might investors have jumped the gun and missed the bullish keynotes of this report? I think so...

Calling all Robin Hoods
The most bullish aspect of Target's report was the health of its credit card division, which is also owned in part by JPMorgan Chase (NYSE: JPM - News). Despite witnessing an 18.3% tumble in credit card revenue, profits in the U.S. credit segment jumped dramatically from $111 million in the year-ago period to $194 million. Why the jump? The credit quality of Target's customer base is improving. Bad debt expense dropped to a mere $12 million this past quarter from a whopping $197 million last year.

Also, don't discount the effect that store reward cards have on Target's consumer base. The company's total credit card penetration rose 1.5 percentage points to 5.9%, while its REDcard penetration jumped from 4.9% to 7.6% year-over-year. This is important for three reasons:

First, the more that consumers are using a Target credit card, the fewer fees that Target is paying to Visa (NYSE: V - News), Mastercard (NYSE: MA - News) and American Express (NYSE: AXP - News) for use of their third-party cards. Secondly, rewards cards generate loyal customers and make it less likely that consumers will opt to shop at rivals Wal-Mart (NYSE: WMT - News) or Costco (Nasdaq: COST - News). Finally, reward cards track shoppers' spending habits, making it much more likely that Target is going to have the right mix of product for its customers and decreasing the likelihood of an inventory glut.

Target's bullseye
Input costs may be rising, but Target looks well-positioned going forward. The credit quality of its customers is improving, and its rewards program penetration has taken off. In a land of razor-thin margins, Target appears to have the pizzazz to grow its business considerably quicker than the likes of Wal-Mart and Costco. It may be time to add Target to my own watchlist now that the company's PEG ratio is hovering around 1 and its forward P/E has drifted below 11.

Does Target deserve a spot on your watchlist or in your portfolio? Sound off in the comments section below and consider tracking Target, and its closest rivals Wal-Mart, and Costco with the free and easy-to-use My Watchlist.

The Fool owns shares of Wal-Mart, Costco, and JPMorgan Chase. Motley Fool newsletter services have recommended Wal-Mart, Costco, and Visa, as well as a diagonal call position on Wal-Mart.

Fool contributor TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that's free of charge and requires no coupons.

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Gasoline prices are up to $4 a gallon. Is that 'Big Oil's' fault? (The Christian Science Monitor)

If you have to fill your gas tank this weekend – whether or not it takes a second mortgage to pay the tab – you’re a soldier in the hottest political fight over energy and the economy. Or maybe you feel more like “collateral damage” as President Obama, lawmakers, and “Big Oil” battle over who’s at fault for $4-per-gallon gasoline.

In his radio and Internet address Saturday, Obama repeated his call to end “unwarranted taxpayer subsidies we’ve been handing out to oil and gas companies – to the tune of $4 billion a year.”

“When oil companies are making huge profits and you’re struggling at the pump, and we’re scouring the federal budget for spending we can afford to do without, these tax giveaways aren’t right,” Obama said Saturday. “They aren’t smart. And we need to end them.”

RELATED: Gas prices: 10 ways you can save at the pump

Them’s fightin’ words to his political opponents, particularly those from oil-producing states.

"The president may think he's punishing CEOs of big companies, but his plan will hurt the everyday consumer of energy and imperil the jobs of millions of hardworking people in American-based companies," first-term Congressman James Lankford from Oklahoma said in the Republicans' weekly address.

The average national price for regular gasoline right now is $3.91 a gallon. In 22 states it’s higher than that, and the price has jumped past $4 in Alaska, California, and Connecticut.

Obama says oil companies are at least partly to blame, and his main ammo are their newly-announced profit statements.

ExxonMobil reports first-quarter profits of $10.7 billion – 69 percent above the company’s first quarter of 2010. Royal Dutch Shell marked $6.9 billion in profits, an increase of 40 percent over last year’s first-quarter number. Chevron Corp. saw its first-quarter net income go up 36 percent to $6.2 billion. BP made $5.5 billion.

Industry spokesmen say such figures should be put into broader perspective.

“We should be proud of the success of an industry that supports 9.2 million American workers and 7.5 percent of our economy while also supplying income to millions of the nation’s retirees,” American Petroleum Institute CEO Jack Gerard said in a statement Thursday. “Oil and natural gas companies are a vital part of our nation’s industrial and manufacturing base. They provide most of America’s energy and are responsible for one in every five dollars invested in renewable energy.”

Record industry earnings “reflect the size necessary for companies to be globally competitive with national oil companies, along with a steady rise in crude oil prices driven by rapidly growing world oil demand and instability in the Middle East,” Gerard said.

Obama’s political problem regarding high prices at the pump – and the reason for his current finger-pointing tactic – are obvious.

Polls show people are more inclined to blame him and the Democrats than they do Republicans for high gasoline prices. At the same time, according to a recent McClatchy-Marist Poll, three times as many respondents say US oil companies are the culprits behind record prices at the pump.

This was the second Saturday in the row that Obama has hit on gas prices and oil industry subsidies in his weekly address.

He may have some openings on the GOP side.

In a TV interview Monday, House Speaker John Boehner said oil companies should “pay their fair share in taxes.”

“I don't think the big oil companies need to have the oil depletion allowances,” he also told ABC News.

A Boehner spokesman quickly walked back those assertions, but the White House and congressional were quick to jump on them.

At a town hall meeting a few days later House Budget Committee Chairman Rep. Paul Ryan (R) of Wisconsin said federal oil subsidies should be eliminated as part of deficit-reduction.

“We’re talking about reforming the safety net, the welfare system; we also want to get rid of corporate welfare,” Ryan said. “And corporate welfare goes to agribusiness companies, energy companies, financial services companies, so we propose to repeal all that.”

The Senate could take up the issue as soon as this coming week. Expect more sparks to fly.

RELATED: Gas prices: 10 ways you can save at the pump

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Gasoline prices are up to $4 a gallon. Is that 'Big Oil's' fault? (The Christian Science Monitor)

If you have to fill your gas tank this weekend – whether or not it takes a second mortgage to pay the tab – you’re a soldier in the hottest political fight over energy and the economy. Or maybe you feel more like “collateral damage” as President Obama, lawmakers, and “Big Oil” battle over who’s at fault for $4-per-gallon gasoline.

In his radio and Internet address Saturday, Obama repeated his call to end “unwarranted taxpayer subsidies we’ve been handing out to oil and gas companies – to the tune of $4 billion a year.”

“When oil companies are making huge profits and you’re struggling at the pump, and we’re scouring the federal budget for spending we can afford to do without, these tax giveaways aren’t right,” Obama said Saturday. “They aren’t smart. And we need to end them.”

RELATED: Gas prices: 10 ways you can save at the pump

Them’s fightin’ words to his political opponents, particularly those from oil-producing states.

"The president may think he's punishing CEOs of big companies, but his plan will hurt the everyday consumer of energy and imperil the jobs of millions of hardworking people in American-based companies," first-term Congressman James Lankford from Oklahoma said in the Republicans' weekly address.

The average national price for regular gasoline right now is $3.91 a gallon. In 22 states it’s higher than that, and the price has jumped past $4 in Alaska, California, and Connecticut.

Obama says oil companies are at least partly to blame, and his main ammo are their newly-announced profit statements.

ExxonMobil reports first-quarter profits of $10.7 billion – 69 percent above the company’s first quarter of 2010. Royal Dutch Shell marked $6.9 billion in profits, an increase of 40 percent over last year’s first-quarter number. Chevron Corp. saw its first-quarter net income go up 36 percent to $6.2 billion. BP made $5.5 billion.

Industry spokesmen say such figures should be put into broader perspective.

“We should be proud of the success of an industry that supports 9.2 million American workers and 7.5 percent of our economy while also supplying income to millions of the nation’s retirees,” American Petroleum Institute CEO Jack Gerard said in a statement Thursday. “Oil and natural gas companies are a vital part of our nation’s industrial and manufacturing base. They provide most of America’s energy and are responsible for one in every five dollars invested in renewable energy.”

Record industry earnings “reflect the size necessary for companies to be globally competitive with national oil companies, along with a steady rise in crude oil prices driven by rapidly growing world oil demand and instability in the Middle East,” Gerard said.

Obama’s political problem regarding high prices at the pump – and the reason for his current finger-pointing tactic – are obvious.

Polls show people are more inclined to blame him and the Democrats than they do Republicans for high gasoline prices. At the same time, according to a recent McClatchy-Marist Poll, three times as many respondents say US oil companies are the culprits behind record prices at the pump.

This was the second Saturday in the row that Obama has hit on gas prices and oil industry subsidies in his weekly address.

He may have some openings on the GOP side.

In a TV interview Monday, House Speaker John Boehner said oil companies should “pay their fair share in taxes.”

“I don't think the big oil companies need to have the oil depletion allowances,” he also told ABC News.

A Boehner spokesman quickly walked back those assertions, but the White House and congressional were quick to jump on them.

At a town hall meeting a few days later House Budget Committee Chairman Rep. Paul Ryan (R) of Wisconsin said federal oil subsidies should be eliminated as part of deficit-reduction.

“We’re talking about reforming the safety net, the welfare system; we also want to get rid of corporate welfare,” Ryan said. “And corporate welfare goes to agribusiness companies, energy companies, financial services companies, so we propose to repeal all that.”

The Senate could take up the issue as soon as this coming week. Expect more sparks to fly.

RELATED: Gas prices: 10 ways you can save at the pump

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Report says Goldman duped clients on CDO prices (Reuters)

WASHINGTON (Reuters) – In a frenzy to protect its interests at the start of the credit crisis, Goldman Sachs Group Inc sold mortgage-linked derivatives to clients at inflated prices and misrepresented the nature of the deals, according to documents released by a Senate subcommittee.

Carl Levin, the Michigan Democrat who heads the Senate Permanent Subcommittee on Investigations, told a press briefing on Wednesday that Goldman had "exploited" clients and that top executives had lied to Congress during testimony in 2010.

"They gained at the expense of their clients and they used abusive practices to do it," said Levin, adding there was still time for regulatory agencies to take action against Wall Street.

The company said that while it disagreed with many of the conclusions, it took seriously the issues explored by the subcommittee.

The bipartisan subcommittee issued a report Wednesday on Wall Street's role in the 2007-2009 financial crisis, and used Goldman Sachs as one of its case studies.

As the market for related credit derivatives ground to a halt in 2007, Goldman management became increasingly concerned about the company's exposure.

Top executives held a meeting on May 11, 2007, to develop a "Gameplan" to value those assets. A few days later, Dan Sparks, who headed Goldman's mortgage division, estimated the company might have to take a $382 million write-down on its portfolio.

"I think we should take the write-down, but market at much higher levels," Sparks told Thomas Montag, then the head of sales and trading, in an email message, according to the subcommittee report.

Another executive, Harvey Schwartz, expressed concern about that tactic, saying, "don't think we can trade this with our clients andf then mark them down dramatically the next day."

Nonetheless, Goldman's collateralized debt obligation sales team actively targeted clients who would be most receptive to buying related CDOs, in hopes of getting additional sales commissions, according to the subcommittee.

FURTHER CHARGES?

Levin and his panel's report stopped short of accusing Goldman of illegal behavior, but Levin said regulators at the Securities and Exchange Commission or the Department of Justice could take the probe further.

The SEC filed civil fraud charges against Goldman last year related to a CDO deal known as Abacus, which the subcommittee also examined in its report. Goldman paid $550 million to settle the claims without admitting or denying wrongdoing.

A source familiar with regulatory investigations into Goldman said all the transactions detailed in the committee's report "have already been subject to review by the SEC staff." The source would not comment on whether the SEC's probes are over or whether it plans to pursue additional charges.

A year ago, Levin's subcommittee held a public hearing into Goldman's practices at which top executives were hammered for selling clients securities that Goldman was betting against.

Since then, Goldman has taken steps to address its perceived conflicts of interest and transparency issues. In January, the company unveiled a new reporting process after a months-long review by a Business Standards Committee.

Goldman spokesman Michael DuVally said the changes "will strengthen relationships with clients, improve transparency and disclosure and enhance standards for the review, approval and suitability of complex instruments."

Levin said he plans to refer certain issues from the report to the Justice Department and SEC, though he would not be more specific about the referrals.

Sources familiar with the panel's investigation cautioned against relating the referrals to Goldman specifically. No referrals have been decided on yet, and Senator Tom Coburn, the ranking Republican on the bipartisan committee, would have to agree.

The subcommittee's report said Goldman management provided the sales team with "talking points" to reassure clients who were wary about the deals. The sales team also advocated for pushing the products onto clients abroad who might be less familiar with the deterioration of the U.S. housing market.

COLORFUL LANGUAGE

Goldman executives and traders used colorful and aggressive language in early 2007 as they strove to extract as much profit from clients as possible.

At one point, Goldman tried to engineer a short-squeeze in the collateralized debt obligation market to drive up prices and maximize its own gains, according to emails and other documents released by the subcommittee.

Michael Swenson, who was then head of Goldman's structured products group and is now a managing director, said traders ought to "cause maximum pain" and "start killing" short investors, with the hopes of leaving "people totally demoralized."

Though the plan ultimately failed, Deeb Salem, a trader involved in the short-squeeze maneuvering, called the idea "brilliant" in a self-evaluation.

There were also interesting tidbits from a Morgan Stanley employee who became increasingly frustrated by Goldman's behavior related to the a CDO deal known as Hudson.

As mortgages went bad and ratings agencies downgraded related bonds, Morgan Stanley advocated for a rapid liquidation of the Hudson CDO. That process took more than a year to perform.

"I broke my phone," a Morgan Stanley trader told a colleague in an email message, after a frustrating conversation with his Goldman counterpart.

Morgan Stanley ultimately lost more than $930 million on the Hudson deal, while Goldman ultimately earned almost $1.7 billion by shorting related securities.

(Reporting by Lauren Tara LaCapra; Editing by Tim Dobbyn)

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British house prices slip in February: survey (AFP)

LONDON (AFP) – British house prices slipped by 0.9 percent in February, offsetting a modest gain in January, data from a top home-loans provider showed on Friday.

"There has ... been little change in house prices over the first two months of 2011 as a whole. February's monthly decline of 0.9 percent offset January's 0.8-percent gain," said Halifax housing economist Martin Ellis.

"Overall, we expect a modest 2.0-percent decrease in house prices in 2011. Uncertainty over the economic outlook is likely to weigh down on housing demand this year."

Halifax, part of state-controlled Lloyds Banking Group (LBG), said the average house price in Britain stood at £162,657 (189,226 euros, $264,257).

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