The popular "cash for clunkers" government program will end
Monday after a rush of buyers apparently exhausted the $3 billion
allotted to encourage car owners to exchange gas-guzzlers for more
fuel-efficient vehicles.
Meanwhile, new-home sales in July are expected to rise for the
fourth month in a row, and economists also predict a smaller
year-over-year decline in June home prices, according to the
S&P/Case-Shiller home price index, out Tuesday.
Computer-maker Dell Inc. (DELL) and retailers, from discounter
Dollar Tree Inc. (DLTR) to jeweler Tiffany & Co. (TIF), will
report quarterly results next week.
Cash-For-Clunkers Program To End Monday
The federal government said it would end "cash for clunkers"
rebates at 8 p.m. Monday, after high consumer demand threatened to
drain the new-car discount program weeks earlier than expected.
Obama administration officials had initially expected the $3
billion program to last through Labor Day, but a big wave of
buyers, as well as administrative bottlenecks, prompted officials
to end the program early. "Cash for clunkers" offered discounts of
$3,500 or $4,500 to consumers who traded vehicles rated at 18 miles
per gallon or less for more fuel-efficient models.
Higher Home Sales, Smaller Price Drops Seen
Economists expect more good news about the housing market next
week after a surprise 7.2% jump in existing-home sales reported
Friday. A government report Wednesday is expected to show new-home
sales rose 1.6% in July, the fourth monthly increase in a row.
Meanwhile, the S&P/Case-Shiller home price index, which
measures home prices in 20 major cities, on Tuesday is likely to
show a smaller year-over-year price decline in June than in the May
report.
An updated figure on second-quarter gross domestic product, out
Thursday, is forecast to show a 1.4% decline, slightly larger than
the 1% contraction estimated earlier this month. The government
also will report on July durable goods orders Wednesday and
personal incomes and spending in July on Friday. In addition, the
final reading on the Reuters/University of Michigan index of
consumer sentiment for August will be released Friday. Regional
manufacturing reports are due Monday from the Chicago Fed, Tuesday
from the Richmond Fed and Thursday from the Kansas City Fed.
Among appearances by Federal Reserve officials: Atlanta Fed
President Dennis Lockhart speaks Wednesday in Chattanooga, Tenn.,
and St. Louis Fed President James Bullard speaks Thursday in Little
Rock, Ark.
Dell, Toll, Retailers To Report Results
Dell, the second-largest PC maker after Hewlett-Packard Co.
(HPQ), is among the largest companies posting results in a slow
week. It is expected to report lower profit and revenue for the
fiscal second quarter on a continuing slump in demand. Also
reporting next week is luxury-home builder Toll Brothers Inc.
(TOL), which last week said orders climbed 3% in its fiscal third
quarter, stunning analysts who had predicted double-digit
declines.
Retailers scheduled to post fiscal second-quarter results
include Chico's FAS Inc. (CHS) on Tuesday; Dollar Tree and Guess
Inc. (GES), both Wednesday; J. Crew Group Inc. (JCG) on Thursday;
and Tiffany on Friday.
FDIC May Loosen Rules On Bank Buyouts
To attract more buyers for failed banks, the Federal Deposit
Insurance Corp. is expected to vote Wednesday to soften its
proposed restrictions on private-equity firms buying collapsed
lenders, according to people familiar with the matter. While FDIC
officials still are hammering out details of the final rule, the
agency is expected to back away from some parts of its July
proposal, including a requirement that buyout firms that bid on
failed institutions maintain much thicker capital cushions than
banks, these people said. The FDIC, grappling with 77 bank failures
this year, the most since 1992, is trying to strike a delicate
balance.
FDA May Delay OK On J&J Epilepsy Drug
The Food and Drug Administration is expected to act by early
next week on Johnson & Johnson's (JNJ) application to market a
new epilepsy drug, which J&J hopes to call Comfyde. But the
drug might not get approved just yet - it failed to show a
significant improvement compared with a placebo in one of its
clinical trials, though it did so in another. Wells Fargo thinks
the mixed data will cause FDA to delay a final decision until more
data supporting the drug's effectiveness comes in, with possible
approval in late 2010. Wells Fargo has modest expectations for the
drug, seeing $405 million in annual sales in 2013.
Reader's Digest Bankruptcy Filing Likely
The publisher of Reader's Digest magazine is set to file for
bankruptcy as early as next week after reaching a deal to turn the
company over to senior lenders, the Wall Street Journal reported.
Readers Digest Association Inc. announced this week that it planned
to restructure through bankruptcy. Under its pre-negotiated
bankruptcy plan, senior lenders led by J.P. Morgan Chase & Co.
(JPM) would swap a significant amount of their $1.6 billion in debt
for about a 92.5% equity stake in the reorganized company. The plan
would cut the company's debt by 75% to $550 million. The board and
senior management would get a 7.5% stake.
GM Could Choose Opel/Vauxhall Buyer Soon
The board of General Motors Co. was meeting Friday to discuss
bids for its Opel/Vauxhall unit, and two people close to the
discussions said an announcement could come as early as next week.
GM's revamped board met last week to review "final" offers for a
majority stake in the loss-making European unit, though the two
bidders are being pressed by German authorities to tweak the
proposals. The Detroit auto maker technically has a final say in
what GM insists will be a "commercial" decision, but the proposed
sale has become politically charged by its reliance on up to EUR4.5
billion in government guarantees, mainly from German federal and
state authorities.
Central Bankers, Finance Officials Meet
Central bankers and global finance officials continue their
annual, two-day conference in Jackson Hole, Wyo., through Saturday.
At the event, organized by the Federal Reserve Bank of Kansas City,
Federal Reserve Chairman Ben Bernanke on Friday said economic
activity appears to be leveling out in the U.S. and abroad, but
he's not expecting a rapid economic recovery.
Obama Takes Break From Health-Care Battle
President Barack Obama will be on vacation next week, along with
much of the rest of the country. He doesn't plan to participate in
any health-care events during his time off in Martha's Vineyard,
Mass., leaving that to other administration officials, his
spokesman said. Obama plans to keep in touch with members of
Congress during his break, and his spokesman didn't rule out
personal meetings with lawmakers to sway them on the health-care
issue.
Islamic Holy Month Of Ramadan Begins
Ramadan, the Islamic holy month of fasting and prayer, starts
this weekend. During the month, Muslims can eat only after the
traditional firing of a cannon to signal sunset. In Dubai,
companies have hosted lavish banquets to woo Muslim clients as they
break their fasts, but they are scaling back amid the financial
crisis.
Conferences
Among the significant conferences next week are the Barrington
Research Healthcare Conference on Monday and Tuesday in Chicago and
SourceMedia Conferences Americas Summit 2009 from Monday through
Wednesday in San Francisco.
-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357;
kathy.shwiff@dowjones.com
(Peter Loftus and other Dow Jones Newswires staff contributed to
this report.)