Finance news. My opinion.

Prices of Kansas City-area homes are expected to fluctuate until fall, then begin a slow, steady rise.

That prediction led off the Kansas City Regional Association of Realtors’ monthly statistical report about the metro-area housing market. According to the report, prices of new homes will rise more quickly than those of existing homes because of declining new home inventory.

“Unemployment is (another) vital ingredient in the formula,” KCRAR said in a release, “and (the National Association of Realtors) has predicted a slight decrease in 2011, which will help sales and prices of existing homes. Interest rates are still at historic lows, but are expected to rise in 2011 and, as that occurs, it may encourage some buyers to ‘get off the fence.’”

In June, KCRAR reported, 2,599 new and existing homes in the Kansas City area sold. That was down 10 percent from the previous month’s total (2,878) and down 3 percent from June 2009 (2,671).

June saw 308 new home sales, a 23 percent increase from a year earlier (251) and a 31 percent increase from May (236).

The association reported 2,291 existing home sales in June. That was down 5 percent from a year earlier (2,420) and down 13 percent from the May total (2,642).

The average new home price in June was $296,768, which was 2 percent lower than a year earlier ($302,628). The average existing home price was $167,487, up 4 percent from June 2009 ($160,487).

The number of new homes on the market continued its steady decline in June. The total new home inventory of 1,624 last month was down only slightly from 1,638 in May but represented a 37 percent drop from June 2009 (2,587).

Resale inventory in June included 15,839 homes, which was 3 percent higher than in May (15,367) and 13 percent higher than a year earlier (14,049).

The area’s supply of new and existing homes — calculated by dividing inventory by the 12-month average number of sales — rose to a 7.7-month supply in June from a 7.5-month supply in May.

When supply exceeds six months, the market is considered to favor buyers. When it’s less than five months, the market favors sellers.

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Wichita home sales in June were down about 1 percent from the same period a year ago, according to data from the Wichita Area Association of Realtors.

The change came as the final closings were being reported from the federal government’s home buyer tax credit programs. Buyers utilizing the program had to close on their purchases by June 30.

A total of 896 homes were sold in the Wichita area during June, down from 906 in June 2009 no fax payday loans.

June’s numbers followed three consecutive months in which sales increased year-over-year.

Of the homes sold last month, 769 of them were existing homes and 127 were new.

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ADC Telecommunications Inc. has been sold to Tyco Electronics in a $1.25 billion deal, the companies announced Tuesday.

Tyco will pay $12.75 per share for Eden Prairie-based ADC, which makes technology for the telecommunications industry.

The transaction is expected to close in the fourth quarter.

Tyco, based in Switzerland, recorded more than $10 billion in revenue last year. The company, formerly part of Tyco International, makes electrical components for several industries, including networking equipment used by telecom companies.

The deal will allow Tyco to expand its portfolio of wireless connectivity products, which are used to build mobile networks, the company said in a news release. Tyco (NYSE: TEL) also will incorporate ADC's U.S. professional services business into its operations payday loan lenders.

The acquisition will add up to 14 cents per share to Tyco's full-year earnings, the company said.

ADC ranked No. 32 on the Minneapolis/St. Paul Business Journal's most recent list of the largest public companies in the state. The firm has 9,050 employees in Minnesota.

An ADC spokesperson couldn't be reached for comment on how the deal will affect jobs in the Twin Cities.

The company has a long history in the Twin Cities. It grew rapidly during the tech boom of the 1990s — becoming a $3 billion company by 2000. It cut its staff sharply after the dot-com bubble burst.

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SurModics Pharmaceuticals, a Birmingham subsidiary of SurModics Inc., has agreed to license a biodegradable polymer implant technology being developed to treat sun-induced skin disorders to an Australian pharmaceutical firm.

SurModics licensed the SCENESSE implant formula to Australian-based Clinuvel Pharmaceuticals. The two companies have collaborated on developing the formula that is a prophylactic treatment for a range of UV and light-related skin disorders for several years.

“We are very pleased to announce the execution of this important license agreement with Clinuvel,” said Phil Ankeny, interim CEO of SurModics. “This announcement demonstrates the value of our sustained drug delivery technologies and reinforces how we partner with our customers to develop and bring to market compelling products that leverage our core technologies cash advance loans.”

Drugs released from the prophylactic causes melanin production in the skin to protect from ultraviolet rays. Estimates from the Royal Bank of Scotland projects the treatment could impact as many as 7 million people worldwide, according to a release from SurModics.

“Today’s announcement represents a natural progression of our relationship with Clinuvel,” said Arthur J. Tipton, senior vice president and chief scientific officer of SurModics. “Together, our teams have solved numerous scientific and technical issues over the years culminating in the signing of this licensing agreement. Clinuvel’s product provides a novel way to treat serious skin disorders.”

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HealthPlan Holdings Inc. said that it has acquired GEMGroup.

Financial terms were not disclosed in a release announcing the purchase.

GEMGroup, headquartered Pittsburgh, specializes in accounting, pension and 401(k) administration software and services to self-funded and Taft-Hartley employee benefit plans for unionized workers, the release said.

The acquisition enhances the outsourcing technology and services that HealthPlan provides to the nation’s largest Taft-Hartley benefit plans, the release said low fee payday loans. It also expands HealthPlan’s presence in the northeastern United States, where GEMGroup has five offices employing more than 120 people.

HealthPlan Holdings, headquartered in Tampa, provides outsourcing solutions to insurers in the individual, small business and union trust markets, and employs roughly 1,100 associates.

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Stocks skidded in the first half of the year, particularly in the second quarter. But investors probably haven’t seen the worst of it.

Welcome to the second half.

With the S&P 500 down more than 15% from the highs of late April and all three major indexes at more than 6-month lows, a bigger selloff could be brewing.

"By year-end we could be roughly where we are now, but between now and then, we could be substantially lower," said Karl Mills, president and chief investment officer at Jurika Mills & Keifer.

Going back to World War II, a decline of 15% off the highs has often turned a correction into a bear market — a drop of 20% to 30% — according to Standard & Poor’s chief investment strategist Sam Stovall.

Late Wednesday, S&P cut its 12-month price target for the S&P 500 to 1,190 from 1,270, citing the "intensifying headwinds."

The Dow is down 7.6% year-to-date, with most of the losses coming in the past two months when the Dow lost more than 10% on worries that the European debt crisis and signs of slowing in Asia will send the U.S. economy back into recession.

"What we saw in May and June was investors trying to understand that it’s going to be a tepid recovery at best," said Alan B. Lancz, president at Alan B. Lancz & Associates.

"We’ll be selective buyers on the dips," he said. "But the weaning off the government stimulus, China slowing down, BP’s oil spill and the sovereign debt issues are going to be an overhang for some time."

Fear of a double dip: Worries that debt-plagued European nations such as Greece and Spain will default on their borrowings were somewhat mitigated by European leaders establishing a nearly $1 trillion fund to provide support. But with governments struggling to implement cutbacks and the euro flailing near a four-year low, concerns remain in play.

"The European issues highlight the fact that fiscal deficits cannot run indefinitely and that we need to fix some of our long-term debt issues," said Ben Halliburton, chief investment officer and founder at Tradition Capital Management."

Congress’ budget chief said Wednesday that the outlook is daunting considering the level of debt cash advance flexible payments.

Recent reports showing that the housing market is slumping again and that job growth remains anemic have added to worries about the strength of any U.S. recovery.

Volatility: The last two months have also brought a return to the level of volatility seen at the height of the financial market crisis in 2008.

"I think we’ll continue to see volatility, with a lot of it to the downside," said Ben Halliburton, chief investment officer and founder at Tradition Capital Management.

He said that between overly optimistic earnings forecasts getting trimmed and the reality of certain tax cuts expiring at the end of the year, the choppiness is unlikely to calm down.

Corporate earnings growth in question: Despite all the turmoil, analysts have barely cut earnings estimates for the second quarter and second half of 2010, and all of 2011, according to Thomson Reuters.

"Since mid-May, analysts have ratcheted their second-quarter estimates down modestly, but they seem to be taking a ‘wait-and-see’ approach for the next 18 months," said John Butters, Thomson’s senior research analyst.

Earnings are expected to have risen 27.2% in the second quarter versus a year ago, down just slightly from mid-May estimates. Financial sector forecasts have come down the most — which is fitting, since those forecasts were raised the most in late April, when the stock market was at its highs.

Analysts currently expect 2010 earnings to rise 34% from a year ago, the biggest year-over-year growth since Thomson began tracking the info in 1998.

For 2011, analysts expect year-over-year growth of 17%.

On the upside, the P/E ratio for the S&P 500 is 12.3 versus the five-year trailing average of 14.2.

"Either the market is overdoing the fears and there’s room for stocks to rally, or the market is ahead of the analysts and the estimates need to come down," said Butters. 

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ST. LOUIS — Boeing Machinists chose to remain on the job instead of walking out on strike — a move that was met with a mix of cheers and jeers inside the Chaifetz Arena on Sunday.

"The membership spoke," said Gordon King, president and directing business representative for the International Association of Machinists District 837. "Ultimately, it is their choice."

The union represents more than 2,500 Boeing Machinists in the St. Louis area. Union negotiators had recommended the workers reject the latest contract proposal, but King said he knew the vote could go either way.

The vote was 1,237 in favor of the contract and 838 opposed.
The result was a far cry from the vote taken just two weeks ago, when the union overwhelmingly rejected Boeing’s previous offer by a 3-to-1 margin. Since then, the fear of going on strike during a recession began to weigh more heavily on many union members, King and several union members said.

Boeing’s 4 1/2-year proposal will raise Machinists’ salaries an average of 3.6 percent a year and increase pension payments for those already employed by the company.

The latest company changes included removal of language requiring employees to pay for dependent medical care coverage during extended leaves of absence and caps to nonformulary name-brand drugs.

In a released statement, Boeing officials said the vote "allows us to keep delivering on our commitments to our customers." The Machinists in St. Louis work on the F/A-18 Super Hornet, the EA-18G Growler, the F-15 fighter jet and the C-17 Globemaster transport plane.

Boeing officials said their goal was to produce a contract that "recognizes both the significant contributions of our employees and the competitive environment in which we must compete to keep jobs here in St. Louis."

A strike would have only magnified what has been a difficult period for Boeing’s St. Louis-based defense business, which has been dealt setbacks in recent Pentagon budgets.

Defense Secretary Robert Gates opposes continued production of the C-17. Last year, the Pentagon scaled back Army modernization and missile-defense programs in which Boeing was a major player.

But Boeing also is working toward securing another multiyear order of locally built F/A-18 fighter jets.

As a strike loomed during the past week, Boeing offered a key concession, removing language requiring employees to pay for dependent medical care coverage during extended leaves of absence and capping the costs of nonformulary name-brand drugs.

But the most contentious issue — pension benefits — was left unchanged empire payday loans. Instead of a pension, Boeing will offer new hires after January 2012 an enhanced 401K contribution plan.

Though they accepted the provision in the new contract, current Machinists and retirees worry that the change means that their pensions, too, will be placed in peril in the future.

"I’m scared to death that they’re going to freeze the defined-benefit pension plan we have right now and end up selling it to an insurance company and turn it into an annuity," King said. "And then what’s going to happen from there, a good possibility of losing what they’ve got."

Maintenance worker Herman Ward of Florissant, a 24-year Boeing employee, said he was relieved the contract was accepted. He was concerned that a work stoppage would have resulted in the elimination of his job. He said he supported the company’s contract offer in both votes this month.

"There’s a possibility that when you go out, you won’t get back in," Ward said of a strike. "There are outside contractors ready to take our jobs … I could not afford to take a chance of losing everything that I’ve worked so hard to get just because another decision someone else wanted to make for us."

Several groups of workers gathered in the Chaifetz Arena parking garage following the vote. Some refused to give their names to reporters. Few would say how they voted. Many expressed relief that the negotiations were over.

"We have a job," said one Machinist between sips of beer. "The way things are right now, you should be thankful you have a job."

But Boeing flight mechanic Peggy Chapin of Granite City said she was disappointed by the outcome — even though both she and her husband, Tom, also a Boeing Machinist, would have been on strike at the same time.

"I think they’re scared," she said of fellow union members moments after Sunday’s vote. "I can understand the economic times and everything. Everybody’s scared. Sometimes you’ve got to stand up and fight for what you believe in."

U.S. Sen. Christopher "Kit" Bond, R-Mo., said in a statement that he was glad that fight did not take the form of a strike, noting the importance of Boeing’s contributions to national defense. "Our nation’s warfighters and our allies depend on the dedicated and skilled Machinists of Boeing," he said.

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Pinnacle Partners LLC of Quincy, Mass., filed Friday to liquidate under Chapter 7 of the U.S. bankruptcy code.

The company listed assets of less than $50,000 and liabilities in the range of $1 million to $10 million.

The major creditor with a secured claim — a pair of mortgages totaling $600,000 — is South Shore Savings Bank.

A major unsecured creditor is Pinncon LLC of Braintree, listed as holding a claim valued at $103,000.

Pinnacle is represented in the bankruptcy by David B. Madoff of Madoff and Khoury in Foxborough.

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The mortgage meltdown is hitting the African-American and Latino communities harder than whites, a new study has found.

Of borrowers who took out mortgages between 2005 and 2008, some 8% of both African-American and Latino borrowers have lost their homes to foreclosure, compared to 4.5% of non-Hispanic whites, according to a study by the Center for Responsible Lending, released Friday.

The racial and ethnic disparities continued even after controlling for income differences. The center’s research shows that African-American and Latino borrowers were about 30% more likely to get higher rate subprime loans than white borrowers with similar risk characteristics.

Of the total pool of homeowners, 17% of Latinos have lost their homes to foreclosure or are at imminent risk of losing their homes, while 11% of African-Americans are in that position. By comparison, 7% of non-Hispanic whites have lost their homes or are about to.

The reason for the disparity is that African-Americans and Latinos were marketed riskier, higher cost loans that became unaffordable during the mortgage and economic crisis, said Keith Ernst, the center’s director of research.

"These are more expensive mortgages," he said. "They are more likely to fail."

African-American and Latino communities are likely to lose $373 billion in declining property values between 2009 and 2012.

The report also found that an estimated 2.5 million foreclosures were completed between 2007 and the end of 2009. This is roughly one in every 20 mortgages outstanding at the time of the crisis.

More than eight in 10 of these foreclosures were on owner-occupied homes with mortgage originated between 2005 and 2008.

An estimated 5.7 additional foreclosures are imminent.

"This crisis still has a long way to go," Ernst said. 

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Initial claims for unemployment insurance climbed last week, the government reported on Thursday.

The Labor Department’s report showed that jobless claims jumped 12,000 in the week ended June 12, compared to the prior week’s revised total of 460,000 claims.

Economists were expected initial jobless claims of 450,000 for the week ended June 12, according to Briefing.com consensus.

The report took the wind out of gains in the U.S. futures market.

The report was released one day after Senate Democrats revised a jobs bill, scaling back unemployment benefits and Medicare physician reimbursement measures. This revision would eliminate a $25 weekly supplement for the jobless that had been part of last year’s stimulus act.

The cut will reduce the bill’s cost by $5.8 billion over the next decade. 

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