Housing and Construction Stats Improve; Mobius: Emerging Markets Close to Bull Market; Sprint Beats Expectations; Bovespa Hits Seven-Month High;  Buffett Says Wall Street Sold “Sewage”; Liberty Spins Off DirecTV; Airlines Low on Cash; Mexico Lifts Work Ban on Flu Scare

• The index that measures pending sales of previously owned homes rose 3.2% in March on the renewed confidence of first-time buyers. Meanwhile, the U.S. Department of Commerce reported that U.S. construction inched 0.3% in March, the first increase in six months, Reuters reported.

• Famed investor and chairman of Templeton Asset Management Ltd. Mark Mobius said emerging-market stocks may “break out” into a bull market at the end of the year. “We are at the base building period for the next bull market,” Mobius, who helps oversee $20 billion in emerging market assets at San Mateo, California-based Templeton, said yesterday (Monday) in an interview with Bloomberg. “What I see happening is perhaps this continuing till the end of the year, and then a break out.”

• Cost cutting measures helped Sprint Nextel Corp. (NYSE: S) post an unexpected quarterly profit excluding items, but the company also lost its highest amount of customers. “There are no clear signs that the business has made its turn,” Piper Jaffray analyst Christopher Larsen told Reuters.

• The Bovespa, Brazil’s benchmark index, hit a seven-month high yesterday (Monday), pushed by analysts’ expectations that Brazil’s economy will contract less than forecast. Analysts also expect commodities to continue jumping on global growth prospects, causing the country’s top commodities producers to see stock gains, Bloomberg reported.

• Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) Chairman Warren Buffett blasted bankers, insurers and regulators and said their shortcomings caused the worst recession in half a century.  As he hosted a record 35,000 people at the company’s annual meeting in Omaha, Nebraska on Saturday, Buffett said Wall Street sold subprime mortgage “sewage,” blamed the media and regulators for missing the danger, and lambasted bankers for being blind to the possibility that housing prices could fall, Bloomberg reported.

• Liberty Media Corp (NASDAQ: LCAPA), controlled by cable pioneer John Malone, said on Monday it plans to split off the DirecTV Group Inc (NASDAQ: DTV) satellite TV operator into a separate company combined with other media assets.  Liberty plans to combine the top U.S. satellite TV provider with assets that include Game Show Network, FUN Technologies and three regional sports networks, Reuters reported. Liberty owns a 54% economic stake in DirecTV.

• U.S. airlines face a potential liquidity crisis if revenue keeps falling while credit markets remain tight, Reuters reported.  If revenue does not increase this year, carriers may breach the minimum liquidity covenants enforced by their creditors, who then may accelerate the loan and force a default. “If revenue doesn’t stabilize and capital markets remain constrained, then I think it’s certainly possible that we’ll see increased risk of a covenant breach for a couple of carriers moving into 2010,” said Fitch Ratings analyst Bill Warlick.

• Health Minister Jose Cordova said most of Mexico’s businesses will reopen in two days as the pace of new swine flu infections slows, putting an end to a five-day shutdown of most businesses enacted to stop the spread of the illness, Bloomberg reported.  Mexicans will return to work on May 6 except in areas of the country where new infections continue to rise. Authorities haven’t yet decided whether schools will reopen May 6, he said.

Source: Investment News Briefs Tuesday May 5, 2009

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