NEWS AT A GLANCE
Lower fuel prices, but lower thermostats, too
Gas prices fell for the 20th consecutive day, to $3.86 a gallon, according to AAA, as declining demand tamps down oil prices. (CNNMoney.com) However, oil and natural gas prices are still high enough that heating bills this winter will be much more expensive than last year. Heating oil is still 36 percent higher than last year, for example, and that will hit Northeast residents particularly hard—with bills rising by up to $1,500 for New England households. Fuel dealers are not offering price protection plans this year, due to volatile energy prices. And with credit tight, fuel companies are also finding it harder to hedge. “This could be the winter of our discontent,” said Daniel J. Weiss at the Center for American Progress. (The New York Times)
Freddie Mac loss grows
U.S. mortgage giant Freddie Mac posted a second-quarter loss of $821 million, its fourth consecutive loss, and said it will cut its common-stock dividend by 80 percent. Freddie Mac earned $729 million a year ago, but has lost $4.6 billion since. (Reuters) Analysts had expected a much smaller shortfall. Freddie Mac’s shares are down 76 percent this year, amid investor fears that it won’t be able to back the $2.2 trillion in loans it owns or guarantees. Rising delinquencies, which raised credit costs, and lower housing prices and sales all hurt Freddie. “What you need for this stuff to work it’s way through is for homes to get through the foreclosure process and be sold,” said Credit Suisse analyst Moshe Orenbuch. (Bloomberg)
Xstrata bids $10 billion for platinum miner
Anglo-Swiss miner Xstrata made an unsolicited $10 billion cash offer for London-based Lonmin, the world’s No. 3 platinum producer. The bid is 42 percent higher than Lonmin’s closing price yesterday. Xstrata said it has already purchased 8 percent of Lonmin’s shares. (AP in CNNMoney.com) Xstrata, the fifth-largest mining group, specializes in copper, coal, and nickel, but also entered the platinum market last year. (Reuters) Lonmin rejected the offer as “opportunistic,” as platinum prices have dropped 29 percent from their record high in March. “Maybe it’s an opportunistic move by Xstrata,” said Constellation Capital Management analyst Peter Chilton, “and maybe Lonmin is more vulnerable now.” (Bloomberg)
Moscow’s hospitality crunch
Hotel rooms in Moscow are among the most expensive in the world, costing $540 a night for the average business-class room, but often above $1,000 in central Moscow. In a case of demand outstripping supply, they are also among the hardest to find. Russia is booming with oil money, and Moscow’s hot real estate market is pushing the destruction of huge, modestly endowed Soviet-era hotels at the same time that business travelers flock to the city in droves. For some of them, the high rates are probably worth the money. “If you’re sealing a multimillion-dollar deal, being in a shabby hotel is not going to help your cause,” says Stephane Meyrat of hotel consultancy Jones Lang Lasalle Hotels. (The Wall Street Journal)
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