QUOTE OF THE DAY
“The more you look into it, the more disappointing it gets. It kind of raises doubts about the sustainability of the manufacturing sector to continue to underpin economic growth.”
Tim Quinlan, Wells Fargo Securities LLC economist, on the September durable-goods report Article, 1D
JPMorgan to pay $5.1 billion to agency
WASHINGTON - JPMorgan Chase has agreed to pay $5.1 billion to resolve claims that it misled Fannie Mae and Freddie Mac about risky home loans and mortgage securities it sold them before the housing market collapsed.
The Federal Housing Finance Agency, which oversees Fannie Mae, the Federal National Mortgage Association, and Freddie Mac, the Federal Home Loan Mortgage Corp., announced the settlement Friday with JPMorgan, the largest U.S. bank. A broader deal with the Justice Department is still being negotiated.
JPMorgan sold $33 billion in mortgage securities to Fannie Mae and Freddie Mac between 2005 and 2007, according to the agency. That was the second-most sold to Fannie Mae and Freddie Mac ahead of the crisis, behind only Bank of America. The securities soured after the housing bubble burst in 2007, losing billions in value.
In a statement Friday, JPMorgan called the agreement with the agency “an important step towards a broader resolution of the firm’s” mortgage-related matters.
Edward DeMarco, the agency’s acting director, said the settlement with JPMorgan “provides greater certainty in the marketplace and is in line with our responsibility for preserving and conserving Fannie Mae’s and Freddie Mac’s assets on behalf of taxpayers.”
Jack Daniel’s sues over square bottle
LOUISVILLE, Ky. - A white whiskey named for an Appalachian moonshiner was first sold in Mason jars, but recently switched to square-shaped bottling.
That new look has the small distiller embroiled in a trademark fight with Jack Daniel’s Tennessee whiskey.
The owner of the Jack Daniel’s trademark has sued the Nashville, Tenn.-based distiller of Popcorn Sutton’s Tennessee white whiskey.
The lawsuit claims the bottling for Popcorn Sutton’s is “confusingly similar” to the Jack Daniel’s packaging. It says the new bottle was sold in either late 2012 or early 2013.
The suit was filed by California-based Jack Daniel’s Properties Inc. and seeks damages and an injunction to stop Popcorn Sutton from using the similar bottle.
Jack Daniel’s is the flagship brand of Louisville-based Brown-Forman Corp.
Officials for Popcorn Sutton did not immediately respond to phone calls.
- The Associated Press
DuPont to split off chemicals branch
DuPont Co., the biggest U.S. chemical maker by market value, plans to split itself in two by spinning off its performance-chemicals unit, part of an effort to increase shareholder value and focus on higher-margin products.
The tax-free spinoff will be completed in about 18 months, after which DuPont investors will hold all of the new company, Wilmington, Del.-based DuPont said Thursday in a statement.
The unit makes pigments, refrigerants and nonstick coatings, accounting for 29 percent of DuPont’s $6.3 billion of operating earnings last year, the company said in a presentation.
DuPont first said in July that it might spin off the unit because of slow-growing, volatile earnings. DuPont Chairman and Chief Executive Officer Ellen Kullman has been under pressure to improve the company’s performance after activist investor Nelson Peltz bought a stake.
Agriculture, already the biggest business, will make up 37 percent of DuPont sales after the spinoff.
French leader sticks to soccer tax plan
BRUSSELS - French President Francois Hollande said Friday that he will stick to a government tax plan to impose a super-levy on soccer players’ salaries despite the threat of the nation’s pro clubs to scrap games one weekend next month.
Hollande told reporters at Friday’s European Union summit that “the law must be the same for all” once the plan to implement a so-called 75 percent tax law on income above 1 million euros $1.38 million per year is approved.
The law would mainly affect the clubs rather than the players, as it is geared toward making employers bear the tax burden.
Jean-Pierre Louvel, president of the Union of Professional Football Clubs, says the law would be “the death of French football” if it is pushed through.
- The Associated Press
Volvo posts 3rd-quarter drop in profit
FRANKFURT, Germany - Volvo reported a surprise drop in operating profit Friday, sending the stock down the most in a year, as a strengthening krona burdened earnings at the world’s second-biggest truck maker.
Earnings before interest and taxes fell 18 percent to $380 million from $462 million a year earlier, Gothenburg, Sweden-based Volvo said in a statement Friday.
Profit was less than the $498 million average of 12 analyst estimates compiled by Bloomberg.
In response to the declining profit, Volvo outlined plans to eliminate 2,000 administrative jobs, or 1.8 percent of its workforce, under a program announced in September to generate annual cost savings of $632 million through 2015.
Volvo reported 7.5 percent growth in third-quarter truck orders, lagging behind jumps of 29 percent at local competitor Scania and 33 percent at industry leader Daimler.
Volvo is “unlikely to be forgiven for the miss this time, especially as it looks like they are trailing peers in terms of orders and the margin improvement plan has shifted two years to the right,” David Arnold, a London-based industry specialist at Barclays Capital, said Friday in a report to clients.
Third-quarter net income fell 0.9 percent to about $220 million, Volvo said. Sales slumped 4.9 percent to about $10.3 billion.
A 1 percent drop in truck-division revenue contrasted with a 4.1 percent increase in deliveries to 43,248 vehicles. Orders amounted to 44,224 trucks.
Volvo shares fell as much as 7.4 percent.
- Bloomberg News
Business, Pages 30 on 10/26/2013