WSF Headline Roundup - 5/19/08 - Recession end by Sept?; Avg gas prices near $4; Bush criticizes Saudi oil boost; Fed's Lockhart on inflation; SAP says U.S. mkt challenging; California luxury home prices drop; Thomson Reuters lay offs;Dairy price probe...

• U.S. Recession to End by September, Business Economists Say
• Average gasoline prices seen nearing $4 soon
• Bush Says Saudi Oil Boost `Not Enough' to Ease Prices
• Fed's Lockhart Says Inflation Is `Elevated' Amid Slowing Growth
• SAP says U.S. challenging; Europe, Asia strong
• ResCap says receives enough consents for bond exchange
• California Luxury Home Prices Fall for Second Straight Quarter
• Thomson Reuters to Cut 835 Technology, News Jobs After Merger
• Dairy Co-Op Faces Price-Manipulation Probe
• Lowe's First-Quarter Profit Falls on U.S. Housing Slump
• Schultz's Second Act Jolts Starbucks

U.S. Recession to End by September, Business Economists Say - Bloomberg

The U.S. economy will probably exit from a recession by the end of the next quarter as credit markets improve after a year of turmoil, according to a survey by the National Association for Business Economics.

The worst of the U.S. credit crunch and housing slump is about over, and growth will pick up to 2.1 percent in the second half, according to the poll of 52 professional forecasters taken April 17 to May 1. More than 60 percent of the economists surveyed predicted that businesses and consumers will find it easier to borrow in the final six months of the year.

The share of analysts who said the U.S. is in or will have a recession this year rose to 56 percent from 45 percent in February. They anticipate that the Federal Reserve's steepest interest-rate cuts in two decades, tax rebates, record exports and some stabilization in housing will lead to a recovery this quarter or next....

Average gasoline prices seen nearing $4 soon - CNNMoney

The average price of gasoline has jumped another 17 cents a gallon in the past two weeks to a record-breaking $3.79 a gallon for self-serve regular, according to a national survey released Sunday.

This climb in prices makes it a "high possibility" that many cities will see $4 a gallon regular gas soon, said survey publisher Trilby Lundberg.

"We are within 21 cents of $4 a gallon," said Lundberg. "There seems to be very good chance that we will reach it."

Four dollars a gallon of regular unleaded happened in two metro areas in the latest survey, according to the biweekly Lundberg Survey.....

Bush Says Saudi Oil Boost `Not Enough' to Ease Prices - Bloomberg

President George W. Bush said Saudi Arabia's decision to raise oil output 300,000 barrels a day is ``not enough'' to ease U.S. energy prices and that more domestic oil exploration and refining capacity are needed.

``It's not enough, it's something but it doesn't solve our problem,'' Bush told reporters in Sharm el-Sheikh, Egypt today when asked about the Saudi decision, taken May 10 and announced yesterday, to increase crude production.

``Our problem in America gets solved when we aggressively go for domestic exploration,'' Bush said after meeting Afghan President Hamid Karzai ahead of a World Economic Forum conference. ``Our problem gets solved if we expand our refining capacity, promote nuclear energy and continue our strategy for the advancement of alternative energy as well as conservation.''.....

Fed's Lockhart Says Inflation Is `Elevated' Amid Slowing Growth - Bloomberg

Federal Reserve Bank of Atlanta President Dennis Lockhart said the U.S. economic slowdown may impede global growth, while rising consumer prices pose an increasing threat both at home and abroad.

``The U.S. economy is in the midst of a pronounced slowdown, with very little growth recorded for two consecutive quarters,'' Lockhart said in the text of a speech today in Atlanta. At the same time, ``the United States has experienced elevated inflation levels partially driven by a run-up of energy and other commodity prices.''

Lockhart joined Kansas City Fed President Thomas Hoenig and Richard Fisher of the Dallas Fed, who also warned about rising prices this week. Policy makers indicated last month they may take a breather after lowering the benchmark U.S. interest rate by 3.25 percentage points since September. The reduction in rates this year has been the most aggressive in two decades.

Lockhart didn't discuss the path of interest rates. The Federal Open Market Committee next meets June 24-25.....

SAP says U.S. challenging; Europe, Asia strong - Reuters

Business conditions in the United States remain challenging for software maker SAP thanks to the financial crisis but there are no signs that matters are worsening, and demand in Europe and Asia is strong, co-Chief Executive Henning Kagermann said on Sunday.

"Europe and Asia are still strong," Kagermann told journalists on the eve of the company's annual European conference, "Sapphire", in Berlin.

Kagermann said he was "not too optimistic" about this year but said the company's profit targets left enough room for conditions to worsen without the targets' having to be adjusted.

ResCap says receives enough consents for bond exchange - Reuters

Residential Capital Management LP, the mortgage finance unit of GMAC GMA.N, said on Sunday it received the requisite consents for a bond exchange on all the $14 billion of its outstanding notes.

ResCap said earlier in May it started offers to exchange $12.8 billion outstanding notes for newly issued notes and had commenced a cash tender offer for all its outstanding $1.2 billion floating rate notes.

GMAC is 51 percent owned by a group led by private equity firm Cerberus Capital Management LP [CBS.UL]. It bought that stake in 2006 from General Motors Corp (GM.N: Quote, Profile, Research), which owns the remaining 49 percent.....

California Luxury Home Prices Fall for Second Straight Quarter - Bloomberg 

California luxury home prices fell for the second consecutive quarter as banks required higher credit scores and down payments, reducing the number of potential buyers in the state's wealthiest communities.
 
  The average price of a luxury home in the San Francisco Bay Area declined 0.8 percent from the previous three months to $3 million, according to a survey by First Republic Bank, a unit of Merrill Lynch & Co. Los Angeles prices dropped 2.2 percent to $2.35 million and San Diego prices fell 2.2 percent to $2.06 million.
 
  ``Values of luxury homes in California have declined slightly in price after many years of strong appreciation,'' Katherine August-deWilde, president of San Francisco-based First Republic Bank, said in a statement.....

Thomson Reuters to Cut 835 Technology, News Jobs After Merger - Bloomberg 

Thomson Reuters Corp., formed by Thomson Corp.'s $15.9 billion purchase of Reuters Group Plc, plans to eliminate about 835 jobs to help make the cost savings promised by executives.
 
  The reductions include 140 news positions, as many as 650 jobs in content, technology and operations, and 45 posts in sales and service, according to e-mails sent by Thomson Reuters managers to staff and obtained by Bloomberg News. More than half the news jobs to be cut are in Europe, the New York-based company told its journalists today.
 
  Chief Executive Officer Thomas Glocer, 48, is integrating legal databases, bond-trading networks, news, and advisory services. The company, which has about 50,000 employees, said May 1 annualized savings will total $1 billion by the end of 2010 and $1.2 billion a year later.
 
  ``There are obvious areas such as databases and news where job cuts are unavoidable and necessary because of overlaps,'' said Gareth Thomas, an analyst at Collins Stewart Plc in London who recommends selling Thomson Reuters shares. ``But investors also want to know what the impact on profitability will be, or how much of the savings will go through to the bottom line and how much will be reinvested.''....

Dairy Co-Op Faces Price-Manipulation Probe - Wall Street Journal

Federal regulators are investigating allegations that the nation's largest dairy cooperative, Dairy Farmers of America, has manipulated milk and cheese prices, and are separately reviewing a secret transfer of cash to a former director of the organization.

The farmer-owned cooperative, which controls a third of the U.S. milk supply, also faces antitrust lawsuits by farmers and retailers alleging it conspired to suppress prices it paid for raw milk in the Southeast, while raising prices to the region's retailers. Such tactics could have the effect of boosting the co-op's profit as a middleman.

The allegations and the respective government inquiries follow six years of rapid consolidation in the dairy industry, one of the reasons milk prices have risen sharply in recent years. But it is difficult to determine how much the alleged manipulation, if it took place, might have affected consumer and farm-level prices because so many other factors influence them.

Dairy prices fluctuate in response to supply and demand, drought and, more recently, fast-rising feed and energy prices. Since the start of 2004, consumer milk prices have risen about 32%, compared with a 15% increase for food prices in general, government data show.....

Lowe's First-Quarter Profit Falls on U.S. Housing Slump - Bloomberg

Lowe's Cos., the second-largest home- improvement retailer, said first-quarter profit fell after the worst U.S. slump in more than 25 years slowed spending on remodeling projects.

Net income decreased to $607 million, or 41 cents a share, from $739 million, or 48 cents, a year earlier, Mooresville, North Carolina-based Lowe's said today in a statement distributed by PR Newswire. Sales declined to $12 billion. The company forecast annual earnings that trail an earlier projection.

``The industry is still feeling the effects of a significant drop in existing home sales,'' Chris Horvers, an analyst with Bear Stearns & Co., wrote in a research note May 16....

Schultz's Second Act Jolts Starbucks - Wall Street Journal

For two decades, Howard Schultz enjoyed uninterrupted success building Starbucks Corp. into a hip chain of coffee shops that richly rewarded shareholders.

But with profits off and the stock sinking, Mr. Schultz is cast in an unfamiliar new role: the person who must re-energize a company that has lost its edge. That has unleashed an intensity in him that is rattling the feel-good Starbucks culture.

"We are going to bring this company back!" Mr. Schultz practically shouted at a meeting with managers in New York in April. The idea of skeptics that the battered stock won't recover is "total bull-" he said, his voice rising.

Mr. Schultz owns 5% of Starbucks's shares, and he just got cause for even more urgency about a turnaround: Activist investor Nelson Peltz, a man known for making waves, disclosed last week that his Trian Fund Management has taken a position in Starbucks. Mr. Peltz, who has pressured other food companies to focus on their core business, wouldn't elaborate on his intentions in making the Starbucks investment. Mr. Schultz declined to discuss it.....