1. Housing starts and rate spikes
A rapid and unexpected spike in mortgage rates, to levels not seen in nearly five years, is casting a shadow over the construction industry. Gear up for more bad news Tuesday, with housing starts for May. Chicago economist Paul Kasriel expects a drop of about 4 1/2 percent to an annual rate of 1.46 million units. “Builder surveys show weakness, and there were dramatic price cuts last month,” said Kasriel, of Northern Trust Co. “Builders are walking away from options on vacant property and it doesn’t appear they are eager to start a lot of new projects.”
2. Boeing’s tour de force
As the global aerospace industry gathers for the Paris Air Show, order-takers are seeing a rush to replace aging jetliners, with Boeing Co.’s 787 Dreamliner flying circles above its restless European competitor, Airbus. Even the Russians are lining up.
3. Black’s swan song
The lengthy trial of news media billionaire Conrad Black goes into final arguments Monday. Black, whose company once owned the Chicago Sun-Times, is accused of committing fraud by taking millions of dollars in payments.
4. Snapping up Snapple
On Tuesday, Cadbury Schweppes PLC, the British candy and soft drink company, is to disclose results of an auction for its U.S. soft drink business, which makes 7 Up, Dr. Pepper and Snapple. Money from the deal may be targeted at buying Hershey Foods or Chicago-based Tootsie Roll. On Wednesday, the Swedish parliament may take steps to privatize Absolut vodka. A possible buyer: Deerfield-based Fortune Brands.
5. Rise and fall of utilities
Recent turmoil in the stock market has taken an especially heavy toll on utility stocks, which fell by about 9 percent from record levels. Analysts blame rising long-term interest rates because electricity providers are big borrowers. Flossmoor-based adviser Richard Evans says, “In 1987, utility stocks went down seven months before the crash. One dip doesn’t make a bear market.”
———-
wsluis@tribune.com
