Stocks on track to cap 4th month of gains in 2013

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NEW YORK (CNNMoney)

Stock market investors will be especially keeping a close eye on how the bankers view the U.S. economy's progress.

Recently, there have been signs that economic growth is losing steam -- job growth slowed in March, retail sales slumped and the manufacturing sector showed signs of weakness.

Still, stocks are on track to end April on a positive note this week, the fourth month of gains for 2013.

The Dow headed for its fifth consecutive up month, and the S&P and Nasdaq are poised for their sixth. So far this month, the Dow Jones industrial average is up 0.9%, while the S&P 500 has gained 0.8% and the Nasdaq is up 0.4%.

But trading could be choppy this week as investors take in another batch of corporate earnings, prepare to face the April jobs report, while digesting the central bank meeting.

Investors are hoping the Fed will pledge to keep up its pace of buying $85 billion in bonds each month, which has helped keep interest rates low. Also overseas, the European Central Bank is meeting Thursday. It is expected to cut the benchmark interest rate as the region's economies continue to struggle.

The commitment from the Fed, ECB as well as other central banks around the world to buy bonds and keep interest rates low until economic growth is stronger and sustainable has helped fuel the global stock market rally. The ongoing stimulus is likely to keep markets lifted.

Related: Google can help you time the market

The closely-watched monthly jobs report for April is scheduled for release on Friday. It will give investors a better idea of whether companies have picked up the pace of hiring, a key driver of the economy. Economists expect the economy to have added 150,000 jobs this month, after just 88,000 in March, according to Briefing.com. The unemployment rate is forecast to hold steady at 7.6%.

Leading up to Friday's jobs report, investors will get snapshots of the labor market from payroll processing firm ADP, Challenger's report on job cuts, and the government's weekly report on initial unemployment claims.

The week's heavy economic calendar also includes reports on personal income and spending, the housing market, manufacturing and consumer confidence.

Related: Fear & Greed index stuck in neutral

The corporate earnings calendar is also busy. Mark Zuckerberg's Facebook (FB), controversial supplements company Herbalife (HLF) and gunmaker Sturm Ruger (RGR) are all on tap to open their books.

More than 100 S&P 500 companies are reporting results this week, including drug makers Pfizer (PFE, Fortune 500) and Merck (MRK, Fortune 500), First Solar (FSLR), credit card companies Visa (V, Fortune 500) and Mastercard (MA, Fortune 500), AIG (AIG, Fortune 500), and Warren Buffett's Berkshire Hathaway (BRKA, Fortune 500).

A slew of media companies are also slated to announce earnings, including CNNMoney parent Time Warner (TWC, Fortune 500), Comcast (CMCSA), Viacom (VIA), CBS (CBS, Fortune 500) and Dreamworks Animation (DWA).

Auto giants General Motors (GM, Fortune 500) and Chrysler parent company Fiat (FIADF) are also expected to report.

More than half of the S&P 500 companies have already reported results, and nearly 70% have topped expectations, according to Thomson Reuters. However, only 43% have exceeded revenue forecasts, which is considerably below the long-term average of 62%.

First Published: April 28, 2013: 11:41 AM ET

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If not now, when will ECB cut rates?

The ECB will meet in the Slovakian capital Bratislava Thursday, under intense pressure to cut rates for the first time since July 2012

LONDON (CNNMoney)

The European Central Bank has kept its main interest rate at a record low of 0.75% since July 2012 but the clamor for it to relax monetary policy is growing as data deteriorates and its peers take more aggressive action to support their economies.

Eurozone inflation fell to 1.7% in March, comfortably below the ECB's target, and economists expect an even weaker print with the release of April numbers Tuesday.

Since the central bank's governing council last met in early April, when the ECB said it was "ready to act" if the gloom deepened, the International Monetary Fund has cut its global forecast and business surveys have signaled renewed weakness in Germany, Europe's most important economy.

Related: U.S. economy revs up but pace may slow

Unemployment levels in struggling eurozone states such as Greece and Spain have scaled new peaks above 27%. Over 6 million Spaniards are now unemployed and more than half of young workers under the age of 24 are out of work in both nations.

Some commentators believe the ECB will hold fire until it releases new forecasts for growth and inflation in June, but a narrow majority of economists surveyed by Reuters expect a cut to 0.50% when the governing council gathers in the Slovakian capital of Bratislava on Thursday.

"Given the latest data, we think that the case for a front-loaded rate cut is strong enough already, so that the ECB is likely to cut rates on May 2," wrote UBS economist Reinhard Cluse in a research note.

European policymakers continue to predict a gradual recovery in output in the second half of the year but are coming under growing pressure to slow the pace of austerity and do more to improve financing conditions for banks and businesses.

Billionaire investor George Soros warned earlier this month that Germany risked sliding into a recession of its own making by insisting on a rigid policy of austerity and because ECB monetary policy was "out of sync" with the quantitative easing being pursued by other major central banks.

Related: Bank of Japan stands firm while deflation worsens

The International Monetary Fund and independent economists have called for the ECB to cut rates, even if the impact may be little more than symbolic because banks in countries such as Italy and Spain are still hobbled by bad debts and need to rebuild their capital.

The ECB is considering other ways of tackling the credit squeeze but has no appetite for the quantitative easing pursued by the Bank of Japan, Federal Reserve or Bank of England.

Its weapon of choice -- buying government bonds in the secondary market but only under strict conditions and within the framework of an EU bailout agreement -- has not even been tested yet and is viewed with suspicion by Germany.

"We continue to believe that the chances of fully-fledged quantitative easing from the ECB are low," noted Nomura economist Nick Matthews.

The challenge facing the ECB was starkly put when German chancellor Angela Merkel, who is hoping to be re-elected later this year, made a rare intervention in the monetary policy debate late last week.

"The European Central Bank is obviously in a difficult position," she said.

"For Germany it would actually have to raise rates slightly at the moment, but for other countries it would have to do even more for more liquidity to be made available and especially for liquidity to reach corporate financing."

First Published: April 29, 2013: 12:25 AM ET

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China cracks down on military use of luxury cars

A fleet of luxury sedans parked outside last year's 18th National Congress of the Communist Party of China.

HONG KONG (CNNMoney)

China has banned the use of military license plates on expensive cars, according to official state media. The new guidelines were issued by the Central Military Commission, and are the latest anti-corruption measures undertaken by the image-conscious government of President Xi Jinping.

Military license plates had been something of a golden ticket in the past, with some owners openly flouting traffic rules and skipping required toll payments. Some reports suggest the plates were occasionally auctioned off to civilian buyers.

Xinhua, China's state news agency, suggested the problem is one of image.

"In recent years, irregularities in the use of military cars have drawn public attention," the agency said. "Some internet users have posted snapshots on popular Twitter-like microblogs featuring limos with military license plates."

Related story: Wild cars from the Shanghai Motor Show

According to the new regulations, military plates are now prohibited on Mercedes-Benz, BMW, Lincoln, Cadillac, Volkswagen Phaeton, Bentley, Jaguar and Porsche models. SUVs including the Porsche Cayenne and Audi Q7 were also singled out.

Put more broadly, the plates cannot be used on cars with engines larger than three liters, or a value over $73,000. To accomplish the change, the army will issue new plates designed to stop counterfeiters, and collect all previously-issued plates.

Luxury auto sales are booming in China, and many automakers are turning to the growing market in search of sales. Government officials are often among the buyers, with the Audi A6 being a particularly popular choice.

Related story: China luxury battles shifting tastes

The People's Liberation Army General Logistics Department said the policy change was needed to maintain the military's reputation.

"The move is meant to crack down on the creation, sale and use of counterfeit military vehicle plates and root out loopholes in military vehicle management, so as to maintain social harmony, stability and the reputation of the military," state media said, quoting a statement issued by the agency.

Xi, China's newly-installed president, has made the fight against corruption one of his government's top priorities.

He has exhorted Communist Party officials to "build a clean government, show self-discipline and restrain their relatives and associates."

The stakes are high, with Xi warning that graft and corruption could lead to "the collapse of the Party and the downfall of the state."

-- CNN's Vivian Kam contributed to this report.

First Published: April 29, 2013: 2:10 AM ET

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Tesla offers idiot-proof battery warranty

NEW YORK (CNNMoney)

The battery is covered even if an owner fails to follow charging guidelines laid out in the owners' manual. "Any product that needs a manual to work is broken," Musk said.

The only cases in which Tesla (TSLA) would not honor a battery warranty would be a case in which a customer deliberately attempted to damage or destroy the battery, he said.

"If you take a blow-torch to the battery pack or blow it up or use it for target practice" the warranty would be voided, Musk said. Also, of course Tesla would not cover battery damage resulting from a crash. Car insurance will have to pay for that.

The Model S batteries will continue to be covered by either an eight year, 125,000 warranty or an eight-year unlimited mile warranty depending on the size of the battery pack in the car. (The Model S is sold with two different size battery packs.)

So far, Musk said, Tesla has not had a single problem with the batteries themselves failing. Any failures that have occurred have been due to faulty computer chips and other components.

The automaker also announced other improvements to the service it offers Model S owners including nicer loaner cars. "Our service is OK and it needs to be great," Tesla CEO Elon Musk said in a conference call with reporters.

When the vehicles need service, rather than having owners bring their cars to Tesla service centers themselves, Tesla will pick up the cars and owners will be given loaner cars. Tesla's loaner car fleet will now include only top-of-the-line Model S cars, equipped with the 265 mile long-range battery packs, and Tesla Roadster sports cars.

Gallery - 8 collectible SUVs

The loaner cars will also be available for sale, at a discounted price, should a Tesla owner decide he or she likes the loaner better than the car he already owns. Tesla also made the previously-required annual service visit entirely optional. The warranty will now be honored even if a Tesla owner never brings the car in for service.

Tesla cars are repaired at service centers that are separate from the showrooms in which the cars are sold. It's a novel system that has brought Tesla into conflict with traditional auto dealers in some parts of the country.
"I've told the Tesla service division that their job is never to make a profit," Musk said. Most auto dealerships make a large portion of their profits from the service department which, Musk pointed out, creates a conflict of interest when it comes to product quality.

"I hate the idea of making money because our product broke," said Musk. "That's just wrong."

These changes to Tesla's service come shortly after Tesla announced new financing options for its electric cars. Tesla is working on improvements to the recently announced financing plan, Musk said in an interview.

"We're going to come out with a modified or improved version as soon as we can get things squared away with our banking partners," he said.

So far, Tesla has sold about 7,000 Model S cars since they went on sale late last year.

First Published: April 26, 2013: 4:05 PM ET

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FAA furlough reprieve: 'No fair!'

Lawmakers effectively canceled the furloughs of FAA air traffic controllers in an effort to end airport delays. Critics say Congress shouldn't pick favorites for reprieve from supposed across-the-board budget cuts.

NEW YORK (CNNMoney)

But advocates for everyone else directly affected by the so-called sequester are miffed with the selective undoing of what were supposed to be across-the-board cuts.

"We've got to save the traveling public but I ask the question about 5,000 children in Texas that will lose Head Start or the millions of seniors or our military families that will lose the support because we've got the sequester," Rep. Sheila Jackson Lee, a Democrat from Texas, said Friday.

Joseph Beaudoin, a former federal air traffic controller who now heads the National Active and Retired Federal Employees Association, was glad to see Congress reverse his former colleagues' furloughs. But he is worried about all the other federal government workers who aren't so lucky.

"Last month, Congress took action to ensure that furloughs could be avoided for TSA agents, meat inspectors and border patrol agents. However, hundreds of thousands of federal employees providing services across the United States still face furloughs," Beaudoin said in a statement. "We've had enough of the reactionary legislative response. It is time for Washington to come together to agree to smart, sensible approaches to tackling the budget."

Weary air travelers to get break from furloughs

The liberal activist group MoveOn.org was more scathing, contending the reversal was "solely to appeal to wealthy contributors who fly frequently." It issued an online petition to "demand that any emergency legislation to eliminate airline delays caused by the sequester also restore cuts to Head Start, cancer clinics, housing assistance, food pantries, and unemployment insurance."

Meanwhile, NDD United -- a coalition of 3,200 groups focused on public health, medical research, education and other areas -- sent a letter to Congress before the FAA reprieve was passed. "Damage control is not a sound fiscal policy. We urge you to reject any efforts to pick favorites and instead fix sequestration, once and for all," the letter said.

First Published: April 26, 2013: 5:06 PM ET

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50 million customers hit in LivingSocial hack

LivingSocial is requiring all customers to change their passwords after a cyberattack on its systems.

NEW YORK (CNNMoney)

The daily deals site recently suffered a cyberattack on some of its servers, and customer data for more than 50 million users may have been accessed, the company said late Friday. Credit card data was not affected.

Some users who attempted to log in on Friday were greeted with a message about the "unauthorized access," and were required to reset their passwords.

A LivingSocial spokesman sent CNNMoney a copy of an email that the company is sending to customers, which says the hackers may have accessed names, email addresses, encrypted passwords and the dates of birth for some users.

All LivingSocial users had some data stored on the hacked server, the spokesman said, except for customers in Korea, Thailand, Indonesia and the Philippines. Those countries use TicketMonster and Ensogo, which are on different systems.

The company declined to comment further on details of the hack, instead sharing an internal memo that CEO Tim O'Shaughnessy sent to employees earlier today about it. Tech blog AllThingsD first reported on the hack, citing that internal memo.

Related story: Stop hackers in their tracks

In the message that greeted users attempting to log in, LivingSocial said it is "actively working with law enforcement to investigate this issue."

News of the LivingSocial hack comes three days after the Associated Press Twitter account was compromised. The hackers sent a tweet falsely claiming an attack on the White House had left President Obama injured, sending stocks sharply lower for a brief moment.

First Published: April 26, 2013: 5:37 PM ET

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GE Capital halts lending for gun shop purchases

GE Capital has halted its lending program for purchases from gun shops.

NEW YORK (CNNMoney)

GE Capital, which provides consumer financing services, had previously provided lending services to gun shops to help consumers finance firearm purchases. Earlier this year, the company sent letters to shops notifying them that the program would be terminated for future purchases.

The move was the result of "a more rigorous audit process... in light of industry changes, new legislation and tragic events that have caused widespread reexamination of policies on firearms," GE Capital spokesman Russell Wilkerson said in an e-mail.

GE Capital had in 2008 stopped providing financing services to new merchants whose primary business was selling firearms. The move to nix the remaining relationships will affect less than 75 retailers and is an "immaterial" part of the company's sales volume, Wilkerson said.

Related: A fourth-generation gunsmith

It will not affect financing for guns bought at major retailers like Wal-Mart (WMT, Fortune 500) and Dick's Sporting Goods (DKS, Fortune 500), which sell guns along with a range of other items.

The decision comes months after the deadly shooting in Newton, Conn., which is not far from GE's headquarters in Fairfield, Conn. In the wake of the shooting, gun and ammunition sales have soared as lawmakers have considered stricter gun control measures.

A Wells Fargo (WFC, Fortune 500)spokeswoman said that the firm decided to stop its gun shop financing program nearly 10 years ago. Citigroup (C, Fortune 500) said that they do not provide retail financing at gun shops. Bank of America (BAC, Fortune 500) did not return requests for comment.

First Published: April 24, 2013: 5:23 PM ET

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Lawmakers probe government loan to Fisker as carmaker struggles

The Fisker Karma.

NEW YORK (CNNMoney)

Fisker laid off most of its employees earlier this month and missed its first loan payment to the Department of Energy on Monday. The Treasury Department has already seized $21 million in an effort to recover some taxpayer funds, but most of the $192 million remains at risk.

Republicans from the Committee on Oversight and Government Reform called Fisker's problems an example of ill-advised government intervention in the private sector, and questioned whether the company had benefited from alleged ties to the Obama administration.

Democrats dismissed these concerns and noted that the DOE loans for alternative-energy-based vehicles have been largely successful, with 98% of the roughly $8 billion awarded to five companies on track to be repaid. Ford (F, Fortune 500), Nissan (NSANF), Tesla (TSLA) and the Vehicle Production Group have also benefited from DOE loans.

Overall, the Department of Energy's clean-energy loan program -- authorized during the Bush administration -- has disbursed $17 billion and faces total losses of up to $780 million should Fisker file for bankruptcy.

While the carmaker could recover some additional funds through asset sales in bankruptcy, it appears in danger of joining solar-panel maker Solyndra as one of the program's high-profile failures.

Rep. Jim Jordan, a Republican from Ohio, said Fisker "never should have received taxpayer money." Noting the $107,850 price tag of Fisker's Karma plug-in sedan, Jordan said taxpayers "effectively subsidized luxury, novelty vehicles for the likes of Justin Bieber, Leonardo DiCaprio and Al Gore."

Jordan and other Republicans also alleged that Fisker backers were in regular contact with Obama administration officials, questioning whether the company had benefited from "crony capitalism."

Related: Carmakers take the Valley

Henrik Fisker rejected this allegation, noting that he had initially been approached to participate in the Department of Energy program by an official from the Bush administration. Nicholas Whitcombe, an official from the DOE's loan programs office, said the department made funding decisions based only "on the merits of the transaction."

"We conduct rigorous due diligence to protect taxpayers' interests," he said.

Democratic lawmakers noted that one of Fisker's key backers had contributed money to Republican political candidates, accusing GOP committee members of partisan grandstanding. Rep. Gerald Connolly of Virginia likened the proceedings to "a Soviet show trial."

Fisker suspended production of its only car, the Karma, in February. That followed a recall of most of the cars built in the second half of last year due to a possible problem with their battery-cooling systems and negative reviews from Consumer Reports.

The Energy Department originally promised Fisker $529 million three years ago. But as the company quickly fell into financial trouble, the department pulled back on that commitment and halted loan disbursements to Fisker in June 2011, after it had received $192 million.

Fisker has been seeking new investors to help revive its business, but has been unable to get back on track with the planned production of a smaller, less expensive plug-in sedan.

CNNMoney's Chris Isidore contributed reporting.

First Published: April 24, 2013: 7:07 PM ET

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Austerity debate rages in Europe

LONDON (CNNMoney)

At issue are the spending cuts and tax increases that have formed the core of the eurozone's response to its credit crisis the past few years.

Criticism that such austerity is self-defeating has gotten louder as evidence mounts that the region's recession and unemployment crisis may be getting worse.

In turn, European policymakers have gone out of their way to acknowledge that there are limits to austerity -- that spending can be cut just so much.

But it's far too soon to write austerity's obituary. While Europe's leaders may tweak policy, they are unlikely to start unwinding their get-tough approach anytime soon.

Related: Debt's impact on growth

European Commission President Jose Manuel Barroso, speaking in Brussels on Monday, admitted that the EU's drive for sound finances had "reached its limits" but was "fundamentally right."

Tough fiscal policy, Barroso said, "is indispensable but it has to be complemented by a stronger emphasis on growth, including short term measures for growth." Leaders need to make that point "louder and clearer," he added.

Olli Rehn, the commission's top finance official, said in a CNN interview that the EU has actually loosened the fiscal noose. He added that the overall pace of budget cuts has slowed in the past year, and that the EU has eased some terms of its national bailouts.

"I'm fully aware of the problems related to high levels of unemployment and low growth in many European countries," he said. "At the same time we have to realize that the debt levels in Europe are around 90% this year, and it is having a drag on growth."

Translation: We hear you that austerity can have harsh consequences, but the debt must be brought under control.

Related: Soros says Germany headed for self-made recession

The bailouts have posed particularly tough choices for EU policymakers.

Ireland and Portugal have been given seven more years to repay bailout loans. Greece, Spain and Portugal have been given more time to bring down their budget deficits, and France and others may be added to that group next month.

Greece, Portugal and Ireland were forced into bailouts in the first place because they were insolvent and investors would not lend to them. Painful deficit reduction, along with reforms to boost competitiveness and productivity, was always going to be the price of a rescue.

And it's clear from the latest government borrowing figures that the region still has a mountain of debt to climb.

The aggregate eurozone deficit fell to 3.7% of gross domestic product last year from over 6% in 2010. But overall debt levels across the 17 member states rose, including in Italy, Spain, Portugal and Ireland.

Eurozone debt hit 8.6 trillion euros, a record 90% of GDP, last year and is forecast to rise to 95% in 2013. Official forecasts see it stabilizing in 2014, but they assume no further relaxation of fiscal policy -- highly unlikely given the mounting social, political and economic pressures.

Either way, the debate over austerity vs. growth is bound to accelerate.

Italy, the region's third largest economy, this week nominated a new prime minister. Enrico Letta is a pro-European from Italy's center-left. He wants Europe to ease up on austerity.

On Thursday, when first quarter data is released, the U.K. may officially join the eurozone in recession. But it too shows no sign of changing course, despite criticism from the International Monetary Fund among others that it is cutting too fast.

"It's fair to say that growth is not coming through at the pace that we would like it, but if we remove the underpinning that financial credibility gives us, we run the risk of the whole thing going wrong and that would be dangerous," Roger Carr, president of the business lobby CBI told CNN.

First Published: April 25, 2013: 3:25 AM ET

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Samsung Galaxy S4 review: Gimmicky, but still one of the best

NEW YORK (CNNMoney)

The Galaxy S4's design is virtually unchanged from the Galaxy S III. And when I say virtually unchanged, I mean that you have to be pretty obsessive to notice the differences. Aside from a slightly more rectangular body and a more substantial, metal-esque band wrapping around the sides, there's little to separate Samsung's successor from its predecessor.

The most notable improvements to the phone's hardware guts come in its processor, display and camera. None are revolutionary, but they all match or one-up the Android status quo.

The 5-inch, Super AMOLED display is one of the best Samsung has ever put on a phone, with a 1080p display and a pixel density of 441 per inch -- more than enough to eliminate any trace of pixelation. The screen could stand to be a bit brighter, but that's a minor quibble.

Even with a bigger screen and a beefier battery, the Galaxy S4 managed to get ever-so-slightly thinner, slimmer, and lighter than the Galaxy S III. It also got a power boost.

Smartphone makers have spent the past few years flinging extra cores at everything, so yet another quad-core processor -- this time in the form of Qualcomm's (QCOM, Fortune 500) Snapdragon 600 -- doesn't sound all that exciting, especially compared to the "octo-core" Samsung Exynos 5 Octa that international markets are getting. (Geek caveat: Those extra four cores in the Exynos 5 are meant for low-power scenarios, so they don't provide the massive boost over Snapdragon that you might expect.)

Still, the fact that the Galaxy S4 is more than three times faster than the Galaxy S III when run through the same benchmarking tests is nothing to scoff at.

In using the phone regularly for a week, I rarely came across a moment when it suffered from significant stuttering, lag or overheating. The one noticeable exception was when I played "Real Racing 3," a graphically intense game that got choppy when too many cars were onscreen. That's not really Samsung's fault -- Android is notorious for its game lag.

The Galaxy S4's camera is also improved, though we're at the point of diminishing returns. On paper, the leap from 8 megapixels to 13 megapixels sounds substantial, but we learned years ago that the megapixel arms race is only part of the story when it comes to camera quality. The Galaxy S4's best new photo trick is a camera sensor that's back-illuminated, which means it can capture more light and produce brighter, more-detailed images without the use of a flash.

The camera works well in most normal situations. Its new user interface, pulled from Samsung's point-and-shoot Galaxy Camera, is nicely laid out and easy to use. The image processing time between hitting the shutter button and having a saved photo isn't blazing, but also isn't a nuisance. A few of the software advances, like being able to erase unwanted objects from an image's background or create time-lapse action shots, are neat and well-implemented.

Related story: Samsung's Galaxy S4 event launch fail

Of course, these improvements -- especially to the camera and screen -- require more power, and Samsung obliged by packing in a bigger battery. With the screen's brightness ranging between 50% and 75%, 4G turned on, and a few apps and services running in the background (Facebook, Gmail, Google Talk, etc. -- the usual suspects), I was still able to get through a full day with moderate use. With heavier usage, I found myself having to recharge after 6 to 8 hours. On the whole, I didn't notice any huge leap in battery life over the S3, but it certainly wasn't worse, either.

The features Samsung wants buyers to focus on, though, aren't the Galaxy S4's internal guts, which are more or less identical to other top smartphones right now. It's the software upgrades baked into Samsung's custom "TouchWiz" interface. The phone's flashier tricks include pausing video when you look away from the screen, letting you answer the phone by waving in front of it, and activating tilt-based scrolling when eye contact is detected. Samsung also pinched a few features from its Galaxy Note 8.0 tablet, like allowing two apps to simultaneously run side-by-side, and the Airview feature, which detects when your finger is hovering over -- but not quite touching -- the screen. The gesture can activate a secondary action or menu.

Those are neat tricks, but they're more like a sword-juggling circus act than the revolutionary breakthrough Samsung would like them to be. They're interesting, novel and sometimes impressive, but they're not significant or lasting advances. None are meaningfully better than our existing methods of smartphone interaction.

So, is the Samsung Galaxy S4 one of the best Android phones available? Yes. There are few other phones, period, that are as powerful and capable. But, in line with what we've seen from the past few iPhone generations, the improvements here aren't as pronounced and exciting as in past years. This isn't a phone that's going to convert an iPhone user, and current Galaxy S III owners aren't going to miss out on a whole lot as far as features go.

If you're ready for an upgrade, and are in the market for an Android phone, there's no reason why this shouldn't be one of top two or three phones you consider. It's not the standout, though, that Samsung needs to remain the preeminent leader of the Android field. Hear that, HTC?

First Published: April 24, 2013: 12:05 AM ET

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America's air is getting cleaner - and less costly

As air pollution decreases, Phoenix is one of the cities that's showing a marked improvement.

NEW YORK (CNNMoney)

The American Lung Association's annual "State of the Air" report -- based on EPA findings for 2009 through 2011 -- found that the three types of air pollution they track have all declined.

"We are happy to report that the state of our air is much cleaner today than when we started the report 14 years ago," said Harold Wimmer, the ALA's CEO. "But the work is not done."

The report covers short-term and year-round particle pollution, which includes dust, metals, smoke, exhaust and acids. It also measures ozone, which is created mainly from a reaction between sunlight and unburned gases in engine exhaust. These three types of pollution represent the most widespread airborne threats to people's health.

About 132 million people in the United States, or 42% of the country's population, live in counties that have unhealthy levels of at least one form of air pollution. This can lead to asthma, cardiovascular issues, lung problems and premature death.

"All three [types of pollution] kill people and cause harm to those with respiratory problems," said Janice Nolen, lead author of the State of the Air report. "Particle pollution is more lethal, but ozone is dangerous too. Both need to be cleaned up."

Related: China crushes U.S. in green energy investments

There's a huge economic benefit to alleviating these health risks, says Nolen. By 2020, the EPA estimates that the savings from cleaner air will total $2 trillion annually and cost just $65 billion to make the necessary improvements.

The country is already seeing the benefits, according to the EPA: Improved air quality helped prevent 160,000 deaths in 2010 (the last year data was available); avoid 1.7 million asthma attacks; and reduce hospital admissions and emergency room visits by 86,000 each.

Wimmer credited the Clean Air Act, first passed in 1963 and expanded over the years, with reducing pollutant levels. The EPA's latest proposal, set to kick in by 2017, will further purify engine exhaust by reducing sulfur content in gasoline.

The agency will also continue its push to retrofit power plants, use more renewable power, switch to "greener" household products and burn natural gas instead of wood for heat.

Related: You're getting stuck in traffic less

Separately, increased natural gas production in the U.S. will be a huge driver in improving air quality. A supply glut has dramatically reduced natural gas prices -- making it cheaper for power plants to burn than coal, and far cleaner. In 2012, for the first time ever, natural gas generated as much electricity as coal, and with energy production booming, this trend is likely to continue.

As a state, California has led the nation in implementing clean-air programs, but its cities still consistently have the most serious pollution. High population densities, a dry and sunny climate, and topography that traps air all frustrate progress. Four cities in the Golden State -- Bakersfield, Fresno, Hanford, and Los Angeles -- are in the top 10 in all three categories of pollution and have been for years. Bakersfield had the worst air quality for any metro area for the third year in a row.

Outside of California, Pittsburgh had the worst air quality, due to the toxic side effects from numerous coal-fired power plants in the region.

A couple of cities made significant progress. Phoenix dropped out of the top 10 cities for year-round particle pollution, while San Diego's ozone levels improved enough to get it out of the top 10 as well.

First Published: April 24, 2013: 12:16 AM ET

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European drug stocks are on a tear

Expiring drug patents are a thing of the past. Investors are taking notice.

LONDON (CNNMoney)

Investors have been piling into big pharma companies as worries about the expiration of lucrative patents and a thin pipeline of new drugs have receded, and as a desire for high-quality stocks with stable dividends has grown.

The STOXX Europe 600 Health Care index has rallied 15% since the start of January and easily outperformed the sluggish benchmark index, the STOXX Europe 600, which has nudged up by less than 4%. An ETF tracking the Health Care index has a dividend that yields nearly 2%.

Well-known names such as Switzerland's Roche and the U.K.'s GlaxoSmithKline (GSK) have been doing particularly well since the start of the year. Roche shareholders have seen the stock surge by roughly 19% and GSK shares have posted a 23% jump.

Prices for large-cap pharmaceutical stocks had been weighed down for years as companies braced themselves to lose their lucrative patents for blockbuster drugs. But now that those 'patent cliffs' have come and gone, investors are focusing more on growth opportunities and dividends.

"I think the run in pharma is going to continue," said Daniel Mahony, a London-based fund manager with Polar Capital who specializes in health care investments. "The patent cliff now is in the rear-view mirror for most companies. The question going forward is, 'where is growth going to come from?'"

The general consensus is that growth will come from the aging population in most developed economies combined with higher demand for healthcare in emerging markets.

Henderson fund manager John Bennett, who has funneled roughly 30% of his investments into European pharmaceutical companies, said that continued concerns about the industry and the expiration of drug patents were overdone.

"We may be only part way into what may turn out to be a decade-long bull market," he said in a recent research report.

Related: Hospitals profit more from surgical complications

Investors are also getting excited about new research and development efforts in the industry as companies increase their drug trials.

Naresh Chouhan, an equity analyst specializing in European pharmaceuticals at Liberum Capital, says R&D has significantly improved over the past few years, which could drive big pharma towards becoming a growth sector.

"Given that output in R&D is improving, the market is more willing to pay a higher multiple because the revenue seems more sustainable than it has done over the last five years," he said.

Worries about bloated R&D budgets are also a thing of the past.

"Commitment to R&D remains strong, but it is much more focused, leaner and efficient than it used to be," said Bennett.

When it comes to stock picking, Roche is a particularly hot investment right now, said Polar Capital's Mahony, who maintains shares are still relatively cheap despite the recent rally.

"The companies that are perceived to be the best innovators will outperform," he said.

Roche's drugs are also particularly difficult to copy, which makes them even more valuable from an investment standpoint, he said.

The current dividend yield for Roche shares is near 3.5%, which is roughly in line with the dividend yield for the rest of the big health care companies in Europe.

Sanofi (SNY) is another company that has the investment odds stacked in its favor, according to Morningstar equity analyst Damien Conover.

"Sanofi is well positioned to take advantage of the accelerating income in emerging markets because the firm has been entrenched in these regions for many years," said Conover.

Of course, the sector is not without its risks.

Scott Braunstein, portfolio manager for J.P. Morgan's global healthcare fund, said big pharma could face further pricing pressure in Europe and the U.S. as healthcare providers tighten their belts, a trend that could also be seen in emerging markets.

First Published: April 24, 2013: 3:37 AM ET

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Netflix stock surges 25% on solid subscriber growth

Netflix trounced Wall Street's earnings expectations thanks to a big increase in video streaming subscribers.

NEW YORK (CNNMoney)

Netflix signed up more than 2 million new U.S. streaming subscribers in the first quarter, which was at the top end of the company's own predictions. The first quarter included the launch of Netflix's most ambitious original series to date: "House of Cards," starring Kevin Spacey.

The strong subscriber gains helped Netflix handily beat analysts' earnings estimates. Profit, excluding one-time debt-related charges, came in at 31 cents per share, while analysts polled by Thomson Reuters were expecting earnings of 19 cents per share.

Sales just topped $1 billion, in line with expectations.

Netflix (NFLX) shares soared 25% in after-hours trading following the company's earnings announcement. That jump could be attributed partially to Netflix's high percentage of short sellers, or investors who "borrow" shares expecting to sell when the price drops. If the stock goes higher, short sellers are forced to buy up shares and cover their positions.

Related story: New Netflix Facebook app lets users share viewing history

Netflix's quarterly earnings report is investors' first look at Netflix's original content plan, which the company first announced in late 2011. Netflix is rolling out a long list of original series this year: A second season of "Lilyhammer," a new season of the canceled "Arrested Development," a kids show from DreamWorks Animation, a new series from horror king Eli Roth, one from comedian Ricky Gervais and another from "Weeds" creator Jenji Kohan.

Hastings said Monday that if the original content is successful in the coming months, Netflix could expand its stable to 20 or more shows.

"In the next two years, it's a modest increase," he said in a conference call with analysts. "If that were wildly successful for us, as the first three shows have been, we could continue to expand to 20 or north, but that would be dependent on what happens the rest of this year."

Though Netflix's results were solid, the company still struck a defensive tone in its letter to shareholders.

"Long term, we believe the value of our original series ... will be borne out as we add more seasons of already popular shows like 'House of Cards' and further series," the company wrote. "Harry Potter was not a phenomenon in book one, compared to later books in the series."

Netflix has reason to be defensive, as analysts have expressed two big concerns about the original content approach. First, the company is releasing all episodes at once -- which means someone could sign up with a free trial for a month to watch "House of Cards" and cancel right afterward.

Netflix addressed that issue head-on in its letter, saying fewer than 8,000 people "gamed" the free trial offer during the quarter.

"Our decision to launch all episodes at once created enormous media and social buzz, reinforcing our brand attribute of giving consumers complete control over how and when they enjoy their entertainment," Netflix wrote in its release.

Critics are also concerned that original series can be costly -- "House of Cards" reportedly cost $100 million for two seasons.

But Netflix spokesman Joris Evers told CNNMoney earlier this year that the company spent about the same amount on "House of Cards" as it would have on an exclusive streaming deal with an outside studio.

Those studios have demanded more for their valuable content over the past two years, as they can now shop their shows around to Netflix rivals: Hulu, Redbox (CSTR), Amazon (AMZN, Fortune 500) and more. HBO (owned by CNNMoney parent company Time Warner (TWX, Fortune 500)) and CBS (CBS, Fortune 500)' Showtime are also expanding their streaming offerings.

That competition has crunched Netflix's streaming growth in the United States, although the last two quarters have each brought more than 2 million new streaming subscriber signups. That gives Netflix a current total of nearly 29.2 million subscribers.

Hastings told analysts that "House of Cards" had generated "a very nice impact" in subscriber growth, "but a gentle impact, not one that's an overnight impact."

Netflix expects that growth to slow in the current quarter. For the second quarter overall, the company expects to add only 230,000 to 880,000 new U.S. streaming customers.

Hastings downplayed concerns that password-sharing could be a problem for the company, saying it was appropriate in the case of immediate family.

"We really don't think that there's much going on of the, 'I'm going to share my password with a marginal acquaintance,'" he said.

CNNMoney's James O'Toole contributed reporting.

First Published: April 22, 2013: 4:33 PM ET

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Cybercrime's easiest prey: Small businesses

Small businesses are the 'most victimized'

NEW YORK (CNNMoney)

A data breach investigations report from Verizon (VZ, Fortune 500), to be released Tuesday, will show that small businesses continue to be the most victimized of all companies.

Of the 621 confirmed data breach incidents Verizon recorded in 2012, close to half occurred at companies with fewer than 1,000 employees, including 193 incidents at entities with fewer than 100 workers.

A separate report from cybersecurity firm Symantec (SYMC, Fortune 500) confirmed that trend. It found cyberattacks on small businesses with fewer than 250 employees increased 31% in 2012, after growing by 18% in the prior year.

It's a pattern that Kevin Thompson, senior analyst with Verizon's RISK team, says he has noticed for the past six years.

Larger corporations have upped the ante against cybercrime recently, investing heavily in sophisticated security strategies. That's forced cybercriminals to look for other ways in.

"A typical small business doesn't have a 50-person IT department and every computer protected," said Andrew Singer, director of Symantec's small business group. "They don't have the money for it."

Related Story: Shodan: The scariest search engine on the Internet

Increasingly, cybercriminals are using smaller businesses as a stepping stone. Smaller suppliers or partners of large companies often "offer the path of least resistance" into a major corporation's network, noted Singer.

Another tactic some more patient cybercriminals are using is targeting small companies in growth industries, such as health care or manufacturing. The bad guys hope that their targets could be acquired by a larger corporation in a year or two. Meanwhile, they lie in wait -- if and when the company merges or is acquired, they gain access to breach the system of the larger parent company.

Despite the statistics, too many small businesses think they're invulnerable. Some believe their small business would be a boring target for hackers.

That's a mistake, said Vikram Thakur, Symantec's principal security response manager. Small businesses can't afford to remain complacent or ignorant about the risk of being a cyberattack target.

"Small businesses retain very valuable information for hackers, like customers' credit card numbers, intellectual property, and money in the bank," he said. "Small companies are lucrative victims, too. That's making the target on their back even bigger."

The most common tactics cyberattackers use against small businesses include "ransomware" scams that lock computers and demand a ransom fee. Attackers also use malicious software designed to steal information from employees' mobile devices and malware that uses a small businesses' website as bait to gain access to a larger company's database.

As cyberattacks proliferate against them, Verizon's Thompson said the most important lessons for small businesses are the most basic: Use good passwords, update your antivirus software and don't expose your essential business services to the Internet.

First Published: April 22, 2013: 9:24 PM ET

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China manufacturing expansion slows

HSBC's flash PMI index dropped in April.

HONG KONG (CNNMoney)

Global bank HSBC said its "flash" index of purchasing managers' sentiment fell to 50.5 in April from March's final reading of 51.6. Any reading above 50 signals expansion in the manufacturing sector.

"New export orders contracted after a temporary rebound in March, suggesting external demand for China's exporters remains weak," said Hongbin Qu, an economist at HBSC. "Weaker overall demand has also started to weigh on employment in the manufacturing sector."

The strength of manufacturing in China is considered a barometer of the global economy because of the nation's role as a powerhouse exporter. Because it makes up a large part of China's economy, manufacturing plays an important role in shaping domestic policy.

China's economy has grown at an average of around 10% a year for the past three decades, allowing the nation to rocket past competitors to become the world's second-largest economy.

But China's economy grew at a slower pace at the start of the year than economists had expected, expanding by only 7.7% over the previous year during the first quarter.

Related story: China growth slows in first quarter

Inflation, a problem in 2012, has been tame so far this year. But economists are worried about a rapid expansion in credit and a red-hot housing market.

Economists at HSBC said the lackluster manufacturing report could help spur policy changes from Beijing.

"Beijing is expected to respond strongly to sustain the economic recovery by increasing efforts to boost domestic investment and consumption in the coming months," Qu said.

First Published: April 22, 2013: 10:54 PM ET

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Deficits are falling. For now

Beyond 2016, both deficits and debt are projected to climb north once again,

NEW YORK (CNNMoney)

Remember 2009, the depths of the economic crisis? That year, the country spent way more than it brought in and ran an eye-popping shortfall that topped 10% of the size of the economy.

This year the deficit is expected to be half that -- around 5.3% of GDP, the Congressional Budget Office estimates.

And by 2015, it's projected to drop to 2.4%.

What's more, the national debt that has accumulated from annual deficits is also projected to fall to an estimated 73.1% of GDP in 2018 from an estimated 76.3% today.

Related: Does debt slow growth?

There are several reasons for the downward trend. The economy is on the mend. Incoming federal revenue has risen from 60-year lows and will soon top its historical average for much of the next decade. Spending, meanwhile, has come down from 60-year highs.

And, of course, projections have improved because Congress and President Obama have signed off on $4 trillion of deficit reduction that is set to unfold over the next decade. That assumes the roughly $1 trillion in forced budget cuts that went into effect last month are kept on the books or replaced with something comparable, as Obama has proposed.

So does this mean everyone can shut up now about needing to reduce deficits?

"The deficit is manageable in the medium-term given growth coming back on-line, low borrowing costs, and political decisions to cut spending in the 2011 debt deal and raise taxes in the 2012 tax deal," said Sean West, U.S. policy director at the Eurasia Group.

But the deficit reduction put in place so far won't do much to address the country's long-term fiscal situation, which is where the real debt problem lies.

"It would be naïve to think we're out of the woods. At the end of the decade we're back in the soup on entitlements. And debt servicing costs start to become a problem as well," said Greg Valliere, chief political strategist at Potomac Research.

Here's what he means: Because Congress has yet to get a handle on the large, long-term imbalances between spending and revenue, deficits are expected to start rising again by 2016 and debt will resume its upward trek by 2019.

Those imbalances will be driven by growth in spending on entitlement programs, especially Medicare, due to two factors.

The first is the aging of the population. The share of the population over 65 is expected to grow to 19% by 2029, up from 13% today, according to the Government Accountability Office. The second is the growth in health care costs, which regularly tops inflation.

Meanwhile, current tax policy won't generate the revenue needed to adequately support the expansion in spending.

As for interest on the debt, assuming current policies stay in place and interest rates start to rise as the economy improves, the CBO projects that by 2023 interest costs alone will be $857 billion, or nearly four times what the federal government is paying today. As a percent of GDP, interest costs would more than double to 3.3%, up from 1.4% this year.

That's why independent budget experts have been saying that policymakers will need to cut long-term spending, raise taxes or do both to head off a future budget crisis.

The GAO now estimates that under current policies and fiscally restrained assumptions going forward federal revenue by 2030 won't be able to cover much more than spending on interest and the big entitlement programs (Medicare, Medicaid, Social Security and health insurance subsidies).

By 2040, it won't even adequately cover those.

Barring serious reforms, the numbers would worsen thereafter.

First Published: April 22, 2013: 1:02 AM ET

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Stocks: Apple, Amazon, Netflix earnings on tap

Click the chart for more stock market data.

NEW YORK (CNNMoney)

One of the most anticipated reports will come from Apple (AAPL, Fortune 500) on Tuesday. The iPhone maker's stock hit a 52-week low last week as shareholders worried about the company's performance.

Last week's sell-off was mostly sparked by a weak sales outlook from chip company Cirrus Logic (CRUS), a key Apple supplier. Cirrus makes audio chips used in the latest iterations of the iPhone and iPad mini. Investors worried that this could signal a weak outlook for sales of those Apple products.

Wall Street expects the company to report a profit of $10.13 a share, a 15% drop from three months ago.

Related: Apple needs the iTV soon

Several other tech companies are also slated to report, including Amazon (AMZN, Fortune 500), Zynga (ZNGA), AT&T (T, Fortune 500), Sprint Nextel (S, Fortune 500)and Motorola (MSI, Fortune 500).

Netflix (NFLX) will also come out with earnings on Monday. Investors will be looking to see if the streaming video company's big bet on its original series "House of Cards" paid off.

Airlines will be on tap, too. United Continental (UAL, Fortune 500), US Airways (LCC, Fortune 500), JetBlue (JBLU), SouthWest (LUV, Fortune 500), and Delta (DAL, Fortune 500) will come out with earnings throughout the week, as will airplane manufacturer Boeing (BA, Fortune 500).

Auto companies Ford (F, Fortune 500) and Mazda (MZDAF) will also be in play. On the oil and energy front, Hess (HES, Fortune 500), Exxon Mobil (XOM, Fortune 500) and Chevron (CVX, Fortune 500) are expected out.

Starbucks (SBUX, Fortune 500), Procter & Gamble (PG, Fortune 500) and YUM Brands (YUM, Fortune 500) will also report.

Overall, analysts expect earnings for S&P 500 companies to rise by 2% for the first quarter, according to S&P Capital IQ. But earnings season is far from over. So far, 104 companies in the S&P have reported, with 70 beating forecasts, 23 missing and 11 in line.

In economic news, the advance estimate for first quarter gross domestic product will come out on Friday.

U.S. economic growth was weak at the end of last year, as GDP rose at a mere 0.4% annual rate in the fourth quarter. Still, it is much better than the original estimate of a 0.1% decline.

Several reports on the U.S. housing market are due out, including new and existing home sales and the FHFA housing price index.

Last week, the U.S. stock market suffered the worst week of 2013, with the Dow Jones Industrial Average, S&P 500 and Nasdaq all falling more than 2%.

First Published: April 21, 2013: 12:17 PM ET

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U.K. may have slipped into a third recession

Bitterly cold weather hit retail sales and construction in the U.K. last month.

LONDON (CNNMoney)

Most economists expect the world's sixth-largest economy to narrowly avoid a second consecutive quarter of contraction when the first estimate of first-quarter output is released on Thursday. But the chances of a surprise are high.

The U.K.'s gross domestic product fell by 0.3% in the final quarter of 2012. A triple-dip recession would be unprecedented, and pile pressure on finance minister George Osborne to spread the pain of government spending cuts over a longer period of time.

UBS economist Amit Kara said he expected U.K. GDP to show zero growth, but cautioned that the cold weather could spring a shock and send the economy into reverse again.

"There are large risks to this forecast because of the unusually cold weather in March, and if we are wrong, and the UK economy does slip into recession once again, the triple dip will have become reality," he wrote in a research note.

A recovery in the dominant services sector was likely to have been canceled out by a "weather-related" collapse in construction, noted Nomura's UK economist Philip Rush, who also expects no growth in the quarter.

Retail sales were also weaker than expected in March, falling 0.7% on the previous month as British consumers, already squeezed by falling real incomes, stayed at home during the unusually cold spell.

Related: Time for world to kick cheap money habit?

The U.K. economy contracted for five consecutive quarters from the second quarter of 2008, and was back in recession for nine months in late 2011 and early 2012 when the eurozone debt crisis was raging.

The International Monetary Fund cut its forecast for U.K. growth in 2013 by 0.3% last week citing depressed demand, and said the government should think about taking a more flexible approach to cutting the budget deficit. On Friday, Fitch Ratings downgraded U.K. debt to 'AA+' from 'AAA', citing the impact of weak growth on debt and deficit levels.

Related: Debt's impact on growth: the debate continues

Finance Minister George Osborne has stuck resolutely to the path of austerity, arguing that a policy of fiscal discipline and cheap central bank money will ultimately bear fruit.

A new recession would also raise the chances of further stimulus from the Bank of England, which has held interest rates at a record low of 0.5% since March 2009 and bought £375 billion of government bonds.

Governor Mervyn King and two fellow members of the Bank of England's monetary policy committee were outvoted again this month when they argued in favour of extending the bond purchases by a further £25 billion. The bank last added to its bond-buying program in July 2012.

First Published: April 22, 2013: 3:28 AM ET

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Another Honda recall: 225,000 SUV's and minivans affected

The 2012 CRV is among the vehicles affected by the Honda recall.

NEW YORK (CNNMoney)

In the U.S., the recall affects roughly 128,000 Honda CR-V's and 59,000 Odysseys from model years 2012 and 2013, as well as 17,500 Acura RDX's from 2013, Honda said in a statement. Some 14,000 CR-V's, 4,500 Odysseys and 2,300 RDX's in Canada are also being recalled.

Honda said that in sub-freezing temperatures, these vehicles may be shifted out of park even with the brake pedal isn't depressed. There haven't been any complaints, crashes or injuries reported in connection with this issue, the Japanese automaker said.

Honda (HMC) will notify vehicle owners of the problem and direct them to dealerships where the issue will be resolved free of charge. Owners can check if their vehicle needs to be repaired at www.recalls.honda.com and www.recalls.acura.com.

This week's recall follows several similar headaches in the past few months.

In January, the company announced the recall of 748,000 Odyssey minivans and Pilot SUVs because of problems with their airbags. In March, the automaker ordered the recall of 180,000 vehicles in the United States, and almost 250,000 worldwide, because of a defect that could potentially cause the brakes to be applied inadvertently.

Just last week, Honda announced the recall of 1.1 million vehicles in order to replace their passenger airbag inflators.

In all cases, the company said it was not aware of any injuries resulting from the problems.

First Published: April 19, 2013: 12:53 PM ET

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Boeing Dreamliner cleared to fix battery, start flying again

The Federal Aviation Administration cleared Boeing to make fixes to the battery system of the 787 Dreamliner. That paves the way for the aircraft to start flying again.

WASHINGTON (CNNMoney)

Nearly 50 Dreamliners have been grounded for the last four months, after two fires on Japanese jets prompted the FAA to order the planes grounded on Jan. 16.

Since then, Boeing (BA, Fortune 500) has redesigned the battery system. Next week, all airlines that have the 787 aircraft will start to install the new systems with the help of special teams deployed by Boeing, said spokesman Marc Birtel. He couldn't say when the 787 Dreamliners would begin flying again.

Boeing basically revamped the internal battery components to minimize the chances of a short circuit. It also improved the insulation of the battery cells, and created a new "containment and venting" system that is supposed to prevent overheating from affecting the plane.

"Safety of the traveling public is our number one priority. These changes to the 787 battery will ensure the safety of the aircraft and its passengers," said Transportation Secretary Ray LaHood.

The move to approve the planes for flight has been expected. FAA Administrator Michael P. Huerta predicted at a Senate hearing on Tuesday that it would happen soon.

Boeing has already completed 20 tests with the new battery technology, Huerta said during that hearing.

United Airlines (UAL, Fortune 500), which has six of the jets, is the only U.S. airline to take delivery of the Dreamliners so far. Boeing's customers are eager to get them into service, since they use lightweight composite materials that greatly improve fuel economy.

The Dreamliner has sold well in Asia and the Middle East, where airlines depend on long-range flights for much of their business, and can benefit most from the improvements in fuel economy.

The problems with the new battery technology have already prompted Boeing's European rival Airbus to revert to standard nickel-cadmium batteries in its A350 plane. The A350 had been designed to compete with the Dreamliner, and is due to make its first test flight in the middle of this year.

The approval for the battery fix comes just a few days before the National Transportation Safety Board, which investigates traffic and aircraft incidents, will convene for a two-day investigation into the fires.

Boeing's shares were up 2% Friday afternoon.

-- CNN's Mike Ahlers contributed to this report.

First Published: April 19, 2013: 4:02 PM ET

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AB InBev and Modelo merger set to move forward

Anheuser-Busch InBev and Grupo Modelo are currently the number-one and -three brewers in the U.S. market, respectively.

NEW YORK (CNNMoney)

The Justice Department announced Friday that it had reached a settlement with Anheuser-Busch InBev and Grupo Modelo to resolve the anti-trust suit it filed earlier this year in response to their proposed merger.

Under the agreement, Anheuser-Busch InBev (BUD) can move ahead with plans to acquire the 50% of Grupo Modelo (GPMCF) it does not already own for $20.1 billion, but it must sell Modelo's U.S. business in order to preserve competition in the American beer market. It must also sell one of Modelo's brewing facilities in Mexico.

The proposed buyer is Constellation Brands -- a wine and liquor producer whose brands include Robert Mondavi and SVEDKA Vodka -- which will acquire the assets for roughly $4.75 billion. Constellation will then have the exclusive right to sell Modelo products in the U.S.

The settlement is subject to a 60-day comment period before it goes before a judge for approval.

The Justice Department's Bill Baer called the agreement "a win for the $80 billion U.S. beer market and consumers."

"Before the merger, there were two competitors -- Modelo and ABI -- and ABI owned a substantial stake in Modelo. The companies' proposed merger would have reduced those two competitors to one -- ABI," Baer said in a statement. "The proposed settlement announced today will create an independent, fully integrated and economically viable competitor to ABI."

ABI was created in 2008 when Belguim's InBev took over Anheuser-Busch in a $52 billion transaction. It currently leads all brewers with a 39% share of the U.S. beer market, producing more than 200 brands including Budweiser, Busch, Michelob and Stella Artois.

Modelo, based in Mexico, is number three in the U.S. market with a 7% share. It produces Corona Extra, the top-selling import in the U.S., as well brands like Modelo Especial and Pacifico.

Related: Small craft breweries hit it big

The two companies originally announced ABI's planned takeover last year, but the Justice Department sued to block the transaction. The companies announced a revised deal in February that was largely similar to the agreement announced Friday.

ABI said that once a judge signs off on the agreement, it will "move swiftly to complete the pending transactions" with Modelo and Constellation.

The Modelo merger "has always been about Mexico and making Corona more global in all markets other than the U.S.," ABI spokeswoman Laura Vallis said in an email. The combination, she added, will create "a significant growth opportunity worldwide from combining two leading brand portfolios and distribution networks."

As part of the new agreement, Constellation must expand production of current Modelo products for the U.S. market in order to help preserve competition. Constellation CEO Rob Sands called the deal "a significant milestone for Constellation as the most transformational event in the history of our 68-year-old company."

"Overall, this transaction will nearly double the sales of our company, significantly enhance our earnings and free cash flow, diversify our profit stream and provide new avenues for growth," Sands said in a statement.

Modelo did not immediately respond to a request for comment.

Constellation (STZ) shares closed up 2.5% Friday following the announcement, while Anheuser-Busch InBev rose 1.7%.

First Published: April 19, 2013: 6:02 PM ET

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Another Honda recall: 225,000 SUV's and minivans affected

The 2012 CRV is among the vehicles affected by the Honda recall.

NEW YORK (CNNMoney)

In the U.S., the recall affects roughly 128,000 Honda CR-V's and 59,000 Odysseys from model years 2012 and 2013, as well as 17,500 Acura RDX's from 2013, Honda said in a statement. Some 14,000 CR-V's, 4,500 Odysseys and 2,300 RDX's in Canada are also being recalled.

Honda said that in sub-freezing temperatures, these vehicles may be shifted out of park even with the brake pedal isn't depressed. There haven't been any complaints, crashes or injuries reported in connection with this issue, the Japanese automaker said.

Honda (HMC) will notify vehicle owners of the problem and direct them to dealerships where the issue will be resolved free of charge. Owners can check if their vehicle needs to be repaired at www.recalls.honda.com and www.recalls.acura.com.

This week's recall follows several similar headaches in the past few months.

In January, the company announced the recall of 748,000 Odyssey minivans and Pilot SUVs because of problems with their airbags. In March, the automaker ordered the recall of 180,000 vehicles in the United States, and almost 250,000 worldwide, because of a defect that could potentially cause the brakes to be applied inadvertently.

Just last week, Honda announced the recall of 1.1 million vehicles in order to replace their passenger airbag inflators.

In all cases, the company said it was not aware of any injuries resulting from the problems.

First Published: April 19, 2013: 12:53 PM ET

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Boeing Dreamliner cleared to fix battery, start flying again

The Federal Aviation Administration cleared Boeing to make fixes to the battery system of the 787 Dreamliner. That paves the way for the aircraft to start flying again.

WASHINGTON (CNNMoney)

Nearly 50 Dreamliners have been grounded for the last four months, after two fires on Japanese jets prompted the FAA to order the planes grounded on Jan. 16.

Since then, Boeing (BA, Fortune 500) has redesigned the battery system. Next week, all airlines that have the 787 aircraft will start to install the new systems with the help of special teams deployed by Boeing, said spokesman Marc Birtel. He couldn't say when the 787 Dreamliners would begin flying again.

Boeing basically revamped the internal battery components to minimize the chances of a short circuit. It also improved the insulation of the battery cells, and created a new "containment and venting" system that is supposed to prevent overheating from affecting the plane.

"Safety of the traveling public is our number one priority. These changes to the 787 battery will ensure the safety of the aircraft and its passengers," said Transportation Secretary Ray LaHood.

The move to approve the planes for flight has been expected. FAA Administrator Michael P. Huerta predicted at a Senate hearing on Tuesday that it would happen soon.

Boeing has already completed 20 tests with the new battery technology, Huerta said during that hearing.

United Airlines (UAL, Fortune 500), which has six of the jets, is the only U.S. airline to take delivery of the Dreamliners so far. Boeing's customers are eager to get them into service, since they use lightweight composite materials that greatly improve fuel economy.

The Dreamliner has sold well in Asia and the Middle East, where airlines depend on long-range flights for much of their business, and can benefit most from the improvements in fuel economy.

The problems with the new battery technology have already prompted Boeing's European rival Airbus to revert to standard nickel-cadmium batteries in its A350 plane. The A350 had been designed to compete with the Dreamliner, and is due to make its first test flight in the middle of this year.

The approval for the battery fix comes just a few days before the National Transportation Safety Board, which investigates traffic and aircraft incidents, will convene for a two-day investigation into the fires.

Boeing's shares were up 2% Friday afternoon.

-- CNN's Mike Ahlers contributed to this report.

First Published: April 19, 2013: 4:02 PM ET

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AB InBev and Modelo merger set to move forward

Anheuser-Busch InBev and Grupo Modelo are currently the number-one and -three brewers in the U.S. market, respectively.

NEW YORK (CNNMoney)

The Justice Department announced Friday that it had reached a settlement with Anheuser-Busch InBev and Grupo Modelo to resolve the anti-trust suit it filed earlier this year in response to their proposed merger.

Under the agreement, Anheuser-Busch InBev (BUD) can move ahead with plans to acquire the 50% of Grupo Modelo (GPMCF) it does not already own for $20.1 billion, but it must sell Modelo's U.S. business in order to preserve competition in the American beer market. It must also sell one of Modelo's brewing facilities in Mexico.

The proposed buyer is Constellation Brands -- a wine and liquor producer whose brands include Robert Mondavi and SVEDKA Vodka -- which will acquire the assets for roughly $4.75 billion. Constellation will then have the exclusive right to sell Modelo products in the U.S.

The settlement is subject to a 60-day comment period before it goes before a judge for approval.

The Justice Department's Bill Baer called the agreement "a win for the $80 billion U.S. beer market and consumers."

"Before the merger, there were two competitors -- Modelo and ABI -- and ABI owned a substantial stake in Modelo. The companies' proposed merger would have reduced those two competitors to one -- ABI," Baer said in a statement. "The proposed settlement announced today will create an independent, fully integrated and economically viable competitor to ABI."

ABI was created in 2008 when Belguim's InBev took over Anheuser-Busch in a $52 billion transaction. It currently leads all brewers with a 39% share of the U.S. beer market, producing more than 200 brands including Budweiser, Busch, Michelob and Stella Artois.

Modelo, based in Mexico, is number three in the U.S. market with a 7% share. It produces Corona Extra, the top-selling import in the U.S., as well brands like Modelo Especial and Pacifico.

Related: Small craft breweries hit it big

The two companies originally announced ABI's planned takeover last year, but the Justice Department sued to block the transaction. The companies announced a revised deal in February that was largely similar to the agreement announced Friday.

ABI said that once a judge signs off on the agreement, it will "move swiftly to complete the pending transactions" with Modelo and Constellation.

The Modelo merger "has always been about Mexico and making Corona more global in all markets other than the U.S.," ABI spokeswoman Laura Vallis said in an email. The combination, she added, will create "a significant growth opportunity worldwide from combining two leading brand portfolios and distribution networks."

As part of the new agreement, Constellation must expand production of current Modelo products for the U.S. market in order to help preserve competition. Constellation CEO Rob Sands called the deal "a significant milestone for Constellation as the most transformational event in the history of our 68-year-old company."

"Overall, this transaction will nearly double the sales of our company, significantly enhance our earnings and free cash flow, diversify our profit stream and provide new avenues for growth," Sands said in a statement.

Modelo did not immediately respond to a request for comment.

Constellation (STZ) shares closed up 2.5% Friday following the announcement, while Anheuser-Busch InBev rose 1.7%.

First Published: April 19, 2013: 6:02 PM ET

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Bowles and Simpson detail $2.5 trillion deficit reduction plan

NEW YORK (CNNMoney)

They're releasing details of a proposed $2.5 trillion deficit reduction plan, which they originally outlined in February.

Bowles and Simpson were co-chairmen of President Obama's bipartisan fiscal commission in 2010, and their plan at the time was criticized by both liberals and conservatives.

The new plan is smaller in scope and seeks to build on the $2.7 trillion in deficit reduction that the White House and Congress have agreed to since 2010.

That $2.7 trillion (which the White House estimates to be $2.5 trillion) does not include the forced budget cuts -- also known as "sequestration" -- that went into effect last month.

Bowles and Simpson call those cuts "mindless" and think they threaten the economic recovery. Consequently, they propose canceling 70% of the cuts for this year and next. Similarly, they recommend delaying most of their plan's deficit reduction until 2016.

But backloading the changes can mean a steep hit in later years, such as $500 billion in deficit reduction in 2023 alone.

Here are some highlights from their new plan:

Debt reduction: $2.5 trillion in additional deficit reduction over 10 years is more than the $1.8 trillion that the president called for in his 2014 budget, but less than the $5 trillion House Republicans want.

The Bowles-Simpson plan aims to keep public debt on a downward path. By 2023, it's estimated to bring debt down to 69% of GDP, from an estimated high of 78% in 2014.

Together with the $2.7 trillion in deficit reduction already agreed to by policymakers, Bowles and Simpson estimate that more than 70% of total savings would come from reduced spending (including lower interest spending), and less than 30% would come from tax revenue.

The plan also recommends indexing the debt ceiling to inflation. Doing so would prevent episodes of political brinksmanship over raising the legal borrowing limit so long as debt stays on a downward path as a percent of GDP.

Taxes: The plan calls for fundamental tax reform that lowers rates, reduces tax breaks and maintains progressivity.

It would raise $585 billion in revenue for deficit reduction.

The plan also calls for a switch to a territorial tax system for corporate taxes. The United States currently taxes profits earned abroad by U.S.-based multinational companies. Under a territorial system, the federal government would only tax corporate income earned within U.S. borders.

Defense spending: The plan would undo most of the defense budget cuts this year and next. But it also would require that Congress achieve $220 billion of defense savings by 2023 relative to pre-sequester levels. It would cap defense spending growth at the inflation rate through 2025.

In addition, Bowles and Simpson suggest capping spending on overseas contingency operations. If Congress spends less than the cap in a given year, the unspent amount must not be used to fund unrelated defense spending.

President Obama never fully embraced the original Bowles-Simpson plan because, among other things, he felt it would cut defense too deeply.

Domestic spending: As with defense spending, the plan would cancel most of the nondefense discretionary budget cuts this year and next. But it also would require $165 billion of savings in domestic spending by 2023, compared with pre-sequester spending levels.

And it would cap spending growth at the rate of inflation through 2025.

Medicare: Bowles and Simpson will touch some nerves with their proposals to curb spending on Medicare and other health spending by $585 billion over a decade.

For instance, they would slowly raise the Medicare eligibility age from 65 to 67 by the mid-2030s. But at the same time, they propose creating a "buy-in" option for 65- and 66-year-olds so they, too, could receive Medicare benefits.

They would also change how Medicare beneficiaries pay for Parts A and B (the programs that cover hospital care and doctor visits).

In addition, they would expand means-tested Medicare premiums, so the highest income beneficiaries would pay even more for their premiums.

Their plan includes a host of health care delivery reforms as well.

Social Security: The plan calls on Congress to make the system solvent over the next 75 years. It also includes one specific and very controversial proposal: changing how annual cost-of-living increases are calculated for benefits .

Using "chained CPI" would be a more accurate way to measure inflation, proponents say. Some liberal economists disagree.

President Obama included the idea in his recent budget. Chained CPI would slow the growth rate in all federal payments that are inflation adjusted. Besides Social Security benefits, the change would affect civilian worker and military pensions, veterans' benefits, and Pell Grants.

The Bowles-Simpson plan includes protections against the effects of chained CPI for the most vulnerable Social Security recipients.

Chained CPI would also raise revenue, since it would slow changes to tax parameters that go up with inflation -- and that could mean somewhat higher taxes for many filers. Measures adjusted for inflation include income tax brackets, the standard deduction, phase-out levels for tax credits and contribution limits to 401(k)s.

All told, the chained CPI proposal would reduce deficits by an estimated $280 billion over a decade.

First Published: April 18, 2013: 10:06 PM ET

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Chromebook could free Google from Microsoft and Apple

Google's head of Chrome and Android Sundar Pichai shos off the new Chromebook Pixel.

NEW YORK (CNNMoney)

That honor was already claimed in February when Google (GOOG, Fortune 500) released the Chromebook Pixel laptop with the latest version of Google's Web-only Chrome OS software. It was designed to eventually get Google out from under Apple and Microsoft's thumbs.

Much of Google's business strategy is easy to figure out: Search is Google's money maker, Android is its pipeline to mobile, and Glass is the great experiment for the future. But figuring out the significance of a $1,400 laptop that runs an operating system built on top of a Web browser can be confusing.

ChromeBook laptops have never been the focal point of the company by any means, but consistent updates and major retail support made evident that they would become more than low-grade tools intended for grandparents and their chain emails.

The release of the Chromebook Pixel put an exclamation point on that sentiment. It isn't just another $400 plastic Chromebook laptop stuffed with last year's guts. It is a premium piece of gear that was very well thought out and constructed as well as any other laptop on the market.

Still, you shouldn't rush out an buy it. The $1,400 price tag is far too much to ask for a Chrome OS device right now, and the masses were right in pointing out that 99% of the population who could shell out that amount of money should probably just buy a high-end Windows PC or a Mac.

Related story: Don't blame Windows 8 for slumping PC sales

So what's the point?

Investing in its own brand of high-end PCs is a smart move for Google: With every tech company building walls around their products and services enough to make Constantine proud, it would be foolhardy for Google to rely on Windows and Mac OS X to serve as a management hub for the rest of its products and services. Microsoft (MSFT, Fortune 500) and Apple (AAPL, Fortune 500) are very much focused on emphasizing the strengths of their own goods -- and not those of a competing third party.

Google probably built the Chromebook Pixel to prove that with the right hardware, a Web browser can come amazingly close to offering the same experience as any other laptop running a full-blown operating system.

If that's the case, then Google would be right. The Chromebook Pixel does at times rival other MacBooks and top-of-the-line Ultrabooks. So much of what we do with a traditional computer takes place in the browser.

Making the move to the ChromeBook Pixel can be limiting, but it's never alienating. With each passing year, it seems as though the average computer user needs less and less of the native software support that an conventional operating system affords.

Related story: Google Keep has great potential

And now that Android and Chrome have been joined under the same roof at Google, it's not hard to imagine Google one day producing dual-mode tablet that, when docked to a keyboard and monitor, seamlessly shifts over from Android to Chrome OS.

It's a good bet that's why Google put so much effort into building the Chromebook Pixel, and why we'll be hearing a lot more about this kind of technology in the next two to three years.

First Published: April 19, 2013: 3:23 AM ET

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Inflation is very, very low. Time to worry?

NEW YORK (CNNMoney)

Not really. Inflation that's too low could be a bad sign for the U.S. economy, and some Federal Reserve officials are starting to get concerned.

Speaking to reporters on Wednesday, St. Louis Fed President James Bullard pointed to the Fed's preferred measure of inflation -- personal consumption expenditures, minus food and energy -- which recently has shown that prices are up 1.3% over a year ago.

"That's pretty low," Bullard said at a Levy Economics Institute event. "I'm getting concerned about that, and I think that gives the FOMC some room to maneuver on its monetary policy."

The Fed typically aims to keep inflation around 2% a year. Inflation at that level is considered healthy, coinciding with solid economic growth, a growing job market and gradually rising wages.

"Economic history has shown that economies perform best with slightly higher levels of inflation, such as 2% to 3%," said Bernard Baumohl, chief global economist for the Economic Outlook Group. "Low and dormant inflation translates into a dormant economy."

Why is low inflation bad? There are a few key reasons.

First, when companies don't have any leeway to raise prices, they're more apt to cut costs, which could mean a cutback in hiring. Second, if inflation remains so low, consumers are not as motivated to rush out and spend, Baumohl said.

Third, when inflation is low, it doesn't offer a large buffer against deflation if an economic shock occurs. Deflation -- when prices fall -- often freezes up spending, because who wants to go out and buy an item now, if they expect it to be cheaper in six months?

Related: The geeky debt fix that might work

And fourth, low inflation often comes along with lower wage and revenue growth.

Even with the recent low inflation data, Bullard's comments Wednesday came as a bit of a surprise to Fed watchers. For one, most Fed criticism lately has focused on how the central bank's unprecedented push to stimulate the U.S. economy could eventually lead to rapid inflation or asset bubbles. Fed policies are already cited as a key reason why stocks have recently hovered near five-year highs.

Second, Bullard is known for leaning slightly hawkish. Just minutes before he met with reporters Wednesday, he gave a speech arguing that the Fed's stimulative policies probably won't solve the job market's problems.

"I found Bullard's comments yesterday the most interesting in some time," said Ellen Zentner, senior economist for Nomura. "It suggests that other hawks could follow suit if lower inflation persists."

The Fed has kept its key short-term interest rate near zero since 2008. When that wasn't enough to boost the U.S. economy, it launched several bond-buying sprees, known as quantitative easing, in an attempt to lower long-term interest rates.

The Fed is now running its third such round of asset purchases, buying $85 billion in Treasuries and mortgage-backed securities each month.

The program remains highly controversial, and most of the conversation lately has been speculation about when the Fed will start tapering off, and eventually ending, those bond buys.

But on Wednesday, Bullard went so far as to say that if the inflation rate falls further, the Fed may have to think about increasing its monthly asset purchases, rather than winding them down anytime soon.

His colleague, Minneapolis Fed President Narayana Kocherlakota, backed that sentiment Thursday.

Kocherlakota is considered a Fed dove and has long favored stimulus, but if inflation was to fall even further, he said "that would make me in favor of even more accommodation," he told reporters.

Bullard is a voting member on the Fed's policymaking committee this year, but Kocherlakota is not. Even so, if low inflation persists, expect to hear more Fed officials discuss the issue in the months ahead.

First Published: April 19, 2013: 3:31 AM ET

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New restrictions spark China property scramble

HONG KONG (CNNMoney)

Housing prices rose in 68 of 70 Chinese cities in March when compared to the previous month, according to the National Bureau of Statistics. Compared to the previous year, prices were higher in all but two of the same 70 cities.

Prices in the capital, Beijing, registered one of the largest increases, rising 8.6% over the previous year. In the southern manufacturing hub of Shenzhen, prices jumped 8.9%.

Real estate prices have been trending higher for much of the last decade in China, sparking a cycle of government reaction.

In response to the latest round of rising prices, China's central government last month directed local governments to rein in housing prices by April 1.

Authorities in Shanghai told banks to stop issuing loans to individuals attempting the purchase of a third home.

Beijing announced that single residents will now be allowed to purchase only one home. Both cities said they would strictly enforce a 20% capital gains tax on income earned in property sales.

The announcements set off a fresh wave of buying, and some couples in Beijing even hatched schemes to skirt ownership restrictions by obtaining a divorce.

Wang He Tao, a real estate agent at Century 21 in Shanghai, told CNN that March was his busiest month in the past eight years.

Related story: World's biggest mall a China 'ghost town'

But the government's efforts might not have the desired effect. Past cooling measures were successful in the short-term, but prices soon resumed an upward swing.

"All these new measures are going to maybe slow down the price growth a little bit, but its still going to go up anyhow," said Nicole Wong, head of regional property for CLSA.

Citing rampant speculation and poor planning, some China analysts are worried about the development -- and possible deflation -- of a housing bubble.

Yet other analysts insist that fears of a bubble are overstated. Hundreds of millions of Chinese are expected to move from rural areas to cities over the next decade, they say, and demand is likely to remain strong.

"While China's property sector may have built up some unhealthy parts, the lack of household leverage and the absence of near term catalyst in changing the underlying fundamental support means we are unlikely to see a collapse of housing market soon," Tao Wang, an economist at UBS, wrote in a recent research note.

First Published: April 17, 2013: 11:34 PM ET

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