New-home sales strongest in more than 2 years

New home sales in November rose to their highest level since 2010.

NEW YORK (CNNMoney)

The Census Bureau reported Thursday that sales of new homes rose to an annual rate of 377,000 in the month, up 4.4% from October, and up 15% from year-earlier levels. It was the highest rate of new-home sales since April 2010, when sales were inflated by a temporary $8,000 tax credit for home buyers.

The housing market is now showing numerous signs of improvement, including better existing home sales and home construction.

A combination of near record low mortgage rates, lower unemployment and a drop in foreclosures means there are more buyers interested in purchasing, and fewer available homes. That in turn has lifted home prices.

Related: Five signs to look for in housing

Those supply-and-demand dynamics are especially true in the new-home market.

There was only a 4.7 month supply of new homes on the market in November, the same tight inventory as has been the case in four of the previous six months. The last time there was a tighter supply of new homes available was in October 2005, near the height of the housing bubble.

The tight supply has lifted the median price of a new home sold in November to $246,200, up 14.9% from the comparable price a year earlier.

Anika Khan, senior economist with Wells Fargo Securities, said the report was stronger than expected, especially for what is traditionally a slow month for home sales. She said new-home sales and construction are becoming a more important driver of overall economic growth, which is even more important with the economy facing other headwinds such as a cutback on business investment and consumer worries about the fiscal cliff.

"New-home sales is a good story and it will continue to be a good story," she said.

New-home sales can be more important to the economy than sales of previously owned homes since they require purchase of other goods, such as appliances, and because of the construction jobs needed to build the homes.

Related: 2013 housing outlook

The continued rebound in prices likely will be a positive for both purchases and construction in the year ahead. Higher prices give current homeowners an incentive to sell their homes and procure the down payment they need for their next home purchase. Potential home buyers, who may have been on the sidelines because of uncertainty about home prices, might also be lured into the market.

Home builders benefit from higher prices and increased demand. Leading home builders such as PulteGroup (PHM), Lennar (LEN), KB Home (KBH), D.R. Horton (DHI) and Toll Brothers (TOL) have all enjoyed at least a 50% rise in their stock price over the last 12 months, with PulteGroup's stock nearly tripling in value.

First Published: December 27, 2012: 10:21 AM ET

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Shares in Spain's Bankia plunge as bailout looms

A rescue recapitalisation backed by EU funds will dilute small shareholders

LONDON (CNNMoney)

The European Commission agreed last month to inject nearly 37 billion euros from the eurozone's bailout fund into Bankia and three more Spanish banks, which had been nationalized to prevent them from collapsing under massive losses on real estate lending.

Spain's bank restructuring fund said it would draw on the EU funds to inject 13.5 billion euros into Bankia's parent company BFA before the end of the year. BFA will then use part of that money to buy new Bankia bonds worth 10.7 billion euros, which will convert into shares early in 2013.

"[W]e are safeguarding the principle established by law ... which requires that shareholders are the first to bear losses or restructuring cuts," the Spanish restructuring fund said in a statement.

A Bankia spokesman declined to comment on the share price fall or details of the capital increase, which was first announced in November, saying only that "existing shareholders will retain a small stake in Bankia".

The EU-backed bailout is designed to allow Bankia, NCG Banco and Catalunya Banco to become viable in the long term without continued state support. The fourth, Banco de Valencia, is being sold to CaixaBank.

Independent stress tests conducted on the Spanish banking sector earlier this year identified a capital hole of about 59 billion euros, to a large extent created by the collapse of the country's property bubble.

Spain is suffering its second recession in three years and can no longer prop up its ailing banking industry. But it has stopped short of following in the footsteps of Greece, Ireland and Portugal in requesting a full-blown sovereign bailout.

Related: EU strikes deal to bring banks under single supervisor

A second group of four banks -- Liberbank, Caja3, BMN, and Banco CEISS -- had their restructuring programs approved by the European Commission last week and will receive some 1.9 billion euros in assistance.

All eight banks in receipt of EU funding have committed to conduct major overhauls of their businesses, shrinking balance sheets, selling assets, offloading property loans to a "bad bank" and imposing losses on existing holders of equity and debt. Together these measures are expected to have reduced the bailout bill by at least 14 billion euros.

Bankia's shares will be suspended from Spain's benchmark Ibex index starting January 2, the stock exchange said. The stock has lost about 85% of its value since the bank was listed in July 2011 via a public offering that was promoted to small investors.

First Published: December 27, 2012: 2:56 PM ET

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Dinosaur smuggler faces 17 years in prison

The U.S. attorneys office said that skeletons of Tyrannosaurus bataar dinosaurs were looted from Mongolia as part of a smuggling scheme.

NEW YORK (CNNMoney)

Florida native Erik Prokopi illegally bought and sold whole and partial dinosaur skeletons between 2010 and 2012, as part of what he described as a "commercial paleontology" business, according to the U.S. Attorney for the Southern District of New York.

The fossils included three Tyrannosaurus bataar skeletons, which are believed to have roamed the earth 70 million years ago, a Saurolophus skeleton and an Oviraptor skeleton.

Prokopi, 38, also faces fines totaling $750,000.

The attorney's office said Prokopi bought fossils from foreign countries and unlawfully transported them back to the U.S. The dinosaur remains slipped through customs, because Prokopi is believed to have misrepresented the shipments on customs forms.

Related: Feds bust black market in dinosaur fossils

The offenses violate laws of the United States and Mongolia, where it is a crime to take dinosaur fossils out of the country.

As part of his plea agreement, Prokopi will forfeit the remains, which will be returned to the country of origin.

"Black marketeers like Prokopi, who illegally export and sell these wonders, steal a slice of ... history," said Preet Bharara, Manhattan U.S. Attorney. "Fossils and ancient skeletal remains are part of the fabric of a country's natural history and cultural heritage."

Prokopi is scheduled to be sentenced on April 25, 2013.

First Published: December 27, 2012: 5:27 PM ET

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'Marriage penalty' could make costly return

NEW YORK (CNNMoney)

As a result of the Bush tax cuts, married couples get a standard deduction that's exactly twice that of individuals. And the income ranges for the 10% and 15% tax brackets are also doubled. Prior to 2001, many married couples had paid a "penalty" because their standard deduction and income tax brackets were less than twice those of singles.

Next year the imbalance could return. While the standard deduction for single filers should rise to $6,100, married couples would receive a deduction of only $10,150 if lawmakers don't extend the provision, according to estimates by the Tax Foundation. To erase the marriage penalty, it would have to be $12,200.

Married couples would also be moved into higher tax brackets more quickly. Individual taxpayers would be in the 15% tax bracket until they hit $36,250 in taxable income, but married filers could be pushed above it after only $60,550 in income, as opposed to $72,500.

The marriage penalty never went away for higher tax brackets above 15% -- and that would continue to be the case. Even if the Bush tax cuts are extended, the 25% bracket would end at $87,850 for singles, but only at $146,400 for joint filers. And the highest bracket starts at the same income level regardless of whether the filer is a married couple or a single person.

Related: Going over the Cliff - what changes, what doesn't

Married couples benefiting from the Earned Income Tax Cut would also get hit if the fiscal cliff isn't addressed. The last two administrations raised the income threshold at which the credit begins to phase out for married couples to $5,000 above the amount for individuals.

Of course, the marriage penalty is only one of a bevy of provisions that are set to expire after 2012 so exactly what both married couples and single filers will pay next year remains up in the air.

First Published: December 26, 2012: 11:01 AM ET

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Geithner: U.S. to hit debt ceiling on Monday

Treasury Secretary Tim Geithner warned Congress in a letter that U.S. borrowing will hit the debt ceiling on Monday, and that Treasury will begin using 'extraordinary measures' to keep under the cap.

NEW YORK (CNNMoney)

As a result, the Treasury Department will soon start using what it calls "extraordinary measures" to prevent government borrowing from exceeding the legal limit.

Such measures include suspending the reinvestment of federal workers' retirement account contributions in short-term government bonds.

On Monday, debt subject to the limit was just $95 billion below the $16.394 trillion debt ceiling.

All told, the extraordinary measures can create about $200 billion of headroom under the limit -- normally about two months worth of borrowing.

But it's unclear how much time the extraordinary measures can buy now because there are so many unanswered questions about tax and spending policies, Geithner said, referring to the lack of any resolution of the fiscal cliff.

"If left unresolved, the expiring tax provisions and automatic spending cuts, as well as the attendant delays in filing of tax returns, would have the effect of adding some additional time to the duration of the extraordinary measures," he wrote.

After the extraordinary measures run out, Treasury won't be able to pay all the country's bills in full and on time. At that point, the United States will run the very real risk that it could default on some of its obligations.

Geithner has predicted for months that the country would hit the debt ceiling by the end of December.

But Congress, first consumed with the 2012 elections and now with the fiscal cliff, has made little effort to raise the ceiling.

Now there's a good chance the debt ceiling issue won't be resolved until the 11th hour and only after an ugly fight.

Indeed, some Republicans have been saying they view the debt ceiling as leverage in budget negotiations in early 2013 in their bid to secure spending cuts.

Before fiscal cliff legislation died last week, House Speaker John Boehner offered President Obama a one-year debt ceiling increase, but only on the condition that spending cuts and reforms exceeded the size of any increase.

The last standoff over the debt ceiling in 2011 ended badly, with Congress raising it only at the last minute. The debacle led to the downgrade of the country's AAA credit rating and caused tumult in the markets.

The Government Accountability Office has long called for Congress to come up with a smarter way to handle the debt ceiling.

"Congress should consider ways to better link decisions about the debt limit with decisions about spending and revenue to avoid potential disruptions to the Treasury market and to help inform the fiscal policy debate in a timely way," the GAO said in a recent report.

Meanwhile, a variety of fiscal and monetary experts have called for the debt ceiling to be abolished altogether.

First Published: December 26, 2012: 4:32 PM ET

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Toyota to pay $1.1 billion in recall case

In one of the largest of its kind, Toyota agreed to pay $1.1 billion to settle claims of acceleration issues in 2009-2010.

NEW YORK (CNNMoney)

This is one of the largest lawsuits of its kind, according to Steve Berman, one of the lead plaintiff lawyers.

Under the agreement, Toyota (TM) will also install a brake-override system in cars where acceleration pedals got stuck in floor mats, leading them to accelerate unintentionally.

The company will also set up a fund of $250 million to be paid to former Toyota owners who sold their cars between Sept. 1, 2009, and Dec. 31, 2010, to compensate the owners for the reduced value of the cars from the negative publicity.

A statement from the attorneys representing Toyota owners said that a separate fund of $250 million will be established to compensate current owners whose vehicles are not eligible for a brake-override system.

About 16 million current owners will be eligible for a customer care plan, that will provide a warranty on certain parts tied to unintended acceleration for between three and 10 years.

This settlement doesn't cover any product liability or personal injury claims related to unintended acceleration issues, according to a Toyota spokesperson.

The car maker said that the settlement will lead to a one-time, $1.1 billion pre-tax charge against fourth quarter earnings to cover the costs.

Related: Toyota set to reclaim 'top car maker' spot from GM

Until these problems surfaced, Toyota held the top reputation for vehicle quality and safety. But since then, it has been dogged by significant recall problems. It has already announced recalls of more than 10 million vehicles worldwide for various problems so far this year.

Earlier this month, the car company agreed to pay a record $17.4 million to the National Highway Traffic Safety Administration for problems related to a 2012 recall in one of its Lexus models. That's the largest fine allowed by law for a single investigation.

And in November, it recalled 7.43 million cars due to a power window problem that poses a fire risk.

In 2011, Toyota relinquished its title as "the world's biggest car marker," when car recalls and Japan's earthquake and tsunami delivered a blow to sales and production.

But the Japanese car maker has since staged a comeback, thanks to a banner year of sales worldwide.

First Published: December 26, 2012: 5:08 PM ET

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Italy's Monti may lead again, reforms key

Monti says he may be a candidate for prime minister if asked by reformist parties

LONDON (CNNMoney)

Monti stood down, and parliament was dissolved Friday, after former Prime Minister Silvio Berlusconi withdrew his support for Monti's unelected government of technocrats, appointed a year ago to save Italy from the financial crisis then threatening to tear the eurozone apart.

Speaking on Sunday, Monti said he was more concerned that his policies survived than taking sides in the campaign but added he was ready to offer advice and leadership if a party or coalition came forward with a program he could support.

"I would be much more interested if the Monti agenda - and I apologise if my name appears here - would serve to provide clarity and perhaps help unite the forces," he said at a news conference.

Monti, an economics professor and former European Commissioner, has been credited with restoring confidence in Italy, as well as with its eurozone partners and investors, thanks to his commitment to reduce government borrowing and introduce economic and political reforms.

"While he may not have thrown his hat into the ring, Il Professore has become Il Politico whether he likes it or not," said Nicholas Spiro, managing director of London consulting firm Spiro Sovereign Strategy.

Related: Greece may remain in euro after all

Yields on 10-year Italian government bonds have risen recently on the renewed political instability but remain way below the 7% level Monti inherited a year ago, when he succeeded Berlusconi, who resigned under a cloud of scandal.

In a taste of a bitter election campaign to come, Berlusconi criticized Monti's lack of business experience and said his government had made too many errors

"Last night I had a nightmare, I woke up screaming. I dreamed of a government still with Mario Monti as president of the council," he said, according to the transcript of an interview posted on his website.

Fiscal tightening, weak confidence and tight credit supply have kept Italy deep in recession for the past five quarters. The economy is expected to shrink by about 2.4% this year, and continue to contract in 2013. Unemployment hit 11% in October and is forecast to rise even further next year.

Related: Europe needs new ideas - Vodafone CEO

Opinion polls suggest the center-left Democratic Party led by Pier Luigi Bersani will win the lower house elections, but may need to build a coalition to gain a majority.

Bersani said in a statement on his website that he had no reason to apologize for supporting Monti's program in government and would consider his policy proposals carefully.

Analysts at Nomura said a Bersani-led government including Monti in some capacity was the "best case" likely outcome for financial markets but cautioned that even such a government may struggle to implement reforms, particularly if it failed to win a majority in the upper house.

"Given all this political uncertainty, we see a non-negligible risk that markets will become unsettled over Italy again early in the new year," wrote Alastair Newton in a research note.

-- CNN's Alex Felton contributed to this article

First Published: December 24, 2012: 9:47 AM ET

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Last minute shoppers bring hope to stores

Shopping has ramped up as consumers rush to get last minute gifts, but experts say the late push may not be enough to save holiday retail sales.

NEW YORK (CNNMoney)

Estimates for the final shopping weekend aren't out yet, but there's evidence that more shoppers were coming into stores as the holidays drew near.

At North Point Mall in Alpharetta, Georgia, the parking lots were at capacity this past weekend, and it was standing room only at the food court, according to the mall's general manager Nick Nicolosi.

"By the amount of bags I saw, with people carrying four or five each, it's looking like a great season," he said.

A poll conducted by The NPD Group and CivicScience revealed that 42% of consumers were still shopping for the holidays last week, since many have been groomed to wait for better deals later in the season.

Related: Last minute deals at Wal-Mart, Target, Bloomingdales

The long holiday shopping calendar also played a role in why many customers waited, said Bill Martin, founder of ShopperTrak, which analyzes retail foot traffic.

"Many consumers delayed their Christmas shopping -- and with good reason," he said. "They saw 32 shopping days between Black Friday and Christmas."

Even if shopping ramped up during the final rush, experts are expecting disappointing numbers for the holiday season overall.

Superstorm Sandy forced many stores to close for days in October and early November. It also left many people in the Northeast without power for weeks, hurting their psyche. Looming worries over whether tax rates will go up from the fiscal cliff has also kept shoppers from going overboard with their holiday lists.

ShopperTrak lowered its holiday sales forecast for the months of November and December. It now predicts that sales will increase 2.5% over last year, down from the 3.3% it initially projected in September.

Retailers were pulling out all the stops at the last minute to lure in late shoppers.

Toys R Us stores were staying open open for 88 consecutive hours until 10 p.m. on Christmas Eve. Macy's (M, Fortune 500) stores were open for more than 48 hours straight.

Other retailers are handing cash back to customers. For every $50 spent at Kohl's (KSS, Fortune 500), the department store gave out a $10 store coupon. Target (TGT, Fortune 500) handed out gift cards worth up to $130 to shoppers who bought certain Dyson vacuums. And Wal-Mart (WMT, Fortune 500)slashed prices on iPhones and iPads.

Trae Bodge, senior editor of RetailMeNot.com Insider, said that these discounts are a sign that retailers want to get stale inventory moving, since shopping so far this season has been slow.

First Published: December 24, 2012: 12:02 PM ET

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Stocks tumble as fiscal cliff deadline nears

Click for more market data.

NEW YORK (CNNMoney)

The Dow Jones industrial average fell 0.4%. The S&P 500 and the Nasdaq both lost about 0.3%. U.S. markets closed at 1 p.m. ET and will remain dark Tuesday for the Christmas holiday.

With time running out, investors are increasingly concerned about the lack of progress in talks over tax hikes and spending cuts set to kick in automatically on Jan. 1, known as the fiscal cliff.

Stocks fell 1% on Friday after a plan by Speaker John Boehner to avert the fiscal cliff failed to get enough support in the House late Thursday. President Obama spoke about the negotiations Friday evening before leaving for the holiday, urging a scaled-back deal that would stop taxes from rising on 98% of Americans -- something both sides say they want.

No one expects progress on a deal Monday, with members of Congress having left Washington for their homes to celebrate the Christmas holiday.

Related: What happens to stocks if we go over fiscal cliff?

But investors are still holding out hope for a temporary fix before the end of the year, said Mark Luschini, chief investment strategist at financial advisory firm Janney Montgomery Scott. Such a deal would only forestall the immediate crisis and delay more difficult decisions until later next month, he added.

"If they can avert the worst, the market will find some support," said Luschini. "Absent that, we will definitely see some pressure on equities."

Fear & Greed Index

Most federal offices and many businesses were closed on Monday. There are no economic reports or corporate news scheduled for release.

European markets ended a holiday-shortened day mixed, with markets in Germany closed. Italy's Mario Monti said this weekend he may consider a second term as prime minister if asked by parties committed to the economic reforms he began over the past 12 months.

Asian markets ended slightly higher, while markets in Japan were closed.

The U.S. dollar rose versus the euro, British pound and Japanese yen. In the bond market, U.S. Treasuries were lower, with the 10-year note yielding 1.78%. Oil prices fell while gold prices edged higher.

First Published: December 24, 2012: 9:41 AM ET

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Italy's Monti may lead again, reforms key

Monti says he may be a candidate for prime minister if asked by reformist parties

LONDON (CNNMoney)

Monti stood down, and parliament was dissolved Friday, after former Prime Minister Silvio Berlusconi withdrew his support for Monti's unelected government of technocrats, appointed a year ago to save Italy from the financial crisis then threatening to tear the eurozone apart.

Speaking on Sunday, Monti said he was more concerned that his policies survived than taking sides in the campaign but added he was ready to offer advice and leadership if a party or coalition came forward with a program he could support.

"I would be much more interested if the Monti agenda - and I apologise if my name appears here - would serve to provide clarity and perhaps help unite the forces," he said at a news conference.

Monti, an economics professor and former European Commissioner, has been credited with restoring confidence in Italy, as well as with its eurozone partners and investors, thanks to his commitment to reduce government borrowing and introduce economic and political reforms.

"While he may not have thrown his hat into the ring, Il Professore has become Il Politico whether he likes it or not," said Nicholas Spiro, managing director of London consulting firm Spiro Sovereign Strategy.

Related: Greece may remain in euro after all

Yields on 10-year Italian government bonds have risen recently on the renewed political instability but remain way below the 7% level Monti inherited a year ago, when he succeeded Berlusconi, who resigned under a cloud of scandal.

In a taste of a bitter election campaign to come, Berlusconi criticized Monti's lack of business experience and said his government had made too many errors

"Last night I had a nightmare, I woke up screaming. I dreamed of a government still with Mario Monti as president of the council," he said, according to the transcript of an interview posted on his website.

Fiscal tightening, weak confidence and tight credit supply have kept Italy deep in recession for the past five quarters. The economy is expected to shrink by about 2.4% this year, and continue to contract in 2013. Unemployment hit 11% in October and is forecast to rise even further next year.

Related: Europe needs new ideas - Vodafone CEO

Opinion polls suggest the center-left Democratic Party led by Pier Luigi Bersani will win the lower house elections, but may need to build a coalition to gain a majority.

Bersani said in a statement on his website that he had no reason to apologize for supporting Monti's program in government and would consider his policy proposals carefully.

Analysts at Nomura said a Bersani-led government including Monti in some capacity was the "best case" likely outcome for financial markets but cautioned that even such a government may struggle to implement reforms, particularly if it failed to win a majority in the upper house.

"Given all this political uncertainty, we see a non-negligible risk that markets will become unsettled over Italy again early in the new year," wrote Alastair Newton in a research note.

-- CNN's Alex Felton contributed to this article

First Published: December 24, 2012: 9:47 AM ET

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