WEEK OF JULY 28 -- AUG. 3
GDP, Other Economic Reports Due This Week
Economists are expecting a passel of reports this week to indicate that the U.S. economy is on more solid footing.
Personal spending, continued improvements in manufacturing and strong momentum in construction spending may be reflected in a modest expansion in the nation’s gross domestic product, which the Commerce Department is set to issue Thursday.
The economy “appears to have accelerated through the end of the second quarter,” said Patrick Fearon, an economist at A.G. Edwards & Sons Inc. “That acceleration is continuing into the beginning of the third quarter. It suggests a little bit of momentum is building in the economy.”
Economists surveyed by Bloomberg forecast GDP growth to accelerate to a 3.5% annual pace this quarter and 3.7% in the final three months of 2003. By comparison, the economy grew at an average 3.6% pace during the 10-year expansion that ended in 2001.
The GDP last quarter was paced by a jump in consumer spending to a 3.1% annual rate of growth, the best performance in nine months, compared with a 2% rate in the previous three months, economists said. Consumer purchases account for 70% of the economy.
Economists expect consumer confidence to remain strong.
Orders for new equipment and manufacturing purchasing may follow suit, setting the stage for a strong second half, economists project.
Here’s a summary of key economic reports due out this week:
Tuesday:
* The Conference Board releases its index of consumer sentiment in July. A separate measure of consumer confidence in June by the University of Michigan is set for release Friday.
Thursday:
* The Commerce Department issues its GDP report.
* The Labor Department posts weekly initial jobless claims. The week ended July 19 was the lowest in five months. Labor also reports employment costs for the second quarter.
Friday:
* The Commerce Department releases June personal spending data.
* The Labor Department issues its June unemployment report.
* The Institute for Supply Management, an industry group, releases its July manufacturing index.
From Bloomberg News
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Arguments to Begin in Amgen Patent Case
Opening arguments are set to begin today in a Boston U.S. District Court over claims by Thousand Oaks-based Amgen Inc. that Transkaryotic Therapies Inc. and Aventis infringed its anemia drug patents.
In January, a U.S. Court of Appeals ruled that Cambridge, Mass.-based Transkaryotic, also known as TKT, and French-Swiss drug maker Aventis, which are developing an anemia drug called Dynepo, infringed two of Amgen’s five Epogen patents. But the case was sent back to the lower court to reconsider the validity of some of the claims.
At issue is whether Amgen’s patents on Epogen -- a genetically engineered form of a naturally occurring protein that boosts the body’s production of red blood cells -- cover the protein, as TKT claims, or the methods used to manufacture it, as Amgen maintains.
Amgen has said it expected to prove the validity of its patents. “We remain confident in our patent estate,” Chief Executive Kevin Sharer said in a conference call last week.
Amgen makes Epogen, which registered 2002 sales of $2.3 billion, by inserting a human gene into hamster cells, whereas TKT has developed an alternative method for Dynepo that uses human genes.
Dynepo is approved in Europe for the treatment of anemia related to dialysis or chronic renal insufficiency, but TKT and Aventis are awaiting the outcome of the U.S. patent case before launching European sales of the drug, which is manufactured in the U.S.
From Reuters
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World Trade Ministers Gather in Montreal
Leading trade ministers from every continent will meet in Montreal beginning today, conscious that talks on a global treaty are in danger of becoming bogged down unless all sides start making major compromises.
Meanwhile, Third World and environmental activists have pledged to “shut down” the gathering, which they say is a prime example of rich nations getting richer at the expense of the developing world.
World Trade Organization ministers have not convened in North America since the 1999 Seattle meeting that was marred by widespread rioting.
It is the last in a series of informal meetings that are supposed to smooth the path to a gathering of trade ministers from all 146 WTO members in Cancun, Mexico, in September.
The biggest issue facing the WTO is trade in farm goods.
The European Union is promising to cut back its farm subsidies budget and reduce import duties, but it stops short of the level demanded by the United States and major farm producers such as Canada, Australia and Brazil.
Meanwhile, those countries mostly reject EU demands to include issues such as animal welfare and consumer labeling, as well as a form of trademark protection for products known by the region where they are made, such as Parma ham.
The meeting runs through Wednesday, and WTO negotiators then take a 10-day break before returning to the body’s Geneva headquarters for an intensive, two-week session.
From Associated Press
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Citadel Broadcasting, Netgear Plan IPOs
A fast-growing maker of computer networking products and a top radio broadcasting company plan initial public offerings this week in a market that investors have given a second chance.
Santa Clara, Calif.-based Netgear Inc. plans to sell 7 million shares Wednesday at $10 to $12 each, raising $77 million. Lehman Bros. is handling the offering. Netgear’s products let small businesses and households share Internet access and information among multiple personal computers.
Meanwhile, Las Vegas-based Citadel Broadcasting Corp., the No. 6 owner of radio stations in the United States, expects to sell 22 million shares at $17 to $19 each, raising about $396 million. Goldman Sachs & Co. will lead the sale, slated for Thursday.
Investors have eaten up many of the recent IPOs, which have come at a rate of about one or two a week. The optimism for many but not all of the companies reflects a broader market rally -- and possibly a willingness by issuers to sell IPOs at a discount.
“These deals are being offered to investors at a fire-sale price to ensure that the deal gets done, and to give it a good start in the aftermarket,” said John Fitzgibbon, an IPO analyst with 123Jump.com.
From Reuters
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OPEC Expected to Hold Oil Output Steady
The Organization of the Petroleum Exporting Countries is likely to maintain its current ceiling of 25.4 million barrels per day at a meeting in Vienna on Thursday because prices have held in its target range, an OPEC oil minister said Sunday.
“The likelihood is that the meeting will continue the production ceiling as it is at present,” UAE Petroleum & Mineral Resources Minister Obaid bin Saif al-Nasseri said. “The market is relatively stable and has moved in a narrow band of $3, which is inside the price band of $22 to $28 per barrel, only briefing going over the top end of the ceiling.”
OPEC controls half of world exports.
Prices have held firm as looting and sabotage have kept Iraq’s postwar oil exports at just a quarter of prewar levels.
From Reuters
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British Airways Tries to Head Off Strike
The head of Europe’s biggest carrier, British Airways, said Sunday that this week would be crucial for the airline as it meets with unions in an attempt to avoid more potentially crippling strikes at its main London base.
“Next week the future of BA is in the hands of the negotiators, including me, of the unions and the management,” BA Chief Executive Rod Eddington told BBC television.
A walkout by BA check-in staff two weeks ago at London’s Heathrow Airport, the world’s busiest international hub, disrupted the travel plans of more than 100,000 people.
The strike was triggered by the introduction of an electronic “clock-in” swipe card, which employees fear would lead to changes in shift patterns, pay and conditions.
But BA denies that the card would change pay and conditions. Eddington has vowed not to scrap the card, already in use by some other staff.
From Reuters
