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China Investment Corp, the $200 billion sovereign fund, is set to pour a total of $2 billion into three U.S. distressed asset-focused funds, including one managed by Goldman Sachs, sources said on Tuesday.

CIC plans to invest around $600-$700 million each in three distressed asset investment funds, another managed by U.S. investment firm Oaktree Capital, said the sources briefed on CIC’s plan.

The name of the third distressed asset fund was unknown but the sources noted that all three funds to be invested by CIC would focus on U.S. distressed assets ranging from real estate to infrastructure.

Officials at CIC, Goldman and Oaktree all declined to comment. The sources declined to be identified as the fund-raising process was confidential.

(Reporting by George Chen; Additional reporting by Michael Flaherty, Editing by Jacqueline Wong)

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It helped Elizabeth Poelker buy her house.

It probably helped Paul Medler sell his.

But is the $8,000 tax credit for first-time homebuyers really helping the economy all that much? Enough to warrant extending it for another year, at an estimated cost of $15 billion? Enough to maybe even expand it to $15,000 apiece, for everyone?

That’s a question Congress is wrestling with these days, as the program starts to near its Nov. 30 closing date, and the real estate industry ramps up a full-throated campaign to keep the credits flowing. It’s unclear at this point what will be decided.

Nearly everyone agrees that the credits have helped keep the housing market afloat during a tough time. After they were enacted as part of the $787 billion federal stimulus Congress passed in February, existing home sales rose for four straight months, before dipping in August. The rate of sales is up 12 percent since March, according to the National Association of Realtors.

About 1.4 million people have already claimed the credit on their taxes, according to the IRS, with probably more awaiting paperwork or delaying until they file in the spring.

And, along with low prices and historically low interest rates, real estate agents say the credits are sparking interest in home-buying.

"There’s no question it’s had a positive impact on our business," said Jim Dohr, president of Coldwell Banker Gundaker, which has 25 offices in the St. Louis region. That’s especially true at lower price points. Coldwell’s business is up 23 percent from last year on homes sold for less than $100,000 and 16 percent for homes sold for $150,000 or less.

"Much of the action in our business is at the lower end, and it’s really being fueled by the first-time tax credit," Dohr said.

What is less clear is how many of those sales would have happened anyway.

Prices and interest rates are low, after all. And people still need a place to live.

Out of a projected 1.8 million sales that will use the tax credit this year, economists estimate that between 350,000 and 400,000 would not have happened without it. And a recent survey commissioned by real estate tracking firm Zillow found that, if the credit is extended another year, it would be a major deciding factor for 18 percent of first-time homebuyers — spurring an additional 334,000 sales in all.

That’s nothing to sneeze at, said Zillow chief economist Stan Humphries. But at $15 billion, it works out to almost $45,000 for every sale generated.

"It’s an expensive program," he said. "For every five homes, four were going to get purchased anyway."

But there’s still that other one — people such as Poelker.

She’s 25 and works at an accounting firm. Her lease in Maryland Heights was coming up this summer, and she had grown tired of renting but didn’t think she could afford a down payment. When the tax credit passed, she started looking.

Soon, she found a nice townhouse in Manchester, put in an offer, and closed in June.

"It really helped me make it work," said Poelker, who noted that her brother and a friend had also used the tax credit to buy houses. "I probably would have purchased in the next couple of years, but it helped me do it sooner."

Still, that raises another question about the tax credit. Is it just borrowing sales from the future?

Skeptics point to Cash for Clunkers, the government-funded program to help spur auto sales. After a surge of car-buying in July and August, September is expected to be car dealers’ worst month of the year, according to a recent report from JD Power. The same thing, critics say, could easily happen whenever the homebuyer credit expires.

But supporters say that’s all the more reason to prolong it, at least for a few months. The economy is still shaky. Any housing recovery is fragile at best. Winter is typically a slow season in real estate. The timing, said Scott Dettmer, general manager of Dettmer Homes in Cottleville, is bad all around.

"You’re taking the single biggest impetus for home sales in at least three years, and you’re going to expire it at what is normally a bad time anyway?" he said. "I’d like to see it extended at least through the spring, to give a bridge over what are normally a tough few months."

At least 20 bills have been proposed in Congress to extend the plan, including one co-sponsored by Sen. Majority Leader Harry Reid that would push it into June. Another bill — to extend the credit and make it $15,000 for all homebuyers — reportedly has 15 co-sponsors.

But that measure was stripped from the stimulus bill in February, and there seems to be a limited appetite for it now, as Congress wrestles with health care reform and other pricey legislation. Many observers don’t expect a resolution until the Nov. 30 deadline draws nearer.

And that will probably keep Paul Medler waiting.

He sold his home in Kirkwood in June to a first-time buyer who used the tax credit. It probably helped make the deal happen, Medler said. Now he’s renting, and waiting to find a good deal to buy, but prices in the neighborhoods where he’s looking still seem too high for this market.

Medler’s hoping the credit either gets extended to everybody — so he can use it — or ends in November as planned.

"After this stops I feel like we might have another dive in housing prices," he said.

And, at least in his case, that would be a good thing.

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Fears are increasing among more than 1,000 workers at the Navistar assembly plant in Chatham that they’ll never produce another heavy truck.

The plant has remained idle since the last ProStar and LoneStar models rolled off the assembly line almost three months ago, and there are no signs of a reopening.

U.S.-based Navistar International Corp. laid off all workers at the venerable operation after their contract expired and bargaining with the Canadian Auto Workers reached an impasse in late June.

Negotiators from both sides haven’t budged from their positions, and uneasy workers are wondering whether the company will close the plant permanently.

"There seems to be more concern among the members that it could happen," said Cathy Wiebenga, plant chair for CAW. "They (Navistar) are playing a new game. We’re being forced to play it but we don’t know what the outcome will be."

Dan Ustian, chief executive of parent Navistar, suggested publicly for the first time this month that the company could close the plant.

"But we also want to point out if we close the plant, we have not incorporated any of the closing costs or restructuring of that yet into our financials," he told analysts during a conference call to discuss third-quarter results.

The plant has operated in Chatham for more than 60 years and remains one of the community’s biggest employers.

Navistar planned on closing the plant in 2003, but reversed the decision when workers agreed to concessions and the federal and provincial governments provided more than $60 million in aid.

A shutdown would be a big blow to the southwestern Ontario region and numerous suppliers. It would follow the closing of the Sterling Trucks assembly plant in St. Thomas and the elimination of about 1,300 direct jobs earlier this year.

Ford’s assembly plant in St. Thomas is also in jeopardy of closing in 2011, which would wipe out another 1,500 jobs.

Although the Navistar plant has experienced ups and downs because of the cyclical nature of the heavy truck market in North America, Wiebenga said she has never experienced such a lengthy stoppage.

Some workers are taking temporary jobs, while others are retraining or looking for new careers.

Kevin Jack, a veteran assembly-line worker, said his anxiety about the plant’s future has increased, and he questions Navistar’s intentions as the shutdown drags on.

It’s difficult for employees to find new work, he said, because companies believe they’ll return to Navistar if the plant reopens.

"They (Navistar) are keeping us all in limbo," he said no fax cash loans. "Let us know so we can get on with our lives."

Since the start of the latest shutdown, Navistar has shifted production to a plant in Escobedo, Mexico. Wiebenga said she thinks it will be difficult for that operation to meet orders when the market improves.

Although she is not optimistic about contract talks any time soon, Wiebenga said bargaining could resume later this year because industry watchers expect the market to recover in early 2010.

Union officials say Navistar’s last proposal for extensive concessions would "gut" the existing contract, eliminating most workers’ jobs and leaving remaining employees with few rights. They say Navistar’s proposals call for widespread contracting out of work, leaving jobs for only about 100 full-time workers.

"The vast majority of workers would be voting themselves out of a job by accepting something like this," Jack said.

The union said Navistar also wants to significantly trim health benefits, freeze pensions and dramatically erode seniority rights. Changes would allow management to award jobs on the basis of ability rather than seniority.

There have been no serious discussions about wages. Under the old contract, workers earned an average of $24 an hour.

Navistar, which weathered a bitter six-week strike at the plant in 2002, has not commented on bargaining since laying off about 350 workers at the end of June. Some 700 employees were already on layoff because of slow sales.

Plant manager Craig Holmes said in an audio message to workers at the time that the operation had reached "a crossroads" and needed to become "smaller and radically different." Navistar has not revealed how much the plant workforce would shrink, or other details.

"Nothing has changed," Navistar spokesman Roy Wiley said about the status of bargaining this week. "We are willing to talk any time as long as the talks are productive."

Navistar has said economic conditions have created the "worst truck market" since 1962.

At the time of the stoppage, the Chatham plant produced 35 trucks daily. During the plant’s peak in daily output, it assembled an average of about 200 trucks a day.

In defence of the company’s proposals, Holmes said employees and retirees would maintain a good quality of life. But he acknowledged the uncertainty and level of necessary change is "tough."

He said he would update the June 30 message when appropriate. The message has remained the same.

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U.S. consumer sentiment rose in late September to the highest since January 2008 as expectations of an economic rebound gathered momentum, a survey showed on Friday.

The data added to indications the economy is pulling out of a lengthy recession more powerfully than many analysts had expected a few months ago, although doubts persist about how much staying power the rebound may have.

The Reuters/University of Michigan Surveys of Consumers said its final index of sentiment for September rose to 73.5 from 65.7 in August. This was above economists’ median expectation for a reading of 70.3, according to a Reuters poll.

The index of consumer expectations rose to 73.5, the highest in two years, from 65.0 in August.

U.S. stock indexes initially bounced on the news but then slipped, while Treasury debt prices were off slightly and the dollar fell against the yen and euro.

“The same pace of gains in confidence continued in late September as the economic news reaching consumers grew even more positive,” the Reuters/University of Michigan Surveys of Consumers said in a statement. “Consumers reported that the economy had already begun to improve and anticipated further gains in the year ahead.”

The index of current conditions rose to 73.4 in late September from 66.6 in August.

“It looks like people feel better about both current conditions and the future. If we can only get business sentiment to improve a bit more, we’d probably go from a yellow light to a green light,” said Gary Thayer, macro strategist with Wells Fargo Advisors in St. Louis. “If business sentiment picks up, the job situation would improve and consumer sentiment will improve further.”

The survey’s 12-month economic outlook jumped to 88 in late September from 69 in late August.

“The data provide considerable evidence that the economy has already begun to recover,” the Reuters/UMich statement said. “Nonetheless, the pace of gains in consumer spending are still expected to be slower than usual due to expected lags in job and income gains as well as the renewed desires of consumers to save and the more limited availability of credit.”

(Additional reporting by Ellen Freilich)

(Reporting by John Parry; Editing by James Dalgleish and Dan Grebler)

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The first 10 firms due to list on China’s Nasdaq-style second board, ChiNext, plan to sell shares at prices 50 percent above their mainboard peers, just as worries over speculation spurred officials to tighten trading rules.

After gauging investor demand, the 10 start-up companies, including software developer Beijing Ultrapower and outdoor sportswear maker Toread, have decided on prices for their shares that average 55 times their 2008 earnings.

That compares with an average price/earnings ratio of 36 for other initial public share offerings this year on the mainland.

“Growth potential, rather than past performance, is what investors are looking at, so a high PE ratio doesn’t necessarily mean they’re over-priced,” said Jiang Jianrong, analyst at Shenyin & Wanguo Securities Co.

“But without doubt it will be quite a speculative market at the beginning because it’s new and the companies are very small.”

To curb risks, the second board for start-ups, to be launched as soon as next month in China’s southern boomtown of Shenzhen, will set an 80 percent limit on share price movements during the first day of trade, the Shenzhen Stock Exchange said on Thursday.

China is hoping that ChiNext could provide badly needed financing for the private sector, which has difficulty obtaining bank loans but is crucial to creating jobs and sustaining growth.

Beijing is also hoping that the market could become a cradle for China’s own future versions of Microsoft or Intel, helping to cut the economy’s reliance on manufacturing.

The 10 companies, which also include drug producer Chongqing Lummy Pharmaceutical and Beijing Lanxum Technology Co, a provider of office information system services, will take subscriptions from investors on Friday.

NARROW THE GAP

“Our rival Fuji Xerox is stronger than us both in branding and in financial strength,” said Lanxum Chairman Chi Yanming. “Listing on the second board would help us to narrow the gap.”

Lanxum, which is selling 5.3 million shares, said on Thursday that it plans to raise 477 million yuan ($70 million), 73 percent more than its previous fund-raising target, after pricing its IPO at 18 yuan per share, or 51.49 times its 2008 earnings.

Lepu Medical, a medical equipment maker, plans to raise 1.19 billion yuan, more than double its target, after pricing its IPO at 29 yuan a share, or 53.54 times its 2008 earnings. Lepu shares were 117.12 times over-subscribed during the road show.

Investor fervour is initially likely to push stocks on the start-up board to excessively high valuations, helping to create new Chinese billionaires.

“Some speculation is not always a bad thing. It provides easy money to private companies which had been at a disadvantage in financing compared with state-owned rivals,” said Shenyin & Wanguo’s Jiang. 

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American International Group Inc’s shares fell 5.4 percent on Tuesday after speculation that the insurer was planning to sell shares, two portfolio managers said.

The source of the speculation was not clear, although earlier on Tuesday, an article by CNBC television host Jim Cramer published on TheStreet.com argued that AIG ought to sell shares.

AIG declined to comment.

The two portfolio managers who had heard the rumors declined to comment because they are not authorized to speak to the media.

AIG’s shares closed down 5.37 percent at $45.80.

(Reporting by Dan Wilchins)

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A congressman accused Bank of America Corp of meeting his requests for information with volumes of irrelevant documents and has set a Monday deadline for more information, according to a letter obtained by Reuters.

The September 18 letter to Bank of America Chief Executive Ken Lewis from U.S. House Oversight and Government Reform Committee Chairman Edolphus Towns outlines what the committee considers inadequate disclosure as it investigates possible wrong-doing in the Merrill Lynch merger.

In his letter, Towns said the bank has produced documents that are “clearly irrelevant” to an August 6 request by the committee for all records from September 1, 2008 through January 16, 2009.

A company spokesman said Bank of America is working closely with the committee on the matter, but did not elaborate further.

The letter said that instead of providing documents relevant to the investigation, Bank of America has produced “hundreds of pages of unrelated, extraneous information” including: emails from employees to Ken Lewis about his “performance on 60 Minutes,” emails to employees about company discounts at retailers and an invitation to attend an East Asian investment conference, written in Chinese.

Towns also wrote that while Bank of America’s executives’ personal information, and information relevant to the investigation, was redacted from documents; the bank did not redact sensitive customer information included in the request, like credit card numbers and account numbers insurance quotes.

The committee has requested information relevant to the investigation be disclosed, and the bank must waive attorney-client privilege to do so.

Towns and the House committee are investigating the details surrounding Bank of America’s purchase of Merrill Lynch, including the disclosure of pre-merger losses at the investment bank, what funding commitments the federal government made prior to the deal and what legal basis the bank may have had for backing out of the deal.

Bank of America has until noon EDT on Monday to comply with the information request.

A spokeswoman for Towns said “the deadline stands.”

The Charlotte, North Carolina-based bank’s stock was down 2 percent in late morning trading to $17.27.

(Reporting by Joe Rauch and Rachelle Younglai; Editing by Tim Dobbyn)

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SINGAPORE — The global economic crisis may have damped the appetite for most high-end goods, but one small daily luxury —gourmet tea — has been posting surprisingly strong sales, prompting some brands to consider expanding around the world.

With names such as Silver Moon, Emperor’s White Garden, Gout Russe Douchka and Sakura, Sakura, the teas reflect a wide range of exotic flavors, attracting an almost religious following among tea lovers.

While the rarest teas, such as yellow teas, can cost $2,120 for 2 instant payday loan.2 pounds, gourmet teas cost 30 percent more than standard teas on average, making them an affordable luxury for many.

"There is definitely no crisis when it comes down to gourmet tea; our sales have been increasing every year by 15 to 25 percent ever since we started in 1987," said Francois-Xavier Delmas, founder and chief executive of Le Palais des Thes in Paris.

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Heartland Bank added Catherine Baize to its Private Wealth Group.

Fulcrum Securities added Teresa Creighton as a financial adviser and first vice president of investments.

Clean The Uniform Company named Angela Willis as a collections representative.

CB Richard Ellis added Holly Heyde as a broker.

BJC Medical Group added Dr. Erica R. Schockett.

Horner & Shifrin added Brooks K. Brestal.

WirelessUSA added Anna Capkovic as a communications consultant.

Payne Family Homes added Edward Lott as sales and marketing manager.

Evans & Dixon promoted attorneys Ellen Brooke and Karen Jones to senior associates.

Gresham Smith and Wyatt added Lynn Swaney as a manager in their accounting services department.

SAK Construction added Steve J. Hirtz to the management team as vice president of rehabilitation operations.

Clear Channel Radio St. Louis promoted Aaron Hyland to director of sales.

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WASHINGTON — Signaling that manufacturers are leading the economy into a recovery, output from the nation’s factories, mines and utilities posted widespread gains in August.

The August gains in industrial production marked the second straight increase after the global recession dried up the appetites of customers worldwide. Output rose 0.8 percent, the Federal Reserve said Wednesday, beating analysts’ estimates.

In part, the improvement reflected auto sales that were boosted by the government’s now-ended Cash for Clunkers program. But analysts were impressed that output rose broadly across industries. Even with autos and parts stripped out, manufacturing activity gained 0.4 percent last month.

"Vehicles are not the whole story," Nigel Gault, chief U.S. economist at IHS Global Insight, said in a note to clients.
Gault noted that production rose in five out of 10 categories of durable goods, including machinery and electrical equipment.

The pace of growth is expected to slow later this year. That’s partly because the stimulative effect of the clunkers program, which issued rebates for people who traded in older gas-guzzlers for new, fuel-efficient models, will fade.

But industrial stockpiles are so low that production should keep rising even as consumer spending remains weak, economists said. Companies had cut their stockpiles by a record $159.2 billion in the second quarter. Low inventories tend to signal higher output ahead, because companies eventually must produce more to refill their depleted stockpiles bad credit personal loan lenders.

Manufacturers "are in a catchup mode right now," Gault said. "They’re adjusting for the fact that the level of demand didn’t meet their worst fears."

Inflation remains nowhere in sight — The Consumer Price Index rose just 0.4 percent in August, after a flat reading in July, the government said. Prices fell 1.5 percent in the last year, as gasoline prices dropped sharply from record levels last summer. The "core" CPI, which excludes volatile food and energy prices, ticked up a scant 0.1 percent, matching expectations.

Buffett thinks economy has hit bottom — Billionaire investor Warren Buffett says the economy appears to have leveled off at the bottom of the recession over the summer, but Berkshire Hathaway’s CEO still isn’t seeing much improvement. "I think the odds are very much against getting significantly worse. It’s sort of plateaued at the … bottom right now," Buffett said in an interview with CNBC that aired Tuesday and Wednesday.

Labor Department reports weekly jobless claims, Commerce Department reports housing starts. STLtoday.com/business

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