Business as usual today has been brought to you by News Corp and chairman and CEO Rupert Murdoch and American banks.

US economy #1. American consumer confidence has fallen to the lowest level in 10 months on fears about unemployment, with the US Conference Board’s index of consumer sentiment hitting 46 in February, down sharply from a revised 56.5 in January. The fall suggests that US consumers have suddenly lost confidence and few are expecting improvements in business conditions or the jobs market in the next six months. The reading was the lowest since last April, around the depth of the slump in global markets. Economists had forecast a slight fall to 55, they were wrong in spades. A reading above 90 indicates a stable economy, and above 100 indicates a growing economy. Interestingly, consumers assessment of their present situation was the glummest since the depths of the financial crisis in the October-November of 2008.

US economy #2. But better news on American house prices, sort of.  Prices in the 20 largest US cities fell by 0.2% in December were down 3.1% from the same month a year ago, according to the Standard & Poor’s Case-Shiller home price index. In the last three months of 2009, US home prices fell by just 2.5 %. That’s better than the 19% fall in the first quarter of last year. But despite these signs of improvement, black spots remain, with Detroit, Las Vegas and Tampa still weak. However, San Francisco, San Diego, Washington and Denver had year-on-year gains in December.

Banking’s cash cornucopia. Wall Street cash is still good. New York State Comptroller Thomas DiNapoli said overnight that Wall Street bonuses rose 17% last year, to an estimated $US20.3 billion, as profits in the financial services sector rebounded. He said the average taxable bonus for securities industry employees in New York rose to $US123,850 in 2009 from $US112,000 the year before. The rebound in bonus payments confirm the explosive return to profitability by Wall Street profits, which could reach an unprecedented $US55 billion for 2009. DiNapoli said that follows a $US42.6 billion loss in 2008, while bonuses will be well below the record of $US33 billion in 2007.

Banking bust list. 702 US banks are now on the problem list of America’s main regulator, the Federal Deposit Insurance Corporation, the highest level since the June quarter of 1993, and more than nine times the number just three years ago. Banks that end up on the problem list are considered the most likely to fail because of difficulties with their finances, operations or management, but only 13% of those on the list go on to fail. But as we have seen with Wall Street banks, profits are back in fashion among US financial groups. US banks collectively reported a relatively small profit of $US914 million in the fourth quarter of 2009. During the fourth quarter of 2008, banks lost a combined $US32.1 billion. The FDIC has closed 20 banks so far this year after shutting 140 in 2009 and 25 in 2008. The FDIC forecast that the pace of bank failures would accelerate during this year.

Murdoch #1: Sheikh bin Al Murdoch. According to the Financial Times, the Rupster’s family company News Corp is paying $US70 million for an initial 9.09% stake in Saudi-based broadcaster, Rotana Media. It’s owned by Saudi billionaire investor Prince Alwaleed bin Talal, who is a big shareholder in News Corp. The FT said the stake could be increased to 18% later on. Prince Alwaleed’s Kingdom Holdings owns 7%, or 56 million shares, of News Corp’s class B stock and is the 4th largest shareholder outside the Murdoch family. Now Fox News and its bunch of right-wing nutters, who are distrustful of everything Middle East, will be in a quandary. The Prince is also a big shareholder in Citigroup, silly him.

Murdoch #2. So how close is the Rupster to the Prince? Well, the book called Alwaleed: Businessman Billionaire Prince, (written by Riz Khan), was published by HarperCollins a couple of years ago. Harper Collins is Rupe’s book-publishing arm. So the answer is that they are very close. The Prince last month called for James Murdoch to follow his dad into the top gig at News Corp (thanks Prince). This is sounding like a Fox Network soap.

Murdoch #3: James Murdoch, drug company director. He has a very, very interesting decision to make, one that could very well define him in the eyes of his peers. James Murdoch was appointed to the board of drug major Glaxo Smith Kline early last year. And started on the board in May. Besides being a director, he is also a member of GSK’s corporate responsibility committee. And there’s a very nasty headache to resolve right now. Should GSK take a very lucrative diabetes drug called Avandia off the market? The drug has generated a lot of controversy over claims it raises the risks of heart attack, something GSK has rejected. But US media reports at the weekend claimed that in 2008, safety reviewers at the US Food and Drug Administration had urged the agency to take Avandia of the market “because they said it was causing 500 additional heart attacks per month”. The reports says that two senior Democratic and Republican senators are pressing the FDA for answers on the reports and claims about the drug. GSK’s response will be a main board decision, but the corporate responsibility committee will be involved. So what will James do, give us another lecture about the evils of big government, as he did about the BBC last year because it dares to compete with News Corp?

Murdoch #4. Remember News Corp’s trans-Pacific flight to the US in 2004? It became part of corporate lore in this country. So, as part of their scrutiny of the related party deal between Kerry Stokes and the Seven Network-WesTrac deal, journalists at News Ltd should cast a wide net in looking at the history of such deals in this country. Related party transactions were at the heart of the brawling at Coles Myer in the mid-1990s. Remember Yannon and the way Coles saved Solly Lew from embarrassment? Related party transactions were also at the heart of the ABC Learning debacle. We still don’t know the outcome there, hopefully we will learn the cost, one day.

Murdoch #4: continued. But they are not the largest, nor is the $2 billion WesTrac deal. No, in their search, News Ltd journalists would discover that the biggest of them all was the $2.95 billion deal that saw News Corp buying the Murdoch family’s 58% stake in Queensland Press in 2004. Murdoch’s private company had been forced to take a majority stake in Queensland Press as part of the deal in 1986 that saw him get control of the Herald and Weekly Times, which remains one of the duddest deals by a competition regulator in this country. But as part of his flight to the wilds of Delaware in the US and the safety of the worst set of corporate regulations in America, News Corp had to “regularise” the Queensland Press position. So Rupert Murdoch organised the purchase of Queensland Press from his private company, at a price that allowed him to a lot of financial room to keep a tenuous hold on the company during the switch of domicile in 2004, and to ward off the aggressive John Malone, who had built a 19% stake in News Corp.

Not so chunky. The weaker US dollar helped Campbell Soup to report a 11% rise in fourth-quarter profit, but soup sales in the US fell as the company missed the trading down American consumers are doing in their shopping. The news helps explain why Campbell last week cut its 2010 sales forecast. In fact the news was more dire than that: sales of the company’s Chunky soups suffered in the trade down. Sales of condensed soup, which is cheaper, were flat. The company said that soup sales in Australia fell, but didn’t break out figures. Ready-to-eat soup sales fell 18%. It was the third quarter in a row that Campbell profits have risen, but soup sales fell. Cost cutting has kept earnings rising, and there’s a further round in store this year, especially in condensed soups.

Labour does well under Labor, in public. The Reserve Bank’s confidence that labour costs remain under control was supported by Australian Bureau of Statistics figures today showing the lowest quarterly rise since the Labour Price Index was started in 1997. The ABS says the “private sector wage price index rose by 0.6% compared to 1.0% for the Public sector, with the All sectors index recording a quarterly movement of 0.6%. The All sectors quarterly movement of 0.6% was the lowest in the history of the series and was the fourth quarter in a row where a quarterly movement below 1.0% was recorded.” For 2009, the rise was 3.0%, but that disguised the continuing surge in public sector wages — they jumped 4.2% over the year, compared with the 2.6% rise for the private sector. The ABS said the 1.4% difference between public and private sector increases was the largest since the series started 23 years ago. The Federal Labor Government  and its mates in all states (bar Western Australia) have been good to union members in the public sector.

Construction in the black. The ABS also reported the value of construction work done in the December quarter rose 2.6%, from a downwardly revised 1.6% rise in the September quarter (2.2% originally). The annual growth rate slowed to 3.9% in the 12 months to December 2009, from 6.9% in the year to September. The important December quarter private investment figures are out tomorrow. The September rise in construction work led to some analysts (including me) to think that would be followed by a rise in Capex. In fact it fell, so there’s no certainty about what the ABS will report tomorrow, but the RBA thinks business investment is now on the upturn.