Top smartphones may soon cost more than $200

Most high-end smartphones cost just $200 after discounts, but that practice may end soon.

NEW YORK (CNNMoney)

It's no secret that wireless companies are trying to do away with subsidies. Typically, customers pay a discounted price up front for their phones and then work the cost off over the course of a two year contract.

This has helped carriers lure in customers and lock them into long-term deals. But those discounts are also bottom-line killers, particularly when subsidizing super high-end devices like the iPhone from Apple (AAPL, Fortune 500). The iPhone carries by far the largest subsidy on the market.

A 16 gigabyte iPhone 5 without a contract sells for $649 on Apple's website, for example. But you can get the phone from a major carrier for $199 with a contract. In quarters in which a new iPhone launches, profit margins for the wireless businesses of Verizon, AT&T and Sprint often plunge.

Carriers usually knock of $400 from the price of top smartphones running Google's (GOOG, Fortune 500) Android operating system, including the Samsung Galaxy S4, as well. That's why wireless companies are beginning to look at ways to end subsidies.

Related story: The iPhone is a nightmare for carriers

Some international carriers have already gotten rid of the price discounts. Others are offering bring-your-own device deals and creative financing options,

In the United States, the first to do away with the subsidy -- sort of -- is T-Mobile (TMUS).

The No. 4 carrier, which has branded itself "the uncarrier," is offering contract-free service plans for customers who buy full-priced phones or already own one that they want to switch to T-Mobile's service. It also offers financing options for subsidized phones, though those customers still need to sign up for a two-year contract to get those deals.

Even though T-Mobile isn't going as cold turkey on subsidies as it claims, it has caught the attention of rivals. The CEOs of Verizon (VZ, Fortune 500), AT&T (T, Fortune 500) and Sprint (S, Fortune 500) have all said recently that they are looking closely at what T-Mobile is doing.

Sprint CEO Dan Hesse said on a conference call with analysts last month that carriers can't keep discounting phones "because subsidies just keep going up, and ... the industry can't afford to upgrade as often." Verizon recently lengthened its contracts by four months -- from 20 to 24 -- to get more bang for its subsidies.

Related story: T-Mobile blows up cell phone pricing model

Industry experts said there are other factors that could lead to the end of subsidies ... or at the very least, smaller discounts.

"Is the subsidy-model definitely going away?" asked Pierre Alain Sur, leader of PricewaterhouseCoopers' global communications business. "It's hard to say at this point, but the trend is pointing that direction."

Smartphones are becoming more durable, and innovation is slowing. Apple is still selling crazy amounts of the iPhone 4, a device that was launched two years ago.

All that's left is to change customers' mindset. Interestingly, consumers have no issue paying full price for tablets, which are essentially large smartphones with all the same features except placing calls. But carriers have been discounting the price of phones forever.

"It's a bad habit," said Craig Wigginton, leader of the U.S. Telecommunications sector at Deloitte. "There's the notion that this will be done in perpetuity."

Wigginton compared the wireless industry to airlines. It may only take one carrier to completely eliminate subsidies before the rest all follow. T-Mobile may be that first "airline" of wireless.

Carriers may gradually charge more for smartphones over the next two to three years, Wigginton said. They may first raise the price of a new phone to $250, then $300 and so-on.

So if you want the latest iPhone or Galaxy for $199, you may need to buy it sooner rather than later.

First Published: May 9, 2013: 10:08 AM ET

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8 to be charged in $45 million cybertheft bank heist

NEW YORK (CNNMoney)

The charges are due to be announced in Brooklyn by U.S. Attorney Loretta Lynch of the Eastern District of New York.

A spokesman for her office said the charges are against eight individuals who were part of the New York cell of the operation. One of the eight to be charged is dead, according to the spokesman. The individuals being charged Thursday were involved in stealing $2.8 million in cash from New York banks.

Cybercrime has become an issue of growing concern, especially as the number of hacking attacks from overseas has grown. Even the Federal Reserve was hacked from overseas earlier this year.

Related: New tools to stop cybercrime

While hacking attacks often steal personal information that can then be used in identity theft schemes, hacking theft from banks and credit card companies by organized crime is also a growing problem. Two years ago Citigroup (C, Fortune 500) admitted that more than $2.7 million was stolen from 3,400 accounts during a hacking attack.

First Published: May 9, 2013: 10:13 AM ET

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Stocks: Shorts get squeezed

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NEW YORK (CNNMoney)

Tesla (TSLA) rallied after the electric car maker delivered its first ever profit and topped sales estimates. Green Mountain Coffee Roasters (GMCR) shares jumped after the company reported better-than-expected earnings and announced plans to extend its partnership with Starbucks (SBUX, Fortune 500). And Groupon (GRPN) shares rose sharply after the daily deal site reported a narrower loss compared to a year earlier.

One reason all three names were gaining so much traction is due to a so-called short squeeze. Shares of Tesla, Green Mountain and Groupon are heavily shorted, meaning that buyers have borrowed the stocks on a bet that their prices will fall. As the stocks rally, short sellers rush in to buy the stocks in order to cover their short positions before they head even higher.

As the bears look to minimize their losses, here are four things to watch:

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1. Stocks still near all-time highs: The Dow Jones industrial average hit a fresh all-time high Thursday before dipping into the red.

The S&P 500 shed 0.2% a day after closing a record high, and the the Nasdaq touched its highest levels since November 2000 before also edging slightly lower.

Despite the step back Thursday, all three indexes are up between 13% and 15% since the start of the year.

"I think we're taking a little breather," said John Edmunds, a business professor at Babson College in Wellesley, Mass., who has written several books about international finance. "[But] I don't see anything that would cause a deep decline. A lot of people think it's gone up so far, it's going to decline, but the fundamentals are actually getting better."

Global markets, which have also been rallying this year, took a pause Thursday as well.

Related: Hedge funds bet against Chipotle

2. Jobless claims fall to another 5-year low: After a solid monthly jobs report last week, the U.S. government said that initial jobless claims dropped further than expected to 323,000 last week.

That's the lowest weekly tally in five years, signaling that layoffs are back to pre-recession levels.

Related: Fear & Greed Index, extremely greedy

3. Microsoft may be interested in buying the Nook: TechCrunch reported that Microsoft (MSFT, Fortune 500) may offer to buy the digital assets of Barnes and Noble's Nook Media e-reader unit for $1 billion. The speculation sparked a 20% surge in Barnes & Noble (BKS, Fortune 500) stock.

4. Monster shares sink: Shares of Monster Beverage (MNST) tumbled after the company's quarterly earnings missed estimates. The energy drink maker, which has been criticized for marketing its highly caffeinated products to children, blamed the drop in earnings on legal costs and other short-term factors.

In other earnings news, DISH Network (DISH, Fortune 500) released quarterly results before the opening bell, showing a decline in sales and profit.

News Corp. (NWSA, Fortune 500) shares jumped as well after the media conglomerate said sales rose in the first quarter and reported earnings that met expectations.

Nearly 90% of the companies in the S&P 500 have now reported results for the first quarter. A majority have topped forecasts for earnings, which are now on track to rise about 5% compared to a year earlier, according to Thomson Reuters. But revenue growth has been subpar.

More than half of the companies that have reported have fallen short of revenue expectations, compared to a typical quarter when more than 60% beat sales estimates. Based on the results so far, revenue growth is expected to be flat compared to a year ago.

First Published: May 9, 2013: 9:57 AM ET

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Stocks retreat from record

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NEW YORK (CNNMoney)

The Dow Jones industrial average edged down 0.1%, but remained above 15,000. The S&P 500 slid 0.1%, while the Nasdaq was flat.

The pullback comes one day after the Dow closed above 15,000 for the first time ever, and the S&P 500 also finished at a record high.

Peter Cardillo, chief market economist at Rockwell Global Capital, said "news from abroad is encouraging," referring to reports about increases in Chinese exports and German industrial output. But he added that there was little in the way of news in the United States to keep stocks moving higher.

Click here for more on stocks, bonds, currencies and commodities

Investors will likely take their cues from another round of corporate earnings.

Shares of JCPenney (JCP, Fortune 500) rose after the troubled retailer released a preliminary report showing a decline in quarterly sales that may not have been as bad as some had expected.

Wendy's (WEN) shares fell after the restaurant chain reported sales that missed forecasts. AOL (AOL) missed earnings estimates. Toyota Motors (TM) reported a surge in profit for its fiscal year 2013, which ended on March 31.

Related: Apple picks itself up off the mat

Walt Disney (DIS, Fortune 500) reported better-than-expected earnings and sales late Tuesday, and several analysts raised their price targets on the stock.

Whole Foods (WFM, Fortune 500) shares surged after the supermarket chain reported quarterly earnings that beat estimates.

Tesla (TSLA), News Corp. (NWSA, Fortune 500) and Green Mountain Coffee (GMCR) will report results after the closing bell.

Shares of Manchester United (MANU) fell nearly 5% after the long-time manager of the English soccer team announced he would retire. This comes less than a year after the company listed in New York.

Related: Fear & Greed Index gets extremely greedy

European markets were trending higher in afternoon trading, with the Euronext 100 index displaying some solid support.

Asian markets ended higher. The Nikkei added 0.7%, the Hang Seng increased 0.8% and the Shanghai Composite rose 0.5%.

First Published: May 8, 2013: 9:42 AM ET

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Ferguson exit knocks Man Utd shares

Shares in Manchester United have surged by nearly 35% since the club listed in New York in August 2012.

LONDON (CNNMoney)

Sir Alex Ferguson, who has led Manchester United (MANU) to victory in the English Premier League 13 times since its inception in 1992, is retiring at the end of the month when the season closes.

"This increases the risk of investing in Manchester United. It's like when Apple (AAPL, Fortune 500) lost Steve Jobs," said sports business expert Emmanuel Hembert from management consultancy A.T. Kearney. "Ferguson is really the key executive that is the core of the business."

Shares in the company, valued at $3 billion, had gained nearly 35% since its New York IPO in August 2012, easily outperforming the benchmark S&P 500 index.

The shares have also trounced the STOXX Europe Football index, which tracks other publicly-traded soccer clubs in Europe including Italy's Juventus and Germany's Borussia Dortmund. That index has risen by less than 5% over the same period.

Manchester United's winning team, brand and management are considered to be key reasons behind the company's impressive share price performance. But uncertainty now hangs over the stock since it is not clear who will replace the 71-year-old Scot.

Related: Jay-Z's latest venture: Sports agent

"Replacing Alex Ferguson is a monumental task and one that shareholders will watch with great interest and nervous uncertainty," said Joshua Raymond, a market strategist at City Index in London. "The man who replaces Sir Alex Ferguson is a significant factor in shareholder confidence."

Manchester United has admitted that a large risk for the business is retaining key personnel, saying in its 2012 annual report that "any successor to our current manager may not be as successful."

The company raked in £320 million ($503 million) in revenue in the year ending June 30, 2012, and estimates it has more than 650 million fans around the globe.

The Florida-based Glazer family, who own the NFL's Tampa Bay Buccaneers, bought the English club in 2005 and retain nearly 60% of the company after last year's New York listing.

Manchester United is a rare example of sporting, commercial and stock market success in the soccer world.

Many other clubs are privately owned by wealthy individuals. For example, the rival Manchester City team is owned by Sheikh Mansour bin Zayed Al Nahyan from the United Arab Emirates.

Bets are now being placed on who will fill Ferguson's shoes. Names at the top of the list include Portuguese manager Jose Mourinho, formerly of Chelsea and currently at Real Madrid, and Everton manager David Moyes.

First Published: May 8, 2013: 10:15 AM ET

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Jack Welch tweets Dimon is a 'great leader'

Jack Welch, who is followed by more than 1.4 million people on Twitter, has been under fire for weighing in on controversial situations before.

NEW YORK (CNNMoney)

The former CEO of General Electric (GE, Fortune 500)weighed in on the brewing controversy over JP Morgan Chase (JPM, Fortune 500) CEO Jamie Dimon's role at the company.

"Jamie Dimon results through crisis and beyond have earned him right to hold both Chairman and CEO titles...Great Leader!!," he tweeted on Wednesday morning.

The tweet comes as a swell of shareholders are pushing for the board to strip Dimon of his role as chairman. Two major shareholder advisory firms are advising clients to vote for an independent chairman at J.P. Morgan, after the bank's big bet on derivatives last year resulted in nearly $6 billion in losses.

Related: Jamie Dimon successor short list will not impress critics

Last year, 40% of the company's shareholders voted for an independent chairman.

Welch, who is followed by more than 1.4 million people on the social network, is no stranger to making contentious comments on Twitter. In October, he was pummeled for claiming the government fixed the unemployment rate to help President Obama's chances at re-election.

First Published: May 8, 2013: 10:46 AM ET

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Online retailers call Internet sales tax a 'nightmare'

Small online retailers, like Kevin Hickey, worry about the costs of complying with an Internet sales tax.

NEW YORK (CNNMoney)

Online retailers would have to start collecting sales tax upfront. They'd also be forced to send payments to local governments across the country. The "Marketplace Fairness Act" passed the Senate but faces a higher hurdle in the House of Representatives before becoming law.

The law would apply to online sellers that have total annual sales of at least $1 million outside of states where they have physical presence.

Justin Krauss is worried about the paperwork burden it would place on his tiny company, Garage Flooring.

His business has annual revenues just above the million dollar threshold and racks up as many as 36,000 transactions a year. The vast majority are outside his home base in Grand Junction, Colo.

There are only four states that have no sales tax. Krauss would have to cut quarterly checks to the other 46.

"I didn't sign up to be a tax collector," he said. "The federal and state governments are putting the burden on small businesses."

Related: What an Internet sales tax will cost you

Krauss says he'd have to update his accounting software, hire a computer programmer to update his virtual shopping cart system, then continuously file a steady stream of paperwork. The initial effort could cost him $40,000, he estimates.

After that, he could rely on an accounting software provider to process transactions and file the paperwork for about $4,000 a year. It's not a huge sum, but Krauss argues most online retailers are operating on thin profit margins already.

"That's coming out of somebody's paycheck," Krauss said. "That's a Christmas bonus that's not being received."

Natalie Mai, a small business tax attorney in Oklahoma City, doesn't represent Krauss. But she said many online shops of similar size won't be able to bear the cost of compliance. Even storefronts that only deal with one sales tax rate have a difficult time when business gets overwhelming and ledgers get messy.

"If you're a mom-and-pop shop online, I doubt you'll be able to stay in business," she said.

There are maybe 7,500 businesses that would be affected by the law, according to a study commissioned by Amazon, which has voiced strong support for the bill.

Supporters say the proposed law levels the playing field between online retailers and storefronts. If you walk into a Miami store and spend $100, it'll cost you an extra $7 in sales tax. Buy the product online, and you'll only pay $100.

Kevin Hickey's company outside Pittsburgh, Online Stores, sells everything from flags to English tea to construction equipment. It's one of those do-everything retailers that essentially serves as an online wholesaler, competing with similar firms all over the world.

That means its profit margin is practically nonexistent. It has annual revenues of $30 million and might clear $400,000 in profit this year.

Related: Meet the new pot entrepreneurs

"We've got a huge, additional compliance nightmare that we've got to deal with," Hickey said. "In fact, we'll be charging more, so we'll lose revenue and have higher costs."

His greatest fear is being subject to another tax audit, like one he went through in 2006. State officials found that he should have been paying taxes on shipping fees -- not just products -- and it cost him $15,000 in back taxes and penalties.

Hickey is worried the new law would mean audits from California, Texas and elsewhere.

"It's basically impossible to collect the sales tax correctly for all states. The chance of us collecting all sales tax correctly all the time is zero," he said.

First Published: May 7, 2013: 10:10 AM ET

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Pagers cost hospitals billions

NEW YORK (CNNMoney)

Physicians and nurses working in hospitals waste an average of 46 minutes a day when they use beepers to exchange information about patients, rather than modern alternatives like texting on smartphones, according to a new study by technology research firm Ponemon Institute.

While pagers are the main culprit, health care providers also blamed lack of Wi-Fi access and email restrictions for time wasted while caring for or discharging patients.

For hospitals, the cost of lost productivity due to outdated technology translates to more than $8 billion annually, the report said.

Related story: Hospitals profit more from surgical complications.

A lot of this inefficiency can be easily resolved because better technology exists today, said Larry Ponemon, chairman of the Ponemon Institute. "But health care is also tied up in heavy-duty regulation -- which is important but has stymied innovation," he said.

In health care, a strict federal law ensuring patient privacy has hindered faster adoption of modern forms of communication. The law -- the Health Insurance Portability and Accountability Act, or HIPAA -- restricts how a patient's protected health information may be transmitted electronically.

Digital communications must include some form of user identification, encryption and an automatic logoff to prevent unauthorized access to a patient's information.

Pagers are still the status quo in hospitals because that technology is still the proven path to ensuring that doctors and nurses are in compliance with the law.

Yet replacing pagers with secure text messaging, which doctors and nurses could potentially do through their personal phones, could not only allow doctors to spend more time with patients but also slash patient discharge time by 50 minutes, the report said.

A majority of survey respondents said they expect pagers will be replaced by secure messaging in the next two years. Ponemon agreed with that viewpoint "given the rise in the use of mobile devices and healthcare apps by clinicians."

The Ponemon study was conducted in March and April and is based on a survey of 577 hospital-employed health care providers.

First Published: May 7, 2013: 9:53 AM ET

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Sentiment shift: Home prices to rise

The majority of Americans once again believe home prices are going up.

NEW YORK (CNNMoney)

A monthly survey by mortgage finance firm Fannie Mae found 51% of those questioned in April believe prices will rise in the next 12 months, while only 35% are projecting a drop in prices. It is the first time in the three-year history of the survey that a majority said they expect prices to increase.

A year ago, 49% were expecting further price declines while only 32% said they though prices were on their way up.

The latest data from the housing market back up the this new level of confidence in the housing recovery. The S&P Case-Shiller Home Price Index rose 9.3% over the last 12 months, the biggest annual rise in home prices since the height of the housing bubble in 2006.

Related: 3 reasons the housing recovery may not last

"Crossing the 50% threshold marks a significant milestone, as most Americans believe a housing recovery is truly occurring throughout the country," said Doug Duncan, chief economist for Fannie Mae.

People who were sitting on the sidelines because of concerns that prices were still falling can be drawn back into the market once they believe prices are on their way up again. Home sales are up 10% from a year ago, helped not only by the climbing prices but also record low mortgage rates and falling unemployment.

Related: Selling your home? The cards are in your favor

The survey found that those expecting prices to go up are forecasting a 7.2% rise, on average. It also found 71% think it is a good time to buy a home, relatively unchanged from a year ago, but the percentage who think it's a good time to sell has doubled over the last year to 30%.

The increase in those thinking positively about selling is also important for the market, as a tight supply of homes for sale has been one of the drags on the market.

The survey is based on the responses of 1,001 respondents, ages 18 and older.

First Published: May 7, 2013: 11:02 AM ET

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Pfizer to start selling Viagra online

Pfizer is now selling Viagra directly to consumers online.

NEW YORK (CNNMoney)

The company said that online pharmacies have proliferated in recent years to meet consumer demand for all manner of medication, but that most of these sites are not legitimate.

Viagra is Pfizer's most counterfeited product. A 2011 study by its security department of the top 22 sites that came up frequently following searches for the phrase "buy Viagra" found that 80% were selling counterfeit pills. The counterfeit pills have only a fraction of the active ingredients advertised.

The new site, Viagra.com, will be powered by CVS (CVS, Fortune 500) pharmacy. Customers must have a prescription to order from the site, and insurance coverage can be used to lower the price of the pills.

Pfizer said the cost of Viagra depends on the strength of the drug and the quantity ordered, and will be set by CVS. The wholesale cost for the 100 mg tablets is $22 a pill. The site is offering customers three free pills with their first order, and 30% off their second order.

This is the first time a major drugmaker will sell a product directly to consumers, rather than through drug wholesalers and pharmacies. Pfizer said it will consider expanding online sales to other products in the future.

"We're going to learn from this and see where we go from there," said spokeswoman Jennifer Kokell.

Related: Most counterfeited goods

Pfizer reported $2.05 billion in Viagra sales in 2012, according to the company's financial filings. But that represents only 3.5% of the company's total revenue and makes Viagra only it's sixth best selling drug. Its patent protections for use of the drug to treat erectile dysfunction runs through 2020.

Shares of Pfizer (PFE, Fortune 500) were lower in early trading Monday.

First Published: May 6, 2013: 10:24 AM ET

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BMC Software sold for $6.9 billion

BMC Software has had a bumpy year as an activist shareholder has tried to take the company private.

NEW YORK (CNNMoney)

The struggling IT services and cloud computing company is being acquired by a consortium of private equity groups, including Bain Capital and Golden Gate Capital, for $46.25 per share.

That represents just a measly 2% premium over Friday's closing price -- an unusually small markup and a sign of how badly BMC (BMC) has fallen behind larger competitors IBM (IBM, Fortune 500) and Hewlett-Packard (HPQ, Fortune 500).

"BMC believes the opportunity to become a private company will provide additional flexibility and position us to invest more strategically to drive powerful innovation and deliver cutting edge customer solutions," BMC CEO Bob Beauchamp said in a statement.

The move follows an effort begun last summer by hedge fund Elliott Management to push the software company into taking action. Elliott Management bought a 9.6% stake in the company and added two directors to the company's board.

The hedge fund applauded the sale, saying the offer price represents "a substantial premium to BMC's unaffected stock price." That price is hard to determine, but the private equity firms' offer is about 11% higher than BMC's share price on Sept. 28, 2012, the day before news reports first circulated that BMC would pursue a sale.

Related: Buffett's Berkshire Hathaway buying Heinz

The deal serves as yet another sign that the private equity industry is returning after a long hiatus that began during the Great Recession. In addition to BMC, other high profile PE deals include moves to take Heinz (HNZ, Fortune 500) and Dell (DELL, Fortune 500) private.

First Published: May 6, 2013: 10:46 AM ET

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Stocks: Will momentum stick?

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NEW YORK (CNNMoney)

Stocks were little changed Monday, amid a lack of any market moving news. The Dow Jones industrial average was flat, while the S&P 500 and Nasdaq edged slightly higher.

As trading resumes quietly on Wall Street, here are five things to watch:

Click here for more on stocks, bonds, currencies and commodities

1. New milestones: The S&P 500 crossed 1,600 for the first time last week, propelled higher by a better-than-expected April jobs report. The broad index hit a fresh-all time high above 1,618 Monday.

The Dow hit an all-time high above 15,000 last week, but has yet to close beyond the psychologically important level. With little news to spur investors into action, stocks may not maintain their robust momentum.

"I think investors got a little lift in their step from Friday's jobs report," said Mark Luschini, chief investment strategist for Janney Montgomery Scott. "[But] this week, we're almost absent anything newsworthy."

Related: Fortune 500's new No. 1: Wal-Mart

2. Apple, Cliffs up on analyst upgrades: Shares of Apple (AAPL, Fortune 500) were on the rise Monday, making the stock among the biggest gainers in the Nasdaq-100. Apple was in favor after Barclays raised its share price target to $525 from $465. Shares are now up almost 20% from their 18-month low hit last month.

Shares of Cliffs Natural Resources (CLF, Fortune 500) rallied after FBR boosted the stock's rating to outperform.

3. Tyson Foods suffers sales slowdown: Tyson Food (TSN, Fortune 500)missed profit and revenue forecasts, citing a slowdown in chicken and beef sales following last year's historic drought. Shares sank more than 5%.

In other earnings news, private equity firm Apollo Global Management (APO) reported an increase in revenue and net income, sending shares up more than 2%.

Warren Buffett's Berkshire Hathaway (BRKB) reported first-quarter earnings that blew past expectations. Shares gained ground.

Related: Fear & Greed Index: Extreme greed

4. Yen keeps falling: The yen continued to slide Monday, nearing ¥100 per U.S. dollar. The Japanese currency has dropped nearly 15% this year as the Bank of Japan aims to pull Japan out of the deflationary spiral it's been in for nearly two decades.

Japan's new economic plan, dubbed "Abenomics" after Japanese Prime Minster Shinzo Abe, combines massive fiscal stimulus with aggressive monetary easing.

5. World markets flat in holiday-thinned trading: European markets were barely moving. Asian markets closed higher on the upbeat U.S. employment report. Exchanges in London and Tokyo were closed for holidays.

First Published: May 6, 2013: 10:02 AM ET

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How construction can lose jobs in middle of home building rebound

Cuts in government spending on construction projects led to the drop in April's construction employment.

NEW YORK (CNNMoney)

The sector lost about 6,000 jobs overall, according to the Labor Department's jobs report. This was largely due to a decline in hiring for non-residential buildings or public works projects like roads or sewer plants. Combined, these two areas lost 19,700 jobs.

Meanwhile, home builders and their subcontractors added 13,300 workers, even more than in March.

A big part of the sector's pullback is due to a drop in government-funded construction projects, a trend that has been going on for about two years.

Federal construction spending is down 28% since peaking in August 2011, when stimulus spending was still going strong, according to Ken Simonson, chief economist of the Associated General Contractors of America, an industry trade group. Local governments, particularly school districts, have also been pulling back on construction spending after building a rush of new ones during the housing boom.

"You don't need to open a new school every month if people aren't coming," he said.

Related: April jobs report - Hiring picks up

Additionally, many builders are having a hard time finding skilled construction workers.

David Crowe, chief economist with the National Association of Home Builders, said residential construction hiring likely would have been even higher in April if not for the shortage of skilled workers in some markets. He said a survey of his trade group's members found about half couldn't find workers with the necessary skills.

Simonson and other experts say the cutback in federal spending -- known as the sequester -- that went into effect March 1 hasn't halted work on any construction projects already underway. But they said federal agencies knew the sequester was looming and did scale back new construction contracts earlier this year.

Record low mortgage rates, a rebound in home prices and strong new home sales prompted the fastest pace of home building in nearly five years in March, according to a separate government report.

First Published: May 3, 2013: 12:54 PM ET

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Buffett's Berkshire blows past estimates

NEW YORK (CNNMoney)

Buffett's Berkshire Hathaway (BRKA, Fortune 500) handily beat analyst estimates with its first-quarter earnings on Friday, booking strong gains in its investments and insurance business.

Excluding certain investment gains, Berkshire reported earnings of $3.8 billion, or $2,302 per Class A share, blowing past the prediction of $1,995.50 per share from analysts surveyed by Thomson Reuters.

Including investment gains, Berkshire's earnings hit $4.89 billion, rising more than 50% versus a year prior.

Berkshire is a broad-based investment conglomerate whose holdings include everything from Geico insurance to Burlington Northern Santa Fe railroad to Dairy Queen. It also has stakes in a variety of other large firms.

Earlier this year, Berkshire was part of a consortium along with private equity firm 3G Capital that purchased ketchup maker H.J. Heinz Co for $28 billion.

Berkshire earned $901 million in the first quarter from its insurance underwriting business, up from just $54 million in the first quarter of 2012. The company said its gains came from the lack of significant catastrophe losses in the first three months of the year.

Related: Buffett is worried about Fed policy

On the investment side, Berkshire has substantial holdings in derivatives that serve as bets on the value of global stock indexes like the S&P 500. Berkshire's position improves when these index values rally.

Berkshire earned more than $1.1 billion from investment and derivative gains in the first quarter, up from $580 million a year ago.

With stakes in several large banks and homebuilders, Berkshire also has significant exposure to the housing market, which appears in the midst of a solid recovery. Earlier this week, the S&P Case-Shiller index of home prices showed a 9.3% rise over the past 12 months, the biggest gain since near the height of the housing bubble.

The aging Buffett has not publicly revealed a succession plan, but says he has informed Berkshire's board about his preferred candidates. He underwent radiation treatment last year for prostate cancer, though he said the illness was "not remotely life-threatening."

Investors will descend on Buffett's hometown of Omaha this weekend for Berkshire's annual meeting, where he and business partner Charlie Munger typically hold forth on their business and the state of the U.S. economy.

You don't have to be in Nebraska to get real-time updates on Buffett's thinking, however; the 82-year-old joined Twitter this week.

First Published: May 3, 2013: 6:00 PM ET

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My First Rifle: The business of selling guns for kids

Chipmunk, a subsidiary of Keystone, sells guns designed for children, along with its sibling subsidiary, Crickett.

NEW YORK (CNNMoney)

The gun used in the recent shooting in Kentucky was a Crickett .22-caliber rifle, marketed with the slogan "My First Rifle," from Keystone Sporting Arms in Milton, Pa. The single-shot rifle uses the smallest caliber available and is sold by major retailers, including Wal-Mart (WMT, Fortune 500), Cabela's (CAB) and Gander Mountain.

The Crickett website was down Friday due to "difficulties," according to John Renzulli, an attorney representing Keystone . But the site for Chipmunk, another Keystone brand, exhibited "quality firearms for America's youth" on its site, including .22-caliber rifles and pistols, with photos of children shooting them. The site includes a "kids corner" section.

Renzulli insisted that the company is not marketing firearms to children.

"No one's marketing to children," he said. "They're marketing to parents who would buy guns for children."

On its website, Wal-Mart markets the Crickett as a "youth rifle," while Gander Mountain's site describes it as a "great beginner's gun."

"All are lightweight and easy for youngsters to carry at the range and in the woods," reads the Crickett description on Cabela's site, which describes it as "a fun firearm to get your young shooter started with."

Wal-Mart did not immediately comment on whether their policy on sales of guns for children would change. Gander Mountain said it would not comment on potential policy changes, but added that it has launched a responsibility campaign aimed at keeping firearms away from "the underaged, untrained and unauthorized." Cabela's did not return a request for comment.

Related: Remington jobs rule the Rust Belt

Lawrence Keane, vice president and spokesman for the National Shooting Sports Foundation, the firearms industry group, described the youth firearm market as a relatively small slice of the gun industry, though large enough to have plenty of participants.

"A number of manufacturers make youth models of firearms for parents to purchase to introduce their children to adult-supervised target shooting," said Keane. "Millions of families all across America participate in the shooting sports as a family recreational activity. Children cannot purchase firearms from licensed dealers, of course."

According to the National Sports Shooting Foundation, the number of unintentional firearm-related fatalities involving children 14 years of age and under decreased by 78% over two decades to 62 in 2008.

Related: Gun and ammo sales fuel jobs boom

Brian Rafn, gun industry analyst and director of research at Morgan Dempsey Capital Management, described the youth gun segment as a small enough portion of the $4 billion industry to call it a "ghost market." He added that most states won't issue a hunting license to children younger than 10.

"I don't know of any state, and I've been hunting for 30 years, that would allow an armed five-year-old out in the woods during hunting season," he said. "In Wisconsin where I go hunting, if you were found out in the woods with a five-year-old with a gun, the game warden would have you in cuffs."

Correction: An earlier version of this article contained incorrect statistics about accidental fatalities involving firearms and children.

First Published: May 3, 2013: 2:44 PM ET

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How construction can lose jobs in middle of home building rebound

Cuts in government spending on construction projects led to the drop in April's construction employment.

NEW YORK (CNNMoney)

The sector lost about 6,000 jobs overall, according to the Labor Department's jobs report. This was largely due to a decline in hiring for non-residential buildings or public works projects like roads or sewer plants. Combined, these two areas lost 19,700 jobs.

Meanwhile, home builders and their subcontractors added 13,300 workers, even more than in March.

A big part of the sector's pullback is due to a drop in government-funded construction projects, a trend that has been going on for about two years.

Federal construction spending is down 28% since peaking in August 2011, when stimulus spending was still going strong, according to Ken Simonson, chief economist of the Associated General Contractors of America, an industry trade group. Local governments, particularly school districts, have also been pulling back on construction spending after building a rush of new ones during the housing boom.

"You don't need to open a new school every month if people aren't coming," he said.

Related: April jobs report - Hiring picks up

Additionally, many builders are having a hard time finding skilled construction workers.

David Crowe, chief economist with the National Association of Home Builders, said residential construction hiring likely would have been even higher in April if not for the shortage of skilled workers in some markets. He said a survey of his trade group's members found about half couldn't find workers with the necessary skills.

Simonson and other experts say the cutback in federal spending -- known as the sequester -- that went into effect March 1 hasn't halted work on any construction projects already underway. But they said federal agencies knew the sequester was looming and did scale back new construction contracts earlier this year.

Record low mortgage rates, a rebound in home prices and strong new home sales prompted the fastest pace of home building in nearly five years in March, according to a separate government report.

First Published: May 3, 2013: 12:54 PM ET

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My First Rifle: The business of selling guns for kids

Chipmunk, a subsidiary of Keystone, sells guns designed for children, along with its sibling subsidiary, Crickett.

NEW YORK (CNNMoney)

The gun used in the recent shooting in Kentucky was a Crickett .22-caliber rifle, marketed with the slogan "My First Rifle," from Keystone Sporting Arms in Milton, Pa. The single-shot rifle uses the smallest caliber available and is sold by major retailers, including Wal-Mart (WMT, Fortune 500), Cabela's (CAB) and Gander Mountain.

The Crickett website was down Friday due to "difficulties," according to John Renzulli, an attorney representing Keystone . But the site for Chipmunk, another Keystone brand, exhibited "quality firearms for America's youth" on its site, including .22-caliber rifles and pistols, with photos of children shooting them. The site includes a "kids corner" section.

Renzulli insisted that the company is not marketing firearms to children.

"No one's marketing to children," he said. "They're marketing to parents who would buy guns for children."

On its website, Wal-Mart markets the Crickett as a "youth rifle," while Gander Mountain's site describes it as a "great beginner's gun."

"All are lightweight and easy for youngsters to carry at the range and in the woods," reads the Crickett description on Cabela's site, which describes it as "a fun firearm to get your young shooter started with."

Wal-Mart did not immediately comment on whether their policy on sales of guns for children would change. Gander Mountain said it would not comment on potential policy changes, but added that it has launched a responsibility campaign aimed at keeping firearms away from "the underaged, untrained and unauthorized." Cabela's did not return a request for comment.

Related: Remington jobs rule the Rust Belt

Lawrence Keane, vice president and spokesman for the National Shooting Sports Foundation, the firearms industry group, described the youth firearm market as a relatively small slice of the gun industry, though large enough to have plenty of participants.

"A number of manufacturers make youth models of firearms for parents to purchase to introduce their children to adult-supervised target shooting," said Keane. "Millions of families all across America participate in the shooting sports as a family recreational activity. Children cannot purchase firearms from licensed dealers, of course."

Keane said safety has improved in recent years, saying data show that accidental fatalities involving firearms and children younger than 14 dropped by more than half over two decades to about 600 in 2009, the most recent year for available data.

Related: Gun and ammo sales fuel jobs boom

Brian Rafn, gun industry analyst and director of research at Morgan Dempsey Capital Management, described the youth gun segment as a small enough portion of the $4 billion industry to call it a "ghost market." He added that most states won't issue a hunting license to children younger than 10.

"I don't know of any state, and I've been hunting for 30 years, that would allow an armed five-year-old out in the woods during hunting season," he said. "In Wisconsin where I go hunting, if you were found out in the woods with a five-year-old with a gun, the game warden would have you in cuffs."

First Published: May 3, 2013: 2:44 PM ET

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Buffett's Berkshire blows past estimates

NEW YORK (CNNMoney)

Buffett's Berkshire Hathaway (BRKA, Fortune 500) handily beat analyst estimates with its first-quarter earnings on Friday, booking strong gains in its investments and insurance business.

Excluding certain investment gains, Berkshire reported earnings of $3.8 billion, or $2,302 per Class A share, blowing past the prediction of $1,995.50 per share from analysts surveyed by Thomson Reuters.

Including investment gains, Berkshire's earnings hit $4.89 billion, rising more than 50% versus a year prior.

Berkshire is a broad-based investment conglomerate whose holdings include everything from Geico insurance to Burlington Northern Santa Fe railroad to Dairy Queen. It also has stakes in a variety of other large firms.

Earlier this year, Berkshire was part of a consortium along with private equity firm 3G Capital that purchased ketchup maker H.J. Heinz Co for $28 billion.

Berkshire earned $901 million in the first quarter from its insurance underwriting business, up from just $54 million in the first quarter of 2012. The company said its gains came from the lack of significant catastrophe losses in the first three months of the year.

Related: Buffett is worried about Fed policy

On the investment side, Berkshire has substantial holdings in derivatives that serve as bets on the value of global stock indexes like the S&P 500. Berkshire's position improves when these index values rally.

Berkshire earned more than $1.1 billion from investment and derivative gains in the first quarter, up from $580 million a year ago.

With stakes in several large banks and homebuilders, Berkshire also has significant exposure to the housing market, which appears in the midst of a solid recovery. Earlier this week, the S&P Case-Shiller index of home prices showed a 9.3% rise over the past 12 months, the biggest gain since near the height of the housing bubble.

The aging Buffett has not publicly revealed a succession plan, but says he has informed Berkshire's board about his preferred candidates. He underwent radiation treatment last year for prostate cancer, though he said the illness was "not remotely life-threatening."

Investors will descend on Buffett's hometown of Omaha this weekend for Berkshire's annual meeting, where he and business partner Charlie Munger typically hold forth on their business and the state of the U.S. economy.

You don't have to be in Nebraska to get real-time updates on Buffett's thinking, however; the 82-year-old joined Twitter this week.

First Published: May 3, 2013: 6:00 PM ET

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Staples starts selling 3-D printers

3D Systems "The Cube" can print 3-D plastic objects, and it is now available at Staples.

NEW YORK (CNNMoney)

Staples (SPLS, Fortune 500) says it is the first major U.S. retailer to sell a 3-D printer. It began selling The Cube, made by 3D Systems (DDD) on Staples.com Friday, and the 3-D printer will hit "many" of the retailer's brick-and-mortar stores by June.

While 3-D printers have long been used in industrial manufacturing, a recent "maker" movement is slowly popularizing in-home versions of the devices.

The Cube, like other 3-D printers, is a machine that creates physical, three-dimensional objects. The printer uses a digital design file as a blueprint, then builds the item layer by layer with plastic powder or liquid. Users can print anything they can design, including action figures, iPhone docks and coffee cup holders.

The Cube can print items up to five-and-a-half inches tall, wide and long in 16 different colors, and it comes packaged with 25 free design templates. Shares of Cube maker 3D Systems were up 3.4% after the announcement, while Staples stock was up 2.5%.

3D Systems says it is devoted to the "democratization" of 3-D printers, making the complex and expensive technology available to the masses. But the company faces a lot of upstart competition.

Perhaps the buzziest 3-D printer company is Brooklyn, N.Y.-based Makerbot, which unveiled its $2,800 "Replicator 2x" at the Consumer Electronics Show in January.

Following Makerbot's success, crowdfunding site Kickstarter quickly became full of similarly named rivals: Printrbot, TangiBot, Ultra-Bot, RigidBot, Gigabot, and Bukobot.

While many 3-D printer owners may be using the devices to prototype inventions or simply have fun making plastic toys, other industries are tapping into the printers' potential. Chefs are using the printers to create intricately designed food. Doctors are even experimenting with advanced versions of the machines to make artificial organs and prosthetic limbs.

In some cases, 3-D designs have been controversial. Makerbot found itself under pressure to crack down on downloadable designs for printable gun parts late last year, after the school shooting in Newtown, Conn. MakerBot's design file repository, called Thingiverse, had long prohibited "the creation of weapons" -- but they were loosely enforced before the crackdown in December.

First Published: May 3, 2013: 10:42 AM ET

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RBS looks to escape state control

The U.K. government currently owns just over 80% of the Edinburgh-based Royal Bank of Scotland.

LONDON (CNNMoney)

Five years after the British state was forced to rescue Edinburgh-based RBS during the financial crisis, the bank believes its house-cleaning operation is nearly complete.

RBS (RBS) chairman Philip Hampton says the bank will work with the government to prepare a privatization prospectus by the middle of 2014, allowing it to extract itself from what has been a troubled relationship.

"It could be earlier [than 2014], that's a matter for the government," Hampton said in a statement. "But certainly we think the recovery process will be substantially complete in about a year or so."

The British government owns just over 80% of RBS and holds a 40% stake in Lloyds Banking Group (LLDTF).

Related: UBS and Deutsche Bank show signs of life

Senior politicians have been pressuring the banks to prepare for privatization ahead of national elections in 2015.

The use of taxpayer money to bail out the banks has been hotly debated, and politicians are looking to rid themselves of the responsibility for two of the country's biggest players.

If the government is able to exit its investments in both banks in the next few years, it will book a multi-billion pound loss, unless share prices recover substantially. However, there is no firm decision yet about how or when the government will sell its holdings.

Shares in RBS have plunged by 95% since their peak in 2007. Shares in Lloyds have also fallen by over 80% since their peak.

Both banks have struggled to recover from the financial crisis. They've introduced massive restructuring programs while dealing with a host of legal problems and increased regulation.

Since being rescued by the U.K. government at a cost of £45 billion in 2008, RBS has been trying to make the bank smaller and financially sound. It has shed over £900 billion in assets.

In February, RBS was fined $612 million by regulators after an investigation found 21 bank employees tried to rig the global benchmark interest rates over a period of four years. RBS was one of 14 global banks implicated in this Libor scandal.

Swiss bank UBS (UBS) and Barclays (BCLY), paid out $1.5 billion and $450 million, respectively, to settle their Libor charges.

First Published: May 3, 2013: 10:46 AM ET

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Fortune Brainstorm Podcast: Procter & Gamble CEO Bob McDonald

NEW YORK (Fortune)

Fortune wants to make it even easier for you to eavesdrop. The Fortune Brainstorm podcast is a weekly show that features recorded conversations from Fortune's live events.

Brainstorm Green 2013 wrapped up on Wednesday, so we have fresh audio from the conference. Today's podcast focuses on a town hall- style talk given by Procter & Gamble (PG, Fortune 500) CEO Bob McDonald, who was presenting some of his company's sustainable products, such as a concentrated version of Tide laundry detergent meant for cold water.

But how much do companies really care about sustainability? We talk to Fortune managing editor Andy Serwer and P&G's vice president of global sustainability Len Sauers to try to get some answers. In a tough economy with vocal investors, how easy is it to go green?

Subscribe to and download the podcast from iTunes.

Or stick the podcast's RSS feed into your favorite podcast app: http://fortunebrainstormpodcast.libsyn.com/rss.

First Published: May 3, 2013: 10:55 AM ET

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France blocks Yahoo bid for video site

Marissa Mayer's Yahoo is being given the cold shoulder as it tries to take control of the popular French website, Dailymotion.

LONDON (CNNMoney)

The veto is the latest in a series of episodes that have undermined France's reputation as a place to invest and cast doubt on its claims that it is 'open for business'.

Industry minister Arnaud Montebourg told CNNMoney that he didn't want Yahoo (YHOO, Fortune 500) taking a majority stake in Dailymotion, a website that is likened to Google (GOOG, Fortune 500)'s YouTube.

Montebourg said he hoped a deal could still be reached where each side would have a 50-50 stake in Dailymotion. Yahoo had originally been insisting on a larger piece of the pie.

The French government owns a 27% stake in France Telecom (FTE), which owns Dailymotion through its Orange brand.

"We don't want to sell Dailymotion, we want to work hand-in-hand with Yahoo," Montebourg told CNNMoney. "We want a win-win situation - in other words - a partnership."

Related: Marissa Mayer's first-year pay hits $6 million

Yahoo would not comment on the status of the talks. Orange said in a statement it has been talking to various potential partners over the last few months as it seeks a strategic partner outside Europe to develop Dailymotion's reach.

Some reports say this would have been Yahoo's largest deal since Marissa Mayer took over as CEO in July 2012.

While the French government veto is a setback, it isn't a make or break situation for Yahoo, said Aaron Kessler, an analyst at Raymond James.

"There's obviously a lot of assets out there. Yahoo needs to continue to diversify, but it's hard to say that Yahoo's success would be based on just one acquisition," he said.

Dailymotion is amongst the biggest video websites in the world, receiving well over 100 million unique monthly visitors each month. Revenues grew by 55% in 2012.

Yahoo been trying to regain its status as a top internet property but has been struggling since its heyday in the late 1990s and early 2000s -- despite seven different CEOs.

It has recently made a handful of small acquisitions, dubbed 'acqui-hires' because they were focused on scoring the technical talent in the target company's workforce.

--CNN's Saskya Vandoorne contributed to this article.

First Published: May 2, 2013: 10:41 AM ET

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The Chrysler-Fiat reversal of fortune

(Fortune)

The year 2007 resonates in Chrysler history for another reason: It was on May 14 that DaimlerChrysler publicly conceded the failure of its cross-ocean , cross-cultural merger by announcing the sale of 80.1% of the Chrysler Group to Cerberus Capital Management for $7.4 billion. At the time of the sale, Chrysler was worth only a fraction of its pre-merger 1998 price, and its fortunes only declined from there. Lehman Brothers went bankrupt a year later, and in the ensuing downturn the government was forced to pump billions of dollars into Chrysler in 2008 and 2009 before it filed for Chapter 11 bankruptcy reorganization on April 30, 2009.

The company nearly died on the operating table. As Steven Rattner related in his book Overhaul, the question of what to do about Chrysler was debated at nearly every meeting of the government's auto task force. After a close vote among economic advisers, the decision about its survival went to the Oval Office, where President Obama decided that Chrysler should be saved. "It was better to invest $6 billion for a meaningful chance that Chrysler would survive than to invest several billion dollars in its funeral," was the rationale, according to Rattner. Further cliff-hanging negotiations were required before the government agreed to pass 20% of Chrysler along with operating control along to Fiat, in exchange for Fiat's technology and management expertise.

Whatever contributions Fiat technology has made to Chrysler are hard to measure, but the impact of Fiat's management has been undeniable. Chrysler sales, which had fallen from 2.3 million in 2005 to only 931,402 in 2009, have rebounded smartly and reached 1.7 million last year. Under previous owners Daimler and Cerberus, Chrysler had been starved of investment and left with the weakest product line in the industry. CEO Sergio Marchionne smartly identified where he could most upgrade Chrysler's cars and trucks with the fewest resources and set Chrysler on its 37-month run. Though its passenger car lineup still lags the industry's best, Chrysler is now fully competitive in pickups and sport utility vehicles.

In other words, instead of being liquidated at the cost of some 300,000 jobs, Chrysler is now a viable company, thanks to Marchionne and Fiat -- which makes it all the more difficult to comprehend the heat of the dispute now consuming Detroit. Where once Fiat rescued Chrysler, now Chrysler is in a position to rescue Fiat, and it drives some people nuts.

MORE: 6 greenest cars made in America

That idea may have seemed far-fetched in 2009 but it is reality today, and Chrysler won't be the only company helping out a European carmaker. General Motors' (GM, Fortune 500) and Fords' (F, Fortune 500) North American operations are supporting Opel and Ford of Europe respectively. Europe's financial crisis combined with its aging demographic and the intransigence of labor unions in the face of overdue cuts in factory capacity have pushed even mighty Volkswagen into a tailspin.

With Europe deep in recession, Fiat, never a strong player to begin with, is drowning, and Chrysler is in the position of extending a life preserver. Fiat now owns 58.5% of Chrysler, and Marchionne wants to buy the remaining 41.5%. Owning 100% of Chrysler would allow him, under his agreement with the government, to finally integrate the two companies on one balance sheet. Chrysler is banking cash while Fiat is burning it, so Chrysler's cash would, in effect, be used to prop up Fiat.

To complicate matters, and to further inflame Detroit passions, the remaining 41.5% that Marchionne wants to buy is owned by a UAW voluntary employee beneficiary association trust (VEBA). The stock was given to the UAW as part of the 2009 government bailout to pay for retiree health care expenses. But there is a difference of opinion about the value of those shares. The UAW trust says they are worth $11.5 billion. Marchionne wants to pay quite a bit less: $4.68 billion.

The dispute has stirred emotions in Motown, where labor unionists fear that a settlement tilted toward Fiat will suck money out of their health care benefits. Indeed, the whole notion of American dollars bailing out an Italian company rankles some. Wrote popular blogger Peter De Lorenzo this week: "Gifted Chrysler by the U.S. Government and funded on the backs of you and me, the U.S. taxpayer, Marchionne is now using Chrysler to sustain that miserable excuse of a car company called Fiat."

MORE: 10 big car brands that bit the dust

What's been forgotten in the controversy is that it wasn't only Fiat that got a sweet deal in the Chrysler bankruptcy; the UAW did too. Here's how it went: According to one analysis, Chrysler's first-line secured creditors got only 29 cents on the dollar; its second-line secured creditors got nothing. Neither did its suppliers By law, the UAW, which figured it was owed $8.8 billion for the VEBA, should have gotten stiffed too. Its claim came after all the secured creditors. But Rattner's team didn't see it that way. Instead it awarded the VEBA 55% of the shares in the reorganized Chrysler, along with a note for $4.6 billion.

Rattner points out that the stock was held by the VEBA and not the union, and carried no voting rights. He goes on: "Most of the equity was unspoken for. We calculated that the UAW was taking a significant cut in its health care claim, at least 40%. Yes, the UAW accepted pain and risk."

A judge in Delaware will decide whose numbers to use: Marchionne's or the union, or something in between. Neither side should be aggrieved; they are both well ahead of where they would have been if the chips had fallen just a bit differently.

A ruling that falls closer to the union's claim would put it out of reach of Fiat's ability to finance. Still, you have to put your money on Marchionne. Having been trained as an accountant, he knows his numbers. He has proved on numerous occasions that he is a fearsome negotiator. And he seems determined to create an automotive enterprise with the scale to compete in the 21st century.

As he told analysts and reporters this week, "Whether we're the sixth or the largest car company in the world as a result of all this, it really does not matter. We are not running to league tables here. The only thing that does matter is that we do have within the combined entity, sufficient mass and sufficient geographic coverage to call ourselves a global car company."

Here's betting he will.

First Published: May 2, 2013: 10:22 AM ET

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Stocks bounce back

Click chart for more market data.

NEW YORK (CNNMoney)

The Dow Jones industrial average rose 0.5%, the S&P 500 gained 0.3%, while the Nasdaq added 0.7%.

As stocks bounce back from Wednesday's 1% sell-off, here are five things to know:

1. Jobless claims fall to 5-year low: First-time claims for unemployment benefits fell to the lowest level since January 2008, surprising economists who were expecting an increase and signaling further improvement in the job market. The good news comes ahead of the government's key monthly jobs report due Friday.

Economists surveyed by CNNMoney are expecting the report to show the economy added 140,000 jobs in April, up from 88,000 in March. They're expecting the unemployment rate to remain at 7.6%.

Click here for more on stocks, bonds, currencies and commodities

2. ECB cuts rates to record low: The ECB cut its key interest rate for the first time in 10 months in a bid to prevent the eurozone from falling even deeper into recession. The central bank was under intense pressure to cut rates.

European market were mixed in afternoon trading, but had been rallying since mid-April in anticipation.

The ECB's move follows the Federal Reserve's decision Wednesday to keep buying $85 billion worth of bonds a month, as part of its effort to stimulate the recovery. The central bank pointed to a high unemployment rate and low inflation as reasons to maintain its pace.

The Fed said it stands ready to either "increase or reduce the pace" of those purchases in response to economic activity.

Related: Fear & Greed Index idling in neutral

3. GM is doing a little better in Europe. General Motors (GM, Fortune 500) shares jumped more than 4% after the automaker's earnings showed progress in stemming losses in Europe, where a worsening recession has resulted in the worst industrywide auto sales on the continent in 20 years. GM CEO Dan Akerson pointed to cost-cutting measures and the successful introduction of new models for the improved performance.

In other earnings news, Yelp (YELP) shares surged after the review site reported a narrower loss and sales that topped estimates.

Facebook (FB) shares rose 3% after the company's sales jumped 38% in the first quarter, boosted by its growing mobile ad business. Facebook investors are laser-focused on mobile, which the social media company has said is the key to its future success.

Results are due in the afternoon from AIG (AIG, Fortune 500), Kraft Foods (KRFT) and LinkedIn (LNKD).

4. ING makes a lackluster debut on Wall Street: Shares of ING (VOYA) rose 0.4% on their first day of trading on the New York Stock Exchange. The U.S. arm of the Dutch bank raised $1.3 billion in its initial public offering, which priced below the expected range.

5. Intel gets a new CEO: Intel (INTC, Fortune 500) said that Brian Krzanich, currently the chipmaker's chief operating officer, will become the company's new CEO on May 16.

Current CEO Paul Otellini announced in November that he would be stepping down this month after 38 years at the company, the final eight of which were at its help.

First Published: May 2, 2013: 10:28 AM ET

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Businesses were more hesitant to hire in April

Hiring by private businesses slowed in April, according to ADP's jobs report.

NEW YORK (CNNMoney)

Private sector employers added only 119,000 jobs in April, the weakest month for hiring since September, according to a report issued Wednesday by payroll-processing firm ADP (ADP, Fortune 500). That figure was a disappointment. Economists had expected the report to show the private sector added 150,000 jobs in April.

According to ADP, manufacturers alone cut 10,000 jobs. But construction firms hired 15,000 employees.

Meanwhile, March hiring was revised lower to show private employers added 131,000 jobs, 27,000 fewer jobs than reported earlier.

Hiring has slowed particularly among small businesses with 20 to 49 employees. They hired only 17,000 workers in April. This phenomenon could be partly due to health care reform measures. The law requires businesses with 50 or more full-time employees to start providing insurance in 2014, or face fines.

"That 50-employee threshold is important and it feels like health care reform is having an impact," said Mark Zandi, chief economist for Moody's Analytics. "If you look at the slowdown in job growth in the last few months, it's primarily among companies that are small."

Small business owners continue to say taxes and government regulations are their two biggest problems, according to a monthly survey by the National Federation of Independent Business.

These are weak signs ahead of the key monthly jobs report released by the Labor Department on Friday. Unlike ADP's data, that report also includes jobs figures from federal, state, and local governments.

Overall, governments have cut 80,000 jobs over the past six months. Economists surveyed by CNNMoney expect Friday's report to show the government cut another 10,000 jobs in April.

First Published: May 1, 2013: 8:38 AM ET

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Stocks: Investors begin May by selling

NEW YORK (CNNMoney)

With worries of another spring swoon on the mind, investors began May by taking a step back. The Dow Jones industrial average fell 0.4% Wednesday morning, while the S&P 500 slipped 0.3% and the Nasdaq declined 0.1%.

Fears of a pullback have been growing, as stocks have been on a tear for the past several months. The S&P 500 closed April at a record high, the Nasdaq finished at its highest level in more than 12 years, and the Dow ended just a hair below its all-time high. But those milestones have been reached amid a still-fragile economy.

Investors are waiting for the Federal Reserve's policy-making committee to wrap up its two-day meeting for any signs as to how long it will continue its aggressive monetary policies. The market is widely expecting the central bank will continue its bond buying program to keep supporting the U.S. economy.

Related: Fear & Greed Index gets greedy

Investors will also look to a handful of economic reports that come ahead of the government's monthly jobs data due Friday.

Payroll processor ADP published its monthly data on private-sector jobs, showing that only 119,000 jobs were added in April, below forecasts.

Also, the Fed will release data on construction spending at 10 a.m. ET.

In corporate news, CNNMoney parent Time Warner (TWX, Fortune 500) reported a dip in first quarter sales but a jump in profit, propelled by "The Hobbit: An Unexpected Journey," a box office hit surpassing $1 billion.

Genworth Financial's (GNW, Fortune 500) stock price surged after the company said that its quarterly profit more than doubled.

Comcast (CMCSA) reported an increase in profit and revenue, which the company attributed to the success of video and high-speed internet subscriptions.

Shares of MasterCard (MA, Fortune 500) slipped, despite the credit card company reporting a quarterly increase in sales and profit.

Facebook (FB) is on deck to report earnings in the afternoon.

Apple's (AAPL, Fortune 500) stock price edged down, a day after rising more than 3% ahead of it record $17 billion bond sale.

Related: Marissa Meyer's first year pay: $6 million

Most European markets are closed for a holiday, but the U.K. remains open and its benchmark index, the FTSE 100, is pushing ahead with some modest gains.

"Today will likely be fairly quiet as it seems like most of Asia and much of Europe are on holiday," said Deutsche Bank analyst Jim Reid, in a note to investors.

In Asia, Japan's Nikkei declined 0.4%.

Exchanges in Hong Kong and Shanghai were closed. The Chinese government reported disappointing manufacturing numbers for the month of April, with purchasing managers indicating a slowdown in growth.

First Published: May 1, 2013: 9:49 AM ET

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Pimco's Bill Gross gets bullish. Sorta.

Pimco's Bill Gross says investors should stay in the market, but trim their risk.

NEW YORK (CNNMoney)

After telling investors for months why they should stay out of the financial markets, Gross, who runs Pimco's Total Return Fund (PTTRX), is changing his tune.

Gross wrote in his monthly investment letter that investors in stocks and bonds have to recognize there are risks. But the alternative is to "quit the game and earn nothing."

Gross noted that the Federal Reserve and other central banks have been supporting stocks and bonds through various stimulus programs -- and that is unlikely to change soon.

"Pimco's advice is to continue to participate in an obviously central-bank-generated bubble but to gradually reduce risk positions in 2013 and perhaps beyond," he added.

Treasury bonds, he says, "are a better bet than the alternative (cash) as long as central banks and dollar reserve countries (China, Japan) continue to participate."

Related: World's 5 hottest stock markets

Rather than his usual musical references, Gross used the "Good as Money" ad for Twenty Grand Cognac as his inspiration. "Being a beer drinker, and never having cashed in a Budweiser to pay for a fill-up at the local gas station, I said to myself 'Man, that must be really good stuff.'"

"It seems the definition of money has been extended, not perhaps to a bottle of Twenty Grand Cognac, but at least to some other rather liquid forms of near currency," including money market funds, stocks and Treasuries that can be converted rather quickly into cash. But Gross worries that these investments may not turn out to be "good as money" if the bubble bursts.

Related: Dr. Doom: Buy stocks while you can

Even if stimulus programs around the world, and near zero-bound yields help boost the global economy, Gross says the revival will be done through haircuts. Along those lines, the title of Gross' latest outlook was "There Will Be Haircuts", which appears to be a nod to the movie "There Will Be Blood."

"These haircuts are hidden forms of taxes that reduce an investors' purchasing power as manipulated interest rates lag inflation," he said. Those actions "theoretically reduce real debt levels as well as excessive liabilities of levered corporations and households." But they can also be viewed as "a hidden wealth transfer."

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Gross specifically called out four such haircuts.

First up, negative real interest rates, or as Gross calls it "trimming the bangs." While central banks have been doing all they can to inject some life into the economy, the Treasury's average cost of money keeps grinding lower. At some point, Gross feared that investors may find themselves paying the government to keep their money "safe."

More pop culture references followed. Gross called the risk of inflation and currency devaluation the "Don Draper," referring to the "Mad Men" character's style (and inflation worries) as "something that's been around for a long time and we don't really give it a second thought."

Gross also fretted about the likelihood of more capital controls from governments, such as the controversial tax on bank deposits in Cyprus. Finally, he said that outright default by governments whose central banks are buying stocks is a possibility.

His concluding advice? Don't completely bail on stocks or bonds. But start to cut back ... unless you want to get slaughtered like customers of the murderous barber of Broadway fame.

"Give your portfolio a trim as the year goes on," Gross wrote. "In doing so, you will give up some higher returns upfront in order to avoid the swift hand of Sweeney Todd. There will be haircuts. Make sure your head doesn't go with it."

First Published: May 1, 2013: 10:58 AM ET

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