Business News Online Today

Facebook, Google, Yahoo Fight "Do Not Track" Privacy Measures

2011-05-04T21:39:00.000-07:00

There's a growing social and legal momentum behind the "do not track" initiative to protect online privacy, but now Facebook and Google are opposing the legislation, hinting that job losses and profit cuts could be the result. Are there slightly dirty tricks afoot?

Californian legislators are slowly pushing ahead with a Do Not Track law introduced by Senator Alan Lowenthal, which would force Net companies to allow consumers to easily and effectively opt out of personal data being collected online--violators could face civil legal action. Lowenthal has noted that in his opinion legislation "is consistent with California's long history of championing privacy issues."

But now Facebook, Google, Yahoo and other companies have written to Lowenthal to state their specific objections. "The measure would negatively affect consumers who have come to expect rich content and free services through the Internet" is one of their counter-arguments, along with an allegation that a no-track law would make the public "more vulnerable to security threats." Also, forcing the law through would "prove costly to the state" and also "cumbersome for the Attorney General to figure out how to regulate under the bill and to enforce the law."

Essentially the letter's signatories say the proposed law would deplete user experience of online services (and potentially stifle innovation), put them at risk from Net criminals in ill-determined ways (an allegation that could scare users), be expensive to enforce, and potentially spawn extra work and maybe legal cases at a governmental level. Oh, and as an extra point the firms note that Net-related businesses are the fastest growing source of jobs in California. Putting this at risk, they argue, would damage the state's potential employment figures. That's a broad list of reasons--each of which, by itself, could really affect the current model for how websites make money from users, or force lawmakers to reconsider. If they're true.

The key part of this to consider are the words "business model." Google and Facebook pretty much own the online ads business between them. A key part of this is highly targeted advertising based on key data on individual subscribers--acquired through systems like cookies, historical archives of web searches, or which sites users visit and log in to via Facebook Connect. The Do Not Track bill threatens this income, as many users could press a button and disconnect Google and Facebook (and other firms like Microsoft) from potential revenue streams. Apple is also an indirect signatory on the objections letter, possibly due to its interest in iAds--its new high-tech ad platform on iOS devices--and other future ad-related plans the firm has, leveraging off increasing use of its iPhones and iPads.

Would a Do Not Track button really put users at risk of security breaches, though? Surely a database of user profiled behaviors is actually more risky--as the Sony hack is ably demonstrating right now. How about the TV business--it doesn't track all the individual viewers, but it manages to bring in billions in advertising revenues by profiling ads in other ways. It's possible to make a case using these, and other, arguments that a Do Not Track law may actually encourage innovation in the online ad space.

Aflac to Present Live, Online at RetailInvestorConferences.com on May 5th

2011-05-02T22:34:00.000-07:00

Company invites Main Street and Wall Street investors to attend interactive real-time virtual conference

NEW YORK May 2, 2011 /PRNewswire/ -- Aflac Incorporated (NYSE: AFL) the insurance company that helps employers offer their workers a financial safety net at no direct cost to their businesses, has been declared a World's Most Ethical Company for a fifth consecutive year, today announced that Delia Moore, Investor Relations Manager, will present at RetailInvestorConferences.com.

DATE: May 5th, 2011

TIME: 4:00 PM EDT

LINK: www.retailinvestorconferences.com > Click the red "register/ watch event now" button.


This will be a live, interactive online event where investors are invited to ask the company questions in real-time both in the presentation hall as well as the company's "virtual trade booth." If attendees are not able to join the event live in real-time, an on-demand archive will be available for 90 days.

It is recommended that investors pre-register to save time and receive event updates.

About Aflac Incorporated:

When a policyholder gets sick or hurt, Aflac pays cash benefits fast. For more than 55 years, Aflac insurance policies have given policyholders the opportunity to focus on recovery, not financial stress. In the United States, Aflac is the number one provider of guaranteed-renewable insurance. In Japan, Aflac is the number one insurance company in terms of individual insurance policies in force. Aflac insurance products provide protection to more than 50 million people worldwide. For five consecutive years, Aflac has been recognized by Ethisphere magazine as one of the World's Most Ethical Companies. In addition, Forbes magazine has named Aflac as one of America's Best-Managed Companies in the Insurance category. In 2011, Fortune magazine recognized Aflac as one of the 100 Best Companies to Work For in America for the thirteenth consecutive year and included Aflac on its list of Most Admired Companies for the tenth time. Aflac Incorporated is a Fortune 500 company listed on the New York Stock Exchange under the symbol AFL. To find out more about Aflac, visit aflac.com.

A copy of Aflac's Financial Analysts Briefing (FAB) supplement for the first quarter of 2011 can be found on the "Investors" page at aflac.com, along with a complete listing of Aflac's investment holdings in the financial sector and a separate listing of the company's investments in perpetual securities.

About RetailInvestorConferences.com:

RetailInvestorConferences.com, created by BetterInvesting (NAIC), PR Newswire and MUNCmedia, is the first monthly virtual investor conference series that provides an interactive forum for presenting companies to meet directly with retail investors using a graphically-enhanced online platform.

Designed to replicate the look and feel of location-based investor conferences, Retail Investor Conferences unites PR Newswire's leading-edge online conferencing and investor communications capabilities with BetterInvesting's extensive retail investor audience network and MUNCmedia's sophisticated retail investor targeting.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" to encourage companies to provide prospective information, so long as those informational statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those included in the forward-looking statements. We desire to take advantage of these provisions. This document contains cautionary statements identifying important factors that could cause actual results to differ materially from those projected herein, and in any other statements made by company officials in communications with the financial community and contained in documents filed with the Securities and Exchange Commission (SEC).

Stocks coming off down week:

2011-04-18T02:01:00.000-07:00

NEW YORK (AP) — It was a down week for stocks. Wall Street is hoping for better this week as earnings reports pick up.

In Friday trading, the Dow rose 57 points to close at 12,342. The S&P 500 index was up 5 points to 1,320. The NASDAQ composite added 4 points to 2,765.

For the week, the key averages were down between 0.3 and 0.6 percent.

WORLD MARKETS

Asia markets higher on US economic news

BANGKOK (AP) — Asian stocks were mostly higher Monday, shrugging off yet another anti-inflation move by China after encouraging news about the U.S. economy.

Japan's Nikkei 225 index eked out a marginal gain of less than 0.1 percent after opening lower. Hong Kong's Hang Seng rose 0.2 percent, while South Korea's Kospi slid 0.5 percent. Australia's S&P/ASX 200 added 0.3 percent.

Benchmarks in Singapore, Thailand, the Philippines and New Zealand were also higher. Mainland China's Shanghai Composite Index rose 0.3 percent. Taiwan's TAIEX was down slightly.

OIL PRICES

Oil near $109 as US gasoline prices jump

SINGAPORE (AP) — Oil prices fell to near $109 a barrel Monday in Asia as gasoline jumped to average $4 a gallon in six U.S. states and the District of Columbia, raising fears higher fuel costs will undermine crude demand.

Benchmark crude for May delivery was down 58 cents at $109.08 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.55 to settle at $109.66 on Friday.

In London, Brent crude for June delivery was down 33 cents to $123.12 a barrel on the ICE Futures exchange.

ECONOMY-WEEK AHEAD

Reports on housing among those due

WASHINGTON (AP) — The week is fairly light for economic reports. A reading is due today from the National Association of Home Builders on builder sentiment. Tomorrow, the government weighs in with housing starts for March. Also due this week, existing home sales, new unemployment claims and the index of leading economic indicators.

NABE SURVEY

Poll: US economy improving despite global events

WASHINGTON (AP) — Economists say the U.S. economy is gaining strength despite political unrest in North Africa and the Middle East and last month's devastating earthquake and tsunami in Japan.

A survey from the National Association for Business Economics finds that economists are hopeful that the broader economy is substantially improving, with rising employment reported for the fifth quarter in a row.

The outlook for employment rose slightly, reaching a 12-year high. No firms reported significant layoffs, with the only reductions coming from already planned cuts.

Sales increased for the third consecutive quarter, profit margins continued to improve and the number of economists whose firms increased spending over the previous quarter held steady. Nearly all of the 72 economists surveyed, about 94 percent, now expect the economy to grow at least 2 percent in 2011.

GAS PRICES

6 states and nation's capital now at $4 gas

WASHINGTON (AP) — Six states and Washington, D.C., now have gasoline prices averaging more than $4 per gallon.

Triple-A says New York State joined the list yesterday, which also includes Alaska, California, Connecticut, Hawaii and Illinois.

The next states could be Michigan, which has gas for $3.95 per gallon on average, and Indiana, where the average price is $3.94. Nevada, Washington and Wisconsin are close behind.

Hawaii has the highest price in the U.S. at $4.48 per gallon. Wyoming has the lowest, at $3.54.

The national average for gas has increased for 26 straight days, and is now at $3.83 per gallon.

New Tool to Ease the Life of the Online Business Entrepreneur

2011-02-28T04:37:00.000-08:00

Online Business entrepreneurs can now find the perfect .co.uk or .com domain name – thanks to a new free tool from web development company, Bird and Co Creative. The new domain tool is the fastest way to check if a domain is available. With thousands of new businesses starting up in the UK every month, this tool will be vital to many business entrepreneurs.

A website’s domain name is recognised as an essential piece of a company’s branding. The best names can change hands for thousands or even millions. One of the most expensive transactions was in 2009 when the domain name insure.com changed hands for a staggering $16 million.

Many popular terms have already been registered as domain names. So people setting up a new business often find it difficult to find the name that they want. In the past, checking to see if domains were free was a frustrating and time-consuming process. But that has now changed. With Bird and Co Creative’s domain tool it is possible to check the availability of domains instantly. As fast as a person can type, it is checking to see if the domain name can be registered.

The tool can be accessed by visiting the following web page:
http://www.birdandcocreative.co.uk/domainchecker/

The tool was created by the web developers at Bird and Co Creative, Bromsgrove. As Online Marketing Manager Paul Ajao explains “We initially developed this tool to be used in-house, as we create many online campaigns for our clients. Everybody that used it thought it was outstanding, so we decided to make it generally available.”

In today’s economic climate, there are thousands of business entrepreneurs looking to set up an online business. Some people are taking their redundancy money and using it to invest in themselves - they start an online business rather than just wait for another job to become available. The domain tool will help them create a branded website that will give them the best chance of success.
source:http://www.webwire.com/ViewPressRel.asp?aId=132907

‘Social Media for Business’ – Online Course for Marketers Launched by Oxford Learning Lab

2011-02-24T04:23:00.000-08:00

‘Social Media for Business’

Facebook and LinkedIn, are heralding an enormous change to the way businesses market themselves. But are marketers keeping up with the important changes? Oxford Learning Lab, an independent digital publisher that works with renowned marketing experts, is launching a new online marketing course that illuminates how social media can work as a marketing tool for any business. Released to coincide with the launch of Oxford Learning Lab’s revamped website, the course - ‘Social Media for Business’ - is based around high quality video content and downloadable course notes. It is perfect for busy people and affordably priced.

Aimed at professional marketers, marketing students and marketing consultants who wish to increase their knowledge base, the social media course, 'Social Media for Business' provides high quality, flexible learning, round the clock, for the fraction of the cost of an instructor-led course and has the benefit of being eligible as Continuing Professional Development (CPD) for marketers.

All course videos feature highly trained marketing professionals, including authors of popular marketing books, and most of the speakers are collaborating with The Chartered Institute of Marketing. The product is endorsed by Oxford College of Marketing, one of the largest providers of The Chartered Institute of Marketing courses.

Giorgio Burlini of Oxford Learning Lab comments: “The user bases of social media such as Twitter, LinkedIn and Facebook have grown enormously in the last year or so and have become the biggest global channels to market. Businesses are winning work from Twitter and LinkedIn, while Facebook has become a vital advertising medium as well as a channel for direct customer communications. It’s important for marketers to understand the many applications and benefits offered to business by social media in engaging customers as well as benchmarking and measuring activities, and planning ahead with quantifiable, achievable objectives.”

P.L.A.Y. Launches New Business and Website Geared Toward Pet Owners

2011-02-14T02:34:00.000-08:00

San Francisco retailer of unique dog beds presents a new option for environmentally conscious and fashion-forward pet owners.San Francisco, CA (Vocus/PRWEB) February 14, 2011

New online retail business P.L.A.Y. (Pet Lifestyle and You) just passed a successful one-month mark in its business, offering pet owners across the US and Canada an affordable, artistically-designed alternative in designer dog beds.

"We can honestly say that we love what we do, and starting this business is one of the best decisions we've ever made. Well, besides getting our own dog, of course," said William Chen, founder and owner of P.L.A.Y. "We've taken that love we have towards our pug and created products that dog-lovers everywhere can appreciate in terms of design, environmental-friendly materials, washable construction and price."

Recognized for its ergonomic construction made with recyclable fill materials, P.L.A.Y. makes designer beds for pets of all sizes. From small beds to extra large dog beds suitable for breeds up to 110 pounds, there is a wide selection of designs and styles, with more in the works.

After solidifying its online ecommerce store, P.L.A.Y. plans to work with brick and mortar retail stores nationwide to allow consumers to physically see and test its products before buying. With quality products and fashionable designs, P.L.A.Y. anticipates expanding into the international market to carve out its own reputation for excellence and care.

"We offer something that is unique," said Chen. "We understand that dog owners want to give the best to their furry friends, so we make that possible at a great price, which is different from many of our competitors. You can get an environmentally-conscious dog bed that is fashionable, made with quality construction and still affordable-all in one pet-friendly package."

About P.L.A.Y.
P.L.A.Y. (Pet Lifestyle and You) began with the mission to create the perfect dog bed for Momo, the pug belonging to P.L.A.Y. owner and founder William Chen. Collaborating with a manufacturer of infant and children products for the ultimate standard in safety and comfort, the company paired with San Franciscan designer David Collins to offer aesthetically pleasing, top quality designs. Each pet product is made with recycled materials, making P.L.A.Y. dog beds great for the environment, your pet and your interior design.

House Republicans lead charge to reduce regulations

2011-02-11T02:32:00.000-08:00

WASHINGTON — House Oversight Committee Chairman Darrell Issa gaveled Thursday's hearing to order with two posters displayed behind him: "How do regulations block private sector job growth?" asked one. "We're listening," promised the other.

The problem, said Democrats on the panel, is whom the committee is listening to: business owners, their lobbyists and conservative think tanks who came with a built-in bias against federal health and safety regulations.

"We need to expand the scope of our inquiry to include the benefits of regulation, as well as the costs," said Rep. Elijah Cummings, D-Md., the committee's top Democrat. "We also need to expand the groups we are seeking input from beyond those who want to repeal regulations."

The oversight hearing was part of a coordinated GOP effort to "expose job-killing regulations." A judiciary subcommittee held a similar hearing Thursday afternoon, followed by floor debate on a resolution requiring House committees to list and review regulations in their jurisdiction.

Rep. Pete Sessions, R-Texas, the resolution's sponsor, said stronger oversight was necessary to "rein in big government and shine light on our federal regulatory process."

Democrats questioned the necessity, if not the goals, of the effort.

"A meaningless gimmick that only wastes time," said Rep. Nydia Velázquez, D-N.Y. "Nothing more than a vehicle to rehash old politically motivated fights," said Rep. Judy Chu, D-Calif. "A feel-good resolution from the Republican majority," said Rep. Nick Rahall, D-W.Va.

President Obama is conducting his own review of regulations. He told the U.S. Chamber of Commerce on Monday that he would work with business leaders to "get rid of regulations that have outlived their usefulness."

Rep. John Tierney, D-Mass., said Congress should "weed out the hyperbole" and look at specific regulations.

Issa, R-Calif., agreed that more work remained to be done but said Congress first needs to raise awareness of the impact of regulations on jobs. "We think what we can be is the canary in the coal mine," Issa told reporters.

"It's easy to rail against regulations in the abstract. It's like railing against taxes," said Nicholas Bagley, a law professor who studies regulation at the University of Michigan. "But it's hard to sell to the American people that we should water down environmental or consumer protection regulations specifically."

Even if Republicans aren't successful in rolling back existing regulations, the effort could make regulators think harder about the costs of compliance.

Brasil Telecom S.A. - Financial and Strategic SWOT Analysis Review

2011-02-07T02:16:00.000-08:00

Brasil Telecom S.A. (Brasil Telecom) is a holding company engaged in the provision of telecommunication services. It is principally involved in the business of providing local fixed-line telephone, long-distance services. In addition, the company offers broadband services to customers including fixed line telephone as well as mobile service, free Internet access data and voice, national and international long-distance, data center,

broadband and dial-up internet access. Furthermore, the company also involves in support services through call center. Brasil Telecom offers the package in bundled solutions to private, public and industrial accounts including home, corporate and city.

This comprehensive SWOT profile of Brasil Telecom S.A. provides you an in-depth strategic analysis of the company´s businesses and operations. The profile has been compiled to bring to you a clear and an unbiased view of the company´s key strengths and weaknesses and the potential opportunities and threats. The profile helps you formulate strategies that augment your business by enabling you to understand your partners, customers and competitors better.

This company report forms part of the ´Profile on Demand´ service, covering over 50,000 of the world´s leading companies. Once purchased, highly qualified team of company analysts will comprehensively research and author a full financial and strategic analysis of Brasil Telecom S.A., including a detailed SWOT analysis, and deliver this direct to you in pdf format within two business days. (excluding weekends).

The profile contains critical company information including*,

- Business description – A detailed description of the company´s operations and business divisions.
- Corporate strategy – Analyst´s summarization of the company´s business strategy.
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- Company history – Progression of key events associated with the company.
- Major products and services – A list of major products, services and brands of the company.
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Small-business optimism in Canada

2011-02-03T02:05:00.000-08:00

Sentiment among small- and medium-sized businesses in Canada was down slightly last month, according to a monthly survey.

The Canadian Federation of Independent Business on Wednesday said its "business barometer" for January was 68.9, down from 69.3 in December.

Despite the decline, the CFIB said the results show the rise in optimism that took place late in 2010 has continued into the new year. The barometer spent most of last year in the mid-60s.

The CFIB says scores greater than 50 show most business owners expect conditions to improve over the next year. If the index is between 65 and 75, that's usually indicative of economic growth, it says.

Earlier this week, Statistics Canada said there was a 0.4 per cent expansion in gross domestic product in November, the most economic growth seen in eight months.

The CFIB said the current optimism among small-business owners is showing up in increased orders and intentions to invest in production equipment.

"It appears to be the business-to-business side of the economy that is powering this latest improvement," said CFIB chief economist Ted Mallett.

"After supporting the economy so well earlier in the recovery, the consumer-led sectors have remained in the background."

The strongest business sentiment is being seen in Manitoba, Saskatchewan, Newfoundland and Labrador, and British Columbia. The weakest is in New Brunswick and Nova Scotia.

The CFIB's January business barometer was based on web surveys with 967 businesses. The results are considered representative within 3.2 percentage points, 19 times out of 20.

KC company in forefront of Internet advertising business

2011-02-01T01:48:00.000-08:00

The biggest advertising spots on the Internet are household names: Google, Facebook, Bing.

But by pulling together all sorts of digital advertising — from e-mail and search-engine ads to mobile ads and online-game offers — a Kansas City company, Adknowledge, has become the No. 4 digital advertising network.

And it plans to keep growing after announcing in January that it attracted $200 million in new outside financing.

Scott Lynn, Adknowledge’s chief executive officer, said most of the roughly million online advertisers today turned to Google. And heavily trafficked websites such as The New York Times, ESPN and Expedia attract big-brand advertisers.

But “the remainder of the Internet is very, very difficult to advertise with,” he said. “We’re trying to create a single advertiser marketplace for those other segments so that advertisers can go to a single website, enter a credit card number and buy traffic with all of these different companies through a one-stop shop.”

In just six years Lynn’s company has put together those pieces, roughly doubling its annual revenue last year to $300 million.

Its work force has grown to 330, about half of them in Kansas City. Adknowledge also has offices in New York; Los Angeles; San Francisco; Chicago; Fort Myers, Fla.; Britain; and Australia.

The Silicon Alley Insider, a website that focuses on tech business news, last year ranked Adknowledge No. 18, after Hulu and before TheLadders.com, on its list “The Digital 100: World’s Most Valuable Start-Ups.” The report estimated Adknowledge’s value at $900 million.

Some of the building blocks of Adknowledge’s success:

•A huge database of consumer profiles and their interaction with ads, used to predict where businesses should put their ads to get the best response. Adknowledge emphasizes that it does not use “cookies” to follow people online, as some companies do, and that its profiles are anonymous — consumer interactions are not linked to any person’s identity. Adknowledge has more than 60 terabytes — a terabyte is 1,000 gigabytes — of that behavior data and says it runs more than 20 billion calculations a day “to determine what ad to show to each consumer.”

•A sophisticated matching site, bidsystem.com, that makes it easier for advertisers and digital advertising channels to find one another. Adknowledge says more than 10,000 advertisers bid for traffic — to put their ads where they’re most likely to be seen. And the company says it generates “more than 280 million clicks per month” for its advertisers across “multiple channels, including e-mail, display and social advertising.”

•A series of acquisitions in the past two years to expand those channels.

Lynn said the company’s 2009 acquisitions of social media businesses such as Super Rewards (an Internet advertising company that offers points or other rewards to online users who sign up for services) and the media division of Miva Inc., one of the largest independent online advertising networks, supported Adknowledge’s vision of creating a single marketplace for online advertising.

And last summer Adknowledge acquired the Hydra Group, which has thousands of online advertising affiliates — sites that get commissions when the ads they display are clicked, especially if they generate sales or other desired actions, such as requesting information on products or services.

“We currently maintain market leadership positions with our social media and e-mail advertising businesses,” Lynn said at the time of the acquisition, “and believe that Hydra will allow us to achieve the leading position in the affiliate industry.”

Lynn said another factor in Adknowledge’s success was that “a majority of the company is technology-focused,” enabling it to come up with powerful, innovative products such as bidsystem.com and its programming to predict which advertising approach would be most effective for a particular client.

TA Global Acquires Hotel Business In Kushan, China

2011-01-31T02:59:00.000-08:00

TA Global Bhd's (TAG) wholly-owned Swiss Liberty Sdn Bhd, has signed a sale and purchase of shares agreement with Kingdom Hotel Investments to acquire the hotel and business of Swissotel Kunshan in Kunshan, China.

This was done via the purchase of the entire issued shares of Kingdom Kunshan Ltd (KKL) of 4.031 million shares of US$1 each for a cash consideration of RM185.500 million. (US$1=RM3.0535), the company said in a filing to Bursa Malaysia.

KKL owns 100 per cent of the equity of First Shanghai Hotel Group (FSHG) and 100 per cent of the equity of Sino Dragon Asset Ltd (SDAL) which in turn owns 65 per cent and 35 per cent, respectively, of the equity of Kunshan Mamlaka Hotel Company Limited, a China incorporated company, which is the registered owner of the hotel property and business.

The hotel, rated a 5-star with 387 guest bedrooms, is prominently located in the city centre of Kunshan, along the western edge of Kunshan Economic and Technological Development Zone.

TAG said the proposed acquisition would be funded from internally-generated funds and external borrowings.

Meanwhile, the original cost of investment in the hotel was US $59.3 million.

In the statement, TAG said the proposed acquisition would further enhance the company's hospitality operations in major cities worldwide and expand its existing hospitality properties portfolio in China.

It will also provide a steady revenue stream and enhance revenue contribution from its hospitality division to the company.

World stocks down ahead of US growth figures

2011-01-29T01:50:00.000-08:00

World stock markets mostly slipped Friday as investors braced for growth figures for the U.S. economy, the world's largest, and worried about debt problems in large economies like Japan.

Markets were still rattled from the previous day's credit rating downgrade of Japan by Standard & Poor's. Rival agency Moody's Investors Service later said that the U.S. rating outlook remains under pressure, increasing the likelihood that it might fall to 'negative' from 'stable' over the next two years due to high levels of debt.
orld stock markets mostly slipped Friday as investors braced for growth figures for the U.S. economy, the world's largest, and worried about debt problems in large economies like Japan.

Markets were still rattled from the previous day's credit rating downgrade of Japan by Standard & Poor's. Rival agency Moody's Investors Service later said that the U.S. rating outlook remains under pressure, increasing the likelihood that it might fall to 'negative' from 'stable' over the next two years due to high levels of debt.

Against that backdrop, the U.S. economic growth figures for the fourth quarter will be crucial to markets.

Economists on average forecast that the economy expanded at an annualized rate of 3.5 percent in the October-December quarter. If they are right, it would show the economy has consistently gained speed since hitting a rough patch in the spring, when Europe's debt crisis hurt sales of U.S. exports and crimped business activity.

How well consumer spending picks up will be key, as it accounts for three quarters of the U.S. economy and a fifth of global growth.

"The financial markets have been taking a rosier view of U.S. economic performance in recent weeks, largely on indications of stronger than expected consumer purchases during the holiday season," said Stephen Lewis at Monument Securities in London.

However, he noted growth is still unlikely to be strong enough to fill spare capacity, meaning the economy still has plenty of idle resources such as factories and workers. Unemployment, which has remained stubbornly high despite the recovery, is a top concern for the Federal Reserve, which has shown no indication of wanting to tighten its monetary policy anytime soon.

In Europe, eyes were on Spain, where the government reached a deal with unions on raising the retirement age to 67 from 65. Along with measures to bolster the troubled savings banks, the pension reform plan is a key component in the country's fight to ease tensions over the debt crisis.

Madrid's exchange was among the top risers in Europe -- gaining 0.4 percent -- as the pensions deal offset the news that Spanish unemployment rose back above the 20 percent level in the fourth quarter.

Elsewhere, Britain's FTSE 100 was 0.7 percent lower at 5,920.05 while Germany's DAX gained 0.1 percent to 7,163.20. France's CAC-40 was down 0.1 percent to 4,056.93.

Europe's debt crisis has eased over the past weeks on signs that governments are committed to a broader, bolder strategy to regain market confidence. Public borrowing rates have fallen and the 17-nation euro has rallied sharply. On Friday, thorld stock markets mostly slipped Friday as investors braced for growth figures for the U.S. economy, the world's largest, and worried about debt problems in large economies like Japan.

Markets were still rattled from the previous day's credit rating downgrade of Japan by Standard & Poor's. Rival agency Moody's Investors Service later said that the U.S. rating outlook remains under pressure, increasing the likelihood that it might fall to 'negative' from 'stable' over the next two years due to high levels of debt.

Against that backdrop, the U.S. economic growth figures for the fourth quarter will be crucial to markets.

Economists on average forecast that the economy expanded at an annualized rate of 3.5 percent in the October-December quarter. If they are right, it would show the economy has consistently gained speed since hitting a rough patch in the spring, when Europe's debt crisis hurt sales of U.S. exports and crimped business activity.

How well consumer spending picks up will be key, as it accounts for three quarters of the U.S. economy and a fifth of global growth.

"The financial markets have been taking a rosier view of U.S. economic performance in recent weeks, largely on indications of stronger than expected consumer purchases during the holiday season," said Stephen Lewis at Monument Securities in London.

However, he noted growth is still unlikely to be strong enough to fill spare capacity, meaning the economy still has plenty of idle resources such as factories and workers. Unemployment, which has remained stubbornly high despite the recovery, is a top concern for the Federal Reserve, which has shown no indication of wanting to tighten its monetary policy anytime soon.

In Europe, eyes were on Spain, where the government reached a deal with unions on raising the retirement age to 67 from 65. Along with measures to bolster the troubled savings banks, the pension reform plan is a key component in the country's fight to ease tensions over the debt crisis.

Madrid's exchange was among the top risers in Europe -- gaining 0.4 percent -- as the pensions deal offset the news that Spanish unemployment rose back above the 20 percent level in the fourth quarter.

Elsewhere, Britain's FTSE 100 was 0.7 percent lower at 5,920.05 while Germany's DAX gained 0.1 percent to 7,163.20. France's CAC-40 was down 0.1 percent to 4,056.93.

Europe's debt crisis has eased over the past weeks on signs that governments are committed to a broader, bolder strategy to regain market confidence. Public borrowing rates have fallen and the 17-nation euro has rallied sharply. On Friday, the common currency was down slightly from two-month highs to trade at $1.3695 from $1.3729 in New York late Thursday.

Wall Street was headed for a lower opening, with Dow futures down 0.1 percent to 11,938 and S&P 500 futures losing 0.1 percent to 1,294.

In Asia, Japan's benchmark Nikkei 225 stock average dropped 1.1 percent to close at 10,360.34 as traders reacted to the news -- revealed after the close the previous day-- that Standard & Poor's has lowered Japan's long-term sovereign debt rating one notch to AA- due to its ballooning public debt.

Investors dumped shares in banks, which own large amounts of government bonds. Mitsubishi UFJ Financial Group, Japan's biggest bank, fell 2.7 percent. Mizuho Financial Group, the No. 2 banking group, declined 1.2 percent and Sumitomo Mitsui Financial Group retreated 1.6 percent.

Analysts said signs of weakness in some of the world's leading economies were causing investors to think hard about stocks and whether now was a time to jump in, stay put, or head for the exits.

The rating given Japan on Thursday -- its first downgrade in almost nine years -- is the same rating given to China, Saudi Arabia and Kuwait. The news sent the dollar as high as 83.18 yen late Thursday from 82.20 yen. On Friday it was trading at 82.63.

The downgrade is a stern reminder to Japan that it faces consequences for letting its debt swell to twice the size of gross domestic product. The government estimated Japan's public debt would swell to 997.7 trillion yen ($12 trillion) by March 2012, up from 943 trillion yen this year.

Elsewhere, Australia's S&P/ASX 200 closed down 0.7 percent at 4,774.90 as the first estimates of the economic cost of east coast flooding -- possibly the most expensive natural disaster in Australia's history -- were released.

South Korea's Kospi declined 0.3 percent to 2,107.87 and Hong Kong's Hang Seng fell 0.7 percent to 23,617.02. Shares in Indonesia and Thailand were all lower.

China's Shanghai Composite index gained 0.1 percent to 2,752.75. Benchmarks in Taiwan and New Zealand were also higher.

Benchmark crude for March delivery was down 1 cent at $85.63 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.69 to settle at $85.64 a barrel on Thursday.e common currency was down slightly from two-month highs to trade at $1.3695 from $1.3729 in New York late Thursday.

Wall Street was headed for a lower opening, with Dow futures down 0.1 percent to 11,938 and S&P 500 futures losing 0.1 percent to 1,294.

In Asia, Japan's benchmark Nikkei 225 stock average dropped 1.1 percent to close at 10,360.34 as traders reacted to the news -- revealed after the close the previous day-- that Standard & Poor's has lowered Japan's long-term sovereign debt rating one notch to AA- due to its ballooning public debt.

Investors dumped shares in banks, which own large amounts of government bonds. Mitsubishi UFJ Financial Group, Japan's biggest bank, fell 2.7 percent. Mizuho Financial Group, the No. 2 banking group, declined 1.2 percent and Sumitomo Mitsui Financial Group retreated 1.6 percent.

Analysts said signs of weakness in some of the world's leading economies were causing investors to think hard about stocks and whether now was a time to jump in, stay put, or head for the exits.

The rating given Japan on Thursday -- its first downgrade in almost nine years -- is the same rating given to China, Saudi Arabia and Kuwait. The news sent the dollar as high as 83.18 yen late Thursday from 82.20 yen. On Friday it was trading at 82.63.

The downgrade is a stern reminder to Japan that it faces consequences for letting its debt swell to twice the size of gross domestic product. The government estimated Japan's public debt would swell to 997.7 trillion yen ($12 trillion) by March 2012, up from 943 trillion yen this year.

Elsewhere, Australia's S&P/ASX 200 closed down 0.7 percent at 4,774.90 as the first estimates of the economic cost of east coast flooding -- possibly the most expensive natural disaster in Australia's history -- were released.

South Korea's Kospi declined 0.3 percent to 2,107.87 and Hong Kong's Hang Seng fell 0.7 percent to 23,617.02. Shares in Indonesia and Thailand were all lower.

China's Shanghai Composite index gained 0.1 percent to 2,752.75. Benchmarks in Taiwan and New Zealand were also higher.

Benchmark crude for March delivery was down 1 cent at $85.63 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.69 to settle at $85.64 a barrel on Thursday.
Against that backdrop, the U.S. economic growth figures for the fourth quarter will be crucial to markets.

Economists on average forecast that the economy expanded at an annualized rate of 3.5 percent in the October-December quarter. If they are right, it would show the economy has consistently gained speed since hitting a rough patch in the spring, when Europe's debt crisis hurt sales of U.S. exports and crimped business activity.

How well consumer spending picks up will be key, as it accounts for three quarters of the U.S. economy and a fifth of global growth.

"The financial markets have been taking a rosier view of U.S. economic performance in recent weeks, largely on indications of stronger than expected consumer purchases during the holiday season," said Stephen Lewis at Monument Securities in London.

However, he noted growth is still unlikely to be strong enough to fill spare capacity, meaning the economy still has plenty of idle resources such as factories and workers. Unemployment, which has remained stubbornly high despite the recovery, is a top concern for the Federal Reserve, which has shown no indication of wanting to tighten its monetary policy anytime soon.

In Europe, eyes were on Spain, where the government reached a deal with unions on raising the retirement age to 67 from 65. Along with measures to bolster the troubled savings banks, the pension reform plan is a key component in the country's fight to ease tensions over the debt crisis.

Madrid's exchange was among the top risers in Europe -- gaining 0.4 percent -- as the pensions deal offset the news that Spanish unemployment rose back above the 20 percent level in the fourth quarter.

Elsewhere, Britain's FTSE 100 was 0.7 percent lower at 5,920.05 while Germany's DAX gained 0.1 percent to 7,163.20. France's CAC-40 was down 0.1 percent to 4,056.93.

Europe's debt crisis has eased over the past weeks on signs that governments are committed to a broader, bolder strategy to regain market confidence. Public borrowing rates have fallen and the 17-nation euro has rallied sharply. On Friday, the common currency was down slightly from two-month highs to trade at $1.3695 from $1.3729 in New York late Thursday.

Wall Street was headed for a lower opening, with Dow futures down 0.1 percent to 11,938 and S&P 500 futures losing 0.1 percent to 1,294.

In Asia, Japan's benchmark Nikkei 225 stock average dropped 1.1 percent to close at 10,360.34 as traders reacted to the news -- revealed after the close the previous day-- that Standard & Poor's has lowered Japan's long-term sovereign debt rating one notch to AA- due to its ballooning public debt.

Investors dumped shares in banks, which own large amounts of government bonds. Mitsubishi UFJ Financial Group, Japan's biggest bank, fell 2.7 percent. Mizuho Financial Group, the No. 2 banking group, declined 1.2 percent and Sumitomo Mitsui Financial Group retreated 1.6 percent.

Analysts said signs of weakness in some of the world's leading economies were causing investors to think hard about stocks and whether now was a time to jump in, stay put, or head for the exits.

The rating given Japan on Thursday -- its first downgrade in almost nine years -- is the same rating given to China, Saudi Arabia and Kuwait. The news sent the dollar as high as 83.18 yen late Thursday from 82.20 yen. On Friday it was trading at 82.63.

The downgrade is a stern reminder to Japan that it faces consequences for letting its debt swell to twice the size of gross domestic product. The government estimated Japan's public debt would swell to 997.7 trillion yen ($12 trillion) by March 2012, up from 943 trillion yen this year.

Elsewhere, Australia's S&P/ASX 200 closed down 0.7 percent at 4,774.90 as the first estimates of the economic cost of east coast flooding -- possibly the most expensive natural disaster in Australia's history -- were released.

South Korea's Kospi declined 0.3 percent to 2,107.87 and Hong Kong's Hang Seng fell 0.7 percent to 23,617.02. Shares in Indonesia and Thailand were all lower.

China's Shanghai Composite index gained 0.1 percent to 2,752.75. Benchmarks in Taiwan and New Zealand were also higher.

Benchmark crude for March delivery was down 1 cent at $85.63 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.69 to settle at $85.64 a barrel on Thursday.

A SWOT analysis of Jamaica's economy

2011-01-28T05:05:00.000-08:00

SINCE the start of the year I have received many questions (both locally and internationally) about the prospects for Jamaica's economy in 2011 and beyond. Perhaps more so today than in previous years, persons are understandably more curious about Jamaica's prospects for growth. This is understandable because with the world coming out of a very significant global recession, there are many realignments of investment portfolios taking place, and investors are more cautious, after being ravaged by the global events since 2007.

Investors also are becoming a lot more conscious of global investments, and understand that true diversification is not just among asset classes but more importantly between economies. This is an underlying ph
Nine Maoists were killed in an encounter with security forces at Luhur forest in Jharkhand's Latehar district in the wee hours on Friday.

"Nine bodies of the Maoists were recovered after the encounter at Luhur jungle under Barwadih police station," Latehar Superintendent of Police Kuldweep Diwedi told PTI over phone.

Security forces comprising CRPF and the district police have also recovered arms and ammunition from the spot,

To know more click hear
ilosophy that Jamaican policymakers need to understand as we craft policies around the economy. As a result of improvements in technology and investor awareness, there are greater choices across economies when choosing where to put money to work. So that even an individual investor can open an online brokerage account and invest overseas in what they consider a more attractive and predictable environment. This, I believe, will be the scene for investors from 2011 going forward, and will be to the disadvantage of countries that do not get their investment environment right.

One particular question being asked is, what are the prospects for the Jamaican economy and investments in particular? I don't believe that this question can be answered in a "one size fits all" sort of way, as it depends a lot on the type of investment one is involved in. For example, while I believe that there are significant growth prospects for small businesses, it depends on the type of business one is in and the approach to that business development.

What I would therefore like to do in this article is look at a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis of the Jamaican economy. This requires much further discourse for anyone looking at an investment or business opportunity.

The table outlines generally the SWOT of the Jamaican economy as I see it, and provides an indication (based on interpretation) of where businesses and investors should be looking for 2011 and beyond.

US stock market daily report (26/01/11, Wednesday)

2011-01-27T01:27:00.000-08:00

President Obama's State of the Union address gave stocks a boost today, helping the Dow Jones rise above 12,000. Last night in Obama's address, he promised to focus on job creation and lowering corporate tax rates. Investors were confident in future business after the President said he wanted to close corporate tax loopholes for the first time in 25 years and use that revenue to lower tax rates. It was also encouraging to hear Obama is in support of a five-year freeze on discretionary spending, resulting in the deficit being lowered by $400 billion over the next 10 years. Investors were very pleased with Obama's plans, helping them look past today's weak reports on earnings. Stocks were rising today; the Dow passed the key 12,000 mark.

Today was the first time since 2008 the Dow has been at this level; it is an encouraging sign for the markets. Analysts are crediting today's increase to higher investor confidence following the State of the Union address. Investors also waited for the Federal Reserve's comments on the Central bank's two day policy meeting that ended today; the news didn't heavily affect the markets since investors were pretty sure today's report would show interest rates remain unchanged, which they did. The markets surly didn't rise off of today's corporate earnings. After the close yesterday, Yahoo gave fourth quarter results that came in under what analysts were expecting, sending shares down over 2% in today's session. Shares of Bowing were also falling, as the company said it expects to see earnings per share for the year to be less than analysts were expecting. Boeing said fourth quarter earnings were at $1.56 per share, more than the $1.11 per share analysts forecasted.

Stocks gave up some of their earlier gains, but managed to remain in the positive; all three major indexes were still rising, with the NASDAQ making the most gains. Commodities were rising; both gold and crude oil prices were increasing following yesterday's losses. As the dollar fell versus the pound and the yen; the greenback rose against the euro. With just under an hour left in the trading session, the Dow was still at a gain of 20 points.

HUL Q3 net marginally declines at Rs 637.5 cr

2011-01-25T02:40:00.000-08:00

Hindustan Unilever (HUL), the country's largest fast moving consumer goods company, has posted a marginal decline of 1.78 per cent in net profit at Rs 637.51 crore in the third quarter ending December 31, 2010 as compared to Rs 649.11 crore in the corresponding quarter of the previous year. Total income during the period under consideration, however, increased from Rs 4,573.23 crore to Rs 5,127.71 crore.

With sustained double-digit underlying volume growth in the domestic consumer business (13 per cent), net sales grew 12 per cent during the quarter and ahead of the market in aggregate. Home and personal care business grew by 11.6 per cent with competitive growth in both laundry and personal wash. Laundry portfolio was further strengthened with Rin delivering record volume growth.

Harish Manwani, chairman said: “Our strategy is working and is reflected in the consistent double digit underlying volume growth over the last four quarters and ahead of market growth. We continue to strengthen our leadership in core categories, even as we invest to build opportunities for the future. In an inflationary environment, we will manage our business dynamically, through judicious pricing actions and increased focus on cost effectiveness, while ensuring that we remain competitive in the market place.”

Personal wash grew ahead of the market with Lifebuoy growing strongly post the relaunch and the premium portfolio continued to deliver robust growth. Personal products grew strongly at 20 per cent across categories with skin care delivering a particularly strong performance.

Skin care growth was innovation led, both on the core and in emerging segments. Fair and Lovely, Ponds White Beauty and Vaseline Healthy White continued to deliver robust sales growth. Both Hair and Oral performed well across the key brands. Dove Hair range was relaunched with Fiber Actives and in Oral, a new variant Close-up, Fire-Freeze. was successfully introduced. Foods business grew 11.3 per cent.

In tea, Red Label was relaunched continuing to deliver double-digit growth. Coffee growth was robust, across conventional and instant coffee, with price point packs performing particularly well. Knorr soupy noodles sustained its strong momentum and is now available nationally. Ice-cream grew by 31 per cent with good growth across formats.

Pureit continued to expand its franchise with product offerings across multiple price and benefit positions. Overall, the water business grew strongly and in line with action standards. Input cost inflation continued to rise during the quarter.

Cost of goods sold went up by 220 bps, as a result of steep rise in material costs, especially in commodity sensitive categories. A&P spend grew by 17 per cent to maintain market competitiveness and to develop emerging categories. Consequently, operating margins were lower by 320 bps.

Financial income increased by Rs 38 crore through further improvement in working capital and sound treasury management. Profit after tax but before exceptional items declined by 2.1 per cent, while net profit declined by 1.8 per cent.

The shares of HUL were trading down 0.77 per cent at Rs 295.60 on the BSE at 1:12 pm.

Australia slowly emerges as prime market for online retail

2011-01-24T01:32:00.000-08:00

Australia is fast-gaining a reputation as a global hub for online shopping, with no less than US giant internet retailer eBay reportedly alluding to the Aussie market as a viable and standout business consideration for web retailers.

The remarks made by eBay chief executive John Donahoe came weeks after a debate was spawned by giant Australian retailers led by Gerry Harvey, when the group called on the federal government to consider the imposition of GST on online purchases originating from Australia.

The group, which also comprised of Solomon Lew and the head of Myer and David Jones, drew flak from Australian consumers, who scored the retail group's position as self-serving and insensitive of shoppers' general welfare.

Harvey pushed forward his suggestion amidst fluctuating performance of the retail sector even during the peak of the holiday season, when shoppers were expected to accelerate their local spending.

Retailers blamed the emerging behaviour of local consumers, in which they turn to online shopping for its offering of more convenience and more savings. Australian retailers explained that internet sellers are able to provide cheaper products due to their lower operations cost.

Harvey also scored that fact that online retailers are not paying local taxes as he asserted during his initial campaign for GST to be imposed on online providers that "if I think something is right I'll fight for it, always have."

Yet his campaign appeared to have adapted a milder tone lately as Harvey revealed that his recent back-pedalling was mostly caused by attacks that he described as increasingly becoming "vicious and hateful."

Australian retailers have been complaining that they are absorbing significant losses owing to the present environment in the industry and reports are swirling around that many retailers are rethinking their current approach to combat rising rent costs and to reach more customers.

Chief of Australian retailers' concern is the prohibitive costs of land leases in the country as Myer chief executive lamented that the business climate in the US is more accommodating for retailers, citing that "in California, some of the largest shopping centres are well out of the cities where the land and rent are a lot cheaper."

However, consumer group Choice reminded the retailers that they may be missing the real reason why they are lagging behind and sales are on a downward spiral.

Choice campaign director Christopher Zinn told The Australian that "the big chains should recognise that it's their high prices, limited range and poor customer service that increasingly encourage people to use the internet."

Business-community support gives Falcon his wings

2011-01-22T02:41:00.000-08:00

Christy Clark leads the opinion polls among candidates for the B.C. Liberal leadership. George Abbott is well positioned as the compromise choice.

Mike de Jong is the sleeper, whose vote tally may well surprise his rivals. Moira Stilwell and Ed Mayne are the undisputed also-rans.

But Kevin Falcon stands out from the six-pack of leadership hopefuls in one regard -- endorsements from the business community.
The Falcon campaign has been trumpeting its support from business and corporate leaders in a series of press releases.

Each sets out the latest inductees into Falcon 20/20, described as "a group of B.C. business people who believe that Kevin Falcon's experience and vision for B.C. make him the clear choice to be the best premier."

The 20/20 moniker -- a play on the slogan "clear vision, clear choice" -- echoes the Top 20, the group of corporate leaders that backed Social Credit during the Bill Bennett era.

Falcon is an unabashed admirer of Bennett and cites him as a leadership model in a recent video where he tries to underscore the differences between his more team-oriented leadership style and that of the current premier, Gordon Campbell.

But where the names of Bennett's Top 20 were kept secret (until leaked to Vancouver Sun columnist Marjorie Nichols during the 1986 Socred leadership race), the members of Falcon's 20/20 are a matter of public record.

The group is chaired by Ryan Beedie, president of the Beedie Group, one of the province's largest developers of industrial property and one-time would-be buyer of the Vancouver Canucks along with Tom Gaglardi.

Also a member of Falcon's 20/20 is Gaglardi, chairman and chief executive officer of Sandman Hotels, grandson of the legendary Social Credit highways minister, "Flying" Phil Gaglardi.

Other key members: Kyle Washington, Seaspan International. Christian Chia, Open Road auto dealerships. Terry McBride, Nettwerk Music. Cam McNeill, MAC Marketing home builders. Roger Hardy, Coastal Contacts/ Clearly Contacts.

Peter Armstrong, Rocky Mountaineer tourist train. John O'Neill, O'Neill hotels and resorts. Restaurateurs Stan Fuller (Earl's), Jeff Fuller (Joey's), David Aisenstat (Keg), Rick Jaffray (Cactus Club) and Emad Yacoub (Glowbal).

Plus, in no particular order: Carolyn Cross, Ondine Biomedical. Samir Manji, Amica Mature Lifestyles. Matt Young, Innovative Fitness. Zahra Mamdani, Wear Else Fashions. Paolo Kalaw, Frontier Dental labs. Tom Greenough, Tom Tar Roofing. Eric Carlson, Anthem Properties.

Sarah MacNeill, MacNeill Yakamoto Recruitment. Rob Macdonald, Macdonald Development real estate. Jeff Booth, Build Direct building materials. Salim Karim, Inn House Retail. Jim Case, Travelers Financial. Paul Hemsley, Hemmera environmental consultants.

Leah Costello, Curious Mind Productions. John Vickerstaff, Network Bonding and Insurance. Bob Cross, Bankers Petroleum. Lance Sparling, Wakefield Home Builders. Lorraine Cunningham, Cunningham Group. Tom Kramer, Canadian Utility Construction. Steve Ashforth, Glastech Contracting.

George Horie, Sanctuary TV series. Martin Charlwood, Uniglobe Travel. Chuck van der Lee, Ananda Holdings, restaurants. Greg Fleck, Service Works Distribution. Tina Osen, HUB International insurance brokers. Riaz Pisani, Contac Services online supply management.

Christopher Philps, Fairborne Homes. John Frostad, Shearers Foods. Suki Sekhon, CRS real estate. John Pacey, Verathon Medical. Holly Gordon, iPOWOW online market research. Steven Dean, Oceanic Iron Ore. Glenn Bailey, Bailey Group business consultants. Sam Gudewill, Pacific Group. Roger Finnie, Pemberton Insurance. Eric Savics, Haywood Securities.

The press releases tout Falcon as the get-things-done guy in the Liberal government, which readily explains his attraction to business leaders. But being top-heavy with such connections also makes him a target for accusations that he'll favour business over the public interest.

Indeed the New Democratic Party Opposition pounced on Friday, noting that a charter member of the Falcon 20/20, Roger Hardy, was urging customers of his Clearly Contacts business to join the Liberals and vote for Kevin Falcon.

The firm, as the New Democrats noted, had already benefited from a Falcon-led decision to relax regulations regarding sale of glasses and contacts. True, though as Hardy noted in his letter to customers, the change also benefited consumers.

"Today, thanks to legislation introduced by the B.C. Liberal Party last year, the doors have been opened to competition in our industry, dramatically reducing the price of contact lenses [and] eyeglasses. This legislation will save British Columbians millions of dollars over the next five years." Then the pitch to join the party -- "it takes two minutes and costs only $10" -- and vote for his man Falcon, "a candidate with experience and a willingness to make changes that require leadership, and benefit all British Columbians."

Hardy's is just one of the 49 names on Falcon's list. Look for the New Democrats to open a file on each of them, just in case Corporate Kevin proves to be as popular with Liberal members as he is with the business sector.

Michael Jackson's estate sues business partner of singer's mother

2011-01-21T01:57:00.000-08:00

Michael Jackson's estate Thursday sued a businessman who has teamed up with the singer's mother to market memorabilia related to the late King of Pop on the website jacksonsecretvault.com.

The site, the lawsuit alleged, "does absolutely everything in its power to suggest to its visitors that it is the hub for all things Michael Jackson, and that it is sanctioned and supported by the estate, when in fact it is neither."

Visitors to the site can buy an "official" $39.99 coffee table book containing hundreds of photos from the Jackson family archive and apparently authorized by Katherine Jackson.

The 80-year-old matriarch of the show business family is featured prominently in promotional photos.

The suit, filed in the U.S. District Court, accuses Howard Mann and related parties of copyright infringement and misappropriation of likeness, among other charges.

It seeks compensatory and punitive damages, as well as the defendants' profits.

"People who trade off Michael's personality, copyrights, and trademarks should not be allowed to exploit the legacy of one of the world's most recognized talents for their own benefit," estate lawyer Howard Weitzman said in a statement.

"Protecting and preserving Michael's assets are a core responsibility of the Estate and we will do everything the law permits to enforce those rights."

Mann could not immediately be reached for comment.

But he told TMZ.comlast November, after the estate had fired off a cease-and-desist letter, that he was "not remotely" worried about it.

He said he was helping Katherine Jackson make money while the estate focused on paying off her son's debts.

Katherine Jackson, notably, is not named in the lawsuit.

A spokesman for the estate declined to comment.

She is also a beneficiary of Jackson's estate and is the guardian of his children.

Budget(2011-2012)to begin funding for Delhi Metro Phase III

2011-01-19T01:13:00.000-08:00

The first tranche of central government funding for the third phase of the Delhi Metro commuter rail project is likely to come in the coming 2011-12 Budget.

The Centre is expected to provide around Rs 750 crore as its share of equity infusion. The entire central government equity amounting to Rs 5,000 crore would be spread over five years.

Delhi Metro Rail Corporation (DMRC) is likely to invest Rs 28,000 crore for the third phase, of which around 40 per cent, amounting to Rs 10,000 crore, would come as equity support in equal proportion from the Centre and the Delhi government.

“We have graded our equity requirement for phase-III. What we will seek in the 2011-12 Union Budget would be roughly 15 per cent of our total requirement from the Union government, of Rs 5,000 crore,” E Sreedharan, managing director of DMRC, told Business Standard.

Adding: “While the funding pattern for phase-III is yet to be finalised, we have already advised that the equity contribution from the two governments of Rs 5,000 crore each would be spread over the next five-six years. A provision for that will come in the Union budget.”

DMRC has proposed to add around 70 km through Phase-III to its 189-km operational network in the National Capital Region.

While the metro train operator has already started minor construction work under phase-III to avoid delays, the work would start in full swing only after the funding arrangement is finalised.

Japanese aid again Sreedharan said of the rest of the fund requirement of Rs 18,000 crore, Rs 10,000 crore would be sourced as loan from the Japan International Cooperation Agency (Jica). This is the Japanese government agency for extending technical and financial assistance for projects in developing nations. Jica loans were instrumental in the commissioning of phases I and II of the Delhi Metro.

“The loan amount from Jica can be further increased to fill the small funding gap that may remain,” Sreedharan said. DMRC prefers Jica, he added, as the rate of interest of 1.3 per cent at which debt had so far been obtained was “quite comfortable”. However, formal talks with Jica on the proposal are yet to begin. These will take place only after the central government approves the project.

Online CRM battle: Microsoft Australia declares war

2011-01-17T22:19:00.000-08:00

Microsoft’s global war against software rivals Salesforce.com, Oracle and NetSuite flared up dramatically on Australian shores this morning, as the company launched the software as a service version of its popular Dynamics CRM suite locally with a slew of partners and its first customer, in addition to an aggressive pricing scheme.

Dynamics has traditionally required an on-premises hosting model, or customers could also outsource it to be hosted by partners. Under Microsoft’s new model, however, the software can be delivered as a service directly from the company’s own global cloud computing infrastructure. The closest such facility to Australia is believed to be located in Singapore.

In a statement issued this morning, Microsoft said the offering would be available in Australia right now at a promotion price of AU$42.25 per user, per month, for the first 12 months of servics to customers that sign up by June 30.

That pricing is a little more expensive than the US$34 per month that US customers will enjoy, but it is still broadly competitively priced with Salesforce.com’s offering — which starts at AU$35 per user, per month for basic sales and marketing functionality and ranges through AU$95, $AU180 and $AU360 pricing plans.

Microsoft stated this morning that Salesforce.com and Oracle customers who switched to its online offering between now and June 30 could receive up to AU$249 for each user that made the switch — money which can be used towards the cost of migrating data or building in customisations.

Locally, Microsoft said it had signed up a slew of local partners to help customers adopt the new technology — ranging from independent software vendors like Connect2Field to global systems integrators like Avanade and HP and those in-between — local systems integrators and partners like CSG, Oakton, eSavvy and JayThom.

The first Australian customer for the suite appears to be local group buying site Cudo, although the site itself is actually a joint venture between Microsoft, publishing giant PBL and ninemsn — which itself is a Microsoft joint venture.

“To support our growth and agility we need to build our business on platforms that give us on-demand scale, the ability to pay as we grow and a familiar, rich set of functionality for our teams to use wherever they are,” said Cudo chief technology officer Greg Willis, in Microsoft’s statement. “The combination of a cloud deployment option and the seamless integration with Microsoft Office Outlook 2010 made this new version of Microsoft Dynamics CRM an ideal choice for our development – even during the beta.” Local partner eSavvy aided with Cudo’s adoption of the platform.

Dynamics CRM Online is actually part of Microsoft’s regular release cycle for its Dynamics CRM software in general; the 2011 version of the software for on-premise and partner-hosted deployments will be available on February 28.

The news comes as Microsoft’s large rivals have been making moves in the Australian market in recent times. Oracle revealed in September that it would partner with local company Harbour MSP to provide a version of its on-demand CRM platform hosted in Australia, while Salesforce.com is known to be currently previewing the ‘Spring 2011′ version of its suite at the moment.

And NetSuite has also been active as well — with global chief executive Zach Nelson making a flying visit to Sydney in October. German software giant SAP, however, has not been as vocal in the Australian market on the CRM front in recent times

Renault working on global, low-cost car for India

2011-01-16T20:30:00.000-08:00

French automaker Renault is keen on developing an affordable car for the Indian market that could be positioned above the Tata Nano in the sub-Rs 3-lakh space.

“Our history has been democratisation of technology and making cars affordable to a vast number of people. I cannot comment on the pricing of this product but it will be sandwiched between the ultra-low cost car planned with Bajaj Auto and other existing models,” Mr Jerome Stoll, Executive Vice-President, Sales and Marketing of Renault, told Business Line.

Growth drivers

Indications are that the car will be produced on a global platform, which will also cater to Brazil and other emerging economies. In that case, the business plan will be pretty much on the lines of what Toyota is planning with the Etios compact. Renault has already zeroed in on India and Brazil, along with Russia, as its future growth drivers beyond Europe.

Mr Stoll said Renault was convinced that there was a market for an affordable car in India. “If we want to be a major player both in India and other price-sensitive countries, this will be a priority,” he added. This explains why the company is pursuing a similar plan in Brazil where there is a sizable market for affordable cars. It will, however, be dearer than the one for India thanks to a host of levies.

Ultra-low cost car

Incidentally, the ULC with Bajaj is due to hit the roads in mid-2012 and is expected to start off with a base price tag of Rs 1.5 lakh and going upwards. Bajaj has been entrusted with the responsibility of developing the car where the focus will be on mileage of over 30 kilometres to a litre.

China, interestingly, does not figure in Renault's priority list though its global ally, Nissan, is working actively on growing its market share there. India's car market is still a fifth of China's but Renault believes that it still holds immense potential. “When we look at the rapid pace of growth in India, we are confident that there is room for us,” Mr Stoll said.

The company is categorical though that it will first focus on the large domestic market where five models, including two compacts, have been planned over the next two years. “We have to optimise the resources available here and are already sourcing engineering work, components and services,” he said.

Renault's India chapter did not exactly start on a promising note with the joint venture with Mahindra & Mahindra achieving little with the Logan in terms of numbers. “Brand awareness of Renault is still low and this could just end up being a big opportunity to redefine what we want to do now,” Mr Stoll said.

The company's logic in starting off with its new innings with the Fluence is more to do with positioning and conveying the Renault DNA. “It is a good way to showcase our technology in the upper end of the segment while meeting the customer's expectations,” he added.

How to Clean Up Your Online Reputation

2011-01-10T20:02:00.000-08:00

If you own a small or medium business, a good reputation--online and offline--is clearly key to your success.

The Internet can overwhelm users with information, so anything negative--especially if it appears high in search results--can have a drastically harmful effect on your company's success and reputation.

A potential customer who searches for your business online is a lot like a recruiter, trying to find the best company for the job.Among U.S. recruiters, 70 percent have rejected candidates based on their online reputation--and yet only 7 percent of Americans believe that their online reputation can affect their job search, according to a 2010 study by Microsoft and Cross-Tab Market Research.

Ignoring how your company appears in search results and on ratings Websites has arguably never been more perilous.

One significant figure in the recently altered relationship between businesses and search engines is Vitaly Borker, owner of retail eyewear Website DecorMyEyes.com, who told the New York Times in November that his unconventional search engine optimization (SEO) strategy worked like a charm: Borker harassed customers, directing them to vent on the Internet. His Website thus climbed higher in Google's search results, bolstered by the many links from established review Websites.

Google immediately reworked its code and buried DecorMyEyes along with other businesses it deemed "bad." Now that Google no longer rewards bad customer service with top spots in searches, it's a good time to examine how your business can get more positive attention in legitimate ways.
Should You Pay for Online Reputation Management?

Deciding to take control of your online reputation is a daunting task, and you may be tempted just to hire someone to do it for you. Online reputation management companies abound on the Internet--claiming everything from 100 percent success rate (or your money back) to a "special technology" that reorders search results.

Such companies may be worth looking into, but there is no magical way to erase content from the Internet. Once something is uploaded to the Web, it's impossible for you or a third party to remove it without help from the administrator of the Website where it appears.

It's even harder to remove content from search engines (like Google) that cache their results and enable surfers, with the click of the Cached link, to view content that has been "removed." In addition, the Internet Archive's Wayback Machine stores records of Websites dating back to the 1990s.

Organizations such as ReputationDefender, RemoveYourName, and Integrity Defenders offer business packages to help you take on your online reputation. Essentially, however, these services focus on two tasks: requesting that negative information about you or your company be taken down, and helping you create new content to displace the negative content.

ReputationDefender, which is perhaps the best-known reputation-oriented service, charges between $3000 and $10,000 to monitor your reputation. RemoveYourName and Integrity Defenders are a bit cheaper; their packages start at $3000 and $630, respectively. Often the quoted prices are just a starting point. ReputationDefender charges extra, for example, for helping you get rid of unsavory remarks that they uncover.

Here are some key points to remember if you decide to hire an online reputation management company:

    * Weigh any negative reviews of the company more heavily than you normally would. Remember, these companies are in the business of defending and rehabilitating reputations; if 10 "bad" reviews of their own service get through, imagine how many others they may have buried.
    * No company has the magical power to automatically remove negative reviews from the Internet.
    * Consider the benefits of a service that charges monthly versus a flat-fee service. Monthly services, such as BrandsEye, will constantly monitor your reputation. Flat-fee services, such as RemoveYourName, will spend as much time as it takes to get results. If you're looking to remove specific negative reviews, a flat-fee service might be best for you; but if you just want someone to monitor your reputation, a monthly service makes more sense.
    * It's entirely possible that a reputation-monitoring service won't be able to help you, or that the service's efforts may backfire. In the case of Ronnie Segev, ReputationDefender and a blog called The Consumerist ended up in a spitting match after ReputationDefender requested that an article about Segev be removed.

Finance firms shrug off bonus rows to report recovery in business levels

2011-01-09T21:27:00.000-08:00

Despite the controversy over bonus payments, Britain's financial-services sector continued to recover during the final quarter of 2010, a report from the CBI reveals today, with businesses such as banking, insurance and investment reporting strong growth in activity.

The employers' group's data is a welcome boost following a string of reports in the past week that the economy had begun to falter, particularly in December when the cold weather wreaked havoc for many firms, especially in the service sector of the economy.
shedding jobs
The CBI said that 50 per cent of financial-services businesses had reported a growth in sales volumes during the three months to the end of December, while 23 per cent reported a fall. The positive balance, of 27 per cent, was almost identical to the corresponding figure of 28 per cent for the third quarter of 2010.

With financial services not affected by the weather, volumes improved in every part of the financial-services sector in the final quarter. However, the growth was not matched by an increase in profitability, with profits growing at their slowest pace for 18 months, according to the CBI's survey. Many firms also gave warning that they expected to see the pace at which volumes are growing to slow during the first three months of this year.

John Cridland, the CBI's director-general designate, said that the mixed picture and the cautious outlook was a reminder that the economic recovery would continue to be lumpy.

"Activity in the financial-services sector grew strongly over the second half of 2010, but firms see growth slowing over the coming three months, and expect another fairly moderate increase in profitability," he said.

"Numbers employed have fallen significantly and investment plans have weakened since September – this probably reflects renewed cost control given little growth in incomes and slower growth in profitability."

One particular worry is that the recovery in the financial-services sector, as in other parts of the economy, does not seem to be producing any significant boost for the jobs market, with companies instead focusing on keeping costs as low as possible.

In fact, the CBI said that numbers employed in finance fell at the fastest rate since March 1993 during the fourth quarter. The resulting negative balance of 48 per cent of employers shedding jobs as opposed to taking them on reflects that trend. And staff costs now account for a smaller proportion of total costs than at any time for more than 20 years.

One other anxiety is that in the crucial banking sector, many firms are nervous about the increasing cost of regulation – they also insist that while they are able to increase lending, the demand from businesses and consumers is not there, claims reflected in recent Bank of England surveys.

Andrew Gray, UK banking leader at PricewaterhouseCoopers, the accountancy firm that helps the CBI to compile the data, said confidence was improving among banks but said the focus on cost and efficiency levels would continue. "While almost all banks expect compliance spend to climb this year, they intend to reduce overall costs putting headcount under continued pressure," he said.

"Focus on balance-sheet management as the sole priority seems to have come to an end, allowing more focus on market positioning and business retention," he added. "Falling activity with financial institutions suggests some banks are now able to be more self sufficient and have more stable longer-term funding and reduced reliance on the inter-bank market."

'Amazon tax' could push e-commerce out of Illinois

2011-01-07T20:50:00.000-08:00

Both House and Senate lawmakers this week approved House Bill 3659, which now heads to the governor's desk. Dubbed the "Amazon Tax," the legislation requires major online retailers, such as Amazon.com and Overstock.com, to collect the state's 6.25 percent sales tax from Illinois customers.

The state can now collect sales tax from online sales of a business that has an actual brick-and-mortar presence in the state.

But the proposed legislation considers Amazon and Overstock's partnerships with local retailers as their extending arms, and is projected to bring in about half of the $150 million in sales tax the state is now losing out on.

Amazon.com has sent a letter to Illinois-based affiliates stating that it would terminate its partnership once Gov. Pat Quinn signs the bill.

Chicago-based BradsDeals.com, a coupons publisher, says the bill will push e-commerce businesses out of the state.

"Amazon will have the responsibility starting on July 1 to charge sales tax to shoppers in Illinois as long as they're working with small businesses in Illinois," said Brad Wilson, BradsDeals founder. "Unfortunately, preserving the lack of sales tax to consumers is more important to Amazon than working with us."

Other Illinois-based online retailers such as CouponCabin.com and FatWallet.com could lose up to a third of their revenues. And some are actually considering moving their business to another state — a thought not far from the corporate mind of FatWallet.com.

"That could account for a large percentage of our revenue, in order to keep our business going because we make pennies on a dollar," said FatWallet spokesman Brent Shelton. "We'd probably be forced to move the business to another state, where Amazon and Overstock would still be willing to work with us."

A spokesman for the Illinois Department of Revenue predicts lawsuits from major online retailers if the proposal is put in place. But Mike Clemons says the new law will not create a loss of local jobs.

"I think this is legislation that will retain jobs in Illinois, and create jobs in Illinois, because it will level the playing field between your local brick-and-mortar retailer, who has to unfairly compete with the Amazons and the Overstocks of the world," Clemons said.

Web businesses say they'll flee Illinois if sales tax is OK'd

2011-01-06T21:01:00.000-08:00

Some Illinois-based Web businesses were furious Thursday at a legislative plan that would require online retailers, such as Amazon.com and Overstock.com, to collect a 6.25 percent state tax if they have commissioned affiliates in the state.

That puts at risk huge revenue streams for such Illinois-based Web sites as FatWallet.com,CouponCabin.com and BradsDeals.com, which receive much of their commissions from sending customers to major online retailers. Their commissions are at risk because large retailers have shown in the past that they will sever business relationships with affiliates like those to avoid collecting state sales tax, called a use tax in Illinois, on products they sell.The bill, passed Thursday afternoon, needs approval from Gov. Pat Quinn.

"I feel like I've been completely flipped the bird," said Tim Storm, chief executive of FatWallet, based in Rockton, near Rockford. "Essentially, 30 to 40 percent of our revenue gets shut off instantaneously."

"The reality is that as a business owner with 52 employees, we're not going to just get shut down because of a law Illinois passes. Our customers don't care whether we're in the state of Illinois," he said.rad Wilson, founder of BradsDeals, in Chicago, said about half his revenue would be in jeopardy, along with 20 jobs at his company.

"We don't have much choice. If this is going to stick, we literally can't physically be in Illinois," Wilson said. "My wife is from Cleveland and would be thrilled if we moved back there. That's the kind of thing that's going through my head."

Though consumers are technically supposed to pay sales tax on Internet purchases via their state income tax forms, few do. That amounts to a built-in discount for consumers and a competitive advantage for online retailers who sell to them.

Currently, only online retailers that have a physical location in Illinois — a retail store, headquarters or warehouse, for example — have to collect state tax at checkout. The new law, which would take effect July 1, would define online retailers as having a physical location in Illinois if they have affiliates in the state.

"The point is that someone is supposed to be collecting this tax," said John Patterson, spokesman for state Senate President John Cullerton, who pushed for the change. "All other retailers in Illinois have to collect the sales tax. They're at a competitive disadvantage from online retailers.

"The motivation is to create some tax fairness among retailers in Illinois."

The Illinois Retail Merchants Association supported the bill.Revenue at CouponCabin, in Chicago, would be cut by one-third if the large retailers cut it off, said Scott Kluth, founder and president. He said he was dismayed that the bill was hurried through the Legislature.

"It was disheartening that this bill was passed by both houses in 30 hours without a full and fair opportunity for the voice of Illinois small businesses to be heard," he said. "Unfortunately, this bill will do significant harm to our growth."

Illinois affiliates were notified this week by some large online retailers that they would cut off business relationships if the bill became law. One letter from Overstock to BradsDeals read, "We are writing to inform you that if (House Bill) 3659 passes, Overstock.com will have to end our relationships with all Illinois-based affiliates before the bill becomes law. … Only three states have passed these laws, and in each … our response, and the response of most large Internet retailers, was to terminate affiliate services in those states."Wilson said he got a similar letter from Amazon.

The bill applies only to affiliates that have at least $10,000 a year in revenue. But if large retailers, such as Amazon, cut off all affiliates in Illinois, it would end commission streams to small Web sites, such as bloggers, who might sell Amazon goods at their sites. Amazon could not be reached for comment.

The bill would not affect Groupon, the wildly successful Chicago-based daily-deal site that offers discount certificates, mostly for use at local businesses, said spokeswoman Julie Mossler. Use tax is handled by merchants at the point of redemption, she said.

The roar of the business dinosaur

2011-01-05T20:33:00.000-08:00

“If you can outsource my job overseas, I can outsource my shopping there too” was one of the many angry online reactions to the latest phase of a campaign by some of Australia’s largest retailers to reduce GST thresholds on imported goods.

This campaign started last year with Harvey Norman co-founder Gerry Harvey and Myer CEO Bernie Brooks threatening to setup Chinese-based online stores to overcome the claimed tax and tariff disadvantages of Australian retailers.

At the time there was little sympathy for this view and the latest campaign from the retailers has attracted even less support from consumers quickly pointing out the main reason for going online are the poor sales experiences and high prices on offer to from Australia’s larger shopping chains.

In Australia and globally we’re seeing two contradictory trends happening – a move to commoditised, global markets driven mainly on price and niche markets based around convenience, locality and service – the Internet drives both of these to some extent but globalisation and changing customer behaviour have also played their part.

For the last decade the retailers have chosen to ignore these changes. Gerry Harvey proclaimed two years ago that online retailing was “a waste of time” while both Myer and David Jones shut down their online services when it became apparent their competitors had been seriously wounded by the dot com crash in 2001.

The demise of many online traders in the post-2001 tech wreck gave the major retailers nearly ten years breathing space to build their online presences and anticipate the return of e-commerce. Instead Harvey Norman stuck with their cheap credit strategy, Myer with their perpetual discounting model and David Jones with their aura of exclusivity.

In the meantime, the online traders learned their lessons and rebuilt their businesses. Amazon expanded from books to everything, online auction sites became popular and new business models like the “deal of the day” websites came along. At the same time, consumers and overseas retailers became relaxed about accepting payments and dispatching goods overseas.

Now the retailers realise they should have adapted while the going was good. That they are reduced to special pleading to the government indicates the bind they now find themselves.

Strangely, were the shopping magnates not complaining about GST but about many of the other problems faced by the retail sector, such as high wholesale costs and rents, they’d probably be a lot more sympathy.

Australian commercial rents are excessive as we see with Sydney’s Pitt Street Mall regularly being listed as having some of the most expensive shopping rents in the world and shopping centres in other cities, suburbs and regions aren’t far behind central Sydney. This all feeds into the cost structures of our retailers.

Wholesale markups by distributors and licensees are probably the biggest problem for Australian retailers competing against foreign online stores, that brand names are a third or a quarter of the price in Europe, Asia and North America illustrate just how rapacious the entire supply chain is.

Those supply chains too shouldn’t be overlooked, either. The ACCC and successive Federal governments have allowed our industries to consolidate into two major players; in supermarkets, breweries, logistics companies, agriculture and many other fields we’ve seen a lessening in competition and innovation, which has pushed up costs to the Australian consumer.

Hopefully the Productivity Commission inquiry will look at these aspects as well as the effects of the Internet on the retail sector.

Whatever the government discovers, it’s not going to get better for the retail industry: location aware services, recommendation engines and virtual reality equipped smartphones are already changing the travel and hospitality industries with the retail sector beginning to feel the early effects of these technologies.

All of this isn’t to say that the future of retail is dismal, there are many innovative stores, both new and established, using the Internet and providing the service, range and experience Australian customers deserve from their shops.

Just last month a Sydney butcher won an international design prize for their shop fit out, likewise many smaller retailers have identified where their strengths lie and how they can use them to grow their businesses in the face of global, price sensitive competition.

The “Fair Go for Retailers” alliance isn’t really about GST – it’s about middle-aged retailers clinging to a 1980s model of doing business while failing to understand how the economy, society and their markets are changing. Just their miscalculation in the public mood indicates how out of touch these folk are with their customers.

We could dismiss the complaints of the large retailers as being the first dying roars of business dinosaurs who failed to recognize and adapt to a changing market place, this would be a mistake as many other Australian industries are displaying the same willful ignorance of the new economy.

This should be the biggest concern for all Australians: that our employers and those our superannuation funds are investing in are ill-equipped to deal with the 21^st Century. We need business leaders capable of recognizing and dealing with change before more industries follow the big retailers onto the edge of irrelevance.

Business, courts, campuses closed

2011-01-04T21:15:00.000-08:00

All the business centers and markets of the city were closed within half an hour of the sad news of Punjab governor Salman Taseerís assassination on Tuesday, in order to avoid any untoward incident.

Afterwards, the Lahore district coordination officer also requested the business community to close their shops voluntarily.

Talking to The News, Waqar Ahmad, who was shopping with his family in Shah Alam market, said, ‘We were surprised to see shopkeepers close their shops. We thought some major incident had taken place. Soon, we learnt from shopkeepers the news of the murder of the governor.’

Mall Road Traders Association leader Raja Riaz said that their business was hit whenever any such incident took place in any part of the country.

‘Hearing about the killing of Salman Taseer, we abruptly asked the members of the trade body to close their shops without any delay’, he said, adding that, even in the past, shops on The Mall were hit by the protesters many times, causing them huge financial loss.

Irfan Iqbal Sheikh of Qaumi Tajir Itehad (QTI) said that they also had asked their members to close the businesses on the incident of the governorís death. Future line of action would be evolved in a meeting as the governor belongs to the business community of Lahore, he added.

Business centers in the posh localities ñ like the Liberty Market, Model Town Link Road, Cavalry Ground Market (residential area of the governor), M M Alam Road and Defense Markets ñ were also closed within one hour of the sad news.

Meanwhile, the Lahore High Court, its benches and all subordinate courts in Punjab will remain closed on Wednesday after the assassination of Punjab Governor Salman Taseer.

According to a notification issued by the LHC registrar, there would no court work in all courts of the province.

Meanwhile, public and private educational institutions across the province will remain closed on Wednesday while a number of examinations scheduled for today have been postponed.

The institutions will remain closed in line with the Punjab governmentís announcement of a holiday after the assassination of Punjab Governor Salman Taseer in Islamabad. According to Punjab University (PU) controller of examination Prof Dr Zahid Kareem Khan, papers of BCom Part-II and MSc Home Economics supplementary examinations scheduled for January 5, have been postponed. ‘The rest of papers will continue as per the announced schedule,’ he added.

He said new dates would be announced later. Meanwhile, a spokesman of Government College University (GCU) said all exams to be held on January 5 had been postponed and new dates would be announced later.

UET Lahore has also announced a holiday and postponed exams while the Lahore campus of NUML will also remained closed.

The King Edward Medical University (KEMU), Lahore, has postponed all examinations scheduled for January 5.

KEMU Vice-Chancellor Prof Dr Asad Aslam Khan, in a press statement on Tuesday, said that new dates would be announced later. However, he said examinations scheduled for January 6 would be held as per schedule.
All the business centers and markets of the city were closed within half an hour of the sad news of Punjab governor Salman Taseerís assassination on Tuesday, in order to avoid any untoward incident.

Afterwards, the Lahore district coordination officer also requested the business community to close their shops voluntarily.

Talking to The News, Waqar Ahmad, who was shopping with his family in Shah Alam market, said, ‘We were surprised to see shopkeepers close their shops. We thought some major incident had taken place. Soon, we learnt from shopkeepers the news of the murder of the governor.’

Mall Road Traders Association leader Raja Riaz said that their business was hit whenever any such incident took place in any part of the country.

‘Hearing about the killing of Salman Taseer, we abruptly asked the members of the trade body to close their shops without any delay’, he said, adding that, even in the past, shops on The Mall were hit by the protesters many times, causing them huge financial loss.

Irfan Iqbal Sheikh of Qaumi Tajir Itehad (QTI) said that they also had asked their members to close the businesses on the incident of the governorís death. Future line of action would be evolved in a meeting as the governor belongs to the business community of Lahore, he added.

Business centers in the posh localities ñ like the Liberty Market, Model Town Link Road, Cavalry Ground Market (residential area of the governor), M M Alam Road and Defense Markets ñ were also closed within one hour of the sad news.

Meanwhile, the Lahore High Court, its benches and all subordinate courts in Punjab will remain closed on Wednesday after the assassination of Punjab Governor Salman Taseer.

According to a notification issued by the LHC registrar, there would no court work in all courts of the province.

Meanwhile, public and private educational institutions across the province will remain closed on Wednesday while a number of examinations scheduled for today have been postponed.

The institutions will remain closed in line with the Punjab governmentís announcement of a holiday after the assassination of Punjab Governor Salman Taseer in Islamabad. According to Punjab University (PU) controller of examination Prof Dr Zahid Kareem Khan, papers of BCom Part-II and MSc Home Economics supplementary examinations scheduled for January 5, have been postponed. ‘The rest of papers will continue as per the announced schedule,’ he added.

He said new dates would be announced later. Meanwhile, a spokesman of Government College University (GCU) said all exams to be held on January 5 had been postponed and new dates would be announced later.

UET Lahore has also announced a holiday and postponed exams while the Lahore campus of NUML will also remained closed.

The King Edward Medical University (KEMU), Lahore, has postponed all examinations scheduled for January 5.

KEMU Vice-Chancellor Prof Dr Asad Aslam Khan, in a press statement on Tuesday, said that new dates would be announced later. However, he said examinations scheduled for January 6 would be held as per schedule.

UPDATE 2-US business urges Pelosi to not push China bill

2010-10-26T21:18:00.000-07:00

* Top Democrat says China "not playing by the rules"
* House to hold hearing on China currency in September
* Lawmakers to vote on three manufacturing bills next week (Adds Hoyer quotes, background)
By Doug Palmer
WASHINGTON, July 23 (Reuters) - A coalition of U.S. business groups urged House of Representatives Speaker Nancy Pelosi not to include legislation aimed at forcing China to revalue its currency in a pre-election package of bills intended to help U.S. manufacturers.
"We agree that China needs an exchange rate that better responds to global trade flows ... We strongly disagree that legislation is the best means to achieve that goal," the U.S.-China Business Council and about two dozen other business groups said in a letter released on Friday.
House Democrats, in the run-up to the congressional elections in November, have started touting a "Make it in America" agenda aimed at boosting manufacturing jobs.
Bowing to pressure for action on China's currency, which many lawmakers believe is unfairly undervalued against the dollar by 25 percent to 40 percent, the House Ways and Means Trade Committee will hold a hearing on possible legislative options when lawmakers return the week of Sept. 12 from a six-week recess that begins July 31.

"We're prepared to compete with anybody in the world but, we can't compete when the rules are skewed against us and that is what the hearing will address ... We frankly think there are a number of areas in which China is not playing by the rules," House Majority Leader Steny Hoyer told reporters.
Representative Tim Ryan, an Ohio Democrat, is expected to testify at the September hearing on a bipartisan bill he has crafted with Representative Tim Murphy, a Pennsylvania Republican, which has 130 co-sponsors in the House.
It would require the Commerce Department to apply countervailing or anti-dumping duties against countries that are found by the U.S. government to have a fundamentally undervalued exchange rate against the U.S. dollar.
It is similar to a bipartisan bill backed by Senator Charles Schumer of New York and others in the Senate.
"China is unlikely to proceed more quickly with currency reforms if threatened with this action," the business groups said in their letter to Pelosi and Hoyer.
Rather than accomplish its goal of helping U.S. manufacturers, the Ryan-Murphy bill would "likely result in the loss of jobs and market share in many competitive U.S. agricultural, manufacturing and service industries that either operate in or export to China," the groups said.
However, many U.S. steel, textile and other import-sensitive manufacturers say the legislation would help keep jobs in the United States.
The House will vote on three bills next week as part of its manufacturing agenda.
One would require the White House to develop and update a manufacturing strategy every four years.
A second would bar President Barack Obama from submitting any free trade agreement to Congress until a commission established by the bill makes recommendations for cutting the U.S. trade deficit and Congress has held hearings on the ideas.
The third would create a $15 million fund to support the development of a National Clean Energy Export Strategy and provide export assistance to clean energy companies.

Mexico's largest pot bust likely hit Sinaloa gang

2010-10-20T02:35:00.000-07:00

MEXICO CITY – Mexico's largest-ever seizure of marijuana packaged for sale is even bigger than the original estimate of 105 tons and probably belonged to the country's most powerful drug-trafficking cartel, authorities said Tuesday.
The Sinaloa cartel run by Mexico's most wanted fugitive, Joaquin "El Chapo" Guzman, now is moving drugs through the Tijuana corridor "unimpeded," said a U.S. law enforcement official in Mexico, a possible reason why violence has dropped in the city across the border from San Diego, California, since a bloody peak in 2008.
President Felipe Calderon recently praised the city's new calm as a success story in Mexico's drug war.
Many have speculated the drop in violence just means the Sinaloa cartel has cut a deal with remnants of the Arrellano Felix gang, which became one of the country's dominant cartels in the 1990s through control of Tijuana's lucrative land and sea routes leading into California, but has suffered from the arrests and deaths of its top leaders since 2002.
Calderon dismissed the idea of an arrangement in a recent interview with The Associated Press, saying the new calm came in part from government cooperation and the arrests of key cartel leaders.
"The truth is that in the last two years, the government has made important hits on the criminal structures," he told the AP.
But the U.S. official said it was a possibility.
"There could be a pact. We don't know for certain if there is one, what that pact would be. But Sinaloa has been able to operate there unimpeded by other cartels," said the official, who spoke on condition of anonymity for security reasons.
Mexican soldiers and police grabbed the U.S.-bound marijuana in pre-dawn raids Monday in three neighborhoods when 11 people arrested after a shootout led authorities to the drugs.

Army officials first said the drugs weighed 105 tons and had an estimated street value of 4.2 billion pesos, about $340 million. But authorities said the haul was even bigger Tuesday, counting 15,300 packages — 5,000 more than first announced. It weighed 134.2 tons, said Ramon Gomez, a spokesman for the federal Attorney General's office.
By comparison, U.S. authorities seized a total of 123 tons of marijuana during 2009 at all San Diego-area border crossings.
Calderon's security spokesman, Alejandro Poire, agreed the drugs likely belonged to Sinaloa and called it a historic seizure.
"This is an important milestone that demonstrates the ability of the Mexican state when security forces in three levels of government coordinate and take responsibility around a common goal," he said.
But the bust indicates what U.S. Department of Justice figures already show — that marijuana cultivation is up in Mexico since 2005, more than doubling to 21.5 million metric tons in 2008. Marijuana seizures on the U.S. side of the border also have increased from about 1,000 to 1,500 metric tons between 2005 and 2009.
A U.S. State Department report said the decline comes as Mexican security forces focus more harder drugs such as methamphetamines — but also on fighting and arresting the traffickers.
"With the Mexican military changing its role and more actively going after organized crime groups, it could have affected that, stopped crop eradication," the U.S. official said.
Poire denied the Calderon government has backed off of seizures and eradication, saying they are up over the first four years of the previous administration by 100 tons.
"This administration has maintained an important effort in the eradication and confiscation of illicit substances," he said.
The drugs were found stored in tractor trailers and houses wrapped in different colors and labeled with apparently coded phrases and pictures that included the cartoon character Homer Simpson. They appeared to make up a major distribution center traced directly to Guzman, who has expanded the reach of his cartel along the U.S.-Mexico border since escaping from prison in 2001.
The Sinaloa cartel controls distribution in neighboring Sonora state and the city of Mexicali, only 120 miles east of Tijuana. It also controls areas to the east and is warring for control of the border city of Cuidad Juarez, across from El Paso, Texas.

Why Nokia can't crack the U.S. market

2010-09-17T21:18:00.000-07:00

NEW YORK (CNNMoney.com) -- Like soccer and small cars, Nokia is popular everywhere in the world except the United States.

Though that near-global popularity has made the company the clear No. 1 handset maker in the world, the tide has shifted, and Nokia is struggling to keep up with the pace of innovation set by Apple (AAPL, Fortune 500) and a number of Android smartphone manufacturers.

Nokia's market share has slipped to 35% this year, according to IDC. That's down from 48% in 2006, the year before Apple unveiled the iPhone. But Nokia's overall performance is significantly better than its showing here in America. Nokia phones make up just 7.8% of the U.S. handset market, according to comScore, far behind leaders Samsung, LG and Motorola (MOT, Fortune 500).

Nokia's rapidly declining market share and absence of visibility in the United States have led investors to send shares of Nokia (NOK) tumbling 75% since its peak in the fall of 2007.

Those factors combined to create a crisis of confidence at the Finnish company. Days before unveiling its new smartphone lineup, Nokia decided last week to oust its CEO and name a North American replacement: Microsoft's Stephen Elop.
"The appointment of an executive from an American company to the CEO post at Nokia is a good indication of the company's renewed focus on the U.S. market," said Dan Hays, partner at consulting firm PRTM. "One of the core issues for Nokia is the United States."

America is a country that Nokia has historically been unable to play nice with. Unlike wireless providers abroad, carriers here like to exercise some control over the look and feel of the devices running on their networks. Other device manufacturers are willing to collaborate, but Nokia has been unwavering in its insistence on having complete control over both the hardware and software of its phones, Hays said.

Some analysts remain skeptical that much will change, even with the new leadership.

"We always hear from Nokia, 'The U.S. is important to us and we're adjusting our strategy,' but it has never worked," said Ramon Lamas, analyst at IDC. "Hiring Elop doesn't necessarily equate to a renewed North America focus."
Still, the infusion of new blood means just about anything at Nokia is fair game. Struggling in all of its key areas, Nokia needs to take a hard look at each of its strategies and product road maps.

That could mean taking a page from America's playbook and ditching Nokia's own proprietary operating systems, Symbian and MeeGo, for Google's (GOOG, Fortune 500) Android.

Android has a number of advantages, not least of which is the fact that it's free for manufacturers to license. Nokia has devoted tremendous time and resources to improving its Symbian software, and it launched a high-profile partnership with Intel (INTC, Fortune 500) to create a second, separate operating system called MeeGo for high-end phones.

By embracing Google's Android operating system, Nokia could follow in the footsteps of Motorola, which struggled to make a winning device to replace its top-selling RAZR until it ultimately adopted Android for its Droid smartphone.
But analysts think that moving to Android is almost entirely out of the question for Nokia. The yet-to-be-released MeeGo has a growing wave of developer support and momentum behind it, and Symbian remains popular among its users.
Plus, ditching its proprietary software would leave Nokia scrambling to stand out in a crowded field.

"Nokia is the market leader, and as such it cannot do what everyone else does," said Carolina Milanesi, analyst at Gartner. "Nokia has spent too much money and resources to get to where it is today."

For all those resources, the most crucial issue facing Nokia is that its phones just aren't all that great. Nokia is way behind its rivals on innovations like touch screens, thin materials, and design. If Nokia was satisfied with its phone lineup, why would it overshadow the much-hyped N8's unveiling with a management shakeup?

The real lesson Nokia should learn from America, say some in the industry, is that it needs to make its phones high-quality vessels for great applications. That's what ultimately made the iPhone take off, and that's what's fueling the Android surge as well.

"Nokia certainly doesn't need North America to survive or even thrive, as the real growth is being generated in emerging markets where Nokia's brand remains strong," said Andy Castonguay, analyst at Yankee Group. "But if it could harness some of the innovation being generated by U.S. app developers, together with a sharp portfolio of smartphones and a more dynamic OS, Nokia can still turn it around."

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What happened to Europe's collapse?

2010-09-17T21:15:00.000-07:00

FORTUNE -- Sherlock Holmes said it best. In Arthur Conan Doyle's classic story "Silver Blaze," about the disappearance of a champion racehorse, there is an exchange between a Scotland Yard detective and Holmes:

"Is there any point to which you would wish to draw my attention?" asks the detective.

"To the curious incident of the dog in the night-time," replies Holmes.
"The dog did nothing in the night-time," says the detective.
"That," says Holmes, "was the curious incident."

Europe, this summer, has been curiously full of dogs doing nothing. Just a few months ago, in the wake of Greece's sovereign-debt crisis and the long, muddled response to it by European political leaders, it was common to hear dire predictions about Europe's economic prospects. Pundits declared that the euro -- the currency shared by 16 countries -- was fundamentally flawed; economies that differed widely in competitiveness could not indefinitely have a common monetary policy when they neither shared a common labor market nor kept to agreed-upon rules on fiscal policy.

The euro was bound to continue its recent fall against the dollar. Europe's highly indebted economies -- the famous PIIGS, or Portugal, Ireland, Italy, Greece, and Spain -- could satisfy the bond markets only if they made drastic budget cuts and reformed their sclerotic labor markets, which in turn would lead to massive public resistance and political crises.

Yet here we are, as the evenings lengthen, and ... no dog has barked. The euro has been strengthening against the dollar. Europe's political commitment to the single currency remains as strong as ever. There has been remarkably little labor unrest in Greece since the spring, nor in Spain, where the government adopted a tough austerity package that included wage cuts for public servants. In Britain the new coalition government has set out radical proposals for tax increases and expenditure cuts designed to shrink the public deficit from 11% of GDP now to 2.1% in 2014-15. Yet Prime Minister David Cameron remains popular, with Britons willing, it seems, to happily trade a silk jacket for a hair shirt.

There is, of course, an easy explanation for the apparent acquiescence in European public opinion: summer! Europeans had the World Cup to enjoy in June and July, and always have better things to do in August than hold protest marches against austerity. Now that everyone's back from the beach, we'll see the political backlash, right?

I'm inclined to think not. The truth is that the European economies are doing better than expected. Everyone knows about Germany's stellar performance this year, with an unemployment rate now lower than it was in summer 2008 (in the U.S. it is 3.5 percentage points higher), while growth in the second quarter was the best quarterly figure for 20 years.

But there are some bright spots in Europe's peripheral economies too. Consider Ireland. Given troubled banks, a debt downgrade, and high unemployment -- the July rate of 13.7% was the worst since 1994 -- you might think there was no good news there. But Barry O'Leary, chief executive of IDA Ireland, the nation's investment agency, says that there has been a significant "repricing of the economy" since the Great Recession bit. In 2009, Irish public sector pay was cut as an austerity measure, and O'Leary says private sector salaries have followed suit, with reductions of 10% to 15%.

The IDA is now once again seeing investors who want to develop manufacturing capabilities in Ireland, the sort of labor-intensive operations that had lately seemed destined to always go Asia's way.

I don't want to sound as if my brain's been addled by too much time on a sun-kissed Greek beach. (I wish.) It's the easiest thing in the world to trot out the challenges that face Europe over the coming decades: aging populations and inflexible labor markets; the need for the German export powerhouse to expand domestic demand; distinct national consumer preferences and regulatory regimes that stop companies from taking good ideas to a global scale -- that list has been the same for 20 years. And so has this truth: Europe remains the world's most populous area of widely distributed prosperity, long life, and good health. They're doing something right over there. Long may the dogs not bark!

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Consumer bureau: More disclosure, fewer hidden fees

2010-09-17T21:13:00.000-07:00

WASHINGTON (CNNMoney.com) -- With Elizabeth Warren as an adviser, the new Consumer Financial Protection Bureau is officially en route to becoming a tough new regulatory body on behalf of consumers.

The set-up process is expected to take 10 months, with an official launch date of July 21, 2011, according to the Treasury Department.

What can consumers ultimately expect? More disclosures and fewer hidden fees.
"The time for hiding tricks and traps in the fine print is over," Warren said on the White House Website.

The Consumer Financial Protection Bureau was the signature piece of the Wall Street reform bill that Congress passed and the president signed into law in July.
The new regulatory bureau will be independent. It will have the power to create rules curbing unfair practices in mortgages, credit cards and a plethora of consumer loans issued by banks and payday lenders, private student loan lenders and check cashing companies.

"Financial innovation has not resulted in simpler, better products, it's resulted in more complicated products," says Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group. "Consumers are going to know that there's someone who's got their back and help them wade through the financial morass."

Obama names Warren as special adviser

The agency has already hired 36 staffers and has a hearing scheduled Tuesday, soliciting expert opinion on creating a simplified mortgage disclosure firm, which the new law requires, said Treasury spokesman Steven Adamske.
Here are some of the things that the bureau is slated to tackle when it gets set up.

Simpler mortgage disclosure forms: The new law requires the agency to set up a standard type of mortgage disclosure form. Lenders won't be required to offer the form, but they may have incentives to use the simpler forms.

Overdraft fees: The regulator will have the power to craft new rules that would make it clear what kinds of fees banks can and can't slap on consumers who overdraw their accounts.

Credit scores: All consumers have been able to get one free credit report a year from the credit rating agencies. But the law allows a consumer to get an actual credit score along with a report, and the agency will oversee that.

Ban on 'liar loans': The regulator would be charged with ensuring lenders are documenting borrowers' income before originating a mortgage and verify a borrower's ability to repay the loan.

Pre-payment penalty fees: The law requires the consumer bureau to crack down on penalty fees consumers often face when they pay off mortgages early.

Mandatory arbitration contracts: Many mortgages, credit cards, gift cards and auto loans force the buyer and seller to hash out disputes before a neutral party called an arbitration panel. These arbitration contracts prevent disputes from going to court, with an eye toward forcing parties to work things out and cut down on lawsuits. The act directs the agency to study the contracts while giving it power to ban them as well.

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Gold hits record high ... again

2010-09-16T21:31:00.000-07:00

NEW YORK (CNNMoney.com) -- Gold prices surged to new record highs on Thursday, continuing a rally started earlier in the week.

Gold futures for December delivery rose $5.10 to close at a record high of $1,273.80 an ounce in New York. That topped the previous all-time high closing price of $1,271.70, which came on Tuesday. Earlier in the day, contracts were trading even higher, at $1,279.50 an ounce.

Typically seen as a safe haven, gold is the ultimate currency for many investors. It involves the lowest risk because it is a tangible asset, and shows the highest upward price potential during times of stock and currency volatility.

Uncertain financial markets, weak economic conditions and the stressful political conditions of the mid-term elections are the main causes for rising prices, said Carlos Sanchez, a precious metals analyst with CPM Group.

And today's record might just be the beginning, with no sign of any of these worries easing up. Sanchez said gold prices will likely keep rising through the first quarter of next year. "The next level is $1,300 -- possibly by the end of this month. And I would not be surprised if it heads up to $1,400 by the end of this year."

Additionally, with the flood of U.S. dollars in the market and serious concerns over European countries' ability to back up debt obligations -- not only investors, but countries such as China, Russia and Egypt are buying gold.

While gold prices hit a record on Thursday, they were still a far cry from their real peak, as measured in dollars adjusted for inflation.

Gold hit its summit on Jan. 21, 1980, when it peaked at $825.50 an ounce -- in 1980 dollars. That translates to an all-time peak of $2,184.08 an ounce in 2010 dollars.
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Hurd: 'No company better positioned than Oracle'

2010-09-16T21:24:00.000-07:00

NEW YORK (CNNMoney.com) -- Mark Hurd, Oracle's new co-president, praised Oracle's strong first-quarter financial performance on Thursday and forecast a very bright future for his new employer.

"I see clear growth opportunities going forward," Hurd said on a conference call with analysts, one of his first public appearances on Oracle's behalf. "There is no other company in the industry better positioned than Oracle. There is no one else in the market with the software and hardware assets that can match Oracle."

Hurd, who was hired last Monday, kept things light and on-message during the call, steering clear of the controversy that has engulfed his short tenure at HP's competitor. HP (HPQ, Fortune 500) is suing Hurd for breach of contract, and IBM (IBM, Fortune 500) CEO Sam Palmisano criticized Hurd this week for slashing research and development spending while heading HP.
The only sparks on the call came from Oracle CEO Larry Ellison, who tore into archrival SAP for its "colossal mistake" in daring to challenge Oracle's software strategy.

"Fusion will be redone 100% in Java," Ellison said, referring to Oracle's new software platform. "SAP is going to compete with us using their 25-year old technology. Good luck."

Oracle reported strong, double-digit sales and profit growth in its first-quarter, on the back of rising demand for business software and servers.
New software license sales rose 25% and license updates rose 12%, a signal of robust demand for Oracle's products.
"I've been doing this a long time," Hurd said. "Twenty-five percent license growth is a big number."

Oracle Co-President Safra Catz called the license renewals "frankly outstanding.
Though Oracle is known for its business software products, the company's executives and analysts spent the majority of the call focusing on the company's integration of Sun Microsystems, which is predominantly a server maker. Oracle completed the $7.4 billion Sun purchase in January.

Ellison noted that analysts and investors have expressed a lot of concern about Oracle going into the hardware business, so he recapped the company's achievements so far and outlined plans for the future.

Oracle has already made Sun profitable by discontinuing sales of products that weren't making money, and by streamlining Sun's operations, he said. As an example, Ellison pointed to Oracle's reduction in the number of Sun's contract manufacturers.

"To quote one of our great presidents, 'Mission accomplished,'" Ellison said. "We think it's going to become more profitable over the fiscal year."
The brash CEO also set ambitious goals for Sun. Oracle thinks it can double the size of its hardware business. Next week, at Oracle's OpenWorld conference, the company plans to announce new high-end systems that combine Sun's hardware with Oracle's software offerings.

By the numbers

Oracle had a very solid financial performance in quarter ended Aug. 31. Net income rose to $1.4 billion, or 27 cents per share, up 20% from a year earlier.
Results included one-time charges totaling 15 cents per share. Without the charges, Oracle said it earned 42 cents per share. Analysts polled by Thomson Reuters, who typically exclude one-time items from their estimates, forecasted earnings of 37 cents per share.

Sales for the Redwood City, Calif.-based company rose 48% to $7.5 billion, topping analysts' forecasts of $7.3 billion.

For the current quarter, Oracle said it expects sales to increase by 43% to 47% and earnings per share of between 45 cents 47 cents, excluding one-time benefits or charges.
Shares of Oracle (ORCL, Fortune 500) rose 4% after hours. The company's stock has been on a tear lately, rising 11% since Hurd came on board
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Stocks stuck in a rut

2010-09-16T21:22:00.000-07:00

NEW YORK (CNNMoney.com) -- On paper, investors have plenty of reasons to get off the sidelines. The jobs landscape has been improving, manufacturing has expanded for 13 straight months, and other economic reports have been pointing to steady growth.

But company hiring reports have been mixed, leaving investors confused. On Thursday, FedEx said it would cut jobs, while Boeing said the industry needs to ramp up hiring. Small business hiring is similarly mixed. Stocks have drifted on this muddied picture, trading in a narrow range.

On Thursday the Dow Jones industrial average (INDU) rose 22 points, or 0.2%, to end at 10,594.83. The S&P 500 (SPX) was flat at 1,124.66 and the Nasdaq (COMP) added 2 points, or less than 0.1%, to close at 2,303.25.
Indexes had been down slightly for most of the day, but they rose modestly in the last hour of trade. Banking, energy and housing shares ended mostly lower, while tech and retail shares turned higher.

September is a historically down month for stocks -- but they started out the strong, with a rally in the first three trading days as the government's monthly jobs report showed improvement. As more data have come out this month, though, movement has slowed.

"We're entrenched in the same patterns recently," said Stephen Carl, head equity trader at Williams Capital Group. "Data aren't pushing us one way or the other."
Investors remained nervous Thursday about Japan's intervention in the currency market. On Tuesday, the nation's government said it would buy up yen in an attempt to curb deflation.

The yen purchase boosted the U.S. dollar, which helped lift stocks Wednesday. But it also kept uncertainty about the recovery at the forefront of investors' minds, sending gold prices to new record highs. The precious metal is considered a "safe" spot to park cash during times of uncertainty.

The Fed's gold problem

Economy: The Labor Department's weekly report on initial jobless claims showed 450,000 people filed for first-time unemployment benefits last week. Economists expected 460,000 new claims.
Initial claims have been stuck in a tight range since November, and economists say there's little reason to celebrate the recovery until weekly claims head below the 400,000 mark.

The producer price index also came out before the bell. The reading of inflation at the manufacturing level rose 0.4% in August, versus an increase of 0.2% the prior month.

RealtyTrac said the number of homeowners falling behind on their loans -- enough to attract initial notices of default -- fell 30% in August. The lower rate should translate into fewer people losing their homes, but the report also showed lenders repossessed a record 95,000 homes last month.
The Philadelphia Fed Index showed the region's manufacturing activity contracted slightly in September, due to a drop in new orders. But hiring has picked up this month.

The Senate passed a $42 billion bill aimed at helping small businesses. The Senate's version of the Small Business Jobs Act will now have to go back to the House, where it's expected to pass, before President Obama can sign it into law.

Retirement investing: Don't abandon stocks

Companies: FedEx (FDX, Fortune 500) said it expected to see moderate growth in the global economy, but the shipping company will still cut 1,700 jobs.
FedEx, which is considered a bellwether for the global economy, also reported fiscal first-quarter earnings of $1.20 a share. That's a penny below analysts' estimates, but still up 57 cents from a year earlier. The company raised its outlook but that still fell short of forecasts. FedEx shares fell to end 3.8% lower.

oeing said the airline industry will need to hire more than 460,000 pilots and almost 600,000 maintenance workers over the next 20 years, to meet growing demand in the airline industry. The company predicted the industry as a whole will need to hire more than one million workers over the same time period.
Microsoft (MSFT, Fortune 500) said its new video game "Halo: Reach" earned $200 million in sales on its launch day. The company will start selling Kinect, a full-body motion-sensing game system, on November 4.

After the bell, Oracle (ORCL, Fortune 500) reported a quarterly profit and sales that beat Wall Street's forecasts. The corporate software company said its net income in its fiscal first quarter rose to $1.4 billion, or 27 cents per share, up 20% from a year earlier. Sales rose 48% to $7.5 billion.
Oracle shares rose 3% in after-hours trade.

BlackBerry maker Research in Motion (RIMM) reported quarterly profit that beat analysts expectations and issued an upbeat forecast. The Canadian company reported net income of $796.7 million, or $1.46 per share in its fiscal second quarter. Sales increased 31% over the quarter to $4.62 billion.
The figures easily topped estimates, and RIM shares surged 8% in after-hours trade.

World markets: Asian markets closed lower. Japan's benchmark Nikkei index fell 0.1%, and Hong Kong's Hang Seng index fell 0.2%. The Shanghai Composite sunk 1.9%.

European shares ended lower. The CAC 40 in France lost 0.5%, Germany's DAX fell 0.2%, and Britain's FTSE 100 slipped 0.3%.
Currencies and commodities: The dollar fell against the euro and the Japanese yen, but posted slight gains against Britain's pound.
Oil futures for October delivery fell $1.45 to settle at $74.57 a barrel.
Gold futures for December delivery jumped to a fresh record intraday high early Thursday of $1,279.50 an ounce. That trumps the previous intraday record of $1,276.50 an ounce, which was just set on Tuesday.

The precious metal also hit a settlement record, closing at $1,273.60 an ounce. Gold has gained traction as investors turn to it as a "safe haven" play in times of economic uncertainty. For that reason, the precious metal is an indicator of investor sentiment.

Bonds: The yield on the 10-year Treasury note rose to 2.76% from 2.72% late Wednesday.

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Avandia: a PR mess for Glaxo, but not a financial one

2010-09-15T22:01:00.000-07:00

FORTUNE -- GlaxoSmithKline is on the hook for Avandia, a drug that helps diabetes patients regulate blood sugar levels, but also causes heart problems. Critical reviews in major medical journals have repeatedly challenged its safety, and mainstream media have picked up on the studies in scathing articles. GSK has tried to defend the drug from the attacks, but there's only so much the company can do.

Yet the outcry against Avandia's safety issues probably won't reach Glaxo's pocketbook. Unless someone, like one of the thousands of plaintiffs suing Glaxo, (GSK) funds a big, expensive, technically difficult study, the drug-maker is probably in the clear.

Most recently, Avandia has come under fire in the British Medical Journal, which claims the drug never should have reached the market in the UK. The authors outline all of the reasons why the British regulatory body called the European Medicines Agency should pull the drug.

This is the latest of a long history of legal problems for Avandia, starting in 2007 with a study co-authored by a well-known cardiologist Steven Nissan. Nissan looked back at studies that GlaxoSmithKline had done about the efficacy of the drug, and sifted through the data to see if patients taking Avandia had suffered an unusually high rate of heart attacks. He found that they did.

The FDA called the first Avandia advisory panel in 2007. After hearing the panel's advice, the regulator ruled that the drug should stay on the market with more warning labels. The FDA also demanded that GlaxoSmithKline foot the bill for an in-house study to see whether Avandia increased the risk of heart attacks.

Sales of the drug plummeted in 2007, due to the controversy. Revenue has since plateaued, keeping Avandia as a money-maker for Glaxo, raking in a little over a billion dollars a year. That's about a third of the revenue it generated as a top-blockbuster when it was first released in 1999.

In 2009, more evidence cropped up in the case against the drug maker -- some of it suggesting that Glaxo knowingly skewed data that would have revealed Avandia's dangerous side effects. This past July, the FDA assembled a panel of 33 experts to advise whether or not to pull the drug. The recommendation was soft.
"The panel seemed to take the easy way out by just saying, 'label it more and let everybody figure it out,'" says Les Funtleyder a health-care analyst at industrial trading firm Miller Tabak + Co.

Post-patent Avandia
Glaxo will lose its patent for Avandia in 2012, and the company will probably fight for the drug to the end, despite its dangers, because that's simply what drug companies do. Even if Glaxo bowed to reality, throwing in the towel on fighting to extend the patent would probably be fodder for victims' lawsuits. Either way, the fight doesn't make Glaxo look good. "If it turns out to be as dangerous as the people say it is, then Glaxo is just raising the litigation bar in the future," Funtleyder says.

Even after Glaxo eventually loses the patent (all drugs eventually 'go generic' thanks to federal laws meant to lower the price of health care) the company could have to deal with problems discovered about the drug in the future, especially since the Avandia brand will probably stay on the market after 2012.
"They must believe they can weather the storm and still make money," says Robert Green, a pharmaceutical intellectual property lawyer with Leydig, Voit & Mayer.

Glaxo is still making off of Avandia now. Its half-billion dollars in sales last year in sales still translates to almost $1.5 million a day, which should cover legal fees for settling lawsuits. As for weathering the storm, Glaxo is in a good situation, in some ways. The drug has been pummeled for so long that shareholders have numbed to fluctuations in the revenue stream. "I think maybe investors have gotten Avandia distress fatigue," Funtleyder says.

The new paper in the British Medical Journal probably won't jolt them out of it. "You'd actually need something quite a bit more to shock everybody-you almost need a smoking gun," says Funtleyder.

It will be difficult to find one. Even the most damning third-party study, which is Nissan's from 2007, wasn't a controlled trial designed to study to study the drug's risk of causing heart attacks. GlaxoSmithKline never did one before the drug was launched.

You could argue that they should have, but there was no real incentive. It's true that the Actos and Avandia are both derivatives of a drug called troglitazone, which was pulled from the US market in 2000 because it caused liver and heart problems in patients. But the compounds in Actos and Avandia are chemically different enough from troglitazone that there is no legal requirement to study whether they cause similar problems.

Regulators only have weak data by which to make decisions about Avandia. In 2007, the FDA mandated that GlaxoSmithKline design a study to test whether Avandia increased risk for heart attacks. They did, but it was flawed. In an internal memo, FDA official Thomas Marciniak admitted that the FDA did not review the study design before it was launched. "If we had, we would have judged it to be unacceptable."

It's difficult to design a trial to test the effectiveness of diabetes medication. For one, people participating in the trial already have a high risk for heart attacks. "It takes a fairly significant patient study to show there's a nexus between things like increased heart attacks and consumption of the drug," Green says.

You would need a randomized, controlled trial looking at risk of heart problems between two patient groups-one taking Avandia, and a control group taking a regimen of diabetes drugs in a different class. No one has done that. No one probably will.

The closest that could happen is something called the TIDE trial that GlaxoSmithKline started in 2007. It compared Avandia with another drug made from a similar compound, called Actos.

"The TIDE trial is the only ongoing GSK-sponsored clinical trial with rosiglitazone [Avandia's active ingredient]. It is a gold standard, large, controlled, prospective, cardiovascular outcome study comparing rosiglitazone to pioglitazone [Actos] and will provide the best evidence regarding the comparative cardiovascular safety of rosiglitazone and pioglitazone," says Mary Anne Rhyne, the director of US media relations for GSK.

But TIDE is a non-inferiority study. This means that the trial is not designed to test whether one drug is better, but to test whether one drug isn't worse. These trials are weaker. In fact, the Government Accountability Office recently reviewed this study design and found it necessary in some cases, but lacking.

Second, the study compares two drugs of the same class. A study completed by health insurer WellPoint Inc found that both drugs increased the risk of heart attacks in patients by the same rate. The study looked at insurance claims filed by patients, and didn't compare the drugs against a control group receiving a placebo, or to a control group receiving a different treatment regimen. That means a problem with this entire class of drugs would not show up in the study.
Perhaps for these reasons, the FDA halted the TIDE study in July. In the meantime, both drugs are still on the market.

By the time the TIDE trial picks up again, if it does, the results won't come out until after Glaxo loses Avandia. It will be much easier for the company to wean itself off of the money it's making on Avandia when the drug is facing competition from generics.

The window of opportunity to punish Glaxo for marketing a drug with dangerous side effects will also have probably passed. The only hits the company will take is to its reputation, and investors will likely forive all the next time Glaxo can push another blockbusters through its pipeline.

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Obama slams GOP on taxes, small business aid

2010-09-15T21:58:00.000-07:00

CNN -- President Barack Obama tore into GOP congressional leaders again Wednesday for trying to block his small business aid bill and opposing his plan to extend the Bush tax cuts only to those making under $250,000.

Flanked by his economic team at the White House, the president specifically thanked GOP Sens. George Voinovich of Ohio and George LeMieux of Florida for breaking with the Republican leadership on the small business bill.

The two senators helped the $42 billion measure clear a key procedural hurdle on Tuesday, setting it up for final passage.

They understand "we don't have time to play games" anymore, Obama said.
The measure is expected to create 500,000 jobs, according to a summary of the bill from the Senate.

Among other things, it would authorize the creation of a $30 billion fund run by the Treasury Department that would deliver ultra-cheap capital to banks with less than $10 billion in assets.

The idea is that community banks do the lion's share of lending to small businesses, and pumping capital into them will get money in the hands of Main Street businesses.

Obama said he is "grateful" that Congress is now on the verge of passing the bill -- which had been stalled until the two senators broke from GOP leaders -- but he added that it "should not have taken this long."

The president also said Republican leaders are holding "middle class tax cuts hostage" by refusing to sign on to his plan to allow the Bush tax cuts for wealthier Americans to expire.

Bush tax cuts: What you need to know

Republicans have repeatedly expressed their opposition to any tax hikes in light of the weak economic recovery. They've asserted that allowing taxes to rise on those making over $250,000 would result in a hit on small businesses.

All of the Bush tax cuts are currently set to expire at the end of this year.
--CNN's Alan Silverleib and Catherine Clifford contributed to this report.

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High supply, low demand: Oil prices under pressure

2010-09-15T21:55:00.000-07:00

NEW YORK (CNNMoney.com) -- As the U.S. dollar gains strength and crude inventories remain high amid low demand, oil prices are coming under pressure.

Prices are down slightly this week, sinking 1% Wednesday after the Japanese government announced it would sell yen and buy U.S. dollars in an attempt to rein in its rising currency.

The nation's move to intervene in the currency markets pushed the greenback up more than 3% versus the yen early Wednesday, sending oil -- which is priced in U.S. dollars -- sharply lower.

Supply glut?: Meanwhile, traders continued to worry about a glut in inventories.
A report late Tuesday from the American Petroleum Institute showed an unexpected build in crude supplies last week, while the more closely-watched inventory report from the Energy Information Administration showed that supplies fell.

The EIA said crude inventories, which remain "above the upper limit of the average range for this time of year," fell 2.5 million barrels last week, slightly more than the 2.25 million-barrel drop that analysts had forecast.
Despite a weekly dip in supplies, oil inventories are hovering at the highest levels since the 1990s, said James Williams, president of WTRG Economics.

What peak oil? Why an oil glut is ahead

"Our inventories across the board are very strong, and in addition to that, this is one of the two low demand seasons of the year -- when driving season is over and the heating season hasn't started," said Williams. "So the overall fundamentals point to lower prices."

Pipeline replacement: Expectations that a 670,000 barrel-a-day pipeline, shut over the weekend by Enbridge Inc., would soon resume normal service also pressured prices.

The pipe runs from Wisconsin to Indiana and is one of three pipelines owned by Enbridge that has been closed this summer due to leaks. The closures have caused gasoline prices to spike throughout the Midwest.

"It doesn't look like it's going to be long before they have this one back up," said Williams. "After taking into consideration the oil diverted through other pipelines around it, we're talking about a net loss of about a quarter of a million barrels a day, so that being replaced is helping prices move lower."

Economic jitters: On top of high supply levels and a stronger dollar, concerns about the global economic recovery haven't gone away. As economic reports about the U.S. economy and abroad continue to send mixed signals, oil will likely hover in a range of $70 to $80 for the rest of the month.

"Crude oil moves with the stock market, and you have a market that has a lot of uncertainty in it," said Williams. "One day it's 'Oh, everything's going to be better," and the next day you read about housing sales or something else and you think, "Oh no, this will never stop.'"

"Clearly we're in anything but what you would call a solid recovery, and the biggest threat to oil prices is a double-dip recession," he added.

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Gold glitters at record high

2010-09-14T21:20:00.000-07:00

NEW YORK (CNNMoney.com) -- Gold surged to a new record high Tuesday, as uncertainties about the global economy sent some investors flocking to the save-haven precious metal.

Gold futures for December delivery, the most actively traded contract, rose $24.60, or 2%, to settle at a new record high of $1,271.70. That topped the previous record of $1,264.80 reached on June 21.

Gold is often seen as the ultimate low-risk asset because it is tangible and unlike currencies, it isn't tied to any one country's policies.

A number of global headlines were fueling the flight to safety on Tuesday, said Phil Flynn, senior market analyst with PFG Best.

Investors are concerned about how banks will phase in the new regulations announced in Basel, Switzerland, over the weekend, he said.

They're also using gold as a hedge against the dollar, which fell to a fresh 15-year low against the yen Tuesday, after Japan's Prime Minister Naoto Kan won re-election. Investors have been looking for the Japanese government to jump in to limit the currency's rise, as a stronger yen can hurt profits at Japan's export businesses. Kan has resisted pressure to do so.

Adding further fuel to the fire, Flynn called out reports showing declines in gold production from Russia -- among the top producers in the world.

"If you ask five people on the street why they're buying gold, five people could give you a different reason," Flynn said. "If you're worried about a weak dollar, you buy gold. If you're worried about bank failures, you're buying gold. If you're worried the global system is going to collapse, guess what? You buy gold."
Gold rose to record highs earlier this year as fears about Europe's sovereign debt crisis escalated, and in late 2009, gold had surged when investors fretted about a weak dollar and inflation fears.

But while gold prices hit a record on Tuesday, they were still a far cry from their real peak, as measured in dollars adjusted for inflation.

Gold hit its summit on Jan. 21, 1980, when it peaked at $825.50 an ounce, in 1980 dollars. That translates to an all-time peak of $2,163.62 an ounce in 2009 dollars.

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Would a midterm loss for Democrats boost stocks?

2010-09-14T21:15:00.000-07:00

FORTUNE -- While most secular market indicators -- hemlines, sports, the weather -- matter little to big investors, the correlation between midterm elections and rising stock prices is practically gospel. "The charts are eye popping," says Deutsche Bank chief U.S. equities strategist Binky Chadha, who points out that the S&P 500 has produced gains in 18 out of the last 19 midterm election cycles. "It really is an anomaly," he says.

The S&P has returned an average of 13% in the six months after midterm elections, Chadha says, and 17% over the next twelve months, which is vastly better than how it has performed in non-election cycles. The indicator works regardless of which party wins control of Congress, but it's especially strong where there is a Democratic president and Republican legislature. When that scenario is in place, stocks average 14.6% annual returns, according to Bill Stone, chief investment strategist at PNC Wealth Management. "It's the best of all iterations," he says.

With that in mind, many investors are gleefully awaiting this year's midterm elections. The latest Cook Political Report projects that Republicans will gain control of the House and come close to winning back the Senate, pushing Congress into a state of political gridlock (according to Chadha, 70% of midterm elections result in the president losing seats in both chambers).

And gridlock, market experts say, is why midterm elections are good for stocks. The less power a president has, the less likely he is to push an activist agenda, unshackling businesses from the burden of regulatory uncertainty. Or so the theory goes.

But while the indicator has worked in just about every midterm election cycle, some experts fear that political gridlock may fail to provide a boost to stocks this year because of the external factors bogging down the economy. They believe the market is struggling not because of anti-Washington sentiment, but because of fundamentals. "There has to be a more significant intervention in the jobs market than simply letting things play out," says Michael Yoshikami, chief investment strategist at YCMNET Advisors. "The economy is too damaged right now to get away with gridlock."

A regulatory stalemate could not only fail to assist the market but would actually make it worse because it would leave economic problems unsolved. "If politicians are unable to work together, some very important policy decision in taxes and energy may not get made, which would cause damage to the economy," says James Angel, a professor at Georgetown's McDonough School of Business. "Gridlock...will cause us to lose precious time."

Could 2011 hold another government shutdown?
Gridlock enthusiasts counter that, while a split government would slow down the pace of legislation, it would also force both sides to arrive at more centrist solutions. Given the dire state of the economy, it's possible that legislators will have to engage in deal making, says Paul Brace, a political science professor at Rice University. "There tends to be a bipartisan gain to bring benefits to states and districts, and even conservative Republicans tend to get pulled into that game," he says. "One might imagine a response like Clinton's, where he let the government shut down in response to the Republican stalemate."

A divided government could arrive at a more business friendly resolution to the issue of tax cuts. Current rates for capital gains, dividends, and individuals are set to expire soon, a hot-button topic in the midterm elections. "As we see a shift in the political pendulum back to the middle ground...maybe those rates will be raised to 20% as opposed to reverting to 39.6%," says Jeff Kleintop, chief market strategist at LPL Financial.

"It would make a big difference to many investors."
Though Obama's massive healthcare and financial reforms are unlikely to be repealed -- the President would veto such efforts -- they could be weakened in their implementation, Chadha says, benefiting stocks in those sectors.

Such pro-business activity, though, would not directly address the problem of joblessness, which many economists believe is still the main source of the economy's -- and tangentially the market's -- woes. Corporate profits have soared this year, but much of that lift has come from cost cutting and inventory restocking. Continued weakness amongst consumers could slow the pace of the recovery, stifling the benefits of reduced legislative activity.

Jobs, jobs, jobs
Both sides of the gridlock debate agree that the jobs problem needs to be solved before the market can roar again. But they are divided over the role that the midterm elections would play in spurring that recovery.

Those who believe that gridlock will help the market say it will also boost hiring and bolster consumer demand by improving corporate sentiment. "There's been hesitance to commit to long-term capital investments because of legislative change," says Kleintop. Once the horizon is clearer, he says, employers will free up resources and start hiring again.

Interventionists, on the other hand, say that while business leaders may complain about the government's heavy hand, they are sitting on the sidelines for other reasons. "Most of business hiring is, what orders do we see coming in the next there to six months -- not what will Congress do towards the end of next year," says Angel.

Hiring will improve when the outlook for demand improves, he says, regardless of whether gridlock comes to Washington.

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Nokia chairman to step down in 2012

2010-09-14T21:13:00.000-07:00

NEW YORK (CNNMoney.com) -- The shakeup at Nokia continued on Tuesday as the Finnish mobile phone maker announced that its chairman, Jorma Ollila, would be stepping down in 2012.

The announcement comes on the heels of Monday's resignation of Nokia's smartphone business chief Anssi Vanjoki. The revolving door of executives started turning on Friday after Nokia said it had hired Microsoft Corp. executive Stephen Elop to replace Olli-Pekka Kallasvuoits as chief executive.

Ollila had served as chairman for 14 years and oversaw the company's rise to the top of the mobile pyramid. But he also witnessed the Nokia's recent inability to keep pace with rivals like Apple (AAPL, Fortune 500) and manufacturers that chose to implement Google's (GOOG, Fortune 500) popular Android software.

Nokia remains the largest handset maker in the world and commands a 40% of the smartphone market, according to IDC. But the company's devices have yet to take off in the United States -- and IDC expects Nokia's share to drop by about 18% over the next four years as Android and soon-to-be-released Microsoft Windows Phone 7 smartphones grow in popularity. To fight that onslaught, Nokia on Tuesday unveiled a new lineup of upcoming smartphones.

Shares of Nokia (NOK) have tumbled by about 70% since the iPhone was released in the summer of 2007.

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Investors refocus efforts on Treasurys

2010-09-13T21:32:00.000-07:00

NEW YORK (CNNMoney.com) -- Treasury yields eased Monday as investors swung back into U.S. government bonds, reversing the momentum from last week's sharp sell-off that pushed yields to monthly highs.

Yields for Treasurys fell across the board on Monday. The yield on the benchmark 10-year note slipped to to 2.76%, from 2.80% late Friday. The 30-year bond slid to 3.85%, down from 3.87% Friday; the 2-year decreased to 0.54%; and the 5-year edged down to 1.53%. Prices and yields move in opposite directions.

"We're seeing a correction to the reaction we got last week, and a bit of bargain-hunting," said David Coard, head of fixed income trading at the Williams Capital Group, adding that the declines in prices last week make Treasurys more attractive.

Treasury yields charged higher last week, as better-than-expected economic news reduced concerns about a stalling recovery and a double-dip recession.
Coard cautioned that as the economy remains under pressure, treasury yields are likely to continue moving lower.

"The economy is still vulnerable and there is a lot of uncertainty involved," he said. "As long as that's the case, Treasurys will maintain decent demand."

Bond yields rising? Curb your enthusiasm

Coard said he believes the chance of a double-dip recession is higher than the market is currently preparing for, and expects that the 10-year yield will drop somewhere between 2% and 2.25% by the end of the year.

Since Treasurys are backed by the U.S. government, they are considered low-risk investments and are attractive during times of economic uncertainty. But when investors gain confidence in the economy, they typically shift away from save-haven assets and pour money into riskier assets -- like stocks.

"Last week's data revealed that although the economy is weak, it is not collapsing and that allowed investors to breathe a sigh of relief," Coard said.

Last week's $67 billion of debt sales also boosted Treasury yields.
Meanwhile, the bid for government debt Monday was also supported by the Federal Reserve Bank of New York's purchase of $3.4 billion in Treasury debt. The purchase is part of the Fed's plan to reinvest cash back into the bond market to help the economic recovery.

The bank said Monday that it plans to purchase about $27 billion in Treasurys through early October.
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Stocks: Investors find reason to cheer

2010-09-13T21:31:00.000-07:00

NEW YORK (CNNMoney.com) -- Stocks finished higher Monday as new global banking rules, upbeat economic data from China and some acquisition activity helped boost investor sentiment.

The Dow Jones industrial average (INDU) added 0.8% to end at 10,544.13. The S&P 500 (SPX) rose 1.1% to close at 1,121.90, and the Nasdaq (COMP) led the gains with a 1.9% jump to 2,285.71.

Markets around the world gained on news of the global banking agreement. The historic new reform will force financial institutions to more than double their capital reserves as a cushion protecting against future meltdowns.
Stocks posted modest gains in a light trading session Friday, as ongoing worries about the economy dampened enthusiasm over an increase in wholesale inventories.

Several economic reports are on tap for the week, and investors are also likely to focus on tax policy as lawmakers return from recess. Congress is expected to work on possible legislation to extend the Bush tax cuts.

Banking shares get a boost: The bank reform came after top central bankers met in Basel, Switzerland, over the weekend. The new rules would require financial institutions to increase their core capital cushions to at least 4.5% of assets, up from the current 2%.

Banks will have until 2019 before the rules come into full force -- a longer timeline than some had predicted.
But that relief will likely be short-lived, said Steven Goldman, market strategist at Weeden & Co.

"This is more a help for overseas banks rather than the U.S.," Goldman said. "Our markets are riding global stocks higher today, but it won't be sustained."
Bank stocks rallied, and the KBW Bank Index (BKX) soared to close 3.1% higher.
Shares of JPMorgan Chase (JPM, Fortune 500), PNC Bank (PNC, Fortune 500) and BB&T (BBT, Fortune 500) also surged to end up about 3%. Shares of Marshall and Ilsley (MI), based in Milwaukee, leapt 4.5%.

Companies: Hewlett-Packard (HPQ, Fortune 500) announced it has agreed to acquire cyber-security firm ArcSight (ARST) for $1.5 billion, or $43.50 per share -- a 24% premium over the stock's Friday closing price.
Shares of ArcSight surged to end 25.1% higher.
Rental car company Hertz Global Holdings (HTZ, Fortune 500) said Monday that it had raised its offer for Dollar Thrifty Automotive (DTG), to $50 per share, or $1.56 billion. Dollar Thrifty shares rose to close up 5.4%, while Hertz added 7.8%.

In April, Hertz originally offered to pay $1.2 billion to acquire its rival, but competing car rental company Avis (CAR, Fortune 500) later offered $1.36 billion for the company.

Genzyme said it will sell its genetic testing unit to Laboratory Corp. of America Holdings for $925 million. Last month, Sanofi-Aventis went public with an $18.5 billion cash offer for Genzyme, with the French firm hinting it may consider a hostile takeover if Genzyme refuses to talk.

Genzyme (GENZ, Fortune 500) shares closed down by almost 0.8%, while Laboratory Corp. (LH, Fortune 500) was fell almost 5%.
Xerox (XRX, Fortune 500) shares ended almost 8% higher after a favorable article in Barron's said chief executive Ursula Burns is rebranding the copier giant as a data-services provider.

Economy: In a Saturday report, China reported stronger-than-expected growth in its industrial sector in August. Inflation in the country also accelerated last month, driven by rising food prices.

The data spurred China's central bank on Monday to set the yuan's daily reference rate at its highest level against the dollar since it scrapped its peg against the greenback in 2005.

China's inflation battle intensifies

New pressure has been building on China to let its currency increase in value. Treasury Secretary Timothy Geithner told The Wall Street Journal that China's decision in June to end its peg to the dollar was an "important step ... but they've done very, very little ... in the interim."

The Treasury Department released August budget numbers, which showed a $90.5 billion deficit in the month, following a shortfall of $103.6 billion in July.
World markets: The Basel bank reform helped European markets finish higher. The CAC 40 in France rose 1.1%, the DAX in Germany climbed 0.8% and Britain's FTSE 100 added 1.2%.

Asian markets ended higher. Japan's benchmark Nikkei index rose 0.9%, the Hang Seng in Hong Kong surged 1.9% and the Shanghai Composite ended 0.9% higher.

Currencies and commodities: The dollar fell against the euro, the British pound and the Japanese yen.

Oil for October delivery rose 74 cents to settle at $77.19 a barrel after a leak forced officials to close a Chicago-area pipeline.
Gold for December delivery gained 60 cents to settle at $1,247.10 an ounce.

Bonds: The yield on the 10-year Treasury note fell to 2.74% from 2.81% late Friday. Bond prices and yields move in opposite directions.

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Plan to end oil industry tax breaks draws fire

2010-09-13T21:27:00.000-07:00

NEW YORK (CNNMoney.com) -- The debate over eliminating tax breaks for the oil and gas companies is heating up, with an industry group saying Monday that the move could cost the energy sector thousands of jobs.

President Obama signaled last week that his administration could pay for $180 billion in recently proposed economic recovery measures by closing tax loopholes for major corporations, including tax breaks and subsidies for oil and gas producers.

However, the proposed tax changes could have "grave economic consequences," according to a study from the American Energy Alliance, which lobbies for the oil and gas industry.

The study, based on research from Louisiana State University economist Joseph Mason, says the proposed changes will trigger an initial loss of 154,000 jobs in the energy sector and related fields by the end of next year.

In addition, the changes would result in more than $340 billion in lost economic output, and $68 billion in lost wages nationwide, according to AEA and Mason.
"The Obama administration aims to single out U.S. oil and gas firms and raise the cost of energy for consumers by eliminating crucial tax credits to which all taxpayers are entitled," Mason said in a statement.

The proposals that the industry objects to are an elimination of a manufacturing tax credit and a modification to the rules for "dual capacity taxpayers," which are primarily oil and gas firms that make "tax like" payments to foreign governments.
According to research from Concept Capital, ending the manufacturing credit would add $15 billion to the federal coffers, while changing the dual capacity rule would raise $8.5 billion. The administration has proposed using that money to offset the cost of new tax breaks for small businesses and infrastructure spending, among other things.

Those who support closing the loopholes argue that the oil and gas companies are among the most profitable in the world, and that the costs could be easily absorbed.

"American taxpayers are currently giving money to BP, Shell, Exxon and others by virtue of these subsidies," said Kert Davies, research director at Greenpeace. "Correcting that and making them pay those costs will allow a more level economic discussion."

Behind the war between Obama and big business

In addition, he pointed to the thousands of jobs that could be created by subsidizing the development of alternative sources of energy, which is a stated goal of the Obama administration.

But critics say the changes would unfairly penalize minor energy firms and hurt small businesses that rely on big oil and gas companies for their survival.
Alex Morris, an analyst at Raymond James who covers big oil companies such as BP, said it's hard to say exactly how the proposed changes will impact the industry, although he expects there to be some job cuts as a result.

"Any time you eliminate millions of dollars in tax credits, the loss will have to be made up somewhere else," he said. "At some level, there will be an impact on employment."
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China's inflation battle intensifies

2010-09-12T21:24:00.000-07:00

NEW YORK (CNNMoney.com) -- Inflation in China accelerated last month, as rising food prices pushed overall prices higher.

The consumer price index increased to 3.5% in August, compared to a 3.3% annual rate in July, China's National Bureau of Statistics reported on Saturday.

The global economy has become increasingly dependent on China's rapid expansion as an engine for growth.
But prices in the fast-growing Chinese economy have been outpacing most western economies; U.S. prices were up only 1.2% over the 12 months ending in July.
That has raised some concerns that the Chinese government might take steps to slow down growth in order to keep prices in check.

"China has to be careful," said Robert Brusca of FAO Economics. "Their big objective is domestic stability, and domestic stability requires employment. But they can't let inflation get away from them. So they have a tiger by the tail."

Separately, China reported that the country's industrial output increased 13.9%.
The increases in Chinese consumer prices have been driven by higher food prices, up 7.5% in the last 12 months. Food makes up about a third of the overall consumer price index in China, compared to only 14% of the official mix of prices in the United States. Fresh vegetables have shot up 7.7% in the last month and further price increases are expected due to a poor wheat harvest in Russia.

There is little the Chinese policymakers can do to control food prices other than provide subsidies, said Virendra Singh, director in international economics for Moody's Economy.com.

But he said there is concern that rising food prices could spill over to the rest of the economy as workers demand higher wages.
So his firm is expecting the People's Bank of China to move soon to raise interest rates.
In fact, the August price report got particular attention when China moved up the release of the data by two days, prompting some to speculate the move was done to give financial markets a chance to digest the news and possibly open the way for the People's Bank of China the chance to raise interest rate.

But Jay Bryson, international economist for Wells Fargo Securities, isn't convinced China is getting ready to raise rates because of uncertainty about the strength of the global economic recovery. And he said even if it does raise rates, the impact will be more symbolic than substantial.

"The Chinese have always had a bias toward growth rather than keeping inflation in check," he said. "[A rate hike] could send a signal that these guys are getting serious about inflation."

The Chinese central bank has left rates unchanged since September 2008 when it cut rates to in the face of the global financial meltdown.

There isn't an overnight lending rate in China comparable to the U.S. Federal Reserve's benchmark fed funds rate, which has been near 0% since December 2008.

By comparison, the People Bank of China's one-year lending rate has been at 5.31%, but that relatively lofty rate has done little to slow the economy overall.

China's gross domestic product, the broadest measure of the size of the economy, was up 10.3% in the second quarter compared to a year earlier.

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New year, no federal budget

2010-09-12T21:22:00.000-07:00

NEW YORK (CNNMoney.com) -- On Oct. 1, just three weeks after lawmakers return from their summer break on Tuesday, fiscal year 2011 will begin. But Congress will not have a new budget in place by then. And it may not materialize anytime soon.

It won't be the first time. In fact, tardy federal budgets have been par for the course for most of the past 35 years.

"It's pretty inexcusable even though we excuse it every year. There's no reason on earth why [lawmakers] shouldn't be able to make up their minds before the start of the fiscal year," said Rudolph Penner, a former Congressional Budget Office director who is now public policy scholar at at the Urban Institute.

Without a formal budget, Congress typically ends up passing so-called "continuing resolutions" for a month or two at a time. That essentially prevents the federal government from shutting down while lawmakers finalize how money will be allocated in the fiscal new year.

The CR authorizes the heads of government agencies to obligate money they need to spend to carry out their agencies' work, whether through signing contracts, making purchases or hiring people.

It's hardly optimal, however. "It has implications for good government. Civil servants can't do their work very efficiently. It's hard to do rational planning," Penner said.
Given the poisonous partisanship that has dominated this mid-term election year, it's easy to wonder if they can even pass a continuing resolution. If they don't, a government shutdown is a real possibility. But Penner believes that is unlikely because it would be deeply unpopular and both parties could suffer politically.
By the same token, Penner can envision a scenario where Congress doesn't finalize a formal budget until sometime after January. If the Republicans win the majority in the House, they may be unwilling to pass anything until they take over, he said.

Why this year is different

While it's not unusual for Congress to ring in the new year budget-free, there's a somewhat new twist in the old procrastination dance this year.
That's because neither the House nor the Senate have even passed a formal budget resolution, which typically is done in the spring before the appropriations committees decide how to allocate federal funds.
The budget resolution sets caps for spending, establishes revenue targets and generally serves as a five- to 10-year blueprint of congressional priorities for the appropriations and tax committees to follow.
Nonetheless, it's not like no work has been on a budget. To date, the House has passed two of the 12 appropriations bills for 2011. The Senate hasn't passed any, but a number have been passed by the subcommittees charged with running the purse strings for different areas of the government, such as education and defense.
But it's a long way from the finish line for legislators. And there is still no consensus within or between the House and Senate on what the specific cap should be on discretionary spending for next year, although they are working within a range of $1.114 trillion to $1.121 trillion, and there's a push to move those levels down to $1.108 trillion.
All told, the CBO estimates that the 2011 budget will total $3.7 trillion based on policies that were in place this summer. A little less than a third of that would go to discretionary spending and the rest would go to entitlement programs such as Medicare and interest on the country's debt.

Long-term debt: The real problem

And that debt is the elephant in the room in all budget discussions.
There may be a wait-and-see attitude at play, since the president's bipartisan fiscal commission will release its recommendations for reining in the debt on Dec. 1, and if any of its suggestions are adopted, that will change any budget plans on tap.
But even if lawmakers could agree on a comparatively modest budget, lawmakers would need to detail how it would affect the country's debt over the next decade. And the debt picture would be ugly no matter what. So voting on that budget would be a political downer right before an election when everyone is trying to show how fiscally irresponsible the other guy is.
"No one wants to spell out what they would do given that the choices are humongous deficits or tough policy choices, all in an incredibly tense election year," said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget. "The budget never really had a chance. And another sad truth -- most of the public will never even notice."

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New bank rules to curb risk

2010-09-12T21:19:00.000-07:00

NEW YORK (CNNMoney.com) -- Global officials meeting in Switzerland Sunday announced new guidelines to strengthen the financial system by forcing banks to set aside more capital.

The goal is ensure that banks have bigger reserve cushions when things go bad and avoid another bank meltdown like the panic of 2008, which led to widespread credit gridlock and fueled the recession.

At the same time, the rules attempt to walk a delicate balance: Forcing banks to stash too much too soon in "rainy day funds" could crimp their ability to lend -- at a time when global credit has already contracted dramatically.

The effort was led by the Basel Committee on Banking Supervision, which is made up of officials from 27 countries including the United States. Federal Reserve Chairman Ben Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair were among attendees from the U.S. government.

U.S. regulators said Sunday that the new guidelines would make the banking system more stable by curbing risk.

Bank crisis still in fifth inning

"The agreement represents a significant step forward in reducing the incidence and severity of future financial crises," the Fed, FDIC and Office of the Comptroller of the Currency said in a joint statement.

The new rules, known as Basel III, will be enforced by local bank watchdogs like the Fed and FDIC and will take effect over a period of years after being adopted by each country.

The reforms will increase the minimum core capital cushion -- the funds banks accumulate by selling stock and retaining profits -- to 4.5% of assets from the current 2%. In addition, banks will have to set aside another 2.5% for "future periods of stress."

"The agreements reached today are a fundamental strengthening of global capital standards," said Jean-Claude Trichet, president of the European Central Bank.

Phase-in period: Under the agreement, the United States and other nations would be required to start implementing the new standards on Jan. 1, 2013. The stricter capital requirements would be phased in over two years to avoid putting too much stress on banks.

The phase-in will reduce "the potential for ... short-term pressures on the cost and availability of credit to households and businesses," U.S. regulators said.

Basel III, which will apply everywhere, was the subject of intense lobbying. Big banks in Japan and Europe, which tend to be less robustly capitalized than those in the United States and the United Kingdom, were particularly aggressive.

Shares of European banks tumbled last week as investors worried about the impact of the new requirements. But the new rules may not have an immediate impact on the likes of Bank of America (BAC, Fortune 500) and JPMorgan Chase (JPM, Fortune 500), which have amassed significant capital over the last few years and boosted profits.

The policies were developed based on lessons from the financial crisis in 2008. As the bubble in home prices burst, banks suffered billions of dollars in losses on mortgage-related assets. Those losses proved fatal for some banks, namely Lehman Brothers, when liquidity dried up and investors panicked.

Earlier this year, President Obama signed a far-reaching Wall Street reform bill that gives regulators more clout to come down hard on banks they think are engaging in overly risky lending.

- Fortune's Colin Barr and CNNMoney's Ben Rooney contributed to this report.

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Yahoo: Can this tech company be saved?

2010-09-09T21:55:00.000-07:00

NEW YORK (CNNMoney.com) -- Does anyone care about Yahoo anymore?
Sure, Yahoo (YHOO, Fortune 500)

Still has a boatload (to use a favorite term of Yahoo CEO Carol Bartz) of users. I still go to Yahoo Finance a lot, for example. Ditto for Yahoo Mail. And I do love Yahoo's fantasy sports sites.

But this isn't 1998 anymore. Being a portal doesn't make you a leader. Having eyeballs doesn't necessarily make you a financial or technological juggernaut.
While rivals like Google (GOOG, Fortune 500), Facebook and Apple (AAPL, Fortune 500) continue to innovate in the worlds of search, social media and mobile, many wonder just what Yahoo is other than a slightly bigger version of AOL.

And heck, even AOL (AOL), which may get a slightly worse rap than warranted due to its former role as an albatross around the neck of my corporate parent company Time Warner (TWX, Fortune 500), has done a decent job of differentiating itself from the competition lately thanks to a keen focus on local content.

So it's no wonder that Yahoo's stock continues to slump. The stock is down 18% this year and is only 7% above its 52-week low.

A post I noticed on StockTwits about Yahoo sums up the company's sorry state the best. "The only worse thing than being talked about is not being talked about. $YHOO," tweeted Eric Jackson, managing member at Naples, Fla.-based hedge fund Ironfire Capital on Wednesday evening.

This is a pretty damning comment from someone who has followed the company very closely. Ironfire owned a position in Yahoo a few years ago and began pushing the company to get rid of former CEO Terry Semel in late 2006. That wound up happening in June 2007.

Jackson also wanted the company to accept Microsoft's (MSFT, Fortune 500) takeover offer in February 2008. But Yahoo spurned the deal, even though it valued Yahoo at a 61.6% premium at the time. So Ironfire sold its position a few months later.

I caught up with Jackson on the phone Thursday to get more of his thoughts about what the company could do to reclaim its former glory.

Jackson said that the biggest problem is that there doesn't seem to be a focus on any specific type of product or area of technology.

"It struck me the other day how little we've heard about Yahoo in the past six to 12 months," he said. "That symbolizes how the company is not as relevant with where the world is moving, especially with respect to mobile and social media. The company seems to be adrift."

Yahoo, to its credit, has done a lot since Bartz joined in January 2009 to become leaner and meaner in order to get profits back on track. The company's net income increased by 40% last year even though revenues slipped.

Google launches live-updating 'Instant' search

But the cost-cutting may have come at a price. Yahoo now lacks strategic vision, Jackson said. He thinks Bartz was the right person to whip Yahoo into shape in the short-term but that a new CEO might do a better job of actually engineering a sustainable turnaround.

I think he's right. Yahoo's total sales are expected to be flat this year and analysts are only forecasting a 4% rise in 2011. That's anemic for an "old media" company, let alone a "new media" firm like Yahoo.

The best you can say about Yahoo these days is that it has done a decent job of partnering with, and occasionally even outsourcing functions to, other relevant companies.

Hence, links to Facebook and Twitter on Yahoo's home page. And the decision to let Microsoft's Bing power search results on Yahoo and give up control of its job listing service HotJobs to Monster Worldwide (MWW).

But Yahoo can only go so far by relying on the help of rivals. Even if companies like Facebook and Microsoft represent, to use an ugly bit of jargon, co-opetition as opposed to true competition, Wall Street is not going to get excited about Yahoo until it can find a way to really get sales growing again.
"The main part of Yahoo is languishing. Another shakeout is needed and warranted. Yahoo has to go beyond hacking away at things and focus on new products," Jackson said.

- The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney.com, and Abbott Laboratories, La Monica does not own positions in any individual stocks.

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Stocks end higher after light trading day

2010-09-09T21:51:00.000-07:00

NEW YORK (CNNMoney.com) -- Stocks posted tepid gains, down slightly from their earlier rally Thursday as investors mulled over better-than-expected reports on the U.S. trade deficit and weekly jobless claims.

At the closing bell, the S&P 500 (SPX) was up 5 points, or 0.5%, to 1,104, the Nasdaq (COMP) Composite climbed 7 points, or 0.3%, to 2,236, and the Dow Jones industrial average (INDU) rose 28 points, or 0.3%, to 10,415.

Earlier in the session, the Dow had gained as much as 51 points.
All three major indexes started the month with a bang following a series of stronger-than-expected economic reports. But this week, trading has been a bit shaky, with little on the docket to push stocks forward.

Trading volume is 30% below the 3-month moving average, which is not unusual for the shortened holiday week following Labor Day. Nevertheless, that lackluster volume means none of this week's stock market moves amount to much, said Art Hogan, chief market strategist at Jefferies & Co.

"Whatever happens, it doesn't clarify anything in investor's minds. We will have to wait until next week," he said. "That said, it's intriguing that as early as two weeks ago the economic calendar was working in the wrong direction. All we could talk about was a double dip. That has gone the way of the dodo bird now."
Stocks closed higher Wednesday as worries about European banks eased, and investors welcomed President Obama's $350 billion jobs recovery plan.

Economy: The Labor Department's weekly report on initial jobless claims showed that 451,000 first-time claims for unemployment benefits were filed in the week ended Sept. 4. This was significantly less that consensus forecast from Briefing.com of 470,000.

The latest figure was down 27,000 from an upwardly revised 478,000 in the previous week.

Also, the Commerce Department reported that the U.S. trade deficit slipped to $42.8 billion in July, sharply lower than the Briefing.com consensus forecast of a $47.3 billion deficit. It also marks a decline from the slightly revised deficit of $49.8 billion for the prior month.

BWF Financial analyst Hamed Khorsand said the jobless claims number was a bigger driver than the trade figures. "Even though employment is really a lagging indicator of the economy, it's gotten to a point where it's now setting the sentiment," he said.

Companies: Shares of Adobe Systems (ADBE) surged more than 12% after Apple (AAPL, Fortune 500) said it will drop restrictions on what programming tools developers can use to create iOS apps. Shares of Apple rose 0.6% after the news.

McDonalds (MCD, Fortune 500) said its global same-store sales rose 4.9% in August, boosted by its sales of smoothies and frappes. But the sales increase fell short of economists' forecasts and shares of the fast-food giant fell 2.3% on the news.

Goldman Sachs (GS, Fortune 500) rose 1.1% after Britain's Financial Services Authority said the firm agreed to pay a $27 million fine for not disclosing a U.S. government investigation into the the allegedly fraudulent activity of Fabrice Tourre, a London-based Goldman trader.

U.S. losing competitive edge

World markets: European shares rose. Both the CAC 40 in France and Britain's FTSE added 1.2%, and the DAX in Germany gained 0.9%.
Asian markets ended mixed. Japan's benchmark Nikkei index rose 0.8%, and the Hang Seng in Hong Kong edged up 0.4%. The Shanghai Composite tumbled 1.4%.

Currencies and commodities: The dollar rose against the euro, British pound and the Japanese yen.

Oil futures for October delivery fell 42 cents to settle at $74.25 a barrel.
Gold for December delivery fell $6.60 to settle at $1,250.90 an ounce.
Bonds: The yield on the 10-year Treasury note rose to 2.76%, from 2.65% late Wednesday.

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When Chrysler could have sold for $1

2010-09-09T21:49:00.000-07:00

FORTUNE -- One of the lesser-known stories of the Obama Administration's auto bailout is how close Chrysler came close to following the fate of Lehman Brothers and being allowed to fail.

A majority of the Treasury Department's auto task force actually voted in favor of withholding further aid from the automaker. And it was only after a tense 45-minute meeting in the White House that President Obama agreed for the federal government to rescue Chrysler.

An insider's account of the Chrysler drama is recounted by Steven Rattner, head of the auto task force, in a new book Overhaul, to be published in October by Houghton Mifflin Harcourt. (I've covered his account of the revolving door at GM's corner office in a previous column.)

The story began to unfold in October 2008. After General Motors went hat in hand to the government for help, Chrysler followed a week later, signaling that it was desperate for cash.

Chrysler chief Bob Nardelli testified before the Senate Banking Committee on November 18, along with his two fellow CEOs, and again on December 8, looking for $7 billion to keep the company afloat.

After the Senate failed to act, Nardelli wanted Treasury to force GM to buy Chrysler. But although Chrysler's Jeep brand, minivan franchise, and full-size pickup business were attractive, GM decided that the overlap of brands and dealers would make a merger too cumbersome.

No merger in sight

With no progress on the merger front, Rattner reports that Steve Feinberg of Cerberus Capital, Chrysler's owner, called Treasury Secretary Henry Paulson at 2 a.m. on the morning of December 19th with an incredible offer: He proposed turning Chrysler over to the U.S. government for $1. Rattner says the Treasury team mistook Feinberg's offer for a joke and didn't respond.

Later that month, President Bush authorized $17.4 billion in TARP money for GM and Chrysler. White House staffers had bought the president a weed whacker for Christmas the year before. In 2008, they joked that they bought him Chrysler.
The automaker was worth more alive than dead. Liquidation would yield just $1 billion. But Chrysler's problems -- loss of market share, overwhelming structural costs, outflows of cash -- were staggering. The auto task force created by new President Obama figured bankruptcy was inevitable.

By the time the auto team met with White House chief of staff Rahm Emanuel in the West Wing, they doubted whether Chrysler should be allowed to continue to survive as an independent entity. Emanuel was characteristically blunt: "Why even save GM?" he asked, according to Rattner. Reminded of tens of thousands of autoworkers whose jobs were at stake, he barked out "Fuck the UAW."

In addition to GM, Nardelli had reached out to Ford and Carlos Ghosn of Renault-Nissan for help, but to no avail. Lacking new designs and unable to meet tightening fuel economy standards, it pinned its hopes on a prospective alliance with Fiat. But when it presented a plan to Treasury on February 25, it provided only sketchy details and no scheme to reduce a heavy $6.9 billion debt burden.
Rattner met with Fiat Sergio Marchionne a few days later. Asked if he would put up capital as part of the deal, Marchionne said the equivalent of "No way."

On March 13, the auto task force met to decide Chrysler's fate. Those who opposed further aid argued that its demise would improve the odds of survival of GM and Ford because most would-be Chrysler buyers would shift to other domestic brands. By one analysis, GM would capture 300,000 additional customers -- a quarter of Chrysler's business -- if Chrysler failed. That would increase GM's profit by $2.4 billion and add $10 billion to its market value.

300,000 jobs at stake

A Chrysler liquidation would vaporize 300,000 jobs industry wide including 40,000 at Chrysler. But some argued that the loss would be minimized as others filled in the gap. Besides, continuing to bail out Chrysler would send the wrong signal about the administration's willingness to make hard decisions.

In the end, the argument to save Chrysler was based more on political and social reality. Saving the automaker would prevent the loss of those 300,000 jobs and President Obama being blamed. Ripple effects might include Michigan's state unemployment fund going broke.

White House Chief Economic Adviser Larry Summers said it was better to invest $6 billion in Chrysler's survival than pay several billion for its funeral. He and others praised a Fiat merger, in part because it would preserve the future opportunity to merge with GM.

Summers pressed the task force members to apply probabilities to their projections. He asked for a show of hands: If you assume the probability of saving Chrysler for five years is 50%, would you save it? The task force members voted four to three against it. Rattner couldn't make up his mind but eventually voted in favor of a bailout. Summers had the tie-breaker and said yes as well.
A memo with the arguments for both sides was prepared for Obama. An entire session of the morning daily briefing on March 26 was set aside to discuss it. After 20 minutes, the president decided the decision was too important to rush and delayed it until evening.

Meeting in the Roosevelt Room of the White House, Obama heard arguments for 45 minutes. Polling data was discussed showing public opposition to the bailout, as was the impact of Chrysler's failure on unemployment. At the end of the meeting, Obama asked "Does anyone else have anything to say?" And then he decided. "I'm prepared to give Chrysler 30 days to see if we can get the Fiat deal done on terms that make sense to us."

Chrysler went through bankruptcy so its debts could be eased and it could continue in business. And negotiations with Fiat turned out to be tougher than expected -- due in part to Marchionne's explosive temper --- but it finally went through and the automaker was saved. But for a long time, its survival hung by the narrowest of threads
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Health insurer faces $9.9 billion in fines

2010-09-08T22:10:00.000-07:00

NEW YORK (CNNMoney.com) -- California regulators are seeking fines of up to $9.9 billion from Pacificare over allegations the health insurer mismanaged claims from physicians, failed to make payments in a timely manner and other violations.

The California Department of Insurance alleges that Pacificare, which was bought by UnitedHealth Group in 2006, violated the state's insurance code 992,000 times between 2006 and 2007.

Each of those violations carry a fine of up to $10,000 each, according to CDI spokesman Ioannis Kazani.

The National Association of Insurance Commissioners said the $9.9 billion fine, if enacted, would be the largest the group has seen.

In court documents filed last year in Sacramento, CDI says an investigation in 2007 found that Pacificare routinely failed to disclose all benefits, coverage, time limits or other provisions in insurance policies. It also found claim files were often missing certain documents and that payments were not made on time.
The allegations have been the subject of an ongoing hearing conducted before an administrative law judge, who is reportedly nearing a verdict after nearly 10 months.

The California Insurance Commissioner, Steve Poizner, who filed charges against Pacificare in 2008, will make the agency's final decision on the fines following the judge's recommendation.

Special Report: Fixing Healthcare

Pacificare and UnitedHealth (UHC) dispute the state's claims, saying regulators have inflated the fines to score political points ahead of election season.
"The inflated figure has no basis in reality," said UnitedHealth spokesman Tyler Mason. "The largest fine in department history [that] we're aware of was $8 million for alleged behavior far more egregious than the supposed issues here."
This is not the first time Pacificare has been fined by state regulators. In 2008, the Department of Managed Health Care, another California regulator, fined the company $2 million over more than 130,000 alleged claims handling violations.
In this current case, analysts doubt that Pacificare will ultimately pay the maximum $9.9 billion fine.

"The '$9.9 billion' figure does not represent (or come close to representing) a reasonable basis for the possible liability, in our view," Matthew Borsch, an analyst at Goldman Sachs, wrote in a research report. "Our understanding is that the vast majority of the alleged violations are technical and/or administrative in nature."
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What peak oil? Why an oil glut is ahead

2010-09-08T22:03:00.000-07:00

FORTUNE -- In May, less than a month after the blowout of the Deepwater Horizon oil rig in the Gulf of Mexico, a key milestone was achieved with little notice: Total U.S. supplies of petroleum and products refined from it (including the Strategic Petroleum Reserve) surpassed 1.8 billion barrels, reaching the highest level in the last 20 years. Since then the total has continued to edge upward, hitting 1.87 billion barrels in the week ended August 27, according to the Energy Information Administration.

Despite the Iraq War and the resulting production disruptions, despite the moratorium on drilling in the Gulf, despite turmoil in Nigeria and ongoing cross-border transshipment quarrels in Central Asia and the multiple, repeated declarations that "peak oil" has arrived and supplies will inevitably dwindle, the United States has more petroleum on hand today than it has had since at least the beginning of the first Gulf War.

Part of that surplus comes from increased oil and gas production, particularly from ongoing production in the non-OPEC countries (including the U.S., where a "shale gas boom" has created a natural-gas glut). It also comes from flat demand due to the stumbling economic recovery and changing consumer behaviors. Neither of those factors is guaranteed to last. But as the summer driving season passes and students head back to school, awareness has gradually dawned that we may be looking at an oil surplus for years to come.

"In the last 18 months we've seen this big trend emerge," says David Kirsch, research director at PFC Energy in Washington, D.C. "We spent five to 10 years in a supply-constrained market, characterized by the growth of the BRIC countries [Brazil, Russia, India and China] and concerns over the security of supplies."

Now, Kirsch remarks, because of the financial crisis and the time it will take to pare down the debt of the major OECD nations, demand growth over the next decade is likely to be lower than previously forecast.

A new forecasting model
Official estimates of future oil supplies don't yet reflect this emerging consensus. Believing that "world oil prices will rise slowly as world oil demand increases because of projected global economic growth, slower growth in non-OPEC oil supply, and continued production restraint by members of the Organization of the Petroleum Exporting Countries (OPEC)," the EIA forecasts that the spot price for West Texas Intermediate crude will start climbing again, averaging $81 per barrel in the fourth quarter of this year and $84 per barrel in 2011.

If government experts are wrong, though, we could see persistent surpluses and an oil price drifting toward $50 a barrel or even lower -- far below the $75-per-barrel that King Abdullah of Saudi Arabia called a "fair price for oil" last year. Economists and policymakers have only begun to contemplate what that means.
New oil supplies are coming primarily from Central Asia and Iraq, where nearly a dozen major contracts have been finalized with foreign producers in 2010. The largest prize is the Rumaila Field, in southeast Iraq near the head of the Persian Gulf, with proven reserves 18 billion barrels. BP and China National Petroleum have signed a contract to jointly develop Rumaila.

A report from the U.S. Special Inspector General for Iraq Reconstruction, issued in July, said that Iraqi production, currently around 2.4 million barrels per day (bpd), could reach 12 million bpd by 2017. Saudi Arabia currently produces around 8 million barrels a day.

In Central Asia, the grandiose predictions for the Caspian Sea basin heard in the late 1990s - "another Saudi Arabia" - are finally approaching reality. Kazakhstan, home of the two largest oil finds in recent decades -- the super-giant Tengiz and Kashagan fields - is building more pipeline capacity heading east, to the vibrant markets of East Asia, rather than west, through the tangled pipeline politics of the Caucasus.

Even Israel, long one of the biggest oil importers in the Middle East, is getting into the act. Last year the U.S. Geological Survey reported that Israeli waters in the Eastern Mediterranean contain more than 120 trillion cubic feet of recoverable gas reserves -- and new discoveries have added another potential 24 trillion or so since that report came out.

Questioning peak oil
At the same time, consumers have finally responded to higher gas prices and, perhaps, concern over the environmental impacts of burning fossil fuels. Miles driven by U.S. motorists have fallen over the last couple of years for the first time since such statistics have been collected, indicating that the American love affair with the automobile could be waning. And gasoline demand in China, the world's largest automotive market, may not skyrocket after all, as the government ramps up its drive to replace internal combustion engines with electric vehicles.

An Israeli economy running on, and exporting, large domestic supplies of natural gas is only the most glaring of the geopolitical game-changers that $50-per-barrel oil would entail. Big growth in Iraq's oil industry would lead that country into discussions, and possible disputes, with Saudi Arabia over OPEC's production quotas. The worldwide gas surplus has already reduced the incentive and ability for Vladimir Putin's Russia to engage in power games with gas importers in Eastern Europe. And, of course, cheaper oil from non-OPEC nations could limit the political focus in the U.S. on foreign oil supplies -- and reduce Congress's urgency to pass a comprehensive clean-energy bill.

More than anything, though, the looming oil surplus calls into question the concept of peak oil, at least in the near future, along with the whole science of forecasting future oil supplies. Adam Brandt, a professor at Stanford's Department of Energy Resources Engineering, released a study last month examining the various models that have been used to predict the future of world oil supplies. "Data do not support assertions that any one model type is most useful for forecasting future oil production," Brandt concludes. "In fact, evidence suggests that existing models have fared poorly in predicting global oil production."
In other words, get ready for $50 oil.

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Stocks end higher after Obama speech

2010-09-08T22:00:00.000-07:00

NEW YORK (CNNMoney.com) -- Stocks ended Wednesday higher as investors shifted their focus from worries about European banks to President Obama's $350 billion jobs recovery plan.

The Dow Jones industrial average (INDU) rose 46 points, or 0.45%, to 10,387 the S&P 500 (SPX) gained 7 points, or 0.6%, to 1,099 and the Nasdaq (COMP) Composite climbed 20 points, or 0.9%, to 2,229.

Stocks are coming off losses Tuesday, when all three major indexes fell more than 1% as investors worried that European banks are in worse shape than previously believed.

But those fears subsided a bit Wednesday morning after the Portuguese debt auction was met with healthy demand. Experts caution that concern about Europe's banks may have eased but the problems are far from disappearing.
As austerity measures take effect in several European countries and various data continue to point to slower economic growth globally, sovereign credit spreads have started widening again, nearing the levels they were at in the spring, said David Chalupnik, the head of equities at First American Funds.

Wider credit spreads are a sign that funding government debt could become more challenging for debt-laden European countries, he explained.

Bank stress socks the Continent

Economy: The Federal Reserve's Beige Book, a snapshot of economic conditions across the central bank's 12 districts, suggested the economy continued to grow between mid-July and the end of August, but with "widespread signs of a deceleration" compared with earlier periods.

A separate report from the Fed showed that consumer debt fell by $3.6 billion in July -- far less than the $5.25 billion decrease predicted by economists surveyed by Briefing.com.

Obama: President Obama officially unveiled three new proposals aimed at bolstering the shaky economic recovery in a speech in Cleveland.

They include an estimated $200 billion in tax breaks for businesses that invest in new plants and equipment; a $100 billion extension of the business tax credit for research and development; and $50 billion over the next decade to improve roads, rails and other infrastructure.

Congress is not expected to pass the proposals soon.
Companies: Shares of BP (BP) surged more than 3% at the opening bell after Fitch upgraded the company's rating three notches.

The ratings firm said the upgrade "primarily reflects an end to the threat of further leaks from the Macondo well in the Gulf of Mexico."

World markets: European shares gained. The CAC 40 in France rose 0.9%, the DAX in Germany added 0.8%, while Britain's FTSE 100 edged up 0.4%.

Asian markets ended sharply lower after the yen hit another 15-year high against the dollar. Japan's benchmark Nikkei index tumbled 2.2% and the Hang Seng in Hong Kong dropped 1.5%. The Shanghai Composite ended 0.1% lower.

Currencies and commodities: The dollar rose against the Japanese yen after sinking to a fresh 15-year low earlier, and the greenback fell against the euro and the British pound.

Oil futures for October delivery rose 41 cents to settle at $74.67 a barrel.
Gold for December delivery fell $1.80 to settle at $1,257.50 an ounce.

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The new young investor: Shunning stocks

2010-09-07T21:17:00.000-07:00

NEW YORK (CNNMoney.com) -- When 18-year-old Robert White decided to jumpstart his retirement plan, he invested his life savings of $25,000 into an aggressive mutual fund.

Little did he know that just five years later, he would make a complete 180 and join the ranks of a new group of young investors who have become so risk averse by the wild market swings that they'd rather park their money in safety zones, like CDs or Treasurys.

Today, only 22% of investors under the age of 35 say they're willing to take on a substantial level of risk, according to the Investment Company Institute. Compare that with 2001, when that same group outpaced every other age bracket.
"We're coming off a series of financial crises that hit this young generation at points in their lives where external events shape strong opinions," said Christopher Geczy, adjunct associate professor of finance at University of Pennsylvania's Wharton School.

When White's fund began to slip with the broader market in 2008, he yanked his savings, now at $35,0000, and put the money into a short-term certificate of deposit with an annual return rate of 4%.

"It's almost embarrassing to talk to anyone about my portfolio because I know how stupid it is to normally keep my portfolio in cash," said White, now a 23-year-old graduate of Northern Arizona University.

While most investors have become more cautious during the decade, the biggest change has come from White's generation.

"Many of them have witnessed a decline in the wealth of their families and seen their parents delay retirement or even return to the workforce," said Geczy, who also serves as the academic director of Wharton's Wealth Management Initiative.
A recent Merrill Lynch survey of 1,000 affluent Americans, who boast more than $250,000 in investable assets, showed 56% of young investors consider themselves to be more conservative today than they were a year ago -- the highest percentage among all age groups.

"If you're in your 20s and are just starting to save for retirement, you've seen the market drop 55%, climb 88%, and drop again in a short span...If you're in your 30s and have been saving for the past decade, you've seen the stock market return essentially 0%," said Vanguard Chief Executive Bill McNabb, at a recent conference.

Members of Generation Y are also having a tougher time finding a job than their counterparts. The unemployment rate for workers under the age of 35 in August stood at more than 13%, compared to the nation's 9.6%.

Prolonging retirement

White has mustered up the courage to return to the market but he is only dabbling in stocks with about 10% of his $60,000. That's a far cry from the 70% advisors typically recommend for young investors. The rest of White's cash is tucked away in a savings account.

He's hopeful he'll gain the confidence to boost his stock allocation to 75% this fall when he returns to his home of Maui and starts a job at a financial planning office.

"I'm just waiting to get the next piece of advice or news that will make me more comfortable about my decisions," said White.
Experts say White and his peers may be doing themselves a disservice by shunning stocks.

"The biggest risk for this generation is that they'll live too long. With medical breakthroughs, the reality is that many of them will live beyond 100," said Barry Nalebuff, a strategy professor at Yale's School of Management and co-author of Lifecycle Investing. "The only way they have enough assets to last them is to invest in stocks. If they don't, a lot of people will have to keep working way past when they want to because they won't have enough money saved up."

How to save $1 million by 65

Nalebuff argues that young investors have decades of earnings to rake in, so they could plow 100% into a diverse portfolio of stocks and still offset the market's risks.

But that's little comfort to people like Neil Sowinski, 30, who remains unnerved by the market's swings. He pulled his money from stock market in January and dumped it into a Pimco bond fund, and advised his wife to do the same.
"We watched the tech bubble bust and then the housing bubble bust, and we lost money left and right but rode it all out," said Sowinski, an industrial mechanic in Racine, Wis. "After the market climbed back in 2009 and put us up about 15%, we pulled out because I felt that rally was just based on the government's stimulus and corporations cutting costs -- it wasn't sustainable."

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Bank stress socks Europe

2010-09-07T21:13:00.000-07:00

"Europe's debt crisis is back from summer vacation with a vengeance"

Borrowing costs soared Tuesday for weaker European governments and their banks, after a series of unsettling reports about bank risks and the region's capacity to shoulder a massive debt burden.

Spreads on government bonds issued by Portugal and Ireland surged above the peaks they reached in May, during the last round of market unrest. Investors were demanding 3.76 percentage points more to lend to Ireland than to Germany, and 3.51 percentage points more to lend to Portugal than Germany. Greek spreads were approaching their record highs.

The moves came after investors got bad news from almost every angle over the long Labor Day weekend in the United States.

The Bank of International Settlements reported this weekend that European banks have been loading up on bonds issued by troubled governments in Greece, Ireland, Italy, Portugal and Spain.

They did this even as private investors backed away from that debt, on the grounds that the risk of a default in one of those countries is rising as the global economic recovery slows, in part because the European Central Bank has been lending freely on the weaker nations' bonds as collateral.

Then The Wall Street Journal reported there are renewed questions about the strength of the stress tests European Union regulators carried out in July, and discrepancies in the size of various banks' exposure to troubled governments.
And in Ireland, policymakers continue to grapple with the quickest and least costly way to wind down the government's support for debt-gorged banks, which already has cost Ireland a string of credit downgrades and stands to consume a huge sum of scarce taxpayer resources.

The cost of insuring against a default on bonds issued by stressed European governments rose 9% in Spain and 7% each in Ireland, Italy and Portugal, according to CMA data.

Shares of the major European banks trading in New York, from Spain's Santander (STD) and Banco Bilboa (BBVA) to Germany's Deutsche Bank (DB) and ING (ING) of the Netherlands, tumbled 3% in early action Tuesday.

Even harder hit was Barclays (BCS) of the U.K., which dropped 5% after a surprise management change and the whiffs of a question about its own sovereign debt exposure. The bank was among those whose exposure to weaker governments was understated by the stress tests, The Wall Street Journal reported.

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Stocks fall on European bank woes

2010-09-07T21:10:00.000-07:00

NEW YORK (CNNMoney.com) -- U.S. stocks fell Tuesday as renewed worries about European banks weighed on financial stocks and investors flocked to such safe-haven assets such as the dollar, Treasurys and gold.

All three indexes fell about 1%. The Dow Jones industrial average (INDU) fell 107 points to 10,341, the S&P 500 (SPX) slipped 13 points to close at 1,092 and the Nasdaq (COMP) lost 25 points to 2,209, according to early tallies.

During last week's stock rally, the Dow turned positive for the year. But Tuesday's losses quickly turned the index back into the red.

On Friday, the major indexes gained more than 1%, after a government report showed fewer jobs were lost in July than economists had expected. U.S. markets were closed Monday for Labor Day.

"We're in September, which is traditionally a softer month for stocks, and so far we've escaped that," said Peter Cardillo, chief market economist for Avalon Partners. "But lingering worries won't diminish until we get more indicators that show the decline in economic activity is leveling off and beginning to turn around again."

Bank stress socks Europe

Economy: Fears that European banks may be in worse shape than indicated by recent financial stress tests spooked investors, said Anthony Conroy, head trader at BNY ConvergEx Group.

"Investors are questioning the shape of the banks, because reports are saying that their sovereign debt holdings are weaker than previously thought," he said. "People see this news coming out and begin to worry more about a possible double-dip [recession], because you can't have a healthy economy without healthy financials."

The renewed worries came after an analysis in Tuesday's Wall Street Journal that said Europe's stress tests -- aimed at measuring the health of the continent's financial sector -- understated major banks' holdings of government debt.

Financial stocks sank after the report, with American Express (AXP, Fortune 500) leading the way with nearly 4% losses and Citigroup (C, Fortune 500) and JP Morgan Chase (JPM, Fortune 500) both falling more than 2%. Shares of Bank of America (BAC, Fortune 500) also fell 2%.

President Obama will introduce a new $200 billion tax cut on Wednesday that will allow businesses to write off all new investments in equipment made between now and the end of 2011.
A reading on hiring from employment firm Manpower showed that employers are likely to remain reluctant to boost hiring in the fourth quarter.

Is Mark Hurd really worth $6 billion to Oracle?

Companies: Shares of Oracle (ORCL, Fortune 500) gained 6% after the business software maker said it has hired former Hewlett-Packard (HPQ, Fortune 500) CEO Mark Hurd as its president. Later in the day, HP filed suit to block Hurd from the taking the job.
Meanwhile, Barclays (BCS) shares sank 5.4% after the British bank announced its CEO John Varley will retire March 31. Bob Diamond, the bank's U.S.-born president and investment banking chief, will replace Varley.

World markets: European shares dipped. The CAC 40 in France tumbled 1.1%, the DAX in Germany fell 0.6%, and Britain's FTSE 100 lost 0.6%.
Asian markets ended mixed. Japan's benchmark Nikkei index dropped 0.8%, while the Shanghai Composite edged up 0.1% and the Hang Seng in Hong Kong gained 0.2%.
Currencies and commodities: Gold for December delivery rose $8.20 to settle at $1,259.30 an ounce, after surging to a two-month high of $1,261.60 earlier in the day. Oil futures for October delivery dropped 51 cents to settle at $74.09 a barrel.
Bonds: The reignited eurozone fears also spurred investors to buy U.S. Treasurys, sending prices higher and yields lower. The yield on the 10-year Treasury note fell to 2.61% from 2.71% late Friday.

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Johnson & Johnson CEO Bill Weldon's painful year

2010-09-06T21:38:00.000-07:00

FORTUNE -- What started last year as a series of small drug recalls at Johnson & Johnson exploded this summer into a full-blown crisis in quality control. But for months there was nary a peep from CEO Bill Weldon.

It wasn't until late August, after McNeil Consumer Healthcare, the division of J&J (JNJ, Fortune 500) that makes over-the-counter drugs, had instituted eight recalls, that Weldon emerged, granting multiple interviews in which he promised to rectify McNeil's quality problems. He told Fortune that he had created a new position: an operations chief who will oversee quality across J&J and report directly to him. Weldon also said the company had been busy inspecting facilities at all of its 250 operating companies, adding, "This is not a systemic problem at J&J." [For a diagnosis of what went wrong, read "Why J&J's headache won't go away."]

That assertion was quickly undercut. About a week after Weldon proclaimed McNeil an anomaly, the company issued two more recalls -- both in divisions completely separate from McNeil. One was for contact lenses made by Vision Care, and the other involved hip implants made by DePuy.

Meanwhile, Weldon's plan to install a new quality czar has rankled some staffers, who say he is resurrecting a concept that was dismantled under his watch. According to four former employees, J&J had a corporate compliance group that oversaw all of the different companies, but it was drastically cut down in 2007.

The group, helmed by Corporate Compliance Officer Brenda Davis, conducted tough biannual audits of J&J's operating companies and helped set up "management action plans" for improving quality control. Davis, who left the company in 2007, did not respond to requests for comment. A J&J spokesperson declined to comment for this article.

"The whole idea was creating a Hawthorne effect: If people know they're being watched, they'll do better," says one former J&J executive. After the group was cut, he says, some divisions lost their focus on quality. "The heads of the operating companies let their hair down."

Weldon told Fortune that the company had made "significant investments" in refitting McNeil's factories -- one of which will be shuttered until next year -- increasing automation and hiring third party experts to assess the company's manufacturing processes. He also said J&J had begun implementing a company-wide quality plan a year and a half ago, which resulted in the creation of the new corporate compliance team. "My expectation of this group is that, as good as we do manufacturing at J&J, we'll take it to a completely new level," he says.

But corporate image experts say Weldon needs to make a grander gesture to restore faith in the brand. "At this point, it's no longer about the specific incidents, but the underlying process," says Daniel Diermeier, a professor at Northwestern's Kellogg School of Management. "That requires a pretty heavy push driven beyond just appointing another person."

J&J announced in July that the McNeil recalls will cost the company some $600 million. That's a small dent in J&J's $62 billion in annual sales, but analysts fear that the highly profitable McNeil business could suffer from permanent reputational damage. "The steady drip is at a modest pace eroding investor confidence," says Les Funtleyder, an analyst at Miller Tabak.

Weldon, who has kept a low profile for the majority of his eight-year tenure, must now fight to salvage not just McNeil's reputation -- but his own. Surveys of business executives conducted by CoreBrand show that favorability ratings of J&J's management have dropped from 88.3% in 2006 to 80.9% last quarter. That's a significant decline, according to Jim Gregory, the branding firm's CEO. "There's something not right here that needs attention," Gregory says. "[Weldon] needs to change it -- or there needs to be a change of management."

The Weldon Era: A Solid B

J&J employees often speak of Weldon's predecessors -- James Burke and Ralph Larsen -- in hushed tones, rehashing stories of how those vaunted leaders managed through crises. Weldon has not engendered that sort of veneration. But his supporters point out that the CEO has faced a very different sort of challenge: A decade of slowing growth for the entire healthcare industry.

The Brooklyn-born son of Broadway stage workers, Weldon is known internally as a tough competitor who hates to lose. He joined the J&J's sales force straight out of college -- the CEO told Fortune in 2002 [see: "Can J & J keep the magic going?"] that he wanted to be a doctor, but couldn't afford to go to medical school -- and was named head of J&J's device-maker Ethicon Endo-Surgery in 1992. At the time, Ethicon was a small player in the surgical device industry, which was dominated by rival U.S. Surgical. Weldon took U.S. Surgical head on by aggressively investing in Ethicon's business, and over the next few years the company's market share grew from 9% to over 50%.

When Weldon became CEO of J&J in 2002, the company was living large off high-margin drugs like Topamax, which treats migraines and epilepsy, and antipsychotic medication Risperdal. Those blockbuster drugs have lost their patent protection in recent years and J&J's lucrative drug-coated stent has ceded much of its market share. The company has battled pricing pressure and weakened demand during the recession.

As J&J's sales growth slowed, turning negative last year for the first time in decades, Weldon fought back with layoffs -- the biggest cuts in J&J's history and acquisitions. His dealmaking record is mixed. Before he became CEO, he spearheaded the successful $12 billion purchase of Alza, which made Concerta, an attention deficit disorder treatment that is still a breadwinner for J&J. His purchase of Scios, a biotech, was less fruitful, as the company's heart-failure drug was later linked to medical problems.

Analysts say J&J lucked out when it lost a bidding war for device-maker Guidant, which was bought by Boston Scientific (BSX, Fortune 500) for $27 billion, a deal that Fortune derided as a bomb. [See: "The (second) worst deal ever."] Shortly after that, Weldon purchased Pfizer's consumer health unit for $16.6 billion.

Critics balked at the high premium, but the buy is now viewed as a prescient move by the CEO, who expanded the company's roster of stable consumer brands before the recession hit. "That looks smart for J&J, and dumb for Pfizer," says Miller Tabak's Funtleyder, who gives the company "a solid B" for its performance over the last decade.

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Leading Economist: U.S. & Europe could sink into ‘Japanese-style’ discomfort

2010-09-06T21:30:00.000-07:00

Quest Means Business: Monday – Friday on CNN @ 2000 CET

Nobel Prize winning economist Joseph Stiglitz joined us on Quest Means Business today. He told guest host Max Foster the U.S. needed more stimulus and that the country could “clearly” afford it. Stiglitz also said, both the U.S. and Europe need to focus on the “direction of spending” and believes there could be dire consequences if they don’t.

“I think it's more likely that the United States and Europe may sink into what might be called a Japanese-style malaise. Growth might be a little higher than in Japan, because in Japan, population/labor force growth was zero,” Stiglitz said.
In contrast, “We have, in the United States, a population - a labor force growth of around 1 percent. Growth in the last quarter was a little over that, 1.6 percent. But this growth is so slow that it won't be able to get the unemployment rate down. So that is where I think we're more likely to go - slow growth, not enough to get us back into a really healthy situation.”

Stiglitz said spending on wars was a lack of the direction of spending in the U.S. and Europe. “Obviously, if you're spending money on wars that don't really enhance your security, you're wasting money and debt is […] going up. If you redirected that money from those unproductive spending to more productive spending, the balance sheet can actually be improved.”

Foster asked Stiglitz if he still stood by the claim he once made that the true price of the Iraq war would exceed $3 trillion USD. Stiglitz stood by his findings saying the data that have come in suggest the cost could be even higher than he first believed. “The number that the politicians focus on is the actual expenditures that goes on the books. And what we did in our study is looked at the costs that go beyond that. For instance, almost 50 percent of those who fought in Iraq are coming back disabled. We're going to be paying for health care and disability payments for the rest of their lives.”

Stiglitz called his original estimates conservative. “The numbers coming back with these disabilities are significantly higher than we estimated. And the cost for each is higher than we estimated. So the numbers that have come in look like that $3 trillion was a conservative number.”

So what do you think? Did the spending on the war in Iraq help bring the U.S. and Europe into a recession? And could both regions be headed for a "Japanese-style malaise" as Stiglitz put it? QMB wants to know what you think. Leave us your thoughts in the comments section, join us on Facebook or Tweet Richard your thoughts to @RichardQuest. Be clever and we just might use your response in the show!

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World markets rally, Nikkei gains 2%

2010-09-06T21:28:00.000-07:00

NEW YORK (CNNMoney.com) -- World markets rallied Monday, with Asian stocks logging their fourth straight session of gains.

U.S. markets were closed in observance of the Labor Day holiday but last week, the bulls returned to Wall Street to start September off with a bang.

European and Asian markets took their cues from the better-than-expected U.S. economic data, including Friday's all-important jobs report, which showed fewer jobs were lost in August than economists had forecast.

The Nikkei, which hit a 16-month low on Aug. 31, launched into September with four straight sessions of gains, closing 2% higher Monday. But the Japanese stock index is still down nearly 12% from the start of the year as worries persist over the strong yen, which hit a 15-year high two weeks ago.

Still, the overall renewed optimism about the U.S. economy spilled over to other markets. The Hang Seng in China closed up 1.8% and European stocks followed the Asian indexes higher.

The CAC 40 in France ended 0.3% higher, the DAX in Germany rose 0.3%, and Britain's FTSE 100 also gained 0.2%.

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Mark Hurd lands at Oracle

2010-09-06T21:26:00.000-07:00

NEW YORK (CNNMoney.com) -- Mark Hurd, who abruptly resigned last month as chief executive of Hewlett-Packard, has landed at another big tech company.

Oracle Corp. (ORCL, Fortune 500) announced late Monday that it had hired Hurd as president, and that Hurd will sit on the company's board of directors.

At the time of his departure, Hewlett-Packard executives said that Hurd, who is married, failed to tell the board about a personal relationship with a female marketing contractor hired by his office. He filed inaccurate expense account reports in a bid to keep the relationship secret, HP said.

Jodie Fisher, an actress who had been employed as a contractor for HP, subsequently came forward and said that there had been no sexual relationship between them.

Hurd was credited with reviving Hewlett-Packard following the tumultuous tenure of his predecessor, Carly Fiorina.

"As Oracle continues to grow we need people experienced in operating a $100 billion business," said Safra Catz, also an Oracle president.

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What might make the Fed flinch?

2010-09-05T21:37:00.000-07:00

WASHINGTON (Reuters) – The U.S. economy appears to be trudging along, neither booming nor busting, growing steadily enough to diminish double-dip recession fears but not quickly enough to bring down unemployment.

That puts the Federal Reserve in a bit of a policy pickle. If the economy were clearly backsliding, Fed Chairman Ben Bernanke has made it clear he would not hesitate to provide further support. But what about an economy that is moving forward, albeit painfully slowly?

Minutes of the central bank's August 10 policy meeting said several officials felt the outlook would have to deteriorate "appreciably" to trigger more action, which might include additional purchases of government debt or a promise to keep interest rates near zero for an even longer stretch.

The latest batch of data -- particularly the employment report on Friday that showed stronger-than-expected private hiring in August -- doesn't seem to fit that description.

"Is there enough here to prompt the Fed to pull the trigger as early as at the September 21 meeting? Probably not," said Lena Komileva, an economist with Tullett Prebon in London.

So what might make the Fed flinch?
Neil Dutta, an economist with Bank of America-Merrill Lynch in New York, thinks the slow-but-steady economic slog will eventually prod the Fed into action, perhaps early next year.

His firm predicts a "growth recession," which may sound like an oxymoron but essentially sums up what is happening now. The economy keeps growing, yet unemployment rises.

Dutta said if monthly employment figures continue to show only modest hiring and rising unemployment, "the Fed is not going to sit idle."

Indeed, many economists think the Fed will feel compelled to step in if unemployment surpasses the recession high of 10.1 percent notched in October 2009. The rate rose to 9.6 percent in August, and is likely to inch higher in the coming months.

The White House is searching for new ideas that might help reduce the stubbornly high unemployment rate, and President Barack Obama said he would outline plans to boost the economy this week. Tax cuts to encourage hiring are expected to be among the proposals, but they would require support from Republicans in Congress.

Dutta pointed out that there are "good" and "bad" reasons for unemployment to rise. The "good" kind, like now, is caused by more people feeling confident enough about job prospects to venture back into the labor force. The "bad" kind is driven by increased job cuts. The first type might not spur the Fed into action; the "bad" kind almost certainly would.

On Wednesday, the Fed will release its "Beige Book" report of anecdotal economic evidence gathered from its 12 regional banks, which will provide insight into what is and isn't working well.

The report drills down to details as specific as Broadway show ticket sales, rural crop conditions and vacation resort bookings, and Fed officials routinely cite the findings when they discuss their views on the economy.

The last report, released in late July, added to double-dip fears because some Fed districts reported the economy was slowing. An upbeat report would support the idea the economy regained some momentum after a sluggish second quarter and encourage a wait-and-see approach from the Fed.

TRADING PLACES
Trade was by far the biggest drag on second-quarter U.S. growth, which registered a lackluster 1.6 percent annual pace. A surge in imports subtracted nearly 4.5 percentage points from gross domestic product. Because GDP measures domestic growth, imports count as a negative.

Thursday's July trade report is expected to show the gap narrowed slightly, which would ease pressure on third-quarter economic growth.

Michael Gapen, an economist with Barclays Capital in New York, said the third quarter appeared to be off to a "respectable start" and growth will likely be modestly stronger than in the second quarter.

The Fed's Bernanke would seem to agree. He pointed out in late August that the spike in imports was probably due to fleeting factors, and economic growth should pick up.

If growth doesn't accelerate, however, that would be one more plausible trigger for renewed Fed action.

China may offer a big clue about whether U.S. imports really are subsiding. It is scheduled to release trade figures for August on Friday, and those are likely to show another month of explosive gains in exports. Economists polled by Reuters think China's exports rose 35 percent, while imports increased a relatively modest 26.1 percent.
(Editing by Dan Grebler)

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Dollar slips on return to risk

2010-09-05T21:34:00.000-07:00

NEW YORK (CNNMoney.com) -- As better-than-expected economic data boosted investor morale this week, the greenback lost some of its luster, falling against a basket of currencies.

Friday's closely-watched employment report from the government, showing that the economy lost fewer jobs than expected last month, on top of reports indicating improving consumer confidence, home sales and manufacturing, have all reduced the appeal of the safe-haven dollar.

On Friday, the dollar index -- which tracks the dollar against a handful of other currencies -- edged down 0.4%, looking to end the week in the red.

But traders aren't convinced that this week's wave of improving data will continue, said Gareth Sylvester, a senior currency strategist at Klarity FX.
Another slew of economic reports due next week, including readings on retail sales and consumer sentiment, will be scrutinized for signs that a recovery is in fact taking hold, he said.

Mixed signals: "The data we're getting month to month and even week to week is still conflicting and sending lots of mixed signals," said Sylvester.

Because of these mixed signals, traders are wary about taking long positions, and are becoming increasingly likely to trade based on day-to-day economic reports.
"There's a general reluctance to want to buy and hold for a particular position at the moment," he said. "Traders have a very short-term mentality right now and are looking to get in and out of positions as quickly as possible, trading on daily data points."

And until consistency is seen, trading is likely to continue to be volatile.
"The dollar will probably see choppy trading in the next few weeks with an overall direction lacking," said Sylvester. "Until we see more economic data suggesting we're firmly on the road to recovery, it's very difficult for an overall direction to be found."

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Wall Street faces an economy at a 'crossroads'

2010-09-05T21:32:00.000-07:00

NEW YORK (CNNMoney.com) -- Stocks started September with a bang as investors cheered a rare dose of good economic news but investors may need to buckle in for the coming week: It's a holiday-shortened week with little on the docket to set the tone.

Last week, the Dow added 2.9% and moved back into positive territory for the year. The advance was fueled by a surprise rebound in manufacturing activity and a better-than-expected report on the labor market.

The upbeat news eased some worries about a renewed recession, but many investors remain skeptical about the outlook for growth and the sustainability of last week's rally.

"The economy is slowing, and appears to be nearing a crossroads," said Jim Baird, chief investment strategist for Plante Moran Financial Advisors. "It is too soon to determine whether a trip down the path toward a double dip recession is inevitable or if that outcome will be avoided."

Others are more optimistic. "There's a very strong argument to be made that stocks are cheap," said Hugh Johnson, chairman of Johnson Illington Advisors.
That argument, he said, assumes the economy will skirt a double dip recession and that growth will resume later in the year. "At a certain level, you're willing to take the risk," Johnson said, cautioning that a reduction in government stimulus and move towards higher taxes could present problems.

The cloudy outlook for the economy probably won't get much clarity this week with relatively few economic reports on the agenda. And trading could be choppy as many investors ease back in. U.S. markets will be closed Monday for the Labor Day holiday.

"I do expect [this] week's volatility to rise and investors begin to take sides on trading levels and economic growth," said Kevin Giddis, president of fixed-income at Morgan Keegan.

On the docket

Monday: U.S. markets are closed for the Labor Day holiday.

Tuesday: Markets are open but there are no economic reports on the agenda.

Wednesday: The Federal Reserve's Beige Book, a snapshot of economic activity across the nation, is due at 2 p.m. ET. The central bank is also slated to release data on consumer credit.

The government's weekly oil inventory report, which is usually released on Wednesday, comes out in the morning.

Homebuilder Hovnanian (HOV) reports quarterly results after the market closes.

Thursday: The government's weekly report on initial claims for unemployment and the July trade balance come out before the market opens.
Economists expect the Labor Department report to show that the number of Americans filing first-time claims for unemployment benefits rose to 470,000 in the week ended Aug. 4, down from 472,000 the week before.

Should US government debt be rated junk?

The U.S. trade balance is expected to have fallen to $47.2 billion in July from $49.9 billion in June, according to economists surveyed by Briefing.com.

Friday: Government figures on July whole sale inventories are expected before the market opens.

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What went wrong at Burger King

2010-09-03T21:32:00.000-07:00

FORTUNE -- It's not yet clear what Burger King's new owner, the Brazilian-backed private equity firm 3G Capital, has in mind for the troubled No. 2 fast-food chain. But a total strategic revamp is in order.

Burger King (BKC), which went public four years ago after its previous private equity owners cashed out, has limped its way through the recession, losing sales and market share even as its far-better-managed rival, McDonald's (MCD, Fortune 500), has thrived. Thriving is what fast-food purveyors are supposed to do during a recession, when diners tend to trade down. But Burger King has stubbornly stuck to a losing strategy, falling further behind with each passing quarter. The result: A loss in share value over the two years up until Tuesday -- just before rumors of the buyout started to float -- of 36%. McDonald's shares over the same period rose 14%.

McDonald's has deftly played the recession in part by offering plenty of value options while also offering some high-margin, premium (but still affordable) items, like the Angus burger, smoothies, and a new line of high-end coffee drinks.
Burger King has tried to do the same, employing what CEO John Chidsey calls a "barbell" strategy -- offering both low-cost and premium items. On the value side, Burger King has insisted on offering $1 double cheeseburgers, hoping to make up the difference by selling fries and drinks. Not only did this enrage franchisees -- who own 90% of the chain's stores -- it also failed miserably. Franchisees filed a lawsuit against the company, complaining that they were being forced to sell burgers below cost and that Burger King was out to boost revenues at their expense in an effort to please Wall Street.

It didn't. After Burger King announced last week that its fourth-quarter earnings fell 17% and that same-store sales for the year were down 3.9% in North America, the Miami Herald reported that although value meals helped increased traffic, the average check fell as the low-priced items made up an increasing share of revenues.

Failure on both ends of the barbell
It seems people weren't buying nearly enough fries and drinks to go along with their loss-leader double cheeseburger.

Nor, for that matter, were they buying enough of Burger King's premium items -- the other end of the barbell. Early this year the chain offered an answer to McDonald's successful Angus burger -- the Steakhouse XT, which is a bit larger than the Angus but is priced the same at $3.99. In May it introduced Fire Grilled Ribs, the eight-piece combo-meal version of which costs $8.99 -- a ridiculous price for a ridiculous meal.

Even Burger King seemed to know the concept was ludicrous. It ran TV spots where a guy says "Ribs from a fast food joint -- what a joke," whereupon another guy wearing a pig head and wings seems to fall from the sky to squeal, "No, they're reeeaal." The pig doesn't say whether it's a good idea to buy ribs from a drive-through window as opposed to from a napkin-laden table at a barbecue joint.

The ribs are part of Burger King's strategy of relying heavily on its core customers: young men. Through its sometimes clever, but often stupid TV spots, the chain markets itself as a place for young dudes to fill their bellies to the brim.
But besides blaming the economy in general for its woes (a disingenuous stance), executives last week noted that young men have been hit particularly hard by the recession, as jobs in manufacturing and construction have vanished.

Nevertheless, the company has doggedly pursued the demographic, even as McDonald's has carefully constructed its menu to appeal to a wide range of people with a wide range of tastes -- families, professional women, executives on the go, as well as young men.

Redesigning while restructuring
Meanwhile, Burger King franchisees are spending big to take part in Burger King's massive, chain-wide remodeling program. The plan calls for all 12,000 worldwide stores to be fitted with rotating chandeliers, electronic-screen menus, and walls of brick and corrugated steel. The cost is reportedly between $300,000 and $600,000 per store.

It's all very confusing for the fast-food consumer. Burger King, even while positioning itself as the place to procure sacks of cheap burgers to be eaten on the run, also seems intent on also competing directly with "fast casual" chains like Chipotle (CMG) and Panera (PNRA), and even with straight-up, sit-down restaurants like Applebee's.

McDonald's, meanwhile, is offering premium, high-margin products, but without shedding its fast-food identity. Everything it sells -- the premium stuff, the healthy stuff, the coffee -- is affordable and convenient. And while it, too, is upgrading its stores, it's not trying to make them look like anything other than McDonald's outlets, where you can grab what you need and be on your way.

It will be interesting to see what the new Brazilian owners will make of Burger King's grandiose vision. Chidsey will step down as CEO, but will remain as a co-chairman along with Alex Behring, 3G's managing director. Supposedly they'll work together to find a new chief.

So far, a few dozen outlets have taken part in the remodeling. While the revamped stores, according to the company, have boosted sales by 12% to 15%, 3G will be looking for ways to cut costs (as is the wont of PE shops) as well as cheaper ways to boost the top line. Of course, 3G has promised to invest big in the chain, but given that it's paying $4 billion, or $24 a share -- a 46% premium to its share price earlier this week -- the new owners will have to show much more care in deploying such investments than Burger King has during its four-year life as a public company.

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August jobs report: Signs of life for employment

2010-09-03T21:30:00.000-07:00

NEW YORK (CNNMoney.com) -- Business hiring is picking up, but not enough to make up for the massive losses of temporary government jobs.
The economy lost a total of 54,000 jobs in August, the Labor Department reported Friday.

Businesses added 67,000 jobs to their payrolls in August. Economists had forecast a smaller gain of 44,000 jobs. It marked the eighth straight month that businesses added jobs, following nearly two straight years of job losses.

The bulk of the losses came from the public sector, as the government cut 114,000 temporary census workers. It was the third straight month that census worker layoffs caused an overall decline in jobs.

But the report showed some improvements in the jobs picture, a welcome piece of good news among a slew of disappointing economic readings in recent months.

"It is a sigh of relief," said Sung Won Sohn, economics professor at Cal State University Channel Islands. "The labor market in August was lethargic, but better than feared, reducing the fears of a double-dip recession."
The overall losses were less than expected. Economists surveyed by Briefing.com forecasted a loss of 120,000 jobs.

And upward revisions for June and July showed there were 123,000 additional job gains in those months than previously reported.
U.S. stocks posted strong gains following the pre-market report.

Government payrolls outside of the Census Bureau, however, trimmed another 7,000 jobs in the month, with cuts coming from cash-strapped state governments.

The unemployment rate rose to 9.6% in the month from 9.5% in July, matching economists' expectations.
President Obama said Friday the business hiring in the report is good news but "not nearly good enough."
"The economy is moving in a positive direction. Jobs are being created," he said. "They're just not being created as fast as they need to, given the big hole that we experienced."
He promised his administration would be unveiling additional legislation next week try to spur more hiring.

House Minority Leader John Boehner, R-Ohio, responded that the Obama administration policies are responsible for the weak jobs growth.
"We will not solve our fiscal challenges until we cut spending and have real economic growth -- and we won't have real economic growth if we keep raising taxes on small businesses," he said.
Not out of the woods yet: Stubbornly high levels of unemployment and weak job creation have raised fears that the nation's economic recovery is in danger of stalling out and falling into a double-dip recession.
Some economists cautioned that despite signs of life in the report, the labor market is still soft.
Scot Melland, CEO of Dice Holdings, a provider of specialized career web sites, said he thinks despite the improvement, the overall labor market deserves no better grade than a C+.
"It's moving in the right direction, but it's not the numbers we'd like to see," he said.
And few are forecasting any significant improvement through the rest of this year.
The pace of job growth among business is not enough to make a dent in the stubbornly high unemployment. About 150,000 jobs are needed every month just to keep up with the pace of population growth.
Even if job growth continues to improve, it will take years to recoup the net loss of 8.4 million jobs in 2008 and 2009. Even with more than 700,000 jobs added so far this year, total employment is 7.6 million jobs below where it stood at the start of the Great Recession.

"We see things going sideways to modestly up," said Tim Quinlan, economist with Wells Fargo Securities. "The layoffs are behind us but the hiring hasn't picked up yet.
September will likely see another large drop in government jobs. But with only 82,000 census workers left, there should be limited impact on employment from the census jobs in the final three months of the year.

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Dow back in the black for 2010

2010-09-03T21:28:00.000-07:00

NEW YORK (CNNMoney.com) -- Stocks closed near session highs Friday, with the Dow erasing its losses for the year, as investors welcomed a better-than-expected report on the U.S. job market.

The Dow Jones industrial average (INDU) rose 128 points, or 1.2%. The S&P 500 (SPX) gained 14 points, or 1.3%, and the Nasdaq (COMP) composite rose 33 points, or 1.5%.

The rally pushed the Dow back into the black for the year. At roughly 10,448 points, the index is up nearly 0.2% since it closed at 10,428 points on Dec. 31.
All three major gauges ended the week with gains. The Dow added 2.9% this week, while the S&P 500 rose 3.7%, and the Nasdaq advanced 3.7% over the last five days. It was the first weekly gain for all three gauges in three weeks.

The advance was broad-based. Caterpillar (CAT, Fortune 500) and Boeing (BA, Fortune 500) led gainers on the Dow, in what was a solid week for industrial names. But shares of consumer-linked stocks, Coca Cola (KO, Fortune 500) and McDonalds (MCD, Fortune 500), weighed on the blue-chip index. Telecoms AT&T (T, Fortune 500) and Verizon (VZ, Fortune 500) lagged, while tech bellwether IBM (IBM, Fortune 500) added over 2%.

Where to invest $10,000

The better-than-expected jobs report, which came on the heels of improved manufacturing data earlier in the week, helped ease some concerns about the economy. But a report on activity in the services sector came in weaker than expected.

Meanwhile, yields on U.S. Treasury bonds and notes rose as demand for safe-haven assets waned. Gold prices fell.

"It's all about the payrolls number," said Tom Schrader, managing director at Stifel Nicolaus.

While the jobs data suggests the economy could avoid a "double-dip" recession, he said investors remain nervous about the outlook for short-term growth. In addition, concerns about growth in China and lingering debt problems in Europe also continue to weigh on the market.

"There's still a lot to worry about," Schrader said.
Trading volume was light with many market participants on vacation. On the New York Stock Exchange, advancers beat decliners by roughly two to one on volume of about 1 billion shares.

Looking ahead, there are relatively few economic reports for investors to digest next week and one fewer trading day on the calendar. U.S. markets will be closed Monday for the Labor Day holiday.

Stocks had ended higher Thursday as investors cheered strong sales results from major retailers and better-than-expected reports on pending home sales and jobless claims.

Economy: The government's widely anticipated jobs report showed that the U.S. economy lost jobs for a third straight month in August, but employers cut fewer positions than economists had forecast.

The economy lost 54,000 last month. That compared with 131,000 jobs shed in July. Economists were expecting employers to slash 121,000 positions in August.
The private sector added 67,000 jobs, beating economists' expectations for a gain of 44,000. The unemployment rate ticked up to 9.6%, from 9.5% in July, in line with expectations.

"Payrolls continue to be added in the private sector, but at a painfully slow pace," said Jim Baird, chief investment strategist for Plante Moran Financial Advisors. "Companies remain in a preservation mode and have continued to seek out alternative ways of increasing production."

Quit whining, Wall Street. Nothing has changed.

Meanwhile, the Institute for Supply Management's (ISM) services index slipped to 51.5 in August from 54.3 in July. Economists had forecast a decline to 53, according to consensus estimates from Briefing.com.

World markets: European shares closed higher. The CAC 40 in France rose 1.2%, the DAX in Germany gained 0.8%, and Britain's FTSE 100 gained 1%.
Asian markets ended mostly higher. Japan's benchmark Nikkei index rose 0.6%, and the Hang Seng in Hong Kong added 0.5%. The Shanghai Composite ended unchanged.

Currencies and commodities: The dollar fell against the euro and the British pound but was higher versus the Japanese yen.
Oil futures for October delivery fell 64 cents to $74.38 a barrel. Gold for December delivery fell $2.30 to $1,251.10 an ounce.

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Stocks drift higher ahead of jobs report

2010-09-02T22:09:00.000-07:00

NEW YORK (CNNMoney.com) -- Stocks pushed higher at the end of a listless session Thursday, extending gains from the previous day, as investors prepare for a critical report on the U.S. job market on Friday.

The Dow Jones industrial average (INDU) gained 50 points, or 0.5%. The S&P 500 (SPX) gained 9 points, or 0.9%, and the Nasdaq (COMP) composite rose 23 points, or 1%.

Stocks were supported by better-than-expected sales from major U.S. retailers and an increase in pending home sales. But the tone was relatively subdued following a big rally on Wednesday and ahead of the government's monthly jobs report on Friday.

"The market is holding its own," said Peter Cardillo, chief market economist at Avalon Partners. "The fact that we're holding yesterday's gains is a good indication that we could rally after Labor Day if the jobs report is within expectations."

The job market has been a major source of worry on Wall Street. Consumer spending, which drives the bulk of U.S. economic activity, is closely linked to unemployment.

In particular, investors are eager to see signs that private sector employers could begin hiring again as public sector jobs related to the Census have disappeared.
"It all depends how bad that private sector number is," said Cardillo.

On Wednesday, payroll processing firm ADP said private sector employers cut 10,000 jobs in August -- a drop from the downwardly revised 37,000 jobs they added the month before. Economists had expected the report to show an increase in private sector payrolls.

Friday's report to is expected to show that employers cut a total of 120,000 jobs in August after payrolls fell by 131,000 in July, according to economists surveyed by Briefing.com. The unemployment rate is forecast to rise slightly to 9.6%.

Meanwhile, trading volumes continued to be light Wednesday as many market participants are on vacation this week. On the New York Stock Exchange, just under 1 billion shares traded hands.

IBM (IBM, Fortune 500) and Merck (MRK, Fortune 500) led decliners on the Dow, while Boeing (BA, Fortune 500), 3M (MMM, Fortune 500) and Home Depot (HD, Fortune 500) gained. Of the 30 stocks in the blue-chip average, 24 were higher.
After closing out a dismal August, stocks rallied more than 2% on Wednesday to start September on a strong note. But the market is still down between 1% and 3% year to date.

Retail: A majority of retailers reported surprisingly strong August same-store sales, as consumers responded to back-to-school deals and tax holidays. Same-store sales, an important gauge of a retailer's health, measure sales at stores open at least a year.

Sales tracker Thomson Reuters said 65% of the retailers in its index, that have reported sales so far, have beat expectations.

Shares of major retailers were higher in early trading. JC Penny (JCP, Fortune 500), Macy's (M, Fortune 500) and Nordstrom (JWN, Fortune 500) led the charge.
Economy: Weekly jobless claim figures dipped slightly, by 6,000 claims, to 472,000 in the week ended Aug. 28. Economists expected the number of Americans filing new claims for unemployment insurance to have edged up slightly last week to 475,000.

Pending home sales -- a forward looking gauge -- rose 5.2% in July, according to an index from the National Association of Realtors. But the index, which is based on sales contracts signed in the month, was down over 19% from July 2009. Economists had expected pending home sales would be flat in July.
The housing data helped boost shares of homebuilders Hovnanian (HOV), PulteGroup (PHM) and D.R. Horton. (DHI)

Separately, the government said factory orders rose 0.1% in July, versus a forecasted 0.3% gain. But the Commerce Department said orders fell 0.6% in June, an improvement over the originally reported 1.5% drop.

The Labor Department said labor productivity in the non-farm business sector fell at an annual rate of 1.8% in the second quarter of 2010. The drop came as hours worked increased 3.5%, the largest quarterly gain in over four years, and output rose 1.6%.

The drop in productivity was roughly in line with estimates from private sector economists.

Companies: Shares of Mariner Energy (ME) fell 2.5% after a fire occurred on an oil and gas production platform the company owns in the Gulf of Mexico.

All 13 people onboard the Vermilion 380 have been accounted for, Mariner said. They are currently investigating the causes of the incident. The company said an initial flyover found no indication that oil or gas had leaked as a result of the fire.
Burger King (BKC) said Thursday that it has agreed to be acquired by investment firm 3G Capital in a deal valued at $4 billion. Shares of the fast-food company rose 25% after surging 14% in the previous session on rumors of the deal.

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Harrisburg, Pa., defaulting on its bonds

2010-09-02T22:06:00.000-07:00

NEW YORK (CNNMoney.com) -- The capital city Pennsylvania is broke and will be skipping this month's multi-million dollar bond payment.

On Sept. 15, Harrisburg, Pa., was scheduled to make a $3.29 million payment on the bonds it issued to build a trash plant. But, the cash-strapped city doesn't have the dough.

"The city's budget is in deficit," said Chuck Ardo, spokesman for Harrisburg Mayor Linda Thompson. "We're looking for ways to trim the budget just to keep services going."

"Now the chickens have come home to roost," the mayor said in a statement released Wednesday.

In May, Moody's knocked the rating on its general-obligation bonds three notches to B2 -- five steps below investment grade. To put that into perspective: Moody's rating on Greece's government debt sits at A3 -- still investment grade.
"It's a warning to holders of bonds issued by financially stressed state and local governments," said John Lonski, chief economist for Moody's Investors Services. "Credit crisis is still with us."

And in, fact, many on city council have been floating the idea of bankruptcy.

America's 7 junkiest cities

However, Mayor Thompson chastised them for that and for shooting down her proposed increases to the real estate tax and water rate. She said that this "created a bigger hole" in the general fund and pushed the city closer to potential bankruptcy.

"There are some in this community who see bankruptcy as a silver bullet," said Thompson. "But, it's actually just a can of worms. The pro-bankruptcy cabal has blocked every attempt we've made to find a way back from the fiscal abyss."
She said the city "is developing a comprehensive plan to meet its debt obligations in the future."

Ardo said the mayor considers bankruptcy to be an "option of last resort," though it's not clear how the city will pull itself out of the red.

"Given the city's financial challenges, it's difficult to predict what will happen next," he said.

The city of Harrisburg is scouring its financial accounts as part of its drive for fiscal austerity. On Thursday, the mayor announced that the city was auditing a sanitation company for not paying $20,000 worth of waste disposal fees.

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How trader Dick morphed into banker CEO Dick Fuld

2010-09-02T22:03:00.000-07:00

FORTUNE -- The rumors persisted of Lehman Brothers' being taken over again, and it was against such a background that Dick devised his pièce de résistance.
Fending off the external threat would involve a lot of bluff to convince people that Lehman Brothers was far stronger than it was. It would have to ooze confidence if it was to make its way. At some stage, Fuld seemed to have decided that the best way to do this was by completely revamping his own image, even, if possible, his personality.

In May 1995 BusinessWeek magazine published an interview with Fuld, just a year after he had led Lehman Brothers into its renewed status as an independent firm. "Free at Last" read the headline, mimicking the cry from the 1960s of the late civil rights leader, Martin Luther King, Jr.

Fuld reported that he had just returned from Israel, where Lehman Brothers had opened an office. Though Fuld was Jewish, this was his "first major trip" there. The Israelis' spirit impressed him, their sense of "we are all in it together," by which he may have meant being surrounded by a collection of hostile neighbors. This was also "the guts" of Lehman Brothers' culture, he said. On the other hand, company togetherness no longer included the one thousand people that Fuld had laid off in the previous year.

An accompanying photograph captured the key theme of the article. It showed a sideways-on shot of a dark-suited Fuld reclining in a Victorianesque armchair. With his head turned straight to the camera and arm bent at the elbow, it looked as if he was about to make a thoughtful, even philosophical contribution to a conversation. In his trader days Fuld would not have been caught at work posing pensively in an old armchair. Rare pictures of him from past times usually had him sitting at a trading desk and computer screens, his tie tightly tied and his collar fiercely buttoned up, jacket off . Such old snapshots give the impression of a man pausing just long enough for the photographer to get his picture before getting back to work.

But evidently, Dick was no longer a trader. "For the clients we're targeting," he said of Lehman Brothers' ambitions, "we want to be their top 1 or 2 banker." This was a radical departure by a man who had once spoken of those "fucking bankers." Fuld, it appeared, had discovered business was not simply a matter of deals and transactions but of clients and relationships. On his recent trip to Israel, he had apparently also taken the road to Damascus.

He was not alone in his itinerant ways. In a 1996 piece for the New York Times entitled "The Death of Sherman McCoy," Michael Lewis said others were en route from the raucous '80s: "[T]hey read the books, saw the movies, studied the lawsuits and decided on balance that it paid them to clean up their acts and pretend to be modest like everyone else." Some big-time traders left their jobs at investment banks to join new institutions such as hedge funds. Hedge funds were pools of unregulated capital, a term for rich people's money invested in lucrative places where the government would not interfere. They were sometimes back-street operations, albeit in quite exclusive back streets.

London's posh Mayfair district, nestled between Piccadilly and Park Lane, became a hedge fund haven. Some traders-turned-hedge-fund types had changed their style: "The very same people who seemed unable to function without cigars, suspenders and thousand-dollar suits were suddenly turning up for work in sneakers." Not all, of course, because by and large, Wall Street firms encouraged formal wear, but the indications were that the transformation was more one of image than substance.

As far as Dick was concerned, some people guffawed: The idea of his turning into a client-relationship man was tantamount to Jack Welch, the hard-nosed head of General Electric, discovering his touchy-feely side. Was this a ruse on Dick's part or did he believe it? Would the slam-bang mentality of the modern market even allow such a thing? But in the can-do trader's mind, to wish for something was as good as to have it done. And after all, Dick was, at his heart, a trader, albeit one who had willed himself to become a banker.

--Adapted from The Last of the Imperious Rich: Lehman Brothers, 1844-2008 by Peter Chapman by arrangement with Portfolio, a member of Penguin Group (USA), Inc., Copyright © 2010 by Peter Chapman.

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Auto sales: Worst August since 1983

2010-09-01T23:19:00.000-07:00

NEW YORK (CNNMoney.com) -- The nation's top automakers reported disappointing sales Wednesday, resulting in the worst August for industrywide auto sales in 27 years.

According to sales tracker Autodata, U.S. new vehicle sales fell just short of 1 million vehicles, a drop of 21% from a year ago, which included Cash for Clunkers. That federal program created a sugar rush of sales by dangling an incentive of up to $4,500 in cash for buyers who traded in older gas guzzlers for more efficient models.

Industry sales also fell 5% from July levels. August sales typically outpace July, as deals become available on older models ahead of the fall introduction of new model year cars. August sales would equate to an annual sales pace of about 11.5 million vehicles.

"Car buying is far from repaired, and consumers hesitate before they make a big ticket purchase," said Jesse Toprak, an analyst with the auto pricing Web site Truecar.com. "It shows that the recovery is going to be much slower and more painful than expected."

This year was the weakest August sales total since the 993,100 sold in 1983. Analysts had been forecasting a weak month, with expected sales of about 1.03 million. Most of the major automakers fell short of estimates. The soft demand for autos is seen by economists as another sign of growing weakness among nervous consumers.

GM sales toppled 25% from a year ago, partly because of comparisons to the Cash for Clunkers program of last summer. The federal program created a sugar rush of sales by dangling an incentive of up to $4,500 in cash for buyers who traded in older gas guzzlers for more efficient models.

But it wasn't all Clunkers. August's sales also dropped 7% from July and fell short of forecasts from sales trackers Edmunds.com and TrueCar.
GM officials echoed that they are seeing a tougher environment for car sales.

"We are realistic. We do think that consumers will continue to be cautious in their spending," said Don Johnson, GM's vice president of U.S. sales.

GM did not get as much of a lift from Cash for Clunkers as some of its rivals. But its sales comparisons were hurt by the nearly 40,000 vehicles it sold a year ago at four brands it has since discontinued or sold -- Pontiac, Saturn, Hummer and Saab. Sales at its four continuing brands -- Chevrolet, Buick, GMC and Cadillac -- fell only 11% from a year ago.

Ford (F, Fortune 500) reported an 11% drop from year-ago sales levels and a 5% decline from July. It also missed forecasts from Edmunds and TrueCar.
Most of the decline in sales were concentrated in its Focus compact sedan and its Escape small SUV, which were the company's best two sellers in the Cash for Clunkers program a year ago.

Ford announced that it made a slight trim in its fourth quarter production target, to 570,000 vehicles from 574,000 a year ago -- a sign that Ford's strong sales gains may be starting to level off in the face of softening demand for automobiles.
"Sales were weaker than expected. Right now auto sales seem to be moving horizontally," said Ken Czubay, Ford vice president of U.S. marketing, sales and service.

Japanese automaker Toyota Motor (TM), which had been the biggest winner in Cash for Clunkers sales a year ago, suffered the hardest hit to sales among the largest automakers -- sales plunged 34% from a year ago, and 12% from July.
"This month's [Toyota] results are even worse than expected," said Michelle Krebs, senior analyst with Edmunds. "Toyota still is suffering a hangover from its numerous recalls this year. It is taking a long time for Toyota to get back to 'business as usual.'"

Sales at Honda Motor (HMC) plunged 33% from a year ago, and 3% from July falling short of forecasts. Nissan sales tumbled 27% from a year ago and 7% from July.

Chrysler Group, which includes the Chrysler, Dodge and Jeep brands, was the only one to report a modest gain in August sales, posting a 7% gain compared to both a year ago and July. But the year-over-year bar wasn't terribly high, as Chrysler got the smallest sales lift of any major automaker from the Clunkers program.

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Apple introduces new Apple TV and iPods

2010-09-01T23:17:00.000-07:00

NEW YORK (CNNMoney.com) -- Apple CEO Steve Jobs introduced a revamped Apple TV device, a new iPod line, an iTunes social network and updates to the operating system for the iPhone, iPod Touch and the iPad at Apple's highly anticipated product launch event on Wednesday.

Apple TV, which hasn't sold well and which Jobs has referred to as a "hobby," got a major revision. The new device is a quarter the size of the current model, fits in the palm of your hand, and sells for just $99 -- much less than the $229 of the current model. (Read Fortune.com's live blog of the event here.)

It's so small because Apple ditched the prior device's video purchase model, dramatically reducing Apple TV's storage requirements. The gadget will now instead be for movie and TV show rentals. Movies can be rented the same day the DVDs go on sale for $4.99, and TV shows are available for 99 cents each.

"Our users want Hollywood movies and TV shows, cheaper; they don't want amateur hour," Jobs said. "They don't want another computer. They don't want to manage storage. They want it to be silent, cool and small."

Jobs promised that the device would have the largest library of movies in the world available for rental on the first day of purchase. As for TV shows, Apple was able to strike a deal with Walt Disney Co.'s (DIS, Fortune 500) ABC and News Corp.'s (NWS, Fortune 500) Fox for TV shows, but Jobs said he believes more networks will soon follow suit.

"We think the rest of the studios will see the light and get on board pretty fast," Jobs said.

The new Apple TV will also be able to connect to users' Netflix (NFLX) accounts, YouTube, and Flickr. The device can link to users' home computers as well, so they can play their iTunes music and video libraries over Wi-Fi.

New iPods

The iPod line got its annual upgrade as well. The flashiest new iPod was the iPod Touch, which starts at $229 and has become the best-selling iPod. The new iPod Touch is thinner and adds many of the new iPhone 4's features, including a front and rear facing camera, "Retina Display," and FaceTime, which allows users to make video calls over Wi-Fi.

The iPod Touch is also the best selling portable game player, outselling Nintendo and Sony's portable game players combined, Jobs said.

The $149 iPod Nano also got a significant upgrade. The tiny device lost its click wheel and will feature a multi-touch screen and a clip on the back. Apple made it almost half the size of the current iPod Nano model and 42% lighter.

Apple went back to the past for its newest $49 iPod Shuffle: After users lamented loss of the buttons Apple took away on last year's model, the company is putting them back on the new one. The new Shuffle keeps the features of the latest one, including the ability to play custom playlists.

The only iPod that didn't get an update is the iPod Classic. All of the new iPods will be available next week.

ITunes 10

Apple also unveiled iTunes 10, complete with a new logo. Jobs said that since iTunes sales have long eclipsed CD sales, it was appropriate that the new icon ditch the CD image. It now features just a blue circle and a musical note.
ITunes 10, which launches on Wednesday, has a slightly new interface, with album art now available to view in list mode. But the major new feature was "Ping," a social network based right in iTunes. People can follow both friends and artists to comment on songs, albums and bands. They can also post videos, and find concert dates.

As always, privacy is a concern with new social networks, but Jobs was quick to say that the settings are "super-simple to set up," and the feature "is as public or private as you like."

The iTunes update didn't include the cloud-based service that many had hoped for. Apple (AAPL, Fortune 500) is building a data center in North Carolina, which many believe will be used to give customers the ability to access their iTunes library anywhere.

IOS 4.1

Jobs unveiled bug fixes and minor performance upgrades for Apple's mobile device operating system. Jobs said that the new iOS 4.1 offers improved photo-taking capabilities, the ability to upload high definition video over Wi-Fi and a new collaborative game playing community called Game Center. The new OS will be available for download in November.

The next update, iOS 4.2, was also previewed. It will feature wireless printing for the iPad and the ability to connect an iPad to Apple TV devices.

Jobs said that 120 million devices with iOS have shipped, dating back to the original iPhone in 2007. Apple is activating 230,000 iOS devices a day, including the iPad, iPhone 4, iPhone 3GS and the iPod Touch. There are now 250,000 apps in the App Store, including 25,000 iPad apps.

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