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Whole Foods Responds To Ramadan Marketing Controversy

by The Huffington Post on August 9, 2011

Huffington Post…

Whole Foods is the object of a growing controversy about the popular grocery chain’s treatment of Ramadan , the holy month of fasting for Muslims that started Aug. 1. On July 27, the retailer introduced a special promotion for the month of Ramadan on their blog, Whole Story , featuring special recipes and product giveaways for the month. This promotion also coincided with the introduction of a new halal-certified product line in Whole Foods stores. A day later, Fast Company posted an article highlighting Whole Foods’ online Ramadan campaign as a first for a major American food chain. The article presciently stated that although no major in-store promotions were planned, the Web and social media efforts were a bit of a risk in a U.S. marketplace that is often hostile to Islam. Unsurprisingly, the campaign garnered the notice of right-wing bloggers who promptly branded Whole Foods as “jihadist” and “anti-Israel.” The absurdity of this position may have been easily dismissed if not for the subsequent reaction by leadership at the company. On Tuesday, the Houston Press published a report revealing the text of an internal email circulated by Whole Foods executives to the chain’s stores. “It is probably best that we don’t specifically call out or ‘promote’ Ramadan … We should not highlight Ramadan in signage in our stores as that could be considered ‘Celebrating or promoting’ Ramadan.” The email went on to explain that the promotion previously announced on the company’s blog should not be misinterpreted to mean that the chain was celebrating or promoting Ramadan, saying, “The misinterpretation has generated some negative feedback from a small segment of vocal and angry consumers and bloggers.” Whole Foods’ apparent capitulation to an extremely vocal minority of Islamophobes has already drawn significant ire from bloggers and on Twitter . What’s your reaction to this story? Will this lead to significant trouble for the chain? UPDATE: Shortly after the publication of this story, Whole Foods publicly responded to the controversy on their Twitter feed , indicating the instruction to de-emphasize Ramadan was an isolated response by one of the company’s 12 operating regions and not indicative of company-wide policy. We are still carrying and promoting halal products for those that are celebrating Ramadan this month. We never sent a communication from our headquarters requesting stores take down signs or remove parts from this promotion. We have 12 different operating regions and unfortunately, one region reacted by sending out directions to promote halal and not specifically Ramadan after some negative online comments.

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Whole Foods Responds To Ramadan Marketing Controversy

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Jobless Claims Down As Labor Market Could Be Picking Up

by on May 19, 2011

Huffington Post…

WASHINGTON – The number of Americans filing new claims for unemployment benefits fell more than expected last week, offering hope the labor market recovery remains on track. Initial claims for state unemployment benefits fell 29,000 to a seasonally adjusted 409,000, the Labor Department said on Thursday, continuing to unwind the prior weeks’ spike. Economists polled by Reuters had forecast claims dropping to 420,000. The prior week’s figure was revised up to 438,000 from the previously reported 434,000. “Clearly what it shows is an ongoing healing in the labor market. The recent data have been skewed by special factors like the Easter holiday and supply chain issues coming out of Japan,” said Neil Dutta, a U.S. economist at Bank of America Merrill Lynch in New York. “Some of the increase in jobless claims have been organic due to the slowing in the economy.” U.S. stock index futures extended gains on the report, while prices for government debt widened losses. The dollar rose against the yen. The four-week moving average of unemployment claims, a better measure of underlying trends, rose 1,250 to 439,000 – the highest level since mid-November. The data covers the survey period for the government’s closely watched employment report for May, which will be released early next month. The recent jump in claims, blamed on auto layoffs because of supply chain disruptions from March’s Japanese earthquake and problems with adjusting data for seasonal variations, had raised fears of a pull back in the pace of job creation. Employers added 244,000 jobs in April, the most in 11 months. However, the unemployment rate rose to 9 percent from 8.8 percent in March. Despite the fall, claims held above the 400,000 mark for a sixth straight week, indicating payroll growth will only be gradual. The four-week average has now been above that level, which is normally associated with stable job growth, for four weeks in a row. A Labor Department official said only one state or territory, the Virgin Islands, had been estimated, indicating the report was largely clear of distortions. The number of people still receiving benefits under regular state programs after an initial week of aid fell 81,000 to 3.71 million in the week ended May 7. Economists had expected so-called continuing claims to fall to 3.72 million from a previously reported 3.76 million. The number of people on emergency unemployment benefits increased 53,398 to 3.47 million in the week ended April 30, the latest week for which data is available. A total of 7.94 million people were claiming unemployment benefits during that period under all programs. (Reporting by Lucia Mutikani; Editing by Neil Stempleman) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Jobless Claims Down As Labor Market Could Be Picking Up

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Eric Ehrmann: New Tango Argentino… Peronism and Globalism Hook Up

May 3, 2011

In a nation that still measures democracy in decades, the period between Easter and May Day evokes memories of food riots and coup attempts triggered by runaway inflation. But when Argentina chose Nestor and Cristina Kirchner to play Juan and Evita in the nation’s never ending political drama, the land of the tango finally revealed its love affair with the yankee dollar. It’s election season in Argentina, and in spite of strikes slowing the oil industry and 100,000 Peronist workers marching down Avenida 9 de Julio to protest low wages, consumer spending is healthy enough for Goldman-Sachs to predict that annual growth this year will be higher than the 6 percent central bank estimate. Official inflation ran at 9.7 percent in March but many private sector analysts argue that the government is grossly understating that figure to assuage the international financial community over a peso that is being weakened by inflation. Fears of recurring inflation remain so deeply embedded in the national psyche that Argentines line up daily at local cambista shops to change pesos to dollars. The agro-export business that helps drive the economy is done in dollars. And billions in flight capital that leave Argentina find happy homes in Manhattan banks. In 2009 nearly $40 billion vanished from the Argentine economy, more than twice the amount of the 2008 goods and services trade that moved between the US and Argentina. Argentina started dancing for dollars big time four decades ago when Juan Peron and his new wife, Isabel (an ex-night club dancer), returned from exile in fascist Spain. Their coterie included Jose Lopez Rega, known as El Brujo (the warlock). Linked in to the Propaganda Due loggia , El Brujo sought solace in the stars instead of the stats; his policies as Peron’s top adviser launched an era of astronomical inflation, the Dirty War, and helped trigger the first Latin debt crisis. With the Peronist government able to freeze savings and other assets by decree, anyone who could afford to buy a few dollars and stash them under the mattress did so. They still do. As sometimes happens during election season, flight capital returned home to support Nestor’s victorious 2002 bid. The power couple from Patagonia then put a new spin on Peronist politics. They engaged young upscale voters who see the world beyond the entitlements provided to dedicated followers of justicialismo (the official name of Peron’s party, an Argentine-Spanish acronym for social justice). The old Peronist concept of the mobilized community morphed into a more inclusive movement and the nation marched forward under the banner of Kirchnerismo . But in Argentina, like Brazil, the collectivisms of the right and the left have been slowed by the strong headwinds of globalism. Instead of a dirty war, Argentina is fighting a war against food price inflation, a war on drugs and syndicalists, and free market technocrats are battling over the spoils as big government sells assets into a dollarized economy. Cristina fell back on the old school Peronist tactic of dipping into central bank resources to drive the economy, creating new inflation and more flight to the dollar. Agribusiness and local oligarchy recoiled and after a contentious debate, Argentina’s political class came down on the side of globalism and Kirchnerismo lost its luster. If inflation-fighting wasn’t enough, Cristina-bashing by the nation’s largest daily, Clarin , reopened old dirty war wounds linked to kidnappings of members of the Graiver family to pressure them to sell off the nation’s newsprint industry, and the death of prominent Peronist party fundraiser, Dudy Graiver. Dudy, who once served as an adviser to junta the junta government of general Alejandro Lanusse and financed publications edited by Jacobo Timerman. He became a powerful international banker active in global flight capital operations and had a close relationship with New York attorney Theodore Kheel. The Graiver family continues to issue conflicting statements on the events. Business publications, including the Economist charged that Argentina is understating inflation and poverty rates. Le Monde Diplomatique questioned the sustainability of syndicalist politics. Neoconservative public diplomacy assets continue to associate Cristina with Washington’s favorite rogue nations, Venezuela, Syria and Iran. But the same globalist media who bully Argentina watched from the sidelines as bankers and business leaders ignored the warning signs that led to the current crisis. Advised by a solid team, including foreign minister Hector Timerman , a dedicated Peronist with close ties to the New York financial community, Cristina has moved her image to the political center to attract dollar investors. New evidence of Cristina’s globalist tilt came on the heels of Friday’s big populist rally along the Avenida 9 de Julio. Cristina named the scion of one of Argentina’s most influential and internationally connected companies to head YPF, the powerful state oil company. Now, as candidates jockey for position in October’s presidential elections, her main competition seems to be Ricardo Alfonsin of the opposing Radical Civic Union (UCR). Ricardo is the son of former president Raul Alfonsin who led the nation’s transition from dictatorship to democracy, only to be forced out of office early by bloody food riots, some of which were orchestrated by Peronist labor thugs. Polls by influential Buenos Aires daily Pagina 12 continue to indicate that, for now, Cristina remains the odds on favorite to win reelection.

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Wall Street Stocks Slip On Fears Of Inflation’s Effect Taking Place

April 25, 2011

U.S. stocks fell on Monday on signs some corporate outlooks were being strained by concerns over higher raw material costs, including consumer products maker Kimberly-Clark Corp. The market’s decline in a low-volume session followed some strong earnings last week, which helped pushed the Dow to a closing high for the year. The S&P 500 has moved to the top end of its recent trading range where it is facing resistance. Kimberly-Clark (KMB.N) sank 2.9 percent to $64.13 and was one of the S&P 500′s top percentage decliners after it cut the low end of its full-year outlook, saying the cost of pulp and other goods were rising more than twice as much as it had expected. The Kleenex tissue maker is one of the companies most exposed to rising commodity costs because its products contain oil-based materials and paper. Johnson Controls Inc (JCI.N) fell 3.3 percent to $39.38 after the company, one of the world’s largest auto suppliers, said its fiscal third-quarter results would be hit by a drop in car production following the earthquake in Japan. “There are some legitimate inflation concerns among investors related to raw material prices, which could put pressure on margins later in the year,” said John Carey, portfolio manager of Pioneer Investment Management in Boston, which has about $260 billion in assets under management. Of S&P 500 companies that have reported results so far, 75 percent beat analysts’ expectations. That is just above the average over the past four quarters but well above the average of 62 percent since 1994, according to Thomson Reuters data. Helping the Nasdaq, SanDisk Corp (SNDK.O) rose 1.6 percent to $49.81 after raising its 2011 margin outlook late on Thursday. The Dow Jones industrial average .DJI was down 34.40 points, or 0.28 percent, at 12,471.59. The Standard & Poor’s 500 Index .SPX was down 2.89 points, or 0.22 percent, at 1,334.49. The Nasdaq Composite Index .IXIC was up just 0.10 of a point, or unchanged on a percentage basis, at 2,820.26. Energy and materials companies’ shares ranked among the weakest of the session, with the S&P Energy Index .GSPE down 0.7 percent and the S&P Materials Index down 0.6 percent. Crude oil futures prices fell after hitting their highest level since September 2008 earlier in the session, while silver reversed course after a sharp rally. The CBOE Volatility Index .VIX, known as the VIX, rose 7.8 percent after falling last week to its lowest level since 2007. This week is another hectic one for earnings with 180 S&P 500 companies set to report, including Amazon.com (AMZN.O), Coca-Cola Co (KO.N), Microsoft Corp (MSFT.O) and Exxon Mobil Corp (XOM.N). The week’s agenda includes a two-day meeting of the U.S. Federal Reserve’s policymaking committee on Tuesday and Wednesday. Fed Chairman Ben Bernanke will hold the first of four annual press conferences on Wednesday after the Federal Open Market Committee’s meeting ends. Investors will look for clues about the direction of monetary policy when the Fed’s bond buying program ends in June. Traders noted that activity would likely be subdued as many major European markets remain closed over the long Easter weekend. About 2.92 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq as of midday, below average for this point in the session. (Reporting by Ryan Vlastelica; Editing by Jan Paschal) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Obama’s Latest Obstacle

April 24, 2011

WASHINGTON — With gas prices climbing and little relief in sight, President Barack Obama is scrambling to get ahead of the latest potential obstacle to his re-election bid, even as Republicans are making plans to exploit the issue. No one seems more aware of the electoral peril than Obama himself. “My poll numbers go up and down depending on the latest crisis, and right now gas prices are weighing heavily on people,” he told Democratic donors in Los Angeles this past week. In fact, Obama raised the issue unsolicited in a series of town meetings in Virginia, California and Nevada that were ostensibly about his deficit-reduction plan. And he made the gas spike the subject of his weekly radio and Internet address Saturday. “It’s just another burden when things were already pretty tough,” he said. As Obama well knows, Americans love their cars and remain heavily dependent on them, and they don’t hesitate to punish politicians when the cost of filling their tanks goes through the roof. Indeed, for presidents, responding to sudden surges is a recurring frustration. “These gas prices are killing you right now,” Obama said at Facebook headquarters in Palo Alto, acknowledging that many Americans can’t afford new fuel-efficient cars and must drive older models.. For some, he said, the cost of a fill-up has all but erased the benefit of the payroll tax holiday that he and congressional Republicans agreed on last December. On Saturday, Obama insisted in his radio and Internet address that the best answer is a long-term drive to develop alternatives to fossil fuel. He also renewed calls to end $4 billion in subsidies for oil and gas companies. “Instead of subsidizing yesterday’s energy sources,” he said, “we need to invest in tomorrow’s.” Republicans contend that high gas prices are the inevitable result of an administration they accuse of stifling domestic drilling, and which placed new curbs on offshore exploration after last spring’s disastrous BP oil spill. “The administration has declared what can only be described as a war on American energy,” said Senate Minority Leader Mitch McConnell. “Obama is vulnerable on gas prices and the Republicans have and will exploit this as a wedge issue,” said James Thurber, who directs the Center for Congressional and Presidential Studies at American University. Legislative aides report House Republicans are considering a series of hearings and floor votes on measures to boost domestic oil and gas production when Congress returns from its Easter break. Meantime, Obama has ordered his Justice Department to form a task force to look for fraud or manipulation in the oil markets. It will “root out” any abuses, he told a town meeting in Reno, Nev. The president is among those who’ve said the surging price for crude is caused by worries about political upheaval in the Arab world and increasing demand from China and elsewhere. Still, Americans have a tradition of holding the party in power responsible for rising gas costs. Obama’s focus on the issue came as a New York Times/CBS News poll published Thursday found that 70 percent of the public believes the country is headed in the wrong direction. That followed a March AP-GfK survey reflecting widespread discontent over the economy, with just 15 percent seeing an economic improvement the previous month. Through the spring, Obama’s approval numbers in several polls have slipped. “Gas prices are a major factor in his slide … along with unemployment and his talk about cuts and tax increases to deal with deficits and debt,” Thurber said. The national average price for a gallon of regular gasoline is currently $3.84, almost a dollar higher than a year ago. In many places, it’s well over $4. The gas price debate has a sense of deja vu to it, Obama notes. Vows to end dependence on expensive oil imports go back to Richard Nixon’s “Project Independence”, a 1973 response to the Arab oil embargo, and this has been a popular refrain by presidents of both parties over the last 40 years. “Whenever gas prices shoot up, like clockwork, you see politicians racing to the cameras, waving three-point plans for two dollar gas,” Obama said in Saturday’s address. But when prices subside, those plans are quietly shelved. Even calls to target price gouging have a familiar ring. When gas hit $3 a gallon in 2006, George W. Bush launched a probe, declaring Americans “don’t want and will not accept … manipulation of the market. And neither will I.” Seven months later, Bush took what he called a “thumping” in mid-term elections. Of course, other issues – especially Iraq – played a big role. But Obama can’t help pondering that example, and wondering what rising gas prices could do to his hopes for a second term.

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A Year Later, Greece Still Struggles

April 23, 2011

ATHENS, Greece — It’s an anniversary few are celebrating. A year ago Saturday, with its faltering economy days away from bankruptcy, Greece ended months of speculation and requested bailout loans. Prime Minister George Papandreou chose the remote island of Kastelorizo, and its tranquil seaside backdrop, to announce the “urgent national need to formally ask our partners to mobilize the support mechanism.” International solidarity, he said in a televised address, would “send a strong signal to markets that the European Union is not to be toyed with, and it will protect our common interests and our common currency.” Twelve months on, there’s little indication that that signal has been received. Greek bonds have been axed to junk status by the three major ratings agencies. And sky-high borrowing costs have roughly doubled, along with the price of insuring debt. Greece would currently have to pay out 15-percent interest on a 10-year bond, compared with the German benchmark of 3.27 percent. At least 160,000 more people have lost their jobs since April 23, 2010, with government austerity accelerating layoffs and business failures. And the national debt is forecast to exceed the emergency level of 150 percent of gross domestic product in 2011. “At the moment we have a very, very difficult situation which requires a rapid response and tough measures,” economic analyst Vangelis Agapitos said. “Of course the markets also realize that there is political fatigue and political cowardice to fully take the tough measures that are necessary.” Despite daily government denials, 47 percent of Greeks now believe the country will have to restructure its debt, while just 24 percent think it won’t be necessary, according to an opinion poll due to be published Sunday. The survey by the Alco research company for the weekly Proto Thema newspaper used data from 1,000 people interviewed April 15-19. No margin of error was quoted but it would normally be around 3 percentage points for a survey of that size. Support for Papandreou’s Socialists has sunk from 34.7 percent to 21.5 percent in the past 15 months, the poll found, though he still maintains a slim lead over rival conservatives. After Papandreou’s call for help from Kastelorizo, a rescue deal was put together in nine days, just ahead of a critical refinancing deadline. Eurozone countries and the International Monetary Fund agreed to lend Greece euro110 billion – equivalent to nearly half the country’s annual output – through 2013. In return for the bailout loans, Papandreou’s Socialist government slashed euro14 billion off the budget deficit in 2010 using salary and pension cuts and a raft of unpopular measures aimed at reducing waste in the public sector and protective market rules. His government has promised debt inspectors that it will start generating a primary surplus in 2012, but fiscal targets have begun slipping this year due to the ongoing recession. And the sharp rise in public discontent is in growing contrast to calls by Greece’s central bank and analysts for bolder cost-cutting measures. “The (national) debt is 150 percent of GDP and rising. Had it been half that amount, maybe these (austerity) measures would suffice,” Agapitos said. “The number of measures is unprecedented. So in a way, Greece is proving that the effort is there. However, the expectations are much higher and keep rising, because of the mess that Greece is in.” Papandreou is unlikely to get much respite this Easter, with school and hospital closures planned this year and a massive privatization program prompting a general strike on May 11. Many of his countrymen, however, are looking forward to a break from the national gloom this holiday weekend. “I just can’t watch the news anymore – it’s so depressing,” said window cleaner Stratis Dervendlis, who is planning a series of day-trips in and around Athens on his days off. “The bad news is constant. It’s like reminding someone in hospital that they’re sick all the time. Instead, they should be giving us courage and telling us how we’re going to get better.” ___ AP writer Elena Becatoros contributed.

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Increased Lamb Prices Help Sheep Farmers Prosper

April 22, 2011

LUBBOCK, Texas — In his 33 years raising sheep in West Texas, Glen Fisher has never seen it so good. Demand by U.S. consumers is up, imports are down and prices have soared. “You have almost what you can call a perfect storm,” said Fisher, 64, who has about 3,100 animals on his acreage near Sonora. “The great part is we have record prices for lambs – the highest ever by a whole lot.” Last year’s May delivery of lamb fetched about $1.39 a pound; this year the price is around $2.20 a pound, said Fisher, the immediate past president of American Sheep Industry Association. Lamb numbers far outstrip those for mutton. In 2010 about 156 million pounds of lamb was slaughtered at federal and state inspected plants, compared with about 11 million pounds of mutton. About 30 percent of lamb is purchased near Easter and Christmas, and consumers this year likely have noticed the increased cost at supermarkets and nontraditional markets that cater to people of Hispanic decent and those from Middle Eastern and African countries who live in urban areas of the Midwest and Northeast. The price is so high that Abbas Ammar, whose family owns two restaurants and a meat market in Dearborn, Mich., won’t carry it in the market. And he tells the restaurant’s wait staff to steer customers away from lamb. “Eat something else, pay less, enjoy,” said Ammar, who refuses to sell it in his market at $7 a pound. “I want to give a quality product for a low price,” he said. “I know it sounds weird. It’s really difficult to keep our (high-quality) standard and keep it at a low price, so I prefer to say I’m just out of it.” Still, Mazen Munaser, who father owns the Islamic Village Market in Dearborn, said demand remains strong. “It’s the busiest thing that we have in the store,” said Munaser. “It’s at a point that it’s very, very big sales. About 5.5 million sheep are raised in all 50 states, with Texas and California leading the nation. Roughly 35 percent of lamb and mutton are imported to the U.S. About one-third of U.S. sales are through nontraditional markets, which use smaller processing plants, farmer’s markets, direct sales off farms and through local butcher shops. The other two-thirds go through larger commercial plants and supermarket chains. Lately, nontraditional markets have grown more quickly. “The growth of the nontraditional markets has surprised everybody,” said Robert Oreck, executive director of the American Sheep Industry Association. “And it hasn’t peaked.” Higher prices have put meatpackers in a bind, said Greg Ahart, director of producer relations for Superior Farms, one of the nation’s larger lamb processors. If Superior raises its prices, it runs the risk that stores won’t buy and sales could plummet. “We need more product in front of the consumer so if they’re thinking about it they can easily find it,” Ahart said. “There’s got to be a happy medium where everyone can make money and the consumer can still find it.” That increased demand has come amid a drop in supply, in part due to decreased production in Australia and New Zealand, two of the world leaders in production and large exporters to the U.S., Orwick said. Australia has about 70 million sheep, down from 170 million 20 years ago. The drop has been blamed on the ending of a government support program and extended drought followed by recent flooding, Orwick said. In New Zealand, sheep numbers have dropped from about 70 million to 40 million, and many producers have switched to dairies and beef production. Drought also has hurt some producers in Texas, but others in states such as Tennessee, Kentucky, Michigan and Ohio have picked up the slack, Orwick said. There also has been increased interest in buying from U.S. producers, most notably demonstrated by a decision by Super Wal-Mart to sell only domestic lamb for the next two years. “It’s great,” Fisher said. “It’s going to be significant and should tip the demand curve up.” The worldwide drop in sheep populations also has created a tighter supply of wool, which is sold in a separate commodity market. That comes amid near-record prices for cotton and synthetic fibers, which are oil-based. It’s combined to push wool prices to a 20-year high. The sheep association has developed a plan to increase sheep numbers by adding two ewes per operation or by two ewes per 100 by 2014. The group also wants producers to increase the average birthrate per ewe to two lambs per year, and to raise the lamb slaughter rate by 2 percent. The program would mean 315,000 more lambs and 2 million pounds of wool for the industry to market. It also would add $71 million in lamb sales and about $3 million for wool, according to the group’s website. “If we can achieve that that’s a lot,” Fisher said.

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Greece PM: Rating Agencies Want To Control Our Lives

April 22, 2011

ATHENS, Greece — Greece’s prime minister has lashed out at credit ratings agencies, as borrowing rates in the crisis-hit country at record levels threaten plans to return to the bond markets next year. George Papandreou in a written statement posted on a government website early Friday said the agencies, instead of elected governments, “are seeking to shape our destiny and determine the future of our children.” Major rating agencies have all relegated Greek bond status to below investment grade amid the continuing debt crisis. The move has angered the government which argues the fiscal benefits of its austerity program are being ignored. Yields on 10-year Greek bonds rose above 15 percent, compared with the German benchmark rate of 3.27 percent, before the Easter long weekend.

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Heavy data in Europe ahead of the long Easter holiday

April 21, 2011

Heavy data in Europe ahead of the long Easter holiday

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Heavy data in Europe ahead of the long Easter holiday

April 21, 2011

Heavy data in Europe ahead of the long Easter holiday

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Squeezing One Last EUR/CAD Trade Before Easter, Majors To Face Choppy Price Action

April 21, 2011

Squeezing One Last EUR/CAD Trade Before Easter, Majors To Face Choppy Price Action

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Global IPOs Have Best Start To Year On Record

February 25, 2011

LONDON (By Kylie MacLellan and Simon Jessop) – Global listings activity has been the highest on record so far this year, with firms raising a total of $24 billion to date, according to Thomson Reuters data, boosted by buoyant stock markets and improved investor interest. It follows a record quarterly volume of initial public offerings (IPOs) in the final three months of 2010, which saw $122.2 billion raised globally, lifted by the mega floats of Asian insurer AIA Group (1299.HK) and U.S. automaker General Motors (GM.N). Fundraising activity has been buoyed by relatively strong stock markets, with world equities, measured by the MSCI All-Country World Index .MIWD00000PUS, hitting 2-1/2 year highs this month despite unrest in the North Africa region. “Investor appetite for IPOs is effectively leveraged to equity market tone, and we finished 2010 with an exceptionally strong four month window from September to December that continued into early 2011,” said Chris Whitman, global co-head of equity capital markets at Deutsche Bank. “A larger universe of willing buyers then entices a larger universe of aspiring sellers.” Last year pockets of market volatility linked to euro zone sovereign debt worries created windows in which the IPO market, particularly in Europe, effectively closed, with billions of dollars worth of planned listings pulled. “It’s a sign of confidence that businesses which have been holding off in the past, as conditions weren’t right, feel there’s enough demand at the moment to get their floats away,” said Henk Potts, equity strategist at Barclays Wealth. “Valuations remain attractive and investors believe the equity market is a promising place to invest and therefore demand for those riskier equities has been increasing, and of course that very quickly filters through into a flourishing IPO market.” Although there are still some difficulties in the macro environment, investors are viewing the corporate environment more positively, Potts added. The $24.3 billion raised globally since the start of January is a 20 percent increase on the same period last year, the data showed. Secondary offerings have also seen a boost, up 23 percent year-on-year to raise $67.7 billion globally. Asia, which dominated equity capital markets in 2010, has continued to lead the field so far this year, with China accounting for 41 percent of issuance, including wind turbine maker Sinovel Wind’s (601558.SS) $1.4 billion listing last month. Boosted by strong energy and commodity prices, energy and power has been the most active sector, making up 30 percent of fundraising, followed by industrials on 16 percent. U.S. pipeline company Kinder Morgan (KMI.N) raised around $2.86 billion earlier this month in the largest U.S. energy-related IPO since 1998, upping the size and price of its offering after strong demand. With several big listings — including a $3.7 billion offering from U.S. hospital operator HCA Holdings and a $2.4 billion IPO by Denmark’s ISS — currently in the works, and a huge pipeline of deals still to launch, the market shows no signs of slowing. In particular, Europe is braced for a flurry of stock market listings in the next two months as firms use annual results as launching pads for share sales and hope to complete deals before investors disappear for the Easter break. “If equity markets continue to be stable-to-higher, IPO activity is poised to continue to intensify,” said Whitman. “There is a good chance that IPO volumes for 2011 will be markedly higher than 2010.” (Editing by Hans Peters) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Stefania Lucchetti: Why Taking Time Off Will Make You a Better Leader

February 20, 2011

For many people, taking time away from work and the daily hustle and bustle is difficult. We all get caught up in the whirlwind of working and taking care of those around us. Recently, I have realized more and more that in order to have creative ideas and the ability to think like a leader, I must give my brain a break. A few days ago, I was talking to a representative from a company who wants to book one of my talks on leadership. He said that he would like for me to come right after the Easter holidays because people’s minds are much more receptive to new ideas right after a holiday. Why is this? The theory is that when we slow down and give our brains a rest from the daily frenzy of activity that they normally experience, we open our minds to huge creative forces. Have you ever experienced your mind just shutting down because there was too much going on around you or you were under great stress? I actually experienced this myself during the last holiday I took. It was during a very busy period for me, so I asked my husband to monitor me and keep me away from my email. It was very difficult at first, but after a few days I started to notice that my dreams were more vivid and my mind was literally teeming with new ideas. Taking time to reflect on your life and your business is crucial. You have to give yourself that necessary time for your mind to shut off the normal stresses and worries so that you can tap into that fountain of wisdom that resides inside of your soul. Reflection should be something that you actively do, and not just some passive activity that only happens by accident. For instance, we should not save reflection time for those moments when we are sick and forced to take a day off. Doing the things you already know how to do will just leave you stagnant, so you must take that time to think and reflect over your business to cultivate new and exciting ideas. Stagnation is the first step to business death in any entrepreneur’s world. You should pursue learning every single day as a part of building your life and your business. When people think about learning, they imagine sitting in a classroom or maybe reading a book. However, another aspect of learning that often gets overlooked is assessing the cause and effect of your own actions. You should be thinking about things you have already done and what effect they have had on your business and life. This is a part of learning from your own unique experiences. So how do you get enough time to reflect? We all have moments in the day to take a few minutes to think. It might be when you are taking your morning shower, walking the dog or sitting in an airplane seat. Unfortunately, we often try to fill every space of time with checking our email or playing on our cell phone instead of sitting in silence. Learning to sit with yourself and just reflect may take some practice at first, but it will be so worth it in the end. Being reflective should be something that you strive for and even schedule into your day if necessary. Use it as an action step to success instead of just a discarded moment in time where you had nothing else to do. Don’t confuse reflection with daydreaming as reflection is using your mind in a purposeful way to examine your actions and thoughts. If we never slow down and think, how will we ever learn from past actions and possible mistakes? Aren’t we destined to repeat potentially catastrophic mistakes over and over if we never reflect on their outcome?

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Cuba To Cut 500,000 Government Workers, Reduce Restrictions On Private Enterprise

September 13, 2010

HAVANA — Cuba announced Monday it will cast off at least half a million state workers by early next year and reduce restrictions on private enterprise to help them find new jobs – the most dramatic step yet in President Raul Castro’s push to radically remake employment on the communist-run island. Castro suggested during a nationally televised address on Easter Sunday that as many as 1 million Cuban workers – about one in five – may be redundant. But the government had not previously laid out specific plans to slash its work force, and the speed and scope of the coming cutbacks were astounding. Cuba’s official work force is 5.1 million – meaning nearly 10 percent of all employees could soon be out of a government job. Workers caught off guard by the announcement said they worried whether the tiny private sector could support so many new jobs, a sentiment echoed by some analysts. “For me the problem is the salaries, that’s the root of it,” said Alberto Fuentes, a 47-year-old government worker. “If they fire all of these people, how can they all become self-employed?” The layoffs will start immediately and continue through April 2011, according to a statement from the nearly 3 million-strong Cuban Workers Confederation, which is affiliated with the Communist Party and the only labor union allowed by the government. Eventually the state will only employ people in “indispensable” areas such as farming, construction, industry, law enforcement and education. To soften the blow, the statement – which appeared in state newspapers and was read on television and radio – said the government would increase private-sector job opportunities, including allowing more Cubans to become self-employed. They also will be able to form cooperatives run by employees rather than government administrators, and increasingly lease state land, businesses and infrastructure. The announcement was short on details of how such a major shift could be achieved, but its intent appeared to deal a body-blow to the decades-old social safety net upon which the island’s egalitarian society is built. Castro has long complained that Cubans expect too much from the government, which pays average monthly salaries of just $20 but also provides free education and health care and heavily subsidizes housing, transportation and basic food. Because unemployment is anathema in a communist society, state businesses have been forced to carry many people who do almost nothing. “Our state cannot and should not continue supporting businesses, production entities and services with inflated payrolls, and losses that hurt our economy are ultimately counterproductive, creating bad habits and distorting worker conduct,” the union said. Even before the announcement, interviews with scores of workers across several government sectors showed that layoffs were already under way – with many complaining the state was not doing enough to find them new jobs. Larry Birns, director of the Washington-based Council on Hemispheric Affairs, said a series of small changes – such as allowing the unrestricted sale of cell phones, privatizing some state-run barbershops, licensing more private taxis and distributing fallow land to private farmers – have moved Cuba toward economic reform since July 2006, when serious intestinal illness nearly killed Fidel Castro and forced him to cede power to Raul. While none of those were blockbusters, Birns said, Monday’s revelation has the potential to be one. “Cuba is rapidly becoming like any other country,” he said. “It is not going back. These are big changes.” Some Cubans also said they supported the changes, hoping that even a small dose of private enterprise would go a long way in a country where state mismanagement has led to frequent shortages of everything from potatoes to toothpaste. “There are many things that are deficient now including services, which, of course, the private sector will improve on,” said Moraima Santos, a 65-year-old employee in the Office of the City of Havana Historian. “I completely support the government giving private employment licenses. That’s going to benefit a lot of people.” Others were skeptical. Arch Ritter, an expert on the Cuban economy at Carleton University in Ottawa, Canada, said the cutbacks rely too heavily on a work force unaccustomed to going into business for itself. “To imagine that the private sector is going to absorb so many people is a bit of a stretch,” he said. “It’s going to be a major problem for the country.” Building on his April remarks, Castro warned in August that layoffs would be coming and said Cuba would expand private enterprise on a small scale, increasing the number of jobs where Cubans could go into business for themselves. Monday’s announcement also said Cuba will overhaul its labor structure and salary systems to emphasize productivity so that workers are “paid according to results.” Castro has said repeatedly he is seeking to reform the pay system to hold workers accountable for production, but change has been slow in coming. Currently the state employs 95 percent of the official work force. Unemployment last year was 1.7 percent and hasn’t risen above 3 percent in eight years – but that ignores thousands of Cubans who aren’t looking for jobs because wages are so low. The labor overhaul comes less than a week after Fidel Castro caused a stir around the globe when he was quoted by visiting American magazine writer Jeffrey Goldberg as saying Cuba’s communist economy no longer works. Castro later said that while he was not misquoted, his words were misinterpreted – and that he meant to say capitalist reforms could never work in Cuba. Goldberg said Monday he was surprised by Fidel Castro’s claim, since he has made similar statements before. He said economic reforms such as the one announced Monday prove the Cuban government realizes the need for change. “Not only has he said things like this before, but the on-the-ground reality is that it is a truism that the Cuban model is not working, and that is why they are starting this large-scale experiment with privatization,” Goldberg told reporters. ___ Associated Press writer Andrea Rodriguez contributed to this report.

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Noah Mallin: Digital: Mad Men Google Bombing For Fun – and Profit?

August 26, 2010

On last Sunday’s episode of AMC’s period ad drama Mad Men , John Slattery’s World War II vet Roger Sterling exploded in rage at the prospect of pitching to a Japanese client: “Why don’t we just bring Dr. Lyle Evans in here?” The other characters draw a blank on who exactly Dr. Lyle Evans is. As Vanity Fair and others pointed out within minutes the Internet surged with the same question – who is Dr. Lyle Evans? Google searches on the name skyrocketed. Initial speculation was that Mad Men creator Matt Weiner and the show’s writers had created the name as a so-called “Google bomb”, a prank intended to drive a made-up name into trending search charts. So far that still seems to be the case, though some have pointed (check the comments in the Vanity Fair link) to the character of Evan Llewellyn Evans played by Sydney Greenstreet in the classic ad movie The Hucksters as the source of the reference. If it was planted on purpose though, could it also have been for another reason beyond the fun of influencing the behavior of a large group of strangers online? This is entirely speculative, but consider the value of product placement within television shows, a practice that has been on the upswing of late. Typically though the results of such placements can be hard to measure, especially when the product is woven organically into the show’s storyline (as it should be.) How do you prove effectiveness? Search engine queries are a great start. The immediate online response of a big swath of viewers to a show that already offers a dense tapestry of historical references and Easter eggs is hard to beat. What better way to show this influence over fans? This got me to thinking on a broader level about how my fellow modern day ad colleagues look at data to guide strategy and measure results. Sometimes it can be helpful to go off the beaten path and look at non-traditional sources of measurement for inspiration. Take a blog post I read recently about a press release from GM’s OnStar division, which offers drivers turn-by-turn navigation to destinations. The press release listed the Top 10 destinations drivers had used OnStar to search for by brand: 1. Wal-Mart 2. Holiday Inn 3. Home Depot 4. Walgreens 5. Marriott 6. McDonald’s 7. Bank of America 8. Starbucks 9. Target 10. Hampton Inn My first thought was that people may need gas but they don’t seem to care what brand they get it from. The second was that every single one of the brands in the Top 10 ought to be thinking about the power of mobile search ads. Plenty of people use their smart phones to find local destinations while driving (hopefully with the help of a non-driving passenger). What a great additional proof point to bring this home. The fact that an in-car navigation system can tell us about the potential of advertising on mobile devices, and search volume on Google can give insight into the behavior of television viewers brings home the fact that we tend to be doing many things at once these days. We search (and make phone calls) while driving and watching TV, we watch TV and buy things online simultaneously, we work and chat with pals on Facebook at the same time. As our activities multiply, the need to vary the data sources that help us understand this is vital .

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U.S. Economy: Spending Pauses as Households Save More

May 28, 2010

By Timothy R. Homan and Shobhana Chandra May 28 (Bloomberg) — Consumer spending paused in April after growing in the first quarter at the fastest pace in three years as Americans used gains in wages to rebuild savings. Purchases were little changed last month after climbing 0.6 percent in March, indicating an early Easter holiday may have pushed demand into the prior month at the expense of April, according to figures from the Commerce Department today in Washington. Other reports showed households gained confidence in May and businesses expanded for the eighth consecutive month. More jobs mean households will be less dependent on government help to maintain spending, which accounts for about 70 percent of the economy. Profits at retailers including Target Corp. are beating estimates, and General Electric Co. is among companies saying the global economic rebound is strong enough to withstand the turmoil in financial markets. “We are looking at fairly decent gains in consumer spending in the second quarter,” said Conrad DeQuadros , a senior economist at RDQ Economics in New York. “There is a pickup in income growth which is reflective of the improved labor-market picture. That’s what’s required to sustain this moderate pace of spending.” Stocks fell, trimming this week’s gain. The Standard & Poor’s 500 Index fell 1.2 percent to close at 1,089.41 in New York. Treasury securities rose, pushing the yield on the benchmark 10-year note down to 3.29 percent from 3.36 percent late yesterday. Gain Projected The median forecast of 77 economists surveyed by Bloomberg News projected a 0.3 percent gain in spending. Estimates ranged from a decline of 0.1 percent to a 0.6 percent increase. Incomes rose 0.4 percent in April for a second month, matching the survey median. Wages and salaries rose 0.4 percent last month after climbing 0.3 percent in March. The savings rate climbed to 3.6 percent last month, the highest level since January, from 3.1 percent in March as incomes increased and purchases cooled. Consumer sentiment improved in May, a report from Thomson Reuters/University of Michigan showed. The group’s confidence index rose to 73.6 from 72.2 in April. The final number exceeded a preliminary reading of 73.3 issued earlier this month, indicating the slump in stocks hasn’t unnerved households. “Important fundamentals, like resumption of job growth and rising wealth, are helping consumers get back in the game,” said Richard DeKaser , chief economist at Woodley Park Research in Washington, who had forecast the May index to rise to 73.8. Continued Expansion The Institute for Supply Management-Chicago Inc. said today its business barometer fell to 59.7 this month from 63.8 in April, which was the highest level in five years. Figures greater than 50 signal expansion. “Clearly the factory sector continues to move ahead at a very healthy clip though it’s slowed somewhat from the torrid April pace,” said DeKaser, who correctly forecast the decline. “We’re coming down to a more sustainable pace.” Rising sales and lean inventories are prompting companies to increase production and hiring, helping to broaden the economic recovery beyond manufacturing. Profits at retailers from Target to Gap Inc. are beating estimates as employment picks up. Employers have increased payrolls in five of the past six months, culminating in a 290,000 gain in April that was the biggest gain in four years, according to figures from the Labor Department. More Jobs Payrolls probably increased again this month, and the unemployment rate likely fell to 9.8 percent, according to the median estimates of economists surveyed before a Labor Department report due June 4. “Because employment is growing, we’re starting to create some labor income and that is positive for future consumer spending,” said Nigel Gault , chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, who projected spending would pause. The economy grew at a 3 percent annual rate in the first quarter, after expanding at a 5.6 percent pace in the last three months of 2009, figures from the Commerce Department showed yesterday. Consumer spending accelerated to a 3.5 percent pace, the best performance since the first three months of 2007. Target, the second-largest U.S. discount retailer, this month said it posted first-quarter earnings that beat analysts’ projections. Chief Executive Officer Gregg Steinhafel cited a better-than-expected economic environment that boosted sales of profitable items such as clothes. General Electric Chief Executive Officer Jeffrey Immelt said May 24 that Europe’s debt troubles can be fixed and they’re not enough to slow a global economic recovery. “In Europe, I think this is going to be solvable; it’s going to mean slow growth,” for the region, Immelt said after his commencement address at Boston College. “I don’t think it’s enough to slow the recovery, I really don’t.” He also said the U.S. economy is “very good and improving.” To contact the reporters on this story: Timothy R Homan in Washington at thoman1@bloomberg.net ; Shobhana Chandra in Washington at schandra1@bloomberg.net

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Consumer Spending Expansion in U.S. Pauses as Households Rebuild Savings

May 28, 2010

By Timothy R. Homan and Shobhana Chandra May 28 (Bloomberg) — Consumer spending paused in April after growing in the first quarter at the fastest pace in three years as Americans used gains in wages to rebuild savings. Purchases were little changed last month after climbing 0.6 percent in March, indicating an early Easter holiday may have pushed demand into the prior month at the expense of April, according to figures from the Commerce Department today in Washington. Other reports showed households gained confidence in May and businesses expanded for the eighth consecutive month. More jobs mean households will be less dependent on government help to maintain spending, which accounts for about 70 percent of the economy. Profits at retailers including Target Corp. are beating estimates, and General Electric Co. is among companies saying the global economic rebound is strong enough to withstand the turmoil in financial markets. “We are looking at fairly decent gains in consumer spending in the second quarter,” said Conrad DeQuadros , a senior economist at RDQ Economics in New York. “There is a pickup in income growth which is reflective of the improved labor-market picture. That’s what’s required to sustain this moderate pace of spending.” Stocks fell, trimming this week’s gain. The Standard & Poor’s 500 Index fell 0.5 percent to 1,097.85 at 12:35 p.m. in New York. The S&P 500 Consumer Staples Index, which includes companies like Wal-Mart Stores Inc. and Procter & Gamble Co. climbed 0.2 percent on signs incomes were improving. Treasury securities rose, pushing the yield on the benchmark 10-year note down to 3.31 percent from 3.36 percent late yesterday. Gain Projected The median forecast of 77 economists surveyed by Bloomberg News projected a 0.3 percent gain in spending. Estimates ranged from a decline of 0.1 percent to a 0.6 percent increase. Incomes rose 0.4 percent in April for a second month, matching the survey median. Wages and salaries rose 0.4 percent last month after climbing 0.3 percent in March. The savings rate climbed to 3.6 percent last month, the highest level since January, from 3.1 percent in March as incomes increased and purchases cooled. Consumer sentiment improved in May, a report from Thomson Reuters/University of Michigan showed. The group’s confidence index rose to 73.6 from 72.2 in April. The final number exceeded a preliminary reading of 73.3 issued earlier this month, indicating the slump in stocks hasn’t unnerved households. “Important fundamentals, like resumption of job growth and rising wealth, are helping consumers get back in the game,” said Richard DeKaser , chief economist at Woodley Park Research in Washington, who had forecast the May index to rise to 73.8. Continued Expansion The Institute for Supply Management-Chicago Inc. said today its business barometer fell to 59.7 this month from 63.8 in April, which was the highest level in five years. Figures greater than 50 signal expansion. “Clearly the factory sector continues to move ahead at a very healthy clip though it’s slowed somewhat from the torrid April pace,” said DeKaser, who correctly forecast the decline. “We’re coming down to a more sustainable pace.” Rising sales and lean inventories are prompting companies to increase production and hiring, helping to broaden the economic recovery beyond manufacturing. Profits at retailers from Target to Gap Inc. are beating estimates as employment picks up. Employers have increased payrolls in five of the past six months, culminating in a 290,000 gain in April that was the biggest gain in four years, according to figures from the Labor Department. More Jobs Payrolls probably increased again this month, and the unemployment rate likely fell to 9.8 percent, according to the median estimates of economists surveyed before a Labor Department report due June 4. “Because employment is growing, we’re starting to create some labor income and that is positive for future consumer spending,” said Nigel Gault , chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, who projected spending would pause. The economy grew at a 3 percent annual rate in the first quarter, after expanding at a 5.6 percent pace in the last three months of 2009, figures from the Commerce Department showed yesterday. Consumer spending accelerated to a 3.5 percent pace, the best performance since the first three months of 2007. Target, the second-largest U.S. discount retailer, this month said it posted first-quarter earnings that beat analysts’ projections. Chief Executive Officer Gregg Steinhafel cited a better-than-expected economic environment that boosted sales of profitable items such as clothes. General Electric Chief Executive Officer Jeffrey Immelt said May 24 that Europe’s debt troubles can be fixed and they’re not enough to slow a global economic recovery. “In Europe, I think this is going to be solvable; it’s going to mean slow growth,” for the region, Immelt said after his commencement address at Boston College. “I don’t think it’s enough to slow the recovery, I really don’t.” He also said the U.S. economy is “very good and improving.” To contact the reporters on this story: Timothy R Homan in Washington at thoman1@bloomberg.net ; Shobhana Chandra in Washington at schandra1@bloomberg.net

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U.S. Economy: Spending Pauses as Households Rebuild Savings

May 28, 2010

By Timothy R. Homan and Shobhana Chandra May 28 (Bloomberg) — Consumer spending paused in April after growing in the first quarter at the fastest pace in three years as Americans used gains in wages to rebuild savings. Purchases were little changed last month after climbing 0.6 percent in March, indicating an early Easter holiday may have pushed demand into the prior month at the expense of April, according to figures from the Commerce Department today in Washington. Other reports showed households gained confidence in May and businesses expanded for the eighth consecutive month. More jobs mean households will be less dependent on government help to maintain spending, which accounts for about 70 percent of the economy. Profits at retailers including Target Corp. are beating estimates, and General Electric Co. is among companies saying the global economic rebound is strong enough to withstand the turmoil in financial markets. “We are looking at fairly decent gains in consumer spending in the second quarter,” said Conrad DeQuadros , a senior economist at RDQ Economics in New York. “There is a pickup in income growth which is reflective of the improved labor-market picture. That’s what’s required to sustain this moderate pace of spending.” Stocks fell, trimming this week’s gain. The Standard & Poor’s 500 Index fell 0.5 percent to 1,097.85 at 12:35 p.m. in New York. The S&P 500 Consumer Staples Index, which includes companies like Wal-Mart Stores Inc. and Procter & Gamble Co. climbed 0.2 percent on signs incomes were improving. Treasury securities rose, pushing the yield on the benchmark 10-year note down to 3.31 percent from 3.36 percent late yesterday. Gain Projected The median forecast of 77 economists surveyed by Bloomberg News projected a 0.3 percent gain in spending. Estimates ranged from a decline of 0.1 percent to a 0.6 percent increase. Incomes rose 0.4 percent in April for a second month, matching the survey median. Wages and salaries rose 0.4 percent last month after climbing 0.3 percent in March. The savings rate climbed to 3.6 percent last month, the highest level since January, from 3.1 percent in March as incomes increased and purchases cooled. Consumer sentiment improved in May, a report from Thomson Reuters/University of Michigan showed. The group’s confidence index rose to 73.6 from 72.2 in April. The final number exceeded a preliminary reading of 73.3 issued earlier this month, indicating the slump in stocks hasn’t unnerved households. “Important fundamentals, like resumption of job growth and rising wealth, are helping consumers get back in the game,” said Richard DeKaser , chief economist at Woodley Park Research in Washington, who had forecast the May index to rise to 73.8. Continued Expansion The Institute for Supply Management-Chicago Inc. said today its business barometer fell to 59.7 this month from 63.8 in April, which was the highest level in five years. Figures greater than 50 signal expansion. “Clearly the factory sector continues to move ahead at a very healthy clip though it’s slowed somewhat from the torrid April pace,” said DeKaser, who correctly forecast the decline. “We’re coming down to a more sustainable pace.” Rising sales and lean inventories are prompting companies to increase production and hiring, helping to broaden the economic recovery beyond manufacturing. Profits at retailers from Target to Gap Inc. are beating estimates as employment picks up. Employers have increased payrolls in five of the past six months, culminating in a 290,000 gain in April that was the biggest gain in four years, according to figures from the Labor Department. More Jobs Payrolls probably increased again this month, and the unemployment rate likely fell to 9.8 percent, according to the median estimates of economists surveyed before a Labor Department report due June 4. “Because employment is growing, we’re starting to create some labor income and that is positive for future consumer spending,” said Nigel Gault , chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, who projected spending would pause. The economy grew at a 3 percent annual rate in the first quarter, after expanding at a 5.6 percent pace in the last three months of 2009, figures from the Commerce Department showed yesterday. Consumer spending accelerated to a 3.5 percent pace, the best performance since the first three months of 2007. Target, the second-largest U.S. discount retailer, this month said it posted first-quarter earnings that beat analysts’ projections. Chief Executive Officer Gregg Steinhafel cited a better-than-expected economic environment that boosted sales of profitable items such as clothes. General Electric Chief Executive Officer Jeffrey Immelt said May 24 that Europe’s debt troubles can be fixed and they’re not enough to slow a global economic recovery. “In Europe, I think this is going to be solvable; it’s going to mean slow growth,” for the region, Immelt said after his commencement address at Boston College. “I don’t think it’s enough to slow the recovery, I really don’t.” He also said the U.S. economy is “very good and improving.” To contact the reporters on this story: Timothy R Homan in Washington at thoman1@bloomberg.net ; Shobhana Chandra in Washington at schandra1@bloomberg.net

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Video: Yamarone Discusses `Fab 5′ Indicators of Spending: Video

May 28, 2010

May 28 (Bloomberg) — Bloomberg economist Richard Yamarone talks with Lori Rothman and Mark Crumpton about his “Fab 5″ indicators of consumer spending. Purchases were little changed last month after climbing 0.6 percent in March, indicating an early Easter holiday may have pushed demand into the prior month at the expense of April, according to figures from the Commerce Department today in Washington. (Source: Bloomberg)

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Retail Sales in U.S. Rise for Seventh Straight Month as Recovery Quickens

May 14, 2010

By Timothy R. Homan May 14 (Bloomberg) — Sales at U.S. retailers climbed in April for a seventh straight month, signaling consumers are helping to broaden the economic recovery. Purchases increased 0.4 percent last month, exceeding the median estimate of economists surveyed by Bloomberg News, after a 2.1 percent gain in March that was larger than previously estimated, Commerce Department figures showed today in Washington. The advance was led by automobile dealers and building-material stores. Further gains in consumer spending may give companies the confidence to keep hiring after payrolls climbed in April by the most in four years, helping households to continue shopping. More employment would ensure the recovery from the worst recession since the 1930s is sustained. “The consumer remains resilient,” said Tom Simon, an economist at Jefferies & Co. in New York, who accurately forecast the sales increase. “If employment continues to grow on the path that it has, it will certainly support sales.” Stock-index futures held earlier losses after the report on concern that Europe’s debt crisis will hurt economic growth. The contract on the Standard & Poor’s 500 Index fell 0.7 percent to 1,148.2 at 8:42 a.m. in New York. Treasury securities rose. Retail sales were projected to increase 0.2 percent, according to the median estimate of 83 economists in a Bloomberg survey. Forecasts ranged from a decline of 0.8 percent to a gain of 0.7 percent. Excluding Autos Purchases excluding autos were projected to increase 0.4 percent, according to the survey median. The gain in sales wasn’t as broad-based as in prior months, which may reflect the influence of an early Easter. More holiday-related shopping probably took place in March at the expense of April. After revisions, the March increase in purchases matched the increase last August as the biggest since January 2006. Six of 13 major categories showed increases in sales last month, led by a 6.9 percent advance at building-material stores such Home Depot Inc. Purchases of automobiles rose 0.5 percent, counter to industry figures which showed a drop. Spending at service stations, health care stores and restaurants also climbed. Excluding autos, gasoline and building materials, which are the figures used to calculate gross domestic product, sales decreased 0.2 percent, the first drop since July. Early Easter Chain stores reported the smallest increase in monthly sales since November, industry figures showed last week. Demand was dragged down by teen-clothing retailers Abercrombie & Fitch Co. and Aeropostale Inc., and the early Easter. Sales at electronics and appliance stores dropped even as Americans snapped up Apple Inc.’s iPad. Chief Executive Officer Steve Jobs of Cupertino, California-based Apple said last week the company sold its millionth iPad, a tablet computer, on April 30. Apple sold out of all three versions of the iPad 3g, which went on sale two weeks ago, at its stores in 13 U.S. cities. “Demand continues to exceed supply,” Natalie Kerris, a spokeswoman for Apple, said May 6. “We’re working hard” to provide iPads to additional customers, she said. Job Gains One reason Americans are spending may be that the labor- market recovery is accelerating. Payrolls increased by 290,000 in April, the most in four years, according to figures from the Labor Department last week. Unemployment climbed to 9.9 percent from 9.7 percent as thousands of jobseekers entered the workforce. Consumer spending has increased for six months through March, the government reported on May 3. Economists surveyed by Bloomberg this month forecast purchases to increase 2.6 percent in 2010. Purchases declined in 2009 and 2008, the first back- to-back decrease since the 1930s. Gross domestic product grew at a 3.2 percent annual rate in the first quarter after expanding at a 5.6 percent pace in the last three months of 2009, figures from the Commerce Department showed last month. Household spending last quarter climbed at the fastest pace in three years. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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John Standerfer: How Santa Claus and the Easter Bunny colluded to crash the stock market

May 12, 2010

Another week brings another round of political theatre on capital hill. This week’s topic was the stock market “crash” of last week and had all the trappings of a game of “Clue”. Who crashed the market? Was it the high frequency trading firms with their cadres of supercomputers? Maybe it was secretive dark pools with their “hidden” quotes? Or it could have been an individual trader who in between browsing the latest Ferraris online accidentally substituted “millions” with “billions”. And if none of those turn out to be true, there is always Santa Claus and the Easter Bunny as they have yet to be called for Congressional testimony. Congress desperately wants one these scenarios to be true for it would then provide them with a new bogeyman on the scale of a Goldman Sachs or British Petroleum. Consider the relative sound bite value of “High Frequency Traders are not only a parasitic tax on our financial markets but pose a grave and immediate threat to the very stability of our public markets” versus “The market declined because there were more sellers than buyers”. Yet the latter is exactly what appears to have occurred and is the very definition of a market. Contrary to Congressional belief and desires, markets were not designed to only increase in value. They are only supposed to rise when there are more buyers than sellers. This was not the case last Thursday and led to large but by no means unprecedented declines. In fact, even at the lowest point during the decline last Thursday, the S&P 500 was down less than 5% for the year – hardly a repeat of 2008. Most publicity was focused on the trades for select large cap stocks and ETFs (Exchange Traded Funds, many of which hold diversified baskets of stocks) that occurred at or near $.01. A value that was clearly erroneous on the large cap stocks and that did not at all reflect underlying net asset values of the ETFs in question. These individual scenarios appear to have been the result of a high number of sell at market orders for these symbols being routed to destinations that did not usually trade many shares of these symbols. Because they were not the usual destination for trading in these symbols, when the sell orders arrived there were simply not any corresponding buy orders to trade against. Think of a ticket scalper trying to sell tickets the day of the Super Bowl in Miami while standing outside of Yankee stadium. Do these tickets still have value? Absolutely, but all the potential buyers are in Miami, not in New York. Once routing resumed to the primary destinations, the values of the stocks and ETFs in question quickly rebounded as the sell orders were able to be matched with the corresponding buy orders. These specific trades and symbols impacted by the above did not account for all of the overall index declines. Those were simply a result of a large amount of selling occurring at the same time. There were more sellers than buyers. Why? It does not matter. There are always numerous news items that can be pointed to – trouble in Greece, concerns about the Euro, rumors of liquidity issues in European banks, etc. All that matters is that more people wanted to sell than buy and that drove the prices down. The irony in all of this is that less than 96 hours after the “crash” we had almost the exact same move but in the opposite direction as the Dow opened Monday morning nearly 400 points. Why? Same as before – more buyers than sellers. I’m still waiting for the Congressional investigation as to how the market could move almost 400 points at the open and who is to blame for it. Maybe the Tooth Fairy?

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John Standerfer: How Santa Claus and the Easter Bunny colluded to crash the stock market

May 12, 2010

Another week brings another round of political theatre on capital hill. This week’s topic was the stock market “crash” of last week and had all the trappings of a game of “Clue”. Who crashed the market? Was it the high frequency trading firms with their cadres of supercomputers? Maybe it was secretive dark pools with their “hidden” quotes? Or it could have been an individual trader who in between browsing the latest Ferraris online accidentally substituted “millions” with “billions”. And if none of those turn out to be true, there is always Santa Claus and the Easter Bunny as they have yet to be called for Congressional testimony. Congress desperately wants one these scenarios to be true for it would then provide them with a new bogeyman on the scale of a Goldman Sachs or British Petroleum. Consider the relative sound bite value of “High Frequency Traders are not only a parasitic tax on our financial markets but pose a grave and immediate threat to the very stability of our public markets” versus “The market declined because there were more sellers than buyers”. Yet the latter is exactly what appears to have occurred and is the very definition of a market. Contrary to Congressional belief and desires, markets were not designed to only increase in value. They are only supposed to rise when there are more buyers than sellers. This was not the case last Thursday and led to large but by no means unprecedented declines. In fact, even at the lowest point during the decline last Thursday, the S&P 500 was down less than 5% for the year – hardly a repeat of 2008. Most publicity was focused on the trades for select large cap stocks and ETFs (Exchange Traded Funds, many of which hold diversified baskets of stocks) that occurred at or near $.01. A value that was clearly erroneous on the large cap stocks and that did not at all reflect underlying net asset values of the ETFs in question. These individual scenarios appear to have been the result of a high number of sell at market orders for these symbols being routed to destinations that did not usually trade many shares of these symbols. Because they were not the usual destination for trading in these symbols, when the sell orders arrived there were simply not any corresponding buy orders to trade against. Think of a ticket scalper trying to sell tickets the day of the Super Bowl in Miami while standing outside of Yankee stadium. Do these tickets still have value? Absolutely, but all the potential buyers are in Miami, not in New York. Once routing resumed to the primary destinations, the values of the stocks and ETFs in question quickly rebounded as the sell orders were able to be matched with the corresponding buy orders. These specific trades and symbols impacted by the above did not account for all of the overall index declines. Those were simply a result of a large amount of selling occurring at the same time. There were more sellers than buyers. Why? It does not matter. There are always numerous news items that can be pointed to – trouble in Greece, concerns about the Euro, rumors of liquidity issues in European banks, etc. All that matters is that more people wanted to sell than buy and that drove the prices down. The irony in all of this is that less than 96 hours after the “crash” we had almost the exact same move but in the opposite direction as the Dow opened Monday morning nearly 400 points. Why? Same as before – more buyers than sellers. I’m still waiting for the Congressional investigation as to how the market could move almost 400 points at the open and who is to blame for it. Maybe the Tooth Fairy?

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U.S. Retailers May Report Smallest Monthly Sales Increase Since November

May 5, 2010

By Allison Abell Schwartz May 5 (Bloomberg) — U.S. retailers may say tomorrow that April sales growth slowed from the previous month after an early Easter shifted purchases into March and cooler weather curbed buying. Revenue at 30 chains probably rose 2 percent from a year ago, led by discounters , according to analysts’ estimates compiled by Retail Metrics Inc., the Swampscott, Massachusetts- based research firm. That would mark the smallest gain in retailers’ monthly sales since November and follow an 8.7 percent increase in March. Easter fell eight days earlier this year, on April 4, which pushed more holiday-related shopping for clothes and food into the previous month. While March benefited from warmer weather in many parts of the U.S., cool and damp weather in April may have hurt sales growth, said Mike Berry , director of industry research for MasterCard Advisors’ SpendingPulse. “These are the first numbers that we’ve seen for a while where we don’t seem to be building momentum,” Berry said. Retailers have posted monthly sales gains since September 2009 after making inventory cuts to emerge from a plunge in demand that began in 2008. Target Corp. ’s comparable-store sales jumped 10 percent in March, and the discount retailer has projected growth of 3 percent to 5 percent when combining both March and April. TJX Cos. said sales in April would rise 2 percent to 4 percent after a 12 percent gain in March. ‘More Disparate’ Ken Perkins , president of Retail Metrics, estimates retailers’ March and April sales combined gained 5.9 percent from a year earlier. It’s unclear what the effect of the holiday shift will be, in addition to stronger sales in the first half of April and cool, wet weather in the second half, he said. “Estimates are more disparate this month than we have seen in a while,” Perkins said. Sales at Costco Wholesale Corp., the largest U.S. warehouse club, may have risen about 11 percent, according to an average of analysts’ estimates compiled by Retail Metrics. Teen clothing retailer American Eagle Outfitters Inc.’s sales last month may have declined 4.1 percent, the research firm said. Pent-up demand, April clearance sales and early Mother’s Day shopping may have given some retailers a boost, according to Christine Chen , an analyst at Needham & Co. in San Francisco. Confidence among U.S. consumers declined in April from the previous month, a Reuters/University of Michigan report released April 30 showed. That contrasts with a Conference Board survey that showed Americans’ sentiment in April increased to the highest level since September 2008 as respondents anticipated greater job availability. To contact the reporter on this story: Allison Abell Schwartz in New York at aabell@bloomberg.net

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Newcrest Agrees to Buy Lihir Gold After Increasing Offer to $8.8 Billion

May 4, 2010

By Rebecca Keenan and Elisabeth Berhmann May 4 (Bloomberg) — Newcrest Mining Ltd. agreed to buy Lihir Gold Ltd. after sweetening its cash and stock bid to A$9.2 billion ($8.5 billion) to create the world’s fifth-biggest producer of the metal. The bid values Port Moresby, Papua New Guinea-based Lihir’s shares at A$3.86 each, based on today’s closing price. Newcrest, based in Melbourne, raised the proportion of shares its paying for Lihir to 8.43 from 9 last month, the companies said today in a joint statement. Buying Lihir will give Newcrest Chief Executive Officer Ian Smith mines in Papua New Guinea, Australia and Africa and boost sales by more than half. Gold has risen for six quarters, marking its longest rally since 1979 as investors purchased the metal as an alternative to holding currency. “The merged entity will be a very large company by Australian standards and a very large gold company globally,” said Prasad Patkar , who helps manage A$1.9 billion and holds Lihir shares at Platypus Asset Management Ltd. in Sydney. “Unequivocally it’s a good deal.” Newcrest , Australia’s biggest gold company, closed down 4.3 percent on the Australian stock exchange at A$30.69, amid concern a new tax will cut earnings. Lihir rose 3.3 percent to A$3.79. Lihir has gained 25 percent since the day before Newcrest’s takeover offer was announced. Lihir rejected the April 1 offer, saying it was inadequate. The deal has helped the combined value of takeovers announced this year in Australia in the energy and mining industries reach about $27 billion, according to Bloomberg data. That’s the busiest start since the same period in 2008. Hold Talks Lihir, the second-largest gold mining company on the exchange, can continue to hold talks with other potential suitors until June 8, the companies said. Lihir appointed Macquarie Capital Advisers and Greenhill Caliburn to help study alternatives to the Newcrest offer, the company said April 23. Talks with other groups are “at various stages” and the company is providing information on its finances to “all of them,” Lihir Chairman Ross Garnaut said during a conference call with reporters. He declined to name the groups. Newcrest is advised by Lazard Ltd. and Merrill Lynch, a Bank of America Corp. unit. “The increase in the offer as well as the ability to continue to see if another interested party arises certainly addresses the issue the board was concerned about when Newcrest proposed an inferior offer before Easter,” Lihir CEO Graeme Hunt said in an interview with Bloomberg TV. Other Bidders? Newmont Mining Corp. may have held talks with Lihir, the Australian Financial Review reported April 19, without saying where it got the information. Newmont and Barrick Gold Corp. might be potential bidders, the report said. “The combined entity would be on the radar for other major gold miners ,” Platypus’s Patkar said today. “It’s only a matter of time.” Newmont, the largest U.S. gold producer, and BHP Billiton Ltd. are among mining companies that may make takeovers this year as higher metal prices buoy finances, Citigroup Inc. said last month. Global mining companies may have $91.3 billion of surplus cash, after paying dividends and capital expenditure, by 2012, according to the broker. Barrick, the world’s largest gold producer, is targeting output of between 7.6 million ounces and 8 million ounces this year, it said Feb. 19. ‘Super Tax’ Lihir has hired an independent expert to report on the bid and consider the possible effect of the proposed “super tax” on mining companies in Australia. Treasurer Wayne Swan said May 2 that the government plans to impose a 40 percent tax on resource profits starting in 2012. The proposal may cut Citigroup Inc.’s valuation of Newcrest by 20 percent, the broker said after the tax was announced. The effect on Newcrest will be limited, CEO Smith said. “The worst case scenario, it has an overall net present value effect on us of about 5 percent,” he said, adding that the tax will likely be watered down before being passed into law. Newcrest will cut its reliance on earnings from Australia to 52 percent from 75 percent under the proposed deal. Lihir, which has more than 97 percent of its production outside Australia, will be unaffected by the new tax, Goldman Sachs JBWere Pty said yesterday in a report. Newcrest’s Smith last year outlined a five-year plan to boost output 40 percent from its mines in Indonesia and Australia. It approved last month the A$1.91 billion expansion of its Cadia Valley operation in New South Wales and said the company’s full-year production may be at the lower end of its 1.81 million to 1.91 million ounce forecast. Cost Savings The combined group would have sales of A$3.9 billion and production of 2.8 million ounces a year, it said, based on 2009 figures. It also would have the world’s fourth-biggest gold equivalent reserves. Output will rise to 3.75 million ounces by 2014, it said. The takeover aims to deliver pretax cost savings of A$85 million a year, Newcrest said. Newcrest is offering to pay 19 times earnings before interest, tax, depreciation and amortization, compared with the median multiple of 24 times for 10 gold mining industry deals complied by Bloomberg data. Lihir is trading at 25 times future earnings, compared with 24 times for Newcrest. New CEO Lihir last month named Hunt, a former senior executive at BHP as CEO, replacing Arthur Hood who resigned in January after his contract wasn’t renewed. Hood led the acquisition of Ballarat Goldfields NL in 2006, which resulted in the company booking $413 million of one-time charges. The Ballarat mine was sold in March for A$4.5 million. Gold for immediate delivery traded at $1,178.63 an ounce at 5:50 p.m. Sydney time, near a five-month high, as sovereign debt risks in Europe and volatile currencies led investors to the safety of bullion. Newcrest is offering one of its shares for every 8.43 Lihir shares plus 22.5 cents, less any first-half dividend, the companies said in the statement. That compares with the earlier offer of one Newcrest share for every 9 Lihir shares held plus 22.5 cents. It had made an initial proposal of one of its shares for every 9.5 Lihir shares on Feb. 15, Lihir said April 1. Lihir is targeting a 40 percent gain in average output to 1.45 million ounces from 2012 to 2016. Last year it produced 1.124 million ounces from its mines in Australia, Papua New Guinea and the Ivory Coast in West Africa. Its biggest asset is the Lihir mine in Papua New Guinea, the world’s fourth-biggest by reserves, according to Southern Cross Equities Ltd. To contact the reporters on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net ; Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net

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Factory Production Gains as U.S. Companies Boost Stockpiles Amid Recovery

April 15, 2010

By Shobhana Chandra April 15 (Bloomberg) — Manufacturing production in the U.S. accelerated in March as factories spearheaded the recovery from the worst recession since the 1930s. Output at factories climbed 0.9 percent after a 0.2 gain in February that was revised from a previously estimated decline, Federal Reserve figures showed today. Warmer weather caused utility use to drop by the most in four years, limiting the overall gain in industrial production to 0.1 percent, less than anticipated. Companies may keep rebuilding depleted inventories and investing in new equipment as global demand rises, one reason why producers like Intel Corp. see better times ahead. Payrolls will probably climb further as factories ramp up, helping drive consumer spending. “Manufacturing is continuing to be quite strong,” Michelle Meyer , an economist at Barclays Capital Inc. in New York, said before the report. “We are seeing gains in production in response to an improvement in sales. That’s a positive for factories and for the economy.” Other reports showed manufacturing in the New York region expanded in April at a faster pace than anticipated, while jobless claims unexpectedly rose last week. Stock-index futures held earlier losses after the reports. The contract on the Standard & Poor’s 500 Index fell 0.3 percent to 1,203.6 at 9:17 a.m. in New York. Treasury securities were little changed. Less Than Forecast Industrial production was forecast to increase 0.7 percent after a previously reported 0.1 percent gain in February, according to the median estimate of 78 economists surveyed by Bloomberg News. Projections ranged from 0.3 percent to 1.2 percent. Manufacturing accounts for about 12 percent of the U.S. economy. The Fed Bank of New York’s general economic index climbed to 31.9, a ninth consecutive month of growth, from 22.9 in March. Readings greater than zero signal expansion in the so- called Empire State Index that covers New York, northern New Jersey and southern Connecticut. A Labor Department report showed the number of Americans filing claims for jobless benefits unexpectedly rose by 24,000 to 484,000 last week, indicating the improvement in the labor market will take time to unfold. A government spokesman said the jump was due more to administrative factors reflecting volatility around Easter than because of economic reasons. Factory output, which accounts for about four-fifths of industrial production, increased for a third consecutive month. Utility Slump Utility production plunged 6.4 percent, the biggest decline since January 2006, after being unchanged in February. “After a relatively cold February, demand for heating fell in March as temperatures climbed to above-normal levels,” the report said. Mining output, which includes oil drilling, increased 2.3 percent after a 1.7 percent February gain. Motor vehicle and parts production advanced 2.2 percent following a 3.9 percent drop the prior month, the report said. Production of consumer durable increased 2 percent, reflecting gains in automobiles, furniture and electronics. Output of business equipment increased 1.4 percent as demand for computers, communications equipment and semiconductors climbed, showing capital investment is climbing. Intel, the world’s biggest chipmaker, is among companies benefiting from rising demand. The Santa Clara, California-based producer this week forecast record profit margins for the year and said sales will rise this quarter after a 44 percent gain in the first three months of the year. ‘Big Driver’ Consumers served as a “big driver” of computer demand and corporate executives, more confident about their outlook, are replacing aging machinery, Chief Executive Officer Paul Otellini told analysts on an April 13 conference call. “We are optimistic about the prospects of our business for 2010 and beyond.” Capacity utilization, or the proportion of plants in use, rose to 73.2 from 73 percent in February. Industrial capacity utilization was estimated to rise to 73.3 percent, according to the Bloomberg survey median. The rate averaged 81 over the past four decades. Economists track plant operating rates to gauge factories’ ability to produce goods with existing resources. Lower rates reduce the risk of bottlenecks that can force prices higher. Excess capacity is one reason Fed policy makers see little risk of inflation. Fed Chairman Ben S. Bernanke yesterday said the rate of increase in consumer prices was “subdued,” and said “moderation in inflation has been broadly based.” He also said economic growth will remain “moderate” as the economy contends with weak construction spending and high unemployment. To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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Retail Sales in U.S. Rise, Inflation Stays Contained as Recovery Quickens

April 14, 2010

By Timothy R. Homan April 14 (Bloomberg) — Sales at U.S. retailers climbed in March more than anticipated, signaling consumers will play a bigger role in a broadening economic recovery. Purchases increased 1.6 percent last month, the most in four months, and gains for February and January were revised up, Commerce Department figures showed today in Washington. Another report showed consumer prices rose 0.1 percent last month. Companies from Target Corp. to Saks Inc . benefited last month from an early Easter, better weather and a pickup in hiring, indicating the expansion is no longer solely dependent on gains in manufacturing. A lack of inflation is one reason Chairman Ben S. Bernanke, who testifies before congress today, and other Federal Reserve policy makers will probably keep interest rates low in coming months. “Consumers are gradually finding their way back to the stores,” said Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio, who forecast a 1.5 percent rise in sales. “The talk about the ‘new consumer’ turns out to be a lot of rubbish. We’re seeing vestiges of the ‘old consumer.’” The increase in the cost of living last month matched the median forecast of economists surveyed by Bloomberg News, figures from the Labor Department also showed today. Excluding food and fuel, the so-called core rate unexpectedly was unchanged after rising 0.1 percent in February. Stocks Climb Stock-index futures climbed after the reports signaled the economic recovery was not stoking inflation. The contract on the Standard & Poor’s 500 Index rose 0.4 percent to 1,198.2 at 8:50 a.m. in New York. Retail sales were projected to increase 1.2 percent, according to the median estimate of 79 economists in a Bloomberg survey. Forecasts ranged from gains of 0.5 percent to 2.1 percent. Purchases in February and January were revised to show 0.5 percent gains, up from the previously reported 0.3 percent and 0.1 percent respective increases. Sales excluding autos rose 0.6 percent, surpassing the 0.5 percent increase projected by the median estimate of economists surveyed. Excluding autos, gasoline and building materials, which are the figures used to calculate gross domestic product, sales increased 0.5 percent after rising 1.2 percent in February. Eleven of 13 major categories showed increases in sales last month, led by a 6.7 percent advance at auto dealers. Purchases of building materials jumped 3.1 percent, the most since November 2007, and receipts at clothing stores increased by the most in a year. Auto Dealers Dealerships saw a rebound last month after the February storms that pushed seasonal snowfall totals to records in parts of the eastern U.S. made some auto lots inaccessible. Chain stores last month turned in their best year-over-year performance since 1999, industry figures showed last week. Gap Inc., Saks and TJX Cos. posted March sales gains that exceeded analysts’ estimates as warm weather and improving job prospects encouraged shoppers. The Easter holiday in early April may have resulted in more March sales, according to economists such as Julia Coronado at BNP Paribas in New York. Home Depot Inc., the largest U.S. home-improvement retailer, is among companies hiring. The Atlanta-based merchant is adding store jobs for the first time in four years. “We made a very conscious decision this year to hire,” Chief Executive Officer Frank Blake said in an April 6 interview. “The fourth quarter was more positive than we anticipated.” Payrolls Expand Payrolls increased by 162,000 in March, the third gain in five months, according to figures from the Labor Department. The jobless rate, which hasn’t risen since reaching a 26-year high of 10.1 percent in October, was 9.7 percent for a third month. Consumer spending has increased for five months through February, the government reported last month. Economists surveyed by Bloomberg this month forecast purchases to increase 2.3 percent in 2010. Purchases declined in 2009 and 2008, the first back-to-back decrease since the 1930s. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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U.S. Gasoline Rises 3.79 Cents to $2.852 a Gallon, Lundberg Survey Shows

April 11, 2010

By Barbara Powell and Jessica Resnick-Ault April 11 (Bloomberg) — The average price of regular gasoline at U.S. filling stations rose to $2.852 a gallon as crude oil futures jumped more than 5 percent. Gasoline gained 3.79 cents in the three weeks ended April 9, according to a survey of 5,000 filling stations nationwide by Trilby Lundberg , an independent gasoline analyst in Camarillo, California. Gasoline for May delivery rose 1.5 percent to $2.2893 a gallon on the New York Mercantile Exchange in the three weeks ended April 9. Crude oil for May delivery advanced 5.3 percent to $84.92 a barrel. Crude oil rose 10 cents during the survey period, said Lundberg, although “refiners were able to only pass through a portion at the pump.” Most took “a 9-cent gallon loss because demand is so weak.” Gasoline demand during the summer will rise 0.5 percent above a year earlier, lower than 2009’s 0.8 percent growth rate because “the stimulus to demand from the continuing modest economic recovery is constrained” by higher prices at the pump, the Energy Department said April 6 in its summer fuels outlook. Regular-grade gasoline will average $2.92 a gallon in the period between April 1 and Sept. 30, up from $2.44 last summer, the department forecast. Average prices will at times exceed $3 a gallon during the season. “Gasoline demand is nearly flat because unemployment is so deep,” Lundberg said. Consumption is dominated by fuel used to commute, she said. “That is the bulk of it,” and the need for fuel will not grow significantly until employment grow is more robust. “Until then, price increases will be small,” she said. Demand and Supply Demand for the motor fuel, as measured by what’s supplied to the wholesale market, rose to 9.08 million barrels a day in the week ended April 2, according to the department. Averaged over the past four weeks, consumption was 1.7 percent above a year earlier. Supplies of the motor fuel are 5.5 percent above the five- year average for the period as gasoline output by refiners and blenders jumped to a 16-week high. U.S. retail gasoline consumption rose 1.2 percent in the week ended April 2 as motorists filled their tanks for the three-day Easter holiday weekend, MasterCard Inc. said in its SpendingPulse report April 6. Demand over the four weeks ended April 2 averaged 9.59 million barrels a day, the highest level since July 3. Regular gasoline at the pump, averaged nationwide , is $2.86 a gallon, according to AAA, the biggest U.S. motoring organization. At the same time a year ago, the average was $2.05, according to AAA. On Long Island, regular gasoline averaged $2.95 a gallon, Lundberg said. Los Angeles-area retail stations averaged $3.06. The highest price among cities surveyed was Honolulu at $3.43 gallon. The cheapest place to buy gasoline was Newark, New Jersey, where a gallon averaged $2.64, Lundberg said. To contact the reporters on this story: Barbara J. Powell in Dallas at bpowell4@bloomberg.net ; Jessica Resnick-Ault in New York at jresnickault@bloomberg.net .

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Retail Sales, Confidence Probably Climbed in Sign of Lasting U.S. Recovery

April 10, 2010

By Timothy R. Homan April 11 (Bloomberg) — Sales and confidence probably climbed, manufacturing accelerated and home construction rebounded, making a lasting U.S. expansion more likely, economists said before reports this week. Retail purchases increased 1.2 percent in March, the biggest gain in four months, according to the median estimate of 65 economists surveyed by Bloomberg News before Commerce Department figures on April 14. Merchants from Target Corp. to Saks Inc. benefitted last month from an early Easter, better weather and a pickup in hiring. “What we’ve seen in recent months is a broadening of the recovery that, in our view, already makes it self-sustaining,” said Dean Maki , chief U.S. economist at Barclays Capital Inc. in New York. “One of the main reasons consumer spending improved pretty dramatically in the first quarter is simply that income growth is improving.” The biggest increase in payrolls in three years may be a harbinger of additional gains as employers become more certain sales will grow, which in turn will further lift wages and buying power. Another report this week is projected to show the recovery isn’t stoking inflation, one reason Federal Reserve policy makers will probably keep interest rates low for months. Auto dealers were among retailers seeing the biggest jump in demand last month as industry data showed car sales rose to an 11.8 million annual pace, the highest rate since August, when the government’s cash-for-clunkers plan was in effect. Broad-Based Gain Excluding autos, retail sales probably increased 0.5 percent after a 0.8 percent gain the prior month, according to the survey . Chain stores last month turned in their best year-over-year performance since 1999, industry figures showed last week. Gap Inc. , Saks and TJX Cos. posted March sales gains that exceeded analysts’ estimates as warm weather and improving job prospects encouraged shoppers. Payrolls increased by 162,000 in March, the third gain in five months, according to figures from the Labor Department. The jobless rate, which hasn’t risen since reaching a 26-year high of 10.1 percent in October, was 9.7 percent for a third month. Home Depot Inc. , the largest U.S. home-improvement retailer, is among companies hiring. The Atlanta-based merchant is adding store jobs for the first time in four years. “We made a very conscious decision this year to hire,” Chief Executive Officer Frank Blake said in an April 6 interview. “The fourth quarter was more positive than we anticipated.” Less Pessimism Households may be feeling less pessimistic as a result. The Reuters/University of Michigan preliminary index of consumer sentiment for April probably rose to 75, the highest level since January 2008, according to the survey median. The figures are due April 16. Manufacturing, which comprises about 12 percent of the economy, continues to expand. A Fed report April 15 may show production at factories, mines and utilities climbed 0.7 percent in March, the ninth straight gain, after increasing 0.1 percent the previous month, according to the survey. Reports from the Fed’s district banks in New York and Philadelphia on April 15 are projected to show factories in those regions expanded at a faster pace this month. Stocks have recovered from a January slump as evidence mounts the economic recovery is broadening. The Standard & Poor’s 500 Index has increased 11 percent since the end of January, climbing on April 9 to the highest level since September 2008. Bigger Deficit As demand recovers, imports are on the rise. The trade deficit probably widened to $38.5 billion in February from $37.3 billion the prior month, according to the survey median before an April 13 report from the Commerce Department. Housing, the industry at the center of the worst recession since the 1930s, may be slow to recover as foreclosures climb. Builders probably broke ground on 610,000 homes at an annual rate last month, up 6.1 percent from February when blizzards stalled work in parts of the eastern and southern U.S., the survey median showed. The April 16 report may also show building permits , an indicator of future construction, dropped. President Barack Obama in November extended a tax credit of as much as $8,000 for first-time homebuyers, and expanded it to some current owners in a bid to underpin the market. The extension covers closings through June as long as contracts are signed by the end of April. Finally, the cost of living in March may have increased 0.1 percent in March after no change the previous month, according to the survey median ahead of the Labor Department’s report on April 14. Excluding food and energy, the so-called core index may have also climbed 0.1 percent, matching the February gain. The Fed on April 14 will issue its report on regional economic activity, known as the Beige Book, which policy makers use to help formulate monetary policy. Their next interest-rate announcement will be on April 28. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Consumers to Aid U.S. Economic Rebound as Unemployment Drops, Survey Shows

April 9, 2010

By Shobhana Chandra and Kristy Scheuble April 9 (Bloomberg) — Consumers are emerging from a two- year hibernation to play a more active role in the U.S. recovery as unemployment recedes, according to economists surveyed by Bloomberg News. Household purchases probably climbed at a 3 percent annual pace in the first quarter of the year, the best performance since 2007, according to the median estimate of 57 economists surveyed from April 1 to April 8. Analysts raised spending forecasts through the third quarter, and projected the jobless rate will fall more than anticipated last month. “The biggest change is that the employment story is looking better,” said Nariman Behravesh , chief economist at IHS Global Insight in Lexington, Massachusetts, who was among those raising spending estimates. “The consumer is feeling a little more comfortable and is a little more willing to spend.” Auto sales rebounded last month, an early Easter buoyed retailers from Target Corp. to Saks Inc. , and employers expanded payrolls by the most in three years, pointing to gains in incomes that will sustain buying power. A lack of inflation and concern over unemployment means the Federal Reserve will keep interest rates low through the third quarter, the survey showed. Consumer spending, which accounts for about 70 percent of the world’s largest economy, will grow 2.3 percent this year, the most since 2007, according to the survey median. Purchases dropped 0.6 percent in 2009 and 0.2 percent in 2008, the first back-to-back decline since the 1930s . More Jobs Payrolls climbed by 162,000 workers in March, the third gain in the past five months, and the jobless rate held at 9.7 percent, where it’s been since January, the Labor Department reported last week. Unemployment has dropped from a 26-year high of 10.1 percent in October. “Consumers are beginning to pull their weight,” said John Herrmann , senior fixed-income strategist at State Street Global Markets LLC in Boston. “The long-awaited recovery in the job market is finally starting to kick in. Not only was consumer spending very decent in February and March, but that momentum looks like it’ll be maintained in April.” Luxury department store Saks and clothing chain Gap Inc. reported sales in the 12 months to March that exceeded analysts’ estimates. Target, the second-largest U.S. discount chain, raised its first-quarter profit projections after sales beat company estimates. Easter fell eight days earlier this year, prompting the biggest year-over-year gain in same-store sales since March 1999, the New York-based International Council of Shopping Centers said yesterday. Retail Shares The reemergence of consumers is helping retail shares outperform the broader market. The Standard and Poor’s Supercomposite Retailing Index is up 14 percent since the beginning of this year, outpacing the 6.4 percent increase in the S&P 500 gauge. Auto purchases climbed last month to the highest level since the government’s cash-for-clunkers plan in August boosted demand. Customers took advantage of discounts after Toyota Motor Corp. sweetened incentives to counter global recalls, spurring rivals to follow suit. As auto sales moderate in coming months, so will spending. Household purchases will rise at a 2.5 percent pace from April through June and at a 2.4 percent rate in the following three months, according to the survey median. The estimates are up from the 2.2 percent gain projected last month. “The consumer is coming back,” said John Lonski , chief economist at Moody’s Capital Markets Group in New York. “Continued growth in sales is compelling employers to add workers. We’re approaching the stage where the recovery is becoming self-sustaining.” Increasing Headcount Home Depot Inc. , the largest U.S. home-improvement retailer, is among companies hiring as sales improve. The Atlanta-based merchant is adding store jobs for the first time in four years, Chief Executive Officer Frank Blake said. “We have already added to our payroll this year,” Blake said in an interview last week. “As you have positive transaction growth, you need more associates.” The 75 percent rebound in the S&P 500 Index from a 12-year low reached in March 2009, and a firming in home values are also helping improve the spending outlook, economists said. At this stage, “it’s very important that equities continue to recover and house prices continue to stabilize,” Lonski said. Economists anticipate the economy will expand 3 percent this year and next, according to the survey median, the same as last month. Less Unemployment Unemployment will drop to 9.4 percent by December, and average 9.6 percent for all of 2010 and 8.9 percent in 2011, this month’s survey showed. While the financial crisis has abated and economic growth will probably reduce unemployment over the next year, the U.S. faces hurdles including the lack of a sustained rebound in housing, a “troubled” commercial real estate market and “very weak” hiring, Fed Chairman Ben S. Bernanke said this week. His remarks reflected similar concerns expressed by other policy makers, including New York Fed President William Dudley , giving economists reason to rein in policy projections. The central bank’s target for the rate on overnight loans between banks will end 2010 at 0.75 percent, the survey showed, reflecting a quarter-point increase in each of the last two meetings of the year. To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net Kristy Scheuble in Washington at kmckeaney@bloomberg.net

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Consumers to Aid U.S. Economic Rebound as Unemployment Drops, Survey Shows

April 9, 2010

By Shobhana Chandra and Kristy Scheuble April 9 (Bloomberg) — Consumers are emerging from a two- year hibernation to play a more active role in the U.S. recovery as unemployment recedes, according to economists surveyed by Bloomberg News. Household purchases probably climbed at a 3 percent annual pace in the first quarter of the year, the best performance since 2007, according to the median estimate of 57 economists surveyed from April 1 to April 8. Analysts raised spending forecasts through the third quarter, and projected the jobless rate will fall more than anticipated last month. “The biggest change is that the employment story is looking better,” said Nariman Behravesh , chief economist at IHS Global Insight in Lexington, Massachusetts, who was among those raising spending estimates. “The consumer is feeling a little more comfortable and is a little more willing to spend.” Auto sales rebounded last month, an early Easter buoyed retailers from Target Corp. to Saks Inc. , and employers expanded payrolls by the most in three years, pointing to gains in incomes that will sustain buying power. A lack of inflation and concern over unemployment means the Federal Reserve will keep interest rates low through the third quarter, the survey showed. Consumer spending, which accounts for about 70 percent of the world’s largest economy, will grow 2.3 percent this year, the most since 2007, according to the survey median. Purchases dropped 0.6 percent in 2009 and 0.2 percent in 2008, the first back-to-back decline since the 1930s . More Jobs Payrolls climbed by 162,000 workers in March, the third gain in the past five months, and the jobless rate held at 9.7 percent, where it’s been since January, the Labor Department reported last week. Unemployment has dropped from a 26-year high of 10.1 percent in October. “Consumers are beginning to pull their weight,” said John Herrmann , senior fixed-income strategist at State Street Global Markets LLC in Boston. “The long-awaited recovery in the job market is finally starting to kick in. Not only was consumer spending very decent in February and March, but that momentum looks like it’ll be maintained in April.” Luxury department store Saks and clothing chain Gap Inc. reported sales in the 12 months to March that exceeded analysts’ estimates. Target, the second-largest U.S. discount chain, raised its first-quarter profit projections after sales beat company estimates. Easter fell eight days earlier this year, prompting the biggest year-over-year gain in same-store sales since March 1999, the New York-based International Council of Shopping Centers said yesterday. Retail Shares The reemergence of consumers is helping retail shares outperform the broader market. The Standard and Poor’s Supercomposite Retailing Index is up 14 percent since the beginning of this year, outpacing the 6.4 percent increase in the S&P 500 gauge. Auto purchases climbed last month to the highest level since the government’s cash-for-clunkers plan in August boosted demand. Customers took advantage of discounts after Toyota Motor Corp. sweetened incentives to counter global recalls, spurring rivals to follow suit. As auto sales moderate in coming months, so will spending. Household purchases will rise at a 2.5 percent pace from April through June and at a 2.4 percent rate in the following three months, according to the survey median. The estimates are up from the 2.2 percent gain projected last month. “The consumer is coming back,” said John Lonski , chief economist at Moody’s Capital Markets Group in New York. “Continued growth in sales is compelling employers to add workers. We’re approaching the stage where the recovery is becoming self-sustaining.” Increasing Headcount Home Depot Inc. , the largest U.S. home-improvement retailer, is among companies hiring as sales improve. The Atlanta-based merchant is adding store jobs for the first time in four years, Chief Executive Officer Frank Blake said. “We have already added to our payroll this year,” Blake said in an interview last week. “As you have positive transaction growth, you need more associates.” The 75 percent rebound in the S&P 500 Index from a 12-year low reached in March 2009, and a firming in home values are also helping improve the spending outlook, economists said. At this stage, “it’s very important that equities continue to recover and house prices continue to stabilize,” Lonski said. Economists anticipate the economy will expand 3 percent this year and next, according to the survey median, the same as last month. Less Unemployment Unemployment will drop to 9.4 percent by December, and average 9.6 percent for all of 2010 and 8.9 percent in 2011, this month’s survey showed. While the financial crisis has abated and economic growth will probably reduce unemployment over the next year, the U.S. faces hurdles including the lack of a sustained rebound in housing, a “troubled” commercial real estate market and “very weak” hiring, Fed Chairman Ben S. Bernanke said this week. His remarks reflected similar concerns expressed by other policy makers, including New York Fed President William Dudley , giving economists reason to rein in policy projections. The central bank’s target for the rate on overnight loans between banks will end 2010 at 0.75 percent, the survey showed, reflecting a quarter-point increase in each of the last two meetings of the year. To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net Kristy Scheuble in Washington at kmckeaney@bloomberg.net

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U.S. Stocks Climb as Retailer Sales Offset Concern Over Greece’s Finances

April 8, 2010

By Whitney Kisling April 8 (Bloomberg) — U.S. stocks rose as a rally in retailers following faster-than-estimated sales growth helped the market recover from an early slump triggered by concern Greece’s debt crisis will derail the global economic rebound. Target Corp. and Gap Inc. climbed more than 2 percent to lead chain stores higher after March same-store sales increased more than forecast. US Airways Group Inc. surged as much as 15 percent as the carrier was said to be in merger talks with UAL Corp.’s United Airlines. Forest Laboratories Inc. tumbled 12 percent after the drugmaker failed to win backing to sell a new lung treatment. Stocks extended gains after an auction of 30- year Treasury bonds signaled strong demand. The S&P 500 increased 0.3 percent to 1,185.9 at 1:05 p.m. in New York, erasing a 0.6 percent slide. The Dow Jones Industrial Average climbed 36.05 points, or 0.3 percent, to 10,933.57.52. “Most of the retailers are beating estimates by a handy margin,” said Sal Catrini , a managing director for equities at Cantor Fitzgerald & Co. in New York. “If they continue to rally it’s a huge positive for markets given the high expectations going in.” Equities also turned higher as European Central Bank President Jean-Claude Trichet said he doesn’t expect Greece to default. U.S. stocks tumbled yesterday on a bigger-than- estimated decrease in consumer credit and concern grew that a European Union rescue package for Greece may unravel. The S&P 500 is still up 75 percent from its 12-year low in March 2009, while 24 percent below its 2007 peak. ‘Mystery’ Plan “The market’s saying, at least initially, Trichet is giving us some comfort that there’s going to be this mystery rescue plan for Greece even though no one knows what it is,” said Malcolm Polley , who oversees $1 billion as chief investment officer at Stewart Capital Advisors in Indiana, Pennsylvania. “It’s in his best interest to say that. If they allow Greece to fail then it throws the whole European Union into doubt.” As a group, S&P 500 retailers gained 1.2 percent for the top advance among 24 industries, with Gap Inc. climbing 2.6 percent to $24.48 and Target rallying 3.5 percent to $55.89. US Airways jumped 13 percent to $7.70 and UAL rallied 9.4 percent to $20.72. United Airlines and US Airways are holding talks on a merger that would reshape the U.S. industry, according to two people familiar with the matter. Discussions began in mid-February on the merger, which would help United steer travelers to international flights from US Airways’ domestic routes, said one of the people, who asked not to be identified because the negotiations are private. Spokesmen for the companies declined to comment. Casinos Rally A Nevada report today showed gaming revenue rose almost 14 percent in February from the same month a year earlier. MGM Mirage and Las Vegas Sands Corp. helped lead casino stocks higher, climbing 9.1 percent and 4.4 percent, respectively. Energy shares erased declines as oil trimmed losses. Exxon Mobil Corp. rose 1 percent to $67.99. ConocoPhillips advanced 1.9 percent to $53.91. Stocks opened the session lower as concern over Greece’s debt crisis worsened. Greek bonds dropped for a seventh day today, driving the 10-year yield premium to German bunds to the most since the euro’s debut, after Finance Minister George Papaconstantinou was reported as saying there will be no need for additional measures to shore up the nation’s finances. Credit-default swaps on Greece’s government debt climbed to a record 445.5, according to CMA DataVision prices. Jobs Stocks also fell in early trading after initial jobless applications unexpectedly increased 18,000 to 460,000 last week, Labor Department figures showed. The median economic forecast was for a decrease to 435,000, according to a Bloomberg survey. The jump may in part reflect difficulty in seasonally adjusting the data ahead of the Easter holiday. “We’ve come back from the brink fairly meaningfully, we’ve seen huge recovery in the value of risk assets,” Tobias Levkovich , New York-based Citigroup Inc.’s top U.S. equity strategist, said in a Bloomberg Radio interview. “What we still have are intermediate and justifiable concerns around sovereign credit, around the structural unemployment issues.” Forest Laboratories sank 12 percent to $28.52 after failing to win a U.S. panel’s backing to sell a treatment for flare-ups of a common lung ailment. The benefits and safety data for the medicine don’t support approval for people with chronic obstructive pulmonary disease, outside advisers to the Food and Drug Administration said in a 10-5 vote yesterday. Piper Jaffray Cos. lowered its recommendation for Forest Laboratories to “underweight” from “neutral.” To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net .

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Apple Says It Sold More Than 300,000 IPads First Day

April 5, 2010

By Connie Guglielmo and Ari Levy April 5 (Bloomberg) — Apple Inc. , trying to ignite demand for tablet-style computers with its iPad, said it sold more than 300,000 of the devices on the first day of their debut weekend. The number includes preorders, sales at Apple stores and deliveries to retail partners on April 3, the company said today in a statement. Users downloaded more than 1 million iPad applications from Apple’s site and bought more than 250,000 electronic books from its online store during the first day. With the iPad, Apple is trying to build on the success of its iPhone and iPod music player and popularize computers in the middle ground between smartphones and laptops. The company is betting the iPad design is enticing enough to prompt consumers to pay a premium over low-cost notebooks and netbooks. Rivals such as Microsoft Corp. have failed to turn tablets into must- have consumer devices. “It was a good number,” said Jeff Fidacaro , an analyst at Susquehanna Financial Group in New York, who recommends buying Apple shares and doesn’t own any. He said the initial sales were in line with his estimate. The company may sell 850,000 iPads in the quarter ending in June as developers start to build “apps ported specifically for this platform,” Fidacaro said. The company said there were already more than 1,000 applications, or apps, written specifically for the iPad. Apple , based in Cupertino, California, rose $2.52 to a record $238.49 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have more than doubled in the past year. Few Estimates Few analysts had published their sales estimates for the debut weekend, underscoring how difficult it is to predict demand for what Apple Chief Executive Officer Steve Jobs said is a new mobile-device category. Analysts had said they didn’t have a good sense of how consumers would respond to the iPad, an untested computer type. “What you’re looking at here is a brand-new category,” said Yair Reiner , an analyst with Oppenheimer & Co. in New York. “A lot of people in line on Saturday morning weren’t sure what they were in line for.” Users can surf the Internet, peruse digital books, watch video and play games on the touch-screen iPad. Tablets have been available in one form or another since the 1990s, without ever catching on. They account for less than 1 percent of the personal-computer market, according to researcher Gartner Inc. Hewlett-Packard Co. , the world’s largest PC maker, also has ambitions in the market. The company released a video teaser today showing off its touch-screen slate device, which it plans to start selling this year. Meeting Demand Apple began selling on April 3 just three of the six iPad versions it plans to offer, with first buyers getting models that connect to the Web via Wi-Fi. IPads that support so-called third-generation mobile-phone networks will go on sale later this month. The initial sales suggest that Apple didn’t have any glitches with producing enough iPads to meet demand, Reiner said. While it will take time before the iPad can be labeled a success, the device should help push up Apple shares, he said. “If the iPad winds up being a significant product and does wind up being the third leg of the PC revolution, as I think it will be, I think that’s all upside,” he said. Sanford C. Bernstein & Co.’s Toni Sacconaghi had projected sales of 300,000 to 400,000 for the weekend. Piper Jaffray & Co.’s Gene Munster projected initial sales of as many as 300,000 units last week before boosting his forecast to at least 600,000 after surveying buyers at Apple outlets on April 3. Some of Apple’s stores were closed yesterday for Easter Sunday. Long Lines The device, which starts at $499, drew crowds to stores across the U.S., rivaling the frenzy seen when the iPhone was introduced in 2007. Lines at five stores surveyed by Piper Jaffray were longer than expected, yet Apple had iPads available late in the opening day, signaling the company was able to fulfill demand, Munster said. Munster said today that his tally was off because he “misgauged” the number of iPads customers had preordered. Apple started accepting orders on March 12. “We originally estimated online sales to be about 75 percent of all iPad sales,” Munster said. “However, it appears that online pre-orders made up about 50 percent of the sales, resulting in a significant unit difference.” ‘Game Changer’ The iPad had a better opening day than the iPhone, which went on sale in June 2007. Customers took home 270,000 iPhones at its debut. “It’s going to be a game changer,” Jobs said in today’s statement. “IPad users, on average, downloaded more than three apps and close to one book within hours of unpacking their new iPad.” Apple also said today that it will hold an event on April 8 to demonstrate the next generation of the operating system used in the iPhone. That software runs on the more than 70 million iPhones and iPod Touch players Apple has sold in the past three years. There are more than 100,000 iPhone developers, who have created 150,000 programs offered through Apple’s App Store. The new software may include multitasking — the ability to run several programs at once — and new support for advertising, Munster said. To contact the reporters on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net ; Ari Levy in San Francisco at alevy5@bloomberg.net

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Rev. Billy Talen ARRESTED For Placing ‘Holy Hex’ On JPMorgan

April 5, 2010

A New York City preacher has been arrested for placing a ‘holy hex’ on JPMorgan Chase. Protesting what he calls JPMorgan’s financing for mountaintop removal in Appalachia, Rev. Billy Talen led his Church Of Life congregation in an Easter morning protest outside of a bank branch in New York City. Courthouse News has the details: “Rev. Billy led his Life After Shopping Gospel Choir to two East Village Chase branches, where the singers “deposited” mounds of “sacred dirt from Coal River Mountain, West Virginia” on the floors of ATM lobbies. At the branch on St. Marks Place and 2nd Avenue, the choir performed a “mystery channeling of money” as bank customers withdrew money, and the reverend/performance artist preached to a crowd through a white megaphone.” The bank’s financing of ” mountaintop removal ” — the controlled deforestation and detonation of upper parts of mountains to access coal deposits — has been widely critizied by environmental advocates. In the past two decades, JPMorgan has underwritten 20 huge bond deals to help support the practice, Mother Jones noted last month. On Rev. Talen’s website he lays out his case against the bank: We are joining thousands of activist citizens who have opposed the removal of peaks in Appalachia for “dirty coal” mining. In resisting Consumerism, there is always an earth-justice motive, right in front of us. We remember leading Iceland citizens into their own super malls to oppose the big dams and aluminum smelters; and we recall opposing the super ferry in Kauai; and also singing to tree-sitters up in the redwoods. Check out Courthouse News’s full piece here .

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DK Matai: Could Rising Bond Yields Trigger An Equity Market Correction?

April 5, 2010

The majority are ignoring what might be the canary in the coal mine — a rise in interest rates demanded by purchasers of US government bonds. The prospect of a spike in yields in the Treasury market is worth considering as a trigger for an equity market correction. In the past, every equity market correction — 1987, 1994, 1998, 2000, 2007 and 2008 — was preceded by what turned out to be a brief but significant spike in yields. The more overvalued the equity market is, the more the downside risks if bonds begin to provide greater yield competition in the near-term. Falling inflation, rising unemployment, the housing market slump, the Federal Reserve’s policies of a near zero overnight borrowing rate and its purchase of up to USD 1.7 trillion in bonds have all helped keep US Treasury yields near historic lows. The Fed has now completed its bond buying programme before Easter, leaving the market to absorb the supply of new debt on its own. The Cusp Long-term bond rates are rising swiftly and it is no coincidence that this has occurred after the passage of the trillion dollar healthcare reform and the end of Fed buy-backs. The 10-year T-bills yield climbed as high as 3.95 percent during the last trading session before Easter, rising to its highest level since June 2009 to approach the psychologically important 4 percent cusp for the first time since 2008. That, in turn, could spook the equity market since another 25 to 50 basis points of upside pressure could then generate a fund-flow spiral as was the case in the summer of 2007. 10-year T-bills last traded above 4 percent in October 2008, just before the global credit crisis peaked and investors poured money into bonds for safety. As a result, by December 2008, bond yields hit generational lows and equity markets carried on falling to reach their lows in March 2009. 10-year Treasury Yields 1962-2010 Source: US Federal Reserve Bond Vigilantes Are the “bond vigilantes” beginning to flex their muscles? The term was coined in the 1980s when bond investors pushed up long-term yields to force central banks into taking action to curb inflation. This time, bond investors may be less worried about inflation: they are more concerned about huge fiscal deficits and the looming bond supply needed to finance them. Concerns about the debt loads of developed economies have come into focus this year amid the crisis threatening smaller members of the Eurozone such as the PIIGS countries in general and Greece in particular. The fact that German Bunds have outperformed both US Treasuries and UK Gilts in recent months highlights this increasing worry over public debt. Germany’s budget deficit is much lower than the US and UK and inflation there is also expected to remain low. Tipping Point The environment for debt auctions has turned negative. Three auctions — of two-, five-, and seven-year US Treasuries — did not go down well recently, as traditional institutional and sovereign investors sat on the sidelines. That triggered a huge sell-off in US Treasuries. Interest rates carried on rising in the bond market last Friday after the government said employers added jobs in March. Investors often sell Treasuries and favour riskier assets like stocks and commodities when the economy shows signs of improving. This is an additional upward pressure on US Treasury yields until the allocation of capital to equity markets crosses the tipping point. Facts on US Gov Debt . The official US national debt now stands at USD 12.7 trillion — an amount equal to 89 percent of US GDP at USD 14.2 trillion. . Last year, Washington added USD 1.4 trillion to the national debt. In this fiscal year, the Obama administration will add another USD 1.6 trillion. This is the largest deficit as a proportion of GDP since 1945, the last year of World War II. For the fiscal year 2010, borrowing will have to provide 40 percent of all government revenue. The economic crisis has reduced tax revenues by 17 percent, a sharper decline than any other year since 1932, the nadir of the Great Depression. . In addition to funding the current deficits, the US Treasury must borrow more each year to replace bills, notes and bonds that are maturing. . This record-shattering borrowing by the US Treasury has resulted in an unprecedented avalanche of Treasury obligations being dumped onto the market, which naturally depresses bond prices and drives interest rates higher with unintended consequences for other asset classes such as equities and commodities. . In an attempt to keep interest rates low, the US Federal Reserve has created USD 1.7 trillion of new money, via quantitative easing, to buy: a. USD 1.25 trillion of mortgage-backed securities; b. USD 300 billion to buy US Treasuries; and c. USD 170 billion to buy other government bonds. . From September 2008, just before the Lehman Brothers crisis, to March this year, the Federal Reserve increased the US monetary base from USD 850 billion to USD 2.1 trillion — a 150 percent increase in just 18 months. . State, county and local governments are nearly USD 3 trillion in debt with rapidly rising budget deficits. Unable to close the gap, they may ultimately demand that Washington DC assume responsibility. Swaps For the first time since swaps emerged in the mid-1980s, the US 10-year swap rate traded below that of the theoretically “risk free” 10-year Treasury yield recently. This reflects how prolific government debt issuance has altered the dynamics between “risk-free” yields and swaps, which reflect borrowing costs for private sector, ie, non-sovereign borrowers. In the UK, swap rates have been below those of 10-year gilt yields since January. Conclusion US Treasuries constitute the most liquid market in the world and the yield on the 10-year US Treasury note is often used as a benchmark for consumer loans and mortgages. Huge issuance of government debt is beginning to create unexpected distortions and stresses in the bond market. It is far from clear that we have seen the last of them, given the amounts that still need to be raised. A long period of stability in the US government bond market is showing signs of cracking in the last few weeks. For more than a year, it has been clear that record sized debt sales by the US Treasury remain at odds with a 10-year yield sitting comfortably below 4 per cent. All that is about to change. In the process, given the long track record, this may precipitate a significant correction in the equity markets as soon as we arrive at the tipping point.

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`Clash of the Titans’ Is Top Weekend Movie With $61.4 Million Ticket Sales

April 4, 2010

By Esmé E. Deprez and Linda Sandler April 4 (Bloomberg) — “Clash of the Titans,” a 3-D adventure based on Greek mythology, was the top film at U.S. and Canadian theaters this weekend, bringing in $61.4 million in ticket sales for Time Warner Inc. “Why Did I Get Married Too” opened in second place, posting $30.2 million for Lions Gate Entertainment Corp. , Hollywood.com Box-Office said today in an e-mailed statement. “Clash,” starring Sam Worthington and Liam Neeson , is competing for 3-D screens with Walt Disney Co.’s “Alice in Wonderland” and DreamWorks Animation SKG Inc.’s “How to Train Your Dragon,” which was the top movie last weekend. A remake of the 1981 film, “Clash” follows Perseus, the son of Zeus, who embarks on a quest to protect earth from Hades, god of the underworld. “Clash’s” strong debut was fueled by moviegoers’ excitement over 3-D, said Paul Dergarabedian , president of the box-office division of Hollywood.com, in an e-mail. “With three of the top five films in this format, there is no question that 3-D is here to stay.” “Clash” posted the biggest Easter debut ever, beating out the $40.2 million “Scary Movie 4” had in receipts in 2006, Hollywood.com said. ‘The Last Song’ Second place’s “Why Did I Get Married Too,” a comedy sequel from director Tyler Perry , follows four couples on vacation. “How to Train Your Dragon” fell to third place, taking in $29.2 million. Distributed by Viacom Inc.’s Paramount Pictures, “Dragon” features the voices of Jay Baruchel and Gerard Butler and tells the story of a young Viking who unexpectedly becomes the owner of one of the creatures. The film has taken in $92.3 million in two weeks. “The Last Song” opened in fourth place with $16.2 million for Disney. The drama, based on the novel by Nicholas Sparks , stars Greg Kinnear and Miley Cyrus as an estranged father and daughter who learn to bond through a shared love of music. Sales Rise “Alice in Wonderland” dropped to fifth place from second with $8.3 million for Disney. The Lewis Carroll tale, re- imagined in 3-D by director Tim Burton , has made $309.8 million in the U.S. since its March 5 release. Sales for the top 12 films rose 14.3 percent to $170.2 million from $148.9 million a year earlier, Hollywood.com said. Year-to-date receipts total $2.84 billion, up 10.3 percent from a year earlier. Attendance has increased 8.1 percent this year. The following table has figures provided by studios to Los Angeles-based Hollywood.com. The amounts are based on actual ticket sales from April 2 and April 3 and estimates for today. Rev. Avg./ Pct. Total Movie (mln) Theaters Theater Chg. (mln) Wks ================================================================ 1 CLASH OF THE TITANS $61.4 3,777 $16,256 — $64.1 1 2 WHY DID I GET MARRIED 30.2 2,155 13,991 — 30.2 1 3 HOW TO TRAIN DRAGON 29.2 4,060 7,192 -33 92.3 2 4 THE LAST SONG 16.2 2,673 6,062 — 25.6 1 5 ALICE IN WONDERLAND 8.3 2,980 2,774 -53 309.8 5 6 HOT TUB TIME MACHINE 8.0 2,771 2,887 -43 27.8 2 7 THE BOUNTY HUNTER 6.2 3,118 1,988 -48 48.9 3 8 DIARY OF A WIMPY KID 5.5 2,842 1,944 -45 46.2 3 9 SHE’S OUT OF MY LEAGUE 1.463 1,390 1,053 -58 28.7 4 10 SHUTTER ISLAND 1.462 1,356 1,078 -54 123.4 7 11 GREEN ZONE 1.2 873 1,394 -64 33.1 4 11 THE GHOST WRITER 1.1 656 1,730 -33 11.0 7 Top 12 Films Grosses This Week Year Ago Pct. (mln) (mln) Chg. =================================== $170.1 $148.9 14.2 Year-to-date Revenue 2010 2009 YTD YTD Pct. (mln) (mln) Chg. =================================== $2,838 $2,574 10.3 Year-to-date Attendance: 8.1% To contact the reporters on this story: Esmé E. Deprez in New York at edeprez@bloomberg.net ; Linda Sandler in New York at lsandler@bloomberg.net .

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Fraud-Battered Salzburg Easter Festival Loses $4 Million, Gets New Chief

April 2, 2010

By Catherine Hickley April 2 (Bloomberg) — Peter Alward , the new director of the fraud-afflicted Salzburg Easter Festival , laughed when asked why he took the job. “A moment of madness,” he said over espresso in his office, down a narrow cobbled passageway in Salzburg’s old-town center. With losses of more than $4 million, the festival has managed to avoid collapse and rally its supporters. The Berlin Philharmonic had considered pulling out of the 43-year-old festival founded by super-maestro Herbert von Karajan , said Pamela Rosenberg , the orchestra’s director, who joined Alward in his office. Two days before this year’s edition opened on March 27 with Simon Rattle conducting “Gotterdammerung,” the Salzburg regional government announced an accord on a new, lifesaving legal structure. The Easter Festival, which is a separate legal entity from the older summer festival, has an annual budget of about 6 million euros ($8 million) that comes mainly from private donors and sponsors. Alward’s predecessor, Michael Dewitte, was fired in December. Both Dewitte and Klaus Kretschmer, the Salzburg summer festival’s former technical director, are under investigation for embezzlement and fraud, the state prosecutor’s office said. Kretschmer may be paralyzed for life after a failed suicide attempt in February, the Austrian newspaper Oesterreich reported on March 15. Personal Payments Calculations by Audit Services Austria show that Dewitte claimed unauthorized personal payments of more than 700,000 euros between 1997 and 2009, the Salzburg government said last week. Fraudulent payments to Kretschmer and the companies he ran totaled 2.4 million euros, it said. Both men have denied wrongdoing in newspaper interviews. No one has yet been charged, said Barbara Feichtinger, a spokeswoman for the state prosecutor. Rosenberg said the fraud had gone undetected for so long because only Dewitte and one other person signed off on bills and the budget. She said she repeatedly asked Dewitte for the festival’s accounts last year and he refused. “There were certain things about the budget that seemed odd to me,” she said. “I had no legal wherewithal to force him to show me the numbers. He stonewalled until December, when finally we issued an ultimatum that he would be fired unless he gave them to us. Then, when we finally got to see them…” She broke off, widening her eyes. “He was fired the next day.” New Structure Under the new company structure, the government of Salzburg province, the city administration and the regional tourism board will each own 20 percent. An association of backers will take 15 percent and the Herbert von Karajan foundation 25 percent. Alward and Rosenberg also plan changes to attract new audiences and make tickets for some events cheaper and more accessible. Subscribers now pay a fee just to be able to buy packages of four tickets. “The Karajan structure was based on it being a private, exclusive event with no public money at all,” Rosenberg said. “For the 21st century, it needs to be thought through in a different way.” Alward, who worked with Karajan and with Rattle and the Berlin Philharmonic for many years, said his new post is “like returning to family.” He said he sees potential for co- productions and more opera performances. The current practice of mounting a staging for just two performances is “economically ridiculous,” he said. St. Matthew Passion The stream of black Mercedes, BMWs and Audis drawing up to disgorge sequined and besuited guests outside the Festspielhaus this week testified that the festival’s loyal, mostly elderly public wasn’t deterred. A staged version of Bach’s St. Matthew Passion on March 28, directed by Peter Sellars , received a standing ovation and glowing reviews. The concert on March 29 began with Gyorgy Ligeti’s “Atmospheres fuer grosses Orchester.” Soprano Barbara Hannigan was clad in Lara Croft-style leather, fishnets and high boots with a black wig. Both the festival’s main sponsors, the Swiss bank Vontobel Holding AG and German carmaker Audi AG , said they will stay on board at least until their contracts expire in 2012 and 2011 respectively, and probably beyond. Bank’s Trust “It’s always disappointing when trust is abused and it’s always regrettable when money is wasted,” Herbert Scheidt , Chief Executive Officer of Vontobel , said in an interview at the bank’s branch on Salzburg’s Rathausplatz. “Both happened here, and both weigh heavily. If you work in a bank, loss of trust is particularly serious. “I had confidence in the Berliners that they would try to clear up the situation,” Scheidt said. “We have been partners of the Easter Festival for 12 years and we want to remain so.” Juergen Bachmann, responsible for culture sponsoring at Audi, said the company also “sees no reason to withdraw from such a high quality event.” “It’s very unpleasant when something like this happens, but this kind of thing can happen anywhere,” he said. “The most important thing is the reaction, and the response to the situation was transparent and communications were good.” Rosenberg said not one sponsor has bailed out as a result of the scandal. The American Friends, a group of U.S. private sponsors and donors, “gave us a vote of confidence,” she said. “Two people actually spontaneously sent checks,” she said. “They just saw it as one black sheep.” To contact the writer on the story: Catherine Hickley in Salzburg at chickley@bloomberg.net .

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U.S. Easter Spending to Rise for First Time Since 2007 on Candy, Clothing

April 1, 2010

By Esmé E. Deprez April 2 (Bloomberg) — U.S. consumers plan to spend as much as $14 billion on candy-filled baskets, lamb dinners and colored eggs for the Easter holiday weekend, a sign that non-essential purchases are rebounding. The projected 1.8 percent boost would be the first increase in Easter holiday spending in three years, with food, candy and clothing leading the growth, according to IBISWorld, a Los Angeles-based research firm. Spending for the same period fell 8.3 percent in 2009 and 1 percent in 2008. Estimates are based on IBISWorld surveys, industry reports and sales figures. “This is another installment of the recent trends we’ve seen toward consumers loosening up their spending patterns,” George Van Horn, senior analyst at IBISWorld, said in a telephone interview. “Consumers are still favoring need versus want, but volume is up as people become more confident.” The Conference Board’s index of U.S. consumer confidence rose to 52.5 in March, exceeding the median forecast of economists surveyed by Bloomberg News, from 46.4 in February. Home prices unexpectedly rose in January for an eighth month, data also showed this week. Easter, which falls on Sunday, April 4, typically ranks fourth for spending after Christmas, Valentine’s Day and Mother’s Day. It is followed by Father’s Day, according to the National Retail Federation . Eastern Orthodox Christian churches will celebrate Easter, or Pascha, on the same day this year as Western Christian churches, and that could boost sales more, especially for food, Van Horn said. Plastic Eggs While consumers may spend more on chocolate bunnies and Easter dresses, the holiday is no longer the most important time of year for the egg industry, said Paul Sauder, president of Lititz, Pennsylvania-based Sauder’s Eggs. As plastic eggs have replaced the chicken-laid variety for hunting and decorating, demand has been declining since 2000, when sales doubled in the two-week period leading up to the holiday, Sauder said. This year, sales may rise 25 percent, he said. The Thanksgiving and Christmas seasons now account for the biggest sales periods, Sauder said. As more Americans began cooking at home amid the recession, non-holiday egg sales increased during the past two years, he said. Sauder’s company ships 5.5 million eggs every day, laid by 5 million chickens from 80 independent farmers in three states. The American Egg Board , the promotional arm of the U.S. egg industry, has highlighted the food’s affordability, versatility and convenience, said Cindy McGarrigle, vice president of industry programs. April 5 will mark the beginning of National Egg Salad Week, according to the Park Ridge, Illinois-based organization. To contact the reporter on this story: Esmé E. Deprez in New York at edeprez@bloomberg.net

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2 Million Eager For Health Care On Parents’ Plans

April 1, 2010

CHICAGO — Congress voted to overhaul the health care system on a Sunday. On Monday, Patti Lawson e-mailed her employer’s human resources office to ask how soon she could get her 22-year-old daughter back on her health insurance. In about six months, the new law will allow at least 2 million young adults to be covered under their parents’ policies. These are the “millennials,” those who came of age in the new century and now are struggling to get on their feet during the worst slump since the Depression. Many can’t find jobs, and many who are employed don’t have health coverage from their employers. The law will allow young adults to stay on or return to their parents’ insurance until age 26. To qualify, young people must be “dependents” of their parents. They don’t necessarily have to live under the same roof. Lawson, a Gettysburg College administrator in Pennsylvania, said she is hoping to get her daughter back on her health plan because she is tired of playing “a roulette game.” Her daughter has just a temporary job that doesn’t provide insurance. “You’re banking on your child staying well,” said Lawson, who has been a single parent since her husband died of cancer three years ago. Regulations still have to be written, but here are some of the crucial specifics of the new law, based on a reading of the measure and interpretation by various experts: _It applies to young adults up to their 26th birthday who don’t have access to insurance through their employer. _There is no dispute the measure applies to young people away at college. It is widely assumed the law also covers other young people living on their own. _It will include married children but not their spouses or their kids. _It is unclear whether parents must wait until their health plan’s next open enrollment period to sign up their uninsured older children. _Young adults who live in a different state from their parents should check to see if their parents’ health plan covers medical services where they live. This is the first time the federal government has forced insurance companies to let young adults stay on their parents’ policies. More than half the states already have laws that extend the age of dependent coverage. New York and New Jersey push it all the way to age 30 and 31 and would be allowed to keep those provisions. The new federal law “provides a minimum, not a maximum,” said law professor Timothy Jost of Washington and Lee University. Also, while many state laws do not apply to coverage from self-insured employer plans, the federal law will, experts say. Much will depend on regulations to be written by federal health officials. Among other things, Health and Human Services will have to decide what constitutes “dependent,” and the definition will not necessarily be the same one used by the Internal Revenue Service for tax purposes. Also, HHS will have to clear up the issue of whether young people who live far from home can stay on their parents’ plans. Young adults in their 20s are the most likely age group to be uninsured, and nearly 30 percent of them lacked insurance in 2008. “Given the downturn in the economy and the unemployment rate among young adults, it’s a really important provision in the bill,” said Sara Collins of the nonpartisan Commonwealth Fund. Since 2003, the group has written a report titled “Rite of Passage?” about uninsured young adults and how they often lose health coverage at age 19 or upon high school or college graduation. “It’s a problem that spans the income spectrum,” Collins said. Before the law takes effect, some young adults who are graduating from college or otherwise becoming ineligible to stay on their parents’ plans may want to buy insurance through COBRA to bridge any gap in coverage. But that can be expensive; there are also short-term plans that can be found through Web sites like . http://www.ehealthinsurance.com The law will help Portland, Ore., mother Jessie Edwards sleep better at night. The nurse practitioner will be able to get both her young adult children covered as dependents on her insurance. Her 23-year-old son is losing his insurance this month, and her 25-year-old daughter has been uninsured for two years. What frightens Edwards most is the possibility of one of them getting into an accident, she said. “What would we do? How would we cover that?” Pat and John Curry of Augusta, Ga., have two daughters, ages 23 and 21. Without the new law, the older daughter would lose coverage on the family health plan at her next birthday. “It would be a tremendous relief to us if we could keep them on our insurance,” Pat Curry said. “This is something that would give them just a little more time to get their feet under them with the economy the way it is.” Lawson bought her college graduate daughter, Katie Byrne, catastrophic coverage on the independent market, so she wouldn’t be completely uninsured while she searches for a job with benefits. But the $100-a-month plan does not include doctor visits. Meanwhile, Lawson’s 19-year-old son is still covered. “My son can go to a doctor if he twists his knee playing soccer and it’s a $15 copay,” Lawson said. “Then I have a daughter who does not have the same benefits. It illustrates for me what a lot of Americans face.” Under Pennsylvania law, Lawson’s employer could choose to offer coverage for dependents up to age 30, but her employer has decided not to do so. In the meantime, Lawson plans to fill an Easter basket with dental floss, medications and other health items for her daughter. She is encouraging her daughter to stay healthy while they wait to get her back on Lawson’s plan. ___ On the Net: FAQs on young dependent coverage: http://www.younginvincibles.org/cover.html

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British Airways Cabin Crews Resume Strike, Disrupting Long-Haul Services

March 26, 2010

By Steve Rothwell March 27 (Bloomberg) — British Airways Plc cabin crew began a second strike in a week with no sign of a settlement being reached in the dispute over pay and staffing levels. About 60,000 customers will be prevented from flying with BA during the walkout, which began at midnight and runs through March 30, the company estimates. Cancellations will wipe out 30 percent of long-haul services from London’s Heathrow airport. The strike follows a three-day walkout by BA’s 12,000 cabin crew that ended on March 22 and cost 21 million pounds ($31 million), according to the carrier. Chief Executive Officer Willie Walsh last met with Unite union leader Tony Woodley on March 19 and efforts by arbiters to bring the men together for fresh talks have failed. “So far BA has done a pretty good job of maintaining a reasonable flying schedule,” said Gert Zonneveld , an analyst at Panmure Gordon in London with a “hold” rating on the stock. “Having said that, one of the things you can’t measure is that if people do book elsewhere, particularly the long-haul premium passengers, there is a good chance they may not return.” BA stock is up 19 percent since Feb. 22, when Unite said it had won a mandate for a strike, suggesting that for the moment investors are dismissing losses from the stoppages as a one-off cost and focusing instead on the airline’s improving traffic. Gatwick Boost British Airways has expanded its schedule since the first walkout in anticipation of more crew reporting for work, allowing the operation of a full timetable at London Gatwick, its second-biggest hub. BA’s claims regarding staff turnout “should not be regarded as credible,” Unite said yesterday. All told, BA will fly more than 180,000 people during the strike, or 75 percent of the booked total, the carrier said yesterday. Of those affected by cancellations, which include 45 percent of European services from Heathrow, 18 percent have been rebooked with other airlines or on different dates. The company will rent 11 planes and crews to supplement its fleet. Shelley Wills, a British Airways passenger whose flight to Hamburg was cancelled today, said the experience won’t stop her travelling with the carrier again. Wills, who plans to tour Germany over the Easter Holiday, was rebooked to Berlin, about 180 miles (290 kilometers) from her original destination. “We’ve flown quite a lot on BA, and in the end it comes down to price and service,” Wills said by phone. “Our holiday hasn’t been completely ruined so I’d look at them again.” While British Airways has declined to provide an estimate of the likely total cost of the full seven days of the walkout, Unite estimates the loss at 100 million pounds. TUC Role Brendan Barber , general secretary of the Trades Union Congress, which facilitated earlier talks, is still talking with both sides, though “things seem to be getting worse rather than better,” Rob Holdsworth, a spokesman for the umbrella group for U.K. unions, said yesterday in an interview. Unite has reiterated that any settlement must include the restoration of travel perks that Walsh said this week had been forfeited by all striking workers, a move that may render unviable work journeys for 1,500 flight attendants employed in the U.K. but resident abroad. The CEO has also withdrawn a previous pay offer, saying any proposal must now be modified to account for the cost of the walkout. Travel in Britain may be disrupted further from April 6 when rail-maintenance and signaling workers plan to strike for four days in a dispute over job cuts and changes to working conditions, affecting the journeys of 3 1/2 million people in what would be the first shutdown of the network since 1994. The National Union of Rail, Maritime and Transport Workers, one of the two groups that called the walkout, said yesterday that it’s drawing up proposal to help resolve the dispute. At British Airways, Unite said it may call another strike after April 14 if no settlement is reached. To contact the reporter on this story: Steven Rothwell in London at srothwell@bloomberg.net

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Obama, Medvedev Move to Reduce Nuclear Arsenals in Arms Control Agreement

March 25, 2010

By Viola Gienger and Roger Runningen March 25 (Bloomberg) — President Barack Obama and his Russian counterpart Dmitry Medvedev may sign the first new treaty to reduce their nuclear arsenals in two decades as early as next month, the Kremlin and U.S. analysts said. Negotiators for the two sides have reached agreement on all elements for an accord, and the leaders probably will meet in Prague for the signing, a Kremlin official said yesterday on condition of anonymity in line with the government’s policy. The timing hadn’t been made final. The new Strategic Arms Reduction Treaty probably will lower the number of deployed warheads to 1,600 for each side, at least 25 percent below actual current levels, said Daryl Kimball , executive director of the Arms Control Association in Washington. Bombers and land- or submarine-based missiles that could carry the warheads probably will be capped at a level below 800, he said. Under the treaty that expired in December, each side is permitted a maximum of 2,200 warheads and 1,600 launch vehicles. Obama’s spokesman, Robert Gibbs , said there are “still some things that need to be worked out” before a deal on a replacement agreement is sealed. Obama and Medvedev probably will have another conversation in the next few days, he said. Officials in Prague said they have been notified that the two leaders are seeking to sign the accord in the Czech capital. U.S. Secretary of State Hillary Clinton said last week that a signing ceremony may be held “in early April.” Medvedev is scheduled to visit neighboring Slovakia on April 6-7. “I would anticipate that when we have something to sign, it will be in Prague,” Gibbs said yesterday. The timing would mark a year since Obama pledged in an April 5 speech in Prague to pursue a replacement for the treaty as a step toward the global elimination of atomic weapons. ‘Really Done’ “I think it’s really done,” Kimball said. “If you look at all the tea leaves in the last several days, the two sides have reached agreement on a critically important” treaty. Disagreements that had stalled a final accord since the basic warhead and launcher levels were settled last year appear to have been resolved, said Kimball and Steven Pifer , a former ambassador to Ukraine with expertise in arms control who is now an analyst at the Brookings Institution in Washington. Signals indicate “they’re pretty much done,” Pifer said. Missile Defense Negotiators got stuck on details including Russia’s demands that the treaty address U.S. plans for a missile-defense system in Europe. The final treaty probably will contain wording addressing the connection between the offensive weapons that the agreement primarily addresses and defensive arms that have the potential to undercut agreed levels, Kimball and Pifer said. Such language is contained in the 1991 accord and wouldn’t limit U.S. missile defense plans, they said. Senate Republicans would object to linkages similar to the one in the 1991 treaty, said Ryan Patmintra, a spokesman for Arizona Senator Jon Kyl . Kyl, who is the party’s whip, and Senate Republican Leader Mitch McConnell wrote Obama on March 15, saying lawmakers probably wouldn’t ratify a treaty that includes “unilateral declarations that the Russian Federation could use as leverage against you or your successors when U.S. missile defense decisions are made.” The two Republican leaders also tied ratification to submission of a plan to modernize the U.S. nuclear arsenal with more funding than the administration has requested. Medvedev and Obama have made signing a new nuclear arms accord a priority as they try to repair ties that sank to a post-Cold War low under Obama’s predecessor, George W. Bush . Breakthrough “This is a major diplomatic and domestic political breakthrough for the president at a critical time,” said Stephen Flanagan , vice president of the Center for Strategic and International Studies in Washington. “While the actual reductions achieved would be modest,” he said, it suggests a “reset in relations with Moscow” may lead to more weapons reductions in years ahead. Obama’s and Medvedev’s meeting may occur before the U.S. president’s summit on nuclear security April 12-13 in Washington. Flanagan said having a weapons reduction treaty in hand may help Obama push his broader non-proliferation agenda at the meeting. Obama yesterday privately briefed Senate Foreign Relations Committee Chairman John F. Kerry , a Democrat, and the panel’s top Republican, Senator Richard Lugar , on the arms-reduction talks. They will play key roles in Senate ratification. A treaty also would be subject to approval by the Russian parliament. “I assured the president that we strongly support his efforts, and that if the final negotiations and all that follows go smoothly, we will work to ensure that the Senate can act on the treaty this year,” Kerry, of Massachusetts, said in a statement. He plans to begin hearings sometime after Congress returns from its Easter holiday break. To contact the reporter on this story: Viola Gienger in Washington at vgienger@bloomberg.net . Roger Runningen in Washington at rrunningen@bloomberg.net

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Chavez Orders Three-Day Holiday to Conserve Electricity Amid Energy Crisis

March 24, 2010

By Daniel Cancel March 24 (Bloomberg) — Venezuelan President Hugo Chavez decreed three extra days off in the week before Easter to save electricity and water amid an energy crisis that is threatening to collapse the power grid. “The objective isn’t for people to be lazy, rather to save energy,” Chavez said today on state television. “Don’t forget to turn off the lights and close the faucet.” Chavez declared a national power emergency Feb. 8. He implemented rolling blackouts in most of the country and threatened to suspend power to businesses that don’t curb consumption by 20 percent. A severe drought is draining the South American country’s reservoirs that supply hydroelectric plants. Venezuela, the largest oil producer in Latin America, depends on hydroelectric power for more than two-thirds of its energy needs. Chavez didn’t say whether next week’s extra holidays would be given to the whole country or only government workers. Water levels at the Guri dam, which provides water to three hydroelectric plants with an installed capacity to generate 10,000 megawatts of power, fell 14 centimeters on March 23 to 251.37 meters above sea level, or 27 percent of its volume, according to the country’s grid operator . If the water level drops below 240 meters, the country may lose 5,000 megawatts of generation, Electricity Minister Ali Rodriguez said on March 18. To contact the reporter on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net .

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Mindich Hedge Fund Counts on Film Department IPO to Recover Defaulted Debt

March 24, 2010

By Miles Weiss March 24 (Bloomberg) — Hedge-fund manager Eric Mindich has as much as $36 million riding on the initial public offering of Film Department Holdings Inc., the movie-studio startup that defaulted on debt held by his Eton Park Capital Management LP. Film Department said in December it wanted to raise $85 million from an IPO as part of an agreement to repay notes held by New York-based Eton Park. The filmmaker, based in West Hollywood, California, delayed the deal last week after cutting it to $60 million earlier this month. Eton Park, which oversees about $13 billion, is seeking to avoid the losses that befell hedge funds after they poured cash into Hollywood during the past decade. The funds participated in more than $11 billion of film financings since 2004, according to Clear Scope Partners, a Los Angeles-based entertainment advisory firm, only to begin withdrawing from the business during the past several years. “The influx of hedge-fund money caused an abundance of films to get made, which artificially increased competition and hurt film performance,” said P. Clark Hallren, Clear Scope’s managing director and a former executive in the entertainment industries group at JPMorgan Chase & Co.’s securities unit. “The combination of the financial crisis and the relatively negative performance of the film funds caused hedge funds to retreat.” Capital Shortage As a result, the film industry faced a capital shortage that cut the number of movies being produced and forced companies such as Film Department to seek alternative funding sources. Because independent film studios have traditionally relied on private financing, there are only a few that are publicly traded, including Lions Gate Entertainment Corp. and DreamWorks Animation SKG. Mark Gill , 47, who co-founded Film Department with Neil Sacker , 48, after establishing and running Warner Independent Pictures from 2003 to 2006, declined to comment. Mary Beth Grover , a spokeswoman for Eton Park, also declined to comment. Film Department started in June 2007, the same month it issued $30 million of notes as part of an effort to raise about $200 million through private stock sales and loans. Eton Park, founded in 2004 by Mindich, a 42-year-old former partner at Goldman Sachs Group Inc., holds all of the notes, which have a second lien on Film Department’s assets, according to an amended IPO prospectus filed March 22 with the U.S. Securities and Exchange Commission. Including accrued interest, Eton Park is owed $36 million. Debt Default After failing to meet film-production targets last year, Film Department defaulted on the notes in August and reported a $10 million net loss for 2009. Outside auditor BDO Seidman LLP said on March 2 that there was “substantial doubt” about the company’s ability to continue as a going concern. Film Department agreed in a November recapitalization plan to use proceeds from a private or public stock sale to repay the Eton Park notes, whose annual interest rate jumped to 16 percent from 12 percent when the company defaulted on the debt, its SEC filing shows. The company’s financial picture has improved since last year, partly because its first release, a thriller called “Law Abiding Citizen” starring Gerard Butler and Jamie Foxx , has reaped $120 million in worldwide box-office receipts and has had higher DVD and Blu-Ray sales than expected. That reduced the amount of cash Film Department needed to raise in an IPO, said Richard Woltman, chairman of Girard Securities Inc., the San Diego-based brokerage that is underwriting the stock offering. ‘Improved’ Cash Flow “As this thing has evolved, the cash flow has been much improved from the distribution of ‘Law Abiding Citizen,’” said Woltman, who added that other underwriting firms have shown a “terrific” interest in participating in the stock sale. Film Department currently plans to sell 4.6 million shares through the IPO at $13 each, according to the March 22 filing. The company expects to repay about $12 million of second-lien notes by the time the IPO takes place, and will need about $22.5 million of the IPO proceeds to repay the remainder of the money owed Eton Park as of March 19. Eton Park will also receive $1.5 million of shares as partial payment. The IPO, which was scheduled to take place last week, may be further delayed because many people are taking breaks for Easter and Passover, Woltman said. Should Film Department fail to complete the IPO and repay Eton Park by April 1, Mindich’s firm will be entitled to an 8.6 percent stake in the box-office receipts from “Earthbound,” a romantic comedy starring Kate Hudson that finished production in New Orleans earlier this month, according to the March 22 filing. As president of Warner Independent Pictures, Gill purchased the documentary “March of the Penguins” at the 2005 Sundance Film Festival and turned it into a blockbuster that grossed $129 million at the box office worldwide. He also ran the Los Angeles office of Harvey Weinstein ’s Miramax Films Corp., where Gill worked from 1994 until 2002, helping to develop movies such as “The English Patient” and “Shakespeare in Love.” To contact the reporter responsible for this story: Miles Weiss in Washington at mweiss@bloomberg.net

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Dodd Financial Reform Bill Passed By Senate Banking Committee

March 22, 2010

WASHINGTON — The Senate Banking Committee has approved Democratic legislation overhauling Wall Street regulations on a party-line vote. The bill now goes to the Senate, where its prospects remain in doubt. The committee vote Monday was 13-10. The bill was written by Banking Committee Chairman Christopher Dodd, a Democrat from Connecticut. It would give the government unprecedented powers to split up firms considered a threat to the economy, put together a council of regulators to watch for risks in the financial system and create an independent consumer watchdog. Sen. Richard Shelby, the committee’s top Republican, said Republicans decided not to seek changes to the bill in committee. He said such an effort would not have been productive. THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below. WASHINGTON (AP) – Republicans abandoned hope of altering Wall Street legislation in a key Senate committee Monday, clouding prospects for a bipartisan bill and leaving the fight for the full Senate. Republicans had offered more than 300 amendments to legislation proposed by Senate Banking Committee Chairman Christopher Dodd, but they withdrew them over the weekend. That cleared the way for a quick party-line committee vote on Dodd’s proposal late Monday or early Tuesday. The surprise development did nothing to mend the partisan fissures over the legislation and adds even more uncertainty to Congress’ ability to pass a sweeping rewrite of financial regulations this year. The Senate would not take up the bill until April at the earliest. “You’ll have Easter recess, and that’s when, I guess, over the course of the next several weeks when the real negotiations will be taking place,” said Sen. Bob Corker, R-Tenn., a member of the committee who had held negotiations with Dodd. Corker spoke on CNBC. Dodd unveiled his bill 18 months after Wall Street’s spectacular failures helped plunge the nation into the worst recession since the Great Depression. The legislation would give the government unprecedented powers to split up firms considered a threat to the economy, put together a council of regulators to watch for risks in the financial system and create an independent consumer watchdog. With more than 300 Republican amendments and nearly 100 Democratic changes, committee members had prepared themselves for a long and arduous week of debate and votes on the bill. Instead, senators now planned to make opening remarks later Monday and then vote on Dodd’s bill. That vote could be pushed back to Tuesday morning. One person familiar with the weekend negotiations said Republicans concluded that most of their amendments would be voted down in committee and that their work would be drawn out and “unproductive.” The source, who spoke on condition of anonymity because he was not authorized to discuss the talks publicly, said the Republicans were convinced there was too big a gap between Dodd’s bill and what Republicans were ready to accept. Dodd did accept 25 Democratic amendments, including one sought by Federal Deposit Insurance Corp. Chairwoman Sheila Bair that she said would prevent unintended bailouts of large financial institutions. Democrats and Republicans are mostly split over the need for an independent consumer entity. But other issues also divide the parties, including how to regulate complex trading instruments and what firms should be exempt from new rules. Industry lobbyists said the decision to move swiftly through committee made it much more difficult to predict what the Senate would ultimately do with the legislation. Various potential outcomes were likely: _The legislation would go to the floor but without the support of at least one Republican, it would be blocked by procedural delays that would require 60 votes to overcome. There are 41 Republicans in the Senate, enough to sustain a filibuster. _The bill would pass out of committee on a party-line vote, but Sen. Richard Shelby of Alabama, the ranking Republican on the committee, would strike a bargain and pass a bill with bipartisan support. That is what happened last year with legislation that changed credit card rules. _The bill would move out of committee and Democrats would seek to pick off one or two Republicans to support the bill and break a filibuster. Corker suggested that the bill, the subject of months of negotiations by Dodd and members of his committee, needed a new environment. “It’s probably true that we have a better opportunity with a different cast of characters, the full Senate, to do something that is sound policy-wise,” he said. Treasury Secretary Timothy Geithner, keeping up Obama administration pressure on Congress, said the country faced a “defining moment” in the battle to overhaul financial oversight. “The test we face is whether we can enact real reforms that provide strong protection for consumers, strong constraints on risk taking by large institutions and strong tools to protect the economy and taxpayers from future crises,” Geithner said in remarks prepared for delivery Monday to the American Enterprise Institute, a conservative think tank.

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Euro Drops on Greece Bailout Concerns; Asian Stocks, Oil, Copper Decline

March 18, 2010

By James Poole March 18 (Bloomberg) — The euro weakened against the dollar and the yen for a second day on concern Greece won’t receive aid from the European Union next week and may need help from the International Monetary Fund. Asia stocks and oil fell. The euro dropped to $1.3667 per dollar as of 5:15 p.m. in Tokyo from $1.3738 yesterday in New York. The MSCI Asia Pacific Index lost 0.3 percent to 124.53, declining for the first time in three days. Standard & Poor’s 500 futures were down 0.3 percent. The Stoxx Euro 600 gave up 0.1 percent to 261.15 at 8:15 a.m. in London. Crude oil dropped 0.9 percent to $82.19 a barrel and copper slid 0.7 percent to $7,481 a metric ton. While Greek government proposals to reduce its deficit led S&P to affirm Greece’s investment-grade credit rating on March 16, the shift in Germany underscored the rift in the European Union as the global economy emerges from the worst slump since World War II. Michael Meister , the chief finance spokesman for German Chancellor Angela Merkel ’s party, said attempting a Greek rescue without the IMF “would be a very daring experiment.” “Fundamentally the euro will be undermined by the situation, even though there may not be a complete sovereign default by Greece,” said Derek Mumford , a Sydney-based senior consultant at HiFX, a foreign exchange risk management firm. “The euro-zone will have low growth and the euro will suffer.” The yen strengthened to 123.58 per euro in Tokyo from 124.06 yesterday in New York. The Japanese currency snapped a two-day drop against the Australian dollar after Chinese newspaper reports indicated the nation, the fastest-growing major economy, is trying to quash land and currency speculation. Risk Aversion “Worries over further monetary tightening in China and political discord within Europe over a rescue package for Greece are sparking risk aversion,” said Lee Wai Tuck , a currency strategist at Forecast Pte in Singapore. “This is leading to buying in the yen and the dollar and selling of the euro.” Greece may seek aid from the IMF over the April 2 to April 4 Easter weekend, Dow Jones said today, citing a senior Greek official it didn’t name. China has banned banks from lending to developers found to be hoarding land or holding back sales of apartments to wait for higher prices, the China Securities Journal said today, citing an unidentified source. Yuan forwards snapped a three-day decline after a trade group said the government is testing the ability of companies to withstand a stronger currency. China is conducting yuan stress tests for 12 industries, Zhang Wei , vice chairman of the China Council for the Promotion of International Trade, said at a briefing in Beijing today. The yuan’s 12-month forwards gained 0.1 percent to 6.6650. The contracts reflect bets the currency will strengthen 2.4 percent from the spot rate of 6.8264. Intervention Speculation Asian currencies declined from near their strongest levels since 2008 on speculation central banks will intervene to damp appreciation that may hurt exports. The South Korean won dropped 0.5 percent to 1,133.85 per dollar. Central banks intervene in the currency markets by arranging purchases or sales. “There’s some rumors that the Bank of Korea has been in the market,” said Gerrard Katz , head of foreign-exchange trading at Standard Chartered Plc in Hong Kong. “Fundamentals still point to a lower dollar against Asian currencies.” Credit risk is declining as Australia & New Zealand Banking Group Ltd., the third-largest bank in Australia, said domestic corporate lending was increasing for the first time in a year. The Markit iTraxx index for Japan and its Asia counterpart fell 1 basis point to the lowest level since the middle of January. More shares fell than gained on the MSCI Asia Pacific Index , which has advanced 3.4 percent this year. Japan’s Nikkei 225 Stock Average lost 1 percent, the biggest drop among major markets in Asia. Westfield, Mitsui Westfield Group, the world’s largest owner of shopping malls by market value, gained 2.2 percent in Sydney after Deutsche Bank AG upgraded the stock. Mitsui Fudosan Co. , Japan’s largest developer, dropped 2.4 percent after a downgrade from Morgan Stanley. A combination of record mutual fund inflows and the world’s fastest economic growth are failing to lift shares in the largest developing nations with valuations at the highest level versus advanced countries since at least 1995. Emerging-market stock funds lured $86.6 billion in the year through January, the most in 14 years of data , according to Cambridge, Massachusetts-based researcher EPFR Global. MSCI’s developing nation index slid 2.2 percent from this year’s peak on Jan. 11 and pared an 80 percent rally in the previous 12 months that sent its price-to-book ratio to a record 17 percent over the MSCI World Index, data compiled by Bloomberg show. Crude Oil, Copper Crude oil declined as the dollar gained and a government report showed fuel demand dropped and crude supplies rose in the U.S. The Organization of Petroleum Exporting Countries, supplier of about 40 percent of the world’s oil, agreed to keep its production limits unchanged for a fifth meeting. It cut quotas by a record 4.2 million barrels a day in late 2008 when global demand collapsed because of the recession. Copper for three-month delivery fell for the first time in three days. To contact the reporter for this story: James Poole in Singapore jpoole4@bloomberg.net ;

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Euro Drops on Greece Bailout Concerns; Asian Stocks, Oil, Copper Decline

March 18, 2010

By James Poole March 18 (Bloomberg) — The euro weakened against the dollar and the yen for a second day on concern Greece won’t receive aid from the European Union next week and may need help from the International Monetary Fund. Asia stocks and oil fell. The euro dropped to $1.3667 per dollar as of 5:15 p.m. in Tokyo from $1.3738 yesterday in New York. The MSCI Asia Pacific Index lost 0.3 percent to 124.53, declining for the first time in three days. Standard & Poor’s 500 futures were down 0.3 percent. The Stoxx Euro 600 gave up 0.1 percent to 261.15 at 8:15 a.m. in London. Crude oil dropped 0.9 percent to $82.19 a barrel and copper slid 0.7 percent to $7,481 a metric ton. While Greek government proposals to reduce its deficit led S&P to affirm Greece’s investment-grade credit rating on March 16, the shift in Germany underscored the rift in the European Union as the global economy emerges from the worst slump since World War II. Michael Meister , the chief finance spokesman for German Chancellor Angela Merkel ’s party, said attempting a Greek rescue without the IMF “would be a very daring experiment.” “Fundamentally the euro will be undermined by the situation, even though there may not be a complete sovereign default by Greece,” said Derek Mumford , a Sydney-based senior consultant at HiFX, a foreign exchange risk management firm. “The euro-zone will have low growth and the euro will suffer.” The yen strengthened to 123.58 per euro in Tokyo from 124.06 yesterday in New York. The Japanese currency snapped a two-day drop against the Australian dollar after Chinese newspaper reports indicated the nation, the fastest-growing major economy, is trying to quash land and currency speculation. Risk Aversion “Worries over further monetary tightening in China and political discord within Europe over a rescue package for Greece are sparking risk aversion,” said Lee Wai Tuck , a currency strategist at Forecast Pte in Singapore. “This is leading to buying in the yen and the dollar and selling of the euro.” Greece may seek aid from the IMF over the April 2 to April 4 Easter weekend, Dow Jones said today, citing a senior Greek official it didn’t name. China has banned banks from lending to developers found to be hoarding land or holding back sales of apartments to wait for higher prices, the China Securities Journal said today, citing an unidentified source. Yuan forwards snapped a three-day decline after a trade group said the government is testing the ability of companies to withstand a stronger currency. China is conducting yuan stress tests for 12 industries, Zhang Wei , vice chairman of the China Council for the Promotion of International Trade, said at a briefing in Beijing today. The yuan’s 12-month forwards gained 0.1 percent to 6.6650. The contracts reflect bets the currency will strengthen 2.4 percent from the spot rate of 6.8264. Intervention Speculation Asian currencies declined from near their strongest levels since 2008 on speculation central banks will intervene to damp appreciation that may hurt exports. The South Korean won dropped 0.5 percent to 1,133.85 per dollar. Central banks intervene in the currency markets by arranging purchases or sales. “There’s some rumors that the Bank of Korea has been in the market,” said Gerrard Katz , head of foreign-exchange trading at Standard Chartered Plc in Hong Kong. “Fundamentals still point to a lower dollar against Asian currencies.” Credit risk is declining as Australia & New Zealand Banking Group Ltd., the third-largest bank in Australia, said domestic corporate lending was increasing for the first time in a year. The Markit iTraxx index for Japan and its Asia counterpart fell 1 basis point to the lowest level since the middle of January. More shares fell than gained on the MSCI Asia Pacific Index , which has advanced 3.4 percent this year. Japan’s Nikkei 225 Stock Average lost 1 percent, the biggest drop among major markets in Asia. Westfield, Mitsui Westfield Group, the world’s largest owner of shopping malls by market value, gained 2.2 percent in Sydney after Deutsche Bank AG upgraded the stock. Mitsui Fudosan Co. , Japan’s largest developer, dropped 2.4 percent after a downgrade from Morgan Stanley. A combination of record mutual fund inflows and the world’s fastest economic growth are failing to lift shares in the largest developing nations with valuations at the highest level versus advanced countries since at least 1995. Emerging-market stock funds lured $86.6 billion in the year through January, the most in 14 years of data , according to Cambridge, Massachusetts-based researcher EPFR Global. MSCI’s developing nation index slid 2.2 percent from this year’s peak on Jan. 11 and pared an 80 percent rally in the previous 12 months that sent its price-to-book ratio to a record 17 percent over the MSCI World Index, data compiled by Bloomberg show. Crude Oil, Copper Crude oil declined as the dollar gained and a government report showed fuel demand dropped and crude supplies rose in the U.S. The Organization of Petroleum Exporting Countries, supplier of about 40 percent of the world’s oil, agreed to keep its production limits unchanged for a fifth meeting. It cut quotas by a record 4.2 million barrels a day in late 2008 when global demand collapsed because of the recession. Copper for three-month delivery fell for the first time in three days. To contact the reporter for this story: James Poole in Singapore jpoole4@bloomberg.net ;

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Chile Hit by Magnitude 8.8 Earthquake, at Least 147 Die; Tsunami Threatens

February 27, 2010

By Sebastian Boyd and Michael Smith Feb. 27 (Bloomberg) — A massive 8.8 magnitude earthquake struck Chile early this morning, destroying highways, bridges and apartment buildings and leaving at least 122 people dead. Tsunami warnings were issued across the Pacific Ocean as far as Hawaii and New Zealand, and Chilean President Michelle Bachelet declared a “state of catastrophe.” The pre-dawn quake was centered 200 miles (317 kilometers) southwest of the capital Santiago near the main winemaking region and close to Concepcion, a metropolitan region of over 500,000 people. In the minutes and hours after the 90-second temblor, stronger than the one in Haiti last month that may have killed 300,000, the U.S. Geological Service reported almost 30 aftershocks. Five measured 6.0 or above. “Amid such a major earthquake we can’t rule out that the death toll will rise,” Bachelet said at a televised news conference. “We will provide information as soon as we have it.” President-elect Sebastian Pinera told reporters that at least 122 people were killed. “This earthquake is a massive blow to Chilean society,” Pinera told reporters in Santiago. Buildings collapsed across Concepcion, CHV Television reported. One four-story apartment building had fallen into a trench opened up by the quake, while another residential building was split in two, television images showed. Many streets were blocked with rubble from collapsed buildings. In towns closer to the epicenter, including Curico and Talca, more than 80 percent of buildings were flattened, CHV Television reported, citing unidentified officials at the national emergency agency. Collapsed Bridges, Roads Closer to the capital, a helicopter tour of the region showed collapsed bridges blocking motorways. Embankments fell apart, and lengthy stretches of road were impassable. Long lines of cars were visible at gasoline stations. Tsunami warnings were issued across the Pacific region, including South America, Australia, New Zealand, Japan, the Philippines, Russia and many islands, including Hawaii where the Pacific Tsunami Warning Centre said “urgent action should be taken to protect lives and property.” An evacuation of Easter Island has been ordered due to the tsunami threat, Bachelet said. Residents on the Pacific Ocean island, 2,180 miles (3,510 kilometers) west of the South American mainland, were told by the Chilean navy that the threat of a tsunami had eased. The temblor struck at 3:34 a.m. offshore from the province of Maule at a depth of 22 miles (35 kilometers), according to the U.S. Geological Survey Web site . Power and phone connections were disrupted and Santiago residents waited in the street amid fears of aftershocks, pictures on CNN+ showed. Copper Mines While the world’s largest underground copper mine, El Teniente, is 180 miles from the epicenter, most of the country’s copper deposits and port facilities are at least 500 miles to the north. Breakwater Resources Ltd., a Canadian mining company, said its Toqui mine facility was undamaged by the earthquake. “I’m trying to get in touch with Santiago,” said Gonzalo Cuadra , a London-based executive at Codelco, the world’s biggest copper producer and the owner of El Teniente. “I think in the north there haven’t been problems. We have to see what happened with the mines near Santiago.” The El Teniente underground copper mine, which is in central Chile, wasn’t damaged, Carmen Fernandez, head of the national emergency office, said in an interview in Santiago. Rio Tinto Group, a shareholder in the world’s largest copper mine, Escondida, located in northern Chile and owned by BHP Billiton Ltd., also had no reports of damage, London-based spokeswoman said Christina Mills said by telephone. State of Emergency A state of emergency was declared in Maule and the province of BioBio to the south, where Concepcion is located. A third region, Araucania, south of BioBio and the center of the country’s forestry industry, may also be added, Bachelet said. Some of the worst damage was around the cities of Talca, Curico and Cauquenes, near the quake’s epicenter, according to ONEMI, the national emergency agency. In downtown Santiago, rescue workers pulled a 92-year-old woman out of a home that had been reduced to a pile of rubble, TVN reported. The city’s international airport will be closed for at least 24 hours because of damage, airport chief Eduardo del Canto told the broadcaster. “The terminal is completely inoperable,” he said. “This is a major, damaging earthquake,” Randy Baldwin of the USGS told the BBC in an interview. “For any population in the area it would be reasonable to expect some damage.” Secretary of State Hillary Clinton is scheduled to arrive March 1 to Santiago on a regional tour. The State Department said in a statement the U.S. government is committed to helping the government of Chile “as rapidly and effectively as we can.” UN, U.K. Help While Chile “has considerable assets of its own,” the U.S. has put together a disaster response team and has placed two urban search and rescue teams on alert, State Department spokesman Philip Crowley said in a statement. “We continue to assess the situation and are prepared to offer whatever assistance Chile needs,” Crowley said. United Nations Secretary-General Ban Ki-Moon said his organization in monitoring the situation in Chile. The UN is on standby to provide emergency relief, the organization said today in an e-mailed statement. U.K. Prime Minister Gordon Brown also offered help. Chile was struck by the most powerful earthquake on record in 1960, when a magnitude 9.5 temblor killed about 1,655 people, according to the USGS Web site. A further 211 people died when associated tsunamis struck Hawaii, Japan and the Philippines. Earlier today, a magnitude 7 earthquake hit near Okinawa, Japan, at about 5:31 a.m. local time, the USGS said. Last month, Haiti was struck by a magnitude 7 quake. The death toll may reach 300,000, President Rene Preval said Feb. 21. More than 1 million people were left homeless. To contact the reporters on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net ; Michael Smith at mssmith@bloomberg.net

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Chile Hit by Magnitude 8.8 Earthquake, at Least 122 Die; Tsunami Threatens

February 27, 2010

By Mike Millard and Paul Tobin Feb. 27 (Bloomberg) — Tsunami warnings were issued across the Pacific Ocean after an 8.8-magnitude earthquake struck Chile, where President Michele Bachelet declared a “state of catastrophe.” The quake was centered 200 miles (317 kilometers) southwest of Santiago near the main winemaking region. At least 78 people have been killed, Bachelet told reporters. Tsunami warnings have been issued across the Pacific region, including South America, Australia, New Zealand, Japan, the Philippines, Russia and many islands, including Hawaii where the Pacific Tsunami Warning Centre said “urgent action should be taken to protect lives and property.” An evacuation of Easter Island has been ordered due to the tsunami threat, the British Broadcasting Corp. reported, citing Bachelet. The temblor struck at 3:34 a.m. offshore from the province of Maule at a depth of 22 miles (35 kilometers), according to the U.S. Geological Survey Web site . In the aftermath of the 90- second quake, the USGS reported 19 aftershocks, of which five measured 6.0 or above. “Amid such a major earthquake we can’t rule out that the death toll will rise,” Bachelet told televised news conference. “We will provide information as soon as we have it.” Copper Mine Power and phone connections were disrupted and Santiago residents waited in the street amid fears of aftershocks, pictures on CNN+ showed. The quake’s focus was 70 miles north of Concepcion, Chile’s second city, close to the vineyards of the Curico valley. While the world’s largest underground copper mine, El Teniente, is 180 miles from the epicenter, most of the country’s copper deposits are at least 500 miles to the north. “I’m trying to get in touch with Santiago,” said Gonzalo Cuadra , a London-based executive at Codelco, the world’s biggest copper producer and the owner of El Teniente. “I think in the north there haven’t been problems. We have to see what happened with the mines near Santiago.” The El Teniente underground copper mine, which is in central Chile, wasn’t damaged, Carmen Fernandez, head of the national emergency office, said in an interview in Santiago. Rio Tinto Group, a shareholder in the world’s largest copper mine, Escondida, located in northern Chile and owned by BHP Billiton Ltd., also had no reports of damage, London-based spokeswoman said Christina Mills said by telephone. State of Emergency A state of emergency was declared in Maule and the province of BioBio to the south, where Concepcion is located. A third region, Araucania, south of BioBio and the center of the country’s forestry industry, may also be added, Bachelet said. Some of the worst damage was around the cities of Talca, Curico and Cauquenes, near the quake’s epicenter, according to ONEMI, the national emergency agency. In downtown Santiago, rescue workers pulled a 92-year-old woman out of a home that had been reduced to a pile of rubble, TVN reported. The city’s international airport will be closed for at least 24 hours because of damage, airport chief Eduardo del Canto told the broadcaster. “The terminal is completely inoperable,” he said. Sections of the Panamerican Highway south of Santiago were blocked after pedestrian overpasses and a bridge collapsed, according to TVN images. Elsewhere, numerous pedestrian highway overpasses collapsed, Bachelet told reporters. ‘Some Damage’ “This is a major, damaging earthquake,” Randy Baldwin of the USGS told the BBC in an interview. “For any population in the area it would be reasonable to expect some damage.” Chile was struck by the most powerful earthquake on record in 1960, when a magnitude 9.5 temblor killed about 1,655 people, according to the USGS Web site. A further 211 people died when associated tsunamis struck Hawaii, Japan and the Philippines. Earlier today, a magnitude 7 earthquake hit near Okinawa, Japan, at about 5:31 a.m. local time, the USGS said. Last month, Haiti was struck by a magnitude 7 quake. The death toll may reach 300,000, President Rene Preval said Feb. 21. More than 1 million people were left homeless. To contact the reporters on this story: Mike Millard in Singapore at Mmillard2@bloomberg.net ; Paul Tobin in Madrid at ptobin@bloomberg.net

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Chile Hit by Magnitude 8.8 Earthquake, at Least 78 Dead; Tsunami Threatens

February 27, 2010

By Mike Millard and Paul Tobin Feb. 27 (Bloomberg) — Tsunami warnings have been issued across the Pacific Ocean after an 8.8-magnitude earthquake struck Chile, where President Michele Bachelet declared a “state of catastrophe.” The quake was centered 200 miles (317 kilometers) southwest of Santiago near the main winemaking region. At least 78 people have been killed, Bachelet told reporters. Tsunami warnings have been issued across the Pacific region, including South America, Australia, New Zealand, Japan, the Philippines, Russia and many islands, including Hawaii where the Pacific Tsunami Warning Centre said “urgent action should be taken to protect lives and property.” An evacuation of Easter Island has been ordered due to the tsunami threat, the British Broadcasting Corp. reported, citing Bachelet. The temblor struck at 3:34 a.m. offshore from the province of Maule at a depth of 22 miles (35 kilometers), according to the U.S. Geological Survey Web site . In the aftermath of the 90- second quake, the USGS reported 19 aftershocks, of which five measured 6.0 or above. “Amid such a major earthquake we can’t rule out that the death toll will rise,” Bachelet told televised news conference. “We will provide information as soon as we have it.” Copper Mine Power and phone connections were disrupted and Santiago residents waited in the street amid fears of aftershocks, pictures on CNN+ showed. The quake’s focus was 70 miles north of Concepcion, Chile’s second city, close to the vineyards of the Curico valley. While the world’s largest underground copper mine, El Teniente, is 180 miles from the epicenter, most of the country’s copper deposits are at least 500 miles to the north. “I’m trying to get in touch with Santiago,” said Gonzalo Cuadra , a London-based executive at Codelco, the world’s biggest copper producer and the owner of El Teniente. “I think in the north there haven’t been problems. We have to see what happened with the mines near Santiago.” The El Teniente underground copper mine, which is in central Chile, wasn’t damaged, Carmen Fernandez, head of the national emergency office, said in an interview in Santiago. Rio Tinto Group, a shareholder in the world’s largest copper mine, Escondida, located in northern Chile and owned by BHP Billiton Ltd., also had no reports of damage, London-based spokeswoman said Christina Mills said by telephone. State of Emergency A state of emergency was declared in Maule and the province of BioBio to the south, where Concepcion is located. A third region, Araucania, south of BioBio and the center of the country’s forestry industry, may also be added, Bachelet said. Some of the worst damage was around the cities of Talca, Curico and Cauquenes, near the quake’s epicenter, according to ONEMI, the national emergency agency. In downtown Santiago, rescue workers pulled a 92-year-old woman out of a home that had been reduced to a pile of rubble, TVN reported. The city’s international airport will be closed for at least 24 hours because of damage, airport chief Eduardo del Canto told the broadcaster. “The terminal is completely inoperable,” he said. Sections of the Panamerican Highway south of Santiago were blocked after pedestrian overpasses and a bridge collapsed, according to TVN images. Elsewhere, numerous pedestrian highway overpasses collapsed, Bachelet told reporters. ‘Some Damage’ “This is a major, damaging earthquake,” Randy Baldwin of the USGS told the BBC in an interview. “For any population in the area it would be reasonable to expect some damage.” Chile was struck by the most powerful earthquake on record in 1960, when a magnitude 9.5 temblor killed about 1,655 people, according to the USGS Web site. A further 211 people died when associated tsunamis struck Hawaii, Japan and the Philippines. Earlier today, a magnitude 7 earthquake hit near Okinawa, Japan, at about 5:31 a.m. local time, the USGS said. Last month, Haiti was struck by a magnitude 7 quake. The death toll may reach 300,000, President Rene Preval said Feb. 21. More than 1 million people were left homeless. To contact the reporters on this story: Mike Millard in Singapore at Mmillard2@bloomberg.net ; Paul Tobin in Madrid at ptobin@bloomberg.net

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Greek Crisis May Slow Trichet’s Push to Scale Back ECB Stimulus Measures

February 8, 2010

By Gabi Thesing Feb. 9 (Bloomberg) — The European Central Bank may be forced to delay the withdrawal of emergency lending measures because it could inflame financial-market concerns about Greece, Spain and Portugal, economists said. Investors are already dumping those countries’ assets as their governments struggle to rein in budget deficits, making it more expensive for them to finance the debt. Should the ECB push ahead with its exit strategy by pulling its unlimited cash support for euro-area banks, interest rates could rise, further undermining confidence in Europe’s economic recovery. “Banks in Greece, Spain and Portugal are disproportionately dependent on cheap ECB cash so any whiff of that drying up and weakening the banking sector further will rattle markets ,” said Colin Ellis , an economist at Daiwa Capital Markets in London. That “strengthens the case for the ECB to slow down its exit.” The ECB wants to withdraw the measures it introduced to nurse Europe through its worst recession since World War II to avoid inflation down the road. It has already announced it will stop giving banks 12 and 6-month loans, and will decide next month whether to revert to an auction procedure in its refinancing operations. The ECB currently lends banks as much cash as they want at its 1 percent benchmark rate . Next Step ECB officials including Juergen Stark , Yves Mersch , Axel Weber and Erkki Liikanen have said they favor a return to conventional measures as soon as economic and financial-market conditions allow. Weber said on Jan. 27 that the next step in the ECB’s exit could be taken before the end of the first half. Economists including Laurent Bilke , who previously worked at the ECB, said the central bank should hold off returning to an auction in its main weekly tender until at least the second half of the year. He said a return to normal refinancing operations would drive the Eonia overnight rate , or the interest European banks charge each other for overnight loans, about 70 basis points higher toward the ECB’s 1 percent benchmark. “If the ECB exits too soon, it could exacerbate problems for the weaker economies that are most sensitive to short-term market rates, making it more difficult and expensive for their governments and banks to borrow,” said Bilke, now at Nomura International in London. “There is also a risk that euro-area money markets could seize up again, disrupting credit flow to the euro-area economy.” The economy of the 16 nations sharing the euro will grow 0.8 percent this year, the ECB predicted in December. It contracted about 4 percent last year, according to the European Commission. The ECB will publish new forecasts after its policy meeting on March 4. Trichet ‘Confident’ “The Governing Council will, in early March, take decisions on the continued implementation of the gradual phasing out of the extraordinary liquidity measures that are not needed to the same extent as in the past,” ECB President Jean-Claude Trichet said last week. He was “confident” Greece would reduce its budget deficit to below the European Union’s limit of 3 percent of gross domestic product by 2012. Concerns about Greece’s ability to cut the deficit from almost 13 percent of GDP are spreading to the euro region as a whole as investors speculate about a possible default and even a break-up of the currency union. As the cost of insurance against Greek, Spanish and Portuguese sovereign defaults last week rose to a record, European stocks posted the biggest weekly slump in 11 months and the euro plunged to an eight-month low. ‘Bank Panic’ “Plenty of European banks have stuffed their balance sheets with Greek debt,” said Peter Vanden Houte , an economist at ING Group in Brussels. “If they did default, it would create a new round of bank panic.” Eric Nielsen , chief European economist at Goldman Sachs International in London, said Greece is in a worse situation than Spain and Portugal and its impact on market confidence should be limited. “If we are wrong” and “contagion from Greece engulfs other countries, then up to 20 to 30 percent of euro-zone GDP could be under severe stress,” Nielsen wrote in a note to clients this week. “Were a major financial instability event to develop, we would expect the ECB to pause in its exit strategy, and then, if needed, reverse course and reinstate longer-term financing.” “The ECB shouldn’t engage in any tightening at the moment,” said Julian Callow , an economist at Barclays Capital in London. Policy makers “should avoid getting egg on their face at Easter,” he said. To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net ;

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British Airways Pilots Train on Drinks Carts as Cabin Crew Vote on Strike

January 24, 2010

By Steven Rothwell Jan. 25 (Bloomberg) — British Airways Plc will today begin training pilots, baggage handlers and engineers to take over the duties of flight attendants as its 12,000 cabin crew commence voting on a walkout over staffing reductions. British Airways has registered volunteers for a three-week course in serving meals, selling duty-free goods and taking charge of passenger safety for the duration of a strike that could cost 20 million pounds ($32 million) a day in lost sales . “This should allow them to operate some flights, but whether they can maintain anything like a full service is another matter,” said Douglas McNeill , an analyst at Astaire Securities in London with a “buy” rating on BA stock. “The question is not how many interim staff they can attract, but how many experienced staff there’ll be to lead them.” The strike ballot, organized by the Unite union, runs until Feb. 25 and a walkout can begin one week after a “yes” vote. The Balpa pilot union says it won’t seek to stop members deputizing as cabin crew after being “stunned” by an earlier attempt to halt flying for 12 days over the Christmas holiday. The GMB union, which represents about 7,000 BA check-in staff and baggage handlers, has e-mailed members at the carrier asking them not to respond to the request for emergency cover, National Executive Officer Mick Rix said in a Jan. 22 interview. BA Chief Executive Officer Willie Walsh wrote to about 25,000 non-cabin crew employees on Jan. 18 asking them to help keep aircraft flying through a strike with a simplified service. Spokesman Paul Marston said the London-based airline “will explore all options” for maintaining schedules. It’s also progressing with plans to hire planes and crews on some routes. Record Loss Formal negotiations between Unite and British Airways ended in stalemate on Jan. 15. While there is still a “continuous dialogue,” contacts have stopped short of full talks and are being maintained through “working parties,” union spokeswoman Pauline Doyle said in an interview on Jan. 22. Unite is seeking a strike mandate over BA’s introduction of new working practices in November that cut at least one flight attendant on long-haul flights from London Heathrow airport. Europe’s third-largest carrier needs to cut costs after posting a record 217 million-pound loss in the six months to Sept. 30. Len McCluskey, Unite’s assistant general secretary, said the savings plan is the result of “machismo management” by Walsh, who he accused of “trying to grind skilled and professional employees into the dirt.” The Christmas walkout would have disrupted travel for 1 million people and was averted only after U.K. judge Laura Cox declared an earlier strike ballot invalid because it included workers who had agreed to leave the airline. Unite said Jan. 20 it would refrain from striking over the Easter holiday, allowing passengers to “plan their travel arrangements in confidence.” Different View The Balpa union said in an e-mail on Jan. 22 that the majority of members have “a very different analysis” of the situation at British Airways to that of Unite, though it isn’t actively encouraging pilots to break the strike. Safety training for cabin crew at U.K. carriers is regulated by the Civil Aviation Authority and requires competence in areas including operation of fire extinguishers and procedures for evacuating aircraft using inflatable slides. “The safety of our customers and staff is always our overriding priority and we would never do anything to compromise that,” BA spokesman Marston said. The CAA also stipulates that airlines must have a hierarchy of crew on each plane, led by an experienced member, and must carry one flight attendant for every 50 seats, whether they’re occupied or not, or one for each exit, whichever is higher. For a Boeing Co. 747-400 in a typical configuration that means 12 people, compared with the 14 British Airways currently provides. “Safety standards are our only concern,” Richard Taylor, a London-based spokesman for the regulator, said in an interview. “Service standards, food and drink, that’s up to them and they are probably going to make it a lower priority.” To contact the reporter on this story: Steven Rothwell in London at srothwell@bloomberg.net

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