new-year

Odysseas Papadimitriou: The Legislative Impetus for Using a Personal Credit Card to Fund Business Spending

by on January 21, 2011

Ok, the holidays are over, and it’s time to get back to business. A new year has arrived, and with it have come the promise of a fresh start and the desire to make this year better than the last. Perhaps you want to expand your business, go after another client segment or launch a new product. Maybe, considering the tough times we’ve all been enduring, you just want to increase profits in 2011. Whatever the case may be, handling your expenses wisely is a necessity. While what you spend money on is the most critical decision you must make, your chosen method of payment is important as well. Many small business owners assume they should fund their companies with business credit cards simply because the word “business” is in the name of the genre. However, contrary to naming conventions, personal credit cards are actually often the best spending vehicles for small business owners. With the passage of the new credit card law (CARD Act) came the institution of a number of credit card regulations designed to protect consumers from the predatory issuer practices that persisted prior to the Great Recession. Such regulations restrict issuers from increasing the interest rate on an existing balance unless a customer becomes severely delinquent. While these changes are undoubtedly a boon for consumers in general, they only apply to personal credit cards . This means that balances held on business credit cards are vulnerable to becoming suddenly more costly because of interest rate changes. Considering that it’s common practice for credit card company executives to raise interest rates in order to quickly increase profits, this lack of protection is troubling for small business credit card users. However, this danger can easily be negated by simply opening a personal credit card and using it for all business purchases that will not be paid for in full by the end of each month. There is ultimately no good reason not to, especially since the common belief that business credit cards provide greater liability protection than do personal credit cards is, in fact, a misconception. Many people assume that the liability for any payment problems encountered with business credit cards will be at least partially assumed by their companies. However, small businesses are simply not large enough to warrant shared liability, and individuals are wholly responsible for delinquency and default with both small business and personal credit cards. There is no difference between the two in terms of individual liability protection. However, business credit cards do prove useful in other facets of business spending. They offer additional tools for tracking and reporting business expenses and allow owners to disperse individual cards with customizable limits amongst their employees and then earn rewards on their spending. For these reasons, business credit cards should still be used, yet only for purchases that will be paid for in full on a monthly basis. Establishing such a strategic method for funding your business will ultimately provide you with the cash flow stability and debt consistency that is integral to small business survival, especially in the current economic climate. So start the New Year off right by opening a personal credit card for your business expenses that will lead to a monthly balance. After all, not doing so is like gambling your company’s debt, and no one wants their livelihood to be a gamble. This article was written by Odysseas Papadimitriou, CEO and Founder of CardHub.com, an online marketplace for credit card offers and gift card exchange .

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Odysseas Papadimitriou: The Legislative Impetus for Using a Personal Credit Card to Fund Business Spending

David Isenberg: Outsourcing War and Peace: Part 1

by David Isenberg on January 7, 2011

It’s a new year so it’s time for a new book on private military contractors. Out later this month is Outsourcing War and Peace: Preserving Public Values in a World of Privatized Foreign Affairs by Laura A. Dickinson. She is a law professor at Arizona State University. I’m in the process of writing a review and don’t want to give anything away but there is a lot of useful information here. So with the permission of her publisher, Yale University Press, I am going to post three excerpts from the book. Here is the first part. Privatization of Defense Department Operations It was not until the presidency of Bill Clinton that privatization began to penetrate deeply into the corridors of the Pentagon and other foreign policy agencies. Through the reinventing government program of Vice President Al Gore, the Clinton administration accelerated the privatization pace across all governmental sectors. But what is significant for our purposes is that in this period the foreign policy sector was also part of the privatization trend. At the DOD, Secretary William Cohen was a key figure. Caught between escalating price tags for weapons systems and political pressure to cut costs in the post-Cold War era without weakening the military’s capabilities, Secretary Cohen turned to the private sector for advice. During the summer of 1997 he assembled a committee that included leading executives from private industry to offer their wisdom about the road ahead. Cohen then proceeded to pursue a reform path that aimed to modernize defense by embracing the rhetoric, practices, and methodologies of American businesses.39 This embrace is perhaps most apparent in his Defense Reform Initiative, which he launched in the fall of 1997 as an effort to “aggressively apply to the Department those business practices that American industry has successfully used to become leaner and more flexible in order to remain competitive.” The four pillars of the initiative included the following practices: “(1) reengineer by adopting the best private sector business practices in defense support activities; (2) consolidate organizations to remove redundancy and move program management out of corporate headquarters and back to the field; (3) compete many more functions now being performed in-house, which will improve quality, cut costs, and make the Department more responsive; and (4) eliminate excess infrastructure.” To further these goals, Secretary Cohen proposed reductions of 33 percent in the number of employees in the Office of the Secretary of Defense, 29 percent in the Joint Staff, 10 percent in military headquarters, 21 percent in defense agencies, and 36 percent in departmental field activities. He also sought to make at least thirty thousand DOD positions subject to competition with the private sector each year for five years, outsourcing those that the private sector could perform better–dwarfing any previous outsourcing efforts. Thus, he sought to implement the troika of practices that had become the buzzwords of American industry in the 1980s and 1990s: downsize, compete, and outsource. While Secretary Cohen cut many civilian employees, Pentagon officials downsized troops and closed military bases, replacing uniformed soldiers with contractors for certain support roles. In the words of one senior DOD official, “The peace dividend requirement forced us to downsize. We had to reduce Army divisions from 18 to 10. But we didn’t cut all types of troops proportionally. We didn’t want to take the risk on the combat side. We took the risk on the support side. In 1991 we had 56 combat brigades. We cut the number down to 46. But if we had taken I down proportionally, we would have taken it down to 36.” Thus, the Pentagon increasingly came to rely on contractors to supply food, build bases, deliver latrines, and perform other support roles. Yet, at the same time, DOD cut its acquisitions staff by 38 percent. As a senior DOD official later noted, “Where we screwed up was not to cut the guys who buy the tanks and the big equipment; instead, we cut the guys who do nuts, bolts, supplies and so on–these were the guys who we were going to need as we turned more and more to service contractors. Thus, at the very moment that the military was turning increasingly to contractors to provide support services to troops, the Pentagon, under pressure from Congress, cut back severely on the acquisitions workforce that would become increasingly necessary to manage those contractors. Yet such cuts were politically much easier to make because, as Steven Schooner has argued, there is no natural political constituency for the acquisitions workforce.

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David Isenberg: Outsourcing War and Peace: Part 1

Will dawn of new year take Islamic finance to next level?

January 3, 2011

Will dawn of new year take Islamic finance to next level?

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Developers Break Ground On Phila. Navy Yard Flex Project

January 3, 2011

The new year brings some much-needed good news for Philadelphia’s beleaguered commercial real estate market. The first large-scale development in the City of Brotherly Love in nearly two years is officially under way. Liberty Property Trust (NYSE: LRY) and Synterra Partners broke ground Monday on two of three planned flex buildings in the Navy Yard Commerce Center totaling 103,137 square feet, and announced the signing of the project’s first tenant…

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A new year is upon us with all new data and figures from the U.S

January 2, 2011

A new year is upon us with all new data and figures from the U.S

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Steven B. Smith: 11 New Year’s Resolutions to Achieve Financial Fitness in 2011

December 31, 2010

In 2010, we saw the average American household slip deeper into financial distress. Fortunately, the start of a new year offers a great opportunity to be proactive about getting our financial lives in order and experiencing financial peace of mind. So if your personal budgeting skills need refreshing, or if your portfolios and insurance policies have not been recently reviewed, then committing to the following eleven resolutions can help make 2011 the year you achieve financial fitness. 1. Resolve to spend less than you make. The oldest financial advice is still the best — spend less than you take in. This will keep you out of debt and help you build fiscal stability. 2. Automate your finances. If something isn’t easy, most of us simply won’t do it. Make it easy on yourself by using a secure online budgeting system, like Mvelopes , to track and categorize your expenses. You can save hours of work every month while also taking control of your spending habits. 3. Create a spending plan. Determine how much you plan to spend and divide that money among your different spending or expense categories. Give yourself some flexibility to allow for some of those impulse buys without ruining your overall plan. Individuals who successfully create and follow spending plans often save as much as 10% of their income during the year – simply because a spending plan guides them in making good spending decisions. 4. Save at least ten percent of your income. If you don’t pay yourself first, there won’t be any left over at the end of the month to save. Set up an automatic transfer to a savings account to make it easy. 5. Start an emergency fund. Use part of your savings to create an emergency fund. You should have three to six months’ worth of expenses set aside in an easily accessible account to cover mortgage, food, car payments and other necessities in an emergency. Keep it separate from other funds to avoid spending it. 6. Pay at least the minimum on your credit cards. And pay off as much extra as you can. Making at least the minimum payment on time accounts for 35 percent of your credit score. Resolve to take control of your credit card usage and set a goal to pay off outstanding balances as soon as possible. Paying off the entire balance each month can save you hundreds of dollars in interest. 7. Begin paying off your debts as quickly as possible. In today’s economy, the best investment you can make is to quickly pay off all your debts. Use the debt roll-down principle to accelerate how you pay down your debt. Used correctly, the debt roll- down doesn’t require any dramatic changes in your spending habits while cutting years off your long-term debts and dramatically decreasing how much interest you will pay. 8. Contribute enough to your 401(k) to get the maximum company match. Your kids can get help to pay for college, but no one will help pay for your retirement. If you’re not taking advantage of a company match, you’re turning down a yearly bonus from your employer. 9. Review and readjust your portfolio. Make sure that no single stock comprises more than five percent of your portfolio. As your different investments perform differently, your distribution will become skewed. Readjust your holdings to match your desired distribution. 10. Check your credit reports. You’re entitled to one free copy of your credit report from each of the three credit-reporting agencies at your request each year. Stagger the reports receiving one every four months to keep an up-to-date view of your credit throughout the year. 11. Review your insurance policies and update as needed. Review your life, health, home, auto, and disability insurance policies. Make sure you have cost replacement coverage on home and auto insurance, as well as good liability coverage. Make sure your home insurance reflects the current value of your home. While it may seem daunting at first, almost anyone can get their financial house in order by following these basic steps. Imagine the success and relief you’ll feel next year at this time if you commit to these resolutions. You have nothing to lose but your frustration and debt, so make this the year you become financially fit! Steven B. Smith is the author of Money for Life: Budgeting Success and Financial Fitness in Just 12 Weeks! and creator of Mvelopes (www.mvelopes.com/save), the award-winning online envelope budgeting system, and Money4Life Center (www.money4lifecenter.com/debt), a debt assistance and money management coaching program.

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U.S stocks open in red ahead of a new year…

December 31, 2010

U.S stocks open in red ahead of a new year…

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Dan Dorfman: 2011 Battleground: UBS Versus the Dorfman Indicator

December 12, 2010

One of Yogi Berra’s more famous Yogi-isms: “It’s difficult to make predictions, especially about the future.” That’s worth keeping in mind since Wall Street’s bulls, bears and buffoons will soon be blitzing us with their traditional year-end bombardment of forecasts on what’s ahead for the stock market in 2011. In fact, the blitz is already under way. The problem is the overwhelming number of forecasters are notoriously inept. Just check the year-end market predictions of your favorite TV business shows and financial publications at any time over the past 10 years, look a year out and you’ll see how consistently wrong the supposed experts have been. In most cases, the self-proclaimed Wall Street and media experts would have probably fared a lot better simply tossing a coin. As far as 2011 goes, one thing seems certain. Clearly, a tug of war lies ahead, what with many hedge fund managers I talk to solidly downbeat for all the reasons everybody knows, while Wall Street is predominantly bullish, again for all the reasons everybody knows. So who and what are we supposed to believe? And is it time to get excited about stocks again? UBS Financial Securities, just out with its new year’s outlook for its wealth management clients, offers what strikes me as a sane look-head. First though, it’s worth your knowing about the Dorfman indicator, one of my favorite market barometers, which has proven infallible as far back as I can remember. A creation of mine, it’s a contrarian view based on the repeated forecasts of a veteran Wall Street trader, who has an incredible knack of consistently being wrong whenever he tries to predict the direction of the market. In this respect, in fact, I can’t ever recall him being right. So whatever he thinks, just do the opposite. The last time I caught up with our trader was in early August with the Dow at around 10,000. He was very bearish, and, in fact, told me he was shorting stocks (a bet they would fall in price). What a mistake! True to form, the market went higher, with the Dow, now at around 11,400, turning in a nifty 14% gain. What does he think now? Bad news, I’m sorry to say. Unequivocally, he tells me, 2011 will be a winning year for investors. “The economic recovery is for real,” he says. “The evidence is all around us. The unemployment and housing problems are not about to be resolved in the next 12 minutes, but we should see some progress in both areas next year, and the stock market should respond positively.” An essentially similar view is held by UBS Financial Services, Looking a year out, Stephen Freedman, the head of investment strategy is convinced being moderately bullish is the way to go. His reasoning: The global economic recovery is on track and equities are set to outperform while fiscal risks remain at the forefront. One key plus, as he sees it, is that global stocks are sporting below-average price-earnings multiples of 12 to 13, versus an average 16.5 over the past 20 years. In terms of better than average 2011 returns, say on the order of 15% to 20%, he favors four fast growing emerging markets, notably Brazil, Russia, China and Taiwan. As far as the U.S. goes, Freedman sees a 2011 combo of a modest economic recovery (2.7% GDP growth), a tailing off in the jobless rate to 9%, continuing earnings gains of 8% to 10%, versus an estimated 35%-40% this year, paltry bond yields, making equities more attractive, and those below-average P/Es producing general 2011 stock returns of about 10% to 12%. Over the near term, though, he feels the recent sharp runup in equity markets, concerns over European sovereign debt and election uncertainties associated with a new Congress could spur a temporary pullback. He also worries about geopolitical risks, namely flare ups between the U.S. and China, new challenges from nuclear-minded Iran, heightened tensions between North and South Korea and renewed debt problems in Europe. Where should U.S. equity investors put their money to work here? Freedman favors information technology, consumer staples, energy, gold and industrials, mainly transportation. At the same time, he would shun the telecom, consumer discretionary, materials and health care sectors. His wrapup: “Economically, it’s going to take the U.S. longer to catch up, but nonetheless “it’s a good time to buy stocks.” Costa Rican money manager Felix Heligmann disagrees. There are lots of cheap U.S. stocks out there, he says, but notes “I’m not a buyer.” His reasoning: “I expect 2011 to be a very difficult year for the U.S market.” In particular, Heligmann sees growing friction between China and the U.S., increasing Washington gridlock, meaning little if anything will be done legislatively to beef up the ailing economy and appreciably lower the high unemployment rate, and a worsening European debt crisis. What do you think? E-mail me at Dandordan@aol.com.

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Chinese new year could set text message record

February 11, 2010

Chinese new year could set text message record

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Chinese new year could set text message record

February 11, 2010

Chinese new year could set text message record

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China’s January Surge in Lending Probably Exceeded Fourth Quarter’s Total

February 8, 2010

By Bloomberg News Feb. 9 (Bloomberg) — China’s banks probably made more new loans in January than the previous three months combined as lenders sought to head off a credit clampdown by policy makers seeking to stem rising inflation pressures. New bank lending totaled 1.38 trillion yuan ($201 billion) last month, according to the median estimate of 16 economists in a Bloomberg News survey ahead of a government report scheduled for this week. Separate figures are projected to show consumer prices rose the most since 2008 and export gains accelerated. Regulators are seeking to slow a credit boom loosed last year that may now be inflating a bubble in China’s property market. The week’s economic reports are likely to reinforce expectations for the central bank to start raising interest rates and loosen controls on the yuan in coming months, moves that might trigger similar steps across the region. “Central banks are looking at China’s policy moves,” said Brian Jackson , an emerging-market strategist at Royal Bank of Canada in Hong Kong who previously worked at the Federal Reserve Bank of New York and Bank of England. “More aggressive policy tightening from China, including interest-rate increases and yuan appreciation, will make it easier for the rest of the region to move as well.” Year-on-year percent changes in some of China’s January economic data may have been distorted by the lunar new year holiday, which was in January last year but February in 2010. Most businesses close for the week-long celebration. Inflation Quickens At the same time, trends show accelerating price pressures across the economy poised to become world’s second biggest this year, behind the U.S. Aluminum Corp. of China Ltd. , the nation’s top producer of the metal, on Jan. 4 raised alumina prices for the third time in five months. Beijing Yanjing Brewery Co. Jan. 15 raised prices for some of its beer about 10 percent, citing rising costs of fuel and rice. “Inflation fears are beginning to take over from China’s growth euphoria as both consumer and producer inflation continue to climb,” said Kevin Lai , an economist at Daiwa Institute of Research in Hong Kong. “The central bank must tighten policies more aggressively,” said Lai, who expects the People’s Bank of China to start lifting its benchmark rate as soon as this month. Consumer prices probably advanced 2.1 percent in January from a year before, a third straight gain, the median estimate shows. Producer price inflation probably quickened to 3.5 percent, according to the survey . Growth of the M2 money supply measure probably slowed for a second month to 25.9 percent, the median projection shows. Regional Response Inflation is also accelerating from South Korea to Vietnam as commodity and food prices rise amid the Asia-led global recovery. Still, South Korea, India, Indonesia, Thailand, Malaysia, Taiwan and the Philippines have yet to raise rates and policy makers in countries including Thailand and Taiwan are restraining currency gains, traders say. In China, authorities have kept the yuan at about 6.83 per dollar since July 2008 to help exporters after letting it appreciate about 21 percent the previous three years. China may allow the yuan to begin appreciate this quarter, which may make its Asian neighbors more comfortable in allowing their currencies to advance, said RBC’s Jackson. Any need to restrain the yuan may be easing. Exports probably jumped 28 percent last month from a year earlier, and imports probably surged 85 percent, leaving a trade surplus of $20 billion, Bloomberg surveys show. Growth Quickens Economic growth accelerated to a 10.7 percent year-on-year pace last quarter, the fastest since 2007, responding to an unprecedented 9.59 trillion yuan of credit extended by banks in 2009 and a 4 trillion yuan two-year fiscal stimulus plan. The estimate for new lending in January is 48 percent more than the total extended in the last three months of 2009. It’s also 18 percent of the 7.5 trillion yuan Premier Wen Jiabao’s government set as the target for this year. Property prices in 70 major cities climbed 7.8 percent in December, the most in 18 months, responding in part to the record credit surge. “There are literally trillions and trillions of renminbi of, frankly, defaulting loans already in China,” Neil McDonald , a business restructuring and insolvency partner in Hong Kong with law-firm Lovells LLP, said at conference last week, using another term for the yuan. “At some point there’s going to be a reckoning for that.” The Shanghai Composite Index has slumped 10 percent since the year began on concern the government will curb lending to cool the economy. The central bank asked lenders to set aside more money as reserves on Jan. 12, the first such increase since June 2008. Some lenders have since been asked to limit credit, punished by even higher reserve ratios. Bank of China Ltd. , the nation’s third-largest lender by market value, on Feb. 3 reduced discounts for some mortgages, citing concern about rising property-market risks. Industrial & Commercial Bank of China Ltd. , the world’s largest bank by market value, said Jan. 27 it “stabilized” loan growth after lending rose “relatively fast” in the first half of the month. — Li Yanping . Editors: Chris Anstey , Cherian Thomas To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net

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Retail Sales Probably Rose in Sign U.S. Consumers Will Help Economy Grow

February 6, 2010

By Timothy R. Homan Feb. 7 (Bloomberg) — The rebound in spending that gave U.S. retailers a lift during the holiday season probably carried over into the new year, signaling consumers may contribute more to growth, economists said before reports this week. Sales climbed 0.3 percent in January, the third gain in four months, according to the median forecast of 51 economists surveyed by Bloomberg News before Commerce Department figures Feb. 11. Another report may show the trade gap fell in December. A drop in unemployment last month, combined with a longer workweek and rising wages, signals the economy is poised to generate jobs, leading to gains in income that may boost sales at companies like Macy’s Inc. and Gap Inc. Retailers have kept inventories in check, resulting in fewer markdowns that point to increases in volumes and profit margins. “Consumers have shown an increased willingness to spend,” said Maxwell Clarke , chief U.S. economist at IDEAglobal in New York. “We see improved prospects stemming from gradual stabilization in labor markets.” Auto sales probably cooled last month, restraining the overall increase, economists said. Vehicles sales fell in January after three months of gains, industry figures showed last week. Excluding automobiles, sales probably rose 0.5 percent after a 0.2 percent decrease the previous month, according to the survey median. Sales at Macy’s Macy’s, the second-largest U.S. department-store company, said in a statement last week that sales at stores open at least a year gained 3.4 percent in January, helped by online purchasing. The Cincinnati-based retailer said fourth-quarter profit exceeded its forecast. Purchases at 31 chains rose 3 percent last month, the International Council of Shopping Centers said Feb. 4, beating the 1 percent increase the group anticipated. The jobless rate unexpectedly fell to 9.7 percent last month from 10 percent in December, figures from the Labor Department showed last week. The median forecast of economists surveyed anticipated no change. A 20,000 drop in payrolls served as a reminder that the labor market has yet to fully recover. The U.S. economy, the world’s largest, expanded 5.7 percent in the last three months of 2009, the most in six years, the Commerce Department said last month. Consumer spending grew 2 percent during that period. As the economy expanded in the second half of last year, the Standard & Poor’s 500 Index rose 21 percent. Stocks have declined 4.4 percent since the beginning of the year as China stepped up efforts to curb lending, the Obama administration proposed rules to rein in risk-taking at banks and concern grew over government debt levels in Greece, Spain and Portugal. Business Investment Manufacturing gains, spurred by business investment in new equipment and growth overseas, probably boosted U.S. exports, helping to narrow the trade gap , economists project a Feb. 10 report from the Commerce Department will show. The deficit probably shrank to $35.5 billion in December from $36.4 billion the prior month, according to the survey median. Inventories in the U.S. probably rose in December for a third straight month, economists said ahead of a Feb. 11 Commerce Department report. Stockpiles increased 0.3 percent after 0.4 percent in November as businesses gained confidence in the strength of the U.S. recovery, the survey showed. Consumers may also be turning more confident. The Reuters/University of Michigan preliminary sentiment index for February, due Feb. 12, probably rose to 75, the highest level since January 2008, from 74.4 last month, the survey showed. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Chicago Purchasing Managers Index Increases More Than Estimated to 61.5

January 29, 2010

By Bob Willis Jan. 29 (Bloomberg) — Companies in the U.S. expanded in January at the fastest pace in more than four years as orders and employment increased. The Institute for Supply Management-Chicago Inc. said today its business barometer climbed to 61.5, the highest level since November 2005, from 58.7 last month. Readings greater than 50 signal expansion. Government stimulus has spurred gains in demand here and abroad that are reducing inventories, paving the way for manufacturers to step up output. Ford Motor Co . is among companies that are beginning to hire again, setting the stage for stronger spending in coming months. “Coming into the new year we had an incredible amount of momentum in the industrial side of the economy,” said Ellen Zentner, a senior economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, whose forecast a reading of 62.2. “That’s a reaction to pentup demand coming forward. Those are the things that recoveries are made of.” Economists projected the Chicago index would drop to 57.2 from 58.7 in December, based on the median estimate of 52 projections in the Bloomberg survey. Forecasts ranged from 55 to 62.2. More Orders, Jobs The group’s gauge of orders climbed to 66.4 from 64.4 the prior month and its measure of employment jumped to 59.8, the highest level since April 2005, from 47.6. The index of production increased to 66.6 from 64.2 the prior month, while the gauge of inventories rose to 48.7 from 38.6, showing a diminishing pace of inventory drawdown. Economists watch the Chicago index for an early reading on the outlook for overall U.S. manufacturing, which makes up about 12 percent of the economy. The group has said its membership includes both manufacturers and service providers, making the gauge a measure of overall growth. Its members have operations across the country as well as abroad. The Tempe, Arizona-based Institute for Supply Management’s factory index probably rose this month to 55.6 from 54.9 in December, according to a survey median. That report is due Feb. 1. The world’s largest economy expanded at a 5.7 percent pace from October through December, its fastest growth in six years, the Commerce Department reported today. Economists surveyed this month forecast the world’s largest economy will grow 2.7 percent this year. Inventory Drawdown Slower drawdown of inventories last quarter contributed 3.4 percentage points to growth. A gain in exports helped shrink the trade deficit, adding another 0.5 point, while consumer spending grew 2 percent, contributing 1.4 points to overall growth. Another report showed consumers gained confidence this month. The Reuters/University of Michigan sentiment index increased to 74.4 in January, the highest level in two years. Among companies hiring, Ford Motor Co. said Jan. 26 it will spend about $400 million and add 1,200 jobs at two Chicago plants to build a new, more fuel-efficient Explorer sport- utility vehicle. The program will be partly funded by an Energy Department program for advanced vehicle technology. “This investment underscores Ford’s commitment to building world-class, fuel-efficient vehicles in America and creating new jobs that will contribute to our nation’s economic recovery,” Mark Fields , the Dearborn, Michigan-based company’s president for the Americas, said in a statement. Growing Exports Growing foreign demand is also helping U.S. manufacturers. Waltham, Massachusetts-based Raytheon Co ., the world’s largest missile maker, said fourth-quarter profit rose 20 percent on higher sales of the Patriot weapon system and repeated its 2010 earnings forecast. “We did have a very strong year in international awards and we expect that to be the case as we go into 2010,” Chief Financial Officer David Wajsgras said yesterday in a phone interview. Taiwan’s order for Patriot missile systems and Japan’s airborne radar systems were examples of foreign sales in the quarter, he said. To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

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Rebecca Fannin: Venture Capital Firms Go for Supersize Status

January 15, 2010

Super-size is the latest trend among venture capital shops that are still capable of raising funds in the current depressed economy. That’s how I interpret recent developments such as the NEA’s newly raised $2.5 billion fund plus a $1.2 billion fund for Norwest Venture Partners and $1.1 billion for Khosla Partners. More power to them! Many firms along Sand Hill Road keep trying and trying to close new funds and capitalize on the ripe opportunity to invest. These giant funds currently in the market doing deals will have the advantage as the venture world shrinks with winners separated from the losers. Valuations to get into entrepreneurial deals are lower, quality teams are easier to assemble and even the IPO exit route shows signs of getting more traveled in 2010. Sure, venture returns are depressed and fund raising is not much fun, hitting a five-year low in the U.S. with a 68 percent drop to $95.8 billion in 2009. But don’t count venture out. It’s a highly cyclical business, as I know all too well having endured the dotcom ups and downs when I was doing international editing for Red Herring. And, when venture is less crowded, that’s when the investment returns are best. Another interesting thing these funds have in common — besides size — is an outlook on India and China. NEA now has teams in both India and China, and Norwest has staffed up an Indian office and may open in China, Promod Haque told Silicon Dragon. He pointed out that India has strengths in software development and outsourcing of business processes, while China kicks in with hardware as well as semiconductor production and logistics. Over the past year, Norwest has funded three companies in India: the National Stock Exchange of India, mobile value-added service OnMobile and Shriram City Union Finance Limited. Norwest also inked a deal in China: mobile software startup Borqs Inc. Spotted at the recent holiday party Norwest had in the Valley, Vinod Khosla also indicated that he’s got at least one cleantech deal in India. I bet there will be more soon. Not to be outdone, NEA’s Dick Kramlich has spearheaded his firm’s outreach in both India and China-and even moved to Shanghai for a few stints to show NEA’s commitment to the region. He has two public listings of Chinese semiconductor companies to show for it too, plus more in the works. Next to make the move to China may be Scott Sandell, at least from what he recently told Silicon Dragon. Stay tuned. Meanwhile, some well-known firms that have scurried to raise new funds and are still on the fund-raising trail have downsized their ambitious targets. Draper Fisher Jurvetson is one. While the firm now has two RMB funds, Tim Draper told me, the much-heralded shop has dropped its fund-raising goal to $400 million from $600 million. Look for other funds to follow that lead as the big get bigger and suck up the also constricted limited partner dollars for lesser groups. History shows just how cyclical the business is. When I was working at Red Herring during the dotcom bubble, super-size venture capital funds were the trend then too. Then came the meltdown and suddenly the ‘in’ thing to do was to downsize. Walden International was one of the pioneering leaders who took down the size of its fund, in this case from $1 billion-plus to a more right-sized fund of $600 million with its latest fund at $380 million. Walden went on to score successive hits, and the industry too shored up for several more years until this latest meltdown in late 2008. Again, let’s not count venture out just because of the poor returns of 2009. It’s a new year, and a new beginning for those who tough it out.

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Global Economic Confidence Index Rises on Signs of Sustained 2010 Recovery

January 13, 2010

By Shamim Adam Jan. 14 (Bloomberg) — Confidence in the world economy rose as an acceleration in manufacturing and service industries signaled a sustained recovery from last year’s recession, according to a Bloomberg survey of users on six continents. The Bloomberg Professional Global Confidence Index gained to 66.6 this month from 58.9 in December, reaching the highest level since the series began two years ago. The index exceeded 50 for a sixth month, which means there were more optimists than pessimists. “The world economy is on the mend and growth is firmly in the plus column this year,” said Chris Rupkey , chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York and a regular survey participant. “As we turn the corner on a new year, the heavy job losses and stock-market lows fall further by the wayside. It may be a slow recovery but it appears to be sustainable and this is likely to give the markets the backbone they need to continue normalizing.” A stimulus-driven rebound in global demand is boosting orders and encouraging companies such as Samsung Electronics Co . to raise capital spending and output. The recovery was aided by policy makers from the U.S. to Europe keeping interest rates at record lows to spur growth after the worst postwar recession. The survey of 5,437 Bloomberg users was conducted between Jan. 4 and Jan. 8. Since the previous survey, revised figures show the U.S. added jobs in November for the first time in almost two years, while manufacturing in the world’s largest economy expanded last month at the fastest pace in more than three years. U.S. Confidence A measure of U.S. participants’ confidence in the economy rose to 54.4 this month from 47.7 in December, exceeding 50 for the first time. The unemployment rate stayed at 10 percent last month even as companies unexpectedly cut jobs. Federal Reserve policy makers say the labor and housing markets are stabilizing, and declared financial markets healthy enough to remove most emergency aid. “The recent data point to a clear improvement in the economic situation and a continuation of the recovery,” said Thomas Herrmann , a global economist at Credit Suisse Group AG in Zurich who participated in the survey. “Recent payroll data in the U.S. have been a slight disappointment but they are just a blip in an upward trend.” The confidence gauge for Western Europe climbed to 55.5 from 50.9 last month, holding above 50 for a second consecutive month. Europe’s manufacturing and services industries expanded for a fifth month in December and the European Central Bank last month said it will exit some unconventional measures adopted to spur growth as the recovery progresses. IMF Forecast The International Monetary Fund will probably raise its estimate for 2010 world growth this month from a 3.1 percent forecast in October, John Lipsky , the organization’s first deputy managing director, said Jan. 6. Asian economies are also strengthening amid rising industrial output and stronger domestic consumption. Asia’s index rose to 79.8 from 76.2 while the confidence gauge for Japan advanced to 44.1 from 29.5. China this week unexpectedly raised the proportion of deposits that banks must set aside as reserves starting Jan. 18 to cool the world’s fastest-growing major economy as a credit boom threatens to stoke inflation and create asset bubbles. Inflation Pressures “As we start the new year, things certainly look better than they did a year ago,” said Ken Wattret , chief euro-region economist at BNP Paribas SA in London, and a survey participant. “It’s now time to differentiate between different economic areas. With regard to some emerging markets, especially China and parts of Asia, the debate is overheating and inflation pressures.” Chinese manufacturing expanded by the most in five years in December, while India’s production also grew at a faster pace, according to HSBC Holdings Plc and Markit Economics’ purchasing managers’ indices for the two countries. Most Bloomberg users were more optimistic on the outlook for their equity markets in the next six months. The MSCI World Index has surged 74 percent from last year’s low in March, adding more than $25.6 trillion to the global equity rally. The indexes showing expectations for stocks in Japan and the U.S. gained the most, according to the survey. Respondents became more bullish on the U.S. dollar, expecting it to strengthen in the next six months against the world’s most actively traded currencies. The trade-weighted Dollar Index has gained about 1 percent in the past month. The dollar confidence index rose to 53.1 from 52 in December. Users in Japan turned pessimistic on the chances that the yen will strengthen against the dollar, with the index sliding for a fourth month to 35.5 from 50.6. Respondents in most Western European nations expected the euro to weaken against its U.S. counterpart. Survey participants in the U.S. and Europe are more confident short-term interest rates will rise in the next six months, the survey showed. To contact the reporters on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

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• Real estate agents hoping market will right itself in 2010 (The Salisbury Post)

January 10, 2010

By Shelley Smith ssmith@salisburypost.com A new year means new beginnings,and local real estate agents in Rowan and Cabarrus counties are hoping that real estate sales in 2010 are better than the past few years. Realtors aren’t the only ones hoping …

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Manhattan Home Sales Rebound in 4Q (MalaysiaNews.net)

January 9, 2010

Factory Orders Jump 1.1% in November (AP) Home sales in Manhattan rebounded at the end of the year, but experts predict a weak recovery for the new year because the number of pending deals declined. …

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Marc Hershon: Seven Soloist Resolutions for 2010

December 30, 2009

It’s not just the start of a new year but, when the clock ticks midnight on December 31st, we’ll be into a whole new decade. The end of the aughts. As in “we ought to have just skipped the last ten years.” Fortunately, with our book I Hate People! now available as your guide for navigating the office oafs in the workplace, it’s a perfect time to make some resolutions. Changes designed to allow you to be a highly productive Soloist who has also learned how to enjoy your job. 1. I Resolve To Grab A Quick 10 The Quick 10 is the Soloist way to start slicing out a little “me” time in the middle of what could be a hectic day. It’s not a coffee break or some other corporately dictated downtime, but ten minutes of your very own. So pick your spot. Maybe it’s 9:40 in the morning. Or 2:12 in the afternoon. Whenever that Quick 10 time is for you, grab it and stick to it. Let everyone know you’re “tied up for a few minutes”. Then maximize those precious Soloist minutes to do what you need to do. Whether it’s the crossword puzzle or finishing a report doesn’t matter. What matters is that you’ve staked your claim on ten glorious minutes. Use it wisely. 2. I Resolve To Clean My Cave A Soloist’s Cave is that spot where you can hide away from the world for a bit. Maybe you use it so you can hyperfocus on the day job tasks. Or perhaps it’s the space to tinker on that screenplay, novel or invention. You might even just grab a snooze. One thing is certain about Caves regardless of their purpose and that is that they gather clutter. That’s okay — creativity is a messy process. But when your Cave gets too out of control, being productive becomes more of a challenge. So make an effort to toss out old papers. Wash that coffee mug. Defrost the mini-fridge. Heck, you could even break out the vacuum cleaner. 3. I Resolve To “Efficient-ize” My Workspace Keeping your cube or office tidy is pretty much a no-brainer for being productive at work. But have you taken a good look at how to make the space more conducive to the way you work? Simply by rearranging a chair or your desk even slightly can discourage drop-in visitors. And take a good look at the patterns you’ve developed doing even simple tasks — we often have things inconveniently out of reach or placed so that accessing supplies keeps the easiest stuff from getting done in a timely manner. Shuffle the things in your desk drawers so that they make more sense and it will help put the “less” into “effortless.” 4. I Resolve To Create A New Ensemble A Soloist’s Ensemble is that neat and nimble replacement for the corporate team. Just a few trusted associates who interact in true productivity to get a specific task done. Chances are you’ve already got at least one together. The problem is that even an Ensemble gets stodgy and slow after a while. So mix yours up a little. Bring in some new blood or even give your current crew a break entirely. Consider bouncing ideas off an out-of-the-office friend who doesn’t do anything close to what you do for a living. The fresher the Ensemble, the fresher the Soloist’s ideas. 5. I Resolve To Find A New Route To Work For some, given their location and situation, this may be an all-but-impossible resolution. But however you can manage it, discovering a new way to get to the job (and get back home again) can spark a whole new wave of creative productivity. The new sights, sounds and people you’ll encounter can’t help but have you seeing the world in a different way. If you normally drive, try public transit. If you normally bus it, jump on a bike. Remember that the journey is the destination. Not to mention if your usual route goes out of commission — be it by traffic accident, bureaucratic blunder or natural disaster — you’re still good to go. 6. I Resolve To Find A New Job…In My Old Job As 2010 is unveiled, the economy is still in (hopefully) recovery. But it’s still not a great time to be looking for a new gig, especially if you’ve already got a job. Still, there’s little more exciting than starting something new. So find ways to “remodel” your current employment to make it fresh. Set new goals for yourself. Meet with your boss and discover some new things you can be doing while retiring other tasks that have become tired and maybe redundant. Even think about doing some “task swaps” with other people in your department to both learn some new skills and refresh the way you look at your job. 7. I Resolve To Help Someone Else Become A Soloist While it’s not your job to help others (unless that actually is your job), letting someone else in on the “secret” of becoming a Soloist can often help you discover new Soloist ways yourself. Step One, of course, would be to get them their own copy of I Hate People! Beyond that, inviting them to be part of your Ensemble is a way to let them see how to form their own Ensemble to get things done (don’t be offended if their Ensemble doesn’t include you — you’ve got better things to do, anyway!) Take them on an out-of-the-office Island Hop sometime and your protege Soloist will start to figure out there’s more to work than the daily grind. These are just some resolutions that come to mind when it comes to becoming a better Soloist. This blog has a lot of regular readers who have discovered the Way of the Soloist for themselves — what are some other ways that the enterprising Soloist can kick off the new year? Marc Hershon is the co-author of the business book with attitude, I Hate People (Little, Brown and Company; June 2009) with Jonathan Littman. Marc is a branding expert who, through his Simmer Creative Studio, has created such memorable names as n

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Edward Harrison: How effective will stimulus be in getting this economy moving?

December 23, 2009

This article originally appeared on my site Credit Writedowns As we approach the new year, I have decided to write a few thematic posts as a look back at some of the more important economic topics that this credit crisis has uncovered. The thinking is that tying posts together in a theme might give a better holistic view of a few themes than the posts do in isolation. The first topic is this: does fiscal or monetary stimulus work? That has been a consistent theme here at Credit Writedowns.

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Decade’s Biggest Gain for Stoxx 600 May Last on Profits, Strategists Say

December 22, 2009

By Adam Haigh and Adria Cimino Dec. 22 (Bloomberg) — European equity strategists say earnings growth can push stocks 11 percent higher in 2010 following the steepest annual rally in a decade. Goldman Sachs Group Inc. and Bank of America Corp., which underestimated the strength of this year’s gains, predict shares in the region may climb more than 20 percent over the next 12 months. Morgan Stanley is the only brokerage among 16 surveyed by Bloomberg to estimate a retreat by year-end, saying the withdrawal of government stimulus will weigh on equities. A rally next year would extend the biggest advance since 1999 for the Dow Jones Stoxx 600 Index, the measure most commonly used by the strategists surveyed, by restoring more of the 5.5 trillion euros ($7.9 trillion) in market value that was erased after the gauge climbed to a more than six-year high in June 2007. The most bullish forecast, by Gary Baker at Bank of America, sees a 26 percent surge for the index. “Everything is in place for a great year,” said Patrick Moonen , an equity strategist at ING Investment Management, which has about $610 billion in client assets. If governments reduce stimulus, “it’s a sign that the economic crisis is behind us, which is positive for earnings growth going forward.” Profits for companies in the Stoxx 600 are expected to climb 29 percent next year, according to data compiled by Bloomberg. That compares with a forecast for a 7.4 percent increase in 2009 profits. Basic-material and financial stocks are forecast to lead the earnings growth, with gains of 62 percent and 61 percent next year, respectively, the data show. Interest Rates The Stoxx 600 has rallied 26 percent this year and is up 58 percent from a 12-year low on March 9 as governments pledged more than $12 trillion and central banks cut interest rates to record lows to end the global recession and fix credit markets. Global economic growth that exceeds the historical average rate next year will allow for an expansion of corporate sales, said Peter Oppenheimer of Goldman Sachs. Morgan Stanley’s head of European equity strategy, Teun Draaisma , says this growth will trigger the start of a “tightening” phase, as governments raise interest rates, reversing the rally in stock markets. Draaisma, who was top ranked by Europe-based investors in the most recent Thomson Extel survey, estimates the MSCI Europe Local Index will fall back to 1,030 by the end of the year, having rallied as high as 1,200. In January, Goldman Sachs’ Oppenheimer said benchmark indexes would climb 20 percent by the end of 2009 if credit markets recover and the pace of economic deterioration slows. Baker’s team at Merrill Lynch & Co., which was rebranded after the takeover by Bank of America, had estimated a 9.1 percent gain for this year, while Draaisma had predicted shares would make little headway in 2009. Economic Recovery Government reports from the U.S. to Europe and China now show economies are recovering from the first synchronized global recession since World War II. China’s purchasing managers’ index grew at the fastest pace in five years in November, while Europe’s manufacturing industry expanded for a second month after the euro-region economy emerged from a recession. U.S. payrolls fell by 11,000 workers last month, fewer than the most optimistic forecast among economists surveyed by Bloomberg News, Labor Department figures showed on Dec. 4. “All of the stars are aligned on the macro settings,” said Franz Wenzel , deputy director of investment strategy at Axa Investment Managers in Paris, which oversees about $600 billion. “This year-end rally can take us further.” Wenzel forecasts European earnings will gain 25 to 30 percent next year, and he predicts a 15 to 20 percent increase in stocks globally. Profit Growth Profit growth may help lift European stocks as much as 19 percent by the end of 2010, according to the London-based head of European equity strategy at JPMorgan Chase & Co., Mislav Matejka. He estimates the MSCI Europe Index may reach 1,300 by the end of next year. “The near-term catalysts are a strong earnings reporting season, positive payrolls, rebound in leading indicators and increasing risk allocation into the new year,” Matejka wrote in a report dated Dec. 8. Morgan Stanley’s Draaisma says the withdrawal of government stimulus measures will spark a “very dangerous period” and equities will suffer. He said the MSCI Europe Local Index would rise 1.5 percent to 925 in 2009, data compiled by Bloomberg show. The European Central Bank said financial markets have improved sufficiently to allow it to rein in some of its emergency liquidity measures as the euro region recovers gradually from the recession, according to its monthly editorial bulletin on Dec. 10. Economists expect the Frankfurt-based central bank to increase borrowing costs in the third quarter of 2010, according to a Bloomberg News survey. ‘More Difficult’ “The major event next year will be the moment when an increase in interest rates takes place,” said Christian Dargnat , chief investment officer at BNP Paribas Investment Partners in Paris. “The second quarter will be more difficult, more volatile as investors anticipate the increase.” Including assets from BNP Paribas SA’s purchase of Fortis, BNP Paribas Investment Partners oversees about $769 billion. Basic-resource shares have led gains in Europe this year, rebounding from the worst performance among the 19 industry groups in the Stoxx 600 in 2008. Dargnat is keeping an “overweight” stance on the industry, which means he’s holding a greater proportion of the stocks than are represented in his benchmark, as he believes the companies are benefiting from improvements in the economy. Bank of America’s Baker says investors will miss out buying so-called defensive shares, such as health-care and utilities companies, whose earnings are less tied to economic growth, and recommends “underweight” positions in these sectors. Utilities in the Stoxx 600 have been the worst performers of 19 industries this year. Banks and basic-resources have surged 45 percent and 93 percent this year, respectively, beating all other sectors, as money managers favored buying some of the most beaten-down industries after the 2007 peak. Below 2007 Peak An 11 percent gain in the Stoxx 600 forecast by the strategists would leave the index at 277, from yesterday’s close of 249.57, compared with its 2007 peak of 400.31. The index plunged 61 percent from the high through March this year amid subprime mortgage-related losses at banks that now total $1.71 trillion and the credit crisis that followed the September 2008 collapse of New York-based Lehman Brothers Holdings Inc. The money spent or lent by government and central banks to revive financial markets that has contributed to gains in equity markets this year will remain a “powerful driver” for stocks in 2010, according to strategists Graham Bishop and Ian Richards at Royal Bank of Scotland Group Plc in London. Morgan Stanley’s Draaisma says the withdrawal of stimulus funding in the second half of 2010 will drag equities lower. “A lot of scenarios depend on the macro environment and how policy makers react,” said Gerhard Schwarz , strategist at UniCredit SpA’s German unit in Munich. “Our message is stay with the market now. We haven’t seen the peak yet.” To contact the reporters on this story: Adam Haigh in London at ahaigh1@bloomberg.net ; Adria Cimino in Paris at acimino1@bloomberg.net .

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Aaron Glantz: States May Shed Another Million Jobs

December 3, 2009

On the eve of President Barack Obama’s White House Summit on Jobs, labor leaders yesterday issued a dire warning: Unless Congress and Obama create a “bold jobs program,” state and local governments could shed almost a million jobs next year, further worsening our national unemployment rate. “The budget crisis that they face is dire,” Thea Lee, chief of staff of the labor federation AFL-CIO, told a conference call with journalists. “If we don’t help state and local governments,” she said, they will “cut off vital services to people who are struggling at the worst possible moment, whether it’s community safety, fire fighting, or health care.” Lee also predicted that they would shed hundreds of thousands of jobs through layoffs. “We cannot afford to have state and local budget cuts undermine the recovery before it gets off the ground,” she said. The nation’s unemployment rate already stands at 10.2 percent, it’s highest rate in 26 years. Unemployment is even higher for blacks (15.7 percent) and Hispanics (13.1 percent). The Labor Department says more than one in four teenagers is unemployed. Obama’s jobs summit today will gather top business leaders, union officials, politicians, and economists to provide ideas for jumpstarting the economy and putting people back to work, according to White House press secretary Robert Gibbs. Unions and liberal lawmakers hope the president will use his jobs forum to get the ball rolling on a second stimulus package that builds on the $787 billion American Recovery and Reinvestment Act (ARRA) he signed in February. That Recovery Act contained a $53.6 billion State Fiscal Stabilization Fund, which the government reports saved 250,000 education jobs across the country. Other provisions of ARRA helped prevent layoffs of police officers, firefighters and health care workers. But that money has all been spent and the financial picture of most state and local governments remains grim. So unless Congress ponies up new money, many of those workers whose jobs were saved by the stimulus will have to be let go. “They are already furloughing a lot of people and laying people off, state aid is going away, sales taxes have been hammered, and income tax in places with high unemployment will continue to decline,” said Mark Muro, policy director of the Metropolitan Policy Program of the Brookings Institution. In addition, Muro said that property tax revenue will likely continue to decline as homes and commercial buildings are re-assessed at lower values. And, Muro said, local government makes up approximately 11 percent of all employment in urban areas. As a result, many Democrats in Congress are pushing the White House to implement a wide ranging, federally funded jobs program implemented by local government. Rep. Keith Ellison, D-Minn., is pushing a $40 billion jobs program, which he says would create “one million full-time jobs.” “These jobs could focus on communities that critically need them and put people back to work,” he said. “People are needed to paint and repair schools, community centers, libraries, clean up abandoned and vacant properties, alleviate the blight that’s been caused by the foreclosure crisis.” “We need people to help expand our emergency food programs to prevent hunger and promote stability, and of course we need staff at our Head Start and preschool programs,” he said. “We have all kinds of jobs that need to be filled and all kinds of people we need to fill them. But we need to pay those people who can get the economy going again.” Financing a new stimulus would likely run into difficulties on Capitol Hill, however. Robert Borosage, director of the Campaign for America’s Future, which organized the conference call, noted the political hurdles. “Speaker [Nancy] Pelosi has pushed hard to get something out of the House before the holiday break, but the Senate is locked into this health care debate and it’s hard to imagine them getting anything done before they get freed of that.” That debate will likely stretch into the new year while job losses mount. Brookings’ Muro is more optimistic. He sees a second stimulus by the end of the year — either in the form of direct federal aid to cities to stave off job losses, or in the form of large amounts of money pumped into transportation and infrastructure projects that would spark additional employment. Another possibility, he said, is a large investment in the Community Development Block Grants program, which would provide federal dollars to local communities across America. “The tension is going to be between a White House very concerned about fiscal issues and an increasing deficit and Democrats in Congress who are more ready to increase the deficit to respond to the jobs emergency.” Regardless, Muro said, “most forecasters expect unemployment to continue with continued job losses for a number of months — let alone beginning to make back the millions of jobs that have already been lost.” Related Articles: Waiting on That Pot of Money 60,000 Teacher Jobs Restored with Stimulus, Educators Say It’s Not Enough This article originally appeared in New America Media .

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China’s Recovery Strengthens as Production, Lending, Retail Sales Increase

September 11, 2009

By Bloomberg News Sept. 11 (Bloomberg) — China’s industrial production rose at a faster pace than forecast in August and new lending unexpectedly climbed, indicating growth in the world’s third- biggest economy is likely to accelerate. Output at the nation’s factories gained 12.3 percent from a year earlier, the most since August 2008, the statistics bureau said in Beijing today. Local-currency new loans were 410.4 billion yuan ($60 billion), up from 355.9 billion yuan in July, the central bank reported. Chinese shares rose after today’s figures, which also included the biggest retail-sales gain this year. At the same time, the reacceleration in credit growth may stoke concern about asset-price inflation; Bank of China Ltd. Vice President Zhu Min yesterday warned that liquidity may cause “asset bubbles in commodities, stocks and real estate.” “Policy stimulus is driving the recovery and China is poised to get more support from exports in coming months,” said Brian Jackson , Hong Kong-based senior strategist for emerging markets at Royal Bank of Canada. “That will give growth an extra push and allow policy makers to ease back on stimulus early next year.” The Shanghai Composite Index rose 1.6 percent as of 1:15 p.m. local time, helping pare losses last month that were stoked by concern about a slowdown in new lending from a record $1.1 trillion in the first half. The index is up about 63 percent this year. Stimulus Spending Premier Wen Jiabao pledged yesterday to sustain stimulus measures to secure the recovery, saying the rebound “is unstable, unbalanced and not yet solid.” Speaking at a conference in Dalian, northern China, he said “we cannot and will not change the direction of our policies when the conditions aren’t appropriate.” Economists had forecast an 11.8 percent gain in industrial production, according to the median of 15 estimates in a Bloomberg News survey. New loans were projected to total 320 billion yuan, a separate survey showed. Retail sales climbed 15.4 percent in August from a year before, the most for the year after accounting for seasonal distortions caused by the lunar new year holiday, statistics bureau data showed today. The median estimate was for a 15.3 percent advance. Regional Impact China is poised to help stoke growth throughout the Asian region, said Gail Fosler , president of the Conference Board, a New York-based research group. “China is much more of a factor in Asian growth than is the U.S.,” Fosler said at a conference today in Singapore. Figures from Japan today showed the region’s largest economy grew less than estimated in the second quarter. Gross domestic product rose at a 2.3 percent annualized pace, less than the 3.7 percent previously calculated. In China, the quickening expansion follows a 4 trillion yuan stimulus package, record lending and a rebound in property investment and sales that have countered a slump in the nation’s exports . Trade data today showed shipments abroad fell a more- than-estimated 23.4 percent in August from a year earlier, the biggest drop in three months. Economists anticipate China’s GDP growth will accelerate to a 9.5 percent pace next year after an 8.3 percent rate in 2009, according to a Bloomberg survey of economists conducted the week ended Aug. 28. Inflation Alert “The biggest challenge now is how to guide monetary and credit policy to a prudent level without impacting the property and stock markets and the economic recovery,” said Isaac Meng , a senior economist at BNP Paribas SA in Beijing. In his remarks yesterday, Wen added that officials also need to guard against inflation. People’s Bank of China figures showed today that M2, the broadest measure of money supply, rose by a record 28.53 percent, as the central bank maintained a “moderately loose” policy stance. Other figures today showed consumer prices fell 1.2 percent last month from a year earlier, declining for a seventh month and giving the central bank more room to keep interest rates at a four-year low to stoke growth. Producer prices dropped 7.9 percent compared with a record 8.2 percent fall in July. PBOC Forecast China will increase interest rates “around next spring” when inflation will climb to as high as 5 percent, economist Meng said. Inflation will quicken to 1 percent toward the end of this year and for the whole of next year will average 3.9 percent, he predicted. Surging auto sales are aiding the nation’s recovery. Hyundai Motor Co., South Korea’s largest carmaker, said yesterday that it will raise annual production capacity at its Chinese venture next year to 600,000 vehicles from 500,000. General Motors Co., the biggest overseas automaker in China, says the nation’s vehicle sales may reach 12 million this year, surpassing the U.S. as the world’s No. 1 market. A rebound in the property market and business investment has added to signs that the recovery is maintaining momentum. Urban fixed-asset investment for the eight months to Aug. 31 climbed 33 percent, the statistics bureau said. That was more than a 32.9 percent gain through July and the 32.7 percent median estimate in the survey of economists. For August alone, the gain was 33.6 percent. Investment in real-estate development grew 14.7 percent in the first eight months after an 11.6 percent gain in the first seven months, the statistics bureau said yesterday. House prices in 70 cities rose 2 percent in August, the fastest gain in 11 months. Besides falling exports, drags on growth include overcapacity in manufacturing and elevated unemployment. The government said Sept. 9 that unemployment is a “grave” concern even after improvements in the past three months, underscoring the need to promote economic growth to create jobs and preserve social stability as the Communist Party prepares to celebrate 60 years of rule on Oct. 1. The urban jobless rate of 4.3 percent understates unemployment because it doesn’t include migrant workers. To contact the Bloomberg News staff on this story: Kevin Hamlin in Beijing at khamlin@bloomberg.net ;

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