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Cleco Corp. Announces Chief Executive Succession

April 25, 2011

Michael H. Madison Announces Plans to Step Down as CEO and Retire at the End of the Year Bruce A. Williamson to Be Appointed President and Chief Executive Officer in July

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GM Will Become World’s Biggest Automaker This Year

April 22, 2011

DETROIT — General Motors is almost certain to claim the title of world’s biggest automaker this year, retaking the top spot from Toyota, which has been hurt by production problems since the Japanese earthquake and still can’t escape the shadow of major safety recalls. The No. 1 title, a morale booster for the winner’s employees and managers, would cap GM’s remarkable comeback from bankruptcy. GM’s sales are up, mainly in China and the U.S, the world’s top two markets. Its cars are better than in the past, especially small ones. But even though GM came within 30,000 sales of Toyota last year and began strong in 2011, any sales victory this year has more to do with Toyota’s problems. First, a series of big recalls has ballooned to 14 million vehicles worldwide and damaged Toyota’s reputation for reliability. That has spurred loyal buyers to look at other brands. Second, a March 11 earthquake and tsunami in Japan curbed Toyota’s car production. On Friday, Toyota Motor Corp. said its factories worldwide won’t return to full production until November or December. That means buyers across the globe may not be able to get the models they want. Already the crisis has cost the company production of 260,000 vehicles. Last year, Toyota sold 8.42 million cars and trucks, barely ahead of a resurgent GM, which sold 8.39 million. GM held the No. 1 spot from 1932 until 2008. Here’s why GM is almost a lock to retake the lead this year: A BETTER GM: General Motors Co. was dysfunctional three years ago, hobbled by enormous debt and a giant bureaucracy. Its quality was suspect, it lost billions, and it had few products other than pickups that buyers found appealing. After a government bailout, a leaner GM emerged from a 2009 bankruptcy with new vehicles and a focus on Chevrolet, Buick, GMC and Cadillac. Since then, GM has come up with hits including the Chevrolet Equinox small SUV, the Buick LaCrosse luxury car, and the Chevrolet Cruze compact. Its quality is better. Sales so far this year are up 25 percent in the U.S. and 10 percent in China. The efficient Cruze compact and Chevrolet Volt car both hit the market as U.S. gasoline prices started rising. TOYOTA TROUBLES: Bad publicity from the recalls, mainly for cars that can accelerate without warning, was hurting Toyota long before the earthquake. The recalls began late in 2009, and came just as GM, Ford, Hyundai, and others introduced more competitive cars and trucks. With a bunch of nice alternatives and doubts about quality, customers who once dutifully returned to Toyota started considering other brands. Many Toyota models look old and need upgrades. Despite rebates and low-interest financing, Toyota was the only major automaker with lower U.S. sales last year. Sales are up 12.5 percent so far in 2011, but only at half the growth of GM. Toyota is scrambling to keep factories open after the earthquake, and U.S. dealers expect to run out of some models. Already dealers are reporting shortages of the Prius gas-electric hybrid, a high-demand model because of gas prices. Merle Gothard, general manager of North Park Toyota in San Antonio, says he’s not worried about GM retaking the title because it still has a tarnished image from bankruptcy. “It’s important from a marketing standpoint,” he says. “But Toyota has other things going for it.” He notes that Toyota is still profitable and never took a dime of stimulus money from the government. THE CHINA FACTOR: Toyota has nowhere near GM’s presence in China, now the world’s largest auto market. Through March, Toyota sold 208,000 vehicles there, but GM and its joint ventures sold more than three times that number. Growth in China by itself probably would have moved GM ahead of Toyota in worldwide sales. Toyota’s lead was only about one day’s worth of sales for GM. CAVEATS: Toyota still has a loyal customer base that believes the cars are safe and will last forever. Many Toyotas run for hundreds of thousands of miles with little more than routine maintenance. It also has a reputation for fuel efficiency, led by the Prius. GM would have to run into major problems to let No. 1 slip away this year. So far it has not been seriously hurt by parts shortages, but if some key electronic components from Japan can’t be made elsewhere, the company could run short of models. A new management team also is pushing to speed up introduction of new models, and that could hurt quality. If GM takes No. 1 this year, it won’t crow much, says Jesse Toprak, vice president of industry trends and insights for TrueCar.com, an auto price tracking website. “It’s because of (factory) capacity restrictions, and that’s not something they want to brag about,” he says.

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Gemma Godfrey: Hedge Funds — to Be Feared or Favored?

April 21, 2011

As the biggest hedge fund insider trading case comes to a close, we are reminded of the risks of investing in the asset class. Ever since generating losses in 2008, the reputation of these ‘absolute return’ vehicles has been damaged. The Madoff scandal which topped off the year did not help. Nevertheless, whilst clarity in the markets remains illusive and with a wider range of tools to exploit opportunities, are they a form of investment to be feared or favored? A Tainted Asset Class Disappointed and disillusioned, many investors are reluctant to revisit the asset class run by managers once hailed as the new ” masters of the universe “. Sold on the promise of generating positive performance in any market environment or at the very least preserving capital in times of stress, losses generated in 2008 came as a shock. With the Madoff scandal came the realization that even funds that did consistently generate steady returns were not immune to trouble. There is even an aptly named ” Hedge Fund Implode-o-Meter ” website tracking the number of major funds which have “imploded” since late 2006 (out of interest the number at last look stands at 117 , although this includes all funds suffering any form of ” permanent adverse change “, not just total shutdown). But Not All Are Created Equal Not all hedge funds should be tarred with the same brush and although grouped within the same category, they can differ tremendously. From the investment vehicles in which they invest to the stringency of their risk management, not all are created equal. The Hedge Fund Association summed the situation up succinctly with the assertion that “investment returns, volatility, and risk vary enormously among the different hedge fund strategies. Some strategies which are not correlated to equity markets are able to deliver consistent returns with extremely low risk of loss, while others may be as or more volatile than mutual funds.” Losses Were Often Greater Elsewhere Putting aside the often misleading ‘absolute return’ banner, the average hedge fund was better able to preserve capital through the market downturn than a regular ‘long-only’ mutual fund. Whilst the MSCI World Index fell 42% in 2008, the Credit/Suisse Tremont Hedge Fund Index fell 19%, More impressive still were the 21% of funds which posted positive returns for the year (the majority of which were up double digits). Crucially, over a more appropriate investment horizon of 3 years, according to figures by EDHEC Business School, ” The majority of hedge funds delivered better returns than the S&P 500 index “. Hedge Funds have shown themselves able of generating highly attractive returns. The Tide Has Changed Investors have demanded more. In 2008 they ‘spoke with their feet’ and the hedge fund industry suffered $782bn of redemptions. The Hedge Funds had to listen. What was requested, according to a report by Scorpio Partnership , was ” transparency, simplicity and liquidity “. Likewise, the Hedge Fund Scandals were a wake up call to investors and much more focus is being placed on operational due diligence , to avoid investing in any future hedge fund failures. Investment Conclusion: Well-Positioned to Exploit Opportunities With the risk of future macro shocks clouding the horizon (read: Japan , Middle East , EU Sovereign Debt ), the direction of the markets is somewhat hard to predict. Therefore investing with flexible managers able to react to the quickly changing environment and nimble enough to exploit opportunities when they present themselves seems an attractive move. Not all investments are created equal, but some are more equal than others.

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Deborah Frett: Last Year’s Slacker Is This Year’s Slow Starter

April 21, 2011

The tide is changing. Rhetoric on the 80 million strong Generation Y is softening. Last year, Gen Y was labeled lazy slackers with unrealistic work expectations . This year, they are simply slow starters who have been humbled by the current economic environment. I’m encouraged that Gen Y is getting a better shake, but I keep wondering if Gen Y is changing or if our perceptions of Gen Y are changing? It could be both; I’m just throwing it out there. Take the discussion of Gen Y living at home longer with their parents. While it’s easy to pass judgment and write them off as not having their act together, new studies indicate that parental assistance in early adulthood isn’t such a bad thing. In fact, it can be a good thing — leading to autonomy and resiliency. The more we explore the beliefs and attitudes of this generation, the more we can understand and can appreciate their decisions and priorities. This year, BPW Foundation critically engaged Gen Y stereotypes through a series of employer-based focus groups which resulted in a newly released report — Gen Y Women in the Workplace: Focus Group Summary Report . Based on our observations, I’d like to suggest a few other areas for changing how we talk about Gen Y in the workplace. Pursuing Life not Work/Life. Practically everyone who writes about Gen Y also covers work/life balance. Keeping in step with the literature our participants also talked about the importance of the two dimensions of their life. However, we found that participants were tired of the “live to work/work to live” debate. They have one life and work is an integral part of that life. They want to have a successful and meaningful career without forfeiting other areas of life (e.g. family, friends, hobbies, spirituality, etc.). Is it any wonder then that they are dissatisfied with current work-life balance programs? They aren’t looking for a stellar concierge program or a “fun” work environment; they are looking for an overhaul of the workplace structure. As one Gen Yer stated, “We [Gen Y] are much more productive when we have the freedom and flexibility to get work done when and how we want to get it done. Society isn’t 9am-5pm. Why should work be?” Unaccustomed not Disrespectful. Throughout the focus groups, we often heard comments from managers of Gen Y like, “Gen Y doesn’t acknowledge or respect the experiences of older colleagues.” At the same time, we heard Gen Y say, “I appreciate the wealth of knowledge and experience older colleagues bring to the workplace.” Gen Y women said that they often feel doubly judged by older colleagues. They already feel that their actions and decisions are scrutinized because of their age and then gender adds a compounding effect. Our participants were not familiar with how to draw out information from older colleagues in a way that capitalized on the benefits of a multi-generational workforce and communicated appreciation for their older colleagues. I truly sensed that these women were simply unaccustomed to adapting to different generational cultures and not deliberately disrespectful. Cautiously Optimistic. Gen Y women are often portrayed as optimistic about their workplace prospects and more likely than any other generational cohort to believe that deliberate discrimination is declining. Yet, there is a disconnect between workplace expectations and workplace experiences. While participants in our study did not believe that gender hinders their access to positions, they did acknowledge that their experiences within positions differ from that of their male counterparts. From pressure to be a “rockstar” to anticipation of the maternal wall, Gen Y women recognize that the workplace is still not gender neutral. As one Gen Yer stated, “We’ve been welcomed into the workplace, but the structure hasn’t changed. The rules haven’t changed.” BPW Foundation’s effort to understand Gen Y women’s workplace continues. We are launching a national survey of Gen Y women to corroborate and build upon our findings. To learn more, please e-mail youngcareerist@bpwfoundation.org.

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GE’s Profit Smashes Wall Street Expectations

April 21, 2011

BOSTON (Scott Malone) – General Electric Co posted quarterly results that blew past Wall Street expectations, joining a wave of better-than-expected earnings in the U.S. manufacturing sector. The largest U.S. conglomerate also raised its quarterly dividend by 1 cent to 15 cents per share, its third increase in the payout in the past year. Its shares rose nearly 4 percent in premarket trading. The first-quarter results reflected revenue growth across all of its industrial and financial businesses, with profit at GE Capital more than tripling and demand for railroad locomotives also bouncing back. “You have got growth coming out of every segment of GE, which is quite encouraging. Infrastructure orders are up 13 percent, which I also think is a very strong indication of a company executing on a strategy of getting back to the core energy and technology infrastructure businesses,” said Daniel Holland, equity analyst at Morningstar in Chicago. “It’s also quite encouraging to see the dividend bump up one more time.” The world’s biggest maker of jet engines and electric turbines said earnings attributable to common shareholders came to $3.36 billion, or 31 cents per share, up from $1.87 billion, or 17 cents per share, a year earlier. Revenue rose 6 percent to $38.45 billion. Factoring out one-time items, earnings came to 33 cents per share, easily exceeding analysts’ average estimate of 28 cents compiled by Thomson Reuters I/B/E/S. Revenue also topped Wall Street’s $34.64 billion forecast — which would have represented a decline, rather than a rise. “This is a superb turnaround,” said Howard Wheeldon, senior strategist at BGC Partners in London. “GE is reflecting an improvement in the U.S. economy and indeed more importantly it reflects the improvement of the global economy.” The Fairfield, Connecticut-based company has been cutting back its GE Capital unit, which Chief Executive Jeff Immelt wants to represent 30 percent to 40 percent of earnings, rather than the more than half it generated before the 2008 financial crisis. Refocusing GE on its industrial businesses has meant lowering revenue. The company also sold a 51 percent stake in the NBC Universal media business to Comcast Corp. Expectations are high for manufacturers this earnings season. On Wednesday, United Technologies Corp, Honeywell International Inc and Eaton Corp reported results that topped analysts’ expectations and raised their profit forecasts for the year. Shares of GE were up 3.8 percent at $21.17 in trading before the market opened. The stock has been particularly strong of late. At Wednesday’s close, it had gained 10.8 percent since the start of the year, well ahead of the 4.4 percent gain in the broad Standard & Poor’s 500 index. GE has come under fire over the past month for its low 2010 U.S. tax bill, although it has denied reports that it paid no income taxes at all last year. GE has also returned to the takeover trail in the past six months, spending some $14 billion on acquisitions, primarily to boost its presence in the energy sector. (Reporting by Scott Malone; Additional reporting by Nick Zieminski in New York, Christoph Steitz in Frankfurt, Harpreet Bhal and Dominic Lau in London; Editing by Bernard Orr, Lisa Von Ahn and John Wallace) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Scott Mendelson: You Say Slump, I Say ‘Smaller Movies With Legs’

April 21, 2011

If Fast Five and/or Thor fail to open to $50 million or more, then I’ll start to worry. If Pirates of the Caribbean: On Stranger Tides doesn’t open anywhere near $100 million and doesn’t clear $250 million, I’ll start to be concerned. If Harry Potter and the Deathly Hollows, Part II grosses under $260 million, I’ll maybe start panicking. But until any of those things occur, let’s stop whining about the week-to-week comparisons at the box office. We’re not in a “slump.” Yes, weekend-to-weekend figures have been consistently down behind last year’s respective weekends for much of 2011. But when you look at the numbers on a movie-by-movie basis, you actually notice something wonderful. A flood of mid-budget, adult-skewed movies have opened at or above expectations, and many of them have had the kind of legs you just don’t see anymore. That’s the Hollywood we claim we want, so why are we complaining? The key thing to remember here is that studios don’t care about the total weekend box office figures. They care only about how well their films did in relation to expectations and cost. And quite frankly, this has been a very cheap first 1/3 of a year. Alice in Wonderland may have grossed $332 million domestic, but it also cost $200 million. There are only two films this year that have cost even $100 million, the $120 million-budgeted The Green Hornet (which was supposed to open late last year) and the $130 million-budgeted Rango . One could argue that Rango will struggle financially due to its cost and marketing expenses (it’s cleared $234 million so far worldwide), but it’s also the best film of the year, so there’s that… The Green Hornet was such a surprise success ($228 million worldwide thus far) that we’ll probably get a sequel if Sony can keep the budget at under $90 million. But Battle: Los Angeles didn’t cost $150 million, it cost just $75 million. And Sucker Punch didn’t cost $175 million, it cost $85 million. Sure, both of those films may have underperformed somewhat. Sucker Punch ($78 million worldwide) was an arty experiment that no one understood , while Battle: Los Angeles ($192 million worldwide) promised Independence Day but delivered Black Hawk Down . But even the ‘under performance of Battle: Los Angeles will mean tripling its budget, because Sony was able to deliver top-notch special effects for bargain basement prices. And even Sucker Punch will equal its budget worldwide, meaning that the film has a shot at “the black” once the DVD and Blu-ray are released. Heck, even the relative underperformance of Red Riding Hood will still yield profits, since the gothic horror film cost just $40 million and has grossed $60 million worldwide thus far. Same thing with the would-be franchise starter I Am Number Four . Sure, there probably won’t be a sequel, but since the film cost Disney and Dreamworks just $60 million, it’s a rock-solid hit at $128 million worldwide. Your Highness will lose money, but Universal was smart enough to cap expenses at $50 million, so the bleeding will be minimal. One can argue that there was no animated sensation like How to Train Your Dragon ($494 million worldwide), but How to Train Your Dragon , which cost $165 million, was pretty much the only major animated film in the marketplace during the first half of 2010. This year, just between February and April, we’ll have SIX animated films: Gnomeo and Juliet (a stunning $175 million worldwide on a $30 million budget), Rango , Mars Needs Moms (the one unqualified mom of the season, with just $36 million worldwide on a $150 million budget), Hop ($111 million thus far on a $63 million budget), Rio ($170 million worldwide thus far on a $90 million budget), and Hoodwinked Too (opening in two weeks at a cost of just $25 million). That’s a total cost of $488 million for six animated films (average cost: $81 million), with a total so-far gross of $726 million worldwide thus far (with Hop , Rio , and Hoodwinked having lots of cash to still pull in). Pointing being, the various animated films that have opened to near $40 million have had to fend off copious competition and pretty much all of them are on track to be profitable despite that, because (in most cases) the studios were able to contain costs to a reasonable level. And that’s just the high-profile cartoons and youth-driven would-be blockbusters. The real story this year has been the surge in adult-driven genre pictures and their uncommonly reasonable budgets and uncommonly strong legs. After years where a major adult-targeted, star-driven thriller or genre picture was cause for celebration, this year has thus far been filled with just that. Imagine, films targeted at grownups with old-fashioned movie stars, relatively intelligent and literate screenplays, narratives that were wholly original or based on actual novels, and almost all of them budgeted at a price that allowed them to be profitable without reaching blockbuster status. Source Code (cost: $37 million/worldwide gross: $56 million thus far), The Lincoln Lawyer (cost: $40 million/worldwide gross: $55 million thus far), No Strings Attached ($25m/$144m), Limitless ($27m/$111m), Unknown ($30m/$114m), The Adjustment Bureau ($50m/$111m), Hall Pass ($35m/$63m), and Hanna ($30m/$23m in under three weeks with international still to come). Not all of these films were great, but all of them were moderately-budgeted, most of them received positive reviews, some of them were even R-rated, most of them had moderate opening weekends and solid legs, and all of them will make solid profits in relation to their reasonable costs. Sure none of them reached the heights of Alice in Wonderland or Clash of the Titans , but they never were expected to. And wasn’t it wonderful to have a season where old-fashioned potboilers took precedence over inflated special-effects epics and/or franchise entries? Isn’t it kinda wonderful that the unneeded cash-grab that is Scream 4 will likely get out-grossed (domestically at least) by a $1.5 million haunted house drama starring adult actors (Patrick Wilson and Rose Byrne), Insidious , that has dropped less than 30% two weekends in a row due to audience excitement and word of mouth (after three weekends, it’s already at $36 million off of a $13 million opening)? I don’t care if the cumulative weekend takes of these films have often failed to match the respective weekends from last year. Even if we agree that fewer people are going to the movies this year, we must acknowledge that the current crop of movies are much cheaper than years previous, and that they are attracting a consistent crop of older moviegoers, just the sort that have allegedly fled the marketplace. Summer will start next weekend, so the kids will get their big-budget fantasies soon enough and the pundits can all start whining again about how the movies are DOOMED, and everything is a sequel or remake or comic book-adaptation. But we know better, don’t we? If the summer of 2011, with a nonstop deluge of massive films that will arguably have to deliver massive opening weekends, doesn’t deliver expected blockbuster results, then we can start worrying. But the winter/spring of 2011 was not a failure at the box office. It was a successful return of smaller films aimed at adults, films that didn’t make most of their money in the first three days, movies that actually stayed in theaters long enough to allow casual moviegoers to check them out a month or so down the line, movies that existed as a movie first and a corporately-tied product second. Looks to me like 2011 has been a pretty terrific year thus far. One can only hope that summer 2011 is anywhere near as artistically and commercially satisfying…

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Restaurant Industry to Show Slow and Steady Improvement

April 19, 2011

As consumers become more confident and increase spending, the restaurant industry is well positioned to begin growing in 2011. And in spite of margin pressures caused by rising commodity prices, the industry should also see increasing capital expenditures as well as strong merger and acquisition (M&A) activity this year, according to the 21st edition of the Chain Restaurant Industry Review by GE Capital, Franchise Finance. “The restaurant industry…

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President & First Lady Paid $453,770 Taxes On $1.7 Million Income

April 18, 2011

WASHINGTON — President Barack Obama and his wife, Michelle, reported income of $1.728 million for last year, much of it from the sale of the president’s pre-presidency books. They paid federal taxes totaling $453,770 after receiving a $12,334 refund. The Obamas paid their taxes at lowered Bush-era rates, even as he campaigns to end them for households with adjusted gross incomes above $250,000 – a category into which the first family clearly fits. Joining the flocks of Americans filing their taxes near the end of the federal filing period, the Obamas made withholding and other payments to the Internal Revenue Service last year totaling $466,104. That was an overpayment, so they got their refund. The president and first lady reported donating $245,075 – about 14.2 percent of their adjusted gross income – to 36 different charities. The largest single gift was a contribution of $131,075 to the Fisher House Foundation, a charity that offers a scholarship fund for children of soldiers who die or are disabled. The Obamas’ adjusted gross income for 2010 of $1.728 million was well below the $5.5 million they reported for the year before, both totals mostly driven by royalties from books written earlier by Obama. They included his 1995 memoir “Dreams From My Father” and his 2006 political book, “The Audacity of Hope.” The White House released the returns on the day that federal tax returns are due this year, although Obama signed his 1040 form last Tuesday. Michelle Obama signed the tax return on Wednesday. They also released their Illinois income tax returns showing they paid $51,568 in state income taxes for last year. Vice President Joe Biden and his wife, Jill, reported more modest earnings, a combined adjusted gross income of $379,178, on which they paid $86,626 in federal taxes for 2010. The Bidens’ withholding and earlier payments came to just $79,446 – so they had a tax bill of $7,180 to settle. The Obamas paid 26 percent of their adjusted gross income in federal income taxes. The Bidens paid 23 percent. The Bidens paid $14,479 in Delaware income taxes and $3,515 in Virginia income taxes. Jill Biden is an adjunct professor at Northern Virginia Community College. The Bidens contributed $5,360 to charities. ___ Associated Press writer Stephen Ohlemacher contributed to this report

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Video: Caldwell Says New Models May Help Ford Maintain Prices

April 15, 2011

April 15 (Bloomberg) — Jessica Caldwell, an analyst at Edmunds.com, talks about the outlook for Ford Motor Co. and General Motors Co. Ford, after increasing its share of the U.S. light-vehicle market for the last two years, is falling short of its retail goal this year, which may put pressure on the automaker to offer larger discounts. Caldwell talks with Matt Miller and Carol Massar on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Poll: Rich Will Drastically Increase Luxury Spending This Year

April 15, 2011

NEW YORK (Michelle Nichols) – Rich Americans are expected to spend an extra $26.6 billion on luxury goods this year but they will do so with an eye toward value as the country recovers from recession, a poll released on Friday found. Spending on luxuries, excluding cars and travel, is set to rise 8 percent to $359 billion compared to 2010, according to the sixth annual American Express Publishing and Harrison Group survey. While the number of affluent families planning to spend more has almost doubled in the past three years, they are emerging from the recession seeking value, quality and service for their money, said Jim Taylor, vice chairman of Harrison Group. “There will be more money spent, but it doesn’t mean it won’t be spent without the prudent skills learned as the result of a very difficult recession,” Taylor said. “This is a survivor’s economy with people who have succeeded in surviving the recession demanding a new form of respect,” he told a news conference. The Survey of Affluence and Wealth in America polled 1,458 families with a discretionary income of more than $100,000 — representing the wealthiest 10 percent in the United States who account for about 50 percent of all consumer spending. It found that 15 percent of these families plan to spend more in 2011, up a quarter from 2010 and almost double from 2008. The number of families cutting spending was nearly halved from last year to 9 percent and down two-thirds from 2008. LESS ANXIOUS Rich families save an average of a quarter of their incomes annually, the poll found, and 34 percent said they were looking forward to spending more money this year. Taylor said that while 70 percent of affluent Americans still believe the country was in recession, they were less anxious. Concern over job loss has fallen 50 percent from 2010 and worries about the potential failure of their companies are down to 11 percent from 28 percent. Almost three-quarters said they had become more resourceful because of the recession. “In the end, the increase in spending we foresee is not a return to the wanderlust of the past, but rather, an expression of sensible, resourceful, self-confident consumers expanding their portfolio of needs,” he said. “The nearly $4 trillion in their money market funds gives these consumers the power to purchase with cash. Their value equation reflects the price of recession: mature judgment,” Taylor said. A 2010 stock market rally, which pushed up the Dow Jones Industrial Average 11 percent, has also helped sway consumers. Consumer spending, which accounts for 70 percent of U.S. economic activity, grew at a brisk 4 percent pace in the final three months of last year. But U.S. retail sales posted their smallest gain in nine months in March, as auto sales plunged and consumers felt the sting of higher gas prices. The online wealth survey was conducted from January 31 to February 14 and had a margin of error of plus or minus 3 percentage points. (Editing by Xavier Briand) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Google Earnings Miss Analyst Target

April 14, 2011

SAN FRANCISCO — Google’s first-quarter earnings came in below analyst projections as the Internet search leader sped up hiring and increased spending other areas to drive up its expenses. The results released Thursday may heighten investor fears that Google’s earnings might suffer because of the company’s commitment to hire at least 6,200 workers this year. That would be the most in Google’s 13-year history. Google co-founder Larry Page, who replaced Eric Schmidt as CEO after the quarter ended, has indicated he plans to keep investing in long-term opportunities that may take years to pay off, even if that crimps the company’s short-term results. Page, known for his aloofness, made a few tame remarks on Google’s earnings conference call Thursday before turning the presentation over to the company’s chief financial officer, Patrick Pichette, who has been steering the presentations for the past year. “I’m very excited about Google and our momentum, and I’m very, very optimistic about our future,” Page said. He also assured that the management transition that Google announced three month ago is unfolding as the company envisioned, with Page overseeing day-to-day operations while Schmidt handles government relations and stalks possible acquisition targets in his new role as executive chairman. Google shares shed $27.74, or nearly 5 percent, to $550.77 in extended trading. The stock closed the regular session at $578.51, up $2.23. The company earned $2.3 billion, or $7.04 per share, in the period ending in March. That was an 18 percent increase from nearly $2 billion, or $6.06 per share, last year. If not for the cost of employee stock rewards, Google said it would have earned $8.08 per share. That was below the average estimate of $8.11 per share among analysts surveyed by FactSet. Revenue was nearly $8.6 billion, a 27 percent increase from last year. After subtracting the commissions paid to ad partners, Google’s revenue stood at $6.54 billion. That figure topped the average analyst estimate of $6.33 billion, according to FactSet. Expenses grew faster than revenue. The company added 1,916 employees to end March with more than 26,300 workers. More than half of the new staff is working on products and services to supplement the search advertising network that makes most of Google’s money. The new growth opportunities include video ads on Google’s YouTube site, ads on smartphones, and more banner advertising. A 10 percent raise that Google gave all its employees at the beginning of the year contributed to rising costs. Google also spent $890 million on data centers and other capital projects in the quarter, more than triple the $239 million it spent in the same period last year.

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Poll: Most Americans Say Taxes They Pay Are Fair

April 14, 2011

WASHINGTON — For all the complaining this time of year, most Americans actually think the taxes they pay are fair. Not that they’re cheering. Fewer people expect refunds this year than in previous years, a new Associated Press-GfK poll shows. But as Monday’s filing deadline approaches, the poll shows that 54 percent believe their tax bills are either somewhat fair or very fair, compared with 46 percent who say they are unfair. Should taxes be raised to eat into huge federal deficits? Among the public, 62 percent say they favor cutting government services to sop up the red ink. Just 29 percent say raise taxes. That’s sure to be a major issue as Congress takes up budget legislation for next year and the 2012 presidential campaign gets under way in earnest. On Wednesday, President Barack Obama revived his proposal to raise taxes on the wealthiest Americans to help reduce government borrowing. In the poll, Democrats were more likely than Republicans to think their tax bills were fair. Liberals and moderates were more likely to think so than conservatives. Women more likely than men. Most whites thought their tax bills were fair; most non-whites didn’t. The young and the old – adults under 30 and seniors 65 and above – were much more likely to say their taxes were fair than those in their prime earning years. Surprisingly, there was little difference in the perception of fairness across income levels. But just because people say they pay a fair amount doesn’t mean that they think others do. Sandra Jennings, a retired teacher in South Bend, Ind., said her federal taxes are fair, but she thinks rich people get off too easily. Rich people, she said in an interview, “get all these loopholes. The middle class does not have loopholes.” Mari Lemelson of Edison, N.J., said, “I have a big problem with the millionaires, at least what I understand to be the millionaires’ tax breaks.” Jim Martel, an electrician from Weymouth, Mass., said his tax bill is already unfair, but he would be willing to pay more if he thought the money would be spent wisely. He’s not optimistic. “If I thought people in office had the right thing in mind and they were doing the right thing with the money instead of blowing it and wasting it and funding these stupid projects that are totally ridiculous, I wouldn’t have a problem with it,” Martel said. “But they don’t, so that’s what bothers me.” Monday is the filing deadline for federal tax returns – three days later than usual because a local holiday is being observed in the nation’s capital on Friday, the traditional deadline. Federal tax receipts are projected to hit their lowest level in 60 years when measured as a share of the overall economy. Tax receipts dipped during the recession and have stayed low in part because Congress has extended Bush-era tax cuts at every income level, leaving federal rates unchanged for much of the past decade. Residents in many states, however, have faced higher taxes because – unlike the federal government – states, school districts and municipalities must balance their budgets each year. The share of the public believing their tax bills were fair was nearly identical to an AP poll taken in 2007, even though fewer people than in the past said they expect to get refunds this year. Fifty-one percent of those polled said they expected refunds this year, down from 57 percent in 2009 and 66 percent in 2007. Many people who don’t expect refunds could be in for a pleasant surprise. Through March 25, about 87 percent of the individual returns processed by the Internal Revenue Service qualified for refunds. That’s about the same rate through the same period as last year. Ultimately, about 85 percent of individual returns qualified for refunds last year, totaling about $360 billion. The refunds averaged $3,000, about the same amount as so far this year. Economists say tax refunds typically provide a boost to the economy each spring. This year, however, more people say they plan to save, invest or use their refunds to pay down debts. Only 27 percent of the people surveyed said they plan to simply spend their tax refund, down from 38 percent in 2009. Forty-five percent said they would save or invest their refunds, compared with 35 percent in 2009. Forty-four percent said they would pay down debt, compared with 37 percent in 2009. “A lot of people got caught with too much debt going into this recession and may well take this as an opportunity to reduce their debt level rather than go out and rent that summer house,” said David Wyss, chief economist at Standard & Poor’s in New York. “When they’re scared, they are more likely to save it than if they are happy and feel like the good times will continue forever.” The Associated Press-GfK Poll was conducted March 24-28 by GfK Roper Public Affairs and Corporate Communications. It involved landline and cellphone interviews with 1,001 adults nationwide and had a margin of sampling error of plus or minus 4.2 percentage points. ___ AP Polling Director Trevor Tompson, Deputy Director of Polling Jennifer Agiesta and AP News Survey Specialist Dennis Junius contributed to this report. Online: . http://www.ap-gfkpoll.com

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Singapore’s economic growth expands more than expected in the first quarter of the year.

April 14, 2011

Singapore’s economic growth expands more than expected in the first quarter of the year.

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Most managers set to look outside the US

April 13, 2011

The managers most in demand by US investors are those with compelling presences in global and emerging markets’ equities, hedge funds, funds of hedge funds, private equity and real assets. The 2011 Consultant Search Forecast by eVestment Alliance and Casey, Quirk & Associates shows that more than 80 per cent of investment consultants expect to look outside the US, according to the eVestment and Casey Quirk survey, the fifth of its kind. The survey, ‘Old Wine in New Bottles’, questioned 55 investment consultants in the US and Canada, with a total of $10.4 trillion in assets under advisement. The main trends were continuing globalisation of portfolios; a growth in alternative investments such as hedge funds, private equity and real estate; and more emphasis on outcome-oriented portfolios built by risk budgeting and return attribution. Heath Wilson (pictured), eVestment principal and founder, said sluggish growth in searches was expected because many investors were still emerging from the policy rebalancing done in the late 2009 and 2010. Casey Quirk partner, Yariv Itah, said that one of the most interesting findings in this fifth survey was the increasing interest in private equity and real assets. “Institutional investors increasingly manage towards outcomes rather than just excess return, and they want asset managers who can use illiquid investments to mitigate inflation risk and manager liabilities.” Other findings of the survey included: consultants expect significant increases in private equity and real estate mandates this year half those surveyed expect institutional interest in inflation-hedging strategies to rise three-fifths of consultants expect moderate or strong bond search activity more than one-third of consultants expect more emerging markets equity and less international developed markets activity for the rest of 2011 more than one-third of consultants anticipate more liability-driven investing mandates, and more than half of US equity, US bond and EAFE searches will involve manager replacements this year

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‘Tax Freedom Day’ May Overstate Middle-Class Tax Burden

April 12, 2011

One hundred and one days. That’s how long it will take Americans to earn enough income to pay off their total 2011 tax obligation to the U.S. government, according to the Tax Foundation, the fiscally conservative think tank that will celebrate April 12 as the day of completion, labeling it Tax Freedom Day. The Tax Foundation’s calculation, however, doesn’t account for America’s richest citizens paying taxes at significantly higher rates than middle- and low-income taxpayers. Instead, they simply divide total taxes collected ($3.628 trillion) by the net national product of the country ($13.107 trillion). But while this year’s tax revenue as a percentage of national income is higher than 2010 (26.9 percent) and 2009 (26.6 percent), it remains lower than any other year since 1966. This recent trend toward earlier Tax Freedom days largely results from declining tax revenues since the recession, the study’s author, economist Kail Padgitt, said in an interview. Tax Freedom Day has sparked debate over middle-class taxes, with the Center on Budget and Policy Priorities arguing , the Tax Foundation figures exaggerates the tax obligations of “typical middle-income workers. Only the richest 20 percent of Americans pay taxes at or above the level indicated by the Tax Foundation, CBPP notes, while the other 80 percent pay a considerably lower percentage, citing the most recent data available from the Congressional Budget Office: Still, the Tax Foundation says their Tax Freedom Day is a useful indication of the state of the country’s overall tax burden. The calculations, the foundation notes, don’t account for Americans’ estimated future obligations to the nation’s $14 trillion deficit . Here’s a Tax Foundation chart on the gap between the deficit and tax revenue. What Tax Freedom Day also doesn’t take into account, though, is that the U.S. has also seen a rapid rise in the amount of income that is exempted from taxation. Over the last 50 years, non-taxable annual U.S. income per capita has grown by 600 percent to $12,528 from $2,007. Taxable income has only doubled in that span — to $31,303 from $15,368 — placing an additional strain on the federal deficit. Some, including University of Maryland political science professor Robert Stoker, argue that the Tax Foundation’s indicator builds an unfair bias against progressive income taxes and other taxes that actually lift the tax burden off of middle-class households. “As [long as] income [becomes] more and more concentrated at the top, Tax Freedom Day will fall later and later in the year,” Stoker says. “That is, unless we shift the tax burden on to working Americans. Among the states, Connecticut (May 2) has this year’s latest Tax Freedom Day, while Mississippi (March 26) has the earliest. Of course, how states and cities obtain revenue for governments differs drastically by region. As explained in Taxing the Poor , a 2011 book by Katherine Newman and Rourke O’Brien, the South tend to rely on sales tax (a regressive tax) while the Northeast is dependent on revenue from income taxes (more often progressive): The largest percentage of income ever dedicated to taxes was 33.0 percent, recorded during the Clinton administration. President Bill Clinton, who benefited from a surging dot-com economy, balanced the budget from 1998-2001.

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The Bank of Korea keeps interest rates steady after raising it twice this year

April 12, 2011

The Bank of Korea keeps interest rates steady after raising it twice this year

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Deborah Frett: On Equal Pay Day, Step Up or Step Out of the Way

April 11, 2011

According to the last study by the National Center for Educational Statistics : Female high school graduates are more likely than male graduates to have taken geometry, algebra II, pre-calculus, biology, and chemistry. Females are more likely than their male classmates to participate in music or performing arts, belong to academic clubs, work on the school yearbook or newspaper, or participate in student government. Last month, T he White House’s Women in America Report noted that those trends continue in college: Greater percentages of females attend college. Females are more likely to attend and graduate from college without dropping out. Females are more likely to earn a graduate school degree. And the 2010 “Women in the Labor Force: A Databook,” compiled by the U.S. Bureau of Labor Statistics reflects similar developments in the workforce: Women account for 51 percent of all people employed in management, professional, and related occupations, somewhat more than their share of total employment (47 percent). The increase in female managers coming to the table with undergraduate and graduate degrees is greater than the increases in male managers. So, are you ready for reality? Women earn 77 percent of what men earn. Equal Pay Day, which signifies the point into the year that a woman must work to earn what a man made, falls on Tuesday, April 12 this year. Wait, what? That’s right; and it’s not what you were expecting, is it? Truth be told, we should expect more for our working women, and they get more. Nearly 50 years ago, when the Equal Pay Act of 1963 brought pay parity for women to the national forefront, critics argued that women simply did not have the same educational background as men, and therefore did not merit the same wages. Well, instead of coming a long way, baby, it seems we have come full circle. Today’s critics of equal pay argue that men as a group earn higher wages in part because men dominate blue collar jobs , which are more likely to require payments for overtime work. In contrast, women comprise more of the salaried white collar management workforce that is often exempted from overtime laws. We were told that we didn’t have enough education to merit equal pay then, and now our educational achievements are the cause of the disparity. Corporate America wants it both ways. Last December, the Paycheck Fairness Act, which would have toughened legal action against discriminating employers, narrowly failed to pass Congress. With few exceptions, business opposed it, citing that new legislation is unnecessary, redundant, and would simply lead to unfair lawsuits against employers. In a June 21, 2010 letter to U.S. Office of Management and Budget Director Peter Orszag, the Business Roundtable wrote, “The Paycheck Fairness Act … would open companies to potentially crippling employment litigation without adding significant benefit to workers, since current law already addresses the discrimination issue.” Then why, nearly 50 years later, has the wage gap only improved by only half a cent per year? In 1963, according to the National Committee on Pay Equity, “women working full-time and year-round earned on average 59 cents for every dollar earned by men. A woman now earns 77 cents for every man’s dollar.” At that rate, it will take nearly another half-century for women to earn a fair wage. In that same time frame, women have made tremendous strides and are more likely than males to enter the workforce with degrees from high school, college, and graduate school. It makes good financial sense for businesses to invest in attracting and retaining the best talent by offering equal and fair compensation and benefits. It’s time for America’s business community to step up with fair pay, or step out of the way of legislation like the just re-introduced Paycheck Fairness Act that will help ensure pay equity. I urge you, on Equal Pay Day this year, to review your compensation packages and address the inequality. We can help. BPW Foundation encourages employers to recognize and reward the skills and contributions of working women. The Employer Pay Equity Self-Audit was developed to assist employers in analyzing their own wage-setting policies and establishing consistent and fair pay practices for all. It can be found on the BPW Foundation website : It’s the right thing to do for your employees. It’s the smart thing to do for your business. Don’t let another year go by for working women — and their families — who are doing more for less. We held up our end of the bargain and came to the workforce better prepared and more skilled. Now it’s your turn: make sure you offer equal pay for equal work.

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China Posts First Quarterly Trade Deficit In Six Years

April 10, 2011

BEIJING — China reported its first quarterly trade deficit since 2004 on Sunday as surging prices for commodities pushed up its import bill. The General Administration of Customs said in an online statement that China posted a trade deficit of $1.02 billion from January to March this year. However, China reported a small trade surplus of $140 million in March, up from a deficit of $7.3 billion the month before, it said. Export growth in the first quarter was strong, it said, increasing 26.5 percent to $399.64 billion compared to a year earlier, but imports soared 32.6 percent during that period, to $400.66 billion. “The value of imports in the first quarter hit a record high for the first time of more than $400 billion,” the administration said. It said China imported more mechanical and electrical equipment, including cars, as well as iron ore and soybeans, than it did a year ago and that the prices of those commodities had all shot up. Analysts expect a Chinese global trade surplus this year of $160 billion-$200 billion but say that should narrow if oil and commodity prices stay high. Last year, China ran a trade surplus of about $16 billion a month. A smaller trade surplus might help to ease trade strains with Washington and other governments that complain Beijing is giving its exporters an unfair advantage with currency controls and other policies. Stronger imports could help economies looking to China’s robust growth to drive demand for their goods. Imports also might benefit from ongoing government efforts to boost consumer spending to reduce reliance on exports and investment. China is a major importer of oil, iron ore and raw materials and runs a deficit with suppliers such as Saudi Arabia and Australia. It pays for that by running multibillion-dollar surpluses with the United States and Europe. ___ Online: General Administration of Customs of China (in Chinese): http://www.customs.gov.cn

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Jason Alderman: Smart Uses for Your Tax Refund

April 8, 2011

Each spring, millions of Americans look forward to receiving a hefty income tax refund. And it truly is “hefty” with the average federal refund in 2010 hovering around $3,000. That’s a lot of money to be giving the government through what is essentially a year-long, interest-free loan. If you regularly receive large tax refunds, you’re probably having too much tax withheld from your paycheck. Instead, you might want to withhold less and put the money to work for you, by either saving or investing a comparable amount each month, or using it to pay down debt. Your goal should be to receive little or no refund at the end of the year. Ask your employer for a new W-4 form and recalculate your withholding allowance using the IRS’ Withholding Calculator . This is also a good idea whenever your pay or family situation changes significantly (e.g., pay increase, marriage, divorce, new child, etc.) Just be careful, because if too little is deducted, you might end up owing more tax next April, and possibly even interest or penalty fees. IRS Publication 919 can help guide you through the decision-making process. Some people received larger-than-normal tax refunds in 2009 and 2010 thanks to the Making Work Pay credit, which expired December 31, 2010. In its place, most taxpayers will see a 2 percent reduction in the amount being withheld for Social Security in 2011 paychecks as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. Another change this year was a U.S. Department of Treasury pilot program that offered 600,000 randomly selected low- and moderate-income families an opportunity to have their tax refunds direct- deposited into a MyAccountCard Prepaid Debit Card offered by my employer, Visa and issued through Bonneville Bank. The pilot explored ways to save the government money (a direct deposit costs 1/10th as much to process as a paper check) as well as to give people with no bank account easier and more cost-effective access to their tax refunds. If you will be receiving a large refund this year, here are ways to put it to good use: Pay down debt. By increasing your payment amount on outstanding loan or credit card balances you can significantly lower the total amount of interest paid. Say you’re paying $80 a month on a $2,000 credit card balance at 18 percent interest. By doubling your payment to $160, you’ll reduce the payoff time from 32 months to 14, and shave $295 off the total amount of interest paid. In effect, you’d be getting the equivalent of an 18 percent return on your money. Start an emergency fund . To protect your family against the impact of a layoff or other unexpected financial crisis (such as a medical emergency, car accident or theft), set aside enough cash to cover at least six months of living expenses. Save for retirement. If your debt and emergency savings are under control, add to your IRA or 401(k) accounts, particularly if your employer matches contributions; remember, a 50 percent match corresponds to a 50 percent rate of return. Invest in yourself. Enroll in college courses or vocational training to ensure you have additional skills to fall back on should you lose your job or want to change careers. And ask whether your employer will help pay for job-related education. Invest in your family’s future . Another good use for your refund is to set up a 529 Qualified State Tuition Plan or a Coverdell Education Savings Account to fund your children’s or grandchildren’s education — all while ensuring your contributions will grow tax-free until withdrawn. Visit the websites of the U.S. Securities and Exchange Commission’s Introduction to 529 Plans and the IRS’s Tax Topic 310 – Coverdell Education Savings Accounts for information. Spend money to save money. If you’ve got older appliances such as refrigerators, washer/dryers or dishwashers, consider replacing them with energy-efficient models that will pay for themselves through lower utility bills. The government’s Energy Star website can help you find Energy Star products. And finally, if you want to check on the status of your refund, go to the IRS’s Where’s My Refund site. You can usually get information about your refund 72 hours after the IRS acknowledges receipt of your e-filed return or three to four weeks if you filed a paper return. This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation. Follow Jason Alderman on Twitter: http://twitter.com/PracticalMoney

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Gold Prices Hit Record High On U.S. Dollar’s Decline

April 8, 2011

NEW YORK (Frank Tang) – Gold rose to a record high for a fourth straight day and silver surged on Friday, as a weaker dollar, the prospect of a U.S. government shutdown and inflation worries lifted precious metals in a broad commodities rally. Gold was set for its biggest weekly gain in four months, drawing support from renewed euro zone sovereign debt fears amid Portugal’s financial crisis and inflation jitters as crude oil and corn hit new highs this week. Bullion broke above key resistance on technical charts and could target above $1,500 an ounce. The metal has risen more than 10 percent since late January when political unrest began to flare in the Middle East and North Africa. “With the expected future inflation being higher in this low interest rate environment, investors are more inclined to have some contributions to commodities as an inflation hedge,” said Hakan Kaya, commodities portfolio manager at Neuberger Berman, which manages about $190 billion client assets. Spot gold rose as high as $1,474.19 an ounce and was later up 1 percent at $1,472.20 an ounce by 12:36 a.m. EDT. Bullion was on track to rise 2.5 percent this week for a fourth straight weekly gain. U.S. gold futures for June delivery gained 1 percent to $1,473.60. Gold remained far below its all-time inflation-adjusted high, estimated at almost $2,500 an ounce set in 1980 as a result of heightened geopolitical pressure and hyperinflation. (Graphic: r.reuters.com/ren88r ) U.S. futures activity was sharply below average for a second consecutive day, but analysts said low volume is not detrimental to the bull run after a strong price rally. Silver rose 2.3 percent to $40.42 an ounce, just off the session high of $40.49. The gold-to-silver ratio — the number of silver ounces needed to buy an ounce of gold — fell to a 28-year low near 36 on Friday. “One would expect silver to outperform in this environment because it bears a higher risk than gold on a volatility basis,” Kaya said. DOLLAR WEAKNESS UNDERPINS The dollar slide against the euro, supported by widening interest rate differentials after ECB’s rate hike, and crude oil’s surge to 2-1/2 year high added fuel to a rally that has already taken gold to a series of record highs this year. Gold also benefits from dollar weakness as Democratic and Republican congressional leaders said on Friday there was no overall deal on government funding for the rest of the fiscal year that ends September 30, and could not even agree on what disagreements remain ahead of the midnight Friday deadline. The looming U.S. government shutdown was “simply a minor problem of far greater problems,” said Camilla Sutton, chief currency strategist at Scotia Capital. The issues with the U.S. dollar are not temporary and the dollar is expected to remain weak this year, she added. On charts, gold breached important technical resistance at $1,466 an ounce near Thursday’s high, said Rick Bensignor, chief market analyst at Dahlman Rose. If bullion could hold above $1,466 early next week, it should next target an area between $1,500 and $1,510 an ounce, Bensignor said. Among other precious metals, platinum gained 1.3 percent to $1,803.74 an ounce, while palladium jumped 2.2 percent to $791.97. Prices at 12:36 p.m. EDT (1636 GMT) (Additional reporting by Julie Haviv in New York, Jan Harvey in London; Editing by David Gregorio) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Investors Biggest Worry: The End Of Fed’s Cheap Money Era

April 8, 2011

CHICAGO (By Doris Frankel) – The end of super-cheap money from the Federal Reserve is trumping corporate earnings results as a key risk to hedge for stock investors. Investors are looking forward to fewer price gyrations during this earnings season but are worried about how withdrawal of the Fed’s extraordinary monetary support, expected in June, will affect shares. Normally the earnings reporting period is prone to ups and downs, but strong profit growth should keep volatility subdued. That’s lessened the cost of hedging risk, and some investors have identified the end of the Fed’s quantitative easing effort as something to hedge against. Some are willing to pay more to protect against declines a couple months down the road. “It looks like all the markets from equities to currencies are pricing in some sort of the continuation of the Fed’s quantitative easing policies,” said Joe Cusick, senior market analyst at Chicago-based brokerage firm optionsXpress. “While that gets debated between now and June, we are going to see some potential for renewed short-term volatility,” Cusick said. Aluminum maker Alcoa Inc (AA.N: Quote, Profile, Research, Stock Buzz) will unofficially kick off the U.S. earnings season next Monday. Profit reports are expected to support U.S. stocks with first-quarter S&P 500 earnings are expected to show 11.5 percent year-over-year growth, according to Thomson Reuters. Investors will be scrutinizing early reports to get a clue of the sentiment for future earnings guidance and the economic landscape for the last two quarters of the year. “The prospect of good earnings in a period of still-low interest rates is supporting equities, even as the European debt crisis, higher crude oil prices, and other events overseas add some earnings risk longer-term,” said WhatsTrading.com options strategist Frederic Ruffy. The Chicago Board Options Exchange Volatility Index, a barometer of investor anxiety known as the VIX , is at relatively low levels. It also indicates S&P 500 index .SPX options are getting cheaper in the near term. The 10-day historical volatility for the SPX dropped below 7 percent on Thursday, a sign of very calm markets, compared to 19 percent two weeks ago. The VIX was lately trading at around the 17 level, after rising to 31.28 on March 16 in the aftermath of the Japanese earthquake crisis. With the stock market near two-and-a-half year highs, in-line earnings may not be rewarded as they have been in past earnings cycles and could lead to disappointment. Still, the expectation of gradual tightening of Fed policy is potentially more worrying. The Fed is in the middle of a $600 billion bond-buying program that has been credited with helping to underpin the stock market’s rally. Investors are starting to buy protection against future headline risk as a result. VIX futures are pricing in some fear in the back months. Contracts from June to November expect the VIX to rise to above a 21 to 24 reading in the second half of the year. “Near-term options as measured by the VIX are getting less expensive but we see buying demand for further out-of-the money puts in the SPX as a hedging tool,” said Chris McKhann, an analyst at stock and options website optionMonster.com. This is also reflected in the CBOE SKEW Index, which measures demand for out-of-the-money puts compared to out-of-the-money calls, McKhann said. The greater the skew, the more investors are willing to pay for the out-of-the-money protective put positions than the upside call positions. “This means those seeking protection for the downside in equities are likely best served by buying near-term at-the-money put options, which are relatively cheap and selling out-of-the-money puts–taking advantage of that skew,” McKhann said. (Reporting by Doris Frankel; Editing by Andrew Hay) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Social Security Stopping Mailed Earning Statements

April 7, 2011

WASHINGTON — Those yearly statements that Social Security mails out – here’s what you’d get if you retired at 62, at 66, at 70 – will soon stop arriving in workers’ mailboxes. It’s an effort to save money and steer more people to the agency’s website. The government is working to provide the statements online by the end of the year, if it can resolve security issues, Social Security Commissioner Michael Astrue said. If that fails, the agency will resume the paper statements, which cost $70 million a year to mail, he said. “We’ll provide it, we expect, one way or another, before the end of the calendar year,” Astrue told The Associated Press. “We’re just right now trying to figure out the most cost-effective and convenient way to provide that to the American public.” The statements, mailed to 150 million people each year, project future benefit payments, helping workers plan for retirement. The decision to suspend the mailings was unrelated to the talk of a possible partial government shutdown. It was, however, related to the agency’s operating budget, which has essentially been frozen at 2010 levels – minus about $350 million in economic stimulus money the agency had been using to handle claims. Advocates for older Americans say they are sympathetic about the agency’s budget problems, but several said an online option is insufficient, especially for people who may not have computer skills or access to computers. “As far as the information being available online, that’s not going to help a lot of people we work with,” said Max Richtman, executive vice president of the National Committee to Preserve Social Security and Medicare. “This was a concrete piece of paper, a document that workers would receive that would give them confidence in the program,” Richtman said. “Otherwise, they hear a lot of the debate in Washington. It’s going to be there; it’s not going to be there.” Claims for retirement and disability benefits are up significantly since the nation’s economy soured in 2008. About 2.7 million people applied for retirement benefits last year, a 17 percent increase from 2008, according to agency statistics. About 3.2 million people applied for disability benefits last year, a 23 percent increase. Since the 1980s, Social Security statements have been mailed each year to workers older than 25. They include a history of taxable earnings for each year – so people can check for mistakes – as well as the total amount of Social Security and Medicare taxes paid over the lifetime of the worker. The statements provide estimates of monthly benefits, based on current earnings and when a worker plans to retire. Workers can claim early retirement benefits starting at age 62. Full benefits are available at age 66, a threshold that is gradually increasing to 67 for people born in 1960 or later. The statements are mailed throughout the year, so many people have already received them this year. Tens of millions have not. The agency does offer a benefits estimator on its website that Astrue said can be even more helpful than the annual Social Security statements. Workers can enter their Social Security numbers on the website and get estimates of future benefits, depending on when they plan to retire. “You can go online and you can get a very accurate estimate of your likely retirement benefits,” Astrue said. Press. “You can run scenarios.” The website, however, does not provide the detailed earnings and payroll tax history that workers had been receiving in the mail each year. Mary Johnson, a policy analyst at The Senior Citizens League, said the detailed paper statements help workers ensure they are getting credit for their proper earnings each year. “When we get these we realize just how modest our benefit will be, and the need for savings, and to work as long as we are able to,” Johnson said in an email. Ending the statements is part of a trend in government to conduct more of its business electronically. Social Security already mails out few paper checks. About 88 percent of beneficiaries have their payments deposited directly into bank accounts. Social Security has been beefing up its website in recent years, offering more services and information online as millions of computer-savvy baby boomers reach retirement age. The agency launched a new public campaign this week featuring two celebrities that baby boomers will find familiar: actors Patty Duke and George Takei. Takei starred in the original “Star Trek” TV show, and the campaign features ads playing on a “Star Trek” theme, with Duke and Takei emphasizing how easy it is to apply for benefits online. About 41 percent of applications for retirement benefits come in online, Astrue said. About 44 percent of Medicare applications are done online. In all, the agency’s website attracts about 11 million visitors each month. ___ Online: Social Security: www.ssa.gov Benefits estimator: http://www.ssa.gov/estimator/

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Video: Codelco May Seek Bank Loans for $600 Million in 2nd Half

April 6, 2011

April 6 (Bloomberg) — Diego Hernandez, chief executive officer of Codelco, talks with Bloomberg’s Matthew Craze about the company’s financing plans and the outlook for the copper market. The world’s largest copper producer, may seek bank loans to raise the $600 million it needs to finance expansions at its Chilean copper mines this year, Hernandez said. (Source: Bloomberg)

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Sam Adams Launches Micro-Loans For Food & Beverage Entrepreneurs

April 6, 2011

The Boston Beer Company, maker of Samuel Adams, is looking to distribute up to a million dollars in micro-loans this year, all through its Brewing the American Dream program, which lends out amounts from $500 to $25,000 to food, beverage, and hospitality entrepreneurs.

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Cuba To Drill For Oil In Gulf

April 5, 2011

HAVANA — Cuba and partner companies will begin drilling five oil wells in the Gulf of Mexico this summer in hopes of locating enough crude to justify the costly exploration, an official said Tuesday. “The prospects are very promising” of finding valuable reserves, said Manuel Marrero, an official with the Ministry of Basic Industry. Cuba’s domestic production is exclusively heavy oil with a high sulfur content. Its offshore Gulf waters could contain large quantities of lighter, sweet crude, although a test well in 2004 turned up only modest deposits. Studies since then have pointed to “oil traps” in the marine floor, persuading partner companies to take on the expensive task of exploration in deep water, Marrero said during an earth sciences convention. The drilling is expected to run through 2013. The Cuban government has designated 59 blocks in Gulf waters encompassing 43,200 square miles (112,000 square kilometers) where private energy companies have said they could drill deep-water test wells. The area opened for international investment in 2000, and currently a half-dozen companies, including Spain’s Repsol-YPF, have contracted for 22 of the blocks. None of the companies are American – due to Washington’s decades-old ban of U.S. business dealings with the communist-governed island – although some U.S. firms have expressed interest in the past. Marrero repeated Cuba’s position that it would be open to partnering with U.S. companies. “Any company could participate under Cuban laws,” Marrero said. Earlier this year, Brazilian officials announced that country’s state-run energy giant, Petrobras, would withdraw from the Cuban area. “They had a small block, barely 1,500 square kilometers,” Marrero said. “They discovered prospects, but that can’t compete with the hundreds of prospects they have” in Brazilian territory. According to geologic studies conducted by several institutions, some of them U.S.-based, Cuba’s Gulf reserves could be 5 billion to 9 billion barrels of crude. Nearly a year after the Deepwater Horizon disaster that killed 11 workers and led to more than 200 million gallons of oil spewing from a BP well a mile beneath the Gulf of Mexico, Marrero assured reporters that Cuba’s exploration will be carried out safely. “The equipment that will be used is the most modern, the safest. The regulatory framework is very strict, and the companies that will drill are prestigious and experienced,” he said. “I don’t think we are going to have any more risks.” Earlier this year, Cuba reported its 2010 production totaled 4 million tons of petroleum equivalent – oil plus natural gas – or about 46 percent of its domestic consumption. The rest it obtains from Venezuela on preferential terms.

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Julian Block: Travel Deductions for Gamblers

April 4, 2011

The tax rules for gamblers can be summed up simply: “Heads, the IRS wins; tails, gamblers lose.” The faux-friendly feds routinely nail gamblers for taxes on their entire winnings from horses, lotteries, slot machines, cards or other games of chance. But their losses are deductible just to the extent of their winnings. What’s more, losing bets that undergo IRS scrutiny generally are allowable only when they’re corroborated by records that pass muster with the agency — a requirement that’s neither more nor less stringent than for other kinds of write-offs The Form 1040 instructions mandate separate reporting for winnings and losses. Gamblers can’t reduce winnings by losses and report the difference, the way investors do for capital gains and losses. They must report the full amount of winnings for the year on the 1040 line for “other income” (line 21 on the 1040 for 2010). The instructions also tell them to specify “gambling” as the source of the winnings in the box to the left of line 21. This remains the case even if winnings are less than losses. The tax code mandates that under no circumstances can a loss deduction exceed reported winnings for the year in question. This holds true whether those losses are incurred by recreational gamblers or professional gamblers. Moreover, the law absolutely bars any use of excess losses to offset wages, dividends, interest and other kinds of income. These rules are similar to the ones for hobbies. Hobby expenses are allowable only up to the amount of income generated by the hobby and can’t offset income from other sources. Gamblers can’t deduct losses if they use the standard deduction. Gamblers can deduct losses only if they itemize on Schedule A of Form 1040. Year in and year out, gamblers get tripped up by this limitation. Gambling losses are considered miscellaneous deductions that are claimed at the bottom of Schedule A. But gambling losses aren’t subject to the nondeductible floor of two percent of adjusted gross income that applies to other kinds of miscellaneous expenses–for instance, unreimbursed employee business expenses, such as employment-related educational expenses and dues for unions or professional associations, and fees for return preparation and tax planning and investment advice. Several imaginative taxpayers have tried to sidestep restrictions on loss deductions by claiming write-offs for their spending on trips to local tracks or longer jaunts to places like Las Vegas. For instance, John Shigeta made regular pilgrimages from California to shoot craps at the Sands Hotel and other establishments in Las Vegas. John’s losses at the crap tables ran to $50,000 over a 10-year period, despite “dogged” efforts to improve his skill. For 1967, his score was $1,300 won and $10,000 lost. In addition to subtracting losses of $1,300 from his winnings, John decided to reduce his tax bite by writing off $1,230 spent traveling to Las Vegas and staying in hotels there as an expense “for the production of income.” But the law says such expenses are deductible only if an activity is profit-motivated. Consequently, the judge, though sympathetic, concluded that John flunked this test and threw out the entire $1,230. His honor reasoned that the main motivation for any crapshooter with an abysmal record like John’s wasn’t profit but pleasure. *** Julian Block is an attorney and author based in Larchmont, N.Y. He has been cited as “a leading tax professional” (New York Times), “an accomplished writer on taxes” (Wall Street Journal) and “an authority on tax planning” (Financial Planning Magazine). His books include Julian Block’s Easy Tax Guide for Writers, Photographers, and Other Freelancers: Trim Taxes to the Legal Minimum

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Video: Papaconstantinou Says Still Chance for 2011 Bond Sales

April 1, 2011

April 1 (Bloomberg) — Greek Finance Minister George Papaconstantinou talks about the outlook for Greece to return to bond markets this year if conditions improve. Papaconstantinou spoke today with Bloomberg’s Ryan Chilcote in Cernobbio, Italy. (Source: Bloomberg)

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Adoptive Parents Receive Unbelievable Tax Refund

April 1, 2011

SMITHFIELD, N.C. (CNNMoney) — The Wards couldn’t believe the news when their tax preparer called to tell them they’re getting a $54,000 refund this year.

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College Job Market Shows Impressive Turnaround

March 31, 2011

Graduating college students might have an easier time finding gainful employment this year. According to a new survey from the National Association of Colleges and Employers , hiring is expected to be up 21 percent from last year for jobs and internships across all majors. The results of this most recent survey come as a surprise — in August, NACE predicted a 13.5 percent increase in hiring. Full results of the survey will become public next month. As of press time, 114 companies had responded to NACE.

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Robert Reich: The Economic Truth That Nobody Will Admit: We’re Heading Back Toward a Double-Dip

March 31, 2011

Why aren’t Americans being told the truth about the economy? We’re heading in the direction of a double dip — but you’d never know it if you listened to the upbeat messages coming out of Wall Street and Washington. Consumers are 70 percent of the American economy, and consumer confidence is plummeting. It’s weaker today on average than at the lowest point of the Great Recession. The Reuters/University of Michigan survey shows a 10 point decline in March — the tenth largest drop on record. Part of that drop is attributable to rising fuel and food prices. A separate Conference Board’s index of consumer confidence, just released, shows consumer confidence at a five-month low — and a large part is due to expectations of fewer jobs and lower wages in the months ahead. Pessimistic consumers buy less. And fewer sales spells economic trouble ahead. What about the 192,000 jobs added in February ? (We’ll know more Friday about how many jobs were added in March.) It’s peanuts compared to what’s needed. Remember, 125,000 new jobs are necessary just to keep up with a growing number of Americans eligible for employment. And the nation has lost so many jobs over the last three years that even at a rate of 200,000 a month we wouldn’t get back to 6 percent unemployment until 2016. But isn’t the economy growing again — by an estimated 2.5 to 2.9 percent this year? Yes, but that’s even less than peanuts. The deeper the economic hole, the faster the growth needed to get back on track. By this point in the so-called recovery we’d expect growth of 4 to 6 percent. Consider that back in 1934, when it was emerging from the deepest hole of the Great Depression, the economy grew 7.7 percent. The next year it grew over 8 percent. In 1936 it grew a whopping 14.1 percent. Add two other ominous signs: Real hourly wages continue to fall, and housing prices continue to drop. Hourly wages are falling because with unemployment so high, most people have no bargaining power and will take whatever they can get. Housing is dropping because of the ever-larger number of homes people have walked away from because they can’t pay their mortgages. But because homes the biggest asset most Americans own, as home prices drop most Americans feel even poorer. There’s no possibility government will make up for the coming shortfall in consumer spending. To the contrary, government is worsening the situation. State and local governments are slashing their budgets by roughly $110 billion this year. The federal stimulus is ending, and the federal government will end up cutting some $30 billion from this year’s budget. In other words: Watch out. We may avoid a double dip but the economy is slowing ominously, and the booster rockets are disappearing. So why aren’t we getting the truth about the economy? For one thing, Wall Street is buoyant — and most financial news you hear comes from the Street. Wall Street profits soared to $426.5 billion last quarter, according to the Commerce Department. (That gain more than offset a drop in the profits of non-financial domestic companies.) Anyone who believes the Dodd-Frank financial reform bill put a stop to the Street’s creativity hasn’t been watching. To the extent non-financial companies are doing well, they’re making most of their money abroad. Since 1992, for example, G.E.’s offshore profits have risen $92 billion, from $15 billion (which is one reason it pays no U.S. taxes). In fact, the only group that’s optimistic about the future are CEOs of big American companies. The Business Roundtable’s economic outlook index, which surveys 142 CEOs, is now at its highest point since it began in 2002. Washington, meanwhile, doesn’t want to sound the economic alarm. The White House and most Democrats want Americans to believe the economy is on an upswing. Republicans, for their part, worry that if they tell it like it is Americans will want government to do more rather than less. They’d rather not talk about jobs and wages, and put the focus instead on deficit reduction (or spread the lie that by reducing the deficit we’ll get more jobs and higher wages). I’m sorry to have to deliver the bad news, but it’s better you know. Robert Reich is the author of Aftershock: The Next Economy and America’s Future , now in bookstores. This post originally appeared at RobertReich.org .

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Spanish house price falls continue unabated

March 31, 2011

Average Spanish house prices fell 4.46% during the year to February 2011, according to the valuers TINSA.

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Video: Lorin Says Applications to Ivy League Schools at Record

March 30, 2011

March 30 (Bloomberg) — Bloomberg reporter Janet Lorin talks about applications and acceptance rates at U.S. Ivy League colleges and the use of school alumni to interview prospective freshmen. Harvard University, Yale University and Princeton University accepted 6.2 percent, 7.4 percent and 8.4 percent, respectively, of their freshman applicants this year as more students than ever seek Ivy League educations. Lorin speaks with Carol Massar and Matt Miller on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Japan’s Crisis Will Lower U.S. GDP, IMF Says

March 30, 2011

ROME (Reuters) – The International Monetary Fund has cut its forecast for Japan’s 2011 GDP growth after this month’s devastating earthquake and has also lowered its near term outlook for the United States, Italian news agency ANSA reported on Wednesday. The IMF cut Japan’s 2011 growth forecast to 1.4 percent from a previous projection of 1.6 percent in January and cut its forecast for the United States to 2.8 percent from 3.0 percent, ANSA said, citing a draft of the IMF’s World Economic Outlook report to be issued in April. However, the Fund’s forecasts for 2012 have been increased to 2.1 percent from 1.8 percent for Japan and to 3.0 percent from 2.8 percent for the United States, ANSA reported. The IMF slightly raised its forecast for euro zone growth this year to 1.6 percent from 1.5 percent and increased the 2012 forecast to 1.8 percent from 1.7 percent, ANSA said. The IMF made no change to its growth forecasts for China, seen at 9.6 percent in 2011 and 9.5 percent in 2012, and also left unchanged its global growth forecast for this year, seen at 4.4 percent, ANSA said. Its report did not include the IMF’s forecast for 2012 global growth. The IMF trimmed its projection for Indian growth to 8.2 percent from 8.4 percent, and lowered its 2012 outlook to 7.8 percent from 8.0 percent. Italian growth has been raised marginally to 1.1 percent from 1.0 percent for 2011 and left unchanged at 1.3 percent for 2012, significantly lagging the euro zone average in both years. Italy has been one of the euro zone’s most sluggish economies for over a decade. (Writing by Gavin Jones; Editing by Toby Chopra) Copyright 2011 Thomson Reuters. Click for Restrictions

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Layoffs Plunge — But Not For Government Workers

March 30, 2011

NEW YORK: The number of planned layoffs at U.S. firms fell in March, despite continued downsizing in the public sector, a report said on Wednesday. Employers announced 41,528 planned job cuts this month, down 18 percent from the 50,702 cuts announced in February, according to the report from consultants Challenger, Gray & Christmas, Inc. The March figure was down 39 percent from a year ago, when 67,611 job cuts were announced, the report said. Overall, 130,749 job cuts were announced in the first three months of the year, marking the lowest rate of downsizing since 1995, when employers announced 97,716 first-quarter job cuts, Challenger, Gray said. Announced first-quarter job cuts for 2011 were also down 28 percent compared with the same period of 2010, when there were 181,183 planned cuts, the report said. Government has led job reduction this year, with 19,099 planned cuts in March — the highest in 12 months, the report said. There were 41,929 government job cuts announced in the first three months of 2011 — a 33 percent drop from the 62,700 government layoffs announced in the first three months of last year. “Despite the decline from last year, it is difficult to be optimistic about the outlook for government workers,” Rick Cobb, executive vice president of Challenger, Gray & Christmas, said in a statement. “Most cities and states have only just begun to address their massive budget deficits and we have yet to see how budget cutbacks are going to impact workers at the federal level.” Downsizing activity in other sectors appears to be stabilizing, he said. “The sectors that had the heaviest job losses at this point a year ago have seen significantly fewer layoffs,” Cobb said. Downsizing has slowed in the pharmaceutical, auto and telecommunications sectors, compared with a year ago, he said. The downsizing figures come ahead of the much-anticipated U.S. jobs report, which is due at 8:30 a.m. EDT (1230 GMT) on Friday. The U.S. economy is expected to have added 200,000 private jobs in March, and slightly fewer jobs overall for non-farm payrolls, according to a Reuters poll. For more, see (Reporting by Edith Honan; Editing by Dan Grebler) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Federal Reserve Unlikely To Extend Quantitative Easing, Top Officials Say

March 25, 2011

NEW YORK, March 25 – With the economy on firmer footing the Federal Reserve Bank is unlikely to extend its bond-buying stimulus program beyond a planned $600 billion, several top Fed officials said on Friday. Members of the more hawkish wing of the Fed went further, with Philadelphia Fed Bank President Charles Plosser saying the U.S. central bank will have to reverse its easy money policy in the “not-too-distant future” to avoid sowing the seeds of inflation. The Fed has kept short-term rates near zero since December 2008 and has bought more than $2 trillion in long-term securities to push borrowing costs down further and boost recovery from the 2007-2009 recession. At its most recent policy-setting meeting, policymakers voted to continue the bond-buying program begun last November and slated to end in June. “Following through on that to the tune of $600 billion, like we’ve said, I think is appropriate,” Chicago Fed President Evans told reporters at the regional bank’s headquarters. “I personally don’t see as many needs for a further amount, as I probably thought last fall.” Evans comments, along with those of Atlanta Fed President Dennis Lockhart who said on Friday that “it’s a high bar” for the Fed to do more, suggest the debate at the Fed has moved away from a consideration of further easing. “Given the pressure, from the hawks on the Federal Open Market Committee, the public, Congress, and foreign officials, I would highly doubt Evans would say something like that if Chairman Ben Bernanke, New York Fed President William Dudley, and Fed Vice Chair Janet Yellen didn’t agree with him,” said Eric Stein, a fund manager at Eaton Vance in Boston. Minneapolis Fed President Narayana Kocherlakota told reporters in Marseilles that the U.S. economy would need to worsen “materially” for the bank to consider further bond-buying. Plosser and fellow hawk Dallas Fed Fisher continue to press for the Fed to do less. Fisher, speaking in Brussels Friday, said the Fed has done enough and may even have done too much. Speaking in New York, Plosser said consumer spending continues to expand at a “reasonably robust pace,” and the labor market is improving. The overall economy, he said, has gained “significant strength and momentum” since the summer. “If this forecast is broadly accurate, then monetary policy will have to reverse course in the not-too-distant future and begin to remove the massive amount of accommodation it has supplied to the economy,” said Plosser, one of the central bank’s biggest inflation hawks. “Failure to do so in a timely manner could have serious consequences for inflation and economic stability in the future,” said Plosser, a voter on the Fed’s policy-setting committee this year. Plosser outlined his preferred strategy for eventually tightening policy. He said he would like to raise interest rates and reduce the Fed’s balance sheet — which ballooned to more than $2 trillion during the crisis — at the same time. “My proposed strategy involves raising rates and shrinking the balance sheet concurrently and tying the pace of asset sales to the pace and size of interest rate increases,” Plosser said. “By tying sales to interest rate decisions, it allows the process for selling assets to be conditional on economic outcomes in ways that are familiar to market participants,” he said. Evans, who like Plosser has a vote on the policy-setting committee this year, suggested that the Fed would not quickly move to tighten its extraordinarily loose monetary policy, and would likely try to keep its balance sheet steady once active bond-buying stopped. That would require the Fed to continue to reinvest proceeds of maturing securities in new purchases, as it has been done for some months now. “It is natural to expect there would be some period of time between when the $600 billion is completed and an assessment in the change of the trajectory,” he said. After a period of what could be some months, he said, the Fed could stop reinvestments, a “modest step” toward tightening that probably not be followed quickly by other steps unless the economy was outpacing expectations. Evans and Plosser both said the earthquake and nuclear crisis in Japan and the rise in oil prices because of turmoil in the Middle East pose a risk to the U.S. recovery — but said he expected this risk to be small and short-term. (Reporting by Kristina Cooke, Edith Honan in New York, Ann Saphir in Chicago, Pedro Nicolai da Costa in Ft. Myers, Fla., Philip Blenkinsop in Brussels, Editing by Padraic Cassidy and Andrew Hay) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Corporate Profits At All-Time High As Recovery Stumbles

March 25, 2011

NEW YORK — Despite high unemployment and a largely languishing real estate market, U.S. businesses are more profitable than ever, according to federal figures released on Friday. U.S. corporate profits hit an all-time high at the end of 2010, with financial firms showing some of the biggest gains, data from the federal Bureau of Economic Analysis show. Corporations reported an annualized $1.68 trillion in profit in the fourth quarter. The previous record, without being adjusted for inflation, was $1.65 trillion in the third quarter of 2006. Many of the nation’s preeminent companies have posted massive increases in profits this year. General Electric posted worldwide profits of $14.2 billion, while profits at JPMorgan Chase were up 47 percent to $4.8 billion. Corporate profits steadily increased last year as companies continued holding onto record amounts of cash and other liquid assets while cutting costs, laying off workers and wringing more productivity — defined as the amount of output that comes from an hour of work — from remaining staff, even as the recession eased. To put that in perspective, said Lynn Reaser, the chief economist at Point Loma Nazarene University in San Diego, it’s important to note that companies were able to bring production back up to pre-recession levels without hiring any more workers. “We have now recovered all of the output lost in the recession, but we are still down by 7.5 million workers,” she said. In addition to layoffs, some companies continued to cut wages and benefits last year. Sub-Zero, the freezer and refrigerator manufacturer, told workers last year that factories in Wisconsin would have to be shut down, with 500 employees loosing their jobs, unless staff took a 20 percent pay cut, The New York Times reported . Workers were expected to put in more hours without overtime pay, while staff facing fewer hours of work due to furloughs were expected to do as much as they would have in a full workday, according to NPR . But, economists said, companies may have squeezed as much as they can out of workers, with a decline in profits for non-financial companies in the fourth quarter of last year suggesting that to improve production, companies will have to start hiring seriously again. On the whole, Reaser said, corporations have significantly improved their balance sheets since the financial crisis. “It’s helped pave the way for a significant gain for corporate capital spending, dividend payouts and corporate buybacks , as well as the significant rise in stock prices ,” she said. But while the financial sector continued to recover from its 2008 meltdown — with profits jumping some $51 billion in the fourth quarter, a gain of 51 percent over the previous quarter — non-financial firms actually saw profits fall by roughly $10 billion, according to the BEA figures. Part of the reason, said Reaser, was that although high productivity drove down labor costs, persistent unemployment and pinched consumers left companies unable to charge the higher prices needed to boost profits. More companies will start pushing more aggressively to improve profit margins this year, she said. In order for those efforts to pay off, she said, many companies will have to start hiring — and keep hiring. Until the end of last year, companies were able to boost productivity by squeezing their remaining workers, who were eager to prove they were worth their paychecks. “But,” said Paul Ashworth, an economist at Capital Economics, “you can’t keep getting more out of workers quarter after quarter after quarter.” To ramp up production this year, Ashworth said, companies have already started hiring modestly. Federal figures show the economy added total of 192,000 jobs in February, the most in nearly a year. The unemployment rate fell to 8.9 percent last month, the lowest since April 2009. Economic growth figures released on Friday also suggested firms were slowly stepping up production. The Commerce Department revised upwards its projections for gross domestic product growth in the fourth quarter of 2010, to 3.1 percent from 2.8 percent. The new projection, BMO Capital Markets senior economist Sal Guatieri said, is “consistent with an economy growing fast enough to gradually reduce the unemployment rate.” But, he said, most of the increase was in business inventories — companies producing and stockpiling more — rather than consumer confidence . Despite positive signs, economists warned that economic growth could be hit by the twin shocks of high gas prices and the impact of events in Japan, which has hampered auto and electronic supply chains. “There are mild headwinds that will slow growth a little bit,” said Nariman Behravesh, an economist at IHS Global Insight, an economic and financial analysis firm. “They’re not going to derail the recovery, and we’re guessing they’ll be temporary.” U.S. consumers appear to be growing nervous, thanks to events in Japan, fears over nuclear power, and unrest in the Middle East and north Africa. That anxiety could take an economic toll, with consumer sentiment falling this month to its lowest level since November 2009, according to the Reuters/University of Michigan index. “The sharp drop in consumer confidence and Japan-related supply chain bottlenecks will likely translate into real GDP growth of only around 2.4 percent in the first quarter, with a bounce back to the 3.5 percent to 4 percent range in the second quarter,” Behravesh said, revising his quarterly GDP growth estimate down from 4.2 percent.

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Bob Meighan: Tax Saving Tips for Procrastinating Filers

March 23, 2011

With just a few weeks left to go, millions of taxpayers are scrambling to meet the April tax deadline. If you’re among them, you’re not alone. An estimated 27 percent of taxpayers wait until the last two weeks to file their return. This year, there’s some good news for all the procrastinators out there, an extra three days to file your federal taxes. The federal tax deadline is Monday, April 18 instead of April 15. Double check with your state as not all state tax deadlines are the same. For those who are waiting until the last minute, there’s still time to reduce your 2010 tax bill. Here are a few things to remember: Go online. Taxpayers can go online to prepare and e-file taxes up to the last minute. Online tax preparation is fast, easy and convenient E-file your return. You avoid long lines at the post office and with direct deposit, get your refund back in as little as eight days. Contribute to your IRA. Even procrastinators can save money on their taxes. Taxpayers have until the April 18 deadline to contribute to an IRA and get a deduction on this year’s return. Remember charitable contributions. Cash and in-kind donations made in 2010 are deductible for itemizers. Even mileage to and from volunteering is deductible. Take advantage of higher education tax breaks. Tax credits like The American Opportunity Credit and The Lifetime Learning Credit are available if you or your children were in college in 2010 – don’t miss the potential tax savings available to you. Don’t just take the standard deduction if you think you’re running out of time. It may be worth more to itemize. Software programs like TurboTax can compare both and help you decide which is best for you. Need more time? Taxpayers can get an extra six months to file (until Oct. 17, 2011). But remember, an extension to file, is not an extension to pay your tax bill. Individuals still need to send the IRS a payment for taxes owed, within 90 percent accuracy, to avoid late penalties. What if you can’t pay? You’re not alone. Taxpayers who can’t pay the full amount they owe can ask for a streamlined installment plan. You may qualify for a streamlined plan as long as you don’t owe more than25,000, and you must be able to pay your tax bill off within five years. See here . These simple tips can provide even the most procrastinating taxpayer with real savings on their 2010 tax bill. Despite the temptation to put off taxes until the very last minute, the clock is ticking so it’s time to get going. Spending a few minutes to take advantage of any of these tips can help you get big savings on your tax return. As vice president for consumer advocacy for Intuit’s TurboTax business, Bob Meighan works with customers to help ensure TurboTax products meet their needs. A Certified Public Accountant, Meighan holds a bachelor’s degree in business administration from the University of North Carolina.

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New Home Sales Plunge To Record Low In February

March 23, 2011

WASHINGTON — Sales of new homes plunged in February to the slowest pace on records dating back nearly half a century, a dismal sign for an already-weak housing market. New-home sales fell 16.9 percent last month to a seasonally adjusted annual rate of 250,000 homes, the Commerce Department said Wednesday. It’s the third straight monthly decline and far below the 700,000-a-year pace that economists view as healthy. New-home sales now account for just 5 percent of total home sales so far this year. They typically represent closer to 15 percent in healthier housing markets. There were just 186,000 new homes available for sale in February, the lowest inventory in more than four decades. The median price of a new home dropped nearly 14 percent to $202,100, the lowest since December 2003. The median is now 30 percent higher than the median price of resold homes – twice the typical markup. In response, homebuilders are cutting their selling prices and building more inexpensive homes, pushing down sales prices. They are struggling to compete with a wave of foreclosures, which has lowered the price of previously occupied homes. High unemployment, tight credit and uncertainty over prices have also kept many potential buyers from making purchases. “Falling housing prices of existing homes are robbing demand for new houses and until that changes, the housing market will be in trouble,” said Yelena Shulyatyeva, an analyst at BNP Paribas. Last year was the fifth straight year of declines for new-home sales after they reached record highs during the housing boom. Economists say it could take years before sales return to a healthy pace. Poor sales of new homes mean fewer jobs in the construction industry, which normally powers economic recoveries. Each new home creates an average of three jobs for a year and $90,000 in taxes, according to the National Association of Home Builders. Many builders are waiting for new-home sales to pick up and for the glut of foreclosures to be reduced. But with 3 million foreclosures forecast this year nationwide, a turnaround isn’t expected for at least three years. “We fully expect further price declines in order to help clear inventory from the market although this problem is more acute in the existing home market than the new home market,” said Dan Greenhaus, chief economic strategist for Miller Tabak + Co. Homebuilders have taken notice. Residential construction has all but halted. Builders broke ground last month on the fewest homes in nearly two years. And building permits, a gauge of future construction, sank to their lowest in more than 50 years. By contrast, sales of previously occupied homes have fallen by a more modest 3 percent in the past year. Prices have dropped more than 5 percent. In February, the median price for a resale was $156,100, according to the National Association of Realtors. New-home sales fell to record lows last month in almost every region of the country. Sales dropped 57.1 percent in the Northeast, 27.5 percent in the Midwest, 14.7 percent in the West and 6.3 percent in the South. Those are record lows in each region except the West, which recorded its lowest sales pace in October. Harsh winter weather that dumped record amounts of snowfall over much of the Northeast and Midwest, along with rare snowstorms in Texas, had an impact on February sales. Given the pace of new-home sales, it would take nearly 9 months to clear them off the market. Economists say a six-month supply of homes is healthy.

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Video: Portes Says U.K. Inflation May Decline `Quite Sharply’

March 23, 2011

March 23 (Bloomberg) — Jonathan Portes, head of the National Institute of Economic and Social Research in London, talks about the outlook for inflation this year and the U.K. government’s budget. He speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse.”

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U.S. Firms Growing Impatient With Chinese Bureaucracy, Survey Says

March 22, 2011

By Koh Gui Qing BEIJING (Reuters) – U.S. firms are increasingly vexed over growing Chinese red tape that prevents them from expanding quickly in China’s vast market, a survey by the American Chamber of Commerce showed on Tuesday. Road blocks faced by firms in getting business licenses have multiplied to the extent that companies are now more worried about bureaucratic hurdles than by nebulous laws and regulation or corruption, AmCham’s annual survey on China’s business climate showed. “The number-one challenge that our members listed this year is bureaucracy,” Ted Dean, AmCham’s chairman in China, told reporters at a briefing. “Members are saying that licensing procedures have become more difficult.” The survey took pains to stress that U.S. firms want to stay in China, but criticisms were also thinly veiled, making plain the alternating love and hate that executives feel when it comes to doing business in a tightly controlled environment in the world’s fastest-growing major economy. “As China enters the tenth year in the World Trade Organization, the goal of a fair and transparent regulatory environment has not yet been achieved,” Dean said. Dean said U.S. firms believe they are discriminated against when they apply for licenses as they face delays and a lack of transparency, and at times are unable to get the licenses that their Chinese peers have received. Nearly 435 firms took part in the AmCham survey. A total of 31 percent of 338 respondents said bureaucratic processing was their biggest challenge, compared with 23 percent last year. To a question on what permit was most difficult to get, 42 percent of 220 respondents said it was a new business license. This is frustrating U.S. firms at a time they want to court the Chinese consumer. “This is just the moment when companies are looking to benefit from domestic demand in the market and looking to sell into the domestic market,” Dean said. Chinese Commerce Ministry spokesman Yao Jian said, however, that China was committed to treating foreign companies well and to opening its market. “We will continue to further promote the opening up of the domestic market,” he told a regular news conference. “We will give equal treatment to foreign investors and Chinese companies alike.” FIRMS STILL EXPANDING Though China has made significant progress in welcoming foreign firms since joining the World Trade Organization in 2001, companies want China to move even faster. Occasional setbacks, as with Google Inc’s (GOOG.O: Quote, Profile, Research, Stock Buzz) accusation on Monday that the Chinese government is foiling its Gmail service, are also unhelpful. China’s Foreign Ministry on Tuesday dismissed Google’s accusation as “unacceptable.” The AmCham survey outlined a laundry list of concerns that foreign firms usually have when operating in China — difficulties in hiring managers, unclear laws and regulations, inconsistent interpretation of regulations as well as infringement of intellectual property rights. Preferential treatment that Chinese firms get when it comes to bidding for contracts from China’s government was also a growing concern among foreign firms. Forty percent of firms polled said they believe China’s policy of favoring “indigenous innovation” would soon start to hurt their profits. But for now, almost 70 percent said they have yet to feel an impact. Still, firms are not slowing their China expansion plans. Nearly 10 percent of 281 respondents said they plan to expand their business by more than 50 percent this year, with 33 percent planning to grow operations by between one-tenth and one-fifth. (Additional reporting by Ben Blanchard; Editing by Richard Borsuk) Copyright 2011 Thomson Reuters. Click for Restrictions

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Yen Intervention Resolves Immediate Crisis, But Japan’s Economy Still Threatened

March 18, 2011

The yen eased off its all-time high Friday as the world’s major central banks lent their support, but Japan’s economic troubles are far from over, experts say. Intervention by the Group of Seven industrial countries has curbed the recent spike in Japan’s currency, and it has, for the moment, shielded the nation against what could have been a devastating blow to trade, economists say. Still, fundamental challenges remain: last Friday’s 9.0-magnitude earthquake has crippled Japan’s economy through the coming months, economists say, as factories, roads and ports lie in ruins. Currency intervention did, however, prevent a bad situation from growing worse, according to analysts. “This is exactly what Japan needed,” said Nariman Behravesh, chief economist for the financial analysis firm IHS Global Insight. “If the yen had continued to rise, the contraction might have been even bigger.” The yen hit its highest value since World War II Thursday, raising fresh concerns about Japan’s economic prospects. Investors contributed to the yen’s rise by buying the currency, expecting an expensive rebuilding process in Japan, experts said. The likely thinking behind such trades was that Japanese institutions would convert foreign assets into yen to pay for damage claims and construction expenses, a process that would strengthen the currency. In anticipation, investors piled into yen, helping drive up its value. That development posed a serious threat to Japan’s economy . Already, with factories and infrastructure destroyed, trade disruptions had prompted economists to downgrade their forecasts for the nation’s output over the coming months. With the yen strengthening, prospects seemed even worse: The goods that Japan did manage to export would be more expensive and thus less attractive to foreign buyers. Toyota , for instance, estimated that each one-yen gain that Japan’s currency makes against the dollar tears about 30 billion yen from the company’s earnings, according to Bloomberg News. Amid concerns that these trade disruptions could affect economies worldwide, international powers took action. For the first time in over a decade, leaders from the G7 nations joined together to intervene in currency markets Friday, buying dollars and selling yen in an effort to tame the yen’s rise. Immediately, investors responded. Stock markets cut recent losses, and the yen fell from its high level, hitting its lowest value against the dollar since 2008. “It’s certainly what they needed to do. We were seeing a slow economic train wreck starting to develop, with the yen appreciating as it was,” said Scott Anderson, a senior economist at Wells Fargo. “The only economic engine Japan has right now — they’re like an airplane with its last engine running — is its exports.” But it’s unclear how lasting the relief will be, economists say. The last time such a coordinated effort took place was in 2000, when central banks attempted to stop the newly created euro from falling in value. The effects, back then, were temporary. The euro ticked upward after the intervention began in late September, but then fell through much of October. After a rise late in the year, it fell again in January 2001, beginning a sustained rise only in 2002. Such interventions can change investor sentiment, but they don’t necessarily have the ability to change fundamentals, said Mark McCormick, a currency strategist at the financial services firm Brown Brothers Harriman. Central banks don’t wield nearly as much money as the foreign exchange market, he noted. “They can’t overpower the market. They don’t have the ammunition to do so,” McCormick said. “But if they’re stealthy and they do it in an intelligent way, they can out-craft the market.” In this case, that may be what’s needed. The yen’s rise wasn’t being driven by fundamental changes, experts say. Rather, investors were anticipating developments that hadn’t yet occurred. In order for the effects of the central banks’ actions to last, investors will likely have to believe that any rise in the yen stemming from the reconstruction process will be offset by monetary stimulus. In essence, if the intervention is widely perceived to be working, then it will be working. But even if the central bank intervention succeeds, challenges for Japan’s economy will remain. Leading economists maintain a bleak outlook for Japan’s next several months. This week, Wells Fargo cut its forecast for Japan’s second quarter economic output, now predicting the economy will slip into recession until the second half of the year. That view still holds, Anderson said. Similarly, Friday’s currency intervention didn’t prompt Moody’s Analytics to change its anemic forecast. The prediction of 1 percent growth for 2011, down from the pre-earthquake forecast of 1.4 percent, still stands, according to Gus Faucher, director of macroeconomics for Moody’s Analytics. That outlook includes a recession that doesn’t let up until the second half of the year. The currency intervention, moreover, “may turn out to be a wash,” said Bernard Baumohl, chief economist of the Economic Outlook Group. “In the short run, the intervention has been a success, but a lot of Japanese companies are going to have to repatriate foreign investments,” Baumohl said. “There’s so much that’s unprecedented about this, it’s hard to figure out where, ultimately, the currency is going to go.”

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After ‘Stress Tests,’ Banks Cleared To Boost Payouts To Shareholders

March 18, 2011

WASHINGTON â The Federal Reserve on Friday cleared the way for some major banks to boost stock dividends, prompting announcements from JPMorgan Chase, Wells Fargo and U.S. Bancorp. JPMorgan Chase said it is increasing its dividend to 25 cents a share from 5 cents, Wells Fargo hiked its dividend to 12 cents a share from 5 cents and U.S. Bancorp boosted its dividend. JPMorgan also authorized a $15 billion stock repurchase program with up to $8 billion approved for this year. U.S. Bancorp authorized a buyback program of up to 50 million shares. Banks can increase dividends if they pass “stress tests” showing that they can weather another recession. The Fed said it had completed those tests and expects that “some firms” will increase or resume dividend payments, buy back shares or repay government capital. The Fed isn’t revealing either the names or number of banks that are expected to do so. All of the 19 largest banks overseen by the Fed were subject to the examinations. Those banks include Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. During the financial crisis banks slashed dividends to build capital cushions to absorb losses. Regulators barred banks from boosting dividends without obtaining approval. By increasing payments, banks may be able to attract new investors, which should lead to more lending to people and businesses, the Fed said. The Fed said it is taking a “measured and conservative approach” on banks’ dividend requests. The Fed said it expects banks to limit dividends to 30 percent or less of their anticipated earnings. A green light from the Fed on bigger dividend payments also would signal that banks are in better financial shape. Federal regulators have been working closely with banks to strengthen operations and get lending flowing more normally again after the worst crisis since the 1930s. The Fed said Friday that the 19 banks had increased common equity by more than $300 billion from the end of 2008 to the end of 2010. Overall, both the banks’ amount and mix of capital have improved since the financial crisis, the Fed concluded in a paper released Friday. Under the stress tests, banks had to show that they could weather another recession. That was defined as a scenario in which U.S. economic activity would shrink 1.5 percent this year and unemployment would spike to 11 percent. In addition, stocks and home prices would fall sharply. Across the Atlantic, European regulators pledged to make their banks’ stress tests this year more difficult than last year’s. The Fed didn’t publicly release the results of this latest round of stress tests. It is keeping the information confidential, which is standard practice in bank exams. However, the Fed deviated from that practice when it conducted its first stress tests in 2009. The country was reeling from a severe recession and financial crisis. Those results were made public in a move to boost confidence in the fragile U.S. banking system. At the time, the government had launched a taxpayer-funded bailout of banks. The fear was that by withholding information on banks’ health, investors’ and the American public’s shaky confidence would be further hurt, worsening the recession.

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Microsoft Rated More Ethical Than Google, Facebook, Apple

March 17, 2011

Ethisphere has rated Microsoft among the most ethical companies in the world, a distinction not granted to tech giants Apple, Facebook or even “don’t be evil” Google. According to the Ethisphere Institute , “the World’s Most Ethical Company designation is awarded to those companies that have leading ethics and compliance programs, particularly as compared to their industry peers.” This list of decidedly reputable companies spans a wide range of industries, including computer software, food stores, telecom services, banking and aerospace. Companies are evaluated based on corporate citizenship and responsibility, corporate governance, innovation that contributes to the public well being, industry leadership, and several other categories. “Microsoft started to make a big ‘corporate citizenship’ push in the early 2000s following the negative fallout from its antitrust trials, and has since donated millions to non-profits, invested in programs for economic development, and tightened up its internal reporting processes. All of this was apparently enough to get the company on the list this year,” writes Business Insider. This year, Ethisphere honored 110 companies with its do-gooder award. eBay, Adobe Systems and Whole Food Market also qualified. As noted by Forbes , this list is not a ranking system, and all companies are considered equal. Litigation and ethics violations generally keep companies off the list, according to Ethisphere. CNET reports that Google has made the World’s Most Ethical list in the past, but that it may have been passed over this year because of the European Union’s antitrust investigation against the company. Google also faces antitrust scrutiny from the U.S. government. Visit Ethisphere’s website to view all 110 of the World’s Most Ethical Companies .

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All eyes on Cityscape Abu Dhabi

March 16, 2011

16 Mar 2011 Real Estate professionals from across the globe have their eyes focused on Abu Dhabi, with a number of companies set to announce, invest and sign on the dotted line at this year’s highly a…

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Rick Perry Reverses Course On Rainy Day Fund

March 16, 2011

AUSTIN, Tex (Reuters) – Texas Governor Rick Perry admitted on Tuesday that the state will have to use about a third of its rainy day fund to close a budget deficit this year, abandoning his stance that the fund should not be used. Perry said he supported using up to $3.2 billion of the $9.4 billion fund to close a deficit in the 2011 budget. But the Republican governor said that he still does not support using the fund to address the shortfall in the 2012-2013 budget. Perry said that using a “one-time amount” from what is officially called the Economic Stabilization Fund would “help our budget deal with the impact of the national recession.” Earlier this year he had opposed using the fund at all. “I remain steadfastly committed to protecting the remaining balance of the Rainy Day Fund, and will not sign a 2012-2013 state budget that uses the Rainy Day Fund,” Perry said in a statement that indicated that he, House Speaker Joe Straus and Comptroller Susan Combs agreed on the plan. Texas, which has a two-year budget cycle, is about $27 billion short of the money it needs to extend current programs and services through 2012 and 2013. That includes a $4 billion deficit in the 2011 budget, which ends August 31. The deficit had been $4.3 billion, but Combs on Monday revised the state’s revenue estimate, saying an additional $300 million is available because of increased sales tax collections. The House Appropriations Committee on Tuesday approved a bill to use money from the rainy day fund for the current budget. The measure now heads to the full House. Appropriations Committee member Mike Villarreal, a Democrat, said that without using the rainy day fund for 2012-2013, the state budget will lead to closing nursing homes, firing teachers and packing more children into classrooms. “The governor doesn’t mind using the fund to avoid the embarrassment of not paying our bills for the next five months, but he refuses to use a single dime from the fund to limit the damage to our children’s schools,” Villarreal said. Copyright 2010 Thomson Reuters. Click for Restrictions .

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The Consumerist Returns For Another Year Of ‘The Worst Company In America’ Contest

March 14, 2011

Hey everyone, it’s March Madness time! You know what that means, right? First of all, it’s the time of year where you loathe yourself for picking Duke, Ohio State, Notre Dame and BYU for your Final Four pool. Because, what? That’s crazy . Happily, it’s also a time where you can work out all of your frustrations with corporate America, as the good people at The Consumerist have once again rolled out their perennial March feature, the Worst Company In America brackets , now in its sixth year. Consumerist reports that this year was the best year ever for user submissions — thousands of companies were nominated, but only 32 were selected. Six slots were taken by banks, including bailout babies Bank of America, Citigroup, Wells Fargo and Chase. Reigning champion Comcast is also back in the mix, and your health care industry is well represented by United Health Group and Wellpoint. (One preexisting condition is that they will face one another in the first round.) Consumerist highlights some newcomers, including one very obvious one: Among the businesses new to this year’s tournament is BP, whose public image was tainted by its troubles in the Gulf of Mexico. And then there’s newcomer Johnson & Johnson, whose McNeill division must have set some kind of record for the sheer number and variety of brands recalled from store shelves in a single year. Voting begins tomorrow, so be sure to get in on the action. And, as always, it is recommended that you make The Consumerist one of your daily reads . Their self-described mission is to “highlight the persistent, shameless gaffes of modern consumerism – and the latest scams, rip-offs, hot deals and freebies.” And if you ever find yourself getting ground up in the gears of “modern consumerism,” their contributors — and their readership — can be your saving grace. RELATED: Here’s Your Lineup For Worst Company In America 2011! [The Consumerist] [Would you like to follow me on Twitter ? Because why not? Also, please send tips to tv@huffingtonpost.com -- learn more about our media monitoring project here .]

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Bank Failures Rises To Twenty Five This Year

March 12, 2011

WASHINGTON — Regulators on Friday shut down small banks in Oklahoma and Wisconsin, lifting to 25 the number of U.S. bank failures this year after economic distress and soaring loan defaults brought down 157 banks in 2010. The Federal Deposit Insurance Corp. seized First National Bank of Davis, with one office in Davis, Okla., $90.2 million in assets and $68.3 million in deposits; and minority-owned Legacy Bank in Milwaukee, also with one office, with $190.4 million in assets and $183.3 million in deposits. Pauls Valley National Bank, based in Pauls Valley, Okla., agreed to assume all the deposits and $28.5 million of the loans and other assets of First National Bank of Davis. Chicago-based Seaway Bank and Trust Co. is assuming the deposits and $165.9 million of the assets of Legacy Bank. The FDIC will retain the rest of the failed banks’ assets for future sale. In addition, the FDIC and Seaway Bank and Trust agreed to share losses on $120 million of Legacy Bank’s assets. Legacy Bank received about $5.5 million in taxpayer funds in January 2009 under the government’s financial bailout program, and it repaid only about $355,000 in dividends, Treasury Department data show. It was the eighth bank that received funds under the Troubled Asset Relief Program to have failed or filed for bankruptcy. The eight banks are among 164 TARP recipients that have failed to pay quarterly dividends to Treasury, according to a tally by Linus Wilson, an assistant professor of finance at the University of Louisiana at Lafayette. The failure of First National Bank of Davis is expected to cost the deposit insurance fund $26.5 million; the failure of Legacy Bank is expected to cost $43.5 million. The 157 bank closures last year topped the 140 shuttered in 2009. It was the most in a year since the savings-and-loan crisis two decades ago. The FDIC has said that 2010 likely would be the peak for bank failures. Already this year the pace of closures has slowed: By this time last year, regulators had closed 30 banks. The 2009 failures cost the insurance fund about $36 billion. The failures last year cost around $21 billion, a lower price tag because the banks that failed in 2010 were smaller on average. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three were closed in 2007. The growing number of bank failures has sapped billions of dollars out of the deposit insurance fund. It fell into the red in 2009, and its deficit stood at $7.4 billion as of Dec. 31. The number of banks on the FDIC’s confidential “problem” list rose to 884 in the final quarter of last year from 860 three months earlier. The 884 troubled banks is the highest number since 1993, during the savings-and-loan crisis. The FDIC expects the cost of resolving failed banks to total around $52 billion from 2010 through 2014. Depositors’ money – insured up to $250,000 per account – is not at risk, with the FDIC backed by the government. That insurance cap was made permanent in the financial overhaul law enacted in July.

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Japan’s earthquake shakes market, STOXX Europe 600 slashes this year’s advance

March 11, 2011

Japan’s earthquake shakes market, STOXX Europe 600 slashes this year’s advance

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Retail Watch: Big Lots Rolling Out More Stores in Higher-End Locations

March 9, 2011

Big Lots Inc. is boosting its plans for new store openings this year, looking to spend $50 million to cover opening 90 new stores. That would be 10 more new stores than opened last year. And more so than in the past couple of years, the discount retailer is looking at opening in higher-end locations. Speaking on an investor call this past week, Charles W. Haubiel II, legal and real estate, general counsel and corporate secretary for the discount…

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Traction Hires Nellie Newman to Lead Client Services

March 8, 2011

SAN FRANCISCO, CA–(Marketwire – March 8, 2011) – Nellie Newman has joined Traction, an advertising agency and innovation consultancy in San Francisco, as Director of Client Services. The agency has experienced rapid growth in the wake of being named the Interactive Agency of the Year in 2009 by BtoB Magazine and the runner-up for that award in 2010, and services clients such as Adobe, Shutterfly, and Intuit.

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