Archive for the 'all' Category

14
Mar

Retail sales rise as shoppers fight winter blues

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WASHINGTON (Reuters) – U.S. retail sales rose unexpectedly last month despite heavy snow storms that were thought to have kept shoppers at home and bolstered hopes of a sustainable economic recovery.

Optimism about Friday's report was tempered by a slip in consumer confidence early this month. Worries about stubbornly high unemployment held back sentiment, even though the economy appears to be on the cusp of creating jobs.

"The manufacturing recovery is starting to broaden out to the key consumer area of the economy. Consumers are keeping up their end of the bargain to ensure the recovery from recession is a sustainable one," said Chris Rupkey of the Bank of Tokyo-Mitsubishi in New York.

Sales rose 0.3 percent, the Commerce Department said, as consumers bought an array of goods from necessities to luxury items. Analysts had expected sales to slip 0.2 percent. January sales, however, were revised down to a gain of 0.1 percent from the previously reported 0.5 percent rise.

U.S. stocks initially rose on the retail sales data but lost steam, and major indexes ended flat on the surprise drop in consumer confidence. U.S. government debt prices rose as investors focused on the weak sentiment data, while the dollar tumbled to a one-month low against the euro.

The sales report was the latest in a series of data hinting at building underlying strength in an economic recovery that has been largely driven by government stimulus and a swing toward inventory building by businesses.

Officials from the Federal Reserve meet on Tuesday and are expected to hold overnight interest rates in a range of zero to 0.25 percent and maintain a pledge to keep them ultra-low for an "extended period" to foster a more robust recovery.

Stronger data, however, could spark a lively discussion at the meeting, as some officials have raised concerns about the inflationary impact of keeping rates too low for too long.

Treasury Secretary Timothy Geithner said on Friday the economy was gradually strengthening across the board, but cautioned it would take time to fully recover.

The rise in spending came even as consumers were turning more sour. Thomson Reuters/University of Michigan's Surveys of Consumers' index on consumer sentiment slipped to 72 cash advance to savings account.5 from 73.6 in February. That was below market expectations for 73.6.

LABOR MARKET KEY

Economists, however, warned against placing too much weight on the dip in sentiment, saying it was not a good predictor of future sales. Consumer spending has continued to surprise on the upside even with confidence trending lower.

"What is more important is what happens in the job market and that market is improving. February was distorted by storms, but the underlying trend is up and March will be strong," said Bill Cheney, chief economist at John Hancock Financial Services in Boston.

Sluggish consumer spending had fed worries the economy's recovery from the worst downturn in seven decades could falter when support from government stimulus and the swing in the inventory cycle disappears.

Motor vehicle and parts purchases extended their decline last month, falling 2 percent, likely reflecting a drop in demand by consumers nervous about vehicle recalls by Toyota Motor Corp. Excluding motor vehicles, retail sales rose 0.8 percent, building on a 0.5 percent rise the prior month.

Even more encouraging, core retail sales — which correspond most closely with the consumer spending component of the government's gross domestic product report — increased 0.9 percent after rising 0.6 percent in January.

"This implies that personal consumption is on track to exceed 2.0 percent for the first quarter of the year and bodes well for a greater than 3.0 percent print on gross domestic product," said Joseph Brusuelas, chief economist at Brusuelas Analytics in Stamford, Connecticut.

A second report from the Commerce Department showed business inventories were unchanged in January after falling by 0.3 percent in December.

Inventories are a key component of gross domestic product changes over the business cycle and a sharp slowdown in the pace of inventory liquidation handed the economy its fastest growth rate in six years in the fourth quarter.

(Additional reporting by Glenn Somerville in Washington and Caroline Valetkevitch in New York; Editing by Chizu Nomiyama)

Retail sales rise as shoppers fight winter blues

06
Mar

Funds Tied to Madoff Win a Ruling to Stop Suits

By alfredlester Closed
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UBS and Ernst & Young won a court ruling Thursday in Luxembourg, potentially blocking hundreds of claims by investors who had lost money in funds tied to Bernard L. Madoff’s fraud.

Luxembourg’s commercial court said that investors could not bring individual lawsuits for damages. The court said it was up to the liquidators of the funds that invested with Mr. Madoff to seek the “recovery of the capital assets.”

Investors who lost millions of dollars through Access International Advisors’ LuxAlpha Sicav-American Selection fund had filed more than 100 lawsuits against UBS and Ernst & Young for “seriously neglecting” their fund supervisory duties. Luxembourg’s commercial court in April 2009 decided to hear some of the cases to test whether the claims were admissible.

UBS served as the custodian for LuxAlpha. Custodians are responsible for oversight of funds and manage deposits and payments to investors.

“UBS welcomes the clarification of Luxembourg law as expressed by today’s decisions,” Tatiana Togni, a spokeswoman for the bank, said in an e-mail message.

Spokesmen for Ernst & Young in Luxembourg could not immediately be reached to comment. LuxAlpha, which invested 95 percent of its assets with Mr. Madoff, said it had $1.4 billion in net assets a month before Mr. Madoff’s arrest in December 2008. The fund was dissolved and is being liquidated.

Luxembourg is the second-largest mutual fund market after the United States, with about 3,463 registered funds holding 1.84 trillion euros ($2 business cards.5 trillion) in assets.

François Brouxel, who represented investors in four of the test cases and has more than 60 others pending, said he would appeal the court’s finding. He said the ruling “is in direct contradiction with E.U. rules and will have repercussions for the Luxembourg financial market if investors feel they are not protected.”

Mr. Madoff, 71, pleaded guilty last year in federal court in Manhattan and was sentenced to 150 years in prison for using money from new clients to pay earlier investors.

UBS Settles Auction-Rate Case

The Swiss bank UBS agreed on Thursday to buy back $200 million of auction-rate securities and pay a $6.64 million fine to settle charges it misled investors about the debt’s safety.

The accord, reached with the Texas State Securities Board, covers investors left out of an August 2008 nationwide settlement with several regulators in which UBS agreed to buy back $18.6 billion of auction-rate securities and pay a $150 million fine.

That settlement covered investors who held securities in UBS accounts. The state said UBS has to date agreed to buy back $22 billion of auction-rate debt.

Auction-rate debt has interest payments that reset at periodic auctions. Regulators have accused many broker-dealers of marketing the debt as being as safe as cash.

Reuters

Funds Tied to Madoff Win a Ruling to Stop Suits

04
Mar

Greece prepares tax rises, debt continues to mount

By alfredlester Closed
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ATHENS (AFP) – Greece, fighting to avert bankruptcy, was to reveal a third wave of tax rises and welfare cuts on Wednesday to win support from the European Union and a reprieve from debt markets.

Prime Minister George Papandreou, who warned lawmakers on Tuesday that the country faced a "wartime situation", was expected to announce the new draconian measures after briefing President Carolos Papoulias.

The latest round of crisis action is believed to include a two-percent increase in sales tax, a pension freeze, heavier benefit cuts for civil servants and steeper tobacco and fuel duties.

The European Commission, the EU's executive arm, insists that Greeks must sort out their fiscal mess — which includes a public debt of nearly 300 billion euros (407 billion dollars) — before expecting any outside help.

Greece must avoid "a nightmare of bankruptcy in which the state would not be able to pay salaries or pensions," Papandreou told lawmakers in Athens. He said: "We find ourselves today in a wartime situation."

That would create a huge headache for its European partners which are alarmed that Greece's problems could cause lasting damage to the credibility and discipline which underpin the eurozone. Related article:EU unveils 2020 vision

Greece needs more than 20 billion euros (27 billion dollars) by May to redeem old debt falling due. It also needs to borrow heavily to finance a public deficit which is close to 13 percent of gross domestic product (GDP).

Overall, the government is desperate to improve its downgraded credit rating and thereby reduce the crippling interest rate, currently slightly above 6.0 percent, which it has to pay to borrow from international investment funds.

And time is short. Papandreou has said that financing needs are assured until the middle of March.

A total of 54 billion euros will have to be raised this year to cover the public deficit which has swollen way beyond the three-percent EU limit make quick cash. Moody's rating agency has estimated that about 15 percent of tax revenues will be absorbed by debt charges this year.

A team of analysts from the Standard and Poor's rating agency is currently in Athens for talks with Greek ministers.

Meanwhile, the sentiment on financial markets about the course of events in Greece is highly uncertain, although there is a suspicion that if the latest round of measures satisfies EU authorities, some sort of support for Greece may emerge in the next week or so.

A Greek official told Dow Jones Newswires that Athens would issue a 10-year bond to raise between three and five billion euros "within days of the announcement of the austerity package."

And economist Neil MacKinnon at VTB Capital told AFP that a rescue "has to be agreed, whether it is some sort of loan package contingent on evidence of Greek budget cuts or debt purchases by EU governments and/or state owned entities or some sort of debt guarantees."

The Greek prime minister flies to Berlin on Friday for talks with German Chancellor Angela Merkel, widely regarded as holding the key to any eurozone bailout.

Papandreou has undertaken to use the crisis to restructure the economy, and cure Greece of decades of fiscal mismanagement and deeply entrenched corruption, but statistics released on Tuesday show that he faces a titanic reform task as bribery is on the rise.

The local branch of Transparency International said that bribes last year rose by 50 million euros from 2008 to 790 million euros (1.1 billion dollars), paid to all parts of the economy, from hospitals to tax officials.

Greece prepares tax rises, debt continues to mount

02
Mar

Dividends on the rise after worst-on-record year

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CHICAGO (MarketWatch) — After 2009 saw companies slashing or eliminating dividend payouts left and right, many American firms are beginning to cautiously reinstate — or even raise — theirs in this period of assumed recovery.

While shareholder payouts still lag versus 2008’s, more than a dozen of the S&P 500 have raised or initiated a dividend this year, while only two have decreased or suspended them. And the firms now offering higher payouts represent a wide range of industries, from Coca-Cola to Tiffany and P.F. Chang’s to T. Rowe Price .

And there could be more to come.

“We expect dividend payments to rebound in 2010, including those from the financial sector, as dividends are reinstated, since some companies now have both the ability and incentive to pay dividends,” said Jeffrey Kleintop of LPL Financial Research. “In the current environment, a boost to the dividend payment may signal more confidence in sustained growth by business leaders than their guidance on the earnings outlook, helping to lift stock prices along with the dividend payout.”

That comes after an especially rough spell as “the past two years have been tough on dividends,” Kleintop added. “In fact, 2009 marked the worst year on record for dividends since 1955, resulting in a 21% decline in dividends per share for the S&P 500 companies as a whole.”

In 2008 and 2009, 32 S&P 500 companies suspended their dividends, while only 11 initiated them, but 49 have raised or initiated dividends so far this year. One of the latest is Qualcomm , which announced late Monday that that its quarterly dividend would increase almost 12% to 19 cents a share.

‘2009 marked the worst year on record for dividends since 1955.’

Jeffrey Kleintop, LPL Financial Research

“The strength of our business model is enabling significant investments in our strategic business initiatives while returning capital to stockholders,” said Paul Jacobs, chief executive of the wireless-technologies firm, in announcing the hike. “Since commencing this program in 2003, we have returned $12.6 billion to our stockholders through a combination of dividends and stock repurchases payday advance online.”

For the month of February alone and for all reporting issues — not just the S&P 500 — dividend increases are up 29% from February 2009, although they’re still down 42% from February 2008, noted Howard Silverblatt, senior analyst at S&P Indices.

Regulatory deja vu

The SEC enacts a new rule limiting short sales, after finding an even stricter version ineffective in 2007. Dennis Berman and Evan Newmark discuss the shift.

“February is typically a good month, and this one has come through,” he said. “Actual cash payments are still down year-over-year, but at least it’s starting to go back up.” He added that he expects it will “most likely [be] 2012-13 until we reach 2008 levels.”

For the S&P 500, “it is the best month in two years, with a very impressive three-month run,” he continued. “I expect more good news, but not as much of it over the next few months; I also expect reductions to start next month.”

Josh Peters, editor of Morningstar’s DividendInvestor, said dividends “really bottomed out last summer after a spate of cutting we hadn’t seen since the Great Depression,” including one from Dow Chemical , for the first time in 97 years. At the same time, he noted that some of the mote stable consumer-focused companies, like McDonald’s and General Mills , “continued to raise theirs even during the crash.”

But over the last couple of months, “we have seen less-traditional payers deciding to raise their dividends,” including retailers, restaurant chains and tech firms, he said. “And assuming we don’t tip back into a double-dip recession, we should continue to see more dividend increases than cuts.”

Many companies will have to do so just to stay competitive against other issues in the stock market, he said, especially as more and more Baby Boomers near retirement.

“They have learned that stock prices don’t just go up, and they will want the reliable income,” Peters said. “Compared to 10 years ago, the idea of trying to live off capital gains is truly frightening.”

Dividends on the rise after worst-on-record year

28
Feb

James River Coal 4th-quarter loss narrows

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RICHMOND, Va. – Coal mining company James River Coal Co. said Friday that its fourth-quarter loss narrowed, but the company said its results were hurt by lower rates of production at its mines.

The company also put out 2010 guidance that came up short of analyst expectations.

James River Coal said it lost $3.2 million, or 12 cents per share, compared to a loss of $33.6 million, or $1.26 per share, in the year-earlier quarter.

The company sold $149.5 million worth of coal during the quarter, up from $140.8 million in the 2008 fourth quarter. But company executives said that they were forced to reduce production because of soft coal markets business cards.

Analysts surveyed by Thomson Reuters expected earnings of 44 cents per share on sales of $175.4 million.

For 2010, the company projects earnings of $1.70 to $2.25. That is below the analyst consensus view of $2.93 per share.

James River Coal earned $51 million, or $1.85 per share, for all of 2009.

Shares of the company fell $1.09, or 6.4 percent, to close at $15.91.

James River Coal 4th-quarter loss narrows

26
Feb

A.I.G. Reports a Loss and Increases Its Reserves

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The American International Group, the insurance giant, said Friday that it lost about $11 billion last year, and cited a rebound in annuities sold by its renamed life insurance companies as a bright spot.

The insurer’s year-end result was a small fraction of the record-breaking loss of $61.7 billion that it reported for 2008, when its large derivatives portfolio blew up, leading to a government bailout. Most of the 2009 loss came from a fourth-quarter charge taken to reflect that its bailout had been restructured — a one-time charge that A.I.G. has been warning about for months. The charge was not connected with the company’s core insurance operations.

But a big part of the loss was directly related to its insurance activity — A.I.G. increased its reserves on the advice of its outside actuaries. The move seemed to vindicate a study by the Sanford C. Bernstein research firm last November, which found a big shortfall in A.I.G.’s reserves for its property and casualty businesses. Those businesses have been renamed Chartis and are expected to be A.I.G.’s backbone.

Insurance companies set aside reserves to pay claims that they anticipate, and when they have to strengthen inadequate reserves, they take money from earnings. The Bernstein analyst, Todd R. Bault, had predicted that A.I.G. would have to “take some kind of a reserve charge” before it could offer Chartis’s shares to investors, as part of the company’s plans to restructure and pay back its government bailout.

For the fourth quarter alone, A.I.G. lost $8.87 billion, or $65.51 a share. That compared with a loss of $458.99 a share in the period a year ago. Analysts surveyed by Thomson Reuters forecast a loss of $3.94 a share.

A.I.G. said that $2.7 billion of its loss, on a pretax basis, came from increasing its reserves. Much of the increase took place in the fourth quarter, after an annual study showed a deficit in the amounts needed to pay workers’ compensation and other commercial claims that are gradually coming due on policies sold in 2002 and earlier.

Mr. Bault had reported that A.I.G.’s reserves seemed inadequate for its workers’ compensation and other types of insurance where claims take a long time to develop. But he said the deficit appeared to be much larger, estimating it at $11.9 billion. A.I.G. said the increase in reserves left Chartis with a surplus of $27 billion, 4 percent more than its surplus in 2008.

The chief executive, Robert Benmosche, said in a statement: “Our team has made great progress during the year in executing our strategic restructuring plan.”

In addition to strengthening the insurance companies, he cited the progress made in winding down A.I.G.’s derivatives business, and “positioning certain businesses for sale.”

A.I.G. has announced that it will sell shares in its biggest international life insurance company, the American International Assurance Company Ltd online pay day loans., on the Hong Kong stock exchange sometime this year. It has also been negotiating the sale of another large international life insurance company, known as Alico, to MetLife. The talks have proceeded slowly because of questions about a possible tax liability and who would pay it.

The first $25 billion in proceeds from those two transactions are to go to the Federal Reserve Bank of New York, to pay back part of the cost of rescuing A.I.G.

Already, A.I.G. had replaced $25 billion of rescue debt to the New York Fed with $25 billion of equity, an investment which will pay off when the sales of the two foreign life insurers go through. The debt-for-equity swap lightened A.I.G.’s debt burden, averting a credit downgrade that loomed in the first quarter of 2009, when the company announced its disastrous 2008 results.

The company said $5.2 billion of its year-end pre-tax loss was the result of eliminating the $25 billion of debt to the Fed. It has been carrying the lending commitment as an asset on its balance sheet, but was able to speed up the amortization of the so-called commitment asset, leading to the $5.2 billion pre-tax charge.

In addition, A.I.G. paid the New York Fed $5.2 billion of interest on its rescue loans over the course of 2009.

Another big factor in A.I.G.’s losses for 2009 was the pending sale of yet another foreign life insurance company, the Nan Shan Life Insurance Company, of Taiwan. Although the sale has not yet closed, A.I.G. said it had recognized a $2.8 billion pretax loss on the sale in the fourth quarter.

In his statement, Mr. Benmosche said his team was “increasingly confident in how we see the mix of A.I.G.’s businesses over the long term.”

He said the “nucleus” would consist not only of Chartis but of “a strong U.S. life and annuity operation and several other businesses,” which he did not identify. In the months immediately after A.I.G.’s rescue, its interim chief executive, Edward Liddy, had spoken of selling the company’s domestic life insurance companies.

Since then, the life insurance companies have been renamed and at least some of them have emerged as significant sources of cash for A.I.G. Mr. Benmosche cited in particular a subsidiary once called A.I.G. Annuity, which last year reverted to the name it used before A.I.G. acquired it, Western National.

Under the new name, Western National has reclaimed its former position as the largest seller of single-premium fixed annuities in banks. Some banks had suspended the sales immediately after the bailout, but in the second half of 2009 the sales were resumed. Demand was strong because the annuities, which are not insured by the F.D.I.C., have offered customers more interest than similar bank deposits.

A.I.G. Reports a Loss and Increases Its Reserves

26
Feb

Visteon turns in 4Q profit

By alfredlester Closed
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VAN BUREN TOWNSHIP, Mich. – Auto parts supplier Visteon Corp. posted a fourth-quarter profit Friday, helped by cost-cutting moves and the hints of a recovery in the global auto industry.

Visteon said it earned $276 million, or $2.12 per share, after a loss of $346 million, or $2.67 per share in the year-ago quarter. The 2008 quarter was affected by a $200 million charge related to its business making interior parts for vehicles.

Sales grew 23 percent to $2.03 billion. The company said sales improved across all major regions where it sells parts, a trend Visteon said was a sign that industry and broader economic conditions are getting better.

Visteon, the top supplier to and a former subsidiary of Ford Motor Co sears kerosene heaters., filed for Chapter 11 bankruptcy protection in May following a sharp downturn in the U.S. market for cars and trucks. However, overall sales began to pick up last in 2009.

Cost-cutting measures from Visteon’s restructuring also helped the quarterly results. That included a $133 million gain from terminating some employee benefit programs.

For all of 2009, Visteon earned $184 million, or 98 cents per share.

Shares of Visteon, which trade on over-the-counter markets, more than doubled in morning trading, rising 7.6 cents to nearly 14.8 cents per share.

Visteon turns in 4Q profit

Hot News: Royal Bank of Scotland loses $5.5 billion in 2009

25
Feb

Asian Shares Falter on Concerns About U.S. Economy

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SINGAPORE — A tepid rally in Asian shares faltered early on Thursday and the dollar rose after the Federal Reserve chairman Ben Bernanke’s reaffirmation of an extended period of low U.S. rates boosted risk-seeking but also raised some concerns about global growth.

The Nikkei 225 average in Japan rose initially, helped by exporters like Canon and as Toyota Motor reversed most of its losses of the past two days after its chief apologized to consumers and pledged reforms to skeptical U.S. lawmakers at Congressional hearings. Toyota’s U.S.-listed shares jumped 3.9 percent.

But a more than 2 percent slide in Denso Corp. weighed on the broader Tokyo market after authorities said the FBI has raided three Detroit-area Japanese auto parts makers for a sealed federal antitrust investigation, including the Toyota suppliers Denso and Tokai Rika.

“The market welcomed a rebound in U.S. stocks after news that the country will continue its low rate policy,” said Yutaka Miura, a senior technical analyst at Mizuho Securities. “But we’ve seen a series of worse-than-expected economic data from America lately and uncertainty about the outlook for the U.S. economy is increasing.”

The MSCI Asia excluding Japan index fell 0.43 percent by midday, and sectors that fell the most were industrials and technology.

The Nikkei closed 0.95 percent lower.

A report on U.S. new home sales on Wednesday highlighted the Fed’s predicament. Sales slumped more than 11 percent to a record low, suggesting the sector at the center of the financial crisis had yet to fully heal.

Mr. Bernanke’s assessment of the economy was also grim, further curbing the speculation of quicker policy tightening that had been spurred by the Fed’s raising of the discount rate last week.

He also said a weak job market and tame inflation warrant low interest rates for “an extended period,” making clear that policy tightening is some time away, which helped the Dow Jones Industrial average rise 0 best humidifiers.89 percent.

The dollar fell initially in Asia but the trade-weighted index soon recovered to 80.96.

Gold was at $1,096 an ounce, far from a the previous day’s high of #1,107.95.

Oil prices also hovered just above the $80 mark but were also off the previous day’s highs at $80.45, a level hit when stock markets rallied on the back of Mr. Bernanke’s remarks despite a bearish report showing a build up in U.S. crude stockpiles.

The euro stayed weak at $1.3483, paring further the gains it had made soon after Mr. Bernanke’s remarks and heading closer to a nine-month low of $1.3442 struck last week.

Worries about a possible downgrade of Greece weighed on the European single currency, pushing it down from above $1.36 on Wednesday.

Standard and Poor’s said it may cut Greece’s BBB+ rating by one or two notches within a month, citing downside risks to growth that could hinder the country’s deficit-cutting plans.

“The Greek situation remains fluid. So acrimonious discussions between Athens and Brussels could easily result in further near term euro slippage,” Citigroup said in a note.

But Citigroup also said that with euro net short positions at a record high, any positive news from Greece in the coming weeks could lead to a bounce in the single currency.

The euro has lost over 10 percent since late November as fiscal woes in Greece intensified in the past few months leading to a huge sell-off by investors.

Reuters

Asian Shares Falter on Concerns About U.S. Economy

Hot News: Targets 4Q profit rises 53.7 percent

19
Feb

Fed’s Move Prompts Drop in Asian Stocks, but Dollar Rises

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HONG KONG — Stock markets in the Asia-Pacific region fell on Friday after the U.S. Federal Reserve increased the rate on loans made directly to banks, as the move reminded global investors that the era of cheap money was gradually drawing to a close.

The U.S. currency continued its recent rise against the euro, trading at around $1.35 by mid-morning in Asia, its strongest level against the European single currency in nice months.

Oil and other commodities fell because they are sensitive to higher interest rates, which can tame economic growth. Crude oil prices were down 1 percent at around $78.20 per barrel.

Gold, which tends to sag when the dollar rises and inflation threats recede, eased to $1,107 an ounce.

The Fed’s move, announced after the close of trade in the United States was seen as the first significant step by the Fed to start exiting some of the extraordinary stimulus measures that were announced as the global financial crisis began to escalate in late 2008. It does not affect the benchmark fed funds rate — the rate at which banks lend to each other overnight that determines the cost of borrowing for normal consumers and businesses. That rate remains at a record low.

However, Thursday’s announcement by the Fed prompted investors to focus on an eventual rise in the fed funds rate as confidence in the U.S. economy’s gradual recovery takes hold.

“The move indicates confidence in market stability and economic recovery and will make it easier to raise the Fed funds rate target,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets in Hong Kong in a note no faxing pay day loans.

The Nikkei 225 index in Tokyo eased 0.7 percent by late morning, with the Japanese Finance minister, Naoto Kan, saying the Fed’s move was unlikely to hurt the Japanese economy.

The benchmark Kospi index in Seoul fell 1 percent, and in Hong Kong the Hang Seng index dropped 2.0 percent.

In Singapore, the Straits Times index in Singapore was 0.5 percent lower in morning trade. In a sign that the Asian region is recovering more quickly than the United States and Europe, the Singapore authorities on Friday said they expected the country’s economy to expand by between 4.5 percent and 6.5 percent this year, more than previously forecast. Last year, Singapore’s economy shrank by 2 percent.

The stock market in Australia, whose economy has been powering ahead thanks in large part to voracious appetite for its natural resources from China, slipped 0.3 percent, amid indications that the central bank there will continue to raise interest rates as economic conditions improve.

The markets in mainland China, Taiwan and Vietnam are closed all week for the Lunar New Year holiday.

The Fed’s increase in its so-called discount rate was by a quarter of a percentage point, to 0.75 percent from 0.50 percent, and is effective Friday.

Fed’s Move Prompts Drop in Asian Stocks, but Dollar Rises

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12
Feb

Michelin posts 71 pct drop in 2009 profit

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PARIS – French tire maker Michelin on Friday reported a 71 percent drop in earnings last year as auto markets slumped, and said it is “vigilant” for the year ahead.

Michelin posted a net profit of euro104 million ($143 million), less than the euro357 million earned last year. Revenues declined 9.8 percent to euro14.8 billion.

Like auto maker Renault SA, Michelin, which is based in Clermont-Ferrand, France, achieved its aim of generating positive free cash flow at the year end to help it ride out the crisis.

Michelin had a positive free cash flow — the funds a company is able to generate after maintaining or expanding assets — of euro1.4 billion compared to a negative euro359 million in 2008 after it ran down inventories and reduced capital expenditure.

In 2010, Michelin is again targeting positive free cash flow.

Chief Executive Officer Michel Rollier said Michelin has “improved its major financial metrics, the foundations of its future growth” as it responded to a “historic decline in tire demand, especially in mature economies paydayloan.”

Looking ahead, he said Michelin is exercising “extreme vigilance.”

Michelin said markets for car and light truck tires fell sharply in the first half as carmakers slashed production and cut inventories, but lifted in the second half thanks to government scrappage schemes.

The exception was China, were demand surged 65 percent, making the country the largest market ahead of the United States for the first time.

Demand for truck tires remained low, the company said.

Michelin posts 71 pct drop in 2009 profit

Hot News: Rates on 30-year mortgages average under 5 pct

09
Feb

Feds Bullard: May see asset sales late 2010

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WASHINGTON (Reuters) – The Federal Reserve could sell some assets later this year in an effort to whittle down its bloated balance sheet to avoid inflation, a senior Federal Reserve official said on Monday.

The Fed's purchases last year of longer-term Treasuries and other debt, undertaken to help revive the economy, were financed by adding cash to the financial system. But leaving large amounts of cash sloshing around as the economy strengthens risks fueling inflation.

"Maybe you get in the second half of 2010 or something like that, if things are going pretty well, maybe then you'd sell a little bit at that point and you'd try to see how the market reacts," St. Louis Federal Reserve Bank President James Bullard told Reuters in an interview.

The U.S. central bank should try to get its balance sheet, which has ballooned by more than $1 trillion, down to a normal size before the next recession strikes to ensure it has the ammunition it needs to counter a downturn, Bullard said.

After the Fed slashed interest rates to near zero in late 2008, it launched a buying spree that also included mortgage-backed securities and debt issued by housing finance agencies to provide further support for the economy.

SALES BEFORE RATE HIKES

Bullard, who is a voting member on the Fed's policy-setting panel this year, said his preference would be to begin selling some assets before raising interest rates, although he said not all Fed policymakers were likely to see it his way.

He said the idea would be not only to get the balance sheet back to a pre-crisis size, but to return it to holdings of mostly U.S. Treasury securities.

The St. Louis Fed chief has long been an advocate of more actively managing the Fed's assets — either by selling them or by leaving open the option of buying more if the economy stumbles anew. The consensus view at the Fed favors shuttering the purchase programs as planned and relying on rate hikes initially to tighten financial conditions.

However, with an economic recovery seemingly on track, Bullard made clear officials had begun to debate how best to normalize the Fed's balance sheet. Fed Chairman Ben Bernanke could shed more light on the central bank's plans in congressional testimony on Wednesday.

Bullard said markets would be disrupted if they came to believe the Fed was planning large-scale sales of mortgage-backed securities. However, he said the idea of gradual sales as a strategy is under discussion.

"Selling has more sympathy than you might think free credit report online. It's more a question of timing and speed," Bullard said.

"You'd kind of want the situation to be back to normal in some kind of time frame before the next storm comes for the economy so that at that point you'd have a fresh set of tools and you can react at that point," he said. "There will be a lot more discussion going forward about how exactly to do this."

INFLATION EXPECTATIONS SEEN RISING

The Fed's unprecedented policy actions helped lift the U.S. economy out of its deepest downturn since the 1930s. After contracting for four straight quarters, the economy grew at a 2.2 percent annual rate in the third quarter of last year and a 5.7 percent pace in the final three months of the year.

Bullard said the economy should grow at an annual rate above 3 percent in the first half of this year, adding that unemployment may have peaked. The U.S. jobless rate dropped to 9.7 percent in January from 10 percent in December.

The Fed is scheduled to wrap up its purchases of $1.43 trillion in mortgage-related securities by the end of next month. The program was undertaken to lower mortgage rates and prop up the struggling housing market.

Bullard said he does not expect a substantial jump in mortgage rates when the program ends, as some fear.

"I think it will be seamless," he said.

Further emphasizing his concerns about preventing inflation, Bullard said inflation expectation are at or above the Fed's implicit target range. Central bankers lay great stress on holding inflation expectations in check because they believe doing so is key to keeping inflation at bay.

"If the data keep coming in as expected and the economy keeps improving, then those will continue to ratchet up unless the central bank sends some signals that, 'No, we intend to keep inflation close to target,'" he said.

Bullard said that if the rise in inflation expectations began to look troubling, the Fed could discard its pledge to hold interest rates exceptionally low for an extended period, even if unemployment remained high.

"We know that the expectations are very important to how these things evolve, and so if those started to get out of hand, we really have to come back in and send a signal to the market," he said. "It would trump everything."

Fed’s Bullard: May see asset sales late 2010

01
Feb

News Analysis: Is the Day of Tiny Ads Finally Here?

By alfredlester Closed
Categories: all, business, economic, news and online
Tags: , , , ,

Every year around this time, a few brave forecasters declare that advertising on mobile devices is poised to become the next big thing in marketing. And every year, the results disappoint.

But this year, with technology powerhouses like Apple and Google introducing whole new mobile devices and buying up ad firms specializing in the small screen, the forecasts may finally be right.

By now, the sales pitch is familiar: The mobile phone offers advertisers all the benefits of traditional Internet ads, including the ability to track their effectiveness. And it lets marketers reach consumers on the go, on a gadget they clutch intimately.

Why, then, according to Juniper Research, did worldwide spending on mobile advertising last year amount to only $1.4 billion — less than one third of one percent of total ad revenue?

For one thing, some marketers remain wary about trying it, for fear of annoying consumers by intruding on their personal space. A technical toolbox poorly equipped to work with small screens has also hurt; after all, banner ads the size of thumbnails don’t make a big impression.

Industry analysts say that now, with the introduction of Apple’s iPad tablet, an entirely new approach to mobile ads could be near.

That is because the iPad, a cross between a laptop and an iPhone, looks more like an iPhone from an ad perspective. It does not support Adobe Flash, the software used for much PC-based advertising. So, to make their ads available to iPad users, marketers may have to develop new kinds of ads, rather than simply adapting existing Web ads no faxing payday loan.

Apple, seeing big potential in mobile advertising, recently agreed to acquire a specialist in that business, Quattro Wireless. That followed a deal by Google to buy one of the largest players in the field, AdMob. The combined $1 billion-plus cost was of a scale not previously seen in the world of advertising on the tiny screen.

“It’s a pretty exciting time for the market,” said Oliver Roxburgh, managing director of the British operations of YOC, a mobile ad agency. “It’s starting to grow up a little.”

Mr. Roxburgh’s enthusiasm has been buoyed by the efforts of Apple and Google and is shared by a growing chorus of industry experts.

Indeed, Windsor Holden, a principal analyst at Juniper Research, predicts that mobile ad spending worldwide will more than quadruple, to $6 billion, by 2014. And he does not shrink from the prediction.

“Everybody has been hoping for about the last five years that the next year would be the one when mobile advertising takes off,” Mr. Holden said. “There are a number of pointers to the possibility that this will be the year when we get some significant traction.”

News Analysis: Is the Day of Tiny Ads Finally Here?

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