World Business News Headlines for January 27, 2009

Standard Life locks in investors

The insurance company Standard Life has become the latest to delay investors taking money out of its property funds.
Source: BBC News | Business | World Edition | 27 Jan 2009 | 1:06 pm

Verizon net profit grows but wireless slows (Reuters)

Reuters - Verizon Communications Inc's quarterly net profit rose, but growth in its mobile phone business slowed and traditional wireline customers continued to disconnect as the recession took a toll.
Source: Yahoo! News: Business | 27 Jan 2009 | 1:05 pm

Earnings Watch: Updates, advisories and surprises

A roundup of the latest corporate earnings reports and what companies are saying about future quarters.

Source: MarketWatch.com - Top Stories | 27 Jan 2009 | 1:01 pm

The Death Of The Old Home Phone Keeps Hurting Verizon

Verizon (VZ) is just like any other big telecom company around the world. The death of the old home phone keeps holding it back as the firm's fourth quarter revenue showed.

The traditional "landline" on which all of the modern telephone firms were built is being replaced by cellphones, VoIP, fiber, and cooper each of which can carry a voice from Beijing to London to New York, and carry it cheaply.

Landline revenue was off 2.7% in the last quarter of 2008 to $11.9 million. The figure would have been worse if DSL, fiber-to-the-home and business data sales were not added as part of the numbers.

What large telephone companies are gaining with cellular service is being eroded by the legacy business which cannot be maintained. Verizon's domestic wireless business grew 12% in the fourth quarter to $12.8 billion, but overall revenue for the period was up less than 5%. To increase the challenge that Verizon has, its wireless growth is slowing, according to Reuters.

With cellular phone penetration in the US starting to reach a limit, the question is becoming what happens when everyone has one cellphone or two. The answer Verizon, AT&T, and Sprint would give is that they are making more and more on wireless data traffic and video. That may keep their top-lines moving up, but if the erosion of home phone use picks up speed, the race with wireless service may become nothing more than a draw.

Telephone operations will be faced with the same issue for a least a decade.Their ancient operations are a boat anchor.

Douglas A. McIntyre

Source: 24/7 Wall St. | 27 Jan 2009 | 12:59 pm

Hershey net income climbs, sales edge up

SAN FRANCISCO (MarketWatch) -- Hershey said Tuesday fourth-quarter net income rose by 50%, as sales edged up and its chocolate business weathered the economic downturn better than many.

Source: MarketWatch.com - Top Stories | 27 Jan 2009 | 12:58 pm

Recession realities: Going back to school

Landing a new job in this withering economy may require a stop in school first.
Source: Business and financial news - CNNMoney.com | 27 Jan 2009 | 12:56 pm

$825B question: How fast will it work?

President Obama on Tuesday will turn up the heat on his push for an $825 billion economic recovery package when he goes to Capitol Hill to meet with Republicans critical of his plan.
Source: Business and financial news - CNNMoney.com | 27 Jan 2009 | 12:56 pm

Corning to cut 3,500 jobs

NEW YORK (Reuters) - Specialty glass maker Corning Inc said its quarterly profit fell sharply due to a significant decline in demand for glass for televisions and computer monitors, and said it would cut about 3,500 jobs.

Source: Reuters: Business News | 27 Jan 2009 | 12:54 pm

Nomura: record loss

Read full story for latest details.
Source: Business and financial news - CNNMoney.com | 27 Jan 2009 | 12:52 pm

Indications: U.S. stock futures point to rise after AmEx results

U.S. stock futures advance as American Express and Texas Instruments results prove to be as glum as, but not significantly worse, than the market had feared.

Source: MarketWatch.com - Top Stories | 27 Jan 2009 | 12:52 pm

Mostly upbeat start seen for stocks

U.S. stocks appeared set for a mostly higher open Tuesday, as investors looked past economic and earnings gloom, and eyed buying opportunities following the Senate's confirmation of the new Treasury secretary.
Source: Business and financial news - CNNMoney.com | 27 Jan 2009 | 12:51 pm

S&P futures rise, optimism on Geithner helps (Reuters)

Reuters - S&P 500 stock futures pointed to a higher open on Tuesday as hopes for swift action from new Treasury secretary Timothy Geithner to prevent the recession from worsening offset fears of weak earnings.

Source: Yahoo! News: Stock Markets News | 27 Jan 2009 | 12:49 pm

S&P futures rise, optimism on Geithner helps

NEW YORK (Reuters) - S&P 500 stock futures pointed to a higher open on Tuesday as hopes for swift action from new Treasury secretary Timothy Geithner to prevent the recession from worsening offset fears of weak earnings.

Source: Reuters: Business News | 27 Jan 2009 | 12:49 pm

S&P futures rise, optimism on Geithner helps (Reuters)

Source: Yahoo! News: Business | 27 Jan 2009 | 12:49 pm

Currencies: Euro turns lower after reaching one-week highs

The euro sees a volatile Tuesday, initially rising on improved German business confidence data, but then turning lower following suggestions that the European Central Bank may be ready to cut interest rates further.

Source: MarketWatch.com - Top Stories | 27 Jan 2009 | 12:49 pm

Opening Bell: 01.27.09

Senate Confirms Geithner (MarketWatch)
The Senate overlooked a minor tax inconvenience and relative inexperience to pull behind Mr. Geithner late Monday in a 60 to 34 vote. As has been pointed out before, Geithner carries on in the Goldman legacy (even if it is once removed), so there's no worries for the Broad boys. President Obama on Geithner's uniqueness:

"The president believes he [Geithner] has unique experience, unique intelligence and a unique background to tackle the economic crises that we face right now. He will be a tremendous leader,"

A Bad Showing At Nomura Holdings (Reuters)
The Japanese powerhouse showed down $3.8B Q4 on the heels of buying Lehman Brothers' operations, exposure to Iceland, and Madoff.

"Nomura said it would cut some executive bonuses and salaries, not pay a dividend for the current quarter and may sell businesses as it integrates the Asian, European and Middle East operations it bought last year from failed Wall Street bank Lehman Brothers"

Tuesday's Pirate Update (BBC)
The head of the Indian Ocean Tuna Commission is screaming bloody murder over the 30% decrease in Tuna production due to piracy, which (according to some economic law or another) means higher Tuna prices.

Yes, ladies, it appears the damn Pirates are snatching up all the Tuna.

Fannie/Freddie May Have To Seek Additional $51B (Reuters)
Freddie is probably going to have to absorb another $35B (we're going high side here) in preferred capital after its rather large subprime portfolio took another round of losses in its most recent quarter, leaving a paltry $16B for Fannie. The loss will mean that Freddie has still only used about half its initial $100B allowance, though the need tramples the expected needs as predicted by Barclays ($26B).

Paulson & Co. Scores Big On RBS Loss (Bloomberg)
In a move sure to draw ire from some corner of the universe, Paulson has effectively shorted the shit out of RBS for a gain of $420MM over the trailing Quarter (roughly).

"Paulson held a short position of 0.87 percent in Edinburgh- based RBS on Sept. 19, according to regulatory filings. The shares traded at 213.5 pence at the time, and Paulson's disclosure indicates he borrowed almost 144 million RBS shares with plans to buy them back at a lower price. He reduced his short position to less than 0.25 percent, or about 98.6 million shares, as of Jan. 23, according to a filing yesterday."

Source: Dealbreaker | 27 Jan 2009 | 12:46 pm

Stocks point higher as companies show profits (AP)

AP - Wall Street showed some relief Tuesday that big companies like American Express Co. and Texas Instruments Inc. managed to post profits in a difficult recession.

Source: Yahoo! News: Stock Markets News | 27 Jan 2009 | 12:45 pm

Delta Air Lines reports quarterly net loss

CHICAGO (Reuters) - Delta Air Lines , the world's largest airline, reported a quarterly loss on merger costs and fuel hedge losses.

Source: Reuters: Business News | 27 Jan 2009 | 12:43 pm

Delta reports $1.4B 4Q loss

Delta Air Lines lost $1.4 billion in the final three months of last year as it recorded a massive charge related to employee stock awards and wasn't able to fully benefit from the decline...
Source: RSS feed - channel BNewsBusiness | 27 Jan 2009 | 12:42 pm

Corning cuts 3,500 jobs as 4Q profit slumps

Corning Inc. says it is cutting 3,500 jobs, or 13 percent of its payroll, as demand slumps for glass used in flat-screen televisions and computers. The specialty glass maker, the world's
Source: RSS feed - channel BNewsBusiness | 27 Jan 2009 | 12:41 pm

DuPont swings to 4Q loss, lowers 2009 forecast

DuPont Co. reported a $629 million loss for the fourth-quarter, reflecting a hefty restructuring charge, and lowered its earnings forecast for the full year due to weak industrial demand...
Source: RSS feed - channel BNewsBusiness | 27 Jan 2009 | 12:41 pm

Corning to cut 3,500 jobs (Reuters)

Reuters - Specialty glass maker Corning Inc said its quarterly profit fell sharply due to a significant decline in demand for glass for televisions and computer monitors, and said it would cut about 3,500 jobs.

Source: Yahoo! News: Business | 27 Jan 2009 | 12:36 pm

Focus unhappy at credit insurers

Focus says credit insurers have almost completely pulled the cover offered to suppliers of the DIY firm.
Source: BBC News | Business | World Edition | 27 Jan 2009 | 12:35 pm

Pound bounces back above $1.40

The pound rallies slightly against the dollar, pushing back above $1.40, as UK banking shares continue to rise.
Source: BBC News | Business | World Edition | 27 Jan 2009 | 12:35 pm

Delta Air Lines reports quarterly net loss (Reuters)

Reuters - Delta Air Lines , the world's largest airline, reported a quarterly loss on merger costs and fuel hedge losses.

Source: Yahoo! News: Business | 27 Jan 2009 | 12:34 pm

Plavix sales help Bristol-Myers swing to Q4 profit

Strong sales of blockbuster blood thinner Plavix help Bristol-Myers Squibb Co. swing to a big fourth-quarter profit, after hefty charges led to a loss a year ago. Bristol-Myers beats...
Source: RSS feed - channel BNewsBusiness | 27 Jan 2009 | 12:33 pm

Wretched trading continues for retailers

Retailers have continued to suffer wretched trading since the start of the year, the CBI reported this morning.
Source: Latest Business News from Times Online | 27 Jan 2009 | 12:31 pm

Ice Cream Cupcake Inventor MaggieMoo's Ice Cream & Treatery Introduces New Valentine's Day Cupcakes

ATLANTA, Jan. 27 /PRNewswire/ -- MaggieMoo's Ice Cream & Treatery has announced that it will expand its line of signature ice cream cupcakes. The brand is known as the...
Source: RSS feed - channel BNewsBusiness | 27 Jan 2009 | 12:26 pm

Tesco names distribution head as finance chief

Tesco, the UK’s biggest retailer, has appointed Laurie McIlwee as its new finance director to replace Andrew Higginson.
Source: Latest Business News from Times Online | 27 Jan 2009 | 12:25 pm

Canada set for stimulus spending

Canada's minority Conservative government is to unveil a new budget which it says will boost the slowing economy.
Source: BBC News | Business | World Edition | 27 Jan 2009 | 12:25 pm

Hershey 4Q profit rises partly on pricing actions

Hershey, the nation's second-biggest candy maker, says its fourth-quarter profit increased 51 percent, helped by pricing measures and its Reese's and Hershey's brands. Hershey, Pa.-based
Source: RSS feed - channel BNewsBusiness | 27 Jan 2009 | 12:24 pm

Bankers braced for bitter pill of regulation

DAVOS, Switzerland (Reuters) - Two years ago anyone uttering the words "state" and "regulation" in the same sentence would have been sneered at in high-powered banking circles gathered by the ski slopes of Davos.

Source: Reuters: Business News | 27 Jan 2009 | 12:24 pm

McConnell: Dems have wrong ideas on stimulus plan

Senate Republican Leader Mitch McConell says Democrats are to blame for problems Congress is having in passing an economic stimulus plan. McConnell said Tuesday that President Barack...
Source: RSS feed - channel BNewsBusiness | 27 Jan 2009 | 12:22 pm

DuPont posts fourth-quarter loss, trims 2009 outlook (Reuters)

Reuters - DuPont Co posted a bigger-than-expected fourth-quarter loss on Tuesday, hurt by restructuring-related charges, a widening global recession and a slump in consumer spending, and the chemical maker lowered its 2009 earnings outlook.
Source: Yahoo! News: Business | 27 Jan 2009 | 12:22 pm

DuPont posts fourth-quarter loss, trims 2009 outlook

NEW YORK (Reuters) - DuPont Co posted a bigger-than-expected fourth-quarter loss on Tuesday, hurt by restructuring-related charges, a widening global recession and a slump in consumer spending, and the chemical maker lowered its 2009 earnings outlook.

Source: Reuters: Business News | 27 Jan 2009 | 12:22 pm

Talkback: How is the economy affecting you?

Source: Business and financial news - CNNMoney.com | 27 Jan 2009 | 12:21 pm

Top Pre-Market Analyst Upgrades (ARMH, BIIB, CAT, CVH, HCBK, LEN, MOH, TTEK)

These are some of the top analyst upgrades and positive research calls we have seen from Wall Street analysts with more than two hours until the market opens this Tuesday morning:

ARM Holdings (ARMH) Raised to Buy at UBS.
Biogen-Idec (BIIB) Raised to Buy at Goldman Sachs.
Caterpillar (CAT) Raised to Neutral from Sell at UBS.
Coventry Health Care (CVH) Raised to Outperform at Wachovia.
Hudson City Bancorp (HCBK) Started at Overweight at Barclays.
Lennar (LEN) Raised to Buy at Citigroup.
Molina Healthcare (MOH) Raised to Neutral at Goldman Sachs.
Tetra Tech Inc. (TTEK) Started as Buy at Piper Jaffray.

Jon C. Ogg
January 27, 2009

Source: 24/7 Wall St. | 27 Jan 2009 | 12:21 pm

London Markets: Oil producers, mineral extractors decline in lower London

London shares decline on Tuesday, with losses from mineral extractors pressuring the top index, although banks manage to extend gains from the previous session.

Source: MarketWatch.com - Top Stories | 27 Jan 2009 | 12:21 pm

Honda slashes output in Japan and North America

Honda Motor Co. said Tuesday it would roll back production further in Japan and North America but step up output in China, where demand is still growing despite the global economic crisis.
Source: RSS feed - channel BNewsBusiness | 27 Jan 2009 | 12:19 pm

Top Pre-Market Analyst Downgrades (ADTN, AFL, CBS, DDUP, ENR, INWK, PCS, PTRY, RGLD, SYK)

These are some of this Tuesday's top pre-market analyst downgrades and cautious research calls from Wall Street that we have seen with more than two hours until the opens:

ADTRAN (ADTN) Started as Equal-Weight at Barclays.
AFLAC (AFL) Cut to Hold at Deutsche Bank.
CBS (CBS) Cut to Underperform at Bernstein.
Data Domain (DDUP) Started as Sell at Broadpoint AmTech.
Energizer (ENR) Cut to Sell at UBS.
Innerworkings (INWK) Cut to Hold at Jefferies.
MetroPCS (PCS) Cut to Sector Perform ar RBC.
Pantry (PTRY) Cut to Market Perform at FBR.
Royal Gold (RGLD) Cut to Underweight at HSBC.
Stryker (SYK) Cut to Hold at Needham.

Jon C. Ogg
January 27, 2009

Source: 24/7 Wall St. | 27 Jan 2009 | 12:17 pm

WRAPUP 1-Business software makers top forecasts with Q4

HELSINKI/FRANKFURT, Jan 27 (Reuters) - Germany's Software AG on Tuesday joined U.S. business software peers VMWare and JDA Software in delivering forecast-topping fourth-quarter results, saying it had...
Source: RSS feed - channel BNewsBusiness | 27 Jan 2009 | 12:14 pm

UPDATE 1-Lexmark quarterly profit falls

NEW YORK, Jan 27 (Reuters) - Lexmark International Inc said quarterly profit fell sharply due to soft sales of computer printers and ink, and restructuring costs.
Source: RSS feed - channel BNewsBusiness | 27 Jan 2009 | 12:14 pm

Bank bailout could cost $4 trillion

The cost of the bank bailout is likely to be much higher than $700 billion.
Source: Business and financial news - CNNMoney.com | 27 Jan 2009 | 12:14 pm

DuPont Losses Reach Staggering Proportion (DD)

If you thought that the chemicals and materials sector was immune from the recession, guess again. This morning DJIA component DuPont (NYSE: DD) posted a loss for the Q4-2008 period. It might not be a surprise that business slowed to a crawl with sales volumes off roughly 20%, but the outlook here is where it gets interesting.

DuPont's loss here is staggering at $629 million. The company's non-GAAP earnings came in at -$0.28 EPS and its net loss including items came to -$0.70 EPS. According to Thomson Reuters (First Call), analysts were looking for a loss of -$0.24 EPS. The giant also posted more than a $1.1 billion drop in revenues year over year to $5.82 billion, which is also worse than the First Call consensus of $6.17 billion.

DuPont did note the global recession as going through 2009, and that is the launch pad for lower expectations. For the quarter ahead the company sees earnings of $0.50 to $0.70 EPS and First Call has estimates at $0.81 EPS for the coming quarter, so if the rough economy slows even further the company will be way under target. The company sees US sales down 15% and volumes down about 22%.

The earnings slash gets even worse for all of 2009 where it lowered guidance to $2.00 to $2.50 EPS. Its prior earnings guidance range was $2.25 to $2.75 EPS. The analyst community had already ratcheted down those targets sharply to $2.24, which was down from $2.37 a month ago and down sharply from the estimate of $3.22 just a quarter ago.

The company has already been very far behind Wall Street in its guidance targets. It is targeting $730 million in fixed-cost reduction in 2009, but it sees about $1 billion less in working capital as well. There is still a deficit there, and the risk is one where the company could have to catch up to analysts even more. When the community sees how the performance so far has been, you might as well expect the forward numbers and targets to come down from analysts.

What if the company cannot cut its costs as fast as business is slowing? Losses, or lower earnings, could become a trend rather than a one-off quarter. That forward P/E ratio of "roughly 10" may very soon become very cloudy. At best.

Jon C. Ogg
January 27, 2009

Source: 24/7 Wall St. | 27 Jan 2009 | 12:09 pm

DuPont reports loss, trims 2009 forecast

Read full story for latest details.
Source: Business and financial news - CNNMoney.com | 27 Jan 2009 | 12:08 pm

Retail sales 'decline in January'

High Street sales fall for the 10th month in a row in January, a study by the CBI business group finds.
Source: BBC News | Business | World Edition | 27 Jan 2009 | 12:06 pm

Job losses 'would damage UK rail'

Rail unions are urging the government to stop train companies from cutting jobs to save money in the downturn.
Source: BBC News | Business | World Edition | 27 Jan 2009 | 12:01 pm

Siemens net drops 81% after last year's asset sale

German conglomerate Siemens on Tuesday reports an 81% drop in fiscal first-quarter profit after last year’s sale of its automotive electronics arm, but by other measures records a solid quarter behind strong growth at its energy division.

Source: MarketWatch.com - Top Stories | 27 Jan 2009 | 12:00 pm

Creating Jobs Trumps Building Bridges (CAT)(PFE)(TXN)(S)(HD)

It seems impossible that a handful of companies could put nearly 80,000 people out of work in a day. Caterpillar (CAT), Pfizer (PFE), Texas Instruments (TXN), Sprint (S), and Home Depot (HD) did most of the damage. What was not seen in the headlines was the thousands of smaller American firms which also fired people over the same 24-hours. Could 200,000 people across the economy have been put out of work in one day? Of course.

Economists were alarmed that unemployment was increasing by 500,000 to 550,000 people a month in the last four months of 2008. The rate at which that pace is quickening since the beginning of the year is nearly beyond imagining. Will one million people lose jobs in January? The anecdotal evidence would support a number much nearer to that than the 500,000 or so that most analysts have forecast.

There is a powerful argument that the number of people unemployed in the United States could rise by more than 2.5 million people in the first quarter based on the current job situation.. The case that no one wants to mention is that the figure could move above three million.

The economic stimulus bill which should get to the president's desk in a month is meant to save or create 3 million to 4 million jobs over the next 2 years. That is impossible. The unemployment hole is getting too big too fast.

The one criticism of the economic stimulus program which comes from almost every corner of the political, economic, and business worlds is that the plan for creating jobs by building infrastructure may take too long.

Beginning projects for expanding the electrical grid for alternative energy requires everything from relocating workers, obtaining local permits, and drawing up the plans designed by engineers. The goal of the program is noble, as are the goals of creating better access to broadband and building more modern schools. None of these programs can be set up quickly enough help stanch the outflow of jobs.

One of the most direct ways of improving employment, or improving unemployment, depending on how quickly people are being put out of work, is to give businesses direct financial incentives to hire.

Tax cuts and rebates are not incentives, at least in an economy that is sinking this fast. The money takes too long to get from the government to the business operator. The system needs something more direct.

The single most direct option is for the government to pay a portion of the salary of each net new employee a company hires. For the recently unemployed, this could be a boon for earlier reeployment. If a company could use new people for expansion but cannot afford them, having 50% of their first year's salary paid by the federal government gives it the opportunity to grow.. This proposal would allow firms which have let people go to save money, even at the peril of the viability of their businesses, the chance to bring them back.

There are, of course, a number of reasons to object to sharing the cost of new employees at private enterprises. The system is subject to fraud. That is accurate, but if the IRS monitors the wages of the people being hired at least the government would have a reasonably accurate count of workers and what they are paid. Businesses that will lie to the IRS are likely to lie to almost any branch of government. It is in their character..

Another charge against supplementing the costs of adding employees to the private sector is that it is a form of welfare. That is almost entirely true, but so is hiring people to build bridges which could be just as easily constructed in a year, or two years, or five. Underwriting infrastructure construction is no more or less welfare than most other forms of stimulating commerce. A job is a job.

What is clear is that none of the jobs the government is trying to create would exist in a deep recession. The normal course of the economy would get the building of bridges done as the capital became available. The same holds true for adding to the energy grid or creating new broadband wiring. In a stable economy, private enterprise would get around to this work based on private capital seeing a need and potential profit.

The alternative to giving US businesses a direct incentive to start hiring people tomorrow is waiting to see if the stimulus package will work on a grander scale. That would be simpler. Four or five large business sectors would get capital to offer hundreds of thousands of jobs each to create the equivalent of a new economy.

If three million jobs disappear between now and March 31, this waiting will have looked good on paper.

Douglas A. McIntyre

Source: 24/7 Wall St. | 27 Jan 2009 | 11:51 am

Nomura swings to $3.8 billion loss; Madoff, Iceland take toll

Ratings agencies move quickly to either downgrade or put Nomura ratings under review as Japan’s largest brokerage reports a third-quarter loss of 342.9 billion yen ($3.8 billion).

Source: MarketWatch.com - Top Stories | 27 Jan 2009 | 11:42 am

Hedge fund makes £90m on RBS fall

A US hedge fund made a profit of at least £90m ($127m) by correctly betting that shares in struggling RBS would fall.
Source: BBC News | Business | World Edition | 27 Jan 2009 | 11:40 am

Who Buys Sprint (S)? (T)(VZ)(VOD)(DB)

Sprint (S) is probably not a viable standalone company any more. It laid off 8,000 people yesterday and said it may outsource some of its work to cover for the drop in employees.

That is not the worst of it. Sprint is still losing market share to AT&T (T) and Verizon (VZ) (VOD) Wireless Both of those companies are financial stronger than Sprint and most wireless consumers believe that Sprint has poor customer sevice.

On many days, Sprint's stock is below $2. Its 52-week high is almost $11. The company's market cap is down to $7 billion It has $21 billion in long-term debt.

If the recession cuts even further into the number of cellular subscribers that Sprint has, it may end up losing money. Combined with debt service, that puts the company is a position where it either has to consider Chapter 11 or find a buyer.

There are two logical acquirers for Sprint. The first is large Korean telecom company SK Telecom. The other is Deuteche Telekom (DT) which owns the No.4 cellular company in the US, T-Mobile. Putting T-Mobile together with Sprint would create some scale to compete with the two giants in the market.

Buying Sprint has a special benefit for any company that believe that fast 4G wireless will eventuall replace the 3G systems used in the US today. Sprint has the US franchise for WiMax, which is considered one fo the most promising 4G technologies. If it gain customers, it may steal a march on AT&T and Verizon and get give Spint something to use to pick up market share.

Source: 24/7 Wall St. | 27 Jan 2009 | 11:38 am

Sorrell: Learning to surmount the economic problems

The WPP chief blogs for FT.com on what he expects from this year's gathering of the World Economic Forum
Source: Financial Times - US homepage | 27 Jan 2009 | 11:38 am

Microsoft and Yahoo: Deal?

It is conventional wisdom in tech circles that Microsoft and Yahoo will resuscitate talks about combining at least some parts of their businesses now that Yahoo has a new CEO, Carol Bartz.
Source: Business and financial news - CNNMoney.com | 27 Jan 2009 | 11:37 am

Irwin Kellner: The thrill is gone since the Fed sidelined itself

PORT WASHINGTON, N.Y. (MarketWatch) -- Now that interest rates are as low as they can go, will anyone care about what the Federal Open Market Committee says this week?

Source: MarketWatch.com - Top Stories | 27 Jan 2009 | 11:37 am

European markets lower as energy stocks slump (AP)

AP - European markets fell Tuesday as a slump in energy and mining stocks offset the renewed confidence in the financial sector and a small recovery in German business confidence.

Source: Yahoo! News: Stock Markets News | 27 Jan 2009 | 11:36 am

Movers & Shakers: Tuesday's biggest gaining and declining stocks

Among the companies whose shares are expected to see active trade in Tuesday’s session are Allegiant Travel, American Express, Amgen, Campbell Soup, DuPont, IBM, Jacobs Engineering, NetFlix, TI, Travelers and VMWare.

Source: MarketWatch.com - Top Stories | 27 Jan 2009 | 11:36 am

The Death of Formal Earnings Guidance

There is a new trend that has emerged in this earnings season that will have an impact in 2009 and maybe beyond: a lack of earnings and/or revenue guidance. This unravels roughly 9 years worth of transparency for annual targets set by major companies. Many companies and many sectors have never offered guidance. There are actually some benefits here in the art of not providing targets. Like it or not, investors are probably just going to have to get used to this trend.

First and foremost, this trend is emerging more and more from major US companies in more than just the financial sector. Brokerage firm stocks have never really been big in offering forward guidance since their guidance is subject to knowing what happens to the stock, bond, and commodities markets, AND in knowing how well the firms will operate in each segment. Banks have not been big in offering formal guidance for too far out on the curve because it requires knowing just how their investments and loans are going to perform for the months ahead, as well as knowing exactly how the economy and the interest rate cycle are going to work out specifically for each company. We now know just how unsuccessful financial institutions are in judging those issues.

But the shock of "no formal guidance" is spreading. In December, it was General Electric (NYSE: GE) which came out and said it was going to abandon the practice of offering quarter to quarter guidance. This was a marked difference in its prior policy of reiterating guidance, particularly when you consider how many times the firm reiterated guidance in 2005 to 2007.

The spillover has also gone into technology, and the companies which have adopted this are setting the trend that it might now be irresponsible to offer guidance. Intel (NASDAQ: INTC) said it was not going to issue formal guidance, and only provided a one-quarter internal revenue target with expectations for much lower margins. Then a week later, it sent an internal memo to employees warning that it could have its first quarterly loss in two decades.

Microsoft (NASDAQ: MSFT) also lowered guidance, but with no real forward dead-set targets ahead. It even noted the lack of transparency in its lower guidance. Advanced Micro Devices (NYSE: AMD) also came out and just lowered guidance, but not with any formal targets. eBay (NASDAQ: EBAY) does not even look quite as rigid in its own offering of an outlook for a full year or more. Even chip giant Texas Instruments (NYSE: TXN) only gave earnings and revenue guidance for one quarter and that guidance was a very wide range compared to the past, with annual targets only being forecast for certain expense items and internal operating expectations.

Companies like Apple (NASDAQ: AAPL) have been deemed for years as "overly conservative" and "great managers of expectation" and "setting the bar extremely low" in its guidance practice. But now, many investors do not even listen to what the company says, and that is greatly evident in how Wall Street and Main Street have criticized (justifiably) the disclosure practices over the health of superstar-CEO Steve Jobs. The company did offer quarterly guidance there, and Wall Street still took the bait of it being overly conservative. Whether that will continue ahead is an unknown.

There are pros and cons to this practice of dropping formal guidance, even if the investor community wants to know what each company is thinking ahead. Regardless of Regulation F.D., or "REG-FD," not offering guidance is actually in no way a violation of securities laws as long as it is not blatantly withholding factual data. Public corporations are required to inform the investment community in a timely fashion when it learns of material business changes. But most of the required disclosure burden actually falls on the company disclosing this in a manner in which every participant in the investment community finds out this data simultaneously rather than the old days where companies would slip this out to analysts and investment bankers before releasing the data to the public.

The positives are not evident for the public when companies "go dark" with not providing much data on their guidance. But it definitely keeps a company from being boxed in and having to live up to certain targets. This now means that a company might not lose 30% when they are 2% short of revenue or earnings targets.

The negatives are also evident. You can expect that analyst expectations will now start to fluctuate much more widely. This could create a more common scenario where investors are told that a company is a screaming buy by one firm but a screaming sell by another firm. That already occurs, but it could become commonplace.

What the likely outcome will be be is one of more and more uncertainty, and more confusion on interpreting data. Analysts used to not get the forward guidance for a year or more, and the practice of firms giving formal targets eased much of the calculation from research firms. The investment community won't like this lack of transparency. Corporate officers are going to now be able to spend more time running their businesses in difficult times rather than having to spend 20% of their time speaking with the investment community. This practice of no guidance or less and less formal guidance is a trend we are just going to have to get used to. At least until the recession is over.

Jon C. Ogg
January 27, 2009

Source: 24/7 Wall St. | 27 Jan 2009 | 11:30 am

Just got laid off? Get better severance

Sure, you read the papers, so you know the ax is falling left and right these days: Home Depot is slashing 7,000 jobs, Caterpillar is laying off 20,000 workers, Microsoft is cutting as many as 5,000 positions, and Pfizer is letting go 10% of its staff of 81,900. Still, you didn't expect it to happen to you. But if you've just left your boss's office with the dire news that your position is being eliminated, what do you do?
Source: Business and financial news - CNNMoney.com | 27 Jan 2009 | 11:29 am

Another Opinion That Stimulus Package Is Light On Cash

There is a growing body of opinion that $825 billion plus the $350 billion left in TARP funds will not be enough to pull the economy out of what has become a flat spin. There is early evidence that jobs losses may be moving toward one million a month.

A new analysis from the Congressional Budget Office says that the pot is light.

According to Reuters, "The $816 billion package will pour some $525.5 billion, or 64 percent, via spending and tax cuts into the ailing economy within 19 months, according to the report issued late on Monday by the non-partisan Congressional Budget Office."

In other words, the total commitment may be too little and it may hit the failing economy too late.

Since the evidence that more money is needed is piling up and the trends which show that that recession is moving toward a depression get more telling every day, where does that leave Congress? Probably on the wrong side of history, although that judgment is years away.

One of the most salient parts of the rhetoric surround the stimulus legislation is that the money needs to get into the system fast and that, if anything, the government needs to spend more than is necessary to make certain that the cure takes.

What the CBO analysts points to is that the total value of the spending bill needs to move up by hundreds of millions of dollars and perhaps more or the programs need to be reset to work more quickly. That would mean the bill has to be torn up and recast, which takes time.

The other alternative may be the more likely one. At midyear, Congress will have to pass a new bill and dump more money into the system.

Douglas A. McIntyre

Source: 24/7 Wall St. | 27 Jan 2009 | 11:26 am

Outside the Box: Gas discovery tempers Israeli recession blues

Good business news is rare these days, even in Israel, where the past half-decade’s economic momentum is now officially over. Still, one bit of enchanting news broke here, and in the most unlikely industry, timing and location.

Source: MarketWatch.com - Top Stories | 27 Jan 2009 | 11:25 am

The man who outfoxed the market

These are brutally difficult times for automakers worldwide, but as crises go, this one could be a lot worse for Wendelin Wiedeking, Porsche's chief executive for the past 16 years.
Source: Business and financial news - CNNMoney.com | 27 Jan 2009 | 11:23 am

Nikkei jumps on government plan

Japanese shares rise after the government says it will use public funds to help companies struggling with the downturn.
Source: BBC News | Business | World Edition | 27 Jan 2009 | 11:13 am

Cabinet approves aid for struggling car industry

Long-awaited plans to boost the ailing car industry are to be unveiled by Lord Mandelson this afternoon, although No 10 denied that they would amount to a "bail-out".
Source: Latest Business News from Times Online | 27 Jan 2009 | 11:12 am

Dow Chemical (DOW) Runs Out Of Options

Dow Chemical (DOW) was supposed to buy Rohm & Haas (ROH). Now, it may be the other way around. Dow can't close the deal and Rohm is suing to get it finished.

Dow has quickly gone from being viewed as one of the most aggressive multinationals in the world to a firm which is in very deep trouble. The Rohm deal was a bold play for combining two similar companies to create big potential cost savings and a broad product line for common customers.

According to the AP, "The suit, filed Monday in Delaware court, alleges Dow is intentionally breaching its obligation to complete the deal even though it has received all regulatory approvals and has the money available."

Dow just lost a deal for a large joint venture with Kuwait that cost the US company as much as $7 billion. Rohm claims that Dow has access to other money from banks and Berkshire Hathaway (BRK). But, does Dow really have the ability to tap all of that cash?

Over the last eighteen months, banks have shown a willingness to walk away from M&A and LBO transitions that they think are not financially viable. The banks are willing to protect their capital at the risk of being sued. Bank balance sheets are that tight. The Dow lending facility may fall into the "too dangerous to fund file."

The Rohm claim that Dow has access to $17 billion of pledged capital may be true on paper, but that may be the only place that it is true.

The legal system will get the opportunity to see whether Dow is liable. If the suit plays out the way several similar ones have, one of three things will happen. Dow will buy Rohm & Haas at a discount because Rohm sees it as the best option for its shareholder even at a reduced price. Or, Rohm may collect several hundred million in damages from Dow for breaching the buyout contract. The last option may be the most likely. If Dow and Rohm can prove that banks who had made lending commitments to Dow are walking away, both of the chemical companies can sue those financial firms.

Then, the banks can use TARP money to cover the costs of breaking their word..

Douglas A. McIntyre

Source: 24/7 Wall St. | 27 Jan 2009 | 11:08 am

Bank rally extends into a second day

HSBC missed out on a sustained rally in the banking sector on Tuesday as the startling recovery in Barclays shares led most of its peers higher.Barclays continued to rise after an open letter sent to staff...
Source: RSS feed - channel BNPaperBusiness | 27 Jan 2009 | 11:02 am

German business morale surprises, Japan helps firms

TOKYO/BERLIN (Reuters) - German business sentiment posted a surprise rise in January, a survey from Europe's biggest economy showed on Tuesday, offering a glimmer of optimism in a global crisis which prompted Japan to extend aid to small companies.

Source: Reuters: Business News | 27 Jan 2009 | 11:01 am

Rising business sentiment boosts euro

A rare piece of positive economic news boosted the euro on Tuesday, helping to extend its recent rally against the dollar and the yen.The single currency advanced as the German Ifo business sentiment index...
Source: RSS feed - channel BNPaperBusiness | 27 Jan 2009 | 10:55 am

The Death Of Dividends, More Money Out Of Consumer Pockets

Companies keep cutting dividends. Some are pressed for cash because of operating losses. Others are being constrained by higher debt service. Banks need to preserve capital.

The problem is becoming big enough that it could actually be a blow to consumer confidence and consumer spending.

According to the AP, "Already this year, seven companies in the Standard & Poor's 500 index have decreased their dividends, removing some $12 billion from shareholders' pockets in the coming months." The rate of the reductions is the greatest in 50 years.

The number does not account for the huge reductions in dividends at most big banks which occurred at the end of last year. Citigroup (C), Wells Fargo (WFC), Bank of America (BAC), and JP Morgan (JPM) have already made cuts or are candidates to do so. Firms in media from The New York Times (NYT) to newspaper chain McClatchy (MNI) are low on income and high on debt. Any company with dwindling cash will be on the list of firms which are likely to need dividend reductions to preserve their balance sheets.

The $12 billion is probably closer to $50 billion if the figures from late last year are dropped in. As the economy gets worse and corporate losses mount, the number could balloon up to $100 million before the end of the first half.

For some investors, dividends are a substantial part of their incomes. For retired people a loss of dividend cash could mean the loss of the ability to pay for housing or essentials.

As dividend cuts move from company to company, more capital is taken out of the hands of consumers who already have barely enough cash to make ends meet. It is another one of the unforeseen domino effects of the growing economic turmoil. And, it is another hole for the stimulus package to fill in.

Douglas A. McIntyre

Source: 24/7 Wall St. | 27 Jan 2009 | 10:48 am

Gold off highs

Gold softened slightly on Tuesday, paring three sessions of consecutive gains, but was still trading comfortably above $890 a troy ounce, as investors sought havens amid the global economic turmoil. Bullion...
Source: RSS feed - channel BNPaperBusiness | 27 Jan 2009 | 10:45 am

Positive Ifo fails to lift Europe's bourses

European shares fell lower on Tuesday after gains for the automobile sector were shaved off by falling energy shares.Some rare positive economic data failed to lift German shares after a monthly poll ...
Source: RSS feed - channel BNPaperBusiness | 27 Jan 2009 | 10:41 am

Nomura posts record loss, hit by Lehman, Madoff

TOKYO (Reuters) - Nomura Holdings Inc , Japan's largest brokerage, posted a record $3.8 billion quarterly loss, hit by costs related to buying Lehman Brothers' operations, soured trades and exposure to Iceland and accused swindler Bernard Madoff.

Source: Reuters: Business News | 27 Jan 2009 | 10:32 am

China vows to help WTO on piracy

China promises to co-operate in the fight against fake goods, in response to a highly critical WTO ruling.
Source: BBC News | Business | World Edition | 27 Jan 2009 | 10:23 am

Japanese shares rise on government bailout

Japanese shares rallied on Tuesday after the government proposed to use state funds to help companies in financial difficulties due to the global crisis while Chinese markets remained closed for the Lunar...
Source: RSS feed - channel BNPaperBusiness | 27 Jan 2009 | 10:15 am

Nomura losses blamed on Lehmans

Nomura reports heavy losses for the final quarter of 2008 as it struggles to integrate parts of failed US bank Lehman Brothers.
Source: BBC News | Business | World Edition | 27 Jan 2009 | 9:59 am

Intermediate Capital plunges on investment fall

Signs of strain in the buyout industry intensified today as Intermediate Capital, one of the industry's key backers, warned that some of its weaker investments had deteriorated markedly in the past four months.
Source: Latest Business News from Times Online | 27 Jan 2009 | 9:51 am

Siemens sticks with 2009 forecast

The German conglomerate beat analysts' estimates with a sharp rise in quarterly operating profit and reaffirmed its forecast for 2009
Source: Financial Times - US homepage | 27 Jan 2009 | 9:48 am

GE plans 2-week production halt in Hungary: report

BUDAPEST (Reuters) - General Electric Consumer and Industrial plans to suspend production at its lighting factories in Hungary for two weeks due to a decline in orders, business daily Napi Gazdasag reported on Tuesday.

Source: Reuters: Business News | 27 Jan 2009 | 9:47 am

Siemens sticks to 2009 goals as eyes cost cuts

MUNICH (Reuters) - German industrial conglomerate Siemens stuck to its profit outlook, focusing on sourcing more components from low-cost countries after fiscal 2009 started well despite the knock-on effects of the credit crisis.

Source: Reuters: Business News | 27 Jan 2009 | 9:41 am

US hedge fund reaps £270m on RBS bet

MPs are expected to grill hedge fund managers on the destabilising danger of short-selling today after it emerged that one of America's top hedge fund managers made a profit of at least £270 million making down bets on Royal Bank of Scotland (RBS).
Source: Latest Business News from Times Online | 27 Jan 2009 | 9:13 am

Severn Trent takes £25m hit from corporates

Severn Trent, the water company, said today that lower consumption among metered customers would inpact revenues by up to £25 million.
Source: Latest Business News from Times Online | 27 Jan 2009 | 8:47 am

London shares open flat (AFP)

AFP - Shares in London were little changed early on Tuesday after the banking sector led strong gains on the market the day before.

Source: Yahoo! News: Stock Markets News | 27 Jan 2009 | 8:25 am

Friends reassures on resilience to downturn

Friends Provident said today that it had £850 million of surplus capital and could withstand a 30 per cent slump in the stock market with no material impact, as it sought to calm concerns about its financial strength.
Source: Latest Business News from Times Online | 27 Jan 2009 | 8:03 am

Fresh cast in place at Screen Actors Guild

Doug Allen is ousted as executive director, improving the odds of a new contract. The prospect of a new contract for Hollywood's film and...
Source: RSS feed - channel BNPaperBusiness | 27 Jan 2009 | 8:00 am

Home Depot to close Expo stores

The home improvement retailer will cut 7,000 jobs as it shuts dozens of stores. Home Depot Inc. announced Monday...
Source: RSS feed - channel BNPaperBusiness | 27 Jan 2009 | 8:00 am

Obama moves to force automakers to produce more fuel-efficient vehicles

Among other actions, the president orders the EPA to reconsider California's request to impose its tougher standards for greenhouse gas emissions on carmakers. ...
Source: RSS feed - channel BNPaperBusiness | 27 Jan 2009 | 8:00 am

Stocks end higher after fluctuating on earnings reports

The Dow Jones industrial average climbs 38.47 points, or 0.5%, to 8,116.03, after briefly moving into negative territory. Other major indexes also rise. ...
Source: RSS feed - channel BNPaperBusiness | 27 Jan 2009 | 8:00 am

Switch to digital TV expected to be rescheduled

The Senate votes to defer the transition from February to June, which would give millions of households time to prepare. ...
Source: RSS feed - channel BNPaperBusiness | 27 Jan 2009 | 8:00 am

Japan offers $16.7bn to troubled firms

The Japanese government threw a $16.7bn lifeline to companies threatened by the global financial crisis to try to shield the shrinking economy from more job losses and bankruptcies
Source: Financial Times - US homepage | 27 Jan 2009 | 7:55 am

Geithner wins OK for Treasury, vows quick action (Reuters)

Reuters - Timothy Geithner won confirmation as U.S. Treasury secretary on Monday and vowed to act quickly to protect the U.S. economy from the worst financial crisis since the Great Depression.

Source: Yahoo! News: Business | 27 Jan 2009 | 7:43 am

Australian stocks: Market closes 3pc higher

MELBOURNE - The Australian share market closed around three per cent higher after stronger commodity prices boosted resources stocks. The local market was closed on Monday for the Australia Day public holiday. At the 1615 AEDT...
Source: New Zealand Herald - Business | 27 Jan 2009 | 7:17 am

NZ stocks: Shares up 1pc in quiet session

The New Zealand sharemarket notched up a 1 per cent gain today during a quiet session, although it failed to match Australia's 3 per cent rise. The benchmark NZSX-50 index closed up 30.11 points, or 1.11 per cent, at 2735.86, after...
Source: New Zealand Herald - Business | 27 Jan 2009 | 6:45 am

Nomura posts $3.8bn fourth quarter loss

Japan's largest brokerage, posted a $3.8bn loss due to the cost of buying Lehman Brothers' operations and trading losses amid financial market turmoil
Source: Financial Times - US homepage | 27 Jan 2009 | 6:42 am

Currency: Dollar stays in recent range, fall on cards

The New Zealand dollar remained stuck in its recent range today, although a fall this week may be on the cards after expected cuts in Fonterra's dairy payout and Reserve Bank interest rates. By 5pm, the kiwi was little changed...
Source: New Zealand Herald - Business | 27 Jan 2009 | 5:49 am

Tokyo stocks surge five percent (AFP)

AFP - Japan's Nikkei stock index soared five percent Tuesday after the government said it was planning to provide public funds to companies to help them through the economic crisis.

Source: Yahoo! News: Stock Markets News | 27 Jan 2009 | 5:39 am

Retail sales forecast to fall in 2009 (AP)

AP - The nation's retailers had a rough 2008, but this year will likely be even scarier, according to a sales forecast released Tuesday from the world's largest retail trade organization.
Source: Yahoo! News: Business | 27 Jan 2009 | 5:04 am

Heroes and Zeroes

As a child, I was frightened of A.T.M.s. Specifically, I was frightened of the first A.T.M. I ever saw, the one outside the imposing headquarters of the Hongkong and Shanghai Bank, at 1 Queen’s Road Central, Hong Kong. This would have been around 1970, when I was eight. My father, being an employee of the bank, was an early adopter of the A.T.M., which stood just to one side of the building’s iconic bronze lions, but every time I saw him use it I panicked. What if the machine got its sums wrong and took all our money? What if the machine took someone else’s money by mistake, and my father went to prison? What if the machine said it was giving him only ten dollars but actually took much more out of his account—some unimaginably large sum, like fifty or a hundred dollars? The freedom with which the machine coughed up its cash, and the invitation to go straight out and spend it, seemed horribly reckless. The flow of money, from our account out through the machine and then into the world, just seemed too easy. My dad would stand there grimly tapping in his PIN number while I hung onto his arm and begged him to stop.

My scaredy-cat eight-year-old self was on to something. The sheer frictionlessness with which money moves around the world is frightening; it can induce a kind of vertigo. This can happen when you are reading the financial news and suddenly feel that you have no grip on what the numbers actually mean—what those millions and billions and trillions actually represent, how to get hold of them in your mind. (Try the following thought experiment, suggested by the mathematician John Allen Paulos, in his book Innumeracy: Without doing the calculation, guess how long a million seconds is. Now try to guess the same for a billion seconds. Ready? A million seconds is less than twelve days; a billion is almost thirty-two years.) Or it can happen when you look at a bank statement and contemplate the terrible potency of those strings of digits, their ability to dictate everything from what you eat to where you live—the abstract numerals whose consequences are the least abstract thing in the world. Or it can happen when the global flow of capital suddenly hits you personally—when your apparently thriving employer goes out of business owing to a problem with credit, or your mortgage payments jump unpayably upward—and you think, Just what is this money stuff, anyway? I can see its effects—I can thumb a banknote, flip a coin—but what is it, actually? What do these abstract numbers stand for? What is the thing that’s being represented? Wouldn’t it be reassuring if it was more like a physical thing, and less like an idea? Wouldn’t the global financial system be less vertiginous, less bizarre, if your money actually stood for something?

The answer to that question is no, and we know this because the system was in effect for years and—to borrow a phrase from the subtitle of Liaquat Ahamed’s new book, Lords of Finance (Penguin; $32.95)—it “broke the world.” The system was the gold standard, and it involved the world’s major currencies being pegged against gold in a way that was, in theory, redeemable: that is, you could go to the bank and exchange your currency for a specified amount of gold. In the United States, it was 23.22 grains of gold to the dollar; in the United Kingdom, it was 113 grains to the pound sterling. (A grain is based on the notional weight of a grain of wheat: 1/7,000 of a pound.) By fixing currencies to gold, the gold standard also fixed them to each other. In addition, the central banks, which had a monopoly on printing and distributing money, were obliged by law to keep the amount of money in circulation linked to the amount of gold in their reserves. This was not just a local issue but a planetary one. Even the most vertigo-prone of us, those who are least comfortable with the abstractness of modern money, can begin to spot a problem here: what if the world needs more money? What if all the gold is in the wrong place, or there isn’t enough of it?

These turn out to be good questions. Liaquat Ahamed’s book stretches from the beginning of the First World War to the setting up of the Bretton Woods system to regulate the global flows of capital, at the end of the Second. At the time his story begins, Ahamed estimates that the entire global supply of gold can be stored in a two-story town house. Most of it is to be found in the vaults of the world’s central banks, doing the passive work of propping up the respective national currencies. The men in charge of the gold are the heads of those central banks, and it is they who are the central figures of Ahamed’s book.

That might make the story sound dry—but it isn’t, not at all. The central banks turn out to be unexpectedly rickety institutions. Most of them had an odd semi-private, semi-public status, as privately owned companies with a legal monopoly on printing money. The oldest of the four central banks that Ahamed writes about, the Bank of England, was founded in 1694 to help pay for the latest installment of the European wars, and it was set up by a group of Protestant merchants, several of them French Huguenot refugees, who made the following offer: the government would get a loan of 1.2 million pounds in perpetuity, at an interest rate of eight per cent. In return, the bank would be allowed to issue 1.2 million pounds in banknotes, and have the exclusive right to be the government’s banker. So the setting up of the central bank was a mutually beneficial deal to create a monopoly—with the faint but perceptible smell of a conspiracy against the public. This trend was to continue. America’s first modern central bank was established in 1913, in the teeth of strong populist suspicion of bankers. The men who conceived it were worried about the perception that they were forming a cabal, and so did what you naturally do when you’re worried about that: they travelled by private train, under pseudonyms, to a top-secret meeting at a private island off the coast of Georgia.

Read the rest of this story at NewYorker.com Related Links
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Extra Credit, Sunday Edition

Source: Portfolio.com: Top 5 | 27 Jan 2009 | 5:00 am

Obama vows to listen to Muslims

Barack Obama granted an Arabic-language television channel his first formal interview as president – an unprecedented gesture that appeared aimed at offering the Muslim world a sharp contrast with his predecessor
Source: Financial Times - US homepage | 27 Jan 2009 | 4:53 am

Now we're ready for the bad news, says AMP Capital

The good news is that the bad news is all out there. And that means financial markets have moved towards pricing in the effects of the global financial crisis, projected unemployment, falling commodity prices and all manner of...
Source: New Zealand Herald - Business | 27 Jan 2009 | 4:10 am

Investors fleeing risk for safe havens - survey

ASB Bank's survey of investor confidence in the December quarter found net confidence slumped to its worst ever level in one of the most volatile quarters in investing history. The net confidence level, the difference between those...
Source: New Zealand Herald - Business | 27 Jan 2009 | 4:00 am

US recession sees 40,000 new job cuts announced

WASHINGTON- The recession is killing off US jobs at an alarming pace, with tens of thousands of new layoffs announced today by some of the biggest names in American business - Pfizer, Caterpillar and Home Depot. More redundancies,...
Source: New Zealand Herald - Business | 27 Jan 2009 | 3:30 am

American Express Q4 profit tumbles; tops estimates

NEW YORK (Reuters) - American Express Co said on Monday its fourth-quarter earnings tumbled 72 percent due to higher loan losses, lower customer spending and a strengthening U.S. dollar, but results beat expectations as it slashed costs.

Source: Reuters: Business News | 27 Jan 2009 | 3:29 am

TV advertising falls 1.1pct in 2008

Spending on TV advertising fell 1.1 percent last year, following a 2 percent gain in 2007 when it was boosted by the Rugby World Cup. Total revenue for 2008 dropped to $647.2 million, a "not unexpected decline" given the worldwide...
Source: New Zealand Herald - Business | 27 Jan 2009 | 3:15 am

Air NZ-Air Canada deal rejected

Air New Zealand and Air Canada have been denied permission by the Australian competition regulator to co-operate on flights between Auckland and Sydney to Vancouver. The airlines had planned to share the revenue from Air Canada's...
Source: New Zealand Herald - Business | 27 Jan 2009 | 3:00 am

Pricey Super Bowl ads a tough sell

KANSAS CITY - Less than a week before the Super Bowl kicks off, America's NBC network is still in "active negotiations" to sell its last few commercial spots. That's why some advertising wags are calling Super Bowl 2009 "the Economy...
Source: New Zealand Herald - Business | 27 Jan 2009 | 2:30 am

APN shares fall after INM cancels sale of stake

SYDNEY - Shares in APN News & Media have fallen today after the media group confirmed that its parent, Independent News & Media PLC (INM), has abandoned the sale of its shareholding in the company. Irish media baron Tony O'Reilly's...
Source: New Zealand Herald - Business | 27 Jan 2009 | 2:00 am

Telecom Infrastructure Installer Tries To Broaden Its Customer Base

Since most people expect this recession to be deeper and longer than the last one, survivors want to be sure that they learned the lessons of the...

Source: Investor's Business Daily: BUSINESS | 27 Jan 2009 | 12:42 am

Business Briefs - Monday

Amgen profit, sales miss views. The world's largest biotech said after the market closed that its Q4 EPS rose 6% to $1.06 ex items, missing views...

Source: Investor's Business Daily: BUSINESS | 27 Jan 2009 | 12:42 am

In Brief - Monday

Smurfit-Stone Container (SSCC), the top U.S. producer of cardboard box materials, filed for bankruptcy protection. It employs 22,000.

Source: Investor's Business Daily: BUSINESS | 27 Jan 2009 | 12:42 am

After The Close - Monday

AMERICAN EXPRESS (AXP), the credit card company, said its Q4 EPS fell 70% to 21 cents ex items, missing views by a penny. Revenue fell 11% to...

Source: Investor's Business Daily: BUSINESS | 27 Jan 2009 | 12:42 am

Trends & Innovations - Monday

Phones imperil child pedestrians

Source: Investor's Business Daily: BUSINESS | 27 Jan 2009 | 12:42 am

US 'ready to lead' on climate change

Barack Obama announces measures to reduce US dependence on fossil fuels but warns China and India they would not be excused from global efforts to tackle climate change
Source: Financial Times - US homepage | 27 Jan 2009 | 12:28 am

Fannie Mae to seek 11-16 bln dlrs from US Treasury (AFP)

AFP - US government-controlled mortgage finance giant Fannie Mae said late Monday it would ask the US Treasury for 11 to 16 billion dollars to prevent its collapse.

Source: Yahoo! News: Business | 27 Jan 2009 | 12:19 am

Hackers steal details of 4.5 million in attack on Monster jobs site

The personal details of millions of job seekers have been stolen in the largest data theft in Britain, The Times has learnt.
Source: Latest Business News from Times Online | 27 Jan 2009 | 12:01 am

Credit crunch claims Icelandic Government after 'Household Revolution'

The global economic crisis claimed its first government yesterday when Iceland’s ruling coalition collapsed amid a cacophony of popular protest.
Source: Latest Business News from Times Online | 27 Jan 2009 | 12:00 am

Lloyds heads for Mandelson clash on oilrig jobs

Lloyds Banking Group was on a collision course with Lord Mandelson, the Business Secretary, on Monday night after complaints that the bank had forced SeaDragon Offshore, an oil and gas company, to move a big project from Labour's North East heartland to Singapore, threatening 1,400 jobs.
Source: Latest Business News from Times Online | 27 Jan 2009 | 12:00 am

Nations turn to barter deals to secure food

Countries struggling to secure credit have resorted to barter and secretive government-to-government deals to buy food, with some contracts worth hundreds of millions of dollars
Source: Financial Times - US homepage | 26 Jan 2009 | 11:32 pm

How the major market indexes fared (AP)

AP - Wall Street has managed an advance the hard way zigzagging on a mix of earnings and economic news Monday before closing moderately higher. The major indexes reversed direction several times, rising in response to Pfizer Inc.'s $68 billion planned acquisition of Wyeth. And the National Association of Realtors said existing homes rose rather than fell in December.

Source: Yahoo! News: Stock Markets News | 26 Jan 2009 | 11:13 pm

China Comes to Broadway, Classical Athens at Onassis Center

Source: Bloomberg - All Podcasts | 26 Jan 2009 | 10:58 pm

Write-Offs: 01.26.09

$$$ CEOs Dropping out of Davos [Portfolio]

$$$ Bernie Madoff Pissed Off the Wrong Trust-Funders [Daily Intel]

$$$ No jet for Vikula? [zerohedge]

Source: Dealbreaker | 26 Jan 2009 | 10:50 pm

Thain admits $1.2m office refit 'mistake'

The former CEO of Merrill Lynch insisted that Bank of America was fully aware of his plans to pay out bonuses before its transaction to take over the investment firm closed
Source: Financial Times - US homepage | 26 Jan 2009 | 10:24 pm

VIX Index Falls 3.3% to Close at 45.69

Source: Bloomberg - All Podcasts | 26 Jan 2009 | 10:17 pm

Holmes Sees Gold Over $1,000 an Ounce, Recommends ETFs

Source: Bloomberg - All Podcasts | 26 Jan 2009 | 10:08 pm

Hear: Don't Call It A Crisis

Protesters outside Iceland's Parliament, 01.20.09.

Scarndp/Flickr.

Today on Planet Money:

-- Iceland's government became the second to fall as a direct result of the economic crisis. Icelandic National Broadcasting's Bjorn Malmquist reports on what some are calling a revolution.

-- Russians have gotten almost accustomed to an economy that grew rapidly, until this year, that is. Now, as David Kestenbaum reports, people there are struggling with what to call the new economic climate. Andrei Illarianov, former adviser to President Vladimir Putin and now of the Cato Institute, says neither media nor the government wants to call it a crisis.

Download the podcast; or subscribe. Intro music: The Streets' "Everything Is Borrowed." Find us: Twitter/ Facebook/ Flickr.

» E-Mail This » Add to Del.icio.us

Source: NPR Blogs: Planet Money | 26 Jan 2009 | 9:51 pm

U.S. High Court Reinstates Long Prison Term for Child Molester

Source: Bloomberg - All Podcasts | 26 Jan 2009 | 9:36 pm

John Thain: I Couldn't Live With The Shag Rug And Disco Ball In Stan O'Neal's Office, Okay? Is That What You Want To Hear?

MARIA BARTIROMO: Thanks very much. Well, while I'm in Davos, Switzerland, right now covering the World Economic Forum, John Thain is in New York City. And he joins us now with this exclusive interview to talk about the events of the day. John, thanks very much for sitting down with us. We appreciate your time.

JOHN THAIN: It's no problem, Maria. It's happy-- I'm happy to talk to you.

MARIA BARTIROMO: Last week you were asked to step down from your job of running Merrill Lynch, just three months after agreeing a deal-- to a deal with Bank of America. Can you tell us what happened?

JOHN THAIN: Well, Maria, I would first say I was surprised. We were only 20 days into the combination. I had agreed to stay because I thought there was a great opportunity-- for the companies. I thought the strategy made sense. And I thought I could help a lot with the transition process. And it's always difficult when you're combining two organizations. And I thought-- my ability to try to help-- with that transition and-- and help build the team going forward would be-- a good opportunity. And, frankly, the first 20 days, the results were very good. So I-- I was surprised.

Source: Dealbreaker | 26 Jan 2009 | 9:36 pm

Things That Make You Go Hmmm...

Picture 633.png Financial News reports that more than half of SAC Capital's London staff has left the building since October, including partners James Van Den Bergh and David Morant. It was not made clear whether the departures were voluntary or precipitated by scar tissue associated with having a deep-fryer thrown in one's direction, but we have our guesses. If anyone has anything to get of his (or her or his/her) chest, do not hesitate to get in touch. In more joyous, sheet-cakes for everyone! news, former Deutsche Bank executive Drew Lubin has joined the London team. Please do your part to make him feel welcome.

Source: Dealbreaker | 26 Jan 2009 | 9:24 pm

Call for teamwork on global stimulus

Governments are not doing enough to co-operate on rebuilding troubled financial systems and fiscal stimulus packages alone will not boost economic growth, according to the heads of the IMF and the World Bank
Source: Financial Times - US homepage | 26 Jan 2009 | 9:23 pm

Ledergerber Says Credit Suisse, UBS Troubles Affect Zurich

Source: Bloomberg - All Podcasts | 26 Jan 2009 | 9:18 pm

Ponzi Ponzi Ponzi!

Do we even have to go through the exercise of putting this through Equity Private's Guidebook for Financial Fraud Analysis (1st Edition)?

New York and federal officials are investigating a Hauppauge investment firm that has indefinitely halted payouts to clients, citing setbacks on commercial real estate loans.
The firm, Agape World, specializes in short-term, high-yield loans to developers and builders, offering investors returns of as much as 14 percent in as little as 72 days.

The firm's founder, Nicholas Cosmo, told investors on a 1 p.m. conference call on Friday that three borrowers had defaulted on loans, forcing the halt in payments. Cosmo told more than 150 investors on the call that he had hired a law firm to foreclose on the projects and recoup investments, but that the process could take as long as one year.

"My job is to make sure that principal is paid back in total," Cosmo said on the call.

Cosmo did not immediately respond to e-mails seeking comment. Attempts to reach him by phone were also unsuccessful.

Agape clients invested between $5,000 and $3 million each to fund what are known as bridge loans that usually lasted 10 to 12 weeks, but which could extend for several months.

Need I go on? Really? Alright.

In 1999, Cosmo was sentenced to 21 months in federal prison and ordered to pay $177,000 in restitution for his role in defrauding investors of a Long Island securities dealer. The court also ordered him to undergo gambling therapy as part of his sentence.
Cosmo founded Agape World soon after his release from prison in August 2000 with money from family and friends.

This is my favorite part though:

Entrepreneur Magazine last year named Agape one of America's fastest-growing companies.

Then there's this:

Angry victims of an alleged Ponzi scheme stormed the Hauppauge offices of Agape World, and one of them socked owner Nick Cosmo upside his head Friday.

I mean, you can't make this stuff up.

Update:

Posted by Anal_yst, Jan 26, 2009 4:20PM

This.Is.Awesome!

Want pics of the carnage asap!

Your wish is my command. Pics after the jump.

LI investment firm halts payouts, under investigation [Long Island Business News]

Agape investor packed a punch [LI Biz Blog]

Source: Dealbreaker | 26 Jan 2009 | 9:17 pm

Indian casinos unlucky in recession

Native American casinos are feeling the pinch of the recession. Revenue is down, and the drop in business is having a big impact on local communities. Alex Cohen reports.
Source: Marketplace | 26 Jan 2009 | 9:07 pm

Say What?

Layoffs are continuing at IBM this week, says Lee Conrad, union organizer with Alliance@IBM. The job cuts started quietly on Wednesday, the day after IBM posted a 12 percent quarterly rise in profits and the CEO sent a companywide letter promising bonuses and raises.

Conrad says nearly 3,000 people have been sent packing so far.

Along the way, workers are wending through jungle of corporate jargon. Most of the laid-off workers have been Resource-Actioned. Conrad expects further cuts this year by Management-Initiated Separations (translation: You're fired.). "Believe me, you need a dictionary," Conrad says. After the jump, more IBM-ese.

An IBM worker forwarded this corporate e-mail, with an acknowledgment that years at the company hadn't made the acronyms any clearer:

Team,

This morning, Marc Lautenbach announced important changes to the way we work in North America. I would like to share these changes with you and outline what it means to our own GTS organization.

North America IOT

We are enhancing the S&D operating model with the introduction of the North America Integrated Operating Team (IOT) to improve how we integrate IBM for our clients. The North America IOT will consist of four Integrated Market Teams (IMTs) led by:

Phil Guido, General Manager, U.S. East IMT

Todd Kirtley, General Manager, U.S. West IMT

Todd Ramsey, General Manager, U.S. Federal IMT

Dan Fortin, General Manager, Canada, IMT

The IMT profit centers replace the current regional structure and have responsibility for brand and client set resource deployment for better integration of IBM capabilities. This, combined with optimal resource allocation, will ultimately improve our sales execution and drive more value for clients. An increased span of control for IMT sales managers and a streamlined IOT leadership team will boost our operational efficiency and speed decision-making.

The new design brings responsibility for IBM's business model closer to our client teams and aligns North America to IBM's global markets strategy. You can read more about the announcement on w3.

What this means for GTS

Our SO brand will continue to be aligned at the North America IOT level to optimize utilization across the IMTs. The SO organization will maintain its current Sector / Industry structure. GBS will also continue to be aligned at the North America IOT level. Because ITS had been aligned by the three US regions, we will adjust our model to align with the new dual East and West IMT structure in the US. Additional details will be provided shortly by John Visentin and his management team.

Despite the economic uncertainty, IBM remains uniquely positioned. We are ready to assist our clients with smarter solutions and strategies to lead in their industries and to help as they retool for efficiency and cost savings. I am counting on this team to remain focused as we implement these changes.

Regards,

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Source: NPR Blogs: Planet Money | 26 Jan 2009 | 8:52 pm

CEO sees health care as fixable issue

With the Obama administration vowing to reform the health care system, Kai Ryssdal talks with Health Net CEO Jay Gellert about how much the health industry is willing to change.
Source: Marketplace | 26 Jan 2009 | 8:30 pm

Rangel Will Overhaul U.S. Tax Code After Health Care

Source: Bloomberg - All Podcasts | 26 Jan 2009 | 8:20 pm

Thain Repays $1.2M

We started the day wondering whether John Thain has any sense of this historic moment. The former CEO of Merrill Lynch has become something of a villain in the financial crisis, with his rush to pay bonuses as the investment firm tanked and his $1.2 million office renovation.

Now comes the news that Thain has decided to reimburse Bank of America, which now owns Merrill Lynch, for the cost of revamping his executive suite. Among its contents: A trash can that reportedly cost $1,405. (Which puts a whole new spin on the 62,000 slated to get canned in corporate layoffs announced today.)

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Source: NPR Blogs: Planet Money | 26 Jan 2009 | 8:14 pm

The Fortune 500 CEO Hall of Shame

ceo_stonecipher

ceo_syron1

ceo_prince1

ceo_oneal1

Source: Business Pundit | 26 Jan 2009 | 8:10 pm

How to Avoid a Tax Audit

irs_audit_swanksalotflickr

Michael Rozbruch is a leading expert on resolving individual and small business problems with the IRS. He says tax audits are on the rise and worse - as a small-business owner, you are among the largest source of uncollected taxes. That makes you a target. According to Rozbruch, the growing federal deficit, proposed government bailout plans, and a push to close the $345 billion tax gap are all leading to stepped up enforcement by tax collectors. In this interview, Mr. Rozbruch helps us all avoid the sting of the IRS agent’s vist.

BP: Thanks for providing your insights, Mr. Rozbruch. Why does the IRS seem to pick on small businesses?

MR: Business owners tend to be the biggest group of tax evaders, particularly during economic downturns. With small business audits on the rise, it is more important than ever to know what triggers an audit, how to avoid being audited and what to do if the IRS is after you.

BP: And is it just the IRS we need to be concerned about?

MR: No. Several states have already started putting more money and personnel into cracking down on tax cheats - large and small - to cut into their growing budget deficits. They have sent letters out to small businesses warning them of the consequences of not collecting or remitting state taxes.

BP: How important are tax issues to a new business?

MR: For anyone planning to start and/or grow your business, it is crucial to know how to avoid tax trouble. I know this because I am a business owner myself. Plus, 25% to 30% of my tax relief clients are small businesses with tax problems. I always tell people who are struggling to overcome their tax burdens that knowledge is power and the key to gaining a new lease on your financial life.

BP: What could trigger an audit?

MR: The number ONE red flag in triggering a tax audit is claiming false business expenses. Monies from your expenses’ payments must be used for legitimate business-related activities. However, many people end up in tax trouble when they used these monies for personal purposes and falsely characterize them as legitimate business expenses. This can be seen as a failure to report additional income on your tax return.

BP: What’s one of the biggest mistakes you see small business owners make?

MR: Generally, owing payroll taxes is the “kiss of death” for many small business owners, whether they operate their entities as a sole proprietorships, corporations (”C” or “S” - doesn’t matter) or LLCs. Many lose their businesses. When it comes to payroll tax debt, the IRS has unyielding power and authority to collect. They have the power to padlock your front doors, putting you out of business, without obtaining a court order. The penalties can add up to about 33% PLUS interest in just 16 days after you have filed the 941 (payroll Tax Return) past the due date and didn’t pay! You can imagine what the debt adds up to if you ignore this for a prolonged period of time.

BP: So what can a small business do to avoid getting audited by the IRS?

MR: There are several ways to stay safe.

Hire a good bookkeeper. You should have a capable bookkeeper that knows double entry accounting. There should always be a debit and a corresponding credit, and they have to go to the right place. So in other words, if you record a sale, you have to debit accounts receivable and credit sales. When you get the cash in, you debit the cash and credit the receivables.

Hire an expert CPA or EA to prepare your tax return. It’s a small annual investment that can pay off big! I wouldn’t recommend doing your own taxes unless you are a straight W-2 wage earner that takes the Standard Deductions (in other words, someone who doesn’t itemize or have any unreimbursed employee business expenses). Tax preparation tools like TurboTax and TaxCut are great, but people with anything more than a straight W-2 (including anyone with even the smallest business “Schedule C”) should be aware of the limitations of these software programs.

File your tax return on time. Even if you don’t have the money to pay your tax bill, you can still file your return on time and save 25% on the failure to file penalty right off the bat. What many people don’t understand is that filing an extension just puts off the inevitable, because it’s not an extension of time to pay, it’s just an extension of time to file. So what we tell our clients is that no matter how much is owed, if they enclose a check for $5 or $10 with the return and file it on time, it will reduce their filing penalties. Additionally, it creates a computerized record of account at IRS showing that you sent in a payment with your income tax return (reflecting good faith and credibility on your part).

BP: What if we do everything right and get audited anyway?

MR: The best thing to do is get expert representation! Fighting the IRS on your own is a “lose/lose” proposition. You WILL get “creamed”. It’s like to going to court without a lawyer. If you are struggling to overcome your tax burdens, know that there’s a solution to every problem. But you have to be willing to do something about it — you can’t just stick your head in the sand and ignore the audit letters. Hire a Certified Tax Resolution Specialist to help you put together a tax relief action plan. An ethical and experienced tax resolution company can help you reduce your IRS debt by qualify for an offer in compromise settlement – where the IRS will accept a much smaller lump sum for the total dept that’s owed if you can prove that you do not have the future ability to pay the IRS off.

You heard the man, tell the truth, keep good records, and file on time!

Image Credit: swanksalot, Flickr

Source: Business Pundit | 26 Jan 2009 | 8:07 pm

Davos, Downsized

The biggest story emerging from the World Economic Forum's annual meeting, set to convene in Davos, Switzerland, tomorrow, isn't about the financial crisis, the environment, or the wars raging on multiple fronts across the globe. It's about who's not showing up.

Portfolio.com has learned that Morgan Stanley CEO John Mack and Google's Sergey Brin, whose company hosts a hot-ticket Davos party every year, are among those who were initially listed among participants but aren't attending. Also on the no-show list: Chevron CEO David O'Reilly, who co-chaired at Davos last year.

They join a growing list of high-profile executives who have decided to stay away from the confab, which has long been the most prestigious business event for A-list financial and corporate leaders.

In the past few years, bankers, private equity investors, and hedge fund managers have been the stars of the meeting, enthralling lesser participants such as prime ministers and Hollywood celebrities. This year, many of them are staying away, including onetime hedge-fund wunderkind Ken Griffin of Citadel Investments, whose fund lost 47 percent in 2008.

The New York Times, Wall Street Journal, and Financial Times reported this morning on other high-profile no-shows, including Goldman Sachs CEO Lloyd Blankfein and Citigroup CEO Vikram Pandit. John Thain, the recently deposed Merrill Lynch CEO, had already backed out, as had Richard Fuld, former CEO of Lehman Brothers. Sony CEO Sir Howard Stringer also sent his regrets.

Certainly, a case can be made for staying home to take care of business in a time of crisis. Perhaps just as important is the PR perception: many of these executives headed to Davos on corporate jets—a now-unfortunate photo-op that in itself has become an embarrassment and cause of shareholder outrage that few can afford to weather.

A World Economic Forum spokesman says cancellations are "running more or less as last year," and that attendance is up slightly from last year, to just over 2,500. The Forum expects 40 world leaders this year, a record—and a clear sign of the shift of economic power away from the free markets and toward governments around the globe.

At least one banker is not only showing up but throwing a party to celebrate: Jamie Dimon, CEO of J.P. Morgan Chase.

One of the few bankers standing with his reputation intact, Dimon will host a cocktail party at the Tonic Piano Bar at the Hotel Europe on Thursday. No doubt those who are showing up at Davos to discuss the agenda—"Shaping the Post-Crisis World"—could use a drink.Related Links
The Man Who Made Too Much
Lehman Europe and Prime Brokerage Counterparty Risk
Did the End of the Investment Banks Cause the Latest Sell-Off?

Source: Portfolio.com: Top 5 | 26 Jan 2009 | 8:00 pm

Chile’s Don Melchor Shows Wines Must ‘Suffer’ to Beat Aussies

Source: Bloomberg - All Podcasts | 26 Jan 2009 | 7:49 pm

Marchesi di Barolo Challenges Barbaresco With Classic Red Wines

Source: Bloomberg - All Podcasts | 26 Jan 2009 | 7:47 pm

Pennsylvania's Chaddsford Wines Are Worth Considering

Source: Bloomberg - All Podcasts | 26 Jan 2009 | 7:44 pm

Hyundai Targets Luxe, Comes Close With Genesis Model

Source: Bloomberg - All Podcasts | 26 Jan 2009 | 7:40 pm

Dreier Touched Elliott Management In The Bad Place

You have to hand it to this guy Dreier. He really managed to scam some sharp folks. Or perhaps we have a very over-inflated view of the collective sharpness of hedge funds with famous names and big AUMs.

Elliott's losses tied to the fraud accounted for less than 1 percent of the money it oversees, according to a person familiar with the firm.
"Elliott has been deceived more than once over the years, and it is likely to happen again in the future," the fund said in the letter.

Elliott Hedge Fund Bought Fictitious Securities From Dreier [Bloomberg]

Earlier: Would You Give $50 Million To This Man?

Source: Dealbreaker | 26 Jan 2009 | 7:35 pm

Fairfield Greenwich Group's Alternative Alternative Revenue Stream?

What follows is a photograph of Philip Toub, Fairfield Greenwich partner, son-in-law of Walter, and husband of Alix, at a Pimps and Hos party. Don't know when it was taken (last night?) but that's pretty much immaterial. PT is on the left.

Source: Dealbreaker | 26 Jan 2009 | 7:28 pm

Minnesota hospital ailing in recession

The affluent town of Edina, Minn., has been slowly feeling the effects of layoffs and stretched budgets. Annie Baxter visits the town's biggest employer to see how it's coping with the economic stress.
Source: Marketplace | 26 Jan 2009 | 7:07 pm

Decoding the nationalization of banks

Talk about nationalization of the banking industry is increasing. But what does that mean and how will it work? Bob Moon reports.
Source: Marketplace | 26 Jan 2009 | 7:07 pm

Rising jobless rate adds to banks' woes

As unemployment rates creep higher, banks are worried that more loans will have to be written off. Because if prime borrowers find themselves jobless, they may not be able to pay their mortgages. Ashley Milne-Tyte reports.
Source: Marketplace | 26 Jan 2009 | 7:07 pm

Home sales up, but not really

Sales of existing homes rose 6.5% in December. But the new numbers might not be much to celebrate since a lot of those sales are skewed by foreclosures. Nancy Marshall Genzer reports.
Source: Marketplace | 26 Jan 2009 | 7:07 pm

Obama OKs new look at emissions rules

President Obama has ordered the EPA to reconsider whether states can set their own auto emissions standards. But if a waiver to states is granted, can the ailing auto industry meet the tougher requirements? Sam Eaton reports.
Source: Marketplace | 26 Jan 2009 | 7:07 pm

Dear Vikings

Performance for everyone's favorite "he is a Tiger cub" "he isn't a Tiger cub" through January 23^rd:

Source: Dealbreaker | 26 Jan 2009 | 6:57 pm

Sing It Again

In November, Ryan Stotland of the Astroturf checked in with "A Central Banker's Dilemma." Now he's back, with "Financial Crisis Revisited." Ryan says he originally called it "Financial Crisis 2008 Revisited," but that's so last year -- and the crisis, of course, is so right now.

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Source: NPR Blogs: Planet Money | 26 Jan 2009 | 6:54 pm

Rohm & Haas asks court to enforce Dow deal

Rival chemicals group asks Delaware court to enforce the $15bn takeover after Dow said it did not have the funds to close the deal
Source: Financial Times - US homepage | 26 Jan 2009 | 6:54 pm

Stimulate Bloggo Removal

None of the funds provided by this Act may be made available to the State of Illinois, or any agency of the State, unless (1) the use of such funds by the State is approved in legislation enacted by the State after the date of the enactment of this Act, or (2) Rod R. Blagojevich no longer holds the office of Governor of the State of Illinois.The preceding sentence shall not apply to any funds provided directly to a unit of local government (1) by a Federal department or agency, or (2) by an established formula from the State.

The Stimulus Bill [Read The Stimulus]

The Blagojevich Provision in the Stimulus Bill [National Review Online]

Source: Dealbreaker | 26 Jan 2009 | 6:49 pm

'Resource Actioned' Lately?

U.S. companies today announced 43,000 layoffs in the works today. President Barack Obama used the news to pitch a quick economic stimulus package again.

It's definitely starting to feel like Layoff Land out there, with e-mails from newly canned folks piling up. I'll drop one from an IBM family after the jump. Note: IBM calls its layoffs a "Resource Action."

A listener whose spouse just got the news at IBM writes:

"[My spouse] got a list of countries in his paperwork. The program to send certain Resource Action'ed (RA'd) employees is called "Project Match". Countries include China, India, Russia, South Africa, Nigeria, Poland, Slovenia, Slovakia, Hungary, Turkey, Czech Republic, Mexico, Brazil, Argentina, UAE. The problem with the program is that you're terminated as a US employee, loose vacation, retirement credits and become an IBM employee of the country. You have to renegotiate your band (level) and salary, and there's no ticket back to a job in the USA."

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Source: NPR Blogs: Planet Money | 26 Jan 2009 | 6:37 pm

2009: "Pershing will focus on attractive businesses where we can be a catalyst to unlock value"

Our favorite Target-lover held his annual investor dinner last Thursday. For those of you who couldn't attend, the presentation is after the jump. Later, we'll simulate what it was like to eat pasta with Ackman, Lady and the Tramp-style, which he took the time to do with each and every guest, because unlike certain other managers, he works hard for the money.

Source: Dealbreaker | 26 Jan 2009 | 6:23 pm

Out Of Work In Michigan

Shane Bailey used to work here.

David Greene/NPR

NPR's David Greene has hit the road for a big "100 Days" project. He's talking about the recession with people around the country. The idea is to travel south on I-75, starting in snowy Sault Ste. Marie, Mich.

Greene sends the photo above, along with this first report:

Dinner on night one was at Applebee's. I was at the bar, reading the Detroit News. The headline striped across the front page: "Mich. Jobless Rate: 10.6 percent." As if I were asking for evidence, a guy sat down next to me. He ordered a beer. Then he shared some news with the bartender -- he'd just been fired.

Shane Bailey, 35, agreed to meet me again the next morning near the "Soo Locks," the river locks between Sault Ste. Marie and Canada. Shane's an engineer for the Coast Guard but said he failed to pass a test for a promotion. He's likely getting his final paycheck in a few weeks. Shane said he's looking at a few different jobs, including a janitor's opening at a local casino. He said he's bracing to be out of work, though, and believes he knows a friend who will give him a spare room if he's forced to give up his apartment.

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Source: NPR Blogs: Planet Money | 26 Jan 2009 | 3:42 pm

Iceland's Government Falls

The news out of Reykjavik is a whopper: Iceland's prime minister says the government has collapsed. Since the economy there tanked, Icelandic protesters have taken to the streets over spikes in unemployment and prices. Hey, the Belgians went first.

Elsewhere, Britain talks recession, economists say things are getting worse, and Washington wonders about nationalizing the banks.

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Source: NPR Blogs: Planet Money | 26 Jan 2009 | 3:00 pm

Couture Stays Viable in Down Economy

Will couture's hand-rendered and delicate seams be able to withstand the economic crisis?

So far, so good, say executives, who anticipate no drop in client attendance—though hardly an avalanche of orders—as the high fashion shows get under way in Paris today.

"The growth will be lower in 2009, but we are expecting growth," said Bruno Pavlovsky, Chanel's president of fashion, which posted a double-digit sales rise in couture last year, selling more units of its summer and winter collections. "We are quite confident; we aren’t specifically anxious about the business.

"If (clients) are coming, they want to continue to be part of the dream," he said in an interview, sounding upbeat and serene. "I believe a lot in couture because of the creativity and because of the very special service we can give to the customer."

"We had double-digit growth and the second half of the year was good," echoed Sidney Toledano, president and chief executive officer at Christian Dior. "I believe that in this world you still have people looking for the exceptional—extraordinary materials and exceptional designs, custom-made by an atelier in Paris."

Toledano said Dior couturier John Galliano, who in the past had staged fantastical shows with extreme silhouettes, has since 2007 returned to "really interpreting the Dior codes and the Dior cuts, and this has been impacting the sales."

To be sure, couture has been riding high in recent years as the luxury boom—and an influx of younger clients from a range of emerging countries—kept the remaining handful of practitioners running at full capacity. Executives allowed that the financial crisis could cast some chill on the uppermost slice of the fashion business, and voiced caution while underscoring the positive trends.

"In the past three years, we have seen many new customers from all parts of the world, not only the U.S. and Europe—from China, for example," Pavlovsky said.

Fabrizio Malverdi, president and ceo of Givenchy, reported an 80 percent increase in its couture revenues last year as Riccardo Tisci’s design imprint helped the brand gain traction. An increase of 20 percent is forecast for 2009, he said, noting the majority of its customers are based in the Middle East. Malverdi also noted new couture clients could be existing ready-to-wear clients looking to trade up, or someone intrigued after seeing a celebrity wearing a couture garment on the red carpet.

A spokesperson for the Giorgio Armani Privé couture collection cited an increase in clients from the Middle East over the past two years, but noted it is "difficult to predict how the American sales will fare. Nevertheless, we have had a positive response in confirming our regular and new clients to the show….The couture business has performed well even in the past two seasons."

"We have a nice carryover of orders into 2009," noted Nicolas Topiol, chief executive officer at Christian Lacroix. "It's performing quite well relative to ready-to-wear and retail, which both suffered at the end of 2008. We have a pretty stable clientele and we've gained some new clients. I’m not too worried."

The global pool of couture clients remains small, numbering in the hundreds, meaning even one new client can turn the tide. "You do a big wedding, and your business is there," said Lacroix's Topiol. Topiol allowed that orders from American clients could drop, given the scale of the financial crisis there, but new clients from Japan and China might pick up the slack.

In recent years, couture houses have dramatically stepped up the level of service provided to clients, dispatching seamstresses and representatives around the world for fittings. Executives agreed the white-glove treatment will only improve.

"Last year, the couture team was the biggest travelers in the company," Chanel’s Pavlovsky said. "One day they are in Greece, the next day Los Angeles, and then Russia and then the Middle East. It's a one-to-one relationship."

"In more of a crisis situation, you need to be very close to your clients," agreed Lacroix's Topiol.

At Givenchy, seamstresses are often dispatched to the client's country on the day of the wedding "in case they need a small adjustment," Malverdi said.

What's more, the Givenchy couture department even helps brides recruit hair and makeup artists for the big day, and photo and video crews to document the entire process, from the show and fittings in Paris through to getting ready for the big day.

"Couture is becoming part of the wedding, and they want to live an experience," Malverdi said. "It's as important as having a great dinner, and a great location for the wedding. It's a full service we give them."

Veronique Gautier, president at Jean Paul Gaultier, said couture posted a single-digit increase last year and "the objective is to stay at the same level" in 2009. She asserted that Gaultier's distinct and irreverent take on couture has engendered a loyal clientele that helps shelter it from economic volatility.

Roughly 70 percent of Gaultier's clients are regulars from America, Europe, the Middle East, Russia and some from Asia, she said. "Couture is fantasy. You come to us if you see the world different," Gautier said.

Executives agreed it would be a mistake to reduce pricing or to tone down couture for more sober times.

Topiol allowed that even wealthy clients may buy less clothing, but they are apt to favor "heirloom-type items," for which couture fits the bill.

"Don't forget that Mr. Dior and the New Look came after the war. It was an optimistic collection," Toledano said. "The genius of Mr. Dior was to bring this elegant, confident, feminine silhouette.…The clients—and this is true for ready-to-wear as well—they want something really elegant and they want details. A lot of subtle things, but at high quality. We need the best workers, the best tailors and embroiderers. The industry should be challenged by that."

"We need maximum creativity," Chanel’s Pavlovsky agreed. "Karl Lagerfeld is an immense design talent…and we have to continue to invest in what makes us different: our know-how and creativity. This direction will continue."

While many observers have suggested conspicuous consumption will nosedive during this economic crisis, and that luxury is becoming a dirty word, Toledano had a different take: suggesting that couture is a beacon of human capacity that should be enshrined, not maligned. He noted the exhibition "Dior and Chinese Artists" that recently wound up a two-month run at the Ullens Center for Contemporary Art in Beijing attracted more than 60,000 paying visitors—evidence that couture dresses, which were displayed among artworks, continue to fascinate the public.

"Even if you can't buy haute couture, you see what men and women are capable of," Toledano said. "Things like haute couture, they're an example of human achievement."

Gautier noted the house of Gaultier continues to receive requests to stage couture shows in other countries, and hinted that a high-fashion collection may soon travel to Russia and one other country. "It's a little part of the business, but it's very big in terms of image and giving the sense of the (brand) story," she said. "Couture is still a pillar."

Related Links
Morning Hemlines: Nexcen, Milan, Paris, Margiela, Theysken, McQueen, Project Runway, Burberry
Russian Dressing
Morning Hemlines: Asprey, Marc Jacobs, H&M

Source: Portfolio.com: Top 5 | 26 Jan 2009 | 3:00 pm

How Stimulus Plan Affects Business

Jack L. Massie Contractor Inc. is doing better than most construction companies: It has not laid off any of its 170 workers.

But the Williamsburg, Va.-based company has cut its workers’ hours in half and may be forced to begin layoffs if it doesn’t find more work soon.

“Quite frankly, the employees are scared,” said Steve Massie, the company’s chief executive officer.

Massie said his company’s private sector clients either can’t get financing for their projects or are leery about going forward without knowing what policies will be coming out of Washington.

State and local governments, which could use Massie’s expertise in road construction, “don’t have money to spend,” he said.

All of this could change if Congress passes the economic stimulus package that is moving through the legislative process. Companies like Massie’s would be among the biggest beneficiaries of the billions of dollars in infrastructure spending that will be included in the package.

“I would be able to avoid layoffs at my company, begin purchasing materials, and personnel could begin to get back to full employment within 30 days of contracts being awarded,” Massie said.

Businesses of all types see the stimulus package as a potential lifeline and are lobbying for provisions that would help them survive a recession that put 2.6 million people out of work in 2008.

Recent surveys of small business owners show the downturn is causing just as much pain on Main Street as it is on Wall Street.

A monthly index of small business indicators compiled by the National Federation of Independent Business hit its second-lowest level in 35 years in December.

“Unless there is a solid turnaround in January, we are in for a longer-than-usual recession,” said NFIB chief economist William Dunkelberg.

A December survey by the National Small Business Association found that 38 percent of small business owners weren’t confident about their business’s future.

“Coming from traditionally upbeat entrepreneurs, this number ought to send a strong message to Congress — as they craft an economic stimulus package—that small business is hurting,” said NSBA President Todd McCracken.

A sizable chunk of the stimulus package will be used to extend unemployment benefits and help states avoid cuts in Medicaid and other essential programs. Tax rebates or other forms of individual tax cuts also will be included to stimulate consumer spending.

Businesses expect a big piece of the pie as well, including tax breaks, infrastructure contracts and targeted assistance for key industries.

Business Tax Breaks

Final decisions on the pieces of the two-year economic stimulus package—and its total size—won’t be made until both the House and Senate pass their versions of the legislation, then iron out any differences. That is not likely to occur until February.

One proposed business tax break already appears to have fallen by the wayside: a $3,000 tax credit for each new job created by a business.

President Barack Obama said the provision would give businesses an incentive to hire additional workers, but the proposal got poor reviews from both Congress and business groups, which agreed it would be difficult to administer.

Business groups hope the package will give struggling companies a much-needed cash infusion by extending their ability to carry back losses on their taxes for five years, instead of the current two years. This would enable companies that now are losing money to apply those losses to years when they made a profit, qualifying them for refunds on the taxes paid for those years.

There also may be incentives for investments in capital equipment. The stimulus package that was enacted in February 2008 temporarily increased the Section 179 expensing limit to $250,000, giving small businesses an immediate tax write-off for equipment purchases rather than making them depreciate the cost over time. Business groups want this higher expensing limit extended.

Last year’s stimulus law also allowed all businesses to depreciate 50 percent of the cost of capital investments in 2008. This investment incentive too should be extended, business groups contend, since the economy is in even worse shape now than it was a year ago.

Some economists doubt whether tax incentives make much difference in business investment decisions, but Giovanni Coratolo, director of small business policy for the U.S. Chamber of Commerce, disagrees.

He offers numerous cases of business owners who said the 2008 investment incentives enabled them to buy equipment they otherwise could not have afforded.

“This incentive is a big boost to our purchasing power for needed equipment,” said Tom Sawner, CEO of Educational Options Inc., an Arlington-based company that provides online educational products to schools.

Many small businesses, however, are in no position to invest in new equipment. NFIB’s December survey found that only 17 percent planned to make capital expenditures over the next few months, the lowest percentage since 1975.

“In this uncertain environment, owners are postponing any capital projects that are not essential to the operation of the firm — or that they can’t afford or can’t finance,” NFIB’s Dunkelberg said.

Temporary tax incentives to support business investment “do not provide a particularly large benefit,” said Mark Zandi, chief economist for Moody’s Economy.com. But, he added, they do not cost the government much and help all kinds of businesses, not just particular industries.

Besides, letting these investment incentives expire would be “a badly timed additional factor depressing business investment,” Zandi said.

Infrastructure Spending

Congress plans to spend billions of dollars on infrastructure projects that employ people quickly and meet the nation’s long-term needs.

Much of this money will go to road repairs, bridges and other transportation projects, but investments also are expected in water projects, health information technology and energy efficiency for schools and federal buildings.

Americans strongly support infrastructure investments, said pollster Frank Luntz, who conducted a survey for Building America’s Future, a coalition of state and local officials.

In fact, 81 percent of Americans said they are willing to pay 1 percent more in taxes to modernize the country’s infrastructure—“as close to universal support as you’ll ever get for any issue,” Luntz said.

A survey by the Associated General Contractors of America indicated that 85 percent of its members could begin work on infrastructure projects within a month.

Hundreds of projects around the country have been put on hold due to revenue shortfalls facing state and local governments.

“There’s just an immense amount of work available,” said Brian Burgett, CEO of Kokosing Construction Co. Inc. in Fredericktown, Ohio.

Those projects need to be funded quickly, however, especially in northern states with a short construction season, he said. “The timing to get this rolling is very important. Hopefully that won’t get lost in the shuffle.”

The stimulus package should include a “use it or lose it” provision that forces state and local governments to return funds for infrastructure projects if they don’t begin the work in a certain period of time, said Pennsylvania Gov. Ed Rendell, a Democrat.

The infrastructure piece of the stimulus package should focus on repairs to roads and bridges—projects that don’t require environmental impact statements or other bureaucratic delays, Rendell said, adding that levee repairs and mass transit projects also should be funded.

Targeted Assistance

Specific industries, including housing and alternative energy, could get a boost from the stimulus.

The National Association of Home Builders and the National Association of Realtors want Congress to give all homebuyers a tax credit to spur housing sales.

First-time homebuyers now are eligible for a $7,500 tax credit but must repay the credit to the federal government over 15 years. This repayment requirement limits the tax credit’s effectiveness, according to the housing industry.

Realtors estimate that dropping the repayment requirement and extending the credit to all homebuyers would create an additional 550,000 home sales.

“Congress must understand that housing is central to the economic crisis, that housing has led our nation out of past recessions and that it can do so again,” said NAHB Chairman Sandy Dunn, a second-generation homebuilder from Point Pleasant, W.Va.

Obama’s goal of doubling alternative energy production in three years may help wind and solar energy companies get what they want: making tax credits for those types of energy refundable—a change they say is needed because the recession has reduced the tax liabilities for companies and individuals that use the credits, making them much less effective.

“We have the potential to put millions more Americans back to work,” said Rhone Resch, CEO of the Solar Energy Industries Association. “But due to the recession, projects are now being put on hold, factories are closing and workers face potential layoffs unless Congress refines the tax credits now so they work as originally intended.”

Electrical contractors and roofing companies also stand to benefit from energy-efficiency incentives.

For example, O’Connell Electric Co. in Victor, N.Y., now gets 25 percent of its revenue from renewable energy projects, including work on large wind-energy generation fields.

A multiple-year extension of federal incentives for renewable energy sources “would provide the necessary predictability in a marketplace that often suffers from projects delayed or put on hold because of the temporary nature of renewable energy tax incentives,” said Timothy Ehman, O’Connell Electric’s senior project manager for emerging electrical construction markets.

The National Roofing Contractors Association is pushing for tax incentives that would encourage building owners to replace aging roofs with energy-efficient roofs, including photovoltaic roof systems that generate solar power.

“We’re ready to put boots on the roof,” said Rob Therrien, president of the Melanson Co., a roofing contractor in Keene, N.H.

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Source: Portfolio.com: Top 5 | 26 Jan 2009 | 2:00 pm

Thoughts On Thain

My dad's an actor. And he taught me that when actors play a villain or a jerk, they have to find a way to sympathetically understand that person. After all, villains and jerks don't think of themselves as villains and jerks. They generally think they are decent people responding to an unfair world, or whatever other justification they have. When an actor doesn't do the work of finding some way to sympathetically embody a bad character, you can tell: they play it as a crude caricature.

So, I've had a lifelong habit of trying to sympathetically understand villains and jerks. This is helpful for a journalist (particularly, for me, when covering the Middle East), though it can make your head hurt sometimes. And John Thain--probably more of a jerk than a villain--is really putting me through my paces.

Where is the soul-searching? Where is the self-doubt? Where is the slightest hint that this guy understands this moment in history?

A quick summary: John Thain was the hero CEO of the New York Stock Exchange who brought success and glory to a company embarrassed by its previous head. He was then hired by Merrill Lynch in 2007 when it was already clear that the investment bank was on shaky ground.

Merrill had a rough 2008, to put it mildly. It lost a lot of money and, eventually, was sold to Bank of America in a panicked weekend.

Thain has done everything he can to stay on the front pages of the Wall Street Journal in a less-than-flattering light. We're told he was preparing to demand a $10 million bonus in 2008 until the board said, effectively, "No friggin' way, buddy, the company is in trouble. We're laying off thousands and you want a BONUS?"

He then forced through a multi-billion dollar bonus package for leading executives. He pushed it through early so that it would happen before Bank of America officially took over. This meant, arguably, that US taxpayers were helping to pay for bonuses to executives who ran a company into the ground.

Then we learned that Thain may have hidden Merill's truly huge losses from Bank of America.

Then we learned that Thain--in his best Kozlowski/Helmsley imitation--spent a fortune redecorating his office when he was demanding employees cut way back on expenses. His $35,000 commode will, no doubt, become the physical embodiment of this crisis (turns out this is not a toilet, but a chest of drawers. Darn. The story would be way better if he was, literally, crapping on gold).

So, let me try to sympathetically understand Thain.

I actually have a reasonably easy time understanding his desire for a bonus and even his maneuvering to get billions in bonuses for his co-executives. He came to Merill after the worst problems were baked in. Many of the executives ran departments that had nothing to do with the subprime crisis. Why should they be punished because of mistakes made by others.

I can sort of imagine someone convincing themselves that, to save Merill, they need to show a powerful optimistic presence, so why not spend over a million on your office. Also, when you're running Merill Lynch, a million bucks just doesn't seem like a lot of money.

What I have a harder time with is how incredibly tone-deaf Thain has been. Every one of these moves seems guaranteed to place him in the gunsights of every state attorney general and banking regulator and congressperson. He seems so blind to the fact that employees in his company and regular folks around the country will zero in on his excesses and choose him as the focus of their rage.

Why is there no moment in which he somehow shows that he is aware that the world in which he excelled was somewhat broken. It was, in part, built on nonsense. Shouldn't he feel some shame if not at his own excess than at his inability to spot the weak foundation of his entire universe?

I want that. I want him and others like him to 'fess up. To show us they know their excesses and arrogance are a bit ridiculous.

Maybe he knows all this and feels deep shame and is telling his friends or his family or his god. I doubt that.

There's something in me that feels unable to rest until I see that he KNOWS.

I'm not going to get that. I don't think. Not any time soon.

So, I find peace, oddly, in economics. I realize that my relationship with Thain is not like mine with my wife or my best friend or a co-worker. The role he and others like him play in my life is more like a machine in a factory. Our capitalist system, if it's working right, should create incentives that push him to make the US and world economies more productive. If they do it correctly then I benefit. Just like I benefit from the fact that factories are much more productive than they were 100 years ago or even 10 years ago. It makes my standard of living much higher; I can buy more goods with less money, I can sell my services to factory workers who make more money because they produce more goods.

If I found out that a machine in, say, an aircraft factory cost more than the benefit it brought the world, I wouldn't want the machine to feel bad. I wouldn't care if the machine was well taken care of and got to live in a really nice factory. I'd want it fixed or tossed away and replaced with a better machine.

I think it's fair to say that the Thain machine and many of the other bank CEO machines haven't fully earned their keep lately. So, I want them fixed.

To fix a CEO, you have to look at the incentive structure. You want them to make money when they actually make their companies more productive and you want them not to make money when they don't. The board of Merrill and the shareholders didn't insist on this. Or they thought they did but they did it wrong. There is a lot of talk now among academics and regulators (if not, yet, among board members and shareholders) about ways to get incentives right so that people who make a lot of money don't actually destroy the company that's paying them.

So, I think while the habit I learned from my dad is helpful--it is a good idea to try to figure out what makes even the jerkiest among us tick--it's not a path to peace on this one, I've found. For me, it's best to look at John Thain as a machine that was programmed improperly. Thinking of him as an actual human being just makes me too mad.

UPDATE: The WSJ publishes Thain's memo defending himself.

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Source: NPR Blogs: Planet Money | 26 Jan 2009 | 1:02 pm

FTSE-100 share index up 33.78 points at 4,086.25 (AP)

AP - Share prices on the London Stock Exchange were higher at midday Monday.
Source: Yahoo! News: Stock Markets News | 26 Jan 2009 | 1:02 pm

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