Screen Survivors

Edward Liddy: I'm Sensing Some Anger Ahead of his appearance before Congress today for tea and crumpets, AIG CEO Ed Liddy is waxing philosophic this morning in a Washington Post essay. Let's see what he has to say! You're pissed. That's obvious. Know who else is pissed? Ed Liddy. The anger is understandable, and I share it. I have been fortunate in more than three decades in business to see firsthand the wealth creation that well-managed American companies bring to their employees and their communities. I have seen the good side of capitalism. But over the past six months, since agreeing to take the reins of AIG and reviewing how it was run in prior years, I have also seen instances of the bad side of capitalism. There were a few missteps at AIG. Mistakes were made at AIG, and on a scale that few could have imagined possible. Do we get any credit for any of this? What also became clear is that once AIG's relationship with the government and taxpayers changed, our behavior as a company needed to change. So, of our own initiative, we suspended our federal lobbying activities and halted corporate political contributions. We also restricted executive compensation. In all, total 2008 compensation for the top 47 executives is 56 percent lower than their total 2007 compensation. My annual salary is $1. My only stake is my reputation. Give yourselves a hand. Taxpayers should know that the government's assistance to AIG has had a beneficial effect. The assistance has provided stability to the company and to the entire financial system. I needed to write something "rich" here, how does this sound? What lessons can we draw from AIG's experience? There must be safeguards against the systemic consequences of failures of large, interconnected financial institutions. Where safeguards are lacking, such companies need to be restructured or scaled back so they no longer come close to posing a systemic risk. We have seen all too clearly where the brink lies; our corporate structures need to be pulled back from that edge. This is America. In America, when you owe people money, you pay them. We are pressing forward with our plan to return money to taxpayers, protect policyholders, and give employees a vision of success and a path for achieving it. With the understanding and patience of the American people and the continued support of the Federal Reserve and the Treasury, we can resolve AIG's challenges and help its businesses contribute to a global economic recovery. Source: Dealbreaker | 18 Mar 2009 | 2:05 pm Curbs on risky banking proposed New rules on lending and curbs on excessive risk-taking by UK banks are proposed by the chairman of the City watchdog. Source: BBC News | Business | World Edition | 18 Mar 2009 | 1:26 pm Can B of A Really Pay the TARP Back That Fast? (BAC, C) There are reports flying around the web that Bank of America Corp. (NYSE: BAC) could pay back the TARP monies late in 2009 or in 2010.  In a report from teh Charlotte Observer, CEO Ken Lewis told a reporter this as being dependent on the economy.  He also reaffirmed a profitability note for 2009 barring an unexpected meltdown.  There are some interesting points that could get more heat off the bank. Another note that Ken Lewis gave was that he wants the bank to be making $30 billion per year before he leaves.  Lewis also told the Observer that he believes the bank will pass stress tests from the government.  The interview also showed how Lewis again said that taking so much second round TARP money got the bank lumped in with Citigroup Inc. (NYSE: C). What is interesting is that this “new” time frame is actually much sooner than what Lewis has said in the recent past.  We had a two to three year horizon in our prior notes of what Lewis had said.  He has said the bank could pay it back now if it wasn’t having to keep its capital ratios up because of the billion in troubled assets that have to be offset by solid capital. What is interesting here that was not conveyed in the interview is that Ken Lewis may inadvertently be cornering himself here.  There is a media and public feeding frenzy (a massive understatement) against wealth and against anyone on the government teat right now.  Lewis has hinted at some staggered payments before and hinted at profitability with an unstated metric of GAAP or from normalized operations. Lewis should start paying back TARP monies, even if it is staggered.  He will have much more leeway with what he can do in a climate where janitors and construction workers feel they have a say in what goes on in the business community.  B of A does currently have to keep offsetting the garbage on the books with good capital that could have otherwise be used to repay Uncle Sam ’s TARP money.  That may change if FASB really does get some new “exceptions” in for mark-to-market under some new guidelines.  Once Bank of America starts paying that money back, Lewis won’t have to tolerate as much heat. Here is a link to that full interview from the Charlotte Observer without our own commentary and analysis. JON C. OGG Tagged: BAC, C Source: 247 Wall Street | 18 Mar 2009 | 1:26 pm Stocks head to lower start ahead of Fed statement (AP) AP - Investors appeared ready to give up some of their recent gains Wednesday as they awaited the conclusion of the Federal Reserve's interest rate meeting. The government's report of a slightly higher than expected rise in inflation had little effect on trading. Source: Yahoo! News: Stock Markets News | 18 Mar 2009 | 1:17 pm Daewoo stands by Madagascar farm Daewoo Logistics of South Korea said that it was confident that Madagascar's new government would support its plan to lease a huge tract of farmland in the island to grow food crops to send back to Seoul – in spite of indications the deal will die with the departure of the ousted president Source: Financial Times - US homepage | 18 Mar 2009 | 1:16 pm Higher gas, clothing prices push up CPI (Reuters) Reuters - U.S. inflation rose in February on higher gasoline and apparel prices, government data showed on Wednesday, pointing to some pricing power in the recession-hit economy and easing fears of deflation for now. Source: Yahoo! News: Business | 18 Mar 2009 | 1:15 pm Stocks to dip at open, Fed unease offsets M&A (Reuters) Reuters - Stocks were set to dip at the open on Wednesday as investors turned cautious before the Federal Reserve's policy decision, tempering optimism from a report that IBM was in talks to buy computer maker Sun Microsystems . Source: Yahoo! News: Stock Markets News | 18 Mar 2009 | 1:15 pm Stocks to dip at open, Fed unease offsets M&A (Reuters) Reuters - Stocks were set to dip at the open on Wednesday as investors turned cautious before the Federal Reserve's policy decision, tempering optimism from a report that IBM was in talks to buy computer maker Sun Microsystems . Source: Yahoo! News: Business | 18 Mar 2009 | 1:15 pm Fed resumes meeting, focus seen on existing plans (Reuters) Reuters - The Federal Reserve resumed a two-day meeting on Wednesday that was expected to end with a vow to do whatever it takes to turn back the U.S. economy's deep recession but no new concrete steps to do so. Source: Yahoo! News: Business | 18 Mar 2009 | 1:12 pm Beacon Equity Issues Technical Trade Alerts on Market Movers: BZH, CEPH, NUE, ENER, AMD, HD DALLAS, March 18 /PRNewswire/ -- BeaconEquity.com announces the availability of Trade Alerts on stocks making news today. Investors can view all of the daily... Source: RSS feed - channel BNewsBusiness | 18 Mar 2009 | 1:10 pm Hallmark Financial Services Files Preliminary Proxy Statement to Elect its Nominees to the Board of Directors of Specialty Underwriters' Alliance FORT WORTH, Texas, March 18 /PRNewswire-FirstCall/ -- Hallmark Financial Services, Inc. (Nasdaq: HALL) announced today that it has filed with the U.S. Securities and Exchange... Source: RSS feed - channel BNewsBusiness | 18 Mar 2009 | 1:09 pm Fed resumes meeting, focus seen on existing plans WASHINGTON (Reuters) - The Federal Reserve resumed a two-day meeting on Wednesday that was expected to end with a vow to do whatever it takes to turn back the U.S. economy's deep recession but no new concrete steps to do so. Source: Reuters: Business News | 18 Mar 2009 | 1:09 pm Opening Bell: 03.18.09 Government Declares War On AIG, TARP Recipients (Bloomberg) The Government has literally gone batshit over this; members from both sides are now planning to introduce legislation that would tax bonuses at 70% for any company that has received federal funds. Geithner went ahead and took it a step further with AIG promising to accelerate the 'wind down' and recoup the money paid out by deducting the money from the next stimulus payout. Long story short, AIG never pays back all of the TARP money, so it doesn't matter anyway. Hedge Funds May Get AIG Cash (WSJ) In essence, while the U.S. government is busy trying to prop up the housing market -- by trying to limit foreclosures, among other things -- it is simultaneously putting up cash that could be used to pay off investors who bet housing prices would tumble and many mortgage holders would default. [...] The investment strategies involved are perfectly legal maneuvers. Still, the losses show how AIG strayed from its core business: selling standard insurance policies to businesses and individuals to protect against everything from fires to lawsuits. "AIG's financial-products division went heavily into the business of speculation, and its gambling debts are what taxpayers are paying off right now," said Martin Weiss of Weiss Research, an investment consultant in Jupiter, Fla. Wagoner Softens View Of Bankruptcy (WSJ) You really have to give it to this guy: he's a master spin artist. In a world where CEO's have started keeping things private until the very last second to then drop them on investors like a 40lb bags of flaming excrement, it's nice to see someone that actually takes the time to lay the ground work softening the general public before major action. This should also read as a pretty good indicator of the firm's general direction in the near future; they can now call in attorneys and bankers without there being a scandal. AIG/ML and anyone else who is looking to adjust/amend payouts to finance kids in the near future could learn a little from this. Buffett Called To Action, Investors Want Moody's Reform (NYT) The Oracle, a 20% stakeholder in Moody's, is facing pressures from his shareholders to do something to fix the company. Burning it to the ground would be a good start. "But on the subject of the conflict of interest built into the rating agencies' business model, Mr. Buffett has been uncharacteristically silent -- even though that conflict is especially glaring in his case because one of the companies that Moody's rates is Berkshire. (Its Aaa rating, for the record, is the same as the one from Standard & Poor's. Fitch downgraded Berkshire for the first time last week.)" Source: Dealbreaker | 18 Mar 2009 | 1:07 pm Goldman Sachs Downgrades Rio Tinto plc (RTP) to Sell Goldman Sachs downgrades Rio Tinto plc (NYSE: RTP) from Hold to Sell citing problematic debt and forecasted losses in the aluminum division for the next two years.   The firm also said there is risk Rio Tinto’s deal with China’s Chinalco (NYSE: ACH) isn’t approved after Australian lawmakers moved to vote for an inquiry into last month’s $19.5 billion funding deal amid growing criticism.. Read more… Tagged: ACH, RCP Source: 247 Wall Street | 18 Mar 2009 | 1:05 pm Higher gas, clothing prices push up CPI WASHINGTON (Reuters) - U.S. consumer prices rose in February on higher gasoline and apparel prices, government data showed on Wednesday, calming fears of deflation for now. Source: Reuters: Business News | 18 Mar 2009 | 1:03 pm Wall St anxious before Fed decision A major piece of acquisition news was not able to tempt US investors out of their caution as equities markets waited for news from the Federal Reserve on what action would be taken on asset purchase schemes Source: Financial Times - US homepage | 18 Mar 2009 | 1:03 pm New Research Finds Carrying Big Bills Curbs Spending U-Md. Business School Finds Large Denominations Help Shoppers Keep a Closed Wallet COLLEGE PARK, Md., March 18 /PRNewswire-USNewswire/ -- Keep large bills in your... Source: RSS feed - channel BNewsBusiness | 18 Mar 2009 | 1:01 pm J.P. Morgan Supports Money Market Working Group Recommendations NEW YORK, March 18 /PRNewswire/ -- J.P. Morgan Funds, the 4th largest mutual fund complex in the U.S. (FRC, 1/31/09), today affirmed its support of the recommendations contained Source: RSS feed - channel BNewsBusiness | 18 Mar 2009 | 1:00 pm Veterinary Pet Insurance Co. Reveals Top Ten Plant Poisoning Claims of 2008 Raisins, Mushrooms and Marijuana Top List of Toxic Plants Most Often Ingested BREA, Calif., March 18 /PRNewswire/ -- The wrath of grapes was, unfortunately, all... Source: RSS feed - channel BNewsBusiness | 18 Mar 2009 | 1:00 pm AMB Property Corporation(R) Leases 250,000 SF in Toronto Distribution Center SAN FRANCISCO, March 18 /PRNewswire-FirstCall/ -- AMB Property Corporation(R) (NYSE: AMB), a leading owner, operator and developer of industrial real estate, today... Source: RSS feed - channel BNewsBusiness | 18 Mar 2009 | 1:00 pm Dunkin' Donuts Launches National Contest Inviting Americans to Help Create Its Next Donut Visit href="http://www.dunkindonuts.com/">www.DunkinDonuts.com for a chance to win $12,000 and have your donut creation sold in Dunkin' Donuts stores across the... Source: RSS feed - channel BNewsBusiness | 18 Mar 2009 | 1:00 pm Grubb & Ellis Company Files 8-K Announcing Restatement of Financial Statements Company Also Files for Extension to File 10-K for 2008 Fiscal Year SANTA ANA, Calif., March 18 /PRNewswire-FirstCall/ -- Grubb & Ellis Company (NYSE: GBE), a... Source: RSS feed - channel BNewsBusiness | 18 Mar 2009 | 1:00 pm Integrity Mutual Funds, Inc. Announces Fourth Quarter and Year-End 2008 Results MINOT, N.D., March 18 /PRNewswire-FirstCall/ -- Integrity Mutual Funds, Inc. (OTC Bulletin Board: IMFD), a mutual fund and financial services company, today reported revenues for Source: RSS feed - channel BNewsBusiness | 18 Mar 2009 | 1:00 pm Shapiro Joins Taylor Capital as General Counsel ROSEMONT, Ill., March 18 /PRNewswire-FirstCall/ -- Taylor Capital Group, Inc. (Nasdaq: TAYC), the holding company for Cole Taylor Bank, today announced that Steven H. Shapiro has Source: RSS feed - channel BNewsBusiness | 18 Mar 2009 | 1:00 pm Price increases pick up speed Prices paid by consumers rose as a faster pace in February, as higher gas prices in the month fed into the highest inflation reading since July, the government said Wednesday. Source: Business and financial news - CNNMoney.com | 18 Mar 2009 | 12:59 pm Unexpected acts of economic heroism From feeding needy families to saving a stranger's home from foreclosure, these people are making personal sacrifices to help others out the doom and gloom. Source: Business and financial news - CNNMoney.com | 18 Mar 2009 | 12:56 pm Valero Takes the VeraSun Prize (VLO, ADM, VSUNQ) Valero Energy Corp. (NYSE:VLO) has won the auction for seven ethanol plants formerly owned by VeraSun Energy Corporation (VSUNQ), which is now in Chapter 11 bankruptcy. Valero will pay a total of $477 million for the seven plants. According to the AP, Archer Daniels Midland Inc. (NYSE:ADM) “participated” in the auction, but did not buy anything. ADM must be too busy looking at Brazilian sugar-cane ethanol producers. Three other lender groups submitted credit bids totaling $576 million for other VeraSun refineries and properties. Valero will operate its new ethanol refineriess through its Valero Renewable Fuels subsidiary. Valero’s 52-week range is $13.94-$55/share. Shares closed at $18.50 yesterday. Buying ethanol refineries is likely to keep the price down closer to the bottom than to the top of that range. Paul Ausick March 18, 200 Tagged: ADM, VLO, VSUNQ Source: 247 Wall Street | 18 Mar 2009 | 12:54 pm Wall Street waits for Fed, AIG Stocks were expected to open lower Wednesday as investors reacted to inflation in consumer prices. Source: Business and financial news - CNNMoney.com | 18 Mar 2009 | 12:53 pm BoJ ramps up purchase of government bonds The Bank of Japan is to increase its purchases of Japanese government bonds by nearly a third, the latest in a series of increasingly assertive measures by the central bank to respond to the pressures created by the global financial crisis and a fierce domestic recession Source: Financial Times - US homepage | 18 Mar 2009 | 12:52 pm Unemployment passes two million The number of people unemployed across the UK goes above the two million mark for the first time since 1997. Source: BBC News | Business | World Edition | 18 Mar 2009 | 12:51 pm US consumer prices rise in February Prices in the US rose in February for the second consecutive month on the back of rebounding energy prices, the labour department said Source: Financial Times - US homepage | 18 Mar 2009 | 12:51 pm Top Analyst Upgrades (AAP, AZO, ED, CRH, DHR, LLY, INTC, LEAP, ORLY, SEIC) These are te upgrades and positive research calls that we have seen from Wall Street this Wednesday morning: Advance Auto Parts (AAP) Started as Outperform at Baird. AutoZone (AZO) Started as Outperform at Baird. Con Edison (ED) Raised to Buy at Jefferies. CRH plc (CRH) Raised to Buy at Goldman Sachs. Danaher (DHR) Raised to Outperform at William Blair. Eli Lilly (LLY) Raised to Buy at Citigroup. Intel (INTC) Raised to Buy at Needham. Leap Wireless (LEAP) Raised to Overweight at Thomas Weisel. O’Reilly Automotive (ORLY) Started as Outperform at Baird. SEI Investments (SEIC) Raised to Outperform at KBW. JON C. OGG Tagged: AAP, AZO, CRH, DHR, ED, INTC, LEAP, LLY, ORLY, SEIC Source: 247 Wall Street | 18 Mar 2009 | 12:47 pm China scuttles Coke bid to take over juice maker BEIJING/HONG KONG (Reuters) - China has rejected Coca-Cola's planned $2.4 billion acquisition of top juice maker Huiyuan Juice, saying the deal would have been bad for competition. Source: Reuters: Business News | 18 Mar 2009 | 12:47 pm Top Analyst Downgrades (AEG, ASTI, AVR, NU, RDS-A) These are the top analyst downgrades and negative research calls we have seen on Wall Street this Wednesday morning: Aegon (AEG) Cut to Sell at UBS. Ascent Solar (ASTI) Cut to Sell at Cantor Fitzgerald. Aventine Renewable (AVR) Cut to Underperform at Credit Suisse. Northeast Utilities (NU) Cut to Hold at Jefferies. Royal Dutch Shell (RDS-A) Cut to Hold at Citigroup. JON C. OGG Tagged: AEG, ASTI, AVR, NU, RDS-A Source: 247 Wall Street | 18 Mar 2009 | 12:45 pm Bank chief executives have bought just £1500 worth of bank shares since September The Chairmen and CEOs of the UK banks have bought just £1500 worth of shares since the collapse of Lehman Brothers. Source: Telegraph Finance | 18 Mar 2009 | 12:44 pm European, Asian markets edge higher ahead of Fed (AP) AP - Most stock markets rose modestly Wednesday ahead of an announcement from the U.S. Federal Reserve, which is expected to leave interest rates unchanged but also say how far it intends to boost credit markets with cash injections. Source: Yahoo! News: Stock Markets News | 18 Mar 2009 | 12:32 pm China scuttles Coke bid to take over juice maker (Reuters) Reuters - China has rejected Coca-Cola's planned $2.4 billion acquisition of top juice maker Huiyuan Juice, saying the deal would have been bad for competition. Source: Yahoo! News: Business | 18 Mar 2009 | 12:32 pm Boost from 'printing money' may take months The Bank of England believes that it may take “many months” before the full benefits of its radical strategy of creating new money to boost the economy will be felt, it emerged today. Source: Latest Business News from Times Online | 18 Mar 2009 | 12:30 pm 1971: What else happened? Source: Telegraph Finance | 18 Mar 2009 | 12:29 pm Lord Turner: a man under pressure to tighten the grip on banks Lord Turner the chairman of the Financial Services Authority has today unveiled his widelyanticipated review of the UK's financial services industry. Source: Telegraph Finance | 18 Mar 2009 | 12:28 pm Oil retreats towards $48 after U.S. stock build LONDON (Reuters) - Oil fell from a 2-1/2-month high toward $48 a barrel on Wednesday after industry data showed large builds in U.S. crude stocks. Source: Reuters: Business News | 18 Mar 2009 | 12:25 pm IBM in talks to buy Sun Microsystems: report BANGALORE (Reuters) - IBM is in talks to buy Sun Microsystems Inc for at least $6.5 billion, The Wall Street Journal reported, in a deal that could bolster their computer server products against rivals such as Hewlett-Packard Co. Source: Reuters: Business News | 18 Mar 2009 | 12:21 pm Bonds wait to see if Fed's a buyer Treasury prices were basically unchanged Wednesday, ahead of what could be a critical decision by the U.S. government to buy up its own debt. Source: Business and financial news - CNNMoney.com | 18 Mar 2009 | 12:19 pm General Mills profit below view but outlook raised NEW YORK (Reuters) - General Mills Inc posted a lower-than-expected quarterly profit on Wednesday, hurt by the effect of the stronger dollar and high costs, but the food maker raised its full-year outlook, citing strong sales in the first nine months and lower costs in the current quarter. Source: Reuters: Business News | 18 Mar 2009 | 12:10 pm Signs of Hope for Housing? (BusinessWeek Online) BusinessWeek Online - This St. Patrick's Day, even the economic data reports were wearing green. In a welcome surprise, U.S. housing starts jumped 22% in February, according to a report released Mar. 17. The news helped boost various housing-related stocks, including builders Ryland and KB Home , as well as retailer Home Depot . Another Mar. 17 release on wholesale inflation was also encouraging, as it showed inflation remains well under control -- something to comfort Federal Reserve policymakers as they kicked off their two-day policy meeting. Source: Yahoo! News: Business | 18 Mar 2009 | 12:08 pm Stock futures flat as IBM deal talk offsets Fed caution NEW YORK (Reuters) - Stock futures were little changed on Wednesday as a report that IBM was in talks to buy computer maker Sun Microsystems offset caution before the Federal Reserve's policy decision. Source: Reuters: Business News | 18 Mar 2009 | 12:07 pm MarketWatch First Take: Regulators should focus on enforcement, not new territory When it comes to the history of the credit crunch, who performed worse, the hedge funds or the regulators? Source: MarketWatch.com - Top Stories | 18 Mar 2009 | 12:07 pm FSA may outlaw super-sized mortgages Homebuyers could be forced to put down a deposit of at least 15 per cent - the equivalent of £24,000 in today's market - under measures announced today. Source: Latest Business News from Times Online | 18 Mar 2009 | 12:03 pm Lord Turner calls for sweeping revolution in financial services industry The financial services industry needs a sweeping revolution in regulation to prevent a repeat of the financial crisis. Source: Telegraph Finance | 18 Mar 2009 | 12:02 pm NewsWatch: Futures extend losses after data, with Fed, IBM in focus U.S. stock futures were indicating a weaker start on Wednesday, with investors nervous ahead of the results of the Federal Reserve meeting and also watching potential mega-merger action between International Business Machines and Sun Microsystems. Source: MarketWatch.com - Top Stories | 18 Mar 2009 | 12:00 pm Economic Report: Consumer prices rise 0.4% on higher gas prices With energy prices rising at the fastest rate in seven months, U.S. consumer prices increase a seasonally adjusted 0.4% in February, the Labor Department reports. Source: MarketWatch.com - Top Stories | 18 Mar 2009 | 11:56 am Indications: Futures extend losses after data, with Fed, IBM in focus U.S. stock futures were indicating a weaker start on Wednesday, with investors nervous ahead of the results of the Federal Reserve meeting and also watching potential mega-merger action between International Business Machines and Sun Microsystems. Source: MarketWatch.com - Top Stories | 18 Mar 2009 | 11:55 am Chinese government denies Coca Cola's bid to buy juice company Reporting from Shanghai -- In the first major test of China's new anti-monopoly law, the Chinese government denied Coca-Cola Co.'s $2.4 billion bid to buy a leading juice producer, saying that the deal could restrict competition and lead to higher prices for consumers. Source: L.A. Times - Business | 18 Mar 2009 | 11:51 am Chinese government denies Coca Cola's bid to buy juice company Reporting from Shanghai -- In the first major test of China's new anti-monopoly law, the Chinese government denied Coca-Cola Co.'s $2.4 billion bid to buy a leading juice producer, saying that the deal... Source: RSS feed - channel BNPaperBusiness | 18 Mar 2009 | 11:51 am U.S. to claw back AIG bonuses, lawmakers eye tax WASHINGTON (Reuters) - The Obama administration turned up the heat on AIG on Tuesday over its employee bonuses, saying the embattled insurer will be forced to repay U.S. taxpayers before it gets another bailout of $30 billion. Source: Reuters: Business News | 18 Mar 2009 | 11:47 am Laid off? Tips to keep health coverage With pink slips accelerating nationwide, health care experts say it's a good idea for everyone - even those who feel their job isn't at risk - to know about their health care rights and options. Source: Business and financial news - CNNMoney.com | 18 Mar 2009 | 11:46 am Before the Bell: IBM, Sun, General Mills Coca-Cola in focus U.S. stock futures were indicating a weaker start for Wall Street on Wednesday, with investors nervous ahead of the results of the Federal Reserve meeting and also watching potential mega-merger action between International Business Machines and Sun Microsystems. Source: MarketWatch.com - Top Stories | 18 Mar 2009 | 11:39 am Higher costs eat into General Mills' profit While demand for its Big G cereals and Totino’s pizza increased as consumers ate more at home, General Mills Inc.’s third-quarter profit fell 33%, hurt by higher product costs and marketing expenses. Source: MarketWatch.com - Top Stories | 18 Mar 2009 | 11:39 am FundWatch: Managers' view on economy improves, risk appetite weakens Fund managers are their most optimistic about the outlook for the global economy since late 2005, thanks to renewed hopes for growth in China, though risk appetite has deteriorated, according to Merrill Lynch’s monthly survey. Source: MarketWatch.com - Top Stories | 18 Mar 2009 | 11:36 am Corrections: CNBC's worry: Stewart's barbs could help Fox, Bloomberg On March 18, the MarketWatch column “Media Web” misspelled the name of CNBC spokesman Brian Steel. Source: MarketWatch.com - Top Stories | 18 Mar 2009 | 11:31 am Jon Friedman's Media Web: CORRECT: CNBC's worry: Stewart's barbs could help rivals When Jon Stewart excoriated CNBC on “The Daily Show,” he barely mentioned its competition. That seemed to imply that the Fox Business Network and Bloomberg TV were so inconsequential by comparison that they weren’t even worth noting. But that may all change. Source: MarketWatch.com - Top Stories | 18 Mar 2009 | 11:30 am Bank of Communications Q4 net profit falls 2% Bank of Communications, China's fourth-largest bank by assets, said Wednesday its net profit for the September-through-December period fell 2%. Source: MarketWatch.com - Top Stories | 18 Mar 2009 | 11:28 am UK unemployment in numbers Unemployment tops the 2 million mark as the recession deepens. Source: Telegraph Finance | 18 Mar 2009 | 11:27 am World Bank lowers China forecast The World Bank cuts its forecast of China's economic growth in 2009 to 6.5% from 7.5% because of falling demand for its exports. Source: BBC News | Business | World Edition | 18 Mar 2009 | 11:27 am Companies Market to Women in Tough Times The Economist describes how some recession-stricken companues are looking to female consumers as a new source of income: In America, where female consumers make more than 80% of discretionary purchases, companies have started tailoring their products and messages to appeal to women, in an effort to boost their sales. Frito-Lay, a snack-food company owned by PepsiCo, has launched a campaign called “Only In A Woman’s World” to convince women that crisps and popcorn are not just for male, beer-guzzling sport fans. OfficeMax, America’s second-largest office-supplies company, has redesigned its notebooks and file-holders to appeal to women and has run advertisements that encourage women to make their cubicles more colourful. For the first time, McDonald’s was a sponsor of New York Fashion Week in February, promoting a new line of hot drinks to trendsetting women. Eric Almquist, head of global consumer insights for Bain & Company, a consultancy, says he is surprised it has taken a recession to get companies to focus on women. After all, it is hardly news that they control the vast majority of consumer spending. (They buy 90% of food, 55% of consumer electronics, and most of the new cars.) But the recession has prompted companies to rethink their approach. Aside from their greater purchasing clout, women are valuable customers for three reasons. First, they are loyal, says Marti Barletta, author of “Marketing to Women”, and more likely to continue to buy a brand if they like it. Second, women are more likely than men to spread information about products they like through word of mouth and social-networking sites. Third, most of the lay-offs so far in America have been in male-dominated fields, like manufacturing and construction. This means women may bring home a greater share of household income in the months ahead and have even more buying power. That’s a smart move by companies. In essence, feminizing products (will OfficeMax be creating leopard print file holders?) is expanding the concept of fashion or trendsetting to products that haven’t been subject to it in the past. Cute products that fit a woman’s sense of style and expression will always be in demand, even if it’s something as small as a stapler. Feminizing mundane products also divides a unisex market (like computer monitors) into two distinct niches. If she buys a lavender computer monitor, he won’t want to use it, at least not in public. So he is more apt to buy his own computer monitor. If it worked for razors, it could work for anything. The trick is to price the product attractively enough that women will reach for it. I look forward to seeing what feminine potato chips look like. Source: Business Pundit | 18 Mar 2009 | 11:26 am Best deals of the day: Wine Today we've tracked down bargains on wine. Source: Telegraph Finance | 18 Mar 2009 | 11:26 am IBM in talks to buy Sun Microsystems: report (Reuters) Reuters - IBM is in talks to buy Sun Microsystems Inc for at least $6.5 billion, The Wall Street Journal reported, in a deal that could bolster their computer server products against rivals such as Hewlett-Packard Co. Source: Yahoo! News: Business | 18 Mar 2009 | 11:23 am Debt defaults rise 4% as downturn worsens Increasing numbers of borrowers are being taken to court over bills and loans they can not pay as the credit crunch and the sharp economic downturn takes its toll on over-stretched consumers. Source: Latest Business News from Times Online | 18 Mar 2009 | 11:20 am IBM in talks to buy Sun Microsystems - report Read full story for latest details. Source: Business and financial news - CNNMoney.com | 18 Mar 2009 | 11:09 am Rate Alert: Cash in on the bonus for a higher rate More and more providers are launching accounts with bonuses in order to pay savers a reasonable rate of interest. Source: Telegraph Finance | 18 Mar 2009 | 11:06 am Asia, Europe markets edge higher after US rally (AP) AP - Most Asian and European markets rose modestly Wednesday after an overnight surge on Wall Street, while Tokyo shares were buoyed by fresh support for the wobbly financial system from the Japanese central bank. Source: Yahoo! News: Stock Markets News | 18 Mar 2009 | 10:53 am GE's credibility gap with investors General Electric stock has fallen 72% over the past year amid concerns about rising losses at its finance arm, GE Capital. In an attempt to reassure investors, the company will deliver a detailed, five-hour presentation on GE Capital to investors in New York this Thursday. Source: Business and financial news - CNNMoney.com | 18 Mar 2009 | 10:32 am Stock futures point to lower open; eyes on Fed (Reuters) Reuters - U.S. stock index futures pointed to a lower open on Wall Street on Wednesday as investors awaited decisions from the Federal Reserve's two-day policy setting meeting. Source: Yahoo! News: Stock Markets News | 18 Mar 2009 | 10:32 am Reading into Palm's future Palm, which invented the smartphone, is on a roll, but not with anything it sells today. Source: Business and financial news - CNNMoney.com | 18 Mar 2009 | 10:31 am Rio shares plunge as Chinalco doubts grow Shares in Rio Tinto plunged almost 9 per cent in Australia today amid growing opposition to the planned $19.5 billion deal with Chinalco, the Chinese state-owned metals group.$ Source: Latest Business News from Times Online | 18 Mar 2009 | 10:26 am The totally wired home In George Jetson's cartoon home, every appliance -- coffeemaker, alarm clock, refrigerator -- is powered by a computer and networked together. Soon that "networked home" (once the stuff of animation and science fiction) could become a reality: This summer a group of personal computer veterans will start selling Fugoo, a brick-size box that will plug into specially outfitted home appliances and connect them to the Internet -- and one another -- via broadband wireless systems. Source: Business and financial news - CNNMoney.com | 18 Mar 2009 | 10:22 am AIG (AIG) May Pay Money To Hedge Funds Since AIG (AIG) is handing out money to anyone it can find, why not give some cash to hedge funds to help them show profits and potentially make their partners millions of dollars. According to The Wall Street Journal, “Some of the billions of dollars that the U.S. government paid to bail out American International Group Inc. stand to benefit hedge funds that bet on a falling housing market.” It would be a shame to see those hedge funds fail. Douglas A. McIntyre Source: 247 Wall Street | 18 Mar 2009 | 10:13 am Traders Turn Cautious Before the Fed (Market Update) News at a Glance Fed Day: Monetary policy statement due out at 2:15 p.m. Weak Start: Dow, S&P 500 futures lower before Fed. China 1, Coke 0: $2.4 bln buyout of juice firm rejected. Bonus Round: Treasury to force AIG to repay bonsuses. The Lowdown Traders took a breather Wednesday morning after another big rally. Stocks looked to open a bit lower ahead of the latest statement on monetary policy from the Federal Reserve and an update on the inflation picture. Shortly before 8:30 a.m., Dow, Nasdaq and S&P 500 futures were trading below fair value. The Fed's policy statement is scheduled to be released at 2:15 p.m., and most economists predict the group will leave the federal funds rate between 0.00% and 0.25%. Of cousre, the market's reaction to the Fed's statement typically has less to do with what the Federal Open Market Committee says than how it says it. Traders, pundits and economists will scour the language of the statement for clues about the health of the economy and the outlook for inflation. The Fed may also hint at other stimulative actions that go beyond changes to monetary policy. In other economic news, the Consumer Price Index rose last month by a hair more than economists had expected. Core prices also offered a small surprise. In Washington, outrage over executive compensation hit a fever pitch. Lawmakers and other officials moved to punish AIG (AIG) for its decision to hand out $165 million in bonuses to its employees after having received more than $170 billion in bailout funds from the federal government. Treasury Secretary Timothy Geithner said in a letter to Congress that the firm should be forced to return to the Treasury the sum of its bonuses and be penalized the same amount by subtracting $165 million from the firm's next bailout installment ($30 billion). Separately, Sens. Max Baucus (D-Mt.) and Chuck Grassley (R-Iowa) announced plans Tuesday to levy a hefty tax on bonuses given to employees of firms receiving federal bailout money. AIG will have an opportunity to defend itself this morning. Chairman and chief executive Edward M. Liddy will testify before a House Financial Services subcommittee at 10 a.m. to discuss the importance of keeping the firm afloat. (There may be a question or two on bonuses, as well.) In energy, oil prices slipped in early trading. By 8:28 a.m., crude traded down 68 cents at $48.48 a barrel. World markets were mostly higher. In Asia, Japan's Nikkei picked up 0.3%, while Hong Kong's Hang Seng rose 1.9%. In Europe, the U.K.'s FTSE took a dip in afternoon trading. Corporate News IBM (IBM) is in talks to acquire Sun Microsystems (JAVA), The Wall Street Journal reported, citing anonymous sources. A deal would give IBM a larger online presence but could cost the firm upwards of $6.5 billion. The Chinese government rejected a bid by Coca-Cola (KO) to acquire China Huiyuan Juice for $2.4 billion, Reuters reported. Citing a negative effect on competition, China's Ministry of Commerce shot down the deal, which would have been the largest acquisition of a Chinese firm by a foreign company. Adobe Systems (ADBE) met Wall Street estimates for the first quarter and predicted a second quarter in line with analysts' projections, as well. During Q1, Adobe earned $156 million, or 30 cents a share, down from $219 million, or 38 cents a share, in the year-ago period. The Economy The Consumer Price Index rose 0.4% in February, up from a 0.3% gain in January, the Labor Department said. Economists had expected the CPI to have risen 0.3% last month. Excluding volatile food and energy prices, the core CPI 0.2% last month after a comparable gain in January. Economists had expected the core CPI to have risen 0.1% last month. REPORT The crude inventories report for last week is scheduled to be released Wednesday at 10:30 a.m. by the Energy Department. In the prior week, inventories were above the upper limit of the average range for this point in the year. The Federal Reserve is scheduled to hand down its statement on monetary policy at 2:15 p.m. The Fed is widely expected to leave the target for the federal funds rate at its record low of between 0.00% and 0.25%. When the Fed last met at the end of January, the group scaled back its economic projections for the year based on weak data. The Fed's next meeting on monetary policy is scheduled for April 28-29. SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved. Source: SmartMoney.com | 18 Mar 2009 | 10:04 am Beginning To Think The Worst About China’s Growth The sound of China’s claims that its economy will grow at 8% or better this year are getting faint. According to the FT, “The World Bank  lowered its forecast for China’s GDP growth this year to 6.5 per cent, down from 7.5 per cent it predicted at the end of November last year, following a huge drop in exports and shrinking private sector investment.” Even that estimate may be too high. China’s factory production and export figures appear to be too low to support rapid GDP growth. That would mean spending inside the country would have to be extraordinary. This may end up being the case as the central government puts $600 billion into the economy to offset the slowdown in the world’s GDP growth. While the move may help China’s growth, it is artificial and because of that it is probably not sustainable. Once the $600 billion has been handed out, China may be left with only two options. The first is to spend another $600 billion. The second is to hope that business and consumer activity will pick up in the US, EU, and Japan, pushing up China’s export figures. What would GDP growth in the world’s most populous nation be without a huge aid package? Probably far less than 6% Douglas A. McIntyre Source: 247 Wall Street | 18 Mar 2009 | 10:02 am IBM (IBM) To Pay Too Much For Sun (JAVA) In a weak economy, troubled companies should never be bought at a premium. No one has mentioned that to IBM (IBM) which is looking at paying $10 a share for Sun Micro (JAVA) which would be almost 100% higher than where the stock trades now. Sun as been an also-ran in the server industry for close to a decade. It is hard to see what strategic value it has to IBM, but the larger company is flush with cash, and may not be able to help itself. Sun has a long history of M&A activity that has done almost nothing to improve earnings. It has also been adroit at firing people. But, the company has not had any significant top-line growth in years. It has used cash to buy back its own shares. The move has done nothing to keep the stock price up, and, therefore, has done nothing for shareholders the way that a special dividend might have. According toThe Wall Street Journal, “Acquiring Sun would bolster IBM as it takes on a new rival, Cisco Systems Inc., the networking company, which this week announced that it would start selling a server of its own.” The investment would seem like an expensive way to pick up market share especially in the server business where machines are increasingly becoming commodities which has to put price pressure on vendors. For Sun shareholders it does not matter who buys the company. It will end their trail of suffering. Douglas A. McIntyre Tagged: CSCO, HPQ, IBM, JAVA Source: 247 Wall Street | 18 Mar 2009 | 9:49 am The road to AIG's ugly, ugly bailout So how did it come to this? How did American International Group go from insurance industry giant to national outcast? Source: Business and financial news - CNNMoney.com | 18 Mar 2009 | 9:45 am Jobless total rockets to two million Money guides: unemployment benefit explained Source: Latest Business News from Times Online | 18 Mar 2009 | 9:40 am UK unemployment jumps at fastest pace on record Unemployment tops the 2 million mark as the recession deepens. Source: Telegraph Finance | 18 Mar 2009 | 9:38 am AIG (AIG): Paying Taxpayers Back With Taxpayer Money Using the oblique reasoning techniques of politicians, the Administration has decided to get back the big bonuses that AIG paid to some of its employees by withholding the next of many payments made to the insurance company. Without the infusions, the company would have gone under and may still falter in the future. According to Reuters, the barely competent Treasury Secretary Timothy Geithner will insist that AIG pay back taxpayers the $165 million in bonuses before the government will send AIG its next $30 billion in bailout cash. The news service reports that Geithner wrote in a letter to Congress, “We will impose on AIG a contractual commitment to pay the Treasury from the operations of the company the amount of the retention awards just paid.” The planned action is hardly more than spitting into a strong wind. AIG’ paid out the bonuses, probably obtained by the employees fair and square in outrageous employment packages. No one seems to have disclosed the name of the people who signed the agreements on behalf of AIG, or who approved them in the first place. AIG’s clueless CEO, Edward Libby, will go before Congress to try to explain that. The long and short of it is that AIG will pay back taxpayers for the bonuses using taxpayer money. AIG has no money of its own. It has planned to sell off some of its divisions to raise capital. With one or two exceptions, there have been no takers. Perhaps the cause of that is tight credit markets, or perhaps the AIG operations that are one the block are not terribly attractive. After a day or two of thrashing AIG and its employees, Congress and the Treasury can pretend to use government bailout money to pay the government back. Or, they can hang on to the issue because it makes for a good political circus. If the latter path is the preferred plan, the business of putting hundreds of billions of dollars into the economy to save it from a deepening recession can be put off to the side of the agenda and the most important work of the Administration can be delayed. Douglas A. McIntyre Tagged: AIG Source: 247 Wall Street | 18 Mar 2009 | 9:36 am Japanese interest rates unchanged Japan's central bank leaves interest rates unchanged and says it will buy more government bonds to revive the economy. Source: BBC News | Business | World Edition | 18 Mar 2009 | 9:35 am London stocks rise in early trade (AFP) AFP - London stocks rose in early trade on Wednesday after Tokyo closed at a five-week high and Wall Street rallied overnight Source: Yahoo! News: Stock Markets News | 18 Mar 2009 | 9:20 am China rejects Coca-Cola bid for juice group Coca-Cola’s ambitions to lead the largest takeover of a Chinese company were dashed today when Beijing rejected its bid for the country's top juice maker. Source: Latest Business News from Times Online | 18 Mar 2009 | 9:18 am UK recession will be longer and deeper says IMF Britain will take longer to recover from the recession than any other major economy according to an IMF report. Source: Telegraph Finance | 18 Mar 2009 | 9:16 am IBM in talks to buy SunMicrosystems for 6.5bn IBM the computer technology and IT consulting company is in talks to buy troubled computer company Sun Microsystems for up to 6.5bn £4.65bn according to reports. Source: Telegraph Finance | 18 Mar 2009 | 9:07 am Falling In Love With The Sucker Rally (C)(GE)(SIRI)(AAPL) The market rise of the last two weeks has been described as a “sucker” or a bear market rally. One means about the same as the other. The premise is that the long term trend of the indexes is down. Once in awhile, investors will stir from their depressions to watch the dead cat bounce. In this case, the Dow is up 10% since March 9. The last long rally the market had ran from March of 2003, when the DJIA was 7,740 to almost 14,100 in October 2007. An investor in an index fund doubled his money and did even better if dividends were factored in. No one calls the long leg up in the market a sucker rally, but it was for those who did not sell their stocks until early this month when the Dow dropped below 6,600. What defines a sucker rally is simply a matter of perspective, and, more importantly, when investors buy and sell. Someone with the fortitude or foresight to buy Citigroup (C) earlier this month at $1 would have had a return of two-and-a-half times in a matter of days. It is pointless to figure out what that would be on an annualized basis. Citi is not going to $5,000 in the next year, so doing the math doesn’t matter. A well timed investment in GE (GE) could be worth a 71% return, also in less than a month. Sirius (SIRI) is up 7x from its low of $.05 which was set only a month ago. Even Apple (AAPL) has moved up 27% in a very short period of time. There really is not any such thing as a sucker rally. There are only suckers. In the long bull market that stretched over nearly four years, many investors who made five or six times their initial investment did not cash out in 2007. Some did not take even a small part of their gains and put them into CDs or yen futures. They just let the money ride which means that they assumed that the market was due to double again. The last two weeks of explosive movement in the market will not continue. The market may have made a turn, and it may trade much higher in a year than it does now. But, a 10% return every two weeks is less probable than the Republic of Madagascar putting a man on the moon during the next decade. People who give investment advice make their living getting other people to gamble their money away.  These advisers want people to listen to predictions which could cause them to lose their life’s savings. Owning a stock that is up by a factor of three or four times in less than a month is a blessing, perhaps not a celestial one, but it is a sign, at least, that fate has been kind. Even the most fabulously gifted investor in the world could not have predicted that Citigroup shares would rebound so far, so fast. Someone will sell Citigroup tomorrow, and someone else will hold it while it goes to $5 or back to $1. As W.C. Fields said, “Never wise up a chump.” Douglas A. McIntyre Tagged: AAPL, C, GE, SIRI Source: 247 Wall Street | 18 Mar 2009 | 8:56 am Google's UK boss moves Stateside The head of Google in the UK has been promoted to oversee the search engine’s advertising sales in North and South America, less than a week after his predecessor of eight years left to join AOL. Source: Latest Business News from Times Online | 18 Mar 2009 | 8:31 am French Connection slumps to £17.4m loss French Connection piled more misery on the high street this morning as the fashion chain slumped to an annual loss, axed its final dividend and warned of more hard times to come. Source: Latest Business News from Times Online | 18 Mar 2009 | 8:06 am Coke's China juice move collapses Chinese authorities reject a $2.4bn bid by Coca-Cola for the country's biggest maker of fruit juice. Source: BBC News | Business | World Edition | 18 Mar 2009 | 8:03 am IBM eyes Sun Microsystems for $6.5bn$ IBM is in talks to buy Sun Microsystems in a move that would strengthen its position against Hewlett-Packard and bolster its influence on the Internet, it was reported today. Source: Latest Business News from Times Online | 18 Mar 2009 | 7:58 am French Connection in £17.4m loss French Connection reports a £17.4m loss after it cut prices to boost sales and wrote down the value of its US unit. Source: BBC News | Business | World Edition | 18 Mar 2009 | 7:54 am China blocks Coca-Cola bid for Huiyuan China formally rejected Coca-Cola's proposed $2.4bn takeover of the country's leading juice maker on competition grounds Source: Financial Times - US homepage | 18 Mar 2009 | 7:51 am World Bank cuts China 2009 forecast The World Bank lowered its forecast for China's 2009 economic growth but warned Beijing that it would be thwarting its own medium-term goals if it tried to offset the slowdown by further boosting investment Source: Financial Times - US homepage | 18 Mar 2009 | 7:37 am Singapore PM warns over economy Singapore's Prime Minsiter Lee Hsien Loong tells the BBC his country's economy is in its worst state in decades. Source: BBC News | Business | World Edition | 18 Mar 2009 | 7:24 am House committee scrutinizes Merrill bonuses (Reuters) - The chairman of the House Committee on Oversight and Government Reform has asked for records on the $3.62 billion of year-end bonuses at Merrill Lynch, to see if the panel was misled about the payments, the Wall Street Journal said. Source: Reuters: Business News | 18 Mar 2009 | 7:12 am Australian stocks: Market little changed SYDNEY - The Australian share market closed steady after being dragged back from early highs by resource stocks including Rio Tinto as political opposition intensified over the planned $19.5 billion investment by China's state-owned... Source: New Zealand Herald - Business | 18 Mar 2009 | 7:05 am Southland median home price holds to $250,000 in February The figure is unchanged from January but is down 39% from a year earlier. Lower prices boost sales 41%. Home prices... Source: RSS feed - channel BNPaperBusiness | 18 Mar 2009 | 7:00 am IPhone 3.0 update cures headaches Users will finally be able to cut and paste, handle MMS texts and more. (Did we mention cut and paste?) Apple... Source: RSS feed - channel BNPaperBusiness | 18 Mar 2009 | 7:00 am When outrage fatigue sets in It's hard to get steamed about the AIG bonuses after months of hearing about scandals that have emerged from this financial mess. A strange thing happened the other day. A radio producer called me up seeking some outrage over this AIG thing, those millions of dollars in bonuses handed out even as billions in taxpayer cash flooded in to keep the insurance giant afloat. Source: L.A. Times - Business | 18 Mar 2009 | 7:00 am Criticized British banker gets pension advance Fred Goodwin is the former chief of the Royal Bank of Scotland. It was saved from collapse by a government bailout, and the pension he negotiated before stepping down has outraged Britons. ... Source: RSS feed - channel BNPaperBusiness | 18 Mar 2009 | 7:00 am National Union of Healthcare Workers gets its first members A new Oakland-based union -- the product of a brutal fight between the elected leaders of healthcare workers in Northern California and their superiors in Washington -- announced Tuesday that it had gained... Source: RSS feed - channel BNPaperBusiness | 18 Mar 2009 | 7:00 am Surge in sales bypasses commercial market Lenders and investors have fled to the sidelines in fear, and tenants are staying put. The low prices and interest rates stimulating sales of residential real estate have done nothing to help the market for commercial buildings. Source: L.A. Times - Business | 18 Mar 2009 | 7:00 am Southland median home price holds to $250,000 in February The figure is unchanged from January but is down 39% from a year earlier. Lower prices boost sales 41%. Home prices in Southern California held steady in February for the first time in nearly a year, figures released Tuesday show, as low prices brought buyers back into the market. Source: L.A. Times - Business | 18 Mar 2009 | 7:00 am MGM Mirage says auditors question its ability to stay in business The Las Vegas casino operator also reports a $1.15-billion loss in its latest quarter as it wins a two-month bank reprieve to restructure its debts. ... Source: RSS feed - channel BNPaperBusiness | 18 Mar 2009 | 7:00 am Surge in sales bypasses commercial market Lenders and investors have fled to the sidelines in fear, and tenants are staying put. The low prices and interest... Source: RSS feed - channel BNPaperBusiness | 18 Mar 2009 | 7:00 am AIG bonus flap may cost recipients Lawmakers aim to place a huge levy on the money. The firm will pay $165 million and lose that amount in bailout funding. The government will deduct $165 million in proposed aid to bailed-out American International Group Inc. to recoup the cost of bonuses paid to employees of the giant insurer last week, Treasury Secretary Timothy F. Geithner said Tuesday. Source: L.A. Times - Business | 18 Mar 2009 | 7:00 am CBS gets applause from Wall Street The network's success in prime time wins praise from one analyst, sending shares up Tuesday. Will all this translate into ad sales later in the year? High TV ratings, low stock price: That's been the bittersweet script for CBS Corp. this season. Source: L.A. Times - Business | 18 Mar 2009 | 7:00 am Stocks record 5th gain in six sessions The Dow rises 2.5%, the Nasdaq 4.1% and the S & P 3.2%. Buyers may be seeing some hope that the economy has stopped getting worse. ... Source: RSS feed - channel BNPaperBusiness | 18 Mar 2009 | 7:00 am When outrage fatigue sets in It's hard to get steamed about the AIG bonuses after months of hearing about scandals that have emerged from this financial mess. A strange... Source: RSS feed - channel BNPaperBusiness | 18 Mar 2009 | 7:00 am IRS giving relief to some Madoff investors The agency issues guidelines that could help many of the 4,800 victims of the $65-billion investment fraud recoup some losses by seeking reimbursement of up to five years of past tax payments. Victims of New York financier-swindler Bernard Madoff will get tax relief from Uncle Sam, but not as much as some had hoped. Source: L.A. Times - Business | 18 Mar 2009 | 7:00 am Stocks record 5th gain in six sessions The Dow rises 2.5%, the Nasdaq 4.1% and the S & P 3.2%. Buyers may be seeing some hope that the economy has stopped getting worse. It's getting safer to peek at your 401(k) account. Source: L.A. Times - Business | 18 Mar 2009 | 7:00 am Tech ventures running lean but upbeat Entrepreneurs attending a South by Southwest festival focus on innovation instead of the economy. With tech-savvy entrepreneurs planning their next ventures and pulsating parties packed with digital hipsters, this year's South by Southwest Interactive Festival didn't feel like an event on the verge of Great Depression 2.0. Source: L.A. Times - Business | 18 Mar 2009 | 7:00 am AIG furor puts spotlight on retention bonuses The payouts, used for years to keep coveted employees from leaving during periods of corporate upheaval, are frequently abused, critics say. ... Source: RSS feed - channel BNPaperBusiness | 18 Mar 2009 | 7:00 am NZ stocks: Market climbs over 1pc A robust performance on Wall Street spurred bargain hunters on the New Zealand sharemarket to push the NZX 50 index up 41.6 points to 2606.3, a lift of 1.6 per cent. Across the Tasman, Australian shares rose to a one-month high... Source: New Zealand Herald - Business | 18 Mar 2009 | 6:12 am Currency: Kiwi stays in US53c range The New Zealand dollar continued trading in a narrow range against the greenback today, in the absence of new domestic economic data. By 5pm the NZ dollar was at US53.01c, having ranged between about US53.06c and US52.79c in the... Source: New Zealand Herald - Business | 18 Mar 2009 | 6:10 am AIG furor puts spotlight on retention bonuses The payouts, used for years to keep coveted employees from leaving during periods of corporate upheaval, are frequently abused, critics say. The furor over American International Group Inc.'s million-dollar payouts to employees who nearly toppled the insurance giant is turning a spotlight on what critics say is frequently an abuse in the way corporate executives are paid. Source: L.A. Times - Business | 18 Mar 2009 | 5:58 am AIG must repay bonuses, says US Treasury chief Timothy Geithner AIG, the insurance giant, will have to reimburse the US Government for the hefty bonuses paid to its executives, Timothy Geithner, the Treasury Secretary, said last night. Source: Latest Business News from Times Online | 18 Mar 2009 | 5:50 am US to force AIG to repay bonuses Insurer AIG must pay back $165m of staff bonuses awarded after accepting public bail-out funds, the US treasury secretary says. Source: BBC News | Business | World Edition | 18 Mar 2009 | 5:31 am Madoff family investments under the prosecutor microscope NEW YORK - Prosecutors stepped up their scrutiny of Bernard Madoff's family and assets Tuesday, telling a judge they want to seize jewellery, business interests and more than $30 million that the disgraced money man and his wife lent... Source: New Zealand Herald - Business | 18 Mar 2009 | 4:30 am Investors to Starbucks: Show me the savings SEATTLE (Reuters) - Investors at Starbucks Corp's annual meeting on Wednesday will be searching for answers on the coffee chain's cost-cutting measures and ideas to galvanize growth despite weakening global consumption. Source: Reuters: Business News | 18 Mar 2009 | 4:27 am Why Avon's Stock Could Double in a Year (Deal of the Day) IMAGINE AN ARMY OF DESPERATE (and far from house-bound) housewives selling cosmetics door-to-door and office-to-office, despite the global economic meltdown. That is the battle plan of Avon Products (AVP), which boosted earnings during the 2001-02 recession. "Women aren't going to stop wearing make-up," regardless of the economic environment, says Joshua Strauss, portfolio manager of the Appleseed Fund, a small two-year-old socially responsible operation that includes Avon in its $11 million portfolio. Investors, however, are skeptical. Avon stock is changing hands at about 17, near its 52-week low and at about a third of its 52-week high of 45.34. The shares trade at a price-earnings ratio of less than 10, based on Wall Street's consensus $1.69 estimate for 2009 earnings, which would be 17% below 2008's $2.04. That P/E is less than half Avon's five-year average multiple of 20. In contrast, rivals such as Estee Lauder (EL) and Alberto-Culver (ACV) sport P/Es in the low double-digits. Fans of the stock say it is undervalued, particularly considering that -- unlike much of cash-constrained Corporate America -- it has a ton of cash for a company its size ($1.1 billion as of Dec. 31). And Avon still has access to the credit markets; last month, it sold $850 million of bonds. In addition, the company has $1.8 billion remaining on a stock-buyback authorization after repurchasing $1.9 billion in stock from 2005 through 2008. Moreover, the company boosted its annual dividend to 84 cents a share in the fourth quarter, and now yields more than 5%. "In the past 10 years, Avon has raised its dividend 9% to 10% a year, compounded annually," says Doug Lane, an equity analyst at Jefferies & Co., which has a Buy rating on the stock and a one-year price target of 29. Why, then, is Avon's stock hurting more than those of most of its competitors? A major culprit is the dollar's rise, which reduces the value of Avon's foreign revenues when they are translated into greenbacks. (Some 77% of its revenue and 86% of its operating profit are generated outside North America.) Andrea Jung, Avon's shrewd but press-shy chief executive, who declined to be interviewed for this story, has said the company can handle the currency-exchange issues. During a conference call with analysts last month, she noted, "I myself had to lead through the 71% drop in the [Russian] ruble in '98, 56% drop in [Brazil's] real in '99, and the meltdown of the Argentine peso in 2001," adding that her company has a "leadership team on the ground that is steeped in" dealing with such problems. As for the recession, she pointed out that Avon "thrived on aggressively reaching new customers and representatives" even during the Great Depression. Another concern is Avon's $2.5 billion in debt, which has prompted Moody's, S&P and Fitch to issue a negative outlook on Avon's credit rating, now single-A. Fitch director Grace Barnett points to the economic slowdown in the emerging markets as a cause for worry. Eastern and Central Europe and Latin America provided 70% of Avon's consolidated profit last year. The problem was apparent in the fourth quarter, when sales slid 9%, even though, excluding the foreign-exchange hit, they were up 2% from sales in the corresponding 2007 quarter. Avon's balance sheet looks solid, and its 2008 operating margin rose by almost four percentage points, to 12.5% of its $10.7 billion in total sales. Maintaining that will pose a challenge for 2009, but the company will be helped by a restructuring plan launched three years ago. The plan is expected to reduce outlays by $300 million this year and $430 million by 2012, when the cost-cutting will be fully implemented. "If history is any indication, the restructuring will take hold and lead to strong growth," particularly outside the U.S., where Avon products have more cachet than they do here, says Larry Coats, CEO and portfolio manager at Oak Value, with $60 million in assets under management. Coats, who first bought the stock back in 1995, thinks the cosmetics peddler has "the right mix of overhead and infrastructure, distribution and product price points" to suit this economy. Avon's strength is its workforce -- the thousands of "Avon ladies" of door-to-door fame. Avon representatives, almost all of them women, typically make $2,000 a year selling cosmetics, fragrances, skin care and toiletries as a part-time job, according to Jefferies' Lane. In fact, these days, while much is still peddled door-to-door, especially abroad, lots of the selling in the U.S. takes place in the workplace, at lunchtime or during breaks. Customers often know the saleslady because they are her friends, family and neighbors. Because the workforce is paid solely on commission, adding to it is essentially costless to Avon, and that is what the company is doing. In her conference call, Jung said active reps were up 4% overall, to about five million in the fourth quarter, and up 1% in the U.S., where the company plans this year to focus on recruiting, "given the high unemployment levels." Avon also is focusing on promoting products more effectively. It spent $400 million on advertising last year, three times its 2005 level, and even bought a pre-Super Bowl commercial. It has signed Legally Blonde film star and Avon Ambassador Reese Witherspoon to hawk its Pro-To-Go lipstick and Courtney Cox of TV's Friends to endorse Spotlight, a fragrance it will unveil next month. Avon, founded in 1886 as the California Perfume Co. (though it was based in New York), adopted its current name in 1939. To boost the motivation of its sales force in the current downturn, Avon has raised the reps' commissions. And in her conference call, Jung said that a key to success this year will be to strike the right balance between low- and premium-priced offerings to consumers around the globe. "Given the breadth of our product assortment," she said, the company is moving quickly "to ensure the appropriate flow of operating in the under-$5 U.S. or equivalent range." The goal, she added, is to stress value, not discounting, and "to remind consumers of [Avon's] everyday low prices," plus the ease of shopping at home or the workplace with no delivery fees. Avon last year increased its prices by an average 6% per item. One potential growth area is China, which last year made up just 3% -- about $350 million -- of Avon's sales. But those sales have been growing 25% a year, and Avon is making a big push to recruit more Chinese representatives for its 5 million global sales force. "Avon Products is probably the best at direct selling in the consumer stable," says Steven Ralston, a senior analyst at Zacks Equity Research, which last month put a Buy rating and six-month price target of 30 on the shares. He says buy low and decide your target price. He'd sell only when the stock hit 36, which he believes could happen within a year. Ralston, who has followed Avon for two decades, adds that eventually the dollar will weaken again, as investors focus on the massive deficits being run up by Washington to battle the recession and credit crunch. "I've seen panic in Avon's stock before," he observes. "It is always a buying opportunity." The Bottom Line Avon's shares, now selling for about a third of their 52-week high, could double over the next year, if the company deals well with the dollar's rise and the economy's fall. SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved. Source: SmartMoney.com | 18 Mar 2009 | 4:00 am 8 Firms With Surprisingly Strong Earnings (Screens) On Tuesday I noted school stocks are beating the broad market. As the newly jobless and the worried employed flock to degree and certificate programs, and as government spends more cash on student aid, online and vocational educators are reporting sharply higher profits. Across other industries, soaring profits aren’t as rare at the moment as investors might assume. Sure, we’re spending sharply less on furniture, clothes, cars and meals out. But we’re still spending plenty on groceries and health care, and at stores that specialize in discounts. I recently used stock screening software to find companies that have increased their per-share profits over the past year, and by a wider margin than Wall Street had forecasted. I ignored the smallest companies. Still, my screen produced more than 200 survivors, including the eight below. Grocery-aisle stocks were well-represented, with Hershey (HSY) and Heinz (HNZ) among companies prospering from more meals served at home. Hershey has held its value better of late. It trades for more or less what it went for a year ago, while the broad market has lost more than 35%. But Heinz, down 22%, is cheaper at 12 times earnings, and carries the bigger dividend yield — 5.1%. Colgate-Palmolive’s (CL) foreign sales are worth less with the dollar up, but lower prices for oil and other commodities are making up for currency losses. Toothpaste, the company’s biggest business and one it dominates, enjoys plenty of brand loyalty, so private-label competition is minimal in Europe and negligible in the rest of the world. The company’s sales are stable and its earnings per share are expected to climb 9% this year. Shares yield 3.1%. Becton Dickinson (BDX) makes syringes, scalpels and the like for hospitals and test kits for laboratories and researchers. Baxter International (BAX) is part drug company, part medical-device maker, selling anesthesia systems, blood transfusion equipment, hemophilia therapies and more. Both companies, like many health-care names, are growing sales even as patients’ buying power declines, since health care is necessary in nature and since insurance helps shield consumers from the immediate sting of costs. Shares of each go for just over 13 times earnings and yield 2%. Finally, Family Dollar Stores (FDO), Ross Stores (ROST) and BJ’s Wholesale Club (BJ) must be wondering what all the recession talk is about. Their sales and profits are up nicely, as customers forsake department stores for deep discounters. Shares of Family Dollar and Ross have jumped more than 70% and 20% over the past year, respectively. BJ’s is down around 5%. It’s the cheapest of the lot at 13 times earnings, but has long been a work in progress, with skimpier profit margins than peers. The busted economy is providing management with a fine backdrop for its turnaround efforts, but so far improvement has been slow.
Company	Ticker	Industry	Share Price	Market Value ($mil.)	Earnings Growth Past Year (%)	Forward P/E	Yield (%)
Data as of March 17, 2009
Baxter International	BAX	Medical Supplies	$51.07	31,672	21	14	2.0
Colgate-Palmolive	CL	Personal Products	57.32	28,930	15	14	3.1
Becton Dickinson & Co.	BDX	Medical Supplies	65.07	15,598	16	13	2.0
H.J. Heinz	HNZ	Food	33.55	10,549	16	12	5.0
Hershey	HSY	Confectioners	33.29	7,561	48	17	3.6
Family Dollar Stores	FDO	Discount Stores	30.59	4,280	5	17	1.8
Ross Stores	ROST	Apparel Stores	32.23	4,170	21	14	1.4
BJ's Wholesale Club	BJ	Discount Stores	29.57	1,739	68	13	n/a

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Card Issuers: Rate Hikes for Everyone! (Deal of the Day)

Much to the aggravation of tens of thousands of consumers, credit cards seem to be beyond the influence of the Federal Reserve and its rapid fire succession of seven interest rates cuts in the last year.

Consumers saw mortgage and savings rates nose-dive after the Fed cut the federal funds rate down to a record low of 0% to 0.25%. But rates on credit cards? They've just climbed higher. Bankrate.com, which monitors the interest rates offered at the 10 biggest credit-card issuers, has reported four straight weeks of increases. Low-rate cards now average 11.62%, balance-transfer cards are at 13.15% and cash-back cards at 13.82%.

The worst part: The rate hikes are happening across the board, even to customers with stellar credit scores. In November, Citibank (C) began raising rates for roughly 20% of its accountholders, bumping APRs up by an average of 3%. (The move happened right about the time the company received some $300 billion in government bailout funds.) Capital One (COF) recently sent out notifications in March to an undisclosed number of its cardholders, letting them know their rates were being increased to reflect the current risk environment. Most of those accounts carried low rates for years, says spokeswoman Pam Girardo.

“I certainly don’t feel like a valued customer,” says Echo Garrett of Marietta, Ga., who saw the rate on her 20-year-old Citi American Airlines (AMR) AAdvantage account jump to 19.99% from 10.9% earlier this year. Garrett’s husband’s Citi Hilton HHonors card got hit even harder, with the rate nearly tripling to 19.99%. “We’ve been good, longtime customers and there’s never been a problem with our accounts,” she says. “I just don’t understand.” Citibank spokesman Samuel Wang said the bank re-priced accounts whose rates had not changed for at least two years, to reflect ongoing risk. He declined to comment on individual accounts.

Jacking up interest rates is not only an easy way for card issuers to boost profits, but it also makes them look more financially sound amid rising defaults, says Richard Cripps, chief market strategist for investment bank Stifel, Nicolaus & Company.

Issuers may also be trying to get the most money they can out of consumers before new Fed rules go into place in July 2010 that prohibit them from raising interest rates on existing balances unless the cardholder is more than 30 days late with a payment. “They’re trying to put themselves in a better position to continue to profit,” says José Garcia, a senior researcher at New York-based economic think tank Demos.

Further regulation is likely. The House Committee on Financial Services says it will discuss interest rate increases in a series of hearings this month on predatory lending practices and credit-card reform. “[Chairman Barney] Frank is committed to putting forth legislation on this,” says a spokesman. Sen. Chris Dodd, chairman of the U.S. Senate Committee on Banking, Housing and Urban Affairs, has also reintroduced the Credit CARD Act, which reinforces the Fed rules and -- if passed -- could bring them into effect even sooner. Committee spokesmen did not respond to requests for comment.

Raising rates may help the credit-card issuers’ bottom line in the short term, but long term it’s a game of Russian roulette, says Garcia. “They’re playing the game of getting people to pay the most they can in interest without going into default -- where [in that case] the issuer gets nothing,” he says. While raising rates is routine with riskier cardholders, desperate issuers have broadened the pool to include those with good credit scores and spotless payment histories.

And make no mistake, higher rates push even the most financially-stable consumers closer to financial ruin, says Robert Manning, research professor and director of the Center for Consumer Financial Services at the Rochester Institute of Technology in upstate New York. Rising interest rates cause minimum monthly payments to creep higher and sometimes move beyond consumers’ ability to pay, leading to a domino-effect increase in bankruptcies, he says.

Recent college grad Amanda Burnett, who is now living in the U.S. Virgin Islands, is struggling to pay off $3,500 in debt on the Bank of America (BAC) card she opened in 2007. She had never been late with a payment, yet the bank raised her APR last fall to a steep 25.99% from 16.99% -- then promptly shut down the account. When she called to try to negotiate a better rate, representatives told her terms on closed accounts are fixed.

Bank of America spokeswoman Betty Riess declined to comment on individual accounts, but said accountholders affected by rate increases are given the opportunity to opt out, and can then pay off their balance under the existing terms before the card is closed. Once an account is closed, terms in affect at the time continue to apply.

“I was shocked,” says Burnett. “I had planned to pay off my balance and keep the credit card for future use, but now I feel misled and betrayed.”

For more on our series about credit-card issuers' recent moves, read:

• Card Issuers: How to Blow Your Credit Limit -- Without Spending
• Card Issuers: Buy Something or Else 
• Card Issuers: What Will It Take to Make You Go Away? 
• Card Issuers: Our Rewards Cards Aren’t So Rewarding 

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Fund Watch: Global Bargain Hunting (Deal of the Day)

THE superpowers needed to save the world from this global recession don't include the ability to leap tall buildings in a single bound, nor do they involve building an arsenal of weapons. The heroes of this scenario are nations with little debt, lots of cash and millions of people willing to shop. And this time around, the U.S. appears to be little more than a sidekick.

The global financial crisis that nearly destroyed many developing economies in 1997 also gave them an incentive to get their house in order. Brazil, for instance, implemented stricter banking regulations, shrank its deficit and focused on reducing its dependence on the U.S. India and China have made similar strides. As a result, these countries are better positioned to weather today's crisis than most developed nations, analysts say. China, for example, is building roads and trains into the hinterlands, which will help develop a middle class and offset slowing demand from the West. Plus, China can more than pay for its infrastructure projects with the $1.6 trillion it has in cash and bonds.

What's more, nearly 80 percent of the world's population (much of that, youth) lives in emerging countries. As those youngsters age they'll be buying mobile phones, homes and many other products, just as Americans are retrenching and saving, says David Riedel, president of emerging-markets research specialist Riedel Research Group. That spending is significant: 31 percent of India's population is under 14, Riedel adds. That's 354 million future shoppers.

You don't have to look past last year to see that emerging markets are still risky: The MSCI Emerging Market index plunged 54 percent, laying waste to the notion that these economies are no longer tied to those of the developing world. Global economic forecasts have been slashed as even China faces a slowdown. But for the first time in 27 years, says Josephine Jimènez, manager of the Victoria 1522 fund, she is finding firms trading for less than what they would fetch at a liquidation sale: "It's a huge treasure chest." Some countries show more promise than others, so investors might want to consider a diversified fund with a seasoned manager, like Matthews Asia Pacific Equity Income (MAPIX), which regularly lands at the top of its category, and Templeton Emerging Markets (EMF) has legendary foreign investor Mark Mobius at the helm and no sales load.

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Krukziener and Hanover settle

Overseas investment review gets mixed reaction

Congress threatens AIG over bonuses

New boss for ANZ National Bank

Too much focus on doom and gloom, says PM

Geithner faces critical test over bank plan

Shares pull KiwiSaver funds down

Good news from the US economy, as Feb house starts jump

After The Close - Tuesday

Pharmacy Benefit Manager Helps Keep A Lid On Rising Drug Prices

Trends & Innovations - Tuesday

Business Briefs - Tuesday

In Brief - Tuesday

Citi's chief economist to join Treasury

School daze

The London street the credit crunch forgot

Madoff victims can claim tax back on losses

Presented By:

Write-Offs: 03.17.09

$$$ Madoff's Wife Declares Palm Beach Home Main Residence [Bloomberg]

$$$ AIG not just wasting money on bonuses. [Cityfile]

$$$ Seriously, CNBC? SERIOUSLY? [CNBC]

$$$ Corzine sues Lehman officials for fraud to recoup stake [Reuters]

$$$ Mailbag: "The Premier group at BOA will lay off 90%+ of its workers tomorrow. "

Capitol Hill, Field Report #1

Adam and Alex and I spent the day running around Capitol Hill, trying to document what could be the most sweeping regulatory reform efforts the banking industry has seen since the great depression.

The House Financial Services Committee held a hearing on Systemic Risk and how to make sure a future crisis doesn't cascade the way this one has. Barney Frank is hoping to get some sort of major regulatory reform package together in very short order.

Adam had somehow set up interviews with what felt like a dozen members of Congress, many of whom were very thoughtful. One told us he was bringing home big stacks of reading at night, to help get his head around this stuff.

The hearing was pretty full. A retired woman wondered in for a while, got bored and left. I introduced myself to a man in a suit and asked who he worked for. "An interested party," was all he would say.

Let's just say the stakes are high. We're going to cover this one in depth.

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Coming Home To Steel City

St. Patrick's Day parade in Pittsburgh, Pa. NPR 100 Days via Flickr

 

Full disclosure? I grew up in Pittsburgh.

There's my disclaimer, before I tell you things in the Steel City don't seem all that bad these days. As 2008 ended, Pittsburgh made news by bucking recessionary trends. Housing prices in 2008? Up. Wages? Up. Unemployment? Tolerable.

All this created a resilient mood in a city hardened by its own downturn, after steel collapsed in the 80s.

When I visited last week, I caught up with 28-year-old Mayor Luke Ravenstahl (yes, the guy who changed his name to "Steelerstahl" for a playoff game against the Baltimore RAVENS last season). He was doing something rare in this recession -- showing reporters a spiffy downtown real estate development that's near completion.

Pittsburgh Mayor Luke Ravenstahl. NPR 100 Days via Flickr

 

I asked the mayor if Pittsburgh is recession-resistant -- and why:

Meanwhile, I kept running into people who lost jobs elsewhere and have come home to the 'Burgh to ride the recession out. Call it mixed results.

Grilling it up in Pittsburgh, Pa. NPR 100 Days via Flickr

 

Luke Wholey, 25, lost his carpenter job in Montana. He landed home in Pittsburgh a few weeks ago and opened a salmon-grilling stand. Luke's now spending his days cooking fish and shrimp on the street -- outside the famous seafood market his family has operated for nearly a century.

Dusty Rowe hasn't found luck -- even with the green wig I caught him wearing for Saturday's St. Patrick's Day Parade.

Reunited, but it's not so good. NPR 100 Days via Flickr

 

Dusty's 26 and was fired last year by an excavation company in Ohio. He's back in Pittsburgh and confident he'll find a job. Just hasn't happened yet. So for now, Dusty's living with his family. Here are Dusty and his mom (Ronda Allen, also pictured) addressing their cohabitation.

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Housing starts surge; wholesale prices edge up (AP)

AP - Housing construction posted a surprisingly large increase in February, bolstered by strength in all parts of the country except the West.

Hank Paulson Speaks

Finally, the crisis has made abundantly clear that our financial system would benefit from a regulator whose focus is on risks across the financial system. While the Fed is assumed to have this role, it does not have the mandate or powers to carry it out effectively. There is already growing support for the blueprint's recommendation that Congress explicitly give this responsibility to the Fed, and provide it with the tools to meet that mandate. It would require the Fed to have access to information from a broader set of financial organisations, including hedge funds and systemically important payment systems. This authority should also have the power to intervene if it concluded that the financial system was at risk. Because the breadth of authority provided must be great, the standard for using such authority - to protect the system as a whole - should be high.

Reform the architecture of regulation [FT]

The Obama Portfolio: Killin' It

Well spank my ass and call me Charlie, populist outrage seems to be good for the First Portfolio, as it now snakes its way up into double digits. U-S-A! U-S-A!

The Obama Portfolio (Since Inception): +10.72%

Earlier: The Obama Portfolio

CT AG Nonchalantly Muses Over AIG Situation

Connecticut AG Doubts AIG Required To Pay Bonuses Under Connecticut Law-- Reuters

Yenne Says Guinness Went Public in 1888 as a Global Business

Your Child Technician Believes In You

So, you just got fired. In this market, you've got no prospects and no reason left to live. What's the next worst thing that could happen? Being quit on by the nanny, of course, over an issue as minor as not being able to compensate him or her for keeping your child at an arm's length, at least while it goes through that "growing" phase. Enter: some great news. Even if you are to get canned in the near future, and find yourself in the position of no longer being able to come with the scratch to child rear via proxy, your hired help will stick it out, on the assumption you'll figure something out eventually, even if it's trick turning.

Cato's Hanke Says Fed Did Cause Housing Bubble (Correct)

Oh, Canada!

Chrysler might not be long for Canada.

In its continual quest to trim operations the big C is presently focused on Canada, where, in addition to a $2.3 dollar loan (we hope that's in Canadian dollars) the automaker is seeking concessions from the Canadian Auto Workers Union.

Chrysler LLC is studying how it could pull operations out of Canada if it doesn't win wage and benefit concessions from the country's auto union that are considerably larger than those given to General Motors Corp.

Chrysler officials are talking to leaders of the Canadian Auto Workers union today to see whether the union will be flexible in terms of changing its contract, said a person involved in the negotiations who asked not be named because the talks are private.

We aren't hopeful.

Chrysler Is Said to Ready for Canada Pullout on Union [Bloomberg]

Natixis's Roque Says S&P Trend Remains Negative

Legal Seagulls: Scavenging Work

You'd think the law would be one of our more recession-proof trades -- we've been counting on it at my house. At the very least, New York's big firms should have a bunch of Wall Street clients to represent. But it turns out even top 10 firms are starting to pare back.

Layoffs are painful everywhere, but how hard are law firms trying to avoid them? The self-styled "legal tabloid" Above The Law has been chronicling the efforts to cut costs and has noticed that some big firms have found creative solutions. They're offering associates cash (generally in the neighborhood of $75,000) to take a year off from firm life and find an unpaid public interest "internship." Some firms are pushing back start dates on incoming first year associates to January 2010. At least one firm has even offered buyouts.

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Cash For Clunkers

Might be too little, too late for Detroit, but it is a neat idea anyhow. That is, if you think we need more cars on the road.

Members of the U.S. Congress are working on a new bill to provide incentives for drivers to trade in older vehicles for newer, more fuel-efficient cars, hoping that the recent success of a program in Germany will give the program new momentum, a House Democratic aide said Tuesday.

The so-called "Cash for Clunkers" program is currently being drafted in Congress, the aide said. A similar proposal gained some momentum in Congress earlier this year but ultimately didn't get the green light from Congress.

We're betting this one will get the green light, so to speak. But should it? For a country so suddenly green conscious, it seems that we are awfully anxious to start subsidizing automobile ownership. Improving the "national fleet" EPA by 10% (which seems a difficult goal) would be rather expensive, and of limited utility in the end. Surely someone has done the "remaining years in lifetime" v. "fuel savings over life of new car" calculation somewhere, but I'm curious to know where the break-even numbers are.

US Lawmakers Drafting 'Cash For Clunkers' Auto Bill - Aide [The Wall Street Journal]

Are Other People Mad, Too?

We've been talking a lot about anger and blame over here. We're asking people to point fingers and name names.

Which got me wondering if people in other countries are drinking the haterade, too. Are people in China, Finland or Azerbaijan pissed about the global recession? And if so, who do they blame? Is there anywhere in the world where people are not angry?

We're hoping to look outside the U.S. a bit for a little international hater survey. Which countries do you think we should look at? What have you heard about international anger over the crisis? If you live abroad, who are you hearing blamed for this mess? Send us your thoughts.

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Lemon Socialism, Anyone?

Better behavior at the dollar store, please Forwarded by Nathan Foote

 

On Monday's podcast, we heard from Matthew Noah Smith, a Yale philosphy professor who walked us through one way of looking at blame. Smith first got in touch with us when he pitched the idea of including philosophers on Planet Money. He wrote:

[O]ne thing to ask a political philosopher is the following:

"Should we sacrifice any of our moral commitments -- for example, our commitments to justice and free markets -- in the name of ending this crisis sooner?"

And then...

"If yes, which commitments, and why?"

or. . .

"If not, then why not?"

Here's what someone like me might say in response to these questions:

There are a lot of moral reasons to try to end this crisis as quickly as possible -- innocent people are suffering a lot due to it and that is morally awful. But some of our values are not worth sacrificing simply to end this suffering as quickly as possible (as an analogy, think about war: we know innocent people suffer in war, but we also believe that despite this, some wars are worth fighting -- often simply over values like sovereignty and property rights!).

Smith raises the possibility of lemon socialism, which Paul Krugman defines as a situation where "taxpayers bear the cost if things go wrong, but stockholders and executives get the benefits if things go right." Smith continues:

For example, the federal government could raises revenues to get out of this crisis more quickly if the state legalized crack and started selling it with a very high tax attached to it, but we know that would be wrong and so it is not even on the table. Similarly, I think that certain forms of bailouts -- the lemon socialism that is currently being practiced and likely to continue -- are blatantly unjust. So, even if lemon socialism is a way out of this crisis, I think it is one of the most unjust ways out. Of course, some people think that lemon socialism not only is not unjust, they think that lemon socialism is the most just way out because it supposedly preserves the free market. What we have here, then, is not a debate about the best way out of the crisis but a substantive moral debate about whether the defining features of lemon socialism are morally repugnant or morally praiseworthy (or at least morally unproblematic). I've not heard a single economist give a sophisticated answer to that question, except when they are quoting philosophers.

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Kantor Says Stable Consumer Spending Key to Recession Ending

Citigroup’s Levkovich Says U.S. Stock Market Rout May Be Over

Bad economy does dating good

Remember Pain At The Pump?

Click for bigger chart from Department of Energy

 

Today the Bureau of Labor and Statistics reported the seasonally adjusted producer price index rose 0.1 percent in February, less than many analysts expected. That means inflation has slowed to a near standstill, as food and energy prices continue to fall.

Nowhere is this trend more apparent than in energy prices, which rose 1.3 percent overall in February. That's much slower than their 3.7 percent pace a month earlier.

Among finished energy goods, gasoline prices rose 8.7 percent, after a 15 percent rise in January. Diesel fuel prices actually plunged, sinking 11.1 percent to a level 49.4 percent lower than a year ago.

The U.S. Energy Information Administration says the average price of a gallon of gasoline this week is $1.91 -- down from $3.28 a year ago. The average price of a gallon of diesel fuel is $2.01 -- down from $3.97 a year ago.

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Drinking water costs lots of dollars

Irish youth out o' luck in downturn

Tyson Foods partners to feed your pet

Apartments lead housing market back?

What more can the Fed do?

Lawmakers look to reclaim AIG bonuses

Rep. Frank has questions ready for AIG

Honohan Says Irish Banks Are Consolidating, Shares Down 98%

Arguing For AIG Bonuses

On Monday's podcast, we talked about the outrage over AIG's plans to pay out $165 million in bonuses. The company says they are contractually obligated to pay bonuses, and they have to follow the law. That may be true, but it's likely not the only reason they feel the need to pay up. As Adam mentioned on Monday, some people suspect that the company is concerned about its ability to retain the very people who created the complex financial products that brought them down in the first place. It's an argument Andrew Sorkin fleshes out in today's Dealbook. He writes:

A.I.G. employees concocted complex derivatives that then wormed their way through the global financial system. If they leave -- the buzz on Wall Street is that some have, and more are ready to -- they might simply turn around and trade against A.I.G.'s book. Why not? They know how bad it is. They built it.

So as unpalatable as it seems, taxpayers need to keep some of these brainiacs in their seats, if only to prevent them from turning against the company. In the end, we may actually be better off if they can figure out how to unwind these tricky investments.

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Levitt Says Obama Is Fueling Anti-Business Sentiment

Hey! What Kind Of Bank Do You Think I Am??

We just got a copy of this: After President Barack Obama's big speech to Congress last month he got a somewhat irate letter.

It came from the American Bankers Association, on behalf of the many small community banks who felt Obama was painting with too wide a brush:

"Mr. President, of the over 8,000 banks in this country, very few ever made a single subprime loan...."

Read it here.

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25 St. Patrick’s Day Quotes and Irish Sayings

Impress your colleagues and friends this year with one of the 25 St. Patrick’s Day quotes and Irish sayings below. If you rattle off one quote per beer, this entire post should get you through the night:

1. If you’re enough lucky to be Irish, you’re lucky enough! –Irish saying

2. Many an opportunity is lost because a man is out looking for four-leaf clovers. –Unknown

3. Here’s to a long life and a merry one.
A quick death and an easy one
A pretty girl and an honest one
A cold beer – and another one!
– St. Patrick’s Day Toast

4. It is better to spend money like there’s no tomorrow than to spend tonight like there’s no money! –Irish toast

5. An Irishman is never drunk as long as he can hold onto one blade of grass to keep from falling off the earth. –Irish saying

6. There are only two kinds of people in the world, The Irish and those who wish they were. –Irish saying

7. Irish diplomacy is the ability to tell a man to go to hell so that he looks forward to making the trip. –Irish saying

8. An Irishman has an abiding sense of tragedy which sustains him through temporary periods of joy. –Irish saying

9. The Irish forgive their great men when they are safely buried. –Irish saying

10. Anyone acquainted with Ireland knows that the morning of St. Patrick’s Day consists of the night of the seventeenth of March flavored strongly with the morning of the eighteenth. –Uknown

11. May your blessings outnumber
The shamrocks that grow,
And may trouble avoid you
Wherever you go.
–Irish blessing

12. Never iron a four-leaf clover, because you don’t want to press your luck. –Unknown

13. A best friend is like a four leaf clover: hard to find and lucky to have. –Unknown

14. The list of Irish saints is past counting; but in it all no other figure is so human, friendly, and lovable as St. Patrick - who was an Irishman only by adoption. –Stephen Gwynn

15. St. Patrick… one of the few saints whose feast day presents the opportunity to get determinedly whacked and make a fool of oneself all under the guise of acting Irish. –Charles M. Madigan

16. May misfortune follow you the rest of your life, but never catch up. –Irish saying

17. May your home always be too small to hold your friends. –Irish toast

18. May your glass be ever full.
May the roof over your head be always strong.
And may you be in heaven half an hour before the devil knows you’re dead.
—Irish prayer

19. May you never forget what is worth remembering or remember what is best forgotten. –Irish blessing

20. In Heaven there is no beer that’s why we drink it here! –Irish saying

21. May God bless and keep in good health your enemies’ enemies. –Irish blessing

22. May the saddest day of your future be no worse than the happiest day of your past. –Irish saying

23. Here’s to you and yours and to mine and ours. And if mine and ours ever come across to you and yours, I hope you and yours will do as much for mine and ours as mine and ours have done for you and yours! –Irish toast

24. May you live as long as you want and never want as long as you live. –Irish saying

25. Drink is the curse of the land. It makes you fight with your neighbor. It makes you shoot at your landlord-and it makes you miss him. –Irish saying

Life In The B In BRIC

William writes from Brazil:

I am an American and loyal listener in Porto Alegre, Brazil. The B in the BRIC. Porto Alegre is one of the strongest cities in Brazil economically, and our location, which is closer to Buenos Aires than to Rio, means that we are deeply tied into the Mercosur. Just in case you were curious what things were like here, I thought I would let you know. High-rent stores in the fancier shopping malls are all liquidating. I mean ALL the retail stores. It is incredible. Orders from manufacturers are collapsing and people are starting to get laid off.

In good news, Brazil understands financial crisis a lot better than Americans do. They have lived through hyper-inflation, dictatorships, and (Bush notwithstanding) some incredibly corrupt politics.They have yet to have an oil-garchy, but they have had a lot of other dodgy leaders.

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An 'Even Stronger' China

Also, while we're talking about China, take a look at this from the New York Times: "In Downturn, China Sees Path to Growth." The Times reports:

The country is using its nearly $600 billion economic stimulus package to make its companies better able to compete in markets at home and abroad, to retrain migrant workers on an immense scale and to rapidly expand subsidies for research and development.

Construction has already begun on new highways and rail lines that are likely to permanently reduce transportation costs.

And while American leaders struggle to revive lending -- in the latest effort with a $15 billion program to help small businesses -- Chinese banks lent more in the last three months than in the preceding 12 months.

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Silvia Sees Fed Buying `Modest' Amount of Treasuries

Saut Sees U.S. Condominium Market Picking Up

Credit Crunch (”CC”) is Now Officially Office Jargon in UK

You’ve heard it at least a thousand times in the media. Now, it’s time to listen to the word “credit crunch” used in office situations, too. The Daily Telegraph reports on new jargon in the UK:

Reflecting travel, favourites include “clocking real mileage”, meaning a really strong idea, “reaching the blue ocean of success”, or reaching a goal, and “get a helicopter view by turning 360 and then circling back to your colleagues”, or taking a step back.

The two CC’s (credit crunch and current climate)
Clocking real mileage (a really strong idea)
A high altitude view (taking a step back)
Reaching the blue ocean of success (reaching a goal)
Get a helicopter view by turning 360° and then circling back to your colleagues (taking a step back)
Let’s run that idea up the flag pole and see if it flies (try out an idea)
Picking the low-lying fruit (a quick win)
Down to that level of granularity (detail)
Let’s touch base about that offline (have a chat face-to-face)
Feeling stressurised (under pressure and stress)
Strategic staircase (a plan for the future)
Better not let the grass grow too long on this one (act quickly).

I’m stressurised about my strategic staircase, so I’d better not let the grass grow too long on this one. Ugh.

Ackman's Pershing nominates five to Target board (Reuters)

After Stumble, Major Indexes Gain Momentum (Market Update)

News at a Glance

• Housing Surprise: New home building rose 22% in Feb.
• Real Rise: Major indexes gain after economic data.
• Smaller Cut: Alcoa slashes dividend by 82% to 3 cents.
• Bonus Battle: With bonuses at risk, hoarding begins.

The Lowdown

A day after a four-day rally fizzled, traders returned to equities on hopes that the housing crisis was showing signs of easing.

Stocks were higher in afternoon trading Tuesday, as Wall Street warmed to the latest report on housing starts. The Dow Jones Industrial Average picked up 178 points at 7395. The Nasdaq rose 58 to 1462, and the S&P 500 picked up 24 at 778.

The February report on housing starts and building permits could suggest the market has found a bottom. New construction and requests to begin to new projects each advanced last month when economists had projected more declines.

Enthusiasm over the housing report was tempered early by an unexpectedly high reading on core inflation. The Producer Price Index rose just 0.1% last month, but the core PPI rose 0.2%, twice the increase economists had predicted.

In Washington, President Obama said his administration would try to block the millions in bonuses AIG (AIG) promised its employees despite having received billions in federal money to prevent its collapse. However, shortly after Obama pledged to try to recover the $165 million in bonuses, administration officials said the potential legal battle could put too high a price tag on the process. That didn't stop New York Attorney General Andrew Cuomo from going after the company. He revealed Tuesday that AIG granted $1 million bonuses to 73 employees, 11 who don't work for the firm any longer.

Meanwhile, other firms, including Citigroup (C) and Morgan Stanley (MS), are looking to safeguard their employees' compensation by couching bonuses in higher salaries, The Wall Street Journal reported, citing anonymous sources.

In energy, crude prices wavered after Monday's gains. Oil traded up $1.55 cents at $48.90 a barrel.

In world markets, Asia finished mixed after the U.S. rally came to an end. Japan's Nikkei picked up 3.2%, while Hong Kong's Hang Seng slipped 0.8%. In Europe, the U.K.'s FTSE stood down 0.3% in afternoon trading.

Corporate News

• Alcoa (AA) will slash its dividend and seek to raise cash through a stock sale, the aluminum producer said. Alcoa, a Dow component, cut its dividend to three cents a share, down from 17 cents a share and said it would issue stock and convertible notes worth about $1.1 billion.
• JPMorgan Chase (JPM) will have to let its shareholders decide on the fate of its bonus plan. Days before AIG suffered a public backlash for paying out its bonuses after having recevied billions in bailout funds, JPMorgan received a letter from the Securities and Exchange Commission mandating that the firm give its investors a say in whether executive compensation is linked to the firm's performance.
• Lehman Brothers is looking to sell off two of its bank divisions, Reuters reported, citing an anonymous source. Lehman, which filed for bankruptcy protection in September, will seek to deal Lehman Brothers Bank FSB and Woodlands Commercial Bank through a private auction process handled by Lazard.

The Economy

• Housing starts jumped 22% last month to an annual rate of 583,000, up from a revised rate of 477,000 in January, the Commerce Department said. Economists had predicted a decline to a February rate of 450,000. Meanwhile, building permits, a leading indicator for the housing market, rose in February in an annual rate of 547,000 up from a revised rate of 531,000 in January. Economists had predict the rate would slip to 500,000 in February. REPORT
• The Producer Price Index, a measure of wholesale inflation, rose 0.1% in February, slowing after a 0.8% gain in January, the Labor Department said. Meanwhile, the core number, which excludes volatile food and energy prices, rose 0.2% last month, slowing after a January increase of 0.4%. For February, economists had predicted a 0.4% increase in the headline number and a 0.1% bump in the core PPI. REPORT

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Costco Makes it to Australia

Some brands are so embedded in the American psyche that reading about them from a fresh perspective is almost shocking. Take Costco, which is getting ready to open its very first Australian store. The Australian reports:

US bulk retailer Costco will open its first Australian store in July. It will introduce low-price, high-volume retailing at a time when shoppers are most in need of ways to save money.

The Melbourne store will include photo-processing, optical and tyre outlets as well as groceries, fresh food, clothing, hardware, furniture, jewellery and sporting goods. (Company officials do) not expect any resistance to the company’s membership model, which required shoppers to pay a $60 annual fee before they could make a purchase.

As a longtime shopper, I’ve become so accustomed to Costco that I forget exactly what it contains. It’s a large wearhouse that satisfies my shopping needs in a primal, hunter-gatherer kind of way, with palettes, forklifts, and large boxes always deliciously in sight. Costco just is. In a few years, if the concept digs into the Australian market, Aussies may feel the same way.

Its recipe is old, but Costco has always been a winner.

Alcoa down after cutting dividend (Reuters)