World Business News Headlines for March 20, 2009

Treasury let stricken Northern Rock issue toxic loans

The Treasury came under heavy fire yesterday for allowing Northern Rock to continue to extend 125 per cent mortgages long after the bank was forced to seek Government help.
Source: Latest Business News from Times Online | 20 Mar 2009 | 11:02 pm

Presented By:

Source: Dealbreaker | 20 Mar 2009 | 1:41 pm

Why Not Just Turn Off Their Heat And Hot Water 'Til They Return The Money?

That oughta show 'em Congress means business!

The House Financial Services Committee will consider legislation to prohibit any bonus payments by companies who have received government bailout funds, until investments are repaid in full, chairman Barney Frank said on Thursday.
The measure, to be considered next Tuesday, would prohibit any compensation arrangements that are unreasonable or excessive for these companies, the panel said in a statement.

The bill would also bar bailed-out companies from paying any bonus to any employee, regardless of when any bonus was agreed to, the statement said.

House panel to consider prohibition on bonus payment [Reuters]

Source: Dealbreaker | 20 Mar 2009 | 1:41 pm

EU urges doubling of IMF capital

The EU urges leading economies to double the money available to the IMF to $500bn (£344bn).
Source: BBC News | Business | World Edition | 20 Mar 2009 | 1:21 pm

How to dress in a recession

With unemployment rising fast and more companies struggling to survive what can you do to stand out from the crowd of jobseekers or to get ahead in the job you have?
Source: Telegraph Finance | 20 Mar 2009 | 1:18 pm

Commodity stocks to lift Wall Street at open (Reuters)

Reuters - Stocks headed for a rise at Friday's opening as a further rebound in shares of natural resources companies offset bleak corporate outlooks and fears of inflation.

Source: Yahoo! News: Stock Markets News | 20 Mar 2009 | 1:17 pm

Opening Bell: 03.20.09

Full interview
Q Well, here's something that kind of scared me. Today they passed this thing that says we're going to tax 90 percent of these bonuses. And the part that scares me is, I mean, you're a good guy -- if the government decides they don't like a guy, all of a sudden, hey, we're going to tax you and then, boom, and it passes. I mean, that seems a little scary as a taxpayer, they can just decide -- you want to take a break and answer that when we come back? Okay, hold that answer.

THE PRESIDENT: I will. I've got a good answer, too. (Applause.)

* * * * *

Q Welcome back. We are talking with President Barack Obama.

Before the break I mentioned that they had just passed this new bill which will tax them 90 percent -- and I said it was frightening to me as an American that Congress, whoever, could decide, I don't like that group, let's pass a law and tax them at 90 percent.

THE PRESIDENT: Well, look, I understand Congress' frustrations, and they're responding to, I think, everybody's anger. But I think that the best way to handle this is to make sure that you've closed the door before the horse gets out of the barn. And what happened here was the money has already gone out and people are scrambling to try to find ways to get back at them.

The change I'd like to see in terms of tax policy is that we have a system, going back to where we were back in the 1990s, where you and I who are doing pretty well pay a little bit more to pay for health care, to pay for energy, to make sure that kids can go to college who aren't as fortunate as our -- as my kids might be. Those are the kinds of measured steps that we can take. But the important thing over the next several months is making sure that we don't lurch from thing to thing, but we try to make steady progress, build a foundation for long-term economic growth. That's what I think the American people expect. (Applause.)

Full transcript here.

Citi's CFO Shifts to New Role; Kelly to Succeed Him (WSJ)
"Citigroup said Chief Financial Officer Gary Crittenden will become chairman of the entity created for non-core assets, with global banking chief Edward Kelly succeeding him as CFO.

The change, the latest for the struggling financial-services company, come as Citigroup looks at shedding those assets while focusing on its core investment bank, credit-card division and regional banking operations."

Chavez Nationalizes Banks, Inspired By American Example (FT)
After seeing the stunning success of Citi and BAC, Chavez has decided to move forward with his nationalization of Santander - we wish you luck, Mr. Chavez.

""We are not retreating. Today we have returned to the subject, I announce the nationalisation of Banco de Venezuela to strengthen the national public banking system," Mr Chávez said during a televised meeting with ministers.

Grupo Santander owns Banco de Venezuela, one of the largest banks in the Opec nation's financial system."

Oh Ye Of Little Faith: CNBC Calls Bottom (CNBC)
Clem, from ADVFN, has the feeling this could lead to a good rally - only time will tell, Clem, only time will tell.

Euro Falls Against Dollar (Bloomberg)
"The euro slid from near a two-month high against the U.S. currency after European Commission President Jose Barroso said leaders may agree today to boost the amount of cash for struggling countries to 50 billion euros ($68 billion) from 25 billion. The dollar rose as some traders bet the slump this week stoked by the Federal Reserve's announcement it start buying Treasuries was overdone given the outlook for the U.S. economy."

Raters See Windfall in Bailout Program (WSJ)
What's funny is people think giving the AIG people bonuses was bad, and this is passing (pretty much) under the radar.

"The new rescue effort, run by the Federal Reserve, kicked off Thursday with bond deals totaling more than $7 billion. Each bond issue will need to be blessed by at least two of the three big rating firms: Moody's Investors Service, Standard & Poor's Ratings Services and Fitch Ratings.

[...]

Rating services typically charge $40,000 to $120,000 for every $100 million in so-called structured-finance securities they rate. For the initial $200 billion portion of TALF, that translates to $80 million to $240 million. If the program is extended to $1 trillion as the government plans, those fees could skyrocket to anywhere between $400 million and $1.2 billion."

Source: Dealbreaker | 20 Mar 2009 | 1:15 pm

French aid prompts Renault move

French carmaker Renault is to shift some car production back to France from Slovenia after the guarantee of state aid.
Source: BBC News | Business | World Edition | 20 Mar 2009 | 1:07 pm

EU leaders boost support for eastern Europe

EU leaders agreed on Friday to double emergency loans to eastern European countries to 50 billion euros, in a show of support for a region hit particularly hard by the worst recession since
Source: RSS feed - channel BNewsBusiness | 20 Mar 2009 | 1:05 pm

Xerox warns profit to fall short (Reuters)

Reuters - Xerox Corp , the world's top supplier of digital printer and document management services, warned first-quarter earnings will fall far short of its earlier forecast as a slowdown in technology spending undercuts revenue.
Source: Yahoo! News: Business | 20 Mar 2009 | 12:58 pm

Wall St looks to end week on high note

US stocks were set to rise ahead of the open after a turbulent week during which investors scrambled to react to an unexpectedly bold plan from the Federal Reserve to buy up Treasury bonds and mortgage-backed securities in order to stimulate the economy
Source: Financial Times - US homepage | 20 Mar 2009 | 12:57 pm

What Would Donald (Duck) Do?

...with a lame job.
Read or listen here. Full disclosure: Isaac is my cousin.

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Source: NPR Blogs: Planet Money | 20 Mar 2009 | 12:56 pm

UPDATE 2-Xerox warns Q1 profit to be far short of forecast

* Seeks $300 mln cost cuts, on top of previous $250 mln
Source: RSS feed - channel BNewsBusiness | 20 Mar 2009 | 12:52 pm

UPDATE 3-TomTom sues Microsoft on patent infringement

* TomTom files countersuit against Microsoft over patents
Source: RSS feed - channel BNewsBusiness | 20 Mar 2009 | 12:51 pm

Citigroup CFO to run troubled bank unit (Reuters)

Reuters - Citigroup Inc named Chief Financial Officer Gary Crittenden as chairman of troubled banking unit Citi Holdings on Friday, and elevated Edward Kelly to replace him as CFO.
Source: Yahoo! News: Business | 20 Mar 2009 | 12:50 pm

Xerox dims first quarter outlook

Xerox, the copier and documents company, lowered its first quarter outlook and said it would look to cut $300m in costs this year as the economic downturn has slowed technology spending
Source: Financial Times - US homepage | 20 Mar 2009 | 12:48 pm

This Week’s Biggest ‘GOING CONCERN’ Stocks (AVR, BBI, CROX, EBHI, MGM)

Will a 'going concern' note burn your money?

We are still in the midst of “annual report season” as companies have been submitting their 10-K annual report filings with the SEC. Or in some cases delaying those filings. There is one theme that has been much stronger during this recession than during any recent years, and that is the dreaded “GOING CONCERN” notice from auditors in the amount of companies which are well known. And this year’s round of GOING CONCERN notes has a host of names that were formally great stocks.

A going concern is the ability of a company to continue to operate as things are now and will not go out of business or have to liquidate its assets. The out is of course that the company must be able to raise enough capital or exit certain operations to stay operational. Here are some of the big names with the notes that have come out this week:

Aventine Renewable Energy Holdings, Inc. (NYSE: AVR) has already been in trouble for some time. The former high-flying ethanol sector is now junk. Aventine warned that it might have to file for bankruptcy protection and it has the going concern note attached. And ethanol is still viable?

Blockbuster Inc. (NYSE: BBI) posted a loss after items, and the company’s CEO said that many other companies are also facing the same challenges. The auditor’s note of a going concern is said to be in place until its financing is complete and its liquidity is assured. The good news is that this one rose this week on the financing discussions. It seems that video rental stores are still like smokers, the numbers keep declining each year yet they still exist.

Crocs, Inc. (NASDAQ: CROX) said that its annual report will have a going concern note from independent registered public accounting firm, Deloitte & Touche, that raises doubt about the company’s ability to continue as a going concern. The company had more than $51 million in cash and equivalents and $22.4 million in credit facility borrowings which mature next month. Ugly shoes that were meant for gardening couldn’t stay mainstream for too long.

Eddie Bauer Holdings Inc. (NASDAQ: EBHI) was also hit hard this week on its massive losses. The company’s report will have a going concern note in it because of the current economic situation and over restrictions under amendments to its term loan agreement. It looks like the company was in compliance at the end of 2008 but 2009 looks like it will be a different story. The preppy retailer has not gone without a troubled history.

MGM Mirage (NYSE: MGM) posted a fourth-quarter net loss after recording a $1.2 billion write-down. This reflects a difficult environment, but it has also prompted the MGM’s auditor to raise doubts about its ability to continue as a going concern. Can people afford to go to casinos in a recession when they know that the odds are stacked against them when they walk in the doors?

There were many others over the last week, namely in the auto parts sector and in speculative companies. But these companies above either have household names that have been there for some time or were not that long ago traded as great growth stocks. What a difference a year makes.

JON C. OGG
MARCH 20, 2009

Tagged: AVR, BBI, CROX, EBHI, MGM

Source: 247 Wall Street | 20 Mar 2009 | 12:46 pm

At the bar last night...

Guy #1: I agree they should take back the AIG bonuses. But they should also take back the salaries of the people at the Securities and Exchange Commission. And Alan Greenspan's salary....

Guy #2: I don't care about the bonuses. I really don't. Maybe because I don't care about money in general. But I just don't feel any moral outrage. And who knows, maybe some of those guys getting bonuses were just doing their jobs, you know 'hey guy: analyze this thing for me' Were they all really in a position to know? You can't blame someone unless they should have known. I'm sure the government's going to get its money back eventually. So who cares?

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Source: NPR Blogs: Planet Money | 20 Mar 2009 | 12:46 pm

Northern Rock can offer a blueprint for disaster

To accept a plan from Northern Rock that house prices would fall just 5pc beggars belief.
Source: Telegraph Finance | 20 Mar 2009 | 12:44 pm

Stocks poised to inch forward

Wall Street's bid for a second straight week of gains faces a bit of a test Friday, with indications of a higher open as investors see some signs of hope that the economy may be starting to recover.
Source: Business and financial news - CNNMoney.com | 20 Mar 2009 | 12:43 pm

Nineteen US states go after AIG

Nineteen US states demand that insurance giant AIG release details of bonuses, so they can take steps to recover the funds.
Source: BBC News | Business | World Edition | 20 Mar 2009 | 12:41 pm

UPDATE 1-Shire extends Fosrenol lawsuit to Mylan

* Lawsuit filed after Mylan requests marketing authorisation
Source: RSS feed - channel BNewsBusiness | 20 Mar 2009 | 12:39 pm

Stock futures gain as commodities shares offset caution (Reuters)

Reuters - Stock futures signaled Wall Street will edge higher on Friday, with a further rebound in shares of natural resources companies likely to offset bleak corporate outlooks and fears of inflation.

Source: Yahoo! News: Business | 20 Mar 2009 | 12:37 pm

Sony Ericsson warning stuns ailing mobile sector (Reuters)

Reuters - Sony Ericsson sparked fresh fear of crumbling consumer demand on Friday when the world's No 4 handset maker said it would sell barely half of the phones it sold last quarter.
Source: Yahoo! News: Business | 20 Mar 2009 | 12:36 pm

Stock futures turn higher ahead of Bernanke speech (AP)

AP - Wall Street headed for a higher open Friday as investors sought to set aside inflation concerns and resume buying ahead of a speech by Federal Reserve Chairman Ben Bernanke.

Source: Yahoo! News: Stock Markets News | 20 Mar 2009 | 12:35 pm

CANADA STOCKS-Oil, gold may weigh on TSX; equities mixed

TORONTO, March 20 (Reuters) - Toronto's main stock index could open lower on Friday, pressured by weakness in the price of oil and gold and as investors book profits after eight sessions of gains.
Source: RSS feed - channel BNewsBusiness | 20 Mar 2009 | 12:32 pm

Stock futures turn higher ahead of Bernanke speech

Wall Street headed for a higher open Friday as investors sought to set aside inflation concerns and resume buying ahead of a speech by Federal Reserve Chairman Ben Bernanke. Bernanke...
Source: RSS feed - channel BNewsBusiness | 20 Mar 2009 | 12:30 pm

Banks' books still blurry

Vikram Pandit, Jamie Dimon and other CEOs say their banks are doing fine, but few people seem to believe them.
Source: Business and financial news - CNNMoney.com | 20 Mar 2009 | 12:29 pm

EU leaders pledge more money to states in distress

Leaders of thee European Union have pledged to double a credit line to those of its member countries facing more financial pain as they rejected criticism they should be doing more to aid the region's economy.
Source: Telegraph Finance | 20 Mar 2009 | 12:26 pm

UPDATE 1-Indonesia orders temporary halt at Bayan coal mine

JAKARTA, March 20 (Reuters) - Indonesia has ordered a coal mining unit of PT Bayan Resources to temporarily stop production for operating outside approved areas, a government official said on Friday.
Source: RSS feed - channel BNewsBusiness | 20 Mar 2009 | 12:23 pm

12 ways to beat the recession

Don't just do nothing. For those worried about what the future might bring being prepared could soften the blow.
Source: Telegraph Finance | 20 Mar 2009 | 12:22 pm

Whizizzle Phonics: Helping Kids Avoid the Summer Slide

Whimsical Reading Game Series Prepares Kids for the School Year Ahead SAN DIEGO, March 20 /PRNewswire/ -- Johns Hopkins Center for Summer Learning estimates that...
Source: RSS feed - channel BNewsBusiness | 20 Mar 2009 | 12:20 pm

FDIC wants more power over bad banks

The Federal Deposit Insurance Corp. is prepared to ask Congress Friday to give it the power to write the rules it enforces on banks that are engaged in criminal acts.
Source: Business and financial news - CNNMoney.com | 20 Mar 2009 | 12:19 pm

Lithuania awaits news from PKN on refiner sale

VILNIUS, March 20 (Reuters) - Polish oil group PKN failed on Friday to execute an option to buy the remaining 10 percent stake in Lithuania's refiner Mazeikiu Nafta, leaving Lithuania to wait for word...
Source: RSS feed - channel BNewsBusiness | 20 Mar 2009 | 12:17 pm

Dollar drops versus euro, yen

The dollar fell Friday on profit-taking after recent strong gains for the US currency in reaction to the Fed's move to pump more than a trillion dollars into the financial system, traders...
Source: RSS feed - channel BNewsBusiness | 20 Mar 2009 | 12:15 pm

'History not repeat itself but it often rhymes as Mark Twain noted'

After some of the most dramatic economic upheavals in living memory the FTSE 100 index of Britain's 100 biggest shares has updated its constituents to reflect waxing and waning corporate fortunes.
Source: Telegraph Finance | 20 Mar 2009 | 12:11 pm

Counting on a dividend? Not so fast

Investors who count on dividend payments as a "safe" investment are getting hammered right along with share prices.
Source: Business and financial news - CNNMoney.com | 20 Mar 2009 | 12:09 pm

Bank of America involved in Merrill writedowns: report (Reuters)

Reuters - Bank of America Corp was involved in accounting for fourth-quarter writedowns at Merrill Lynch & Co before it acquired the brokerage firm, the Financial Times reported on Thursday.

Source: Yahoo! News: Business | 20 Mar 2009 | 12:03 pm

World markets mixed on worries about US inflation (AP)

AP - Stock markets were mixed Friday as investors turned cautious amid worries the U.S. Federal Reserve's latest move to combat recession in the world's largest economy will lead to rampant inflation.

Source: Yahoo! News: Stock Markets News | 20 Mar 2009 | 11:54 am

Top Analyst Upgrades & Downgrades (EXPE, F, JNJ, CTXS, DSX, EGLE, GM, JCI, HOT, URBN)

These are the top upgrades and downgrades from Wall Street analysts this Friday morning:

Expedia (EXPE) Raised to Buy at Citigroup.
Ford (F) Started as Buy at UBS.
Johnson & Johnson (JNJ) Raised to Buy at UBS.
Citrix Systems (CTXS) Cut to Market Weight at Thomas Weisel.
Diana Shipping (DSX) Cut To Market Perform at Wachovia.
Eagle Bulk Shipping (EGLE) Cut To Market Perform at Wachovia.
General Motors (GM) Started as Sell at UBS.
Johnson Controls (JCI) Started as Buy at UBS.
Starwood Hotels (HOT) Cut to Underperform at FBR.
Urban Outfitters (URBN) Cut to Neutral at Cowen & Co.

JON C. OGG

March 20, 2009

Tagged: CTXS, DSX, EGLE, EXPE, F, GM, HOT, JCI, JNJ, URBN

Source: 247 Wall Street | 20 Mar 2009 | 11:50 am

Before the Bell: Johnson & Johnson, Citigroup, Xerox in focus

U.S. stock market future pointed slightly higher Friday, with Palm and Sony Ericsson in focus after both suffered from weak mobile handset sales.

Source: MarketWatch.com - Top Stories | 20 Mar 2009 | 11:45 am

First black FTSE 100 boss at Pru

Tidjane Thiam will become chief executive of Prudential in October, becoming the first black head of a FTSE 100 company.
Source: BBC News | Business | World Edition | 20 Mar 2009 | 11:42 am

European Stocks to Watch: Lonmin gets bearish reception ahead of FTSE 100 entrance

Platinum miner Lonmin is about to re-join the ranks of the top 100 U.K.-listed companies, but many in the market say the company shouldn’t be uncorking champagne.

Source: MarketWatch.com - Top Stories | 20 Mar 2009 | 11:42 am

World economy: First shrinking in 60 years

The global economic slowdown is so severe that the worldwide economy will contract for the first time in 60 years, the International Monetary Fund says.
Source: Business and financial news - CNNMoney.com | 20 Mar 2009 | 11:35 am

Indications: U.S. stock futures turn mildly higher

U.S. stock futures pointed to a slight rise on Friday, with Palm and Sony Ericsson reports reinforcing the worries that have led central banks across the globe to take unprecedented steps to try to help the economy.

Source: MarketWatch.com - Top Stories | 20 Mar 2009 | 11:33 am

Citi names Crittenden Citi Holdings chairman

Citigroup names its current chief financial officer, Gary Crittenden, as chairman of Citi Holdings, the firm’s nonbanking arm established to hold and manage billions in bad assets covered by its arrangement with the federal government to guarantee some of Citigroup's losses.

Source: MarketWatch.com - Top Stories | 20 Mar 2009 | 11:29 am

Currencies: Dollar poised for big weekly tumble

The U.S. dollar rebounds Friday but remains in line for a huge weekly loss against major rivals following the Federal Reserve’s decision this week to massively pump up the supply of dollars in a bid to jumpstart the economy and avert a deflationary spiral.

Source: MarketWatch.com - Top Stories | 20 Mar 2009 | 11:12 am

Wall Street set to extend losses

(Reuters) - Stock futures pointed to a lower open on Friday, extending losses from the previous session, as investors became concerned about the inflationary effects of the Federal Reserve's move to buy long-term Treasuries.

Source: Reuters: Business News | 20 Mar 2009 | 11:08 am

Eurozone industrial output drops

Eurozone industrial output fell by 17.3% over the past year, the biggest drop since its inception in 1990, official figures show.
Source: BBC News | Business | World Edition | 20 Mar 2009 | 11:08 am

Bank of America involved in Merrill writedowns: report

NEW YORK (Reuters) - Bank of America Corp was involved in accounting for fourth-quarter writedowns at Merrill Lynch & Co before it acquired the brokerage firm, the Financial Times reported on Thursday.

Source: Reuters: Business News | 20 Mar 2009 | 11:03 am

Earnings Watch: Updates, advisories and surprises

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

Source: MarketWatch.com - Top Stories | 20 Mar 2009 | 11:01 am

Treasury slated over Rock lending

The Treasury is criticised for allowing Northern Rock to lend £800m in risky mortgages after it was rescued with public funds.
Source: BBC News | Business | World Edition | 20 Mar 2009 | 10:59 am

London Markets: U.K. benchmark index holds steady; HSBC shares decline

U.K. shares are mixed in the final trading session of the week with HSBC Holdings declining, while shares in office-rentals firm Regus soar after it announces strong results and a higher dividend payout.

Source: MarketWatch.com - Top Stories | 20 Mar 2009 | 10:59 am

Geithner defends bonus action

Treasury Secretary Tim Geithner told CNN Thursday that his department, concerned that language about bonuses would not hold up to a court challenge, asked Sen. Chris Dodd to include an executive pay provision in the stimulus bill. The loophole allowed bailed-out insurance giant American International Group to pay out $165 million in bonuses.
Source: Business and financial news - CNNMoney.com | 20 Mar 2009 | 10:53 am

UBS hit with lawsuit by 'cheated' investors

A class action lawsuit has been filed against UBS by a New York law firm on behalf of investors who claim that the Swiss banking giant cheated them.
Source: Latest Business News from Times Online | 20 Mar 2009 | 10:44 am

Fiat denies plan to assume Chrysler debt

MILAN (Reuters) - Italy's Fiat SpA denied on Friday it would assume any current or future debt from Chrysler LLC , the troubled U.S. car maker with which it plans to form a partnership.

Source: Reuters: Business News | 20 Mar 2009 | 10:36 am

Sony Ericsson warning stuns ailing mobile sector

HELSINKI (Reuters) - Sony Ericsson sparked fresh fear of crumbling consumer demand on Friday when the world's No 4 handset maker said it would sell barely half of the phones it sold last quarter.

Source: Reuters: Business News | 20 Mar 2009 | 10:36 am

Europe Markets: Sony Ericsson warns, paces Europe drop

A profit warning from Sony Ericsson Mobile Communications combines with a weak close across the Atlantic to drag Europe stocks lower on Friday morning.

Source: MarketWatch.com - Top Stories | 20 Mar 2009 | 10:36 am

Xerox slashes first-quarter earnings target

Xerox slashes its first-quarter earnings target as it grapples with an “increasingly more challenging global economic environment.”

Source: MarketWatch.com - Top Stories | 20 Mar 2009 | 10:33 am

Sony Ericsson: Global Handset Sales Disaster (NOK)(MOT)(AAPL)(PALM)

Based on recent data on handset sales from research groups, Motorola (MOT), and Nokia (NOK) reinforced their forecasts that global cellphone demand could drop modestly this year

It would be the first time that has happened in over a decade. But, the drop was not seen as being catastrophic.

The latest figures from Sony Ericsson, the fourth largest supplier of handsets, indicate the sales of cellphones and smart phones are falling off a cliff.

Sony Ericssson surprised the market by saying it would only ship 14 million units this month. According to Reuters, some analysts had expected shipments of 21 million.

The handset company may be poorly positioned. Many of its products are outdated, so Sony Ericsson could be losing market share. But, the information probably points to something more ominous which is that worldwide handset sales could be down well over 10% this year which should further damage earnings at weak competitors like Motorola and Palm (PALM) and dent the quarterly earnings of the stronger operators like RIM (RIMM) and Apple (AAPL).

Almost every forecast about the consumer electronics and cellphone industries pointed to a tough year, but now 2009 is shaping up to be the worst year in memory.

Douglas A. McIntyre

Tagged: AAPL, MOT, NOK, PALM

Source: 247 Wall Street | 20 Mar 2009 | 10:21 am

Car production crashes 59% as demand falls

Car production fell 59 per cent last month as manufacturers continued to respond to falling demand. Only 59,777 cars were made last month, according to the Society of Motor Manufacturers and Traders.
Source: Latest Business News from Times Online | 20 Mar 2009 | 10:19 am

Hong Kong bankruptcy filings hit five-year high

Bankruptcy applications in Hong Kong hit a five-year high in February, marking the highest level of petitions seen since the territory's economy was devastated by the fallout from the Severe Acute Respiratory Syndrome (SARS) crisis.

Source: MarketWatch.com - Top Stories | 20 Mar 2009 | 10:18 am

AIG bonus tax: Feels good, but is it?

Public outrage can be a potent agent for change, but it doesn't always make for great policy.
Source: Business and financial news - CNNMoney.com | 20 Mar 2009 | 10:14 am

The revenge of JetBlue's founder

David Neeleman, founder of Brazil's new Azul Airlines, is seated in the back of his armored Ford Fusion, stopped in a rush-hour traffic jam between the airport and his office in Sao Paulo. "How did he get dengue fever?" he asks Paulinho, the rotund, well-armed cop who moonlights as his bodyguard/driver.
Source: Business and financial news - CNNMoney.com | 20 Mar 2009 | 10:14 am

Harvey Nichols hit by recession

Harvey Nichols, the upmarket department store chain frequented by designer-clad celebrities, has become the latest victim of the economic recession, with annual profits down by a reported 40 per cent.
Source: Latest Business News from Times Online | 20 Mar 2009 | 10:09 am

OECD says world economy to shrink

The head of the Organisation for Economic Cooperation says the world economy will most likely contract this year.
Source: BBC News | Business | World Edition | 20 Mar 2009 | 10:09 am

Oil Moves Toward $60,

Oil prices hit a low of $33.87 about a month ago. Now there are a lot of reasons that they could top $60, coming close to doubling in less than 60 days. While the drop from $147.27 last summer was a relief, the current climb may be extremely painful because it could compound other factors which are fueling the recession.

The latest rise in oil prices is supposed to be based on two things. The first is a weakening dollar, which could be an issue for several months, depending on how hard the Fed will fight to combat the US liquidity and credit crisis.

The other factor is harder to gauge, which makes it more frightening. Over the last few weeks the perception has begun to emerge that the recession may be bottoming and that the global economy could pick up toward the end of the year, driving more crude consumption especially in the largest nations–the US and China. Recent data on manufacturing output would make the notion that the recession is blowing itself out unlikely. But, if consumer sentiment and business capex do not drop sharply, there will be enough anecdotal information to encourage some traders to bid oil up.

The trouble with the cycle of modestly good news leading to higher oil prices is that they could undercut any economic recovery. The low price of gas and petrochemicals has been one of the few bright spots that have benefited consumer living costs and helped manufacturing company margins. Those benefits may be coming to an end.

Douglas A. McIntrye

Source: 247 Wall Street | 20 Mar 2009 | 10:07 am

Futures Point to Lower Start for Equities (Market Update)

News at a Glance

Early Growling: Stock futures point to lower start.
Crude Eases: Oil takes a step back after Thurs. rally.
Fed Update: Bernanke to speak on crisis at 12 p.m.
Weakness Abroad: Asia, Europe sink on economic concerns.

The Lowdown

Persistent concern over the economy could leave stocks lower today, but the major indexes may yet finish the week in the black.

Stocks looked take an early dip Friday, as traders appeared to grow less certain that the Federal Reserve's sweeping actions intended to lower mortgage rates and jumpstart growth would be met with near-term success. Shortly after 7 a.m., Dow, Nasdaq and S&P 500 futures were trading below fair value.

The Fed promised earlier this week to vastly expand its holdings, investing heavily in mortgage-backed securities and Treasuries. The moves were intended to promote lending and instill confidence, however, after a modest rally, stocks declined on Thursday, as traders began to question the potential of the Fed's plan.

Nonetheless, the major indexes appeared likely to post their second straight week in the black. The Dow would need to finish the day down more than 177 points to erase this week's gains.

In energy, crude prices dipped before the opening bell but remained elevated. Shortly before 7 a.m., oil traded down 89 cents at $50.72 a barrel.

World markets were lower after Thursday's losses. In Asia, Japan's Nikkei slipped 0.3%, while Hong Kong's Hang Seng dropped 2.3%. In Europe, the major indexes of London, Frankfurt and Paris were each lower in midday trading.

Corporate News

Bank of America (BAC) was involved in assessing Merrill Lynch's fourth-quarter writedowns before the brokerage was acquired by the bank, The Financial Times reported, citing anonymous sources. Merrill's finance employees worked with BofA chief accounting officer Neil Cotty, who was linked to markdowns that were a part of Merrill's $15.3 billion fourth-quarter loss. BofA said the judgment behind Merrill's valuations was left to its own staff.
Citigroup (C) could spend as much as $10 million for a new suite at the firm's Park Avenue office for chief executive Vikram Pandit, Bloomberg reported, citing an anonymous source. The outlay would come after the federal government handed over $45 billion in bailout funds to keep the bank afloat. Citi was criticized for wreckless spending on a corporate jet earlier this year before canceling the order.
AIG (AIG) executives may not have their controversial bonsuses for very long. The House of Representatives passed a 90% tax on bonuses paid to high-tax-bracket employees of institutions receiving at least $5 billion federal aid, Reuters reported. A Senate version of the bill was blocked by Republican leadership, which said it needed to be studied further.

The Economy

There are no substantial economic reports scheduled to be released today.

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Source: SmartMoney.com | 20 Mar 2009 | 10:03 am

States: We'll take stimulus - our way

Big money often spurs big battles. A month after President Obama signed the $787 billion economic stimulus law, governors and state lawmakers are already fighting with Washington and each other about putting the money to use.
Source: Business and financial news - CNNMoney.com | 20 Mar 2009 | 9:53 am

Ford's ready-made electric car

Ford is preparing to sell an electric car developed almost entirely by an outside supplier. While that may cut down on bragging rights - General Motors created the Chevy Volt in-house - Ford says it also cut down on costs and risk.
Source: Business and financial news - CNNMoney.com | 20 Mar 2009 | 9:52 am

The Sony (SNE) PS3 Hits The Wall

Sir Howard Stringer, the CEO of Sony (SNE), tried to convince himself and his company’s stockholders that the PS3 game platform would be a key component to turning the consumer electronics and entertainment firm around.

Over the last month, things have not worked out well for Stringer. He has sacked his No.2, admitted that Sony will take a loss, and froze the salaries of many employees.

But, that is not the end of the bad news. PS3 sales are still stunningly low. The product is overpriced and under-featured. The less expensive and, in the eyes of most consumers, more fun, Nintendo Wii still leads sales in the game system world. The Xbox from Microsoft (MSFT) has kept its second place rank.

For Sony, PS3 sales rates are not improving even though the company has cut prices on some of the models and added new games. According to Bloomberg, “Nintendo Co.’s U.S. sales of its Wii video-game consoles rose 74 percent in February, extending the company’s lead over Microsoft Corp. and Sony Corp. ” During the same period, Xbox sales rose 53% to 391,000 and PS3 sales were off almost 2% to 276,000.

Most of the divisions at Sony are doing poorly now. It TV screen business has been hurt as its products have become commodities in the world of consumer electronics. It digital cameras face the same fate. Its movie studio revenue goes up and down based on how well its releases do.

The PS3 is the most visible sign of Sony’s desperate situation. It has no product on the horizon to pull it out of the dumpster, so it faces years of being on the fringes of businesses that it dominated with the Walk-Man and PS2.

Douglas A. McIntyre

Tagged: MSFT, SNE

Source: 247 Wall Street | 20 Mar 2009 | 9:44 am

UK car production tumbles as crisis worsens

UK car production tumbled almost 60pc last month underlining the scale of the crisis facing the industry.
Source: Telegraph Finance | 20 Mar 2009 | 9:40 am

Oil dips to $51 on dollar, Fed plan uncertainty

LONDON (Reuters) - Oil fell from a four-month high on Friday, paring the previous session's 7 percent rise, on a weaker dollar and doubts over the effectiveness of the U.S. Federal Reserve's $1 trillion package to revive the economy.

Source: Reuters: Business News | 20 Mar 2009 | 9:37 am

Stupidity And The Alchemy Of Chaos

“Never apologize and never explain–it’s a sign of weakness.”, John Wayne as Captain Nathan Brittles in “She Wore A Yellow Ribbon.”

One of the goals of big government in the midst of a crisis is to calm the masses. That was the thinking of leaders like Churchill and Roosevelt. It probably did not occur to them that inflaming the concerns of people who are worried about their jobs and keeping their homes is not a part of the solution to bringing a crisis to an end.

So far this week, Treasury Secretary Geithner and President Obama have both taken some responsibility for the fact that AIG (AIG) employees got large bonuses which were, if effect, paid from government bailout money. Senator Chris Dodd, who may have had a role in allowing a loophole in a bill which let the AIG compensation slip through, refuses to be cast as the villain who let bankers make more money than they deserved.

The reaction to the bonus issue is that Congress is in the midst of passing a bill to tax the payouts at a 90% rate, punishing people for taking money that they appeared to be entitled to and doing nothing to the management that agreed to the deals in the first place. The tax will not be the end of the blow-up. Indignation makes good theater for politicians and makes some of their more naive constituents think that their elected officials are looking after their best interests.

The best interests of anyone suffering under the weight of the recession is to get some legislation passed that at least gives the economy a chance to recover with government spending and jobs programs. The programs may be the wrong programs, but that is not something that is going to be known ahead of time. There are a number of gambles in the proposed federal budget and many of them will not pay off. Many of the plans that the Treasury has to improve bank balance sheets and lending will simply be a waste of money. There is no entirely convincing argument that helping worthy people who cannot pay their mortgages with their home loans will stabilize the housing market. The Fed’s plan to buy as much as $300 billion in Treasuries may bring down interest rates, but that will not automatically cause businesses and consumers to borrow money and restart the spending cycles that, to some extent, caused the current financial crisis.

The assumptions behind the Congressional hounding of AIG must be based on the premise that attacking a problem which happened in the past is better than simply ensuring, as best the government can, that it will not happen in the future. People will make money for things that they did not do from now until the end of time. And, suckers who actually accomplish something will often get nothing. Christopher Columbus died in relative affluence, claiming to have discovered what would become known as America. The first non-natives to actually set foot in the New World were Vikings, and they were probably eaten by black bears.

For some reason, it has not occurred to the Treasury Secretary that at his next public appearance, he should take responsibility for everything that has gone wrong in the financial world since he was sworn in. He can then refuse to resign and say that he has the full support of the President. The most important thing he can do is say that the AIG and Merrill Lynch compensation issues are no longer a matter of interest. If the Justice Department wants to pursue them, it can have the files.

There are now, by most accounts, some $2 trillion taxpayer dollars at stake in the salvage programs in place or being considered, to save the national economy. The results of the failure of those plans are unimaginable. Almost no one living in America now was an adult during the early 1930s. It is impossible to imagine how 13% or 14% unemployment would affect the modern economy, just as there is no way to suss out what a 50% drop in housing prices from the 2006 peaks would do. Some economists believe that these problems will drive the nation into a decade of economic stagnation, while others would like to see the boil lanced no matter how painful it may be. The second group wants to see the unimaginable after effects of years of leverage taken as one mammoth typhoon, hoping that it will only last a few quarters, blow itself out, and allow the resulting low cost of labor and commodities to bring the economy back.

It is unsettling that the arguments which dominante the discourse on the future of the financial system center around issues that are petty and not imperative. They are battles over indignities of the past and not programs for the future.

Douglas A. McIntyre

Source: 247 Wall Street | 20 Mar 2009 | 9:25 am

FTC to curb mortgage-lending abuse: report

(Reuters) - The U.S. Federal Trade Commission (FTC) will use new authority to bar lending practices by mortgage brokers who have deceived borrowers, Bloomberg said, citing the FTC's chairman.

Source: Reuters: Business News | 20 Mar 2009 | 9:21 am

FTC to curb mortgage-lending abuse: report (Reuters)

Reuters - The U.S. Federal Trade Commission (FTC) will use new authority to bar lending practices by mortgage brokers who have deceived borrowers, Bloomberg said, citing the FTC's chairman.
Source: Yahoo! News: Business | 20 Mar 2009 | 9:21 am

AIG unit sues Countrywide over loan losses (AP)

AP - A unit of embattled insurer American International Group Inc. filed suit against mortgage lender Countrywide Financial Corp. in California federal court Thursday, alleging Countrywide misrepresented the health of loans that the company insured, resulting in massive losses.

Source: Yahoo! News: Business | 20 Mar 2009 | 9:18 am

Beating Collegiality Out Of The Work Place

American management began to do what it could to make office environments more pleasant sometime after the bad economic patch in 2001 and 2002. At some companies such as Wal-Mart (WMT) workers have been called “associates” for years. More and more companies began to refer to employees as “partners” and “team members” in the last decade. Even middle management at many firms got into the habit of sending memos to “The Team”.

Collegiality is a trait prized in the Girl Scouts, but this is a recession; it weakens the system of most companies. Workers begin to think that they are at the same level as their bosses. Senior people lose authority in the eyes of their charges. And, people begin to think that their co-workers are their friends rather than individuals competing with them for jobs in a shrinking workplace.

One of the positive things about a recession is that it removes the perception that “getting along” is important in the workplace. It reinforces the idea that people are paid to work and not socialize. People who view others employed at their company as “co-workers” are likely to feel that they should not be asked to fire anyone or discipline subordinates for poor performance.

While there may be no statistics about this, companies that run their operations like a revival meeting are almost certainly less likely to be successful or have high employee productivity compared to their competition. When William Clay Ford ran Ford Motor Company (F) from 2001 to 2006 he wandered the halls of company offices and assembly plants kissing babies and shaking hands. In the meantime the company went to hell. Jerry Yang was everyone’s favorite CEO at Yahoo! (YHOO) until he turned down a generous offer from Microsoft (MSFT) to buy the portal company. After that, he had to worry about his safety in the company’s own cafeteria. Dick Parsons, the former head of Time Warner (TWX), was another affable CEO who took his company nowhere.

Most people who began reading the business press after 1995 think of Jack Welch as a business genius with the intellectual capacity to keep GE’s (GE) earnings growing year after year. Anyone who spent time reading the business press 25 years ago knows that Welch was a bastard who would do whatever he felt was necessary to improve GE’s operations. He may have been the smartest persons in the room but he was also the meanest. The same can be said for Oracle (ORCL) founder and CEO Larry Ellison, whose company continues to beat Wall St. forecasts quarter after quarter.

Now that even some of the largest corporations in America are fighting for their lives, it has almost certainly dawned on most workers that someone standing near them on an assembly line or sitting in an office down the hall will be out of a job. Alternatively, they may be fired and their teammate may get to keep their jobs.

The long knives are out now and the notion that companies are groups of “partners” is gone and will not come back while this generation of workers is still on the job.

Douglas A. McIntyre

Tagged: F, GE, MSFT, ORCL, TWX, WMT, YHOO

Source: 247 Wall Street | 20 Mar 2009 | 9:09 am

Fear And Loathing In The Commercial Real Estate Industry

In most large American cities there are office buildings which sit half finished in their financial districts. There are still huge cranes next to some of them. If the construction on a site ended months ago, there is nothing left beyond the skyscraper skeleton and a security fence to keep vandals out.

As business such as law firms, investment banks, car companies and retailers cut jobs and move to less expensive offices, the commercial real estate industry is collapsing with astonishing speed. None of the unfinished buildings were erected with cash from the developers. Banks put the money up for the physical location and structure, and perhaps even the rent from tenants, as security deposits in most cases. The land is no longer worth much. The buildings are half empty or unfinished and tenants are leaving, and, in many cases, defaulting on their leases. Lawsuits to get payment of those obligations are long and expensive. As often as not, the former tenant could not afford to pay a judgment anyway.

According to the FT, Leon Black, head of Apollo Management and a crafty investor in distressed debt told the paper that “the extra costs of cleaning up the US banking industry could total as much as $2,000bn, putting further strain on the economy. He said the woes of the commercial property had not yet been reflected fully on bank balance sheets.”

Black is reinforcing what the smart money already thinks about the big money center banks. Their CEOs are talking about profits and paying back TARP money the same way that they were calling an end to banking write-offs a year ago. Former Lehman CEO Fuld said last April that the worst of the writedowns was probably over and Morgan Stanley (MS) chief John Mack said that the financial crisis was in the “eighth inning or top of the ninth.”

It pays for bank presidents to say the most positive things that they can about their firms. They have the benefit of SEC rules that say it is OK to talk about the future as long as there are no guarantees given. In other words, CEOs are allowed to guess without getting into trouble as long as they do not turn their guesses into formal forecasts. In the world of corporate governance it is one of the great “get out of jail free” cards.

Several bank stocks have doubled or tripled since the beginning of the month and many analysts say that these stocks were “oversold.” In reality, when buyers moved into the shares short sellers were pushed out, which gave an irregular boost to buying. But, most of those short sellers are gone now and bank share prices will have to stand on their own.

Bank stock bulls rest much of their case on the fact the write-offs at financial firms are slowing and the Fed is putting enough money into the credit system to restart the normal cycle of borrowing and lending. That may well be true. Those pushing bank stocks as a great investment would also say that, even though a stock like Citigroup (C) has had a great run, it is down 90% from its 52-week high. That makes it a bargain.

Before the subprime mess began, no one talked about the danger that mortgage derivatives posed to banks. Now, there is not much talk about what could bring the banking industry to its knees again. That talk has gone away and been replaced by a childish hopefulness that decades of overleveraging can be fixed by a few months of losses and hundreds of billions of dollars in government aid.

There is a reason that Citigroup is down 90% this year and down 95% from its all-time high. The experts who really know the banking industry believe that there are still hundreds of billions of dollars or write-offs walking around the financial system waiting for big banks to run into them.

Douglas A. McIntyre

Tagged: C

Source: 247 Wall Street | 20 Mar 2009 | 9:02 am

Sony Ericsson sends profit alert

Sony Ericsson, the mobile phone maker, warned this morning that it would make a loss and sell fewer handsets in the first quarter as it continued to be hit by weaker consumer demand.
Source: Latest Business News from Times Online | 20 Mar 2009 | 8:58 am

AAPL Weekly Headline Roundup: March 16-20

Apple shares broke through $100 this week with charts suggesting there’s more upside to come. Here are other top Apple headlines aggregated from 24/7 Wall St. partner Apple Investor News:

• iPhone 3.0 system software was announced Tuesday and due by Summer. Aside from cut-and-paste, better video, push technology, etc., the real story here: the 1,000 developer tools that will allow even more functionality for this mobile platform. Though the lack of new iPhone hardware discouraged some, this seems likely by mid-year.
• Upgrade of the week: Broadpoint.Amtech analyst Brian Marshall raised his estimates and upped price target to $120 from $110, maintaining a Buy rating and noting Apple remains “a must own technology bellwether.”

• Downgrade of the week: S&P analyst Clyde Montevirgen cut his rating on Apple to Hold from Strong Buy and lowered his target price to $110, from $123, noting strong “macroeconomic headwinds.”

• Dell introduced a $2000 laptop some say is designed to compete with Apple’s MacBook Air or MacBook Pro.

• Question of the week: NPD data announced Monday says that February Mac sales were down over 16% from a year ago (PC sales were down 22%). So why didn’t this have an impact on AAPL shares?

• Sleeper of the week: From the trendy South by Southwest Interactive Conference (SXSW), several blogs discussed the well-attended panel, “iPhone – The New Gaming Platform” and the successful iPhone app developers who’ve become quick millionaires.

• On a lighter note, Microsoft CEO Steve Ballmer chimes in again about Apple’s prospects in a recession: “No one’s going to pay $500 more for a logo,” said Ballmer to a McGraw-Hill Media Summit. The reporter noted his statement resulted in “audience gasps.” Ballmer is such a great CEO. It’s unfortunate that he hurts his stature, and credibility, when he talks about the competition.

Frank Cioffi, Apple Investor News.

(full disclosure: Cioffi owns AAPL shares)

Tagged: AAPL

Source: 247 Wall Street | 20 Mar 2009 | 8:52 am

London stocks down in early trade (AFP)

AFP - Stocks in London opened down on Friday, after closing higher the day before on news the US Federal Reserve will spend another trillion dollars to get the US economy back on track.

Source: Yahoo! News: Stock Markets News | 20 Mar 2009 | 8:46 am

Sony Ericsson braced for losses

Sony Ericsson expects to make a loss in the first quarter of this year as sales continue to suffer in the economic downturn.
Source: BBC News | Business | World Edition | 20 Mar 2009 | 8:43 am

Weavering Capital collapses over suspect trade

Investors in Weavering Capital were braced for losses of hundreds of millions of dollars today after one of London's oldest hedge funds was forced to call in liquidators following the discovery of a series of suspect derivatives trades.
Source: Latest Business News from Times Online | 20 Mar 2009 | 8:42 am

Americans vote for 90% tax on AIG bonuses

The political backlash over controversial bonus payments to AIG bankers grew last night as American politicians overwhelmingly voted for 90 per cent tax on the payouts in an attempt to reclaim the payments.
Source: Latest Business News from Times Online | 20 Mar 2009 | 8:12 am

Regus profits soar as companies rent offices

Regus, the serviced office operator, reported a 25 per cent rise in full-year profits this morning as businesses increasingly looked to cut costs by renting their place of work.
Source: Latest Business News from Times Online | 20 Mar 2009 | 8:04 am

Media Digest 3/20/2009 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, the House passed a bill that would tax AIG’s (AIG) and some other bonuses by 90%.

Reuters reports that the US gave auto suppliers a $5 billion lifeline.

Reuters says that it is too early to write off the dollar despite the Fed’s move.

Reuters reports that US jobless roll swelled to a record 5.47 million.

Reuters reports that GE (GE) sees a profit for its financial division but its number was below December views.

Reuters writes that HSBC (HBC), UBS (UBS), and Citigroup (C) made moves to improve their balance sheets.

Reuters reports that some rescued companies owe the US back taxes.

Reuters reports that the competition among online travel agencies is heating up.

Reuters writes that Bank of America (BAC) was involved in Merrill’s Q4 write-downs.

Reuters reports that the Fed may plan to keep lowering rates, but there will be a cost.

Reuters reports that the IBM (IBM) talks with Sun (JAVA) are not just about servers.

Reuters writes that the FTC plans to curb mortgage-lending abuses.

Reuters reports that Palm (PALM) said its Pre is on track as its revenue fell sharply last quarter.

Reuters reports that a debate is emerging in the US about privatizing assets.

The Wall Street Journal reports that Apollo is thinking of taking a position in Charter Communications.

The Wall Street Journal writes that rating agencies will get a windfall from the government’s plan to put large sums of capital into the market.

The Wall Street Journal reports that mortgage rates are not likely to go much lower.

The Wall Street Journal writes that Cuomo has gotten lists of Merrill employees who received bonuses.

The Wall Street Journal reports that travel spending sank sharply.

The Wall Street Journal says that the oil and gas rally may be overdone.

The Wall Street Journal reports that Wal-Mart (WMT) increased employee bonuses.

The Wall Street Journal reports that Turkey may take IMF money.

The Wall Street Journal reports that Cisco (CSCO) bought a video camera maker.

The Wall Street Journal reports that FedEx (FDX) will cut more expenses.

The Wall Street Journal reports that excess capacity is keeping pressure on the Fed.

The Wall Street Journal reports that a program to allow judges to alter mortgages has stalled.

The Wall Street Journal reports that the TALF debuted with three deals.

The Wall Street Journal reports that Citigroup (C) will reverse split its stock.

The Wall Street Journal reports that Australia is delaying two deals for China to buy into its mining industry.

The Wall Street Journal reports that Buick and Jaguar topped the new JDPower quality list.

The New York Times reports that federal employees knew about AIG bonuses weeks ago.

The New York Times reports that global drops in manufacturing are increasing quickly.

The FT reports that commodities surged on the Fed’s new debt purchasing plan.

The FT reports that the IMF is criticizing the US plan to stabilize markets.

Bloomberg reports that naked short sales may have helped to bring down Lehman.

Douglas A. McIntyre

Tagged: AIG, BAC, C, CSCO, FDX, GE, HBC, IBM, JAVA, PALM, UBS, WMT

Source: 247 Wall Street | 20 Mar 2009 | 7:54 am

Stock markets slide in Asia

Stock markets in Asia fell with banks among the sharpest decliners as some investors chose to take profits after the biggest weekly rally in equities of the year.
Source: Telegraph Finance | 20 Mar 2009 | 7:51 am

Obama offers a fresh start to Iran

President Barack Obama issued a widely awaited message to the people and government of Iran in his bid to end a 30-year diplomatic standoff between the US and the Islamic Republic
Source: Financial Times - US homepage | 20 Mar 2009 | 7:45 am

Prudential: key figures

Source: Telegraph Finance | 20 Mar 2009 | 7:42 am

ThyssenKrupp to cut more than 3,000 jobs: report

FRANKFURT (Reuters) - German industrial conglomerate ThyssenKrupp plans to cut more than 3,000 jobs or about 1.5 percent of its total staff amid a slump in demand, the Financial Times reported on Friday.

Source: Reuters: Business News | 20 Mar 2009 | 7:13 am

Australian stocks: Market closes slightly down

SYDNEY - The Australian share market closed the week marginally lower after falls in the financial sector offset gains on resource stocks. The benchmark S&P/ASX200 dropped 14 points, or 0.4 per cent, to close at 3466.2, while the...
Source: New Zealand Herald - Business | 20 Mar 2009 | 7:03 am

Indie labels talk survival at South by Southwest

Bailout for car parts makers a hopeful sign for Detroit

If the government commits funds to suppliers it won't let the Big Three fail, conventional wisdom says. By deciding...
Source: RSS feed - channel BNPaperBusiness | 20 Mar 2009 | 7:00 am

Mortgage rates sink to lowest level in decades

The average rate on 30-year fixed mortgages falls to 4.94%, HSH Associates says, after the Federal Reserve launches a new effort to prop up the flailing housing market. ...
Source: RSS feed - channel BNPaperBusiness | 20 Mar 2009 | 7:00 am

Jaguar, Buick dethrone Lexus in reliability study

NEW YORK -- British luxury carmaker Jaguar surged to the top of J.D. Power and Associates' closely watched vehicle dependability study this year, tying Buick for the No. 1 spot and dethroning Lexus for...
Source: RSS feed - channel BNPaperBusiness | 20 Mar 2009 | 7:00 am

Law for 90% tax rate could be hard to overturn

AIG employees who received bonuses may think they're being targeted. But courts have long been reluctant to strike down tax legislation, legal experts say. ...
Source: RSS feed - channel BNPaperBusiness | 20 Mar 2009 | 7:00 am

Southwest Airlines kicks off summer fare war

Other carriers quickly match or even beat the lower ticket prices as the carriers scramble to fill seats.

A summer airfare war is heating up as one of the worst downturns in travel is leaving airlines scrambling to fill seats.

Source: L.A. Times - Business | 20 Mar 2009 | 7:00 am

Countrywide sues AIG unit over its failure to cover loan losses

The legal battle could provide a rare window into the collapse of the financial and real estate markets.

A legal battle between units of Countrywide Financial Corp. and American International Group Inc. could provide a rare window into the collapse of the financial and real estate markets.

Source: L.A. Times - Business | 20 Mar 2009 | 7:00 am

Ticketmaster loses $1.07 billion in fourth quarter

The red ink reflects a $1.1-billion write-down because of the company's falling share price. Ticketmaster Entertainment...
Source: RSS feed - channel BNPaperBusiness | 20 Mar 2009 | 7:00 am

Southwest Airlines kicks off summer fare war

Other carriers quickly match or even beat the lower ticket prices as the carriers scramble to fill seats. A summer...
Source: RSS feed - channel BNPaperBusiness | 20 Mar 2009 | 7:00 am

Former employees file wage and hour suit against 'American Idol' producer

Fremantle Media is accused of depriving workers of overtime pay and meal breaks. Three former employees of Fremantle...
Source: RSS feed - channel BNPaperBusiness | 20 Mar 2009 | 7:00 am

Lions Gate in a vulnerable spot

With Carl Icahn threatening a proxy war, the producer of the Tyler Perry movies, 'Crash,' the 'Saw' franchise and the 'Mad Men' TV series is no longer so assured about its future.

Hollywood is littered with failed entertainment companies started by starry-eyed moguls with dreams of taking on the big studios and competing alongside them. In the case of one, success brought with it something of a nightmare.

Source: L.A. Times - Business | 20 Mar 2009 | 7:00 am

Obama administration backs workers' suit against Wal-Mart

The Obama administration sided with women suing Wal-Mart Stores Inc. for discrimination, urging a federal appeals court to let the current and former workers sue as a group and proceed with the biggest...
Source: RSS feed - channel BNPaperBusiness | 20 Mar 2009 | 7:00 am

Indie labels talk survival at South by Southwest

Declining album sales, online piracy and rampant layoffs: The problems that have been afflicting corporate labels for the last decade are even worse in this niche industry, executives say.

The stark realities facing the independent music sector threatened to cast a pall over the hard-partying revelry as the South by Southwest music festival began its second full day Thursday.

Source: L.A. Times - Business | 20 Mar 2009 | 7:00 am

Law for 90% tax rate could be hard to overturn

AIG employees who received bonuses may think they're being targeted. But courts have long been reluctant to strike down tax legislation, legal experts say.

The American International Group Inc. employees who received big bonuses and now could face a 90% tax bill may feel they have been singled out for unfair punishment by angry lawmakers.

Source: L.A. Times - Business | 20 Mar 2009 | 7:00 am

Lions Gate in a vulnerable spot

With Carl Icahn threatening a proxy war, the producer of the Tyler Perry movies, 'Crash,' the 'Saw' franchise and the 'Mad Men' TV series is no longer so assured about its future. ...
Source: RSS feed - channel BNPaperBusiness | 20 Mar 2009 | 7:00 am

Bailout for car parts makers a hopeful sign for Detroit

If the government commits funds to suppliers it won't let the Big Three fail, conventional wisdom says.

By deciding to give as much as $5 billion to struggling auto parts suppliers, the government could help keep afloat dozens of the companies that provide the seats, pistons and thousands of other components needed to assemble a car.

Source: L.A. Times - Business | 20 Mar 2009 | 7:00 am

Car production decline worsens amid crisis

Production of new cars in the UK fell by roughly 60pc last month new figures will reveal today.
Source: Telegraph Finance | 20 Mar 2009 | 6:51 am

No time for the Spanish to be saying adiós to the odd airport or two

The Competition Commission has given BAA not one headache but three with its overdue ruling that it must sell Gatwick Stansted and either Glasgow or Edinburgh airports.
Source: Telegraph Finance | 20 Mar 2009 | 6:47 am

NZ stocks: Market gives back gains

The New Zealand sharemarket slipped back today with the benchmark NZSX-50 index down 34.183 points to 2599.026, wiping out its 26.9-point rise yesterday. The 1.298 per cent fall in the index on turnover of 34 million shares valued...
Source: New Zealand Herald - Business | 20 Mar 2009 | 6:34 am

Currency: Kiwi pushes to two-month highs

The New Zealand dollar pushed above US56c early today for the first time in more than two months, as the US dollar continued to reel in the wake of the Federal Reserve's moves to inject more money into the US economy. The Fed said...
Source: New Zealand Herald - Business | 20 Mar 2009 | 6:31 am

AIG gives names of bonus recipients to New York's attorney general

Andrew Cuomo had subpoenaed the information, insisting the public had a right to know their identities. But concerns have been raised about the bonus recipients' safety.

American International Group Inc. on Thursday surrendered the names of employees who received controversial retention bonuses, but don't look for the list to go public any time soon.

Source: L.A. Times - Business | 20 Mar 2009 | 4:52 am

U.S. throws lifeline to distressed auto suppliers

WASHINGTON/DETROIT (Reuters) - The Obama administration pledged up to $5 billion on Thursday to immediately assist auto suppliers whose health is crucial to the survival of stricken U.S. car manufacturers.

Source: Reuters: Business News | 20 Mar 2009 | 4:25 am

House passes tax to recoup most of AIG bonuses

WASHINGTON (Reuters) - The U.S. House of Representatives swiftly passed a bill on Thursday to recoup controversial bonuses paid to American International Group Inc as Treasury Secretary Timothy Geithner tried to calm the furor by taking responsibility.

Source: Reuters: Business News | 20 Mar 2009 | 4:23 am

Pink Slips Sink Ships (Screens)

The best death euphemisms make living sound unpleasant. Uncle Melvin was laid to rest and moved on to a better place, lucky fellow. Firing euphemisms attempt but don’t always achieve the same softness. “Bob was let go” means vastly different things to a rock climber than to a parole board. A “severance package” sounds as though it ought to include a tourniquet.

I’m no fan of “downsizing,” since companies that trumpet growth shouldn’t make shrinking sound good, too. Worse than all these, though, is “rightsizing,” first attributed in 1988 to a General Motors (GM) personnel manager who felt that a 25% downsizing of salaried worker sounded too negative. “Rightsizing” sounds as though firings will fix things, and ultimately enrich companies and their stockholders. GM’s 90% stock decline over the past two decades, and a large body of research, say otherwise.

“Layoff announcements have an overall negative effect on stock market prices, and this remains true whatever the country, the period of time or the type of firm considered,” concluded French economist Gunther Capelle-Blanchard in a recent meta-analysis of the subject. Capelle-Blanchard combined the findings of 41 studies covering 15,000 layoff announcements in more than a dozen countries over 31 years ended 2001. The circumstances surrounding mass layoffs matter, he found; companies that fired because of financial difficulty fared worse than those that fired offensively as, say, part of a general restructuring, but neither group fared as well as companies that hung onto workers.

The effect on stock prices corresponds with what happens to financial results. University of Colorado management professor Wayne Cascio studied layoffs for the Department of Labor in the 1990s and is the author of "Responsible Restructuring," published in 2002. In a study of 18 years’ worth of downsizings among S&P 500 companies, he found that downsizing companies went on to do worse in terms of profitability than stable companies -- ones with less than 5% staff fluctuation per year -- and that hiring companies did best.

Perhaps that’s because firing workers is expensive. It frees up salary, but also creates severance costs. Retained workers sometimes have to be moved. Unions might strike. Someone might file a lawsuit -- resulting perhaps in a costly award, but more likely, in a costly defense. New workers, once conditions improve, must be trained. There are less-quantifiable costs, too. Layoff headlines can mar brands that advertising has polished. So can grumbling ex-workers. Perhaps worst of all, workers who survive a layoff tend to turn timid at just the time that bold contributions are needed.

That’s not to say that all or even most of the companies that have reduced staff during the nasty spending contraction of the past year have had a choice. It just suggests that companies, as Cascio puts it, can’t shrink their way into prosperity, and that stock investors should in general view mass layoffs as a sign of worse profits ahead, not better ones.

That's a worrisome sign for big banks and car makers in particular and the broad market in general. In February the unemployment rate reached 8.1%, up from 4.8% a year earlier. Among other companies with massive layoffs since last fall: Starbucks (SBUX), Eastman Kodak (EK), Pfizer (PFE), Sprint Nextel (S), Caterpillar (CAT) and United Technologies (UTX).

Source: SmartMoney.com | 20 Mar 2009 | 4:00 am

7 Things You're Wasting Money On (Deal of the Day)

These days, keeping your budget in line isn’t measured by the amount you spend, but by how much you save.

Before you blame your daily jaunt to Starbucks (SBUX) or weekly trip to the movies for breaking your budget, take a good hard look at how much you’re paying for less obvious but much more expensive money wasters like overdraft fees and auto insurance.

Cut back on these seven items and you could save roughly $1,000 a year.

1) Bottled Water

Getting your recommended eight glasses of water a day by bottle instead of tap is a huge waste of cash, says Phil Lempert, founder of Supermarket Guru. That buck-a-bottle water you down on a regular basis can really add up. (Even more so now that cities like Chicago collect an additional tax of five cents per bottle.)

Potential Savings: Spend $37 to buy a 40-ounce Brita pitcher and filter ($13 at Bed, Bath and Beyond (BBBY)), plus a four-pack of replacement filters ($24), and you'll be able to filter 200 gallons of water. Buy that much water in 24-packs of 16.9-ounce Aquafina bottles at Shop Rite instead, and you’d spend $283.50. Your total savings: $246.50.

2) Extended Warranties

Think twice before you shell out $10 a month for a two-year protection plan on your pricey new BlackBerry. New products tend to malfunction within the manufacturer’s initial warranty period, or well after any extended warranty has expired, says Michael Gartenberg, vice president of strategy and analysis for Interpret LLC, a market researcher. (Most extended warranties exclude accidental damage, too, so you’d still be out of luck if you drop that Blackberry and crack the screen.) To protect yourself, pay with the right credit card. Many credit cards -- including most American Express (AXP) and MasterCard (MA) cards -- double the manufacturer’s warranty on purchases, adding up to another year of free protection.

Potential Savings: Someone buying a 40-inch Samsung flat panel high-def television at Best Buy (BBY) for $800 has the option to add a four-year protection plan for another $150. Skip it, and pocket the cash instead. (The set already has a one-year manufacturer’s warranty.)

3) Gym Memberships

The cost of a gym membership can really rack up over the course of a year (an average of $775, according to the International Health, Racquet & Sportsclub Association). So make sure you're tapping into all of the discounts available to you. Check with your employer, health insurer and other membership groups like your union or alma mater to see if they offer discounts on gym and fitness club memberships, says Bob Nelson, president of Nelson Motivation, a benefits consulting firm.

Potential Savings: On your own, you’d pay $54.99 per month, plus a $49 enrollment fee, for a national access plan at Bally’s Total Fitness. Through discounter GlobalFit.com, which offers special rates for members of partner companies, you’d pay $37.80 per month plus a $29 enrollment fee for the same Bally’s membership. Over a yearlong membership, that’s $226.28 saved.

4) Overdraft Fees

Overdraft fees can run as high as $35 apiece and banks have a host of sneaky tricks that can cause even the most diligent consumer to overdraw on an account. For example, they may approve debit purchases that would put you in the red, or re-order transactions so that the biggest purchases go through first -- and deposits get processed last. To protect yourself, sign up for overdraft protection, which can cost as little as $5 to $10 a year (and is often free with high-level checking accounts), and can save you hundreds of dollars.

Potential Savings: Pay $5 annually for a connected line of credit at Citibank (C). It kicks in only when you overspend, helping you to avoid the $30 fee per overdraft. Mess up just four times within a year and you've saved $115.

5) Organic Produce

Sure, buying organic makes you feel like you’re doing the right thing, but it isn't always the best choice for your wallet. Fruits and vegetables like kiwis, sweet corn and broccoli require very little pesticide to grow. Others -- like avocados, onions and pineapples -- have thick or peelable skins that reduce your exposure to harmful chemicals. “Any pesticide that remains is not getting through,” says Lempert. For a handy reminder as you shop, download the Environmental Working Group’s wallet-sized organic produce guide. (For more tips to save on organics, click here.)

Potential Savings: Organic broccoli costs $2.99 per pound at online grocer FreshDirect, which also offers conventional broccoli for $1.49. A pound of navel oranges is $4 for the organic and $2 for conventional. Someone buying a pound of each item weekly could save $182 over the course of a year.

6) Auto Insurance

“[Auto insurers] often give discounts for consumers who don’t drive long distances,” says Sam Belden, a spokesman for Insurance.com. If your driving habits have changed in recent months -- say, you’ve switched jobs or cut out pricey trips to the mall – call your insurer to ask if you now qualify for a better rate. (For more on the discounts available, click here.)

Potential Savings: A driver who cuts back to fewer than 7,500 miles a year could shave 5% to 15% off his premiums, depending on his insurer. Considering that the average driver shells out $817 a year on auto insurance, according to the Insurance Information Institute, that saves $40.85 to $122.55.

7) Music Downloads

For the longest time, Apple (AAPL) iPod and iPhone owners were stuck downloading their music from iTunes, while consumers with other MP3 players couldn’t put the service’s content on their devices. But now, most online music purveyors (including Apple as of March) offer content in a DRM-free format -- meaning you can listen to it on any MP3 player. That frees iTunes users to pursue cheaper music from sites like Wal-Mart (WMT) and Amazon.com (AMZN). Music fans with other MP3 players may benefit from Apple going DRM-free, too. The company plans to revamp its fees in April, charging 69 cents to $1.29 per song instead of the current flat fee of 99 cents. Bottom line: Check prices on several sites before you download.

Potential Savings: “Hot N Cold” by Katy Perry costs 99 cents at iTunes, but just 74 cents at Wal-Mart and 79 cents at Amazon.com. Someone buying a song a week could save $10.40 to $13 annually by shopping around.

Source: SmartMoney.com | 20 Mar 2009 | 4:00 am

10 Things the IRS Won't Tell You (10 Things)

1. “Like it or not, you may need help with your taxes.”

When Cindy Hockenberry and her husband sent in a tax-penalty payment in 2007, they knew there was a chance their math might not jibe with the IRS’s. When that turned out to be true and the amount was much higher than expected, they decided to dispute it. Fortunately for them, Hockenberry’s a pro. As tax research coordinator at the National Association of Tax Professionals, she spotted a glitch in the IRS’s calculation; after visiting the local IRS office, the agency admitted its mistake and lowered the penalty. “There’s no way the average taxpayer would have noticed,” she says.

As recently as 2000, less than half of all taxpayers were using a preparer. Today 80 percent use software or a tax pro, “because they’re scared of making a mistake,” says Nina Olson, the National Taxpayer Advocate. “That’s a sign the system’s too complex.” A pro may not be necessary for basic returns that include just a W-2 and, say, mortgage interest; in those cases, TurboTax will do. However, if you’ve made a lot of market moves or run a side business, consider a preparer. (You can find one at www.natptax.com; expect to pay $150 to $200 per return.)

2. “You don’t have to be rich to get audited.”

The IRS’s job is to enforce the tax laws enacted by Congress and to collect what’s due. Its primary weapon? The audit, whose use has more than doubled since 2000, to surpass 1 percent of all returns, according to the Transactional Records Access Clearinghouse, a Syracuse University data-research organization. The increase can be attributed to the rising number of so-called correspondence audits—those done through the mail asking for specific information rather than, say, investigating your whole return, says Susan Long, codirector of the organization. “It’s more efficient.”

One way to get the IRS’s audit sensors tingling is to claim deductions much higher than are typical for your income level. We’d share them with you, but the IRS keeps that information under wraps. What’s more clear: Big charitable donations have been getting a much closer look, says Bob Meighan, VP of TurboTax. “It’s been an area of abuse for a while,” he says. To protect yourself, get a receipt for any donation you plan on deducting. And keep those receipts for seven years—unless it suspects you of outright fraud, that’s how far back the IRS will go with an audit.

3. “Fear is often our best weapon.”

The threat of an audit is enough to send many folks scurrying to their tax preparer, and no wonder. “With audits, you’re assumed guilty until proven otherwise,” says Long. It’s this fear, coupled with the complexity of the system, that causes some to overpay their taxes by not taking deductions they’re entitled to, according to experts. A study by the Government Accountability Office found that 2.2 million people a year overpay, by an average of $438. “Americans are leaving a lot of money on the table,” says Roni Deutch, a Sacramento-based tax attorney.

The GAO report listed mortgage interest, personal property tax, and state and local income tax as the main deductions not being taken. But there are more. Net market losses can be deducted up to $3,000, and if you lost more, you can roll it over into the next year. (Note: To claim a loss now, you need to have sold the stock last year.) You can also deduct things like tax-prep software, a résumé service and IRA fees if they total more than 2 percent of your adjusted gross income. Bottom line: “Take every legitimate tax break out there,” says Kay Bell, a tax expert at Bankrate.com. “Just make sure you can justify it.”

4. “The AMT is our ATM.”

When the alternative minimum tax was introduced in 1969, it affected only a handful of taxpayers with high income and big deductions. But by 2010, it will hit 87 percent of married couples with income between $75,000 and $100,000. That’s not what it was designed to do; the AMT was meant to force big earners with lots of deductions to pay their fair share. Now it “brings in a group of taxpayers the IRS has no problem with,” says Olson. “The AMT has run its course.” The problem is, the AMT hasn’t been updated to account for inflation. Instead, Congress has been adjusting exemption criteria on a yearly basis. “It’s just a Band-Aid,” says Hockenberry.

The Band-Aid in this year’s stimulus plan reduces the number of taxpayers subject to the AMT to 4.4 million—it would’ve been 30 million, according to the Tax Policy Center. But if you’re living in a high-tax state or married with two or more kids, you might find as you calculate both your regular return along with the AMT—form 6251, which taxpayers are responsible for—that you could be liable for the latter. Confused? The IRS offers AMT assistance at www.irs.gov; click on “Online Services.”

5. “Just because we billed you doesn’t mean you owe us money.”

Receiving a CP2000, also known as a correspondence audit, sure sounds scary, but in most cases, you don’t actually owe any more money. Not that the IRS will make that clear—it’s likely billing you because of a discrepancy on a certain deduction or reported income; then it’s up to you to prove otherwise. But as the number of these audits have risen, up 176 percent since 2000, the chance for error goes up as well. The IRS says 98 percent of the audits it sends out require clarification, not payment, but Charlotte Ogorek, an Illinois-based enrolled agent, thinks it’s more like 85 percent.

Even if the charge is unfounded, to appeal it could cost you anywhere from $500 to $4,000, depending on how long it takes, says Bill Wandel, a licensed taxpayer rep at JK Harris. If you plan to challenge a CP2000, contact your local taxpayer advocate from the IRS (go to www.irs.gov/advocate to find yours), who will provide advice and representation free. If it turns out you need even more expertise, contact a tax lawyer or an enrolled agent (a professional licensed by the IRS to represent taxpayers in front of the IRS). Find one at www.naea.org.

6. “If you don’t pay, we’ll sic a collection agency on you.”

If you thought dealing with the IRS was bad, wait till you’re past due on a payment and get turned over to one of the two private collection agencies the IRS taps to help collect its money. Since 2005, the IRS has been assigning delinquent taxpayer accounts to either Pioneer Credit Recovery or the CBE group of Iowa—much like any other business or lender. “These are federal taxes,” says Olson, the National Taxpayer Advocate. “The IRS should be collecting them.” The retention of these private agencies costs $7.65 million annually, yet when the IRS works these cases instead, “it’s three times more productive,” Olson says. (A spokesperson for Pioneer Credit Recovery and CBE says the issue isn’t who can do the work more efficiently; it’s whether these taxes would be collected at all without the private collection agencies.)

If the IRS puts a private collection agency on your case, Olson says the first thing to do is to request that your case be turned back over to the IRS. The reason: IRS collectors have the authority to offer you a compromise settlement, something the private agencies aren’t authorized to do.

7. “Want to go green? We’ll help pay.”

Tucked into last year’s unprecedented $700 billion bailout plan was some pork that even a vegan could love. Congress not only added an extension of the eco-friendly Energy Policy Act of 2005, which was set to expire at the end of 2007, but it also sweetened the pot for homeowners looking to green up their homes.

Want to grab some energy from the sun? Starting in 2009, a number of energy-saving steps will garner tax breaks for green consumers. Installing a photovoltaic system for solar energy, for example, will net
you a tax credit worth 30 percent of the total cost; at www.solar-estimate.org you can find out the price and potential savings of installing a system in your neighborhood. Or if you’re gung-ho for wind energy, you’ll get up to $4,000 or 30 percent of the cost of installing a small home windmill system to generate energy. Check out the National Renewable Energy Laboratory’s “In My Backyard” tool at its Web site (nrel.gov/eis/imby) to see how much energy you can expect to get from a windmill. For homeowners who aren’t looking to go quite that green, there will be a $500 onetime credit for installing energy-efficient windows, insulation or a central air system.

8. “April 15 isn’t necessarily a hard deadline.”

If you're one of the 112 million taxpayers who receive a refund every year rather than owing more, you have a lot more flexibility around the standard Apr. 15 deadline than you might think. Feeling rushed this year? By filling out IRS form 4868, which you can find online, you can buy yourself a no-questions-asked six-month extension on filing your taxes. And you can file the form requesting your extension as late as Apr. 15 without incurring any penalties. The only catch—and it’s significant for some: If you do owe any taxes, then you must still pay those by the 15th.

How do you know if you’re going to owe taxes this year? If your life is basically the same year to year, then your refund is pretty much on autopilot, says Bell. But any big changes—such as a large increase in salary, unexpected commission or year-end bonus, or having a child go from dependent to independent—could potentially swing you into the loss column. So when in doubt, do the math in advance, or check with a tax pro to see if there’s anything you should be worried about.

9. “We may be a government agency, but that doesn’t mean your data’s safe.”

One things you may not be thinking about as you file your taxes this year is that the documents you’re sending off to the IRS contain virtually every piece of information an identity thief would ever need to drive your credit, and your sanity, into the ground. And considering that data breaches are on the rise—up 47 percent in 2008 from 2007, according to nonprofit Identity Theft Resource Center—protecting your information, which includes your Social Security number and home address, should be paramount. But a recent report by the Treasury Inspector General for Tax Administration (TIGTA), an independent IRS oversight organization, casts some doubt on the agency’s ability to protect your information. For example, TIGTA says two new systems the IRS is implementing to manage taxpayer accounts and account data were “deployed with known security vulnerabilities in the controls over sensitive data protection, disaster recovery and system access.”

Alarming as this information is, it’s hardly a new problem at the IRS, says J. Russell George, inspector general for TIGTA. “We’ve seen this before when they implement a new system. The organization’s unwillingness to change its behavior is potentially harmful to taxpayers,” he says. (The IRS had no comment.)

10. “We may still have your refund.”

Waiting on a refund? Typically, it takes three to six weeks to get your money back from Uncle Sam, depending on whether you e-filed or sent your paper return through snail mail. Either way, the IRS does a pretty good job, by and large, of getting refund checks out to taxpayers in a timely manner. But the agency’s record is hardly perfect: Every year a fraction of refunds—belonging to more than 100,000 taxpayers, and with an average due of $988—never get to their destination.

What’s the problem? According to the IRS, these undelivered refunds are mainly due to issues regarding the accuracy of a taxpayer’s mailing address or direct-deposit information. For example, people move and don’t leave a forwarding address, handwritten returns may be illegible, or the direct-deposit routing number may be off by a digit or two. If you haven’t received your tax return in a reasonable amount of time, check out the IRS’s “Where’s My Refund?” tool on its Web site.

Source: SmartMoney.com | 20 Mar 2009 | 4:00 am

Deep Down in the Mines, a Ray of Light

WHEN THE WORLD SLOWS DOWN, COAL GOES BEGGING. Coal prices have been cut in half over the past year, to about $50 a ton, as the global recession has gathered force. With manufacturers idling plants and retailers closing stores, there is less and less demand for electricity, which is mostly generated with coal. Result: Shares of major U.S. coal producers have plunged more than 60%.

At least one of those stocks, Consol Energy (CNX) now looks like a real bargain. While the stock trades at a low valuation, the company's balance sheet is stronger than rivals' -- and Consol could post significantly larger profit gains in any economic recovery, thanks to notably low operating costs. In fact, some analysts think the shares, recently trading at about 27, could triple by 2010.

Based outside of Pittsburgh, Consol not only produces coal but also holds an 83% stake in a natural-gas spinout, CNX Gas (CXG). That stake provides about a quarter of the company's profits, and natural gas is often a good hedge for the coal business, since some utilities can switch between the two.

But investors don't seem to care much about the CNX Gas stake: Consol's enterprise value (market capitalization plus net debt) amounts to 5.4 times its earnings before interest, taxes depreciation and amortization, or Ebitda -- only slightly above the 5.3 multiple of coal leader Peabody Energy (BTU), which has minimal interests in natural-gas.

Certainly, Consol isn't helped by the fact that it produces Eastern coal, which pollutes more than coal from the Western U.S. Although Eastern coal burns more efficiently, and is better located for power suppliers in the East and in Europe, its producers are more vulnerable to stricter environmental regulations from the Obama administration. Investors are also worried about the rapidly deteriorating economies of Europe; Consol already has lost some overseas business.

But those worries seem excessive. Any new regulation could be months or even years in the making, and U.S. utilities are increasingly installing "scrubbers," which help reduce emissions by absorbing noxious elements.

What's more, Consol enjoys a big competitive advantage from its low costs. Because of its scale and efficiently run mines, it produces coal for $10 to $15 less per ton than most competitors, says Dan Rice, who co-manages a number of BlackRock natural-resource and energy funds.

"Consol is the lowest-cost Eastern producer and benefits the most from the next up-cycle," says Rice, who sees the shares headed for about 75. He adds that the company has protected itself by locking in contracts to sell all its production this year; the average price is about $61 a ton, well above current market prices.

That should result in a hefty $700 million of free cash flow this year, says Friedman Billings Ramsey. And with relatively little long-term debt (see table), Consol could acquire coal or gas assets on the cheap.

Coal clearly has a solid future, even if going "green" is the new black and a new cap-and-trade system for polluters looms. After all, half of U.S. electricity is coal-generated, and the infrastructure built for coal won't change soon.

On the gas side of the business, the company has been expanding from methane, which comes from deep coal mines, into shale plays. In a Pennsylvania pocket of the Marcellus Shale, a new Consol well recently surprised observers with initial natural-gas production of 6.5 million cubic feet per day, says David Khani, a coal analyst at FBR. That is significantly higher than the average rates reported by the largest dedicated Marcellus exploration-and-production company, Range Resources (RRC), which produces 4.3 million cubic feet per day.

Consol's earnings, $2.40 a share in 2008, could spike to $5 this year, Khani figures. Standard & Poor's sees a more moderate $4.25 this year, but that would still be a 77% gain -- not too shabby for a recession.

If customers try to renegotiate 2009 contracts, analysts will have to ratchet down their earnings estimates. But Consol's solid balance sheet is evidence that it has staying power. For investors patient enough to wait for commodity cycles to work through, the winning combination of coal and gas seems like a compelling opportunity in this troubled market.

The Bottom Line
At 27, Consol's stock is off about 60% from a year ago -- in line with the industry's decline. But some analysts think the stock could triple in an economic recovery.

Source: SmartMoney.com | 20 Mar 2009 | 4:00 am

Broker Talk: Are You Better Off Than Your Friends? (Broker Talk)

Comparisons are odious, they say. And irresistible. It would take a supremely self-assured person to pass up the chance to measure the size of his 401(k) against a co-worker’s, or a mortgage against a neighbor’s. For the rest of us, brokerages are starting to offer online peer comparison tools — anonymous quizzes that tell you exactly how you stack up against your peers.

Currently, Charles Schwab (SCHW) and ING (ING) offer such tools; Fidelity will launch its version next week. They all function in a similar way: They ask you for basic demographic information (age, income, marital status) followed by a series of questions about your financial life, like your level of credit card debt and how much you’ve saved for retirement. Then, voila, results like these: I occasionally carry a balance on my credit card, like 74% of my peers, but their average balance is more than $6,000, while mine is zero. There are slight differences: Schwab’s site offers advice along with the peer data; Fidelity will allow you to sort your peers by geographic area; ING has a series of questions about investments and investing style. But they all eventually answer the same question: Are you keeping up with the Joneses?

I am. But other than smug satisfaction, am I really better off for having measured myself against my peers? The brokerages offering the tools hope so — and that they’ll be better off, too. Basically, it’s a marketing tool, explains Ilkay Can, director of acquisition at Schwab, which has aimed its comparison tool at younger investors, through its web portal aimed specifically at Generations X and Y. (Eventually, it’ll be on Schwab’s soon-to-be-launched Facebook page.) But the brokerages are also hoping you’ll take action. Learn you’re saving less than your peers, and maybe you’ll start, says Denis Monty, director of strategic innovation at ING, which launched its “Compare Me” tool last week. And maybe you’ll do it by opening an ING account.

It’s a new tactic for brokerages, which are just starting to embrace so-called Web 2.0 strategies. Other people’s opinions and preferences carry a lot of weight, says Monty, but because financial information is so sensitive, you might not want to talk about your net worth at a cocktail party. These tools, he says, “let people investigate what people like them do, but stay anonymous.”

The tools are too new to know how effective they’ll be in turning voyeurs into brokerage customers. Lauren Pollack, a consultant at Jump Associates, which does innovation and strategic consulting, isn’t so sure. People are more likely to respond to individual financial triggers in their lives, she says, not what their anonymous peers are doing. Sure, the tool can be fun, “But it’s fun to look at the Social Security Administration’s baby names chart and see how popular your name is,” she says. “You’re not going to change your name because of it.”

Source: SmartMoney.com | 20 Mar 2009 | 4:00 am

Chávez to nationalise Santander bank unit

President Hugo Chávez has announced that his government will push ahead with its plan to buy Banco de Venezuela, a lender owned by the Spanish financial group, weeks after officials said the purchase was on hold
Source: Financial Times - US homepage | 20 Mar 2009 | 3:50 am

Air NZ trying to delay cartel case, says Commission

The Commerce Commission says Air New Zealand is trying to delay proceedings aimed at determining whether the airline was part of an an international price fixing cartel. Today the commission replied to a statement made yesterday...
Source: New Zealand Herald - Business | 20 Mar 2009 | 3:30 am

Aussie migration flow slows in Feb

The flow of New Zealanders crossing the Tasman to live in Australia eased last month, after reaching record levels earlier in summer. Statistics New Zealand today said that a net 34,400 people left for Australia on a permanent...
Source: New Zealand Herald - Business | 20 Mar 2009 | 3:00 am

In U.S., a hot debate on infrastructure privatizing

CHICAGO (Reuters) - As they struggle to close ballooning budget deficits amid the worst financial crisis since the Great Depression, many U.S. state and local governments will be tempted to follow the example of Chicago.

Source: Reuters: Business News | 20 Mar 2009 | 2:41 am

Summer tourism plunge confirmed

Tourism, one of New Zealand's most important industries, is taking a battering from the international economic crisis, latest figures suggest. The number of overseas visitors arriving on short-term trips fell 9 per cent in February...
Source: New Zealand Herald - Business | 20 Mar 2009 | 2:30 am

100pc tax plan for AIG bonuses approved

WASHINGTON - Acting swiftly, the Democratic-led House has approved a bill to slap punishing taxes on big employee bonuses at firms bailed out by taxpayers. In some cases the bonuses might be taxed 100 per cent leaving the recipients...
Source: New Zealand Herald - Business | 20 Mar 2009 | 2:00 am

In Brief - Thursday

Alcoa (AA) raised $1.3 bil from a stock and convertible note offering, more than expected. The aluminum giant on Mon. said it planned to raise...

Source: Investor's Business Daily: BUSINESS | 20 Mar 2009 | 12:39 am

Trends & Innovations - Thursday

Doubts raised on prostate tests

Source: Investor's Business Daily: BUSINESS | 20 Mar 2009 | 12:39 am

Landlords Face A Tax Crackdown Ahead

Anyone with an interest in rental property would do well to keep an eye on Washington. Landlords could soon have to track more specifics about...

Source: Investor's Business Daily: BUSINESS | 20 Mar 2009 | 12:39 am

After The Close - Thursday

3COM (COMS), the networking gear maker, said Q3 EPS jumped 63% to 13 cents ex items, beating views by 3 cents. Sales fell 3.5% to $325 mil, below...

Source: Investor's Business Daily: BUSINESS | 20 Mar 2009 | 12:39 am

Acquisition Revs Up Auto Supply Store Chain In Western States

Americans have cut back sharply on new auto purchases. But that only means they're driving their old cars longer. And that translates into more...

Source: Investor's Business Daily: BUSINESS | 20 Mar 2009 | 12:39 am

Business Briefs - Thursday

Off-price Ross on target in Q4. The discount apparel retailer met Wall St. profit forecasts for a 9% rise to 76 cents. Sales rose 5% to $1.73 bil,...

Source: Investor's Business Daily: BUSINESS | 20 Mar 2009 | 12:39 am

BofA linked to Merrill writedowns

Bank of America was directly involved in the markdowns that contributed to Merrill Lynch's $15.3bn loss in the last quarter of 2008, its final reporting period before the Wall Street bank was acquired by BofA, sources familiar with the matter say
Source: Financial Times - US homepage | 20 Mar 2009 | 12:32 am

Nuplex shares plunge on $132m rights issue news

The share price of resins maker Nuplex has plummeted this morning after the company lifted its trading halt and announced plans to raise $132.8 million through a rights issue. The shares fell more than 70 per cent from $1.07 in...
Source: New Zealand Herald - Business | 20 Mar 2009 | 12:30 am

US plans $5bn in aid for car suppliers

The US Treasury's auto taskforce laid out $5bn in federal financing to suppliers in a deal that protects the core of the industry but could spell the end for some weak companies.
Source: Financial Times - US homepage | 20 Mar 2009 | 12:29 am

Obama signals support over bonus clawback

President Barack Obama offered broad support for legislative efforts to claw back bonuses at bailed out financial institutions after the House of Representatives voted to impose a punitive tax on such payments
Source: Financial Times - US homepage | 20 Mar 2009 | 12:27 am

New destinations

Migrants make tough decisions as the recession bites
Source: BBC News | Business | World Edition | 20 Mar 2009 | 12:05 am

Alistair Darling attacked as borrowing hits £75bn

Graphic: Britain's burgeoning debt
Source: Latest Business News from Times Online | 20 Mar 2009 | 12:00 am

Alistair Darling attacked as borrowing hits £75bn

Graphic: Britain's burgeoning debt
Source: Latest Business News from Times Online | 20 Mar 2009 | 12:00 am

Paying the price

Plans to combat recession threaten poorest countries
Source: BBC News | Business | World Edition | 20 Mar 2009 | 12:00 am

Tata cuts target for low-cost Nano car

The Nano, the world's cheapest car due to launch in India on Monday, will have an initial production run of 40,000 – a fraction of Tata Motors' original target
Source: Financial Times - US homepage | 19 Mar 2009 | 11:31 pm

Wall St rally doused by Fed plan worries

NEW YORK - Investors have doused a two-week-old US stock rally on worries about fallout from the Federal Reserve's plan to pump more than $US1 trillion into the financial system. A slump in banking and other financial shares pulled...
Source: New Zealand Herald - Business | 19 Mar 2009 | 11:00 pm

Write-Offs: 03.19.09

$$$ Ari Kiev: "Success is all in your head" [Reuters]

$$$ An Insider's Perspective On White Collar Crime [zero hedge]

$$$ House GOP Report Details Countrywide's Efforts to Benefit VIPs [Washington Post]

$$$ More Press Than Protesters Show Up At Goldman HQ. Security precautions apparently for naught. [clusterstock]

$$$ BofA Tries to Stem Merrill Defections in London [CNBC]

$$$ Maria Bartiromo Slips Into Lou Dobbs Territory [Cityfile]

$$$ A history of expensive offices at Citigroup [The Deal]

$$$ Contrarian View: HR 1586 (T.A.R.P. Surtax Bill) will Create Millionaires [DJT]

Source: Dealbreaker | 19 Mar 2009 | 10:50 pm

Protestors Visit AIG

Across the street from the AIG offices on Wall St. Caitlin Kenney/NPR

According to the folks behind the website Take Back the Economy, today is a national day of action to demand "more responsible corporate behavior" and "employee free choice and healthcare reform." In New York, that meant a couple hundred protesters chanting and holding signs in front of the offices of Goldman Sachs and AIG.

Caitlin Kenney and I made the trip down from Planet Money HQ in Midtown to check out the action.

The rally hit a peak in front of AIG's offices, where we saw AIG employees standing in the skybridge above Wall St., looking down as protesters chanted "A-I-G! Shame on you!"

AIG employees look down on the protest. Click to enlarge. Caitlin Kenney/NPR

The protesters we talked to were angry over planned AIG bonuses, but they weren't only pointing fingers at the insurance giant. Most of them said they blame corporate greed and Washington for the current crisis.

All in all, it felt like a union rally (Service Employees International Union was an organizer) fueled by a dose of populist outrage at the government's bailout plan. It started on time, the police kept everything under control, and the whole thing was over by 5 PM.

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Source: NPR Blogs: Planet Money | 19 Mar 2009 | 10:45 pm

Financiers busy in taxing times

Demand is growing for a service known as tax financing as economic conditions make it harder for businesses to meet their tax requirements. There are now a handful of companies offering assistance to businesses having trouble paying...
Source: New Zealand Herald - Business | 19 Mar 2009 | 10:30 pm

Is The AIG Tax Constitutional?

A Dealbreaker commenter points out: "The bill that just passed is saying that anyone working for those firms with a combined family income of $250k or more will have the bank employee's bonus taxed at 90%."

The reason for this, which I hinted at yesterday, is that its difficult to get such a directed tax bill to pass constitutional muster without widening the people it impacts. If you think it is an accident that the bill has been set up this way after executive comp failed badly on the first two go-arounds, then you just don't understand the meaning of "never let a crisis go to waste."

I expect that anyone who watches carefully for the inevitable "But we had to expand the reach of the bill to make it legal," will be rewarded with almost exactly this line from proponents of the newly expansive bill. This is both because the legislature can't simply target a subset of individuals with punitive intent, even if its a tax, and because the goal was always an expansive executive comp cap.

The "bill of attainder" test keys off these two prongs:

Is it targeted at specific individuals?

Is it of punitive intent?

So what's punitive intent? The Fifth Circuit's SBC Communications v. FCC ruling is about the most direct on this as the Supreme Court hasn't touched the issue in decades. In short:

Does the legislation fall into the historical meaning of legislative punishment,

Can the statute "reasonably be said to further nonpunitive legislative purposes," and;

Does the record show "a congressional intent to punish?"

We leave it to you to decide where these prongs fall on the "punish-o-meter."

What is the specificity prong? No one really has any clue as the Fifth Circuit (which effectively invented it) declined to address it in SBC.

All this overlooks the fact that Bill of Attainder jurisprudence is in quite a bit of disarray and this would make for a very juicy (and time-consuming) case if it went to the Supreme Court. The legislature, and the New York Attorney General, is hardly helping itself with the level of punitive sounding rhetoric that daily issues forth from those offices to clog the public record. Neither would it serve the legislation if anyone bothers to recognize that AIG was basically given the green light by the very people now up in arms over the "outrage" of these bonuses, and that they have been "approved" since 2008.

So, instead it looks like, in order to avoid that particular courtroom morass, we will get a wide-ranging executive compensation cap of the sort that was violently resisted not a few months ago. And no one dares vote it down now. Hurray for our side!

Source: Dealbreaker | 19 Mar 2009 | 10:10 pm

Carrington Capital Sued For Racketeering

From Housing Wire's Teri Buhl:

After finding itself dragged into court by hedge fund manager Bruce Rose of Greenwich-based Carrington Capital, Irving, Tex.-based mortgage servicer American Home Mortgage Servicing, Inc. fired its own volley back at both Rose and Carrington on Thursday, suing for alleged acts of racketeering and a scheme to profit illegally from holding REO hostage at the servicing firm. American Home is owned by legendary investor Wilbur Ross' WL Ross & Co., and is the nation's largest independent residential mortgage servicer.

The allegations made in the complaint by AHMSI against Rose and Carrington show just how complex relations between servicers and investors can be, amid increasing pressure from lawmakers and regulators to find solutions to the nation's housing mess.

Source: Dealbreaker | 19 Mar 2009 | 9:52 pm

Geithner Takes Fall For Dodd On AIG Bonuses

CNN reports:

Treasury Secretary Timothy Geithner said Thursday that he takes responsibility for knowing the stimulus legislation had a loophole that would allow bailed-out insurance giant American International Group to keep its bonuses.

In an interview with CNN's Ali Velshi, Geithner said the Treasury Department did talk to Sen. Chris Dodd about a clause he put forth that would have strictly limited executive bonuses.

The Treasury Department was concerned that legislation that would restrict contractual bonuses would not hold up to legal challenges, Geithner said.

"We expressed concern about this specific version. We wanted to make sure it was strong enough to survive legal challenge," Geithner said.

Source: Dealbreaker | 19 Mar 2009 | 9:43 pm

Cuomo Gets His Precious Names

The Attorney General, still refusing to agree not to disclose names, has succeeded in getting AIG to turn over its list of bonus recipients. Apparently he'll offer them up for your consumption only after security concerns are assessed. Meanwhile, Bloomberg reports that Connecticut AG Richard Blumenthal has taken a tiny page from his NY counterpart's playabook, and issued AIG subpoenas of his own (three day deadline? Dick, please. You give them 3 hours and threaten to "cut a bitch" if they don't comply).

Source: Dealbreaker | 19 Mar 2009 | 9:34 pm

How Not to Get Fired: Top 10 Tips For Keeping Your Job in a Bad Economy

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It’s so much easier to keep your job than look for a new one in this economy. These tips are a good reminder for all of us to love the one we’re with.

1. Do Your Job - Only Better
A freelancer I know recently told me she’d rather just go to work for someone else so that she could show up in the morning and leave in the afternoon without worrying about every moment of billable time. That is exactly the kind of thing that’ll get you fired anytime, and especially now. Bottom line: contribute to the bottom line.

2. Suck It Up
Unless you work for AIG, you’re probably not getting a bonus this year. Or a raise. Get over it. Money isn’t everything. Giving off the impression that you’re working just for a paycheck is a direct route to Pinkslipville.

3. Be Extra Politically Correct
This is not the time for taking chances. Gossip-wise that is. Talking behind co-workers’ backs is always a bad idea. In tough times it could be lethal. Make sure your work/social interactions are above reproach. While a little office gossip is often expected, you’ll do well to learn to turn the conversation to the positive.

4. Don’t Be Politically Correct
This is precisely the time to take chances. Who is going to save our economy? Many say it’s the entrepreneurs. I say it’s the entrepreneurially minded - no matter where they work. Don’t be afraid to follow your instincts. You may have the idea that saves the company.

5. Never Miss a Deadline
This is standard, and yet there are so many excuses. Don’t use them. Work early, work late, teach your kids to prepare your Powerpoint presentations. Do whatever it takes to get the job done. On time.

6. Monitor Your Personal Use of Company Time
It is ridiculously easy to fritter away your precious time (paid for by your employer) on the multitude of electronic diversions we have at the ready. Worse yet: you can totally get away with it and even look like you’re working while you’re at it. One minute you’re on LinkedIn looking up an advertising contact, and the next you’re reading your college roomate’s fishing blog. Poof - there goes an hour. Coming from a billable hour background I can vouch for the fact that once that hour is gone, it’s never coming back.

7. Stay in the Loop
This is no time to isolate yourself. While you certainly don’t have to hang out with co-workers all the time, don’t be aloof either. Go to lunch with the gang. Chat in the hall. Say hi to absolutely everybody.

8. Be Humble
When jobs are in jeopardy, it’s easy to let fear get the best of you. Don’t let insecurity turn you into the jerk who has to be the loudest in the room to prove he’s valuable.

9. Toot Your Horn
Another contradiction. You don’t want to be obnoxious about it, but you don’t want to let the obnoxious guy take credit for your work either. (Ladies, I’m especially talking to you.)

10. Leave Office Romance to The Office
I’ve changed my stand on office romance to match the economic times. Normally I would say go for it, it’s normal to become involved with someone you spend so much time with. But now, you can’t risk it. Too much is at stake for you to deal with the extra complications of cube fever. If the relationship ends badly you’ll likely not want to spend all your waking hours together and there just aren’t enough other jobs out there to take the chance.

That’s all I’ve got. What are you doing to keep the boss happy?

Feel free to add on to the list in the comments!

Image Credit: wOOkie, Flickr

Source: Business Pundit | 19 Mar 2009 | 9:11 pm

The Obama Portfolio

Still nicely in double digits, a small setback will not detract from the glory that is the First Analyst's performance.

The Obama Portfolio (Since Inception): +11.65%

Earlier: The Obama Portfolio

Source: Dealbreaker | 19 Mar 2009 | 9:08 pm

Protest At Wells Fargo

No word yet on the demonstrations going on downtown today (which were scheduled to begin at 4PM), but apparently there are "lots of angry people" outside Wells Fargo in San Fransisco circa now, with "quite a few police and fire trucks" surrounding the area.

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Source: Dealbreaker | 19 Mar 2009 | 9:07 pm

Banks warned on commercial property 'black hole'

A 'black hole' in the US commercial property market is set to put further pressure on troubled banks, the head of leading private equity firm Apollo Management has warned
Source: Financial Times - US homepage | 19 Mar 2009 | 9:06 pm

Fed Decoder Ring

I wish there were an online translator for Fedspeak to English, but until that great day we'll do our best. Here's an explainer for what the Federal Reserve announced yesterday.

Q: What is the Fed doing?
Basically it's going to increase the amount of money out there by a trillion dollars.

Q: How the heck do you do that?
The Fed has the power to create money essentially out of thin air. It does this by buying things (typically treasury bonds) from the market. So the Fed takes the bond, pays for it with money. Voila, the money supply has grown.

Q: What's the point?
The Fed says it wants to improve the mortgage lending market, and that is how a good part of that trillion dollars will enter the economy. The Fed pledged to buy $750 billion of mortgage backed securities, guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae. So the Fed is basically increasing the pool of money available to lend to people who want to buy houses. And when there is more money available, the interest rates for mortgages drops. The Fed has been doing this for a while, but yesterday's announcement more than doubles the effort. This year it could buy up to $1.25 trillion worth of these mortgage backed securities.

The Fed also said yesterday it would buy up to $300 billion of longer-term Treasury bonds.

Q: Why longer term?
Short-term bonds are paying almost no interest right now. So from a bank's perspective, swapping one for cash doesn't really make much difference. Money pays zero percent interest. But short term treasuries are about the same. So buying short term treasury bonds doesn't encourage the banks to lend money to, say some guy who wants to buy a car.

But long-term bonds pay more interest. (The yield on a 10-year treasury is 2.6% at this moment.) So if a bank sells one of these, it's going to want to replace the investment with something comparable.

James Hamilton at the University of California San Diego argues that the Fed is also acting to prevent the dreaded possibility of deflation. Hamilton says it sends a strong signal to investors worried we might fall into that hole: "The Fed slapped them on the face pretty hard, and said 'You got that wrong. We are not going to let that happen.'"

Q: What's the danger?
Inflation. Putting more money into the world tends to push prices up. To prevent that from happening, eventually the Fed is going to have to suck some of that money back out of the economy by raising interest rates or selling back those Treasury bonds into the market. And sucking money out of the economy is never fun. Hamilton points to the recession in the early 80's, driven largely, he says, by efforts to reign in inflation.

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Source: NPR Blogs: Planet Money | 19 Mar 2009 | 9:00 pm

Hypo reality

Germany's banking calamity: the collapse of HRE, whose future the Bundestag aims to resolve this Friday, shows Rhineland finance developed excesses just like those of the Anglo-Saxon world
Source: Financial Times - US homepage | 19 Mar 2009 | 8:47 pm

House passes bill taxing AIG and other bonuses

Acting swiftly, the Democratic-led House approved a bill today to slap punishing taxes on big employee bonuses at firms bailed out by taxpayers.

Source: L.A. Times - Business | 19 Mar 2009 | 8:36 pm

Greenlaw Says Fed's Objective Is to Lower Mortgage Rates

Source: Bloomberg - All Podcasts | 19 Mar 2009 | 8:32 pm

Fed Injection: 'A Leap of Faith? '

The blogosphere is abuzz today over news that the Federal Reserve plans to inject $1 trillion into the financial system by purchasing Treasury bonds and mortgage securities.

Here's the take from Simon Johnson at Baseline Scenario:

The big banks are essentially making themselves Too Politically Toxic To Rescue, and this has potentially bad macroeconomic consequences. So what will Bernanke do?

As he sees the world, there is only one course of action remaining: print money and hope for a moderate degree of inflation. The money part was, of course, the announcement yesterday from the Fed.

The inflation part is a leap of faith. If inflation is driven by the so-called "output gap," i.e., how far the US economy is below potential output, then prices will not increase much, the yield curve steepens moderately, and banks make out like bandits (it's just an expression).

But if the whole world is moving more into an emerging market-type situation then (a) inflation expectations become deanchored (central bank jargon for "really scary"), (b) potential output falls as we massively deleverage, and (b) people move increasingly into alternative assets - storable commodities spring to mind - and we get some serious inflation.

Tyler Cowen over at Marginal Revolution writes:

It is cheaper and quicker than fiscal stimulus; this should have been our first move. It is more likely to work. There are two effects: lowering long-term interest rates and the helicopter drop of the cash. It belies previous talk of a liquidity trap. It does not address most of the underlying problems in the real economy and as you know I see the "sectoral shift" element of this downturn as very much underrated. In that sense don't expect too much. It shows that at the limit fiscal and monetary policy blur together. The more the Fed takes on its balance sheet, the more the long-run independence of the central bank is damaged.

And from Naked Captialism:

The Fed first and foremost is trying to prop up asset prices, particularly housing, out of a view that their current level is the result of irrational pessimism. The Fed had indicated in earlier statements that it was going to target interest spreads over Treasuries of various types of credit products, and that is still by far the greatest use of firepower. However, the addition of Treasuries is a new, albeit expected, wrinkle. Let's face it, if the long bond continues on its march to 4%, the Fed can do all it wants to contain mortgage spreads, but it become increasingly difficult to keep mortgage rates from rising.

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Source: NPR Blogs: Planet Money | 19 Mar 2009 | 8:22 pm

Eddie Bauer stock drops on debt, earnings news (AP)

AP - Eddie Bauer Holdings Inc. shares lost more than 40 percent of their value Thursday after the outdoorsy clothing retailer warned the recession had put it in jeopardy of violating some loan requirements.
Source: Yahoo! News: Business | 19 Mar 2009 | 8:12 pm

At The Zero Bound

The Federal Reserve's decision to buy $1 trillion in Treasury bonds and mortgage securities comes at what's called the Zero Bound. The Fed has already lowered its key interest to nearly zero, and now it has to find new ways to get money into the economy to get it moving again.

Looking around for more information on the zero bound, I came across this 2004 paper "Monetary Policy Alternatives at the Zero Bound: An Empirical Assessment" written by none other than Federal Reserve Chairman Ben Bernanke. (It's nice to know he's been studying it.) The paper can be a bit dense at times, but it does provide a good analysis of "quantitative easing."

Here's a bit:

Central banks normally lower their policy rate through open-market purchases of bonds or other securities, which have the effect of increasing the supply of bank reserves and putting downward pressure on the rate that clears the reserves market. A sufficient injection of reserves will bring the policy rate arbitrarily close to zero, so that the ZLB rules out further interest rate reduction. However, nothing prevents the central bank from adding liquidity to the system beyond what is needed to achieve a policy rate of zero, a policy that is know as quantitative easing.

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Source: NPR Blogs: Planet Money | 19 Mar 2009 | 7:36 pm

Ortwerth of Edward Jones Sees Long-Term `Opportunity' in FedEx

Source: Bloomberg - All Podcasts | 19 Mar 2009 | 7:30 pm

Alcoa Raised to `Overweight' at JPMorgan

Source: Bloomberg - All Podcasts | 19 Mar 2009 | 7:09 pm

Fed Feeling Desperate?

If you missed Adam Davidson's live chat earlier today, you can check it out here. One of the things Adam addressed was the Fed's decision to inject $1 trillion into the financial system by purchasing Treasury bonds and mortgage securities.

Geneva, Switzerland: Could you comment on the Fed injecting $1.2 trillion into the markets? Over in Switzerland, we noticed the dollar fall against the euro and CHF almost immediately upon this announcement. The WP article starts out "The Federal Reserve yesterday escalated its massive campaign to stabilize the economy..."Is this move supposed to be reassuring? To me (non-economist) it just seems desperate, like they are scraping the bottom of their tool chest.

Adam Davidson: I think desperate isn't too far off. The Fed is in a very tough position. Normally, it can respond to a slow economy by lowering interest rates. That encourages borrowing, which tends to make the economy speed up. But the Fed's short term interest rate is at zero. That means it can't go any lower. The Fed's main tool to stimulate the economy is broken. Useless.

So, the Fed is doing what many believe is the appropriate action at what is called the "zero bound." They are figuring out all sorts of ways to push money into the economy to encourage more borrowing and spending and to try to get things growing again.This process is much less frequently used (we are way beyond unprecedented territory by now for the US) and much more poorly understood.Fed officials don't actually know, with any precision, how much money they should put into the economy or how long it will take to see an impact.

I'm sure they're having some desperate hours. But just because it's desperate doesn't mean it's the wrong thing to do. Desperate times call for desperate actions, and all that.

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Source: NPR Blogs: Planet Money | 19 Mar 2009 | 6:58 pm

Stanford's Taylor Says Fed Needs Clear Market Recovery Plan

Source: Bloomberg - All Podcasts | 19 Mar 2009 | 6:54 pm

Trone Says Clients Aren't Long-Term Investors in Citigroup

Source: Bloomberg - All Podcasts | 19 Mar 2009 | 6:50 pm

Sector Snap: Analyst cuts restaurant ratings (AP)

AP - Restaurant stocks mainly fell Thursday after a Raymond James analyst downgraded his rating on a number of sit-down restaurant stocks, saying they are now fairly valued.
Source: Yahoo! News: Stock Markets News | 19 Mar 2009 | 6:46 pm

For this Afghani, smuggling's his job

Afghans desperate for opportunities outside their country rely on smugglers to lead them through Pakistan's rugged terrain and into Iran. Reporter Gregory Warner introduces us to an old hand in the smuggling trade.
Source: Marketplace | 19 Mar 2009 | 6:32 pm

Why Do We Cheat?

Listener Chris Boehm dropped this treat into the comments for the latest podcast. It's a video of a TED Conference talk about how social pressures tighten or loosen morality around the idea of cheating. Chris writes:

Dan Ariely, a behavioral economist, gave a TED talk that was just posted on YouTube about "cheating."

He talked about experiments he did, where people were given tokens that they could exchange for money, and how their behavior was different than those who were paid money directly.

He then applied this to the stock market: "What happens when you remove things from money?

"Could it be that people would cheat even more? And what happened to the social environment [sic] where people see other people behave around them?"

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Source: NPR Blogs: Planet Money | 19 Mar 2009 | 6:03 pm

Kellogg's CEO: Ramp up food regulation

Kellogg's CEO David Mackay is urging Congress to improve government regulation on food safety. His company lost nearly $70 million in recalled products after the salmonella outbreak in peanuts. Steve Henn reports.
Source: Marketplace | 19 Mar 2009 | 5:07 pm

New pot policy could help state coffers

A new Justice Department policy on medical marijuana could lead to the drug becoming a regular source of tax revenue in states where it's legal. Jeff Tyler reports.
Source: Marketplace | 19 Mar 2009 | 5:07 pm

Name this recession

One day, hopefully sooner rather than later, we'll look back at this time in history of economic troubles and call it... something. Commentator Justin Wolfers offers a few suggestions.
Source: Marketplace | 19 Mar 2009 | 5:07 pm

Where will recovery programs take us?

The government is spending a lot of money on programs aimed at getting the economy back on track. Bob Moon speaks with Morgan Stanley economist Kevin Flanagan about where the money's going and how it may help.
Source: Marketplace | 19 Mar 2009 | 5:07 pm

Fed's plan moves mortgage market

The Federal Reserve's plan to pump $1 trillion into the economy initially had its intended effect on the mortgage market, where interest rates dropped. But it also spawned concerns of inflation. Jeremy Hobson reports.
Source: Marketplace | 19 Mar 2009 | 5:06 pm

SEC charges adviser to ex-NY official on kickbacks (Reuters)

Reuters - The U.S. Securities and Exchange Commission on Thursday charged the political adviser to New York state's former comptroller for "corrupting the integrity" of the pension fund by taking kickbacks from companies seeking to manage its money.
Source: Yahoo! News: Stock Markets News | 19 Mar 2009 | 5:04 pm

Wien Says 10-Year Treasury Yield May Rise to 4% in 2009

Source: Bloomberg - All Podcasts | 19 Mar 2009 | 5:03 pm

IMF Criticizes Response To Banking Crisis

The staff of the International Monetary Fund says the G-20 response to the global banking crisis has so far been lacking. In a note released today, the IMF says bank restructuring measures have not gone far enough because they have "responded to market pressures rather than being based on a full diagnosis of the underlying soundness of institutions and estimating losses."

Even on a national basis, resolution strategies for the banking problems have taken place on a case-by-case basis, rather than as part of an overall assessment of the distress in the financial system. Capital injections were often not accompanied by an assessment of bank viability or by restructuring plans. Moreover, the injection of preferred shares in distressed institutions, while giving the authorities some upside benefit should the institutions recover, did not give governments a way to control or influence the bank's use of public money.

The U.S. approach to dealing with toxic assets is also specifically highlighted as a cause for concern:

Asset management policies are only slowing being put in place. Institutional arrangements for dealing with bad assets are only just emerging (e.g., the U.S. public-private investment fund and the U.K. asset purchase scheme), and difficult operational issues related to the valuation and disposal of these assets still need to be addressed.

The IMF is forecasting that the global economy will shrink by nearly 1 percent this year and that the U.S. economy will decline by 2.6 percent.

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Source: NPR Blogs: Planet Money | 19 Mar 2009 | 4:23 pm

World of Hurt

40 cent store at Ithaca Commons. Randy Philipp/Planet Money Facebook group

More evidence of tough times everywhere. We've been asking for your photos of the recession, and the responses have been amazing. The Boston Globe got in on the action yesterday with a photo gallery that shows foreclosures, closed ports, empty stores and stalled building projects.

It's rough out there. Keep those pictures rolling in.

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Source: NPR Blogs: Planet Money | 19 Mar 2009 | 4:01 pm

Yergin Says Washington Is Now Global Financial, Energy Capital

Source: Bloomberg - All Podcasts | 19 Mar 2009 | 3:59 pm

De Gan Says Details Needed on GE Capital's Funding

Source: Bloomberg - All Podcasts | 19 Mar 2009 | 3:44 pm

Online Tools & Investment Software: An Overview

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Online tools and investment software enable investors to track their investments’ potential, ideas, and records in more detail. They are most useful for intermediate to advanced investors. In this article, we’ll differentiate between online tools and investment software, explain the perks of each, give you a list of the best ones, and cover some additional ways that you can use online tools and investment software.

What’s the difference between online tools and investment software?

The main difference is the level of detail. Online tools refers to investment tools available online, often for free through your brokerage account. Basic online tools offer you:

-Live quotes
-Stock trend charts and historical price information
-Companies’ financial data
-Portfolio performance charts
-Charts illustrating your asset allocation
-The ability to allot how much money to give each trade and automatically stop losses
-Alerts
-Equity analysis
-Financial calculators
-Account balances
-Transaction history
-Stock selection tools
-General advice and help

Five Recommended Sites for Online Tools

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Yahoo Finance: Excellent resource for ticker information and public documents.

MorningStar: Excellent site for mutual fund information, as well as for stock investing tools.

MarketWatch: Up-to-the-minute market news is this site’s strength. It is also an excellent resource for tracking indexes and IPOs.

Investing in Bonds: The resource for bond investors.

E-brokers also offer investing tools. These include ETrade, Vanguard (for customers), and the online services of Morgan Stanley (for customers).

Investment Software

Most investment software contains all the features of online tools, with a few added perks to help you organize, visualize, and stay disciplined. Among the more common features of investment software:

-It is designed to be easy to navigate, which could save you hours of research
-Visuals like charts and graphs are more extensive and/or more customizable, giving you an easy-to-process overview of your portfolio.
-Some investment software offers tools to help you see when a stock is oversold or overbought.
-Tools to help you project your investment’s success over a certain period of time
-Trading and risk management plan templates and checklists
-The ability to compare your strategy to that of prominent or successful investors
-Checklists and plans to help you make more rational decisions
-Analyze capital gains and losses so that users can tweak their portfolios to minimize taxes
-Automatically rebalances your portfolio
-Scans markets for new investment opportunities based on your criteria
-Offers goal-setting tools

Investment software usually requires an annual subscription or download fee, although you can also find freeware. Online tools are generally free.

Why would you buy investment software?

To save time. When you have all of your resources in one customized place, you will ideally be able to save hours of online research and homemade spreadsheets. Investment software is especially useful for professionals, day traders, and active investors. Passive investors (those who buy and hold for more than 6 months) may find it to be a waste of money.

Most professional traders, on the other hand, need investment software to do their jobs. Not only does it save time, but it generates automatic reports for clients, tracks their portfolios and billing accounts, automatically rebalances portfolios, supports multiple currencies, tracks pooled funds, measures ROI, runs reports from multiple accounts, and more. The average investor will find these tools superfluous, but to professionals, they are indispensable.

Recommended Investment Software for Active Investors

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Portfolio Manager: The perk with this investment software is simplicity. You can track each of your holdings on a single screen, allowing you to stay aware of your investments’ real-time prices, how long you’ve held them, dividends, and trends.

CharTTool: As its name suggests, this investment software’s strength lies in its charts. You can customize, follow, and print several stock charts on the same screen. Also contains a good list of technical indicators.

Recommended Investment Software for Day Traders

CQG: CQG tagets day traders with bigger accounts or money to invest in good software. Known for its quality analytics, customizable indicators, studies, and charts, CQG is a favorite high-end software.

Wealth-Lab Developer: This portfolio simulator helps you perfect your strategy, which is helpful in a game where accurate, fast decisions are of the essence.

QuoteTracker: A good option if you want to save your funds for investments, QuoteTracker is reliable and intuitive. Its attractive price tag makes it a good basic to add to your software suite.

Recommended Investment software for Professionals

Button Trader: This software’s hotkey system gives new meaning to instant trading. Low price and excellent support make it a solid investment.

TeleChart Gold: Although coders may find this software more intuitive than technical laypeople, its wide range of capabilities—especially in scanning—is a key attribute that many professional investors and day traders find extremely helpful, especially for EOD trading.

Wireless Online Tools and Investment Software

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You can always use online investment tools on your mobile device. Some companies also offer mobile versions of investment software; other apps are designed exclusively for wireless use. They’re perfect when you’re on the go and need to check your finances frequently. Examples include Finance Genius for the Palm, the AquaSys Pocket Investor for Pocket PC, and StockWatch for the iPhone.

Conclusion: It pays to research online tools and investment software to find the best combination of products to suite your needs. Especially for investment software, one size fits many, but not all. Good luck, and happy investing!

Source: Business Pundit | 19 Mar 2009 | 3:32 pm

UK School Reduces Tuition for Vegetarians

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One UK school wants its students to go veg. If they won’t do it willingly, they can be forced, via cost-conscious parents. From the UK Telegraph:

Parents whose children sign up to the ‘Vegetarian Scholarship’ could save £1,500 each year at Wycliffe College in Stonehouse, Glos. The “progressive” school was founded by a vegetarian Methodist minister in 1882, and today’s governors hope the new incentive will keep his values alive.

But spokesman Melanie Gray admitted the offer has not gone down too well, with pupils preferring steak and sausages to pasta and peppers. She said: “We have offered it and we are keen to promote it. No-one has taken it up and we are looking for candidates.”

She said vegetarians are well catered for at the school, though there is no compulsion to go without meat or fish. Many of the staff are vegetarian, though no sixth former has taken up the offer of the vegetarian scholarship.

The school was founded by GW Sibly. He chose the school site for its clean water and proximity to a railway station, and the pupils grew their own fruit and vegetables. Vegetarianism remains an important part of school life.

I’m surprised nothing like this has happened in the US, where childhood obesity remains a major problem. Reducing tuition is a good way to push all kinds of agendas, especially during hard economic times.

Source: Business Pundit | 19 Mar 2009 | 3:31 pm

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