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March 29, 2010

Best Buy shares soar after earnings surprise

Filed under: finance — Tags: , , — Snowman @ 11:03 am

Shares of Best Buy Co. surged Thursday after the electronics seller posted fiscal fourth-quarter results that beat Wall Street’s expectations.

Net income for the three months ended Feb. 27 jumped nearly 37% to $779 million, or $1.82 a share. Revenue rose 12% to $16.6 billion from a year earlier.

Analysts polled by Thomson Reuters were looking for earnings of $1.79 a share on sales of $16.08 billion.

Comparable sales gained 7.4%, driven by double-digit percentage increases in sales of its notebook computers and flat-panel TVs.

Best Buy (BBY, Fortune 500) shares rose 7% in early trading, but pared gains a bit to end the day almost 3 low fee pay day loans.6% higher.

The government reported that overall retail sales last month rose 0.3%, better than what analysts had been expecting. The increase was led by a 3.7% jump in electronics and appliance sales, signaling that demand in the sector may be recovering.

In January, Best Buy said sales grew 13% in December, the first holiday season without competition from Circuit City, which closed its doors last year.

Looking ahead, Best Buy forecast earnings of $3.45 to $3.60 per share for fiscal year 2011.  

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March 27, 2010

Tanning salons burned by health care bill

Filed under: business — Tags: , — Snowman @ 11:33 am

The Obama administration is turning up the heat on tanning salons across the country with the passage of its new health care bill.

To help fund the $940 billion health care overhaul, a 10% tax on individuals receiving indoor tanning services was tacked on, and the initiative is expected to generate $2.7 billion over ten years.

As a result, many salon goers and owners are outraged by the so-called "tanning tax" and think they’re being unfairly targeted by the bill.

"It’s terrible," said Jan Meshon, owner of City Sun Tanning in New York City. "You know how they say that passing a bill is a bit like making sausage? Well this was the weirdest, ugliest piece of sausage to get stuffed into the bill."

City Sun Tanning customers are shocked and disappointed by the tax as well, and Meshon said he expects the tax to hurt business.

"We’ll do everything to keep our customers, but they are very upset by this," he said. "When they first hear about the tax, their reaction is, ‘What? How did that get in there? Why are they attacking me?’"

Meshon said the average customer spends about $15 to $20 per visit, and a typical tanning session lasts about 10 minutes, which is roughly the equivalent of thirty minutes in natural sunlight.

"An extra 10% on top of that is definitely not helpful," he said. "All of our customers would like to spend less already."

Adrienne Zarisky, a regular tanner, said she has used tanning salons several times a week for the last two years in order to maintain sufficient levels of Vitamin D.

"I use it not so much for the cosmetic effect as I do for my health," she said. "But of course, in the dead of winter it just feels so good."

Zarisky said she probably won’t change her tanning habits because it’s still "cheaper than having to take sunny vacations three times a year," but she is sure the tax will cause financially-strapped tanners to give up bronzing, and in turn, will seriously hurt the salons.

"I really fear for the salon owners," she said. "The place I go has really been a fixture in my neighborhood. I got to know some of the people that work there and they’re lovely people — I would just really hate to see people like that lose their jobs."

Jobs on the line

The tanning tax will go into effect July 1 and will apply to electronic products designed for tanning that use one or more ultraviolet lamps with wavelengths between 200 and 400 nanometers. Other sunless tanning options such as spray tans and tanning lotions are not included in the tax.

"This is going to close tanning salons," said Joseph Levy, vice president of the International Smart Tan Network, which has 3,000 member salons. "You can’t just pass on a tax like this to customers and not have it hurt your bottom line."

Levy estimates that about 9,000 jobs are in jeopardy and more than 1,000 salons are at risk of being forced to close their doors. The tax also targets middle-class and female business owners, with about two-thirds of tanning salons in the U.S. owned by women, he said.

In addition to putting thousands of employees out of work, Levy predicts the tax will ultimately generate 40% to 50% less than the projected $2 fast payday loan no faxing.7 billion.

"There was no due diligence done on how much money this will raise, and it’s going to be nowhere near what they are expecting," he said. "After taxing female entrepreneurs and primarily female customers, this is the other part of what’s so repulsive about this tax."

The health care reform bill is returning to the Senate for revisions, and Levy is rallying support to nix the tax from the measure before it’s too late.

"We have more than 200,000 signed letters to Congress between our businesses and customers," he said. "We’re hopeful that the Senate and Senators we’ve talked to will come through and get this ridiculous tax out of the bill."

As another last ditch attempt to remove the tax, the Indoor Tanning Association has started a Web site, Stopthetantax.com, where tanning salon owners and customers can send personalized letters of opposition directly to state representatives and senators.

Cutting out the ‘Botax’

The 10% tanning tax has replaced the 5% tax on cosmetic surgery that was originally included in the bill.

That tax, nicknamed the "Botax," would have included Botox injections and breast implants among other elective surgeries, but was cut out of the bill last year after heavy lobbying from the medical and dermatology industries.

Because the Botax was expected to generate $5.8 billion, more than double the amount the tanning tax is projected to raise, many tanning industry professionals are furious about the switch, arguing that while the tanning tax targets middle-class, women-owned businesses, the Botax would mainly impact wealthier Americans who would be more able to handle higher prices.

The American Academy of Dermatology, which strongly opposed the Botax, applauded the inclusion of the tanning tax as a replacement because of the significant health risks associated with indoor tanning.

According to the Academy, indoor tanning before the age of 35 is linked to a 75% increase in the risk of melanoma, the deadliest form of skin cancer, which has also become more common in young females. Meanwhile, nearly 30 million Americans hit the tanning beds each year and about 2.3 million of these people are teenagers.

An indoor tanning tax will therefore "serve as a signal from the federal government to young people that indoor tanning is dangerous and should be avoided," said Dr. William James, president of the academy.

In addition, because the United States currently spends about $1.8 billion on treating skin cancers each year and $300 million on melanoma alone, the tax will significantly reduce the future costs of treating skin cancers, Dr. James said.

Meshon and Levy, however, said many of the health concerns over indoor tanning are unjustified and exaggerated.

"It’s at least as good for you as it is bad for you," said Meshon. "There’s a lot of misinformation out there and scare tactics trying to make indoor tanning sound like the scariest thing in the world, and while there are risks to tanning like almost anything else you do, the risks in tanning are relatively low." 

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March 23, 2010

AZ congressional delegation votes along party lines on health care bill

Filed under: term — Tags: , , — Snowman @ 1:48 pm

The U.S. House of Representatives passed a contentious health reform plan Sunday that includes mandates for expansions of Medicaid and coverage for young adults and other without medical insurance.

Arizona's congressional delegation split along party lines with the state's five Democrats voting in favor of the bill and three Republicans opposing it.

The bill does not include creating a public option, government system to operate along side private insurers, but it does restrict private companies from limiting coverage because of pre-existing conditions.

The health care vote and the economy are expected to be key issues in GOP efforts to unseat U.S. Reps. Ann Kirkpatrick of Flagstaff, Gabrielle Giffords of Tucson and Harry Mitchell of Tempe.

“I am putting my district first again by voting for this reform package. Health insurance reform is critical to ending denials of coverage based on pre-existing conditions, making sure our children can get the care they need and protecting our seniors from unaffordable prescription drug costs, Kirkpatrick said in a statement instant payday loan.

"I was able to make important improvements to this bill, including addressing the potential costs for AHCCCS," she said. AHCCCS is Arizona's Medicaid program and previous plans created concerns that some states, such as Arizona, would lose out on federal matching funds.

Mitchell said in a statement released Sunday that rising health care costs are burdening the economy and stifling recovery.

"We cannot sustain the path we are on because health care costs are burdening Arizona families, hurting the economy and slowing the recovery,” Mitchell said.

Joanna Burgos, spokeswoman for the National Republican Congressional Committee, said the passage of the legislation will hurt the economy because of mandates and spending, and that Giffords and Mitchell bowed to pressure from the White House and House Speaker Nancy Pelosi, D-Calif.

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March 21, 2010

Tennessee unemployment flat at 10.7%

Filed under: technology — Tags: , , — Snowman @ 4:36 am

The Tennessee unemployment rate again remained unchanged in February, stuck at 10.7 percent, according to data released today by the Tennessee Department of Labor and Workforce Development.

One year ago, state unemployment stood at 9.6 percent. The national unemployment rate for February was 9.7 percent, unchanged from the January rate.

According to the Department of Labor and Workforce Development, 3,100 monthly job gains occurred in state government educational services, 3,000 job gains came in educational and health services, and 1,900 job gains came in professional and business services. Major employment decreases from January to February occurred in mining and construction, down by 1,800, transportation and warehousing (-1,400 jobs), and clothing and clothing accessories stores (-1,200 jobs) guaranteed fast personal loans.

According to the Department of Labor and Workforce Development, year-over-year increases occurred in educational and health services, up by 9,300 jobs; state government gained 1,000 jobs; and real estate, rental and leasing was up by 900 jobs. Year-over-year decreases occurred in manufacturing, down by 26,200 jobs; trade transportation and utilities, down 22,500 jobs; and mining and construction, down 15,100 jobs.

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March 18, 2010

Driving deaths plunge, fewest since 1954

Filed under: management — Tags: , — Snowman @ 11:45 am

The U.S. Department of Transportation said Thursday that traffic fatalities in 2009 reached their lowest level since 1954.

Highway fatalities totaled 33,963 nationwide last year, according to the DOT, a drop of 8.9% from 2008, when deaths on the road totaled 37,261.

The government also said that the fatality rate in 2009 declined to 1.16 fatalities per 100 million miles traveled — the lowest rate ever. This is down from a rate of 1.25 fatalities the prior year.

The DOT also said that fatalities have been in decline for 15 consecutive quarters, through the end of 2009.

Traffic deaths reached a "near-term" peak in 2005, then plunged 22% through 2009, the government said.

The National Highway Traffic Safety Administration attributed the decline in deaths to its campaigns for increased use of seatbelts and against drunk driving, as well as safer roads and safer vehicles. 

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March 11, 2010

Banks wrote off record amount of credit card debt

Filed under: marketing — Tags: , , — Snowman @ 7:51 pm

With unemployment high and personal wealth diminished, how was it that strapped consumers were paying down their credit card debt last year?

It turns out they probably weren’t. The bulk of 2009’s drop in credit card debt instead came because banks were forced to write off loans consumers failed to pay, according to an analysis of Federal Reserve data instant credit report.

Loans are typically charged off by banks once they’re 180 days past due, under the assumption that the debt won’t be repaid.

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March 8, 2010

Schaeuble Says Euro Region May Need a European Monetary Fund

Filed under: online — Tags: , , — Snowman @ 11:02 am

German Finance Minister Wolfgang Schaeuble said the Greek crisis shows the euro region should consider creating an organization with powers similar to the International Monetary Fund.

“For the internal stability of the euro zone, we need an institution that has the powers and know-how of the IMF,” he said in an interview with Welt am Sonntag published today. “We shouldn’t rule anything out, including the creation of a European Monetary Fund.”

The financial turmoil sparked by Greece’s budget shortfall has highlighted the absence of a single euro-region finance ministry that could tackle the default of a member state or force a country to cut its deficit before it got out of hand. Former Federal Reserve Chairman Paul Volcker said in an interview yesterday that the lack of political union to back up the European Central Bank is a “structural crack.”

Billionaire investor George Soros said Feb. 22 the common currency could disintegrate if the European Union doesn’t act.

“I support a stronger coordination of economic policy in the EU and the euro region,” said Schaeuble, who will publish his own proposals “soon.” He doesn’t support any IMF rescue package for Greece because that “would be an admission that the euro region can’t solve its own problems by itself.”

Euro ‘Football’

Schaeuble, who also said the euro shouldn’t become a “football” for speculators, said that any new organization wouldn’t compete with the IMF. His comments were confirmed by Finance Ministry spokesman Michael Offer.

The comments come after proposals for a European Monetary Fund were put forward last month by Deutsche Bank AG Chief Economist Thomas Mayer and Daniel Gros, director of the Centre for European Policy Studies in Brussels. Countries could draw on funds equivalent to the money deposited at the EMF and exceed that amount if they agreed to a “tailor-made adjustment program” supervised by the European Commission and governments, they said.

The EMF could also ease the disruption caused by the default of a member state by offering investors new EMF bonds in exchange for the defaulted bonds, they said. Bond holders would be required to take a “haircut.”

“Setting up a European Monetary Fund is superior to the option of either calling in the IMF or muddling through on the basis of ad hoc interventions,” Mayer and Gros wrote in an article in the Economist.

The lack of a unified fiscal policy has sparked a divergence of bond yields across the euro region as Greece’s crisis worsened. The extra yield investors demand to hold Greek 10-year debt instead of German equivalents jumped to 396 basis points in January, the highest since 1998. The average gap over the past decade was 34 basis points. The Spanish and Portuguese spreads are about five times their respective 10-year averages.

Greece managed to sell 5 billion euros ($6.8 billion) in government bonds this past week after announcing a new round of austerity measures.

“I have no doubt that Greece will execute its announced measures,” Schaeuble said. “Their current efforts deserve big respect.”

Source

March 6, 2010

Asset Bubbles Unlikely to Threaten Asian Economies, Roach Says

Filed under: technology — Tags: , — Snowman @ 3:27 am

The risk posed by asset bubbles in Asia is overstated because surging prices in markets don’t threaten regional economies, said Stephen Roach, chairman of Morgan Stanley Asia Ltd.

“The difference between the asset bubbles in this region and asset bubbles also around the world is that they have not affected the real side of the Asian economy,” Roach told Bloomberg Television in an interview in Hong Kong today.

Concerns about inflation in Asia are “overblown” as excess capacity in the global economy is likely to keep a “lid” on prices for the next few years, said Roach, author of “The Next Asia.” “Beyond that, it’s a big challenge.”

Standard & Poor’s warned yesterday that Asian policy makers may fuel asset bubbles by leaving interest rates “too low for too long” as the region leads a global recovery from the worst slowdown since World War II. Stock and property markets are looking “frothy” in Asia, said David Wyss, an economist at S&P.

The U.S. had “monster bubbles in property credit that ended up stalling home-building activities and personal consumption” and when they burst the “economy went into the tank,” said Roach. In contrast, in Asia “you have bubbles that come and go, but they don’t impact on the real economy free credit reports.”

China’s Economy

Roach also said that Chinese Premier Wen Jiabao’s past warnings that his nation’s growth path is “unbalanced and unsustainable” have become a “serious concern now.”

“Two of the main engines of the Chinese economy, exports and investments, really have reached their point of maximum dynamism,” Roach said. “The Chinese need to change the model and move much more into consumer-led” growth, he said.

China’s central bank last month ordered banks to set aside more deposits as reserves for the second time in a month to cool the economic expansion after loan growth accelerated and property prices surged 9.5 percent in January, the most in 21 months. The China Banking Regulatory Commission told banks the same month to “strictly” follow property lending policies.

China’s consumer prices increased 1.5 percent in January from a year earlier, mainly due to gains in food costs resulting from the cold winter weather, the National Bureau of Statistics said. The gauge rose 0.6 percent from December.

In the fourth quarter of 2009, the Chinese economy grew 10.7 percent from a year earlier, the fastest pace since 2007.

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March 3, 2010

Be prepared: Rates will rise again

Filed under: management — Tags: , — Snowman @ 1:45 am

The rate hikes are coming! The rate hikes are coming! Eventually.

Days after the Federal Reserve seemed to sound the alarm that the era of near-zero interest rates is ending, Chairman Ben Bernanke tempered those expectations a bit this week. Just because the Fed boosted the rate it charges banks, he told Congress, doesn’t mean it will move any time soon to boost broader interest rates too.

Nonetheless, it behooves investors to be ready, regardless whether rate hikes come in the second half of 2010 or next year.

Despite what some may think, moving toward higher rates will be good news in many ways. It’s an endorsement of the economy’s potential to stand on its own. It means yields from CDs as well as savings and money-market accounts at banks won’t be minuscule much longer. It could even bode well for certain types of stocks.

But higher rates are bad for bonds and may make some other holdings less appealing too. So investors should take a close look at what they own.

"It’s a wakeup call," says Larry Glazer, partner at Mayflower Advisors in Boston quick cash.

Here’s how rate hikes could affect you:

Bonds — Bonds are in line to experience the biggest fallout, because they generally move inversely to rates. When rates exceed the rate on a previously issued bond, the bond’s value on the open market drops.

Stocks — Overall market returns may be harder to come when the Fed determines it needs to raise rates to try to keep the economy from growing too fast. But stocks should still climb. Tread carefully, though. Some sectors — notably utilities, financials and materials — have been big laggards when rates rise.

Saving and borrowing — Long-suffering savers can look forward to their money growing at a decent clip again while sitting in the bank. At the same time, rising rates will make mortgages and other loans more expensive. If you’re thinking about buying a house or refinancing a current mortgage, it might be time to consider locking in those low-low rates.

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