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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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February 26, 2010

Bernanke Says Fed Reviewing Goldman Swaps With Greece

Filed under: management — Tags: , — Snowman @ 10:03 pm

Federal Reserve Chairman Ben S. Bernanke said the use of credit default swaps to destabilize a country is “counterproductive,” and added the central bank is reviewing the arrangements of Goldman Sachs Group Inc. and other companies with Greece.

“We are looking into a number of questions related to Goldman Sachs and other companies and their derivatives arrangements with Greece,” Bernanke said today in testimony before the Senate Banking Committee in Washington.

Greek bonds slid today, pushing the premium investors demand to hold the nation’s 10-year securities instead of German bunds to the most in more than two weeks, amid concern the country’s credit ratings may be cut.

Federal Reserve officials are using new supervisory powers over firms such as Goldman Sachs and Morgan Stanley to gather information on financial system risks. Bernanke was responding to a question from Senator Christopher Dodd, a Connecticut Democrat, who asked if there should be limits on the use of credit default swaps to prevent “runs against governments.”

Destabilize

“Obviously, using these instruments in a way that intentionally destabilizes a company or a country is — is counterproductive, and I’m sure the SEC will be looking into that,” Bernanke said. “We’ll certainly be evaluating what we can learn from the activities of the holding companies.”

U.S. stocks fell today in part as Moody’s Investors Service said it may downgrade Greek debt. The Standard & Poor’s 500 Index was down 1.52 percent at 10:51 a.m. in New York. Yields on U.S. 2-year notes declined 0.03 percentage point to 0.828 percent.

Goldman Sachs helped Greek officials raise $1 billion of off-balance-sheet funding in 2002 through swaps, which European Union regulators said they knew nothing about until recent days.

Goldman Sachs did “nothing inappropriate” when it arranged currency swaps for Greece that reduced the nation’s national debt by 2.37 billion euros ($3.2 billion), a top executive said.

“They did produce a rather small, but nevertheless not insignificant reduction, in Greece’s debt-to-GDP ratio,” Gerald Corrigan, chairman of Goldman Sachs’s regulated bank subsidiary, told a panel of U cash advance payday loan.K. lawmakers Feb. 22. The swaps were “in conformity with existing rules and procedures.”

“As a matter of policy, we don’t comment on legal or regulatory matters,” Michael DuVally, a Goldman Sachs spokesman, said today.

Credit Ratings

Corrigan is the former president of the Federal Reserve Bank of New York. The Federal Reserve gained oversight powers over Goldman Sachs and Morgan Stanley following their conversion to bank holding companies in Sept. 2008.

Yields on two-year Greek bonds rose to the highest since Feb. 9 after Standard & Poor’s and Moody’s said they may cut their ratings if Greece fails to implement a plan to reduce its budget deficit. Pierre Cailleteau, managing director of sovereign risk at Moody’s, said a downgrade may come by the end of March.

“Greece is able to make headlines every day, and for now volatility is here to stay,” said Michiel de Bruin, who helps manage $28 billion of assets as head of euro government bonds at F&C Investments in Amsterdam. “The market is also taking into account the possibility of a double dip in economic growth, and that’s causing risk aversion.”

The cost of insuring against default on Greek government bonds rose for a fourth day, with the credit-default swaps on the debt rising 10 basis points to 392, the highest in more than two weeks, according to CMA DataVision.

The Greek 10-year bond increased 12 basis points to 6.64 percent as of 3:02 p.m. in London. The 6 percent security maturing July 20109 lost 0.82, or 8.2 euros per 1,000-euro face amount, to 95.56. The two-year yield jumped 61 basis points, the most since Jan. 29, to 6.35 percent.

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February 22, 2010

Yahoo-Microsoft search deal gets final OK

Filed under: management — Tags: , — Snowman @ 12:20 pm

Microsoft and Yahoo said Thursday that their online search deal has received approval from U.S. and European Union regulators, paving the way for the two companies to combine much of their Internet search business.

Under the 10-year deal, which was announced in July, Yahoo.com and Bing.com will maintain their own branding but search results on Yahoo.com will say "powered by Bing." Yahoo, in turn, will be responsible for getting premium advertisers.

Microsoft will pay Yahoo 88% of the revenue it gains from searches on Yahoo’s sites. Microsoft will also have the rights to integrate Yahoo’s search technology into its own existing Web search platforms.

With the final hurdle out of the way, the companies said Thursday that they will start implementing their partnership in the coming days. Yahoo and Microsoft have set a goal to complete all aspects of the deal in the United States by the end of 2010 and globally by the end of 2012. The companies previously said that U.S. users will start to see the change three months after regulators approved the deal.

"This breakthrough search alliance means Yahoo! can focus even more on our own innovative search experience," said Yahoo Chief Executive Carol Bartz in a statement.

Microsoft Chief Executive Steve Ballmer called the regulatory approval "an exciting milestone," noting that the companies are "just at the beginning of this process."

Google (GOOG, Fortune 500) remains the clear dominant search engine, controlling more than 65% of the market, according to online data tracker comScore. But Microsoft’s (MSFT, Fortune 500) Bing and Yahoo (YHOO, Fortune 500) control nearly 30% of the market combined, which analysts say will help the companies attract better advertising partners.

Shares of Microsoft and Yahoo both rose less than 1% in midday trading. 

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January 29, 2010

Pfizer to drop 100 experimental drugs from research program

Filed under: management — Tags: , , — Snowman @ 10:24 pm

Drugmaker Pfizer Inc., which just bought rival Wyeth in October, said Wednesday that it would scrap testing of roughly 100 experimental drugs from their combined research operations to focus more resources on its priority areas.

New York-based Pfizer said it would continue with about 500 research projects. About 70 percent of those — and 75 percent of its late-stage research — fall within what it calls "Invest to Win" areas because of the great need for better treatments.

They are Alzheimer’s, diabetes and metabolic disorders, pain, cancer, inflammatory disorders such as rheumatoid arthritis, and mental illnesses.

Pfizer will reduce the square footage of its R&D facilities by one-third, eliminating six research sites and an unspecified number of workers.

Pfizer maintains a research facility in Chesterfield, though the company is scaling back those operations. The company announced in November that it would eliminate 600 of the 1,000 jobs at the research center and sell the property to Monsanto.

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December 14, 2009

What’s next for Fenton plants?

Filed under: management — Tags: , , — Snowman @ 11:06 am

Fenton — It has been nearly six months since the last Dodge Ram rolled out of the massive Chrysler plant here.

Now, on a weekday morning, there are perhaps two dozen cars in parking lots meant for thousands. The neat rows of shiny new pickups are gone. The smokestacks stand cold.

And six months after the closure of vast twin auto plants along Interstate 44, there is a growing conversation about just what to do them, how to take this empty symbol of St. Louis’ old economy and use it to help the new one.

It’s a tough question.

There are, after all, few uses for a one-story building the size of 86 football fields, surrounded by acres and acres of asphalt. Throw in environmental question marks and a weak economy, and the options grow even fewer.

But local leaders want to take a hard look at what those options might be.

St. Louis County is applying for a federal grant of nearly $1.6 million to establish a commission to study the site. With cash from the state, the county and the city of Fenton, officials are ready to launch a two-year, $2 million effort to plan incentives, cleanup, marketing and more.

"There’s a lot of things that could happen here," said County Executive Charlie Dooley. "How do we use this land to attract the business we want?"

That question is being asked by many cities these days. At least 20 U.S. auto plants have closed in the last two years, from Delaware to Detroit to St. Louis, and most of them face the same daunting challenges of age, size and a highly specialized use that is no longer needed.

"We’re kind of new in this game right now," said Kim Hill, who heads the Automotive Communities Program at the Center for Automotive Research in Ann Arbor, Mich. "Obviously, there are a lot of facilities that shut. There’s a lot of head-scratching going on.

Chrysler alone shuttered eight plants when it filed for bankruptcy in April. It spun them off into a separate company and now must sell them one by one under court supervision. A spokesman for the automaker wouldn’t discuss any specifics about the two Fenton plants but said they were being actively marketed. He acknowledged it would take some "creativity to get them back into productive use."

So far, just one Chrysler plant has found a buyer.

Last month, the University of Delaware closed on a $24.3 million deal for the automaker’s assembly plant in Newark, Del. The 272-acre site is across the street from the university’s campus, and the school hopes to expand there, said spokesman Dave Brond.

"It provides generations of capacity for us to grow," he said. "It adds 22 percent to the size of our campus."

The university hopes to take advantage of an Amtrak line that runs by the plant to build offices and stores around a rail station, and to partner with a medical school and a nearby Army base on research and teaching facilities.

"It was an opportunity we couldn’t pass up," Brond said.

Still, he expected it would be three or four years before any buildings were complete. And Delaware officials knew the closure was coming and started talking with Chrysler 20 months ago, eight months before the plant actually closed. That’s a contrast with St. Louis, where local leaders had focused mainly on getting Chrysler to keep operating in Fenton almost until the day of the shutdown.

That may have been a long shot, but given the thousands of good-paying jobs Chrysler supported here, it was one worth taking, said U.S. Rep. Russ Carnahan, D-St. Louis.

"Unfortunately that didn’t work," he said. "Now we’re at Plan B."

Some, such as Carnahan, say Plan B might be a next-generation automaker’s moving into Fenton, something like Fisker Automotive’s decision to buy a GM plant in Wilmington, Del., to build plug-in hybrid vehicles.

But those opportunities are few, and the longer the plant sits empty, the less appealing it becomes payday loan.

So when it comes to finding a new use, Dooley said, pretty much everything is on the table.

He will have the commission study cleanup costs and potential incentives for a developer, the prospect of breaking the 5-million-square-foot building up for several tenants, or knocking the thing down and starting over.

"We will do everything we possibly can to make something happen there," Dooley said. "That’s too much space to leave undone."

But one thing that won’t happen is the county’s taking over the site itself. It’s just too complicated, Dooley said. A private company will have to lead any project.

That’s what has happened in Hazelwood, where Ford Motor Co. closed a plant in 2006. California-based Panattoni Development Co. bought it two years later and has since demolished the 3.5-million-square-foot structure. It plans to turn the 160-acre site into Aviator Business Park, an 11-building, $200 million complex of office and warehouse space.

Site work is basically complete, said Mark Branstetter, a senior vice president in Panattoni’s Clayton office, and the company will start marketing it to tenants in early 2010. It will have some nice things to offer, he said: a good location on Lindbergh Boulevard near Lambert-St. Louis International Airport and Interstate 270, a rail line, tremendous power and water connections, and a 25-year tax abatement negotiated with the city of Hazelwood.

Even with all that, Branstetter said, it made no sense for Panattoni to keep the old buildings in place. The plan was always to tear them down.

"These buildings really aren’t made for any sort of adaptive reuse," he said. "They’re simply an envelope around a bunch of equipment. And once that equipment goes out, it has no use."

Then there’s what lies beneath the envelope.

Most auto plants made cars for decades. The ground underneath may include metals, dangerous chemicals, all sorts of things. Often, no one is quite sure what is there, or who would be liable for pollutants two or three owners down the road.

If the concrete slab is taken up, cleanup costs could easily run $10 million or $20 million, Hill said. That makes buying one without some sort of insurance or cleanup fund a risky proposition.

"That is probably the No. 1 issue in moving these properties," he said.

In Hazelwood, Branstetter said, Panattoni did extensive testing when it took over the property. It thinks it knows what is in the ground. In Delaware, Brond said, the state took on the risk and factored it into the price.

In Fenton, that is still in the future. It will be part of the task of Dooley’s commission — if it gets funding. The county executive said he hoped to hear on that by the end of the year. Carnahan, who is supporting the application, said it might be January. Either way, they want to get started.

Meanwhile, the bankruptcy court is in the process of hiring a broker to market the site, and several people close to the process say a number of potential buyers are taking a close look.

"There’s been enough interest that (advisers for the bankruptcy court) believe it’s going to be sold, probably sooner rather than later," said Fenton Mayor Dennis Hancock.

If it is, the challenge will become what happens next, and how this place that may well have put out its last-ever vehicle six months ago can find a new reason for being.

"The obstacle is in people believing that something is going to go there," Dooley said. "To a lot of people, a church is a church and a school is a school and a plant is a plant. We’ve got to figure out how to turn it into something else."

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December 12, 2009

What is green training in the commercial construction industry and why is it important?

Filed under: management — Tags: , , — Snowman @ 10:30 am

As President Barack Obama said in his recent jobs summit, future jobs will be found in cultivating alternative energy sources to create a cleaner environment. According to the Renewable Energy Policy Project, efforts to rein in Missouri’s carbon emissions have the potential to generate more than 22,000 manufacturing jobs in wind, solar, geothermal and biomass industries.

In addition to job creation, carbon reduction and energy savings are among the key reasons green training is important.

The potential for new jobs in Missouri spurred the IBEW/NECA Electrical Industry Training Center to consolidate 70 courses into one comprehensive green curriculum to keep pace with rapidly changing technology that includes greater understanding of energy-conversion rates of solar panels. Traditional solar cells are comprised of crystalline silicon, which has a relatively poor light absorption rate, requiring considerable thickness just to harness 11 percent to 16 percent of the sun’s rays. With silicon accounting for half the cost of a solar cell panel, we are now training on "thin film" technology installment payday loans. "Thin film" panels are less expensive, easier to install, more durable and have the potential to capture up to 35 percent of the sun’s rays.

Another part of green training is the study of advances in geothermal energy, which taps the steady flow of heat from the Earth in winter and displaces heat in the summer. This advanced training is applied to geothermal pump installations that can reduce utility costs up to 70 percent, compared with conventional systems.

Also key is understanding the dynamics of energy transfer in wind turbines, which convert the wind’s kinetic energy into electricity for homes and businesses.

The next phase of green training will be smart grid technology. It will produce a network among electric utilities to distribute power more efficiently while modifying consumer use to control energy costs.

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November 20, 2009

Wall St’s image needs years to rebound

Filed under: management — Tags: , , — Snowman @ 3:09 pm

Wall Street’s image, battered by the financial crisis, may take years to recover as its executives themselves are the first to acknowledge.

Executives from a range of financial companies — both on and off Wall Street — told the Reuters Global Finance Summit in New York that the recent economic crisis has shaken outsiders’ faith in the industry.

It has also damaged high-profile executives’ reputations and spoiled what little goodwill others had for the industry, they said.

Repairing the damage will take time, executives said, and may be impossible in some cases.

“We had a saying that it takes years to build a reputation and you can lose it overnight,” said Joe Perella, CEO of Perella Weinberg Partners and a long-time Street veteran. “And it’s hard to repair it overnight after what’s happened.”

FAILURES

Critics — from Main Street to the halls of Congress — said the industry is out of touch and ignored significant risks in the pursuit of profit, placing the global economy at risk.

The broader financial sector’s failures, critics said, are widespread check cash advance.

Mortgage companies implemented too-loose lending standards, bolstered by Wall Street’s demand for mortgage-backed securities to bundle and sell across the globe.

Even ratings agencies often failed to identify the risks being created by a handful of industry professionals.

The crisis created the largest bank failure in U.S. history and six of the ten largest bank failures since 1934, as well as the largest recession since the Great Depression.

Merrill Lynch & Co did an eleventh hour deal with Bank of America at the depth of the crisis, in part to avoid a possible collapse.

CRITICISM DESERVED

Industry executives said the ongoing furor is at least somewhat justified.

“The criticism is definitely deserved,” said Lee Fensterstock, CEO of Broadpoint Gleacher Securities Group Inc, a New York-based boutique investment bank. “I don’t know what these guys were thinking about.” 

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November 11, 2009

Cooper looks to fire up Imperial’s growth

Filed under: management — Tags: , , — Snowman @ 8:48 am

Alison Cooper is set to become the youngest female chief executive of a FTSE 100 company as she looks to put sales growth at the top of her agenda for the world’s No 4 cigarette group Imperial Tobacco Plc

Cooper, 43, was widely tipped to take over the top job at the maker of Lambert & Butler and Gauloises cigarettes next year after shadowing current CEO Gareth Davis for eight months.

Davis is set to retire next May, the day before his 60th birthday.

“Alison has worked closely on all the big deals with Gareth so the transition at the top of Imperial would appear to be very smooth,” said one tobacco industry analyst.

When she takes over, Cooper will join three other female CEOs of Britain’s top 100 companies, and become the second woman to run a big tobacco company following Susan Ivey at United States-based Reynolds American Inc.

In her ten years at Imperial, Cooper has worked closely on the two big acquisitions that transformed Imperial into a world tobacco player - Reemtsma and Altadis — but as big tobacco deals start to dry up her emphasis will be on sales growth.

“Imperial’s highlights have been on acquisitions and cost control, now we will look for growth with our expanded business in different geographies,” Cooper said on a conference call.

She is set the join Angela Ahrendts at luxury goods group Burberry Group Plc, Cynthia Carroll at mining group Anglo American Plc and Marjorie Scardino at publishing group Pearson Plc as female CEOs at FTSE 100 groups.

Davis has led Imperial since its demerger from the sprawling Hanson empire in 1996 where he embarked on a series of acquisitions to put the cigarette maker on a faster growth path than its arch British rival Gallaher no credit check payday loans.

Accountant-trained Cooper was appointed No 2 to Davis in March in a new role as chief operating officer, and with Davis long expected to retire around his 60th birthday it seemed only a matter of time before she got promoted.

Davis had dropped heavy hints about his hopes that his successor would come from within the Bristol-based cigarette maker because of the challenges and stoicism needed in a industry under attack from anti-health groups and governments.

“I am a massive advocate of internal succession,” Davis said in May soon after Cooper’s appointment as his number two.

Cooper has been at the heart of expansion of Imperial Tobacco buying Germany’s Reemtsma in 2002 and Franco-Spanish Altadis in 2008 which transformed Imperial into the world’s number four cigarette company from a largely domestic player.

Cooper joined the maker of Embassy and Richmond cigarettes in 1999 from accountants PricewaterhouseCoopers after having worked with Davis and his team for a number of years. She became group financial controller in 2001, before becoming director of finance and planning in 2003.

Cooper, married with two daughters, became sales and marketing regional director for Imperial’s Western Europe region in 2005 and, two years later, joined the four-strong Imperial executive board in a new role as corporate development director. 

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October 28, 2009

British economy shrinks unexpectedly

Filed under: management — Tags: , , — Snowman @ 12:06 am

Britain’s gross domestic product suffered another decline in the third quarter of 2009, figures showed Friday, meaning the country remains mired in recession.

GDP decreased 0.4% in the third quarter, according to preliminary estimates from Britain’s Office of National Statistics.

Some analysts had expected Friday’s GDP figures to show the recession in Britain was over.

The British economy officially entered recession in January after two consecutive quarters of negative GDP growth, which is the traditional definition of a recession.

For the third quarter of 2009, statistics showed the biggest declines occurred in the hotel and restaurant industry, which fell by 1%; construction, which decreased by 1.1%; and agriculture, forestry and fishing, which declined by 1.6%.

There was zero growth in government and other services — a marginal increase from the previous quarter — with the health industry making the largest contribution to that figure, statistics showed. 

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October 9, 2009

Obama faces clamor for action on economy

Filed under: management — Tags: , , — Snowman @ 9:41 am

As the unemployment rate climbs toward 10 percent, President Barack Obama is facing a rising clamor from within his Democratic party to take new steps to lift the economy and jump-start job growth.

But soaring budget deficits are likely to constrain Obama’s options as he considers ideas ranging from bolstering safety-net programs and extending a popular tax credit for first-time home buyers to new initiatives such as tax incentives to encourage business hiring.

“The administration and the country are in a very difficult situation,” said William Galston, a scholar at the Brookings Institution and former policy adviser to President Bill Clinton.

“All of the projections known to me suggest we are in for a very extended period of higher-than-average unemployment, a more extended period than we’ve endured for a very long time.”

On the other hand, Galston said, “You run up against the stubborn fact that our budget deficit is already sky high.”

He and other analysts said the means to alleviate the economic distress are by no means clear. Ideas such as a tax credit for job hiring face questions about their effectiveness and would be costly.

Still, the bleak jobs picture could put some of Obama’s Democratic allies at risk in next year’s congressional elections, unless voters are convinced they are doing all they can to help the economy.

Obama met on Wednesday with the two top Democrats in Congress, House of Representatives Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, to discuss the economy no fax pay day loan. The meeting took place at the lawmakers’ request.

INEFFECTIVE STIMULUS PACKAGE

The White House has emphasized its discussions on how to spur job growth are still in the preliminary stages.

One dilemma for Obama is that Republicans, seizing on the rise in the unemployment rate to 9.8 percent, argue that the $787 billion stimulus package passed earlier this year was ineffective.

The White House says the stimulus plan cushioned a blow to an economy that was in dire straits and would have been in far worse shape without the package.

Still, perhaps out of wariness of giving Republicans further ammunition, the Obama administration has steered clear of using the term “stimulus” to describe the additional moves it is considering for the economy.

Some measures, such as extending safety-net programs, could be adopted quickly, while other proposals may not be put forth until Obama’s State of the Union address in January.

One step that enjoys strong support is extending jobless benefits for those who may have already exhausted them. 

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