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U.S. retailers are expected to post positive October sales results this week, but investors hoping for a clear signal on economic recovery could be in for disappointment, industry experts said.

Many top retail chains will report same-store sales results on Thursday, with the overall industry expected to post a 1.2 percent rise, according to Thomson Reuters data.

That compares with a 4.1 percent fall in October 2008, just weeks into a global financial markets collapse.

If the expected increase materializes, it will raise hopes that consumers are prepared to spend more during the crucial holiday season.

“Our forecast is that we are on a recovery path but the recovery path will be uneven,” said Frank Badillo, senior economist at Retail Forward. “From month to month some of these numbers will give false signals either way. We are seeing a recovery that is zigzagging in a positive direction.”

But high expectations mean any disappointment in sales results could fuel a retreat by investors on stocks that have risen in recent weeks, fueled by pockets of good news from a variety of retailers from J Crew Group Inc to TJX Companies Inc.

“If expectations are too high, even if the absolute number shows sequential improvements, the stocks will sell off,” said Needham & Co analyst Christine Chen.

The Standard & Poor’s Retail Index .RLX has risen 1 percent this month, and almost 37 percent since January bad credit payday loans. That has fueled a belief among some on Wall Street that along with positive sales, retailers may raise outlooks next week.

Cool weather and new merchandise in stores before the holidays have both fueled spending, continuing on advances made in September, and easy comparisons with year-ago results.

Drugstore operators are expected to have fared the best in October with an expected rise of 3.4 percent, according to the Thomson Reuters data. Teen retailers face an estimated 2.8 percent same-store sales decline, driven by lingering weakness at Abercrombie & Fitch Co.

DATA CONFUSES PICTURES

But while sales trends have improved from a disastrous October 2008, data on the economy and consumer spending show shoppers remain tight-fisted and cautious.

On Friday, the Commerce Department reported that consumer spending fell 0.5 percent in September, the largest drop since December, following the end of the government’s program to boost auto sales.

At the same time, the U.S. economy is officially out of recession with positive gross domestic product growth, according to data released on Thursday.

That means that optimism for October is tempered by realistic caution on the part of many, making sales numbers difficult to predict. 

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Stocks ended higher Monday as investors ultimately shook off the day’s jitters about China’s trade rift with the U.S. just ahead of the anniversary of the collapse of Lehman Brothers.

The Dow Jones industrial average (INDU) gained 21 points, or 0.2%. The S&P 500 (SPX) index gained 6 points, or 0.6%. The Nasdaq composite (COMP) gained 11 points, or 0.5%.

Stocks took a breather Friday after a five-session winning streak that left the major indexes at the highest levels in nearly a year. But after that selloff, investors were wary Monday. A choppy session ended with only slim gains.

Higher commodity prices have supported the most recent leg of the advance, boosting the underlying stocks. Gains in technology and financial shares added to the advance.

But oil services, tech and financial shares struggled Monday, limiting the market’s movement.

Tuesday brings the August retail sales report from the Commerce Department and, the Producer Price index (PPI), a measure of wholesale inflation, and the Empire State manufacturing index.

China: The U.S. and its largest trading partner are facing a growing rift, even as the countries continue to collaborate as part of a global effort to tackle the economic slowdown.

Late Friday, President Obama, responding to complaints from labor unions, said the U.S. would impose tariffs of up to 35% on tires from China.

On Sunday, China said it would begin the process of imposing tariffs on U.S. cars and chicken meat. On Monday, China asked the World Trade Organization to get involved.

The conflict precedes the Group of 20 meeting of leaders of the largest and fastest-growing economies in the U.S. next week.

Global markets tumbled, with major European and Asian markets ending lower.

The trade spat and slide in global markets gave a boost to the U.S. dollar, which has been sliding versus other major currencies lately.

President Obama: The president spoke Monday on Wall Street about financial services reform on the eve of the one-year anniversary of the collapse of Lehman Brothers.

Obama said that the economy is returning to normal, but that it will take time. He also said Wall Street must take steps to rebuild its relationship with the public and make sure that it doesn’t engage again in the kind of behavior that led to the crisis.

One-year later: Tuesday is the anniversary of the collapse of Lehman Brothers and buyout of Merrill Lynch by Bank of America, events that were seen as turning a recession into a full-blown crisis on a level not seen since the 1930s.

On that day, the Dow plunged 504 points as financial shares tumbled, credit seized up and investors panicked.

Stocks zigzagged through the week, but managed to end with just slim declines that Friday thanks to some government actions. They included the Fed jumping in to save AIG (AIG, Fortune 500) from bankruptcy and the establishment of an early version of the TARP bank bailout plan.

For a look at what the government has been doing over the last year to manage the crisis, click here.

Company news: Eli Lilly (LLY, Fortune 500) said its cutting around 5,500 jobs as part of a bigger plan to save $1 billion by 2011. Shares ended modestly higher.

Sprint (S, Fortune 500) shares rallied 11% on published reports that Deutsche Telekom, the owner of T-Mobile USA, is interesting in acquiring the U.S. based phone carrier.

Oil and gold: The stronger dollar dragged on dollar-traded commodities Monday, with oil and gold prices retreating.

U.S. light crude oil for October delivery fell 43 cents to settle at $68.86 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery fell $5.30 to settle at $1,001.10 an ounce, remaining above the key $1,000 level.

Bonds: Treasury prices fell, raising the yield on the benchmark 10-year note to 3.38% from 3.35% late Friday. Treasury prices and yields move in opposite directions.

Market breadth was positive. On the New York Stock Exchange, winners beat losers two to one on volume of 1.21 billion shares. On the Nasdaq, advancers beat decliners eight to five on volume of 2.19 billion shares. 

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Hundreds gathered Tuesday to hear from the leaders of two big downtown St. Louis projects — one apparently getting under way within weeks and the other still stuck in uncertainty.

Bill DeWitt III, president of the St. Louis Cardinals, told those at a Partnership for Downtown St. Louis luncheon that continuing trouble in financial markets means that bonds to raise money for the first phase of Ballpark Village might not be sold until the middle of next year.

Regardless, "behind the scenes" leasing activity for the $520 million retail, entertainment and office project next to Busch Stadium remains strong, DeWitt said.

The Cardinals and Cordish Co. of Baltimore are co-developers of Ballpark Village.
DeWitt said the project will be completed.

"We’re going to stick this out," he said during the luncheon’s discussion that was moderated by KMOV (Channel 4) news anchorwoman Vickie Newton. No questions were taken from other journalists or the audience during the luncheon affordable health insurance quote self employed.

The bonds cannot be sold until the Missouri Development Finance Board gives final approval of state subsidies for Ballpark Village. DeWitt hopes the board will approve the subsidies at its July meeting.

In contrast, bonds to help pay for David Checketts’ $74 million plan to reopen the Kiel Opera House are on the market.

Checketts, owner of SCP Worldwide and the St. Louis Blues, told the luncheon crowd he believes work on the Kiel project should begin in early August and be completed late next year.

Checketts plans to restore the Opera House for shows and musical events. He also said the Opera House would host some activities surrounding the National Hockey League’s All-Star Game, which he hopes to bring to the adjoining Scottrade Center.

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As an NBA Hall of Famer, Earvin "Magic" Johnson faced down such giants as Larry Bird and Julius Erving. Diagnosed with HIV in 1991, Johnson has fought off full-blown AIDS for the past 18 years. Now, as a coffee shop proprietor, he’s fighting his latest battle against…scones.

"My customers in urban America are so skeptical, we have to win them over," he says — and the skepticism extends to exotic pastries. "So in my Starbucks, we serve sweet potato pie."

Sixteen years after retiring from pro basketball, Johnson is finding almost as much success as a small business owner as he did on the court. Magic Johnson Enterprises, a private Los Angeles-based company, has 35 employees and assets of more than $700 million. It works with local entrepreneurs to open franchises in inner-city neighborhoods across the U.S., and has signed a unique deal with Starbucks (SBUX, Fortune 500) that allows MJE to open franchises and split the revenue fifty-fifty.

Now Johnson is advising big-box stores such as Best Buy (BBY, Fortune 500) on how to crack urban markets once the economy allows the stores to expand again. The key, he says, is paying attention to customers. When Johnson makes public appearances — as he does about 100 times a year — he isn’t just signing autographs. He also gives his office phone number to any customer who complains to him personally, even if the problem is a dearth of sugar packets. If the problem persists, he wants to know about it.

"Minorities appreciate that, because we are used to corporations coming in, opening up their building, but then disrespecting us with their service," Johnson says cash loan lenders. "If you don’t engage us, we’re going to cut you off our list."

He found that out the hard way. One of his first franchises was an NBA store that lost $200,000 before it closed. The reason? Johnson picked the inventory based on his own preferences rather than the customers’. Another early venture, a movie theater near L.A.’s gang-ridden Crenshaw district, seemed doomed to failure until Magic sat down with the gang leaders and asked for their respect. It worked. The theater is now one of the highest earners in the AMC chain.

Johnson is on to something, says Dominique Hanssens, chair of the marketing department at UCLA’s Anderson School of Management. Selling sweet potato pie instead of scones, she says, "shows customers that you’re trying to figure out how to serve them in new ways." By targeting a less affluent market, Johnson benefits from less competition, greater loyalty and, paradoxically, more revenue in the long run.

"The lifetime value of his customers can be quite high, even if they don’t bring in as much money in the short term," Hanssens says. "Everybody loses business in a recession. But it’s better if your existing customers stay with you and just spend a little less."  

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One year ago today, St. Louis learned its premier corporation was "in play," as they say on Wall Street. In a flurry of late-afternoon press releases, it was revealed that Anheuser-Busch was being targeted for a takeover. The hunter: Belgian brewer InBev.

A potential takeover of Anheuser-Busch had been mulled among analysts for a while. InBev, formed in 2004 from a combination of Belgium’s Interbrew and Brazil’s AmBev, was constantly on the prowl for acquisitions. Its executives had alternately admired and coveted Anheuser-Busch for a long time. InBev, imbued with an investment bank’s ultra-aggressive style, had quietly put itself into position to vie for the ultimate prize.

Anheuser-Busch, long the world’s biggest brewer, had slipped from the pinnacle. But it still dominated the U.S. beer market, the world’s most profitable. St. Louis still thought of it as the "King of Beers."

On June 11, 2008, that illusion was damaged. Later, it would be shattered.

At first, InBev couched its $46.3 billion buyout offer in friendly terms. It said it would invite a number of A-B directors to join the board of the combined company and would retain key A-B managers. It would work to make Budweiser the company’s flagship brand.

"We have the highest respect for Anheuser-Busch, its employees and leadership" InBev chief executive Carlos Brito wrote in a letter to August Busch IV, his counterpart at A-B.

But InBev’s tough reputation had preceded it. For some, the shock to the system was immediate.

"I was nearly in tears," Maureen Ogle, author of "Ambitious Brew," a historical look at the U free credit report online.S. beer industry, said this week. If Anheuser-Busch was taken over, she recalled thinking, "it would never be the same."

A-B employees, area residents, beer distributors and others also had plenty of worries. "There was so much fear in the network," said Harry Schuhmacher, editor of Beer Business Daily.

But at first, there was plenty of doubt that InBev could pull off the buyout, said Schuhmacher. "It was still very much in limbo."

The proposed deal was the biggest news to hit the beer industry in years. It even eclipsed the creation of MillerCoors — a U.S. joint venture between SABMiller and Molson Coors.

For a month, Anheuser-Busch and InBev alternately maneuvered behind closed doors, in courtrooms and in the media. St. Louis citizens hoped the Busch family had a strategy to keep the company independent. Observers wondered whether the company’s hastily announced plan to cut costs was designed to help it escape InBev, or simply a ploy to get a better price.

It was soon a moot point. A-B’s board accepted a sweetened bid in mid-July. The official purchase would wait for a few months, but it was a fait accompli.

The foreign buyout of an American icon did not spark a widespread backlash. Outside St. Louis, the controversy died down quickly.

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U.S. auto suppliers, who negotiated federal loans earlier this year, plan to ask the Obama administration’s auto task force this week for $8-$10 billion in loan guarantees, Bloomberg reported on Tuesday.

Industry trade groups plan to request the U.S. Treasury to back at least a part of loans for auto suppliers from banks to reduce risk and increase lending, the news agency said, citing Neil De Koker, president of the Original Equipment Suppliers Association (OESA).

The banks may be part of a group of lenders who could choose the suppliers to receive loans, De Koker was cited by the news agency as saying.

Suppliers will need loans to start producing parts for General Motors and Chrysler when the automakers resume manufacturing, De Koker was cited as saying in the report one hour cash loan.

“We have very good companies that can’t get financing,” Bloomberg quoted De Koker as saying. “It’s essential to provide support to suppliers in order to ensure that the money already spent on GM and Chrysler doesn’t go to waste.”

The OESA and the Motor & Equipment Manufacturers Association will meet with the auto task force on Wednesday, and U.S. House and Senate members later in the week, according to the report.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Dan Lalor)

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When all else fails, the Treasury Department is now willing to cough up cash to get homeowners to move on and to get loan servicers to forgive mortgage debt.

The new initiatives are part of the government’s Making Home Affordable program.

Under the original program, unveiled earlier this year, homeowners could be eligible for loan adjustments or refinancings if they meet several criteria: the home must be their primary residence, for example, and the mortgage balance must be no more than $729,750.

Even then, however, mortgage help is not assured. The homeowners may still not be able to afford reduced monthly mortgage payments of 31% of income. And to protect the investors who own the mortgage, the value of a modified loan still has to be greater than the value of what would be recovered in foreclosure.

In these cases, lenders first consider a short sale, a deal in which the home is sold for less than the mortgage balance, and loan servicers may forgive the difference.

If that is unsuccessful, the final step is a "deed in lieu of foreclosure," when borrowers voluntarily forfeit the deed and the debt may be erased.

Under the new initiatives, for short sales and deeds in lieu, borrowers will get up to $1,500 to assist with relocation expenses. Treasury will also pay the servicers $1,000 to complete a short sale or deed in lieu.

A deed in lieu can be the least painful way of ending a mortgage default nightmare, according to Pamela Simmons, a real estate attorney in California.

"Borrowers often prefer to end it quickly and cleanly," she said. "They just want to get it over with." And it’s better than just walking away from a mortgage, a situation where the debt still looms.

A deed in lieu might also be better for the banks. Banks acquire the properties back from delinquent borrowers faster and more easily, saving them legal, financial and other costs associated with going through the entire foreclosure process.

Not every deed in lieu involves "cash for keys," but motivated lenders will often pay borrowers something, typically about $1,000, to vacate by a fixed date and to not vandalize the homes or strip it of fixtures bad credit pay day loans.

Who is this good for?

The borrowers who may benefit most from this program are the ones who would still not be able to repay their mortgages under any reasonable workouts.

These would include delinquent borrowers who are way underwater, owing much more on their mortgages than their homes are worth, people who have lost their jobs with little hope of finding another and ones who have gone through a divorce or another life-changing event.

In those cases, they may be better off cutting their housing expenses by switching to a rental and the cash-for-keys is one more good reason to do so.

Complications

But deed in lieu may not be simple, according to Lawrence Jacobson, a Los Angeles-based real estate attorney.

The least complicated scenario is a borrower with no other debt on the home. In that case, it’s just a matter of the lender taking its lumps and writing off the difference between what it’s owed and what the repossessed home realizes when resold.

If there’s a second mortgage, however, the lender will not allow a deed in lieu unless they get the full cooperation of the holder of the second mortgage.

"[Giving the deed back to the bank] is a transfer of title," said Jacobson, "and it’s subject to all encumbrances. Lenders will only consider deed in lieu if they’re the only [mortgage holder] or if the second lien-holder is willing to give up its interests. Everyone has to be a party to the transaction."

To help solve that issue, Treasury will also make incentive payments to second mortgage holders, up to $1,000, if they give up all claims. 

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The survival of Chrysler as an independent company is looking increasingly unlikely.

The fundamentals of its business structure - unappealing passenger cars, dismal quality, little technology, minimal international operations - are scary enough. Meanwhile, continuous rounds of layoffs have hollowed out the company, starving it of the basic resources it needs to engineer, manufacture and market automobiles.

One executive described Chrysler as looking like an imposing castle from the outside, but actually being empty once you got beyond the front door.

Now debt-holders are balking at government demands to take a haircut, car sales show no signs of improving, and the government’s May 1 deadline for demonstrating viability is fast approaching. Having escaped bankruptcy in the late ’70s and again in the early ’90s, Chrysler appears to have run out of options.

Fiat, once held out as Chrysler’s last hope, no longer needs to go through the trouble of a formal takeover. It could easily cherry-pick the company’s assets in a liquidation. It would cost the Italian automaker a few bucks more, but it would be a lot cheaper in the long run.

So what happened to Chrysler?

While General Motors has been on a slippery slope for 40 years, the roots of Chrysler’s decline are more recent. At the time of its merger with Daimler in 1998, it was the hottest company in Detroit.

With its dream team of engineers, designers, and marketers, Chrysler had created a high-profit lineup of minivans, pickup trucks and Jeeps. At one point, its CEO, Robert J. Eaton, was fantasizing about 20% market share and 8% profit margins. Mixing in Daimler’s technical resources, global reach, and the always-tantalizing benefits of synergy should have created a Chrysler recipe for success.

But the Germans hamstrung their new American unit more than they helped it. Their formal business structure clashed with Chrysler’s more freewheeling ways and promised resources took a long time to make their way from Stuttgart to Auburn Hills.

And Chrysler made plenty of mistakes on its own. The dream team disbanded, engineering costs skyrocketed and an ill-conceived efficiency program hurt vehicle quality and customer appeal.

In retrospect, the fatal blow was struck when then-CEO Dieter Zetsche tried to stretch the product development budget by churning out more new models with less money. It sounded like black magic — and as it turned out — it was no teletrack payday loan.

What Chrysler produced were half a dozen derivative models with eye-catching but cheesy styling, bargain-basement interiors and the worst quality in Detroit. Customers caught on quickly. This year, sales of many models are just one-third of what they were just a year ago:

– 3,186 copies of the square-cornered Jeep Commander, derided as the box that the smaller Grand Cherokee came in, sold in the first quarter, compared with 9,648 a year ago.

– The smaller, clunkier and even more angular Jeep Compass performed even more poorly, with 3,147 sold in the first quarter versus 10,400 in the same 2008 period.

– Looking like an extra from a "Transformers" movie, the Jeep-based Dodge Nitro has lit very few fires. Exactly 5,218 have found buyers this year, as against 15,355 last year.

A special place in the Chrysler Hall of Shame should be reserved for the executive who green-lighted the Sebring sedan. Designed to compete against the Toyota Camry and the Honda Accord, the Sebring became a total flop in the midsize segment by trying to combine the virtues of a higher "command seating" position with traditional four door styling. The awkward design satisfied no one. Chrysler managed to sell 30,411 Sebrings in the first three months of last year but just 5, 636 this year.

Instead of 20% market share, Chrysler has notched just 11.2% of U.S. sales in 2009. And of course its profit margin is less than zero.

With that kind of product lineup, why would Fiat want to rush in to save the company? The redesigned Jeep Grand Cherokee looks promising, but its arrival in dealer showrooms is many months away. A new Chrysler 300C is on the way, too, but its day may have come and gone. Designs that really turn heads rarely have legs.

Fiat would be far better off bidding for Chrysler’s viable pieces after the lights are turned off: the Jeep Grand Cherokee and Wrangler; Chrysler and Dodge minivans, and Dodge trucks.

After it buys the cars and trucks, it may want to acquire the valuable Saturn network from General Motors to have some dealers through which to sell them. And then Chrysler can join American Motors, Studebaker-Packard and all the other departed in the automotive graveyard. 

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Canadian realtors are anxiously waiting to see if the key spring market will show signs of a thaw in property sales.

But with vendors ready to list their homes in warmer weather, the Canadian Real Estate Association reported yesterday that existing sales in Canada fell 31 per cent in February compared with a year earlier, the smallest year-over-year decline since last October.

"It looks like the Category 5 hurricane which had been pounding the home resale market has been downgraded to `just’ a Category 4," BMO Capital Markets deputy chief economist Doug Porter stated in a note.

On a seasonally adjusted basis, sales increased 8.6 per cent in February compared with January, the first monthly increase since last September and enough to elicit a cautious burst of optimism from some analysts.

"The Canadian housing market sprung to life in February," says Millan Mulraine, an economics strategist with TD Securities.

It’s too early to determine whether the momentum will last, since an unusually cold January may have repressed sales.

"Typically the spring market we’re moving into generates more activity," CREA president Calvin Lindberg said.

The national average home price was $281,972, down 9.2 per cent compared with February 2008.

Windsor, which posted the highest jobless rate in the country last month at 12 creditreport.6 per cent, recorded the biggest drop, down 15.7 per cent year over year, followed by Vancouver, down 13 per cent, and Calgary, down 10.8 per cent.

The Toronto area fared relatively well in February, with an average resale price of $361,305, down 5 per cent from a year earlier.

"Consumer confidence will continue to be depressed from the barrage of negative economic news in the months ahead," said CREA chief economist Gregory Klump. "Heightened job insecurity will keep many buyers on the sidelines."

Listings, meanwhile, remain high but have trended down 10.9 per cent compared with a year earlier as some buyers have decided to take their homes off the market.

"Even with a moderate improvement in February home sales from the exceedingly weak levels at the turn of the year, it’s still a clear-cut buyer’s market in most regions of the country, and that doesn’t look likely to change anytime soon," Porter said.

Globally, Canada ranked 32nd in house price appreciation in the fourth quarter of last year, according to a report by London-based Knight Frank.

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Acquisitions and higher trading revenues boosted Scotiabank’s profits in its latest quarter, even as the bank set aside more money to account for bad loans.

Scotiabank posted net profit of $842 million for the three months ended Jan. 31, 2009, up 1 per cent from $835 million in the year-earlier period. Earnings per share were 80 cents, down from 82 cents the year before.

"All three of our business lines delivered revenue growth through increases in volumes, net interest and other income. The business lines benefitted from broadly diversified revenues and a strong focus on risk and expense management," Scotiabank president and chief executive Rick Waugh said in a release.

The bank’s dividend was unchanged at 49 cents per common share.

Total revenues were $3.42 billion, up 16 per cent from the year-earlier quarter.

"This quarter’s revenues were buoyed by strong capital markets results, including record precious metals and fixed income trading, along with higher credit and underwriting fees," the bank said.

Net income on the Canadian banking side were $438 million, up 18 per cent from the year-ago period. Revenues from domestic operations rose 15 per cent to $192 million, primarily from an increase in mortgage and business lending auto loans for people with bad credit.

"Loan losses have been manageable, but rose as expected in both the retail and commercial portfolios compared to the same period last year due to deteriorating economic conditions," the bank said.

International banking revenues were $1.42 billion, due mainly to acquisitions Chile, Peru, and Central America. Net profits were $388 million.

International deposits and loans were also strong, particularly in Peru and Chile, but revenues also took a hit from rising provisions for bad loans in Latin America.

Scotia Capital’s net income was $300 million, on revenues of $704 million.

Provisions for loan losses rose to $281 million in the quarter. That’s up from $207 million in the fourth-quarter of 2008, and $111 million for the three months ended Jan. 31, 2008. The increase came primarily from the bank’s retail lending side.

The bank said that net impaired loans rose to $1.6 billion, up from $689 million in the year-earlier period, and up from $1.2 billion in the previous quarter.

Scotiabank will hold its annual meeting this morning in Halifax.

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