European inflation slowed less than economists forecast in March as rising energy costs countered the effects of a cooling economy.
The inflation rate in the 17-nation euro region fell to 2.6 percent from 2.7 percent in February, the European Union
Just in time for the hockey playoffs, Scotiabank has launcheda loyalty credit card that allows fans to get discounts on regular season tickets,NHL merchandise and offers a choice of team logo on the card.
The ScotiaHockey NHL VISA card was introduced this week and comes with a $29 annual fee and 19.99 per cent interest on outstanding monthly balances. It gives diehards
Polish central bank Governor Marek Belka signaled he
Dubai port operator DP World says it will pay off $3 billion of debt months before it becomes due.
The world’s third biggest port operator said Monday it will pay off the balance outstanding on its revolving credit facility using cash it has on hand.
It expects to pay back the debt, which was due in October, in early April. The company says it will still have $1.2 billion in cash reserves afterward.
DP World is a division of Dubai’s troubled Dubai World conglomerate, but was excluded from its parent’s highly publicized debt restructuring payday loans. It manages more than 60 sea cargo terminals on six continents, including the Middle East’s busiest in Dubai.
The Federal Reserve should be wary about “over-committing” to an ultra-easy monetary policy that has served the economy well in recent years but could be detrimental eventually, a top Fed official said on Friday.
“Some of the further actions that could be undertaken at this juncture would have effects far into the future, in an environment of continual improvement and repair for the U.S. economy,” St. Louis Fed President James Bullard said in remarks prepared for delivery at the Credit Suisse Asian Investment Conference in Hong Kong.
“Overcommitting to the ultra-easy policy could well have detrimental consequences for the U.S. and, by extension, the global economy.”
Bullard said rates may need to rise in late 2013, rather than in the following year as the Fed’s policy-setting committee has said. He is not a voting member of the committee this year, but he takes part in the central bank’s rate-setting meetings.
The Fed has kept rates near zero since December 2008, and has bought $2.3 trillion in bonds to stimulate growth. At its March meeting, the Fed reiterated its view that lackluster growth will require keeping rates near zero through late 2014.
The Fed’s current pause in policy is a good time to take stock of whether it is at a “turning point,” Bullard said.
Rising oil prices have heightened concerns about both inflation and growth, but Bullard said it would probably take gasoline prices of more than $5 per gallon to cause a significant U.S. economic shock. Consumers already went through a severe oil price spike in 2008, and a re-run of that would probably have more limited impact on buying behavior, he said.
“So what I think is, we have to have gas prices at the pump go up to $5 a gallon before we can get the kind of energy shock (that causes a change in) behavior in the U.S.,” Bullard said. “There are a lot of cross-currents in the gas situation, so we’ll see what happens.”
The average U.S. retail price was $3.84 per gallon in the week to March 16, according to MasterCard’s weekly Spending Pulse report.
BRIDGING THE GAP
Bullard, seen as a policy centrist, expects the U.S. economy to grow at about 3 percent this year, hardly high growth but potentially fast enough to keep trimming unemployment, he said. U no faxing payday loans.S. unemployment stood at 8.3 percent in January.
Meanwhile, inflation in the U.S. has risen despite less-than-stellar economic growth, he said, suggesting that the Fed may not have as much leeway to ease without sparking unwanted price rises as many may think.
“The hard-learned lesson of the 1970s was that if the inflation genie is let out of the bottle, it can be extremely difficult to get it back into the bottle,” Bullard said.
Analysts who calculate the United States is operating well below its potential output — and therefore that the economy has plenty of room to run before inflation kicks in — may not be taking the bursting of the housing bubble into account, he said.
Filtering out the effects of the bubble, he said, “suggests that the U.S. output gap today is much smaller than commonly believed.”
AVAILABLE HEADROOM?
Advocates of policy easing point to forecasts within the Fed that inflation will fall below the central bank’s 2 percent goal in coming years, giving headroom for pushing borrowing costs lower to boost jobs.
More stimulus is needed, say policy doves such as Chicago Fed Bank President Charles Evans, because the economy is not growing at a fast enough clip on its own to reduce uncomfortably high unemployment.
Not so, Bullard countered in Hong Kong on Friday.
The relationship between unemployment and GDP growth is clear during downturns, but muddled during expansions, he said.
“This might suggest that the nation does not need rapid growth to see a reduction in unemployment â it only needs to see some positive growth,” he said.
Fed Chairman Ben Bernanke and other policymakers have held the door open for the possibility of further Fed easing.
But analysts now see a third round of bond purchases, or quantitative easing, as less likely given recent improvement in the economic backdrop, especially in the job market. Bullard himself said he saw no need for further bond buying unless the economy and the inflation outlook deteriorate significantly.
Traders are betting the Fed will begin to raise rates by July 2013, more than a year earlier than it currently projects.
FedEx says the global economy isn’t growing as strongly as expected and customers are reacting by choosing cheaper means of shipping packages.
The world’s second-largest package delivery company is predicting a slower pace of growth this year for the U.S. and abroad than most economists.
Chief Financial Officer Alan Graf said the current economic environment and higher fuel prices are driving more customers to “trade down” or choose slower methods of shipping to save money, just like they did during the recession.
Its stock, which is close to a year-high, fell about 3 percent.
The comments on a conference call with analysts overshadowed a strong third quarter driven by holiday sales. Online holiday sales helped drive FedEx’s profit between December and February to more than double what it was a year earlier.
Higher prices from rate increases and surcharges that cover the rising cost also drove results. That was most notable in the ground segment that delivers packages by truck to consumers and businesses.
In its fiscal third quarter, FedEx earned $521 million or $1.65 per share, compared with $231 million, or 73 cents per share, a year earlier.
The company had record holiday package shipments. FedEx gains when more people shop online for the holidays. It also benefits when recipients return those ill-fitting sweaters or unwanted presents.
Excluding one-time items, FedEx earned $1.55 per share compared with 81 cents per share a year ago. The results beat both analysts’ and the company’s own expectations pay day loans.
Revenue rose 9 percent to $10.56 billion.
Sales at FedEx’s express segment, its largest, rose 8 percent to $6.54 billion. That was mostly due to higher prices and heavier packages in the U.S.
FedEx’s ground segment results were boosted by its home delivery services, which include directing packages between residential customers and major retailers. The segment’s revenue growth of 14 percent was the most at any of FedEx’s businesses.
The company’s freight segment reported a fourth straight profitable quarter. It ships bigger items like refrigerators and cars and was hardest hit during the recession. Its revenue rose 10 percent in the latest quarter.
FedEx narrowed its forecast for the fiscal year ending in May. It now expects to earn $6.43 to $6.68 per share compared with between $6.25 and $6.75 per share previously. Analysts, on average, predict $6.39.
FedEx Chairman and CEO Fred Smith declined to comment on rival UPS’ planned $6.77 billion purchase of Dutch parcel TNT Express. But he inferred his company won’t make a competing bid.
“I’m extremely pleased with our operations (in Europe) and we feel confident in our plans to continue the expansion through organic growth,” he said.
The Obama administration on Tuesday granted exemptions from U.S. economic sanctions to 10 European Union countries and Japan because they have significantly reduced their purchases of petroleum from Iran.
Secretary of State Hillary Rodham Clinton gave the waivers to Belgium, Britain, the Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland, Spain and Japan, meaning that banks and other financial institutions based there will not be hit with penalties under U.S. law for 180 days.
President Barack Obama has until March 30 to determine whether oil prices and supplies are sufficient enough to levy sanctions later this year on countries that still buy oil from Iran. Pending that decision, another 12 nations _ including India, China and South Korea _ that are deemed to be major importers of Iranian oil have until the end of July to take similar steps or face sanctions.
In a statement, Clinton lauded the countries granted exemptions, noting that the actions they had taken to reduce their imports from Iran “were not easy.”
“They had to rethink their energy needs at a critical time for the world economy and quickly begin to find alternatives to Iranian oil, which many had been reliant on for their energy needs,” she said. “We commend these countries for their actions and urge other nations that import oil from Iran to follow their example.”
Clinton singled out Japan for praise, noting that it had acted despite severe energy constraints brought about by last year’s earthquake and tsunami. Japan has reduced its imports by between 15 percent and 22 percent by finding other suppliers and focusing on alternative energy sources, according to U.S. officials.
The European nations were already subject to European Union rules requiring them to phase out their imports. Those rules were put in place after the passage of the U.S. sanctions legislation that is designed to further isolate Iran and compel it to comply with U.N. demands to come clean about its nuclear program. The U.S. and its allies accuse Iran of using the program to develop atomic weapons while Iran insists it is to produce nuclear energy.
“The United States is leading an unprecedented international coalition of partners that has brought to bear significant pressure on the Iranian regime to change its course,” Clinton said. “Diplomacy coupled with strong pressure can achieve the long-term solutions we seek and we will continue to work with our international partners to increase the pressure on Iran to meet its international obligations.”
Sen. Bob Menendez, D-N.J., who co-authored the sanctions legislation designed to thwart Iran’s suspected nuclear weapons program with Republican Sen. Mark Kirk of Illinois, said in a statement that he supported the secretary’s decision.
“The sanctions are working _ many countries and companies have stepped up in recognition of the real threat that Iran poses to its neighbors and the global community and are terminating business relations with Iran,” he said. “For the first time we are seeing a real impact on the Iranian economy.”
“I think our message to Iran is clear and time will tell what they value more, their nuclear program or the political and economic stability of their state,” Menedez said.
The bond market has repeatedly resisted threats to its three-decade rally, but a big selloff this week may be an early sign that the bull market in Treasuries is truly coming to a end.
The biggest weekly decline in prices since last summer, which pushed yields to their highest level in more than four months, has caught banks, bond dealers, pension funds and other investors flat-footed.
The rout prompted investment bank UBS to declare the start of a long bear market and even prominent investor, and one-time bond bull, Jeffrey Gundlach says yields will rise further.
What has investors questioning the bond market’s ability to sustain super-low bond yields is the steady improvement in U.S. economic data that has buoyed the stock market to four-year highs. It means the flight to safety that has underpinned capital flows to U.S. debt in recent months may be eroding.
“There appears to be an asset allocation shift out of Treasuries and into risk assets that includes equities,” Tom Sowanick, chief investment officer at OmniVest Group LLC in Princeton, New Jersey, said on Friday.
News that a majority of banks passed the Federal Reserve’s stress test is another reason for investors to gain confidence to take more risks. “Banks now have been given a green light from the Federal Reserve to return capital to shareholders. This is positive,” Sowanick said.
Treasuries are the worst performing U.S. bonds so far this year. Barclays Capital’s Treasury total return index was down 1.68 percent after a stellar 9.81 percent gain in 2011.
As Treasuries prices drop, yields go up.
“We are seeing some shifts in the market’s expectations and in the past three days they have happened very quickly. My expectation is that interest rates will modestly increase during the course of the year,” said Jeffrey Rosenberg, chief fixed-income strategist at BlackRock in New York, which oversees $1.3 trillion in fixed income assets.
The Fed’s modest upgrade of its view of the U.S. economy and a temporary reprieve of Greece’s debt woe unleashed a stampede from the Treasuries market, sending benchmark yields to their highest levels since late October.
Volume in popular exchange-traded funds that track long-dated bond market indexes shot up earlier this week as investors pulled back from long positions in those instruments and instead bought ETFs that go short - or bet against - long Treasury debt.
On Wednesday, the biggest day of the rout, 24.5 million shares in iShares Barclays 20+ Year Treasury Bond Fund traded, the heaviest day of trading since mid-September.
“We believe a long-term bear market has commenced,” UBS’s asset allocation team said on Friday.
The steady drumbeat of solid economic figures has surpassed expectations and improvement in the long-suffering labor market has been particularly encouraging to investors.
U.S. equity funds had $9.05 billion in inflows, up from redemptions of $5.73 billion the previous week, and outpacing this week’s U.S. bond inflows of $5.29 billion, according to data from EPFR Global released on Friday.
In contrast to the bond market, the S&P 500 .SPX closed out its best week in three months on Friday.
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ANOTHER HEAD FAKE
But reports of bonds’ demise have frequently been exaggerated and could be wrong for a third straight year.
Veteran bond investor Jeffrey Gundlach, who runs $30 billion at DoubleLine Capital in Los Angeles, said yields could rise further but the 10-year yield would have trouble holding much above 3 percent because that level would hurt the economy.
“Now that Treasuries have broken out to higher yields after six months of mind-numbingly low volatility, it is logical to expect the move to higher rates to last more than one week,” Gundlach said. “The way things look today I think a move toward 3.25 percent would weaken the economy noticeably.” Greece’s debt restructuring has reduced risks of a wider euro zone bank crisis, but European leaders are still far apart in coming up with long-term solutions to the region’s festering fiscal problems. Potential for problems in Spain, Ireland or Portugal, could still dash investor optimism.
At 8.3 percent, the U.S. unemployment rate remains high, which will limit economic growth. This means another round of massive Fed stimulus cannot be ruled out, which would support bonds since its previous efforts have focused on buying debt.
A good portion of investors seem to be taking a wait-and-see approach rather than jumping on the bond bears’ bandwagon.
“Right now in terms of flows we don’t seem to be seeing much reaction to the recent move in Treasuries, though that could come later,” said Kenneth Volpert, head of the taxable bond group at Vanguard in Valley Forge, Pennsylvania, which oversees about $560 billion in bond assets.
“But there’s definitely a good deal of volatility that investors will realize, and there could be potentially negative returns associated with rising rates,” Volpert said.
Indeed, the Fed has bought $2.3 trillion in bonds in the aftermath of the 2007-2009 global financial crisis to get the economy going. It might be reluctant to see its efforts undone by bond market disturbances.
This doesn’t mean yields won’t rise, but it should be viewed in the context of historically low yields.
BlackRock’s Rosenberg said he expects the 10-year yield to test the 3 percent threshold this year, but a massive rise on the order of 3 to 5 percentage points is unlikely because economic conditions are still fragile.
“It is a bear market because we are talking about rising interest rates,” Rosenberg said. ”But let’s scale it so we know the size of the bear market we are talking about.”
Think of it as Media Convergence III. And maybe this will be third time lucky for the dwindling number of conglomerates in a rapidly consolidating media industry.
With its announced purchase of Astral Media Inc. on Friday, BCE Inc. has solidified its status as Canada
Long lines snaking around Apple stores today
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