Finance Blog number 1

The number of people applying for U.S. unemployment benefits ticked down last week after dropping sharply the previous week, evidence hiring could pick up this month.

Weekly applications dropped 1,000 to a seasonally adjusted 367,000 in the week ending May 5, the Labor Department said Thursday. The previous week’s figure was revised up slightly.

The four-week average, a less volatile measure, fell 5,250 to 379,000.

Applications are a measure of the pace of layoffs. When they stay consistently below 375,000, it suggests job growth is strong enough to lower the unemployment rate.

Applications are falling again after rising for most of April. The spike in applications coincided with weaker hiring in March and April. That raised fears that the job market is sputtering after a strong winter.

From December through February, employers had created an average 252,000 jobs a month. That was the best three months of job growth since the recession ended in June 2009, not counting months thrown off by the hiring of temporary census workers in 2010.

The unemployment rate has dropped a full percentage point since August _ to 8.1 percent in April.

The recent jobs picture has been clouded by an unseasonably warm winter. That allowed construction firms and other companies to hire earlier than usual, effectively stealing jobs from the spring. Economists are puzzling out how much of the slower hiring in March and April was weather-related payback and how much reflects economic weakness.

More than 500,000 Americans have left the work force since February. That’s one reason _ and not a good one _ that unemployment has continued to fall. People who are out of work but not looking for jobs aren’t counted among the unemployed.

The economy grew at a disappointing 2.2 percent from January through March, a rate consistent with less than 110,000 new jobs a month.

There’s still has a long way to go. The United States has regained only about 3.8 million, or 43 percent, of the 8.8 million jobs lost during and immediately after the recession.

The number of people receiving unemployment benefits also dropped. That is partly because extended benefit programs are winding down. More than 6.4 million people received benefits during the week that ended April 21, down nearly 175,000 from the previous week.

The government did release some good news this week: In March, employers advertised 3.74 million job openings, the most since July 2008. The increase in U.S. job openings suggests that weaker hiring gains in March and April could be temporary. It usually takes one to three months for employers to fill openings.

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President Barack Obama is returning to his familiar agenda of righting the U.S. economy and winning a second term, wrapping up three days of Latin American summitry that yielded mixed results and were clouded by a Secret Service scandal.

Domestic issues are immediately on tap, with the Senate scheduled to vote Monday on Obama’s proposal to increase taxes on millionaires. The proposal stands little chance of passing Congress, but Obama has cast it as an election-year theme as he seeks to paint sharp contrasts between himself and his likely Republican challenger, Mitt Romney.

Obama returned to Washington late Sunday with a key free trade deal with Colombia ready to be fully enforced next month and with important face time with Latin American leaders that cannot hurt his diplomatic outreach.

But the weekend trip to Cartagena, Colombia, for the sixth Summit of the Americas also underscored old and new fissures that exist between the United States and its southern neighbors, from the U.S. isolation of Cuba to calls by some Latin American leaders to defang the violent drug cartels by legalizing drugs.

The trip was clouded by unseemly allegations against Secret Service personnel and military service members working on security in Cartagena ahead of Obama’s arrival. Obama, at a press conference in Cartagena, said that if the accusations, proved true “of course I’ll be angry.”

The Secret Service sent 11 agents home and placed them on leave for misconduct as the agency investigates what happened. Five members of the military working with the Secret Service were confined to quarters, pending an investigation into an alleged prostitution scandal.

“I expect that investigation to be thorough, and I expect it to be rigorous,” Obama said. “We are representing the people of the United States, and when we travel to another country, I expect us to observe the highest standards.”

The story could also be kept alive in Congress where at least one Republican committee chairman suggested the scandal may not be an isolated incident.

Obama began moving forward to domestic issues even as he was still wrapping up business in Cartagena. At the news conference, with Colombian President Juan Manuel Santos at his side, Obama mounted a vigorous defense of his tax proposals.

“I want everybody to remember, I’m going to say this repeatedly: This is not an argument about taking from A to give to B. This is not a redistributionist argument that we’re making. We’re making an argument about how do we grow the economy so that it’s going to be prospering in this competitive 21st century environment,” Obama said.

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ST. CHARLES • The former president of US Fidelis, once one of the nation’s largest sellers of auto service contracts, admitted in court here Thursday that he bilked consumers and looted his own company of millions of dollars.

Darain Atkinson pleaded guilty to state charges of insurance fraud, stealing and unlawful merchandising practices. It was part of a deal negotiated without the knowledge of his co-defendant and brother, Cory Atkinson, the latter’s lawyers said.

After that agreement in St. Charles County Circuit Court was announced, federal prosecutors in St. Louis unsealed an indictment accusing both men of defrauding consumers, failing to pay taxes and using more than $71 million from the company to fund a lavish lifestyle of luxury boats, cars and mansions here and overseas.

Prosecutors recommended a sentence of eight years for Darain Atkinson on the state charges. Sentencing was set for July 16, but won’t happen until after the federal case is resolved, his attorney, Scott Rosenblum, said in court.

Later, Rosenblum said the prison term and any penalty in the federal case likely would run concurrently, resulting in no more than eight years total.

It marked one more step in a dramatic fall for the Atkinsons. Just three years ago, the brothers were self-made millionaires with palatial homes, fleets of exotic cars and more than 1,100 employees working at the Wentzville headquarters of the auto service contract company they founded.

Bill Margulis, one of the lawyers representing Cory Atkinson, the former company vice president, reacted to the plea agreement by saying, “Whatever allegations in there pertain to Cory, Cory denies.” Margulis declined to comment on the tax charges, saying another lawyer was handling those.

Asked about Darain Atkinson’s motivation to plead guilty, Margulis responded, “I can only speculate that he made a decision … that eight years was a lot better than whatever the alternative might be.”

Lawyers on both sides said that Darain Atkinson did not agree to testify against his brother or provide information against him.

Cory Atkinson’s state case is pending, with a trial set for September.

Darain Atkinson has prior convictions — in 1986 for theft, burglary and forgery, and in 1987 for making counterfeit federal reserve notes. Cory Atkinson has a 1987 felony conviction for trespassing.

As part of Thursday’s plea, 11 state charges against Darain Atkinson were dropped.

“He’s done everything he can not only to accept his responsibility, he’s surrendered everything he’s owned to make things good,” said Rosenblum.

Appearing in court in a black suit, blue shirt and striped tie, Darain Atkinson provided polite and brief answers Thursday to questions from Circuit Judge Jon Cunningham and attorneys. He remained free on bail and walked away from the courthouse without speaking to reporters.

The federal indictment makes many of the same allegations outlined in Darain Atkinson’s plea, using similar language.

It also accuses both brothers of failing to declare or pay taxes on more than $40 million received from the company for the tax years 2006 and 2007. On his 2007 tax return, Darain Atkinson reported $73,378 in taxable income when he’d received $8.1 million from Fidelis, the indictment says. That return was the only one for those years on which either brother reported a positive taxable income, it says.

The federal charges also say the brothers’ lavish spending drained an escrow account that was supposed to pay taxes.

Fidelis was a broker for service contracts that promised financial protection for drivers after their vehicles’ original warranties expired. It also sold product warranties, coverage conditioned upon the purchase and use of certain auto additives.

In his plea, Darain Atkins admitted that the profit was often more than $1,200 on a contract typically priced at more than $2,000.

The company used deceptive and misleading direct mail and telemarketing campaigns designed to fool consumers into thinking they were talking to dealers or auto manufacturers, and portrayed service contracts as more comprehensive than they actually were, the plea says.

Unhappy customers canceled, sometimes at a rate as high as 60 percent.

When they did, Darain Atkinson told Fidelis staffers to arbitrarily withhold 10 to 40 percent of their money — and Cory Atkinson knew the full amounts of refunds were not being returned, the plea says.

The Atkinsons funneled millions of dollars into multi-million dollar homes in St. Charles County and elsewhere in Missouri as well as Lake Tahoe and the Cayman Islands.

Although it is not mentioned in the plea, the company paid almost $27 million to buy land and build Darain Atkinson’s Lake Saint Louis home, which featured a observation tower, bowling alley, beauty salon, a two-story walk-in closet, safe rooms, and secret doors and passageways.

Cory Atkinson’s Wentzville manse was valued at $10 million.

The founders’ spending and the customer cancellations put a strain on the company’s cash flow, and Fidelis was forced to rely on cash from new sales, the plea says. The company collapsed in 2009.

Last month, in a proposed settlement filed in bankruptcy court in St. Louis, the company agreed to pay $1.45 million to 556 former employees.

Missouri Attorney General Chris Koster, who represented the state in Thursday’s case, said after the hearing that since the Atkinson indictment in June, his office has received fewer complaints about other vehicle service contract providers.

“I think the indictment of US Fidelis sent a shock wave through this industry,” he said.

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PepsiCo Inc. revamped its management structure Monday in a move intended to strengthen its lineup of potential successors to CEO Indra Nooyi and leverage its scale as a global company.

The management restructuring puts John Compton, who heads the company’s Americas foods division, in charge of all the company’s global groups in the newly created role of president.

PepsiCo said Compton will also work with its regional groups for Europe, Asia, the Middle East and Africa to build brands, develop new products and cut costs. Compton, who is 52, started his career with PepsiCo when he was 22 and has been there ever since.

Brian Cornell, who was president and CEO of Wal-Mart Stores Inc.’s Sam’s Club division, will take over for Compton as CEO of PepsiCo Americas Foods. The unit includes the Purchase, N.Y.-based company’s Frito-Lay and Quaker foods and snacks businesses.

Cornell, who is 50, previously held management positions at Pepsi, including president of its Tropicana brand and its Europe and Africa beverage businesses, before leaving the company in 2004.

PepsiCo said the appointments are effective immediately.

John Sicher, editor of Beverage Digest, said the appointments were in line with PepsiCo’s focus on transforming into a more international company like its rival The Coca-Cola Co.

“They want to extract all the benefits they can from being as big and global a company as they are,” Sicher said.

The focus on international markets has become increasingly critical for beverage and snack food companies, given the flat growth at home in recent years.

PepsiCo in the past few years even created three new groups _ global beverages, global snacks and global nutrition. The company said the heads of each of those groups will now report to Compton.

The new management structure comes as PepsiCo, the nation’s No. 2 cola company, has lost ground in recent years to Coca-Cola and faced speculation that Nooyi would step down amid investor dissatisfaction.

In a note to investors, Stifel, Nicolaus & Co. analyst Mark Swartzberg said he considered the appointments positive for the company’s long-term fundamentals. Although he said he no inside knowledge of the situation, he said it was a “reasonable outcome” that Nooyi would soon leave her post as CEO, paving the way for Compton or another senior PepsiCo executive.

At its annual investor meeting last month, PepsiCo said it plans to focus on regaining market share in North America by rolling out new products and significantly boosting its ad spending. The company also said it would cut 8,700 jobs, or about 3 percent of its work force.

While PepsiCo is clearly focused on identifying its business fundamentals and identifying ways to strengthen its advantages, Citi analyst Wendy Nicholson also noted last month that it would be “a mistake to underestimate the chaos factor” at PepsiCo.

She cited the high level of turnover during the past year, including the company’s announcement that Massimo d’Amore, the president of its global beverages group, would retire early next year.

“While we believe change is good, especially for an organization that has underperformed, we also wonder how much more shifting of responsibilities is yet to come,” she wrote.

Shares of PepsiCo gained 32 cents to $63.47 in morning trading.

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U.K. house prices held their value for a second month in February, boosted by a seasonal increase in demand and a rush to beat the expiration of a property-tax exemption, Hometrack Ltd. said.

The average cost of a home in England and Wales was unchanged from January and 1.4 percent lower than a year earlier, the London-based property research company said in a report today. The number of potential buyers registering with estate agents rose 18 percent over the month, the largest gain for five years.

The figures partly reflect people looking to take advantage of a two-year stamp-duty exemption for first-time buyers purchasing a home for less than 250,000 pounds ($396,000) before it ends next month. Hometrack said the supply-demand balance suggests property prices will resume their decline in the coming months as banks restrict lending and Britons are squeezed by government budget cuts and rising unemployment.

Stocks fell in morning trading Tuesday as investors once again turned their eyes to Greece, where talks dragged on over terms of new spending cuts.

The Dow Jones industrial average lost 44 points to 12,800 shortly after 10 a.m. Eastern. The Standard & Poor’s 500 gave up 5 points to 1,339. The Nasdaq composite fell 10 points to 2,891.

Investors are monitoring talks in Athens over new cost-cutting measures being demanded by Greece’s lenders. They’re worried that the measures may not get passed in time to release the latest installment of emergency loans for the struggling country.

Markets in Europe and Asia also fell.

In the U.S., these stocks were among those making big moves:

_ Yum Brands, which owns Taco Bell and KFC, jumped 4 percent. The company’s income surged 30 percent in the fourth quarter on strong growth overseas and a turnaround in its Pizza Hut business in the U.S.

_ Emerson Electric Co. lost 4 percent after the manufacturing and technology company said its first-quarter net income fell 23 percent as costs rose and sales took a hit from flooding in Thailand.

_ Becton, Dickinson & Co., a medical technology company, fell 4 percent. The company’s income fell 17 percent in the latest quarter on higher costs for raw materials and other expenses. The company also cut its 2012 earnings forecast.

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(Corrects number of electoral votes in next to last paragraph. For more campaign news, see ELECT)

President Barack Obama called yesterday

Italy had to pay sharply higher borrowing rates to entice investors to part with their cash during a couple of auctions Friday, in an acute sign that Europe’s crippling debt crisis is laying siege to the eurozone’s third-largest economy.

The auction results are another sign that the country’s new technocratic government, faces a big battle to convince that it has a strategy to get a grip on the country’s massive debts.

The country had to pay an average yield of 7.814 percent to raise euro2 billion in two-year bills. That rate was sharply higher on the 4.628 percent it had to pay in the previous auction and represented a new high since the creation of the euro in 1999.

And even raising euro8 billion for six months proved exorbitantly expensive. The yield for this auction spiked to 6.504 percent, nearly double the 3.535 percent rate in the last equivalent auction no faxing payday loans.

Following the grim news on the auction front, the country’s borrowing rates in the markets sky-rocketed, with the ten-year yield spiking 0.34 percentage point to 7.30 percent _ above the 7 percent threshold that is widely-considered unsustainable in the long-run and eventually proved the point at which Greece, Ireland and Portugal had to seek financial bailouts.

The renewed rise is likely to renew tensions over Italy’s debts, which stand at euro1.9 trillion ($2.6 trillion), or a huge 120 percent of economic output. Europe’s current anti-crisis measures are too not big enough to deal with Italy’s debt mountain.

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The number of Americans who signed contracts to buy homes fell for the third straight month in September after the spring-and-summer peak buying season failed to entice new buyers.

The National Association of Realtors says its index of sales agreements fell 4.6 percent last month to a reading of 84.5.

A reading of 100 is considered healthy. The last time the index reached that high was in April 2010, the final month that buyers could qualify for a federal tax credit that has since expired cash advance no fax.

Contract signings are usually a reliable indicator of where the housing market is headed. There’s typically a one- to two-month lag between a contract and a completed deal.

But the Realtors group said a growing number of buyers have canceled contracts.

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