Finance Blog number 1

The world’s car makers sought to look past economic worries in Europe and the United States at the Frankfurt auto show on Tuesday, with many betting on cleaner, smaller, high-mileage vehicles aimed at evolving consumer tastes.

The industry, which suffered through the recession caused by the 2007-2009 financial crisis, has been riding the global recovery but now is looking at shakier prospects amid Europe’s debt crisis and worries about the U.S. economy.

Some executives want a firmer response from Europe on its government debt woes. Fiat and Chrysler CEO Sergio Marchionne urged German Chancellor Angela Merkel, who opens the show to the public Thursday, to step up efforts to solve the crisis.

“I think she needs to be part of a permanent solution to this problem,” Marchione told The Associated Press on the sidelines of a Fiat presentation, referring to the leader of the European Union’s economic engine. “She needs to force a fundamental change in the system.”

Fears of possible government debt defaults, starting from bailed-out Greece, are threatening to engulf Fiat’s key market of Italy and are sapping consumer confidence: auto sales there are forecast at around 1.8 million this year, the lowest level since 1983.

Still, this year’s 64th International Motor Show is more cheerful than its 2009 predecessor, which took place during the recession. Organizers say 1,007 exhibitors have signed up _ up from 781 last time, and German car makers including BMW, Daimler, Volkswagen and Porsche have put up strong recent profits _ thanks in part to rising sales in fast-growing emerging markets.

The confidence of the home carmakers showed in a lavish display of Daimler’s Mercedes-Benz and Smart lines, with CEO Dieter Zetsche speaking in front of a giant screen flashing high-resolution video graphics and accompanied by a thunderous sound system. Zetsche said that no matter the “turbulence on the Frankfurt stock exhange” in recent days, “all lights are green” at the company.

VW luxury brand Audi is splashing out for its own test track that winds in and out of the exhibit building.

“People are talking too much about crisis,” said Rupert Stadler, Audi’s chief executive who predicts, for example, double-digit growth for its U.S. sales this year pay day advance. “It’s always possible to complain.”

Journalists and industry executives were getting a sneak peak on Tuesday and Wednesday of the show at Frankfurt Messe exhibition center. It runs from its open to the public Thursday through Sept. 25.

Lighter material, electric-powered engines and tiny, fuel efficient cars styled for city driving are among innovations on display: iconic luxury brand Rolls-Royce presented its electric experimental car, the 102EX, while sports car standout Aston-Martin rolled out its pint-sized Cygnet “commuter” car.

Fiat has a new, slightly longer version of its Panda small car, a mainstay that has sold 6 million since 1980, while Toyota has a new take on its familiar Prius, offering a plug-in hybrid version and a Prius+ seven-seater. Daimler AG’s Smart brand has an electric version of its tiny two-seater.

Ford Motor Co. is unveiling the Evos, a concept car that won’t make it into production but which shows design elements that will appear on Ford’s regular models soon. Those could include the car’s slender, LED headlights.

VW has its new subcompact up, which is only 3.54 meters long and has a new fuel-efficient three-cylinder engine. BMW’s small electric i3 saves weight with high-tech carbon reinforced plastic, or CRP.

“The use of CRP has allowed us to solve the contradiction that electric vehicles _ BEVs _ will have to be distinctly heavier because of the weight of the battery,” said BMW’s development chief, Klaus Draeger, “because CRP is a lightweight yet strong and rigid material.”

As usual, the show isn’t all about small and frugal. At the Porsche stand, journalists and other onlookers pawed the new version of the classic 911 Carrera sports car. The gleaming dark blue display model was quickly covered with fingerprints from people climbing in and out or leaning on it to have their snapshot taken.

A new 911 is priced in Germany at euro88,037 _ including tax _ for the Carrera, euro102,436 for the Carrera S with the bigger engine. U.S. prices start at $82,100 and $96,400.

___

Online:

http://www.iaa.de/en/visitors/

Source

European Central Bank head Jean-Claude Trichet warned there are increasing risks for the eurozone’s waning economic recovery and less chance of inflation _ clear signals the bank is done raising interest rates for some time.

At a news conference, Trichet offered new, gloomier economic projections after the bank’s 23-member governing council left the benchmark refinancing rate unchanged at 1.5 percent.

Pressure had risen on the bank to freeze its rate hike campaign after a turbulent summer in which worries grew that the 17-nation currency bloc’s debt crisis was hurting consumers and businesses and global growth was stalling.

Trichet said the eurozone economy was expected “to grow moderately” but that that assessment was “subject to particularly high uncertainty and intensified downside risk.”

Meanwhile, the risk of excessive inflation, which he had previously described as leaning to the upside, was now “broadly balance” with an equal chance of inflation below forecasts.

Trichet turned aside questions about whether rates are on hold, saying “we are never pre-committed, and we stand ready to do whatever is necessary.”

But economists say the lower inflation estimate and reduced growth expectations are signs that the bank will not raise rates soon. It controversially raised rates a quarter point in April and July, based on earlier expectations for more inflation and stronger growth.

Shadows over Europe’s recovery have gathered quickly since the bank last made a rate decision on Aug. 4. Indicators of business and consumer optimism have sagged and second quarter growth came in at a bare 0.2 percent. The continent’s debt crisis has led to dizzying ups and down on stock and bond markets, which is now weighing on consumption and production.

The uncertainty over growth also pushed Britain’s Bank of England to leave rates unchanged on Thursday, at a record low of 0.5 percent, although in Britain’s case inflation remains stubbornly high at 4.4 percent.

Eurozone officials are trying to contain a crisis triggered by market concerns that governments cannot handle their high debt loads. Fears of default have raised borrowing rates for financially troubled countries, to the point where Greece, Ireland and Portugal have need bailouts from other eurozone countries and the International Monetary Fund.

With prospects for the economy worsening, some experts even think the bank may have to cut rates if Europe’s debt crisis takes a turn for the worse. Economists at the Royal Bank of Scotland see a 40 percent chance that the bank will have to slash rates by a half percent by the end of this year.

Source

Asia-Pacific markets rebounded in early trading Wednesday, as traders looked past some bleak U.S. jobs data and Europe’s debt crisis to scoop up bargains following a steep selloff of equities.

Japan’s Nikkei 225 index, which on Tuesday fell to its lowest level since April 2009, rose 1.4 percent to 8,714.59. A slightly lower yen helped Japan’s powerhouse export sector recover from the beating it took earlier this week.

Mazda Motor Corp. jumped 3.4 percent, and Sony Corp. gained 2.8 percent. Toyota Motor Corp. rose 2.3 percent.

Markets received further good news when the Australian government said the economy expanded 1.2 percent in the quarter through June, rebounding from a 0.9 percent contraction in the previous three months. Australia’s S&P ASX 200 index gained 1.9 percent at 4,153. New Zealand’s NZX 50 was 0.7 percent higher at 3,294.42.

South Korea’s Kospi clawed back the prior day’s losses to rise 2.4 percent at 1,809.35, with blue chip high-tech stocks among those leading the way. Hynix Semiconductor, the world’s second-largest memory chip maker, soared 7.4 percent. LG Electronics Inc., which ranks No. 2 globally in flat screen televisions, was 5.8 percent higher.

Softening gold prices, which recently have hit all-time highs, caused gold-related shares to decline. Newcrest Mining Ltd., Australia’s top gold miner, lost 1 percent.

A wave of negative sentiment slammed global stock markets last Friday, when a government report said the U instant payday loan.S. economy failed to add any new jobs in August. It was the worst reading on jobs since September 2010.

But signs of growth in the U.S. service sector helped tame concerns about another U.S. recession. The Institute for Supply Management said Tuesday that the service sector grew more than analysts had expected in August.

Growth in that part of the economy, which employs nearly 90 percent of America’s work force, fell the three previous months.

The Dow Jones industrial average fell 0.9 percent to 11,139.30. The Standard and Poor’s 500 index dropped 0.7 percent to 1,165.24. The Nasdaq composite fell 0.2 percent to 2,473.83.

Separately on Tuesday, the Swiss franc dropped sharply after the country’s central bank pegged it against the euro in an attempt to rein in the export-sapping appreciation of the currency.

The franc has been hugely in demand in recent weeks due to its widely perceived status as a safe haven during times of market volatility.

The dollar strengthened to 77.38 yen from 77.67 yen in late trading Tuesday in New York. The euro rose to $1.4027 from $1.3991. It was the first time the euro has fallen below $1.40 since July 13.

Source

Drugmaker Bristol-Myers Squibb Co. said Thursday that its second-quarter profit fell nearly 3 percent due to higher taxes and increased costs for production, marketing and administration. Those were partly offset by a 14 percent jump in sales.

The company, which sells blockbuster blood thinner Plavix, still beat Wall Street expectations, and it increased its earnings-per-share forecast for 2011 by 8 to 10 cents.

New York-based Bristol-Myers said net income was $902 million, or 52 cents per share, down from $927 million, or 53 cents a share, a year earlier. Excluding a total of $69 million in one-time restructuring and licensing charges, it would have made 56 cents per share.

Analysts surveyed by FactSet were expecting, on average, 55 cents per share and revenue of $5.05 billion.

Revenue totaled $5.43 billion, up from $4.77 billion in 2010’s second quarter, on strong increases for most drugs and encouraging initial sales for a new cancer medicine.

“This performance demonstrates the success of our biopharma strategy in delivering short-term results and in positioning the company for the future,” Chief Executive Lamberto Andreotti said in a statement.

The company raised its full-year profit forecast to $2.08 to $2.18 per share, or $2.20 to $2.30 per share excluding one-time items. In January, it gave a forecast of $2 to $2.10 per share, or $2.10 to $2.20 excluding one-time items.

Bristol also confirmed its forecast of $1.95 per share, excluding one-time items, for 2013. That’s the first full year after generic competition starts slashing Plavix revenue.

Andreotti noted the company has had three new products approved in three months: just-launched Yervoy for advanced skin cancer, Nulojix for preventing rejection of transplanted kidneys and Eliquis, an anticlotting drug approved in Europe for preventing dangerous blood clots after knee or hip replacement surgery. Bristol and partner Pfizer Inc. plan to apply for U.S. approval of Eliquis later this year.

Top seller Plavix, which faces generic competition next May, had sales jump by 15 percent to $1.87 billion, and bipolar disorder treatment Abilify rose 12 percent to $706 million. Rheumatoid arthritis drug Orencia, Baraclude for hepatitis B and Sprycel for leukemia were all up by more than 25 percent, for a total of $713 million. Yervoy brought in $95 million.

But blood pressure drugs Avapro and Avalide, hurt by supply problems that have been mostly resolved, saw sales drop 18 percent to $251 million.

The company’s tax rate jumped to 27 percent, from 20.4 percent a year ago, boosting income taxes to $483 million.

For the first six months, Bristol-Myers reported net income of $1.89 billion, or $1.10 per share. That was up 13 percent from $1.67 billion, or 96 cents per share, in the first half of 2010. Revenue was up 9 percent, to $10.45 billion from $9.58 billion.

Source

When I went to college (which wasn’t THAT long ago), it was slim pickings when it came to dorm furnishings, especially trying to locate those elusive twin extra-long sheets.

Not so anymore. From bean bag chairs to funky lamps, many big box stores are now full of merchandise at this time of year aimed at the college-going crowd as retailers have realized that this is a huge untapped market. Or at least it was.

Now one more store to add to some St. Louisans’ college shopping list will be Pottery Barn’s new tween and teen store that will open on Saturday next to Plaza Frontenac. The adjoining 1,300 square-foot PBteen and 6,100 square-foot Pottery Barn Kids stores will be housed in the building formerly occupied by the standalone Williams-Sonoma home store in the parking lot. (Williams-Sonoma is the part of the same company as Pottery Barn.)

PBteen, which sells bedding, lighting, and other home furnishing accessories, has been around as an online store since 2003 — and just went international with its online sales earlier this year. But it only has a handful of bricks-and-mortar stores around the country. The Plaza Frontenac store will be the company’s fourth store in addition to ones in New York, Atlanta, and Chicago. So why did St. Louis get the honor?

“With all of the colleges in the St. Louis area, we think it will be a great place to showcase our PBdorm brand,” Janey Hayes, president of Pottery Barn Kids and PBteen said in an email.

And, of course, it had an existing piece of real estate to fill.

So will PBteen be opening other stores across the country? It looks like St. Louis is it for now. Hayes said the company has no other confirmed plans for expansion.

Source

TORONTO

QUOTE OF THE WEEK

“For (American workers) you have the twin forces of technology, which means that machines can do things that people used to … and (employers can now) make stuff all over the world. You take technology, you take globalization, and for the American worker this is incredibly difficult. If you look at the state of American labor right now, you have 7 million officially unemployed payday loans. But when you add all the people who have stopped looking for work and all the people working in part-time jobs … that pay half the median wage, that’s 24 million people. And those numbers aren’t getting better anytime soon.”

Widespread gains in commodity prices lifted energy and materials companies as part of a broad stock market rally. Stocks built on morning gains after the Federal Reserve released minutes that showed that officials at the central bank agreed that the economy is improving.

Oil gained nearly 4 percent to settle above $100 a barrel Wednesday. That sent energy companies like Chevron and Exxon Mobil Corp up nearly 2 percent.

The Dow Jones industrial average added 81 points, or 0.6 percent, to 12,560. The S&P 500 rose 12, or 0.9 percent, to 1,341. The Nasdaq composite gained 32, or 1.1 percent, to 2,815.

Four stocks rose for every one that fell on the New York Stock Exchange. Consolidated volume came to 3.5 billion shares.

Source

European inflation accelerated to the fastest pace in two and a half years and confidence in the economic outlook declined as surging energy prices threatened to undermine growth.

Inflation in the 17-nation euro region quickened to 2.8 percent in April from 2.7 percent, the European Union’s statistics office in Luxembourg said today in an initial estimate. Economists had expected inflation to remain unchanged, according to the median of 34 forecasts in a Bloomberg News survey. An index of executive and consumer sentiment slipped to 106.2 from 107.3 in March, the sharpest drop since May 2010, and unemployment held at 9.9 percent, separate reports showed.

Crude-oil prices have soared 38 percent in the past six months, pushing inflation above the European Central Bank’s 2 percent limit and prompting policy makers to raise interest rates this month for the first time in almost three years. At the same time, higher raw-material costs are weighing on consumption and company profits, just as governments across the region cut spending to narrow budget deficits.

“The inflation numbers support the view that the ECB will deliver another interest rate hike before long,” said Aline Schuiling, senior economist at ABN Amro Bank NV in Amsterdam. “Growth was exceptionally strong in the first quarter, but will slow from here. The labor market is still very sluggish and paired with inflation that’s not good for purchasing power.”

German Output

The euro was little changed after the data were released, trading at $1.4867 at 11:31 a.m. in Brussels, up 0.2%.

European services and manufacturing growth unexpectedly accelerated in April, driven by higher output in Germany and France, the region’s largest economies. Still, European investor confidence declined as faster inflation and higher interest rates may hurt the recovery. Euro-region growth will slow to 1.6 percent this year from 1.8 percent in 2010, the European Commission forecast last month.

A gauge of sentiment among euro-region manufacturers slipped to 5.8 in April from 6.7 in the previous month, the European Commission said today. Services confidence dropped to 10.4 from 10.8 and an index of consumer confidence eased to minus 11.6 from minus 10.6. Sentiment among builders rose to minus 24.2 from minus 25.4.

Debt Crisis

Capacity utilization rose to 81.3 percent in the second quarter from 80.3 percent in the previous three months, the commission said.

As governments from Ireland to Spain cut spending to contain a sovereign debt crisis, eroding consumer and investment spending, European companies have relied on faster-growing markets to bolster sales. Volkswagen AG (VOW), Europe’s biggest automaker, this week reported record operating profit in the first quarter on stronger demand from China.

Source

The United States, Britain and France are pledging to keep up the military campaign in Libya until leader Moammar Gadhafi leaves.

In a joint declaration, U.S. President Barack Obama, British Prime Minister David Cameron and French President Nicolas Sarkozy say they will not stop the campaign and “remain united” _ despite European complaints about the low-profile U.S. role.

The leaders say that as long as Gadhafi remains in power, NATO and its partners “must keep up their operations” to protect civilians and increase pressure on Gadhafi.

They say Gadhafi must leave “definitively.” If he doesn’t, they warn, his opponents would face vicious reprisals and the country could become a haven for extremists.

Sarkozy’s office released the declaration to The Associated Press late Thursday.

Source