German and French leaders meet this week to map out a revised plan for the euro as the Group of Eight exposed disagreement on a rescue strategy, Greece lurched toward a possible exit and Spain
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Treasuries fell for a second day on speculation record-low yields will curb demand when the U.S. auctions $99 billion of coupon-bearing debt beginning tomorrow.
The government plans to start the sales with $35 billion of two-year notes, followed by the same amount of five-year debt on May 23 and $29 billion of seven-year securities on May 24. Seven-year yields slid to 1.135 percent May 18, the least ever, raising concern U.S. bonds are becoming too costly. German and French finance ministers plan to meet today on the euro, after Europe
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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.
U.K. services, manufacturing and construction probably waned this month as Bank of England policy makers prepare to discuss whether they need to extend stimulus after the economy slipped back into recession.
A gauge of factory activity based on a survey of purchasing managers will fall to 51.5 from 52.1 in March, according to the median estimate of 27 forecasts in a Bloomberg News poll. A reading above 50 indicates expansion. An index of services, the largest part of the economy, will decline to 54.1 from 55.3, while a construction measure will also fall, separate surveys of economists show.
U.K. gross domestic product fell in the first quarter, pushing the economy into its first double-dip recession since the 1970s. While Bank of England officials have said that may hurt confidence, they must balance that risk with the threat from faster-than-targeted inflation at their May 9-10 meeting.
A sexy, award-winning smartphone is going on sale Sunday at half the price of the iPhone, and it’s launching on a blazing fast 4G network.
What’s the catch? Two things: The phone, called the Lumia 900, is made by Nokia — and it’s running Microsoft’s Windows Phone software.
They may be household names, but Microsoft (, Fortune 500) and Nokia () are unproven in the U.S. smartphone space. Nokia hasn’t ever sold a major smartphone in the United States, and it has been almost invisible in the North American market for the past five years.
Meanwhile, Microsoft had a big, expensive, but tepidly received launch of Windows Phone 7 in late 2010. The software giant has actually lost market share since then.
Putting Microsoft and Nokia’s efforts together to create a third major challenger to the iPhone-Android smartphone duopoly is kind of like putting Linux on a Sony () Vaio to take a run at HP (, Fortune 500) and Dell (, Fortune 500). In the United States, Apple (, Fortune 500) and Google (, Fortune 500) control a combined 80% share of the smartphone market, according to comScore. Microsoft has less than 4%.
But if ever there were a time to make a run, it’d probably be now.
The Lumia 900 is a visually dazzling smartphone that’s generating a lot of chatter after it took home the Best of Show award at this year’s Consumer Electronics Show in Las Vegas. Windows Phone has already gone through its first major update to clear away the early bugs and has 77,000 apps in its app store. And Nokia’s phone is compatible with AT&T’s new ultra-fast 4G LTE network, making it the first LTE-capable Windows Phone device.
To top it all off, AT&T (, Fortune 500) is selling the Lumia 900 for just $100.
The iPhone is a nightmare for carriers
"We have a great amount of consumer buzz, so we feel good about our ability to take off in a really big way," said Chris Weber, president of Nokia’s North American business. "But we’ve got to have a great device that is super compelling to do that. We think we have that."
As Microsoft’s Aaron Woodman, the company’s Windows Phone director, put it: "There is an enormous amount of momentum, and now is the time to strike."
The Lumia 900 is not the first Nokia Windows Phone device to launch in the United States no fax payday advance. That was the Lumia 710, an entry-level device that went on sale on T-Mobile’s network in January.
But Nokia’s new Lumia 900 device is the first Windows Phone that stacks up well against the big boys — the iPhones and the Samsung Galaxies of the smartphone world. Nokia’s expensive ad campaign for the phone goes for the jugular, attacking the iPhone’s Antennagate issue, as well as rival smartphones’ fragile cases and poor screen performance in sunlight.
The jabs play to Nokia’s strengths. Cased in a polycarbonate shell, the Lumia 900 lacks any paint — it is blue, black, or white all the way through, making the device appear scratch- and crack-resistant. It feels solid, though at 5.6 ounces it’s a bit on the heavy side. The device’s large, eye-popping screen performs quite well outdoors.
But is that enough to persuade former Android and iPhone customers to switch?
Microsoft thinks they’re ready.
"There is a sense of fatigue with Android, which really makes you do a lot of work — that’s true for Apple as well," Woodman said. "Since we arrived late to the game, that allowed us to solve a lot of problems that people were having with their smartphones."
Microsoft thinks sales will really take off after Windows 8 launches later this year. The company’s reimagined Windows for PCs will look and feel a whole lot like Windows Phone.
Windows 8: It’s a game changer
"A successful Windows 8 and a congruent platform across phone, tablet, PC, TV and cloud is the vision they are going for," said Al Hilwa, analyst at IDC. "That is going to take a few years to execute on."
That means Microsoft will have to be patient — but it’s always been willing to play the long game. It plowed billions into its Xbox division, which was unprofitable for years, and continues to lose billions each year on Bing and its online services.
"The critical question is, ‘Will they be able to ride out short-term failures and moderate successes with the aim of creating a long term viable third ecosystem?’" said Jagdish Rebello, director at IHS iSuppli. "I believe that the answer is yes."
They are sentries at the stock market’s wall of worry, warning investors to prepare for another epic crash for debt-laden economies.
But with U.S. equity markets on a tear since early October, hitting levels not touched in several years, most of Wall Street isn’t seeing much cause for alarm.
Instead, increasingly optimistic buyers have pushed the Dow Jones industrial average above 13,000; the Nasdaq composite index over 3,000, and the Standard & Poor’s 500 index past 1,400.
The gains extend beyond stocks. Gold may be off its September 2011 high of $1,907 an ounce, but is still in the respectable mid $1,600s, and oil remains above $100 a barrel. Meanwhile, yields on both the 10-year Treasury note and the 30-year bond are around a percentage point lower from a year ago, boosting bond values.
Also, the greenback is rising. The U.S. Dollar Index, a measure of the dollar against six other major currencies, is up sharply over the past 12 months.
It’s enough to make a confirmed pessimist downright gloomy.
After all, what’s a doomsayer to do when it seems everything — even Europe — is rallying? Do you stand your ground in cash, or join the crowd and closely eye the exit?
Of the five market skeptics interviewed for this article, four are reluctantly going along for the ride.
The consensus among this group is that the rally is not sustainable — just another big party before an even bigger hangover. They see stock prices as being artificially inflated by Federal Reserve policies of quantitative easing and low interest rates, and that to put out the fires in Europe, the European Central Bank has gotten in on the act.
But, these strategists say, while these monetary drugs are palliative to markets, they require bigger doses for progressively dwindling results and will eventually fail.
FIVE SHADES OF GRAY
1. Peter Schiff • Peter Schiff, chief executive of Euro Pacific Capital, said the worst investment now is bonds, because it’s the one asset that hasn’t been crushed. The second-worst is cash, because the Fed insists inflation isn’t a threat, he said.
Schiff said the Fed can be in denial about inflation for only so long and eventually will have to raise interest rates.
“They’ll keep (rates) low until the market forces them,” Schiff said guaranteed pay day loans. “It’s like trying to hide it when you’re pregnant, you can only do it for so long.”
2. Harry Dent Jr. • Harry Dent Jr., head of research and forecasting firm HS Dent, said the recovery is “artificial” in that it’s being fueled by quantitative easing measures in the U.S. and Europe.
Aging baby boomers are no longer fueling U.S. economic growth, he said, and younger generations can’t keep the momentum going. “The government and most economists are in denial when the largest generation is spending less and paying down their debt,” he said.
3. A. Gary Shilling • Economic consultant A. Gary Shilling said stocks are vulnerable because the consumer is worn out, and that puts businesses, and the broader economy, on weak footing.
Shilling has long predicted that Fed measures to stimulate the economy will fall short and believes the global economy is in a long period of deleveraging marked by anemic growth.
“If the consumer pulls back, there’s nothing else in the economy that can sustain growth, and if the consumer retrenches, we have a recession,” Shilling said.
4. Charles Biderman • Charles Biderman, who heads TrimTabs Investment Research, said he’s bullish on stocks given that the Fed’s cheap money is levitating prices. But, he added, at some point stocks are going to drop.
A day will come, Biderman said, when the Fed will pull the plug on cheap money. Then he sees the Dow tumbling to financial crisis lows in the 6,000 range. For clues, watch what companies are doing with their cash, he said. “If buybacks slow,” he said, “that would be the time to start getting out.”
5. Robert Prechter • Robert Prechter, head of market forecasting firm Elliott Wave International and the most bearish of the five, said investors should shun every asset class popular now, including stocks, commodities, metals and bonds.
“Hold cash, and keep it safe,” Prechter said. “There will be another buying opportunity, probably about four years from now.”
He added: “When investors are afraid again, and when stocks are cheap again, that will be the time to buy.”
JetBlue says the crew of Las Vegas-bound flight 191 _ which had to make an emergency landing in Texas because of the strange and frightening behavior of its pilot _ will remain quiet about the incident.
“We understand and appreciate everyone’s desire to hear directly from the crew regarding their experience, but the crew has decided to decline all media opportunities in order to spend time with their families,” JetBlue Airways Corp. said in a statement Friday.
The flight Tuesday that started in New York proceeded normally for most of the trip. But pilot Clayton Osbon became increasingly incoherent, left the cockpit and later sprinted down the cabin yelling jumbled remarks about Sept. 11 and Iran, documents and witnesses say. Co-pilot Jason Dowd brought an off-duty JetBlue captain who was flying as a passenger into the cockpit to assist and locked the door.
When Osbon tried to re-enter by banging on the door, the co-pilot gave an order through the intercom to restrain Osbon, according to the documents, which don’t mention Dowd by name. Passengers wrestled Osbon to the ground, and Dowd diverted the flight from New York to Amarillo, Texas. No one onboard was seriously injured.
Dowd’s quick thinking and calm management of the emergency landing brought comparisons to `Miracle on the Hudson’ Capt. Chesley Sullenberger. The pilot’s bizarre behavior also drew references to another crewmember’s behavior that JetBlue likely would like to forget.
In 2010, JetBlue flight attendant Steven Slater pulled the emergency chute on a flight after it landed at John F. Kennedy International Airport. He went on the public-address system, swore at a passenger, grabbed a beer and slid down onto the tarmac. He was sentenced to probation, counseling and substance abuse treatment for attempted criminal mischief.
JetBlue is encouraging the public to send messages to the crew of Flight 191 through its blog at http://blog.jetblue.com.
Hewlett-Packard is shaking up its business yet again, combining its printer and personal computer divisions. One of HP’s longest-tenured and most-admired executives is retiring as a result.
HP’s printing group was once its shining star, returning ridiculously high profit margins on ink cartridge sales. But that business stagnated over the past decade and particularly slumped in the last few years. HP’s printing profit fell 10% last year as sales remained flat.
The holiday season was particularly tough. Ink sales fell 6%, office printers fell 5% and consumer printer sales tumbled 15% in the company’s fiscal first quarter, which ended in January.
As it lumps printers and PCs together, HP (, Fortune 500) said that imaging and printing group chief Vyomesh "VJ" Joshi was stepping down. Joshi, the division’s leader for the past decade, served in various roles at HP throughout his 32-year career there. His tenure dates back to the golden years of "Bill and Dave," when Bill Hewlett and Dave Packard still had active roles at the company they founded.
"VJ embodies the spirit of HP and his impact on the company has been tremendous," HP CEO Meg Whitman said in a written statement. "We wish him the very best as he embarks on a new chapter in his life."
After Ann Livermore stepped down as HP’s enterprise chief last year, Joshi was the last remaining top HP executive to have ties to the Bill and Dave era. He is well-respected throughout the industry and had long been considered a superstar executive.
Joshi was forced off of Yahoo (, Fortune 500)’s board in that company’s shakeup last month. He had been a Yahoo director for seven years.
The merging of the printing and PC units means HP Personal Systems Group executive Todd Bradley will now oversee two struggling businesses. HP considered spinning off its PC unit last year. The board later decided that it would hang onto the business-critical but low-margin unit.
The overall PC industry is stuck in neutral, but HP, the world’s largest computer maker, is traveling at high speed in reverse. PC sales fell 3% last year and 15% during the holiday quarter, with consumer computer sales tumbling 25%.
Whitman said on recent conference calls with investors that she hopes to streamline HP’s businesses and ensure that individual business groups work together in the future. She also said that the company’s divisions have been too separate in the past, leading to too much competition within the ranks.
The Reserve Bank of India
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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