Finance Blog number 1

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.”

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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.

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International Monetary Fund official Zhu Min said China will avoid an economic hard-landing even as government data showed property prices falling in most of the nation

Panera Bread Co. founder Ron Shaich will share the title of CEO of the chain of bakery cafes with Bill Moreton, the company announced today.

Moreton was promoted to president and CEO of the Sunset Hills-based company in May 2010, and Shaich took on the role of executive chairman of the board of directors.

The chain has more than 1,500 locations and operates locally as St. Louis Bread Co.  

Shaich’s new titles are co-CEO and chairman, and Moreton is co-CEO and president payday loans. 

In announcing the changes, Panera said in a statement that the switch to co-CEOs “formalizes a relationship that has evolved over the last year and is a reflection of the way in which Shaich and Moreton have been operating as partners.”

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President Barack Obama countered Republican attacks on his trade record with China by filing a complaint seeking to stop Beijing

The chairman and chief executive of American Express Co. received a compensation package valued at $22.5 million for 2011, a 38 percent increase from a year earlier, according to an Associated Press analysis of a regulatory filing.

The company credited Kenneth Chenault and his management team for delivering revenue and profit growth, and gaining market share over the past two years.

The executive, who has been chairman and CEO since 2001, received $16.3 million in compensation in 2010.

Chenault, 60, received a base salary of $2 million, up 3 percent from the previous year, according to documents filed Friday with the Securities and Exchange Commission.

The executive also received a cash bonus of $2 million, unchanged from 2010.

But the bulk of Chenault’s compensation hike came in the form of stock awards, which were worth about $15.3 million at the time they were granted _ a sevenfold increase from $2.1 million worth of stock awards the year before.

Chenault also received option awards valued at about $2.2 million on the day they were granted, down 76 percent from $9.2 million a year earlier.

His other compensation declined 7 percent to about $1.02 million, and included $570,000 in company contributions to Chenault’s defined contribution plans; $395,439 for perks and other personal benefits; $53,458 in dividends and equivalents; and, $3,939 in life insurance.

Even with high unemployment and continued doubts about the strength of the economy, credit card use has been on the rise.

New York-based American Express, which caters to a more affluent customer than its peers, saw its 2011 profit climb to $4.94 billion, an increase of 22 percent from the year before. Full-year revenue rose 9 percent to $29.96 billion.

Shareholders saw the company’s stock price rise about 10 percent last year. The stock closed Friday at $52.99.

The Associated Press formula calculates an executive’s total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.

The value that a company assigned to an executive’s stock and option awards for 2011 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company’s stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.

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President Obama’s plan to reform the corporate tax system will come out in the next few weeks, Treasury Secretary Tim Geithner told a Senate panel Tuesday.

But don’t get too excited. It won’t be detailed legislation. In fact, it’ll be vague on purpose in an effort to find "common ground" on broad principles between Republicans and Democrats on Capitol Hill, Geithner said.

"We want to maximize the chance we can take advantage of that (common ground) to build consensus on something that’s going to work," Geithner told the Senate Finance Committee.

The Obama administration has been talking about unveiling a plan to fix corporate tax system for well over a year. Last year, the pressure for a corporate tax system fix heated up with news of General Electric’s zero tax rate in 2010 due to profits overseas and losses at its financial unit. General Electric (, Fortune 500) CEO Jeffrey Immelt is the chief of President Obama’s Council for Jobs and Competitiveness.

The top corporate tax rate of 35%, among the highest in the world, has long been bemoaned by business leaders and tax experts. They say it discourages foreign investment in the United States and hinders the ability of U.S. companies to compete internationally.

The Obama administration is expected to talk about lowering the top rate while axing some of the more than 130 business corporate tax breaks currently on the books and limiting companies’ ability to shift profits to nations where tax rates are lower.

"In short, it will help level the playing field for businesses and allow the government to collect needed revenue while promoting economic growth," Geithner said in his written statement.

Obama budget fails to tackle entitlements

However, cutting the top rate to below 30% will require some serious slash-and-burn action. And details are key to moving corporate tax reform forward, said Clint Stretch, managing principal of federal tax policy at Deloitte Tax.

For example, a lot of publicly traded companies will want to know what they would pay in a tax year versus what they can defer. And cash-sensitive companies are going to want to know if they can depreciate the value of capital equipment.

"At some point people have to step up and say here are the details — here are the winners and losers," Stretch said. "Folks want to know where they are on that spectrum."

- CNNMoney senior writer Jeanne Sahadi contributed to this report. 

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A member of the storied McDonnell aerospace family is suing Boeing, the company that acquired McDonnell Douglas in 1997, alleging the aircraft maker infringed on his patents related to an unmanned aerial vehicle landing system.

William “Randy” McDonnell is seeking $160 million in damages from Boeing Co. and Insitu, Boeing’s Washington state subsidiary that produces unmanned aircraft for the Hazelwood-based Boeing Defense, Space and Security division.

Boeing denied the allegations, saying it would fight the lawsuit.

Randy McDonnell, an aeronautical engineer, is the son of Sanford McDonnell who served as chief executive and chairman of McDonnell Douglas from 1972 to 1988.

He is also a cousin of another former McDonnell Douglas chief executive and chairman - John McDonnell, who guided the corporation through its merger with Boeing.

John McDonnell still holds a seat on Boeing’s board of directors.

The suit was filed Thursday in U.S. District Court in St. Louis by Advanced Aerospace Technologies Inc., which is owned by Randy McDonnell.

The suit claims Boeing and Insitu knowingly encroached the patent McDonnell obtained for a “skyhook retrieval system” that enables drones to set down without a runway.

The technology is similar to the tail-hook mechanism that snags incoming manned jets on the decks of aircraft carriers, the suit says.

Randy McDonnell invented the process in the capacity of president and sole owner of Advanced Aerospace, an independent St. Louis County research and developmental engineering firm he founded prior to the Boeing merger, according to the filing.

He continues to operate the company to this day.

“I am greatly disappointed that Insitu, and then Boeing, declined to pay the compensation due for their use of my inventions and that I now must resort to court action,” McDonnell said in a statement issued through his Washington attorney, Craig S. King.

In a companion lawsuit filed in the U.S. Court of Federal Claims in Washington, McDonnell is also seeking remuneration from the federal government.

The District of Columbia filing asks the U.S. to reimburse McDonnell for profits Insitu and Boeing earned as independent contractors operating drones on behalf of the U.S. military.

Both suits stem from engineering designs developed by Randy McDonnell in the 1990s online payday loan lenders. The patents, owned by his company, were eventually issued in 2005 and again in 2006.

The lawsuit said McDonnell shared details of the design in 2000 upon learning that Insitu, then known as the Insitu Group, had encountered “difficulties” with its own retrieval system. At the time, the patent was pending.

A leader in the development and production of unmanned aircraft, Insitu produces the Boeing ScanEagle, Integrator and other drones currently deployed by not only behalf of the U.S. but the military forces of Australia and Canada as well.

“Without advising Mr. McDonnell, Insitu misappropriated critical features of Mr. McDonnell’s UAV retrieval solution … for use on the Insitu (unmanned aircraft systems),” the legal papers alleged.

The suit also claims that Insitu induced McDonnell to delay enforcement of the patents until the company’s sale to Boeing was finalized. Boeing purchased Insitu in 2008.

“Insitu’s decision to incorporate Mr. McDonnell’s inventions in its systems gave Insitu a major advantage in the industry,” the suit says.

The filing additionally accuses Boeing of ignoring warnings of possible patent infringement that Advanced Aerospace sent prior to the Insitu acquisition.

King, McDonnell’s attorney, said his client took legal action after failing to resolve the dispute with Boeing and Insitu out of court.

Boeing declined to comment on the specifics of the case, citing pending litigation.

“We believe our products don’t infringe on the patents in question and believe the court will agree with us,” spokesman John Dern said from Boeing corporate headquarters in Chicago.

King noted McDonnell refrained from filing an injunction that would have blocked Boeing and Insitu from further using the retrieval system until the matter is played out in court.

“The safety of our war fighters and performance of military missions is of paramount concern to (Advanced Aerospace), and neither will be affected by these lawsuits,” King said in a statement.

Lisa Brown of the Post-Dispatch contributed to this report

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ATHENS

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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