Finance Blog number 1

The Reserve Bank of India

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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Days after the Conservative government introduced its copyright reform bill in June 2010, Canadian Heritage Minister James Moore spoke out in support of the legislative package by notoriously labeling critics as

Oil prices hovered below $107 a barrel Tuesday in Asia after U.S. and Israel leaders met to discuss growing tensions over Iran’s nuclear program.

Benchmark oil for April delivery was down 2 cents to $106.70 at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 2 cents to settle at $106.72 per barrel in New York on Monday.

Brent crude was steady at $123.80 per barrel in London.

After a meeting Monday in Washington, President Barack Obama and Israeli Prime Minister Benjamin Netanyahu showed no sign of give on competing ways to resolve the crisis. Obama urged pressure and diplomacy to prevent Iran from getting a nuclear bomb while Netanyahu emphasized his nation’s right to a pre-emptive attack.

The U.S., Europe, Israel and other nations fear that Iran may be building a nuclear weapon. Iran, the world’s third-largest oil exporter, denies the charge.

“The Iranian fear premium didn’t change in our view,” energy consultant Ritterbusch and Associates said in a report.

Crude has risen from $96 last month amid investor concern that a military conflict aimed at destroying Iran’s nuclear capabilities would disrupt global oil supplies. Analysts say Saudi Arabia and other oil producers do not have enough spare capacity to quickly make up for Iran’s 4 million barrels a day of crude.

Analysts estimate crude would jump to $150 in the wake of an attack by Israel on Iran’s nuclear operations.

“The risk of a supply disruption due to geopolitical factors is uncomfortably high and increasing,” said Richard Soultanian of NUS Consulting.

In other energy trading, heating oil fell 0.6 cent to $3.21 per gallon and gasoline futures were steady at $3.26 per gallon. Natural gas fell 0.5 cent at $2.35 per 1,000 cubic feet.

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The global economy faces

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.

Inflation picked up slightly last month, as rising gas prices took a bigger bite out of consumers’ wallets.

The government’s key measure of inflation, the Consumer Price Index, showed prices rose 0.2% from December to January, slightly weaker than the 0.3% increase economists had predicted.

Rising prices at the gas pump were a key factor, increasing 0.9% during the month, the Labor Department said. Improving U.S. economic data, including stronger job growth, and tension with Iran have been driving the price of oil and gasoline higher.

Gas prices ended last month at a national average of $3.443 a gallon, according to the AAA Fuel Gauge Report.

Tom Kloza, chief analyst at the Oil Price Information Service, recently forecast gas prices will hit a $4 national average by Memorial Day. They could even near $5 a gallon in certain regions.

Check gas prices in your state

Could this mark a repeat of early 2011?

Amid revolutions in North Africa and the Middle East, gas prices spiked 3.5% In January 2011 alone, and kept rising, nearing $4 a gallon in May. Those higher prices trickled through to other goods and dragged on consumer spending. Economic growth slowed and job growth eventually slumped.

So far, the 2012 price hikes at the gas pump aren’t as severe, but that’s not to say employers aren’t concerned.

About 68% of executives surveyed by the Corporate Executive Board expect cost pressures to increase in 2012 — and not just on energy. On Thursday, the Labor Department’s Producer Price Index showed a modest 0.2% increase in the cost of raw materials in January, after commodity prices fell the month before.

But higher costs won’t necessarily lead to higher prices for consumers.

Businesses don’t expect to see a major increase in consumer confidence this year, according to Michael Griffin, executive director at CEB. It’s that slack in the economy, amid high unemployment and slow wage growth, that is likely to keep companies from trying to pass higher costs on to consumers.

"Demand is still fairly weak out there so it’s difficult for firms to raise prices," said Gus Faucher, senior economist at PNC Financial Services Group. "Consumers are shopping around and still watching their costs."

Year over year, the inflation report showed consumer prices were up 2.9% in January, barely changed from a 3% annual inflation rate in December.

The CPI report also showed food prices rose 0.2% in January, mainly driven by higher prices at restaurants. Prices at grocery stores barely changed. Overall, food prices up 4.4% over a year ago.

Core CPI, which strips out volatile food and energy, showed consumer prices rose 0.2% in January, and 2.3% year-over-year.

Core inflation is at its highest level since September 2008, when the rate was 2.5%. 

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Drug maker AstraZeneca PLC said it will cut another 7,300 jobs as it warned Thursday of a tough year ahead, due to government spending cuts on healthcare and stiff competition, even as it reported a 24 percent increase in 2011 profits.

The Anglo-Swedish company said its full-year profit was $10 billion, up from $8.1 billion a year earlier. The profit advance was helped heavily by a $1.5 billion gain from the sale of its dental subsidiary, Astra Tech.

The company said revenue this year will be hit by government interventions on prices, generic competition and the loss of exclusivity for Seroquel IR, a drug for the treatment of depression, and hypertension drug Atacand in global markets.

Job cuts and restructuring are expected to save $1.6 billion a year by 2014, the company said. AstraZeneca said it would shortly begin consultations with affected employees.

AstraZeneca shares were down 4.2 percent at 2,960 pence just before noon in London.

Generic competition cut revenue by $2 billion in 2011 while price interventions cost another $1 billion, AstraZeneca said.

Despite its concerns over the year ahead, AstraZeneca raised its full-year dividend by 10 percent to $2.80 a share10 percent, and announced a $4.5 billion share buyback program.

The company reported double-digit sales gains for cholesterol drug Crestor, Symbicort for asthma and Seroquel XR freecreditscore.

U.S. revenues were up 5 percent despite the negative impact of health care reform, while revenue in the rest of the world was down 3 percent, including a 15 percent slide in Europe.

AstraZeneca said it was reshaping its research and development activity to focus on neuroscience, employing 40 to 50 scientists in a new Innovative Medicines unit based in Boston in the United States and Cambridge in England.

The company will close its facility in Montreal and lay off some staff in Soedertaelje in Sweden.

“We’ve made an active choice to stay in neuroscience though we will work very differently to share cost, risk and reward with partners,” said Martin Mackay, the company’s president of research and development.

Linda McCulloch, a national officer for Britain’s Unite union, said the cuts were a blow to the research and development base.

“If the company can afford a 10 percent hike in its dividends, then it can afford to retain these roles,” McCulloch said.

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Taiwan President Ma Ying-jeou named Sean Chen as premier, choosing an official who oversaw the island

Greece and its private investors are close to a deal that will significantly reduce the country’s debt and pave the way for it to receive a much-needed euro130 billion bailout.

Negotiators for the investors announced the tentative agreement Saturday and said it could become final next week.

Under the agreement, the investors would take a hit of more than 60 percent on the euro206 billion of Greek debt they own.

Here’s how it would work: private investors would receive new bonds whose face value is half of the existing bonds. The new bonds would have a longer maturity and pay an average interest rate of slightly less than 4 percent (compared with an estimated 5 percent on the existing bonds).

Without the deal, which would reduce Greece’s debt load by at least euro120 billion, the private investors’ bonds would likely become worthless. Many of these investors also hold debt from other eurozone countries, which could also lose value in the event of a Greek default.

The agreement taking shape is a key step before Greece can get a second, euro130 billion bailout from its European Union partners and the International Monetary Fund, although there are other issues involved before Greece can get that aid. This would be Greece’s second bailout. The EU and the IMF signed off on a euro110 billion aid package for Greece in May 2010, most of which has already been disbursed.

Greece faces a euro14.5 billion bond repayment on March 20, which it cannot afford without additional help.

Private investors hold roughly two-thirds of Greece’s debt, which has reached an unsustainable level _ nearly 200 percent of the country’s economic output. By restructuring the debt held by private investors, Greece and its EU partners are hoping to bring that ratio closer to 120 percent by the end of this decade.

In return for the first bailout, Greece’s public creditors _ the International Monetary Fund, the European Union and the European Central Bank _ have unprecedented powers over Greek spending. However, austerity alone will not fix Greece’s problem. The country must also find ways boost its economic output, which at the moment is shrinking.

If no debt-exchange deal is reached with private creditors and Greece is forced to default, it would very likely spook Europe’s _ and possibly the world’s _ financial markets. It could even lead Greece to withdraw from the euro.

The banks, insurance companies and other private holders of Greek bonds are being represented by Charles Dallara, managing director of the Washington-based Institute of International Finance, and Jean Lemierre, senior adviser to the chairman of the French bank BNP Paribas.

The main creditor negotiators will leave Greece on Sunday and will remain in close consultation with Greek and other authorities.

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