Labor Market Shows Signs of Rebirth in New Data

The New York Times - The unemployment rate unexpectedly dipped to 9.7 percent in January, from 10 percent in December, the government reported Friday, buoying hopes that the worst job market in at least a quarter-century is finally improving. But a different survey in the Labor Department’s report found that the economy lost 20,000 net jobs during the month, muddying the picture and underscoring the formidable struggles still confronting millions of Americans. Yet with the pace of decline slowing, most experts focused on signs that the economy was recovering after the longest recession since the Great Depression.

Investors Fear Europe’s Woes May Extend Global Slump

The New York Times - Just as America’s recession begins to ebb, trouble is brewing in Europe that may prolong a downturn on the Continent and ricochet through the global economy as it struggles toward a recovery.

A rout in stock markets that began in Europe spread to Wall Street on Thursday and around the globe to Asia on Friday, amid fears that Europe may be the world’s next financial flashpoint. Pressure has been mounting across the Atlantic as Greece, Portugal and a handful of struggling countries that use the euro scramble to pay off mountains of debt accumulated from years of profligate spending.

The Dow Jones industrial average slid 2.61 percent, or 268.37 points, to 10,002.18 Thursday, after briefly falling below 10,000 for the first time since November, as American investors grew more uncertain about Europe’s economy.

Stock markets across Europe slumped as much as 6 percent, and worries that the troubles might push even big European nations like Spain into a financial crisis drove the euro to $1.37, a seven-month low against the dollar.

Markets in Europe slipped further on Friday, after a sharp sell-off in Asia, amid continued worries about government debt in several European countries and about the state of the U.S. labor market.

Related Story: 
http://www.nytimes.com/2010/02/06/business/global/08euro.html?ref=europe

Rising U.S. Job Worries Add to Upheaval

Job seekers line up to speak to a representative from the U.S. Customs and Border Protection agency at the Houston Diversity Job Fair in Humble, Texas, this week.

The Wall Street Journal - Concerns about the ability of the U.S. economy to create jobs added to a broader wave of fear about European finances, as fresh data showed unemployment claims rising and companies managing to boost production without adding workers.
The Labor Department reported initial claims for jobless benefits rose by a larger-than-expected 8,000, to 480,000 claims in the week ended Jan. 30. A separate report showed that companies managed to increase output for each hour worked at a seasonally adjusted annual rate of 6.2% in the 2009 final quarter, down from the third quarter's 7.2%, but still well above average.
The data reinforced doubts that a strong rebound in jobs will give U.S. consumers the wherewithal they need to contribute to a sustainable economic recovery. The market will learn more early Friday when the U.S. unemployment number for January is reported.
The latest reports "confirm that the recovery in the labor market is likely to be quite slow," said Conrad DeQuadros, an economist at consultancy RDQ Economics. "That suggests consumer spending is not going to be the major driver of growth in 2010."

WSJ Top News Feb. 5 &6

 
Sign of Hope As Jobless Rate Dips
The unemployment rate dropped sharply last month, but employers continued cutting jobs in January as businesses remained insecure about the economic outlook. The jobless rate fell to 9.7% from 10% in December, the Labor Department said Friday, because its survey of households found more people landed jobs than entered or returned to the labor market. But a separate survey of employers, which counts how many workers are added or cut from payrolls, found that 20,000 jobs were eliminated last month. And revisions to last year's data found far more jobs were lost over the 12 months than previously predicted.
http://online.wsj.com/article/SB10001424052748704533204575046960669803550.html?mod=WSJ_hps_LEFTWhatsNews
 Toyota plans to repair Prius brakes
DETROIT -- Toyota Motor Corp, has told dealers it's preparing a plan to repair the brakes on thousands of hybrid Prius cars in the U.S. In a message sent Friday night to dealers, a Toyota group vice president, Bob Carter, said the company is working on a plan and will disclose more details early next week. More than 100 drivers of 2010 Prius cars have complained that their brakes seemed to fail momentarily when they were driving on bumpy roads. The U.S. government says the problem is suspected in four crashes and two minor injuries.
http://online.wsj.com/article/SB10001424052748704829704575049241913621402.html?mod=WSJ_hpp_LEFTWhatsNewsCollection&mg=com-wsj 

Goldman Bows on CEO Pay
Goldman Sachs Group Inc., trying to show it is responsive to public pressure over its pay, said Chairman and Chief Executive Lloyd Blankfein would get a $9 million bonus for 2009, a fraction of the $68.5 million payout he got in 2007. Friday's announcement was one of the most highly anticipated pay figures in Wall Street history. As Goldman rebounded in 2009 to its most profitable year ever, the 55-year-old Mr. Blankfein became the focus of anger about sky-high bonuses on Wall Street. That criticism continued even after Goldman said last month that it would make the smallest employee payouts relative to revenue since the firm went public in 1999.
http://online.wsj.com/article/SB10001424052748704533204575047132761932208.html?mod=WSJ_hps_LEFTWhatsNews

WSJ & NYT Feb. 3 Top News

Ron Burkle Seeks 37% of Barnes & Noble
Activist investor Ron Burkle sent a letter to Barnes & Noble Inc. seeking to acquire as much as 37% of the company, up from his current stake of 19%, and blasting the book retailer for having different sets of anti-takeover rules for big investors: one applying to insiders and one applying to outsiders.
http://online.wsj.com/article/SB10001424052748703422904575039713084867850.html

Gannett reports fourth quarter profit

Gannett Co. returned to the black for the fourth quarter, helped by lower expenses and no big writedowns as it had in the year-earlier period. The publisher of USA Today and more than 80 other daily newspapers saw advertising slide another 18%, but the drop wasn't as steep as last year's, and was characterized as a stabilization.
http://online.wsj.com/article/SB10001424052748704107204575038981134299578.html

Battle over UK cigarette packaging heats up
Tobacco companies are digging in to fight a possible U.K. ban on one of their last marketing tools: cigarette packaging.The U.K.'s Department of Health said Monday that it would consider mandating generic packaging for all cigarettes as part of an aggressive campaign to halve smoking rates by 2020.
Such packs would be white or brown with the brand name written in simple type and no logos or colors allowed. The packs would continue to carry large health warnings.
http://online.wsj.com/article/SB10001424052748703422904575039410524001480.html

AIG Plan to Pay $100 million in bonuses draws fire
The American International Group has agreed to cut employee bonuses by $20 million and will distribute about $100 million on Wednesday, according to people with knowledge of the negotiations. But the reductions may not be enough to appease the company’s critics, who do not accept the company’s argument that it has to honor contracts from before its government bailout. 
http://www.nytimes.com/2010/02/03/business/03aig.html

 Time Warner Posts Fourth Quarter Profit
Time Warner Inc. moved back into the black for the fourth quarter, rebounding from a large write-down a year earlier and benefiting from strength in its film and television businesses.The media giant also raised its quarterly dividend 13% to 21.25 cents a share. That move comes a day after competitor News Corp. raised its six-month dividend for both classes of its stock by 25%.
http://online.wsj.com/article/SB10001424052748704259304575042800323826926.html

Home Builders Cut Prices, Warn about Foreclosures
LAS VEGAS—Home builders have lost half their share of the U.S. housing market in the past two years, largely because of competition from cheap foreclosed houses. In 2009 only 7.6% of the homes sold were newly constructed, down from the average of about 16% over the previous two decades.
But home builders are fighting back, cutting prices, promising to complete homes faster, and warning about the risks of buying foreclosed property.
http://online.wsj.com/article/SB10001424052748703422904575039691675728982.html?mod=WSJ_WSJ_US_News_5

Toyota's Troubles Deepen
Toyota Motor Corp.'s quality crisis deepened Tuesday, as U.S. regulators accused the company of dragging its feet on fixing defective gas pedals and threatened civil penalties and further reviews of Toyota products.
The move means that Toyota's efforts to address its biggest-ever safety and public-relations mess are far from over. Last week, the administration indicated it had no issues with how Toyota had responded to the sudden-acceleration reports, which led the company to recall about six million vehicles and have been linked to at least five fatalities.
http://online.wsj.com/article/SB10001424052748704107204575040353375520866.html?mod=WSJ_WSJ_US_News_6

Lee Fisher commentary: Third Frontier is key to nurturing Ohio recovery

In the midst of a punishing recession, Ohio's Third Frontier program has been a rare bright spot and a critical driver of economic growth across our state. Since the bipartisan economic-development program was enacted under former Gov. Bob Taft, state grants have helped create more than 41,000 jobs and $6.6 billion in economic activity through 2008. That was a $10 return on every dollar invested by the state.
And yet, despite the undisputable success of this effort to nurture home-grown, high-tech companies, some Republicans in the legislature oppose a robust renewal of this vital program. The Ohio House has passed a measure to extend the program for five years at a cost of $950 million, while the Republican-controlled Senate has proposed a far smaller effort of $500 million over the same time frame.

http://www.dispatch.com/live/content/editorials/stories/2010/01/31/fisher31.ART_ART_01-31-10_G5_GHGES52.html#story-continues

WSJ News Feb. 1

Windows 7 fails to boost PC makers profits
Microsoft Corp.'s new Windows 7 operating system has fattened the company's earnings and boosted personal-computer sales at retailers like Best Buy Co. But it hasn't increased the profits of PC giants Hewlett-Packard Co., Dell Inc. and others. While consumers purchased more than 90 million new PCs during the holiday quarter, when Microsoft released Windows 7, up 22% from a year earlier, PC revenue grew at just a single-digit rate, analysts say.
http://online.wsj.com/article/SB10001424052748704343104575034233214601248.html?mod=WSJ_business_whatsNews

Obama proposes a $3.8 trillion budget
WASHINGTON—President Barack Obama proposed a $3.8 trillion budget for fiscal 2011 that will add fuel to the debate over the size and scope of government. The plan includes big increases in personal and business taxes, modest spending cuts and increased outlays for education, defense and jobs initiatives.The Obama administration has focused in the days leading up to Monday's formal release on proposals to cap so-called discretionary spending, roughly 17% of the total budget, as part of a plan to start narrowing the record $1.6 trillion gap between proposed budget outlays and tax receipts.
http://online.wsj.com/article/SB10001424052748704107204575038733246595218.html?mod=WSJ_hps_LEADNewsCollection

Factory sector books best performance in five years
U.S. factory sector activity booked its best performance in more than five years in January, amid a rebound in hiring and rising price pressures. In a key report, private research group the Institute for Supply Management said Monday its index of manufacturing activity moved to 58.4 in January, the best reading since August 2004, from 54.9 in December and 53.7 in November. Readings over 50 indicate growth and describe the breadth, but not magnitude, of the change. Economists had expected the index to come in at 55.3.
http://online.wsj.com/article/SB10001424052748704107204575038941133108482.html?mod=WSJ_hps_LEFTWhatsNews

Exxon Mobil's fourth quarter profit falls
Exxon Mobil Corp.'s fourth-quarter earnings fell 23% as lower profit margins for refining and fuels and lower natural-gas prices were partly offset by higher prices for crude oil.
Prices for oil products like gasoline and diesel have failed to keep pace with the rising price of crude, putting intense pressure on refining profit margins, and leading to losses, shutdowns and some refiners putting operations on the block.
http://online.wsj.com/article/SB10001424052748703422904575038930311563198.html?mod=WSJ_business_whatsNews

Crude oil prices climb to $72 a barrel
NEW YORK -- Crude futures rose Monday on positive corporate earnings and due to geopolitical tensions.
Light, sweet crude for March delivery recently traded 42 cents, or 0.6%, higher at $73.31 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 47 cents, or 0.7%, higher at $71.93 a barrel.
http://online.wsj.com/article/SB10001424052748704107204575038870579452504.html

Obama proposes boosting education department spending
WASHINGTON—President Barack Obama's proposal to boost the Education Department by 9%, even as other areas get squeezed, highlights one area where the administration and Republicans have found some common ground.Most of the additional $4.5 billion in spending proposed for the Education Department new money is slated to fund competitive programs, making the budget a key part of an administration bid to transform how local school officials interact with the federal government.
http://online.wsj.com/article/SB10001424052748704107204575039090128849972.html

Toyota has fix for gas pedal problems
DETROIT – Toyota Motor Corp. said on Monday that it has already begun shipping a fix to the gas pedal problem involved in the recall of millions of vehicles and forced the company to stop selling eight of its models in the U.S. and some other countries around the world.Toyota has pinpointed the issue that could, on rare occasions, cause accelerator pedals in recalled vehicles to stick in a partially open position. The issue involves a friction device in the pedal designed to provide the proper "feel" by adding resistance and making the pedal steady and stable, Toyota said. The device includes a shoe that rubs against an adjoining surface during normal pedal operation.
http://online.wsj.com/article/SB10001424052748704107204575038802851805726.html?mod=WSJ_hps_LEFTWhatsNews

Trustbusters Try to Reclaim Decades of Lost Ground

John Sherman, author of the act bearing his name.

The Wall Street Journal - WASHINGTON—If populism is emerging as a potent new force in American politics, then government trustbusters and sympathetic Democrats in Congress stand ready to offer a new outlet. But first, they'll have to overcome a major hurdle: the judges.

Over the past three decades, U.S. courts have sharply limited the scope of the 120-year-old Sherman Antitrust Act, which has been used to target companies from Standard Oil to Microsoft Corp. In so doing, judges have clipped the wings of two agencies charged with policing anticompetitive behavior: the Justice Department and the Federal Trade Commission.

Now Democrats on Capitol Hill are joining forces with antitrust cops to push back against the judicial tide. Congress is preparing measures to reverse the effect of court rulings that have made it harder for the government to win antitrust cases and break up monopolies, while the FTC and Justice Department are trying out new legal tactics to reclaim lost powers

If successful, the efforts could presage an upswing in antitrust cases against America's leading companies and reverse the legal trends of recent years.

Sensing a shift in the political landscape, big business is girding for a fight. "Voters are demanding jobs and growth, but Washington is moving in the opposite direction by advancing an agenda focused on increased litigation against business," said Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform, an offshoot of the Chamber of Commerce that seeks to ease the burden of civil litigation for businesses.

Antitrust enforcers since the 1980s have had an increasingly hard time winning cases against accused monopolists. Judges have largely agreed with the reasoning of the so-called Chicago School of economists, which holds that big companies aren't necessarily bad and that the market—not government—is best placed to promote competition.

Existing-Home Sales Plunge

Two Big Printers Expected to Merge

Privately held Quad/Graphics Inc. of the U.S. is expected to acquire Canadian rival World Color Press Inc. for roughly $1.3 billion to $1.4 billion, said people familiar with the matter, in a deal that would create North America's second-largest commercial printer by sales, behind industry giant R.R. Donnelley & Sons Co.

Under the plan, these people said, shareholders of Toronto-listed World Color, which prints such magazines as Sports Illustrated and Rolling Stone, as well as the Crate & Barrel catalog and Yellow Book directory, would get a 40% stake in the newly combined company. The new company would then list on a U.S. stock exchange, they said, in effect bringing Quad/Graphics, whose clients include Newsweek, GQ and the L.L. Bean catalog, to the public market for the first time since its founding in 1971.

Quad/Graphics, based in Sussex, Wis., has 11,500 employees and 11 plants, most of them in the U.S. Its annual sales are around $2 billion. Montreal-based World Color, with a market capitalization of around $730 million, has about 18,000 employees and annual sales of around $3 billion, with about 30% of that coming from Canada and Latin America.

Demand for Macs, iPhones Fuels Apple

Wall Street Journal - Two days before it's set to unveil a major new product, Apple Inc. reported a surge in quarterly profit and revenue that showed demand for its technology hasn't cooled off.

The Cupertino, Calif., company continued to power through the weak economy. Apple, after adjusting for a key accounting change, posted a 50% rise in profit and a 32% increase in revenue for its fiscal first quarter ended Dec. 26.

The growth was fueled by strong sales across most of Apple's product lines as iPhone shipments more than doubled and Macintosh computer sales climbed 33%.

"What this demonstrates is the strength of Apple's brand in good and bad times," said Bill Kreher, an analyst with Edward Jones.

Overall, Apple reported a quarterly profit of $3.38 billion, or $3.67 a share, up from $2.26 billion, or $2.50 a share, a year earlier. Revenue increased to $15.68 billion from $11.88 billion.

One Third U.S. is Now Below the Poverty Line

A new study from the Brookings Institution tells us that the largest and fastest-growing population of poor people in the U.S. is in the suburbs. You don’t hear about this from the politicians who are always so anxious to tell you, in between fund-raisers and photo-ops, what a great job they’re doing. From 2000 to 2008, the number of poor people in the U.S. grew by 5.2 million, reaching nearly 40 million. That represented an increase of 15.4 percent in the poor population, which was more than twice the increase in the population as a whole during that period.

Job losses, stagnant or reduced wages over the past decade, and the loss of home equity when the housing bubble burst have combined to take a horrendous toll on families who thought they had done all the right things and were living the dream. A great deal of that bleeding is in the suburbs. The study, compiled by the Brookings Metropolitan Policy Program, said, “Suburbs gained more than 2.5 million poor individuals, accounting for almost half of the total increase in the nation’s poor population since 2000.”

Democrats in search of clues as to why voters are unhappy may want to take a look at the report. In 2008, a startling 91.6 million people — more than 30 percent of the entire U.S. population — fell below 200 percent of the federal poverty line, which is a meager $21,834 for a family of four.

http://www.nytimes.com/2010/01/23/opinion/23herbert.html

WSJ Top News Friday-Sat, Jan. 22-23, 2010

New Bank Rules Sink Stocks
WASHINGTON—President Barack Obama proposed new limits on the size and activities of the nation's largest banks, pushing a more muscular approach toward regulation that yanked down bank stocks and raised the stakes in his campaign to show he's tough on Wall Street. With former Federal Reserve Chairman Paul Volcker at his side, Mr. Obama said he wanted to toughen existing limits on the size of financial firms and force them to choose between the protection of the government's safety net and the often-lucrative business of trading for their own accounts or owning hedge funds or private-equity funds.
http://online.wsj.com/article/SB10001424052748703699204575016983630045768.html?mod=WSJ_hps_LEFTWhatsNews

GE Earnings Fall
General Electric Co. posted a 19% slump in fourth-quarter profit, dinged again by weakness at its finance arm and NBC Universal, but offered an upbeat outlook that foresees a return to growth in 2011.
Orders have improved since its investor update in December, with delinquencies in its problematic finance unit also trending down, though commercial real-estate remains a key concern.
http://online.wsj.com/article/SB10001424052748704509704575018672407762274.html?mod=WSJ_hps_LEFTWhatsNews

Birth Weights Fall in U.S.
Mothers are giving birth to lighter babies in the U.S., and no one is quite sure why.
The finding, published Thursday in the Journal of Obstetrics and Gynecology, has potentially troubling public-health implications, if the trend continues. Low-birth-weight babies are at higher risk for a host of health problems.
http://online.wsj.com/article/SB10001424052748704423204575017471267586344.html?mod=WSJ_hps_MIDDLEFifthNews

Court Kills Limits On Corporate Campaign Spending
WASHINGTON—A divided Supreme Court struck down decades-old limits on corporate political expenditures, potentially reshaping the 2010 election landscape by permitting businesses and unions to spend freely on commercials for or against candidates.President Barack Obama attacked the ruling and said it gave "a green light to a new stampede of special-interest money in our politics," particularly "big oil, Wall Street banks, health-insurance companies and the other powerful interests" that "drown out the voices of everyday Americans." He pledged to work with lawmakers to craft a "forceful response."
http://online.wsj.com/article/SB10001424052748703699204575016942930090152.html?mod=WSJ_hps_MIDDLEForthNews

Restaurants Begin to Count Calories
Restaurants from Applebee's to Starbucks are pushing new low-calorie menu items in an effort to attract customers who say they want healthier options.Chain restaurants, traditionally known for peddling fatty food and sugary drinks, hope that offering healthier fare will give them a competitive advantage, especially with the prospect of a federal nutrition labeling law looming.
http://online.wsj.com/article/SB10001424052748704381604575005530811257728.html?mod=WSJ_hps_MIDDLEFifthNews

Google Earnings Soar 
Google Inc. reported its strongest revenue growth in a year and issued its firmest public statement saying it would like to continue doing business in China, a week after it said it may pull out of the country due to a sweeping cyber attack.The Mountain View, Calif., company said its revenue rose 17% in the fourth quarter to $6.67 billion from a year earlier, up from only 7% revenue growth in the third quarter and 3% growth in the second quarter.http://online.wsj.com/article/SB10001424052748703699204575017451974056226.html?mod=WSJ_hps_LEFTWhatsNews

Time to Sell Health-Care Stocks?

                                                                  Aetna Inc. (AET)

Barron's - HEALTH-CARE STOCKS seemed to get a late Christmas gift last night in the form of a Republican victory in Massachusetts.

But as stunning as the final result might be coming from the liberal state, the market saw it coming.
The sector rallied in recent days, as a victory by Republican Scott Brown looked increasingly possible. Managed-care stocks were up significantly in the last five days, including 12% for UnitedHealth Group (ticker: UNH), 8% for Aetna (AET) and 7% for WellPoint (WLP). Pharmaceutical giant Pfizer (PFE) was up 7% and medical-device maker Boston Scientific (BSX) gained 5%. All of those returns are well ahead of the Standard & Poor's 500 index's 1% gain over the last week.

Given those impressive returns, we would "sell on the news" today. To be sure, analysts are generally dire in their predictions for health-care reform. "We think the Democratic push for the government takeover of health care is dead or effectively dead," David Maris, a well-respected health-care analyst for Calyon Securities wrote this morning.

Falling Beer Sales Have Brewery Mergers Over a Barrel

The Wall Street Journal - U.S. beer sales volumes fell 2.2% last year, the highest rate since the 1950s, with demand worsening late in the year in a sign of the pressures on big brewers to make their mergers pay off.

The decline, the industry's first since 2003, raises demands for industry leaders Anheuser-Busch InBev NV and MillerCoors LLC to come up with better advertising and to rethink recent price increases, said retailers and analysts.

But they must tread carefully, balancing price moves against a need to drive profits in the wake of the mergers that created the two.

The two giants increased prices by about 5% last year, fresh off InBev NV's acquisition of Anheuser-Busch Cos. and the move by SABMiller PLC and Molson Coors Brewing Co. to combine U.S. operations. Those increases, along with a weak job market and lackluster advertising, contributed to the sales drop, industry analysts said.