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Stocks extend gains after drop in jobless claims

admin — Thu, 09 Sep 2010 20:29:09 +0000

Stocks extended their September rally Thursday following more encouraging news on the job market.

NEW YORK (AP) -- Stocks extended their September rally Thursday following more encouraging news on the job market.

The Dow Jones industrial average gained 28 points after the Labor Department said first-time claims for unemployment benefits fell last week to the lowest level in two months. In another hopeful sign on the economy, the trade deficit narrowed in July.

Stocks pared their gains in the afternoon after a report came out saying Deutsche Bank is considering raising new money through a stock sale, in what could be another troubling sign for European banks. Trading volume was very light.

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The jobs report came in much better than analysts had expected and added to other positive signals on the economy, including a pickup in job creation for August reported last week. Treasury prices and gold fell as investors found themselves with more appetite for risk.

"The employment report is still the king of kings," said Edwin Denson, head of market strategy at Singer Partners LLC. "The labor market is still the indicator, that if it's positive, would give people the most comfort."

Unemployment claims have still not fallen enough to suggest that widespread hiring is around the corner, but investors have taken solace in recent employment news that suggest the economy will continue to grow slowly during the rest of the year. Traders concerned about the potential for the economy to slide back into recession drove stocks lower through most of August.

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"All we need is slightly good news ... relative to expectations, and at this point expectations are relatively poor," said Tyler Vernon, principal and portfolio manager at Biltmore Capital Advisors.

According to preliminary calculations, the Dow Jones industrial average rose 28.23, or 0.3 percent, to close at 10,415.24. The Dow had risen as much as 90 points earlier.

The Standard & Poor's 500 index rose 5.31, or 0.5 percent, to 1,104.18, while the Nasdaq composite index rose 7.33, or 0.3 percent, to 2,236.20.

Rising stocks outpaced those that fell three to two on the New York Stock Exchange, where volume was extremely low at 840 million shares.

--The Associated Press

Oregon index of leading indicators dips further in July

admin — Thu, 09 Sep 2010 17:44:06 +0000

The index, which follows indicators ranging from housing starts to consumer confidence, has declined 4.7 percent over the past six months.

University of Oregon economist Tim Duy has crunched July's numbers and they aren't good.

Duy, whose UO Index of Economic Indicators tracks trends, says the figures - unless reversed quickly in the next month - are consistent with "renewed economic weakness again emerging in the next three to six months."

The index, which follows indicators ranging from housing starts to consumer confidence, has declined 4.7 percent over the past six months.

"In the past," Duy says, "such declines have foreshadowed a decline in nonfarm payrolls."

The situation reminds Duy of the period following the 2001 recession: a temporary improvement followed by renewed weakness, although initial employment declines are less pronounced this time.

Duy's index fell 2 percent in July, from a revised June figure of 88.1. (The index is based on a 1997 value of 100). June registered a small increase, reflecting revised Oregon numbers that showed a jump in temp-agency hiring.

In Oregon in July, initial unemployment claims rose and residential building permits fell sharply. But temp agency hiring, often a leading indicator, edged up.

Nationally, consumer confidence fell, manufacturing orders dropped and the interest-rate spread declined as investors decided previous market forecasts had been too optimistic.

Duy highlighted the similarity to the period following 2001's recession. "This would be consistent with fears," he said, "that the economic improvement beginning in the latter half of 2009 would reverse with the fading of the positive impetus of inventory correction and fiscal stimulus."

- Richard Read

New York AG reviewing college debit and credit card pacts

admin — Thu, 09 Sep 2010 17:31:18 +0000

The investigation could look into SUNY's pacts with Higher One, which provides debit cards at Portland State, Southern Oregon and Mt. Hood Community College.

The Associated Press/Mike GrollNew York Attorney General Andrew M. Cuomo

UPDATED 9/9: New York Attorney General Andrew M. Cuomo has asked 300 colleges in New York for copies of their contracts with credit card and debit-card companies. His office also announced a "code of conduct" with State University of New York to protect students from “deceptive and unfair credit card marketing,” according to Bloomberg.

Several State University of New York campuses appear to use Higher One debit cards either as student IDs. As It's Only Money readers know, four Oregon colleges have contracted with Higher One to distribute its financial aid.

Portland State and Southern Oregon's student IDs can double as a Higher One debit card. Both colleges recently negotiated one controversial fee off the card, though they've also agreed to continue marketing it almost as if the fee still existed.

Julie Harrison Blissert, public affairs director at SUNY at Oswego, said the New York Attorney General's office and state comptroller both approved the campus' agreement with Higher One in 2007. Students can receive financial aid through the card, but it doesn't function as an ID.

"Complaints from students are many, many fewer than under our previous system of issuing refund checks, primarily because that process took weeks, compared to about one business day currently," Blissert said by e-mail. "We inform new students about fees associated with the debit card at our Orientation sessions; we encourage them to contact us if they feel fees are unwarranted or excessive and we work on their behalf with Higher One. In our experience, Higher One has typically waived the abandoned account fee, for example."

Lane Community College student and a Portland State student filed complaints this year with Oregon Attorney General John Kroger's office about Higher One's fees.
Kroger's office forwarded one complaint to the company and said it was voluntarily resolved; the other was closed because the consumer did not request action.

Mortgage rates edge up as investor worries ease

admin — Thu, 09 Sep 2010 15:28:23 +0000

Mortgage rates mostly edged up last week as investors’ fears about the economy eased.

Mortgage rates mostly edged up last week as investors’ fears about the economy eased.

Mortgage buyer Freddie Mac says the average rate for a 30-year fixed loan was 4.35 percent, up from 4.32 percent the week before. It was only the second rise in the past 12 weeks. Last week’s was the lowest number since Freddie Mac began tracking rates in 1971.

The average rate on a 15-year fixed loan remained at 3.83 percent after falling last week. It’s still the lowest rate on records starting in 1991.

Rates have been falling since spring as investors shift money into safe Treasury bonds. That influx of money has lowered Treasury yields, which mortgage rates tend to track.

But improved economic news this month has drawn some money back into the stock market.

--The Associated Press

Elizabeth Warren could head new consumer agency

admin — Thu, 09 Sep 2010 15:18:37 +0000

Elizabeth Warren, a popular but polarizing consumer advocate, met with President Barack Obama at the White House Tuesday, adding to speculation she could be named to head a new consumer protection agency.

WASHINGTON — Elizabeth Warren, a popular but polarizing consumer advocate, met with President Barack Obama at the White House Tuesday, adding to speculation she could be named to head a new consumer protection agency.

Warren also met with senior administration officials last month. However, White House spokeswoman Amy Brundage said other candidates are still being considered and that no decision has been made on who will lead the agency, which was created under terms of the financial overhaul bill Obama signed into law earlier this year.

The agency will have vast powers to enforce regulations covering mortgages, credit cards and other financial products. Consumer advocates and labor groups want Obama to nominate Warren to lead the agency, but she has little support within the financial community and her nomination could set the stage for a divisive Senate confirmation hearing.

Warren now heads the Congressional Oversight Panel, which has been a watchdog over the Treasury Department’s bank bailout fund.

Others mentioned as contenders to lead the consumer agency are Michael Barr, an assistant treasury secretary who was a key architect of the administration’s financial regulatory plans, and Eugene Kimmelman, a deputy assistant attorney general in the Justice Department’s antitrust division.

--The Associated Press

Trade deficit shrinks, boosting hopes for economic growth

admin — Thu, 09 Sep 2010 15:09:47 +0000

The trade deficit narrowed significantly in July as exports climbed to the highest level in nearly two years, reflecting big gains in sales of U.S.-made airplanes and other manufactured goods while imports declined

WASHINGTON — The trade deficit narrowed significantly in July as exports climbed to the highest level in nearly two years, reflecting big gains in sales of U.S.-made airplanes and other manufactured goods while imports declined.

The July deficit fell 14 percent to $42.8 billion, the Commerce Department reported today. That was much lower than economists had forecast. The lower trade deficit should give a boost to overall economic growth.

Exports rose 1.8 percent to $153.3 billion, the best showing since August 2008, as sales of jetliners, industrial machinery, computers and telecommunications equipment all posted large gains. Imports, which had been surging, dropped 2.1 percent to $196.1 billion.

Imports of oil edged up a slight 0.1 percent to $26.8 billion but demand for other foreign products fell sharply. Imports of autos dropped by $713 million while those for other consumer goods such as clothing, televisions and toys all dropped sharply. Demand for business machinery and other capital goods also declined.

The drop in demand for imports reflected the slowdown in the U.S. economy during the spring as businesses cut back on rebuilding inventories and consumer demand slackened under the weight of high unemployment.

The surge in the trade deficit in the second quarter had trimmed 3.4 percentage points in the April-to-June quarter, leaving the gross domestic product rising at an anemic rate of 1.4 percent in the spring. The narrowing of the deficit in July, if it continues, could give a boost to GDP growth in the third quarter.

Economists at Decision Economics said in a research note that analysts who had been expecting 2 percent GDP growth in the third quarter might need to revise those forecasts higher by as much as a percentage point.

Through the first seven months of this year, the trade deficit is running at an annual rate of $495.1 billion, 32 percent higher than the $374.9 billion deficit for all of 2009, a year when the trade gap narrowed dramatically as a deep recession cut into demand for imports.

While the deficit is expected to increase this year, economists are hoping that an improving global economy will boost demand for U.S. exports. So far, manufacturing has been a standout performer in what has been a sub-par economic recovery.

For July, the trade deficit with China dropped slightly to $25.9 billion, but remained the highest for any country. Through the first seven months of this year, the deficit with China is running 17.7 percent above last year’s pace, spurring increased calls in Congress for a crackdown on what critics see as unfair Chinese trade practices such as a currency regime that keeps the Chinese yuan lower in value against the dollar. American manufacturers contend the yuan is undervalued by as much as 40 percent, making Chinese products cheaper in the United States and American goods more expensive in China.

Given America’s high unemployment rate, there is growing pressure to erect barriers to protect American workers. Some lawmakers are pushing legislation that would impose trade sanctions on Chinese imports unless Beijing moves more quickly to allow its currency to rise in value against the dollar.

The deficit with the European Union jumped by 27.8 percent to $9.9 billion in July. U.S. sales to Europe have been hurt by a rise in the value of the dollar against the euro earlier this year during the European debt crisis. The higher dollar compared to the euro makes American goods less competitive in that region while making European products cheaper for U.S. consumers.

America’s deficit with Canada, the country’s largest trading partner, dropped to $1.4 billion in July, a decline of 44.4 percent, while the deficit with Mexico narrowed to $5.3 billion, a decline of 14 percent.

Chinese President Hu Jintao sought to smooth over recently rocky relations with the United States on Wednesday, telling two visiting administration officials that he wants to see healthy and stable ties between the two nations.

Lawrence Summers, head of Obama’s National Economic Council, and Deputy National Security Adviser Thomas Donilon had productive discussions during two days of talks in Beijing, according to National Security Council spokesman Mike Hammer. But beyond the positive tone, neither side provided details of any agreements that might have been reached during the meetings.

Treasury Secretary Timothy Geithner on Wednesday noted that China in June had announced it would allow its currency to be more flexible in relation to the dollar. Since that time, the yuan has risen in value by less than 1 percent.

Geithner, in an interview on Bloomberg television, said the administration would like to see Beijing move more quickly on currency revaluation. The House Ways and Means Committee has scheduled a hearing on the currency issue for next week.

__The Associated Press

Smoothies help boost McDonald’s revenues

admin — Thu, 09 Sep 2010 14:58:02 +0000

August’s summer heat provided a lift for fast-food giant McDonald’s, pushing a key revenue figure up 4.6 percent in the U.S. during the month as customers came in for frappes and fruit smoothies.

NEW YORK — August’s summer heat provided a lift for fast-food giant McDonald’s, pushing a key revenue figure up 4.6 percent in the U.S. during the month as customers came in for frappes and fruit smoothies.

But the results weren’t as strong as analysts were expecting, largely on weakness in Europe, and shares fell this morning.

The world’s largest hamburger chain said that August sales at restaurants open at least 13 months climbed 4.9 percent. While the performance was strong and beat growth of 2.2 percent from in August 2009, it is down from July’s 5.7 percent rise — the biggest monthly increase since a 6.1 percent gain in April 2009.

The measurement is important for restaurant operators because it measures growth at existing locations. It excludes growth at stores that open or close during the year.

McDonald’s Corp. said the figure climbed 2.2 percent in Europe on strong results in the U.K. and Russia. Limited items, such as the U.K.’s summer barbecue food event, drove sales.

In the rest of the world, those sales were up 7.8 percent — marking a reverse from a drop of 0.5 percent in the same period last year. Among the strongest performers were Japan, China and Australia. The hamburger chain said menu items that appealed to local tastes and convenience helped push sales higher.

Shares fell $2.18, or 2.9 percent, to $73.90 in morning trading.

Performance in the U.S. and Asia, the Middle East and elsewhere beside Europe was strong, said Janney Capital Markets analyst Mark Kalinowski, but “Europe was the culprit.”

He had expected revenue at locations open at least a year to rise 5.5 percent there. He told clients in a note that Europe’s weak results could be because of France, which lowered its value-added tax on restaurant meals from 19.6 percent to 5.5 percent. That spurred a sales gain in August 2009, which created a tougher comparison, he said.

“This move likely helped to boost McDonald’s sales the last several months, but not that we’ve rolled over the benefits from this modification, all else equal France won’t be producing as robust top-line results now that the benefit is gone,” he said.

Revenue in rose 4.7 percent overall, though the company did not say how much revenue was.

McDonald’s, based in Oak Brook, Ill., says customers continue to be drawn to its low cost and core menu items. Its focus on value through its $1 menu has helped the company outpace competitors, including Burger King Corp. and Wendy’s/Arby’s Group Inc. in the weak economy. Shoppers are limiting their meals out in restaurants and increasingly focusing on price when they do venture out.

New menu items, including the highly profitable smoothies the company launched nationwide in mid-July, are also spurring sales. The drinks cost a little over $2 for a small.

So far this year, through the end of August, revenue at locations open at least a year rose 4.9 percent overall, an improvement from 4.2 percent at the same time last year. The figure rose 3.3 percent in the U.S., slightly below last year’s 3.5 percent. The fast-food industry is still hurting a bit in the U.S. as shoppers continue to grapple with weak job and housing markets.

Europe’s performance also slowed, with the figure rising 4.8 percent there, down from 5.2 percent last year. That market too is hurting because of the economy. But the rest of the world’s growth soared, rising 6.2 percent, from 3.8 percent last year. Consumer-oriented companies are increasingly focusing their growth in less developed markets including China as those economies grow.

The company said it tentatively plans to release its third-quarter results on Oct. 21.

--The Associated Press

Apple to publish guidelines on what can be sold in App Store

admin — Thu, 09 Sep 2010 14:48:00 +0000

Apple Inc. said today that it will publish the guidelines it uses to determine which programs can be sold in its App Store.

NEW YORK — Apple Inc. said today that it will publish the guidelines it uses to determine which programs can be sold in its App Store.

The move follows more than two years of complaints from software developers about the company’s secret and seemingly capricious rules, which block some programs from the store.

Developers have had little guidance from Apple, meaning they often had to complete their programs only to find them blocked by the company. The company has been known to block applications because of sexual content, because they contain political satire, and because they just don’t do much.

All the same, Apple’s store has been a runaway success since its launch in 2008, and now has more than 250,000 applications for iPhones, iPads and iPod touches.

Apple also said it will lift restrictions imposed earlier this year on using third-party development tools that “translate” code written for another platform. That means developers who work in Adobe Systems Inc.’s Flash or Oracle Corp.’s Java language can convert their programs into iPhone apps without rewriting them.

The App Store’s chief competitor, Google Inc.’s Android Marketplace, has few restrictions for developers.

Adobe shares jumped on the news, rising $2.29, or nearly 8 percent, to $31.60 in morning trading. Apple shares rose $2.87, or 1.1 percent, to $265.79. Google shares gained $8.68, or 1.8 percent, to $479.26. Oracle shares rose 23 cents to $24.37.

--The Associated Press

3M to buy warming blanket business

admin — Thu, 09 Sep 2010 14:40:55 +0000

Manufacturing conglomerate 3M Co. has agreed to pay $810 million for Arizant Inc., a company that makes heating devices for surgical patients.

ST. PAUL, Minn. — Manufacturing conglomerate 3M Co. has agreed to pay $810 million for Arizant Inc., a company that makes heating devices for surgical patients.

The deal announced today is one of a string of recent acquisitions for 3M as it stretches beyond its traditional business of making Post-It Notes and Scotch Tape.

Last month, 3M agreed to buy Attenti Holdings SA, an Israeli company that makes ankle bracelets used to keep track of people, for $230 million. It also announced it would put up $943 million for Cogent Inc., which provides equipment that reads finger and palm prints.

Arizant, which is majority owned by the New York private equity firm Court Square Capital, is based in Eden Prairie, Minn., near 3M’s own headquarters in St. Paul.

Arizant launched in 1987 with a product called the Bair Hugger, a type of warming blanket that helps regulate body temperature for patients under general anesthesia.

According to 3M, which expects to close the acquisition during the fourth quarter, Arizant’s technology is now used on more than 20 million patients a year.

The company has about 375 employees and expects revenue this year of about $200 million.

3M shares rose 84 cents, or 1 percent, to $83.59 in morning trading.

--The Associated Press

Thursday biz roundup: Mining companies plan to export coal through Northwest; more federal money to fight Oregon foreclosures

admin — Thu, 09 Sep 2010 13:55:53 +0000

Also: Port of Portland director Bill Wyatt got a glowing job evaluation and a pay raise Wednesday.

Kraig Scattarella/The Oregonian

Here's a roundup of the morning's news from The Oregonian's business desk:

Markets: Stocks extended their September rally Thursday after another report showed modest improvement in the job market.

Energy: While Oregon works to shut its only coal-fired electricity plant and reduce the state's greenhouse gas emissions, global mining companies are increasingly bullish about exporting that very same coal through Northwest ports to China.

PGE: The utility has completed the final phase of the Biglow Canyon wind farm near Wasco in Sherman County.

Real estate: Still more federal money is pouring into Oregon in hopes of alleviating the foreclosure problems plaguing homeowners.

Insurance: Oregon employers on average will see no change in workers' compensation insurance costs next year -- the first time costs haven't dropped since 2003.

Port: Port of Portland director Bill Wyatt got a glowing job evaluation and a pay raise Wednesday.

Retail: New businesses in Washington County, Bridgeport Village and Washington Square.

Find the latest Oregon business news at The Oregonian's Business Center, or follow us on twitter.