Finance and Economic

Greece replaced its debt management chief as declines in the country’s bonds roil European markets.

Petros Christodoulou, general manager of treasury and global markets at National Bank of Greece SA, the country’s biggest lender, will take over from Spyros Papanicolaou as head of the Athens-based Public Debt Management Agency, the country’s Finance Ministry said yesterday in an e-mailed statement.

“The incoming guy is walking into a tough mandate,” said Charles Diebel, senior interest-rate strategist at Nomura International Plc in London. “Such is the sentiment towards Greece at the moment, a new broom could be a positive.”

Greek bonds have slumped in the past two months, driving yields to the highest in 10 years, on concern the government will struggle to narrow a budget deficit that is more than four times the European Union limit. Prime Minister George Papandreou’s government needs to sell 53 billion euros ($72 billion) of debt this year, the equivalent of 20 percent of gross domestic product.

Papanicolaou, a former central bank official, was appointed general director of the debt office by the previous New Democracy government in January 2005. His predecessor, Christopher Sardelis, had held the role since 1999, when the organization was created.

“I’m not stepping down,” Papanicolaou said in a telephone interview yesterday. “It’s normal” that a new government changes staff, he said. “It’s a long tradition. Whether it’s good or not, that’s another story,” he said.

Rising Yields

The Greek government is under pressure to show that it can reduce a budget deficit that was equivalent to 12.7 percent of gross domestic product last year after the EU this week stopped short of offering financial support.

The yield on Greek two-year notes has remained above 5 percent, the highest in the euro region, even after officials this week urged the nation to reduce the deficit. The premium investors demand to hold the notes instead of benchmark German securities has held above 4 percentage points, the most since the Mediterranean nation joined the euro and more than 10 times its 37 basis point average the past decade.

The yield on two-year Greek government notes yesterday rose 31 basis points to 5.67 percent. The 10-year bond yield added 16 basis points to 6.54 percent.

“It’s a very challenging job,” Papanicolaou said. “We are going through a very difficult period.”

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For the first time in a decade, Pennsylvania's bridges are actually getting healthier. That is, the number of structurally deficient bridges has decreased from a high of 6,035 in 2008 to 5,646, according to the latest rankings from the state's Department of Transportation.

Pennsylvania's focus on bridge repair has been building, beginning with the accelerated bridge program which identified 411 needy structures for repair in 2009, but actually bid 470 with another 403 bridges expected to be under contract by the end of the fiscal year.

When the federal Recovery Act came around in early 2009, dishing out $1.026 billion for transportation infrastructure to Pennsylvania, the state quickly identified another 476 crossings for repairs fast cash.

"We're making headway," said PennDOT spokesman Rich Kirkpatrick.

But much more work, not least of which will involve securing funding for bridge repairs, remains ahead.

The state is working against an infrastructure that's older than in most other parts of the country.

Almost half of its 25,322 bridges were built 50 years ago or more.

That's more than twice the national average.

Click here for a searchable database of Pennsylvania's bridges, and their current conditions.

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Home Depot Inc posted a higher-than-expected quarterly profit and raised its full-year outlook as the top home improvement chain cut costs to offset weak demand for big-ticket remodeling projects.

Although the company is seeing “some positive signs of stabilization,” Chief Executive Officer Frank Blake warned there was “still a great deal of pressure” in the housing and home improvement markets.

Home Depot and smaller rival Lowe’s Cos Inc have suffered from the prolonged U.S. housing slump. On Monday, Lowe’s said it did not expect a market recovery to begin until the middle of 2010.

Home Depot said net profit fell to $689 million, or 41 cents a share, in the third quarter ended on November 1 from $756 million, or 45 cents a share, a year earlier.

Analysts on average were expecting earnings of 36 cents per share, according to Thomson Reuters I/B/E/S.

Sales fell about 8 percent to $16 low cost payday loans.36 billion, beating the analysts’ average forecast of $16.28 billion.

Home Depot has been quicker to cut costs and constrict inventory levels than Lowe’s, and in some cases has benefited as housing markets improved in regions where it has a heavy presence.

Same-store sales fell 6.9 percent in the third quarter, with those at U.S. stores down 7.1 percent.

For the full year, Home Depot sees earnings of about $1.55 a share from continuing operations before items, down about 13 percent from the prior year. It had earlier forecast a decline of 15 percent to 20 percent.

Home Depot said it still expected sales to fall by about 9 percent this year.

(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn)

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New orders for long-lasting U.S. manufactured goods fell in August and sales of new homes rose below expectations, government data showed on Friday, fanning fears that recovery from recession would be anemic.

The Commerce Department reports overshadowed a jump in consumer confidence this month to its highest since January last year and were the latest indication that growth could taper off once the government stimulus expired.

Durable goods orders tumbled 2.4 percent in August, the largest percentage decline since January, after rising 4.8 percent in July, the Commerce Department said. That was well below market expectations for a 0.5 percent rise in August.

In another report the department said sales of newly built single-family homes rose 0.7 percent in August for a fifth straight month, to a 429,000 unit annual pace, the highest since September last year. However, the increase was below market expectations for a 440,000 unit rate.

“The trend is continuing to be positive, but not gigantically robust for growth because we don’t have a lot of consumer spending going on,” said Kurt Karl, head of economic research and consulting at Swiss Re in New York.

U.S. stocks fell on the data, which, coming a day after a survey showed a drop in existing home sales in August, served as a reminder that recovery from the worst recession since the 1930s would be protracted and bumpy.

Government bond prices rose on the news.

“While the recovery is gaining momentum, there are a number of major speed bumps on the horizon,” said Brian Bethune, chief U.S. financial economist at Global Insight in Lexington, Massachusetts.

“These include the expiry of fiscal stimulus measures supporting the housing market in November and uncertainty about the potential impact of the Federal Reserve’s ‘exit strategy’ availability of credit to critical areas such as auto and mortgage finance.”

Federal Reserve Chairman Ben Bernanke said on Friday consumer and small business loans remained in great need of the U.S. central bank’s support even as use of other financial backstop programs tapered off as markets regained balance.

Leaders from the Group of 20 rich and developing countries meeting in Pittsburg pledged to keep emergency economic support in place until sustainable recovery was in place, according to a draft communique obtained by Reuters.

AIRCRAFT HIT DURABLE GOODS

The drop in durable goods orders, a leading indicator of manufacturing activity, was largely caused by a decline in new orders for commercial aircraft — likely reflecting a drop in orders received by Boeing.

Still, new durable goods orders excluding transportation were flat in August after rising for three straight months, the Commerce Department report showed. The market had expected a 1 percent gain after a 1.1 percent rise in July.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, unexpectedly fell 0.4 percent in August — confounding market forecasts for a 1.3 percent rise. Core capital goods fell 1.3 percent in July. 

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Boeing said it’s prepared to enter the next Air Force tanker competition with one of two planes.

The St. Louis-based defense unit of Boeing Co. on Monday offered details of its tanker proposals that would be either a KC-767 or a larger, converted 777. The latter would be comparable in size to the modified A330 offered by competitor Northrop Grumman Corp. and European Aeronautic Defence & Space Co.

"Boeing is ready to deliver maximum capability at the lowest cost," Boeing program manager Rick Lemaster said in a prepared news release Monday.

The Pentagon is preparing draft guidelines spelling out the rules for a new refueling tanker competition. Boeing will review the request before it decides what it would offer, said Bill Barksdale, a spokesman for Boeing Global Mobility Systems.

In February 2008, the Pentagon chose the Northrop/EADS proposal to build aerial refueling tankers that were larger than Boeing’s proposed KC-767 tanker. Boeing protested and was supported by the Government Accountability Office, which found problems with how the contract was awarded.

The Pentagon decided to start over and reopen the $35 billion tanker competition.

"All that matters is the Air Force and what they want," Barksdale said. "If they want a bigger tanker, we have one that is definitely superior" to the A330.

Part of Monday’s message is that "the other guys don’t have a permanent advantage" with respect to the size of its tanker proposal, said Richard Aboulafia, an analyst with the Teal Group in Fairfax, Va. But converting the 777 into a refueling tanker would likely take time and money, he said.

"This is supposed to be an off-the-shelf procurement," Aboulafia said.

Boeing has produced some of the KC-767s already, including three that are in operational squadrons for the Japanese air force, Barksdale said. If it wins the contract, Boeing projects 50,000 jobs will be dedicated to the tanker. The planes would be built in Washington state.

Boeing officials provided the details at the Air Force Association’s 2009 Air and Space Conference and Technology Exposition near Washington, D.C. The company also has launched a website devoted to its refueling tanker options called UnitedStatesTanker.com

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Barrick Gold Corp said on Thursday that proceeds from its pending equity offering will total around $4 billion, making the stock sale the biggest in Canadian history, according to Thomson Reuters data.

The world’s top gold miner said underwriters exercised in full their option to purchase an additional 14.21 million shares at a price of $36.95.

The offering, including sale of the overallotment shares, is expected to close on or about September 23, and is subject to customary conditions, including the approval of the Toronto Stock Exchange.

Barrick, in a move that shows its faith that gold will continue to rise, announced an equity sale of at least $3 billion late on Tuesday, to be used to eliminate all of its fixed-price gold hedges and a portion of its floating hedges.

Gold has moved past the $1,000-an-ounce level this week. On Thursday, U.S. December gold futures settled down 30 cents at $996.80 an ounce on the COMEX division of the New York Mercantile Exchange.

Barrick’s said its common shares outstanding are expected to increase to approximately 982.7 million.

(Reporting by Deena Beasley; Editing by Christian Wiessner)

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The $10.5 million pay package for American International Group Inc’s new chief executive Robert Benmosche will likely be approved formally by the U.S. government’s compensation czar Kenneth Feinberg next week, the Wall Street Journal said, citing people familiar with the matter.

Benmosche’s pay will likely be approved before other rulings about pay at AIG are made, the paper said.

AIG, the recipient of $80 billion in taxpayer loans, said last week that its pay agreement for Benmosche had been approved in principle.

The bailed-out insurer said it will pay Benmosche, who became CEO on August 10, a salary of $3 million in cash and $4 million in fully vested stock. He also could receive a bonus valued as high as $3.5 million.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Muralikumar Anantharaman)

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Ameren Corp. said second-quarter profit fell 20 percent from a year ago when the company recorded a gain on a settlement related to the early termination of a coal-supply agreement.

Excluding the gain and other nonrecurring items, net income increased 13 percent to $161 million, or 75 cents a share. On the same basis, Ameren earned $142 million, or 67 cents a share in last year’s second quarter.

St. Louis-based Ameren, which sells electricity and natural-gas to 2.4 million customers in Missouri and Illinois, said the improvement reflects rate increases in both states within the past year and lower operating expenses totally free credit score.

Electricity sales to industrial customers fell 13 percent from last year as a result of the recession, Ameren said. The figure doesn’t include the loss of sales to Noranda Aluminum Inc.’s smelter in southeast Missouri, which has been operating below capacity since January.

Ameren benefited from electric rate increases totaling more than $300 million a year. The company’s utilities have sought additional increases in Illinois and Missouri during recent weeks.

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U.S. retailers could post their 11th consecutive drop in monthly same-store sales this week as cool weather, a weak job market, and a lack of tax-free holidays had shoppers picking through the clearance racks in July instead of buying full-priced back-to-school clothes.

July typically offers retailers a chance to bolster second-quarter profits by selling new autumn merchandise to fashion conscious students, eager to begin piecing together a stylish wardrobe for the first day of school.

But this year, analysts expect that July got little boost from back-to-school sales. Shoppers are showing a reluctance to buy anything at full price, and new fall merchandise arriving in stores is competing with the heavily discounted summer goods that failed to sell well in June.

When retailers release July sales results on Wednesday and Thursday, the reports, which measure sales at stores open at least a year, could be peppered with some profit warnings from chains that were unable to attract shoppers with the right mix of merchandise and prices.

“This is the end of the quarter for most retailers,” said Eric Beder, retail analyst at Brean Murray, Carret & Co. “The final reckoning is going to happen on Thursday.”

Beder said American Eagle Outfitters could warn on its second-quarter earnings due to back-to-school merchandise that was “highly underwhelming” and increased competition from lower-priced competitor Aeropostale Inc.

In July, overall same-store sales for U.S. retailers are expected to fall 5 percent, according to data from Thomson Reuters free business card. The figure excludes Wal-Mart Stores Inc, which stopped reporting monthly sales earlier this year.

Department stores and retail chains that sell clothes to teenagers and children are expected to post the worst sales declines in July with a 9 percent and 10.4 percent drop, respectively.

JULY NO BETTER THAN JUNE?

June same-store sales fell 4.9 percent, according to Thomson Reuters.

With last month ranking as the coolest July in North America in 17 years, according to weather tracking firm Planalytics, “We think July trends are going to be similar to slightly worse than June,” Pali Research analyst Amy Noblin said.

She said retailers also missed getting a boost in July from tax-free-shopping holidays, which were shifted in some states from the July reporting period into the August period.

During tax holidays, which have been a boon to the back-to-school sales season in recent years, states suspend their sales taxes to encourage shopping.

Wedbush Morgan said July typically represents about 30 to 35 percent of second-quarter sales for many clothing retailers. Following three months of soft sales trends, it said earnings could be at risk at American Eagle Outfitters and Zumiez Inc.

But it said that Aeropostale and Gymboree could raise earnings expectations, given solid business trends. 

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A new task force on financial literacy will develop a national strategy to help Canadians learn the basics when it comes to financing a new home, balancing the cheque book and saving for retirement.

"Our economy is built on millions of everyday financial decisions by Canadians. Recent events have shown us that financial decisions carry risk," Finance Minister Jim Flaherty said in Toronto yesterday.

A foundation of financial literacy "will make the Canadian financial system more stable, more competitive and make the economy stronger," he added.

Donald Stewart, chief executive of Sun Life Financial Inc., will serve as chair of the task force. It has 13 members, drawn from business, education, community organizations and academia.

"Our focus is going to be on practical solutions for real people in real life," he said.

While education falls within the provincial domain, he expects co-operation from all sides. "It’s very important that the government get the best advice available and do this with the co-operation of the provinces," Flaherty said acceptance car insurance.

The task force is expected to deliver its findings in the fall of 2010.

Task force member Bill Schwartz developed lesson plans for "The City," a website that helps teachers teach and students learn financial life skills. The program, which took more than five years to develop, is mandatory learning for Grade 10 students in British Columbia.

It can be a challenge to convince education ministers "that teaching financial life skills is as important as teaching reading and history," said Patricia Bowles, director of communications and education for the B.C. Securities Commission, which spearheaded the program.

"It’s way better to graduate young people with those skills as they go into a job or post-secondary than to try to teach somebody in mid-life."

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