]]> http://variousnotes.com/shoppers-skipping-pomegranates-show-india-rate-dilemma-economy-bloomberg/feed/ http://variousnotes.com/sears-holdings-returns-to-a-profit-in-1st-quarter/ http://variousnotes.com/sears-holdings-returns-to-a-profit-in-1st-quarter/#comments Thu, 17 May 2012 11:56:03 +0000 Economic http://variousnotes.com/sears-holdings-returns-to-a-profit-in-1st-quarter/ Sears Holdings Corp. returned to a first-quarter profit, benefiting from a gain on the sale of some stores.

The Hoffman Estates, Ill., company, which runs Sears, Kmart and Lands’ End, also said Thursday that it plans to spin off a minority stake in Sears Canada Inc.

Sears earned $189 million, or $1.78 per share, for the period ended April 28. It lost $170 million, or $1.58 per share, a year ago.

Excluding store closing costs and other items, Sears lost 31 cents per share from continuing operations. Analysts expected a loss of 67 cents per share.

Revenue slipped 3 percent to $9.27 billion, hurt by unfavorable currency exchange rates. Wall Street forecast $9.26 billion.

Sears will keep an approximately 51 percent stake in Sears Canada, down from 95 percent.

Source

The move has been widely expected, since the company’s options for appeasing its creditors were running out. LightSquared’s lenders claim that it has been in default on its debt since its $9 billion partnership with Sprint Nextel (, Fortune 500) dissolved in March.

LightSquared’s principal backer, hedge fund Harbinger Capital Management, had already twice staved off bankruptcy by receiving short-term waivers from its creditors. The last such deal, struck two weeks ago, was reached after Harbinger founder Philip Falcone agreed to leave LightSquared’s board in the near future.

But the lenders continued trying to wrestle control of the company away from Falcone and Harbinger, and an agreement that would have granted another waiver extension could not be reached before a Monday deadline.

"Today’s filing was not an option the company embraced quickly or easily, but it was necessary to protect LightSquared against creditors who were looking for a quick profit, as opposed to our goal to create long-term market competition," said Falcone in a prepared statement.

The Chapter 11 bankruptcy protection documents were filed in New York’s Southern District Court in New York.

Related story: The wireless industry’s biggest gamble is failing

LightSquared’s prospects for becoming a national carrier hit a major setback in February, when U.S. regulators barred the company from turning on its network, citing interference concerns with GPS devices. A month later, Sprint terminated its agreement with the company. The deal would have provided LightSquared with 4G infrastructure in return for $9 billion cash and the delivery of additional network capacity for Sprint quick payday loans.

LightSquared’s lenders viewed the cancelled deal as a material default on the terms of the company’s debt. Harbinger vehemently disagreed; it viewed the Sprint deal as essentially worthless at the time it was dissolved.

LightSquared has more than $5 billion in funding: $2.9 billion from Harbinger and $2.3 from outside lenders and investors. The company had ambitions to become the country’s fifth nationwide wireless carrier, going toe-to-toe with giants such as Verizon (, Fortune 500) and AT&T (, Fortune 500).

But those dreams began to unravel in February, when LightSquared failed to convince the Federal Communications Commission and the National Telecommunications and Information Administration that its network would not interfere with GPS signals. CEO Sanjiv Ahuja stepped down two weeks later.

LightSquared’s investors have increased their pressure on Harbinger to sell the company’s assets to another wireless carrier. Falcone believes LightSquared still has some options available to it, including swapping wireless spectrum with another company or government agency, which would sidestep the interference issues.

The company is sitting on a truckload of valuable wireless spectrum, and it continues its hopes of entering the wireless market as a wholesale provider of 4G service. Falcone said Monday that the bankruptcy filing provides the company "the additional runway it needs to resolve the regulatory issues."

Yet that goal now seems far out of reach — a dismal end for one of the tech industry’s most ambitious and expensive gambles.  

Source

Last-ditch efforts by President Karolos Papoulias to broker a deal between wrangling party leaders ended with no deal in sight late Sunday, a week after national elections produced a deadlock, with no party winning enough seats to form a government.

State television said talks would continue Monday evening between the heads of the parties that came in the top three spots in the elections, the conservative New Democracy, radical left-wing Syriza and socialist PASOK, plus the head of the small Democratic Left party, which is in a king-maker position.

But Syriza said it would not attend the talks, state television said, throwing the entire meeting into question.

Syriza head Alexis Tsipras campaigned on a platform for Greece to pull out of its commitments in the international bailout agreement, which has given the country billions in rescue loans. He has insisted he can’t back a government that won’t overturn the harsh austerity measures taken in return for the bailout.

“Syriza refuses to be a left-wing alibi for a government that will continue the policies the people rejected on May 6,” NET state television quoted Tsipras as saying.

Spokesmen for the three other parties said they would attend Monday’s meeting.

Voters furious at the handling of Greece’s financial crisis and two years of harsh austerity measures taken in return for the bailout loans punished the formerly dominant PASOK and New Democracy, which saw their support crumble to historic lows Business Card Holders. Syriza made big gains, more than tripling its popularity to come in second place after campaigning on an anti-bailout platform.

New Democracy head Antonis Samaras, PASOK leader Evangelos Venizelos and Democratic Left head Fotis Kouvelis, agree a coalition must be formed that will work to guarantee Greece’s continued presence in the euro, but have insisted it must have the participation or at least the support of Syriza.

In return for (EURO)240 billion ($310 billion) in rescue loans from the European Union and International Monetary Fund, Greece has imposed severe spending cuts, including slashing pensions and salaries in the public sector, and repeated rounds of tax hikes. The austerity has left Greece mired in a fifth year of deep recession, with unemployment spiraling above 21 percent.

“After today’s meeting it is obvious they are demanding that Syriza become an accessory to a crime,” Tsipras said earlier, after the discussions with the president. “In the name of democracy, of our patriotic duty, we cannot accept this shared guilt. We call on all Greeks to condemn once and for all the forces of the past and to realize that only one hope remains: unity against blackmail in order to prevent the continuing barbarity.

“Fellow Greeks, we can assure you of one thing: we will not betray you.”

If no solution can be found, Greece will have to hold new elections next month, prolonging the political uncertainty and bringing the country’s continued membership in the euro into doubt.

Source

More than three years after the financial industry almost collapsed, the colossal misfire was cited as proof that big banks still do not understand the threats posed by their own speculation.

“It just shows they can’t manage risk _ and if JPMorgan can’t, no one can,” said Simon Johnson, the former chief economist for the International Monetary Fund.

JPMorgan is the largest bank in the United States and was the only major bank to remain profitable during the 2008 financial crisis. That lent credibility to its tough-talking CEO, Jamie Dimon, as he opposed stricter regulation in the aftermath.

But Dimon’s contention that the $2 billion loss came from a hedging strategy that backfired, not an opportunistic bet with the bank’s own money, faced doubt on Friday, if not outright ridicule.

“This is not a hedge,” said Sen. Carl Levin, D-Mich., chair of a subcommittee that investigated the crisis. He said the trades were instead a “major bet” on the direction of the economy, as published reports suggested.

On Friday, Dimon told NBC News, for an interview airing Sunday on “Meet the Press,” that he did not know whether JPMorgan had broken any laws or regulatory rules. He said the bank was “totally open” to regulators.

The head of the Securities and Exchange Commission, Mary Schapiro, told reporters that the agency was focused on the JPMorgan loss but declined to comment further.

JPMorgan’s disclosure Thursday recharged a debate about how to ensure that banks are strong and competitive without allowing them to become so big and complex that they threaten the financial system when they falter.

The JPMorgan loss did not cause anything close to the panic that followed the September 2008 failure of the Lehman Brothers investment bank. But it shook the confidence of the financial industry.

Within minutes after trading began on Wall Street, JPMorgan stock had lost almost 10 percent, wiping out about $15 billion in market value. It closed down 9.3 percent. Fitch Ratings also downgraded the bank’s credit rating by one notch.

Morgan Stanley and Citigroup closed down more than 4 percent, and Goldman Sachs closed down almost 4 percent. The broader stock market was down only slightly for the day.

Dimon gave few details about the trades Thursday beyond saying they involved “synthetic credit positions,” a type of the complex financial instruments known as derivatives.

Enhanced oversight of derivatives was a pillar of the 2010 financial overhaul law, known as Dodd-Frank, but the implementation has been delayed repeatedly and will not take effect until the end of this year at the earliest.

JPMorgan’s trades show that the derivatives market remains too opaque for regulators to oversee effectively, said Rep. Barney Frank, D-Mass., one of the law’s namesakes.

“When a supposedly responsible, well-run organization could make such an enormous mistake with derivatives, that really blows up the argument, `Oh, leave us alone, we don’t need you to regulate us,’” he said.

Criticism of the bank did not stop with its traditional chorus of detractors. It also came from Sen. Bob Corker, R-Tenn., a prominent member of the Senate Banking Committee who has received $10,000 since January 2011 from JPMorgan’s political action committee, the most any candidate has received.

Corker, a leader of a failed effort last year to block a Federal Reserve rule that slashed bank profits from debit cards, called for a hearing “as expeditiously as possible” into the events surrounding JPMorgan’s loss.

Tim Ryan, president of the Securities Industry and Financial Markets Association, a trade group, said it was imposible to legislate or regulate risk out of the financial system short term personal loans.

“My hope is that this is viewed as bona fide hedging, but it went wrong,” he said in an interview. “A mistake was made. Money is going to be lost. It’s not customer money. It’s not government money. It’s JPMorgan’s money, the shareholders of JPMorgan.”

No one seemed to suggest Friday that JPMorgan had broken a law. But the mistake added a wrinkle to the still-unsettled discussion about how the financial industry should be regulated in the aftermath of 2008.

“This just tells you that we are a long, long way from getting our arms around this whole `too big to fail’ issue,” said Cliff Rossi, a former top risk executive for Citigroup, Countrywide and other big financial companies.

Immediately after the crisis, a time of popular outrage over bailouts and investment losses, there was broad public support for an overhaul of bank regulations.

The changes promoted by the Obama administration were in many cases similar to what the financial industry had sought before the crisis: Consolidation of regulators and oversight of the multi-trillion-dollar marketplace for derivatives.

Regulators are still drafting hundreds of rules under the 2010 law. As Wall Street has returned to record profits, and executives to million-dollar bonuses, banks have fought to soften those rules.

In particular, the industry has fought hard against a few provisions that might have prevented the problems at JPMorgan.

One is the so-called Volcker rule, which will prohibit banks from trading for their own profit. The rule is still being written, and the Federal Reserve has said it will begin enforcement in 2014.

JPMorgan said that its bets were made only to hedge against financial risk. Dimon conceded that the strategy was “egregious” and poorly monitored. But analysts, former bank executives and many lawmakers disagreed.

“This is an exact description of proprietary trading-style activity,” Sen. Jeff Merkley, D-Ore., told reporters Friday. “This really is a textbook illustration of why we need a strong Volcker rule firewall.”

Nancy Bush, a longtime bank analyst at NAB Research and a contributing editor at SNL Financial, said the trades probably crossed that line because they were making money for JPMorgan.

“So they made money on hedges and then they hedged some more,” she said. “At some point it goes from being a hedge to being a moneymaker.”

JPMorgan was seen as a savior of weaker banks during the financial crisis and the only big bank to escape relatively unscathed. His reputation enhanced, Dimon, 56, has been emboldened to challenge efforts to toughen regulation.

In an interview with the Fox Business Network earlier this year, Dimon said that Paul Volcker, the former Federal Reserve chairman for whom the rule is named “doesn’t understand capital markets.”

Last year, he questioned the current Fed chair, Ben Bernanke, about the rules and said they might be delaying the recovering of the financial system and the broader economy.

“Has anyone bothered to study the cumulative effect of all these things?” he asked.

Dimon, who grew up in the Queens borough of New York and was groomed by the former Citigroup chief executive Sanford Weill, has also chafed against Occupy Wall Street protesters.

“Acting like everyone who’s been successful is bad and that everyone who is rich is bad _ I just don’t get it,” he said at a conference earlier this year.

On Thursday, at about the same time he was breaking news of the $2 billion loss to Wall Street, Dimon sent an email to JPMorgan’s 270,000 worldwide employees assuring them that the company was “very strong.”

Source

The Dow rose 19.98 points to close at 12,855.04, after rising almost 100 points earlier in the day. The Standard & Poor’s 500 index rose 3.41 points to close at 1,357.99.

Before Thursday, the Dow had fallen six days in a row, its longest losing streak since August.

Investors have worried that job growth is fading. They were encouraged by a Labor Department report that applications for unemployment benefits dropped 1,000 to 367,000 in the week ending May 5.

That pulled the four-week average, which economists watch more closely, down to 379,000 _ closer to the 375,000 level, which suggests job growth is strong enough to reduce the unemployment rate.

Eight out of 10 industry groups in the S&P 500 rose, with only materials and technology stocks declining. Utilities were the biggest gainers, up 0.9 percent, followed by health care and consumer staples.

Tech stocks closed down 0.8 percent, and the Nasdaq composite index fell 1.07 points to 2,933.64. Networking gear maker Cisco Systems plunged 10.5 percent after warning that technology spending appears to be slowing and that its revenue would rise much less than analysts expected this quarter. Hardware maker Oracle fell 2.7 percent.

Stocks also benefited from news that Spain would take over Bankia SA, the country’s fourth-largest bank, which has high exposure to bad property loans. The government hopes to convince investors that Spain won’t need a bailout. The yield on Spain’s 10-year debt fell 0.12 percentage points to 5.95 percent _ meaning its borrowing costs fell slightly because of reduced worries about its debt.

Spain’s IBEX 35 index jumped 3.4 percent.

“Europe’s problems are by no means being solved. But the feeling that there is some support there probably helps sentiment a little bit,” said Ed Hyland, a global investment specialist with J.P. Morgan Private Bank.

Other European stocks rose, too. Britain’s FTSE 100 closed 0.3 percent higher, and Germany’s DAX rose 0.7 percent.

Other U.S. stocks on the move:

_ Pfizer rose 1.7 percent after the drugmaker got preliminary approval for an arthritis drug.

_ Avon fell 3.3 percent after beauty products maker Coty Inc. raised its offer to buy Avon but also said it will withdraw the latest bid if it doesn’t get a response by the close of business Monday. Some analysts have been saying Avon is worth more.

_ Kohl’s fell 4.3 percent after price-cutting led to a 23 percent drop in its first-quarter profit.

Oil prices rose 8 cents to $96.89 per barrel.

Source

For the three months to March 31, HSBC reported Tuesday a net profit of $2.58 billion for the period, down from $4.15 billion a year earlier. Operating income was flat at $20.44 billion.

The bank said its tax bill rose from $491 million a year ago to $1.39 billion in the first quarter, and insurance claims and liabilities increased by $836 million.

Gary Greenwood, analyst at Shore Capital, said the bank had reported “a pretty decent set of numbers” with a strong recovery in global banking and markets, a reduction in its underlying cost/income ratio and a cut in impairments from $3 billion to $2.4 billion.

HSBC shares were up 1 percent at 561 pence following the release of the report, which was better than expected payday loan lenders.

“We continued to make good progress in implementing our strategy, with 11 transactions to dispose of or close businesses announced since the start of 2012, and we continued to position the business for growth with increased revenues in Hong Kong, Latin America and rest of Asia-Pacific against the previous quarter,” Chief Executive Stuart Gulliver said.

The number of full-time equivalent employees at the end of the quarter was 285,000, down 3,500 from the previous quarter, the bank said.

Source

Analysts were watching for signs of voter anger over Monti’s austerity measures and toward mainstream parties that have supported them since Monti took over from Silvio Berlusconi in November.

Candidates for mayor in Parma and in Genoa who galvanized discontent with mainstream politics appeared to gain enough votes to force a runoff, projections showed. And the popular mayor of Verona, whose Northern League party has strongly opposed a new housing tax, appeared headed to a first round victory.

Italy’s more established parties were faring less well.

“We made a mistake with our candidates, I don’t have a problem admitting it,” said Ignazio La Russa, former defense minister in the Berlusconi government.

The government said turnout after polls closed was 67.5 percent, 6.5 percent lower than in the last such elections.

Some 9.5 million Italians were eligible to vote for 942 city councils and mayorships.

Source

Japan will be without electricity from nuclear power for the first time in four decades when the reactor at Tomari nuclear plant on the northern island of Hokkaido goes offline for routine maintenance.

After last year’s March 11 quake and tsunami set off meltdowns at the Fukushima Dai-ichi plant, no reactor halted for checkups has been restarted amid public worries about the safety of nuclear technology.

“Today is a historical day,” Masashi Ishikawa shouted to a crowd gathered at a Tokyo park, some holding traditional “koinobori” carp-shaped banners for Children’s Day that have become a symbol of the anti-nuclear movement.

“There are so many nuclear plants, but not a single one will be up and running today, and that’s because of our efforts,” Ishikawa said.

The activists said it is fitting that the day Japan is stopping nuclear power coincides with Children’s Day because of their concerns about protecting children from radiation, which Fukushima Dai-ichi is still spewing into the air and water.

The government has been eager to restart nuclear reactors, warning about blackouts and rising carbon emissions as Japan is forced to turn to oil and gas for energy.

Japan now requires reactors to pass new tests to withstand quakes and tsunami and to gain local residents’ approval before restarting.

The response from people living near nuclear plants has been mixed, with some wanting them back in operation because of jobs, subsidies and other benefits to the local economy payday loans guaranteed no fax.

Major protests, like the one Saturday, have been generally limited to urban areas like Tokyo, which had received electricity from faraway nuclear plants, including Fukushima Dai-ichi.

Before the nuclear crisis, Japan relied on nuclear power for a third of its electricity.

The crowd at the anti-nuclear rally, estimated at 5,500 by organizers, shrugged off government warnings about a power shortage. If anything, they said, with the reactors going offline one by one, it was clear the nation didn’t really need nuclear power.

Whether Japan will suffer a sharp power crunch is still unclear.

Electricity shortages are expected only at peak periods, such as the middle of the day in hot weather, and critics of nuclear power say proponents are exaggerating the consequences to win public approval to restart reactors.

Hokkaido Electric Power Co. spokesman Kohei Ofusa said Saturday’s shutdown was proceeding as planned. Power generation was gradually being reduced, with all operations expected to end at 11 p.m. (1400 GMT), he said.

Yoko Kataoka, a retired baker who was dancing to the music at the rally waving a small paper Koinobori, said she was happy the reactor was being turned off.

“Let’s leave an Earth where our children and grandchildren can all play without worries,” she said, wearing a shirt that had, “No thank you, nukes,” handwritten on the back.

Source

Before the elections, investors have the monthly U.S. government jobs report to digest. It often sets the market tone for a week or two after its release as it’s considered the key barometer of the health of the world’s largest economy.

Following a week of mixed U.S. economic releases, there’s a high degree of uncertainty going into the figures, which will be released an hour before Wall Street opens. At the moment, the consensus in the markets is that the U.S. generated around 160,000 jobs during April _ a steady if unspectacular result. The range is between 90,000 and a little over 200,000.

“What we can say is that there will be considerable uncertainty going into the release of today’s payrolls report,” said Adrian Foster, an analyst at Rabobank International.

The figures could well have a bearing on market expectations over whether the U.S. Federal Reserve enacts another monetary stimulus over the coming months. Recent indicators have suggested that the U.S. economy has lost steam at the start of this year.

In the run-up to the figures, stocks were trading lower in Europe. The FTSE 100 index of leading British shares was down 0.7 percent at 5,725 while Germany’s DAX fell 0.6 percent to 6,652. The CAC-40 in France was 0.8 percent lower at 3,198.

Wall Street was poised for a subdued open though clearly that could alter once the payrolls figures are out _ both the Dow futures and the S&P 500 futures were down 0.1 percent.

The dollar could be a major mover after the payrolls data. Ahead of them, the currency was fairly steady, with the euro down 0.1 percent at $1.3134.

Once the payrolls figures are digested, investors will be focusing on weekend elections in France and Greece Faxless payday loans. In France, President Nicolas Sarkozy has for weeks looked like he would lose to his socialist rival Francois Hollande, but recent opinion polls suggest the election could be tighter than expected.

Though a change in leadership in Paris could prompt a change in the way Europe responds to the debt crisis that’s already seen three countries bailed out, the elections in Greece have the potential to prompt far more volatility once markets reopen on Monday.

“Traders then need to position themselves for the weekend drama, with the Greek elections the major event risk,” said Chris Weston, institutional trader at IG Markets.

Opinion polls in Greece are banned in the run-up to elections so there’s no real clear gauge as to the likely result. However, it does seem that Greek society is heavily divided and that the traditional parties of right and left will not get anything like the level of support they have been used to. New Democracy and Pasok are backing the terms of the most recent bailout, unlike many of the smaller parties that may well garner some support in Sunday’s elections.

Earlier in Asia, Hong Kong’s Hang Seng fell 0.8 percent to 21,086 and South Korea’s Kospi lost 0.3 percent to 1,989.15.

However, mainland Chinese shares rose, with the benchmark Shanghai Composite Index up 0.5 percent at 2,452.01 and the Shenzhen Composite Index adding 1.1 percent to 972.30.

Oil prices drifted lower alongside stocks in Europe, with the benchmark New York rate down 93 cents at $101.61 a barrel.

____

Pamela Sampson in Bangkok contributed to this report.

Source