Financial life in a big town

JP Morgan Chase CEO Jamie Dimon was overwhelmingly optimistic Monday — but was quick to say things would be even better were it not for government policies.

His reasons for optimism: the world’s strongest military, best businesses, most entrepreneurial workforce and deepest capital markets. "We have the royal straight flush," Dimon told Fortune.

So what’s the problem? Dimon cited three examples of where the government went wrong: The debt ceiling crisis, the failure to adopt Simpson-Bowles and what he calls the "constant attack on business."

When asked why, at a time of record profits, Corporate America isn’t hiring more, Dimon said American businesses had added 4 million jobs in the past two years no fax needed payday loans. "I don’t think government policy had anything to do with it," Dimon said. "It should have been 8 million.

More video on Jamie Dimon and the economy:

Dimon on lending, taxes and Romney

Buffett: Obama beats Romney on economy

Obama: Trickle down doesn’t work

Munger on Occupy: ‘I hate that’ 

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Oil prices dropped slightly on Wednesday after the government reported an increase in U.S. supplies.

Benchmark West Texas Intermediate crude lost 22 cents to $103.33 per barrel in New York. Brent crude, which sets the price of oil imported into the U.S., lost 28 cents to $117.88 per barrel in London.

Prices dipped after the Energy Information Administration reported that U.S. oil supplies increased by 4 million barrels last week. The increase was a surprise following an industry trade group’s prediction late Tuesday that supplies had declined last week. The price of oil tends to fall as more supply becomes available to refineries.

Crude supplies climbed close to a record high in Cushing, Okla., where benchmark crude is delivered. High oil supplies in Cushing have pushed the benchmark price lower than other oil varieties. Those supplies are expected to begin falling in May when the Seaway Pipeline begins carrying crude oil from Cushing to the Gulf Coast.

Supplies also rose last week on the East Coast, Gulf Coast, Midwest and Rocky Mountains.

Petroleum demand fell by 3.2 percent when compared with the same time last year.

At the pump, gasoline prices fell for a ninth day to an average $3.84 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. The price of gasoline has declined by an average of 9.6 cents per gallon since it hit $3.936 per gallon on April 6.

In other energy trading, heating oil was flat at $3.1314 per gallon and gasoline futures gave up 3.05 cents to $3.1288 per gallon. Natural gas added 2.9 cents to $2.004 per 1,000 cubic feet.

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A top European Central Bank official says the 17 countries that use the euro will probably see a “very mild recession” this year and that higher oil prices should not have a lasting impact on inflation.

Benoit Coeure, an ECB executive board member, told Japan’s Nikkei newspaper that growth was held back by scarce bank credit and necessary government budget-cutting because of problems with debt in some eurozone countries.

He added that higher oil prices and increased value-added taxes on consumer purchases in some countries had led the bank to raise its outlook for inflation but that “insofar as they are temporary, higher energy prices should not have a lasting impact on inflation.”

Coeure said that whether inflation rose over the longer term would depend on whether higher oil prices were reflected in higher wages, creating so-called second round effects or a wage-price spiral.

He said in an interview text made public Sunday that “there are good reasons to believe that second-round effects will be limited.”

Coeure is one of six members of the ECB’s executive board, the body that runs the bank day to day at its Frankfurt headquarters. He also sits on the 23-member governing council, which decides interest rates.

Higher prices have become part of the bank’s discussion of the economy in recent days thanks to higher prices for crude and an easing of the eurozone debt crisis with a successful debt reduction and second bailout for Greece. Fears of a deeper recession and financial crisis pushed inflation concerns to the background in the last two months of last year when the bank cut interest rates.

But inflation increased in February to 2.7 percent, above the bank’s goal of just under two percent, and ECB President Mario Draghi said at his news conference last week that it was likely to remain over 2 percent for all of this year before falling payday advance. For 2013 the bank projects inflation between 0.9 and 2.3 percent.

Draghi made renewed mention of the bank’s primary mission of keeping inflation under control, as spelled out in the basic EU treaty, saying that task was “of the essence.”

That, along with expectations of a mild rather than deep recession, lead some analyst to think the ECB will not lower its benchmark rate below the current record low of 1 percent and may leave them unchanged into next year. Lower rates help growth but can worsen inflation if done at the wrong time.

The bank has helped bring a period of respite from the eurozone debt crisis with two offerings of more than euro1 trillion ($1.32 trillion) in cheap, 3-year loans to banks. The loans added around euro500 billion net in new cash to the banking system, given that some of the money was moved to the new loan offering from previous ECB loan programs.

The money has helped weaker banks repair their finances and led some of them to buy government bonds. That lowered borrowing costs for indebted governments such as Italy and Spain. High borrowing costs fed by fears of default are what drove Greece, Ireland and Portugal to seek bailout loans from other eurozone countries and the International Monetary Fund.

The eurozone economy shrank 0.3 percent in the fourth quarter, and two quarters of negative growth is one definition of recession.

The ECB’s staff projections foresee growth between minus 0.5 percent and plus 0.3 percent this year.

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Official data show that Germany’s unemployment rate edged up to 7.4 percent in February, due to a spell of bitterly cold weather.

The Federal Labor Agency said Wednesday the unadjusted jobless rate was up from 7.3 percent in January. The number of people registered as unemployed was 3.11 million _ that’s 26,000 more than in January but 203,000 fewer than a year ago.

Germany’s job market is nonetheless remains in a good condition after two years of strong economic growth.

Its strength contrasts with high unemployment in economically weaker countries that have been hit hard by the eurozone debt crisis. Spain and Greece have jobless rates above 20 percent.

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Agribusiness conglomerate Archer Daniels Midland Co. says it will cut 1,000 jobs company wide.

CEO Patricia Woertz said in a Wednesday statement that the majority of the positions will be salaried staff. The move will cut about 15 percent of the company’s corporate staff.

The Decatur, Ill.-based company employs 30,000 people worldwide.

Woertz says the company is cutting jobs to boost productivity and profits. The company does everything from processing crops to make food ingredients, to shipping grain overseas.

The last year has been a volatile one for agribusiness companies, with crop prices swinging wildly on global markets.cher Daniels Midland to cut 1,000 jobs

Eds: APNewsNow. Will be updated.

Agribusiness conglomerate Archer Daniels Midland Co business card. says it will cut 1,000 jobs company wide.

CEO Patricia Woertz said in a Wednesday statement that the majority of the positions will be salaried staff. The move will cut about 15 percent of the company’s corporate staff.

The Decatur, Ill.-based company employs 30,000 people worldwide.

Woertz says the company is cutting jobs to boost productivity and profits. The company does everything from processing crops to make food ingredients, to shipping grain overseas.

The last year has been a volatile one for agribusiness companies, with crop prices swinging wildly on global markets.

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Greece’s government warned Tuesday that the debt-crippled country will have to ditch the euro if it fails to finalize a second, euro130 billion ($169 billion) international bailout.

Spokesman Pantelis Kapsis said negotiations in the next three or four months with international debt monitors will “determine everything,” including whether Greece escapes a disastrous bankruptcy.

Greece is being kept afloat by a first, euro110 billion ($142 billion) international bailout agreed in May 2010, after investors shocked by the country’s huge budget deficit and debt mountain demanded sky-high interest rates to continue buying Greek bonds.

An additional bailout was agreed in October, when it became clear that the first batch of funds would not suffice, but that deal has yet to be finalized.

Sorting out the details of the bailout, which also foresees a euro100 billion writedown of Greece’s privately held debt, is the main task of the coalition government headed by former central banker Lucas Papademos, whose short mandate is expected to expire in early April.

“This famous loan agreement must be signed, otherwise we are outside the markets, out of the euro and things will become much worse,” Kapsis told private Skai TV.

In return for its first batch of rescue loans from its European partners and the International Monetary Fund, Greece imposed deeply resented austerity measures to contain its budget deficit _ set to hit at least 9 percent of GDP last year despite repeated spending cuts and tax hikes.

Kapsis said further cutbacks, possibly including new taxes, might be required to address a revenue shortfall,

“We will see what the shortfall is and it is very likely that measures will be required,” he said. “I also don’t believe it is easy to impose new taxes, but what does cutting spending mean? To close down the public sector?”

“There is no easy solution,” Kapsis said.

The details are expected to be determined during talks later this month with debt inspectors from the EU, the European Central bank and the IMF, who will determine whether the country receives its next loan installment.

“We can’t take (approval of the next installment) for granted,” Kapsis warned.

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Ask the people who invest billions for a living to name their favorite picks for 2012 and you’ll get a smorgasbord worthy of a holiday party: Brazilian stocks, U.S. junk bonds, and government debt from Colombia. Ask them what they dislike and they’ll name one of the top-performing investments this year: U.S. government bonds.

Investors can rattle off a long list of reasons to avoid Treasurys. They pay next to nothing and are bound to plunge in value whenever interest rates begin climbing from their historically low levels. It seems nobody likes Treasurys, yet everybody keeps buying them anyway.

“Our least favorite asset is Treasurys,” said Christine Hurtsellers, chief investment officer for fixed-income at ING Investment Management during a recent press briefing. “We still have a lot, but it’s hard to make the argument for them.”

It’s a tricky problem for bond-fund managers at a time when everyday Americans are trusting them with more of their savings. Among investors, there’s a solid belief that Treasury prices must fall and push interest rates up at some point. But those who have bet on a Treasury market collapse this year got burned.

Bill Gross, the bond-world version of investment sage Warren Buffett, dropped nearly all Treasury holdings from the fund he manages at Pimco in early 2011. He argued that if Republicans held up lifting the government’s borrowing limit, the country would risk default. Borrowing rates would spike as the world’s investors dropped U.S. government debt, just as they have in Europe.

Most of what Gross predicted came true. The debt-limit fight raised worries about default and led to Standard & Poor’s taking away the country’s AAA credit rating in early August. But instead of spiking, U.S. borrowing rates plunged as traders sold everything else to buy U.S. government debt. The race into Treasurys helped drive the entire bond market up 3.8 percent from July to September. Gross got the big picture right but his big bet against Treasurys didn’t pan out. Pimco’s Total Return Fund lost 1.2 percent, its worst quarterly performance in three years.

It’s been a recurring story since the financial crisis hit in 2008. For three years running, pundits have predicted that investors will eventually refuse to finance the U.S. government’s $15 trillion in debt and the Treasury market will collapse. But worries over the U.S. economy and the perilous state of Europe’s financial system keep drawing banks and money managers from around the world back to the U.S. dollar and Treasurys.

That demand continues to push U.S. government bond prices up, the main reason why the Treasury market has returned 8.5 percent this year, despite microscopic yields, according to Bank of America-Merrill Lynch data. The benchmark for stock market funds, the S&P 500 index, has returned less than 1 percent, including dividend payments, and that’s with a 7.4 percent surge over the past week.

“It’s been a pretty strong year for bonds,” said Michael Gitlin, director of fixed income at T. Rowe Price, “and it’s largely a result of Treasurys.”

Judging by the gauges money managers usually check before making a move, buying Treasurys still looks like a bad idea. Consider this sample:

(asterisk) The benchmark 10-year Treasury pays just 2 percent a year. Take inflation into account and the payout on Treasurys equals negative 1.5 percent, what finance types call the real rate.

(asterisk) Treasury yields pay less than top-grade corporate bonds at 3.7 percent and even less than the stock market’s 2 percent dividend yield.

“My colleagues say there’s little value in 10-year (Treasurys) and I’d agree,” Gitlin said. “People have been saying there’s a fixed-income bubble. No, there’s a Treasury bubble.”

If there’s so little to like about U.S. government bonds, why are the world’s investors still buying Treasurys instead of dumping them? In a word, it’s Europe.

As the crisis seemed to spread from country to country this year, the world’s traders plowed more money into Treasurys. The higher the demand for U.S. debt, the lower the interest rate, or yield. So when it looked like Greece might default on its debts earlier this year, the yield on the 10-year Treasury note sank below 3 percent. And when attention turned to Italy and its government debts the yield sank even further, dipping below 2 percent in September. The shift of money out of Europe and into the U.S. has pushed Europe’s borrowing rates to dangerous levels while causing U.S. interest rates to sink.

“You can hate the budget situation and hate the low yield, but if there’s a panic it’s the asset that outperforms,” said Robert Robis, head of fixed-income strategy at ING Investment Management.

A good reason to hold Treasurys, in other words, is that the Treasury market remains the world’s favorite hiding spot. So, for many fund managers Treasurys aren’t exactly an investment. Buying Treasurys is like taking out an insurance contract, Robis said. They’re protection against global financial trouble.

The ING Global Bond fund, for instance, has 15 percent of its $641 million in Treasurys, less than the 20 percent in the benchmark Barclay’s bond index. Robis said having none would be like betting European governments will come to a quick solution to the region’s debt crisis and that the U.S. economy will soon recover its health.

“There’s still a need to hold Treasurys,” Robis said. “Just don’t expect to make a fortune off them.”

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Bistate wage gender gap

The wage gap between men and women yawns wider in Missouri and Illinois than elsewhere, according to new data from the Bureau of Labor Statistics.

The average full-time woman worker in Missouri made just 75 percent of the average man’s earnings in 2010. Women in Illinois did a little better at 78 percent. The national average is 81 percent.

The bureau doesn’t blame the gap on state-to-state differences in sexism. Instead, it cites “variations in the occupations and industries found in each state and the age composition of each state’s labor force.”

In Missouri, the median weekly wage stood at $813 for men and $616 for women. Illinois was at $814 for men and $634 for women. The national average is $824 for men and $669 for women. (Jim Gallagher)

Ralcorp in ‘buy’ mode

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Stocks edged between small gains and losses Friday afternoon as traders scrutinized a plan to contain Europe’s debt crisis that sent the market soaring a day earlier.

The Dow Jones industrial average ended up nearly 23 points at 12,231. The Dow surged 339 points the day before, its biggest gain since Aug. 11. The Dow is headed for its biggest monthly gain since 1987.

“It’s a kind of sobering-up after a day of partying,” said Jerry Webman, chief economist with Oppenheimer Funds in New York.

European leaders unveiled a plan early Thursday to expand their regional bailout fund and force banks to keep bigger cash buffers. Banks agreed to forgive half of Greece’s debt. The Dow and the Standard & Poor’s 500 index both gained more than 3 percent.

Optimism ebbed on Friday as analysts raised questions about the plan, which lacks many key details. It is not yet clear how the rescue fund will work, for example. European markets mostly fell, and the euro declined against the dollar.

“We got back to what’s more of a square position, closer to where we want to be, and now we’re going to take a couple of deep breaths and reassess what this really means,” Webman said short term personal loan. He said there are still plenty of obstacles to overcome before the crisis is resolved.

One troubling sign: Borrowing costs for Italy and Spain increased, signaling that traders remain worried about their finances.

The S&P 500 index was up less than a point at 1,285. The Nasdaq composite index slipped a little over a point to 2,737.

The Dow is up 11.9 percent this month, the S&P 13.4 percent. Both indexes are on pace to have their best month since January 1987.

In less than four weeks, the Dow has risen 14.5 percent from its 2011 low, reached on Oct. 3. The S&P has gained 16.6 percent in that time. However, the Dow remains 4.8 percent below this year’s high, reached on April 29. The S&P is 6.1 percent below its high.

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