Financial life in a big town

The Philippine central bank refrained from cutting its benchmark interest rate on concern lower borrowing costs would weaken the peso and fan inflation.

Bangko Sentral ng Pilipinas maintained the rate it pays banks for overnight deposits at 6 percent for a second month today, Governor Amando Tetangco told reporters in Manila. The decision was predicted by 7 of 16 economists in a Bloomberg News survey. Nine expected the bank to lower the benchmark.

“Rising readings on core inflation suggest there are still price pressures in the pipeline,'' Tetangco said. “Sources of upside inflation risk remain, including volatility in the foreign-exchange market.''

Bangko Sentral has reduced the amount of deposits it requires banks to hold in reserve, approved a dollar-lending facility and raised the amount banks can borrow from it to boost liquidity, rather than join counterparts in India and China in cutting interest rates to sustain growth amid a global recession. Those measures are adequate for the economy, Tetangco said today.

“The central bank is more concerned about the exchange rate so I think any rate cut may happen in January unless major economies slow further and drastically,'' said Joric Nazario, treasurer at Philippine Veterans Bank in Manila.

Peso Falls

The peso fell 0.2 percent today to a two-year low of 49.999 against the dollar. It's declined 17 percent this year, set for the biggest drop since 2000, shortly before former President Joseph Estrada was ousted from office by a popular revolt in January 2001.

“Reducing policy rates would affect capital flows,'' Deputy Governor Diwa Guinigundo said today cash in 1 hour. Keeping the rate steady “will prevent additional volatility in the foreign- exchange market.''

The peso's drop is eroding the value of local assets and threatening to swell the nation's $33 billion foreign-currency obligations. Foreign investment in stocks and bonds posted a net outflow of $911.5 million in the ten months to October compared to a net inflow of $3.7 billion in the same period a year ago, data from the central bank showed.

Remittances from overseas nationals this quarter will boost the supply of dollars and support the peso, Guinigundo said.

Bangko Sentral had raised interest rates three times since early June to damp inflation that accelerated to a 16-year high in August, before halting last month. Consumer-price gains have slowed to 11.2 percent in October and may fall below 10 percent next month, Tetangco said yesterday.

Flexibility to Review

“If the upside risks start to retreat next month or in 2009, there's a flexibility to review'' the policy stance, Guinigundo said today. Still, possible increases in government wages may be a risk to inflation, he said.

Expansion in the Southeast Asian nation may slow to an eight-year low of 3.5 percent next year while average inflation will likely ease to 6 percent, the International Monetary Fund said last week.

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SIOUX FALLS, S.D. — The United States added nearly 1,400 megawatts of new wind energy capacity during the second quarter of 2008, providing enough electricity to power more than 400,000 homes, according to an industry report released Wednesday.

The American Wind Energy Association said new wind turbines this year will generate some 7,500 megawatts of additional electricity, far surpassing the 5,249 megawatts installed in 2007.

Wind power accounted for more than one-third of the new electric generating capacity installed in the U.S. in 2007, and the industry is projected to grow at a 45 percent pace for the second straight year, said Randall Swisher, the association’s executive director.

"We’re past the point of wind being a marginal player," Swisher said.

A financial bailout package passed by Congress and signed by President George W. Bush earlier this month provided an eight-year extension of investment tax credits for the solar industry but gave just a one-year extension of production tax credits for the wind industry.

Swisher said wind advocates were disappointed they couldn’t secure a more long-term policy, but the industry will work with the next administration on a stable five-year tax credit extension and a federal renewable energy standard internet payday loans.

The government, utilities and financiers also will have to come together to build a nationwide network of high voltage lines that will provide a backbone so the country can fully access its wind potential.

"In 2009, energy will be front and center with the new Congress and the new administration," Swisher said. "Both McCain and Obama have made that clear."

Swisher said the credit crisis and overall economic downturn undoubtably will have some effect on the capital-intensive industry, but it’s too early to predict to what extent.

He said capital in the near-term clearly will cost more and be more difficult to get, but other factors provide a bit of a silver lining. Transportation costs are continuing to come down, and steel prices have dropped significantly in the last few months. A wind turbine, by weight, is 89 percent steel, Swisher said.

Industry growth also is occurring on the manufacturing side. Eight new wind turbine component manufacturing facilities opened in the U.S. this year, nine were expanded and 19 new facilities were announced, according to the trade group.

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United Airlines parent UAL Corp (UAUA.O: Quote, Profile, Research, Stock Buzz) posted a quarterly loss due to July’s record-high energy prices and a drop in the value of its fuel hedges as oil later plummeted, but the results were not as bad as Wall Street expected, and the company’s shares rose more than 10 percent.

The loss underscores the troubles UAL and its rivals had last quarter as they grappled with skyrocketing fuel bills that peaked alongside crude oil in July.

The carrier suffered an additional noncash loss of $519 million, however, as its hedges — designed to blunt the impact of rising fuel — lost book value as oil began a rapid descent.

“While oil prices are lower in recent weeks, they continue to be volatile,” UAL Chief Executive Glenn Tilton said in an e-mail to employees.

“That said, the convergence of falling oil prices with our capacity flexibility, strong improvement on costs and competitive revenue put us in a position to make our margin and return United to profitability,” Tilton said faxless online payday advances.

Minus the noncash loss, the carrier’s results easily beat market expectations. UAL shares rose $1.30, or 10.3 percent, to $13.97 in morning Nasdaq trade.

The airline industry has been battered by soaring fuel costs, which peaked alongside crude oil as it notched a record high in July. Oil has fallen about 50 percent since it touched its high.

Nevertheless, airlines are rapidly downsizing to offset fuel bills. UAL, which intends to reduce its domestic capacity by 14 percent in the fourth quarter, is cutting 7,000 jobs from its workforce of 55,000. 

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Diversified electronics maker Samsung Electronics Co Ltd said it is re-entering the U.S. computer market with a range of branded products that build on its component supply strengths.

The Korean-based company will introduce on Tuesday new ultralight notebooks designed to appeal to potential buyers of Apple Inc’s ground-breaking MacBook Air and smaller “netbook” models from the likes of Asustek Computer.

Breaking into the crowded U.S. market involves taking share from more established players. The Korean electronics maker sees other Asian brand-name players as vulnerable, especially Toshiba Corp, Sony Corp and Lenovo.

Samsung is also coming out with models aimed at business professionals and the market for bulkier laptops known as “desktop replacements,” a Samsung executive said.

Like Apple’s Air, Samsung’s X-Series premium lightweight notebooks come with options for either a hard drive or solid state memory no teletrek payday advance. But Samsung’s X360 is priced at $2,499 and carries 128 gigabytes of flash memory, twice the 64 gigabytes that comes with the Apple Air selling for $2,598.

“These products really go after Apple and Sony. This is the MacBook Air killer,” Bret Berg, the senior product manager for Samsung’s U.S. computer division, said in an interview.

The X360 weighs 2.8 pounds and has an ultra-thin, tapered wedge design with a magnesium allow chassis, an aluminum top and a “pebble”-style keyboard.

Samsung’s hard-drive version, the X460, starts at $1,899 for a 160-gigabyte hard drive, twice the capacity of Apple’s existing MacBook Air model that is priced at $1,799 for an 80-gigabyte drive. The X460 weighs just under 4.2 pounds. 

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OTTAWA–Prime Minister Stephen Harper leapt on the news that Canada created a record 107,000 new jobs last month as evidence his government has the right policies for the economy.

The massive number – the largest since Statistics Canada began tabulating labour statistics in this manner in 1976 – shocked economists who had been forecasting a modest pick-up in the 12,500 range.

"When I say that notwithstanding the challenges our fundamentals are strong, let me repeat we’ve had GDP (gross domestic product) numbers up dramatically, we’ve had employment numbers up dramatically," Harper told a rally in Brantford, Ont.

However 90 per cent of last month’s new jobs – 97,000 – were part-time, and the official unemployment rate remained at 6.1 per cent because more Canadians were looking for work.

"It seems like everyone has a paper route these days," commented CIBC World Markets economist Avery Shenfeld. "How else to explain how Canada created 97,000 part-time jobs in a single month, during a period of severe economic strain across the country?"

The Canadian Labour Congress said the "low-quality" new jobs offer "an omen of tough economic times."

But Finance Minister Jim Flaherty said the numbers show the government has handled the economy properly, including by cutting taxes last October to stimulate activity.

He noted that the International Monetary Fund predicts Canada will top the G7 in growth next year with a modest 1.2 per cent advance.

With most economists judging the economy is in or near a recession, the September job increase may be seen as a correction of the 55,000 lost jobs in July, which also threw economists for a loop.

BMO Capital Markets economist Douglas Porter noted the latest numbers come from a survey in mid-September, "just as financial turmoil began to gather serious momentum," and may already be old news. But they show the domestic economy "carried much firmer momentum heading into the storm than many other nations."

Statistics Canada concedes the survey of 53,000 households has an error factor of plus or minus 43,500 jobs from the 107,000 number, 90 per cent of the time.

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The worldwide credit crunch has sideswiped the blockbuster corporate partnership between the companies of auto-parts tycoon Frank Stronach and Russian billionaire Oleg Deripaska.

Russian Machines, which Deripaska controls, revealed yesterday it had relinquished its big stake and accompanying boardroom clout in Magna to lenders who financed his $1.54 billion (U.S.) investment last year.

Basic Element, Deripaska’s investment company, said in a statement it had decided to "terminate the participation of Russian Machines as a shareholder in Magna International due to the current global financial crisis."

Industry and financial sources say many Russian companies that have spent heavily abroad in recent years now face serious squeezes because refinancing debt has become much more expensive in view of credit woes rocking the world’s financial systems.

"It’s clear he (Deripaska) was forced to sell," said one analyst who requested anonymity.

Basic Element didn’t identify any creditors. But in filings at the time of the purchase of the 20 million Magna A shares, it named BNP Paribas SA, a major bank in France, as a top lender.

Speculation swirled yesterday that institutional investors would snap up many shares because they consider Magna undervalued at current prices.

Magna’s A shares plunged $8.23 or 16 per cent at one point in trading on the Toronto Exchange after the early morning announcement, but they recovered later and closed the day at $46.32, down $2.92, or about 6 per cent. The company, which is feeling the impact of the turmoil in the North American auto industry, has lost more than half of its market value in the past year.

In disclosing the exit of Russian Machines, Magna added that the Deripaska firm will no longer be an indirect shareholder in Stronach’s lucrative European consulting company. In a side deal last year, Russian Machines invested $150 million for a 50 per cent stake in Stronach & Co. which entitled it to millions of dollars in annual consulting fees from Magna (quick payday loans).

Magna co-chief executive officer Siegfried Wolf said the company still has a good working relationship with Deripaska, Russian Machines and subsidiary GAZ Group, Russia’s second biggest auto company.

"We believe that the Russian market still holds significant opportunities for us and intend to continue to pursue joint opportunities …," Wolf said in a statement.

Tracy Fuerst, Magna’s director of corporate communications and media relations, also noted that the decision did not reflect any disagreement between Magna and the Russian interests.

"It had nothing to do with the relationships we have with Oleg, Basic Element or Russian Machines," Fuerst said.

She also said Magna’s ownership will revert to previous percentages, whereby a Stronach family trust will indirectly control the holding company that has two-thirds of the parts maker’s voting shares.

In May 2007, Magna announced that Russian Machines would buy the big stake in exchange for six of 14 seats and 42 per cent of the holding company that would control Magna.

It also meant that the Stronach trust would reduce its level of control in the new venture.

A small group of senior managers would hold the remaining interest plus two seats.

The new company would control 68 per cent of Magna although it held only 16 per cent of the equity.

Magna’s senior managers said the arrangement would bolster the company’s fortunes in Russia and other nearby countries, where emerging middle classes are increasing demand for autos.

Shareholders approved the deal a few months later although there was significant opposition.

Some minority investors, including the Ontario Teachers’ Pension Plan Board, argued there was little consideration for shareholders who held most of Magna’s equity.

Sourse

ROME–Italy’s government held emergency talks with unions and investors yesterday over a plan to save Alitalia, as the bankrupt airline risks having to ground flights for lack of fuel.

The rescue plan would have investors buying profitable assets and investing euro1 billion ($1.4 billion).

But the plan also envisages wage cuts and layoffs opposed by the unions.

The government began mediating when direct talks broke down Friday after the investors failed to win the unions’ crucial support. The investors said, however, that their offer remained on the table.

The labour and transport ministers met yesterday with representatives of flight attendants and pilots, who have been the most critical of the rescue plan.

The talks with unions and investors had started Saturday but ended late at night with no resolution.

Among the sticking points in the talks are new contracts, salary cuts and layoffs that might run to 5,000, out of the airline’s 20,000-strong work force.

Each side has accused the other of being intransigent. But with time running out and the airline edging toward collapse, officials gave some signal of compromise. "There is a different atmosphere. Everybody is aware that there are no alternatives to an agreement," said Giuseppe Caronia of the transport chapter of the UIL national labour confederation cash advance. “There’s a sense of a moderate, cautious optimism.”

Labor Minister Maurizio Sacconi, who summoned all nine Alitalia unions to the meeting, expressed confidence that a deal would be reached.

Italian reports said the investors might offer an additional euro100 million ($140 million) in order to minimize the wage cuts and overcome the unions’ opposition.

However, pilots union representative Fabio Berti said after yesterday’s talks that he saw no substantial improvement. "Right now it is very difficult to be optimistic,” he added. Other union leaders voiced similar concerns.

In a sign of high tensions yesterday, Administrator Augusto Fantozzi was heckled and booed as he walked into the Labor Ministry for the meetings. Some in a crowd of 200 Alitalia workers that had gathered outside the ministry shouted: "Buffoon! Buffoon!" while others threw coins at him.

Workers have been holding protests and demonstrations for days, including at Rome’s Leonardo da Vinci airport, where on one occasion flights had to be cancelled.

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The U.S. government plans to put government sponsored mortgage finance companies Fannie Mae and Freddie Mac under federal control, the New York Times and Washington Post newspapers reported late Friday, in what could be the largest financial bailout in the nation’s history.

The two government sponsored enterprises (GSEs) own or guarantee almost half of the country’s $12 trillion in outstanding home mortgage debt.

The Wall Street Journal reported earlier on Friday that the U.S. Treasury Department is close to finalizing a plan to restructure the two companies that includes changes to their senior management.

The plan could be announced as early as this weekend, the Journal said.

U.S. Treasury spokeswoman Brookly McLaughlin declined to comment on the Journal report on Friday. Fannie Mae and Freddie Mac spokesmen also declined to comment. The Federal Reserve, which earlier this year gave both companies the right to borrow from its discount window if necessary, declined comment also http://paydayloans-on.com.

The two firms would be placed in “conservatorship”, the Washington Post said, citing sources familiar with the discussions.

The value of the company’s common stock would be diluted but not wiped out, while the holdings of other securities, including company debt and preferred shares, would be protected by the government, the Washington Post said.

Senior Bush administration and Federal Reserve officials called in top executives of Fannie Mae and Freddie Mac on Friday and told them that the government was preparing to place the two companies under federal control, officials and company executives told the New York Times. 

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Kohl's Department Stores said Wednesday its same-store sales fell 5.8 percent in August.

Menomonee Falls, Wis.-based Kohl's (NYSE: KSS) said overall sales for the four-week period ending Sept. 1 increased 2.6 percent, to $1.26 billion, compared with $1.22 billion over the similar period in 2007.

For the fiscal year to date, Kohl's said total sales were up 2.6 percent, to $8.6 billion, compared with $8.4 billion in the same period a year earlier. On a comparable store basis, sales for the period decreased 5.6 percent.

Kevin Mansell, Kohl's president and CEO, said some back-to-school business such as footwear and children’s performed well while other areas, such as juniors and young men’s, were more challenging.

“As expected, August was more difficult than our expectations of a 2 to 4 percent comparable sales decrease for the third quarter," Mansell said.

As of Aug faxless payday loans. 30, the company operated 957 stores in 47 states, including Georgia, compared to 834 in 46 states at the same time last year.

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As proposed buyouts sweep through the drug sector, Pfizer’s failure in recent years to buy another big rival has surprised many investors, some of whom say its too late for a big acquisition to rescue the No. 1 drugmaker.

Investors had long expected Pfizer to acquire another large drugmaker or sizable biotechnology companies to gain rights to new medicines before it loses U.S. patent protection on its Lipitor cholesterol fighter in 2011.

“The hole created by generic forms of Lipitor will be so gapingly big that it’s hard to argue convincingly for an acquisition,” said Scott Richter, a portfolio manager with Fifth Third Asset Management. He noted that other Pfizer drugs will also lose patent protection soon after Lipitor.

The company, which rakes in $13 billion a year for Lipitor, also badly needs new products to offset sales declines for drugs already facing generic competition.

Pfizer, which became the industry leader by buying Pharmacia Corp and Warner-Lambert Corp over the past decade, is trading at 11-year-lows because its laboratories have failed to produce important drugs payday advance low fees. Pfizer edged up 1 cent to $19.85 on the New York Stock Exchange on Monday.

Richter said other drugmakers are facing similar problems, including a poor record of developing new drugs or getting them approved. “So Wall Street would be super-skeptical about the success of bringing two problem children together.”

Moreover, Richter said, Pfizer would probably need to repatriate many billions of dollars in overseas profits to finance a big deal. That would greatly raise its tax rate, he cautioned.

Pfizer’s inaction has been underscored in recent weeks by Roche Holding AG’s (ROG.VX: Quote, Profile, Research, Stock Buzz) $44 billion offer for all outstanding shares of its U.S. partner, Genentech Inc (DNA.N: Quote, Profile, Research, Stock Buzz), and Bristol-Myers Squibb Co’s (BMY.N: Quote, Profile, Research, Stock Buzz) $4.5 billion bid for cancer-drug partner ImClone Systems Inc (IMCL.O: Quote, Profile, Research, Stock Buzz). 

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