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While optimism among small U.S. businesses perked up slightly in September, owners saw little to celebrate as they planned to cut inventories and trim their workforce, a survey released on Tuesday showed.

The National Federation of Independent Business said its small business index for last month rose 0.2 point to 88.8 and was 7.8 points higher than the survey’s second-lowest reading reached in March.

“The good news is the index didn’t decline,” said William Dunkelberg, chief economist for the group. “The bad news is that improvements were far less than what we hoped for.

“The job generating machine is still in reverse,” said Dunkelberg. “Sales are not picking up, so survival requires continuous attention to costs, and labor costs loom large.”

More firms plan more inventory reductions than plan to invest, and more owners plan to trim their workforce than plan to increase employment, NFIB said.

Credit markets are expected to remain difficult for those wanting to borrow, but with inventory investment and capital spending plans near historic lows, it is clear that loan demand — not the supply of credit — is weak, the trade group said no fax pay day loans.

There is not a lot of optimism about the economy, which is one reason why hiring and spending plans remain depressed, Dunkelberg said.

Only 7 percent think the current period is a good time to expand, the group said.

“Although third-quarter real GDP growth will likely be over 3 percent, the surge hasn’t shown up on Main Street as yet,” Dunkelberg said.

Of the small business owners polled, 32 percent said their biggest problem was a dearth of customers.

(Reporting by Nancy Waitz; Editing by Kenneth Barry)

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Investment bank Lazard Ltd said on Sunday that Chairman and Chief Executive Bruce Wasserstein, a legendary dealmaker, had been hospitalized for an irregular heartbeat.

Wasserstein’s condition is serious, but he is stable and recovering, Lazard said, adding that it will not be providing updates at this time.

Wasserstein, a rainmaker since the 1970s, has most recently been involved in the looming takeover battle between Kraft Foods Inc and Cadbury PLC.

The Wall Street veteran achieved fame as an adviser to buyout house KKR on its unprecedented acquisition of RJR Nabisco in 1989, which was recorded for posterity in the book, “Barbarians at the Gate,” by Bryan Burrough and John Helyar no faxing payday loan. Until a few years ago, the RJR takeover was the largest leveraged buyout in history.

(Reporting by Paritosh Bansal; Editing by Jan Paschal)

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As the top dogs of private equity gather in Dubai next week for one of the industry’s biggest events, the priority will be raising and retaining money from investors in the Middle East rather than spending it in the region.

Just three investments have been made in the Middle East by private equity firms from outside the region so far this year, according to data from Thomson Reuters, and the aggregate value of those is negligible.

That’s a stark contrast from the previous four years when there was a total $4.8 billion invested.

Still, the amount invested by Middle East sovereign wealth funds in private equity funds remains high, with 69 percent of SWFs in Middle East and North Africa invested in the asset class in October, according to a report from London-based research firm Preqin, up from a 63 percent estimate in April.

On Monday, private equity chiefs from the world’s biggest firms, such as Blackstone Group’s Stephen Schwarzman, Carlyle Group’s CYL.UL David Rubenstein and Providence Equity Partners’ Jonathan Nelson, convene in Dubai for one of the major industry conferences of the year, Super Return Middle East.

They’ll join leaders of funds and banks such as Cairo-based private equity firm Citadel Capital; Saudi-based private equity firm Swicorp and Dubai-based Abraaj Capital.

Looking for new investments in a region hard hit by the global economic downturn after a boom fueled by higher oil prices isn’t a priority. Much more time will likely be spent appealing for new funds and trying to keep existing investors happy.

“The primary focus of most of the U.S. groups in the Middle East has been on the region as a source of capital,” said Josh Lerner, a Harvard Business School professor specializing in private equity easy pay day loans. “It may change, but I don’t think it will change overnight.”

Still, promising high returns on new buyout funds has become a tougher sell for U.S. and European private equity shops, which have taken writedowns on their portfolios and seen some failures of companies they own. Attracting money for new funds may not be as easy as it once was.

“The last year has not been a pretty one for many of the sovereign funds,” said Lerner, who is speaking at the conference. “My guess is that we’ll probably see more focus on more emerging economies as opposed to necessarily investing in the U.S. or Western Europe — driven partially by anticipation of where the most attractive opportunities are likely to be.”

As well as having sovereign wealth funds as investors in their funds, some private equity firms have them as stakeholders. Abu Dhabi bought a $1.35 billion stake in Carlyle Group in September 2007, and Blackstone has China Investment Corp as an investor.

STILL CASH RICH

But despite continued strong interest caution reigns, and the types of investments are changing.

One U.S. investor, who declined to be named, said very few SWFs in the Gulf emirates are making commitments to private equity funds currently.

That investor, however, said the attitude is more positive for making direct private equity investments and co-investing alongside PE funds, which gives them the ability to conduct due diligence on assets. 

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Morgan Stanley likely broke a string of three straight losses in the third quarter, while chief rival Goldman Sachs Group Inc extended its dominance.

The growing mismatch between the last two big names on Wall Street is illustrated by analysts’ forecasts: Goldman earnings are expected to more than double, while Morgan Stanley is seen just eking out a profit, lagging far behind its year-earlier results.

Analysts say the third quarter was a resilient one for the banks, with strong sales and trading results and gains in asset management.

“These are two companies that have two less major competitors than they did last year with the failure of Lehman Brothers and Bear Stearns,” said Bill Hackney, chief investment officer with Atlanta Capital Management. “We think the outlook for both of these companies is very strong.”

Goldman is expected to post earnings of $4.24 per share before one-time items, up from $1.81 a year earlier, according to analysts polled by Thomson Reuters I/B/E/S. Morgan Stanley is expected to report 29 cents a share, down from $1.32, hurt by debt-valuation adjustments.

Goldman, whose embarrassment of riches is setting it up for a possible bonus bonanza at year-end, earned $4.93 per share in the second quarter, while Morgan Stanley lost $1.10 per share.

Goldman plans to report third-quarter results on October 15; Morgan Stanley has not yet set a date bad credit pay day loans.

MORGAN REBOUND

If Morgan Stanley did manage to turn a profit in the third quarter, it was with a sigh of relief. The bank has suffered three straight quarterly losses and has been slow to join Wall Street’s rebound party after the near-collapse of the financial services industry a year ago.

Analysts remain concerned about the bank’s continued losses on real estate principal investments and the accounting ramifications of improvements in its debt prices.

In recent years banks recorded big gains on the declining market value of debt they issued, because they could buy back the debt cheaply. But as banks’ prospects have improved in the last few quarters, the value of their debt has jumped, forcing them to reverse earlier gains, weighing on earnings.

Morgan Stanley “will take some pain in terms of writing up their own debt yet again,” said Steve Stelmach, an analyst with FBR Capital Markets.

Goldman, though, looks to be well past the troubles that continue to plague its rivals.

BONUS BONANZA

“Goldman is in a very sweet spot and they should do very well,” said Marshall Front, chairman of Front Barnett Associates. 

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A government watchdog says federal officials weren’t entirely honest with the public about the health of the first 9 financial firms that got federal bailouts, according to a report released Monday.

Bailout special inspector general Neil Barofsky says in an audit that Treasury Department officials painted an overly rosy picture, creating "unrealistic expectations," when they called the first bailout banks "healthy" institutions that would be able to lend more with government help.

"It is not our intent to suggest that government officials should make public their concerns over the financial health of individual institutions, but rather that government officials should be particularly careful, even in a time of crisis, of describing their actions (and the rationales for such actions) in an accurate manner," the report stated.

Treasury appeared to disagree with the assessment of the Special Inspector General of the Troubled Asset Relief Program (SigTARP), saying "people may differ" on the phrasing of the original bailout announcements.

"Any review of the announcements must be considered in light of the unprecedented circumstances in which they were made," wrote TARP chief Herb Allison in response to the SigTARP report.

Separately, the new audit looks into charges that federal officials strong-armed Bank of America (BAC, Fortune 500) into completing its planned purchase of Merrill Lynch, even as BofA worried about mounting losses at Merrill in late 2008. Further, the report looks into whether officials pressured BofA to conceal those losses from its shareholders.

Barofsky gives the major players the benefit of the doubt. He acknowledges that Federal Reserve chairman Ben Bernanke and then-Treasury Secretary Hank Paulson wanted the deal to go through, fearing the potential failure of Merrill Lynch and the "collateral damage to the economy."

But Barofsky "found nothing to indicate Treasury and Federal Reserve officials instructed Bank of America executives to withhold the public disclosure of losses."

SigTARP is also involved in a separate criminal investigation, led by the New York Attorney General’s Office, into the Bank of America-Merrill Lynch merger. The report doesn’t mention that investigation.

Barofsky’s office was created by the 2008 law that established the $700 billion federal bailout program. This audit is the fourth completed so far by SigTARP in recent months; the first looked at how banks said they used their bailout dollars.

SigTARP has opened 35 ongoing criminal and civil investigations looking for fraud, with a focus on banks that falsely applied for a bailout and those that used the TARP name in scams.

In the newest audit of the bailouts to the first 9 firms, SigTARP points out that the Federal Reserve had concerns about the financial health of several of these firms and that former Treasury Secretary Hank Paulson was concerned that one would even "outright fail."

The report says that officials’ portrayal of the bailout banks as healthy eventually contributed to a loss of credibility in TARP, when the firms did not lend more and when more bailouts were given to Citigroup (C, Fortune 500) and Bank of America.

"Ultimately, the lesson is straightforward: accuracy and transparency will enhance the credibility of Government programs like TARP and restore taxpayer confidence in the policy makers who manage them," the report said. "Inaccurate statements, on the other hand, could have unintended long-term consequences that could damage the trust that the American people have in their government." 

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Brocade Communications Systems Inc has put itself on the block and Hewlett-Packard Co is one of the companies that could be interested in buying the network equipment maker, people familiar with the matter said.

Brocade, which sells routers and switches as well as software to help companies manage data networks, has shopped itself around to potential buyers for a few weeks, the sources told Reuters on Monday. They said the process is still in preliminary stages.

One source described it as “feelers” rather than a formal process, and said a deal may not happen.

A deal for Brocade, whose equipment and software make it attractive to companies seeking to boost their presence in corporate data centers, would be the latest in a whirlwind of technology dealmaking in recent weeks.

One possible buyer is Hewlett-Packard, the world’s No. 1 personal computer maker, which also makes server computers used in corporate data centers.

Sources said HP has looked at Brocade’s assets, but has not yet made a formal bid. That could be because HP is potentially interested in acquiring only certain components of Brocade, one source said.

HP wants to fill holes in its portfolio, especially after Cisco Systems Inc moved into its traditional server turf earlier this year, and people familiar with the company’s strategy have said it is looking at both software and networking acquisitions.

Shares of Brocade, which bought Foundry Networks last year and has expanded sales partnerships with large technology vendors such as IBM and Dell Inc, rose as much as 19.9 percent after The Wall Street Journal reported that it was up for sale.

The Journal also named Oracle Corp as a possible buyer of Brocade, which entered the day with a market capitalization of $3.2 billion.

Oracle executives were not immediately available for comment. Brocade and HP executives declined to comment.

FOR HP, A SENSIBLE BUY

Brocade is a top pick for HP, the sources said. One reason is that HP needs to develop more security and “cloud” technology that enables access to software and services over the Web.

“HP has no security offering, no real cloud-enabled technology except through partnerships and no real presence in systems and network management,” one of the sources said. “It’s a no-brainer that they’re looking at all these.”

A deal for Brocade could satisfy any need for HP to boost its storage and IP (Internet protocol) networking, Brocade’s expertise, UBS analyst Nikos Theodosopoulos said.

He said Juniper Networks Inc, another network equipment maker, could also be a potential buyer. 

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One steady bit of good economic news: Inflation remains near zero. So who would want to pay extra these days to add a dose of inflation protection in their portfolio?

Plenty of people. It turns out sales are hot for Treasury Inflation-Protected Securities, a common hedge against rising prices known by their acronym TIPS.

New money from investors and market gains have boosted total assets in mutual funds investing in TIPS nearly 36 percent so far this year, according to Morningstar Inc.

It’s part of a broader shift by many investors who have been scared away by stocks, despite the market’s hefty rebound from its March low. They’ve been piling into the greater safety of bonds, and TIPS — while not without risk — are about as safe as you can get.
The value of the underlying investment in TIPS rises with inflation, providing an additional layer of protection beyond what Treasury bonds offer.

Hardly anyone expects inflation to re-emerge as a big threat anytime soon, so TIPS aren’t necessarily the best short-term investment. But historically low interest rates and the federal government’s growing deficit are expected to drive prices higher, especially once the economy truly gets back on its feet and spending rebounds.

Here are some common questions and answers about TIPS:

How do TIPS work?

Introduced by the government in 1997, TIPS are a type of Treasury bond — investments that are super-safe, provided you believe the government will continue to make good on its credit obligations.

TIPS adjust their yield based on changes in the Consumer Price Index. The principal in TIPS adjusts every six months. The so-called "coupon" rises when inflation grows, and decreases in the less-likely instance of deflation. When the bond matures, you’re paid the adjusted principal or the original principal, whichever is greater. TIPS are sold in maturities of five, 10 and 20 years.

Investors in "nominal" Treasury bonds get a fixed rate of return if they hold the bonds until they mature. For example, 10-year Treasury notes are now yielding about 3.32 percent per year.

On the other hand, 10-year TIPS are yielding 1.55 percent, which doesn’t seem so good, until you consider what havoc inflation might wreak pay day loan. The difference — or "break-even rate" — between those two numbers is 1.77 percentage points. That suggests investors are expecting inflation will average 1.77 percent per year over the next 10 years. So if inflation exceeds that amount and erodes Treasuries’ current 3.32 percent yield, TIPS investors will be glad they paid for the protection.

Inflation had historically averaged 2 to 3 percent until falling to near zero when the market tanked last fall and deflation fears set in.

How have TIPS’ values held up lately?

Inflation and interest rate expectations are constantly changing, which is reflected in the prices traders are willing to pay for TIPS. Lately, TIPS have generally been seen as a good deal. Mutual funds investing in TIPS have returned an average of 8.63 percent so far this year, according to Morningstar. That puts TIPS in the middle of the performance pack among fixed-income fund categories.

How can I buy TIPS?

TIPS are available for purchase from the Treasury at http://www.treasurydirect.gov to avoid brokerage fees. If you’re not sure you can keep the bond until maturity and are nervous about managing your investment over time, you can buy into a mutual fund that focuses on TIPS, or an exchange-traded fund. Like TIPS mutual funds, TIPS ETFs hold baskets of TIPS with varying maturities but can be traded like a stock.

TIPS appear to carry little risk. Is that the case?

Any bond is subject to risk from rising interest rates, and TIPS are no exception. If the Fed boosts interest rates faster than inflation grows, or before inflation sets in, TIPS’ values will erode.

They also can be hit in a falling market, as happened last fall. Many institutional investors had to come up with cash to meet clients’ orders to pull out their money, forcing them to sell their most liquid investments. TIPS often fit the bill, and massive TIPs sales reduced prices. But as seen this year, they’ve bounced back.

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Contegra Construction of Edwardsville has begun work on a two-story, 21,000-square-foot headquarters office building for The Kean Insurance Group at 135 West Adams Street in downtown Kirkwood.

Keane, which leases space at 10777 Sunset Office Drive in Sunset Hills, is one of the largest brokers of professional liability insurance for physicians in the nation. In addition to St. Louis, it has branch offices in Austin, Texas; Chicago; and Kansas City empire payday loans.

The building will host 60 employees of Keane and KIG Healthcare Solutions, Inc, an affiliate. The estimated completion value is $6 million.

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A deal between Comcast Corp and General Electric Co for NBC Universal would seem a storybook match — one wants in to the media business and the other may be well-served to get out.

Comcast shareholders see it another way, sending its shares down 7.2 percent on Thursday as sources familiar with the matter said the top U.S. cable service provider was in talks to buy a majority stake in NBC Universal from GE.

While a deal would allow Comcast to acquire the cable networks it has coveted — Bravo, USA and CNBC, among others — shareholders worry it would saddle the company with more than it needs. Specifically, the underperforming NBC broadcast TV network. NBC Universal also owns a studio and theme parks.

“Investors have long pressed Comcast for an aggressive return of cash to shareholders,” Bernstein Research’s Craig Moffett said in a note. “An acquisition of a major content studio, even if consummated at an attractive price, is most decidedly not what Comcast investors had in mind.”

GE, which has been pressured by investors to offload its 80 percent stake in NBC Universal, is considering a host of proposals for NBC Universal as partner Vivendi SA explores whether to sell its 20 percent stake.

At the moment, the most likely scenario is a deal in which Comcast would buy 51 percent of NBC Universal, leaving GE with 49 percent, according to the sources.

The sides still have plenty of details to work out and an agreement is far from certain, said the sources, who described a complex framework to discussions that are still in the earliest stages.

They said the plan is for GE to buy Vivendi’s stake, and put the borrowings that fund that deal on NBC Universal’s balance sheet. Other debt would also be added to what would essentially become a new, stand-alone company. But how that company would be valued remains to be seen.

One source said it would be worth $23 billion to $27 billion — so Comcast would contribute $4 billion to $6 billion in cash and $7 billion worth of assets, like the “E” Channel and the Golf Channel, in exchange for majority control.

Another source said the new company would be valued more highly, and Comcast’s cash payment would be closer to $6 billion to $7 billion.

Over time, Comcast could increase its ownership stake, according to CNBC, which first reported the news.

For GE, whose shares ended 2.7 percent lower on Thursday, selling NBC Universal would allow it to concentrate on the better-performing heavy industrial businesses. It may also be the best choice facing GE Chief Executive Jeff Immelt.

“If you take Jeff Immelt’s commentary seriously, where he thinks the economy is in for a slow recovery, then the industrial side of the business needs every dollar it can keep,” said Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors.

LIMITED CHOICES?

Vivendi has the right to exercise its sell option in NBC Universal each fall until 2016, but is thought likely to do so this year to fund businesses that it finds more essential. 

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U.S. holiday sales in 2009 will likely be almost flat with the anemic showing of a year ago, a new survey predicted, following in a line of cautious early forecasts for the period.

Overall sales in the holiday shopping season will likely rise only 0.03 percent this year to over $90 billion, according to a survey by data and media firm Nielsen Co.

On the basis of sales by the number of items sold, sales would be flat to down 0.11 percent in the period, the survey showed.

Holiday sales, usually measured in the November-December shopping period, can ring up anywhere between 25 and 40 percent of annual sales for retailers. Last year’s holiday sales season was the worst in nearly 40 years by some measures.

Early forecasts for the 2009 holiday shopping season call for sales to be anywhere from up 2 percent to down 1 percent.

Nielsen surveyed more than 22,000 U.S. households in early September for the survey, which has a margin or error of plus or minus 2 percent.

(Reporting by Aarthi Sivaraman, editing by Gerald E. McCormick)

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