Welcome to Finance World

Despite much hope that Americans are finally thawing out of their year-long self-imposed shopping freeze, store sales last month were good in pockets — but not great, as many analysts were hoping.

With this latest disappointment behind them, the concern now for merchants is when, or will, consumers get their shoppping bags out in earnest for the start of the 2009 holiday shopping period.

The holiday shopping frenzy unofficially kicks off in just a few weeks on Black Friday, or the day after Thanksgiving.

The fourth quarter, which includes the November-December gift-buying months, is typically the most critical annual sales period for sellers. Those two months can account for 50% or more of retailers’ sales and profits for the year.

"For well over a year, consumers have been in shellshock. They are now starting to come out of the bunker, but they still are wearing their body armor and shopping smartly," said Craig Johnson, president of retail consulting group Customer Growth Partners.

While consumers are still very price-focused, he said better-than-expected sales results from some high-end sellers shows more people are becoming comfortable spending a little bit more money again.

"This trend bodes well for the holiday season," said Johnson.

Big hope, some disappointment

As leading chain stores trotted out their October same-store sales Thursday, it was obvious that shoppers did remain very budget conscious, and are still favoring bargain and bulk sellers over clothing, department stores and other merchants.

Same-store sales, or sales at stores open at least a year, are considered to be a key measure of a retailer’s performance.

While cooler October weather likely helped lift sales of winter clothing, many retailers posted better sales numbers because of significantly easier comparisons from a year ago, said sales tracker Thomson Reuters’ retail analyst Jharonne Martis.

Thomson Reuters, which tracks monthly same-store sales for 30 chains such as Target, Gap and J.C. Penney, said overall October sales for the group rose 1.8% compared to a 4.1% decline last October. Analysts had expected a gain for the group.

Last month’s shopping patterns favored Costco (COST, Fortune 500), the No. 1 warehouse club operator, which reported a 5% same-store sales gain, beating analysts’ estimates for a 4.7% increase.

However, Costco said the company’s sales also benefited from a weak dollar that boosted its overseas sales.

Discounter Target (TGT, Fortune 500) reported a 0.1% sales decline in October, better than a 4.8% drop a year ago. Wal-Mart (WMT, Fortune 500), the world’s largest retailer, which has benefited from the recession as consumers flock to its low prices, no longer reports monthly sales numbers.

However, the retailer is expected to provide details about its monthly sales when Wal-Mart reports its quarterly results next week.

Mid-price department store chain J.C. Penney (JCP, Fortune 500) reported a 4.5% drop in its same-store sales, which was slightly better than its own forecast for a 5% to 8% decrease in the month.

Gap Inc (GPS, Fortune 500)., the No. 1 clothing seller, reported a better-than-expected 4% sales gain in the month.

The high-end space saw a little bit of relief as well. Department store chain Nordstrom posted a 6.5% sales gain while sales at Saks (SKS) rose 0.7% for the month.

Elsewhere, merchants took a beating. Comparable sales at teen clothing chain Abercrombie & Fitch tumbled 15% in October. Limited Brands (LTD, Fortune 500), parent of Victoria’s Secret and Bath & Body Works chains logged a 4% decline in its sales versus analysts’ expectations for a 2.7% decline.

And department store operator Macy’s said its monthly sales slipped 0.8%.

On the fence

Some industry watchers, however, aren’t convinced yet of a full-bodied return to spending.

"Yes, there is clear momentum building in as we go into the holiday season," said Ken Perkins, president of sales tracking firm Retail Metrics. "Consumers are looking at better housing data and other economic reports, and are more comfortable making discretionary purchases when when unemployment is rising."

Still, Perkins said he’s skeptical about the strength of this recent uptick in spending.

"Retailers are up against their easiest year-over-year comparisons in a decade," he said. "And the comparisons get even easier over the holiday months."

"So this improvement in the monthly sales could be more of an optical illusion rather than a real improvement in spending," he said.

The National Retail Federation, the industry’s largest trade group expects 2009 holiday sales to decline 1%, improving from last year’s 3.4% decline.

Johnson expects holiday sales to grow about 2.4% while Perkins’ forecast is for a gain of between 1 to 2%. 

Source

The yen rose to two-week highs while the U.S. dollar clung to gains on Monday as jittery investors cut back long positions in growth-linked currencies.

Traders said the drop in high-yielders like the Australian and New Zealand dollars is partly due to a correction after the rally in the past few months. Also, weighing on sentiment was news that CIT Group filed for bankruptcy.

The yen rose to as high as 89.17 per dollar in early Asian trade, from around 90.00 per dollar late on Friday when it gained over 1.5 percent. It was also firmer against the euro and the Aussie.

The euro inched up to $1.4715, from $1.4708 late on Friday when it lost over 0.8 percent. The Aussie, having lost nearly 2 percent on Friday, fell to a near one-month low of $0.8900 before recovering to $0.8970.

The U.S. dollar, which tends to gain when doubts about a global recovery emerge, traded above the 76 mark against a basket of currencies.

“It has been a pretty violent move and I think it is partly to do with positioning,” said Jonathan Cavenagh, currency strategist at Westpac. “The economic data has not been all that bad, so I think it should be a good opportunity to rebuild long positions in commodity currencies.”

Such long positions would have been very profitable over recent months and investors could be seeking to lock in gains for year-end and bonus season.

There was also upbeat news from Chinese manufacturing data at the weekend. China’s PMI rose to an 18-month high of 55.2 in October, indicating an acceleration in output and boding well for growth-linked currencies.

Latest data from the Commodity Futures Trading Commission showed speculators trimming long positions in the euro, the Aussie and the Kiwi bad credit payday loans. The value of the dollar’s net short position fell to $15.61 billion in the week ending October 27 from $18.65 billion net the prior week.

Traders said the mood was likely to remain cautious ahead of big event risks in the week ahead, which include central bank meetings in Australia, Europe and the U.S. and the all important U.S. non-farm payroll data on Friday.

The Federal Reserve’s rate setting committee, which meets on Tuesday and Wednesday, is expected to keep rates unchanged but there is speculation that it might change its language. That could see markets pricing in a rate hike in the United States sooner than expected.

“We see the Fed reiterating that ‘economic conditions are likely to warrant exceptionally low levels of the fed funds rates for an extended period’,” said David Watt, senior currency strategist at RBC Capital.

In the UK, the focus is on whether the Bank of England will increase its asset-purchase program to give a boost to its economy.

In contrast, the Reserve Bank of Australia is expected to raise rates by a quarter of a percentage point, with Governor Glenn Stevens and the monetary policy Statement later in the week to provide perspective.

The European Central Bank is also expected to hold rates steady, but it could provide some details on the schedule of open market operations for 2010.

(Editing by Wayne Cole)

Read more

U.K. gross domestic product unexpectedly dropped in the third quarter as enduring slumps in services, manufacturing and construction kept the economy mired in its longest recession on record.

Gross domestic product dropped 0.4 percent from the previous three months, the Office for National Statistics said today in London. Economists predicted a 0.2 percent increase, according to the median of 33 forecasts in a Bloomberg News survey. The economy has now contracted in six quarters, the most since records began in 1955.

Chancellor of the Exchequer Alistair Darling said this week he will focus on spurring economic growth as he struggles to cement a recovery in time for a general election due by June. Today’s data may add to pressure on Bank of England officials to expand bond purchases at their Nov. 5 decision after completing a plan to buy 175 billion pounds ($291 billion) in assets.

“The main picture for the government going into the general election isn’t particularly promising,” said David Tinsley, an economist at National Australia Bank in London who used to work at the central bank. “There hasn’t been a great deal of evidence on the recovery. It would seem a very inopportune moment to end quantitative easing.”

The data, the first for the third quarter from a Group of Seven nation, suggests Britain may turn out to be the last of them to exit the recession sparked by the worst financial crisis since the Great Depression.

Central banks in Canada and Italy both forecast slumps in their economies ended in the same period, and the U.S. probably also returned to growth then, according to the median forecast of economists in a Bloomberg News survey. France, Germany and Japan exited their recessions in the second quarter.

Services Drop

U.K. services industries, which account for 76 percent of the economy, shrank 0.2 percent on the quarter, the statistics office said. The drop was led by distribution, hotels and catering, followed by transport, storage and communication, and business services and finance.

Industrial production shrank 0.7 percent as manufacturing contracted 0.2 percent, the statistics office said. Construction slumped 1.1 percent.

The economy’s output is “well below” the levels of a year earlier and there should be no illusion of a “smooth and painless” return to sustainable growth, Bank of England Governor Mervyn King said this week. Officials said at the Oct. 8 meeting that there is still a danger of further losses.

Credit losses and writedowns worldwide now total $1.6 trillion. Lloyds Banking Group Plc and the government are weeks away from an agreement on whether the lender can escape a program to insure up to 260 billion pounds of potentially toxic assets, a person familiar with the matter said yesterday.

Setback for Brown

Today’s report is a setback for Prime Minister Gordon Brown as his ruling Labour party struggles to erode the poll lead held by David Cameron’s Conservatives. The opposition party had a 17 percentage-point gap over Labour in an ICM Research poll for the Guardian newspaper published on Oct. 21.

The economy will contract 4.4 percent this year and then expand 1.3 percent in 2010, according to forecasts released this week by the National Institute of Economic Research.

Some companies are weathering the slump. British Sky Broadcasting Group Plc, the U.K.’s biggest pay-television provider, said today that first-quarter profit rose. “We have won more clients despite the tough economic environment and I’m confident that we will continue to grow,” Chief Financial Officer Andrew Griffith said in an interview on Bloomberg TV.

Slump Damage

Today’s data show the recession shrank the U.K. economy by 5.9 percent, compared with a total 6 percent slump in the recession that ended in 1981, the statistics office said.

Unemployment may keep rising even after the end of the recession as a lagged effect of the slump. St. Ives Plc, the U.K. printer of the Economist and Vogue magazines, has shed about 12 percent of workforce, Finance Director Matt Armitage said on Oct. 19.

Niesr says that the Bank of England should pause its bond purchase program at the Nov. 5 decision, when officials will have revised forecasts on the economy. The British Chambers of Commerce has called for a further expansion of the plan to reach 200 billion pounds to secure the recovery.

Source

Qatar is selling a 1.3 billion pound ($2.1 billion) stake in British bank Barclays, stoking talk it will use a big profit to make a move on UK food retailer J.Sainsbury.

Qatar owns 26 percent of Sainsbury and the retailer’s shares jumped by a fifth last Thursday on talk the sovereign wealth fund was planning a renewed offer for it, after a previous bid attempt failed in 2007.

Qatar Holding is set to make a 600 million pound ($985 million) profit on its Barclays stake, making it the second big Middle-Eastern investor to make a big profit from a stake in the bank this year, after Abu Dhabi made $2.5 billion on the sale of an 11 percent stake in June.

Qatar will remain Barclays’ biggest shareholder with a stake of about 7 percent. It is selling 379.2 million shares, which will come from the exercise of warrants for the same amount of shares at a price of 197.775 pence.

Barclays will receive 750 million pounds from the warrants.

The warrants were part of a controversial 5.8 billion pound fundraising by the bank last November, when the bank avoided selling the state a stake by raising money privately.

Roger Jenkins, a top Barclays banker who orchestrated that fundraising, left the bank in August and his new investment firm is working with Qatar, according to an industry source. A spokesman for the firm, which specializes in the Middle East, declined to comment.

The Barclays shares are being sold by Credit Suisse via an accelerated bookbuild.

By 0800 GMT Barclays shares were down 4.6 percent at 364.5 pence. Sainsbury shares were up 3.2 percent at 340.8p, valuing the retailer at 6.3 billion pounds.

Sainsbury declined to comment.

The Qatar Investment Authority was mulling an offer at 420p per Sainsbury share, traders said last week, well below its 2007 proposal of 600p a share.

QIA was founded by the State of Qatar in 2005 to strengthen its economy by diversifying into new asset classes. Subsidiary Qatar Holding is its main vehicle for strategic and direct investments by the state.

($1=.6088 Pound)

(Editing by Hans Peters)

Read more

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. 

Read more

In a letter to Barron’s, Sears Holdings Corp Chairman Edward Lampert defended the retailer from what he called an inaccurate and biased report in the August 24 edition of the paper.

The billionaire was responding to a report that suggested Sears stock could fall 50 percent after extreme cost-cutting depleted its ability to generate cash flow needed to win back market share from rivals.

“The article exaggerates the extent of our cost-cutting in an attempt to make it appear that what we are doing is somehow extreme or unproductive,” Lampert said, adding Sears is prioritizing spending and “reducing and reallocating certain expenses that those who are more conventionally focused might disagree with.”

The chairman also defended an amended credit deal, an amended partnership agreement related to his hedge fund ESL Investment Inc, as well as possible store closings, which he said will generate cash and eliminate ongoing losses from operations flexcheck cash advance.

The article was “misleading, inaccurate and poorly researched,” Lampert said in the letter, published in Barron’s September 7 edition, which also defended Sears’ quarterly reporting of “special charges” and “adjusted earnings before interest taxes, depreciation and amortization,” or EBITDA.

Jonathan Laing, who wrote the article, said in a reply on the same page that free cash flow is the best measure of the company’s performance, on which score “Sears is losing ground.”

Sears shares are down 15.4 percent since the company reported a surprise quarterly loss on August 20, which dampened hopes Lampert could turn the company around. The shares closed at $62.38 on Friday.

(Reporting by Jonathan Spicer; Editing by Marguerita Choy)

Read more

My OfficeMax Inc. shares have done better lately. What does the future hold?

The No. 3 U.S. office products firm is continuing its cost-cutting efforts in an attempt to improve its profitability and sales in a highly competitive business hampered by the weak economy.

It isn’t, for example, opening any new stores this year. It is increasing the number of private-label products bearing its name to lure shoppers with lower prices while expanding profit margins. About one-fourth of its sales are currently private-label.

It expects sales to decline in the second half due to cutbacks in corporate America, the economy and what is projected to be a lackluster back-to-school season.
Shares are up 31 percent this year following drops of 61 percent last year and 57 percent in 2007. While the company lost $17.7 million in the second quarter, the fact that Wall Street had expected far worse provided a boost to its stock.

OfficeMax sells through a direct sales force, the Internet and catalogs. It has improved its profitability but still lacks the economies of scale of its larger rivals and must compete with numerous retailers that have begun to sell office products.

No. 1 Staples, whose profits were down 33 percent in the past quarter, has more than 1,500 stores and is taking market share away from OfficeMax’s main Chicago sales area. It bought the Dutch office-supply firm Corporate Express NV last year. In comparison, No. 2 Office Depot has more than 1,200 stores and OfficeMax fewer than 1,000.

The consensus recommendation on OfficeMax shares is "hold," according to Thomson Reuters, which consists of one "strong buy," three "buys" and seven "holds."

Yet OfficeMax remains aggressive. It recently signed a multiyear deal that will allow it to use some FedEx Corp. services in about 900 U.S. retail locations. It is offering domestic FedEx Express and ground shipping, while it will accept drop-off packages from FedEx customers at its in-store print and document services center car loans for bad credit.

The company has also forged an alliance with Lyreco, a global distributor of office products in 36 countries, and has a partnership to distribute co-branded office products through 1,600 Safeway grocery stores.

Earnings are expected to decline 75 percent this year compared with a 6 percent gain projected for the office supplies industry. The forecast is for a 50 percent gain next year versus a 13 percent rise industrywide.

Is there any advantage to having my various individual retirement accounts with the same investment firm, or does it make no difference?

It can make things easier having your investments with one firm because you can check them online in the same place and will have fewer statements to contend with.

Too often investors with funds at several firms also own similar funds, just in different places.

You can find an array of choices in most any investment style at larger fund firms. In addition, for mutual funds sold with "loads," or sales charges, there can also be discounts for those who invest certain amounts of money with them.

"You’re picking the investments, so you’re not giving up that control to the investment firm," said Marilyn Capelli Dimitroff, certified financial planner and president of Capelli Financial Services Inc. in Bloomfield Hills, Mich.

"Within your account, however, you want to make sure that you have diversified investments."

Still, there’s nothing that should tie you to keeping investments with one firm if you feel that you can find some better funds at an additional firm and keeping everything together won’t meet your goals.

Source

Belgian financial investor RHJ International has offered 275 million euros ($387.6 million) for a 50.1 percent stake in General Motors’ Opel business, according to RHJ’s takeover offer for the German carmaker obtained by Reuters.

The offer, which envisions production cutbacks and pay cuts for staff, sees Opel posting a positive cash flow before funding of 1 faxless payday loans.0 billion euro by 2011.

Apart from RHJ, Canadian auto parts maker Magna is in talks about taking a stake in Opel, as is Chinese carmaker Beijing Automotive (BAIC).

(Reporting by Gernot Heller, Writing by Nicola Leske)

Read more

The Boeing Co. on Wednesday rolled out the first of two dozen F/A-18 Super Hornets bound for the Royal Australian Air Force over the next three years.

While a shot in the arm for Boeing’s Integrated Defense Systems in St. Louis, the first international sale of its latest multirole fighter jet occurs at a time of uncertainty for the St. Louis F/A-18 line. The Defense Department sought just 31 in next year’s budget — or nine fewer than expected.

Boeing and its supporters are pushing for another multiyear contract for the Super Hornets. Boeing officials say multiyear contracts with the U.S. Navy help hold down production costs and have saved taxpayers $1.7 billion so far.

Boeing said the first of the Super Hornets bound for the Royal Australian Air Force will be delivered ahead of schedule to the Navy, which will test it and then deliver it to Australia next spring.

Australia will pay $3 billion for the 24 aircraft, said Marcia Hart-Wise, a Department of Navy spokeswoman. That price includes service and support through 2020.

U.S. and Australian military leaders said the rollout of the

F/A-18F was an important cooperative milestone between the two countries. The planes are equipped with the latest radar and weapons systems.

Boeing also is vying to provide F/A-18 Super Hornets to India, Denmark, Brazil, Greece and Japan.

Congress has added language supporting the U car loans for bad credit.S. purchase of more Super Hornets to proposed defense authorization bills. In late June, U.S.

Sen. Christopher "Kit" Bond, R-Mo., also went to bat for the purchase of more F/A-18s "as the most cost-effective, near-term means to address the Navy’s tactical fighter shortfall," and a multiyear contract, according to a June 22 letter he co-authored to the Senate Appropriations Committee.

Senator Claire McCaskill, D-Mo., also supports multi-year purchases.

Boeing is the region’s second-largest employer, and its F/A-18 fighter jet line employs 5,000 workers.

St. Louis Mayor Francis Slay trumpeted Boeing’s regional importance — from jobs to philanthropy — in remarks he made at Wednesday’s ceremony. Other speakers included Rear Adm. David Philman, director of air warfare for the U.S. Navy, and Air Marshal Mark Binskin, chief of the Royal Australian Air Force.

Despite the uncertainties, top Boeing officials remain upbeat about the future of aircraft manufacturing here.

"In case anybody’s wondering, we’re going to be building Super Hornets here for a long time to come," said Jim Albaugh, president and chief executive of Boeing’s Integrated Defense Systems.

Source

WASHINGTON — The Supreme Court on Monday delayed the sale of most of Chrysler’s assets to Fiat pending further consideration of an appeal by three Indiana state funds and several consumer groups, a move that injects a new element of uncertainty over the carmaker’s fate.

Justice Ruth Bader Ginsburg, who handles emergency matters arising from the 2nd U.S. Circuit Court of Appeals, said in a one-sentence order that the rulings of the bankruptcy judge allowing the sale "are stayed pending further order of the undersigned or of the court."

The order is in effect a holding action that gives Ginsburg or the full court more time to consider whether to delay the deal while parties objecting to it file appeals. The most likely explanation for the temporary stay is that the justices needed more time to consider the filings, which started arriving over the weekend.

Chrysler LLC, Fiat and the government were prepared to close the deal as soon as Monday night if the court let the deal go forward, according to people briefed on the matter. Lawyers for the carmakers and the government have said that speed was of the essence to ensure the companies’ survival and preserve thousands of jobs.

Under the terms of the deal, Fiat can walk away as soon as June 15, a move that Chrysler executives warned would mean near-certain liquidation. Executives testified in court that despite spending more than a year scouring the globe for someone to buy the company, none except Fiat made an offer. And a lawyer for Chrysler argued in a recent court filing that the carmaker was losing $100 million a day while in bankruptcy.

Chrysler halted production at its factories in the United States after it sought bankruptcy protection on April 30 florida health insurance. The company said it would restart the plants, including a truck assembly plant in Fenton, once the sale of its assets to Fiat was finalized. The Fenton plant is scheduled for permanent closure by the end of September as part of the bankruptcy. Another Chrysler plant in Fenton that made minivans was shuttered in October and will not be restarted.

For much of its court case, decisions had fallen Chrysler’s way. The carmaker won quick approval of its sale from two lower courts, and many legal experts said they did not expect the Supreme Court to further delay the deal.

But lawyers for the objectors, including Indiana funds representing teachers and police officers and several groups with product liability claims, filed their appeal to Ginsburg late Saturday night, after the 2nd Circuit reaffirmed a lower court’s approval of the sale. The appeals court had delayed the closing of the deal until Monday afternoon or until the Supreme Court declined to issue its own delay.

The Indiana funds have sought greater compensation for their portion of Chrysler’s $6.9 billion in secured debt. They have also argued that the Obama administration illegally used federal bailout money earmarked for financial institutions to help Chrysler. The Indiana funds bought their holdings in July 2008 for 43 cents on the dollar.

Lawyers for the funds have questioned whether Chrysler could have received a better deal than the Fiat transaction or through a liquidation. They have also objected on constitutional grounds, saying that the Obama administration was not allowed to give bailout money meant for financial institutions to Chrysler.

Source