Finance & Business World

The Air Line Pilots Association International (ALPA) announced Tuesday it has filed a lawsuit against DHL Holdings USA on behalf of ASTAR Air Cargo Inc. pilots.

In a suit filed in the Court of Common Pleas in Clinton County, ALPA alleged that DHL breached its contract with ASTAR pilots. It also accused DHL of fraudulent inducement. DHL is owned by Deutsche Post World Net, and it operates a major sorting center in Wilmington.

DHL is in negotiations with Atlanta-based United Parcel Service Inc. (NYSE: UPS) to take over its North American air service from ASTAR Air Cargo, which was formerly DHL Airways.

The deal would also negatively affect another DHL spin-off, Air Transport Services Group (NASDAQ: ATSG) in Wilmington, which operates ABX Air and gets much of its business from DHL.

ALPA alleges DHL is in violation of certain job security assurances under ASTAR pilots’ labor agreement free credit reports.

The pilots also claim that DHL “fraudulently induced” the pilots union to drop lawsuits against the parcel company by promising job security assurances while the pilots argue the company was in discussions about switching service to UPS, according to a news release.

The pilots union has asked the court to enjoin DHL from switching service to UPS. ALPA also asks for compensatory damages and attorney’s fees.

ALPA says 10,000 pilots and other DHL employees will lose their jobs with the switch to UPS.

An after-hours message left with a DHL spokeswoman was not immediately returned. Representatives with UPS declined to comment.

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New Zealand home-building approvals slumped to the lowest in almost 22 years in June, adding to signs rising credit costs and falling consumer confidence have pushed the economy into recession.

Approvals fell 20 percent from May to 1,337, the lowest since October 1986, Statistics New Zealand said in Wellington Today, citing seasonally adjusted figures. Excluding apartments, approvals dropped 13 percent from May.

Fewer building approvals suggest residential construction is contracting, subtracting from economic growth. The $104 billion economy shrank in the first quarter and eight of 13 economists surveyed by Bloomberg News expect gross domestic product also declined in the three months ended June 30, putting the nation in its first recession since 1998.

“The background of a glut of homes listed for sale, weakening prices, high financing costs and muted migration are behind a contraction in residential construction,'' said Jane Turner, economist at ASB Bank Ltd. in Auckland.

The decline is in line with the central bank's expectations and is “unlikely to convince the bank of a more aggressive easing cycle,'' Turner said free credit report without a credit card.

Reserve Bank of New Zealand Governor Alan Bollard last week cut the benchmark interest rate from a record-high 8.25 percent, the first reduction in five years. All 15 economists surveyed by Bloomberg expect another quarter-point cut at the next review on Sept. 11.

House sales fell 42 percent in June from a year earlier and the days to sell a property rose to a six-year high, according to the Real Estate Institute. Consumer confidence slumped to an all-time low in the second half of June, according to a Roy Morgan poll.

Approvals in the year ended June fell 12 percent from a year earlier, the statistics agency said, citing unadjusted figures. Second-quarter approvals dropped 19 percent.

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The U.K. government should consider pursuing an antitrust investigation in Britain's wholesale gas and electricity markets, as retail prices head “significantly'' higher, a panel of lawmakers said.

The Business and Enterprise Committee in the House of Commons, which includes members of Parliament from the nation's three main political parties, concluded in a report today that the U.K. has higher natural gas prices than other European countries. The panel said this suggests a lack of competition, though it didn't find proof of price-fixing.

“Just because we have found no evidence of collusion does not mean we have given the Big 6 energy companies a clean bill of health,'' said Peter Luff, a lawmaker from the Conservative opposition who leads the committee. “Far from it.''

The report reflects mounting pressure on politicians to tackle record energy prices as slowing economic growth and accelerating inflation squeeze household budgets. In the U.S., the Senate is debating a bill to curb energy-market speculation.

The U.K. lawmakers said Ofgem, the industry regulator, should have first crack at reining in the industry. If that doesn't curb prices, then the Competition Commission, an independent agency that can order companies broken up, should step in.

Any probe into wholesale gas prices would send a “chill'' through the energy industry and lead to reduced investment, Richard Guerrant, a director of European operations for Exxon Mobil Corp., told the committee when he testified last month.

Committee Recommendations

The panel has no authority to enforce its recommendations, which the government and regulators are free to ignore. The government will respond to the report in the next few weeks.

Ogfem, the regulator, said in a statement in “welcomed'' the committee report, saying it will contribute to its own ongoing investigation into a link between wholesale and retail energy pricing http://pay-day-home.com.

U.K. gas prices have risen more than fourfold to about 60 pence a therm from a low in April last year of 13.5 pence a therm. Gas for delivery this winter reached an all-time high of 105 pence a therm last month.

The report said producers' unwillingness to sell gas on forward markets, which let buyers and sellers lock in prices at delivery in the future, was pushing prices higher. It urged Ofgem to investigate the lack of price transparency in forward markets.

Rising Prices

The lawmakers' committee, which monitors the performance of the government on energy matters, said it expects gas and electricity bills to rise “significantly'' in the near future.

Electricite de France SA's U.K. unit on July 25 raised electricity and natural gas bills for households because of rising wholesale costs. Power bills will be increased by 17 percent and gas charges by 22 percent from today, according to company spokesman Rajan Lakhani.

The lawmakers urged Ofgem to show a “greater sense of urgency'' in its work and to “look again'' at the way wholesale markets work in the U.K. The report said a competition inquiry should be avoided if possible.

“Our view is that changes can best be made through improving market design, by taking specific regulator steps and by continue to work for liberalization of European markets,'' Luff said. “Such an approach is more likely to bring real and lasting investment the U.K. needs so urgently.''

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German business confidence probably fell to the lowest level in more than two years in July as record oil prices and the U.S. slowdown dimmed the outlook for growth in Europe's largest economy.

The Ifo institute's business climate index declined to 100.1 from 101.3 in April, according to the median of 40 forecasts in a Bloomberg News survey. That would be the weakest reading since December 2005. Ifo will release the report, based on a survey of 7,000 executives, at 10 a.m. in Munich today.

The fastest inflation in 16 years prompted the European Central Bank to raise its key interest rate by a quarter point to 4.25 percent this month even as soaring energy and food costs squeezed household incomes. With the stronger euro and deepening U.S. housing crisis curbing exports, German Chancellor Angela Merkel said yesterday the country faces a “clear slowdown.''

“Economic growth will weaken further,'' said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt. “We won't see a recession, but it won't be a soft landing either.''

The government forecasts growth will slow to 1.7 percent this year and 1.2 percent in 2009 from 2.6 percent in 2007. Germany accounts for about a third of the 15-nation euro-region economy.

“Germany is the last man standing in the euroland economy, but it is suffering from a deteriorating international environment and sluggish domestic demand,'' said Soren Dijohn, an economist at Danske Bank in Copenhagen. “If Germany falls, it will have a profound effect on euroland growth, and downside risks have risen markedly in just a few months.''

Downside Risks

Oil prices surged to a record $147.27 a barrel this month and are up 70 percent in the past year. Over the same period, the euro has appreciated 16 percent against the dollar, making European exports less competitive.

Heidelberger Druckmaschinen AG, the world's largest printing- press maker, reported a first-quarter loss last week and said full-year sales and operating profit will decline. The company plans to cut 500 jobs and reduce expenses to counter higher steel and energy prices.

German exports dropped the most in almost four years in May and manufacturing orders fell for a sixth month faxless payday advances. The country's benchmark DAX share index has declined 19 percent this year, helping to drive investor confidence to the lowest level since records began in 1991.

The worst U.S. housing slump since the Great Depression has pushed up the cost of credit globally and roiled financial markets. The world's biggest financial companies have posted at least $460 billion in writedowns and credit losses since the start of last year after the subprime mortgage market collapsed.

Fannie, Freddie

U.S. lawmakers yesterday authorized Treasury Secretary Henry Paulson to inject capital into Fannie Mae and Freddie Mac if needed after confidence in the mortgage-finance providers collapsed.

Some German companies are trying to offset falling European and U.S. orders by expanding in oil-exporting countries and Asia.

BASF SE, the world's biggest chemicals maker, last month reiterated full-year profit and sales forecasts as it grows its Asian business. Volkswagen AG opened a plant in Russia in November to tap into that country's oil-rich economy. Europe's largest automaker said yesterday that second-quarter profit rose 35 percent, beating analysts' estimates.

ECB policy makers say Europe's economic fundamentals are sound and they're more concerned about inflation, which at 4 percent is running at twice the central bank's limit.

Investors are betting the ECB will raise borrowing costs again by March to contain price increases, taking its benchmark rate to 4.5 percent, Eonia forward contracts show. By contrast, the U.S. Federal Reserve cut its key rate seven times to 2 percent to stave off a recession.

While Germany is “flying at stall speed,'' the ECB will “probably welcome below-trend growth to help them bring inflation down,'' said Richard Berner, co-head of global economics at Morgan Stanley in New York. “We expect the ECB to tighten once more this year.''

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Tesla Motors Inc., maker of the 100 percent electric Tesla Roadster, opened its second company-owned sales and service facility in Menlo Park on Monday.

The store is located at 300 El Camino Real, just north of the Stanford Shopping Center, downtown Palo Alto and Stanford University.

San Carlos-based Tesla said the 40,000 square-foot facility replicates the unique Tesla brand experience of its flagship Los Angeles store on a larger scale. In addition to showcasing the roadster, the showroom is part museum, displaying several car models originally used for aerodynamic and styling studies, as well as exhibiting the bonded aluminum frame of the Tesla.

“Tesla is building its own stores to provide a unique, branded experience for Tesla customers and provide the highest level of service for our unique power train,” said Darryl Siry, senior vice president of Global Sales, Marketing & Service http://payday-badcredit.com. “We will continue to build our store network in the U.S. and in Europe, focusing initially on key markets for the Tesla Roadster and then expanding over time to cover broader distribution of the ‘Model S’ Sedan.”

The Menlo Park store is open to the public Tuesday through Saturday from 10 a.m. to 6 p.m. and Sunday noon to 5 p.m. Test drives are available by appointment only.

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Home sales in the U.S. probably declined in June as the housing slump headed for a third year, undermining the economy and prompting businesses and consumers to trim spending, economists said before reports this week.

Combined sales of new and existing homes dropped 1.3 percent last month, according to the median estimate of economists surveyed by Bloomberg News. Orders for durable goods, products meant to last several years, probably fell 0.3 percent.

The biggest housing recession in a generation, now being exacerbated by a tightening in credit as financial losses spread, threatens to stall economic growth. The surge in raw-material costs and slowing demand will likely prompt companies to keep reducing investment in a bid to protect profits.

“Stress in financial markets and curtailment in lending are going to make it more difficult to buy homes,'' said David Resler, chief economist at Nomura Securities International Inc. in New York. “Manufacturers that produce for homebuilders or homeowners are being hurt by the slump in housing.''

The National Association of Realtors' report on sales of existing homes is due July 24. Purchases declined to a 4.93 million annual pace from 4.99 million in May, according to the survey median. Sales reached a 4.89 million pace in April, the fewest since comparable records began in 1999.

A day later, the Commerce Department is forecast to report that sales of new houses dropped to an annual pace of 503,000 from 512,000 in May, according to survey estimates. Sales of existing and new homes are down 35 percent from their July 2005 peak.

Construction Drops

Reacting to the weak sales, builders in June began work on the fewest single-family homes since 1991, the Commerce Department reported last week. That signals that home construction will continue to weigh on the economy after subtracting from growth since the first quarter of 2006.

More Americans are walking away from their homes as property values tumble and borrowing costs on adjustable-rate mortgages reset higher. Bank seizures increased a record 171 percent from a year ago and foreclosure filings rose 53 percent in June, RealtyTrac Inc., a seller of default data, said July 10 easy payday loans.

Stricter lending regulations and the drop in home prices make it harder for Americans to tap home equity for extra cash. Consumer spending in the first quarter grew at the slowest pace since the 2001 recession and is likely to keep slowing later this year, according to economists surveyed this month by Bloomberg.

Bernanke's View

Federal Reserve Chairman Ben S. Bernanke last week abandoned his June assessment that the threat of an economic downturn had diminished, telling lawmakers in semiannual testimony in Washington that there were “significant downside risks to the outlook for growth.''

The index of leading economic indicators may have fallen in June for the first time in four months, economists forecast a report tomorrow will show. The Conference Board's gauge dropped 0.1 percent after increasing by the same amount in May, signaling growth is likely to slow over the next three to six months.

The report on durable goods, due from the Commerce Department on July 25, is also projected to show that orders excluding transportation equipment fell 0.2 percent in June, according to the Bloomberg survey.

Carmakers in particular have been battered. Sales of cars and light trucks fell to an annual pace of 13.6 million units in June, the lowest since 1993, according to industry figures.

General Motors Corp., buffeted by three years of losses, will hasten reductions in truck production and planned closings of four truck plants, Chief Operating Officer Fritz Henderson said on July 15.

“Lack of demand warrants'' accelerating the cutbacks, he said in a press conference in Detroit. “The market is even softer'' than GM projected in June, when the reductions were first announced. “We need to act now.''

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The Bank of New York Mellon Co., New York City, saw second quarter 2008 profit down by one-third compared to the same three months last year. BNY Mellon (NYSE:BK) today reported net income of $309 million or $.27 per diluted share for the quarter ended June 30, 2008. That compares to $445 million and $.62 for the second quarter of 2007. Revenue for the recently completed quarter was $3.41 billion.

BNY Mellon recorded a $380 million after-tax charge related to lease transactions for the three months ended June 30, 2008, which reduced net interest revenue by $377 million low fee cash advance.

BNY Mellon was created through the July 1, 2007 merger between Mellon Financial Corp., Pittsburgh, and The Bank of New York Co. Inc.

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South Korea's department store sales rose for a sixth straight month in June on purchases of women's clothing, luxury goods and food.

Sales at the nation's three biggest chains climbed 11.2 percent from a year earlier, following May's 11.3 percent gain, the Ministry of Knowledge Economy said in Gwacheon today.

Lotte Shopping Co. and smaller retailers offered bigger bargains in June to attract customers, who are contending with record debt levels and soaring living costs. Sales at discount stores fell for the first time in four months, the report also showed, an indication that rising prices have constrained spending by lower-income earners.

“Department store sales rose mainly because of more promotional events but it's hard to say consumption is solid,'' said Kim Jae Eun, an economist at Hana Daetoo Securities Co. in Seoul. “Rising oil prices are costing consumers more and crimping confidence.''

South Korean policy makers have stepped up their focus on reining in inflation after surging prices sent confidence among households tumbling to a seven-year low.

A jump in oil and food costs stoked the biggest increase in consumer prices in a decade in June and prompted the government to cut its 2008 economic-growth forecast to 4.7 percent from 6 percent cash advance loans.

Shares, Currency

The Kospi stock index rose 1.3 percent to 1,529.50 at 9:33 a.m. in Seoul from a 15-month low yesterday. The nation's currency gained 0.2 percent to 1,006.20 against the U.S. dollar.

South Korea's benchmark stock index has dropped 19 percent in 2008 on concern rising prices are damping domestic demand just as slowing global growth curbs exports. Shares in Lotte Shopping, the nation's largest department store operator, have fallen 28 percent this year, and those in Hyundai Department Store Co., the second biggest, have slumped 34 percent.

Sales at discount stores dropped 1.9 percent last month from a year earlier as spending on clothing slumped, today's report showed.

In contrast, spending on luxury goods at department stores gained 37.1 percent in June and sales of women's suits climbed 7.7 percent. Food sales through department stores rose 12.6 percent from a year earlier.

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Madison19, a condominium development at 670 Madison Ave., has been completed.

Condo developer Phil Woodard started the $2.3 million project in late 2006.

It has 18 one-story units and one two-story unit, which will sell for $160,000-$170,000.

One of the ground floor units can be converted into office space as well.

Woodard has developed mostly Downtown condo projects such as St. Marten’s Place, GE 5 and 2 West.

However, this new project is located near the UT-Memphis campus and medical district, along the Madison trolley line.

The project is targeting first-time homebuyers, students, medical residents and professors.

Martin Realty Group will be marketing the project.

The residential market has changed since Woodard started the project, but he’s confident.

“It’s definitely gotten softer, but I think my price range is good, being under $200,000,” Woodard said payday loans.

Archer Custom Builders was the general contractor and Archimania designed it.

Archimania’s rendering of the project won a Construction Specifications Institute award.

The project is not LEED-certified, but it has several environmentally friendly features including recycled materials, low-water landscaping, programmable thermostats, florescent light bulbs and cellulose insulation made from recycled materials.

There are bike racks, a green space, 22 surface parking spaces and four garage spaces behind the building, which is gated.

There will be an open house at Madison19 from 5-7 p.m. on July 10.

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Chancellor of the Exchequer Alistair Darling wants European Union policy makers to curb their reliance on credit-rating firms, joining his counterparts in calling for stricter industry oversight, a U.K. Treasury official said.

Darling, responding to record losses on subprime-mortgage bonds, will tell EU finance ministers meeting in Brussels today that their excessive use of ratings by companies such as Standard & Poor's and Moody's Investors Service discourages proper risk assessments, the official told reporters.

The current use of ratings is “too hard wired'' in EU policy making, the official added. For example, a directive enacting Basel II bank-capital rules requires banks to use recognized ratings to value their assets, the official said.

EU finance ministers will call for credit-ratings firms to register with EU authorities, an effort to increase control in response to the credit-market turmoil of the past year, according to a draft statement disclosed last week.

In the U.S., the Securities and Exchange Commission plans new rules to prevent conflicts of interest at credit-rating companies and help investors distinguish rankings on asset- backed securities from other types of debt.

The SEC has proposed that raters be barred from guiding investment banks on gaining top rankings for structured-finance offerings. It may also recommend that companies use symbols for asset-backed securities that differ from corporate and municipal debt ratings low fees payday loan.

McCreevy Plan

The EU proposal, meanwhile, will bolster EU Financial Services Commissioner Charlie McCreevy's plan to require rating companies to register with regulators in the EU, allowing authorities to oversee the business. French Finance Minister Christine Lagarde, who will lead today's meeting as France holds the EU's rotating presidency, called for such a system in May.

Nonbinding measures by the rating companies aren't sufficient, the ministers will say today, while they'll welcome moves by regulators and the industry to stiffen a code of conduct and set additional procedures for assessing asset-backed securities.

U.K. Prime Minister Gordon Brown in April asked U.K. bank executives to improve financial reporting and adopt more systematic methods for writing down bad debts.

The world's largest banks and securities firms have absorbed almost $400 billion of losses and writedowns since the start of 2007 after home loans made to the least creditworthy borrowers went bad. Pension and money-market funds also invested in mortgage bonds because the securities offered higher returns than government bonds with the same AAA rankings.

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