Finance & Business World

The debate over gun control is heating up at Starbucks.

Gun owners bearing arms have been gathering at various Starbucks locations in states where it’s legal to do so in public. That’s sparked protests from gun-control advocates and kudos from pro-gun groups.

The coffee chain says that its stores simply abide by state laws, and it is legal to carry weapons in 43 states. But businesses have the right to prohibit customers from carrying guns in their establishments despite state laws, and that’s the crux of this particular dust-up.

"While we deeply respect the views of all of our customers, Starbucks’ long-standing approach to this issue remains unchanged," the company said in a statement. "We comply with local laws and statutes in all the communities we serve."

Starbucks (SBUX, Fortune 500) said the gun-toting gatherings first began at its stores in Northern California after two other chains, San Francisco-based Peet’s Coffee & Tea and California Pizza Kitchen, put policies in place to prevent gun owners from carrying firearms in their stores.

The Brady Campaign to Prevent Gun Violence then wrote a letter to Starbucks CEO Howard Schultz, urging Starbucks to enforce a similar policy. On its Web site, the Brady Campaign is soliciting supporters through an online petition that urges Starbucks to offer "espresso shots, not gunshots" and reverse its corporate policy.

On the other side of the debate, gun rights advocates are pleased with Starbucks’ decision. Forum members of OpenCarry.org, a pro-gun Internet community with nearly 28,000 members, are posting that they are "impressed" with Starbucks’ stance and will regularly buy the company’s coffee to show support.

Starbucks said if it were to adopt a policy prohibiting customers from carrying guns in states where it is legal to bear firearms, that would require its employees to ask law abiding customers to leave stores, putting them in an unfair and potentially unsafe position.

The company also said the gun-control debate belongs in the legislatures and courts, not at its stores.

"Advocacy groups from both sides of this issue have chosen to use Starbucks as a way to draw attention to their positions," the company said. "As the public debate continues, we are asking all interested parties to refrain from putting Starbucks or our partners in the middle of this divisive issue."  

Source

No faxing fast cash advance gets you cash fast and easily.

Revamped pizza and a frank advertising campaign helped Domino’s Pizza Inc. more than double its fourth-quarter profit as curious customers tried out its new recipe, the chain said Tuesday.

Executives have said the chain decided to start overhauling its recipes more than 18 months ago after mounting criticism from focus groups and on social media sites.

And it boldly admitted in a series of documentary-style spots that under its old recipe, customers complained its crust tasted like cardboard and its sauce was reminiscent of ketchup.

The company began promoting its new pizza in December. That helped profit climb to $23.6 million, or 41 cents per share, compared with $11 million, or 19 cents, a year earlier.

Removing one-time items, the company’s profit was 30 cents per share — well ahead of forecasts.

Sales improved to $462.9 million from $428.2 million. Analysts expected a profit of 25 cents per share with sales of $437.5 million.

In the U.S., sales at stores open at least a year grew 1.4 percent, while overseas — which comprises nearly half of global retail sales — climbed 3.9 percent. This figure is a key measure of a retailer’s performance since it measures results at existing stores rather than newly opened ones free credit score online.

Meanwhile, Chairman and Chief Executive David Brandon said traffic increased all of last year and has continued to grow in 2010.

The question remains, though, whether Domino’s can keep the momentum going, or whether the novelty of the new recipe will wane.

"When a restaurant company radically changes their menu, usually there’s a curiosity bump involved in the results," said Morningstar analyst R.J. Hottovy.

"But it’s too early to tell if that’s going to be sustainable for a long time."

Full-year profit surged 48 percent to $79.7 million, or $1.38 per share, from $54 million, or 93 cents, a year ago. Adjusted earnings were 87 cents per share. Annual revenue fell 2 percent to $1.4 billion from $1.43 billion.

Domino’s does not give quarterly or full-year profit outlooks, but did provide some long-term same-store sales forecasts. The pizza chain predicts domestic sales at stores open at least a year will rise 1 percent to 3 percent, with international sales at stores open at least a year up 3 percent to 5 percent.

Source

Aqua America Inc. posted nearly flat income on a revenue increase in the fourth quarter, as earnings per share met analysts’ estimates and revenue did not.

The Bryn Mawr, Pa.-based water and wastewater utility holding company earned $26.7 million, or 20 cents per fully diluted share, in the quarter. The average estimate of eight analysts polled by Thomson Reuters was that it would earn 20 cents per share in the quarter. It earned $25.7 million, or 19 cents per fully diluted share, in the fourth quarter of 2008.

Aqua America’s revenue in the quarter was $167.9 million, up from $159.8 million in the fourth quarter of 2008. The average revenue estimate of six analysts polled by Thomson Reuters was $176 cash advance america.2 million.

In all 2009, the company earned $104.4 million, or 77 cents per fully diluted share, on revenue of $670.5 million. All the figures were increases from 2008, when Aqua America (NYSE:WTR) earned $97.9 million, or 73 cents per share, on revenue of $627 million.

Nicholas DeBenedictis, the company’s chairman and CEO, said in Aqua America’s earnings press release that he expected its earnings to continue to rebound in 2010, supported by an improving economy, a return to normal weather patterns and the successful completion of rate cases it has pending.

Source

A Greek government inquiry uncovered a series of swaps agreements with securities firms that may have allowed it to mask its growing debts.

Greece used the swaps to defer interest repayments by several years, according to a Feb. 1 report commissioned by the Finance Ministry in Athens. The document didn’t identify the securities firms Greece used. The government turned to Goldman Sachs Group Inc. in 2002 to obtain $1 billion through a swap agreement, Christoforos Sardelis, head of Greece’s Public Debt Management Agency between 1999 and 2004, said in an interview last week.

“While swaps should be strictly limited to those that lead to a permanent reduction in interest spending, some of these agreements have been made to move interest from the present year to the future, with long-term damage to the Greek state,” the Finance Ministry report said. The 106-page dossier is now being examined by lawmakers.

European Union leaders last week ordered Greece to get its deficit under control and vowed “determined” action to staunch the worst crisis in the euro’s 11-year history. Standard & Poor’s and Fitch Ratings are questioning Greece over its use of the swap agreements, said two people with direct knowledge of the situation, who declined to be identified because the talks are private.

“Greece used accounting tricks to hide its deficit and this is a huge problem,” Wolfgang Gerke, president of the Bavarian Center of Finance in Munich and Honorary Professor at the European Business School, said in an interview. “The rating agencies are doing the right thing, but it may be too little too late. The EU slept through this.”

Euro Criteria

Lucas van Praag, a spokesman for New York-based Goldman Sachs, the most profitable securities firm in Wall Street history, didn’t respond to e-mails seeking comment.

Greece, whose burgeoning budget deficit caused it to fail the criteria for joining the single European currency in 1999, joined the Euro in 2001. Member nations had to reduce their budget deficit to less than 3 percent of gross domestic product and trim national debt to less than 60 percent of GDP.

Greek Prime Minister George Papandreou, who came to power in October after defeating two-term incumbent Kostas Karamanlis, more than tripled the 2009 deficit estimate to 12.7 percent. Greek officials last month pledged to provide more reliable statistics after the EU complained of “severe irregularities” in the nation’s economic figures free business cards.

‘Political Interference’

The Finance Ministry report blamed “political interference” for the collapse of credibility in Greece’s statistics. There were “serious weaknesses” in data collection, especially with spending figures, as information often came from second-hand sources, the report found.

The Goldman Sachs transaction consisted of a cross-currency swap of about $10 billion of debt issued by Greece in dollars and yen, Sardelis said. That was swapped into euros using a historical exchange rate, a mechanism that implied a reduction in debt and generated about $1 billion of funding for that year, he said. Eurostat, the EU’s Luxembourg-based statistics office, and the rating companies were both aware of the plan, he said.

Officials for Eurostat couldn’t be reached for comment. Officials for Fitch, Moody’s and Standard & Poor’s didn’t return calls seeking comment outside regular office hours yesterday.

‘Deal Restructured’

Sardelis said the agreement was restructured “a couple” of times while he was still in office. He left in 2004 and joined Banca IMI, the investment-banking unit of Italy’s Intesa Sanpaolo SpA’s. He said the fees, or the spread that Goldman Sachs was paid on the contract, were “reasonable.” The New York-based firm made about $300 million from the agreement, the New York Times reported Feb. 14.

Goldman Sachs bankers including President Gary Cohn traveled to Athens in November to pitch a deal that would push debt from the country’s health-care services into the future, the newspaper reported, citing two people briefed on the meeting. Greece rejected the offer, the New York Times said.

The government met with major international banks over the last month in order to explore options and discuss their involvement in financing Greek national debt, said an official at the Greek finance ministry who declined to be identified. Debt-financing operations are conducted transparently in order to be fully Eurostat-compliant, the official said.

Goldman Earnings

Goldman Sachs reported net income of $13.4 billion in 2009’s fiscal year, outpacing the $11.6 billion profit in 2007, its next-best year. The shares doubled last year to $168.84.

Source

Spanish Prime Minister Jose Luis Rodriguez Zapatero defended his country’s budget deficit and urged more U.S. investment in Spain during a meeting with U.S. business leaders, as investor concerns caused stocks to plummet in Spain.

Zapatero told a closed-door gathering at the U.S. Chamber of Commerce in Washington yesterday that Spain’s deficit was a consequence of stimulus spending that has peaked, and will be reduced through an aggressive austerity plan, according to an aide to the Spanish leader who briefed reporters and asked not to be identified.

Zapatero told the U.S. executives that his government will reduce spending by 50 billion euros ($68.7 billion) by 2013, the aide said. Spain, with a budget shortfall equivalent to 11.5 percent of gross domestic product, must bring its deficit down to 3 percent of GDP by 2013 to conform to European Union rules, the prime minister noted.

Spain’s benchmark IBEX 35 Index fell 5.9 percent yesterday day to 10,241.7, the steepest decline since Nov. 6, 2008. Stocks also fell in neighboring Portugal on concerns that the two nations will face difficulties like Greece has experienced in shrinking deficits.

Rating Agencies

Zapatero defended Spain’s debt as reasonable, according to the aide who attended the meeting. The prime minister said he was confident rating agencies would maintain a positive assessment of his economy.

Standard & Poor’s cut its rating on Spanish debt to AA+ from AAA in January 2009, and changed the nation’s outlook to “negative” from stable last December. S&P said Spain will experience a “more pronounced and persistent deterioration” in its budget and a “more prolonged period of economic weakness” than expected a year ago.

Speaking later yesterday to the Atlantic Council, a Washington-based public-policy group, Zapatero stressed that Spain’s debt-to-GDP ratio is 20 points lower than the average among EU countries.

Zapatero told U.S. executives in the private meeting that labor reforms would be announced today in Madrid that would reduce public spending, and said Spain is looking to the U.S., the biggest investor in Spain’s economy, to maintain confidence, his aide said.

Senior Executives

Zapatero was joined at the meeting by senior executives from Spanish bank BBVA SA, construction giants Acciona SA and Ferrovial SA, and Iberdrola SA, Spain’s biggest power company, according to the Spanish Embassy and Zapatero’s aides.

In his speech to the Atlantic Council, Zapatero said the Spanish financial system is “strong and solid,” and the country’s banks “have proven to be resilient.”

Spain has shown “its ability to grow and its ability to handle its public resources well,” the prime minister said.

“We know the reforms we need to make and I am certain Spanish society will be with us,” he added.

Zapatero recently announced tax increases and a rise in the retirement age as part of the package to cut Spain’s deficit.

Zapatero in his speech also underscored Spain’s commitment to the NATO-led security effort to stabilize Afghanistan, noting that his country had “heeded the call” of President Barack Obama and would be adding 500 new Spanish soldiers. Spain has lost 90 soldiers in Afghanistan, the fourth-largest number of casualties among the NATO nations.

“It’s a very difficult mission,” he said, adding, “we know what’s at stake in Afghanistan.”

Source

Vietnam raised $1 billion from its second global bond sale, offering higher yields than Philippines and Indonesia, amid the busiest start to a year for global borrowing by developing nations since 2005.

The Southeast Asian government sold 10-year bonds to yield 6.95 percent, or 332.7 basis points more than Treasuries, according to a person close to the transaction who declined to be identified because he’s not allowed to speak publicly. A basis point equals 0.01 percentage point.

The Philippines sold debt due in 2020 at 5.67 percent on Jan. 7, while Indonesia offered similar-maturity notes at 6 percent on Jan. 12. Both countries carry lower debt ratings than Vietnam from Standard & Poor’s.

“I like the country and see continuing inflows into emerging markets,” Francesca di Cesare, a bond manager who helps oversee the equivalent of $10 billion at Aletti Gestielle SGR SpA in Milan, said in an interview before the bond pricing. “Vietnam is not a frequent issuer and thus offers a diversification factor.”

AllianceBernstein L.P. and Western Asset Management Co. last week said Vietnam needed to offer at least 7 percent as the government struggles with a currency trading near a record low, accelerating inflation and a widening trade deficit. Before today’s sale, countries from Turkey to Slovenia and Philippines have sold more than $13 billion of debt, the most in the same period since 2005, data compiled by Bloomberg show guaranteed payday loans.

Market Volatility

The government delayed the pricing on Jan. 22 because of increased market volatility after President Barack Obama unveiled measures to curb risk-taking by U.S. banks. The JPMorgan Chase & Co. Emerging Market Bond Index Global fell 0.5 percent last week, the most since October. Vietnam has a 0.23 percent weight in the index that tracks debt of 37 emerging- market countries.

“If the market sentiment is less supportive like last week, the spreads could widen after the sale,” said di Cesare, who bid for the securities.

Vietnam is struggling to balance policies that spur growth with efforts to ensure its economy remains stable, Moody’s Investors Service said Jan. 15. The nation is rated Ba3 by Moody’s, three levels below investment grade, with a negative outlook. The ranking is on par with the Philippines and one grade weaker than Indonesia. S&P rates Vietnam BB, one level higher than the BB- ranking for Indonesia and the Philippines.

The government sold $750 million of 10-year bonds to yield 7.125 percent at its inaugural sale in October 2005, a premium of 2.56 percentage points over similar-maturity Treasuries. The January 2016 notes yielded 6.15 percent yesterday, according to Bloomberg data.

Barclays Plc, Citigroup Inc. and Deutsche Bank AG managed the sale.

Source

India’s industrial production grew at the fastest pace in 25 months in November, strengthening the case for the central bank to raise interest rates in the first half of this year.

Output at factories, utilities and mines rose 11.7 percent from a year earlier after gaining 10.3 percent in October, the statistics agency said in New Delhi today. The gain exceeded the median estimate of 10 percent in a Bloomberg News survey of 25 economists.

The acceleration of India’s economy, Asia’s third-largest, parallels a rebound in China that may also see policy makers there boost borrowing costs in the coming months. India’s biggest stock-market advance in 18 years, along with fiscal and monetary measures, have stoked demand for cars made by Maruti Suzuki India Ltd. and plasma screens from LG Electronics Inc.

“The pace of growth is much stronger than anticipated and clearly indicates that consumption is in a self-propelling mode,” said Shubhada M. Rao, chief economist at Yes Bank Ltd. in Mumbai. “And with inflation surging, the probability of an increase in the cash reserve ratio in the central bank’s Jan. 29 policy statement is now very high.”

India’s bonds fell after the report. The yield on the 6.35 percent note due in January 2020 climbed to the highest level in almost two months, rising by five basis points to 7.71 percent as of 1:05 p.m. The Bombay Stock Exchange’s Sensitive Index declined 0.51 percent at 2:11 p.m., after rising 0.4 percent earlier, on concern a faster recovery will prompt the central bank to raise rates.

Stimulus Measures

Economies are recovering across Asia after the region’s policy makers unveiled about $1 trillion in stimulus measures and cut rates to spur growth. China’s industrial production rose 19.2 percent in November and its exports climbed 17.7 percent in December.

Recent data show growth is gaining traction in India as well, with manufacturing rising at the fastest pace in seven months in December, according to the Purchasing Managers’ Index compiled by HSBC Holdings Plc and Markit Economics. Exports surged to a 15-month high in December after rising 18.2 percent in November, the first increase in 14 months.

RBI Governor Duvvuri Subbarao “should begin monetary action by shrinking the excess liquidity in the local money markets and then move to increasing policy rates around March and April,” said Rajeev Malik, an economist at Macquarie Group Ltd. in Singapore. The central bank “will be concerned about the excess liquidity and second-order inflationary effects of high food inflation.”

Food Prices

India’s benchmark wholesale-price inflation rate rose to 4.78 percent in November, more than three times October’s 1.34 percent. Wholesale food prices soared 18.22 percent in the week to Dec. 26 from a year earlier, near the most in 11 years. The government is next due to release food inflation data on Thursday.

“This release, together with the likelihood of a strong December inflation number on Thursday, seals India’s near-term interest rate fate,” said Robert Prior-Wandesforde, Singapore- based senior Asia economist at HSBC Holdings Plc. He expects the RBI to start increasing its key policy rates in April after raising lenders’ reserve requirements at this month’s meeting.

Subbarao slashed the cash reserve ratio by 400 basis points to 5 percent between October 2008 and January 2009 to shield the economy from the global recession. The central bank has left its reverse repurchase rate and repurchase rate unchanged since April, after respective cuts of 2.75 and 4.25 percentage points.

Fridges, TVs

By comparison, China’s one-year lending rate is at a five- year low of 5.31 percent and its one-year deposit rate is 2.25 percent.

Manufacturing output increased 12.7 percent in November from a year earlier, accelerating from an 11.1 percent gain in October, today’s report showed. Mining grew 10 percent, compared with 9 percent in the previous month and electricity rose 3.3 percent from 4.7 percent. Production of consumer durables such as refrigerators and televisions surged 37.3 percent in November, compared with a 20.2 percent gain.

Prime Minister Manmohan Singh last year cut taxes on consumer products, increased spending on roads and utilities, raised salaries for government workers and waived farm loans.

The central bank injected about $130 billion into India’s banking system by reducing interest rates and lowering lenders’ reserve requirements. That helped the $1.2 trillion economy to grow 7.9 percent in the three months ended Sept. 30, the most in 1 1/2 years.

Surpassing China

Faster growth has attracted overseas inflows into stocks, taking the Sensitive Index to the highest in 18 years in 2009. The rupee gained 4.8 percent.

India’s growth may quicken to 10 percent in a “couple of years,” exceeding that of China as early as 2014, Kaushik Basu, chief economic adviser to the South Asian nation’s finance ministry, said Jan. 4. The government has no plans to “suddenly” withdraw last year’s stimulus, he said.

The strength of the Indian economy is enticing foreign companies to expand and set up operations. Toyota Motor Corp., Volkswagen AG and other carmakers introduced 10 new models at the Delhi Auto show last week. Passenger car sales hit 1.43 million units in 2009, the most in three years, according to the Society of Indian Automobile Manufacturers on Jan. 8.

ArcelorMittal, the world’s biggest producer of steel, and Posco, the sixth-biggest maker of the alloy, plan to set up new steel mills in southern India. Posco will invest 323 billion rupees ($7 billion) on a mill in Karnataka state, the regional government said Jan. 7. ArcelorMittal plans to sign an accord in June for a 300 billion-rupee project in the same state.

Source

The groundbreaking deal that will see Time Warner Cable Inc. pay News Corp. for over-the-air television programming illustrates the differences between the broadcasting models in Canada and the United States, observers say.

Time Warner and News Corp. agreed on a distribution deal Jan. 1, though details were not disclosed. Other broadcasters, such as CBS Corp., have also said they may seek payment for programming that is currently free.

News Corp. demanded to be paid for the rights to shows on Fox Networks, home of The Simpsons and American Idol as well as sports programming such as college and NFL football games.

If other networks seek similar terms, cable operators may have to fork out as much as $5 billion (U.S.) a year and would likely pass the cost on to subscribers, said Craig Moffet, an analyst at Sanford C. Bernstein in New York.

"The broadcast networks are really struggling to find a viable business mode," Moffett said. "They’re looking at the cable networks that make money both on advertising and the money that the cable operators pay them and saying, `We need a dual revenue stream to survive, too.’"

These battles are playing out just as the television industry is coping with the wrenching changes brought on by new competition from the Internet.

In Canada, the Canadian Radio-television and Telecommunications Commission has embarked on a sweeping review of the cable and satellite television industry business

Options traders are growing less bullish on the yen after efforts by Japanese officials to boost the world’s second-biggest economy and a U.S. jobs report led to the currency’s biggest weekly decline in a decade.

Japan’s currency plunged 2.5 percent against the dollar and 1.3 percent versus the euro on Dec. 4 after the U.S. Labor Department said employers cut the fewest jobs since the recession began. The yen sank 4.5 percent versus the greenback for the week, the most since February 1999 and retreating from a 14-year high. Traders sold yen and bought dollars on speculation interest rates in the U.S. will increase before June.

“The improving U.S. jobs market suggests the Federal Reserve won’t stand pat on interest rates longer than the Bank of Japan,” said Kazutoshi Yasuda, general manager of the markets department in Tokyo at FX Prime Corp., a unit of Itochu Corp. Increased U.S. borrowing costs would lead traders to favor using yen to finance higher-yielding investments, leading to more losses for the Japanese currency, he said.

Options showed declining bets the yen will rise. The odds for a gain to 84.5 yen per dollar by the end of March from 90.56 last week fell to 38 percent from 80 percent on Nov. 30, data compiled by Bloomberg show. Chances of a decline to 92 versus the dollar by Dec. 31 reached 63 percent. Options grant buyers the right to purchase or sell an asset at a predetermined price.

Weekly Tumble

The yen tumbled 3.6 percent versus the euro last week, the sharpest slide since the five days to April 3. The yen also fell 4.5 percent against the dollar, the most since the week ended Feb. 19, 1999, when it slumped 5.9 percent. The yen’s biggest drop during the week came after the U.S. Labor Department said payrolls dropped by 11,000 last month, the smallest decrease since the recession began.

The yen traded at 89.90 per dollar as of 11:53 a.m. in Tokyo from 90.56 last week, and was at 133.87 versus the euro from 134.54.

“What the job numbers do is firm up expectations that the Fed interest-rate hike is coming,” said Camilla Sutton, a strategist in Toronto at Bank of Nova Scotia, the nation’s third-largest lender. “That should be a strong-dollar story.”

Federal-funds futures contracts on the Chicago Board of Trade show a 43.3 percent probability the U.S. central bank will raise its target rate for overnight bank borrowing to 0.5 percent by June from the current range of zero to 0.25 percent, up from 12.6 percent odds a month ago.

‘Finally Turning’

UBS AG expects the Fed to set its key rate at the top end of its 0.25 percent range in April and follow with a quarter- point increase in June. The jobs report and last week’s gains “suggest the greenback is finally turning,” Mansoor Mohi-uddin, the Zurich-based bank’s global head of currency strategy, wrote in a note to clients.

The yen was the best performer against the dollar among the 16 most-traded currencies the past four years, Bloomberg data show. It surged to 84.83 on Nov. 27, the strongest since July 1995, from 124.13 in June 2007. The yen tends to advance amid financial turmoil because Japan’s trade surplus reduces reliance on foreign capital.

Record low U.S. interest rates have kept the dollar under pressure at the expense of the yen, making the greenback the favorite for so-called carry trades, where investors raise funds in countries with low borrowing costs and use the proceeds to invest in countries with higher returns.

Benchmark rates of as low as zero in the U.S. and 0.1 percent in Japan compare with 3.75 in Australia and 2.5 percent in New Zealand.

Libor

The London interbank offered rate, or Libor, for three- month loans in the U.S. currency has been below the equivalent yen rate since Aug. 24. In the decade before then, the dollar rate averaged 2.94 percentage points more than the yen rate.

Contracts betting the yen would climb against the dollar rose to 51,710 on Nov. 27, the most since May 2008, according to the Commodities Futures Trading Commission in Washington based on contracts at the Chicago Mercantile Exchange. As recently as June, there more contracts betting on a decline than a gain.

Such “extreme” positioning may suggest that the decline in the yen represents traders unwinding “long” positions rather than an outright bet on the currency’s depreciation, Marc Chandler, the global head of currency strategy at Brown Brothers Harriman & Co. in New York, said in a note to clients on Dec. 4.

The median estimate of more than 30 strategists surveyed by Bloomberg is for the yen to end March at 92 to the dollar and 136 to the euro.

‘Urgent Steps’

Fujio Mitarai, head of Japan’s largest business lobby, called on the government to take “urgent steps” on Nov. 27 to curb gains in the yen, which make Japanese exports less competitive and threaten corporate profits. The same day, Finance Minister Hirohisa Fujii said in Tokyo the nation will “do what is necessary” and he may contact U.S. and European officials to act.

Exports make up about 12 percent of Japan’s economy, compared with 6 percent in the U.S. The nation’s gross domestic product is forecast to shrink 5.7 percent this year, according to the median estimate of economists surveyed by Bloomberg. That compares with a contraction of 2.4 percent in the U.S.

The Bank of Japan announced an emergency 10 trillion yen ($113 billion) credit program on Dec. 1 to combat falling prices and the stronger yen. The spread between dollar- and yen-based Libor narrowed to 2.72 basis points on Dec. 4 from as much as 7.25 basis points on Sept. 8.

Stimulus Plan

“The BOJ’s action worked,” said Masato Mori, senior manager of the business and marketing department at NTT SmartTrade Inc. a unit of Nippon Telegraph & Telephone Corp. “Stopping the yen’s advance will require additional spending from the government.”

A stimulus plan worth as much as 4 trillion yen may be agreed upon today, Chief Cabinet Secretary Hirofumi Hirano said last week. The government planned to announce the measures on Dec. 4 before disagreements between Prime Minister Yukio Hatoyama’s ruling Democratic Party of Japan and coalition partners, who want a larger package, caused a delay.

Bonds to be issued in the fiscal year starting April 1 may reach 146.2 trillion yen compared with a revised 132.3 trillion yen this year, according to Citigroup Global Markets Japan Inc.

“There is probably enough in the policy action in Japan by the government and the BOJ to argue for further upside on cross- yen currencies near term,” said Greg Gibbs, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in Sydney.

Source

Norway must remove government stimulus or risk faster interest-rate increases that would strengthen the krone and stifle an export recovery, Finance Minister Sigbjoern Johnsen said.

“My main task is to try to prevent fiscal policy putting an extra burden on the krone,” Johnsen, named to the post last month, said in a Nov. 20 interview in Oslo. “The extraordinary efforts of the fiscal policy should be phased out.”

Prime Minister Jens Stoltenberg’s Labor-led government, which was re-elected in September, will breach expenditure guidelines for a second consecutive year after using a record amount of the nation’s $440 billion oil wealth to revive the economy in 2009. The pre-election pledge to spend more came after the world’s sixth-biggest oil exporter, which boasts Europe’s lowest unemployment rate, had already emerged from recession in the second quarter.

Norway’s recovery trajectory has forced interest rates higher. Norges Bank on Oct. 28 became the first rate-setter in Europe to lift borrowing costs since the height of the global slump. Governor Svein Gjedrem increased the deposit rate by a quarter point to 1.5 percent and his bank predicts the rate will average 1.75 percent this year and 2.25 percent in 2010, rising to an average of 4.25 percent by 2012.

“If we spend too much money” it would lead “to a faster increase in interest rates and this could have an impact on the exchange rate and on the competitiveness of our businesses,” Johnsen said.

Krone Best Performer

The prospect of higher rates has helped the krone, making it the best performer of the 16 major currencies tracked by Bloomberg since the end of June. The krone is up 7.3 percent against the euro and 14 percent against the dollar in the period.

That’s cutting into profits at manufacturers like Norsk Hydro ASA, Europe’s second-largest aluminum producer. For every krone the Norwegian currency strengthens against the dollar, based on an exchange rate of 5 instant payday loan.5 kroner, Norsk Hydro’s earnings before interest and tax would be cut by 1.6 billion kroner ($282 million), according to its third-quarter presentation.

Norway’s mainland economy, which excludes oil, gas and shipping, will grow 2.8 percent next year and 3.2 percent in 2011, according to the Organization for Economic Cooperation and Development.

OECD Warning

The government’s spending plans have attracted criticism from the Paris-based organization, which on Nov. 19 warned of the need for “strong fiscal consolidation” and said that “sizeable” policy tightening is “desirable” after a “tremendous” stimulus.

Johnsen, who served as finance minister under Prime Minister Gro Harlem Brundtland from 1990 to 1996, faces the challenge of reining in public spending while keeping his party’s election pledge to support welfare and employment.

Norway, which is also the world’s second biggest natural gas exporter, puts most of its petroleum revenue in a sovereign wealth fund established during Johnsen’s first term in office.

The Government Pension Fund - Global, which started to invest Norway’s oil wealth in 1996, was created to avoid stoking inflation by preventing oil and gas income from seeping through to consumption. Fiscal spending guidelines limit the use of oil money to plug budget deficits to 4 percent of the fund.

Johnsen isn’t promising a sudden shift in his government’s stance.

The return to the spending rule “must be gradual,” Johnsen said. “I will try what I can in order to get back on the 4 percent path during this period. But it is going to be difficult.”

Editors: Chris Kirkham, Tasneem Brogger.

Source