Finance & Business World

Shoppers appear to have given the nation’s stores a needed last-minute sales surge.

Early readings from Toys R Us, Sears Holdings Corp. and several mall operators show packed stores on Christmas Eve following a busy week fueled by shoppers who delayed buying, waiting for bigger discounts that never came or slowed by last weekend’s big East Coast snowstorm.

Stores are counting on these stragglers in a season that so far appears slightly better than last year’s disaster. The jury is still out, because the week after Christmas accounts for about 15 percent of sales as gift card-toting shoppers return to malls.

"The procrastinators were really out in force," says David Bassuk, managing director in the retail practice of AlixPartners, a global business advisory firm.

"But I think retailers needed to be more aggressive to fight for those sales. A lot of people are still willing to hold out until after Christmas because the deals weren’t as good."

A Christmas Eve snowstorm in the nation’s heartland was slowing some shoppers after snarling roads in the mountain states a day earlier.

Wally Brewster, spokesman at General Growth Properties said merchants in his centers said they had made up for lost sales.

Still, he expects overall holiday sales will be only about even with a year ago payday loans with no faxing.

Caution remained. Karen MacDonald, spokesman for mall operator Taubman Centers Inc., noted that stores said many shoppers, remembering the 80 to 90 percent clearance sales they found last year, were asking whether the discounts were going to get any deeper.

And Rebecca Stenholm, a company spokesman for mall operator Macerich Co., reported that more people were using cash to pay for gift cards than a year ago, reflecting tight credit and a desire to pay down debt.

The full picture won’t be known until merchants report December sales Jan. 7. But most expect merchants’ fourth-quarter profits should be intact because they didn’t have to cut prices more than they’d planned as they were cushioned by lean inventories.

ShopperTrak is sticking to its prediction for a 1.6 percent gain, compared with a 5.9 percent drop a year ago.

The National Retail Federation expects that total retail sales will slip 1 percent, though some experts say that might be a bit too cautious.

A year ago, they fell 3.4 percent by the trade group’s calculations.

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Sales tax revenue continues to fall in Dallas and other cities across North Texas.

Dallas' sales tax revenue fell 5.3 percent for November, compared to collections for the same period in 2008. Still, it's better than the Texas average, which dropped 14.4 percent, according to state Comptroller Susan Combs.

Dallas' net payment was $14.5 million, compared to $15.4 million for the same period last year. So far this year, payments are down 9.2 percent, dropping to $205.4 million from $227 million in 2008.

Fort Worth saw its monthly payment drop a whopping 17.3 percent, to $7 million from $8.5 million a year ago. For the year, payments in Fort Worth are down 7.9 percent, to $97.8 million from $106 no fax payday loan.2 million.

Frisco saw its November collections drop 11.6 percent, Plano saw a drop of 19.1 percent, Grapevine tax revenue for the month was down 8.3 percent and Irving showed a decrease of 18 percent. Lewisville fared better than most North Texas cities, with November 2009 collections dipping less than 1 percent when compared with November 2008.

Texas collected $1.7 billion in sales taxes last month, making November the ninth consecutive month of a year-over-year decline.Combs says collections are down in all categories, including retailing, oil and gas production and construction.

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The United Arab Emirates’ central bank set up an emergency facility on Sunday to support bank liquidity in the first policy response to Dubai’s debt woes that threatened to paralyze lending and derail economic recovery.

Dubai rocked the financial world on November 25 when it said it would ask creditors of Dubai World, the conglomerate behind its rapid expansion, and Nakheel, builder of its palm-shaped islands, to agree to a standstill on billions of dollars of debt as a first step to restructuring.

As a result, banks face heavy losses and the risk that fearful depositors could rush to remove cash from the system, and threatening interbank lending with the second largest Arab economy still facing a downturn this year.

“It might support the market a little bit but I don’t think it is enough,” said Shawkut Raslan, head of brokerage at Prime Emirates brokerage.

“I think some foreigners will take their money of the country and others will be afraid to put their money into these markets.” The central bank policy move came late on Sunday as Dubai’s Supreme Fiscal Committee gathered to prepare a statement before market open on Monday in an attempt to reassure investors.

The central bank said the banking system was more sound and liquid than a year ago, when the global crisis ended the oil and real estate fueled boom in Arab Gulf, the world’s top oil producing region.

The monetary authority said on Saturday it was closely watching events stemming from the Dubai debt crisis to ensure there is no negative impact on the UAE economy.

Before the Dubai debt crisis, the UAE economy was seen falling by 1.1 percent this year before returning to a 2.9 percent growth in 2010, a Reuters poll of analysts showed earlier this month.

PREVENTIVE MOVE

Analysts said the central bank’s move was a preventive measure to avoid a possible capital flight and a run on deposits when markets reopen on Monday after a four-day holiday break.

“It is important because the main concern is that there might be some panic behavior by depositors in Dubai and by bankers who want to take deposits out of the banking system,” said John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole Group in Riyadh.

Senior bankers in Abu Dhabi, Dubai’s oil-rich cousin in the UAE federation, told Reuters on Friday Abu Dhabi banks have built up an exposure to Dubai-based companies worth at least 30 percent of their loan books.

In reaction to Dubai’s debt problems, Fitch Ratings has said it downgraded Dubai Bank, Tamweel and Bahrain’s TAIB Bank.

“It (the facility) would cover the immediate concerns related to deposits in the UAE banks,” said Ghanem Nuseibeh, senior analyst at Political Capital consultancy.

“It doesn’t mean that lending would necessarily ease. It is no guarantee for depositors. We still don’t know the extent of the UAE banks’ exposure to Dubai’s problems,” he said. 

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WASHINGTON — Toyota plans to replace the gas pedals on 4 million vehicles in the United States because the pedals can get stuck in the floor mats and cause sudden acceleration.

The massive recall is the largest in the U.S. for Toyota Motor Corp. The Japanese automaker earlier told owners to remove the driver’s side floor mats to keep the gas pedal from becoming jammed.

A deadly crash in California brought attention to the problem. Investigators of the accident, in which four died, determined that a rubber all-weather floor mat found in the wreckage was slightly longer than the mat that belonged in the vehicle, and it could have snared or covered the gas pedal.

The government has attributed at least five deaths and two injuries to floor mat-related acceleration in the Toyota vehicles. Regulators have received reports of more than 100 other incidents.

Dealers will offer to shorten the gas pedals by three-fourths of an inch beginning in January as a stopgap measure while the company develops replacement pedals. New pedals will be installed by dealers on a rolling basis beginning in April, and some vehicles will get a brake override system as a precaution.

The recall involves 3.8 million vehicles, including the 2007-10 Camry, 2005-10 Avalon, 2004-09 Prius, 2005-10 Tacoma, 2007-10 Tundra, 2007-10 Lexus ES350 and 2006-10 Lexus IS250/350. Owners of the ES350, the Camry and the Avalon will get first notification because the cars are believed to be at most risk.

For more information, owners can contact Toyota at 1-800-331-4331 or the National Highway Traffic Safety Administration hot line at 1-888-327-4236.

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German business confidence probably increased to a 14-month high in November, suggesting the economic recovery may gather pace next year.

The Ifo institute in Munich will say its business climate index, based on a survey of 7,000 executives, increased to 92.5 from 91.9 in October, according to the median of 37 forecasts in a Bloomberg News survey of economists. That would be the highest reading since September last year. The index reached a 26-year low of 82.2 in March. Ifo releases the report at 10 a.m. today.

Economic growth accelerated in the third quarter as export orders rose and companies increased production and investment. The manufacturing industry expanded for a second month in November and the country’s benchmark DAX share index has advanced 19 percent this year. Unemployment, the euro’s strength and the expiry of government stimulus measures may still damp growth in 2010.

“New orders are strong, the inventory cycle is turning around and the manufacturing sector has just left recession, which means there’s a lot of room for improvement in the economy,” said Carsten Brzeski, senior economist at ING Group in Brussels. “Germany should continue leading the euro-zone economies for quite some time.”

The government last month raised its economic outlook, forecasting growth of about 1.2 percent in 2010 after a 5 percent contraction this year.

GDP Breakdown

Gross domestic product rose 0.7 percent in the third quarter from the second quarter, preliminary figures showed on Nov. 13. The Federal Statistics Office in Wiesbaden will release a detailed breakdown at 8 a.m. today.

Germany’s Beiersdorf AG, the maker of Nivea products, on Nov. 3 raised margin forecasts after reporting third-quarter profit that beat analysts’ estimates, saying its tape-making Tesa unit is seeing a “trend reversal in its industrial business.”

Ifo’s gauge of the current situation will increase to 88 from 87.3 while an index of executives’ expectations will advance to 97.3 from 96.8, according to the survey of economists.

Chancellor Angela Merkel’s government is spending about 85 billion euros ($127 billion) on measures to stimulate growth, including infrastructure projects and a 2,500-euro payment for people who junk an old car and buy a new one. The so-called cash-for-clunkers fund ran dry in September.

‘Propped Up’

“Growth so far has been propped up by stimulus,” said Costa Brunner, an economist at Natixis in Frankfurt. “There’s not a self-supporting recovery and the stimulus will run out. We see a W-shaped recovery, and a recession in the second half of 2010 isn’t out of the question.”

German investor confidence declined more than economists forecast in November on concern that the economic upswing isn’t sustainable.

Exports, the motor of German economic expansion this decade, have so far weathered the euro’s 20 percent appreciation against the dollar since mid-February.

“Exports will continue to steam ahead on the recovery in world trade and the pick-up in the global economy,” said Aline Schuiling, an economist at Fortis Bank Nederland in Amsterdam. “Ifo will continue, slowly, to move ahead.”

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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.

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Asia-Pacific leaders will pledge on Sunday to keep stimulus policies in place to stop the world from sliding back into recession, wrapping up a summit that has been dogged by accusations of U.S. trade protectionism.

President Barack Obama arrived in Singapore late on Saturday, missing most of the day’s formal talks and speeches where several leaders suggested the world’s largest economy was hampering free trade through policies such as “Buy America” campaigns.

Speaking in Tokyo before he arrived, Obama called for a new strategy to rebalance global growth, referring to the excessive consumption in the United States and the over-reliance on exports from some countries that many blame for the economic crisis.

Leaders from the Asia Pacific Economic Cooperation (APEC) forum will vow to “maintain our stimulus policies until a durable economic recovery has taken hold,” according to a draft of their final statement, to be issued later on Sunday.

APEC is the last major gathering of global decision-makers before a U.N. climate summit in Copenhagen in three weeks meant to ramp up efforts to fight climate change.

Those negotiations have largely stalled, but a U.S. official said Obama had backed a two-step plan by the Danish prime minister to aim for an operational agreement and to leave legally binding details until later.

The APEC draft earlier dropped a reference to emissions reductions of 50 percent by 2050, and pledged instead to “substantially” cut carbon pollution by 2050.

The statement said job creation would be at the heart of economic policy, a hot topic as unemployment has risen across the industrialized world and put pressure on governments to act.

“Looking beyond supporting the recovery, we recognize the necessity to develop a new growth paradigm for the changed post-crisis landscape, and an expanded trade agenda for enhanced regional economic integration,” the draft APEC statement says.

DOHA RHETORIC

The leaders of APEC, a 21-member grouping accounting for more than half of all global output and 40 percent of world trade, will also resolve to exert more political will to jump-start the Doha Round of global trade talks, stalled for eight years.

Beyond the rhetoric of trying to conclude the Doha Round, APEC officials have sought to instead talk up a so-called Transpacific Partnership aimed at forging a regional trade deal.

Obama said Washington would work with the partnership countries, but stopped short of saying Washington would join the pact. The former U.S. administration said last year it would launch talks to join the partnership with Singapore, Chile, Brunei and New Zealand, countries that together comprise a minor component of trade within APEC.

It is the first free trade agreement that spans both side of the Pacific and supporters are touting it as a precursor to a possible APEC-wide pact in the future.

Washington has been criticized on several fronts for its trade policies, especially toward China, which will be the most closely watched of Obama’s four stops on his first Asia tour as president. He leaves for Shanghai later on Sunday. 

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The U.S. economy seems to be on the mend, but some economists are arguing that another round of stimulus is needed to keep the recovery on track.

Congress passed the largest stimulus bill on record in February, a $787 billion package that included aid to states and local governments, money for public works projects, tax breaks and more assistance for the unemployed.

With the help of that package, most economists now believe the recession that started in December 2007 came to an end at some point this summer.

But unemployment has continued to climb, hitting a 26-year high of 10.2% in October. Now there are some worries that the economy could slip back into recession at some point next year. And that is prompting calls for another shot of federal help.

The case for more stimulus

Mark Zandi, chief economist for Moody’s Economy.com, said that between $125 billion and $150 billion in new stimulus, with about $50 billion to $60 billion of that going to further extensions in unemployment benefits beyond what was passed by Congress last week, is needed.

A big portion of the remaining new stimulus funds could be used to give more help to state and local governments. Zandi said without another stimulus package, "the odds of sliding back into recession rises with the incredibly weak labor market."

Zandi is not alone in calling for more stimulus. On Wednesday, the Center on Budget and Policy Priorities, a think tank that concentrates on state and local government financial issues, called for additional help to states.

The center estimated that about $50 billion in additional state and local government aid is needed, and added that state budget cuts could lead to a loss of 900,000 jobs next year if there isn’t additional federal help.

Robert Greenstein, executive director of the center, said calls for more stimulus are justified because the recession has dragged on longer and unemployment has risen higher than foreseen in February.

"The magnitude of the state budget deficits that lie ahead could be a significant drag on the economy just as it is beginning to recover," he said.

Other economists argue that the original stimulus package didn’t go far enough to spur economic growth or job creation.

Gary Burtless, senior fellow at the Brookings Institute, a liberal think tank, said that it is not clear if the economy can continue to grow once the effect of February’s stimulus plan fades.

He said that while concerns about the size of the federal deficit will limit what can be approved in any additional stimulus act, a bigger danger "is that we may have an extremely weak, slow recovery in which unemployment remains high for an unnecessarily long time no credit check payday loan."

Some think existing stimulus is already working

Still, there are plenty of economists who question the need for additional stimulus.

"Rather than force feed an economy, you have to show some patience that it will perform as it did in the past," said Joseph Carson, chief economist at AllianceBernstein. "Trying to push a button and get an immediate result — economies don’t work that way."

Lakshman Achuthan, managing director of the Economic Cycle Research Institute, added that offering additional unemployment benefits might be a good idea but agreed that Congress shouldn’t hastily approve another stimulus package.

He said that by the time another round of stimulus has an actual impact, the economy would already have improved even more on its own.

"Throwing some money into [the economy] doesn’t change the direction or the fact that the [recovery] process is happening," he said.

The administration has been noncommittal about whether it would call for additional stimulus as it concentrates on the health care reform battle.

When asked about more stimulus recently, White House Press Secretary Robert Gibbs said only that the administration would continue to look at "any idea that can help our economy become stronger."

Nadeam Elshami, a staffer for House Democratic leadership, said that another large stimulus package is not being discussed right now. But he said there have been discussions about what smaller steps can win support, such as additional help to state governments. But nothing is likely to start moving on these fronts until the debate over health care reform is complete.

Even advocates of additional stimulus acknowledge that increased government spending is a tougher sell now than at the start of the year. But Zandi said the near unanimous vote for a partial extension in unemployment benefits approved by Congress last week shows that there can be support for what he calls "smaller scale stimulus."

"Another extension in unemployment benefits to help those who are suffering the most: who is going to vote against that?" Zandi asked. 

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It is the most prestigious job that nobody wants.

Bank of America is searching for a new chief executive, and by all accounts, it is having a tough time finding someone for the job.

Heading up Bank of America, an appealing task in better times, has become unpalatable to potential candidates from outside the bank amid a bevy of operational, regulatory and political challenges.

“This job doesn’t have all the advantages it would normally have,” said Anthony Polini, an analyst with Raymond James Financial Services.

The bank is struggling to staunch real estate and consumer credit losses, while simultaneously integrating two large businesses– mortgage lender Countrywide Financial and brokerage Merrill Lynch & Co.

On top of that, government regulators are bearing down hard on Bank of America, issuing a secret regulatory oversight agreement, overhauling the company’s board and mandating pay cuts for some top employees. The bank needs to not only maximize shareholder profit, it must also placate regulators and politicians.

As a result, high profile external candidates linked with the job — like Bank of New York Mellon’s CEO Bob Kelly and BlackRock CEO Laurence Fink — have either declined the post, or denied any interest in the position to begin with easy payday loans.

“Who wants this headache right now? Nobody,” said Paul Miller, a bank analyst with FBR Capital Markets.

Some internal candidates are still expressing interest. Brian Moynihan, head of the bank’s consumer unit, told Reuters on November 4 he would take the top job if offered it.

“Anybody would want this job, it’s one of the best jobs in the business,” he said before a speaking engagement in Los Angeles.

A CNBC report on Monday said Moynihan and Greg Curl, Chief Risk Officer, were two finalists for the position, and the board was divided on them.

Although some investors would like to see the bank pick a CEO as soon as possible, others recognize that the process will take time.

“A 90-120 day period would not be unusual in a search like this,” said Dan Genter, CEO of RNC Genter Capital, which owns 400,000 shares. “There’s a significant amount of searching and its very difficult to find a candidate for this job.”

The bank has until the end of the year to replace outgoing chief Kenneth Lewis, scheduled to retire on December 31.

CREDIT LOSSES 

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The U.S. dollar may come under renewed pressure from emerging market currencies and the euro after a meeting of the world’s top finance officials failed to take concrete action on rebalancing global money flows.

Finance ministers and central bank governors of the Group of 20 major countries, meeting in Scotland at the weekend, launched a “framework” in which they will discuss how to reduce trade and savings imbalances between nations.

But their communique talked only in general terms about rebalancing economies, and implied they might not agree on specific policies for individual countries to adopt before the end of next year at the earliest.

The result may be a continuation of heavy fund flows into emerging markets, boosting currencies there. And central banks intervening to slow currency appreciation may keep investing much of the money they obtain in the euro, pushing up that currency too.

“We’re probably looking at fresh dollar weakness in the short term” in the wake of the G20 meeting, said Kenneth Broux, senior markets economist at Lloyds TSB.

CHINA, BRAZIL

At the center of the currency issue is China’s reluctance to permit appreciation of its tightly controlled yuan, which it has kept flat against the dollar since mid-2008.

That has prompted additional fund flows into emerging market currencies that do trade freely, such as the Brazilian real, which has soared over 30 percent this year. Last month, Brazil slapped a 2 percent tax on foreign investments in fixed income and stocks in an effort to slow the real’s rise.

Last week, Brazilian officials said they would discuss this problem at the G20 meeting. But the G20 communique made no reference to the issue, and Brazil appeared to get little sympathy from a senior official of the International Monetary Fund, which is a key player in the global rebalancing campaign.

Youssef Boutros-Ghali, who chairs the International Monetary and Financial Committee, the IMF’s policy steering committee, told Reuters that Brazil’s tax was unlikely to work and that “we should not be fixated on currencies.

Officials from several countries, including Brazil, Japan and Indonesia, urged China on the sidelines of the meeting to let the yuan move more flexibly.

But as a group, the G20 did not press China on the sensitive issue, G20 sources said. British finance minister Alistair Darling told reporters: “We didn’t discuss the renminbi. I think that’s a question for China rather than us.”

In fact, China appeared in a combative mood. Finance Minister Xie Xuren and central bank governor Zhou Xiaochuan, speaking to the official Xinhua news agency after the meeting, made no mention of the yuan and instead warned developed countries to focus on the quality of their own policies.

Xie said countries with global reserve currencies should work to maintain the currencies’ value, to avoid destabilizing the global economy — implying it was up to Washington, not Beijing, to resolve the issue of the weak dollar.

The silence on the yuan in Scotland suggested countries accepted the G20 was not a forum in which to press China. The other main global economic forum, the Group of Seven nations, last met in October; it did mention the yuan, but only in the softest terms, “welcoming China’s continued commitment” to free up the yuan without referring to a timetable. 

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