China’s decision to keep its currency weak has caused the government to lose control of inflation and risks fuelling wage-price gains, billionaire investor George Soros said.
While the policy helped insulate China from the financial crisis in 2008, the world’s second-biggest economy has missed its chance to allow the yuan to appreciate to tame inflation, Soros, chairman of Soros Fund Management LLC, said yesterday at a conference in Bretton Woods, New Hampshire.
“It would be very advantageous to allow the currency to appreciate as a way of controlling inflation,” Soros said. “The authorities missed that opportunity. You now have inflation somewhat out of control, and causing some serious danger of wage-price inflation.”
The yuan gained 4.6 percent against the U.S. dollar in the past two years, the second-smallest gain of 10 Asian currencies tracked by Bloomberg, even as economic growth rebounded and foreign-exchange reserves jumped to a record. Inflation accelerated to 5.2 percent in March, exceeding government targets for a ninth month, according to the median estimate in a Bloomberg News survey.
The yuan’s gain since April 2009 compares with a 31 percent advance for the Indonesian rupiah, a 22 percent climb by the South Korean won and a 21 percent jump by the Singapore dollar. Only the Hong Kong dollar, which is pegged to the U.S. currency, has appreciated less than the yuan.
‘Marginal Role’
China’s currency was little changed at 6.5367 per dollar as of 10:02 a.m. in Shanghai, trading near a 17-year high. Twelve- month non-deliverable forwards climbed 0.07 percent to 6.3660 per dollar in Hong Kong, reflecting bets the yuan will gain 2.6 percent, according to data compiled by Bloomberg.
China has resisted pressure from U.S. officials to let the yuan appreciate more rapidly, rejecting Treasury Secretary Timothy F. Geithner’s argument that a stronger currency would make it easier to manage inflation pressures.
“While exchange rates can be an effective tool to contain inflation in some countries, I don’t think that’s the case for China,” said Li Cui, chief China economist at Royal Bank of Scotland Plc in Hong Kong. “It’s not so surprising that we are seeing higher inflation in China as price growth is mainly driven by strong domestic demand, while imported inflation only plays a marginal role.”
‘Critical Question’
China’s economic growth accelerated to 9.8 percent in the fourth quarter, driven by a pickup in industrial production and retail sales. The government will report first-quarter economic data on April 15.
The People’s Bank of China raised interest rates four times and boosted banks’ reserve requirement ratios six times since the third quarter to help contain inflation. HSBC Holdings Plc said last week the possibility of another rate increase is rising. Credit Suisse Group AG forecasts the benchmark one-year deposit rate, which has risen 1 percentage point to 3.25 percent, will climb another 1.5 percentage points by the end of the year.
“This cannot continue indefinitely,” Soros said. “There’s great resistance with the government mechanism to relax the system which serves the interest in power very well. I find that the critical question for the future of China.”
A stronger currency would combat inflation by making foreign goods cheaper in China. The nation reported its first quarterly trade deficit in seven years yesterday, driven partly by rising commodity prices. Inbound crude oil shipments rose 12 percent by volume and 39 percent by value, while iron-ore imports rose 14.4 percent by volume and 82.5 percent by value.
Bretton Woods
Soros, 80, reportedly made $1 billion in a successful bet in 1992 that Britain would fail to keep its currency in a European exchange-rate system that pre-dated the euro. Other successful trades included a bet that the deutsche mark would rise after the collapse of the Berlin wall and a wager that Japanese stocks would start to tumble in 1989.
He spoke at a conference sponsored by the Institute for New Economic Thinking, which Soros helped found and supports.
U.S. and European officials met in Bretton Woods in 1944 to draw up rules that governed much of the world economy for almost three decades. Nations agreed to fix exchange rates, establish the International Monetary Fund and start the process of rebuilding Europe’s economy in the aftermath of World War II by encouraging coordinated economic policies.
The Bretton Woods era ended in 1971, when inflation forced the U.S. to abandon the dollar’s peg to gold, an anchor of the system, heralding the era of floating exchange rates. The Bretton Woods agreement had linked currencies around the world to the price of gold and restricted their fluctuations versus the dollar, requiring intervention by participants to comply.
If you want to know why so few women hold executive positions at Wal-Mart Stores Inc. (WMT), here’s the answer the Walton Institute gives out to management trainees:
Women aren’t as aggressive at seeking promotions as men.
Not surprisingly, women at Wal-Mart have a different explanation: Management stereotypes employees by gender (see example above).
Women from Florida to Alaska swear in court papers that they wanted to build careers at Wal-Mart, worked extra hard, earned good evaluations and openly sought promotion only to be bypassed by less-qualified men.
So they filed the world’s largest sex discrimination case against the world’s largest employer. How’s that for gumption?
Their case has been going well for them, if slowly, since they filed it 10 years ago. But when it got to the U.S. Supreme Court this week, they ran into trouble. How much trouble’s hard to say until the court rules, probably in June.
Given the size of Wal-Mart’s labor force, we are talking about a case that would cover at least 500,000 employees and possibly more than 1 million. Every current female employee can become part of the lawsuit that claims company-wide bias against them, two federal courts in California have ruled.
The class is so humongous, and each woman’s situation so different from another’s, that Wal-Mart says the Supreme Court should disband it and force any aggrieved employee to sue individually. It’s just too big for a court to manage fairly, they say.
Judge’s Opinion
And yet, the company’s sheer size, with its gargantuan labor force, can’t be allowed to insulate it from claims that something about its corporate conduct denied hundreds of thousands of employees the pay they would have gotten but for their sex.
“If the employer had 500 female employees, I doubt that any of my colleagues would question the certification of such a class,” 9th U.S. Circuit Court of Appeals Judge Susan Graber, writing approvingly but separately from the 6-5 majority that let the class certification stand last year.
Wal-Mart says company-wide policy forbids discrimination, not encourages it. For a class-action lawsuit to prevail, the women have to show corporate involvement. But at Wal-Mart, each manager in its 3,400 stores has near-complete freedom to decide pay and promotions.
So we’re talking about a huge coincidence, apparently. Women in almost every job category, in each of Wal-Mart’s 41 regions make less than men in the same jobs, by an average of $5,000, according to the plaintiffs’ statistician. This is true despite findings that women stay with the company longer than men and generally have higher performance ratings.
Deli Manager
Gretchen Adams says she was told she was getting top pay at $26,500, when promoted to deli manager at a Wal-Mart Supercenter in Stillwater, Oklahoma faxless cash advances. Then she found out that a man she was training for the same position in Jasper, Alabama, was getting $30,000. It happened again when she trained a man in Cape Coral, Florida, and then in Las Vegas.
Although similar accusations show up in multiple stores located around the country, Wal-Mart’s statistician challenged the plaintiffs’ figures as being too regional to be useful. Looking on a store-by-store, department-by-department basis, she found little pay disparity, a method the plaintiffs attack.
As for promotions, the company doesn’t post most openings. You learn about them if your manager taps you on the shoulder and suggests you apply. Is it surprising that the mostly male management prefers mostly male management, especially in a corporate culture as traditional as Wal-Mart’s?
Through classes, meetings and pep rallies at stores, the company’s Bentonville, Arkansas, home office sends forth its culture to each and every store.
Scalia’s Confusion
So while the plaintiffs acknowledge decentralized personnel decisions at Wal-Mart, they say that the company’s distinctive and tightly controlled corporate culture plays an indirect but powerful role.
“I’m getting whipsawed here” as to how personnel decisions are made, Justice Antonin Scalia complained to the lawyer for the women.
“On the one hand, you say the problem is that they were utterly subjective, and on the other hand you say there is strong corporate culture that guides all of this.
“Well which is it,” Scalia demanded.
Does he really not understand this?
Just Maybe
It could be both. You just might have a corporate culture that allows illegal job discrimination to flourish at the hands of independent store managers. It could happen if management trainers defend the paucity of women in higher ranks and tells trainees women don’t want promotions; if the company sponsors hunting trips as bonding exercises for executives; if the home office doesn’t intervene when its mostly male store management keeps promoting mostly men or ask questions when men are routinely paid more than better-qualified women doing the same work.
For all the discussion of whether a company-wide policy or practice keeps women down, it’s too early in the case to say for sure. A trial will determine that.
But there’s enough for the Supreme Court to allow the class action suit to keep going.
If you’ve gotten this far, you’re among the readers to whom I’d like to say good-bye — as a columnist. After 10 years writing commentary for Bloomberg, I’ll break out of the column format starting next week to write features and investigative pieces related to the law. Thank you for reading.
(Ann Woolner is a Bloomberg News columnist. The opinions expressed are her own.)
South Korea’s unemployment rate rose to a four-month high in January as the number of workers in agricultural, fishery and forestry industries declined.
The jobless rate rose to 3.6 percent from a revised 3.5 percent in December, Statistics Korea said today in Gwacheon, south of Seoul. The median estimate in a Bloomberg News survey of eight economists was for a rate of 3.7 percent.
South Korea’s economic recovery may limit further job losses while also stoking price pressures, with Bank of Korea Governor Kim Choong Soo signaling a pause in interest-rate increases last week may be temporary. Growth has spurred hiring at firms including Seoul-based LG Electronics Inc., the world’s third-largest maker of mobile phones.
“It’s not unusual to see the jobless rate going up during a recovery, as many people sitting idle decide to find a job,” Jun Min Kyoo, an economist at Korea Investment & Securities Co. in Seoul, said before the release. “Given economic growth is solid and that inflation pressures are mounting, the central bank will likely raise rates next month.”
The won rose 0.3 percent to close at 1,119.25 per dollar in Seoul yesterday, according to data compiled by Bloomberg. The benchmark Kospi stock index dropped 0.2 percent.
Private Sector Hiring
The Bank of Korea kept borrowing costs at 2.75 percent on Feb. 11, refraining from a second straight monthly increase this year even after inflation breached its 4 percent ceiling. “We will move ahead with normalizing interest rates at a pace that’s not too slow, nor too fast,” Kim said the same day. The central bank raised its benchmark by half a percentage point last year.
Private sector hiring has led an improvement in the jobs market, the central bank said after last week’s decision. It forecasts economic growth of 4.5 percent this year, slowing from a 6.1 percent pace in 2010, and predicts inflation will accelerate to 3.5 percent from 2.9 percent.
The seasonally unadjusted jobless rate was 3.8 percent in January, compared with 3.5 percent in December, today’s report showed. The number of employed people increased by 331,000 to 23.196 million last month from a year earlier.
Employment in manufacturing climbed 5.7 percent from a year earlier, while the number of people self-employed or working in the public-service sector rose 3.4 percent.
The number employed in construction increased 0.9 percent, while jobs in the agricultural, fishery and forestry industries fell 9.3 percent.
The finance ministry projected in December that the annual average unemployment rate will probably fall to 3.5 percent in 2011 from 3.7 percent last year, as the nation adds 280,000 jobs.
President Barack Obama took bipartisanship beyond civility to gosh-darn friendliness when he ambled across Lafayette Square to speak to the U.S. Chamber of Commerce.
He rarely walks anywhere — strolling presidents drive the Secret Service crazy — but he decided strolling into enemy territory would send just the right message.
Once there, he began with a muted apology for not acting more like Mister Rogers: “Maybe we would have gotten off on a better foot if I had brought over a fruitcake when we first moved in.”
He may not have sent sweets to the chamber, but he did ladle out some pretty sweet deals to its members.
The recovery and stimulus measures he supported included massive helpings of taxpayer money to banks, brokerages and big corporations, few strings attached.
While his political base clamored for the stricter control Republicans demonize as nationalization, Obama went the other way, trusting the banks to lend the money to businesses to help retain and rehire workers. They didn’t, instead hoarding the cash for themselves — and letting top executives keep their bonuses. Sounds like a pretty beautiful day in the neighborhood to me. Who needs cake?
Corporate America is racking up record profits, the Dow Jones Industrial Average is back above 12,000, rising consumer confidence has shoppers flocking to stores. So what exactly is the chamber’s beef with Obama?
Hurt Feelings
It’s true that business continues to be a vocal critic of Obama’s reshaping of health care and of the Dodd-Frank financial reforms. Yet there has to be something more to explain how a traditionally staid member of the Washington establishment has become such a vociferous critic of the president.
There’s a whiff of hurt feelings and bruised egos in the complaints you hear from the chamber about being left off invite lists and about Obama speaking directly to its members. Now there’s a concept for you: I guess presidents should talk to business leaders only through their lobbyists.
Then there’s the “fat cat” insult Obama uttered in an interview on CBS’s “60 Minutes” in December 2009 just before the heads of a dozen or so banks were asked, nicely, in a confab at the White House, to help speed the economic recovery.
When Obama took a stab at explaining the public’s unhappiness over news that huge bonuses were going to the folks who caused the meltdown, he veered into a little trash talk.
“I did not run for office to be helping out a bunch of, you know, fat-cat bankers on Wall Street,” Obama said.
‘You Guys’
And moments later: “They’re still puzzled, why is it that people are mad at the banks? Well, let’s see. You know, you guys are drawing down $10 million, $20 million bonuses after America went through the worst economic year that it’s gone through in decades, and you guys caused the problem.”
Don’t fat-cat bankers have mothers who made the timeless point that words could never hurt them?
Some other questions: If Obama had spent the year spooning with corporate America, as it apparently had hoped, would the 500 largest nonfinancial companies have spent money on new plants and equipment rather than accumulate $1 easy to get unsecured personal loans.93 trillion — a record — in cash and other liquid assets as of the end of the third quarter? Would the flotilla of lobbyists arrayed to fight Dodd-Frank have stood down?
Monday’s visit wasn’t Obama’s first to the chamber but his third, despite the chamber spending an estimated $32 million in the midterm election cycle on issue advertising dedicated overwhelmingly to defeat Democrats.
No Objection
For some reason, the White House chose not to fight the “pivot” story line — the idea that Obama suddenly is wooing business to create the millions of jobs it would have, had it been courted properly.
It can hardly be said with a straight face that the original Obama economic team of Timothy Geithner and Lawrence Summers, with Ben Bernanke at the Fed, was hostile to business.
If corporate America wants to believe that Obama chose his new chief of staff, William Daley, for his relatively few years in the private sector as opposed to his many stellar ones in government and politics, fine. The same goes for appointing General Electric Co. Chief Executive Jeffrey Immelt to head a newly rebranded Council on Jobs and Competitiveness. Hey, it’s cheaper than going to marriage therapy.
Meanwhile, beleaguered homeowners who don’t own valuable real estate just across from 1600 Pennsylvania Avenue can only hope Obama “pivots” to being as anti-homeowner as he’s been anti-business.
Backing Down
A report by the nonprofit investigative website ProPublica found that Obama backed off his campaign pledge to empower bankruptcy judges to lower the mortgage payments of homeowners facing foreclosure. Seems that Geithner and Summers, those raging populists, were worried that an undeserving homeowner or two might get help.
The industry-friendly voluntary program that instead was implemented will help fewer than 800,000 homeowners get lasting mortgage modifications, far less than the administration’s target of 3 million to 4 million, the report said. And the Treasury Department allowed banks to break the program’s few rules with no ramifications.
We live in a world where corporations have recovered but people have not. Coddling the Fortune 100 doesn’t guarantee any new paychecks. Sweet talk is as devoid of nutrition as fruitcake.
Margaret Carlson, author of “Anyone Can Grow Up: How George Bush and I Made It to the White House” and former White House correspondent for Time magazine, is a Bloomberg News columnist. The opinions expressed are her own.)
Islamic bonds are outperforming emerging-market debt for a second month as new note sales rebound, Malaysia boosts spending on roads and power plants and confidence returns to the Persian Gulf.
Global Shariah-compliant notes returned 1.2 percent in December, the HSBC/NASDAQ Dubai US Dollar Sukuk Index shows, while bonds in developing regions fell 0.7 percent, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index. Emerging- market returns have dropped as rising yields on U.S. Treasuries gave dollar-based investors less incentive to buy riskier fixed- income assets.
Islamic debt sales increased 34 percent in the second half compared with the first six months as investor confidence was boosted by Dubai World’s September agreement with most of its creditors to restructure $24.9 billion of debt. Developing nation bond funds suffered net outflows for three consecutive weeks until Dec. 8, the longest stretch since the first quarter of 2009, according to Cambridge, Massachusetts-based research firm EPFR Global.
“Demand for sukuk is outstripping supply,” Mohd Noor Hj A Rahman, the head of the Islamic fund management unit at Kuala Lumpur-based OSK-UOB Unit Trust Management Bhd. that manages about 250 million ringgit ($81 million) of assets, said in an interview yesterday. “The better outlook and the debt restructuring in the Gulf has given comfort to investors.”
‘Scrambling’ For Sukuk
Global sales of sukuk, which pay returns based on asset flows to comply with Islam’s ban on receiving and paying interest, fell 24 percent this year to $15.3 billion. There were $6.52 billion of offerings in the first half and $8.75 billion in the second. Issuance reached a record $31 billion in 2007.
“Everyone is scrambling to buy sukuk and the supply is limited,” Noripah Kamso, chief executive officer at CIMB- Principal Islamic Asset Management Bhd. in Kuala Lumpur, said in a telephone interview yesterday. “Pension houses are coming to us and saying I want this money to be invested in sukuk. For the first quarter, we still expect very good pricing for sukuk.”
A Malaysian government 10-year private-led project initiative, including a nuclear power plant and an underground rail network, will spur sales of Shariah-compliant debt next year, Prime Minister Najib Razak said in an Oct. 25 speech in Kuala Lumpur.
Saudi Stimulus
Saudi Arabia’s 1.44 trillion-riyal ($384 billion) stimulus plan may see the kingdom’s borrowers overtake Malaysia as the largest issuer of Islamic debt next year, Tariq Al-Rifai, director of Islamic Market Indexes in Dubai for Dow Jones Indexes, said Dec. 17. The world’s largest oil exporter announced in August a five-year development plan to spur growth, create jobs and diversify its economy away from hydrocarbons.
Malaysian and Persian Gulf infrastructure spending will boost sukuk issuance in 2011, said Badlisyah Abdul Ghani, Kuala Lumpur-based chief executive officer at CIMB Islamic Bank Bhd., a unit of CIMB Group Holdings Bhd., this year’s top sukuk arranger. Islamic bond sales may match 2007 levels next year, he said in an interview on Dec. 22.
Average yields on Shariah-compliant bonds from the Gulf Cooperation Council countries fell for a third consecutive week, down 13 basis points, or 0.13 percentage point, this week to 5.5 percent yesterday, according to the HSBC/NASDAQ Dubai GCC Dollar Sukuk Index.
Spread Narrows
The yield on Dubai Department of Finance’s 6.396 percent sukuk due November 2014 fell 33 basis points this month to 6.48 percent, according to data compiled by Bloomberg. The extra yield investors demand to hold Dubai’s government sukuk rather than Malaysia’s narrowed 62 basis points to 336, Bloomberg data show.
The difference between the average yield for emerging- market sukuk and the London interbank offered rate narrowed 172 basis points this year to 297 yesterday, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index. In the GCC, the gap shrank 185 basis points to 359.
“We see that the sukuk spread over Libor has narrowed, reflecting that demand for sukuk is stronger,” Zamri Shariff, head of asset management at Asian Finance Bank Bhd., the Kuala Lumpur-based unit of Qatar Islamic Bank SAQ, said in an interview yesterday. “We should start seeing other issuers coming into the fray, the non-traditional sukuk issuing countries like Thailand, Korea and the Philippines.”
Electric car maker Fisker Automotive plans to sell its luxury Karma model in China, teaming up with a local distributor of top auto brands.
Irvine, California-based Fisker has reached an agreement with vehicle retailer and service provider China Grand Automotive Group to sell Fisker vehicles in its more than 200 outlets, which carry such brands as Mercedes-Benz, Lexus and Lamborghini.
The Fisker Karma is due to debut in China at the Shanghai Auto show next April and to begin deliveries by the autumn, the company said in a release seen Thursday on its website. The hybrid sedan has a total range of 483 kilometers (300 miles) and can travel 80 kilometers (50 miles) on electricity alone.
The first factory built Karma debuted at the Paris auto show in October.
“With its vast network of experienced retailers CGA will give Fisker an instant and credible footprint in the region,” said Henrik Fisker, Fisker’s CEO.
He said China’s fast growing market and keenness to reduce smog make it a good potential market for Fisker. Though most Chinese car buyers purchase economy or mid-range vehicles, there is a relatively large and growing pool of affluent car aficionados who opt for flashy luxury sedans and sports cars.
China is promoting use of electric vehicles with subsidies and other incentives, but has yet to construct a widespread system of charging stations and other infrastructure _ one factor behind the relatively low level of interest so far in purchasing electric and hybrid vehicles in a market that is forecast to grow 30 percent this year.
China Grand Automotive, one of five international distributors for Fisker, estimates its 2010 sales at 50 billion yuan ($7.5 billion). The company is a joint venture between Xinjiang Guanghui Industry Investment (Group) Co., a diversified property and energy group, and Texas-based private equity firm TPG Newbridge Capital LLC.
Stocks rose Friday, with the S&P 500 closing at a 2-year high, as investors welcomed some upbeat economic news and a dividend hike by General Electric.
The Dow Jones industrial average (INDU) gained 40 points, or 0.3%, to 1,1406. GE (GE, Fortune 500) was the index’s biggest gainer, climbing 3.4% after the conglomerate boosted its quarterly dividend 17% to 14 cents per share.
The S&P 500 (SPX) added 7 points, or 0.6%, to 1,240 after breaking through a key technical level. The broad market gauge ended at the highest point since September 2008.
The tech-heavy Nasdaq (COMP) rose 21 points, or 0.8%, to 2,637 — the highest level since December 2007.
For the week, the Dow locked in a gain of 0.4%. The S&P 500 added 1.3%, and the Nasdaq rose 1.5% over the last five days.
The advance came after government data showed that the U.S. trade deficit unexpectedly narrowed in October, raising optimism about economic growth early next year. A separate report on consumer sentiment also came in better than expected.
The trade data "caught people off guard and suggests that the fourth-quarter GDP might look much better than expected," said Dan Greenhaus, chief market strategist with Miller Taback & Co. "But I think the news out of China is the bigger story."
The People’s Bank of China further increased its reserve requirement ratio for banks as part of an ongoing effort to cool inflation and avoid an economic crash landing. The move stoked speculation that the central bank could hike interest rates next year.
"China continues its steady steps towards tightening," said Greenhaus, adding that such moves are necessary. "They need to slow things down."
A separate report showed that China’s trade surplus fell 16% in November, as exports surged 35% from the prior month.
Earlier in the week, investors cheered as Washington appeared close to reaching a compromise deal to extend Bush-era tax cuts for another two years. But House Democrats voted Thursday against considering the tax package, which would also provided for extended unemployment benefits and a break in payroll taxes.
The final outcome of the tax debate is "a major source of uncertainty" in the market, said Greenhaus.
On Thursday stocks ended mixed, as a stronger dollar dragged on commodity-related companies, while financial and tech shares firmed.
Looking ahead, investors expect the market to continue to drift modestly higher. "We will continue to move sideways to upwards, which is good," said Chip Brian, chief executive of MySmartrend.com, which analyzes over 6,000 stocks in realtime.
Next week brings a raft of economic reports on retail sales, consumer prices and new home construction. In addition, the Federal Reserve will release a policy statement Tuesday.
Investors will also look to a report on Chinese inflation due over the weekend.
Economy: The U.S. trade balance, which measures the difference between the nation’s imports and exports, narrowed to $38.7 billion in October, down 13% from $44.6 billion in September, according to the Commerce Department. Economists were expecting a deficit of $44.5 billion.
The decline brought the U.S. trade deficit to a 9-month low, as exports jumped 3.2% to $158.7 billion, the highest since August 2008, and imports fell 0.5% to $197.4 billion.
The University of Michigan/Reuters index of consumer confidence for early December rose to 74.2 from 71.6 last month. Economists had expected a more modest increase to 72.5, according to consensus estimates from Briefing.com.
World markets: Asian markets ended mixed. The Shanghai Composite gained 1.1%, while the Hang Seng in Hong Kong slipped less than 0.1% and Japan’s Nikkei fell 0.7%.
China’s trade surplus fell to $22.9 billion in November, marking a 16% decrease over October’s $27.2 billion surplus. Exports soared 34.9% in November, a $17.3 billion increase from the previous month, China’s General Administration of Customs said.
Separately, the People’s Bank of China said it would lift the bank reserve requirement ratio by one-half percentage points as of Dec. 20. Banks will now have to set aside 18.5% of their reserves, according to Xinhua. This is the sixth such hike this year, as China attempts to put a damper on what "runaway lending amid accelerating inflation."
European stocks were mixed. The DAX in Germany rose 0.5%, while Britain’s FTSE 100 and France’s CAC 40 were both flat.
Companies: GE announced plans to pay a fourth-quarter dividend of 14 cents per share, up from 12 cents, and said it expects to make "opportunistic share repurchases" next year.
"We are able to increase the GE dividend for the second time this year because of continued strong cash generation, accelerated recovery at GE Capital and solid underlying performance in our industrial businesses through year-end," GE chief executive Jeff Immelt said in a statement.
Community Health Systems (CYH, Fortune 500) announced Thursday that it has made an offer to acquire smaller rival Tenet Healthcare (THC, Fortune 500) for $6 per share, a premium of 40% over Tenet’s closing stock price Thursday. An initial offer to Tenet was rejected and this is Community Health Systems’ second attempt. Shares of Community Health Systems rose 13%, while shares of Tenet Healthcare surged 55%.
Green Mountain Coffee (GMCR) reported fourth-quarter net income of $27 million, or 20 cents per share, in line with expectations. But shares fell nearly 10% as investors responded to the company’s outlook and decision to no longer provide specific guidance about its K-Cup sales.
The S&P 500 is shaking up the contents of its broad-market index. F5 Networks (FFIV), Netflix (NFLX), and Newfield Exploration (NFX) will replace The New York Times (NYT), Office Depot (ODP, Fortune 500) and Eastman Kodak (EK, Fortune 500) Cablevision Systems (CVC, Fortune 500) is taking the place of King Pharmaceuticals Inc., but only because King Pharmaceuticals has agreed to be acquired by Pfizer (PFE, Fortune 500).
Currencies and commodities: The dollar gained ground against the euro and the Japanese yen, but it fell versus the British pound.
Oil for January delivery fell 58 cents to end at $87.79 a barrel.
Gold futures for February delivery fell $6.40 to settle at $1,386.40 an ounce.
Bonds: Bond prices were mixed. The price on the benchmark 10-year U.S. Treasury edged down, pushing the yield up to 3.3%.
The economy will remain sluggish early next year as the lingering effects of the recession continue to drag on growth and the benefit of government stimulus fades, a panel of professional forecasters said Monday.
In its November outlook, the National Association for Business Economics predicts that the U.S. economy will grow 2.7% this year. That’s a slight improvement from the October survey, but is a far cry from the 3.2% rate the survey had projected in May.
Richard Wobbekind, the association’s president, said in a statement that NABE members expect economic growth to be "sub-par" in the first quarter of next year, and "moderate" for 2011 overall.
The dim outlook reflects ongoing "balance-sheet restructuring" as consumers and businesses pay down debt and remain cautious about spending, he said. In addition, the inventory restocking that helped boost economic activity earlier this year will be "diminished" going forward, as will government supports under last year’s Economic Recovery Act.
While NABE economists are concerned about the long-term effects of the U.S. budget deficit, high unemployment, changes in business regulation and rising commodity prices, they do not expect the economy to relapse into recession or suffer deflation.
"Confidence in the expansion’s durability is intact," said Wobbekind.
Looking ahead, NABE expects economic growth of 2.4% in the first three months of next year, a slight improvement from the October survey. For the full year, NABE sees gross domestic product, the broadest measure of economic activity, expanding 3% in 2011.
Despite the modest growth forecast, the economists anticipate conditions in the labor market will improve slowly in the second half of next year, with employers expected to 150,000 to 170,000 jobs per month.
The unemployment rate will hold above 9.5% in the first six months of 2011, before easing to 9.2% by the end of the year, according to NABE.
Given the weary job market and "negligible growth" in household net worth, the economists expect retail sales this holiday season to be subdued, rising 2.5% from last year.
However, business spending on equipment and software will strengthen into next year, and the "tepid" recovery in the housing market will remain intact, the economists said.
The U.S. trade deficit will continue to widen as the outlook for exports has deteriorated while import growth was revised higher in the November survey. The net-export deficit will top $460 billion in 2011, according to NABE.
Global trade imbalances have been in the spotlight recently as economies with large deficits, including the United States, have called on surplus countries such as China to increase domestic consumption and refrain from devaluing currencies.
While the economists said there is a relatively low risk of "competitive currency depreciation" next year, they still expect the U.S. dollar to remain weak.
The dollar has been under pressure since the Fall, as investors bet the Federal Reserve would pump more money into the economy. The central bank officially announced its $600 billion bond-buying program earlier this month.
With that in mind, the economists expect the Fed to hold short-term interest rates near zero until late 2011, "due to the mix of persistently high unemployment and very low inflation."
Long-term interest rates will also remain low, the survey said, with the 10-year Treasury note now expected to yield 3.25% by the end of 2011, compared with 3.75% in the last survey.
Tyson Foods Inc. returned to a fourth-quarter profit, partly helped by higher prices and increasing sales of pork and prepared foods.
The improvement is a sign that the meat producer, based in Springdale, Ark., is getting past an industrywide downturn brought on by a combination of higher production costs and slumping demand as shoppers cut spending.
The meat producer said Monday that it earned $213 million, or 57 cents per share, for the three months ended Oct. 2. That compares with a loss of $457 million, or $1.23 per share, a year ago.
Removing an impairment charge of 7 cents per share related to Tyson’s Brazilian poultry operations, earnings were 64 cents per share.
The results beat the 56 cents per share analysts surveyed by Thomson Reuters expected. Analysts’ estimates typically omit one-time items.
Revenue climbed 3 percent to $7.44 billion, but fell short of Wall Street’s $7.75 billion.
Pork sales climbed to $1.26 billion from $972 million, while prepared foods sales grew to $799 million from $733 million. Beef sales edged up slightly to $3.04 billion, while chicken sales dipped to $2.62 billion from $2.65 billion.
“We’re just over halfway through our first quarter of fiscal 2011, and it is shaping up to be a strong quarter and another good year,” President and CEO Donnie Smith said in a statement instant payday loan.
The company expects chicken, beef, pork and turkey production to rise next year, but that total domestic availability will likely be relatively flat compared with 2010 because of increased exports. Over the past couple of years, meat producers have cut production because less supply meant higher prices.
Tyson anticipates strong beef and pork exports in fiscal 2011. Higher prices for prepared foods will offset likely increased costs for grain and other materials next year, while domestic availability of chicken will depend on export volumes.
Tyson also said it cut its debt to the lowest level in almost a decade.
For the fiscal year, Tyson posted net income of $780 million, or $2.06 per share. In same period last year, the company lost $547 million, or $1.47 per share.
Annual revenue increased to $28.43 billion from $26.7 billion.
The dollar remained weak but regained some ground Friday as investors reacted positively to Fed chair Ben Bernanke’s comments about the central bank’s plans to pump more money into the economy.
The prospect of the Fed purchasing massive amounts of Treasurys - a process know as quantitative easing - has kept the dollar under pressure in recent weeks as investors remained nervous about the Fed’s intentions.
That speculation had pushed the dollar index to its lowest level since December 2009 on Thursday. The index tracks the dollar against a basket of currencies.
But Bernanke’s speech actually offered some support to the beleaguered currency.
Boris Schlossberg, the director of currency research at GFT Forex, said the market had already priced in a massive amount of quantitative easing, and the Fed’s action might not go as far as investors had thought.
"I think the Fed realizes they have created a monster in terms of telegraphing their intentions," Schlossberg said.
"Bernanke came out today and confirmed what the market knew. The one thing he didn’t say was the size and scope of Fed action," he added.
The implications of quantitative easing are "stark" for the dollar, which will likely see further erosion, said Michael Woolfolk, the managing director of BNY Mellon Global Markets.
And that has big time implications.
"Bernanke has effectively rolled the dice on his own legacy," Woolfolk wrote in a research note. "We can only hope that his gamble pays off, and QE measures actually do boost inflation."
While the markets wait for the final word on the QE from the Fed that will come at its November meeting, the currency market will have a slew of economic reports to key off of.
"It’s really going to be in many ways for the next month a data point by data point market," Schlossberg said.
And while QE dominated the chatter on Friday, there was other good news for the dollar.
"What has been lost in all this," Woolfolk said. "Is we had a retail sales report that was so strong, if it was any stronger, we would have to question the economists putting it together."
In its report on September retail sales, the Commerce Department said total retail sales rose 0.6% from the previous month to $367.7 billion, news that indicates shoppers are looking to spend in advance of the holiday season.
That kind of good news could lift the dollar as economic and earnings reports influence the market in the comings weeks. Another question that needs answering: elections.
If Republicans sweep to power in November, investors will be paying attention to policy shifts from the new sheriffs in town.
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