COLUMBUS, Ohio–Oil and gasoline prices continued a recession-defying march higher yesterday, doubling in six months on optimism of a strengthening U.S. economy.
Predictions for just how high oil can reach this year, like in 2008, continue to creep upward, just five months removed from when crude priced around $32 (U.S.) per barrel.
Benchmark crude for July delivery rose $1.23 to settle at $66.31 a barrel on the New York Mercantile Exchange.
The pump panic of 2008 has yet to surface, but that’s not to say there haven’t been some double takes.
Wholesale gasoline prices, which typically rise during this time of year, are up a staggering 140 per cent since Christmas Eve. Retail gasoline prices have hit a U.S. average of $2.467 a gallon. American pump prices have jumped 20 per cent in the past month alone.
In Canada, the price at the pump averaged $1.009 (Canadian) per litre, up from 89.8 cents per litre a month ago, but down from $1.33 per litre a year ago, according to website GasBuddy.com.
Crude prices have spiked 30 per cent this month, enough to give anyone vertigo. But the pain is relative.
This time last year, crude prices were brushing up against $130 (U payday loans no faxing.S.).
Crude has risen fast, but we’re still only hitting around $66.
For U.S. gas prices to hit $3 a gallon, crude would need to go to about $100 a barrel, well above even the highest projections this year of $70 to $75, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.
Still, many analysts, including Kloza, have been surprised by the run-up in gasoline.
"If you had asked a month ago if we would see a $2.50 national average, I would have said `no.’"
The jump in energy prices has not been fuelled by demand, but by a belief that demand will rise at some point. That has created momentum in a market that does not have the fundamentals to support it.
With demand for gasoline running flat to slightly below last year’s levels, unemployment moving higher, and ample inventories and refinery capacity, it is hard to see prices get much higher from here, said Adam Sieminski of Deutsche Bank.
"We’ve climbed out of the depths, but it’s still not growing on a year-over-year basis," he said.
Deflation is the largest threat faced by the world economy as the squeeze on bank lending persists, said Stephen King, chief economist at HSBC Holdings Plc.
“The biggest single risk is deflation,” he said. “People have underestimated the risk that we might see price and wage declines over the course of the next year. It’s something that is deeply disturbing I think for the central bankers.”
The Federal Reserve and the Bank of England have started printing money to nurture economic growth and prevent deflation from taking hold. Inflation is slowing after crude oil prices fell more than 50 percent over the past year, while rising unemployment weakens consumer spending.
“You’ve got really a big hit to consumer wealth because of continuous falls in house prices,” King said. “You have got a credit crunch which is still persisting.”
Data today suggested the global recession may be easing. Japan’s industrial production jumped the most in 56 years in April and India’s economy expanded more than economists forecast in the first quarter no fax payday loans.
“What we’re seeing is a good old-fashioned kind of inventory rebuild associated with the fact that supply collapsed further than demand over the last 12 months and we’re now seeing a recovery in that supply,” King said. He said that there will be three or four months of good news in industrial production and then “all bets are off.”
Inflation in the euro region slowed to zero for the first time in at least 13 years in May, while prices in the U.S. showed no change from a year earlier in April. The International Monetary Fund last month forecast consumer prices will fall 0.2 percent this year in advanced nations while the world economy shrinks 1.3 percent.
“The worst of it probably is coming to an end in the sense that we’ve got some green shoots here and there,” King said. Still, “the fact of the matter is that demand around the world is still pretty depressed.”
Strategic Capital Bank and Citizens National Bank failed on Friday, bringing the total bank failures for 2009 to 36, up from 25 in all of 2008.
The failure of Strategic Capital, a Champaign, Ill.-based bank, will cost the Federal Deposit Insurance Corp.’s deposit insurance fund $173 million; Citizens National, of Macomb, Ill., will cost the FDIC $106 million.
Strategic had $471 million in deposits and $537 million in assets. Citizens National had $400 million of deposits and $437 million in assets.
Strategic’s deposits were acquired by Midland States Bank of Effingham, Illinois. Midland took $536 million of Strategic’s assets, leaving just $1 million for the FDIC to sell. Morton Community bank bought all but $200 million in Citizens’ brokered deposits. Deposits are sought after by other banks, as they can be used to loan against. But assets include things like troubled mortgages and other housing-related products that are often not desirable in this market car insurance.
Strategic Capital Bank will reopen on Tuesday as a branch of Midland States Bank. Citizens National will reopen Saturday as Morton Community Bank.
Customers with questions can call the FDIC at 1-866-954-9527 for Strategic and 1-866-954-9529 for Citizens, or visit the Web sites at http://www.fdic.gov/bank/individual/failed/strategiccapital.html and http://www.fdic.gov/bank/individual/failed/citizensnational.html
The FDIC, which is funded by fees paid by banks, insures individual deposits up to $250,000. It is expected to lose $70 billion over the next five year covering failed banks.
This week President Obama increased the amount the FDIC can borrow from the U.S. Treasury to $100 billion from $30 billion.
On Friday, the FDIC approved a special assessment on banks in an attempt to rebuild its dwindling coffers.
Prominent hedge fund firm Pequot Capital told investors on Wednesday it will shut down because of a reopened government probe into possible insider trading.
“Public disclosures about the continuing investigation have cast a cloud over the firm and have become a source of personal distraction,” the firm’s founder Arthur Samberg, long one of the hedge fund industry’s best-known managers, wrote in a letter obtained by Reuters.
“With the situation increasingly untenable for the firm and for me, I have concluded that Pequot can no longer stay in business as an investment adviser.”
In the past, Samberg and Pequot have denied allegations of insider trading.
The fund’s closure is likely to reignite controversy over the firing of an SEC lawyer whose earlier probe into Pequot led him to request an interview with John Mack, who is now the powerful head of Wall Street investment bank Morgan Stanley.
The lawyer, Gary Aguirre, said he was fired because of his persistent requests for the interview.
Mack, a friend of Samberg, had worked at the Westport, Connecticut-based hedge fund firm from 2004 to 2005 before taking the Morgan Stanley position in the summer of 2005.
A Morgan Stanley spokeswoman declined to comment.
The SEC’s Inspector General last year said there was a connection between Aguirre’s firing and his efforts to interview the influential Wall Street executive in connection with the probe.
Pequot, which once invested $15 billion and most recently managed $3 billion, became the target of a Securities and Exchange Commission and U payday advance.S. Attorney’s office investigation several years ago when investigators reviewed trades made by Samberg in Microsoft stock in 2001 by the Core Funds.
Although regulators and prosecutors brought no charges and closed the probe in 2006, the government reopened the matter in 2008.
Samberg told investors that the firm will spin off two portfolios and liquidate its Core Funds. Fund manager Mike Corasaniti will run the Matawin fund while Rob Webster and Paul Mellinger will lead the Special Opportunities fund as separate entities before the end of the year, Samberg said. Other investors will begin to get their money back by the end of next month.
Samberg’s illustrious career has included growing Pequot into one of the world’s most powerful hedge funds and being counted among industry leaders whose opinions could move markets.
The 68-year-old trader, who famously once had a basketball court built in his offices for his employees, started his career by focusing on stocks. He later moved into other areas.
Now he joins the growing ranks of shuttered hedge funds, a list that also includes his former partner, Dan Benton, who shocked investors by his decision to close down last year.
McDonald’s Corp is looking at expanding its chain of McCafe stores to 1,200 in Europe by the end of the year, the Financial Times reported on its website late on Tuesday.
“We can become the biggest seller of coffee in Europe,” the paper quoted Jerome Tafani, chief financial officer for McDonald’s Europe, as saying.
The paper did not say where in Europe the expansion will happen or how many McCafe stores were operating there currently.
McDonald’s said its strategy of opening McCafes in existing restaurants in Europe has allowed it to recoup its investment more quickly than rival Starbucks Corp, according to the paper cash loan.
“Our business case is not the same as Starbucks,” the paper quoted Tafani as saying.
McDonald’s could not be immediately reached for comment by Reuters.
(Reporting by Ajay Kamalakaran in Bangalore; Editing by Muralikumar Anantharaman)
TOKYO – Google has identified social networking sites like Facebook as growing competitors in search, a company spokesman said Monday.
Internet users are increasingly looking for answers to their search questions, not just a list of sites in response to a query.
They also expect something personal from the Internet – and they’re increasingly turning to it to answer more personal questions, which daycare to choose and what restaurant to go to, said Google Group Product Manager Ken Tokusei.
Social networking sites have a big advantage in this shift because information gleaned from them comes from friends, acquaintances, or at least an individual, and Tokusei said users tend to trust that information more.
"We haven’t gotten to the point where results are seen as if they come from someone you know," said Tokusei.
The search giant has begun to offer tools for users to rate results and delete unrelated links, but it still has work to do, he said.
Google is also trying to better home in on the information requested in a search. Sites such as WolframAlpha (www.WolframAlpha.com), launched earlier this month, comb the Internet for data, analyze it and then provide specific answers to queries, rather than a list of sites.
Google can do something similar for some searches, providing price quotes for "Sony stock" or an answer to "Tunisia capital." But these are followed by the familiar list of sites on which to dig further paydayloans.
"It’s a matter of determining what kind of information the user is looking for. But we will always serve some links to pages with our results," said Tokusei.
He spoke to reporters at Google’s Japanese headquarters in Tokyo, where he gave an overview of the company’s basic search tools.
Google has developed a host of expanding tools and services, from a mobile operating system to an online word processor, but it devotes 70 per cent of its employees and resources to search.
The company also still faces fresh competition from its traditional rivals, which are regrouping in an attempt to take back market share.
Microsoft has failed to make much headway in repeated Internet ventures. But the deep-pocketed company, which has poured hundreds of millions of dollars into improving its search engine, continues to develop a new search technology, part of which is called "Kumo" internally.
Yahoo, which has seen much of its market share plummet in the face of Google’s dominance, is tweaking its search results, cutting out some links altogether and adding more emphasis on images and video.
Microsoft Chief Executive Steve Ballmer has said he is still interested in buying part of Yahoo, after a proposed deal was turned down last year.
Boeing Co. leaders say that the U.S. military’s airlift needs are growing and that a Pentagon proposal to halt future orders for the C-17 Globemaster III cargo plane is premature.
Boeing, whose defense unit is headquartered in St. Louis, is trying to rally support for the C-17 on multiple fronts — arguing that ceasing production would erode the U.S. industrial base, costing thousands of jobs at Boeing plants and those of its main suppliers. But Boeing officials also emphasize the plane’s strategic value.
"Right now, since 9/11, the airplane has been flying at about a 15 percent higher rate than was anticipated," said Donald A. Anderson, Boeing’s C-17 program manager in St. Louis. "In addition, they’re talking about rebasing troops in the United States. They’re talking about an increase in the size of the Marines Corps and the Army.
"So it seems like the airlift requirements are growing. And you need airlifters to meet those needs."
Starting with Secretary of Defense Robert Gates’ announcement in early April and continuing through last week, the Pentagon has said it can get by with the 205 C-17s that are either in service or on order. The Air Force also uses the Lockheed Martin C-5 Galaxy to transport weapon systems, cargo and personnel to overseas locations.
Republican Sen. Christopher "Kit" Bond and Democratic Sen. Claire McCaskill, both of Missouri, have written letters supporting more orders of the C-17, and Machinists Union officials have traveled to Washington to show their support for a program that supports 900 jobs in St. Louis.
"This is high political theater," said analyst Richard Aboulafia of The Teal Group in Fairfax, Va. "The bottom line is I don’t think the line is threatened. But it is up to everybody from Department of Defense to Congress to Boeing to the unions to make it look as though it were."
The Defense Department has not sought funding for the C-17 in the last three years. But Congress has stepped in to add funding for more of the $202 million planes through supplemental defense appropriations bills.
Bond and Boeing officials have asked why Gates would halt C-17 orders while there is a study under way into the military’s future air-mobility needs. The results are expected this fall.
"But yet we’re making that decision now to stop the airplane," Anderson said. "So it seems somewhat premature creditscore."
Bond said shutting down production of the C-17 is a "dangerous gamble" and warned that the U.S. can’t afford to "lose the capability to transport safely our troops and equipment to anywhere in the world."
In a letter to President Barack Obama, McCaskill said the U.S. is "literally flying the wings off these planes," and added "this is not the time to end its production, especially in light of projected global mission sets for the U.S. military."
Both legislators also have gone to bat for Boeing’s St. Louis-built F/A-18 Super Hornet, whose future was placed in limbo under the latest Pentagon spending plan.
The C-17 is assembled at a plant in Long Beach, Calif. But the cargo door, cargo ramp, landing-gear pods, nose and engine pylons are built in St. Louis.
A November 2008 report by the Government Accountability Office recommended "careful planning to avoid shutting down the C-17 line prematurely." Both Boeing and the Air Force believe shutting down and restarting production "would not be feasible or cost effective," the report found.
The GAO cited the high costs of hiring and training a new work force, reinstalling equipment to proper working condition and re-establishing a supplier base.
Boeing has delivered the C-17 to other countries, including Australia, Canada and the United Kingdom. The United Arab Emirates has announced its intent to buy four of the planes, and Qatar has ordered two and exercised an option on two additional C-17s.
But Anderson said international sales alone are not enough to sustain the C-17 line. Boeing officials say maintaining C-17 sales to the U.S. Air Force is necessary to keep the price of the planes competitive in the international market.
Defense analyst Loren Thompson of the Lexington Institute in Arlington, Va., said the C-17 is the best strategic airlifter ever built and "a very cogent case" can be made that terminating production at 205 planes would be too early. At the moment, he said, its future will be dictated by Congress.
"Here’s the bottom line to C-17," Thompson said. "If Congress doesn’t add money, there won’t be any more."
His lender, TD Canada Trust, said there would be an $8,000 penalty to break his five-year closed mortgage – an amount he found tolerable.
"By the time we sold in April 2009, TD Bank quoted us a doubled penalty of $18,000. Now, they are stating it will be approximately $25,000 upon closing in June," he says.
Most mortgage contracts and renewal forms specify that clients seeking an early exit will pay either three months’ interest or an interest rate differential (IRD), whichever is greater.
The IRD is calculated by taking the outstanding balance, multiplying it by the gap between your existing mortgage rate and the current rate for a term similar to what you have left, and multiplying by the number of months left to the end of your term.
Mortgage rates have fallen steadily since last fall, making the IRD penalties grow bigger and bigger.
Once I got involved in Moosa’s case, TD worked hard to cushion the blow. It sent him to a mortgage specialist, who suggested making a 15 per cent lump-sum prepayment using a line of credit that would be paid back at closing.
Since TD hadn’t told him about this option last October, Moosa asked for and received the right to make a 30 per cent prepayment to reduce the outstanding balance.
The estimated penalty is now $11,000 to $14,000.
"We won’t know for sure what the exact penalty will be until the payments are made using the line of credit next week," Moosa says.
He wonders why TD dragged its feet when told about his financial problems last fall.
"Our branch representative should have advised us that we could pay a 15 per cent lump sum to reduce the penalty.
"TD needs to have a better process in place, particularly when dealing with clients whose largest investment is in their hands electronic check payday advance."
Moosa’s comments will be reviewed, Hechler said. "We could have moved more quickly to help and provided clearer information from the beginning."
Kevin Plautz, also a TD mortgage customer, felt he received misleading information when he asked about breaking the deal to take advantage of lower rates.
His financial adviser initially quoted a penalty of $2,100, based on three months’ interest. Other TD staff he spoke to later did not challenge that figure.
Only when he was ready to renegotiate did he learn there would be an IRD penalty of $5,900.
"I wouldn’t have bothered doing a renegotiation if I had just been told the correct penalty at the start or one of the many times I asked about it since then," he says
TD agreed to reduce his IRD penalty to $4,000 after I escalated his complaint to the head office.
"We have offered to substantially reduce the amount of Mr. Plautz’s IRD penalty as a goodwill gesture in recognition of the confusion he experienced over the amount he was quoted," Hechler told me.
While planning to take the offer, Plautz is leaving TD. He’s found another bank that will give him a lower interest rate and cover $225 of his $270 mortgage discharge fee.
"I have a very bad taste in my mouth. I think I still prefer to move my business," he says.
I’d like to hear from readers. Have you tried to renegotiate a mortgage amid falling interest rates? How did the lender respond and what penalty was charged? I’ll publish comments in a future column.
Write to onyourside@thestar.ca
or check the On Your Side blog at www.ellenroseman.com
The recipes for Reine Bayoc’s cakes and cookies can’t be found in a book, and neither can her ingredients for starting her own business in St. Louis. The concept for her SweetArt bakeshop was born from raw rejection and creative energy, all brought to life with family support and convenient timing.
Bayoc opened the shop in the Shaw neighborhood in December, specializing in cupcakes, cookies and other baked sweets. Since then, she has expanded the menu to include quiches, sandwiches and light lunch items — all vegetarian, all natural ingredients and all made fresh daily. Keeping things fresh has Bayoc putting in 70 hours in a five-day workweek, but she said she refuses to freeze her products overnight for future sale.
SweetArt was started with loans from family and not long after a successful art sale by her husband, Cbabi, a local artist who has gained some national attention during their 11 years of marriage. Bayoc’s creative interests were in writing, but after having three children, she found it difficult to get a job that allowed her to be a mother and a steady supplier of income for the family.
While searching for jobs and raising her children, Bayoc learned to bake and started selling her goods at local markets, even getting a cookie contract with Straub’s Markets for a time. Despite minor success, she longed for something steadier that also could be a home to her husband’s art.
When friends found a deal for cheap retail space, the Bayocs decided to take a risk, spent their last cent to open the shop the day after Christmas and prayed for rain. She now says with a nervous laugh that the family might have been homeless if the shop had failed.
But Bayoc said the business is on pace to turn a small profit in its first year — which, if that holds true, is a major accomplishment for most any small business during this recession.
When did you realize you would make the switch from writing to baking?
I go (into a local magazine) and I’m doing the interview and I’m thinking it’s going really well. … You know I have holes in my r
Kohlberg Kravis Roberts & Co KKR.UL may take advantage of the U.S. government’s infrastructure stimulus plan but is not as keen on buying banks or their troubled assets, the private equity firm’s co-founders Henry Kravis and George Roberts told the Financial Times.
Kravis told the paper that there may be some programs where it will be appropriate for the firm to partner with the U.S. government. “I think one area in particular that I think is a very big need and where we will have opportunities to participate is in infrastructure.”
Kravis told the paper that the firm was looking at the public-private investment partnership and other initiatives, but the partners expressed caution about an overly opportunistic approach payday advances.
“Simply buying a pool of assets through a highly levered vehicle because a government is willing to give you more leverage than the markets and just sitting there and running off the assets and giving the money back to your partners is not what we do,” Roberts told the paper.
(Reporting by Ajay Kamalakaran in Bangalore; Editing by Jon Loades-Carter)
Powered by WordPress -- XHTML 1.0