The dollar turned higher this week as jittery investors flocked to the greenback for its safe-haven appeal amid fears of a global economic slowdown.
For weeks, the dollar had been slipping as investors focused on weak U.S. economic news and improvements abroad. It is now making a comeback as disappointing news out of other regions join center stage.
Bleak outlooks from central banks in Europe, as well as signs of slower growth out of China, have rattled investors and boosted their demand for low-risk investments, including the dollar.
Softer risk appetite has pushed dollar up to a three-week high against the euro — below $1.28 — and the highest level this month against the pound. The dollar index, which tracks the buck against several major rivals, has climbed 3% this week.
Against the yen, also a low-risk currency, the dollar hit a 15-year low.
"It’s come to the market’s attention that the problems for recovery aren’t just in the United States," said Kathy Lien, director of currency research at Global Forex Trading. "Everything is congealing at the same time."
Following the Federal Reserve’s most bearish outlook for the U.S. economy in more than a year, the Bank of England and the European Central Bank also said recovery in the the United Kingdom and through Europe is also losing steam.
China reported industrial output slowed for the fifth consecutive month in July, signaling that growth in the world’s third largest economy is continuing to ease.
"The United States and China, two of the largest contributors of economic growth, are slowing at the same time, and that could sap the global recovery over the next quarter," Lien said.
Though the dollar will push higher in the near term, Lien said it will resume a decline as fears abate.
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Southwest, American and American Eagle rank in the bottom half of all U.S.-based airlines in the U.S. Department of Transportation's latest monthly report of on-time arrivals.
Southwest (NYSE: LUV) ranked 10th out of 18 carriers after posting an on-time arrival rate of 78.45 percent in June.
American (NYSE: AMR) ranked 14th, with an on-time arrival rate of 73.76 percent. American Eagle ranked 17th with an on-time arrival rate of 67.89 percent. American Eagle’s rate was followed only by Comair, which had an on-time arrival rate of 64.87 percent.
The top three airlines were Hawaiian, Alaska and US Airways, which reported on-time arrival rates of 93 one hour payday loan.62 percent, 88.94 percent and 83.37 percent, respectively.
For the first six months of the year, Southwest ranked seventh with an on-time arrival rate of 80.58 percent. Meanwhile, American and American Eagle ranked 14th and 17th, respectively, with on-time arrival rates of 77.18 and 74.53 percent, respectively.
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With a new mandate looming that will require business owners to file millions more tax forms, the Internal Revenue Service has begun the daunting process of figuring out how to turn the law’s sweeping demands into actual rules for taxpayers.
The new regulations, which kick in at the start of 2012, require any taxpayer with business income to issue 1099 forms to all vendors from whom they purchased more than $600 of goods and services that year. That promises to launch a fusillade of new paperwork: An estimated 40 million taxpayers will be subject to the requirement, including 26 million who run sole proprietorships, according to a report released this week by National Taxpayer Advocate Nina Olson.
Olson’s office, which operates independently within the IRS, flagged the new reporting requirements as one of its priority issues for the next year. Like many who have delved into the details of the new rules, Olson is concerned about their far-reaching scope and potential unintended consequences.
"The new reporting burden, particularly as it falls on small businesses, may turn out to be disproportionate as compared with any resulting improvement in tax compliance," the Taxpayer Advocate Service wrote in a report released this week.
The new rules are aimed at reducing the "tax gap" between what individuals and businesses owe and what they actually pay. The federal government misses out on estimated $300 billion each year from tax underpayment. The expanded reporting requirements, which Congress slipped into the landmark health care reform bill passed in March, are an attempt to create a paper trail of 1099s exposing business-to-business payments that might otherwise stay off the radar.
But the cost of that paper trail could swamp the small companies, sole proprietors freelancers forced to generate it. Pennsylvania business networking organization SMC Business Councils surveyed its members and found that they currently average 10 filings a year of 1099 forms. The new rules would push that average to more than 200 filings per year for a typical small business, the industry group estimates.
The IRS will have broad leeway to interpret the rules — and it’s already showing signs that it will look for ways to staunch the paperwork flood.
In a late May speech before the two payroll industry trade group, IRS Commissioner Douglas Shulman announced a major exception to the new rules: The IRS plans to exempt transactions made through credit and debit cards. A separate reporting requirement kicks in next year that will cover card transactions and help the IRS spot unreported payments made through those channels, "so there is no need for businesses to report them as well," Shulman said. "Whenever a business uses a credit or debit card, there will be no new burden under the new law."
How much of a sigh of relief you should breathe depends on what kind of purchases your business makes. Some big-ticket consumer items that are typically paid by card — airline tickets or hotel stays, for example — will be 1099-free. But SMC Business Councils President Tom Henschke, a vocal critic of the new law, estimates that exempting credit-card transactions would affect less than 10% of his members’ reporting requirements.
"Most of the small businesses out there that do small business [purchasing] don’t do it by credit card," he said. "One of the reasons is the transaction cost is very high — 2% to 3%."
Henschke thinks the main beneficiaries of the exemption are likely to be credit-card companies, which will gain an added hook to get small businesses to pay their fees pay day loans. Nolan Newman, a Seattle CPA who specializes in small-business needs, says it’s certainly possible that card usage will rise as a result: "If I’m a small business and I use my credit card moderately, would I try to increase my volume with which I pay vendors with it? Maybe."
Henschke foresees another unintended consequence of the new reporting provisions: that in order to cut down on tax forms to be filed, businesses will trim the number of vendors they do business with. "I’ve actually heard businesses talking about consolidating their purchases, going from 150, 200 vendors, down to less than 100," he said. "That will most certainly lead to some small businesses being swept under the door."
The taxpayer advocate’s office shares that concern. "Many large vendors already have computer systems that can track purchases by customer. They are likely to advertise that they will track each customer’s total purchases and send them a report at the end of the year that business customers can use to comply with the Form 1099 filing requirement," the office wrote in its report. "Small businesses that lack the capacity to track customer purchases may lose customers, leaving the economy with more large national vendors and less local competition."
That was just one of seven major pitfalls the Taxpayer Advocate Service foresees in the new rules. It also questions whether they will actually do much to close the tax gap. Because of product returns and other complications, the payments documented by the 1099 trail won’t match up cleanly against the revenue businesses report. "The IRS will face challenges making productive use of this new volume of information reports," Olson’s office concluded.
That could help explain one otherwise puzzling aspect of the new tax law, which is that despite the sweeping reporting requirements, the Joint Committee on Taxation — a nonpartisan Congressional committee that analyzes pending tax legislation — estimated that it would bring in only about $2 billion a year in new tax revenue. Committee staffers wouldn’t comment on the record.
"Judging from the estimate that the committee has made, they didn’t think it was that far-reaching," said Eric Toder of the Tax Policy Center, a nonpartisan think tank. "Does it close a lot of the tax gap? No."
The IRS did not return repeated calls and e-mails asking for clarification on its timeline for drafting the new regulations.
In his talk to accountants in May, Shulman put off questions about the expanded 1099 reporting, saying that even the idea of exempting credit-card transactions was just "an example of where we are headed, not as a complete implementation plan." The agency is currently seeking public comment on how it should implement the new rules.
The IRS has some leeway in implementing the new law — but only some. "The regulations are supposed to implement the intent of Congress; they’re not supposed to be independent policy-making," Toder said. "But obviously, there’s some discretion there."
Shulman himself hinted that it may take new legislation — not just IRS regs — to fix what Congress has wrought. "We won’t hesitate to consider alternate approaches," he said in his speech, "including working with Congress to address any potential implementation issues that may arise during this process."
Results of a Field Poll that measured voter awareness and sentiment toward four of 10 propositions slated to appear on the state’s November general election ballot were released Friday.
Voters are opposing Proposition 23, the initiative to suspend AB 32, California’s greenhouse gas reduction law, and Proposition 19, the marijuana legalization initiative, and supporting Propositions 25 and 18, the Field Poll said.
Proposition 25 would require a majority vote to approve the state budget while retaining a two-thirds vote to increase taxes, while Proposition 18 is an $11.1 billion bond measure to fund water supply and protection facilities.
Voter awareness of the measures varied widely, according to the survey. More than three in four likely voters (77 percent) report some familiarity with Proposition 19, the marijuana legalization initiative. Most voters (56 percent) also had heard of Proposition 25, which would change vote requirements needed to pass the state budget.
Fewer potential voters (39 percent) had heard of Proposition 23, which would suspend AB 32, or water bond measure Proposition 18 (24 percent).
According to the Field Poll:
The poll has a sampling error rate of plus or minus 3.2 percentage points for likely voters and a higher margin for subgroups. Pollsters surveyed 1,005 people by telephone between June 22 and July 6.
Fitch Ratings agency said it will have to downgrade Blockbuster’s ratings to “restricted default” or “default” if the company fails to make a $42.4 million payment to creditors next month.
The payment was originally due July 1, but Blockbuster received an extension from bondholders who hold 70 percent of the outstanding principal on the senior secured notes, which are due in 2014. Blockbuster now has until Aug. 13 to make a payment.
Fitch said Blockbuster’s ratings are okay for now, but will become a problem if they miss another payment when the extended deadline hits.
Fitch said it will downgrade Blockbuster’s issuer default rating to ‘RD’ from ‘C’ if the company ends up defaulting again or receiving another extension on Aug cash advance in one hour. 13. In the alternative, the ratings giant said it will downgrade the company’s issuer default rating from ‘C’ to ‘D’ if the company ends up filing for bankruptcy or entering into a similar procedure on or before Aug. 13.
New York-based ratings agency Standard & Poor’s also reacted to Blockbuster’s rough Thursday. The company lowered its corporate credit rating on Blockbuster to ‘SD’ from ‘CC’, and the company’s ratings on Blockbuster’s $675 million senior secured notes were downgraded to ‘D’ from ‘CC.’
All dollar figures, except for per-share figures, are in millions.
Allied Healthcare Products Inc. Amdocs Ltd. Ameren Corp. American Railcar Industries Inc. Arch Coal Inc. Bakers Footwear Group Inc. Belden Inc. Brown Shoe Co Inc. Build-A-Bear Workshop Inc. Cass Information Systems Inc. Centene Corp. Centrue Financial Corp. Commerce Bancshares Inc. CPI Corp. Emerson Electric Co. Energizer Holdings Inc. Enterprise Financial Services Corp. Esco Technologies Inc. Express Scripts Inc. First Clover Leaf Financial Corp. Furniture Brands International Inc. Insituform Technologies Inc. Isle of Capri Casinos Inc. KV Pharmaceutical Co.* LaBarge Inc. Laclede Group Inc . LMI Aerospace Inc. MEMC Electronic Materials Inc. Monsanto Co. Olin Corp. Panera Bread Co. Patriot Coal Corp. Peabody Energy Corp. Perficient Inc. Pulaski Financial Corp. Ralcorp Holdings Inc. RehabCare Group Inc. Reinsurance Group of America Inc. Reliv International Inc. Savvis Inc. Sigma-Aldrich Corp. Solutia Inc. Spartech Corp. Stereotaxis Inc. Stifel Financial Corp. Synergetics USA Inc. Thermadyne Holdings Corp. Viasystems Group Inc. ** Young Innovations Inc. Zoltek Cos Inc.
A diverse musical line-up featuring some familiar acts along new ones dot Buffalo Place’s annual Thursday at the Square and Buffalo Place Rocks the Harbor concerts.
The 18-show line-up was announced Thursday evening.
Among the highlights: a July 15 show featuring Umphrey’s McGee and G. Love & Special Sauce’s only summer show on July 22.
Favorites like Robert Randolph and the Family Band, Los Lobos and the Fabulous Thunderbirds are also slated to appear at Thursday at the Square shows.The Buffalo Place Rocks the Harbor concerts include a two-night stand by moe. and a rare appearance by jazz great Herbie Hancock.
The Thursday at the Square shows, which are held in Lafayette Square, are free. They begin on June 10 and run for 10 weeks through Aug. 12.
Buffalo Place Rocks the Harbor concerts are held along the Central Wharf area in the Canal Side footprint of downtown Buffalo. Those concerts have $10 advance fee and $20 at the door.
M&T Bank is the presenting sponsor.
Concerts at both venues begin at 5 p.m.
Buffalo Place has been presenting the concerts for 24 summer seasons as means to help attract visitors to downtown Buffalo. It is estimated the concerts have an estimated $4 million economic impact including more than $3 million that stays in the downtown Buffalo core.
“Besides the economic impact, the other value these shows have is by the number of people they bring to downtown,” said Anthony Colucci III, Buffalo Place Inc. president. “We hope the bars and restaurants do benefit.”
The Thursday at the Square line-up is:
• June 10: Alejandro Escovedo and the Sensitive Boys with special guest Tift Merritt
• June 17: Ingrid Michaelson
• June 24: Martin Sexton and Ryan Montbleau Band with Civil Twilight
• July 1: Ed Kowalczyk of Live
• July 8: Ozomatli with Rebelution
• July 15: Umphrey’s McGee with Tea Leaf Green
• July 22: G. Love & Special Sauce with Rogue Wave
• July 29: Robert Randolph & the Family Band
• Aug. 5: Los Lobos
Bank of America Merrill Lynch is one of several financial institutions providing debt financing Cerberus Capital Management’s acquisition of DynCorp International Inc.
The deal is valued at $1.5 billion, including the assumption of debt. It is slated to close in the third or fourth quarter.
DynCorp International, based in Falls Church Va., provides government services related to U.S. national security and foreign policy objectives. The company (NYSE:DCP) operates programs in logistics, contingency operations and training to reinforce security.
New York-based Cerberus Capital Management is a private-investment firm with $23 billion under management.
Along with BofA Merrill Lynch, the lenders financing the deal include Citigroup Global Markets Inc., Barclays Bank plc and Deutsche Bank Securities Inc. Each institution also acted as a financial adviser to Cerberus.
BofA Merrill Lynch is a global strategic adviser and underwriter, raising nearly $3 trillion for clients worldwide over the last 10 years. It is a division of Charlotte-based Bank of America Corp. (NYSE:BAC).
Electrical Components International Inc., a manufacturer of wire harnesses for appliances, sought bankruptcy protection with a plan to reduce debt by about 50 percent.
The Creve Coeur-based company listed assets of about $363.6 million and debt of about $435.7 million in Chapter 11 documents filed Tuesday in U.S. Bankruptcy Court in Wilmington, Del. The company is owned by San Francisco-based private-equity firm Francisco Partners LP.
Electrical Components makes wire harnesses, bundles of wires or cables fitted with connectors or plugs that deliver electricity throughout appliances.
David J. Webster, chief executive of Electrical Components, said in court filings that the company had had financial difficulties since late 2007 because of the downturn in the housing market.
The company had taken cost-cutting measures including plant shutdowns and consolidations and layoffs, but "the downturn continued to reduce sales at unprecedented levels and consequently reduce earnings," Webster said.
Under a proposal the company worked out with creditors before bankruptcy, lenders with the highest level of repayment — owed a principal of about $261.4 million — would get 54.7 percent of the new common stock in the reorganized company and a $145 million term loan. Some of the lenders elected to receive $10.4 million in cash rather than stock.
Investors have agreed to buy the remaining 45.3 percent of the new stock.
Lenders with a secondary priority of repayment, owed a principal of $60 million, would share $10 million. Unsecured creditors wouldn’t be affected, and would be paid what they’re owed as it is due.
The company said it was the largest supplier of wire harnesses to the North American white goods market, a term used for large home appliances. The company generated $460 million in sales for the year ended Dec. 31.
Electrical Components International was formed in 2006 when Clayton-based Viasystems Group Inc. sold its wire harness business to Francisco Partners for about $320 million.
The Viasystems wire harness business was renamed Electrical Components International and operated as a stand-alone company under Electrical Components International Holdings, a subsidiary of Francisco Partners.
Robert Kelly of the Post-Dispatch contributed.
Mexico’s Carlos Slim, 70, the son of an immigrant shopkeeper who amassed a $53.5 billion fortune and bought a major stake in the New York Times, became the first person from a developing nation to be named the world’s richest person instant credit report.
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