Business and Finance

Stocks are turning mixed in midday trading as oil and other commodities reversed earlier losses.

Crude oil wavered after a report from the International Energy Agency said demand for oil would be lower than previously expected.

Silver dropped more than 3 percent, extending a deep slide from $48.60 at the end of April.

Cisco Systems Inc. fell 5 percent Thursday, the largest drop among companies in the S&P 500 index. The maker of computer networking equipment reported an 18 percent slide in earnings and lowered its profit forecast installment payday loans. It also plans to cut jobs.

The Dow Jones industrial average fell 11 points, or 0.1 percent, to 12,618. The S&P 500 index gained less than 1 point to 1,342. The Nasdaq composite index rose 5 points, or 0.2 percent, to 2,850.

Source

The election of a majority Conservative government has generated much speculation about the future of digital policies in Canada. It is hard to project precisely what will happen; given the number of open cabinet positions it is not known whether Industry Minister Tony Clement and Canadian Heritage Minister James Moore will remain in their portfolios or move elsewhere. If they stay the course, the Conservative digital policies are strong in a number of areas.

Concerns over the lack of competitiveness in the Canadian telecom market emerged as a campaign issue and a majority government may pave the way for removing foreign ownership restrictions in the telecom market. The Conservatives have consistently focused on improving the competitive environment, and opening the market is the right place to start to address both Internet access (including consumer frustration over usage-based billing) and wireless services.

Addressing the foreign competition issue will be only a piece of the bigger puzzle, however. The government has yet to set targets for universal broadband access and has been mum about the possibility of a set-aside for new entrants as part of the forthcoming spectrum auction. Answers to those questions may come from the much-anticipated digital economy strategy.

The Conservatives have a chance for some easy digital policy wins. Ending the Election Act rules that resulted in the Twitter ban on election night would receive broad support, as would maintaining their opposition to deeply unpopular proposals such as an iPod tax or new regulation of Internet video providers like Netflix.

On the hot button issue of copyright reform, it appears certain that Canada will pass a bill on the fourth try. The last bill had its flaws

In a story May 4 about an attack on Sony Corp.’s PlayStation Network, The Associated Press erroneously reported that Sony knows who is responsible. In a letter to Congress, the company said it does not know who is responsible.

Source

President Barack Obama plunged into donor-rich New York on Wednesday, his first fundraising sweep of the city since announcing his re-election bid this month, with a lament that he has not seen his wish for less-polarizing politics realized.

“The hope that I had that we’d start coming together in a serious way … has been resisted,” Obama told contributors gathered at the home of financier and former New Jersey Gov. Jon Corzine.

His intention, Obama said, is to make the 2012 campaign an “election in which we’re not just talking slogans …but we are looking soberly at the choices we face.”

The president’s outreach to donors came on a whirlwind day that began by taking on “birthers” who dispute he was born in the United States and producing his detailed birth certificate. He also flew home to Chicago to help pal and supporter Oprah Winfrey close out her syndicated talk show with a “big get” _ an interview with him.

“Today was a fun day,” Obama said as he entered his first fundraising event. “Nobody checked my ID at the door. But it was also a serious day because part of what happened this morning was me trying to remind the press and trying to remind both parties that what we do in politics is not a reality show. It’s serious.”

The three Democratic Party in New York fundraisers were scheduled across midtown Manhattan, including a dinner at The Waldorf-Astoria hotel. Obama was not due back at the White House until the wee hours of Thursday. He was expected to raise between $2 million and $3 million.

In Chicago, Obama and his wife, Michelle, took turns answering Winfrey’s questions during a taped interview at her studio, her show’s first interview with a sitting president and first lady. Winfrey has announced that she’s ending her top-rated program on May 25 after a quarter-century on television.

The Obamas’ interview is scheduled to air on Monday.

The show released one excerpt from the interview, an exchange over his decision to produce his Hawaii birth certificate. Laughing, he said: “Can I just say? I was there, so I knew that I knew I had been born. I remembered it.”

Winfrey’s relationship with the Obamas dates to their days in Chicago, and she lent her credibility and celebrity status to his 2008 presidential campaign with her first-ever political endorsement.

Corzine, who lost his political job in 2009 despite Obama’s efforts to help him get re-elected, is a former chairman and CEO of Goldman Sachs. He has deep ties to the financial industry, which felt battered by Obama’s rhetoric blaming the financial crisis on “fat cat” Wall Street bankers. The industry also chafed at the subsequent overhaul of financial regulations.

Corzine now heads MF Global Inc., a financial services firm, and Obama has begun trying to repair his relations with the business sector.

From Corzine’s home, Obama was heading to Park Avenue for a dinner at The Waldorf-Astoria, followed by a concert-style event at the Town Hall theater primarily for his younger supporters and featuring The Roots, a hip-hop band from Philadelphia.

Since he became a candidate for re-election on April 4, Obama has embarked on an aggressive inaugural fundraising tour that included three events in Chicago on April 14 and six events spread over two days last week in Los Angeles and San Francisco.

Obama raised $750 million for the 2008 campaign and hopes to top that for his re-election.

Source

Congressional Republicans maneuvered on two fronts Monday in the federal spending showdown, demanding Democrats agree to more than $33 billion in swift cuts to avoid a government shutdown, even as they readied a separate plan to slash deficits by a staggering $4 trillion over a decade. With little progress evident on the first track, President Barack Obama invited key lawmakers to the White House in search of a deal to avoid a partial shutdown Friday at midnight.

“Time is of the essence,” said White House press secretary Jay Carney, announcing plans for the Tuesday meeting.

House Speaker John Boehner of Ohio said he would attend on behalf of Republicans. But he also emphasized in a statement that the $33 billion total often cited “is not enough and many of the cuts that the White House and Senate Democrats are talking about are full of smoke and mirrors.”

Boehner has said repeatedly he does not want a shutdown. Yet a new public opinion poll underscored the political dilemma confronting the leader of a conservative majority swept into power with the support of tea party supporters.

In a survey by the Pew Research Center for the People & the Press, 68 percent of tea party adherents said lawmakers should stick to their principles in the budget negotiations, even if it means the government shuts down.

Yet in the population as a whole, only 36 percent supported that view, according to the survey, and only 38 percent of independents, who comprise a key swing vote in any election.

In remarks on the Senate floor, Majority Leader Harry Reid emphasized a similar point. Tea party Republicans, the Nevada Democrat said, “stomp their feet and call ‘compromise’ a dirty word and insist on a budget that will hurt America rather than help it.”

He said a deeper-cutting House-passed bill “slashes programs for the sake of slashing programs. It chops zeroes off the budget for nothing more than bragging rights.”

The House passed the legislation more than a month ago calling for $61 billion in cuts from current levels.

In addition, that measure includes dozens of proposals not directly related to spending, including curbs on the Environmental Protection Agency and other federal regulatory agencies and a denial of funding to Planned Parenthood.

Unlike the House, the Senate has yet to pass a spending bill to close out the current budget year, now more than half over, and Democrats are divided on how deeply to cut. In several weeks of maneuvering, Congress has agreed on a pair of stopgap bills that cut $10 billion, and Obama has signed them.

While much of the leadership’s attention was focused on the Friday deadline, Republicans also looked ahead to Tuesday’s planned launch of the most far-reaching series of deficit-reduction measures in years.

Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, has said the blueprint would cut in excess of $4 trillion from the budget, far more than the $2.2 trillion that Obama claimed in his own blueprint and on a par with recommendations of a bipartisan deficit commission last winter.

Other officials said that under Ryan’s proposal, the annual deficit would fall below $1 trillion at the end of the coming fiscal year but would not be erased by the end of the decade.

The deficit is currently projected at $1.6 trillion for the current fiscal year, and the administration estimates that under Obama’s budget, it would drop to $1.1 trillion next year and $774 billion in 2021.

Republican officials said about $1 trillion in savings under their emerging plan would come from changes to Medicaid, the federal-state program that provides health care for the poor.

Spending on hundreds of domestic programs _ the accounts at the heart of the talks to avoid a government shutdown _ would be returned to levels in effect in 2008, at a savings of hundreds of billions of dollars.

One of the most significant changes would occur in Medicare, which provides health care for seniors, but would not affect current beneficiaries or workers age 55 and older.

Once eligible, they would receive Medicare coverage from private insurance companies that operate plans approved by the federal government. No details were available on what level of service would be assured, or how much financial support the government would provide.

At the same time, officials said Ryan intended to propose restoring at least some of the $129 billion in subsidies that Democrats cut a year ago from a private alternative to traditional Medicare that is already in existence.

The Obama administration and other critics maintained that payments to private insurers exceeded the government’s cost for the traditional Medicare program.

The officials who described the recommendations did so on condition of anonymity, saying they were not authorized to pre-empt a formal announcement.

Republicans intend to move quickly to advance their new blueprint. They hope to have the Budget Committee approve it Wednesday and push it through the House next week.

The plan is expected to serve as a rallying point for Republicans who took power in January, but it is also likely to give Democrats a ready target to attack.

Democratic Leader Nancy Pelosi has drawn attention in recent days to public opinion surveys reporting widespread skepticism about fundamental changes in Medicare.

Source

The world economy can withstand the surge in oil prices sparked by unrest in the Middle East and North Africa so long as the increase proves short-lived, said the International Monetary Fund’s No. 2 official, echoing Deutsche Bank AG and Bank of America Merrill Lynch.

Futures for April delivery climbed to within $2 of $100 a barrel in New York today, and London-traded Brent rose to $108.57, close to the highest since September 2008, as escalating violence in Libya stoked concern supplies from the region will be disrupted. Oil in New York has gained almost 6 percent since Jan. 24, the day before the first anti-government protests erupted in Egypt.

“It’s unlikely it would make a substantial change in the global economic outlook,” John Lipsky, the IMF’s first deputy managing director, told Bloomberg Television’s “Inside Track” today. The Washington-based lender assumed oil would average about $95 a barrel this year when it forecast global economic growth of 4.4 percent for 2011, he said.

Political unrest that has swept from Tunisia to Yemen, Algeria, Bahrain and Iran in the past four weeks is fanning oil’s advance at a time when the global economy is emerging from the deepest recession in more than 50 years. U.S. consumer confidence rose to its highest level in three years this month, according to a report today. Data showed yesterday that German business confidence increased to a record in February.

While an extended $10 advance in oil cuts 0.5 percentage point off U.S. growth over two years, the world’s biggest economy will expand 3.8 percent this year, almost a percentage point more than in 2010, according to Deutsche Bank.

‘Relatively Strong’

“Economies are vulnerable to the oil price, but so far it’s looking like business and consumer confidence are relatively strong,” said Michael Lewis, London-based head of commodities research at Deutsche Bank, which predicts world growth will surpass 4 percent for the second successive year.

At least 250 people died in the Libyan capital Tripoli overnight as protests against Muammar Qaddafi’s leadership spread, al-Jazeera reported. Libya accounted for 4.6 percent of the 29.4 million barrels of oil pumped daily by the Organization of Petroleum Exporting Countries in January, making it OPEC’s ninth-biggest producer, according to data compiled by Bloomberg.

Brent may trade between $105 and $110 a barrel in coming weeks if the unrest continues, and reach a record should the violence spread to larger Middle East producers, such as Saudi Arabia, Goldman Sachs Group Inc. said in a report today. Global expansion would be hurt if there were a sustained surge in oil to about $120 a barrel, according to Deutsche Bank and BofA Merrill Lynch.

Gasoline, Heating Oil

Gasoline and heating oil rose to the highest levels in more than 28 months today, rising more than 5 percent before paring gains. Gasoline for March delivery added 7.36 cents, or 2.9 percent, to $2.6249 a gallon at 11:25 a.m. on the New York Mercantile Exchange. Prices touched $2.681, the highest level since Sept. 25, 2008. Heating oil for March delivery rose 9.87 cents, or 3.6 percent, to $2.8116 a gallon after touching $2.8589, the highest level since Oct. 2, 2008.

The risk of costlier crude is that it may deprive consumers of purchasing power, hurt corporate profits and force central banks to raise borrowing costs to curb price increases. Inflation in China, the world’s biggest energy consumer and fastest growing major economy, was 4.9 percent in January, above the government’s target.

‘Serious Threat’

“The global recovery now faces a serious threat from a sustained oil-price spike,” said David Hufton, London-based managing director at PVM Oil Associates Ltd.

About $10 of the recent increase in the oil price relates to tension in the Middle East and Africa, with the remainder a reflection of the strengthening global economy, said Julian Jessop, chief international economist at Capital Economics Ltd. in London.

“The old rule of thumb was that a $10 increase reduces global growth by half a percent, but if that still held then the world would now be in a deep recession,” said Jessop, a former U.K. Treasury official. “The point is oil prices are high, but the global economy is in a much better position to cope so it’s not too big a problem.”

U.S. government data also show the economy imported less than half of 1 percent of its oil imports from Libya in the past two years.

Hedged

“The good thing is we’re seeing generally positive economic conditions and the higher oil prices we’re seeing don’t seem to be having an impact on the economic climate,” Willie Walsh, chief executive officer of International Consolidated Airlines Group SA, said in an interview today at an aircraft finance conference in Geneva sponsored by ICBI. “Most airlines are hedged.”

Deutsche Lufthansa AG’s hedging contracts for this year mean the airline is saving money when the price of crude oil rises to more than $88, Stefanie Stotz, a Frankfurt-based spokeswoman for the company, said today.

The world recovery would be jeopardized if oil climbed to average $115 a barrel this year and $130 next year, according to analysts at BoA Merrill Lynch. That would return the world’s energy bill as a share of the economy to the 9 percent level of the 1980s, when costlier crude tipped consuming nations into a recession, they said in a Jan. 25 report.

Still, that’s unlikely because energy demand is set to ease by almost half this year to an average of 1.5 million barrels per day, inventory levels are near a five-year high, OPEC nations have more spare productive capacity than in 2008 and more Iraqi crude is on the way, according to the report.

At Risk

Not all economies are safe, say the BofA Merrill Lynch strategists. Turkey, so-called peripheral European economies, India, South Korea and Indonesia could start to suffer if oil averaged $110 to $120 a barrel this year, while a range higher than that would start to pinch Germany, Japan and China.

“We’re hoping capacity will be brought to bear so it will continue to support our economic recovery,” Deputy U.S. Energy Secretary Daniel Poneman told Bloomberg Television.

Mohammad Ali Khatibi, Iran’s governor to OPEC, said the organization is supplying more oil than the world market needs, and it has no plans to call an emergency meeting.

“There are some temporary supply issues, but stocks are high and there is no permanent shortage in supply,” he said.

Source

Increases in online holiday shopping that have spurred the hiring and firing of thousands of express delivery workers is playing havoc with U.S. payroll data, and indicates employment will rebound in coming months, according to economists at Credit Suisse.

Employment at courier and messenger services, which include workers at companies like FedEx Corp. and United Parcel Service Inc., plunged by 45,000 in January after climbing by 46,000 the prior month, according to figures from the Labor Department. The swing in that one category, comprising 0.4 percent of all payrolls, accounted for all the slowdown in employment last month, and then some.

Source

Pipeline company Kinder Morgan Inc. said Thursday its parent company, Kinder Morgan Holdco LLC, plans to raise $2.2 billion in the biggest initial public offering by a U.S. energy company in 13 years..

The IPO would be the biggest for a U.S. energy company since Conoco Inc.’s debut in 1998, which raised $4.4 billion, according to data provider Dealogic. Norway’s Statoil ASA 2001 IPO in New York raised $2.94 billion.

Kinder Morgan, which was taken private in 2007, said the offering would sell 80 million shares at $26 to $29 each. The underwriters have the option to buy another 12 million shares if needed.

If Kinder Morgan’s IPO priced at the middle of the expected range, the company would have a market capitalization of $19.44 billion, the largest ever for the IPO of a U cash advance.S. oil & gas company.

All of the common stock in the offering will be sold by existing investors. Those investors include funds advised by or affiliated with Goldman Sachs & Co., Highstar Capital LP, The Carlyle Group and Riverstone Holdings LLC.

Kinder Morgan will not receive any proceeds.

Kinder Morgan Holdco LLC plans to convert from a Delaware limited liability company to a Delaware corporation.

Goldman Sachs & Co. and Barclays Capital are acting as primary book-running managers.

The company said its stock will trade on the New York Stock Exchange under the symbol “KMI.”

Source

German two-year government note yields jumped to the highest in more than a year this week on speculation the European Central Bank may act to stem inflation.

ECB President Jean-Claude Trichet said on Jan. 26 that policy makers will do “what is necessary” to keep inflation in check. German consumer-price growth accelerated to the highest level since October 2008. Irish bonds slid before a vote on the budget tomorrow. The debut auction of the European Financial Stability Facility drew bids for almost nine times the securities on offer.

The increase in the German note yield “was driven by fears of tighter monetary policy,” said Patrick Jacq, a senior fixed- income strategist at BNP Paribas SA in Paris. “This is clear when you look at the evolution of the curve. We have hawkish rhetoric coming in from the ECB so it makes sense to be short at the short end.”

The two-year note fell for a fourth straight week, pushing the yield eight basis points higher to 1.37 percent as of 5:27 p.m. in London. It earlier reached 1.43 percent, the highest since Jan. 4. The 10-year yield fell two basis points to end the week at 3.16 percent.

Euribor futures declined, signaling traders were adding to bets on an increase in borrowing costs. The implied yield on the contract expiring in December increased four basis points to 1.9 percent.

German Inflation

German consumer-price inflation, calculated using a harmonized European method, rose to 2 percent from 1.9 percent in December, the Federal Statistics Office in Wiesbaden said on Jan. 27. Data published a day earlier showed import prices rose at the fastest annual pace in more than 29 years in December, also fueling speculation of central bank action.

“A permanent and repeated increase in the prices of imported products will tend to impact on inflation in the advanced countries, including the euro area,” ECB Executive Board Member Lorenzo Bini Smaghi said in a speech in Bologna, Italy. “This phenomenon can no longer be ignored fast cash online.”

Irish 10-year yields jumped 32 basis points to 9.12 percent as uncertainty rose about passing the Finance Bill and possible policy changes after elections. The bill paves the way to fully implement the 2011 budget, a condition of Ireland’s 85 billion- euro ($116 billion) aid package from the International Monetary Fund and the European Union.

‘Political Uncertainty’

Belgian debt also dropped after the collapse of talks to form a government, seven months after inconclusive national elections left the country with a caretaker administration.

“Both Ireland and Belgium are dogged by political uncertainty,” said Nick Stamenkovic, a fixed-income strategist at RIA Capital Markets Ltd. in Edinburgh. “The market is nervously awaiting the outcome of the Irish election next month but I think, ultimately, whoever gets into power has no choice but to pursue the fiscal consolidation that’s been put in place.”

Ireland became the first recipient aid from European Financial Stability Facility in November. The fund attracted 44.5 billion euros of orders for its debut sale of five-year debt on January 25, almost nine times the securities on offer. Asian investors bought about 38 percent of the 5 billion euros sold.

Spanish government bonds fell for the first week in three, widening the spread with bunds by 29 basis points, as a 20 billion-euro plan to shore up savings banks failed to convince investors. Portuguese debt also dropped, pushing the yield up 13 basis points to 7.07 percent. The Greek 10-year yield jumped 16 basis points.

Bunds have lost 1.7 percent this month, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies, compared with a 0.4 percent decline in Irish securities, 1.9 percent drop in Portuguese debt and a 0.4 percent return on Spanish bonds.

Source

Portugal will sell six-month bills today, the first of Europe’s high-deficit nations to test investor demand in 2011 after the threat of default forced Greece and Ireland to seek bailouts last year.

“People will be looking to see if yields are higher, and they might well be,” said Phyllis Reed, head of bond research at Kleinwort Benson Private Bank in London. “The big question in the market for Portugal is, is it next in terms of a bailout? It may be that, sooner or later, that is what is going to happen.”

The government debt agency, known as IGCP, plans to auction 500 million euros ($665 million) of bills repayable in July. Portugal sold six-month bills on Sept. 1 at an average yield of 2.045 percent, with investors bidding for 2.4 times the amount of securities offered. A year ago, the country paid just 0.592 percent to borrow for six months.

Portugal, which intends to sell as much as 20 billion euros in bonds to finance the budget and finance redemptions this year, is raising taxes and cutting wages as it tries to convince investors it can narrow its budget gap after the Greek debt crisis led to a surge in borrowing costs for indebted euro nations last year. Ireland in November became the second euro country to seek a bailout and the first to request aid from the European Financial Stability Facility.

‘Not Optimal’

European nations that have already sold bills this year include France, Belgium, the Netherlands and Malta, with Germany also holding an auction today. Austria’s debt agency canceled a scheduled Jan. 11 bond auction, opting instead to sell debt via a syndicate of banks later this month. Portugal’s borrowing costs rose at a Dec. 15 auction of 500 million euros of three- month bills, the country’s final debt sale of 2010, almost doubling to 3.403 percent from 1.818 percent in November.

“I don’t see any reason for this bill auction not to be accomplished,” said Diogo Teixeira, chief executive officer of Optimize Investment Partners, a Lisbon-based firm that manages 38 million euros in assets including Portuguese government debt. “Market conditions are not optimal, but they are stable.”

The difference in yield between Portuguese 10-year bonds and German bunds, Europe’s benchmark, reached a euro-era record of 484 basis points on Nov. 11. The spread was at 370 basis points yesterday. A basis point is 0.01 percentage point.

Testing Times

Portugal doesn’t face any bond redemptions until April, with repayments that month and in June worth about 9.5 billion euros. The nation’s debt agency estimates this year’s gross financing needs will be 3 billion euros lower than in 2010, and plans to sell a new bond through banks in the first quarter no credit check payday loans.

“The real test will be a bond auction,” said Olaf Penninga, who helps oversee 140 billion euros at Robeco Group in Rotterdam. “Portugal really needs to sell a new bond in the first quarter. It needs to raise money to finance the budget and face the bond redemption in April.”

The government is taking the necessary measures so that it doesn’t have to request aid, Finance Minister Fernando Teixeira dos Santos said on Dec. 15. The 2011 budget includes the deepest spending cuts in more than three decades. In September, the government said it would trim the wage bill by 5 percent for public-sector workers earning more than 1,500 euros a month, freeze hiring and raise value-added sales tax by 2 percentage points to 23 percent to help narrow a deficit that amounted to 9.3 percent of gross domestic product in 2009.

Rating Cuts

Portugal’s debt rating was cut one level by Fitch Ratings on Dec. 23, which said the economy faces a “deteriorating” outlook. The grade was lowered to A+, the fifth-highest level, from AA-. Fitch said the outlook for that assessment is negative, meaning it is more likely to worsen than improve.

Moody’s Investors Service on Dec. 21 said Portugal’s bond rating may be downgraded one or two levels because budget cuts may worsen the country’s “sluggish” economic growth. Moody’s cut Portugal’s credit rating two steps to A1 on July 13. Standard & Poor’s said on Nov. 30 it may lower the country’s rating, having already cut it to A- from A+ in April.

The credit rating companies are also reviewing other countries. Moody’s said on Dec. 15 it may cut Spain’s Aa1 credit rating and on Dec. 16 said it placed Greece’s Ba1 bond ratings on review for a possible downgrade. Ireland’s credit rating was cut by five levels by Moody’s on Dec. 17.

Portugal is counting on exports such as paper and wood products to support economic expansion as it cuts spending. The budget forecasts gross domestic product growth of 0.2 percent in 2011, slower than last year’s estimated 1.3 percent pace. Portugal’s economic growth has averaged less than 1 percent a year in the past decade, one of Europe’s weakest growth rates.

The country posted the biggest shortfall in the 16-nation euro region in 2009 after Ireland, Greece and Spain. It set a target for a budget deficit of 7.3 percent of GDP last year and 4.6 percent in 2011, and aims to reach the European Union limit of 3 percent in 2012.

Source