Business and Finance

SATURDAY

Email marketing — SCORE St. Louis is holding a workshop on using email and search engines effectively to reach your customers.

— 9 a.m. at the St. Charles Economic Development Center, 5988 Mid Rivers Mall Drive, St. Peters.

— $30. Register: www.stlscore.org or 314-539-6600

MONDAY

Workplace wellness — Regional and national experts will discuss wellness trends and practical ideas for area employers in a “workplace wellness” summit.

— 7:30 a.m. at the Spencer Road Branch Library, 427 Spencer Road, St. Peters.

— Free. Register: 636-441-6880

TUESDAY

Corporate networking — The Jewish Federation of St. Louis will host a “meet and greet” corporate and professional networking session paperless payday loans.

— 9 a.m. at the Hard Rock Café, St. Louis Union Station.

— Free. Register: 314-442-3731 or kweintraub@jfedstl.org

THURSDAY

Business leadership — The Walker Speaker Series presents a panel discussion on “Leadership Lessons from the Corner Office.”

— 5:30 p.m. at the East Academic Building, Webster University, 545 Garden Avenue, Webster Groves.

— Free. Register: www.webster.edu/speakers or 314-246-5973

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The British government’s intention to tax the humble Cornish pasty, a cheap pastry savory snack much beloved by workers and students, has opened a new front in the country’s never-ending class war.

In his U.K. budget last week, Finance Minister George Osborne announced he would close a loophole which allowed some fresh-baked takeaway items _ including pies, sausage rolls and pasties (PASS-tees) _ to escape a 20 percent sales tax.

The move, however, has caused a media storm, with tabloid headlines portraying the new tax as an attack by the Conservative-led government on working class life.

This Tuesday, Osborne faced questions from a parliamentary committee on aspects of his budget _ which included such macroeconomic measures as a cut in the top rate of income tax, a lowering in the personal tax allowance for retired people and reduction in corporation tax. But is was the levy on the lowly pasty _ a mixture of meat and vegetables encased in pastry that was first baked for tin miners of 17th century southwest England _ that generated all the headlines.

“I can’t remember the last time I bought a pasty in Greggs,” Osborne told a parliamentary committee on Tuesday, referring to a low-price snack shop chain.

“That kind of sums it up,” responded Labour Party lawmaker John Mann, a former union official.

The storm rolled into Wednesday when, at a press conference to discuss London’s readiness for the Olympics with International Olympic Committee chairman Jacques Rogge, Prime Minister David Cameron was compelled to pledge allegiance to the pasty.

“I am a pasty eater myself,” he declared to reporters.

Cameron said he last ate one in Leeds, though not at a Greggs. “I have a feeling I opted for the large one, and very good it was, too,” the Oxford-educated prime minister said.

Greggs bakeries, a purveyor of fast-food, including 140 million sausage rolls per year, saw its shares slump 5.5 percent last week on news of the new tax.

Greggs chief executive Ken McMeikan met Treasury officials on Tuesday to plead his case and afterward said the government had “lost touch” on the issue.

“For ordinary, hardworking families, putting 20 percent on to a product that is freshly baked actually is going to make a severe dent in their pockets,” he said in a BBC interview.

The opposition Labour Party has often charged Cameron’s government with being “out of touch” with the average Briton, a message party leader Ed Miliband repeated while standing outside a Greggs shop.

Even a Conservative legislator, Nadine Dorries, has said Cameron and Osborne “don’t know what it’s like to go to the supermarket and have to put things back on the shelves because they can’t afford it for their children’s lunchboxes. What’s worse, they don’t care either.”

The National Federation of Fish Fryers jumped into the debate, calling the present tax provision “an utter mess” and wondering why their hot food taxed when the bakery next door was exempt.

The government expects the levy on sausage rolls and pasties, effective Oct. 1, to raise 105 million pounds ($167 million) in the first full year. A Treasury consultation paper drily noted that the change would only hit “individuals and households that purchase products that are affected by this change.”

Under current law, shops like Greggs’ have to charge sales tax _ called Value Added Tax _ on hot takeaways including soup and hot sandwiches. Pasties and sausage rolls are exempt because after baking they are left to cool in unheated cases.

Extending the tax to rolls and pasties is no simple change. According to the finance ministry, the tax now applies to food “heated for the purposes of enabling it to be consumed at a temperature above the ambient air temperature and which is above that temperature” when purchased.

The proposed change would tax any food hotter than the ambient temperature, but could pose difficult issues: do you check the temperature of the inside of the sausage roll or pasty, or the cooler crust? Might the buyer ask to have it cooled to get it tax-free?

Osborne denied that the government would be poking a thermometer into every pie and roll. Tax officials and bakers would simply agree on the portion of total sales which would be affected, he said.

“There are perfectly sensible ways of working this out,” Osborne said.

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U.S. stocks were poised to open higher Monday as Fed chairman Ben Bernanke’s comments on the job market gave investors reason to believe interest rates will stay low.

The Dow Jones industrial average (), S&P 500 () and Nasdaq () futures were higher. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

In an address Monday to the National Association for Business Economics, the Federal Reserve chairman said that while recent jobs data have been positive, "the better jobs numbers seem somewhat out of sync with the overall pace of economic expansion."

Futures edged higher during Bernanke’s speech, as his comments suggest the central bank is prepared to keep interest rates low for an extended period of time.

A report on pending home sales is due later Monday, following a number of reports on the housing market last week, which provided a mixed picture of the sector. The housing market remains a source of worry despite other indicators suggesting the broader economy is improving.

U.S. stocks closed slightly higher Friday after moving unevenly throughout the day, but the Dow and S&P 500 both closed the week down. Only the Nasdaq was able to claw out a weekly gain.

Investors’ enthusiasm was dampened by a series of dour economic reports out of China that underscored concerns about slower growth in the world’s second largest economy.

Despite the off week, the S&P 500 is up 11% for the year while the Dow is 7% higher. The Nasdaq is up nearly 18% in 2012.

World markets: European stocks were mixed in afternoon trading. Britain’s FTSE 100 () shed 0.2%, the DAX () in Germany gained 0.6% and France’s CAC 40 () was flat.

Asian markets ended little changed. The Shanghai Composite () and Japan’s Nikkei () added 0.1%, while the Hang Seng () in Hong Kong was flat.

Economy: Pending home sales for February are expected to have increased by 0.5%, after ticking up by 2% in January, according to a survey of analysts by Briefing.com.

Companies: Shares of Lions Gate Entertainment () were up more than 9% in premarket trading after a gangbusters opening weekend for the studio’s post-apocalyptic teen death match film "The Hunger Games."

BATS Global Markets, an equities and options exchange operator, started trading Friday at $15.25, after pricing its initial public offering at $16, the low end of its estimated range.

BATS: Well, this is awkward

Trading was halted in late morning, however, as the exchange said it was investigating system issues, and by day’s end, BATS announced it had withdrawn its IPO.

A BATS spokeswoman said Friday that the company had no further plans to go public at present.

Currencies and commodities: The dollar strengthened against the euro, the British pound and the Japanese yen.

Oil for May delivery slipped 11 cents to $106.76 a barrel.

Gold futures for April delivery fell $2.30 to $1,660.10 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury dropped, pushing the yield up to 2.28% from 2.24% late Friday.  

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Less than two years after tightening some financial regulations in the Dodd-Frank Act, Congress appears ready to loosen others in the name of job creation.

The Jumpstart Our Business Startups bill – known as JOBS, of course – would reduce the red tape involved in making an initial public stock offering, and make it legal for businesses to solicit investors over social media, a process known as crowdfunding.

The bill also would roll back some longstanding investor protections. The Securities and Exchange Commission, AARP, the AFL-CIO and the Consumer Federation of America have all expressed concerns that the bill will lead to a surge in investment fraud.

The North American Securities Administrators Association, a group of state regulators, calls the bill “an investor protection disaster waiting to happen.” The group’s president, Nebraska official Jack Herstein, said in a statement that the JOBS bill creates “new jobs for promoters of Internet investment scams.”

Tossing such warnings aside, Senate passed JOBS Thursday on a 73-26 vote, following an even more lopsided approval in the House. (The bills differ slightly, so another House vote is necessary. President Barack Obama has said he’ll sign the legislation.)

The hope is that, freed of red tape, entrepreneurs will find it much easier to raise money and hire people. It’s tough to be against a jobs bill in an election year.

What happens, though, if the critics are right and there’s an increase in fraud? If investors lose faith in the capital markets, companies will find it harder, not easier, to raise money.

“Investors won’t return to the IPO market if they don’t believe they can trust it,” SEC Commissioner Luis Aguilar says in a statement on the agency’s website. He also calls the legislation “a boon to boiler room operators, Ponzi schemers, bucket shops, and garden variety fraudsters.”

The bill would create a new class of “emerging growth companies” that wouldn’t have to follow certain rules. They’d get a five-year reprieve, for example, from the need to have an audit of their internal controls.

The most eagerly anticipated part of the bill involves crowdfunding, a concept that sites like Kickstarter have used to raise money for art projects and other nonprofit causes.

Advocates say crowdfunding could be a big new source of capital for new businesses.

“The majority of Americans have been excluded from the opportunity to participate in the startup community,” says Clifford Holekamp, a lecturer in entrepreneurship at Washington University’s Olin School of Business. “It really democratizes the process of equity investing. This is a cultural shift that’s really exciting.”

Those novice mini-angel investors will be operating, however, with only a thin layer of protection. The Senate version of JOBS requires crowdfunding platforms to register with the SEC, but no regulator would vet the offerings themselves.

They’d be exempt from states’ registration requirements, and that’s what bothers Robin Carnahan, the Missouri Secretary of State.

“I’m a fan of crowdfunding,” she said. “It’s important to give small businesses access to new funding opportunities, but we need to do it in a measured and responsible way.”

Her office will watch crowdfunding deals for signs of fraud, she says, but unfortunately, it’s hard to get your money back from a scam artist. A wiser course would have been to combine this new form of investing with the upfront protection that people have come to expect in America’s financial markets.

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World stock markets were mixed Monday as doubts about Greece’s ability to follow through with tough economic reforms required under an international bailout overtook good news about the U.S. economy.

Benchmark oil rose fell below $107 per barrel while the dollar was higher against the euro but lower against the yen.

Britain’s FTSE 100 fell 0.4 percent to 5,941.15. Germany’s DAX dropped 0.6 percent to 7,114.64 and France’s CAC-40 lost 0.7 percent to 3,568.63.

Wall Street was poised to fall, with Dow Jones industrial futures down 0.3 percent to 13,130 and S&P 500 futures slipping 0.3 percent to 1,294.30.

Debt-loaded Greece recently qualified for a second multibillion dollar bailout after its private creditors took significant losses on their bond holdings to avoid losing even more money in a Greek bankruptcy. Now, new doubts are emerging about whether Greece will be able to deliver on austerity promises that were part of the bailout deal.

“Officials remain concerned about the ability of Athens to politically deliver on the tough economic-overhaul policies, especially considering that the forthcoming elections in Athens may mean new leaders aren’t as committed to reforms,” Stan Shamu, market analyst with IG Markets in Melbourne, Australia said in an email.

In Asia, Hong Kong’s Hang Seng Index fell 1 percent to 21,115.29 as falling home prices in China and its weak trade in the first two months of 2012 kept investors’ verve in check.

New home prices dropped in 45 Chinese cities in February, the official Xinhua News agency said, the result of government policies intended to cool property speculation.

Evergrande Real Estate Group lost 3.7 percent, and Industrial & Commercial Bank of China, the world’s biggest bank by market value, lost 1.5 percent.

Further evidence from the U.S. last week that its economic recovery is gaining strength buoyed stocks elsewhere in Asia. The U.S. is a crucial market for the region’s exporters.

The Dow Jones industrial average is up 8.3 percent this year, and the Nasdaq on Friday broke through 3,000 for the first time since the dot-com days more than a decade ago.

Japan’s benchmark Nikkei 225 finished higher for the fifth session in a row and recorded its highest close since a disastrous earthquake and tsunami on March 11, 2011. The index gained 0.1 percent to 10,141.99.

South Korea’s Kospi index added 0.6 percent to 2,047 and Australia’s S&P ASX/200 rose 0.3 percent to close at 4,290.80. Benchmarks in Singapore, Taiwan and Indonesia fell.

In mainland China, the benchmark Shanghai Composite Index gained 0.2 percent to 2,410.18. The Shenzhen Composite Index rose 1.1 percent to 993.75.

Benchmark oil for May delivery was down 32 cents to $106.74 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.95 to finish at $107.06 per barrel.

The euro fell to $1.3153 from $1.3171 late Friday in New York. The dollar fell to 83.08 yen from 83.36 yen.

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Follow Pamela Sampson on Twitter at http://twitter.com/pamelasampson

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The Federal Reserve is pushing back against some banks

First-time claims for unemployment benefits ticked higher last week, slightly dimming prospects for Friday’s employment report.

The Labor Department reported Thursday that 362,000 people filed for initial unemployment benefits in the week ended March 3, up from the previous week’s revised 354,000 claims.

Economists surveyed by Briefing.com had predicted 355,000 new claims would be filed.

About 3.4 million people filed for their second week of unemployment benefits or more in the week ended Feb. 25, the most recent data available.

Jobless claims are considered a key indicator of the job market’s strength. The number can be volatile from week to week, so economists often look to the four-week moving average as a broader gauge.

Lately, that figure has been on a gradual decline. But last week it rose slightly to 355,000, up from the previous week’s average of 354,750.

The worse-than-expected report on initial claims comes one day before the government’s monthly employment report is scheduled to be released.

A CNNMoney survey of 19 economists predicts that the economy added 210,000 jobs in February, down from January, when 243,000 jobs were added to payrolls.

Most of the gain will likely come from the private sector, where the prediction is for an addition of 225,000 jobs.

The unemployment rate is expected to remain unchanged at 8.3%  

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WASHINGTON • U.S. service companies expanded in February at the fastest pace in a year, helped by a rise in new orders and job growth.

The Institute for Supply Management said Monday that its index of nonmanufacturing activity rose to 57.3, up from January’s 56.8 and the third straight increase. Any reading above 50 indicates expansion.

Expansion in the service sector coincides with the lowest unemployment in three years, five straight months of solid to strong job growth and rising consumer confidence.

The trade group of purchasing managers surveys roughly 90 percent of U.S. companies in all sectors outside of manufacturing. That includes retail, construction, financial services, health care and hotels.

Fourteen of the 18 industries that the survey tracks expanded in February. Real estate, rental and leasing, transportation and warehousing, construction, hotels and restaurants, and information technology firms were among those that reported growth.

Anthony Nieves, chairman of the ISM’s survey committee, said that most of the comments from the group’s members “reflect a growing level of optimism about business conditions and the overall economy.”

Companies expressed concerns about inflation and rising gas prices, Nieves said. A measure of prices paid by service firms jumped to the highest level in 11 months.

Still, the overall reading for the sector was the best since February 2011.

“February seems to be off to a strong start for the economy,” John Ryding, an economist at RDQ Economics, said in a note to clients. “The pickup in order growth was particularly encouraging,” he added, because it indicates that growth will likely continue.

A separate report showed factory orders fell 1 percent in January, the biggest decline in 15 months. Businesses sharply reduced orders for machinery, equipment and other so-called core capital goods, the Commerce Department said.

The decrease was largely expected after a tax cut expired at the end of last year. Even with the decline, orders have gradually been climbing back to near pre-recession levels.

Demand for services should continue to rise, according to the ISM report. A measure of new orders reached its highest point in a year.

The group’s employment index declined from its highest reading in six years. Still, it stayed at a level that suggests many service companies are adding workers.

That confirms other data that show service companies have stepped up hiring. The government said last month that service firms added 176,000 jobs in January, the most in four months.

On Friday the government issues its February jobs report. Economists expect another big month of job gains; the latest forecast predicts 210,000 total net jobs were added last month, according to a survey by FactSet.

Big job gains at service firms are necessary to reduce unemployment. Factories are creating a lot of new jobs, but the sector isn’t large enough to employ that many people.

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Even as lawmakers spent the fall debating its fate, the use of Missouri’s Historic Preservation Tax Credit surged at the end of 2011.

State officials authorized $90.8 million worth of the credits – which pay back a developer one-fourth of the cost to rehab a historic building – in the six months from July 1 to Dec. 31, 2011. That’s $18 million more than the entire 12 months prior and a pace similar to the program’s pre-recession heyday in the mid-2000s, when it funded the rehab of countless lofts, office buildings and single-family homes across St. Louis.

The quick clip of authorizations – which happen before a building is rehabbed (credits are cashed in after the project is done) – suggest that, after a few slow years, a new wave of redevelopment may be kicking off in St. Louis and Kansas City. But it also comes amid unrelenting pressure from Jefferson City lawmakers who say the historic tax credit, which is awarded to any rehab that qualifies, is gobbling up too much of the state budget.

The $91 million already approved this fiscal year is a bit higher than the full-year cap proposed in tax credit bills last fall — and well above the $75 million limit that a state tax credit panel endorsed in 2010. At this pace, authorizations would hit even the $140 million cap set on the program in 2009, before demand dried up in the recession.

A big reason for the surge is simple economics. Commercial real estate is starting to pick up. Building projects – including tax-credit funded rehabs – are moving again.

The activity also has Fred Lafser’s phone ringing. Lafser, a redevelopment consultant in Creve Coeur, does a lot of front-end tax-credit work, such as getting a building listed on the National Register of Historic Places and filing the historic credit application with the state.

“During the recession, people just weren’t calling with new projects. We went from the phone ringing all the time to the phone not ringing at all,” he said. “In the last six to nine months we’re getting a lot more phone calls.”

A company like Lafser’s will often start working nine months or a year before the state actually OKs a tax credit award, making him an early indicator, of sorts, for historic redevelopment. If Lafser is busy, the pipeline of tax credit projects likely will grow.

Still, it’s not clear that the state will hit its $140 million cap by July. Of the $90.8 million in authorizations through December, $3.9 million went to small projects that are exempt from the cap. And nearly two-thirds went to just two buildings: $31.3 million to turn the old Federal Reserve Bank of Kansas City into a hotel; and $27.5 million over four phases to renovate the Railway Exchange Building in downtown St. Louis. If no more large rehabs win authorization, there should be funds to spare.

Urban appeal

Of the 66 projects authorized for credits, just two – one each in Columbia and Boonville – were located outside the St. Louis or Kansas City metropolitan areas. In the 12 months ending last June 30, 15 of 125 recipients were outside the state’s two largest metropolitan areas, with much of the money going to two big projects in Springfield.

That urban-rural split helps to explain divisions in the General Assembly about the future of the historic tax credit. While The credits enjoy strong support from urban lawmakers – and House Speaker Steven Tilley, R-Perryville – Senate budget hawks, particularly from outstate districts, have long targeted them for cuts.

After last fall’s failed special session, few in Jefferson City expect anything to happen on the topic in this election year spring. Still, some are trying. Sen. Jason Crowell, R-Cape Girardeau, has filed a bill that would halt historic tax credit authorizations entirely for a year, and another that would place a one-year stop on redemptions of them.

In a recent hearing on the bills, Crowell blasted the credits, and the developers who use them, noting they consume more than $100 million a year from the state budget while funding for education gets cut.

“Our priorities are all screwed up,” he said. “If the No. 1 priority is rehabbing old buildings, and the hell with the children, it’s shameful.”

The historic program’s many supporters see it differently. They point to studies saying the credit drives enough investment to recoup its cost, and – coupled with schools and businesses – it has rebuilt both downtowns and neighborhoods across the state.

That’s what Brent Crittenden is trying to do.

An architect and developer, he was approved last year for about $1.6 million worth of historic tax credits to rehab 11 buildings in McRee Town, a long-battered neighborhood just north of the Missouri Botanical Garden. The biggest building is a new home for the City Garden Montessori school, and the rest will be rehabbed townhouses, with some infill new construction mixed in.

The townhouses are priced between $165,000 and the mid-$200,000s, which is comparable to similar-sized rehabs in many parts of south St. Louis. Absent the credits, Crittenden said, they would cost much more, too much to sell in this market. The project wouldn’t happen.

“It just wouldn’t make sense,” he said.

Where the money goes

Historic tax credit authorizations, July 1 - Dec. 31, 2012

County           Number         Value

STL City          50                $49.2 million

Jackson            9                $35.5 million

Clay                 3                $4.7 million

Boone              1                $1.2 million

STL County       1                $250,000

Cooper             1                $25,475

St. Charles       1                $17,500

Source: Mo. Dept. of Economic Development

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I did a double take when I recently saw a pile of blank VHS tapes for sale at a local Blockbuster store that was closing.

Granted those videotapes were only a tiny sliver of the store’s inventory being liquidated. But it seemed to me an irresistible metaphor for the anachronism that bricks-and-mortar video rental stores have become in the age of Redbox and Netflix.

Now movie rental chain stores are becoming an even rarer breed in St. Louis.

I made a round of calls to local Blockbuster stores this week and found that 10 out of 26 locations — including stores in Collinsville, St. Ann, and O’Fallon, Mo. — are in the process of closing.

Dish Network, which bought Blockbuster at a bankruptcy auction last year, has been fairly quiet about this current wave of store closings. When it first took over, Dish said it would keep open about 1,500 stores — or about 90 percent of the outlets.

But last month, the company told Reuters that it would shutter more stores than originally planned with some of those locations becoming customer-service points for Dish’s satellite TV services.

The company would not provide a list or a number of the stores that are closing.

“We remain committed to maintaining only those stores that we believe we will be able to operate profitably,” Danielle Johnson, a Dish spokeswoman, wrote in an email. She added that the company continues to focus on its mail rental service and a streaming service package available to satellite customers.

Of course, it should come as no surprise that physical movie rentals are on the decline as video on demand and streaming subscription services such as Netflix continue to gain traction.

According to the Digital Entertainment Group, movie rental sales in bricks and mortar stores plummeted 29 percent last year.

“My guess is at some point you’ll just have a kiosk model and the digital model and they will have a peaceful coexistence,” said Russ Crupnick, an analyst with the research firm The NPD Group.

But in the meantime, he expects there to continue to be a market — albeit a shrinking one — for DVD rentals. Redbox will pick up a lot of that demand. But Blockbuster can still be a player with its more extensive in-store selection compared to Redbox’s limited titles, he said.

“I think we’ve all stared at a kiosk and said, ‘Gee, there’s nothing here I want to watch,’” he said. “But at Blockbuster, you can always go in and say, ‘OK, I’ll watch ‘The Bodyguard’ again.’”

Among those perusing the store closing sale at the Blockbuster location on Lindell Boulevard earlier this week were St. Louis University seniors Tim Hoffman and Arthur Hermann.

Hermann used to regularly rent movies at Blockbuster until he and his friends started using Netflix’s streaming service about a year ago.

“That’s the only way I watch movies now,” he said.

Hoffman said he would miss Blockbuster’s movie sales, but he didn’t seem too heartbroken about the store’s demise. After all, he added, there are two Redbox locations just around the corner.

END IS NEAR FOR CRESTWOOD SEARS

The red and yellow “inventory blowout” signs are up around the Sears store in Crestwood Court.

This store is one of 80 nationwide that Sears said in December that it would shutter amid struggling sales. Still to come is the announcement of another 20 to 40 stores that the company will close.

Sears recently filed a notice with the state that the Crestwood store’s 102 employees could be laid off as soon as April 15. But Kim Freely, a Sears spokeswoman, said that a store closing date has not yet been set and that it could be later than that.

“When the store closes will be based on the needs of the liquidator and the needs of the store,” she said.

Earlier this week, sale prices around the store ranged from 15 percent off most appliances to 30 percent off clothing. But you can bet the discounts will get sweeter as the closing date nears.

Meanwhile, the fate of the rest of Crestwood Court remains unknown. The mall, of course, is mostly vacant. Many of the artists who have filled some of the empty storefronts in the last couple of years have to leave by the end of the month.

And now the mall’s website notes that it will be limiting hours and access to several areas starting March 1 because of the “pending redevelopment.”

But it’s unclear where those redevelopment efforts stand. The mall’s owner — Centrum Properties — had indicated it would present redevelopment plans to the city at the end of 2011 or early 2012, said Petree Eastman, Crestwood’s city administrator. But she said this week that she hasn’t heard a peep of late about when those plans might be presented to the city.

“I believe the Sears’ closure has changed the game a little bit and has probably affected how their numbers are working out,” she said.

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