Actual finance blog

ST. LOUIS — People attending the first day of the St. Louis Auto Show filed past a shimmering lime-green Ford Fiesta — a fuel-sipping car that will roam 40 miles for every gallon of gas.

Ford was among a handful of automakers inside America’s Center to give prominent display to their eco-friendly, fuel-efficient cars at the start of the four-day event Thursday. Ford launched its strategy three years ago — before $4-a-gallon gas — and it’s still a top priority, said Cory Miller, a Ford zone manager in Kansas City.

"The Nineties was a decade where people didn’t necessarily care so much about fuel consumption; they cared more about style of the vehicle they wanted," Miller said. "Since the spike in the gas prices — even though the prices have stayed relatively moderate — people are once-bitten, twice shy.

"People remember having to dip into their pockets quite deeply to fill up."

While gasoline prices have returned to Earth, many car owners are still jittery about future price swings, Miller said. But they also want cars that are fun to drive, safe and of good quality. The Fiesta — a top seller in Europe — will be available in U.S. showrooms this spring.

Despite a dismal two-year stretch that resulted in the

government bailout of General Motors and Chrysler, industry officials said Thursday that there is guarded optimism that the worst may be over for the beleaguered auto industry.

"Really, I think we’ve turned the page," said Brian Sullivan, executive producer of the St. Louis Auto Show.

Still, not all manufacturers have been able to shake bad news entering the show.

Toyota was forced to suspend U.S. sales of top sellers because of problems with the gas pedals. Toyota representatives staffing the St. Louis display declined to talk about the halt to sales or a related recall, referring questions to company officials in California.

A federal judge on Thursday rejected the United Auto Workers’ request for a temporary restraining order that would have allowed the union to pass out leaflets in the lobby of the America’s Center. The UAW sought to draw attention to Toyota’s recent product problems and Toyota’s decision to close a plant in California.

Honda touted its entry-level Fit and its hybrid Insight alongside its Accord Crosstour, CR-V and Element, although Joe Duco of Meyer Honda in O’Fallon, Ill., said fuel efficiency isn’t the only thing driving today’s car buyer.

"There are still a lot of people inquiring about fuel efficiency," Duco said. "I think right now they’re kind of looking for that in-between vehicle."

Jeff Blair of Festus crawled behind the wheel of the Insight but concluded it would be too small for his family of four. While he’s not in the market for a new car right now, Blair said fuel efficiency is important when deciding to buy a car.

Blair is a copy machine technician in St. Louis who spends a lot of time on the road. His wife drives 45 miles each way to work at Barnes-Jewish Hospital.

"Gas mileage is definitely a big thing when you buy a car," said Blair, who owns a Honda Civic.

Not far away, Volkswagen’s display boasted that its TDI clean-diesel vehicles would make owners the toast of "tree-huggers and road-huggers alike."

While the blending of green technology and vehicle performance has been a theme at auto shows nationwide, so has one of relief among automakers who believe the worst is over, said Jeff Schuster, executive director of global forecasting for J.D. Power and Associates.

To that end, Schuster said, there is a correlation between attendance at auto shows and the public appetite to buy cars.

"Fuel economy … raises itself in importance more when fuel prices are high," said General Motors spokesman Craig Eppling. "They’re moderate now. We would have thought maybe three or four years ago $2.50 or so was high. Now, we’re generally accustomed to it."

Eppling said General Motors tracks why people buy cars. Style now rates high — along with safety and price. GM expects vehicle sales to track with the U.S. economy, Eppling added, so 2010 should be a good market but not necessarily a great one.

"This past year, the motivation has been value," Eppling said. "With the economy and the mind-set of ‘Do I have a job?’ and so forth, people are looking for a value."

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The owner of Quality Candy Shoppes and Buddy Squirrel has filed for Chapter 11 bankruptcy, but the future of the 13-store St. Francis-based chain could not immediately be determined.

Quality Candy Shoppes/Buddy Squirrel of Wisconsin Inc. filed for bankruptcy Jan. 15 in U.S. Bankruptcy Court in Milwaukee. The company listed assets of between $1 million and $10 million and liabilities in the same range.

Two of the company’s largest unsecured creditors are suppliers: Cargill Inc., for $89,938, and Wright Brothers Paper Box at $10,959. The other top unsecured creditors include radio station owner Lakefront Communications, $10,332; George Pinter, accounting services, $8,910, and J.M. Swank Co., $8,032.

Harris Bank is the company’s secured lender and is owed an unspecified amount.

In a Jan. 19 hearing, Quality Candy/Buddy Squirrel sought emergency funding to make its payroll. Bankruptcy Judge Margaret McGarity approved the motion and required the company to provide an accounting of its cash use by this Wednesday and make interest-only payments to the bank until then payday loans guaranteed no fax.

Another hearing is scheduled for Feb. 8.

Jonathan Goodman, an attorney for the company, declined to comment Monday. The president, CEO and sole shareholder is Margaret Gile, who represents the third generation of family ownership.

Quality Candy was founded in Milwaukee in 1916, according to the firm’s Web site. In the 1960s, Quality Candy bought Buddy Squirrel of Wisconsin, and in 1999, the two businesses were merged and the company was renamed Quality Candy Shoppes/Buddy Squirrel of Wisconsin Inc. The company built a 15,000-square-foot distribution center in 2001.

Margaret Gile, represents the 3rd generation as owner and president.

Quality Candy/Buddy Squirrel owns and operates stores in the Milwaukee area, Racine and Madison.

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The road for another stimulus bill just got tougher following Tuesday’s election of Republican Scott Brown to the Senate in Democratic stronghold Massachusetts.

After health care, Congress’ next big priority is to pass something that shows voters in an election year that they’re on top of the nation’s unemployment scourge.

But the Democrats’ loss of a filibuster-proof super-majority in the Senate throws hurdles onto an already rocky path toward a new stimulus bill aimed at saving jobs.

Given how controversial the first stimulus package remains, passing a new jobs bill, or "second stimulus," was never going to be easy. Republicans have especially targeted the first stimulus package as a prime example of the kind of big government spending they aim to end.

"There is a reason the nation was focused on this race," said Senate Minority Leader Mitch McConnell, R-Ky. "The American people have made it abundantly clear that they are more interested in shrinking unemployment than expanding government. They are tired of bailouts."

Experts and policy analysts say the Republican win in Massachusetts will shore up Republican opposition to anything that looks like big spending.

"I think it’ll be very hard," said Julian Zelizer, a professor of history and public affairs at Princeton University. "Democrats will be under more pressure to pass a jobs bill, because if they don’t do something about the economy, voter dissatisfaction will increase. But Republicans are going to be more emboldened not to vote for it." (Democrats scramble on health care - CNN.com.)

The bills: The House passed a $154 billion jobs bill in December, but Senate Democrats are planning to debut their own jobs-creation bill in coming weeks.

The two bills were developed independently but share some components, like infrastructure spending to build roads and bridges, as well as state aid to plug budget holes and keep teachers and police officers employed.

Senate Democrats have been brainstorming in backrooms since last summer to come up with a package that incorporates ideas from all parts of their caucus, according to congressional aides. Party leaders Dick Durbin of Illinois and Byron Dorgan of North Dakota have been running the negotiations.

The final package will offer something for the left, like spending for green sector jobs, and something for the right, like tax breaks for small businesses that hire new workers.

On the tax breaks, Senate leadership is considering a proposal that Sen. Robert Casey, D-Pa., plans to introduce this week incorporating ideas Republicans have touted.

Casey wants to give a one-year payroll tax break to companies that create new jobs offering wages up to $50,300. Small companies would qualify for a 20% tax break and larger companies with more than 100 employees would qualify for a 15% break fast cash loans.

Another way to make a jobs bill more palatable to both fiscally conservative Democrats and Republicans is to craft a bill that pays for itself and doesn’t add to the deficit. That’s a big goal of the jobs proposal, Democratic aides say. But they wouldn’t spell out how.

The bill may try to take advantage of money freed up in the budget by the fact that the Troubled Asset Relief Program is coming in under budget.

Wooing Republicans: Will such fiscal carrots be enough to woo any Republicans?

"Small business tax breaks are great," said Brian Darling, director of Senate relations at the conservative Heritage Foundation. "But when they’re basically being used just to get some Republican support and the balance of the proposal is just federal spending, this sounds very similar to the first stimulus plan."

Douglas Holtz-Eakin, a former Congressional Budget Office director, said that the Massachusetts win should send a signal to Democrats to start from scratch on the jobs bill and start working with Republicans. He said Republicans would prefer a bill that focuses more on bigger and more effective tax cuts, like blanket breaks on payroll taxes and capital dividend taxes.

"The landscape has changed," said Holtz-Eakin, who advised 2008 presidential candidate Sen. John McCain. "They’re going to have to go back and think about what policies are going to get the Republicans on board."

Indeed, a couple of Republican senators’ offices said they can’t imagine a Democratic proposal on jobs that could win them over.

"A second stimulus bill, packed with more spending, is the wrong way to approach this," said Jeff Sadosky, spokesman for Sen. Kay Bailey Hutchinson, R-Texas. "Obama’s budget has already ballooned the debt. More spending is not the answer."

But Democrats may be able to peel off someone like Sen. Susan Collins, R-Maine, one of three Republicans who last February voted with Democrats to pass the original stimulus package. But she’d only be game if the jobs bill really didn’t add to the deficit, a spokesman said.

"Senator Collins has said that she is open to considering the possibility of a jobs bill but her main concern is how it would be paid for?" said Collins spokesman Kevin Kelley. "She believes that the debt levels we are accumulating now, and that are projected, are simply not sustainable and pose a considerable threat to the health of our economy." 

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Glen W. Bell Jr., founder of the Taco Bell restaurant chain, died Saturday at his home in Rancho Santa Fe, Calif. He was 86.

Bell was born Sept. 3, 1923 in Lynwood, Calif.

He founded the Taco Bell chain in 1962 in Downey, Calif., and sold the first franchise in 1964. He sold his entire 868-franchise company in 1978 to PepsiCo., which spun the company off in 1997 as a part of Louisville-based Tricon Global Restaurants Inc. Tricon became Yum Brands Inc. (NYSE: YUM) in 2002.

Yum Brands also owns Pizza Hut, Long John Silver’s A&W Restaurants, and KFC.

Today, Irvine, Calif.-based Taco Bell has more than 5,600 U.S. restaurants that serve about 36.8 million customers each week.

"The entire Taco Bell family of franchisees and employees are deeply saddened by the loss of the founder of Taco Bell. Glen Bell was a visionary and innovator in the restaurant industry, as well as a dedicated family man," Greg Creed, president and chief concept officer of Taco Bell, said in a news release. "His innovative business acumen started out of humble beginnings and created one of the nation's largest restaurant chains in Taco Bell. Mr. Bell introduced an entire nation to the taco and Mexican cuisine."

Click here to read the full release.

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Stocks rose Thursday, led by technology shares, as investors looked past the day’s ho-hum economic news and geared up for Intel’s quarterly report, released shortly after the bell.

The Dow Jones industrial average (INDU) added 30 points, or 0.3%. The S&P 500 index (SPX) added 3 points, or 0.2%. Both closed at the highest point since Oct. 1, 2008. The Nasdaq composite (COMP) rose 9 points, or 0.4%, ending at the highest point since Sept. 3, 2008.

After the close, Dow component Intel (INTC, Fortune 500) said it earned 40 cents per share in the fourth quarter on sales of $10.6 billion. Both earnings and sales trounced estimates and marked a sharp improvement from the previous year. The stock gained 2% in extended-hours trading.

Overall S&P 500 earnings are expected to have risen more than 200% from the previous year, the worst quarter in Thomson’s history. JPMorgan Chase (JPM, Fortune 500) is due to report results Friday morning.

The financial behemoth is expected to have earned 66 cents per share on revenue of $27 billion.

Stocks ended higher Wednesday, with the Dow closing at a 15-month high, as investors looked past Google’s potential shutdown of its China operations and mea culpas from the nation’s major bank executives. After a weak start Thursday, stocks turned higher, despite the day’s mixed economic news.

The major indexes posted sizable gains last year as investors dove back in after moving beyond the worst financial crisis in decades. But any gains this year are likely to be more subdued.

"The next few months is going to be about merging expectations and reality," said Jack Ablin, chief investment officer at Harris Private Bank.

"Expectations have been set pretty high for earnings and the economy, in terms of where stock valuations are set," he said. "Now we need to see if the results can deliver."

Economy: Retail sales fell 0.3% in December, the government reported Thursday. The report was a surprise to economists who were expecting sales to have risen 0.5%, according to a consensus of economists surveyed by Briefing.com. Sales rose a revised 1.8% in November.

Retail sales excluding autos fell 0.2% in December after rising 1.9% in the previous month. Economists thought they would rise 0.3%.

Helping to soften the blow, the National Retail Federation said holiday sales for the November-December period rose 1.1%, a better showing than the retail group’s forecast of a 1% decline low interest rate personal loans.

The number of Americans filing new claims for unemployment rose last week to 444,000 from 433,000 in the previous week. Economists thought claims would rise to 437,000.

Continuing claims, a measure of Americans who have been receiving benefits for a week or more, fell to 4.596 million from 4.807 million in the previous week. Economists thought claims would fall to 4.750 million.

November business inventories rose 0.4% after rising 0.4% in the previous month. Economists thought claims the increase would be 0.3%.

Banks: A congressionally appointed panel investigating the lead-up to the financial crisis was holding a second day of hearings, with government officials including Attorney General Eric Holder testifying.

On Wednesday, CEOs of the largest financial institutions testified that while the banks took on too much risk and made mistakes, they were not aware at the time that a financial crisis of such a magnitude could develop.

In other news, President Obama proposed a plan Thursday to tax companies that took bailout funds, legislation he says is necessary to make sure the banks return the money they accepted in full.

Results: Intel shares gained ahead of its results. Merck (MRK, Fortune 500), Microsoft (MSFT, Fortune 500), IBM (IBM, Fortune 500) and Hewlett-Packard (HPQ, Fortune 500) were the Dow’s other big gainers.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by four to three on volume of 890 million shares. On the Nasdaq, advancers topped decliners five to four on volume of 2.3 billion shares.

World markets: Asian and European markets mostly ended higher.

Commodities and the dollar: The dollar fell against the euro and gained versus the yen.

COMEX gold for February delivery rose $6.20 to settle at $1,143 an ounce. Gold closed at an all-time high of $1,218.30 an ounce last month.

U.S. light crude oil for February delivery fell 26 cents to settle at $79.39 a barrel on the New York Mercantile Exchange.

Bonds: Treasury prices rallied, lowering the yield on the 10-year note to 3.73% from 3.79% late Wednesday. Treasury prices and yields move in opposite directions.  

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The Greater Cincinnati Microenterprise Initiative (GCMI) and Adams/Brown Counties Economic Opportunities Inc., were among 11 organizations and municipalities to share more than $591,000 in microenterprise grants from the Ohio Department of Development.

The grants, funded through the Ohio Housing Trust Fund and Community Block Development Grant Program, help develop local microenterprise businesses.

GCMI will receive $58,300 to give training and technical support to 85 low- and moderate-income micro-entrepreneurs, according to a news release.

The Adams/Brown organization also will be awarded $58,300 for 40 low- and moderate-income entrepreneurs, and for loans to four microenterprise businesses.

“Microenterprise businesses throughout the nation and our state are a major source of employment,” said Lisa Patt-McDaniel, director of the Ohio Department of Development, in the release.

Other areas receiving grants include: Athens, Pike, Franklin, Perry, Columbiana, Morgan, Van Wert and Vinton counties, and the city of Zanesville.

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Canada’s premier luxury retailer, Holt Renfrew, has replaced Caryn Lerner as its president following a year in which many luxury retailers struggled.

Lerner, an American with a strong fashion background, will be succeeded by Mark Derbyshire, a 40-year-old former Canadian Tire marketing executive who was most recently in charge of human resources at Holt Renfrew’s parent company.

The changes are effective immediately, said the owner of the 11-store chain.

"Mark has displayed tremendous leadership and business acumen over the six years he has been with our organization," said W. Galen Weston, chairman of Holt Renfrew. "We are confident that he will continue to evolve and grow Holt Renfrew as an international brand and a continued fashion authority in Canada."

Lerner will stay on as an independent consultant to Holt Renfrew’s parent firm, Wittington Fashion Retail Group, the company said.

Lerner’s departure, after five years as president and chief executive officer, took some retail industry observers by surprise and raised questions about the luxury department stores’ performance. Long considered a leader in fashion retailing, featuring names like Prada, Gucci, and Jil Sander, Holt Renfrew faced increased competition as designers opened their own shops on Bloor, and the Bay expanded its designer floor at its flagship store in downtown Toronto.

"This sounds like a fairly sudden change of direction," said Wendy Evans, president of the retail consulting firm Evans & Company.

Noted Maureen Atkinson, a partner in the retail-consulting firm J.C. Williams Group: "I don’t think their results have been spectacular. I think that’s been an issue and a challenge. I don’t think it’s her. I think it is what it is. The economy. I think there’s a whole bunch of reasons why they’re not really doing well payday loans guaranteed no fax."

However, the Weston family appeared to be "firmly behind her," Atkinson said of Lerner.

Luxury retailers across Canada were hit hard at the start of the recession but had seen their performance improve toward year-end, Evans noted. "The high end has certainly taken a beating over the last year or so. But in the last couple of months luxury retailing has seen some pretty good signs of life."

Holt Renfrew’s results are not publicly available.

"2009 was a tough year for everybody. But it was a pretty good year for Holt Renfrew," spokesperson John Crean said in an interview later. "Going into 2010, the board (of directors of Holt Renfrew) is very optimistic about the prospect for Holts going forward."

Describing Derbyshire as "a relationship guy," Crean said his first priority would be meeting with customers, suppliers and employees. "You’ll see him in short order reach out to them on what their perspective is on what Holts is doing well and what it can do better."

Derbyshire’s most recent title, chief talent officer for Wittington Fashion, involved recruiting senior talent across all of the holding group’s properties, Crean said.

The private company, owned by the wealthy Weston family, also owns two other luxury retailers, Selfridges in London and Brown Thomas in Dublin.

Derbyshire was previously head of human resources at Holt Renfrew, which operates nine stores in Canada. He grew up in a retail family. Both his father and grandfather owned Canadian Tire dealerships.

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For car buyers, four words mean the difference between going home in a new sedan or their old clunker: Your loan is approved.

They are being uttered more often these days, spurred by a government program that provides guarantees when those loans are sold to investors. That is helping banks, credit unions and auto finance companies make auto loans at a quickening pace. And consumers are paying less to borrow. Interest rates have been at record lows since December 2008.

It’s bit of good news for the auto industry in the U.S., where 2009 sales are expected to hit a 30-year low of around 10 million when figures are announced today. Partly because of loosening credit, analysts expect more than 1 million cars and light trucks to be sold in December, the best monthly performance since Cash for Clunkers in August.

Financial firms wrote 5.5 percent more car loans in the third quarter compared with the prior three months, Experian Automotive says. Fourth-quarter figures aren’t yet available, but Jesse Toprak, vice president of auto pricing tracker TrueCar Inc., says December saw an uptick in auto loan approvals for consumers with average or above-average credit as auto finance companies tried to clear out inventory.

Paul Taylor, chief economist for the National Auto Dealers Association, said used-car prices also have stabilized due to limited supply, making used-car loans more attractive to banks.

Still, Toprak said it could take another year or even longer for financial firms to trust consumers enough to return to normal levels for auto lending cheap business cards. It’s also far from the freewheeling days of the credit boom. Third-quarter auto lending was down 30 percent from the same period in 2006, a year when U.S. car and light truck sales reached 16.5 million.

In the meantime, only those with good credit need apply.

A top-tier borrower — someone with a credit score between 720 and 850 — can get a 36-month auto loan with an average monthly rate of 5.74 percent, down from 6.65 percent a year ago, according to Informa Research Services, a financial research firm in Calabasas, Calif. On a $20,000 car loan, that’s a savings of nearly $300 over three years.

But the cost of borrowing has risen for people in the bottom tier. A person with a score of 500 to 589 has seen the average rate climb to 18.56 percent from 16.47 percent a year ago. That translates to an extra $751.68 over three years. Banks are still nervous about lending money to risky borrowers given high rates of unemployment, foreclosures and late payments since the financial crisis began.

"We used to have a subprime auto lending industry," says Dan Alpert, managing partner at Westwood Capital, an investment bank involved in the securitization business.

"We don’t have that anymore."

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MONTREAL–Bombardier Inc. has received an order from Spain's national rail operator to maintain a fleet of high-speed trains for 14 years, the transportation equipment maker announced Thursday.

RENFE will pay US$917 million to Bombardier and Spanish railway vehicle maker Talgo to maintain the new trains. Bombardier's share of the contract comes to US$405 million.

The maintenance activities will take place at RENFE's depots in Spain with work expected to begin in 2010.

Bombardier will be responsible for the preventive and corrective maintenance of the train power-heads, power supply, signalling and propulsion system and auxiliaries.

The trains that will be maintained are currently being manufactured by Bombardier in association with Talgo.

Bombardier is no stranger to Spain's railway industry, and employs more than 600 people at various sites in the country. The AVE 102 and AVE 103 high speed trains and the Madrid Barajas airport people mover are among its key projects in the region.

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