Actual finance blog

BOSTON • The Federal Reserve is making it increasingly hard for investors to earn anything, unless they’re willing to accept plenty of risk. Ben Bernanke and his Fed are playing the role of adviser, encouraging Americans to get a little more adventurous by shifting savings out of low-yielding bonds and putting it to work in stocks.

The latest nudge came last month when the Fed said it doesn’t expect to raise its benchmark rate until late 2014, at the earliest. Rates have been near zero since December 2008. The latest extension means borrowers can expect another three years of low-cost loans and mortgages.

It’s more bad news for savers and retirees depending on investment income, particularly when there’s 3 percent inflation. Investors who value earning stable returns from Treasury bonds end up with little more than satisfaction that they’re faring better than people keeping money in savings accounts.

Consider that investors committing to lock up their money for a full decade were only being paid 1.8 percent for buying U.S. Treasurys last week. And yields have turned negative for investors trading 10-year Treasury Inflation-Protected Securities, or TIPS. On Wednesday, the yield was negative 0.28 percent. In essence, investors are willing to pay Uncle Sam to borrow their dollars for 10 years, because the opportunity to minimize losses is attractive compared with other options.

Here’s a look at three relatively low-risk alternatives to generate some income in this environment:

DIVIDEND STOCKS

Dick Bristol, 74, a retired Air Force major from Biloxi, Miss., counts on dividend-paying stocks for his retirement security. His investment portfolio is nearly 100 percent in stocks that make regular payouts, and he and his wife count on a few hundred dollars of dividends coming in each month quick payday loans.

Of course, dividend-paying stocks are not immune from market drops. And companies often cut dividends when the economy skids. But Bristol is convinced the potential returns are worth the risks.

“Keep in mind that if you invest in something that’s earning 1 to 2 percent, you’re losing out to the 3 inflation we’ve got now,” Bristol says. “Over the long run, nothing pays like dividend stocks.”

HIGH-YIELD BONDS

These bonds are issued by companies with credit problems. High-yield investors expect higher returns because there’s a greater risk of default. And they’ve gotten them recently. Mutual funds specializing in high-yield bonds have produced an average annualized return of 19 percent over the last three years.

Anne Lester, lead manager of JPMorgan Income Builder, has recently been adding to the fund’s holdings in high-yield bonds. They now make up 44 percent of a portfolio. Corporate default rates remain low and high-yields are attractively priced compared with Treasurys and other bonds, Lester says.

MUNICIPAL BONDS

Investments in the bonds of state and local governments won’t make you rich because returns are generally low. But muni bond interest payments are exempt from federal taxes. That protection may extend to state taxes if the munis are issued by the state in which the investor lives. Investors can pocket attractive returns even after taxes, because the tax hit can be sizeable for those in higher income brackets.

“Munis give an investor opportunity,” said Jim Colby, a muni bond analyst with Van Eck Associates.

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Stocks rose early Friday as spending cuts by Italy lifted traders’ hopes about Europe’s progress toward taming its debt crisis. A flat reading on U.S. inflation sent bond yields lower.

World markets rose Friday after Italy’s lower house of parliament approved an austerity package in hopes of lowering the country’s escalating borrowing costs.

The Dow Jones industrial average is up 58 points, or 0.5 percent, at 11,926 in the first half-hour of trading. The Standard & Poor’s 500 index is up 8, or 0.7 percent, at 1,224. The Nasdaq composite index is up 22, or 0.9 percent, at 2,563.

The gains were broad. Nine of the 10 industry groups in the S&P 500 index rose, led by industrial and technology companies. Telecommunications was the only sector to fall, by 0.3 percent.

The yield on the 10-year Treasury note plunged to 1.88 percent from 1.93 percent earlier Friday after the government said consumer prices were unchanged last month, suggesting that inflation remains low. Low inflation makes bonds more attractive because it doesn’t diminish the buying power of the fixed return a bond provides over time.

BlackBerry maker Research In Motion Ltd. plunged 12 percent after the company said late Thursday that new phones seen as critical to the company’s future will be delayed until late next year. The company is also taking a big loss on unsold tablet computers and predicted that its BlackBerry sales will fall sharply during the holiday period.

If stocks hold their gains, it will be only be the second up day this week. Indexes rose Thursday after positive economic news brought relief to choppy markets. The Dow rose 45 points after separate reports showed sharply fewer layoffs and better business conditions for factories on the Eastern seaboard.

World markets followed U cash advance.S. markets higher Friday as the European debt crisis failed to produce any worrying headlines. Bad news out of Europe has overshadowed positive economic news for months.

Italy’s austerity measures are seen as a crucial step toward soothing fears about Europe. The nations’ borrowing costs have risen in recent weeks to levels at which other nations, such as Greece, were forced to take bailouts.

The cuts are aimed at persuading bond traders that Italy can emerge from the widening crisis without defaulting on its debts. The nation still sits on a $2.5 trillion powder keg of debt that could cause a global economic recession if it defaults.

Stocks mostly rose in Europe following gains in Asia. Britain’s FTSE added 0.5 percent and Italy’s benchmark index rose 0.4 percent.

Online game developer Zynga Inc. begins trading later Friday on the Nasdaq. The San Francisco company, which specializes in Facebook games, priced its initial public offering late Thursday at $10 per share, raising $1 billion. It’s the largest Internet IPO since Google Inc. went public in 2004.

Among companies making big moves:

_ New York-area cable TV provider Cablevision Systems Corp. plunged 14 percent, the most in the S&P 500, following the sudden departure of its chief operating officer, Tom Rutledge.

_ Adobe Systems Inc. jumped 8.4 percent, the most in the S&P 500, after the software maker reported earnings and revenues that were far ahead of what analysts were expecting. Analyst Walter Pritchard at Citigroup said the quarter was a “blow-out when most expected weakness.”

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Asian stock markets fell Tuesday after Standard and Poor’s warned 15 countries using the euro currency that their credit ratings are at risk of a downgrade.

Japan’s Nikkei 225 dropped 0.8 percent to 8,628.73. South Korea’s Kospi dipped 0.7 percent to 1,908.75 and Hong Kong’s Hang Seng lost 1 percent to 18,988.82. Australia’s S&P/ASX 200 shed 0.6 percent to 4,293.90. Benchmarks in Singapore, Taiwan and New Zealand also gave up ground.

The S&P announcement came only hours after French President Nicolas Sarkozy and German Chancellor Angela Merkel on Monday unveiled sweeping plans to change the European Union treaty in an effort to keep tighter checks on overspending nations.

The S&P warning left out only two of 17 countries that use the euro: Cyprus, whose bonds have near-junk status, and Greece, which already has ratings low enough to suggest that it’s likely to default soon anyway. The inclusion on the list of Germany, Europe’s strongest economy, was the biggest surprise.

The Franco-German plan, which would tie the 17 euro nations closer together, would likely also result in heavier financial burdens for Germany and other stronger economies that have already put up billions of euros to rescue Greece, Ireland and Portugal no fax payday loans.

Sarkozy and Merkel discussed several broad changes for the EU treaty, including the introduction of a penalty for any government that allows its deficit to exceed 3 percent of gross domestic product. The penalty would be automatic _ unless a majority of nations opposed it, a loophole that drew sharp criticism from analysts.

Andrew Sullivan, principal sales trader at Piper Jaffray in Hong Kong, said the sanctions were “subject to political control” and in reality represent no change from mechanisms already in existence.

The French-German proposal will be taken up at a summit of EU leaders on Thursday and Friday aimed at fixing a debt crisis so severe that it threatens the viability of the euro currency.

On Wall Street, the Dow Jones industrial average rose 0.7 percent to 12,097.83. The S&P 500 rose 1 percent to 1,257.1. The Nasdaq added 1.1 percent to 2,655.76.

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Developers asked the Ballwin Board of Aldermen Monday for help financing a development at the old Rothman Furniture location at Manchester Road and Seven Trails Drive.

The board has approved the development of a Wendy’s fast food restaurant and U-Gas at 14799 Manchester Road.

Project Manager William Biermann asked the city for financial support through a tax-increment financing district. Biermann said the taxes raised would be used to pay to remove dirt and materials excavated from the site payday loans for bad credit. He said the cost of the work had been miscalculated by up to $700,000.

The board may consider support in the future. Biermann said the project was going to be completed despite the cost mistake.

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Shops in India have closed their doors in observance of a nationwide strike to protest the government’s decision to allow big-box retailers in the country.

Hundreds of traders marched on New Delhi streets Thursday demanding the Cabinet revoke its decision. The strike was only partially observed in New Delhi, Mumbai and other cities.

The government provoked furor last week by deciding foreign retailers could own up to 51 percent of supermarkets and 100 percent of single-brand stores. Shopowners fear that the entry of companies such as Wal-Mart and Tesco will crush local mom-and-pop stores.

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A push to build a Pacific free trade bloc gained ground Friday with Japan’s decision to join negotiations, as Asia-Pacific leaders converging on Hawaii for an annual summit mulled ways to prevent Europe’s crisis from derailing the global recovery.

The weekend meeting of the 21-member Asia-Pacific Economic Cooperation forum, which brings together leaders from Russia to Chile, is focused on creating jobs and business through nuts-and-bolts measures such as investment in infrastructure and reforms aimed at providing more access to financing for the poor.

Such moves are gaining urgency, with the European Union warning of a possible “deep and prolonged recession” next year as the debt crisis that has engulfed Ireland, Portugal and Greece shows signs of spiraling out of control. A European recession would be felt sharply in the U.S., where growth is already anemic, and in Asia, which relies on Europe as a big market for its cars, clothing, consumer electronics and other exports.

“In the coming 12 months there is quite a strong likelihood that things will go worse,” Hong Kong’s chief executive, Donald Tsang, told a gathering of business leaders on the sidelines of the APEC meetings. “Global performance will be dragged down and then there will be an awakening, I hope,” he said.

U.S. Secretary of State Hillary Clinton said in opening a meeting of foreign and economic ministers that many forces outside the Pacific region will have an impact on it. “Global trends and world events have given us a full and formidable agenda,” she said. “And the stakes are high for all of us.”

As host of the annual summit, the U.S. has made expanding trade, promoting green growth and deepening cooperation on regulation and standards to help dismantle barriers to trade and nurture faster growth.

“We’ve even created an unofficial slogan: ‘Get Stuff Done,” Clinton said.

The U.S. also is hoping to garner support for a Pacific free trade pact that many APEC members see as a building block for a free trade area that encompasses all of Asia and the Pacific, covering half the world’s commerce and two-fifths of its trade.

That goal advanced Friday with Japan’s announcement that it will seek to join the bloc, called the Trans-Pacific Partnership, despite strong opposition from farmers fearful of exposure to greater foreign competition.

The Pacific trade pact, known as the TPP, currently includes Chile, New Zealand, Brunei and Singapore _ all relatively small economies. The U.S., Australia, Malaysia, Vietnam and Peru are negotiating to join. The participation of Japan, the world’s third-largest economy, would vastly expand its reach.

At the same time they are working toward a broader agreement, countries continue to forge separate free-trade agreements. On Friday, Vietnam and Chile were to due to sign a free trade agreement on the sidelines of the APEC meetings.

The U.S. recently clinched long-sought free trade pacts with South Korea, Colombia, and Panama _ agreements that if ratified will bring to 20 the number of countries that have free trade agreements with the U.S.

In Honolulu, Washington was keeping up pressure on China to commit to faster trade liberalization and to freeing its currency, which U.S. officials say remains undervalued even though it has gained substantially against the U.S. dollar in recent years.

A statement by APEC finance ministers released Thursday included a call for exchange rate flexibility. Treasury Department officials said China’s willingness to back such a commitment _ both at the Group of 20 meeting in Cannes last week and in Honolulu this week _ could encourage similar moves by other Asia-Pacific economies.

But Beijing’s apparent openness to move faster on its currency policy was not matched by similar support for the Trans-Pacific Partnership, which earlier this week a senior official in Beijing described as “overly ambitious.”

Overall, given APEC’s lack of negotiating power _ all decisions are by consensus _ prospects for major changes are slim. But over the years the group’s incremental efforts have helped build support for closer economic ties and freer trade.

Clinton said that by agreeing on something as rudimentary as shared safety standards for televisions, countries in the region saw exports of TVs jump by nearly half in three years.

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OTTAWA—A surging energy sector gave a healthy 0.3 per cent boost to the economy in August, suggesting Canada rebounded much more strongly than believed during the summer, following a surprising dip in the spring.

Statistics Canada also upgraded July’s gross domestic product a tick to 0.4 per cent on Monday, which places the economy on track to post a strong three per cent gain in the third quarter.

Following a 0.4 per cent contraction in the second quarter, and expectations of softness due to the market turmoil that took hold in early late July, some analysts had speculated it was possible for Canada to have suffered a technical recession of two negative quarters over the summer.

But that is no longer in the realm of possibility, given the bigger than expected numbers in the first two months.

“Even assuming a soft September, the quarter could come in at 2.9 per cent,” said Avery Shenfeld, chief economist with CIBC World Markets.

“We still see growth slipping back below two per cent in the fourth quarter, but odds are increasing that the second half should end up well above the Bank of Canada’s recent projection barring some new, unforeseen shock,” he added.

Scotiabank’s Derek Holt said the stronger two months means that September would need to have seen a disastrous 0.5 per cent retrenchment — and there were no signs that happened given the 61,000 pick up in jobs during the month — for third-quarter growth to have come in as weak as the Bank of Canada’s call of two per cent.

“Indeed, the recession chatter of a few weeks ago looks pretty ridiculous in light of almost four per cent GDP growth in the latest three months.

The consensus of economists had expected a 0.2 per cent increase in August, and did not foresee July’s revision.

However, August’s expansion was not as strong in other areas — the agency noted the country’s gross domestic product would have remained unchanged but for the 2.8 per cent jump in the energy sector.

Overall, industries tied to Canada’s domestic economy did well, while those related to exports did not.

The financial sector, as well as real estate and insurance, retail and construction all posted gains.

On the flipside, manufacturing fell 0.4 per cent, wholesale trade 1.4 per cent, and transport and warehousing was also down slightly on weak foreign demand and strong dollar.

The public sector (public administration, education and health care) overall was unchanged, as was mining.

Economists were uniform in saying the stronger than expected state of the economy is unlikely to materially impact the Bank of Canada’s position on interest rates.

Analysts still expect the central bank to keep its target overnight rate at one per cent until at least the middle of next year, and some say until well into 2013.

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Lawyers say interior designer Kelly Hoppen has accepted 60,000 pounds ($93,000) in damages for phone hacking from the publisher of the News of the World.

Hoppen, former stepmother of actress Sienna Miller, is one of scores of people accusing the tabloid of eavesdropping on cell phone voicemails. Her case was due to go to court in January.

Her lawyer, Mark Thomson, told a hearing Friday that the paper’s publisher had agreed to pay Hoppen damages and legal costs low fee payday loans.

He said that between 2004 and 2006, Hoppen was the subject of numerous articles in the paper “which contained intrusive and private information.”

More than 60 people have filed court papers alleging their phones were hacked by the News of the World, which was shut down by owner Rupert Murdoch in July.

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The United Auto Workers union extended its contracts with General Motors Co. and Chrysler Group LLC early Thursday after failing to meet a deadline to reach a new agreement.

GM broke off talks after midnight and said they would resume at 8 a.m. EDT Thursday. Chrysler didn’t say when its talks would resume.

The decision has little impact on the 71,000 U.S. factory workers covered by the GM and Chrysler contracts. In the past, workers might have gone on strike if the UAW hadn’t extended their contracts. But as part of their 2009 government bailouts, GM and Chrysler workers had to agree not to strike over wages.

“We should continue to do the things we do until we receive official notification otherwise,” a UAW local official at a GM factory in Lordstown, Ohio, wrote Wednesday in a message posted on the local’s website.

The UAW extended its contract with Ford Motor Co. last week, as talks have progressed more slowly with that automaker. The Ford contract covers around 40,000 workers.

Up until the deadline, the negotiations that began over the summer appeared to be proceeding without the acrimony that plagued them in the past. But just before the 11:59 p.m. EDT Wednesday deadline, the CEO of Chrysler fired off a letter to UAW President Bob King saying an agreement likely wouldn’t be reached because King didn’t come to the table Wednesday night to finish the deal.

“I know we are the smallest of the three automakers here in Detroit, but that does not make us less relevant,” Chrysler CEO Sergio Marchionne said in the letter, which was obtained by The Associated Press.

Marchionne said he planned to travel out of the country for business and will return next week. He said he would agree to a weeklong extension of Chrysler workers’ current contract. The UAW didn’t set a new deadline to reach agreements.

UAW President Bob King wouldn’t comment on Marchionne’s letter when he was reached by phone early Thursday.

The UAW extended its contract with Ford Motor Co. last week, as talks have progressed more slowly with that automaker.

Marchionne said he and King met a week ago and agreed to finish work on the new contract before the deadline. He said not meeting the deadline hurts Chrysler’s workers.

“You and I failed them today,” he wrote. “We did not accomplish what leaders who have been tasked with the turning of a new page for this industry should have done.”

Things appeared to be progressing more smoothly at GM. Joe Ashton, the UAW’s vice president in charge of the GM negotiations, told local union officials Tuesday night in a note that bargainers have made “much progress” in talks with the company. GM has taken the lead on the negotiations and its agreement may be used to set the pattern for the other two companies.

The contract talks will determine wages and benefits for 111,000 union workers at the auto makers, and they also set the bar for wages at auto parts companies, U.S. factories run by foreign automakers and other manufacturers, which employ hundreds of thousands more. The contract talks are the first since GM and Chrysler needed government aid to make it through bankruptcy protection in 2009.

GM nearly ran out of cash and needed $49.5 billion from the government to survive, but it’s been making billions in the last two years because its debt and costs were lowered in bankruptcy and its new products have been selling well.

Ashton wrote that “difficult restrictions” have been placed on the union and company as a result of the bailout. To get the government funding, the union had to agree not to strike over wages at GM and Chrysler. Also, unresolved issues can be taken to binding arbitration, and the union’s new contracts must keep the companies’ labor costs competitive with Asian automakers such as Toyota Motor Corp. and Honda Motor Co.

“As you know, several difficult conditions were agreed to in order to obtain financing during the bankruptcy,” Ashton wrote in the note to local union officials. “We are confident that we can reach an agreement that will meet many of the goals we set at the beginning of negotiations.”

The union has been seeking bigger profit-sharing checks instead of pay raises, higher pay for entry level workers who make $14 to $16 per hour, signing bonuses and guarantees of new jobs as auto sales recover. Ford and GM want to cut their labor costs to get them closer to Honda and Toyota, while Chrysler wants to hold its costs steady. Health care costs are also an issue.

Once the contract agreements are reached, workers will vote on them.

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The PC is dead. Long live the PC.

The personal computer marked its 30th anniversary as a mass-market product last month. To mark the occasion, Hewitt-Packard Co., world