Actual finance blog

The dollar slipped against other major currencies Wednesday after Greece announced measures to reduce its deficit by four percentage points this year.

What prices are doing: The dollar fell 0.6% against the euro to $1.3694, and dropped 0.8% against the pound to $1.5131. The greenback edged 0.4% lower against the yen to ¥88.47.

The dollar was first higher Tuesday but then lost steam and ended lower, as the euro rose on hopes that debt-choked Greece would make decisions about its deficit.

What’s moving the market: Greece announced plans to make steep cuts in civil servant salaries and raise taxes to save the debt-challenged country more than $6.5 billion this year, according to a report in the Wall Street Journal’s online edition.

Greek officials expect the cuts to lower Greece’s budget deficit to 8.7% of the country’s gross domestic product from its current level of 12.7%, according to the report.

Investors also digested some U free credit report and score.S. economic data ahead of Friday’s all-important February jobs release. Traders took in labor market reports from outplacement firm Challenger, Gray & Christmas and payroll data firm Automatic Data Processing, which showed job losses continue to slow.

The employment component of the Institute of Supply Management’s report on the service sector also rose to its highest level since April 2008 as the service sector expanded.

What analysts are saying: "The dollar is trading lower today as Greece’s austerity package lifts demand for European currencies," said Kathy Lien, director of currency research at Global Forex Trading, in a research note.

But the rally in the euro may be limited because there is still a lot of back and forth on whether Germany and other strong European countries will offer aid to Greece, she added. 

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Options traders are growing less bullish on the yen after efforts by Japanese officials to boost the world’s second-biggest economy and a U.S. jobs report led to the currency’s biggest weekly decline in a decade.

Japan’s currency plunged 2.5 percent against the dollar and 1.3 percent versus the euro on Dec. 4 after America’s Labor Department said employers cut the fewest jobs since the recession began. The yen sank 4.5 percent versus the greenback for the week, the most since February 1999 and retreating from a 14-year high. Traders sold yen and bought dollars on speculation interest rates in the U.S. will increase before June.

“The improving U.S. jobs market suggests the Federal Reserve won’t stand pat on interest rates longer than the Bank of Japan,” said Kazutoshi Yasuda, general manager of the markets department in Tokyo at FX Prime Corp., a unit of Itochu Corp. Increased U.S. borrowing costs would lead traders to favor using yen to finance higher-yielding investments, leading to more losses for the Japanese currency, he said.

Options showed declining bets that the yen will rise. The odds for a gain to 84.5 yen per dollar by the end of March from 90.56 last week fell to 38 percent from 80 percent on Nov. 30, data compiled by Bloomberg show. Chances of a decline to 92 versus the dollar by Dec. 31 reached 63 percent. Options grant buyers the right to purchase or sell an asset at a predetermined price.

Weekly Tumble

The yen tumbled 3.6 percent versus the euro to 134.54 last week, the sharpest slide since the week ended April 3. The yen’s biggest drop during the week came after the U.S. Labor Department said payrolls dropped by 11,000 last month, the smallest decrease since the recession began in December 2007.

“What the job numbers do is firm up expectations that the Fed interest-rate hike is coming,” said Camilla Sutton, a strategist in Toronto at Bank of Nova Scotia, the nation’s third-largest lender. “That should be a strong-dollar story.”

Federal-funds futures contracts on the Chicago Board of Trade show a 43.3 percent probability that the U.S. central bank will lift its target rate for overnight bank borrowing to 0.5 percent by June from a range of zero to 0.25 percent now, up from 12.6 percent a month ago.

UBS AG expects the Fed to set its key rate at the top end of its 0.25 percent range in April and follow with a quarter- point increase in June. The jobs report and last week’s gains “suggest the greenback is finally turning,” Mansoor Mohi-uddin, the Zurich-based bank’s global head of currency strategy, wrote in a note to clients.

Best Performer

The yen was the best performer against the dollar among the 16 most-traded currencies the past four years, Bloomberg data show. It surged to 84.83 on Nov. 27, the strongest since July 1995, from 124.13 in June 2007. The yen tends to advance amid financial turmoil because Japan’s trade surplus reduces reliance on foreign capital.

Record low U.S. interest rates have kept the dollar under pressure at the expense of the yen, making the greenback the favorite for so-called carry trades, where investors raise funds in countries with low borrowing costs and use the proceeds to invest in countries with higher returns.

Benchmark rates of as low as zero in the U.S. and 0.1 percent in Japan compare with 3.75 in Australia and 2.5 percent in New Zealand.

The London interbank offered rate, or Libor, for three- month loans in the U.S. currency has been below the equivalent yen rate since Aug. 24. In the decade before then, the dollar rate averaged 2.94 percentage points more than the yen rate.

‘Extreme’ Positioning

Contracts betting the yen would climb against the dollar rose to 51,710 on Nov. 27, the most since May 2008, according to data from the Commodities Futures Trading Commission in Washington based on contracts at the Chicago Mercantile Exchange. As recently as June, there more contracts betting on a decline in the yen than a gain.

Such “extreme” positioning may suggest that the decline in the yen represents traders unwinding “long” positions rather than an outright bet on the currency’s depreciation, Marc Chandler, the global head of currency strategy at Brown Brothers Harriman & Co. in New York, said in a note to clients on Dec. 4.

The median estimate of more than 30 strategists surveyed by Bloomberg is for the yen to end March at 92 to the dollar and 136 to the euro.

‘Urgent Steps’

Fujio Mitarai, head of Japan’s largest business lobby, called on the government to take “urgent steps” on Nov. 27 to curb gains in the yen, which make Japanese exports less competitive and threaten corporate profits. The same day, Finance Minister Hirohisa Fujii said in Tokyo the nation will “do what is necessary” and he may contact U.S. and European officials to act.

Exports make up about 12 percent of Japan’s economy, compared with 6 percent in the U.S. The nation’s gross domestic product is forecast to shrink 5.7 percent this year, according to the median estimate of 14 economists surveyed by Bloomberg. That compares with a contraction of 2.4 percent in the U.S.

The Bank of Japan announced an emergency 10 trillion yen ($113 billion) credit program on Dec. 1 to combat falling prices and the stronger yen. The spread between dollar- and yen-based Libor narrowed to 2.72 basis points on Dec. 4 from as much as 7.25 basis points on Sept. 8.

Stimulus Plan

“The BOJ’s action worked,” said Masato Mori, senior manager of the business and marketing department at NTT SmartTrade Inc. a unit of Nippon Telegraph & Telephone Corp. “Stopping the yen’s advance will require additional spending from the government.”

A stimulus plan worth as much as 4 trillion yen ($45.4 billion) may be agreed upon today, Chief Cabinet Secretary Hirofumi Hirano said last week. The government planned to announce the measures on Dec. 4 before disagreements between Prime Minister Yukio Hatoyama’s ruling Democratic Party of Japan and coalition partners, who want a larger package, caused a delay.

Bonds to be issued in the fiscal year starting April 1 may reach 146.2 trillion yen compared with a revised 132.3 trillion yen this year, according to Citigroup Global Markets Japan Inc.

“There is probably enough in the policy action in Japan by the government and the BOJ to argue for further upside on cross- yen currencies near term,” said Greg Gibbs, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in Sydney.

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Business managers interviewed by Federal Reserve researchers conducting their eight-times-a-year review of the New England economy “cite mixed results amid signs of improvement, although activity generally remains below year-earlier levels,” the analysts wrote in the report, which was released Wednesday.

“Some respondents are beginning to hire and/or reverse pay cuts or freezes, or planning to in 2010,” the researchers wrote in the summary often referred to as the “beige book.”

“Prices are generally said to be stable,” they wrote. “Contacts in a number of sectors express uncertainty about whether recent improvements will last, but most — outside of commercial real estate — expect recovery to take hold in 2010.”

By sector:

• A number of retailers told the researchers “consumers are much more cautious than in previous years.” And executives in the category worried about the impact of unemployment on consumer spending.

Several retail concacts told the researchers they are maintaining lower inventory levels than a year ago.

Capital spending in the sector is “guarded,” the Fed team wrote, though there is some spending planned on renovations and IT.

“Seasonal hiring is mixed,” the report states. “Wages remain mostly steady, although one respondent reports wage cuts were successfully taken in order to prevent a cut in headcount. Selling prices are reportedly stable.”

• In manufacturing, the report states, “biopharmaceuticals companies indicate that their revenues continue to increase. Some equipment makers report that sales have picked up from their depressed levels in the first half of the year, while others say their business remains in a slump.”

The researchers wrote: “Respondents across a variety of industries note that sales to retailers, restaurants, and personal services establishments remain depressed.”

Materials costs and selling prices remained largely unchanged.

“Some firms that cut wages and salaries earlier in 2009 have recently restored pay to pre-cut levels or plan to do so in 2010,” the researchers wrote. “Most contacts say that they have held their domestic headcounts relatively steady in recent months, but biopharmaceutical firms continue to expand employment.”

They add: “Some seeking to fill specialized technical positions indicate they are disappointed with the quality of the applicant pool.”

“For the most part, capital spending remains subdued,” the report states. “Many note that they have adequate cash to fund both needed and discretionary investments.”

For the sector, it concludes: “Most manufacturers and related services providers are anticipating modest to moderate revenue increases over the coming six to 12 months.”

• Software and Information Technology Services could see some new hiring in 2010.

“Those firms that implemented wage freezes this year anticipate lifting them in 2010, with raises expected to be in the 3-percent to 5-percent range,” the report states.

It states: “Expectations range from gradual upticks over the course of 2010 to high levels of growth from the start of the year.

• “New England staffing contacts report upticks in activity through the end of the third quarter and

into the fourth,” the report states. “While year-over-year revenues are still down — from 10 percent to 60 percent — revenues are improving on a sequential basis, with increases reported in billing hours and number of assignments.”

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An Indian Ocean airline is planning the first regular flights for more than 800 passengers after buying a budget version of the Airbus A380, the world’s largest airliner, with economy seating throughout.

Reunion-based Air Austral confirmed an order for two superjumbos at the Dubai Air Show and said it would operate them between Paris and the French overseas department from 2014.

The deal will put the A380 into service as the industry’s largest people carrier and comes 80 years after the first wood and canvas plane touched down on the Indian Ocean island after making the 9,300 kilometer (5,800 mile) trip from Paris in 10 days.

The A380 entered service in 2007 and is designed to seat 525 people in ordinary three-class seating or 853 people when its two floors of cabins are filled with economy seats — giving it 8 times more capacity than Airbus’s smallest model, the A318.

So far, buyers of the plane have focused on luring premium passengers with facilities from beds and showers in first class to a stand-up bar, with total seating of around 500 people.

Air Austral said its low-cost version would seat 840 people.

“We are convinced that airplanes with good priced tickets will help explode traffic figures,” founder and president Gerard Etheve told Reuters after announcing the deal on Tuesday.

The economy end of the airline market has performed relatively better during the financial crisis, but revenues everywhere have been battered by recession this year no credit check payday loans.

The budget version of the A380 aims at tapping growth in China, India and demand from airlines flying aging Boeing 747s on high-density routes in markets like Japan, where rival Boeing dominates air travel.

Boeing’s 747-400D, a version of the jumbo jet built for the Japanese domestic market, carries up to 660 people in one class.

Etheve said the airline he founded in 1975 had paid less than the $660 million list price for two Airbus A380s.

The aircraft was tested for the ability to evacuate over 800 people in cabin emergency tests before entering service.

Air Austral’s planes will be powered by engines from the Engine Alliance, a joint venture between General Electric and Pratt & Whitney.

The A380 deal, reported by Reuters earlier this week, includes options for a further two A380s to either serve future Caribbean routes or more flights to La Reunion.

(Editing by Jon Loades-Carter)

(Reporting by John Irish, Writing by Tim Hepher, editing by Will Waterman and Jon Loades-Carter)

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The Federal Open Market Committee in its statement November 4 left unchanged the language that its ultra-low rates would be kept for "an extended period". By not even signaling an end to the current era of easy money, the central bank runs the risk of further inflating asset and commodity prices and sinking the dollar.

The Fed’s mandate is to keep inflation and employment stable. It’s hard to see how avoiding bubbles — and the crashes that accompany them — shouldn’t be central to its mission.

By the Full Employment and Balanced Growth Act of 1978, the Fed must maintain long-run growth, minimize inflation and maintain price stability. As the events of 2007-09 demonstrated, in order to achieve these goals it helps to avoid bubbles, the bursting of which makes prices unstable and causes unemployment.

Fed Chairman Alan Greenspan used to claim that it was impossible to recognize a bubble in progress, but that does not preclude the Fed’s responsibility to prevent them from developing.

Currently, stock prices are up 50% from their lows, oil prices are above $80 a barrel and the gold price has surged to close to $1,100 an ounce. Global monetary conditions have been exceptionally accommodative for over a year, with Chinese M2 money supply up 29.3% in the year to September, for example.

All of which suggests the substantial probability of a bubble developing, whether or not it can be detected in progress. The bursting of such a bubble, at a time of large global budget deficits, could prove highly destructive to economic growth and employment.

So the Fed’s lack of action — either in word or deed — seems incautious. It may believe that raising interest rates would abort the incipient U.S. economic recovery and that removing quantitative easing could cause a liquidity crisis given the huge U.S. budget deficit.

However, removing the language promising to keep interest rates low for an "extended period" could have no real economic effect, but would warn the markets that the Fed is aware of the potential bubble. Sometimes two words can make all the difference. 

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The economy in the U.S. probably grew in the third quarter at the fastest pace in two years as government stimulus helped bring an end to the worst recession since the 1930s, economists said before reports this week.

The world’s largest economy grew at a 3.2 percent pace from July through September after shrinking the previous four quarters, according to the median estimate of 65 economists surveyed by Bloomberg News. Other reports may show sales of new homes and orders for long-lasting goods increased.

Americans flocked to auto showrooms and real-estate offices last quarter to take advantage of government programs such as “cash-for-clunkers” and tax credits for first-time homebuyers. Growing demand caused stockpiles to keep falling, which will prompt companies to rev up assembly lines and help sustain the recovery into 2010 even as unemployment climbs.

“The recovery is off to a decent but unspectacular start,” said Joe Brusuelas, a director at Moody’s Economy.com in West Chester, Pennsylvania. “While another large drawdown in inventories will be a drag on third-quarter growth, it sets the stage for a longer and stronger upturn in manufacturing.”

The Commerce Department’s report on gross domestic product is due Oct. 29. The four consecutive decreases through the second quarter marks the longest stretch of declines since quarterly records began in 1947. The economy shrank 3.8 percent in the 12 months to June, the worst performance in seven decades.

Stocks Climb

Stocks have rallied as earnings at companies from Caterpillar Inc. to Morgan Stanley topped estimates. Profits exceeded expectations at about 80 percent of the companies in the Standard & Poor’s 500 Index that have released results, according to Bloomberg data. That marks the highest proportion in data going back to 1993. The S&P 500 closed at a one-year high on Oct. 19.

Consumer spending last quarter probably jumped at a 3.1 percent annual rate from the previous three months, the biggest gain since the first quarter of 2007, the GDP report is also projected to show.

September readings on household purchases, due from the Commerce Department on Oct. 30, may show the quarter ended on a soft note after the Obama administration’s car incentive expired the month before. Spending probably fell 0.5 percent last month as car sales slowed after jumping 1.3 percent in August, the biggest gain since 2001.

The so-called cash-for-clunkers program offered buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles. The plan boosted sales by about 700,000 vehicles, according to a Transportation Department estimate.

Homebuyer Credit

The administration’s $787 billion stimulus package, signed into law in February, included an $8,000 tax credit for first- time homebuyers that expires at the end of November.

New-home sales last month increased 2.6 percent to an annual pace of 440,000, the highest level since August 2008 and reflecting the boost from the credit, according to economists surveyed. The Commerce Department’s report is due Oct. 28.

Lawmakers in Washington are debating an extension of the credit through June, and are discussing expanding it to all buyers under an income cap.

A report from S&P/Case-Shiller home-price index due Oct. 27 may show home values in 20 U.S. metropolitan areas declined in the year ended August at the slowest pace since January 2008, according to the survey median.

More Orders

Orders for durable goods rose 1 percent in September, economists project the Commerce Department will report Oct. 28. A gain would be the fourth in the last six months and indicates companies are starting to invest in new equipment.

Business spending and housing “stand ready to provide the oomph necessary to generate continued optimism until consumer activity stabilizes,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia.

Optimism among U.S. consumers in October is forecast to rise even as unemployment probably also increased, economists said. The Conference Board’s confidence index, due Oct. 27, climbed to 53.5 from 53.1, according to the survey median.

The economy will likely grow at a 2.4 percent annual rate from October through December, according to a Bloomberg survey earlier this month. GDP will also expand 2.4 percent next year and 2.8 percent in 2011, the survey showed, compared with an average of 3.4 percent growth over the past six decades.

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This week is slated to be the biggest for initial public offerings in the United States in nearly two years — and some say the resurgence could be sustainable.

There are eight deals on deck and they are expected to raise $3.5 billion, which would increase 2009’s total so far by 66 percent. In an additional sign of strength, they run the gamut from real estate investment trusts created to buy toxic assets to a clean tech company that has never made a profit.

That broadening of industries shows how much the IPO market has healed since a six-month virtual drought ended in February, with the recovery in the IPO market that started in China and Brazil making its way to the United States.

“It’s too early to say ‘everything’s fine, everyone come back into the pool,’ but we are seeing signs that more and more types of investors are coming back to the market and there is robust interest in IPOs,” said Mary Ann Deignan, head of equity capital markets for the Americas at UBS Investment Bank.

The number of deals could make it the busiest since the week of December 9, 2007, when 11 IPOs came to market. So far this year, there have been only 22 IPOs.

LESS RISK AVERSE?

Among the IPOs ready to test investor appetite for risk is Foursquare Capital Corp, a REIT that will be run by a unit of money manager AllianceBernstein and plans to raise $500 million with which to buy “toxic assets” under a U.S. Treasury program.

Two other REITs, Colony Financial Inc and Apollo Commercial Real Estate Finance Inc, created by Leon Black’s private equity firm, are each seeking hundreds of millions to buy commercial mortgage-backed securities, betting that their values will rebound allied insurance.

IPO investors are becoming more adventurous again.

“Investors are looking more broadly across all sectors now. It’s not just defensive names that are appealing,” Deignan said.

But a flop or two next week, or a sudden end to the recent stock market rally, could be enough to send investors running for the doors again, an analyst said.

People could be frightened if some of these deals do badly,” said Nick Einhorn, a research analyst at Connecticut-based investment firm Renaissance Capital.

Despite considerable buzz, A123 Systems Inc, a promising lithium car battery maker gunning for $225 million, may give investors pause as it would be the first this year by an unprofitable company.

Two of the offerings are carve-outs from large companies: Swiss bank Julius Baer’s U.S. asset management unit Artio Global Investors Inc ($585 million) and Chinese media company Shanda Interactive’s spin-off of its gaming unit Shanda Games Ltd in a $725 million IPO.

Investors have been receptive to carve-outs this year. Shanda Games’ rival Changyou.com Ltd was carved out of Chinese Internet portal Sohu.com and has risen 156 percent since its IPO in April in the best performance of the year, leading some analysts to say Shanda could see the strongest first day jump of this week’s crop. 

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Morgan Stanley Chief Executive John Mack is stepping down and will be replaced by retail brokerage head James Gorman, signaling the storied bank is embracing stable businesses after losing big on risky ones.

Mack, 64, a former trader who rose to CEO after a coup toppled Philip Purcell, will remain chairman of Morgan Stanley, which posted a second-quarter loss of $1.26 billion even as other banks had stronger results.

Under Mack, Morgan Stanley was willing to bet more of the bank’s own money, a strategy that yielded big rewards in years like 2006, but also helped push the investment bank to the brink of collapse in 2008.

The shift to Gorman, 51, who runs Morgan Stanley’s brokerage and has been overseeing its expansion through a joint venture with Citigroup’s Smith Barney unit, could be a sign of a wider shift in the industry, analysts said.

“All these large financial institutions are going to replace their head honchos with someone with a background in a business with a more consistent, predictable revenue stream — commercial banking, retail brokerage, or asset management,” said Bill Fitzpatrick, equity research analyst for financials at Optique Capital Management in Milwaukee.

Gorman will take over the CEO job — and join the board of the iconic bank which has struggled to keep up with archrival Goldman Sachs — effective January 1, 2010.

FIGHTING FOR SURVIVAL

The Australian born Gorman has long been seen as a front runner for the top job at Morgan Stanley, the bank founded 74 years ago by former executives from JPMorgan & Co.

“Gorman has really earned his stripes,” said Anton Schutz, president of Mendon Capital Advisors in Rochester, New York, which owns Morgan Stanley shares. “He did a great job at Merrill, he’s doing a good job at Morgan Stanley, and the timing for a change seems to be good, because we’ve made it through the worst of the crisis.”

Mack had told the bank’s board that he planned to step down from the CEO post when he turned 65 in November, the bank said in a statement on Thursday.

Morgan Stanley’s shares have come roaring back this year after it fought for survival in the wake of the Lehman Brothers collapse, helped by the U.S. government and an investment from Japanese bank Mitsubishi UFJ that Mack took the lead in negotiating.

Still, the bank’s shares, which are up nearly 80 percent so far this year, have fallen short of a 107 percent surge in Goldman Sachs Group Inc’s stock.

Morgan Stanley earlier this year paid $2.75 billion to acquire a controlling stake in Citi’s Smith Barney retail brokerage, a move that could provide a more stable source of revenue to offset some of the investment bank’s more volatile businesses.

Prior to joining Morgan Stanley in 2006, Gorman worked at Merrill Lynch & Co. From 2001 to 2005, he led Merrill’s global private client business.

STANDING OVATION 

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They sell quirky beers with names such as "Buffalo Drool" and "Wheach," a peach-wheat combo. You won’t see their commercials on television, because they do their marketing through fish fries and Facebook, e-mails and street festivals. Their staffers might wear kilts from time to time.

They are Missouri’s craft brewers, independent makers of small-batch beers. In this recession, they are proving they have something more than quirkiness: Staying power.

Craft brewers across the St. Louis region say their business is proving surprisingly resilient as the economy slices into the hide of other industries. Times are difficult, but craft brewers are growing or holding steady.

Good beer, good food and strong connections to the local area are essential.

"I don’t think our crowd has pulled back," said Dushan Manjencich, owner of Buffalo Brewing in midtown St. Louis. The brewpub, which opened in March 2008 on St. Patrick’s Day, is apparently benefiting from the revitalization of the Olive Boulevard corridor. Sales are up this year by 10 to 15 percent, Manjencich said.

Craft brewers — including beer-

brewing restaurants called brewpubs, microbreweries and regional breweries that send beer across hundreds of miles — sold 4.2 million barrels of beer nationwide in the year’s first half, up from 4 million in the same period last year, according to the Colorado-based Brewers Association.

With the overall U.S. beer industry basically flat, craft brewers will take that pace of growth, even if it’s slower than before.

Dollar sales from craft brewers increased 9 percent in the first half of 2009, compared with 11 percent growth in the same period in 2008. Measured in liquid, sales rose 5 percent this year, compared with 6.5 percent growth last year.

"Real good, considering," said Paul Gatza, director of the Brewers Association. "A lot of companies are still growing and expanding distribution."

O’Fallon Brewery in O’Fallon, Mo., is certainly looking for new territories. The company, which saw its beer sales to Missouri wholesalers rise 4.7 percent through June, is expanding distribution into Kansas and is also eyeing other states as far away as Florida.

"It’s pretty much, putting the blinders on and working the plan and not really doing anything different during the recession," said co-founder Tony Caradonna. "People are still coming to the party."

In Missouri, retail sales of craft beers brewed in the state were up nearly 18 percent, according to Nielsen. That far outpaced overall beer sales.

"Consumers are looking to buy locally," said Nick Lake, vice president at Nielsen Co. Drinkers of craft beers "like variety, and they certainly like ‘local,’ and they like to support the underdog."

Craft brands are slowly gaining space on store shelves and restaurant menus, Gatza said.

One reason is that some drinkers are switching from wine and distilled spirits to cheaper beer when they’re at a restaurant, bar or nightclub. In a Nielsen survey released in May, nearly a quarter of wine consumers reported choosing less expensive drinks.

Perhaps most importantly for craft brewers, support from wholesalers and retailers is growing, thanks to the hefty profits that stores and distributors can earn from selling pricey craft beer.

Craft beers represent 3.2 percent of the U.S. beer industry’s case sales and 5.2 percent of dollar sales, according to Nielsen.

Several craft brewers and beer-focused restaurateurs say they have not had to cut prices to attract drinkers. Prices for craft beers have risen more than 4 percent this year — an increase of $1.44 per case in supermarkets — according to Information Resources Inc.

In this economy, that’s "remarkable," said Dan Wandel, senior vice president at IRI. "The craft beer segment has a lot of momentum."

At St. Louis Brewery, the makers of Schlafly beer are watching sales rise in Missouri and across the Mississippi River in Illinois. The company’s beer sales to wholesalers in Missouri and Illinois were up more than 30 percent in the year’s first half.

For St. Louis Brewery — which operates the Tap Room in downtown St. Louis and the Bottleworks in Maplewood — the spike in beer sales in stores across the metro area has helped compensate for flat restaurant sales. The company is in the middle of a renovation at Bottleworks that will allow it to brew thousands of additional barrels of beer per year.

"We’re now a brewery with a restaurant, instead of a restaurant with a brewery," said Dan Kopman, chief operating officer.

That might be a good thing, because bars and restaurants are weathering tough times.

At Morgan Street Brewery on Laclede’s Landing, co-founder Steve Owings said overall business was flat. The brewpub opened in 1995 and focuses on attracting visitors to downtown hotels and conventions as well as sporting events.

Banquets, which represent about a third of Morgan Street’s overall business, are fewer and farther in between these days. Morgan Street’s beer production is on pace to be flat compared with last year, or perhaps short by a couple of batches. With one month remaining in its fiscal year, the company had made 600 barrels of beer. That compared with about 690 barrels in fiscal year 2008.

Square One Brewery near Lafayette Park and its sister brewpub, Augusta Brewing, are boosting production to keep up with bigger sales. Augusta’s production of beer is up about 27 percent compared with last year, and Square One is up 5 percent, said Steve Neukomm, owner of the establishments. Augusta might brew 550 barrels or more this year, he said.

"This year, we’ve actually been running very well," said Neukomm, who opened Square One in 2006. "I’ve been very, very happy. I almost don’t want to say something and jinx it."

Still, people have noticeably cut back on visits to bars and restaurants. That has been a challenge for Kansas City-based Boulevard Brewing, which draws 55 to 60 percent of its business from draft beer sold at such establishments.

Boulevard, one of the biggest craft brewers in the U.S., expects to make about 150,000 barrels of beer this year and is planning an expansion that will add another 60,000 barrels of capacity. But its sales in Missouri are basically flat this year.

The recession has taken a psychological and emotional toll even on folks who didn’t lose their jobs, benefits or even much investment holdings, said Bob Sullivan, Boulevard’s vice president of marketing. "They’ve kind of been holed up in their houses," said Sullivan.

But the new dynamic of eating and cooking at home also creates opportunity for Boulevard, which is paying more attention to grocery chains and other key retailers. Boulevard is putting on beer and food pairings at Schnucks stores. There are also radio commercials — featuring a voice-over by actor Matthew McConaughey — that encourage visitors at Price Shopper stores to grab a package of Boulevard Wheat along with prime cuts of beef.

"Certainly in tough economic times, drinking a good beer is an affordable luxury," said Nielsen’s Lake. Craft beer has "a lot of legs and a lot of room to grow."

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Brenda Rundle bought a Dell laptop at a Future Shop store in Toronto.

Her computer froze up last April, requiring a major repair by Future Shop.

The same thing happened in June.

"It consistently keeps losing memory," says Rundle.

"Eventually, it won’t even turn on."

She found that the manufacturer and retailer were doing little more than pointing fingers at each other when asked for help.

"I’ve been caught in the middle with a $1,400 paperweight, while spending money on Internet service," she complained.

Dancing a tango with two partners is no fun.

Recognizing the frustration factor, Future Shop’s head office took action quickly.

"Here’s what we’ll do," said spokeswoman Shannon Kidd.

"We’ll pick up and courier the laptop to our service depot in Toronto; we’ll diagnose, detail and repair the problem; we’ll courier it back to her home; and we’ll expedite the repair so the delay is minimized."

Future Shop also offered her an extended one-year warranty on her Dell laptop and a replacement if she had another issue with it during that time.

Dell Inc. started selling through retail stores in 2007, after selling online and over the phone before.

"Dell works with trusted retail partners such as Future Shop that strive to offer the best available customer service," says Gretel Perera, a spokeswoman for the Austin, Tex.-based manufacturer.

"In this case, we agree with the options and extended service that Future Shop has offered to the customer.

"The inconvenience caused to the customer is regrettable, but we trust Future Shop is doing everything in its power to accommodate the customer’s needs."

Some people who buy directly from Dell also write to me, asking for help.

Mike Delmar bought a Dell laptop in September 2006, along with a three-year extended warranty that covered on-site repairs lowest fee payday loans.

After shelling out money for several repairs not covered under the warranty, he refused to pay any more to fix a faulty laptop battery.

After I contacted Dell spokeswoman Janet Fabri, Delmar received a new battery, but had to keep the details confidential.

Ed Berlot told me about his $600 Dell monitor, bought last July, that had been replaced four times with refurbished models.

He said each monitor was replaced with a minimum of hassle under a three-year warranty that covered shipping costs. But he wanted help in getting a new monitor, not refurbished.

Dell gave him what he wanted three months ago – and the new one "works like a charm," he told me.

I’m in favour of a lemon law for computers: Once a repair has to be done three times in a row, a replacement is mandatory.

Future Shop already has a "three strikes and you’re out" provision in the extended warranties it sells.

Meanwhile, Lior Hershkovitz found a way to get faster service from Dell.

He has a brand-new laptop whose monitor was defective on receipt.

He didn’t want to ship it back and wait a month for a new one, custom-built to his specifications.

"I had only 30 days to get an exchange or a refund," he said.

"After that I’m at the mercy of their warranty.

"So I had to act quickly."

So, he went online and found an email address for founder Michael Dell, michael@dell.ca, at the Consumerist website.

That little exercise apparently did the trick.

An hour after he wrote a message, he got a call from Dell’s head office, promising to exchange his computer more quickly (within nine days).

Write to onyourside@thestar.ca or check the On Your Side blog at www.ellenroseman.com

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