Actual finance blog

Two prominent liberal politicians have pulled out from a panel tasked with drafting a new constitution after Islamists won a majority of seats on the body.

The 100-member panel selected over the weekend includes nearly 60 Islamists and only six women and six minority Christians. The members were chosen by parliament’s two chambers, where Islamists have a majority.

The two pulling out are independent lawmaker Amr Hamzawy and veteran Christian activist Mona Makram Obeid paperless payday loans.

They announced they were quitting the panel on Monday on their Twitter accounts.

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The number of first-time filers for unemployment benefits fell to a four-year low last week, hinting that solid job growth likely continued in March.

About 348,000 people filed for initial jobless claims in the week ended March 17, down from the previous week’s 353,000 claims, the Labor Department reported Thursday.

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Obama battles job crisis

Before Obama even took office, America had lost 4.4 million jobs. Track his progress since then.

Economists surveyed by Briefing.com had predicted the newly unemployed would file 355,000 claims payday loans for bad credit.

Unemployment claims are considered a key indicator of the job market’s strength, and recently they have fallen back to levels consistent with a healthier labor market.

Check the unemployment rate in your state

Even when the economy was stronger in 2005 and 2006, it was not uncommon to see Americans file around 350,000 new claims a week, due to usual turnover.

Employers have now added more than 200,000 jobs each month since December, and a decline in unemployment claims suggests job growth may have continued at that pace in March, said Jennifer Lee, senior economist with BMO Capital Markets.

Since the initial claims number can be volatile from week to week, economists often look to the four-week moving average as a broader gauge of the labor market’s health. Lately, that figure has also been on a gradual decline.

Meanwhile, continuing claims fell. About 3.35 million people filed for their second week of unemployment benefits or more in the week ended March 3, the most recent data available. That’s down 9,000 from the previous week.  

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Emerson said today it has purchased Avtron Loadbank, a Cleveland-based firm that makes testing equipment for standby power generators.

Avtron will become part of the Ferguson-based manufacturer’s Network Power division, which has seen its data center business grow in recent years. The company, which has about 200 employees and three factories in the U.S. and U.K., makes equipment that tests the emergency power supplies that keep data centers up and running if normal power fails.

“The acquisition is a perfect fit with our existing services network, expanding the touch points we’re able to provide data center managers,” said Armand Visioli, president of the Emerson division that Avtron will join.

Avtron Load Bank is a division of Avtron Holdings, LLC, which is owned by Morgenthaler Private Equity. Terms of the deal were not disclosed.

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The Greek government

The economy grew at a slightly faster pace in the final three months of last year, and Americans earned more income than previously reported. That could set the stage for stronger growth this year.

The Commerce Department said Wednesday that the economy expanded at a 3 percent annual rate in the October-December quarter _ the fastest pace since the spring of 2010. It exceeded the previous estimate of 2.8 percent. And it was better than the third quarter’s 1.8 percent growth rate.

The growth estimate was revised up because consumers spent more than first thought, and businesses cut spending by much less. Imports rose by a smaller amount.

The report also showed that incomes rose in the second half of last year by more than previously estimated. Americans saved more, too.

Much of the growth in the fourth quarter was driven by companies restocking their shelves. Many had cut their inventories over the summer, when they thought the economy was on the verge of a recession.

That didn’t happen. In fact, the economy has steadily improved since then. Still, companies likely scaled back the pace of their restocking at the start of the year to match the pace of consumer spending. That should slow growth in the current quarter.

Economists predict growth at an annual pace of 2 percent in the January-March quarter, according to a survey by the National Association of Business Economics. Growth will reach 2.4 percent for the full year, up from 2011’s increase of 1.7 percent, the survey found.

A host of recent data has made many analysts more optimistic about this year’s prospects. Companies have stepped up hiring, pushing the unemployment rate down for five straight months to 8.3 percent.

U.S. factories boosted output last month and December was their strongest month of growth in five years. Consumer confidence rose to its highest point in a year this month, the Conference Board reported Tuesday. That could signal Americans are ready to step up spending, which would fuel more growth. Consumer spending accounts for 70 percent of economic activity.

Some trends likely to slow growth in the current quarter are still good for consumers. The warm winter weather will likely mean Americans won’t have to spend as much to heat their homes. But that technically will lower the economy’s growth rate.

The economy was held back in the fourth quarter by a big drop in government defense spending. Defense spending is unlikely to be much of a factor in the current quarter, economists say.

Growth could be slowed or even derailed this year by rising gas prices, which have jumped 30 cents in the past month. That forces consumers to spend more for the same amount of gas and leaves less money for other purchases. A sharp rise in gas prices early last year choked off growth after companies began the year with a burst of hiring.

But so far, the increase isn’t enough to cause a repeat of last year’s disappointment, economists say. With hiring accelerating and incomes higher, consumers are better able to afford higher prices at the pump.

And the prices of other goods also jumped last year, particularly food, as well as other energy sources such as natural gas. But natural gas costs have plummeted recently while food prices are rising at a much slower pace. Those trends should offset some of the squeeze on spending from pricier gas.

The government makes three estimates of the gross domestic product for each quarter. The GDP is the economy’s total output of goods and services and includes everything from autos to utility output to haircuts. Each revision is based on more complete economic data.

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Federal Reserve Chairman Ben S. Bernanke is trying to compensate for the damage lawmakers threaten to inflict on the U.S. economy, even as Republicans skewer his stimulus efforts for risking inflation.

The potential drag from fiscal restraint contributed to the rationale behind policy makers

Just two years after it was rescued and reconstituted through bankruptcy and a government bailout, General Motors Co. cruised through 2011 to post the biggest profit in its history.

The 103-year-old company, leaner and smarter under new management, cut costs by taking advantage of its size around the globe. And its new products boosted sales so much that it has reclaimed the title of world’s biggest automaker from Toyota.

GM may have a hard time breaking this record in 2012 because it is losing money in Europe and South America, and U.S. sales growth slowed in the last three months.

But the company’s performance in North America and Asia still helped it earn $7.6 billion for the year, beating the record of $6.7 billion set during the truck boom in 1997.

The profit won’t stop the debate about spending $49.5 billion in taxpayer dollars to save GM. But it did drive up the company’s stock price, which could help the government get more of its money back.

The bailout of GM and Chrysler Group LLC, begun by George W. Bush and finished by Barack Obama, remains a major issue in this year’s presidential campaign. It’s so politically charged that even a Super Bowl ad celebrating Chrysler’s rebirth caused arguments.

GM, which released its earnings Thursday, performed best in its home territory, posting a $7.2 billion pretax profit in North America. The numbers were so good that 47,500 blue-collar workers will get $7,000 profit-sharing checks, the maximum allowable under their new union contract. International Operations, which includes Asia, made $1.9 billion before taxes, but that was down from 2010.

GM’s cost cuts, and its outlook for this year helped to push up the stock price by almost 9 percent to $27.08. The company said it trimmed costs by $500 million in the fourth quarter alone mainly by consolidating advertising agencies and engineering operations. A prediction that costs wouldn’t rise this year wowed investors, especially since other automakers have forecast rising costs, said Itay Michaeli, an analyst for Citi Investment Research.

“That was a very pleasant surprise,” he said.

GM also was optimistic about sales and revenue. It sees its global market share holding steady at 11.9 percent, and if global auto sales rise as expected this year, GM’s slice of that would also increase no fax cash loans.

That’s especially promising, since GM managed to make money last year with industry-wide sales in the U.S. at a historically low 12.8 million. Sales this year could rise to 14 million.

The company expects to charge more for its cars and trucks this year, but warned that the prices could be pressured as the market shifts toward smaller, less-expensive vehicles.

CEO Dan Akerson hinted at a better year for GM in 2012, saying that the company will build on the 2011 results as it brings more new products into the market.

“The outlook here is quite favorable for earnings growth,” said Citi’s Michaeli. “They’re keeping their costs really under control.”

That’s good news for the U.S. government, which still owns 26.5 percent of the company and needs more strong earnings to push up the stock price.

The government owns 500 million shares of GM, which it got in exchange for the $49.5 billion bailout. Through earlier stock sales and loan repayments, the government has recouped about $22.3 billion of that money. The remaining shares would have to double in price and sell for around $53 for the government to get back the rest.

Despite the big annual profit and optimistic outlook, GM still lost $747 million before taxes in Europe last year, and its losses are expected to continue until a restructuring plan takes hold.

Akerson said GM will have to cut its European factory capacity to match lower sales. South America lost money, too: $122 million for the year. GM’s fourth-quarter profit fell 8 percent, and its U.S. sales growth slowed in the quarter even as more Americans bought cars and trucks.

Also, GM’s U.S. stockpile of cars and trucks is growing, and that could force it to offer discounts, especially in competitive market segments like pickup trucks and midsize cars. In January, GM’s inventory was about 620,000, enough to supply its dealers for 89 days. That’s up by more than 100,000 from a year earlier, when GM had a 68-day supply, according to Ward’s AutoInfoBank.

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At first glance, there’s nothing the least bit unusual about the routine followed by Ben Griswold on any given workday.

He analyzes markets, crafts investment strategies and performs various other responsibilities assigned him by Kennedy Capital Management, a boutique Creve Coeur financial services firm.

All fairly normal in the world of finance, were it not for this:

Griswold is an intern.

The hand-wringing over the brain drain that siphons the best and brightest from St. Louis to New York, Chicago, San Francisco and other exotic locales (Minneapolis, anyone?) has gnarled a fair share of economic development knuckles in these precincts.

But there may be an antidote to St. Louis bidding farewell each Spring to newly-minted professionals that head for brighter lights the ink barely dry on diplomas from St. Louis University, Washington University and the University of Missouri-St. Louis (to name just a few).

It can be found in the paid internship programs offered by Kennedy Capital and its larger counterpart, Town & Country-based ScottTrade - two businesses that provide college students with far more than a single semester or a summer break to absorb the intricacies of the trade.

Companies that offer extended internships are the exception rather than the rule, said Peggy Gilbertson, intern coordinator at UMSL.

But the role of interns, she added, have thankfully evolved whether a college student is on the job for three months or three years.

“I’m definitely part of a team,” said UMSL student Ceri (cq.) Berble, an intern in the ScottTrade public relations department. “I don’t get coffee for anyone. I sit in team meetings and my ideas are heard. I’m not intimidated.”

The interns at both Kennedy Capital (12 currently) and ScottTrade (428 in company branches nationwide) further shatter the stereotype of college students relegated to menial tasks with zero professional value.

“I’d be embarrassed to ask our interns” to make coffee, said Caroline Dybala, the internship program manager at ScottTrade.

Basic economics guided Kennedy Capital co-founder Jerry Kennedy’s decision 20 years ago to hire interns for terms of as long as 36 months.

From a business perspective it makes little sense to show interns the exit just at the exact moment they were getting comfortable with the quotidian of institutional finance.

“There’s a lot to learn at the start,” said Alex Mosman, the manager of the intern cooperative learning program. “And if you only had a summer or a semester you’d learn the basics and then leave.”

A fair number of the 185 sophomores and juniors hired by Kennedy Capital out of SLU, WashU, UMSL and other schools over the past two decades have in fact stuck around a lot more than three years.

In fact, 25 percent of the full-time employees at the company’s Olive Boulevard headquarters are former interns, Mosman and the firm’s chief financial officer included.

The same is true at ScottTrade which moves between 50-60 percent of its interns into permanent positions.

ScottTrade launched its extended length internship 12 years ago as a farm system to accommodate job growth at its network of branch offices, said Caroline Dybala, the internship program manager.

Dybala knows first hand the benefit of the long-term internship.

She arrived as a ScottTrade intern in 2000 with a goal of working in human resources but uncertain about where she might fit into the field following graduation from xxxx.

Her six months at ScottTrade cleared the picture and paved the way for Dybala’s current position.

By encouraging college students to stay on the job longer than standard internships, the ScottTrade and Kennedy Capital programs support to the notion that an investment in the personal and professional of young employees is an investment in the community as well.

Kennedy Capital in fact estimates that at least 60 percent of its former interns have remained in St. Louis. (The numbers for ScottTrade are more difficult to track since its interns are scattered around the country.)

The first three months former intern Alex Mosman spent at Kennedy Capital in the capacity of 20-hour-a-week intern may have been “overwhelming.”

But he attributes a big part of steep learning curve to his invaluable interaction with the top company executives.

“You’re thrown into it right away,” said Mosman, now a full-time research associate and the manager of the firm’s intern cooperative learning program. “You’re sitting in on management meetings and having conversations with (the chief financial officer).”

Research director Michael Bertz notes that Kennedy interns as full members of the team are expected to interact with clients and do their share to bump up the firm’s bottom line.

Likewise at ScottTrade where Dybala says an intern is usually the company representative greeting customers that walk through the door of its branches.

Griswold’s tenure as a Kennedy Management intern will earn him him a valuable entry for the resume he’ll send to prospective employers following graduation next year from SLU with a bachelor’s degree in finance and a graduate degree in accounting.

As the head intern charged with coordinating the schedules of seven fellow undergrads in the finance department (four other interns serve in other Kennedy Capital departments) Griswold will bring supervisory experience to his first job out of college.

“I’m not saying I was a 100 percent proficient from day one. But I communicate here constantly with professionals and I won’t miss a beat wherever I go,” Griswold said.

The reluctance of companies large and small to hire untested graduates straight of college have long-since turned real-world internships into a pre-requisite for full-time employment.

The question facing St. Louis businesses is whether to make worthwhile internships available locally or open the door for top-drawer college students to look elsewhere.

For the answer, the local business community might want to consult Alex Mosman.

“You can leave St. Louis and take an internship somewhere else,” said Mosman. “But if you do that, you may be gone for good.”

QUOTE OF THE WEEK

“Don’t just always go out to lunch with, you know, a couple of your friends, but actually go out to lunch with people from other departments, from other companies, and explicitly address questions like, how do you see the industry changing? How do you do your job effectively? Is there anything I should learn from that in terms of how do I do my job effectively? Do you see interesting opportunities? And that’s not necessarily always a question of job transition. It can be. Those kinds of talking to other people, building those relationships, are, I think, the things that everyone needs to be doing.” - Reid Hoffman, co-author of LinkedIn and author of The Start-up of You.

Source: National Public Radio’s Morning Edition

BY THE NUMBERS

43 - Percentage of hiring managers who expressed concern the top talent in their organizations will voluntarily depart for other positions in 2012.

34 - Percentage of hiring managers working for companies that experienced voluntary turnover in 2011.

Source: Harris/CareerBuilder survey

FINAL WORD

“You know, it’s funny. I bet someone is going to listen to this and say, you know, if I went in to my boss at my workplace, and said, you know, I went out to lunch with this guy from another division, or another company entirely, and came up with this interesting idea, that they would say my boss doesn’t want to hear that.” - Morning Edition co-host Steve Inskeep’s response to Reid Hoffman’s observation.

“Well, then your boss is not really adapting to the modern world.” - Reid Hoffman

Source: National Public Radio’s Morning Edition

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President Barack Obama called for $1.4 trillion in fresh revenue from Americans at the top of the income scale, proposing higher taxes on wages and investments and limiting breaks for retirement savings and health insurance.

The tax proposals in the administration

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