Financial News

State Treasurer Dean Martin has pulled out of the race for governor of Arizona and will support Gov. Jan Brewer in her re-election bid.

Martin said in a release that he didn’t want the primary race for governor to be a “distraction,” in a time when “serious debate about the fiscal condition of our state is needed.”

Martin’s term will end in December, and he said at that time he will take some “much-needed time off.”

The full text of Martin’s letter is below:

It has been an honor to serve the people of Arizona. Public service takes dedication and many long hours to accomplish the business of the people who elected us. I am humbled to have had the support of the people for these past 10 years.

Elected office was never my intended career path; I am a small business owner who was drafted to run for the Arizona State Senate and then later Arizona State Treasurer. I am proud of my service and I am forever grateful for the support you have given me over the years. I especially want to thank my friends and colleagues who stood by my side last year during the tragic death of my wife Kerry and my son Austin. I will never forget your support.

Today, I am announcing that I am suspending my campaign for Governor of Arizona. During a time when the Obama Administration has filed a frivolous lawsuit against our great state, a budget deficit is looming, and our economy is still shaky, I feel a contested primary would be a distraction. While a serious debate about the fiscal condition of our state is needed, the heavy hand of the Obama Administration will not allow this debate to continue. I fully intend to support the Governor in her battle with the Obama Administration and its relentless attack on the people of Arizona.

In that regard, I urge the Governor to file suit against the Federal Government for the costs of not securing our border no checking account payday advance. Earlier this year I sent former Arizona Governor and now Homeland Security Secretary Janet Napolitano a bill for one billion dollars of uncompensated costs due to incarceration of illegal immigrants who have committed felonies in Arizona. This is a good start and trust the Governor will follow through. As a state we need to stand together to fight the overreaching federal government that has failed to secure our border with Mexico.

I want to thank the countless volunteers who have been part of this campaign since January. Their dedication to the campaign and Arizona is second to none. But our state and the residents of Arizona are more important than playing politics. The Obama Administration’s lawsuit is a blatant attempt to divide us and I will not be part of the problem; rather I intend to be part of the solution. Attorney General Terry Goddard, is not willing to enforce our laws and is instead playing the role as Obama-defender-in-chief. I got into this race because I did not want to see Goddard become Governor. This is still my goal, and is the reason I have made this decision to suspend my campaign.

Governor Brewer is going to need all our help to shoulder the burden of defending Arizona from the federal government. It is our duty to stand together as Arizona residents against an intrusive federal bureaucracy.

While my service to this state as an elected official will come to an end in December, I will continue to serve in other ways. After taking some much needed time off, I will be focusing my efforts on the charitable foundation we established, MartinCharities.org to continue my late wife Kerry’s spirit of service to the community in water safety and financial literacy.

Thank-you and God Bless the great State of Arizona.

Dean Martin

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Arts and crafts retailer Hobby Lobby Stores Inc. has increased the minimum wage for full-time hourly employees to $11 per hour. The employees affected previously made $10 per hour.

The change in pay will effect 9,600 Hobby Lobby employees nationwide.

The company also raised its part-time hourly wage to $8 per hour.

There are 22 Hobby Lobby stores in North Texas.

The minimum wage increase also will benefit the company’s affiliated businesses – Hemispheres and Crafts Etc cheap pay day loans.

The Oklahoma City-based company said its minimum wage is now 52 percent above the national minimum of $7.25 per hour.

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Maricopa County Attorney Andrew Thomas is stepping down to run for Arizona attorney general.

Thomas spokesman Jason Rose said the Republican prosecutor's last day in office will be April 6.

Thomas is a close ally of Maricopa County Sheriff Joe Arpaio, backing Arpaio's immigration raids and crime sweeps. The two also have battled with the Maricopa County Board of Supervisors and U.S. Circuit Court judges over immigration issues, county budgets and the construction of new court tower in downtown Phoenix.

Thomas' entry sets up a GOP primary race for attorney general against Tom Horne, the state's superintendent of public instruction.

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Europe’s unemployment rate unexpectedly increased to 10 percent, the highest in more than 11 years, as companies cut costs in the wake of the worst recession in more than six decades.

November’s euro area jobless rate rose from a revised 9.9 percent in October, the European Union statistics office in Luxembourg said today. That’s the highest since August 1998. Economists forecast a November rate of 9.9 percent after the 9.8 percent initially reported for October, a Bloomberg survey showed. The euro-area economy expanded 0.4 percent in the third quarter from the previous three months, according to a separate report.

European companies are cutting jobs and paring wages to shore up earnings battered by the global slump. While economic confidence has risen to a level last seen before the 2008 demise of Lehman Brothers Holdings Inc., a surge in energy costs and a stronger euro threaten to damp the recovery.

“We’ll probably see further gains in unemployment over the coming months, with the jobless rate peaking at 10.7 percent in the second half,” said Juergen Michels, chief euro-region economist at Citigroup Inc. in London. “That’s obviously bad news to consumers, which will be hurt by job cuts, lower wage growth and rising energy costs.”

The euro pared its gains against the dollar after the data and traded at $1.4317 at 10:31 a.m. in London, up less than 0.1 percent on the day. The yield on the German 10-year benchmark bond rose 0.2 basis point to 3.38 percent.

Consumer Spending

The euro-area economy returned to growth in the third quarter after governments spent billions of euros on stimulus programs to bolster spending. Still, corporate investment fell 0.8 percent in the quarter and consumer spending dropped 0.1 percent, today’s data showed. The European Central Bank last month kept borrowing costs at a record low and said it will exit some unconventional measures as the recovery progresses.

In Germany, Europe’s largest economy, unemployment unexpectedly declined in December, keeping the jobless rate at 8.1 percent, the Federal Labor Agency said on Dec. 5. German Chancellor Angela Merkel’s Cabinet extended the so-called short- term work program for a year from this month, allowing companies to continue tapping federal aid to help pay wages direct payday loans. As many as 140,000 people were on short-term work last month, the Federal Labor Agency said on Jan. 5.

Industrial Orders

With a 94 percent surge in oil prices over the past year threatening to crimp earnings and the euro’s 5.2 percent ascent against the dollar over the same period making exports less competitive, companies may remain reluctant to add workers. European industrial orders dropped more than economists forecast in October from the previous month.

Siemens AG, Europe’s largest engineering company, last month posted its first quarterly loss in a year and forecast a drop in 2010 earnings. The Munich-based company cut its global workforce by 3.6 percent in 2009 to weather a slump in orders.

Paris-based Accor SA, Europe’s largest hotel company, eliminated 1,000 jobs in France last year. ThyssenKrupp AG, Germany’s largest steelmaker, said in November that it plans to cut about 20,000 jobs.

With the euro-area jobless rate forecast by the EU to reach 10.7 percent this year, consumers may keep a rein on spending. European retail sales posted the biggest drop in 13 months in November, the statistics office said yesterday.

‘Significant Doubt’

“Significant doubt and uncertainties remain about the future strength of consumer spending,” said Howard Archer, chief European economist at IHS Global Insight in London. “Businesses may well remain cautious in their employment and investment plans for some time to come.”

At 19.4 percent, Spain had the highest unemployment rate in November among the 16 countries using the euro, today’s report showed. Austria and the Netherlands had the lowest jobless rates with 5.5 percent and 3.9 percent, respectively. The number of unemployed people rose by 102,000 to 15.7 million from October, the statistics office said.

Euro-region gross domestic product declined 4 percent from a year earlier in the third quarter, instead of a previously reported drop of 4.1 percent, today’s data showed.

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Wells Fargo, citing the need to make cuts in its Menomonee Falls real estate resource center, will permanently lay off 26 employees beginning in February 2010.

The San Francisco-based financial services firm (NYSE: WFC) said in a notice released late Friday that it will lay off 19 loan servicing specialists, four loan documentation specialists and three administrators or supervisors. The employees work in the Wells Fargo office complex at 200 Woodland Prime.

"We regularly reveiw and adjust our staffing levels to match the needs of our business," Wells Fargo said in its layoff notice to the Wisconsin Department of Workforce Development.

The company said it expects most, if not all, of the laid off employees to accept paid leave benefits based on years of service and compensation levels. The employees will continue to receive health care benefits for an unspecified period, Wells Fargo said.

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The total number of bankruptcies filed in the third quarter surged 33% in 2009 and is at the highest level since 2005, according to data released Wednesday.

The American Bankruptcy Institute, an industry research firm, said 388,485 bankruptcies were filed during the last quarter, compared to 292,291 filed during the same period in 2008, according to data released by the Administrative Office of the U.S. Courts.

Filings for the first nine months of the year climbed 35% to 1,100,035, compared to 841,496 filings during the same period in 2008. A total of 1,117,771 bankruptcies were filed last year.

"The spike in bankruptcy filings for both consumers and businesses reflect the continuing effects of today’s weak economy," said ABI executive director Samuel Gerdano in a statement. "With unemployment surpassing 10% and credit to businesses remaining tight, consumers and businesses are increasingly turning to the financial relief of bankruptcy."

Bankruptcies are at the highest level since 2005, when 2,078,415 were filed before Congress passed amendments to the Bankruptcy Code, said ABI.

In October 2005, Congress implemented legislation making it more difficult for filers to prove they should be allowed to clear their debts in a Chapter 7 bankruptcy, forcing more to file under Chapter 13. The law triggered more Americans to rush to file for bankruptcy in the months before the law went into affect.

The ABI report said business bankruptcy filings rose 32% in the third quarter of 2009 to 15,177, and filings for the first nine months of the year totaled 45,510, topping the total 43,546 business bankruptcies filed in 2008.

Personal bankruptcies increased 33% to 373,308 during the last quarter, led by a 42% hike in Chapter 7 filings, which totaled 265,721. The number of consumers filing Chapter 13 bankruptcies rose 15% to 107,142 filings in the third quarter, according to ABI.

During a twelve-month period ending Sept. 30 2009, the report said total filings increased more than 34% to 1,402,816, compared to 1,042,993 in the same period of 2008.

Nevada had the highest rate per capita filings in the country, with 10.49 residents per thousand filing for bankruptcy in the year ended Sept. 30. The state also had the highest rate of filings for chapter 7 bankruptcies at 7.53.

Tennessee had the highest rate of filings for Chapter 13 bankruptcies in the 12-month period with 4.36 people per thousand. 

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Rogers Communications Inc. says it's laying off about 900 employees across Canada, mostly in executive and management positions, in an effort to streamline operations as it grapples with intensifying competition.

A spokeswoman for the telecommunications and media giant didn't give a precise figure for the number of people affected but said the layoffs represent three per cent of the company's total workforce of 30,000 across the country.

"The goal was to streamline the organization, remove the number of layers and enable quick and faster decision making," said Rogers spokeswoman Terrie Tweddle in an interview Thursday.

Areas of the company affected by the cuts include marketing and communications, human resources, and technology support operations.

Tweddle added that the cuts have a minimal effect on "frontline" operations, such as call centres and customer services.

"We actually continue to hire and invest in resources, particularly in customer-facing areas, while we're going through the reorganization," she said.

The job cuts come as Rogers, which owns Canada's largest wireless phone service, faces heated competition from established rivals Bell and Telus and new entrants who plan to offer cheaper wireless airtime packages.

This holiday season is considered crucial for Rogers because it's the first time the company hasn't held the exclusive rights to the popular iPhone in Canada. Both Telus and Bell now offer the device, which was previously only available through Rogers Wireless and its Fido brand.

Both BCE Inc.'s Bell and Telus hope that holding the iPhone will help them lure away some of Rogers' customer base before new competitors enter the market next year.

Wireless profits are a crucial piece of Rogers' overall operations, and in the third quarter represented more than 70 per cent of the company's overall operating profit of $1.15 billion.

Industry analyst Carmi Levy of AR Communications Inc. said that while Rogers is facing pressure from its competitors, it's also having to respond to subscribers who demand lower-priced wireless packages.

"The industry is facing a bit of a double-edged sword. Consumers are demanding more service for less money," Levy said.

"As a result, service providers need to raise the level of their game by delivering richer, more complete services while at the same time holding the line on costs."

Rogers also owns numerous publications, broadcast outlets, specialty cable networks, the Toronto Blue Jays baseball team and Rogers Cable, which dominates Ontario's largest urban areas.

Rogers announced separately on Thursday that it has increased its stake in Canada's fourth-largest cable company, Cogeco Cable Inc. and its parent Cogeco Inc.

Rogers says it spent a total of $163 million cash, plus commissions, to increase its minority stakes in the two Montreal-based companies, which are controlled by the founding Audet family through their ownership of multiple-vote shares.

The Cogeco cable systems serve communities in an area that stretches from the tip of southwestern Ontario to the Gaspe region in eastern Quebec.

As a result, Cogeco is Ontario's second-largest cable provider after Rogers and Quebec's second-largest cable company after Quebecor's Videotron.

In September, the Rogers announced plans to further integrate its cable and wireless businesses to better respond to its customers.

"Our industry is in transition with products and networks converging, product cycles maturing and customer expectations increasing. To remain the industry leader, we need to work and operate differently," Rogers president and CEO Nadir Mohamed said at the time.

Even before that, Rogers had laid off an unspecified number of employees in its media division last December. Some external estimates suggested that about 100 jobs were affected, including staff at the Blue Jays baseball team operations and Citytv stations, though the company refused to confirm the amount.

"Rogers is, in effect, testing the waters," Levy said of the recent layoffs.

"They're slicing off relatively thin amounts of their infrastructure to see what works in today's business environment. After this 900 employee layoff they'll likely take some time to measure the impact on their ability to deliver services and see if subsequent cuts are needed."

Bell and Telus could mirror the Rogers cuts within their own operations before new wireless entrants Public Mobile and DAVE wireless debut next year, Levy suggested.

"I'd suspect they're all looking at their employee levels," he said.

"They need to clean up their house before the neighbourhood changes."

On Tuesday, a judge in B.C. decided that Rogers cannot continue to claim it has "Canada's Most Reliable" wireless network without qualification. The decision followed a request by competitor Telus Corp. to prevent Rogers from making the statement in its advertisements. Rogers says it plans to appeal.

Shares of the company fell 54 cents to $32.21 on the Toronto Stock Exchange in the afternoon.

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U.S. merchants suffered one of the biggest jumps in shoplifting and other retail crimes over the past year, a trend that cost the average American family about $435, according to a new report Tuesday.

Retail crimes such as shoplifting, employee theft and supply chain fraud rose 8.8% in the United States, to $42.2 billion, in the year ended in June, according to the 2009 Global Retail Theft Barometer report from the U.K.-based Center for Retail Research. In the prior year, retail crimes rose 1.5%.

"It is a shocking increase and something that retailers need to get to grips with quickly," said Joshua Bamfield, author of the report, which identified top trends in retail crimes in 41 countries, including the United States, China, India, Europe, Japan and Australia.

The report was based on a confidential survey of 1,069 large global retail companies

Bamfield said the 8.8% rise in retail crimes in the United States — the biggest retail market in the world — was largely spurred by the recession and affected about 1.6% of the nation’s total retail sales in the 12-month period.

Reflecting the global scope of the downturn, he said retail crime rose 5.9% to $115 billion.

He said employee theft cost merchants about $18.7 billion in the period, shoplifting cost sellers $15 billion, and processing and other supply chain errors or fraud cost retailers about $6.8 billion.

What’s worse is the cost of store crimes to consumers, which the report estimated at being about $435.17 per family over the past year.

"Prices on products would be lower on average if merchants did not have to incur lost revenue from store crimes," Bamfield said.

Most-stolen products

The report said thieves bagged a wide range of items, but tended to focus on expensive popular branded items payday cash advance. These included perfume, cosmetics, razor blades, small leather products and electronics such as the Wii gaming system, iPods and cellphones.

Satellite navigation equipment and laptops were also vulnerable categories, the report said. In supermarkets, thieves were targeting fresh meat and cheese.

Bamfield said the biggest driver of store theft is for resale. "It’s primary to feed the habit for extra money," he said. "A lot of it funds criminal activity. So there’s a societal cost on top on an economic cost of these trends."

And while merchants are at the frontline of these crime sprees, Bamfield said the repercussions are felt from manufacturer to store shelf.

"Retailers don’t accurately know how much merchandise they have in stock if deliberate errors are made in processing that information," he said. "This can affect suppliers managing their production. Manufacturers and distributors are are impacted."

What’s more worrying is that Bamfield said this uptick in retail crimes could last for a while. ‘I think this trend is more than just a temporary response to the recession," he said.

For its part, the National Retail Federation (NRF) maintains that merchants cannot be solely responsible for trying to prevent organized retail crime. The group said tougher federal legislation is needed to contain the problem

"New federal laws will make organized retail crime part of our federal criminal statutes, giving law enforcement officers and prosecutors the tools they need to put these criminals behind bars," Joe LaRocca, an NRFofficial, said in a report earlier this month. 

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OTTAWA–Statistics Canada says wholesale sales increased in July for the second consecutive month, mainly as a result of higher sales in the auto sector.

Sales in current dollars rose 2.8 per cent to $41.7 billion.

The data shows stronger sales in five of the seven wholesale trade sectors, although there were drops in the food, beverage and tobacco products and farm products sectors.

Automotive products jumped 14.2 per cent to $6.8 billion, reaping the benefits of higher exports and imports as the sector continued to rev up again as Chrysler and General Motors factories resumed production following spring closures.

It was the sixth consecutive monthly increase for the sector, although sales are still 13.5 per cent below the level of July 2008.

Wholesale sales rose in eight provinces in July.

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Balenciaga, the trendy fashion house favoured by actresses such as Charlotte Gainsbourg, is the fastest growing brand within the Gucci Group and meeting all pre-crisis targets, its head said on Monday.

But the group as a whole, whose brands include Gucci and Stella McCartney, does not believe good days are around the corner and it is preparing itself for a continuing downturn just as it is for an eventual upturn, he added.

“I am not more optimistic now than I was a year ago,” Robert Polet told Reuters in an interview on the fringes of the Venice film festival. Polet was attending festival to grant the Gucci Group Award which pays tribute to an artist’s contribution to film-making.

“I see the world as being prepared for everything. You do not want to miss an upturn when the upturn comes but you do not want to build up inventories either.”

Polet also said he could not predict whether Christmas 2009 would be better than it was last year and declined to be drawn on the group’s summer trading.

Gucci Group, the world’s third largest luxury company behind LVMH and Richemont in terms of sales, is owned by French retailer PPR which is pursuing a combative plan centered on cost-cutting and cash-preservation.

Balenciaga, which became profitable in 2005, was elevated to the status of a main strategic brand within the Gucci Group two years ago alongside Gucci, Bottega Veneta and Yves Saint Laurent, which meant more resources were allocated to it quick payday loans.

“Balenciaga is the fastest growing brand in the group and it is delivering on all the things it set out to do two years ago,” Polet added.

Acquired by the Gucci Group in 2001, Balenciaga has become the darling of fashionistas under the creative stewardship of Nicolas Guesquiere, the brand’s designer since 1997.

A person close to Gucci Group, who did not wish to be identified, said Balenciaga has seen sales grow in “double-digit terms” for the past three years on a reported and comparable basis.

Polet declined to give precise figures on Balenciaga’s growth and profitability.

CRISIS-PROOF

Even though Balenciaga is starting from a lower base than more established brands, its performance makes it part of the Pantheon of luxury products enjoying relatively crisis-proof growth such as Louis Vuitton and Hermes leather goods.

Most luxury products’ sales have collapsed since last year as the industry suffered its deepest spending slump in recent memory.

Consultancy Bain & Co estimated global luxury sales dropped between 15 and 20 percent in the first half and predicted overall they would fall by about 10 percent at constant exchange rates in 2009 thanks to improved trading in the second half. 

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