Financial News

Japan’s economy grew faster than economists anticipated last quarter, reducing the risk of falling back into a recession even as deflation intensifies.

Gross domestic product rose at an annual 4.6 percent pace in the three months ended Dec. 31, the Cabinet Office said in Tokyo today, more than the 3.5 percent median estimate of economists surveyed. The GDP deflator, the broadest measure of prices in the economy, fell a record 3 percent.

Exports led the expansion, aided by a global recovery that prompted manufacturers from Panasonic Corp. to Nissan Motor Co. to raise their profit forecasts this month. An increase in consumer spending may not last as government stimulus measures fade and households expect prices to keep falling along with their wages, said economist Hiroshi Miyazaki.

“The benefits from the global recovery are spilling over,” said Miyazaki, chief economist at Shinkin Asset Management Co. in Tokyo. “The economy will keep recovering even if the government does little to fight deflation, but the risks are heightening that growth ahead will be slow.”

The yen traded at 90.15 per dollar at 3:20 p.m. in Tokyo from 90.03 before the report. The currency has gained 5 percent in the past six months, eroding exporters’ earnings. The Nikkei 225 Stock Average fell 0.8 percent, extending this year’s losses to 5.1 percent.

The world’s second-largest economy expanded 1.1 percent from the previous quarter, today’s report showed, more than the 0.9 percent median estimate of economists surveyed.

Revised to Zero

Third-quarter GDP was revised to zero from an annualized 1.3 percent growth, reflecting a change in how the Cabinet Office calculates exports and imports on a seasonally adjusted basis to account for the global trade collapse in 2008.

Overseas shipments increased 5 percent from the previous three months, the report said. Net exports, or shipments minus imports, added 0.5 percentage point to growth.

“Risks for a double-dip recession are receding,” Finance Minister Naoto Kan told reporters in Tokyo today. “We’re starting to see some bright signs emerge from the clouds, but we can’t be complacent.”

The GDP deflator’s year-on-year decline was the biggest since records began in 1955. Without adjusting for price changes, Japan grew an annualized 0.9 percent from the previous quarter.

The Bank of Japan, amid pressure from politicians, stepped up its fight against deflation in December, saying it “does not tolerate” price declines. Governor Masaaki Shirakawa and his colleagues, who will decide policy on Feb. 17-18, will keep the benchmark interest rate at 0.1 percent for all of 2010, according to all 17 economists surveyed by Bloomberg last month.

‘More Pressure’

“It’s likely that the Finance Ministry will put more pressure on the BOJ to implement more accommodative policies, highlighting today’s figures that point to deflation,” said Miyazaki at Shinkin Asset business cards. “That pressure is likely to run the BOJ into a corner.”

Compounding the woes from deflation, in the past month Standard and Poor’s has warned that the nation’s debt rating may be cut and Toyota Motor Corp., the country’s biggest automaker, has recalled 8 million vehicles because of accelerator and brake problems.

Kan said yesterday that the government will next month begin debating whether to overhaul the sales tax amid concerns about the widening deficit.

Chief Cabinet Secretary Hirofumi Hirano said today that the government must do its utmost to avoid another recession. Prime Minister Yukio Hatoyama, whose Democratic Party of Japan faces an upper-house election in July, received parliament’s approval for a 7.2 trillion yen ($80 billion) stimulus package last month.

Spearheading Revival

Asia spearheaded the export revival, led by China, Japan’s biggest overseas customer, which grew the most since 2007. U.S. demand is also improving after the nation’s GDP expanded the most in six years last quarter. Still, a report last week showed Europe’s economy almost stalled in the period, underscoring the frailty of the world recovery.

Panasonic, the world’s largest maker of plasma televisions, raised its operating profit forecast by 25 percent this month. Flat-panel TV sales rose 48 percent from a year earlier, driven by purchases in regions including China and South America.

Nissan Motor predicted a return to profit this fiscal year, scrapping an earlier loss estimate, citing government incentives that boosted demand for vehicles in China and Japan. The country’s third-largest carmaker expects net income of 35 billion yen in the year ending March 31, compared with an earlier forecast of a 40 billion yen loss.

A separate report today showed industrial production growth in December was revised to 1.9 percent from 2.2 percent.

Consumer Spending

Spending by consumers, which accounts for more than half of the economy, rose 0.7 percent in the fourth quarter, today’s report showed. Business investment climbed 1 percent, the first positive reading in seven quarters.

The gain in capital spending “signals a turning point in the economy toward a sustainable recovery,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo.

Even as exports improve, Japan’s expansion may lose momentum as the effects of stimulus spending at home fade.

“Consumption has been sluggish if you exclude purchases of autos and flat-panel televisions, which have received a direct boost from government stimulus,” said Ryutaro Kono, chief economist at BNP Paribas in Tokyo. “Many households perceive income declines since late 2008 not just as a result of the economy’s growth cycle but as permanent declines.”

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Within the next month, a subsidiary of the Erie County Industrial Development Agency is expected to award a new round of loans aimed at aiding minority-run businesses.

David Kerchoff, ECIDA assistant treasurer, said 89 applications were received for this year's $500,000 loan pool, under the minority entrepreneur program. From that, 57 made it to the second round of reviews. A third round whittled the list to 32 potential loan applicants.

From that pool, 10 businesses will likely be selected, Kerchoff said. Loans amounts will vary, according to the company's business plan and needs.

Kerchoff said he expects this year's awards to be named by mid-March.

The loans are run through the IDA's Buffalo and Erie County Regional Development Corp. affiliate. Nine of the 10 businesses that received assistance in the initial 2008 round remain in business. The only failure was the much-publicized One Sunset restaurant on Delaware Avenue, which received a $50,000 loan.

Kerchoff said the IDA remains hopeful it may, someday, see that loan repaid.

"Do we collect it?" Kerchoff said. "It's hard to say at this point."

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Brighton, a Clayton-based marketing and communications agency, hired Tom Shipley as vice president for interactive marketing.

Shipley began his career at Anheuser-Busch Cos. in 1989, and held a variety of positions in sales and marketing there, including senior director of industry development and senior director of Budweiser marketing.

His most recent job at Anheuser-Busch was as senior director of digital media and marketing.

He led the team responsible for all digital marketing and media initiatives for the Anheuser-Busch brand portfolio.
Shipley has a bachelor’s degree in American studies from the University of Dayton.

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The high-profile squabble that captivated late-night television for weeks comes to a close Friday, when Conan O’Brien makes his final appearance as host of "The Tonight Show."

O’Brien walks away from "Tonight" after just seven months with a severance package said to be worth $45 million, including $12 million for his staff, according to people familiar with the terms.

The payout is roughly equivalent to what NBC would have paid O’Brien for the remaining two years on his contract. Industry analysts say cutting ties with O’Brien was the best option for the struggling network.

"Even though it was hurtful for the business and individuals, it is the right business move," said Steve Farella, chief executive of media and marketing firm TargetCast tcm.

NBC, currently the lowest rated network, has suffered financially amid dwindling ad sales and stiff competition from cable networks. General Electric (GE, Fortune 500), the network’s parent, said Friday that NBC’s profit tumbled 30% in its latest quarter compared to last year.

O’Brien’s departure stems from a dispute over scheduling changes NBC sought to implement after it abruptly decided to cancel "The Jay Leno Show."

NBC launched "Leno" in an effort to save money on prime-time costs by airing content that was cheaper to produce during peak viewing hours.

"NBC did a Hail Mary in prime time," said Bill Caroll, director of programming at Katz Television Group. "They believed that they could change the economics of prime time payday loans guaranteed no fax."

But the show received lackluster ratings during its three month run, and NBC came under intense pressure from local affiliates to replace "Leno" with more popular programming.

"The volume of objections from affiliates drove them to take this step," said Steven Winoker, an analyst who covers NBC’s parent GE for Sanford Bernstein. "The best thing they can do now is put this behind them and move on."

Still, some industry analysts say the "Leno" experiment could have been a success if it had been given more time.

"It may have been a plan that was too far ahead of its time," said Brad Adgate, an analyst at branding firm Horizon Media. "NBC wanted to take a step forward and wound up taking a step back."

NBC is expected to fill the 10 p.m. ET slot vacated by "Leno" by programming perennial favorites such as the "Law and Order" franchise and the newsmagazine "Dateline." The network is also launching a new show starring Jerry Seinfeld called "The Marriage Ref."

"Clearly, they’re hoping to lead from strength in the 10 o’clock time period," Caroll said.

Looking ahead, Katz said Leno should do "reasonably well" when he returns to "Tonight" in March: "He has a core audience and more than a decade of success." 

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Anyone having to take care of business with the state of Colorado before the end of 2009 should plan to do it Wednesday, as most state government offices will be closed Thursday.

The New Year’s Eve closings are one of eight unpaid furlough days that some 15,500 non-essential state personnel are being made to take in order to help close a budget shortfall this fiscal year. The furlough days are expected to save a combined total of $27.2 million.

Among the offices closed Thursday are state driver’s license offices, the attorney general’s office, state administrative offices, state history museums, Division of Wildlife service centers and the Department of Public Health and Environment’s vital records office.

Essential state services that will remain open Thursday include the state unemployment benefits office, the state judicial branch, the Treasurer’s Office, the Secretary of State’s Office, Colorado State Parks and the transportation department’s snow plows and maintenance crews.

State offices also will be closed Friday for New Year’s Day.

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Jackie Krovblit’s heart is bigger than the 120-pound inspiration behind her company’s namesake, Big Dog Bakery.

Having instantly fallen in love with Trixie, her Great Dane and silent business partner, Krovblit opened Big Dog Bakery when she realized her "child" was too important for mass-produced pet food.

And now Big Dog Bakery is the big dog on Queen Street in the Beach – the only boutique pet store in the area that bakes products on the premises.

The bakery, located in the building that once housed the Three Dog Bakery, is decorated in a rainbow of colours. Cupcakes covered in blue, pink, white and cocoa icing sit in display windows. The shelves are stacked with cookies and empanadas for cats and dogs. Dog cakes are baking in an oven behind the counter.

Trixie greets customers with a wag of her tail. The gentle Great Dane is the hallmark of Big Dog Bakery. Her face is on every package of treats the stores sells.

Trixie "is my big dog in a little package," says Krovblit, who confesses, "I never thought I would have a dog. But when I got Trixie, my whole world opened up, like a lightning bolt."

Krovblit started Big Dog Bakery from her home in 2004. Making biscuits and treats in her toaster oven, she used Trixie and dogs in the park to figure what worked.

Big Dog then moved to Toronto’s Woofstock – a festival for dogs in the Distillery District – in its first year.

"They (cakes and cookies) are healthy – it’s like giving your dog something really special," Krovblit says. "Yes, the look is entirely marketing, it is for the person, the dogs can’t really see the colour but they can smell. So the dog will think, `What’s that?’

"It goes back to what makes something really palatable for the dog payday loans for bad credit. The market is there, so give people what they want. And the dog is going to feed off it and the person will get a kick out of it."

After her inaugural year at Woofstock, she started selling gourmet cakes, made with natural, human-grade ingredients and an assortment of dog treats through select stores around the GTA. It was in 2006 when she lost her job in the restaurant industry and put all her efforts into the bakery, which she opened in July.

Big Dog Bakery has since expanded to Home Sense locations throughout Ontario and Quebec at Christmas.

"I had to carry over from an existing store (Three Dog Bakery) with an American branding so it took a bit of work to convince people our product is better and healthier. All our bakery stuff is almost 100 per cent made in store. It’s a new concept so people need to realize that," says Krovblit.

Iced with either carob or cream cheese, the store sells about 40 customized cakes each month in flavours like Peanut Butter Bliss, Chop Lick ‘n Liver and Banana Rama.

Krovblit has also discovered the purrfect companion products for dogs – cat food. So Big Dog Bakery now includes freshly made gourmet cat treats in its menu.

"People these days really care (about their pets), and they want to know where things are coming from and everybody in our market and demographic consider the dog to be part of the family," Krovblit said.

"They want to give that dog a lot and they want them to live as long as possible. And why shouldn’t that dog be on the same level of health and nutrition (as its masters)?"

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Wind Mobile will announce its handsets and rates Wednesday and if online speculation is anything to go by, consumers will be pleased, though perhaps not surprised.

The company has refused to comment on rumours and leaks on blogs and online forums – some supposedly posted by insiders, others leaked by disgruntled ex-employees. But top industry analysts, who did not want to be named, said some of the information looked "dead-on," while adding some aspects were likely to change.

According to a posting on Howardforums.com, a site for cellphone junkies, Wind seems to be coming in with an expansive low-rate plan, with unlimited calling between the company’s subscribers and 100 minutes for $15 – twice the minutes of Telus Corp.’s discount Koodoo brand and Rogers Wireless Inc.’s Fido, which have similar $15 plans.

The posting, which has almost 50,000 page views, also lists a $35-per-month plan with unlimited provincial calling (but only 50 outgoing texts) and a $45 monthly plan that includes unlimited national calling and texting.

In interviews, Anthony Lacavera, chairman of Wind Mobile parent Globalive, has stressed that cheap pricing is not his strategy. Rather, he says, his goal is to provide value for money, good customer service and clear billing.

"It’s right in line with what we’ve expected, what the market has expected," one analyst said.

"That’s why you’ve seen the stock get knocked from the big three (incumbents Rogers, Telus and Bell Canada)."

Websites have also described the company’s data packages, pointing to a $10 social BlackBerry package and an unlimited mobile data plan for $35.

One analyst said he doubted whether the data would be truly unlimited, adding that "tethering" – effectively using a BlackBerry’s Internet service as a modem for a laptop – is unlikely to be included, as was suggested.

"It’s very difficult to give people unlimited data because it’s just so expensive," the analyst said.

The upstart wireless carrier’s launch was delayed by a Canadian Radio-television and Telecommunications Commission ruling that said Globalive was a foreign company and ineligible to operate in Canada.

It received the green light from Industry Minister Tony Clement last Friday, after cabinet concluded that the CRTC had erred in its decision payday loan. Almost all of Globalive’s debt and 65 per cent of its equity is held by Egyptian telecom giant Orascom Telecom Holdings SAE, which has cellular services in Greece, Italy and Algeria.

The delay has been costly. After the CRTC ruling, many of Wind’s 800 or so employees sat idle, and were then sent out volunteering in the community.

And the company, which previously said it was ready to launch, is now grappling with the actual process, and the difficulties that come with erecting a complicated network.

However, it is doing so without the established resources of the giant incumbents, one analyst said.

It is also unclear if Wind will have the BlackBerry at launch, since it sucks up a lot of bandwidth on the network and may get wonky service – a disaster for a company such as Wind, which is launching with an emphasis on customer service.

Lacavera has told the Star that Wind was in discussions to begin carrying Apple Inc.’s iPhone, though analysts said not to expect it in the short term, as the company struggles with more practical tasks.

The new year will see other new entrants, as well, which will challenge Globalive for the roughly 30 per cent of Canadians who do not currently have a cellphone.

Public Mobile CEO Alek Krstajic told the Star earlier the company aims to be the cellular provider "of the working class," with lower rates and cheaper devices.

DAVE Wireless president Dave Dobbin has a target audience more similar to Globalive’s, and said in an interview on Monday his company won’t be the cheapest but will focus on value.

"What I can assure you is that Canadians will have greater choice," Dobbin said.

Wind will be selling phones out of 13 Blockbuster Video locations in Toronto and three in Calgary, the company’s first launch markets, as well as designated stores.

At the Liberty Village Blockbuster in Toronto, four cheery employees stood by a kiosk empty of phones.

"We’ve been waiting to tell people for months," said Chanel Manthorpe, 22. "We’re excited."

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Apple Inc. is in talks to acquire online music service Lala, according to two people familiar with the matter.

The terms of the deal weren’t known. The people declined to be identified because talks are still in progress.

The Lala service lets users listen to any song on its site once for free. Customers can then opt to buy the track for 10 cents and listen to it on the Web paperless payday loans.

The service differs from iTunes because the music is stored on servers via so-called cloud computing, instead of being downloaded to the user’s computer.

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Stocks rallied Tuesday as worries about Dubai’s debt problems eased, gold hit a record above $1,200 and GE and Comcast moved closer to a deal on NBC Universal.

The Dow Jones industrial average (INDU) added 127 points, or 1.2%, closing at the highest point since Oct. 2, 2008. The S&P 500 (SPX) index gained 13 points, or 1.2%, and closed just short of a 14-month high. The Nasdaq composite (COMP) rose 31 points, or 1.5%, and remained short of a 14-month high hit a week ago.

Bets that Dubai’s debt problems won’t have a major impact on U.S. institutions lifted stocks late Monday and through Tuesday’s session. Stocks also reacted to the day’s better-than-expected economic readings on construction spending and pending home sales.

"The market is treating Dubai like a non-event and continuing to trade on momentum," said Joe Clark, market analyst at Financial Enhancement Group.

He said that the momentum is likely to keep stocks aloft or even push them higher through year-end, despite the already substantial run up since the March lows.

Since bottoming at a 12-year low March 9, the Dow has gained nearly 60%, the S&P 500 has gained 64% and the Nasdaq has gained 72%.

Investors also kept an eye on auto sales, which were down from October but mostly higher from a year ago. After the close, GM said CEO Fritz Henderson has resigned and will be temporarily replaced by Chairman Ed Whitacre, until a successor is found.

The weak dollar also played a role in the day’s advance, boosting commodity prices and stocks, continuing a trend that’s been in place all year.

Gold touches $1,200: COMEX gold for December delivery rallied $18 to settle at $1,199.10 an ounce, after rising as high as $1,202.70. It’s the first time the precious metal has ever traded at this level.

Company news: AIG (AIG, Fortune 500) said it is wiping out $25 billion of its government debt by selling stakes in two of its life insurance subsidiaries to the Federal Reserve Bank of New York. Shares gained 8.6%.

General Electric (GE, Fortune 500) has reportedly reached a deal to buy Vivendi SA’s 20% stake in NBC Universal for about $5.8 billion, moving GE closer to its goal of partnering with Comcast (CMCSA, Fortune 500) to create one of the largest U.S. media companies.

GE is looking to sell a 51% stake in NBC Universal to Comcast, while retaining a 49% stake in the company that is valued at around $30 billion.

Dubai and world markets: Dubai World, the city-state’s main investment arm, said it is in talks to restructure $26 billion in debt, cooling worries that it might go into default and wipe out the investment of its creditors.

Global markets slumped last week after the Dubai government asked to defer payments for at least six months on $60 billion in debt owed by Dubai World and Nakheel, its real estate arm.

Overseas markets surged, with London’s FTSE 100, Germany’s DAX and France’s CAC 40 all closing with gains of more than 2%. Asian markets rallied too, with Japan’s Nikkei ending 2.4% higher.

Autos: Major automakers reported sales in November that met or topped expectations. But any improvements year-over-year were easy, given the dismal results in November 2008. On a monthly basis, sales slumped from October levels.

Among the standouts: General Motors reported a 1.8% drop in November sales from a year ago, versus forecasts for a drop of 1.3%. But sales were down 15% from October levels. Ford Motor’s sales were little changed from a year ago and down 10% from October.

ISM index: The November manufacturing index from the Institute for Supply Management fell to 53.6 from 55.7 in October, surprising economists who were looking for ISM to fall to 55. However, any reading over 50 implies expansion in the sector.

Pending home sales: Signed contracts to buy homes rose 3.7% in October, the ninth monthly increase in a row, according to a National Association of Realtors report released Tuesday. Pending home sales were expected to have fallen 1% after rising 6% previously.

Other economic news: Construction spending in October was unchanged, the government reported. Spending fell 1.6% in September and was expected to have fallen 0.5% in October, according to analysts’ estimates.

President Obama is due to announce his strategy on Afghanistan in a speech Tuesday night from West Point.

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

U.S. light crude oil for January delivery rose $1.47 to $78.75 a barrel on the New York Mercantile Exchange.

Bonds: Treasury prices tumbled, raising the yield on the 10-year note to 3.27%, from 3.20% late Monday. Treasury prices and yields move in opposite directions.

Market breadth was positive. On the New York Stock Exchange, winners beat losers four to one on volume of 1.13 billion shares. On the Nasdaq, advancers topped decliners by two to one on volume of 2.20 billion shares. 

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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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