Greg's Stack-of-Stuff

[Greg]

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washingtonpost.com

OPM Postpones New Dental-Vision Benefits

By Stephen Barr
Tuesday, September 20, 2005; B02

Here's one that will make you grind your teeth:

A new program to offer enhanced dental and vision benefits to federal employees and retirees is being delayed until December 2006, the Office of Personnel Management announced yesterday. OPM had previously said the program would begin in July.

Many federal employees have eagerly awaited the program's launch. The government offers meager dental and vision coverage to its workers, with reimbursement levels and annual maximum benefits that are much less than those provided by private-sector employers.

Rather than offer enrollment in the spring, OPM said, the dental-vision benefit will be launched next autumn and coincide with the November-December open season for health insurance and flexible spending accounts.

"OPM favors this approach, noting simultaneous open seasons will give individuals access to the full complement of information they need to compare features of each program and to make informed choices on benefits and coverage levels," the agency said in a news release.

Congress approved the program last year, in large part because it will require enrollees to pay all premium costs. Supporters of the legislation, which was sponsored by Sen. Susan Collins (R-Maine) and Rep. Thomas M. Davis III (R-Va.), said they intended that OPM harness the government's purchasing power to obtain affordable and favorable group rates for employees and retirees. The law creating the program calls for it to be established in 2006.

OPM had drafted a proposal for the program and had planned to issue the "statement of work" this week. But regional insurance companies faulted the program, raising concerns about overhead costs, the role of health maintenance organizations, the maximum benefit design and whether OPM would be limiting competition by restricting the types and numbers of participating plans.

Susan Bryant , OPM spokeswoman, said the agency had asked for comments, and "they are being considered." She said a revised statement of work will be issued within the next few weeks.

Bryant said tying the start of dental-vision benefits to the health insurance enrollment period next December will make it easier for employees to do their financial and tax planning.

L Funds Take Off

More than 100,000 participants in the Thrift Savings Plan have invested more than $3 billion in lifecycle funds since they became available six weeks ago, officials said yesterday.

The L Funds also lived up to their goals, assuming that any insights can be drawn from the mixed returns in the stock market last month. In their inaugural month, the L Funds were not the best performer nor the worst performer in the TSP portfolio.

The five L Funds ended August on a positive note, posting returns that ranged from .07 percent to .17 percent. Two popular stock funds, large U.S. stocks (C) and small-to-midsize U.S. stocks (S) were down -- the C Fund by .9 percent and the S by 1.01 percent.

Three other TSP funds -- international stocks (I), U.S. bonds (F) and government securities (G) -- were winners. The I Fund returned 3.23 percent, the F Fund 1.23 percent and the G Fund .37 percent.

Although the first-time returns of L Funds drew the attention of the TSP board at its meeting yesterday, officials cautioned against reading too much into the data and urged federal employees to not base their investment decisions on short-term results.

The L Funds are geared for long-term investing and emphasize diversification, rebalancing of assets and assuming the right level of risk for the participant's draw-down date. Over time, the funds should produce smoother returns than TSP stock funds, said James B. Petrick , the TSP's chief financial officer.

The L Funds use the TSP's other five funds as their foundation and allocate money among those funds based on when a participant expects to begin withdrawals. There is a current income fund for those in retirement or very close to it, and 2010, 2020, 2030 and 2040 funds for projected withdrawals in those time frames.

The funds shift from aggressive to conservative investments as participants near the time they will start drawing down their savings.

Of the L Funds, the 2020 Fund appears to be the most popular. It ended August with $1.24 billion in assets. That may reflect interest among employees who are well along in their careers but not ready to retire in the next few years.

The TSP is in the midst of a major education campaign to encourage investors to consider the L Funds. Officials created them out of concern that too many employees were not taking the time to rebalance their accounts or were making bad investment decisions by trying to chase hot market sectors.

 

[Greg]

imported post

Mike Causey's Federal Report

Front Loading Your TSP
Sep. 20, 2005

Next year federal investors will be able to "front-load" their Thrift Savings Plan accounts, if they can afford it, by putting all of their after-tax paycheck into the federal 401(k) plan each pay period.
This is the ideal situation for someone who wants to retire early or in mid-2006 but who also wants to invest the maximum amount ($20,000 in the case of 50-plus feds or military people) in the TSP as quickly as possible.

It would help to have a spouse or significant other who is employed and will help you with odds and ends, like rent and food, so you can channel all of your net paycheck into the TSP. The current percentage limits on employee contributions will not apply in 2006.

Front-loading would be ideal for individuals who want to retire earlier in the year while also getting the maximum tax break by putting the maximum allowed in their TSP. This year that maximum is $14,000 plus an additional $4,000 for people who are 50 or older. Next year that limit goes to $15,000, with an additional $5,000 tax-deferred catch up contribution allowed for people 50 and older.

Recently, reader Carlos from the NRC, asked about the possibility of front-loading. I told him it sounded too good to be true, but that I would check. I did. Guess what! Carlos was right on the money. And this could be a very helpful tip whether you plan to retire next year or five years from now.

Starting in 2006, some feds can cram the entire amount of their after-deductions biweekly check into their tax-deferred Thrift Savings Plan. That would enable some people to retire early or mid-2006 but still have taken advantage of the maximums allowed by the IRS for the TSP.

The source for all this is Tammy Flanagan, top benefits expert for the National Institute of Transition Planning.

This is part of what she wrote:

Yes. Carlos is correct. Next year employees will be able to "front-load" their TSP account (as they say in the financial planning world!). There will no longer be percentage limits on employee contributions (currently FERS employees are limited to no more than 15% of their biweekly salary and CSRS employees are currently limited to 10% of their biweekly salary). 2006 and beyond...no limit!

So, what Carlos is explaining can start happening next year. I recently prepared an article that talks about this as a potential benefit for someone who wants to take advantage of one last big boost to their TSP account before they retire. This is an employee (who) is not as concerned about cashing out 448 hours of annual leave, but is more interested in sheltering up to $20,000 of tax-deferred income to their TSP account.

For information on NITP, check out: http://www.nitpinc.com/main/

Four Day Week

Earlier this year the government of the Republic of the Philippines put most of its civil servants on a mandatory 10 hour day, 4-day week. That was an energy conservation move during the especially hot months of April and May.

Now some American civil servants, specifically postal clerks, will try out the 4-day week. As part of the extended contract with the Postal Service and the American Postal Workers Union, the 4-day week, 10-hour day will be tested in 18 sites. Stay tuned...

 

[Show-me]

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Greg wrote:

Mike Causey's Federal Report

Front Loading Your TSP
Sep. 20, 2005

Now some American civil servants, specifically postal clerks, will try out the 4-day week. As part of the extended contract with the Postal Service and the American Postal Workers Union, the 4-day week, 10-hour day will be tested in 18 sites. Stay tuned...

Bring it on!

 

[pyriel]

imported post

Thanks Greg, I didn't even think about front loading my tsp... This will require additional planning...

Greg, does this mean that I can put in 5k per month for the first three months and be done with it for the year?

 

[Greg]

imported post

Dollar up after suggested rate rises

[font=Verdana,Sans-Serif]Tuesday September 20, 8:54 PM EDT[/font]

[font=Verdana,Sans-Serif]TOKYO (Reuters) - The dollar held near a seven-week high against the euro and a six-week peak versus the yen on Wednesday after the Federal Reserve raised interest rates and appeared to leave the door open for even higher rates.

In its post-meeting policy statement, the U.S. central bank repeated a "measured" pace of rate rises was likely, saying that economic disruptions triggered by Hurricane Katrina did not pose a persistent threat.

"The Fed's statement confirmed the strength of the U.S. economy, which improved dollar sentiment," said Takehiko Jimbo, forex manager at Mitsubishi Trust and Banking.

The dollar rose as far as 112.03 yen -- its highest level in six weeks -- in early Asian trade, before easing to around 111.90 yen , little changed from the level in late New York trade.

Traders said the dollar's advance would likely slow with selling from Japanese exporters seen lined up above 112 yen.

The British pound also hit a three-week low of $1.7961

The euro hovered around $1.2125 , near the seven-week low of $1.21 hit on Monday in the wake of indecisive German election results.

Traders expect the dollar to keep the upper hand in the near term as the Fed did not suggest it would pause the gradual tightening it started back in June 2004.

Rising short-term interest rates in the United States have been one of the main drivers of the dollar's rise this year, as higher rates are thought to attract more funds.

The Fed raised its fund rate by 0.25 percentage point to 3.75 percent on Tuesday, improving the dollar's rate advantage over the euro and the yen.

The comparable rate in the euro zone is 2.0 percent, and near zero percent in Japan.[/font]

 

[Greg]

imported post

Allstate says it won't pay for Katrina flood damage

[font=Arial,Helvetica,Geneva]Insurer's operating chief responds to Mississippi suit

[size=-2]Sep 20, 2005
SAN FRANCISCO (MarketWatch) -- Allstate Corp. won't pay flooding claims stemming from Hurricane Katrina, Chief Operating Officer Tom Wilson said on Tuesday, in a direct challenge to a lawsuit filed last week by Mississippi Attorney General Jim Hood.

Katrina, a Category 4 storm that hit Louisiana, Mississippi and Alabama on Aug. 29, may end up being the most expensive catastrophe in U.S. history, costing insurers as much as $60 billion, according to one estimate.

Controversy has emerged surrounding the devastating flooding that followed the storm. Standard homeowners' insurance policies typically exclude flooding, partly because a national, government-run program covers those risks. However, many homeowners hit by Katrina may not have bought this extra coverage.

Mississippi's Hood sued Allstate and four other leading insurers in the state on Sept. 16, arguing that their flood exclusions should be voided and that they should pay flood claims.

"The Mississippi attorney general's view [is] that we should pay for claims -- flood claims even though we never insured those," Allstate's Wilson said during a speech at a Banc of America Securities conference in San Francisco. "We do not intend to do that."

Allstate has contracts that specifically exclude flooding that were enforced and approved by regulators in all the states affected by Katrina, Wilson added.

Allstate hasn't had problems with customers not knowing that their policies excluded flood damage, partly because the government flood-insurance program advertises heavily in flood-prone areas every year, Wilson continued.

"Exhibit one for us will be just the national flood-insurance programs -- advertising programs, which they put on very aggressively every year," he said. "People know this is a separate coverage, so we're not having many issues with our customers."

Analysts have been concerned that the insurance industry may be vulnerable to political pressure to cover some of the costs of flood damage, especially in New Orleans, where it's been estimated that about a quarter of the city's inhabitants didn't have flood insurance.

This problem is accentuated because the industry has more than $400 billion in capital after several years of rising premiums.

"The nature of the industry's 'deep-pocket' risks are especially acute in the case of Hurricane Katrina, since only a fourth of policyholders are reported to have purchased flood insurance, which could severely raise the cost, and limit the availability, of funding for rebuilding efforts," Ken Reed, an analyst at rating agency Fitch, wrote in a note to clients on Monday.

Allstate's Wilson did concede that there will be "issues" when assessing what damage was caused by wind and what was the result of flooding.

Wilson also said that Allstate hasn't finalized an estimate of its Katrina-related losses yet.

Allstate shares fell 31 cents to $53.11 on Tuesday. The stock has dropped more than 8% since Katrina hit on Aug. 29. [/size][/font]

 

[Greg]

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Consumers' gloomy mood gets worse

Sep 20, 2005

WASHINGTON (MarketWatch) -- U.S. consumer confidence dropped again this week, according to a weekly survey released Tuesday by ABC and the Washington Post.

The ABC/Post consumer-comfort index fell to negative 23 this week from negative 20 last week. It's the lowest since May 2003.

With 60% saying the economy is worsening and 11% saying it's getting better, pessimism about the near-term future was at its highest level since December 1991.

Consumer attitudes have plunged since Aug. 29, when Hurricane Katrina devastated New Orleans and other Gulf Coast regions. The slide in consumer sentiment began before the storm hit, as gasoline prices crept higher.

The retreat in gasoline prices from $3.07 to $2.79 over the past two weeks has little impact on consumer's psyches.

The index is down 16 points in the past five weeks and down 11 points since Katrina.

Despite the gloomy assessment by consumers, the Federal Reserve boosted its short-term interest rate target on Tuesday to 3.75%, saying the dislocations caused Hurricane Katrina won't pose a "persistent threat" to the economy in the long run, while higher energy prices could fuel a new wave of inflation.

In the ABC/Post survey, fewer than a third of consumers said that it's a good time to buy things, the lowest since November 1993.

Consumers aren't buying as much, according to a separate index that tracks retail chain-store sales. Same-store sales fell 2.1% last week, the International Council of Shopping Centers reported Tuesday. The shopping industry group is forecasting a 3% year-over-year increase in September sales.

Personal finances remain in good shape, with 55% expressing comfort in their own pocketbooks.

The ABC/Post index is a four-week moving average of the responses to its weekly polls. The average this year is negative 12, while the average over the past 19 years is negative 9.

A separate daily tracking poll of consumer attitudes shows a similar trend, according to Scott Rasmussen of Rasmussen Reports. The Rasmussen Consumer Index fell to 98.9 on Tuesday from 102.6 on Monday.

The index was established in October 2001 at 100.

"Today's reading means that the nation's level of economic confidence is slightly lower than it was in the aftermath of the Sept. 11, 2001 terrorist attacks," Rasmussen said.

 

[Greg]

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FEMA OKs Mobile Homes for Katrina Evacuees

Tuesday September 20

CHATTANOOGA, Tenn. (AP) — The Federal Emergency Management Agency ordered tens of thousands of mobile homes and travel trailers on Tuesday to accommodate Katrina evacuees, approving manufacturer bids totaling at least hundreds of millions of dollars, an agency spokesman said.

FEMA spokesman Butch Kinerney said the specific number of units and dollar totals were not immediately available Tuesday evening.

The nation's largest mobile home manufacturer, Clayton Homes Inc. of Maryville, received a government order Tuesday to build 2,000 single-wide models, company spokesman Chris Nicely said, with delivery requested by Dec. 1.

"That won't be a problem," Nicely said.

But some manufacturers have complained that FEMA's pace of responding to bids they submitted by Sept. 9 could mean production delays. FEMA officials earlier said they did not want to make spending decisions too hastily.

Riverside, Calif.-based Fleetwood Enterprises Inc. received orders for 7,500 travel trailers and 3,000 single-section mobile homes, Elden L. Smith, the company's president and chief executive, said in a statement Tuesday. Smith said the "total value of the order to our company is upwards of $170 million."

FEMA spokeswoman Nicol Andrews said Monday that at least 30,000 travel trailers would be ready in Louisiana by Oct. 18, with another 170,000 to be installed soon after.

State officials were working to identify plots of land where the trailers could be placed and outfitted with plumbing and electricity, Andrews said.

Andrews said FEMA awarded another contract to Fluor Corp. of Aliso Viejo, Calif., to build temporary housing units and that other contracts were pending.

Clayton — which had already shipped 1,800 homes from retail lots as far away as Delaware and Wyoming to a FEMA staging area at Texarkana, Texas — submitted a bid to build 3,000 units, but FEMA ordered only 2,000.

"I think they are trying to spread it around, to keep everybody happy and so they don't get delayed by a bottleneck in one operation," Nicely said.

Nicely declined to provide his company's price information but said the single-wide units typically range in cost from $25,000 to $35,000. He said the mobile homes would likely be built at Clayton plants "closest to the Gulf," including some in Texas, Georgia and Tennessee.

FEMA estimates Katrina displaced 200,000 households, far more than the 15,000 households that needed shelter last year after the Florida hurricanes last year.

 

[Greg]

imported post

Mike Causey's Federal Report

Sep. 21, 2005

FrontLoading Your TSP

Yesterday's column about front-loading your TSP prompted a number of readers to warn of the downside (loss of matching contributions) of front-loading for workers under the FERS retirement system.

As Mary Johnson of Clifton, Va., writes:

Please let your readers know that making all of their TSP contributions in the first few weeks or months of the year will greatly reduce their TSP benefits. While this approach will allow an employee to have more money in the fund for a longer period, it will reduce the matching funds from their employer - losing up to 5% of matching contributions.

The key to ensuring matching funds for the entire year is to make sure you contribute in every pay period for the year. If the employee does not contribute in a given pay period, the government doesn¹t contribute either.

The key to maximizing contributions AND earnings is to contribute a higher amount during the first part of the year and then a reduced amount during the back end."

The vast majority of the people retiring next year, and over the next couple of years, will be under the CSRS system which has no government match. But for FERS employees front-loading does have its downside.

Good point!

 

[Greg]

imported post

Oil prices may be threat to growth - IMF

Wednesday September 21, 6:32 PM EDT

WASHINGTON (Reuters) - Surging oil prices are becoming a much greater threat to world economic growth, the IMF warned on Wednesday, as a second hurricane threatened the big oil producing and refining areas of the United States.

In its twice-annual World Economic Outlook, the International Monetary Fund said global growth was set to grow a swift 4.3 percent this year and next -- above the 3.9 percent average of the past decade, despite the higher oil prices.

It downgraded its forecast for global growth in 2006 from the 4.4 percent expected in April but retained this year's projection.

But IMF chief economist Raghuram Rajan told Reuters oil prices are surging increasingly because of supply disruptions.

Before Hurricane Katrina battered the Gulf of Mexico, a major oil producing and refining area, in late August oil prices had risen mostly on demand from China and the United States, he said.

"We are getting more and more into supply-driven price increases which are going to be more constraining for growth going forward," Rajan said. "We are at a point where further substantial increases will start mattering far more."

He said when oil prices are driven by demand, it indicates strong economic growth. Supply-fueled increases, in contrast, are caused by fundamental factors such as constraints in production or fears of shortages.

Rajan said consumers would start to get nervous as oil prices rose further and would hurt confidence.

As he spoke, Hurricane Rita headed toward Texas, threatening to disrupt 18 oil refineries, which have a combined capacity of 4 million barrels of a day, or 23 percent of U.S.'s total refining capacity.

U.S. crude oil futures jumped sharply then pared to settle up 60 cents at $66.80 a barrel. Last month, crude prices hit record levels above $70 a barrel, more than double the levels at the start of last year.

LURKING THREATS

Earlier, the IMF also warned that other risks to global growth loomed large, including a lack of government savings, widening current account imbalances and regional growth distortions.

However, global financial market conditions remained benign amid low borrowing costs, high equity prices and strong corporate balance sheets, it said.

Emerging markets' financing conditions were also favorable, it said, reflecting strong economic fundamentals and an increased presence of long-term investors.

The IMF shaved its 2005 forecast for the world's largest economy, the United States, to 3.5 percent from 3.6 percent it envisioned in April, due to the impact from Hurricane Katrina, lower consumer confidence and rising interest rates slowing house price growth.

It also trimmed the U.S. outlook for 2006 to 3.3 percent from 3.6 percent.

Rajan said Katrina would reduce U.S. growth this year, but it would regain its footing next year because of the post-hurricane reconstruction.

He said the U.S. should not add to its already hefty budget deficit to pay for the reconstruction, but should find funds elsewhere.

"The right thing to do is if your spending priorities are altered to find savings elsewhere and hopefully that is the process that will take place now," he said.

In the World Economic Outlook, the IMF criticized Washington's "unambitious" plan to cut the U.S. budget gap in half by the time President George W. Bush leaves office in early 2009.

The U.S. budget deficit hit a record $412 billion last year. While recent tax receipt data suggest the shortfall has been narrowing, the potential cost of reconstruction after Katrina -- which some lawmakers say could hit $200 billion -- has led analysts to raise their deficit forecasts.

Elsewhere, the IMF said Japan's economy looked poised for a recovery and would grow 2 percent this year and next.

It said the growth outlook for the euro area remained somber amid weak domestic demand, with projections drifting down to 1.2 percent for 2005 and 1.8 percent next year.

"Europe's citizens do not seem convinced that the bitter medicine of continued structural reforms will cure the stasis that afflicts much of the continent," Rajan said. "Of course economists can only prescribe but it takes politicians to persuade," he added.

The IMF said the European Central Bank should be ready to cut interest rates if the economy falters again.

On China, it cautioned that the country may need to tighten monetary policy if investment growth intensifies.

The fund said 2005 Chinese growth was now poised to reach 9 percent, up from 8.5 percent predicted in April. In 2006, Chinese growth was likely to ease to 8.2 percent.

©2005 Reuters Limited

 

[Greg]

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Stocks due for an upswing post-Rita

12:01 AM ET Sep 24, 2005

SAN FRANCISCO (MarketWatch) - Stocks are expected to rise next week, boosted by tame energy prices and renewed buying interest in the aftermath of what looked likely to be a slightly weaker-than-expected Hurricane Rita, analysts predicted on Friday.

While analysts conceded that a last-minute shift in the storm's direction or a sudden strengthening of its winds could change their outlook, they said the refinery-rich Texas/Louisiana coast was likely to weather the storm, keeping energy prices stable and allowing stocks to move ahead.

Early last week, the major indexes dropped to their lowest levels in three months as traders unloaded stocks amid fears that Hurricane Rita would paralyze the other half of the energy sector off the coast of Texas and Southwest Louisiana that Hurricane Katrina missed three weeks earlier.

The Dow Jones Industrial Average fell Friday 2.46 points 10,419.59, wrapping up a week in which the benchmark index fell 2.1%, while the S&P 500 Indexclosed 0.67 point higher at 1,215.29; the broad gauge booked a weekly loss of 1.8%.

"Stocks are already discounted," said Al Goldman, chief market strategist at AG Edwards. "If Rita is horrible, they are already discounted. If it's less than horrible, they are over discounted," he said.

While a host of economic data highlighting consumer confidence is scheduled for release next week, the main force driving stock movement will be oil prices, say analysts.

Oil prices on the mind

Though some analysts differed on whether stocks would improve next week, all agreed that investors would take their cues from oil prices.

"Anyway you slice it, if energy is high, stocks are low," said Art Hogan, chief market strategist at Jefferies & Co.

Crude prices drifted lower at the end of the week as forecasters lifted their doomsday scenario for the oil industry that many had feared earlier in the week as Rita was gathering strength.

Crude for November delivery closed at $64.19 a barrel, down 3.5%, or $2.31, for the session, but up 1.3% from the week-ago close on the New York Mercantile Exchange.

Some analysts say that even if the Gulf of Mexico's refining complex takes another major hit, the market knows that President Bush is willing to tap the strategic petroleum reserves to relieve refiners in distress, as occurred after Hurricane Katrina paralyzed oil and gas operations.

Furthermore, global demand for crude is falling, while the U.S.'s need for gasoline eases after Labor Day, which should keep crude prices from creeping back above $70 a barrel, said Goldman.

"It would take a truly catastrophic event to top out already high [oil] prices," he said.

Hurricane redux

Other analysts note that the major indexes are sitting at levels similar to where they were in late August, just prior to Katrina, and that stocks are due to bounce if investors react the same as they did then during the aftermath of Rita.

"If looking at some of the major indices we're at or near the short-term bottom end of the range," said Joe Sunderman, director of research at Schaeffer Research. "If we have a similar reaction [post-Rita] this could be a bullish development," he said. "There might be a bounce or consolidation of recent volatility."

However, it could take months to fully evaluate whether the Gulf Coast's one-two hurricane hit seriously damaged the economy, which could result in lower stock prices in the months ahead, even if stocks bounce next week.

"Clearly stocks were to some degree discounted [last week], but the hurricanes' impacts aren't immediate, it will take months to digest their effects," said Stephen Sachs, head of trading at Rydex Investments.

Pre-earnings season

This week is also the unofficial start of the "pre-earnings" season, offering a glimpse of what is to come during earnings season, which kicks off the second week of October.

"My only real bet [for this week] is on single-stock volatility on pre-earnings announcements," said Sachs.

Companies are starting to update their guidance from earlier announcements to include the potential impacts from the storms, which threw much of the southeastern U.S into disarray, and hopefully mitigate reactions against their stocks whey the do start reporting, said Sachs.

Several economic indicators are scheduled for release this week that should shed further light on how consumers are reacting to the vagaries of energy prices and Mother Nature.

Beginning Monday, existing home sales statistics are scheduled for release, followed by new home sales data and the consumer confidence index on Tuesday. Consumer spending and consumer sentiment surveys are due out on Friday, as well as the second quarter GDP update.

Copyright © 2005 MarketWatch, Inc

 

[Greg]

imported post

Dollar near peaks as higher rates seen

Tuesday September 27, 11:37 PM EDT

TOKYO (Reuters) - The dollar stayed near two-month highs against the yen and the euro on Wednesday as a swelling chorus of comments from Federal Reserve officials suggested the currency's interest rate advantage would keep strengthening.

Kansas City Fed President Thomas Hoenig said late on Tuesday that the central bank must ensure price stability after the damage wrought by hurricanes Katrina and Rita.

That echoed comments he made earlier in the week and San Francisco Fed President Janet Yellen's remarks on Tuesday that an unacceptable rise in inflation was not an option, signaling the Fed's 15-month streak of rate rises would not end soon.

"The market is saying what we're not going to get is a surprise in terms of rates -- we're not going to get some cuts because of storm-damage problems," said Luke Waddington, head of forex trading at Royal Bank of Scotland in Tokyo.

Market worries about higher costs for consumers intensified in the wake of Katrina as oil prices soared on the hit to production in the U.S. Gulf Coast, and stayed on the back burner as Rita made its run at the region.

Some in the market were cautious about getting carried away over Fed officials' playing down concerns about the bruising of the U.S. economy after the hurricanes.

"That's how they have to act," said the chief trader at a European brokerage in Tokyo. "They cannot show weakness."

The dollar's rise to fresh two-month highs against the euro and the yen on Tuesday was tempered by data showing a steep fall in U.S. consumer confidence in September -- one of the first monthly reflections of how the economy was faring after Katrina.

The dollar was also capped by disappointment that Fed chief Alan Greenspan's speech on Tuesday had little bearing on the interest rate outlook.

YEN PINNED

The dollar was little changed on the day at 113.30 yen , near the two-month high of 113.52 yen struck in the previous session.

Some traders said the dollar had consolidated somewhat after it failed to breach the year's high just above 113.70 yen, while the Japanese currency was supported by rising Tokyo stock prices.

Japanese exporters' selling of the dollar against the yen was seen offset by investors buying U.S. bonds as they adjust portfolios before the fiscal half year ends on September 30.

The euro was a tad higher at $1.2025 , after hitting a two-month low around $1.1980 a day earlier.

Sterling and the Swiss franc were also mired in sight of two-month lows against the dollar.

After three lean years, the dollar has risen this year on its widening rate advantage over the yen and the euro.

The Fed raised overnight rates last week for an 11th straight time to 3.75 percent. That compares with 2.0 percent in the euro zone and near zero percent in Japan.

The U.S. central bank said in its latest policy statement that Katrina's blow to the economy would not pose a "persistent threat," and it repeated that more "measured" monetary tightening was needed.

©2005 Reuters Limited.

 

[Greg]

imported post

Heating homes to cost more

Wednesday, September 28, 2005

Utilities board hikes natural gas rates 45% locally

Heating North Alabama homes with natural gas just got a lot more expensive.

The Huntsville Utilities Natural Gas Board on Tuesday adopted a 45 percent natural gas rate increase that would drive up the typical residential bill by $46 a month this winter.

North Alabama Gas District customers in Madison, Madison County and Limestone County will see a similar hike.

"It's going to be a rough winter for the customer," Huntsville Utilities General Manager Bill Pippin told the board.

The latest rate increase is the third in a year for natural gas customers. Rates have increased 66 percent during that time. Huntsville Utilities had 39,227 residential customers last month and another 4,800 commercial and industrial customers.

The increase adopted Tuesday is effective immediately and will show up on customers' October bills.

But Pippin said during the meeting that if the price of natural gas the utility pays drops in November, the utility could cut rates to customers.

"Hopefully," Pippin said, "it will be a mild November and we can bring the rates down in November."

The average residential customer who uses 10,250 cubic feet of natural gas during the coldest months of the year will see the natural gas portion of his or her bill go from $101.99 to $148.11. The cost for 1,000 cubic feet of natural gas will go from $9.95 to $14.95 with the latest increase.

"It will be a bad year for the customer," Pippin said. "They will see a $40 to $45 increase."

Huntsville Utilities customers are not alone. The North Alabama Gas District Board raised its residential rate starting this month from $10.73 per 1,000 cubic feet to $15.73. The district supplies natural gas to customers in Madison and Madison, Limestone and Colbert counties.

Huntsville Utilities officials will urge customers to conserve energy in its quarterly newsletter to be mailed to all customer in the next few weeks. Pippin said customers could lower their thermostats to 65 degrees to save money.

The only comment by a board member during the discussion was by Stanley Statum, who asked what the utility could do to help the elderly with higher bills.

Pippin said the utility will work with customers to give them more time to pay their bills. The normal three-month period for paying a bill could be stretched to four or five months, he said.

Pippin cited the cost of natural gas to the utility for the increase. The former residential rate was based on the utility paying $6.37 for 1,000 cubic feet of gas, but that cost had increased to $10.62 last week. The utility adds a $3.02 per 1,000 cubic feet pipeline distribution cost and a tax equivalent charge to the cost of gas to set the rates it charges to customers. The tax equivalent is increasing from 56 cents to 81 cents per 1,000 cubic feet.

Huntsville Utilities will buy natural gas on a monthly basis instead of tying itself to a long-term contract to take advantage of any price decreases, Pippin told the board.

"We do feel gas prices will come down, but we don't know how much they will," he said.

Pippin presented a graphic that showed how natural gas prices that the utility pays have fluctuated and increased over the past three years. He said the price it pays for natural gas has been higher than the rate it charges for more than a year.

Hurricane Katrina took out 38 percent of production and disrupted the natural gas supply from the Gulf Coast, driving up costs. Pippin said that both Tennessee Gas Pipeline and Southern Natural Gas Co. have curtailed natural gas shipments to the utility.

Rates for industrial and commercial customers will increase from 45 percent to almost 53 percent.

Industrial and commercial natural gas customers who have interruptible contracts with Huntsville Utilities saw their gas supply cut off Friday, Pippin said. But utilities officials think those 20 or so customers will be restarted soon.

Businesses with interruptible contracts pay less for natural gas than a customer with a non-interruptible contract, but they do so knowing their gas could be cut off during a shortage.

© 2005 The Huntsville Times
© 2005 al.com

 

[Greg]

imported post

Money supply has tenuous relationship to stock market

By Mark Hulbert, MarketWatch
Last Update: 12:01 AM ET Sep 28, 2005

ANNANDALE, Va. (MarketWatch) -- My wife, who is a clinical psychologist, accuses me of having a narcissistic streak. So I may be overreacting.

Nevertheless, I confess to being amazed at the number of advisers who ignore what I've written and continue to make a big deal about trends in the money supply.

After all, I devoted one of my columns in April to what I considered to be conclusive evidence that the money supply is not correlated with the stock market's performance.

When I wrote that column, I had naively hoped that advisers would stop basing their market forecasts on money supply trends, or produce statistical evidence showing why I was wrong.

Yet neither of those things occurred.

So let me try again.

Statistically speaking, the growth rate of the money supply has an exceedingly small correlation with the stock market's subsequent performance. And to the tiny extent that it does, it is correlated in just the opposite way that advisers are asserting.

I reached these conclusions by studying the Federal Reserve's data back to 1959 for each of the three major definitions of the money supply, from M1 (the narrowest definition) to M3 (the broadest definition). For each month I calculated the growth rate for each of these three definitions over the previous one, three, six and 12 months. I then correlated those growth rates to how the stock market performed over the subsequent same periods. I looked at the raw as well as the seasonally adjusted data.

In the vast majority of cases, I found no statistically significant correlation between the stock market and any of the money supply's growth rates.

But here's the real kicker: In each of those few cases in which a modest statistical relationship did show up in the data, there was an inverse correlation between the growth rate of the money supply and the stock market's subsequent performance.

That's directly contrary to what is being assumed by most of the newsletter editors who are basing their market forecasts on the money supply. They evidently believe that faster money supply growth must be bullish, on the grounds that some of the newly-created cash will find its way into equities.

At least over the last 45 years, however, faster money supply growth has not led to a higher stock market.

So my advice is to ignore all market forecasts based on money supply growth rates, until and less the advisers making those forecasts can show that there is a statistically significant basis for those forecasts.

I'm not holding my breath.

 

[Greg]

imported post

Monster Mold Threatens Health in the South

Sep 27 3:22 PM US/Eastern

Associated Press Writers

NEW ORLEANS- Wearing goggles, gloves, galoshes and a mask, Veronica Randazzo lasted only 10 minutes inside her home in St. Bernard Parish. Her eyes burned, her mouth filled with a salty taste and she felt nauseous. Her 26-year-old daughter, Alicia, also covered in gear, came out coughing.

"That mold," she said. "It smells like death."

Mold now forms an interior version of kudzu in the soggy South, posing health dangers that will make many homes tear-downs and will force schools and hospitals to do expensive repairs.

It's a problem that any homeowner who has ever had a flooded basement or a leaky roof has faced. But the magnitude of this problem leaves many storm victims prey to unscrupulous or incompetent remediators. Home test kits for mold, for example, are worthless, experts say.

Don't expect help from insurance companies, either. Most policies were revised in the last decade to exclude mold damage because of "sick building" lawsuits alleging illnesses. Although mold's danger to those with asthma or allergies is real, there's little or no science behind other claims, and a lot of hype.

"We went through a period when people were really irrational about the threat posed by the mere sight of mold in their homes," said Nicholas Money, a mold expert from Miami University in Oxford, Ohio, and author of "Carpet Monsters and Killer Spores," a book about mold.

"If you give me 10 minutes in anybody's home, I'll find mold growth somewhere," he said.

Mold is everywhere. Most people have no problem living with this ubiquitous fungus. It reproduces by making spores, which travel unseen through the air and grow on any moist surface, usually destroying it as the creeping crud grows.

Mold can't be eliminated but can be controlled by limiting moisture, which is exactly what couldn't be done after Hurricane Katrina. Standing water created ideal growth conditions and allowed mold to penetrate so deep that experts fear that even studs of many homes are saturated and unsalvageable.

In fact, New Orleans is where mold's health risks were first recognized.

A Louisiana State University allergist, the late Dr. John Salvaggio, described at medical meetings in the 1970s what he called "New Orleans asthma," an illness that filled hospital emergency rooms each fall with people who couldn't breathe. He linked it to high levels of mold spores that appeared in the humid, late summer months.

"These are potent allergens," but only for people who have mold allergies, said Dr. Jordan Fink, a Medical College of Wisconsin professor and past president of the American Academy of Allergy, Asthma and Immunology.

Molds produce irritants that can provoke coughing, and some make spores that contain toxins, which further irritate airways.

"The real pariah is this thing called Stachybotrys chartarum. This organism produces a greater variety of toxins and in greater concentrations than any other mold that's been studied," Money said.

Doctors at Cleveland's Rainbow Babies & Children's Hospital blamed it for a cluster of cases of pulmonary hemorrhage, or bleeding into the lungs, that killed several children in the 1990s, but the link was never proved.

The federal Centers for Disease Control and Prevention says there is no firm evidence linking mold to the lung problem, memory loss or other alleged woes beyond asthma and allergy. However, the sheer amount of it in the South could trigger problems for some people who haven't had them before, medical experts said.

"The child who didn't have a significant problem before may be in a much different scenario now," said Dr. Michael Wasserman, a pediatrician at Ochsner Clinic in the New Orleans suburb of Metairie whose office and home were flooded and are now covered in mold. He plans to tear down his house.

Even dead mold can provoke asthma in susceptible people, meaning that places open to the public _ restaurants, schools, businesses _ must eliminate it.

This is most true for hospitals, where mold spores can cause deadly lung diseases in people with weak immune systems or organ transplants. Such concerns already led Charity Hospital's owners to mothball it.

Tulane University Hospital and Clinic's cleanup is expected to take months.

"The first floor's got pretty much mold. It's going to be pretty much a total loss," said Ron Chatagnier, project coordinator for C&B Services, a Texas company hired by the hospital's owner, HCA.

"It might be difficult or impossible to reopen some of these medical centers," said Joe Cappiello, an official with the Joint Commission on Accreditation of Healthcare Organizations.

"It's not just the physical destruction that you see," but ventilation systems and ductwork full of mold, ready "to seed the rest of the hospital with spores" if the heat or air conditioning were turned on, he said.

As for houses, "anything that's been submerged probably will be a tear-down," said Jeffrey May, a Boston-area building inspector, chemist and book author who has investigated thousands of buildings for mold problems.

Clothes can be washed or dry cleaned, but most furniture is a loss. Ditto for carpeting, insulation, wallpaper and drywall, which no longer lives up to its name. Mattresses that didn't get wet probably have mold if they were in a room that did.

"Anything with a cushion you can forget about," May said.

The general advice is the same as when food is suspected of being spoiled: when in doubt, throw it out.

When is professional help needed?

"It's simply a matter of extent. If you've got small areas of mold, just a few square feet, it's something a homeowner can clean with 10 percent bleach," said Anu Dixit, a fungus expert at Saint Louis University.

She studied mold after the Mississippi River floods in 1993 and 1994, and found cleaning measures often were ineffective, mainly because people started rebuilding too soon, before the surrounding area was completely dry.

In the New Orleans suburb of Lakeview, Toby Roesler found a water line 7 feet high on his home and mold growing in large black and white colonies from every wall and ceiling on the first floor.

Wearing goggles, a mask and rubber gloves, he sprayed down the stairwell with a bleach solution. A crew will arrive soon to gut the lower floor.

"I think it's salvageable," he said, but admitted, "It's going to be some gross work to get it ready."

Others won't try.

Dionne Thiel, who lives next door to the Randazzo family, was only 7 when Hurricane Betsy raced through her neighborhood 40 years ago. Returning on Monday, after Hurricane Katrina, something was instantly familiar.

"The mold and the water," she said. "It's the exact same smell."

Mold covered her dining room walls, snaked up doorframes and even found its way into the candles she sold for a living. She and her husband salvaged his golf clubs but left the rest. They'll move to Arizona.

"I would never want to live here again," said her husband, Don Thiel. "It's not going to be safe."

___

Associated Press

 

[Greg]

imported post

Overdue Credit Card Bills Hit Record High
Sep 28 5:12 PM US/Eastern

AP -WASHINGTON

Charge it! That familiar refrain is producing an unwanted response for more Americans: Your bill is overdue! Surging energy prices, low personal savings and the higher cost of borrowing have combined to produce a record level of overdue credit card bills.

The American Bankers Association reported Wednesday that the percentage of credit card accounts 30 or more days past due climbed to an all-time high of 4.81 percent in the April-to-June period. It could grow in the months ahead, experts said.

The previous high of 4.76 percent came during the first three months of the year, in keeping with a generally steady rise over the past several years.

"The last two quarters have not been pretty," said Jim Chessen, the association's chief economist.

Chessen and other analysts mostly blamed high prices for gasoline and other energy products, but said that low savings and higher borrowing costs also played a role.

"The rise in gas prices is really stretching budgets to the breaking point for some people," Chessen said. "Gas prices are taking huge chunks out of wallets, leaving some individuals with little left to meet their financial obligations."

Pump prices were high before hurricanes Katrina and Rita hit the Gulf Coast. After Katrina, prices jumped past $3 a gallon. Prices have moderated since but remain high.

The personal savings rate dipped to a record low of negative 0.6 percent in July. The negative percentage means that people did not have enough left over after paying their taxes to cover all of their spending in July. As a result, they dipped into savings to cover the shortfall.

When people have less money available money to pay for energy costs or emergencies such as a big car repair, many resort to credit. That option is getting more expensive, too.

The Federal Reserve has been tightening credit since June 2004. That has caused commercial banks' prime lending rate to rise to 6.75 percent, the highest in four years. These rates are used for many short-term consumer loans, including credit cards and popular home equity lines of credit.

Late payments may be bad news for consumers, but credit card companies do not necessarily mind them because late fees are a source of revenue.

"Credit card companies are increasingly addicted to their fees," said Daniel Ray, editor-in-chief at Bankrate.com, an online financial service. "Six years ago, all fees _ including late fees _ contributed only a minor portion to overall revenue. Today it accounts for more than 30 percent."

About half of all credit problems stem from poor money management. Credit problems due to the loss of a job, sickness or divorce play less of a role, said personal finance expert Susan Tiffany, director of consumer publishing at the Credit Union National Association.

"That tells us people have some ability to do a better job. They are not completely helpless in the situation, and that's good," said Tiffany, whose trade group also is involved in efforts to improve people's financial literacy.

Getting back on the road to financial health takes discipline and hard choices about what can be cut back or eliminated. If credit card problems are plaguing a family, all the members should work together to come up with a plan and pare down spending.

From an economic perspective, the current rise in delinquent credit card payments is not overly worrisome. But if the trend were to continue for a sustained period, it could spell trouble for the overall economy, said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group.

"It's a flashing yellow light that we need to watch," she said.

Copyright 2005 The Associated Press[

 

[Greg]

imported post

Million-dollar homes are now a dime a dozen

Demand for housing still outstripping supply in many U.S. markets
The Associated Press
Updated: 3:57 p.m. ET Sept. 27, 2005

NEW YORK - Everything about Frank Fazio’s new two-bedroom apartment on Manhattan’s Upper West Side is decidedly average, including its price: a hair under $1 million.

With five rooms and about 1,050 square feet of space, the place is a nice size, by New York standards, but it is no mansion. There are no chandeliers, no soaring cathedral ceilings and no doorman downstairs to help with groceries.

"There is nothing that would make you say, 'Wow this place must have cost a million bucks,'" said Fazio, 42, a banker who relocated from Chicago.

Yet pay a million he did, something more Americans are doing these days.

For the first time, there are more than 1 million owner-occupied homes in the United States worth $1 million or more, according to a Census Bureau survey published late last month.

Once a symbol of unusual wealth, million-dollar dwellings now seem like a dime a dozen in some places. San Francisco alone has more than 20,000 of them. There are another 46,000, or so, in Orange County, Calif.

In Manhattan, even someone with a million dollars in their pocket can't buy luxury. The average price for an apartment in all but Harlem and the borough’s northern tip climbed above $1.2 million in the second quarter of 2005, said Gregory Heym, chief economist for Terra Holdings, an owner of real estate brokerages in the city.

"For a million dollars, you couldn’t get a two-bedroom on the East Side," Heym said.

The surge in high-end prices has happened quickly. The Census Bureau’s 2004 American Community Survey found 1,034,386 homes worth at least $1 million in 2004, compared to 595,441 in 2002 and only 394,878 in 2000.

Demand for housing is still outstripping supply in many U.S. markets, said John M. Clapp, a professor of finance and real estate at the University of Connecticut. Low interest rates have made it easier for people to afford more house, as have some new financing methods, like interest-only adjustable mortgages, which initially allow buyers to lower their monthly payments.

Even in land-rich cities like Phoenix, the demand for housing in mature neighborhoods has outstripped supply.

In a few exclusive communities, $1 million won’t buy you more than “an acre of dirt,” said Kristy Ryan, a broker at Re/Max Fine Properties in Scottsdale.

In other parts of town, $1 million is still enough to build a 4,000-square-foot villa with a pool and a three-car garage, but Ryan noted that the same house might have sold for $700,000 just five years ago.

"Some people are disappointed when they get here," she said of the northerners who continue to arrive in droves. "They don’t realize how much it has appreciated in the last few years."


How will homeowners fare?
Federal Reserve Chairman Alan Greenspan has warned that housing prices in some markets have been driven to “unsustainable levels,” and some homeowners have borrowed heavily against their homes’ equity to fuel their consumer spending. If mortgage rates rise, that spending will have to drop and homeowners will be forced to save, Greenspan said in a speech to a bankers group Monday. But he added that homeowners on average have enough equity to absorb the hit if home values drop.

The losers in this hot market, Clapp said, are people buying a home for the first time. At current interest rates, the monthly payment on an $800,000 mortgage is about $4,700 a month. The financial hit is especially bad in places like New York, where the city’s many condominiums and co-ops require monthly maintenance fees that often exceed $1,000 a month.

“I think they are stretched to the limit at this point,” Clapp said. “In some markets, renting makes more sense.”

Real estate has become so hot that the boom has spread to neighborhoods formerly written off by many investors as hopelessly impoverished.

Urban success story
In Bedford Stuyvesant, the section of Brooklyn that was the setting for Spike Lee’s 1989 film, “Do the Right Thing,” some owners were asking more than $950,000 this week for their brownstones.

The prospect that a neighborhood that experienced rioting in the 1960s and a crack epidemic in the late 1980s would fetch such high prices now is both an urban success story, and potentially dismaying, said Richard Weeks, an agent at Coldwell Banker Mid Plaza Real Estate.

If a working-class family can’t afford a home in Bed Stuyvesant, he asked, just where can they buy?

“As an African American, I worry about it,” said Weeks, whose listings include a limestone town house in a fast-gentrifying section of the neighborhood, priced at $975,000. “It is definitely going to become harder for the people who aren’t well off to purchase there.”

If prices stop rising, other potential losers could be speculative investors who were counting on a quick resale of a home at a profit to pay back debt. Economists have split over whether the rise in housing prices constitutes a bubble that could burst at any time.

“In the long run, things have to come back into equilibrium,” Clapp said.

© 2005 The Associated Press.

 

[Greg]

imported post

Twinkies Maker Works Through Bankruptcy

Sunday October 2, 2:57 PM EDT

KANSAS CITY, Mo. (AP) — A year after bankruptcy, the maker of Wonder Bread and Hostess Twinkies has taken steps to solve a host of internal problems but is still not out of trouble.

Interstate Bakeries Corp. has consolidated operations, announced more than 4,000 layoffs and is renegotiating more than 500 separate union contracts than cover a majority of its 32,000 employees as part of its efforts. Also part of its recipe: new products to reach new customers, something that had been a blind spot for the 78-year-old company.

Interstate Bakeries, based in Kansas City, filed for Chapter 11 protection from its creditors last September, blaming inflexible costs and low sales it said were caused by consumers' preference for foods low in carbohydrates.

The company had spent decades amassing national and regional brands and ended up with a glut of bakeries and distribution centers that loaded the company down. New management installed after the bankruptcy filing reviewed operations in five of its 10 regions, closing six low-performing bakeries and consolidating delivery routes, distribution centers and thrift stores along parts of the east and west coasts and the Midwest.

"What they're doing is getting smaller to get more profitable, something we've been advocating for years," said Janney Montgomery Scott analyst Mitchell Pinheiro, who covers the food industry.

Interstate Bakeries also has in recent months begun rolling out new products, a weakness for which analysts frequently lambasted the company in past years.

Under its Wonder brand, the company has test-marketed White Bread Fans, a high-tech bread made with whole wheat but featuring the taste and texture of white bread. The company also has introduced a Wonder brand fortified with minerals and vitamins, aimed at children.

For the first time in decades, Hostess packaging and other marketing efforts received a facelift, designed to look more contemporary and attract greater attention on supermarket shelves. Interstate Bakeries also rolled out Las Delicias de Hostess, a separate line of treats aimed at the Latino market.

Josh Sosland, editor of the Kansas City-based Milling & Baking News, said the products wouldn't change the company's slow-moving image in the industry — the company only released a reduced-carb bread last year, far behind most baking competitors. But he said its recent moves are a start.

"Really what's important is they've shown us they know what's going on in the market," Sosland said. "But it still remains to be seen if these will translate into sustained success for this business."

Investors have at least found something to like in the company's moves. Interstate Bakeries' stock now trades on the highly speculative over-the-counter market but has seen its price rise from $3 to as high as $13 this summer. The stock closed at $9.70 a share on Friday.

While the company has seen monthly sales between $250 million and $270 million since last September, high operations costs and the price of the restructuring have led to $86.5 million in losses. July saw the first monthly profit since bankruptcy and that was thanks to a property sale in California and Idaho.

Meanwhile, even company officials can't say when Interstate Bakeries will resurface from bankruptcy.

After filing for bankruptcy, the company's directors got rid of its former management and brought in New York-based turnaround firm Alvarez & Marsal LLC. John Suckow, one of the firm's partners and now Interstate Bakeries' chief restructuring officer, said he wouldn't know when the company could come out of bankruptcy until the end of the year, at least.

"Timing of our exit is uncertain given the challenges in front of us," Suckow said in response to e-mailed questions from The Associated Press. He said once costs are under control and sales and product development are more consistent, management will work out a plan to emerge from Chapter 11 protection.

Also working against Interstate Bakeries is that, aside from monthly revenue and expense reports ordered by the bankruptcy court, the company hasn't released audited financial information in more than a year. The company, which reported massive problems with its accounting system shortly before filing for bankruptcy, told securities officials in May it won't release the delinquent numbers until Dec. 31.

Last month, Interstate Bakeries said it had renegotiated its first of 500 union contracts, a pair of agreements covering about 500 employees in New York City affiliated with the International Brotherhood of Teamsters, which represents roughly half of the company's unionized workers. Company officials said that while the contracts were small, they could be used as a blueprint for negotiating hundreds of other deals.

They also said the agreements could slow down their review of operations in the remaining five regions and reduce the number of layoffs already announced.

Pinheiro said the company should focus on developing new products, marketing and overseeing manufacturing, and leave getting the product on the shelves to local distributors who likely have better contacts with retailers and know what sells.

He said that would ensure the company got into the most profitable markets and didn't waste resources trying to have a presence in all markets.

"They're focusing on strengthening areas where they do have critical mass, but, man, they're way behind," he said. "Ultimately, the success or failure of Interstate Bakeries will be on the distribution side."

 

[Greg]

imported post

Speak Less, Listen More

October 2, 2005
As told to EVE TAHMINCIOGLU

I WAS always very U.S.-centric, and my wife, Noveline, was the first one to encourage me to travel abroad. She thought it was important to learn about the world and that it would be influential for my career and me.

The first trip we took was a 16-day trip to Europe, seeing pretty much a country a day. We landed in London and ended up in Paris, seeing Germany, Austria, Italy, among others, in between. I realized right away that we were in a different world. We were sitting in London for our first breakfast in Europe, and the young lady serving us did something that would be considered nonhygienic in the United States. She sneezed into her hand and did not go back and wash her hands. She continued to serve us. We decided we were either going to be here and take things as they came or not enjoy our trip. At that very moment, we decided to just enjoy things. The world was different.

I've been to 73 countries since then.

My first job after college was as a district manager in Houston overseeing eight stores in the Jack in the Box chain. The restaurant business was new to me. But I fell in love with it in the first 90 days. It was an opportunity to run something. I was responsible for that space, running a million-dollar business that had it all - labor-management relationships, responsibility for executing the company's plan, serving customers.

I remember a customer stood in one of our dining rooms and asked me, "Are you the boss?" I said I was in charge of this store, but I thought to myself that there was someone who managed that location. But I realized, I was indeed the boss. The customer looked around the dining room and said, "Is this the best you can do?" I looked at the dining room and, you know, he was right. It didn't look that good. Within a week we devised a dining room improvement program for all my restaurants that ended up increasing our mystery-shopper scores.

From then on, I always listened to customer complaints and treated them all as real. Once a month, I would go on the 1-800 complaint line and answer customer complaints for an hour. Hearing real-life customers talk about how disappointed they are is one of the best reality checks.

And listening to employees is also important. I gave a speech once about nine years ago, and a comment came back from someone at the company that I gave four closings and that it was really long. Since then, if I have 30 minutes to speak, I give them a 22-minute speech. I used to write my speeches out completely and memorize them. Now I put an outline together and address key points, more of a conversation.

I learned that from one person who influenced me in my career: Bob Nugent, the chairman and C.E.O. of Jack in the Box. He was the first guy I saw walk into a meeting and sit down at a table and roll up his sleeves and talk about business without giving a canned presentation. We were in a turnaround situation, and he was making road trips and talking to people about plans to change the company. Typically that meeting would not have been held at my level, and it would have lasted an hour with charts and graphs. He just sat down and talked. He listened to me. You could tell he was listening. He answered the questions from us, and they weren't canned answers. My jaw dropped. That meeting lasted four or five hours.

One bad boss I had long ago, whom I won't name, used to have a lot of dinners after meetings with his underlings. He would drink a lot and become a bad drunk, obnoxious, profane and disrespectful. The next time you saw him he didn't remember a thing. But that had a demoralizing effect on the team and his relationship with the team. People didn't respect him. As a leader you are always on stage, and you don't have the room to be self-indulgent. He only lasted a year.

Copyright 2005 The New York Times Company

 

[Greg]

imported post

U.S. stocks face oil, earnings, jobs report next week

Sept. jobs report on tap; Yum!, Costco report earnings

Oct 1, 2005

NEW YORK (MarketWatch) -- Stocks are set to kick off the fourth quarter assailed by concerns over high energy prices, their impact on corporate earnings and uncertainty over the financial and economic cost of Hurricanes Katrina and Rita.

"Market action will continue to be driven by the price of oil futures until we begin to see actual third-quarter earnings reports and assess the impact of the hurricanes and the accompanying higher fuel prices left in their wake," said Robert Pavlik, portfolio manager at Oaktree Asset Management.

Pavlik said there is optimism on Wall Street that the fourth quarter will be the market's "saving" quarter for the entire year.

But "this optimism is at best described as tentative and could likely be swayed by 180 degrees depending on the guidance given over the next two to three weeks."

Historically stocks have performed well in the last three months of the year. The Dow Jones Industrial Average has posted fourth-quarter gains for the last seven years. Both the Nasdaq Composite and the S&P 500 Index have gained for the last four years in a row.

On Friday, stocks closed higher, as the Dow industrials posted its first gain for the month of September in seven years and all three major averages realized gains for the third quarter.

The Dow rose 15.92 points to 10,568.70, with the benchmark index up 0.8% on the month, and up 2.9% for the third quarter.

The Nasdaq Composite Index climbed 10.47 points to 2,151.69, making for a small 0.1% loss for the month but a 4.6% gain for the quarter.

The S&P 500 Index was up 1.13 points at 1,228.81, giving the broad gauge a 0.7% gain for the month of September. The index logged a 3.1% gain for the third quarter.

Even as investors remain cautiously upbeat the fourth quarter could see solid gains for stocks, near-term the market still faces an uphill battle to break out of its trading range, according to Joe Liro, equity strategist at Stone & McCarthy Research Associates.

"We've been stuck in a range, that for the S&P is roughly between 1,125 and 1,250," said Liro. "This is a very large range for a period of time that stretches back to the end of last year."

Liro said the natural proclivity of the market would be to drift back down to the middle of that range on the absence of any significant news allowing it to break out to the upside.

A strong September employment report however could prove a catalyst for gains, according to Liro.

"If it's stronger than expected it will confirm the Fed view, the hurricanes will have a temporary impact the economy can easily handle. If that's the case, the market will feel more optimism about earnings for the fourth quarter and into the first half of 2006."

Conversely, said Liro, an employment report showing weaker-than-expected jobs growth and rising wage pressures would be a "decided negative" for the stock market. It would show the economy is not as strong as the Federal Reserve thinks while inflation, through rising labor costs, is beginning to pick up.

The latest forecast is that the U.S. economy will have lost around 155,000 jobs in September, according to economists polled by MarketWatch . The fall is due primarily to the impact of Hurricane Katrina.

Excluding the effect of the hurricane, economists estimate payrolls rose around 185,000. The unemployment rate is expected to tick up to 5.1% from 4.9% in August.

Among other data of note, investors will be hoping the Institute for Supply Management's September national manufacturing survey confirms last Friday's regional report of the Chicago area showing factory activity in robust health. The ISM index is expected to come in at 51.7% versus 53.6% in August. Any reading over 50% indicates expansion.

"I'll be looking at the Sept. Auto sales on Monday for signs of spending being impacted by higher energy prices," said Pavlik of Oaktree Asset Management.

"This will be hard to figure because the automakers have extended their factory discounts. However a large drop from the August results will likely be attributed to higher fuel prices and displacement of the Gulf Coast residents."

Other reports slated for release include August construction spending data on Monday and August factory orders on Tuesday. After the release of its manufacturing survey, the ISM comes back to the market with the publication of its September services index on Wednesday at 10 a.m. Eastern Time. The index is forecasts to come in at 60.2%, down from 65% in August.

August wholesale trade data and consumer credit figures are set to be released on Friday.