Bloggy Business Today

By Antonella Ciancio

WASHINGTON |
Sun May 6, 2012 2:51pm EDT

WASHINGTON (Reuters) – Monica Soltes was excited 10 years ago to leave Merrill Lynch and start her own business as an independent financial planner in San Diego. After she fell off a porch at her cousin’s cottage and broke her elbow, her dreams unraveled.

Following multiple surgeries that confined her to bed, Soltes was diagnosed with a hormonal disease that is weakening her bones. She also ran out of money, signed up for disability benefits and has been unable to work again.

The 47-year-old from Michigan is among the 8.7 million American workers on the U.S. disability rolls, an important part of the social safety net. Since the recession began in 2007, she has been joined by a record number of people seeking disability benefits, raising questions about the program’s solvency and casting a pall over future prospects for U.S. economic growth.

Applicants soared to a record high of 2.94 million in 2010, and have held above 18 per 1,000 workers in the past three years – a far higher rate than in previous recessions.

“There are serious concerns that this increase in disability benefits is a type of ‘hidden unemployment,’” said Richard Burkhauser, a professor of economics at Cornell University.

Even though only 35 percent of applicants are awarded disability, those receiving disability benefits now account for 5.6 percent of the working age population, up from about 4.5 percent in 2007. At this rate of growth, Burkhauser estimates that total would reach over 7 percent by 2018.

The problem is those on disability rarely return to work, reducing the overall size of the labor force and weakening the U.S. economy’s growth prospects. Rising gross domestic product (GDP) depends upon a growing workforce and rising productivity.

Since the recession began, the share of Americans actively looking for work, known as the labor participation rate, has fallen to 63.6 percent from 66 percent in 2007.

Some people give up looking for work temporarily, but the size of the decline has perplexed economists and disability is clearly a factor.

JP Morgan estimates it accounts for half a percentage point of the drop. With jobs scarce, it causes little drag on growth.

But Chris Low, chief economist at FTN Financial, said over time, disability will rob roughly $250 billion – or 1.6 percent – from total output each year once the economy returns to full employment, probably within the next five to seven years. This will also widen the budget deficit.

“There is no

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By Rodrigo Campos

NEW YORK |
Fri May 4, 2012 7:12pm EDT

NEW YORK (Reuters) – After Wall Street ended its worst week of the year on Friday, U.S. stock investors will look across the Atlantic next week to take their cue from Europe as France and Greece go to the polls.

That could offer some respite from a string of weak U.S. economic data and the earnings season winding down.

Markets worldwide have closely watched developments in Europe for the past several months, with calls for austerity seen as positive for stocks as they seek to prevent a credit crisis in the region that could take down or deeply hurt the global economic recovery.

But an economic slowdown throughout the region has amplified calls for a change of direction.

In France, the prospect of a victory by Francois Hollande over conservative incumbent Nicolas Sarkozy, which would instate the country’s first Socialist president since 1995, initially alarmed some investors. Hollande’s win could be a hurdle to the German-led drive for austerity in Europe.

Adding to the markets’ jitters: Anti-bailout parties are expected to perform well in Greece’s vote on Sunday, raising the risk of more opposition to already unpopular reforms.

“There’s potential for uncertainty and instability in Europe,” said John Praveen, managing director of Prudential International Investment Advisors in Newark, New Jersey. “The market is pricing in extremely negative scenarios.”

Praveen said there is still room for a market rebound if Hollande, should he win the presidency, comes out with a more conciliatory tone that would ease investors’ fears about France’s commitment to fiscal stability.

Investors are waiting to see if Hollande, who holds an advantage in polls over Sarkozy, will be able to square France’s need for fiscal reforms with his plans to promote growth.

“I’m not quite sure, regardless of who wins, does it say ‘sell the SP’? … It just continues the uncertainty, no matter who wins,” said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago.

TECHNICALS RULE IN A LIGHT WEEK

Technical levels could regain importance next week as the U.S. economic data calendar thins and fewer than 30 of the SP 500 components are expected to report earnings.

“On no news, we all start looking at charts,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati.

“We found support recently on the SP near 1,360. If we violate that, it would be a bad sign,” he said.

The SP 500 slipped below that level twice last month and bounced back, but has

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By Edward Krudy

NEW YORK |
Thu May 3, 2012 4:31pm EDT

NEW YORK (Reuters) – Stocks fell on Thursday as economic data sent mixed signals on the recovery a day before the April payrolls report, while shares of Green Mountain (GMCR.O) plunged after poor results.

Slower-than-expected growth in the dominant U.S. services sector drove the day’s trading. The retail sector dragged the market lower after several chains, including Target Corp (TGT.N) and Gap Inc (GPS.N), fell after missing April sales estimates.

Market expectations for Friday’s non-farm payrolls report have fallen this week. Traders now suspect the economy added 125,000 to 150,000 jobs in April, below a Reuters consensus forecast of 170,000. One trader said there had even been some talk of a number below 100,000.

Still, the SP 500 keeps up its flirtation with new four-year highs, although it has struggled to rise above resistance at the 1,400 level.

Ryan Larson, head of equity trading at RBC Capital Management, said muted reactions to recent signs of economic weakness suggest some investors are counting on more monetary stimulus from the Federal Reserve if the data gets worse.

“You are going back to ‘bad numbers are good numbers’,” he said, referring to the latest change in Wall Street’s perception of discouraging data. “The market will believe that (Fed Chairman) Bernanke Co will have to step in.”

Shares of Green Mountain Coffee Roasters lost 47.8 percent to $25.87 a day after the company badly missed sales estimates for the second time in three quarters. The stock was the second-biggest drag on the Nasdaq 100 .

The Dow Jones industrial average .DJI dropped 61.98 points, or 0.47 percent, to 13,206.59 at the close. The Standard Poor’s 500 Index .SPX fell 10.74 points, or 0.77 percent, to 1,391.57. The Nasdaq Composite Index .IXIC lost 35.55 points, or 1.16 percent, to 3,024.30.

With Thursday’s decline, the SP 500 has fallen close to its 50-day moving average of around 1,386.48. The benchmark index has retraced about 50 percent of its move off its closing low of 1,358.59 on April 10.

The SP 500 slipped in April, the first monthly drop since November, on softening domestic data, coupled with flare-ups in the euro zone’s debt crisis.

In Thursday’s session, retail stocks fell after several large chains missed sales estimates in April. The results were a troubling sign for consumer spending.

Gap Inc (GPS.N) fell 1.6 percent to $28.67 while Target Corp (TGT.N) dropped 2.5 percent to $56.55. The SP retail index .RLX lost 0.9 percent.

Initial jobless claims

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LONDON |
Wed May 2, 2012 4:15am EDT

LONDON (Reuters) – U.S. stock index futures pointed to a steady open on Wall Street on Wednesday, with futures for the SP 500, the Dow Jones and the Nasdaq 100 trading flat to 0.05 percent lower.

The Dow closed at its highest level in more than four years on Tuesday after U.S. manufacturing expanded at a faster pace than expected in April, easing jitters about a slowdown in the economic recovery.

The Mortgage Bankers Association releases its Weekly Mortgage Market Index for the week ended April 27 at 1100 GMT, versus the prior week. The index read 697.7 and the refinancing index was 3,715.2 in the previous week.

At 1215 GMT, Automatic Data Processing (ADP) releases its April employment report. Economists expect 177,000 jobs were created in April, versus 209,000 new jobs in March.

Major companies announcing results included Time Warner (TWX.N), Visa (V.N), MasterCard (MA.N), Whole Foods (WFM.O), Symantec (SYMC.O) and Franklin Resources.

The Institute for Supply Management-New York releases its April index of regional business activity at 1345 GMT. In March, the index read 551.8.

U.S. auto sales rose 2.3 percent in April, helped by strong gains at Toyota Motor Corp (7203.T) and Chrysler Group LLC, as American shoppers looked to replace their aging cars and trucks and the broader U.S. economy showed signs of strength.

The Commerce Department releases March factory orders at 10:00 a.m EDT (1400 GMT). Economists expect a 1.6 percent drop, compared with a 1.3 percent rise in February.

BSkyB (BSY.L) posted record nine-month operating profit boosted by strong broadband growth, as Britain’s dominant pay-TV group showed few side effects from problems affecting its biggest shareholder – Rupert Murdoch’s News Corp (NWSA.O).

The roadshow for Facebook Inc’s (FB.O) initial public offering is scheduled to start on Monday, meaning the company’s shares should begin trading on May 18, a source familiar with the process said on Tuesday.

European shares rose 0.4 percent on Wednesday as investors had their first chance to react to encouraging U.S. data after a holiday in the previous session.

Germany’s manufacturing sector shrank at the fastest pace in nearly three years in April, as export orders plunged, raising questions over whether Europe’s biggest economy can continue to drive growth in the euro zone.

The Dow Jones industrial average .DJI gained 65.69 points, or 0.50 percent, to 13,279.32 at the close on Tuesday. The Standard Poor’s 500 Index .SPX rose 7.91 points, or 0.57 percent, to 1,405.82. The Nasdaq Composite Index .IXIC added 4.08 points, or 0.13

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By Edward Krudy

NEW YORK |
Mon Apr 30, 2012 4:39pm EDT

NEW YORK (Reuters) – The SP 500 posted its first monthly decline since November on Monday, as stocks slipped in one of the lightest trading days of the year on signs the U.S. economy may be slowing and as a recession in Spain highlighted risks in the euro zone.

Despite Monday’s decline, the picture was not overwhelmingly negative. The SP closed out April with a decline of 0.8 percent, after four straight days of gains last week helped the index pare much steeper losses for the month.

Still, a recent string of economic data suggests the economy may slow in the summer months and has caused the market to stall just shy of the four-year highs reached earlier in the month. A much sharper-than-expected decline in Midwestern business activity in April reported on Monday by an industry group was the latest evidence of a slowdown.

“We had such a strong first quarter, and we’ve lost that momentum in the last two weeks,” said Jake Dollarhide, chief executive at Longbow Asset Management in Tulsa, Oklahoma. The data “reinforces the ominous tone on Wall Street, along with the fears we have about Europe.”

Composite trading volume was the third lightest of the year at 5.8 billion on Monday compared with a daily average of this year of around 6.8 billion, according to preliminary data. The CBOE volatility index .VIX, or VIX, climbed 5.1 percent, after earlier hitting its highest level in more than a week.

Spain on Monday reported its economy contracted in the first quarter, dragging the country into recession as deep government spending cuts to reduce a massive deficit and troubles in the banking sector likely delayed any return to growth. Though expected, the news highlighted the serious headwinds the world economy faces.

Banks were among the top decliners on Wall Street after Standard Poor’s cut the credit ratings of 11 Spanish banks on Monday, following its downgrade of Spain last week.

The SP 500 financial sector index .GSPF fell 0.6 percent while Bank of America Corp (BAC.N) dropped 1.7 percent to $8.11. Shares of Spanish bank Santander (STD.N) traded in New York fell 2.2 percent to $6.33 and are down 16 percent this year.

The Dow Jones industrial average .DJI dropped 14.68 points, or 0.11 percent, to 13,213.63. The Standard Poor’s 500 Index .SPX fell 5.45 points, or 0.39 percent, to 1,397.91. The Nasdaq Composite Index .IXIC lost 22.84 points, or 0.74 percent, to

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