Financial thoughts

Police say three roadside bombs have killed six people at a market in central Baghdad at the beginning of a Muslim festival.

Officials said the bombs, planted on Sunday in different parts of the Iraqi capital’s Shorja market, killed afternoon vendors and afternoon shoppers buying goods for the Eid al-Adha feast.

Police officials said twenty-one people also were wounded. The casualties were confirmed by health officials. All officials spoke on condition of anonymity because they were not authorized to speak to the media quick pay day loan.

Iraqi Shiites mark the beginning of the Eid on Monday, while Sunnis do so on Sunday.

Violence across Iraq has dropped dramatically, but deadly attacks still happen nearly everyday as the U.S. moves to withdraw all of its 33,000 troops from Iraq by the end of the year.

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Marlboro maker Altria Group Inc. said Thursday that it will cut the number of salaried workers at its cigarette business and related service subsidiaries by 15 percent as cigarette sales continue to decline industrywide.

The owner of the nation’s largest cigarette maker, Philip Morris USA, announced plans to trim $400 million in annualized costs by the end of 2013 as it reported quarterly earnings Thursday, which would include about $300 million in employee separation costs and additional reductions in spending.

Altria, based in Richmond, Va., would not say how many people would be impacted by the layoffs. The company said employees that will lose their jobs will be informed by mid-December and most will leave the company by late February. The reductions announced Thursday do not include hourly manufacturing workers.

Altria has 10,000 employees across the U.S., including about 4,600 in Virginia. Cigarettes make up the bulk of its business.

Cigarette volumes have declined annually by about 3 percent in recent years and have fallen significantly since a 62-cents-per-pack federal tax increase in 2009. Additional state tax hikes, smoking bans, health concerns and social stigma have made the cigarette business tougher. Consumers also face economic challenges, and unemployment remains high.

“One of the things that you’re going to have to do in this business is as volume declines … you have to take out cigarette-related infrastructure cost, in order to manage the business properly,” CEO Michael E. Szymanczyk said in a conference call with investors regarding the company’s third-quarter financial results. “You can’t carry infrastructure for a business that was originally designed for a bigger business. You have to continue to shrink it as the overall business shrinks.”

The number of cigarettes that Altria sold declined 9 percent in the third quarter to 33.3 billion cigarettes compared with a year ago, and the segment’s revenue during the quarter fell 6 percent to $3.64 billion, excluding excise taxes.

Tobacco companies like Altria have tried to offset declines in cigarette sales by reining in expenses and raising prices.

During the third quarter, Altria said it completed a multiyear cost savings program, exceeding its goal of reducing costs by $1.5 billion between 2007 and 2011. That program included the closure of its Cabarrus manufacturing facility in North Carolina in 2009.

Others in the industry also have made cost-cutting moves, including closing or consolidating factories and sales forces, and offering buyouts to some workers.

Efforts to reduce costs are commonplace for consumer goods companies in recent times, Edward Jones analyst Jack Russo said.

“Especially in developed markets such as the U.S. and Europe, it’s been very hard to grow for these consumer companies,” Russo said. “And when you can’t grow the top line, you’ve still got to grow profits in line with what Wall Street’s expecting, there’s only one way to do it, you’ve got to cut costs and headcount is part of that.”

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An Australian court has temporarily banned Samsung from selling its new Galaxy tablet computer in the country, another setback for the South Korean electronics giant in a global patent battle with Apple Inc. that accuses it of slavishly copying the iPad and iPhone.

Federal Court Justice Annabelle Bennett on Thursday granted a temporary injunction against sales of Samsung’s Galaxy Tab 10.1 in Australia. The decision prevents Samsung Electronics Co. from selling the device in Australia in its current form until a further court order, or until a pending patent lawsuit between the warring technology giants is resolved.

The ruling is a blow for Samsung, which had hoped to launch the new product in time for Christmas sales. It comes after courts in other countries including Germany and the Netherlands made judgments that upheld Apple’s claims that its intellectual property had been appropriated by Samsung.

The patent battle spanning 10 countries has underlined the perception of Samsung as an efficient imitator among technology companies rather than a pace setter. Over the years, the company has grown to become the global No. 1 in TVs and No. 2 in smartphones by sales. But unlike archrival Apple Inc., it has not mesmerized consumers with its originality and innovation.

In April, Cupertino, California-based Apple Inc. sued Samsung in the United States, alleging the product design, user interface and packaging of Samsung’s Galaxy devices “slavishly copy” the iPhone and iPad.

Suwon, South Korea-based Samsung Electronics Co No teletrack payday loans. fought back with lawsuits of its own, accusing Apple of patent infringement of its wireless telecommunications technology.

Apple filed the Australian lawsuit in July, accusing Samsung of copying its touch screen technology. In her ruling Thursday, Bennett said she was granting the temporary injunction in part because she felt Apple had a sufficient likelihood of winning the trial against Samsung.

The judge’s full orders will not be published until Friday. It was not immediately clear whether Samsung could _ or would _ attempt to sell a variation of the device that removed the features Apple objected to in the Australian lawsuit.

“We are disappointed with this ruling and Samsung will be seeking legal advice on its options,” Samsung said in a statement. “Samsung will continue its legal proceeding against Apple’s claim in order to ensure our innovative products remain available to consumers.”

Samsung, which filed its Australian countersuit in September, said it remained confident it could prove Apple violated its wireless technology patents.

“We will continue to legally assert our intellectual property rights against those who violate Samsung’s patents and free ride on our technology,” the company said in a statement.

An attorney for Apple declined to comment after the hearing.

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Oswald Gruebel, the chief executive of UBS, has dismissed calls for his resignation as politically motivated, even as the Swiss banking giant raised its estimated loss by a rogue trader to $2.3 billion.

UBS AG had previously put the loss at $2 billion when news of the scandal first broke Thursday.

In a bid to reassure investors, the Zurich-based bank said Sunday it has “now covered the risk resulting from the unauthorized trading” and its equities business “is again operating normally within its previously defined risk limits.”

UBS also confirmed for the first time that the trader, 31-year-old Kweku Adoboli, was already under investigation by the bank when he revealed his actions to authorities Wednesday.

“The loss resulted from unauthorized speculative trading in various S&P 500, DAX, and EuroStoxx index futures over the last three months,” UBS said, adding that the magnitude of the bank’s risk exposure was hidden by fake trades.

Adoboli remains in custody in London, charged Friday with acts of fraud and false accounting dating back to 2008. His next court appearance is Thursday.

The fact that the fraud took place over three years raises serious questions about the bank’s ability to manage its risk. UBS said it has set up a special committee chaired by David Sidwell, the bank’s senior independent director, to investigate the incident.

But speaking for the first time since UBS revealed the loss Thursday, Gruebel told the Swiss weekly Der Sonntag that the loss couldn’t have been prevented.

“If someone acts with criminal energy, then you can’t do anything. That will always be the case in our business,” he said in the interview published Sunday.

But some Swiss politicians and commentators have called for Gruebel’s head to roll over the loss, which is likely to put UBS’s third-quarter results deep in the red. Such a move would signal defeat for the gravel-voiced German, who was brought in more than two years ago to revive the bank’s fortunes after a series of missteps that included vast losses in the U.S. subprime mortgage market and an embarrassing U.S. tax evasion case cash advance loans.

Gruebel told Der Sonntag that he has no intentions of resigning.

“I’m responsible for everything that happens at the bank,” Gruebel told the paper. “But if you ask me whether I feel guilty, then I would say no.”

Gruebel pledged to stamp out risky business practices at UBS when he came out of retirement in early 2009 to take the helm of Switzerland’s biggest bank. UBS had just suffered its biggest losses ever due to mistakes by the very investment unit that is now making headlines again, and had to take a $60 billion bailout from the Swiss government to stay afloat.

Swiss media on Sunday cited unnamed UBS board members saying the 67-year-old Gruebel retains the confidence of major shareholders, including the Government of Singapore Investment Corp. The sovereign wealth fund holds more than 6.4 percent of UBS’s stock, whose value dropped almost 10 percent following the announcement about the fraud.

Gruebel is expected to survive until at least Nov. 17, when he is presents investors with an update on the bank’s activities. Banking experts in Switzerland have suggested the investors day may be used to announce a downsizing or even a spin-off of the investment unit.

In a previous case of rogue trading causing massive losses, the chairman of French bank Societe Generale, Daniel Bouton, stepped down more than a year after the bank revealed that a single trader lost euro4.9 billion ($6.7 billion). Bouton said that repeated attacks on him were becoming a threat to the bank’s health.

So far, it is unclear who could even replace Gruebel.

The only name that has been mentioned is that of Sergio P. Ermotti, chief executive of the bank’s Europe, Middle East and Africa business. Promoting Ermotti would satisfy those who want to see a Swiss at the head of the country’s most important financial institution, to counterbalance incoming chairman Axel Weber, another German and a former president of Deutsche Bank.

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Bank of America is slashing 30,000 jobs as part of an effort to reverse a crisis of confidence among investors. It’s the largest single job reduction by a U.S. company this year.

What CEO Brian Moynihan is trying to do is nothing less than save the nation’s largest bank. Investors have cut the bank’s market value by half this year. The bank is facing huge liabilities over soured mortgage investments and concerns over whether it has enough capital to withstand more financial shocks.

The cuts, which affect Bank of America’s consumer businesses, represent 10 percent of the Charlotte, N.C. bank’s work force. The bank said it hopes the cuts and other measures will result in $5 billion in annual savings by 2014. The bank has already cut 6,000 jobs this year. The bank also said it would look for cost savings at its other businesses in a six-month review that will begin next month.

“It’s as if someone has hit the panic button,” said Bert Ely, president of banking consultant Ely & Co.

Moynihan has been taking other steps to shore up the bank’s standing. Last week he shook up the bank’s top management ranks and has been selling parts of the company to raise cash. Last month Warren Buffett’s Berkshire Hathaway Inc. invested $5 billion in the company.

Moynihan has struggled to calm investors ever since he took the top job in January 2010. He is reversing the empire-building strategy of his predecessor, Ken Lewis, who stepped down amid controversy over the purchase of Merrill Lynch during the financial crisis. Lewis also engineered the ill-fated acquisition of Countrywide Financial Corp., then the country’s largest mortgage lender, which has led to heavy financial losses, lawsuits and regulatory probes.

Moynihan is now taking a knife to the company, hoping to shrink it down to a more manageable size even if it means losing the bragging rights of being the nation’s largest bank. “We don’t have to be the biggest company out there,” said Moynihan.

Bank of America’s stock has lost 48 percent this year, largely because of problems related to poorly-written mortgages at Countrywide. Just in the first half of the year the bank paid out $12 payday loan companies.7 billion to settle claims from investors that it sold them securities backed by faulty mortgages.

Some investors and analysts worry that the job cuts will lead to poor customer service and the bank will lose market share to rivals at a time when there are signs that the economy is slowing down. They also wonder if the job cuts are enough to produce the profits the bank needs to overcome the spiraling costs from its mortgage business.

“There is a fair amount of skepticism on Wall Street, and Brian is doing as much as he can do in the face of a worsening economy,” said Nancy Bush, an analyst and contributing editor at SNL Financial, a research firm.

The bank’s stock was down for most of the afternoon but rose along with the overall market to close up 7 cents, or 1 percent, at $7.05.

The job cuts follow a revamp of the bank’s top management team last week. Two senior executives, wealth management head Sallie Krawcheck and head of consumer banking Joe Price, left the bank. The bank also elevated commercial banking chief David Darnell and investment banking head Tom Montag to co-chief operating officers, reporting to Moynihan.

Bank of America is seen as one of the most bloated banks in the industry. The payroll cuts will bring its work force in line with some of its key rivals. JPMorgan Chase & Co. had 250,000 workers at the end of the second quarter.

“Financial companies have already been cutting for a few months now. He’s a little late to the game already,” said Walter Todd, a portfolio manager at Greenwood Capital, which owns Bank of America preferred shares.

The cuts are the largest by a U.S. employer this year, according to the outplacement consulting firm Challenger, Gray & Christmas Inc. Merck & Co. said this year it would cut 13,000 jobs. Bank of America’s cuts are the largest since the Postal Service announced 30,000 job cuts last year. General Motors Co. cut 47,000 jobs in 2009.

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On Tuesday, Missouri lawmakers will start debating $360 million in proposed tax breaks to help turn St. Louis’ underused airport into a bustling international cargo hub.

Yet, as currently written, that bill could commit Missouri to spending $300 million of that to build factories and giant freezers

CLAYTON

U.S. retailers who come to Canada face higher rents, a tighter market, and higher real estate taxes than they do in their home market, according to industry experts.

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The Toronto stock market was sharply lower Wednesday morning, a day after staging a big rally to end a major slide that had been precipitated by fears of another recession.

The S&P/TSX composite index dropped 127.02 points 11,982.24 and the junior TSX Venture Exchange gained 14.99 points to 1,726.21.

The main index had soared 438 points Tuesday after the U.S. Federal Reserve provided some relief with a promise to leave interest rates ultra-low until mid-2013. But on Wednesday, there was little appetite to extend gains after investors snapped up stocks beaten down during a market rout that carved 10 per cent from the TSX over the previous six sessions.

The central problems confronting markets remain: dwindling confidence in political leaders and central bankers to get a grip on the European government debt crisis and a growing conviction that the U.S. is sliding back into recession. A downgrade of U.S. government debt by S&P last Friday served to further sour investor sentiment.

The U.S. Federal Reserve said Tuesday that it would likely keep its Fed funds rate at near zero per cent through 2013 to help the ailing U.S. economy.

The Canadian dollar was down 1.3 cents to 100.86 cents US as investors believe the Fed

Greek officials launched talks with international bankers Thursday on the details of a complex plan to restructure the loan-dependent country’s privately held debt under a new bailout deal.

Finance Minister Evangelos Venizelos said the Athens negotiations started “in a most encouraging manner.”

“We have started (the talks) and will conclude very soon because we face specific bonds maturing in August and September and want either to have finished before that or to have formulated a transitional framework until we have finished,” Venizelos told parliament.

Last week, European leaders agreed on a second bailout for Greece worth a total euro109 billion ($155 billion) _ on top of a euro110 billion deal in 2010 _ to protect the country from looming default and ease its massive debt burden.

The agreement called for banks, pension funds and other private institutions that hold Greek debt to voluntarily swap their bonds for new ones with lower interest rates or slightly smaller face value.

On Thursday, the French finance ministry said local lenders will participate with all their Greek bonds that mature by 2020, worth “about euro15 billion.”

Provided overall private sector participation meets a targeted 90 percent, the swap will involve some euro135 billion worth of bonds that mature by the end of 2020, with bondholders taking a net 21 percent loss.

“We want the process to be immediately implemented and we want the duration of its implementation to be the shortest possible,” Venizelos said.

Greece is unable to borrow from international money markets as the interest rates currently demanded exceed 15 percent, with its bonds designated barely above the level of default by all three major international ratings agencies.

The duration of the bond swap process is crucial, because for that period Greece will most likely be rated in default _ a humiliating first for a country using the euro payday advance.

However, provisions in the bailout that secure Greek banks’ credit lines mean the default rating should have limited practical repercussions.

“There will be no problem for Greek banks,” Venizelos said. “There is no issue with their liquidity, and ratings have no practical significance.”

Despite strong opposition from trade unions and even some of its own lawmakers, Greece’s Socialist government has implemented harsh austerity measures for more than a year, cutting pensions and public sector salaries while increasing taxes and retirement ages.

Other measures include an ambitious euro50 billion ($71 billion) privatization program by 2015, and a series of reforms to open up tightly regulated professions such as lawyers, pharmacists and truck drivers.

Taxi drivers, who are also affected by the reforms, have been on strike for the past 11 days, alarming Greece’s tourism industry _ a key earner _ by periodically blocking airports and harbors.

On Thursday, hundreds of protesting taxi drivers clashed with the police in Greece’s largest port of Piraeus, which adjoins Athens, after preventing thousands of foreign cruise ship passengers from boarding tour coaches to the capital’s ancient sites. No injuries or arrests were reported. Strikers also held a peaceful protest at the northern port of Thessaloniki.

Tourism Minister Pavlos Geroulanos appealed for calm.

“The situation at the harbor this morning is extremely dangerous for tourism,” he said. “Every Greek family lives from tourism, and I believe it is a sector that everybody must protect.”

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