Financial thoughts

Shares of American Apparel plummeted another 21% Wednesday, on top of a comparable drop the previous day, as the casual clothing chain said accounting troubles that have put it on the brink of closing have led to investigations.

American Apparel (APP) shares were off 22 cents to 81 cents. The stock dropped 22% Wednesday when the Los Angeles-based retailer said a steep sales slump and manufacturing problems could cause the company to default on its loans.

In a government filing Tuesday, American Apparel said the U. S. Attorney’s Office for the Southern District of New York sent it a subpoena relating to the circumstances around Deloitte & Touche’s resignation as the company’s auditor last month.

The filing also said the Securities and Exchange Commission has made inquiries into the situation.

American Apparel said Deloitte is investigating the "reliability" of the company’s consolidated financial statements for all of 2009, the company’s financial results for the first quarter of 2010 and its projected financial results for the rest of 2010 instant payday loans.

Officials for the U.S. Attorney’s office in New York and the SEC both declined comment. Deloitte representatives did not immediately return a call for comment.

Defaulting on its loans could sink the company within the next 12 months, the company said. American Apparel added it is in talks with its creditors to amend its loan agreements.

American Apparel said it expects to post a loss from operations of between $5 million to $7 million for the second quarter. It also warned losses from operations would continue into its third quarter. 

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Millions of jobless Americans are getting their unemployment benefits back.

Hours after the House voted Thursday to push back the deadline to file for extended unemployment benefits until the end of November, President Obama signed the measure into law.

The approval came a day after the Senate voted 59 to 39 to restore the payments, ending a seven-week stalemate.

Some 2.9 million people were scheduled to run out of benefits by the end of the week. The jobless stopped getting their checks in early June, after Congress failed to extend the deadline to apply for unemployment insurance.

Senate Republicans, as well as Nebraska Democrat Ben Nelson, prevented the legislation’s passage, saying it should be paid for first. They suggested covering the $34 billion tab with unused stimulus money, a step the Senate Democratic leadership rejected.

Federal unemployment payments, which last up to 73 weeks, kick in after the state-funded 26 weeks of coverage expire. These federal benefits are divided into tiers, and the jobless must apply each time they move into a new tier Online payday loans.

The payments will be retroactive to the previous deadline of June 2. But it could take up to a month for states to start sending the checks again, experts said.

Lynda Kahn of Coral Springs, Fla., can’t wait to get that check. She stopped getting benefits last week and applied for Medicaid, only to be turned down because she doesn’t have dependent children. But she did get a supermarket gift card from a local charity to supplement her $200 a month food stamp allotment.

Kahn depends on her unemployment check, which was $275 a week plus a $25 stimulus-funded supplement that will be discontinued for those newly unemployed. She lost her job as a manager for a doctor’s office last August.

"It covers my mortgage payment," she said. 

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Sensor technology developed by Southwest Research Institute has been named one of the 100 most significant technological achievements by R&D Magazine.

Southwest Research Institute (SwRI) created an underwater cave-mapping sensor that has the capability of traveling down a cave to gauge the path, dimensions and morphology of the tunnel. SwRI officials say these remote neutrally buoyant sensors work by injecting a dye in the water that can be used to determine the path and travel time of water through caves. The sensors are designed to float through the cave or conduit to measure the path by using an array of ultrasound sensors.

Local scientists say cave diving is extremely dangerous and is limited to large passageways, relatively shallow caves and limited distances.

“The information captured from these sensors is critically important for water-resource management and geotechnical risk assessment,” says Ronald Green, a scientist in the geosciences and engineering division at SwRI and a principal developer of the sensor paperless payday loans. “Adequate management of karst aquifers requires knowledge of water flow through caves and conduits, including location, size and morphology of the complex interconnected voids.”

SwRI officials say there could be applications in pipelines or sanitary sewers. Also, there could be future applications in flooded underground mines, tunnels or conduits that are not safe for manned entry.

San Antonio-based SwRI is an independent, nonprofit applied research and development organization. It has more than 3,200 employees and an annual research volume of more than $564 million. The institute has won 35 R&D 100 Awards since 1971. SwRI will accept its 2010 R&D Award Nov. 11 in Orlando.

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Graphic Packaging International Inc. plans to close its beverage-packaging plant in Golden at the end of October.

The plant at 4455 Table Mountain Drive employs about 150 workers. Most are in manufacturing jobs, and Graphic Packaging hopes to be able to move them to its other facilities around the country, said company spokeswoman Cindy Baerman. About 12 research-and-development employees will remain in Golden, she said.

In a statement, Graphic Packaging said the Golden shutdown “reflects the company’s ongoing efforts to align its manufacturing footprint to the changing needs of its beverage customers and improve its cost structure and margins to better position it for future growth.” It said the plant’s business and equipment will be moved to the company’s other U.S. locations.

“While closing the Golden facility is a difficult decision, it is necessary to ensure that we are able to consistently serve our customers and meet their changing needs from a solid network of efficient, low-cost manufacturing facilities, even in the face of the ongoing economic challenges of today’s marketplace,” David Scheible, the company’s president and CEO, said in the statement.

Graphic Packaging International is a unit of Graphic Packaging Holding Co. (NYSE: GPK), of Marietta, Ga. The company, which has about 15,000 workers worldwide, makes paperboard packaging for food, beverages and other consumer products and is a major producer of folding cartons, coated-recycled boxboard and specialty bag packaging.

The company is a descendant of Coors Paper Packaging, a packaging arm of Coors Brewing Co. that was launched in the 1970s.

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Five college students were awarded a total of $15,000 Wednesday for having the top business plans at the first annual Mason Wells BizStarts Collegiate Business Plan Competition, BizStarts Milwaukee announced in a news release Thursday.

BizStarts Milwaukee is a nonprofit organization dedicated to promoting entrepreneurship in the Milwaukee area.

Fourteen student plans were entered by eight participating colleges. Judges read the top five plans and listened to presentations by the finalists Wednesday to determine the final ranking.

Winners were:

1st place, $5,000: Gabriel Wahab, US Combat Sports — a website where fans of Ultimate Fighting Championship and other combat sports can find fighting dates and locations, player statistics and related information.

2nd place, $4,000: Tyler Sailsbery, Nomoredorms.com — a website for college students seeking off-campus housing.

3rd place, $3,000: Trevor Whately, 5tooltee — a new product designed for use by baseball players that combines different styles of batting tees into a single, easy-to-use tee.

4th place, $2,000: Hugh Morris, Proximity LLC — a marketing alert system that uses the technology of smart phones to forward special coupons, messages or deals to users whenever they are in the proximity of their favorite stores.

5th place, $1,000: Vince Anewenter, Eco-Disk — a company that creates disc golf putters and drivers made from recycled plastic and resin.

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Nearly 40 public school systems in North Carolina — including four in the Charlotte region — will share $5.4 million in federal stimulus funding to help save money on utility bills and create jobs.

Grants have been awarded to the following local systems:

•Central Piedmont Community College: $200,000 to repair and upgrade the central energy plant for the uptown Charlotte campus and improve lighting. Total cost of the project is $210,630.

•Charlotte-Mecklenburg Schools: $200,000 for lighting retrofits in 16 schools. The project’s total cost is $400,000.

•Gaston County Schools: $169,200 to upgrade heating and air-conditioning systems and add system controls for Stanley Middle School and North Gaston High School. Total cost of the project is $369,200.

•Rowan-Cabarrus Community College: $177,521 for lighting improvements, occupancy sensors and HVAC system upgrades. Total cost of the project is $194,546.

The grants program is administered by the N.C. Energy Office, part of the state’s Department of Commerce, to encourage energy conservation and economic investment in counties, municipalities, community colleges and public schools.

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Wells Fargo gave $21.6 million to Bay Area nonprofits in 2009.

The greatest focus area for Wells' philanthropy was community development, followed by education. The giving broke down into the following focus areas:

• Community development: $8 million

• Education: $6.8 million

• Human services: $3.2 million

• Arts and culture: $2.4 million

• Civic: $905,000

• Environment: $215,000

Wells Fargo also announced that its giving nationwide totaled $202 million.

The company said that the $21.6 million to Bay Area nonprofits is a 30 percent increase over 2008 giving, though the higher numbers reflect Wells Fargo's takeover of Wachovia, which also had a strong corporate philanthropy program.

In 2008, Wells Fargo gave $16.7 million to local nonprofits and Wachovia gave $5.3 million. Nationwide, Wells gave $102 million in 2008 and Wachovia gave $124 million.

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The Dow and S&P 500 ended at fresh 18-month highs Thursday, but tech concerns limited the Nasdaq composite’s gains ahead of a long weekend.

The Dow Jones industrial average (INDU) added 70 points, or 0.7%, ending at 10,927.07, its highest close since Sept. 26, 2008, when it ended the session at 11,143.13. The blue-chip indicator rose to within 43 points of 11,000, a key psychological indicator, before pulling back.

The S&P 500 index (SPX) gained 9 points, or 0.7%. The Nasdaq composite (COMP) added 5 points, or 0.2%.

Stocks rose through the early afternoon as investors welcomed reports showing the pace of job losses is slowing and manufacturing is picking up both in the U.S. and abroad. The advance briefly lost steam in mid-afternoon, before picking up again near the close. Stock markets will be closed for Good Friday, although Treasury markets will have a shortened session.

Weaker-than-forecast readings on private-sector employment and manufacturing dragged on stocks Wednesday at the end of an up quarter, in which the Dow gained 4.1%, the S&P 500 gained 4.9% and the Nasdaq gained 5.7%.

Stocks have been on the rise since mid- February, as worries about a global debt crisis have given way to renewed optimism about the economic recovery. All three major stock indexes have risen in six of the last seven weeks.

On Thursday, reports showed that weekly jobless claims continued to slip, U.S. manufacturing continued grew at the fastest pace since 2004 and construction spending retreated. Reports coming out of China and the United Kingdom showed manufacturing activity picked up the pace in March.

"The initial claims number shows we are seeing shows slow and steady improvement in the jobs market and the manufacturing numbers are providing reassurance about the global economy," said Jim Baird, chief investment strategist at Plante Moran Financial Advisors.

However, he said Wednesday’s weak report on private-sector employment and the still relatively high weekly jobless claims numbers over the last few months show the jobs market is not recovering enough to spark economic growth.

"To get a good number tomorrow would be a strong indicator that we are moving toward a period of job creation," Baird said.

Jobs market: The number of Americans filing new claims for unemployment fell last week to 439,000 from 445,000 in the previous week, matching the lowest level since August 2008. Forecasts were for 440,000 claims, according to a consensus of economists surveyed by Briefing.com.

The Labor Department report also showed that continuing claims, a measure of Americans who have been receiving benefits for a year or more, fell to 4,662,000 from 4,668,000 the previous week. Economists thought continuing claims would fall to 4,618,000.

A separate report from outplacement firm Challenger, Gray & Christmas showed that planned job cuts rose in March. Employers said they were planing to cut 67,611 jobs in March, a rise of 61% from February’s 42,090 cuts.

The biggest employment report of the week is Friday’s March jobs report from the government. Employers are expected to have added 190,000 jobs to their payrolls in March after cutting 36,000 in February. The unemployment rate, generated by a separate survey, is expected to hold steady at 9.7%.

Manufacturing: The Institute for Supply Management’s manufacturing indexrose to 59.6 in March from 56.5 in the previous month. Economists surveyed by Briefing.com expected a reading of 57.

February construction spending fell 1.3% after falling 1.4% in January, according to a Census Bureau report released in the morning. Economists thought it would fall 1%.

Company news: BlackBerry maker Research in Motion (RIMM) slipped after it posted fiscal fourth-quarter earnings and revenue that rose from a year earlier, but missed forecasts due to weaker-than-expected phone shipments.

The company also issued a fiscal first-quarter earnings and revenue forecast that was better than expected. But shares fell Thursday as analysts and investors expressed worries that the company is not keeping up with Apple (AAPL, Fortune 500) and Google (GOOG, Fortune 500).

Primerica, Citigroup’s soon-to-be spun-off life insurance division rallied more than 20% in its first day of trading as a public company.

Autos: General Motors (GM, Fortune 500) and Ford Motor (F, Fortune 500) were among the automakers reporting improved sales in March, although forecasts were short of more bullish analyst estimates released earlier in the month.

Ford said sales rose 40% versus earlier forecasts for a gain of 55%. GM said sales rose 21% versus forecasts for a gain of 27%.

Overall auto industry sales were expected to rise sharply in March in comparison to a weak period a year earlier.

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

COMEX gold for June delivery rose $11.60 to settle at $1,126.10 per ounce.

U.S. light crude oil for May delivery rose $1.11 to settle at $84.87 a barrel on the New York Mercantile Exchange, the highest close for crude since October 2008.

Bonds: Treasury prices tumbled, raising the yield on the 10-year note to 3.86% from 3.83% late Wednesday. Treasury prices and yields move in opposite directions.

World markets: In overseas trading, European markets rallied. Asian markets ended higher as well.

Market breadth was negative. On the New York Stock Exchange, winners beat losers eleven to four on volume of 930 million shares. On the Nasdaq, advancers beat decliners five to four on volume of 2.28 billion shares.  

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Though home prices moderated nationally in January, home prices in the Nashville-Davidson-Murfreesboro-Franklin area continued to decline, according to data released today by First American CoreLogic.

Nashville-area home prices declined by 4.21 percent in January compared to one year ago, a deepening of the 3.94 percent reduction witnessed in December 2009. Excluding distressed sales, the January year-over-year decline was 2.46 percent, compared to December’s 3.04 percent decline. First American CoreLogic forecast that Nashville-area home prices, including distressed sales, will tick up 0 cheapest personal loan rates.10 percent over the next 12 months.

National home prices declined by 0.7 percent in January, compared to the national decline of 3.4 percent in December. Nationally, First American CoreLogic expects home prices to rebound 4.5 percent over the next 12 months.

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The Philippine central bank cut the amount of money available for loans to lenders through its so- called rediscounting facility to reduce cash in the economy, even as it kept interest rates at a record low.

Bangko Sentral ng Pilipinas reduced the budget for the facility to 40 billion pesos ($875 million) from 60 billion pesos, effective March 15, it said in a statement in Manila today. Policy makers kept the benchmark interest rate at 4 percent for a sixth straight meeting, as expected by all 15 economists surveyed by Bloomberg News.

Asian nations from China to Malaysia have started withdrawing monetary stimulus as growth accelerates and inflation returns amid the global economic recovery. Philippine exports, which account for about a third of the nation’s $167 billion economy, rose at the fastest pace in more than 14 years in January, a report showed yesterday.

“Upbeat export readings would nudge policy makers’ priority away from downside risks to growth, and more into emerging inflation risks,” Jun Trinidad, an economist at Citigroup Inc. in Manila, said in a report yesterday. It “would support the phase out of accommodative liquidity measures.”

Philippine economic growth accelerated to a one-year high of 1.8 percent last quarter from a decade-low 0.4 percent in the previous three months, lifting prospects for the country’s property and food companies. Jollibee Foods Corp., the fast-food chain that outsells McDonald’s Corp. in the Philippines, is looking forward “to a more robust growth in 2010,” the company said last month.

Capital Flows

The government forecasts the economy will expand 2.6 percent to 3.6 percent in 2010, as President Gloria Arroyo, whose term ends this June, increases outlays on airports, bridges and state programs to a record 1.54 trillion pesos ($34 billion) this year to bolster growth.

Low interest rates in the U.S. and Europe and faster growth in Asia are spurring capital flows into the region, prompting China to start draining excess cash from the economy to prevent asset bubbles free online credit report. Australia and Vietnam have raised borrowing costs as inflation accelerates, and Malaysia last week increased its overnight policy rate, saying it wants to avoid “financial imbalances”.

Bangko Sentral in January announced the year’s first increase in the interest rate that it charges lenders for borrowing money from the central bank through the rediscounting facility. The rediscounting window allows lenders to borrow using loans as collateral.

Inflation Forecast

Deputy Governor Diwa Guinigundo said yesterday the unwinding of liquidity measures is “always on the table” and will happen in “a matter of time.” Still, “the policy rates can be maintained at this point as our inflation outlook remains positive and benign,” he said March 8.

Benchmark four-year bond yields dropped to a three-month low yesterday on optimism borrowing costs will remain low. The Philippine peso traded near an eight-week high today as Asia’s rebound attracts funds to the region’s assets.

Bangko Sentral forecasts inflation may slow to a range of 3.4 percent to 3.5 percent in 2011 from an estimated 4 percent this year, Guinigundo said this week. Consumer-price gains in the Philippines eased for a second month in February to 4.2 percent.

The Philippines’ benchmark interest rate is at the lowest level since central bank data started in 1990. Easing inflation last year allowed Bangko Sentral to slash the overnight borrowing rate by 2 percentage points from December 2008 to July 2009 to support economic growth as exports collapsed.

Policy makers also reduced the proportion of cash banks need to set aside as reserves and raised the amount of money available for the rediscounting facility in late 2008.

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