DETROIT — As Toyota dealers across the country work to repair the defective gas pedals in millions of vehicles, they also are trying to repair the automaker’s reputation by extending hours, making house calls and offering other services.
Toyota Motor Corp. recalled eight vehicles Jan. 21 and stopped selling those vehicles five days later because their accelerator pedals could stick in a depressed position. Toyota is sending dealers a piece of steel about the size of a postage stamp that can be inserted into the accelerator mechanism and eliminate the friction that causes the problem.
Kent Newbold, president of Newbold Toyota in O’Fallon, Ill., said Wednesday that he was even offering customers free tickets to a movie at the nearby O’Fallon 15 Cine while repairs are made to their recalled vehicles.
Nobody had taken him up on that offer, but he said it would remain until all of the recalled vehicles were fixed. "They’re our customers and we’re going to take care of them. … I was even tempted to sneak out and see ‘Alvin and the Chipmunks 2′ myself," Newbold said.
Jim White Toyota, a dealership in Toledo, Ohio, received about 350 steel pieces, or shims, and began repairs Wednesday morning. By mid-afternoon, about 25 cars were fixed, said Terry Treter, service manager.
Repairs were going smoothly and a little faster than the half-hour Toyota estimated, he said. Technicians do a test drive as part of the repair.
Dealers said they would extend service hours as needed to make repairs at the convenience of their customers. "The main thing the dealers want to do is to get the cars repaired and back on the road," said John S. Poppell, president of Twin City Toyota in Herculaneum.
Tom Seeger, owner of Seeger Toyota in Creve Coeur, added, "We’re going to get this done as seamlessly and comfortably for our customers as possible."
Dealers said customers had been calm despite a warning early Wednesday from U.S. Transportation Secretary Ray LaHood, who said owners of recalled Toyotas should stop driving them. LaHood later said he misspoke and told owners to get their cars repaired.
"There was an (increase in) concerned calls five minutes after Ray LaHood made his first comment, but people calmed down after he later explained himself," Seeger said.
Toyota is giving U.S. dealers payments of up to $75,000 to help them offer extra measures such as house calls. The automaker also suggested other steps, such as additional hires to help with recall repairs, dedicated recall service lanes and complimentary oil changes.
Toyota is sending checks this week based on the number of cars each dealer sold in 2009. Dealers who sold fewer than 500 cars will get $7,500. Dealers who sold more than 4,000 will get $75,000.
Robert Kelly of the Post-Dispatch contributed to this report.
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Lee Enterprises Inc., owner of the St. Louis Post-Dispatch, said Friday it had stronger advertising sales in November and expects declines in revenue to ease for the company’s fiscal first quarter ending Dec. 27.
"Based on trends through early December, we’re hopeful that the turnaround has begun," Mary Junck, chairman and CEO, said in a news release. "Although it’s premature to guess when year-over-year revenue comparisons will turn positive, we expect our aggressive cost reductions will enable meaningful earnings growth when they do."
Among the cost reductions were increases in premium cost-sharing for some participants in retiree medical plans and elimination of retiree health care coverage for other participants. Lee said these changes will reduce annual retiree medical costs beginning in 2010 and will cut benefit obligation liability by up to $30 million.
Lee said it expects operating revenue for the quarter ending Dec paydayloans. 27 to fall 14 percent to 15 percent compared to the same period in 2008. Revenue declined an average of 20 percent in the last three quarters of fiscal 2009.
The company also said that debt refinancing, adequate liquidity and improving business conditions allowed its accounting firm, KPMG LLP, to drop from this year’s annual report an explanatory paragraph in 2008’s annual report that raised doubt about Lee’s ability to continue as a going concern. Lee filed the 2009 report Friday with the Securities and Exchange Commission.
Lee, based in Davenport, Iowa, owns 49 newspapers and has a joint interest in four others. It also has online sites and nearly 300 specialty publications in 23 states.
The American whiskey market may be back on a roll. The industry which produces Jack Daniel’s and Jim Beam is seeing sales flatten in its domestic market but overseas business is booming and driving overall growth.
These two top brands already have half or more of their sales overseas and are dragging the rest toward export markets such as Western Europe and Australia where annual sales volume growth has averaged nearly 6 percent over the last 10 years.
Both compete head on with other Scotch, Irish and Canadian whiskies, but have done well as Brown-Forman Corp’s Jack Daniel’s became the world’s largest selling single whisky brand four years ago overtaking Diageo’s Johnnie Walker Red.
“Worldwide American whiskey has the opportunity to be the fastest growing in overseas markets. One of its advantages is its mixability compared to scotch whisky,” said Brown-Forman’s Chief Executive Officer Paul Varga.
In the economic downturn, Varga has seen some downtrading to cheaper brands, but whisky’s heritage and taste protects it from the worst of the downtrading seen in the vodka sector.
“The summer months have seen some easing of industry destocking while there is still some trading down,” he said.
The current downturn comes after a decade of growth which followed sliding volumes in the 1990s, and the domestic market has gained nearly 2 million 12-bottle cases since 2000 as whiskey like other spirits gained at the expense of beer.
The U.S. whiskey market was worth 28.3 million cases in 2008, over twice the size of the French cognac market at 12.4 million, but well below the scotch industry at around 100 million. This U.S. industry takes in two Tennessee whiskey distilleries and around 10 bourbon distilleries in Kentucky.
The market is dominated by Jack Daniel’s at 9.5 million cases and Jim Beam at 6 million, which make up 55 percent of U faxless pay day loans.S. industry volumes, and on the export front the former started selling more overseas two years ago and now sells 4.8 million cases outside the U.S. as it pushes into the big export markets of Britain, France, Japan and Australia.
“We are a near-10 million case brand, but could be a 17 million brand with more warehousing,” said master distiller Jeff Arnett at the Jack Daniel’s Lynchburg distillery in Tennessee.
North of Tennessee, Jim Beam is the world’s No 1 Kentucky bourbon, owned by Fortune Brands Inc, selling its 6 million case sales split equally between the U.S. and its big export markets especially Australia and Canada.
Around 12 years ago Jack Daniel’s first moved ahead of Jim Beam in volume terms, but Beam is fighting back as it is the first to move into flavored whiskeys, so popular in the vodka market, with its new Red Stag bourbon infused with black cherry.
This new product has sold 90,000 cases since its launch in June and is attracting new drinkers not seen as typical bourbon consumers. It is Fortune’s first major launch since Jim Beam Black Label over 10 years ago, and executives say if U.S. sales continue strong, it will look at the overseas market.
At Brown-Forman, Varga says Jack Daniel’s has not launched a new pure whiskey product for 12 years, and its flagship No 7 brand accounts for 97 percent of Jack Daniel’s volume.
In its last quarter, (May-July) the Jack Daniel’s family of brands, which includes strongly-growing ready to drink products, saw sales up 8 percent at constant currencies, and Varga says the sales mainly came from volume rather than higher prices.
In the 1980s, when stocks mostly surged, a few mutual fund managers became the equivalent of rock stars.
Tops among them: Peter Lynch, who racked up average annual returns of a remarkable 29 percent over a 13-year run.
Lynch did it at Fidelity Magellan, which continued to grow after he left in 1990. What once was the world’s largest fund swelled from $13 billion to nearly $110 billion a decade later. Assets peaked three years after the fund shut its doors to new investors because it became so big it was hard to manage effectively.
So where is Magellan now? It’s at $24 billion, and struggling to draw investors who fled in droves after years of mediocre performance. Magellan is still big by any standard, but it’s merely Fidelity’s fourth-largest stock fund.
"I don’t worry about too many assets now," says current manager Harry Lange, who took over in late 2005.
Magellan reopened to new investors early last year, but those who gave it a try were disappointed. The fund’s 2008 plunge? Forty-nine percent — steeper than the market’s nearly 39 percent decline. Blame bad bets on dogs like AIG and Wachovia — financial companies that Lange held on to for too long.
But Lange is turning things around, thanks to a sharp departure from his predecessor’s style. Where Robert Stansky was criticized for too closely mirroring broader markets, Lange has tilted the fund heavily in favor of growth stocks — companies whose comparatively steep share prices are backed by expectations that earnings will keep growing rapidly. He’s eased out of cheaper value stocks with steadier earnings, and takes a go-anywhere approach in keeping with the fund’s namesake 16th century explorer. Nearly one-quarter of Magellan’s holdings are international stocks.
Many of the same bets on riskier stocks that weighed Magellan down last year are lifting it in 2009. It’s up 35.6 percent, easily topping the nearly 17 percent gain for its benchmark, the Standard & Poor’s 500, and beating nearly nine of 10 of its peer funds.
So is it time to climb back aboard Magellan? Only if you’re willing to commit to a fund whose penchant for racy stocks makes it unusually volatile.
This year, the fund expanded its already substantial stake in recently hot technology stocks — its second- and third-largest holdings are specialty glass maker Corning Inc. (up 62 percent this year) and semiconductor maker Applied Material (up 34 percent). It’s also favored hard-hit fare like home builder Toll Brothers (down 8 no teletrack payday loans.8 percent) and big banks — Magellan’s most recent list of top 10 holdings included Bank of America, J.P. Morgan Chase, Wells Fargo and Goldman Sachs.
Lange has turned Magellan into "a fund for optimists," according to Morningstar’s lead Fidelity analyst, Christopher Davis.
"If you look at its portfolio, it’s positioned for an economy that’s improving," Davis says, noting an absence of such defensive favorites as Wal-Mart and Procter & Gamble.
Lange says this year he’s slightly eased off his leaning toward growth stocks but still heavily favors the category. Though value stocks outperformed growth for an eight-year run after the dot-com bubble deflated early this decade, the pendulum swung back to growth last year — financial stocks that were hit so hard last year are mostly in the value category. Growth’s ranks include plenty of tech names that have recently fared well.
Lange still likes tech because of its big stake in emerging markets, where consumers in countries like China and India continue to drive growing demand for gadgets including mobile phones from makers like Nokia, Magellan’s top holding. He figures that trend will continue giving growth an edge over value. "I’m pretty confident that growth will be as strong in the next six to 12 months," Lange says. "There are a lot of people out there who think after that, it will be a sluggish recovery. I’m more bullish than that."
As for his fund’s choppiness, Lange acknowledges that with his growth-oriented style, "it’s pretty tough not to have volatility in these unusual times."
Even with this year’s strong results, winning back investors who fled Magellan has proved tough. Lange is still trying to shake the cumulative record of the last 10 years, a period when Magellan posted an average annual loss of 1.2 percent, slightly worse than most of its peers.
"This is not your grandfather’s Magellan fund," says Jim Lowell, a former Fidelity employee who runs an independent newsletter, FidelityInvestor.com, that evaluates the company’s funds.
Lowell currently recommends Magellan but says it’s no longer appropriate as a core retirement holding for investors who are looking for the broad exposure it once offered. Instead, Magellan is geared toward those seeking more growth exposure in an otherwise diversified portfolio.
Thailand’s economy won’t shrink as much as earlier forecast this year, the Finance Ministry said, as government spending and improving export orders spur a recovery from recession.
Gross domestic product may shrink 3 percent this year before expanding 2.5 percent to 4.1 percent in 2010, Somchai Sujjapongse, director-general of the ministry’s fiscal policy office, said in Bangkok today. The ministry had predicted a 2009 contraction of 2.5 percent to 3.5 percent in June.
Thailand’s exports fell the least in six months in August, and the contraction in manufacturing has eased as the slump in Southeast Asia’s second-largest economy abates. The economy will recover in the second half of this year and resume growth in the fourth quarter, Somchai said.
“The recovery will be obvious in the fourth quarter and the growth momentum will continue to next year, driven by government spending and a recovery in private spending,” Somchai said. “Exports will also improve in line with the recovering economies of our trading partners.”
The $261 billion economy shrank 4.9 percent last quarter from a year earlier, less than a 7.1 percent contraction the previous three months.
The government implemented a 116.7 billion-baht ($3.5 billion) stimulus package in the first half of 2009 and plans to spend 1.06 trillion baht on transportation, logistics, health and education projects over three years to help revive the economy.
Interest Rate
Thailand’s central bank kept its benchmark interest rate unchanged at 1.25 percent for a third straight meeting last month after four cuts from December to April. Bank of Thailand Governor Tarisa Watanagase said Sept. 25 the recovery from the nation’s first recession in a decade will be “gradual.”
The interest rate will stay at the current level until the end of this year as inflation isn’t a problem, said Ekniti Nitithanprapas from the finance ministry’s fiscal policy office. Borrowing costs may rise next year as consumer prices increase on higher oil costs, he said.
The finance ministry expects consumer prices to climb by 2 percent to 3 percent next year, after declining 0.8 percent in 2009, it said in a statement.
The ministry said it expects Thailand’s currency to range from 33.5 to 34.5 per dollar in 2010, from 34.5 this year. The benchmark interest rate will range from 1.25 percent to 1.75 percent in 2010, from 1.25 percent this year, it added.
Standard & Poor’s said on Tuesday U.S. credit card losses declined in July, but forecast bad loans would soon resume their upward trend as thousands of Americans lose their jobs.
The ratings agency’s credit card quality index, which measures credit card loans that banks do not expect to be repaid, fell to 9.8 percent in July from a record high of 10.4 percent in June, helped by more cautious consumer spending.
Analysts have also said loan losses eased as consumers used more tax refunds to pay down debts.
But S&P estimated credit card losses would pick up again as the economy continues to shed thousands of jobs every month in the worst recession since the Great Depression.
Credit card losses usually follow unemployment, which rose to a 26-year high of 9.7 percent in August.
S&P said that, considering its own estimates that unemployment would rise to between 10 payday loans.4 percent and 12.7 percent, credit card losses rates could go up to between 10.5 percent and 13 percent and “remain in this range for the next 12 to 24 months.”
S&P said losses could also be boosted by company moves to increase fees and interest rates before limits on those charges come into effect in February 2010.
In aggregate, S&P’s credit card quality index tracks the performance of more than $491.1 billion of receivables held in trusts of rated U.S. credit card-backed securities.
American Express Co, Bank of America Corp, JPMorgan Chase & Co, Citigroup Inc, Capital One Financial Corp and Discover Financial Services make up around 80 percent of the credit card industry.
(Reporting by Juan Lagorio; editing by Andre Grenon)
The Federal Reserve has made $14 billion in profits on loans made in the last two years, The Financial Times reported on Monday, citing officials close to the matter.
The U.S. central bank also earned about $19 billion from interest and fees charged to institutions that tapped liquidity facilities during the global financial crisis, the report said.
If the Fed had invested the same amounted loaned out in three-month Treasury bills since August 2007, it would have earned $5 billion in interest, the FT said.
This estimate excludes company bailouts and purchases of long-term assets as well as unrealized gains or losses on the Fed’s portfolio of mortgage-backed securities and Treasuries purchased as part of the $1.75 trillion asset purchase program.
The Fed was not immediately available for comment on the report.
A recent column advocating a fiduciary standard for all financial advisers — meaning always putting the client’s interests first — prompted a spate of questions about how to make sure advisers adhere to such a standard.
I’ll discuss that and also how to find an adviser who can help you even if you don’t have a lot of money.
First, we need to know this:
— Registered investment advisers, or RIAs, who are regulated by the U.S. Securities and Exchange Commission and/or the states where they do business, must legally adhere to the fiduciary standard.
— Advisers who’ve earned the certified financial planner (CFP) designation, conferred by the independent group Certified Financial Planner Board of Standards, also are expected to act as fiduciaries based on their code of ethics (the same person can be an RIA and CFP).
— Stockbrokers, who fall under the jurisdiction of the industry group Financial Industry Regulatory Authority, are not held to the fiduciary standard. "Dually registered" brokers who are also RIAs must legally act as fiduciaries when giving investment advice but don’t have to when selling products as brokers.
Being held to a fiduciary standard, however, is no guarantee the standard will be followed. It’s up to you to ask questions.
"The adviser should be willing to state in writing his or her status as a fiduciary," said Knut Rostad, a member of the Committee for the Fiduciary Standard, a group of a dozen prominent investment advisers.
Also ask the adviser to explain, as part of a written "investment policy statement," how he performs "due diligence" before picking an investment and how investments will be monitored.
"If an adviser cannot articulate this, that’s a red flag," Rostad said. The adviser should also fully disclose and resolve, in the client’s favor, all unavoidable conflicts car loan rates.
Say your adviser is paid, as it is common, based on "assets under management" or a percentage of the money you invest. You ask whether you should pay down your mortgage. The adviser must give you his best recommendation while disclosing his conflict: Paying down the mortgage will reduce the amount you invest and lower his compensation.
You can find other questions to ask advisers at the Certified Financial Planner Board of Standards website. Among them: What services do you offer? How will I pay for your services? Could anyone besides me benefit from your recommendations? Go to www.cfp.net and click on "Learn about financial planning."
The best planner in the world can’t help you, however, if you cannot afford him or her. Most fee-only fiduciary advisers charge about 1 percent of assets under management "and cannot make a living" advising the 80 percent of Americans who have a net worth of less than $250,000 including the value of their home, said Robert Schumann, a certified financial planner with Cambridge Financial Advisors LLC in Colorado.
Some advisers who charge by the hour provide "as needed" services to those who can’t afford or don’t need an ongoing relationship. Still, I agree with Schumann that most Americans may not afford or be willing to pay the hourly fees of $150 or more these planners typically charge.
An option worth considering — one I believe will become more prevalent — are Internet-based, fee-only fiduciary registered investment advisers such as People’s Financial Advisor (www.peoplesfinancialadvisor.com), developed by Schumann.
While never as good as face-to-face advice from a trusted fiduciary, they beat hucksters pushing commission-laden products for their benefit, not ours.
Most investors want to avoid motion sickness.
Even if the final results could be the same, arriving at those results on a smooth road with few bumps is preferable to veering up and down like a roller coaster.
Yet those same investors also have difficulty shaking off a commonly held belief that volatility leads to investment success while smoother vehicles will probably take them nowhere.
"There really isn’t any evidence I’ve seen that says lower-volatility funds will significantly lag their higher-volatility peers over the long run," said Ryan Leggio, mutual fund analyst with Morningstar Inc. in Chicago.
Investors should look at mutual funds that have a consistent strategy of owning cheap, high-quality companies with little debt, reliable earnings and high profit margins, Leggio said. Those funds fared best during this bear market and also in the long run, he said, because their strategy leads to more reliable performance.
"The less-volatile investments are definitely the high-quality, blue-chip dividend-paying stocks that are purchased when they offer good value," said Kelley Wright, managing editor of the Investment Quality Trends newsletter in Carlsbad, Calif., noting that a low price with a high yield provides great value, as well as potential for that price to rise in the future.
Wright prefers companies whose stock has sufficient liquidity for ease in buying and selling and whose debt load "isn’t an albatross hung around their necks." Too much debt means more of a company’s earnings must be applied to servicing that debt rather than areas that improve the bottom line, such as research and development.
It makes sense to be careful these days. "Investors tend to underestimate volatility," observed Ron DeLegge, editor of ETFguide.com in San Diego. "For example, they underestimated volatility in financial stocks in 2008 and in technology stocks in 2002 because they were looking to history as the guide to the future."
Investors blind to the potential downside were taken by surprise when dot.com stocks crashed and when big financial stocks cut or eliminated dividends, he said. Such dramatic possibilities weren’t in their memory bank.
Yet no one should expect miracles either, since even those investments operate in the real world.
"One mistake investors make is assuming that because a fund is less volatile it won’t ever lose any money, or that it will lose very little money, in a downturn," said Leggio, pointing out that a number of the less-volatile funds are fully invested in stocks.
"Another mistake is selling whenever a fund is dropping in value because your expectations have been too high, since those dips could present buying opportunities."
Jensen Fund is a high-quality fund recommended by Leggio that owns fewer than 40 companies and has large holdings of Johnson & Johnson, Procter & Gamble and Coca-Cola Co. It seeks companies with steady revenues and clean balance sheets.
Vanguard Dividend Appreciation Index Fund and its exchange-traded sibling Vanguard Dividend Appreciation ETF focus on companies with consistent dividends, while Amana Trust Growth Fund is a well-run fund that doesn’t invest in companies with debt worries. Leggio recommends all three.
In international funds, Leggio suggests First Eagle Overseas "A" and Tweedy, Browne Global Value Fund. Both have long-tenured managers, value strategies and competitive fees. They find dependable foreign stocks.
AIM Charter "A" boasts respected manager Ron Sloan, who openly tells his investors he won’t do as well as rivals in market upturns but will do a lot better in downturns. An accomplished risk-avoider, Sloan sidestepped last year’s debacle in financials. Despite holding a considerable amount in cash, in the recent market upswing he has kept pace with the Standard & Poor’s 500, said Leggio.
The well-known Sequoia Fund is a dependable choice that always holds some cash — currently a significant 20 percent of its portfolio. It holds 29 stock names, led by Berkshire Hathaway Inc.
"Investors should look at which asset classes tend to be less volatile and an easy way to do this is through ETFs," said DeLegge. "If you want to dial down the risk, look at asset classes or areas with lower volatility."
Though they’ve underperformed this year, utilities and health care are such sectors considered "safe havens" and steadier than many other groups even in recession. Utilities Select Sector SPDR and Health Care Select Sector SPDR are ETFs recommended by DeLegge. Another "dull" sector is industrials, with Industrial Select Sector SPDR DeLegge’s ETF choice there.
For investors who wish to avoid a case of nerves, Wright recommends dividend-paying stocks. In pharmaceuticals, Abbott Laboratories is a bargain with a dividend yield over 3 percent, Wright said. Telecom giant AT&T Inc., yielding around 6.5 percent, offers good value even when the dividend is lower than that.
Beverage leader Coca-Cola Co. is an outstanding value that features a yield of about 3.5 percent yield, Wright said, while Colgate-Palmolive Co. is a quality, easily understood business likely to be around for a long time. It has a yield of around 2.5 percent.
No one can promise an investment ride with no bumps, or with investments that will never go down in value. But with careful planning you can improve your odds.
Southeast regional bank BB&T Corp, which on Friday agreed to buy assets of lender Colonial Bank, said it is making an offering of $750 million of its common stock.
BB&T, shares of which were down 4.6 percent in midday trading, said the proceeds will boost its equity capital and will be used for general corporate purposes.
Last week, the Federal Deposit Insurance Corp said BB&T will buy about $22 billion of Colonial’s assets. The FDIC and BB&T agreed to share losses on about $15 billion of those assets. The bank had deposits of about $20 billion as of June 30.
The Winston-Salem, North Carolina, bank said it will grant underwriters an option to purchase up to an additional 15 percent of the offered amount of shares.
“This is somewhat of a safety measure for the bank, and they showed earlier this summer they have an ability to readily raise capital,” said Chris Marinac, an Atlanta-based bank analyst at FIG Partners LLC.
BB&T in May raised $1.5 billion in the wake of the government’s “stress tests” aimed at determining big banks’ potential to withstand a more severe economic downturn.
The following month, it repaid the U.S. government’s $3.1 billion Troubled Asset Relief Program, or TARP; it is one of the few banks to do so this year online payday loans.
The latest offering buttresses the bank’s tangible common equity ratio on the heels of the Colonial acquisition, a deal dilutive to BB&T’s capital. During the ongoing banking sector downturn, analysts and industry observers have used the tangible common equity ratio to gauge a bank’s health and ability to absorb climbing credit issues.
Most banks, analysts said, are attempting to keep the ratio at more than 6 percent; BB&T’s stood at 6.5 percent at the end of June, but that was before the Colonial takeover.
“They want to keep it at 6 percent, there’s no doubt about that,” Marinac said.
Credit Suisse Securities LLC and Deutsche Bank Securities are underwriters for the common stock offering and it will be co-managed by subsidiary BB&T Capital Markets.
BB&T shares were trading at $26.93, down 4.6 percent, on the New York Stock Exchange, underperforming the KBW Banks .BKX, which was down 3.2 percent.
(Additional reporting by Archana Shankar in Bangalore, Editing by Dinesh Nair and Gerald E. McCormick)
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