Jin Liqun, chairman of China Investment Corp.
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Senate Republicans are trying an unusual tactic to nullify new labor regulations that would speed up the time frame for unions to hold workplace elections.
The Senate will vote Tuesday on a rarely invoked measure, known as a resolution of disapproval, to overturn rules approved last year by the National Labor Relations Board.
Though the measure has little chance of passage _ it also faces a White House veto threat _ the vote forces Democrats in tough elections to take a stand on rules that have won praise from unions and sharp rebukes from business groups.
The rules simplify procedures and reduce legal delays that can hold up union elections after employees at a work site gather enough signatures to hold a unionization vote. They are set to take effect on April 30.
Unions call the changes a modest fix that would limit corporate stalling tactics, where litigation can delay elections while workers are can be subject to harassment, threats and even illegal firing.
During debate Monday, Republicans claimed the new rules would lead to “ambush” elections that barely leave company managers enough time to respond or counsel against forming a union.
“The NLRB has chosen to impose new rules to aid big labor at the expense of employees, small business employers and the jobs they would create,” said Sen. Mike Enzi of Wyoming, top Republican on the Senate Health, Education, Labor and Pensions Committee.
Sen. Tom Harkin, D-Iowa, called the vote “the latest chapter in an unprecedented Republican assault on unions.” Harkin, who chairs the Senate committee overseeing labor, said employers “have ample opportunity to express their views” on unions.
Business groups including the U.S. Chamber of Commerce and the National Association of Manufacturers have designated the vote a “key vote” _ used to score members of Congress each year on their records. The AFL-CIO has also aggressively lobbied lawmakers to vote against the measure.
Myanmar
McDonald’s ever-evolving mix of old menu standbys and new items like Chicken McBites lured in more diners who helped boost its first-quarter profit.
The world’s biggest hamburger chain said Friday that its net income rose 5 percent in the first quarter, in line with Wall Street expectations.
McDonald’s Corp. said global sales rose 7.3 percent at stores open at least 13 months, driven by gains from all regions. The metric is key because it excludes the impact of newly opened stores.
A big part of the McDonald’s success story in recent years has been the chain’s rollout of popular menu items such as coffee frappes and fruit smoothies, which have high profit margins and bring in customers throughout the day. Customers also love them because it’s a way to have a treat for a couple of bucks.
Other recent introductions by the fast-food chain include oatmeal and Chicken McBites, which the company said helped boost sales in the U.S. in the first quarter.
For the first three months of the year, McDonald’s reported a profit of $1.27 billion, or $1.23 per share. That compares with a profit of $1.21 billion, or $1.15 per share, in the year-ago period.
In the U.S., sales at restaurants open at least 13 months rose 8.9 percent, as new menu items like Chicken McBites, updated restaurants and warm weather drew customers. The results also benefitted from an extra day in the Leap Year.
McDonald’s said sales in Europe, its biggest market, rose 5 percent despite economic turmoil and severe weather in many parts of the region. Sales rose 5.5 percent in the Asia Pacific, Middle East and Africa region, where the company is focusing its expansion efforts in the coming years.
Although McDonald’s has consistently outperformed its peers in the fast-food industry, the company is facing the pressures of increasing costs for ingredients. The company’s is also seeing costs for labor and rent increase in some overseas markets.
The higher expenses are particularly problematic for a chain like McDonald’s, which risks driving away customers if those costs are passed on.
Still, the fast-food chain last year raised prices three times for a total price increase of 3 percent. The company has said it expects commodity costs to increase an additional 4.5 percent to 5.5 percent this year, which would be roughly in line with last year’s increases.
Because of its size, the way McDonald’s handles price increases can set the tone for the rest of the fast-food industry.
Shares of McDonald’s, based in Oak Brook, Ill., rose $1.72, or nearly 2 percent, to $95.28 in premarket trading.
Hospital operator Tenet Healthcare Corp. has agreed to pay $42.8 million to resolve allegations it overbilled Medicare for the treatment of patients who needed intense inpatient rehabilitation.
The Dallas company said today that the settlement resolves inquiries by the U.S. Department of Justice, Department of Health and Human Services and the U.S. Attorney’s Office for the Northern District of Georgia.
The allegations involve the admission of patients at 25 facilities from May 2005 to December 2007. No information was immediately available on whether any of the facilities were in the St. Louis area, where Tenet operates two medical centers: Des Peres and St. Louis University hospitals.
The Justice Department said Tenet billed Medicare for patients who did not meet the standards for admission to inpatient rehab facilities. Medicare pays those facilities at a higher rate because patients require more difficult rehabilitation and more medical supervision than patients at other types of facilities no faxing pay day loans.
The Justice Department said it was the single largest U.S. recovery to date involving inappropriate inpatient rehab admissions.
Tenet said it already set aside money to cover the settlement and will make the payment in the second quarter.
The company said it now operates only eight inpatient rehabilitation centers. It also runs 50 hospitals and around 100 outpatient health centers.
Tenet said it identified overpayments at one facility in Georgia in 2007, and disclosed those payments to the government.
Shares of Tenet Healthcare Corp. fell 14 cents, or 2.7 percent, to $4.97 in midday trading Tuesday. Its shares have traded in a 52-week range of $3.46 to $7.56 per share.
Stocks pulled back sharply as Wall Street got its first chance to react to a slowdown in hiring in the United States in March.
The Dow Jones industrial average dropped 136 points to 12,923 in the first half-hour of trading. The Standard & Poor’s 500 index was off 17 at 1,381, and the Nasdaq composite lost 40 points to 3,040.
The losses were broad _ only 13 stocks in the S&P 500 rose. Financial stocks fell the most. Bank of America was off 3 percent, Citigroup 2.5 percent.
The U.S. added just 120,000 jobs in March, about half the pace from December through February. The slowdown interrupted the strongest stretch of job growth since the Great Recession. The government released its jobs report on Friday, but the stock market was closed.
The stock market had already started to pull back from its strongest first quarter since 1998. The Dow closed as high as 13,264 earlier last week, then lost more than 200 points in three days.
Even before the job number came out, investors were worried that the Federal Reserve does not appear inclined to take further steps to stimulate the economy.
This week, investors will turn their attention to first-quarter corporate earnings reports. Aluminum maker Alcoa releases its results Tuesday, becoming the first company among the 30 in the Dow to do so. Two major banks, JPMorgan Chase and Well Fargo, report on Friday.
Analysts are expecting quarterly earnings to decline slightly compared with a year earlier. That would break a streak of nine straight quarters of earnings growth since 2009.
The yield on the 10-year Treasury note fell to 2.04 percent from 2.06 percent Friday.
In other corporate news:
_ AOL shot up 44 percent after the company agreed to sell hundreds of patents and patent applications to Microsoft for a little more than $1 billion. The company plans to return some of the cash to shareholders.
_ Avon fell 3 percent after the struggling beauty products company named a former executive at Johnson & Johnson, Sherilyn S. McCoy, to be its CEO. She starts April 23.
China
The bulls weren’t bullish enough.
The stock market just had its best first quarter in 14 years. The surge has sent Wall Street analysts, some of whose forecasts seemed too sunny three months ago, scrambling to raise their estimates for the year.
“That it’s up isn’t surprising. It’s the magnitude,” says Robert Doll, the chief equity investment manager at BlackRock, the world’s biggest money manager.
Doll says stocks could rise 10 percent more before the end of the year. That would be enough to push the Dow Jones industrial average to an all-time high and the Standard & Poor’s 500 close to a record.
For the first three months of the year, the Dow was up 8 percent and the S&P 12 percent, in each case the best start since the great bull market of the 1990s. The Nasdaq composite index, made up of technology stocks, has had an even more remarkable run _ up 19 percent for the year, its best start since 1991.
“I don’t think anyone could have predicted this,” says Chip Cobb, a senior vice president at Bryn Mawr Trust Asset Management. For these gains, he says, “I thought it would take all year.”
The jump gives money managers like Cobb hope that ordinary folks burned by two deep bear markets in a decade will start buying again, propelling the indexes even higher.
In a remarkable act of self-restraint _ or foolishness, depending on your view _ they have mostly stayed out of the market. One reason they may jump in now is that fear of looming disasters, like a full-blown debt crisis in Europe or a second recession in the United States, has faded.
Bulls say investors will turn their attention to the only thing that really matters for stock prices in the long run _ corporate profits.
Another hopeful sign for gains is that those who have been buying stocks appear to be taking bigger risks than before, suggesting growing confidence.
Last year, investors put much of their money into so-called defensive stocks, such as utilities and health care companies, which make money in bad times as well as good. This year, it’s the risky fare that’s being scooped up.
Financial stocks are up 22 percent, the best among the 10 industry groups within the S&P. Technology companies are up 21 percent. Consumer discretionary stocks, like hotels and cable companies, are up 16 percent.
Utilities are down 3 percent for the quarter, the only group in the red.
Standard & Poor’s Capital IQ, a research firm, predicted at the beginning of the year that the S&P would hit 1,400 by the end of the year. By March 15, it had hit 1,403, and on Friday it was at 1,408.
“We were originally accused of being too optimistic,” says Sam Stovall, chief equity strategist at S&P Capital IQ. “It doesn’t mean we can’t have a 10 percent correction, but it’s unlikely we will.”
The Dow is less than 1,000 points away blow its all-time high of 14,164.53, set Oct. 9, 2007. The S&P is about 150 points from its record close of 1,565.15, set the same day.
The first day of the year set the tone. On Jan. 3, the Dow rose 180 points. Later that month, the Federal Reserve said it would probably keep benchmark interest rates near zero for almost three more years. That sent stocks to their highest levels since May 2011.
It was the best January for stocks since 1997. Skeptics pointed out that profits at U.S. companies, after jumping by double-digit percentages for eight quarters in a row, seemed to be growing much more slowly. They also worried that the number of shares of stock traded each day was low, which suggested a lack of conviction by buyers.
Stocks kept climbing anyway, passing two milestones in quick succession.
On Feb. 28, the Dow rose above 13,000 for the first time since May 2008, four months before the financial crisis hit that September payday loan lenders. Two weeks later, it was the Nasdaq’s turn. It crossed 3,000 for the first time since the dot-com frenzy a dozen years earlier.
Even a few duds got caught in the upswing. The stocks of Microsoft and Cisco have barely budged this century. This year, they have have risen 24 percent and 17 percent, respectively. Dell, which has languished for years, is up 13 percent.
Some of the big winners of 2012 are perhaps less surprising: Apple has risen 48 percent. Lions Gate Entertainment, the company behind the hit movies “The Hunger Games” and “Twilight,” is up 67 percent.
As if the surge weren’t enough, the markets impressed long-time stock investors with the way it climbed _ slowly and steadily, without the wild swings of bravado and panic that characterized the market much of last year.
The gap between the daily high and low for the S&P has averaged about 0.9 percentage points. It was three times that early last fall, when the market was obsessed with debt problems in Europe and at home, among other fears.
Investor attention turns next to corporate earnings announcements, which begin when aluminum maker Alcoa, one of the 30 stocks that make up the Dow, reports April 10.
Companies in the S&P 500 are making more money than ever, an impressive feat in a tepid economic recovery.
Those who are bullish on stocks note that the S&P 500 trades at 12.9 times expected earnings this year, somewhat cheap compared with its 10-year average of 14.6.
The so-called forward earnings multiple is generally higher than the long-term average during bull markets. If it rose to 16 or 18 this year, stocks would be significantly higher than they are now, even if corporate earnings failed to grow at all.
Some investors say the bulls are fooling themselves if they think big profits this year are assured. Indeed, first-quarter profits for the S&P 500 are expected to fall 0.1 percent from a year earlier, according to a survey of analysts by FactSet, a provider of financial data.
That would be the first time in more than two years that earnings will not have grown. For the full year, analysts are expecting profits will rise a healthy 9 percent, but those predictions depend on a surge of 16 percent in the last three months.
“The idea that we’re going to have a huge rebound at the end of the year is unrealistic,” says Barry Knapp, head U.S. equity strategist at Barclays Capital.
Knapp says he’s bullish on technology stocks but the rest of the market has “overshot the fundamentals.” He says he’s sticking with his target for the S&P this year: 1,330, which would be a drop of about 6 percent from Friday’s close.
Other skeptics of the surge point to the role of central banks around the world in lifting markets by printing money, lending at near-zero rates and buying bonds and other securities.
The fear is that once that support is removed, stock prices could fall, and all the talk about profits could prove beside the point.
The same day the Nasdaq broke through 3,000 earlier this month, Michael Hartnett, chief global equity strategist at Bank of America, published a report with a curious chart showing how stocks reacted to programs by the Federal Reserve to buy bonds, or big announcements about lending rates.
In every case since the market hit a 12-year low in March 2009, prices jumped on the Fed moves, then fell when the programs ended. A question above the chart asked whether it was time to move more money into stocks.
Hartnett’s answer was no. The bank expects the S&P to end the year at 1,400, almost exactly where it is now.
Let your tax return be a lesson to you.
Next year at tax time, there may be no need to end up the way you did on taxes this year. Many people can improve the outcome with a little advance thought.
You might be able to put more money into your pocket from each paycheck during the year or ensure that you write a smaller check to the IRS, or no check at all, when you sign your tax return at this time next year.
For example, if you receive a big tax refund this year, you probably sent too much each payday to Uncle Sam. You can fix that and have more spending money during the year. Simply go to your benefits office now and change the withholding form.
See the effect on take-home pay by completing the questionnaire at http://www.tinyurl.com/irsquestionaire.
Or if you missed a great tax credit on your tax return this year because your income was too high, you might be able to adjust so you get credits worth thousands on your 2012 tax return. For example, if you are raising a child, there’s a credit worth $1,000. If you are going to college or sending a child to college, there’s another, up to $2,500. If you want to capture the credits for 2012, look for ways to cut your taxable income.
Accountants have many ideas, such as deciding what year a person should receive a big bonus or adjusting what a small-business owner takes out of a business each year. But individuals have a lot of control, even if they simply rely on a basic paycheck. The easiest way to slice income for tax purposes is to contribute more of it to a 401(k)-type retirement plan at work or an IRA outside of work. If you set this up so a little money comes automatically out of each paycheck, it can feel painless.
Anything you save will reduce the income that gets taxed, and the tax reductions help you save more without digging deep into your pocket. Say, for example, you are in the 25 percent tax bracket and contribute $100 a pay period to your 401(k). You won’t really be taking $100 out of your pocket, because the deduction you get on your taxes means your take-home pay goes down just $75.
To see the impact, visit http://www.tinyurl.com/takehomepaycalculator.
Still, cutting income to take advantage of favorite tax credits could end up being futile after the 2012 tax year. Many of the best credits families enjoy, such as the child tax credit or college credit, may be reduced after this year if Congress doesn’t extend the so-called Bush tax credits that were enacted in the early 2000s pay day loans. About $450 billion is at stake.
Given the uncertainty, financial advisers and accountants are having their clients make contingency plans, strategies they will put into action or abort depending on which way the politics takes the tax issue this year.
For the very wealthy, tax advisers are getting clients to get ready to give $5 million to heirs this year because they think a lifetime exemption on gifts might decrease to only $1 million in future years, said Anita Sarafa, a wealth adviser at JPMorgan Private Bank.
Certified public accountant Robert Keebler is suggesting that individuals consider selling before the end of the year stocks or funds that have appreciated significantly since purchased. This will allow taxpayers to take advantage of today’s zero to 15 percent capital gains rates rather than the 20 percent rate, plus a 3.8 percent surtax on high-income earners, for next year. The 3.8 percent Medicare surtax is being challenged. The 20 percent capital gains rate will depend on Congress.
Keebler is encouraging affluent retirees to look ahead at spending needs and possibly pull money out of IRAs for 2013 needs in November or December of 2012, if they see higher taxes coming. That way they can pay federal taxes at today’s 35 percent rate rather than a potential 39.6 percent next year.
With taxable accounts, selling stocks, bonds, real estate or mutual funds at a 15 percent capital gains rate now might make sense if the money will be needed for a big expense such as college tuition in 2013, Keebler said.
Another popular idea is to convert regular IRAs to Roth IRAs so taxpayers won’t have to pay taxes on earnings withdrawn for retirement, and so they can pass Roths tax-free to heirs, Sarafa said.
Even timing charitable contributions becomes tricky, she said. If the highest-income taxpayers will have to pay 43.4 percent next year (personal income tax plus Medicare), waiting until then to make a charitable contribution could provide a more valuable deduction than doing it this year.
Yet, Sarafa notes, “there is talk in Washington to make charitable deductions worth only 28 percent,” so waiting might not make sense.
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