Finance news. My opinion.

The chairman and president of Export-Import Bank, the official export credit agency of the United States, will speak in Wichita on Aug. 12.

Fred Hochberg’s visit is partly the result of a recent Brookings Institute report that ranked Wichita as the top community in the United States in export growth.

Hochberg will talk about the importance of competing in a global marketplace. He also will discuss export financing and its role in helping businesses create jobs.

Hochberg will speak at a noon luncheon at the Hyatt Regency. Tickets are $40 and can be purchased online at the Kansas World Trade Center Web site at kansaswtc.org.

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Energizer Holdings Inc. posted a profit of $104 million in its third fiscal quarter, up 43 percent from $72.7 million a year earlier.

Net sales for the quarter ended June 30 increased 8 percent to nearly $1.1 billion from $997.5 million, thanks to a favorable impact of currencies totaling $18 million, the launch of the new Schick Hydro shaving razor and the inclusion of Edge and Skintimate shaving products, which added $41 million to net sales for the quarter, the Town and Country, Mo.-based company (NYSE: ENR) said.

Earlier this year, Energizer Chief Executive Ward Klein unveiled the Schick Hydro — the company’s most advanced razor yet — after five years and $150 million in research and development.

The product launch is an escalation of its razor war with market leader Procter & Gamble, which also has operations in St. Louis.

"We are pleased with the initial launch results of the new Schick Hydro men's shaving system," Klein said in the earnings release Tuesday. "Our distribution build was the fastest we have ever executed, and this true innovation in men's shaving is being well received by consumers No teletrack payday loans."

But negative trends continue in the battery category, prompting Energizer to start a "thorough review of our household products division," Klein said.

An increasing number of devices are using built-in rechargeable battery systems, particularly in developed markets, hurting demand for primary batteries. "This trend, coupled with aggressive competitive activity in the U.S. and other markets, could put additional pressure on segment results going forward," Energizer said in its earnings release Tuesday. "In light of this trend, the company is evaluating a number of initiatives to better position its Household Product business including options related to capacity requirements, the mix of product offerings, go-to-market strategies and investment initiatives. We expect this evaluation to continue for the next three to six months."

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Stocks skidded in the first half of the year, particularly in the second quarter. But investors probably haven’t seen the worst of it.

Welcome to the second half.

With the S&P 500 down more than 15% from the highs of late April and all three major indexes at more than 6-month lows, a bigger selloff could be brewing.

"By year-end we could be roughly where we are now, but between now and then, we could be substantially lower," said Karl Mills, president and chief investment officer at Jurika Mills & Keifer.

Going back to World War II, a decline of 15% off the highs has often turned a correction into a bear market — a drop of 20% to 30% — according to Standard & Poor’s chief investment strategist Sam Stovall.

Late Wednesday, S&P cut its 12-month price target for the S&P 500 to 1,190 from 1,270, citing the "intensifying headwinds."

The Dow is down 7.6% year-to-date, with most of the losses coming in the past two months when the Dow lost more than 10% on worries that the European debt crisis and signs of slowing in Asia will send the U.S. economy back into recession.

"What we saw in May and June was investors trying to understand that it’s going to be a tepid recovery at best," said Alan B. Lancz, president at Alan B. Lancz & Associates.

"We’ll be selective buyers on the dips," he said. "But the weaning off the government stimulus, China slowing down, BP’s oil spill and the sovereign debt issues are going to be an overhang for some time."

Fear of a double dip: Worries that debt-plagued European nations such as Greece and Spain will default on their borrowings were somewhat mitigated by European leaders establishing a nearly $1 trillion fund to provide support. But with governments struggling to implement cutbacks and the euro flailing near a four-year low, concerns remain in play.

"The European issues highlight the fact that fiscal deficits cannot run indefinitely and that we need to fix some of our long-term debt issues," said Ben Halliburton, chief investment officer and founder at Tradition Capital Management."

Congress’ budget chief said Wednesday that the outlook is daunting considering the level of debt cash advance flexible payments.

Recent reports showing that the housing market is slumping again and that job growth remains anemic have added to worries about the strength of any U.S. recovery.

Volatility: The last two months have also brought a return to the level of volatility seen at the height of the financial market crisis in 2008.

"I think we’ll continue to see volatility, with a lot of it to the downside," said Ben Halliburton, chief investment officer and founder at Tradition Capital Management.

He said that between overly optimistic earnings forecasts getting trimmed and the reality of certain tax cuts expiring at the end of the year, the choppiness is unlikely to calm down.

Corporate earnings growth in question: Despite all the turmoil, analysts have barely cut earnings estimates for the second quarter and second half of 2010, and all of 2011, according to Thomson Reuters.

"Since mid-May, analysts have ratcheted their second-quarter estimates down modestly, but they seem to be taking a ‘wait-and-see’ approach for the next 18 months," said John Butters, Thomson’s senior research analyst.

Earnings are expected to have risen 27.2% in the second quarter versus a year ago, down just slightly from mid-May estimates. Financial sector forecasts have come down the most — which is fitting, since those forecasts were raised the most in late April, when the stock market was at its highs.

Analysts currently expect 2010 earnings to rise 34% from a year ago, the biggest year-over-year growth since Thomson began tracking the info in 1998.

For 2011, analysts expect year-over-year growth of 17%.

On the upside, the P/E ratio for the S&P 500 is 12.3 versus the five-year trailing average of 14.2.

"Either the market is overdoing the fears and there’s room for stocks to rally, or the market is ahead of the analysts and the estimates need to come down," said Butters. 

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A congressional watchdog panel warned on Thursday that mounting commercial real estate losses could endanger the banking system and thwart economic recovery.

A total of $1.4 trillion in commercial real estate loans will require refinancing in the next four years, the Congressional Oversight Panel said in a report. More than half of those loans are underwater, written for properties whose value has dropped like a rock.

The expected losses when loans go bad could hit between $200 billion to $300 billion and threaten 3,000 small and mid-size banks with a disproportionate share of commercial real estate assets on their books, according to the panel.

The report is intended to "wave a red flag" to the White House and Congress that the commercial real estate loan market is going to get a lot worse before it gets better.

"We’re at a point where even as TARP is ramping down another major challenge in our economy is ramping up," said Elizabeth Warren, the oversight panel’s chairwoman. "We need to start now, before the system is on the brink of collapse to figure out a plan," she added.

The panel’s research found that 2,988 banks are heavily invested — with more than three times their assets tied up — in commercial real estate loans. Of that number, 2,500 banks each have less than $1 billion in assets.

Indeed, many such smaller banks have already failed. Small bank failures"will intensify sharply over the next few years," Warren said.

"When commercial properties fail, the result is a downward spiral of economic contraction, as these are the same small banks that create jobs and boost economic activity," she said Business Card Holders.

Solutions: The panel offers a number of possible solutions for policymakers to head off a commercial real estate crisis. For example, it says the Treasury Department should "stress test" banks that are concentrated in commercial real estate loans.

Treasury Secretary Tim Geithner said at a congressional hearing last fall that "it is not realistic or feasible" to review such a large number of banks in a detailed level.

The oversight panel also suggested that the federal government should consider other remedies, including injecting capital into these small banks, buying their toxic assets or guaranteeing loans.

Bank regulators could also simply allow banks to extend underwater loans rather than requiring them to recognize losses, but the panel worries that such a move could delay a rebound in bank lending. But the panel also worries that massive writedowns throughout the banking system could stymie lending and create a "negative bubble."

"There’s a need for a nuanced response," Warren said. She said that banks should recognize some commercial real estate losses, but that regulators should monitor them closely to ensure that losses don’t spiral downward and drag down the larger economy. 

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Liberty Global, the international cable operator controlled by John Malone, has agreed to buy Unitymedia from a private equity group for $3 billion in its first German acquisition.

The sale of Germany’s second-biggest cable network by a shareholder group led by BC Partners and Apollo is worth $5.2 billion including assumed debt and marks the largest private equity exit in Europe this year.

The private equity group bought Unitymedia for 1.5 billion euros ($2.2 billion) in 2003.

Unitymedia, second behind Kabel Deutschland, has 4.5 million subscribers in a region covering 10 of the country’s 20 biggest cities, including Cologne, Duesseldorf and Frankfurt.

Liberty Global was created from the combination of cable pioneer Malone’s Liberty Media International and UnitedGlobalCom in 2005.

It operates in Austria, the Netherlands, Eastern Europe, Asia and Latin America and had until now avoided Germany because of regulatory complications. Unitymedia has taken some measures to simplify operations.

BC Partners and Apollo had been running a dual-track process in which they also considered an initial public offering. Liberty Global now plans to increase Unitymedia’s debt to $3.7 billion and use part of the proceeds to fund the equity buy.

The remainder would be funded by a combination of existing liquidity, proceeds from the sale of $750 million in convertible notes and the sale of 6 million Series A and C shares to SPO Partners & Co for about $128 million, Liberty said no credit check payday loan.

GOOD TIME FOR A COMEBACK

Malone, known for creating Byzantine holding structures, has tried to make inroads into Germany before.

In 2001, Liberty Media launched a multi-billion euro bid to become Germany’s largest cable operator by buying assets from Deutsche Telekom and Deutsche Bank. That was eventually blocked by German regulators.

Guy Bisson, a senior analyst at research firm Screendigest, said Liberty tends to pursue market leaders and Kabel Deutschland would have been the natural choice.

“But as a strategic player Unitymedia is the stronger one,” Bisson said because Unitymedia had a higher uptake of digital TV and higher revenue-generated units (RGU) per household.

Asked about regulatory obstacles that thwarted Malone before, Bisson said: “In the late 1990’s everyone thought the German market would turn the corner and become more commercial but that never happened…It’s starting to happen now, so it’s a good time to get back in the market.”

Arndt Rautenberg of OC&C Consultants said he was curious to see how Liberty would increase Unitymedia’s core profit. 

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U.S. business productivity grew at its fastest clip in six years in the third quarter and new claims for jobless aid fell to a 10-month low last week, suggesting the labor market may be starting to bottom out.

The Labor Department said on Thursday that productivity surged at a 9.5 percent annual rate, the quickest pace since the third quarter of 2003, as companies squeezed more output from a smaller pool of labor to hold the line on costs.

The Labor Department also reported that initial claims for state unemployment benefits dropped to 512,000 in the week ended October 31, the lowest level since early January. Markets had expected a decline to only 523,000, from the 530,000 reported in the prior week.

Some healing of the labor market is crucial to sustaining and strengthening the economy’s recovery after its worst recession in 70 years, with employment key to underpinning consumer spending.

Analysts doubt that the rapid growth rate in productivity, which measures the hourly output per worker, can be sustained, which some analysts say means businesses may soon have to step up hiring to meet the demand for their goods and services.

“We expect the pace of efficiency gains will soon begin to fade,” said Michelle Girard, a senior economist at RBS in Greenwich, Connecticut. “Having cut payrolls so dramatically during the last downturn, we believe that companies will be forced to add workers earlier in this recovery than was the case following the last two recessions.”

U.S. stocks rallied on the reports, with the productivity data viewed as good news for company earnings. The blue chip Dow Jones industrial average gained more than 2 percent and closed above the 10,000 threshold for the first time in about two weeks payday loans for bad credit.

Financial markets had expected productivity to rise at a 6.4 percent rate. It grew at a 6.9 percent pace in the April-June period, when the economy was still contracting.

MUTED INFLATION PRESSURES

The U.S. Federal Reserve on Wednesday held overnight interest rates close to zero percent and said it would keep them extraordinarily low as long as excess economic slack and a lack of inflation warning signs prevailed.

The U.S. economy grew in the third quarter for the first time in more than a year, driven largely by government stimulus. The strong productivity report suggested there was little need to worry about inflation at this juncture.

Unit labor costs, a measure of the cost of labor for any given amount of production, fell 5.2 percent last quarter after declining 6.1 percent the previous period. Analysts had forecast a drop of only 4 percent.

“Solid productivity growth provides the basis for a recovery in business earnings and investment in the second half of 2009, and keeps a firm lid on prices and inflation,” said Brian Bethune, chief U.S. financial Economist at IHS Global Insight in Lexington, Massachusetts.

“They provide the Fed more room to keep rates exceptionally low for an extended period in order to coax the economy through the fragile recovery period over the next year and ultimately to an expansion mode.”

Productivity in manufacturing rose at a record 13.6 percent rate in the third quarter, likely driven by automakers ramping up production to rebuild depleted stocks after the popular “cash for clunkers” program boosted sales. 

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Deputy Treasury Secretary Neal Wolin, the department’s No. 2 official, said he expects Congress to revamp financial regulations for Wall Street this year.

Congress is considering legislation that would impose tighter regulations on banks, lenders, and other financial institutions following the worst recession since the Great Depression.

One proposal, the creation of a Consumer Financial Protection Agency, remains a top priority for President Barack Obama, Wolin said in an interview today at a conference hosted by the Congressional Black Caucus in Washington.

The plan would create the consumer agency and move most of the $592 trillion over-the-counter derivatives market onto regulated exchanges and increase capital requirements fast payday loan no faxing. It would also boost oversight of the systemic risks large financial institutions pose to the economy and give the government power to dismantle failed companies.

“There is a definite need for an agency that focuses on consumer protection as part of our overall structure for a financial services regulatory framework,” he said.

Wolin’s office translated the administration’s 88-page financial-regulations proposal into more than 600 pages of legislation for lawmakers to use as a foundation for crafting their proposals.

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The Philippine government reported a fourth monthly budget deficit in August as tax revenue faltered amid the global recession, prompting the peso to fall.

The shortfall of 22 billion pesos ($460 million) widened the eight-month deficit to 210 billion pesos, the Finance Department said in an e-mail in Manila today. Spending fell 0.2 percent in August from a year earlier and revenue dropped 20.1 percent after falling 3 percent in July.

Slowing economic growth earlier this year prompted the government to widen its 2009 budget-deficit target to a record 250 billion pesos, as the global slump hurt tax collection and forced President Gloria Arroyo to boost spending. The budget report may revive investor concern about the strength of the Philippine economy, said Antonio Espedido at China Banking Corp.

“The budget deficit is a sign of weakness,” said Espedido, a Manila-based treasurer at China Banking. “If there’s a sign of weakness, some investors try to pull out of the country.”

The peso, which was little changed before the announcement, fell 0.2 percent to 47.895 a dollar at 10:02 a unsecured personal loans.m. in Manila, according to Tullett Prebon Plc. The Philippine Stock Exchange Index dropped as much as 0.6 percent.

The Philippine government said yesterday it had sold 100 billion pesos of so-called retail bonds, in an offering scheduled to end Sept. 22. That compares with 70 billion pesos last year.

Dollar Bonds

The government sold $750 million of U.S. dollar bonds in July, adding to $1.5 billion sold in January. Its targeted 2009 budget deficit would be the biggest since Bloomberg data began in 1985.

The Southeast Asian nation’s economy grew 1.5 percent in the second quarter from a year earlier, accelerating from a decade-low 0.6 percent the previous three months.

The Bureau of Internal Revenue, responsible for more than 60 percent of government earnings, collected 67.6 billion pesos in August, 14 percent lower than a year earlier, according to the budget report today. Collection at the Bureau of Customs fell 28.5 percent.

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Rep. Barney Frank, the chairman of the U.S. House of Representatives Financial Services Committee, said he plans legislation to restrict the Federal Reserve’s emergency lending powers and subject the central bank to a “complete audit.”

At a recent town hall meeting, Frank said the House would pass a bill to use an audit to crack open the central bank’s books more widely, but in a way that will not encroach on the central bank’s monetary policy independence.

In addition, he said the House would move to rein in the authority that allows the Fed to lend to a wide range of non-bank firms in “unusual and exigent circumstances.”

A bill sponsored by Texas Republican Rep. Ron Paul that would allow the Government Accountability Office, a federal watchdog agency, to audit Fed interest-rate decisions has won the co-sponsorship of more than half of the House.

Fed Chairman Ben Bernanke has warned that the bill would compromise the U.S. central bank’s policy-making independence and could undermine financial markets and the economy.

Frank said he has been working with Paul on compromise language. “He agrees that we don’t want to have the audit appear as if it is influencing monetary policy because that would be inflationary,” Frank told constituents. A video of his remarks was posted on the popular video file-sharing website YouTube here .

Steven Adamske, a spokesman for Frank, told Reuters compromise language had not yet been written. He provided no further details. A spokesman for Paul could not be reached.

OCTOBER TARGET

Frank said the audit and emergency lending provisions would be incorporated in broader legislation to revamp U.S. financial regulation that would likely pass the House in October car loan interest rates. By seeking a compromise with Paul, Frank could strengthen the broader legislation’s chance at passage.

As chairman of the House Financial Services Committee, Frank is a key player in the effort to overhaul U.S. financial regulation.

The Obama administration has proposed giving the Fed responsibility for overseeing firms whose collapse could endanger the entire financial system. At the same time, it wants to strip the central bank of its consumer protection function, and invest that authority in a new agency.

Frank expressed unease at what he called the Fed’s power to “lend money to anybody they want” in emergency circumstances. “We are going to curtail that lending power. We are going to put some restraints on it,” he said.

Since the financial crisis struck two years, the Fed has used this emergency authority to prop up a number of non-bank financial firms with billions of dollars in loans, including insurer American International Group.

The Fed’s actions have angered many lawmakers who are concerned the central bank has put taxpayer money at risk. Fed officials have defended their actions as necessary to prevent a deeper credit crisis and widespread damage to the economy.

Bernanke, who President Barack Obama nominated this week to serve a second four-year term at the helm of the central bank, told lawmakers in July that the Fed understands the need to be accountable to taxpayers but that monetary policy decisions needed to be shielded from political interference. 

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Ben S. Bernanke deserves another term as Federal Reserve Chairman based on his success in battling the financial crisis, said Princeton University Economist Paul Krugman, a winner of the Nobel Prize.

“He’s earned the right to a second term,” Krugman, 56, said yesterday in an interview in Kuala Lumpur. “He turned the Fed into the financial intermediary of last resort. When the banking system failed to deliver capital where it was needed, he put the Fed into the markets.”

Debate over the fate of Bernanke, 55, is intensifying as he nears the end of his four-year term as chairman on Jan. 31. While Krugman and economist Nouriel Roubini have voiced support for the former Princeton economist, others including Anna Schwartz have said a lack of transparency exacerbated the financial crisis.

“I think Bernanke has done a really good job,” Krugman said. “He failed to see this coming and he was behind the curve in early phases. But he’s been really very good in the sense that it’s really very hard to see how anyone could have done more to stem this crisis.”

As his terms draws near an end, Bernanke has written in the Wall Street Journal and appeared on television to defend the unprecedented actions he took during the financial crisis.

“In a financial crisis, if you let the big firms collapse in a disorderly way, it will bring down the whole system,” Bernanke said last month at a town-hall-style meeting in Kansas City, Missouri, taped for broadcast on PBS television. “I was not going to be the Federal Reserve chairman who presided over the second Great Depression.”

Zero Rates

Under Bernanke’s stewardship, the Fed cut the benchmark lending rate to as low as zero and expanded credit to the economy by $1 lowest fee payday loans.1 trillion over the past year.

Joseph Stiglitz, another Nobel Prize-winning economist, said on Aug. 5 that he expects a “very slow recovery” and that a replacement for Bernanke should be considered.

“There are lots of potholes in the road,” Stiglitz, a Columbia University economics professor, said in an interview. “There are problems in commercial real estate. We know that there will be more foreclosures in the mortgage market” and “we know we don’t know the state of the banks.”

Squared Off

Economists Roubini and Schwartz squared off in the New York Times last month over Bernanke’s fate. Roubini, the New York University professor who predicted the credit crisis, voiced support for the central banker, while Schwartz, co-author with Milton Friedman of a history of U.S. monetary policy, wrote that the chairman should be replaced because of policy missteps and a failure to clearly articulate the bank’s goals.

The Fed also helped rescue Bear Stearns Cos. and American International Group Inc. last year while backing creation of the $700 billion Troubled Asset Relief Program.

Schwartz said Bernanke failed to explain why the Fed supported the rescue of Bear Stearns and not Lehman Brothers Holdings Inc., whose bankruptcy in September 2008 added to the severity of the credit crisis.

President Barack Obama said last month that Bernanke has done “a fine job” as Fed chairman while declining to comment on the possible reappointment of the former Princeton University economist, which is subject to Senate approval.

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