For the first time since the start of 2008, bonds were the only investments to provide positive returns amid renewed concern the global economy is slowing and as widening deficits in Europe threaten contagion.
Fixed-income assets — from Australian government debt to U.S. Treasuries to global junk bonds — gained 0.7 percent last month including reinvested interest, according to Bank of America Merrill Lynch index data. The MSCI All-Country World Index of stocks lost 1.1 percent including dividends while the Standard & Poor
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Laclede Group Inc., the owner of Missouri’s largest natural gas utility, overcame one of the mildest winters on record to post a higher fiscal second-quarter profit.
Net income for the three months ended March 31 rose 6 percent to $29.7 million, or $1.32 a share, from $27.9 million, or $1.25 a share, for the same period last year, the St. Louis-based company said.
Sales fell more than a third to $358.2 million.
Earnings for the company’s gas utility, Laclede Gas Co totally free credit score., fell slightly to $25.9 million as customers ran their furnaces less because of the warmer winter.
The company’s wholesale natural gas marketing business more than made up the difference, more than doubling its profit to $3.8 million.
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Parts of the Canadian housing market, especially condominiums in some major cities, have seen prices jump to levels that warrant caution, the head of the country
The number of people seeking U.S. unemployment benefits suggests hiring is slowing.
The Labor Department said Thursday that weekly applications dipped last week by 2,000 to a seasonally adjusted 386,000. But that was only after the department revised up the previous week’s data to show 8,000 more people applied for benefits than first estimated.
The four-week average, a less volatile measure, rose last week by 5,500, to 374,750. That’s the highest level in three months, although it is still 9 percent lower than the level from September.
Applications have started to tick up in recent weeks after months of steady declines. When applications fall below 375,000, it generally suggests hiring will be strong enough to lower the unemployment rate.
Some economists said temporary layoffs stemming from the spring holidays have inflated the figures. Many school employees are laid off during spring break and are eligible to file for benefits.
“What we’re seeing in the numbers is not unusual at this time of year,” said Carl Riccadonna, an economist at Deutsche Bank. Applications will likely fall in the coming weeks, he added.
Others said the gains may not only reflect seasonal adjustments.
“Discouraging news on initial jobless claims suggests job growth is slowing,” said Jennifer Lee, an economist at BMO Capital Markets. “Still growing, mind you, but at a slower pace.”
Hiring weakened in March after a fast start this year. Employers added only 120,000 jobs in March _ half the pace of the previous three months.
Many economists downplayed the weak March figures, noting that a warmer winter may have led to some earlier hiring in January and February. They have noted that the economy has added an average of 212,000 jobs per month in the January-March quarter, well ahead of last year’s pace.
The unemployment rate has fallen to 8.2 percent in March from 9.1 percent in August. Part of the drop was because people gave up looking for work. People who are out of work but not looking for jobs aren’t counted among the unemployed.
Lower benefit applications indicate that companies are cutting fewer jobs. And economists note that unemployment benefit applications are at a much lower level than they were last year, which is a hopeful sign that March’s weak numbers were a temporary lull. Economists say they will have a better sense of the trend in hiring when the government issues the April jobs report next month.
The U.K. trade deficit widened to the most in three months in February as exports of cars and heavy machinery fell, especially to the U.S., China and Russia.
The goods-trade gap widened to 8.77 billion pounds ($14 billion) from a revised 7.88 billion pounds in January, the Office for National Statistics said today in London. The median of 18 forecasts in a Bloomberg News survey was for a deficit of 7.65 billion pounds. Exports fell 3.4 percent while imports were unchanged.
Prime Minister David Cameron is in Asia this week, leading a trade and diplomatic mission seeking to boost commercial ties with the region. The government hopes exports can bolster the British economy as manufacturers cope with rising unemployment and inflation that
Iran is signaling a possible compromise offer heading into critical talks with world powers deeply suspicious of its nuclear program: offering to scale back uranium enrichment but not abandon the ability to make nuclear fuel.
The proposal _ floated by the country’s nuclear chief as part of the early parrying in various capitals before negotiations get under way Friday _ suggested that sanctions-battered Iran is ready to bargain. But this gambit, at least, appeared to fall short of Western demands that Iran hand over its most potent nuclear material.
Still, the public jockeying ahead of the talks pointed to an attempt to ease a standoff that has rattled nerves and spooked markets with seesaw oil prices and threats of Israeli military strikes. The talks involving Iran and the five permanent U.N. Security Council nations plus Germany, to be held in Istanbul, are the first direct negotiations on Tehran’s nuclear program since a swift collapse more than 14 months ago.
Despite far-reaching complexities, the dispute effectively boils down to one issue: Iran’s stated refusal to close down its uranium enrichment labs.
For Iran, uranium enrichment is a proud symbol of its scientific advances and technological self-sufficiency. Iran’s president, Mahmoud Ahmadinejad, called the nuclear program on Sunday “a locomotive” for other showcase projects such as Iran’s space effort.
The U.S. and its allies contend that the same sites that make fuel for reactors could also eventually churn out weapons-grade material. Iran has repeatedly insisted that its nuclear program is for peaceful purposes only.
The ideas put forth late Sunday by the nuclear chief, Fereidoun Abbasi, are an attempt to at least acknowledge this huge divide.
Abbasi said Tehran could eventually stop its production of the 20 percent enriched uranium needed for a research reactor, used for medical research and treatments. But, he added, Iran would continue enriching uranium to lower levels of about 3.5 percent for power generation.
The framework addresses one key Western concern. The U.S. and others worry the higher-enriched uranium could be turned into warhead strength _ more than 90 percent enriched _ in a matter of months.
Yet Abbasi also directly snubbed a demand backed by the U.S. and some other countries. They want Iran’s stockpile of 20 percent-enriched uranium to be transferred out of the country. Abbasi indicated that it would remain in Iran.
“Such a stockpile could enable Iran to make a bomb in the future, should it decide to do so,” said Meir Javedanfar, an Iranian-born political analyst now based in Israel.
“Unless an agreement is reached whereby this stockpile is transferred abroad for conversion into nuclear fuel or, at the very minimum, placed under international supervision in an another country, it will be very difficult for the (world powers) to accept Iran’s current offer,” he said.
Last week, U.S. Secretary of State Hillary Rodham Clinton said it was up to Iran to show that its claim of rejecting nuclear weapons is “not an abstract belief but it is a government policy.”
“And that government policy can be demonstrated in a number of ways, by ending the enrichment of highly enriched uranium to 20 percent, by shipping out such highly enriched uranium out of the country, by opening up to constant inspections and verifications,” she said at a conference in Istanbul to seek ways to aid opposition forces in Syria _ Iran’s main Arab ally.
Clinton will not be attending Friday’s conference on Iran. The State Department’s third-ranking diplomat, Under Secretary of State for Political Affairs Wendy Sherman, will lead the U payday loan companies.S. delegation.
Abbasi also insisted that Iran will never close down its new underground enrichment facilities south of Tehran, saying it would be “illogical” for the West to raise such a demand.
It’s unclear, however, whether Abbasi was conveying a real negotiating position or simply testing the waters.
The proposal came from an unconventional venue, airing just before midnight on a state-run TV channel for Iranians and other Farsi-speakers abroad. Iran has used its array of government-controlled media, such as its Arabic-language Al-Alam channel, to make regional and international policy statements.
Abbasi said production of uranium enriched up to 20 percent is not part of the nation’s long-term program _ beyond amounts needed for its research reactor in Tehran _ and insisted that Iran “doesn’t need” to enrich beyond the 20 percent levels.
“The job is being carried out based on need,” he said. “When the need is met, we will decrease production and it is even possible to completely reverse to only 3.5 percent” enrichment levels.
Meanwhile, Foreign Minister Ali Akbar Salehi was quoted on the Iranian parliament’s website Monday as saying he hopes for some progress in the talks. But he warned that Iran would not accept preconditions _ an apparent reference to last year’s impasse.
The U.S. and its allies have sought to press Iran to suspend uranium enrichment in exchange for receiving reactor-ready fuel from abroad. Iran has pushed back by refusing to curtail enrichment, which is permitted under the U.N. treaty overseeing the spread of nuclear technology.
“We will honestly try to have the two sides conclude with a win-win situation in which Iran achieves its rights while removing concerns of five-plus-one group,” Salehi said, using the name often used for the five permanent Security Council members and Germany. “But imposing any conditions before the talks would be meaningless.”
Abbasi’s remarks also could be a bid to tone down the rhetoric.
Last week, Iranian lawmaker Gholam Reza Mesbahi Moghadam claimed Tehran has the know-how and the capability to produce a nuclear weapon, but would never do so. Iran’s supreme leader, Ayatollah Ali Khamenei, also has said that Iran does not seek nuclear arms and described them as against the tenets of Islam.
“The Iranians themselves have said, at the level of the supreme leader, that they don’t have any weapons intention,” U.S. State Department spokeswoman Victoria Nuland said Monday. “Well, if that is in fact the case, then it ought be relatively straightforward for them to demonstrate that to the international community’s satisfaction, and that’s what we’re talking about when we see them.”
After a protracted flap over the venue for the talks, Iranian state TV reported Sunday that both sides had agreed on Istanbul. It said a second round would be held in Baghdad, and that its timing would be decided during the meeting in Turkey. This suggested that Iran views the process as a potential slow, step-by-step series of talks.
The venue still has to be formally confirmed by the European Union’s foreign affairs chief Catherine Ashton. But a diplomat familiar with the preparations for the talks confirmed to The Associated Press on Monday that Istanbul had been chosen for the first round.
The diplomat demanded anonymity because he was not authorized to disclose the information ahead of the formal announcement.
Walgreen Co. has already suffered punishing losses since December, when it ended its contract with Express Scripts after a bitter public dispute over pharmacy reimbursement rates.
And with this week’s merger of Express Scripts and Medco Health Solutions Inc, Walgreen will have to contend with an even larger giant.
Now commanding more than 40 percent of the pharmacy benefit management market, north St. Louis County–based Express Scripts Holding Co. likely will likely demand big concessions from other drug store chains and grocery markets that operate pharmacies.
Walgreen standoff with Express Scripts provides a telling test case of industry fears that the now super-sized Express Scripts, the nation’s biggest PBM, wields too much market power. Critics of the merger have contended the merger will give Express Scripts unchecked ability to force untenable contracts on retail pharmacies, while pushing consumers into getting their drugs by direct mail.
For now, Express Scripts plans to operate Medco as a stand-alone business. Express Script “absolutely will have more negotiating gower in dealing with both the chains and the independents,” said Jeff Jonas, a stock analyst at Gabelli & Co, an investment management firm in Rye, N.Y. “But they need to integrate the companies first, which could take up to 18 months.”
Jonas estimates that Walgreens stands to lose $4 billion in revenue in 2012 — about 6 percent of its total revenue — due to lost prescription sales from the Express Scripts contract, and could lose another $3 billion in 2013.
Walgreen Co. Vice President Michael Polzin said the company intends to honor its existing contract with Medco, but would not disclose when that contract is set to expire. Express Scripts spokesman Brian Henry also declined comment on the specifics of the Medco-Walgreens contract.
Employers contract with pharmacy benefit managers to cover their workers’ drug benefits. PBMs then deliver drugs through the mail or reimburse pharmacies for filling prescriptions.
From Walgreen’s perspective, the only thing worse than losing the Express Scripts deal would have been taking it.
“We firmly believe that this decision was in the long-term interests of our customers, employees, and shareholders,” said Michael Polzin, a Walgreens vice president. “We expect the short-term impact to lessen over time. If the same terms are offered to us by another company, it still wouldn’t be in our long-term interest to accept those terms.”
In the meantime, Walgreen will pursue a strategy of aggressively seeking deals with small and mid-sized pharmacy benefit managers and remaking its stores to offer a wider array of health and wellness services to consumers. And it’s trying to get lean for the challenges ahead, cutting costs at its corporate offices in Deerfield, Il., which began several months ago and will continue, probably including layoffs, Polzin said.
Walgreen has largely shied away from public comments about the Express Scripts-Medco merger, but other drug store and supermarket representatives have asserted that consumers will lose as Express Scripts drives up prices and profits.
Express Scripts, which has built its business on cutting health costs, counters that economies of scale resulting from the deal will in fact drive down consumer prices. “We have a robust and competitive industry, by any analysis,” said Express Scripts’ Henry. “We’re going to have to compete against a large number of PBMs who have their own special niche in the marketplace. … We believe we have a very healthy relationship with over 60,000 retail pharmacies and that will only continue.”
Walgreens dropped its contract with Express Scripts on Jan. 1 after months of stalled talks, and has seen its rivals — including CVS Caremark, WalMart, and Rite-Aid, along with supermarket pharmacies — openly advertise that their readiness to fill prescriptions of Express Scripts members. And those competitors have picked up a sizeable chunk of Walgreens’ business.
The drug store chain reported March sales of $6.02 billion, a decrease of 4.3 percent from the previous year.
“The negative impact on comparable store prescriptions filled due to no longer being part of the Express Scripts, Inc. pharmacy network was 10.7 percentage points,” Walgreens disclosed Thursday in a news release.
Meanwhile, Moody’s Investors Service on Thursday downgraded Walgreen’s credit rating by one small notch. The rating service voiced concern about the drug chain’s ability to win back Express Scripts customers.
So the conventional wisdom is that the Express Scripts-Medco merger puts Walgreens over an even deeper barrel. Walgreens might get along without Express Scripts but probably can’t afford to lose Medco, said Judson Clark, a stock analyst at Edward Jones & Co. in Des Peres.
“It’s in the best interest of Walgreens to get a deal done,” Clark said.
Walgreens “made an attempt to play hardball with Express Scripts and it didn’t work. It looks like it’ll be difficult for Walgreens to grow with this hanging around their neck.”
Meanwhile, Walgreens is expanding its health-related business beyond the traditional pharmacy. Since November 2010, Walgreens has opened about 200 “wellness format” stores in Chicago, Indianapolis, and through its subsidiary, Duane-Reade locations, in New York.
The stores offer immunizations, health testing, disease management progreams, and the treatment of minor ailments such as skin rashes, with the goal of lowering overall healthcare costs. The stores accept insurance payments but also have cash prices.
“We’re looking to focus overall on health, pharmacy and wellness. To help people live well, stay well, and get well,” Polzin said. “And that means creating a new pharmacy and health experience … Expanding fresh healthy food offerings in the store. Bringing more beauty and cosmetic services.”
— Jim Gallagher of the Post-Dispatch contributed to this report
Nearly five months after some $1.6 billion in customer money went missing at bankrupt brokerage MF Global, the question remains: Will anyone be held responsible?
A congressional subcommittee will take up the issue on Wednesday in the latest hearing on Capitol Hill to focus on the firm’s collapse. Watching anxiously will be the 38,000 former MF Global customers who are still missing money and are waiting for someone to be held accountable.
"We’ve been arguing for a long time that at a minimum, this was larceny," said John Roe, a partner at BTR Trading Group who has advocated on behalf of MF Global customers. "This was a company appropriating money that wasn’t its own."
While the case had been quiet in recent months, that changed last week when the subcommittee released a memo detailing a critical $200 million transfer out of an account holding customer funds.
The memo has reignited questions about who at MF Global knew that customer money had been appropriated and how that information could influence a possible criminal case.
It cites an email from MF Global assistant treasurer Edith O’Brien saying the transfer, to resolve an overdraft of an account at JPMorgan (, Fortune 500), came "Per JC’s [Jon Corzine’s] direct instructions."
The memo does not say, however, that Corzine ordered that the transfer use customer funds, in violation of industry rules.
Futures brokers like MF Global can hold their own cash in customer accounts along with that of their clients, and money belonging to the firm may be transferred out freely.
Testifying under oath before Congress last year, Corzine denied ordering the use of client money, saying he received assurances "both orally and in writing" that the transfer had been lawful.
Corzine’s spokesman also said last week that the former New Jersey governor had not specified from which account the transfer was to be made
No one from MF Global has been formally accused of wrongdoing, though the FBI and federal regulators are investigating.
In a criminal case, prosecutors must prove there was a deliberate intent to appropriate customer funds, or failing that, that there was "willful blindness" by Corzine or others to the fact that such funds were at risk, said Michael E. Clark, an attorney with the law firm Duane Morris and a former federal prosecutor.
"The practical problem is that, if there were instructions given to move the money from customer accounts, can they establish a direct link or is this going to be more circumstantial?" Clark said. The testimony of lower-level employees, he added, could be crucial to building a case.
Finding charges that stick: Shortly after the transfer to JPMorgan, the banking giant requested that O’Brien sign a letter certifying that the transaction complied with industry rules on the protection of customer funds. O’Brien was "reluctant" to sign this letter, according to the memo from the subcommittee, and it was never returned.
In addition, Terry Duffy, the head of exchange operator CME Group (), has accused MF Global of falsifying accounting statements in the week prior to its bankruptcy to conceal its use of customer funds.
O’Brien has been summoned to appear at Wednesday’s hearing along with several other former MF Global staffers, though she is expected to refuse to testify, invoking her Fifth Amendment right against self-incrimination.
Leaving aside the issue of the missing money, there are other ways prosecutors might pin charges on MF Global executives.
MF Global was felled after its disclosure of billions of dollars worth of bets on risky European debt sparked a panic among investors. Trading partners called for increased margin payments and clients began taking their business elsewhere, leaving the firm scrambling for cash to make good on its obligations.
Less than two weeks before MF Global went bankrupt, however, executives assured staff from ratings agency Standard & Poor’s that the firm was in good health. A week before the bankruptcy filing, CFO Henri Steenkamp told S&P that the firm was in "its strongest position ever as [a] public entity."
"Let’s ignore the missing $1.6 billion for a second and let’s talk about securities fraud, because you have the CFO running around telling ratings agencies that the company had never been in a stronger position, and that clearly wasn’t the case," said Roe, the customer advocate.
Again, a fraud charge would require proof that misstatements by MF Global executives about the health of the firm were intentional. Lawyers for Steenkamp and Corzine did not respond to requests for comment.
There’s also the Sarbanes-Oxley Act of 2002, which requires corporate officers like those at MF Global to certify that the internal risk controls at their firms are adequate. Ironically, Corzine helped write this law while serving in the Senate.
Sarbanes-Oxley violations can carry prison terms of up to 20 years. While the law has seldom been used in this context over the years, Clark said it could be part of a broader case against MF Global executives.
"I would hate to be in their shoes," he said.
Hamburg, Europe
The Federal Reserve
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