U.S. stocks looked ready for a strong start Monday, as investors continue to be upbeat about the economic recovery following a key report on retail sales and ahead of comments from Federal Reserve Chairman Ben Bernanke.
The S&P 500, Nasdaq-100 and Dow Jones industrial average futures were higher.
Futures measure current index values against their perceived future performance and offer an indication of how markets may open when trading begins.
Wall Street has rallied for the past two weeks as investors have gained confidence in the pace of the economic recovery.
"There really just doesn’t seem to be anything holding this market back," said Manus Cranny, senior market commentator of MF Global Spreads in London.
Cranny said the markets are being driven by "a tsunami of positive sentiment."
Economy: Retail sales jumped 1.4% in October from the prior month, according to the Census Bureau, exceeding the increase of 0.9% expected by a consensus of economists surveyed by Briefing.com. Sales without automobiles rose 0.2%, falling short of the 0.4% gain that was forecast by Briefing.com consensus.
That’s compared to an overall decline of 1.5%, or an increase of 0.5% without auto sales, the prior month.
A survey on manufacturing in New York state also comes out at 8:30 a payday loan companies.m. ET. That’s followed by a report on September business inventories at 10 a.m. ET.
The Fed: Bernanke will offer an outlook of the U.S. economy at a speech in New York City, starting at 12:15 p.m. ET.
Autos: General Motors, releasing its first financial results since emerging from bankruptcy in July, said it lost $1.2 billion in the third quarter. It also said it would begin repaying government loans in December. The U.S. government will received $1 billion, with nearly $200 million going to the Canadian and Ontario governments.
World markets: Stocks worldwide were lifted amid optimism that governments would keep up stimulus efforts. In Asia, Japan’s Nikkei added 0.2%. European shares jumped in midday trading.
Money, oil and gold: The anemic dollar was lower versus major international currencies.
Commodities continued to benefit from the weaker greenback. Oil for December delivery jumped 68 cents to $77.03 a barrel.
And gold prices, which have been on a tear this month, reached a new record of $1,133.50 a troy ounce before retreating slightly. The precious metal was still up $11.90 per troy ounce to $1,128.60 in electronic trading.
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Oil fell more than 2% Wednesday on worries about demand in the world’s largest fuel consumer after data showed a surprise build in U.S. gasoline inventories and weak U.S. new home sales.
U.S. crude oil inventories rose less than expected last week as imports increased, but gasoline stockpiles logged an unexpected gain of 1.7 million barrels, according to data from the U.S. Energy Information Administration.
"Crude stocks were only up 800,000 but the surprise was gasoline stocks. I think that’s what is keeping the market down," said Dan Flynn, analyst at PFGBEST Research in Chicago.
U.S. crude fell $2.09, or 2.63%, and settled at $77.46 a barrel.
Oil prices came under pressure after data showed sales of new U companies making payday loans.S. homes tumbled unexpectedly in September, the first drop in six months, feeding doubt about an economic recovery.
Oil markets have been watching equities and economic data for signs of a rebound that could lift flagging fuel demand.
U.S. and European equity markets fell after the housing sales data. The U.S. dollar rose on safe-haven demand.
Weaker crude oil prices and slumping margins at refineries knocked quarterly earnings lower at ConocoPhillips (COP, Fortune 500), PetroChina (PCCYF) and Hess Corp., (HES, Fortune 500) all of which reported earnings on Wednesday.
If the word ‘cybercrime’ conjures up images of computer geeks trying to crash computers from their mothers’ basements, think again.
Cybercrime has become a rapidly growing underground business built by savvy criminals, who buy and sell valuable stolen financial information from millions of unsuspecting Internet users every year in an on online black market.
"Most cybercriminals are very, very interested in financial gain by compromising customer accounts," said FBI special agent Austin Berglas, who supervises the Bureau’s New York Internet crimes squad. "Believe it or not, there are people who fall victim to their scams, and we see it every day."
Because cybercriminals are so skilled at hacking into thousands of computers every day, the crime is potentially a billion-dollar business. If every stolen credit card and bank account had been wiped clean last year, that would have netted cybercriminals some $8 billion, according to data from Symantec, maker of the Norton antivirus software.
As a result of the lucrative payout, more and more online criminals are entering the game. In fact, the number of new Internet security threats rose nearly three-fold last year to 1.7 million.
Those cyber attacks mostly come from malware, or malicious software, that hands control of your computer, and anything on it or entered into it, over to the bad guys without you even knowing it. The most common forms of malware include keystroke logging, spyware, viruses, worms and Trojan horses.
How the deed is done. Once your information has been stolen, cybercriminals go onto an invitation-only Internet Relay Chat (like a chat group) to do commerce with other online criminals. Cybercriminals will often set up a hacker channel for a matter of days, do business, and then take it down to avoid detection. When active, hacker IRCs can get upwards of 90,000 cybercriminals talking to one another at a given time, according to Dave Cole, senior director of product management at Symantec.
Online criminals use the IRCs to sell or trade your credit card or bank account information. Credit cards are some of the cheapest commodities sold on the Internet Black Market, averaging about 98 cents each when sold in bulk. A full identity goes for just $10.
Credit cards and bank account information made up 51% of the goods advertised on the underground economy last year, up from 38% in 2007. Credit cards are most popular because they’re the cheapest stolen commodity. Cards with expiration dates, CVV2 numbers and names go for more than ones with numbers only, but there is no honor in the underground online crime world — oftentimes hackers will sell the same credit card information to multiple users, and many have already been canceled.
As a result, buyers and sellers on IRC channels will often give the information to a trusted third party for a fee guaranteed high risk personal loans. The third party will test the card information, often by charging a very nominal amount or by posing as a charity, and then verify the goods to the buyer.
After the information is purchased by a secondary criminal, that person can use a machine to print out a fake credit card with your information. But many use yet another tertiary person to wire stolen money into an overseas bank account.
That third person in the chain is usually called a "mule," who often doesn’t even know he or she is part of an underground organized crime scheme. Many mules respond to the "make money from home" schemes, where stolen money is sent to their accounts, and they subsequently wire that money to an overseas account for a 10% to 15% fee.
Other mules are given phony ATM cards and are asked to retrieve cash for a small fee. But there is substantial risk involved — law enforcement usually comes knocking on mules’ doors first.
To catch a thief. The FBI is working undercover in many of these IRC channels in an effort to thwart the cybercriminals. And in many cases, captured criminals agree to work for the government in exchange for reduced sentences.
"After we make an arrest for someone cashing out at ATM machines, I’ll tell them they can go to jail for 10 years or they can come work for Team America," said Berglas.
The strategy doesn’t always work. Albert Gonzalez, the infamous TJ Maxx (TJX, Fortune 500) thief who stole 45 million credit card numbers and private information of 450,000 customers in 2007, was an FBI informant. He helped bring down a massive credit card theft scheme, but double-crossed the FBI, using insider information to help fellow criminals evade detection and carry out the TJ Maxx theft.
Security software also helps, but it far from solves the problem. To avoid detection, many cybercriminals will send out just a handful of viruses before modifying the code and sending it out again.
"The truth is that ‘fingerprint’ security technology is no longer effective," said Rowan Trollope, senior vice president of product development at Symantec. "The bad guys that got involved are organized professionals, and they figured out how to get around our technology."
Though Trollope said the new version of Norton’s antivirus software helps address the problem by scanning for files’ reputations, he said that Internet consumers also need know how how to keep their identities safe online.
"We do products really well, but the next step is education," said Trollope. "We can’t keep the Internet safe with antivirus software alone."
Warren Buffett praised the U.S. government Tuesday for its efforts to heal the economy, but the influential investor said he expects a slow recovery as consumers remain wary of spending.
Buffett said U.S. officials have done "a terrific job, all things considered" to help forestall the worst economic crisis since the Great Depression.
"We were right at the brink," Buffett told Carol Loomis, Fortune senior editor at large, at the magazine’s Most Powerful Women Summit in California. "This country was becoming not only dysfunctional, but nearly inoperative."
In fact, Bank of America chief executive Ken Lewis may have "inadvertently" helped save the financial system a year ago by arranging for BofA (BAC, Fortune 500) to buy troubled Merrill Lynch in "virtually a 24-hour period," according to Buffett.
If Lewis hadn’t, Buffett said Merrill "would have been gone in a nanosecond," joining Lehman Brothers in going out of business.
While he does not see the "green shoots" of economic renewal, Buffett said "I don’t see things getting worse either."
He said the housing market has shown signs of improvement and that markets in certain parts of the country could stabilize within a year.
But the pullback in consumer spending that has occurred as unemployment has risen to a 25-year high could remain in place for some time, he said free credit report without a credit card.
"I think that change in behavior is going to be long lasting, and that may mean that the recovery will be quite slow," he said.
Looking back, Buffett said the head of American International Group (AIG, Fortune 500) contacted him last year looking for help raising money shortly before the troubled insurer was rescued by the government.
"Don’t waste your time on me," Buffett told said he told Robert Willumstad, then the chief executive officer of AIG. "I’m not going to be able to do anything for you."
Buffett said he was also contacted by Barclays with a request to provide insurance for the British bank’s bid to buy Lehman Brothers last year. Buffett said he requested additional details from the bank but didn’t learn until 10 months later that a Barclays executive had tried to contact him on his cell phone, which he didn’t understand how to operate.
"Don’t try to get in touch with me by cell phone," he said.
Buffett’s Berkshire Hathaway Inc. (BRK.A) invests in more than 70 businesses, including various insurance and reinsurance companies and public utilities.
The fight over health care overhaul is on track to be the most expensive issue ever to hit the hallways of Congress.
The bill for lobbyists, television ads and political donations has topped $375 million — or enough to pay the entire insurance tab for about 30,000 families a year.
The big spenders range from drug companies, hospitals and doctor groups to organizations that advocate for unions, immigrants and retirees.
The largest chunk has gone to direct lobbying of lawmakers and other policymakers. In the first half of 2009, the health care industry spent nearly $280 million on lobbyists, according to the Center for Responsive Politics.
Another $75 million was spent on television advertising airtime by health care interests, mostly politically left-leaning groups and health industries. And another $23 million has flowed from the health care sector into the campaign war chests of 2010 candidates for federal office, on the heels of some $95 million raised during the 2008 cycle.
"The health sector is on track in 2009 to spend more on lobbying than it has on any other year in U.S. history — and by a lot," said Dave Levinthal of the Center for Responsive Politics, which analyzes and collects lobbying and campaign spending figures.
Taking the Hill
Part of the reason for the big price tag is that so many different types of groups and companies could be affected by health care reform. Business models could be upended — for better or worse — for everything from urgent care clinics to providers of electronic medical records.
Lobbyists have been hired for groups as varied as the College of American Pathologists, which has spent $775,717 on lobbying this year, and the prestigious University of Texas M.D. Anderson Cancer Center, which spent $220,000.
The other reason for the big bucks is the duration of the debate. Every week it goes on, millions more are spent trying to influence the negotiations.
The lobbying figures alone are on track to exceed half-a-billion-dollar mark by the end of the year, which would be a record.
The big payoff for such spending? Open doors to policy makers.
Consider that Richard Umbdenstock, who heads the American Hospital Association, has spent $7 million on lobbying this year and made seven White House visits since March to talk to staffers, according to a White House letter to Citizens for Responsibility and Ethics, a nonprofit watchdog group that sued to get such information.
Other advocates that have made White House visits include the head of the lobbing group for drug makers, Pharmaceutical Research and Manufacturers of America, and the head of the health insurance lobbying group, America’s Health Insurance Plans.
"Health care is supposed to be a personal issue that addresses the issues of individual Americans, but now it’s addressing drug and insurance industry concerns, thanks to their lobbyists," said Christine Hines of Public Citizen, a nonprofit group that tracks money and power on the Hill.
Yet, lobbying and advertising is guaranteed by the Constitution. And several big spenders, such as the Pharmaceutical Research and Manufacturers of America, say they’re educating not advocating for any particular bill creditreport.
"All of our advertising to date has been done to raise awareness of the importance of passing bipartisan health care reform this year," said Ken Johnson, a senior vice president at the pharmaceutical group, which has spent $13 million on lobbying this year.
Johnson points out that his association’s members have told policymakers they’ll commit $80 billion to cutting costs over the next 10 years. However, the group is also wary of legislative attempts to allow government to use its purchasing power to force drugmakers to negotiate pricing or allow cheaper foreign drugs to be imported.
"Our companies directly employ nearly 700,000 workers around the country as well as another 2.5 million indirectly," Johnson said. "I would say that we have a pretty significant stake in this debate, too."
TV ads get the word out
A popular way to influence public opinion is through television ads, and August was the biggest month this year for health care advocacy ads, according to the Campaign Media Analysis Group.
About $1 million a day has been spent on health care reform TV ads since June, said Evan Tracey, president of the the media research group.
In August alone, $20 million was spent on 34,000 ads, with foes of congressional reform proposals outspending proponents. Earlier in the year ads supporting reform outnumbered those opposing by a margin of 2-to-1.
The buyers range from left-leaning groups Health Care for America Now, whose members include unions and immigrant advocacy groups, to the U.S. Chamber of Commerce and anti-tax groups such as Our Country Deserves Better.
"What you’ve got is the perfect storm of lots of stakeholders who have access to all kinds of capital, so they’re putting everything into this," said Tracey, whose group consults for CNN. "Everyone has a dog in this fight. That’s what is compounding this from an advocacy perspective."
Another way to influence the debate is through election campaign contributions. Although it is early in the 2010 election cycle, the health care sector has contributed $23 million, according to the Center for Responsive Politics.
One of the biggest beneficiaries has been conservative Blue Dog Democrats.
Many Blue Dogs are on the fence about controversial health care issues, such as whether to create government-run insurance plans. Their votes are crucial to passing a final bill, so they also tend to attract more attention and campaign contributions than other Democrats and Republicans.
Health and accident insurers, HMOs and health services organizations increased their contributions to Blue Dogs from $106,200 in the first quarter of 2009 to $122,650 in the second, according to the Center for Responsive Politics.
That is a 15% increase. By comparison, Democrats not in the Blue Dog group saw a 3% hike in contributions.
The Obama administration pledged unprecedented transparency in its accounting of the $700 billion bank and auto bailouts (TARP) and the $787.2 billion Recovery Act. A lot of information has been made public but there are some key details where the transparency falls far short.
Here’s what we still don’t know:
They’re important questions: We want the government to ensure it is spending our money wisely, and experts want to know why the Obama administration won’t provide the answers.
"Why are we bailing out banks, and what are we getting out of it?" asked Craig Jennings, senior fiscal policy analyst at transparency research organization OMBWatch. "These are very big questions, and the administration doesn’t seem to be willing to answer them."
What we do know. To make the bailouts and stimulus more transparent, the administration commissioned Web sites like recovery.gov and financialstability.gov, which have given the public previously unattainable information about how taxpayer funds are spent.
"The president and vice president made a clear commitment from the beginning that we would provide unprecedented accountability and transparency," said Liz Oxhorn, the Obama administration’s spokeswoman for the Recovery Act. "Look at recovery.gov and compare it to the standard of how government worked in the past. It is truly a pioneering site in terms of access."
But many analysts and overseers say that the provided information is not nearly enough.
"The administration’s transparency goals clearly have not been reached," said John Clippinger, co-director, of the Berkman Center for Internet & Society at Harvard University. "I think this administration is making a huge effort to enable them, considering where we’ve been in the last eight years, but they’re certainly not there yet."
Accounting for TARP. The Treasury Department states on financialstability.gov that the $204 billion in capital investments in banks are "for stability or lending." But it does not require banks who have received the funds to show how they are using the money.
Special Inspector General for TARP (SIGTARP) Neil Barofsky, and Prof. Elizabeth Warren’s Congressional Oversight Panel (COP) have been outspoken on this issue, and Barofsky even performed his own voluntary survey to show the accounting could be done. Treasury responded that its current method of accounting is sufficient — reporting on broad trends for the top 21 banks’ lending habits.
"We share SIGTARP’s interest in tracking the level of lending by those institutions that have received government investment," a Treasury official said. "To that end, Treasury has released monthly reports tracking how much these institutions are actually lending."
Experts say without deeper digging into the question of "where the money is going," the public will never really know if the program is working: If banks are lending, what do they have to show for it? How has lending improved?
"Are they giving loans just to extremely credit-worthy people? Subprime borrowers? Are minorities able to secure loans?" asked Jennings online payday loans.
Besides "is it working," Treasury also won’t answer how taxpayers’ investments are faring, declining to make public the fair market value for the shares and warrants it holds as a result of TARP. Taxpayers won’t have any way of knowing whether they have lost or gained money on their investments in companies like General Motors, AIG (AIG, Fortune 500), Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500) until after the government sells its stakes.
Digging into stimulus. The accounting of stimulus has been met with less scrutiny, mostly because Congress made it a point to track how every dollar was spent after struggling to get the same information from the TARP program.
Still, the government’s accounting only goes as far as the first tier recipients from the states. For example, say a construction company gets stimulus funds from the state of Nebraska. That company has to report the receipt of those funds to the government, but if they hire a dump truck company and an asphalt company to do the work, that doesn’t get reported.
Why do we care? "It would enable the Obama administration to say there were X amount of businesses that benefited from a particular project, and the government could connect the dots if there is fraud, waste or abuse," said Jennings.
What can be done. Some argue open-source technology is the best solution for both the government and the public.
That is, use the Internet to provide all forms of government data in a very sortable, searchable database, said Clippinger. He argues that if all the data are in one place, with independent eyes looking at it, then the data couldn’t be co-opted, or selectively made available.
"When you get lots of people looking at it, you’ll create better accountability and efficiency," said Clippinger.
That idea is supported by House bill H.R. 1242, backed by Reps. Carolyn Maloney (D-N.Y.) and Peter King (R-N.Y.). The bill would take the reporting out Treasury’s hands, and require the administration to send all data straight into a database.
It’s similar to the model used by recovery.gov, which is run by the independent Recovery Accountability and Transparency Board (Recovery Board), not by the Obama administration, which runs financialstability.gov.
"We’re fully aware of what our name is and what the public expects of us," said Ed Pound, a Recovery Board spokesman. "We’re not going to fall into that trap of not sharing certain information."
In the end, experts say the Obama administration will have to find ways to make a greater amount of data even more accessible to achieve the transparency goals it set out for itself.
"There are other ways of skinning this cat," said Clippinger.
After several months of growing optimism about the state of the economy, suddenly there’s a lot of concern that a recovery has come off the tracks.
A June employment report included an unexpected jump in job losses. That was followed by last week’s report of a nearly 5% decline in June year-over-year sales at major retailers other than discounter Wal-Mart Stores (WMT, Fortune 500), which no longer releases monthly results.
The gloomier economic outlook has hurt stocks, and prompted talk among some economists and policymakers about whether a new round of economic stimulus is needed to get the economy growing sooner.
But there are still many economists who believe the early signs of a turnaround in the economy are there — and growing.
They’re not saying the recession that started 19 months ago is already over. But many believe the economy will reach bottom and finally start to improve as soon as late summer. Some even believe employers could again start adding jobs before the end of this year.
"It would have certainly been better if the jobs report had continued to show improvement," said Lakshman Achuthan, managing director of Economic Cycle Research Institute, which specializes in calling when the economy will turn from recession to recovery and back again. "The fact that after a few steps forward we had a step back doesn’t negate the indicators pointing to a recovery this summer."
Reasons for encouragement: There are several factors accounting for these economists’ optimism.
They say that business inventories have been cut so deep that production will need to start to resume simply to keep minimal supply of product on shelves.
In the auto industry, for example, General Motors is restarting six of its assembly lines Monday after what was typically a two-week summer shutdown was extended to up to three months this year.
Chrysler Group also had its own extended shutdown as it went through the bankruptcy process. Ford Motor (F, Fortune 500), after cutting production plans repeatedly, recently announced it was increasing third-quarter production by 25,000 to deal with low inventories of some of its more popular vehicles.
The same kind of inventory bounce back is likely to be seen in many other industries, according to the economists who see a recovery sooner rather than later. They say much of the drop in gross domestic product, the broad measure of the nation’s economic activity, at the end of 2008 and the first three months of 2009 came from businesses slamming the brakes on production due to excess inventories.
"If you just stop cutting inventory, you add $80 to $90 billion to GDP. That’s pretty impressive," said Robert Brusca of FAO Economics us fast cash.
The severe job cutting done by businesses over the past year is another reason some economists are expecting a bounceback sooner rather than later. They say the low employment levels should help corporate income rebound relatively quickly once demand starts to build again.
Thomson Reuters is forecasting two more quarters of double-digit percentage earnings declines in the second and third quarter, but a 187% jump in income among S&P 500 companies in the fourth quarter as they move to put the year-earlier losses behind them. That could be a key to employers hiring again, according to some economists.
"You have a super-lean corporate sector that should be able to generate earnings fairly quickly," said Joseph Carson, chief economist at AllianceBernstein. "You usually need the health of the corporate sector to flow to the labor markets, and I think that’s the way this is playing out."
Jump in confidence: The Conference Board’s CEO Confidence Index released last week showed a huge jump, with nearly 55% of business leaders expecting economic conditions to improve in the next six months, up from only about 17% in the previous reading three months ago.
Lynn Franco, director of the business research group’s consumer research center, said that kind of jump in CEO confidence is a good predictor that spending on capital spending is about to increase, even if management will be more cautious about hiring again.
But businesses might not be the only ones poised to start spending again. Many economists believe there is pent-up demand among consumers that will cause a rebound in spending, once confidence in the labor market stabilizes.
"Even people with jobs have been pulling back on spending, concerned they’re going to be next," said Brusca. "I think the people with jobs will spend a little more freely when they’re less concerned about the economy."
Achuthan said two factors giving him hope are that the financial stimulus bill passed earlier this year has yet to have much effect on spending and jobs, and that credit markets are still constrained by troubled assets due to the problems in the housing market and foreclosures. He said it’s possible both those things could change quickly before the end of the year.
"If the stimulus dollars start to hit, and the financial system starts to behave more normally, there is a wall of money that will begin to flow through the economy," he said.
Chrysler’s bankruptcy lasted just six weeks, but its next test — operating as a Fiat SpA-controlled company — arguably will last longer.
The road ahead for Chrysler Group LLC remains a rocky one, analysts say, despite being saved from liquidation by Fiat of Italy.
Benefits of the partnership, such as sharing vehicle platforms and dealership networks, won’t surface until mid-2011, when the first vehicles using Fiat platforms arrive at U.S. dealerships, according to one analyst’s timeline.
Until then, the alliance must figure out how to endure a dire market without a strong portfolio of new products. It also must implement its plans to make and sell Fiat vehicles in the U.S.
"The next couple of years are going to be about figuring out the difference between the idea and reality," said Stephanie Brinley, a Troy, Mich.-based analyst for auto consulting firm AutoPacific.
Already, the automaker has taken sweeping steps: It laid off workers, cut production and announced plant closures — including both assembly plants in Fenton — to restructure and survive. It has a new leader, Fiat Chief Executive Sergio Marchionne, who spearheaded a turnaround at the Italian automaker in recent years.
But Marchionne and Chrysler still face worrying obstacles:
— Tumbling sales caused by the global recession and tight credit.
— Consumers’ negative perception of a bankrupt company.
— An aging product line with few new products in the pipeline until the Fiat-based vehicles arrive.
Those issues will push Chrysler’s U.S. market share below 5 percent in the next 12 to 15 months, predicted Erich Merkle, president of Autoconomy.com in Grand Rapids, Mich.
Chrysler had a 13.6 percent market share in 2005 and was the No. 3 automaker in terms of U.S. market share, according to data from J.D. Power and Associates. The next year, Toyota pushed Chrysler into the fourth spot.
Merkle estimates Nissan and the South Korean conglomerate of Hyundai-Kia Automotive Group will outpace Chrysler’s U.S. market share in the next six months. That could push Chrysler to the No. 7 spot, he said.
"Every time you find a new partner, the product cadence and product pipeline takes a hit," Merkle said of Chrysler’s new alliance.
Chrysler, for its part, contends it has 24 new vehicles in the next four years. Spokesman Rick Deneau declined to say how many of those were new-name products versus redesigned versions of existing models.
In 2010, it will launch completely redesigned versions of the Chrysler 300, Jeep Grand Cherokee, Dodge Charger and Dodge Durango, he said.
Another analyst, Jim Hall, said that for the next few years, Chrysler will need to live off its profitable vehicles — the minivans and the Dodge Ram. Both have had sales challenges.
"They have to play with what they’ve got," said Hall, principal of 2953 Analytics in Birmingham, Mich.
FIAT TURNAROUND
But the automaker will be playing with a new leader, Marchionne.
Marchionne took the helm of Fiat in 2004, when the automaker was at the edge of bankruptcy. By changing its management and elevating younger employees to higher positions, he helped Fiat rebound, said Pierluigi Bellini, an associate director in Milan, Italy, for IHS Global Insight.
"He’s a very strong leader. He thinks very much outside of the box," Bellini said. "He’s very demanding (of those he oversees) but also gives a lot of empowerment to them."
Marchionne also has forged more than two dozen partnerships globally, Bellini added. And it seems he intends to do more: Marchionne told trade publication Automotive News that manufacturers need to make 5.5 million vehicles a year to remain profitable and survive.
Fiat made about 2.4 million vehicles last year among its Fiat, Alfa Romeo, Ferrari, Maserati and Iveco units, according to IHS Global Insight data. Chrysler made about 1.9 million vehicles among its Chrysler, Jeep and Dodge brands.
Bellini expects that Marchionne will continue to pursue alliances.
Just two weeks into his position as the head of the new Chrysler company, he is using a similar shake-up to the one implemented with Fiat.
Earlier this month, on the day Chrysler and Fiat finalized their deal, Marchionne announced changes to the new company’s leadership affordable car insurance. He promoted several Chrysler executives, including Jim Press as his deputy chief executive, but also brought in a few Fiat leaders.
Fiat is "certainly not coming in and taking over," Brinley said, adding that Marchionne kept many responsibilities with North American, not Italian, executives.
A request to talk with Marchionne or one of his executives was not granted. Chrysler spokeswoman Shawn Morgan said the company is not making executives available for interviews.
WHAT’S NEXT
Fiat SpA took an initial 20 percent stake in the U.S. automaker earlier this month. In exchange, the Italian automaker will give Chrysler access to small-car platforms at a time when the U.S. company’s lineup is skewed toward pickups and sport utility vehicles. It also gives Chrysler another inroad to selling vehicles outside North America — a feat the U.S. automaker has struggled to achieve.
For Fiat, the alliance gives it access to Chrysler’s manufacturing facilities and dealership network. Fiat made a strong push in the U.S. market in the 1960s and 1970s but pulled out after distribution and quality problems, according to IHS Global Insight.
"Fiat has been looking for returning to the U.S. with the Alfa Romeo (luxury) brand for years," Bellini said.
Several Alfa Romeo cars are scheduled for the U.S. market in the next few years, according to a research note by IHS Global Insight. Likely plans include:
— The Alfa 169 sedan will be built in Chrysler’s Brampton, Ontario, plant in November 2011 for the 2012 model year.
— The Alfa Romeo GTX will be built at Chrysler’s Jefferson North Assembly Plant in Detroit in July 2011.
— The Alfa Romeo MiTo hatchback will be built at the Belvidere, Ill., plant in July 2011.
Some Chrysler products — like the Dodge Caliber and Jeep Liberty — likely will be built on Fiat-based platforms, the research note said.
The only Fiat-badged model to be sold in the U.S., the Fiat 500 subcompact, will be made at Chrysler’s Toluca, Mexico, plant starting roughly in July 2011, according to IHS Global Insight.
Chrysler’s Deneau said Marchionne told employees a few weeks ago that product plans for the Chrysler-Fiat alliance could be unveiled in 60 to 90 days. He could not provide details about specific vehicles.
Deneau also wouldn’t comment on IHS Global Insight’s report of the mid-2011 timeline for Fiat-based vehicles to be sold in the U.S.
But before those car designs come to the U.S., Fiat and Chrysler will have to address differences in federal vehicle regulations and pricing structures.
"Europeans are willing to pay more for small cars (than Americans), and they’re willing to pay for features in small cars," Brinley said.
Several analysts said American car shoppers may not eagerly embrace the Fiat products for several reasons. First, the reputation of poor quality that Fiat left in the U.S. may dissuade consumers from returning to the automakers’ brands, analysts said.
Second, analysts question whether the U.S. government, and not consumer demand, is leading the push for smaller cars on U.S. roads.
"The U.S. is not (a big market) for small, compact cars," even if gasoline prices go higher and the government implements higher fuel regulations, Bellini said. "I still think the American people like big cars, maybe with smaller engines."
Whether Fiat can sell these smaller vehicles in the U.S. is difficult to gauge.
And some say the Fiat alliance won’t accomplish Chrysler’s most important goal: saving it from an eventual breakup.
Merkle said he was glad a bankruptcy judge approved the alliance because it gives Chrysler a chance to wind down operations versus a quick liquidation.
A possible scenario, he said, is Fiat selling off the Jeep and pickup brands, while keeping some Chrysler plants open to produce its own products in North America.
"I take no pleasure in saying that because I love the Chrysler (brands)," he said. "I just don’t see how they get through this."
Singapore’s exports dropped the least in eight months in May, adding to signs the worst global recession since the Great Depression is easing.
Non-oil domestic exports fell 12.1 percent from a year earlier, after contracting 19.2 percent in April, the trade promotion agency said in a statement today. Economists had expected an 11.7 percent decline.
Singapore’s government said last month the nation may have “hit the bottom” of its deepest recession since independence in 1965. Factory production fell at the slowest pace in seven months in April, boosting economists’ expectations the export collapse may also ease as manufacturers start rebuilding stockpiles in anticipation of improving demand.
“We are still in the midst of a bottoming out in the global economy and there will be better visibility of a recovery towards the end of the year,” said Irvin Seah, an economist at DBS Bank Ltd. in Singapore. “We aren’t seeing very strong demand from consumers but demand from producers is significantly better on the back of restocking.”
The Bank of Japan today raised its assessment of the economy for a second month and said the situation has stopped worsening after exports improved and factory output climbed at the fastest pace in 56 years. U.S. Treasury Secretary Timothy Geithner said June 9 that the “global storm” is showing signs of receding.
A rally in world equity markets has added more than $11 trillion to the value of global stocks since this year’s low on March 9 everyone approved 1 hour payday loans.
Manufacturing Expands
Singapore’s purchasing managers’ index showed manufacturing expanded in May for the first time in nine months. Export orders climbed last month, according to a June 2 report by the Singapore Institute of Purchasing & Materials Management.
“While trade is still expected to be weak for the rest of 2009, further declines of the magnitude seen earlier this year seem unlikely,” the government said last month.
Singapore’s non-oil exports rose a seasonally adjusted 5.6 percent last month from April, when they slid a revised 1.4 percent, today’s report showed. Economists had expected a 1.4 percent increase.
Electronics shipments plunged 21.8 percent in May from a year earlier, the 28th consecutive drop, following a 25.6 percent decline in April. Sales of electronics products by companies including Chartered Semiconductor Manufacturing Ltd. were worth S$3.89 billion ($2.7 billion) last month.
Non-electronics shipments, which include petrochemicals and pharmaceuticals, fell 5.6 percent in May from a year earlier. Pharmaceutical shipments rose 40.2 percent.
NEW YORK — A federal bankruptcy judge approved the sale of most of Chrysler LLC’s assets to Italy’s Fiat, moving the American automaker a step closer to its goal of a quick exit from court protection.
But a trio of Indiana state pension and construction funds filed an appeal, saying that the ruling sets aside the rights of the company’s secured lenders while doling out the company’s assets to others.
Judge Arthur Gonzalez said in his ruling late Sunday that a speedy sale — the centerpiece of a restructuring plan backed by President Barack Obama’s automotive task force — was needed to keep the value of Chrysler from deteriorating and would provide a better return for the company’s stakeholders than if it had liquidated.
"Any material delay would result in substantial costs in several areas, including the amounts required to restart the operations, loss of skilled workers, loss of suppliers and dealers who could be forced to go out of business in the interim, and the erosion of consumer confidence," Gonzalez wrote in his ruling.
As a result, the proposed sale must be approved in order to preserve the value of Chrysler’s business and what is ultimately left for its stakeholders, Gonzalez said.
"While this has been an extremely difficult chapter in Chrysler’s history for all involved, the new company and its customers, employees and suppliers can now begin on a fresh page," Robert Nardelli, Chrysler’s outgoing chairman and chief executive, said in a statement payday loans lenders.
Nardelli is slated to leave Chrysler once the sale is final. The ruling came ahead of fellow U.S.-automaker General Motors Corp.’s government-backed bankruptcy protection filing on Monday.
President Barack Obama released a statement Monday saying that Gonzalez’s decision "paves the way for the new Chrysler to successfully emerge from bankruptcy as a new, stronger, more competitive company."
Gonzalez’s ruling came after three days of testimony last week, during which everyone from the automaker’s outgoing chief executive to dealers slated to lose their franchises took the stand.
Chrysler has maintained that selling the bulk of its assets to Fiat Group SpA is the only way it can avoid selling itself off piece by piece.
With the approval of the sale, Chrysler could emerge from Chapter 11 bankruptcy protection as soon as this week, defying observers who said that the company could linger under court oversight for years.
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