Design Within Reach will soon require a lot more effort, as the chain closes its midtown store at 16th and J streets.
The company confirmed it would close the 2,700-square-foot store at 1020 16th St. — in the ground-floor of the Loftwork’s o1 Lofts development, which includes Bistro 33 Midtown and P.F. Chang’s China Bistro. Design Within Reach will close March 15, with a 30 percent-off sale until then, a company spokeswoman said paydayloans.
The San Francisco-based company, which has about 60 of the boutique stores featuring cool and trendy furniture nationwide, is the latest to close its local outlet during the recession. Two employees work at the store.
The company has a Berkeley and three San Francisco stores, the soon-to-be closest outlets to Sacramento.
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European Central Bank Governing Council member Athanasios Orphanides said the bank will continue to support the economy even as it unwinds its emergency lending measures, suggesting interest rates may remain at a record low for some time.
“The phasing out of some unconventional measures should not be misinterpreted as a desire to remove policy accommodation from the economy,” Orphanides, who heads the central bank of Cyprus, said in an interview in Nicosia on Feb. 12. “Policy accommodation continues to be needed in light of the very subdued inflation outlook and the unevenness and weakness of the economy.”
The Frankfurt-based ECB has started to withdraw the measures it used to fight the financial crisis and economists last month predicted it would raise the benchmark rate from 1 percent in the fourth quarter. Still, the euro-area economy barely expanded in the final quarter of last year and the fiscal crisis gripping the region may weigh on growth and inflation as governments cut spending to reduce budget deficits.
Orphanides’ comments “confirm our call that the ECB will not raise rates this year,” said Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc in London. “He sounds very concerned about the outlook for both growth and inflation.”
The euro eased to $1.3613 after the interview was published from $1.3622.
‘Subdued’ Inflation
Orphanides, a former U.S. Federal Reserve economist, said the “evolution of the economy and the associated risks to price stability are the key” to the rate outlook.
“If events over the next several months are consistent with inflation remaining subdued and considerably below our price-stability objective, that would indicate that the accommodative policy should remain in place,” he said.
The ECB in December predicted growth of 0.8 percent this year and 1.2 percent in 2011. Inflation was projected to average 1.3 percent this year and 1.4 percent next year. The ECB aims to keep the rate just below 2 percent.
Orphanides said preventing inflation from dropping too far below the ECB’s goal is as important as keeping a lid on price increases.
‘Symmetrical’ Policy
“The most important element is to be symmetrical in the pursuit of our price-stability objective,” he said. “I am concerned that if HICP inflation stays significantly below our definition of price stability for an extended period, this deviation could become embedded in longer term inflation expectations business cards. This would be an unwelcome development.”
In its latest quarterly survey of professional forecasters published on Feb. 11, the ECB said five-year inflation expectations stayed at 1.9 percent. However, forecasters lowered their 2011 inflation prediction to 1.5 percent from 1.6 percent.
Orphanides said he would be “more comfortable” if 2011 expectations “moved closer to our definition of price stability rather than a little bit away from it.” The current inflation rate of 1 percent also “confirms the appropriateness of continuing with an accommodative monetary-policy stance,” he said.
The 16-nation economy grew just 0.1 percent in the fourth quarter from the third, the European Union’s statistics office said Feb. 12. Economists had forecast 0.3 percent growth.
Weaker Growth
Growth “was a little bit weaker than the baseline scenario,” said Orphanides. “We are monitoring the improvements in the economy overall, but at the same time we also note the weakness in the money figures as well as the weakness in credit growth. Those are in my view consistent with the recovery not being very strong at the moment.”
The ECB’s 22-member Governing Council will decide at its next policy meeting on March 4 whether to further scale back its emergency lending measures. It has already announced the end of its 12 and 6-month loans to banks and indicated it may return to an auction procedure in some of its refinancing operations as a next step.
“The longer our interventions remain in effect, the more dangerous the side effects become,” ECB Executive Board member Juergen Stark told Germany’s Spiegel magazine in an interview published today.
Orphanides indicated he favors leaving full allotment in the main weekly refinancing operation in place for the time being.
“In the circumstances we are in at present, with very low short-term nominal interest rates, it’s very hard to assess precisely what the demand for liquidity in the banking sector is,” he said. “For that reason it is entirely sensible to have a procedure that can flexibly meet variations in the demand for liquidity, and that is what our fixed-rate, full-allotment policy is doing.”
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Aircraft makers such as EADS’s Airbus and Boeing Co. are counting on Asia to pull the industry out of a slump and spur growth for years to come, executives said Wednesday.
Fueled by a growing middle class eager to travel, the region will need about 8,000 planes costing $1.2 trillion by 2028, France’s Airbus estimates. Passenger traffic in Asia is likely to grow an annual average of 5.9 percent in the next 20 years, overtaking the United States and Europe to become the largest air transport market, said Airbus, the world’s biggest airplane maker.
"We’re very optimistic this region will play a leading role in global economic growth and particularly aviation," Airbus Chief Executive Tom Enders said at the Singapore Airshow.
Global passenger traffic dropped about 2 percent last year amid a recession in most developed countries. Most Asian countries, meanwhile, continued to expand in 2009, and growing populations and vibrant economies are making the region the center of the aviation business.
Domestic air travel in China rose 21 percent last year, and Boeing estimates the Chinese market will need about 3,800 airplanes costing $400 billion over the next 20 years.
Aircraft makers are targeting local carriers such as Garuda Indonesia, which will receive 23 planes from Boeing and one from Airbus this year, part of a plan to boost its fleet by three quarters to 116 planes by 2014.
Niche players also are eyeing Asia. EADS unit Eurocopter, which says it has about half of Asia’s helicopter market, expects demand to grow at least 10 percent a year for the next decade.
If regulations that limit helicopter use in China and India are lifted, demand will explode further, said Eurocopter CEO Lutz Bertling.
"The Asian market is for sure the fastest growing," Bertling said. "It’s going to be bigger than the U.S. by 2020."
Experts on retail sales are obsessed with Thanksgiving weekend — particularly the Black Friday frenzy.
Most pundits agree that the start of the season was just ho-hum. But if you examine the details, you’ll come across all sorts of disagreement over exactly how things have gone. Why is it so hard to judge how many shoppers turned out, and how much they spent?
Here are some answers.
How important is Thanksgiving weekend as a predictor of the season?
The day after Thanksgiving is the traditional start of the season. In recent years, Black Friday has been the busiest shopping day of the year. But it’s not considered a predictor of the rest of the season, since it accounts for 10 percent of total holiday sales.
Still, pundits study the weekend’s receipts to decipher shoppers’ mind-sets. And if stores have a weak start, chances are slim that they will be able to make up for lost sales.
What makes this season’s kickoff particularly hard to assess?
One major factor is that stores have increasingly been hawking deals and offering expanded hours throughout November. That has likely diluted sales for the holiday weekend.
Parsing the data got even trickier because for the first time, major merchants offered early morning Black Friday specials on their websites at the same time as in their stores, as they aimed to compete with pure online retailers.
That helped boost online sales on Thursday and Friday, which rose 11 percent compared with a year ago, according to comScore Inc same day payday loans., an Internet research company. Also, more stores, like Old Navy, were open on Thanksgiving.
"Black Friday was definitely expanded. It wasn’t as concentrated," said Bill Lewis, executive vice president of Karabus Management, a retail advisory firm. He noted that heavy online buying likely depressed store traffic.
What type of data has been out there in recent days? Any contradictions?
The National Retail Federation released data on spending and traffic late Sunday, based on an online poll of 5,000 shoppers. The group extrapolated that total spending reached $41.2 billion for Thursday through Sunday, up 0.5 percent from a year ago; it reported 195 million people were visiting stores and websites, compared with 172 million a year ago.
Meanwhile, research firm ShopperTrak released data that showed customer counts actually declined 1.1 percent for the Friday-through-Sunday weekend, but showed sales were up a more robust 1.6 percent.
When will we get a full picture of the start of this year’s holiday season?
Major retailers’ individual sales reports should offer some sense, even though most figures exclude online business.
University City — For nearly two years, no new development in St. Louis County has obtained tax-increment financing, the controversial incentive that cities use to attract developers.
The Kingsland Walk development, about two blocks north of the Delmar Loop in University City, is expected to change that.
It will be the first TIF project in the county since state law changed the make-up of TIF commissions on Jan. 1, 2008.
For years, local governments doled out tax-increment financing as a tool to encourage developers to locate in their cities. In 2007, the Missouri Legislature changed the law, taking some authority from the cities and adopting a regional countywide approach. That — combined with the downward spiral of the economy — put a lid on TIF requests.
While not as far along as the U. City project, Brentwood, Valley Park, Bridgeton and St. Louis County also are beginning to look at possible TIF projects, said Glenn Powers, the county’s planning director.
Under TIF, a developer may divert some money that would have been used for taxes to help pay for some development costs.
Local governments and schools receive the same base property and sales taxes as before, but forgo part of the additional tax money generated by the development for a period up to 23 years. The jurisdictions expect to benefit fully from the development in future years.
In University City, developer Metropolitan Development-Kingsland Walk LLC has asked for $5.5 million in tax-increment financing for its $36 million project, featuring 98 condos and apartments and more than 23,000 square feet of retail space at the southeastern corner of Vernon and Kingsland avenues. The development would be built in two phases.
The proposed agreement with the city requires the developer to close private financing by March 1 and begin construction within 60 days. A 12-member TIF Commission has given unanimous support and recommended the City Council do the same. Final approval is expected Dec. 7.
"It’s a fabulous re-use of an almost vacant area," Mayor Joe Adams said. "It will help University City move forward."
The developer sought $2.5 million in TIF money for phase one — an area north of Metcalfe Park — and $3 million for the second part, extending to Vernon. The builder will be Metropolitan Design and Building with Thomas Cohen Architecture as architect.
Lehman Walker, director of community development in University City, said Kingsland Walk fit the criteria for the special financing because it’s in a depressed, largely vacant area. University City had only awarded TIFs "if an area is truly blighted and in need of redevelopment," Walker said.
The project would be U. City’s third TIF project and its first in more than 10 years direct payday loan lenders. Powers said TIFs were intended to encourage retail and commercial growth in areas where development might not otherwise happen.
hurting competitors?
The changes in state law altered the composition of 12-member TIF commissions — increasing the number of St. Louis County representatives to six and cutting to three from six the number of slots for the municipality in which the project is situated.
The other three appointees represent affected taxing districts such as school and fire districts.
"The idea behind the changes was to get the composition of the TIF commissions more regional," Powers said. "When a city’s members dominated the commission, a TIF was usually about the city getting more commercial revenue into their city, a lot of times that was at the expense of other cities. You’d open a store here, and another one would shut down over there. "
He gave as an example a Wal-Mart closing in Town and Country and a larger one opening in Manchester a mile away.
"As a county TIF commission member myself, we’re going to be scrutinizing these things a little more. … Do we really want to approve a new retail development if it’s going to hurt the competitor down the road?"
If a county TIF commission turns down a project, the local government may still approve it but only with two-thirds majority of the council. Powers, who was on the commission that voted on Kingsland Walk, said the project was a good use of TIF. "It strengthens what’s already there in University City."
Jay Simon, president and CEO of Metropolitan Design and Building Co. here, said the 98 condos and apartments would vary from 680 square feet to 1,600 square feet. One, two and three-bedroom units would be available in the nine-building project.
"We plan on just building primarily apartments at first due to the market condition on condos," Simon said this week. "Those units will start at $750 a month and go up to $1,680 a month."
Preliminary plans call for Phase One to include four buildings with 51 residential units and about 8,800 square feet of retail space, scheduled for completion by early 2011. Phase Two includes five buildings with 47 residential units and about 11,000 square feet of retail space scheduled for completion by early 2012.
City officials hope the project will be a catalyst to revitalize the eastern part of University City.
"We think this will generate additional improvements as the Loop continues to expand," Walker said.
Banks that are considered too large to fail should be dismantled rather than “coddled,” Dallas Federal Reserve Bank President Richard Fisher said on Thursday.
Large-scale government bailouts of institutions like insurer American International Group have generated widespread controversy following last year’s global financial meltdown.
Fisher suggested the only way of ensuring that such financial giants to not pose recurrent problems is by making them smaller.
“This means finding ways not to live with ‘em and getting on with developing the least disruptive way to have them divest those parts of the ‘franchise,’ such as proprietary trading, that place the deposit and lending function at risk and otherwise present conflicts of interest,” Fisher said in prepared remarks to the Cato Institute, a libertarian think tank low fee cash advance.
It was one of the strongest calls to date from a sitting Fed official for an actual breaking up of large financial institutions.
Fisher also said the too-big-to-fail problem hinders the effectiveness of monetary policy, perverting incentives and contributing to financial volatility.
Even as the central bank cut interest rates sharply to deal with the crisis, the borrowing costs for banks and consumers actually climbed.
“Those banks with the greatest toxic asset losses were the quickest to freeze or reduce their lending activity,” Fisher said. “Their borrowers faced higher interest rates and restricted access to funding.”
Gold rose to record highs above $1,150 an ounce on Wednesday as the dollar index languished, boosting interest in the metal as an alternative asset, after largely benign U.S. inflation data.
The metal remains firmly underpinned by technical support after several days of gains, and is likely to break through to further fresh highs in coming sessions after a build-up of momentum, analysts said.
Spot gold hit a high of $1,150.20 an ounce and was at $1,148.50 an ounce at 1431 GMT, against $1,141.50 late in New York on Tuesday.
U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange also hit a record $1,151.00 and were later up $9.20 at $1,148.60 an ounce.
“This is a sentiment-driven market, which means that should data confirm expectations, the market trades on it, otherwise it ignores it,” said Commerzbank analyst Eugen Weinberg.
“The liquidity is still there, risk appetite is still there, the dollar is weak, so all the factors which have been in place for weeks and months are still in place.”
The metal is attracting a new wave of investment as it pushes through key technical resistance levels to fresh highs.
“(Gold’s) momentum is not down to any particular reason, it is just due to the extraordinary gains seen recently,” said Weinberg. “It is attracting new speculative capital emergency cash loans.”
The euro rose to a session high against the dollar on Wednesday on benign U.S. inflation data, while the dollar index, which measures the U.S. currency’s performance against a basket of six others, was still down 0.52 percent.
Other commodities also climbed, with oil rising back toward $80 a barrel and copper to 13-1/3 month highs near $7,000 a ton. Both have been lifted by the weak dollar.
NON-DOLLAR GOLD CLIMBS
Gold rose in currencies other than the U.S. dollar, reaching its highest since late February in euro and sterling terms, and since May when priced in the Australian dollar.
The physical market was quiet, however, with India’s gold demand abating as prices struck fresh record highs after offtake picked up slightly in the previous two sessions, while scrap flow eased on hopes for higher prices.
The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,113.833 tons as of November 17, unchanged from the previous business day.
Gold’s strength also lifted other precious metals, with silver hitting a 16-month high at $18.83 an ounce, platinum reaching a peak of $1,463.50, its highest since September 2008, and palladium reaching a 15-month high of $376.
The Federal Reserve on Wednesday is expected to reaffirm its intention to keep U.S. interest rates at ultra-low levels for a long time to support the economy, even as signs of recovery accumulate.
The Fed’s policy-setting Federal Open Market Committee resumed a two-day meeting at about 9 a.m. (1400 GMT), a Fed spokesperson said. The Fed will issue a statement around 2:15 p.m. (1915 GMT).
The central bank cut overnight rates close to zero percent last December and it has vowed to keep them there for an “extended period.” While some analysts think the Fed could start to tip-toe away from that pledge, most say it is too soon.
“Once they start removing that, that’s a real sign that they intend, within six months, to start raising rates,” said Deutsche Bank economist Torsten Slok. “But it’s just premature, looking at the economic numbers, to arrive at that conclusion.”
Analysts expect the Fed to nod to modestly encouraging signs suggesting the economy is gaining strength, but still expect a cautious tone on policy.
A private report on Wednesday showing U.S. companies cut payrolls at the slowest pace in more than a year may add to a sense that the economic numbers are moving in the right direction.
The government on Friday is expected to report that the decline in employment is abating, though the jobless rate is forecast to rise to a fresh 26-year-high of 9.9 percent.
ECONOMY’S STAMINA IN DOUBT
Policymakers will need to take into account the economy’s faster-than-expected 3.5 percent annualized growth rate in the third quarter, which effectively signaled the end of the most painful recession since the 1930s.
Suggesting further momentum, data on Monday showed manufacturing activity hit its highest level in 3-1/2 years last month, though a report on Wednesday showed the nation’s vast services sector was growing only modestly.
Improved third-quarter corporate earnings have also fed optimism that the upturn can be sustained next year even after government help has dried up.
In an act underlining rising confidence in the recovery, billionaire investor Warren Buffett on Tuesday said his company, Berkshire Hathaway Inc, agreed to purchase the nation’s largest rail company, saying it is poised to benefit from the recovery.
Fed officials in recent weeks, however, have sent the message that while the outlook has improved, the recovery is likely to be sluggish and needs continuing support.
Unemployment is expected to climb into next year, damping the consumer spending that accounts for around 70 percent of U.S. output. The banking system is still under pressure from loan losses, and credit remains tight.
“We have to think about our exit policy and are looking at it very carefully, but at the moment, that’s not our first order of concern. At the moment, it’s policy accommodation,” Chicago Federal Reserve Bank President Charles Evans, a voter on the Fed’s policy-setting panel, said on October 22.
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.
Even as the Obama administration is unveiling plans to impose unprecedented pay caps on top officials at the seven U.S. companies receiving the largest federal bailouts, the U.S. Supreme Court is preparing to hear a case that turns on whether to apply analogous pay caps on certain financial advisers.
Even more important, the court’s ruling in the case known as Jones v. Harris Associates — being argued November 2 — will provide insight into how the current roster of justices view the economic question of our day: When should market forces be reined in by government?
Typically, when directors pay a CEO a suspiciously bloated salary, the action raises only state-law questions, not warranting the Supreme Court’s attention.
The upcoming case, however, raises a closely analogous issue that does happen to be controlled by federal law: What happens when ostensibly independent directors of a mutual fund approve bloated fees for the fund’s financial adviser — the same adviser who most likely created the fund and, in most cases, still oversees it? (A 1970 amendment to the federal Investment Company Act imposes a fiduciary duty on fund advisers not to accept excessive compensation and empowers investors to enforce that duty in court.)
The facts of the case are these: In 2004 investors in three Oakmark mutual funds — which had, ironically, each just completed three years of stellar performance — sued the funds’ adviser, Harris Associates, for allegedly accepting too much in fees during that time. (The investors’ law firm also brought similar cases against 11 other leading fund advisers, including those for American Century, Fidelity, Janus (JNS), and Putnam.)
Citing the fact that Oakmark’s fees had been fully disclosed and were well within industry standards — roughly 1% of assets for the first $2 billion invested — the district judge threw the case out before trial in 2007.
Last year the federal appeals court in Chicago affirmed that decision. U.S. Circuit Judge Frank Easterbrook, one of the most eminent jurists of the conservative Chicago School of Law and Economics, explained his ruling bluntly: "A fiduciary must make full disclosure and play no tricks but is not subject to a cap on compensation." Ho-hum.
Then things took a turn toward the extraordinary. In August 2008, when the full Seventh Circuit Court of Appeals declined to rehear the case, five judges signed a rare dissenting opinion. More remarkable still, the dissent was authored by Judge Richard Posner, another towering intellect of the free-market Chicago school.
Perhaps undergoing a mid-financial-crisis crisis, Posner urged that market forces could not be trusted in this situation. In his view Judge Easterbrook’s analysis was "ripe for reexamination" because of the "feeble incentives of boards of directors to police compensation." He stressed that Harris charged mutual fund investors roughly twice what it charged independent institutional investors.
Seeing the deep rift within the Seventh Circuit and a conflict with other circuit court rulings, the Supreme Court snatched the case up in March.
Even aside from its implications for CEO pay, Jones v. Harris Associates directly affects the $10 trillion mutual fund industry in which 92 million investors participate. At least 14 outside groups have filed friend-of-the-court briefs.
Jones’s supporters include Vanguard founder John C. Bogle, AARP, and the U.S. Securities and Exchange Commission. Rooting for Harris Associates, on the other hand, are various industry trade groups and the libertarian Cato Institute.
We’re wagering that the court will reject Judge Easterbrook’s view — that virtually any fee, so long as it’s disclosed, is okay — but still won’t find Oakmark’s fees to have been illegally out of whack.
Of greater interest will be the straw poll of the Supreme Court’s views on laissez-faire capitalism itself. Is it, too, "ripe for reexamination"?
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