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Advertising: Billie Jean King Raises Arthritis Awareness

August 31, 2011 by Leave a Comment

The new campaign — which was developed with the Advertising Council and created by the New York office of YR Advertising — follows humorous ads introduced last year that featured people of different ages, races and shapes doing a type of break-dancing. The spot advised, “Moving is the best medicine.”

Most of the new ads show middle-age men and women participating in sports like swimming, biking, boxing and walking, activities the Arthritis Foundation said could help relieve arthritis pain and sometimes even delay the onset of symptoms. The copy says, “In the fight against arthritis, you need a weapon,” and asks, “What’s yours?”

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In addition, some ads feature Billie Jean King, the 12-time Grand Slam singles winner and co-founder of World Team Tennis. Ms. King, who is 67, has had osteoarthritis since she was in her 20s, and had both knees replaced last year. Advertising featuring her — created with the cooperation of the United States Tennis Association — as well as the rest of the campaign will be announced at Arthur Ashe Stadium Wednesday morning, before U.S. Open play begins.

Peggy Conlon, president of the Ad Council, said the Arthritis Foundation’s 2010 advertising was “lighthearted. The first campaign helped us raise awareness for this issue. For the second year, we wanted to be more empowering and more action-oriented.”

According to Dr. Patience H. White, vice president for public health for the Arthritis Foundation, arthritis is the leading cause of disability in the United States, affecting 50 million Americans, or one in five adults; that number could jump to 67 million by 2030. Osteoarthritis — a degenerative joint disease characterized by a breakdown of joint cartilage from obesity, past joint injury and age — is the most common form of arthritis, and a type whose pain can be managed by exercise.

Dr. White said the foundation wanted to be “more serious about arthritis” with its new advertising. The 2010 concept was “fun and caught people’s attention, but now we want people to refuse to accept pain and the limitations of arthritis on their life. We want it to be more urgent and hard-hitting, to aim it at baby boomers 55 and older, to have them take action today to prevent the progression of arthritis.”

Research conducted last November among adults age 40 and older by Harris Interactive for the Ad Council found that only 16 percent of those with arthritis were very confident they could manage their pain. The research also found that while 58 percent believed taking medication is the most effective way to relieve arthritis pain, only 45 percent thought regular exercise was an effective way to reduce this pain.

The voiceover on new television commercials — with middle-age adults doing sports — says, “The pain will not control us. It will never break us, define us, or keep us still. Because arthritis can’t beat us, if we beat it first.”

Radio, print and banner advertising delivers similar messages. All advertising carries the tagline, “What’s your weapon? Visit FightArthritisPain.org.”

Television ads featuring Ms. King depict her playing tennis, with arthritis as her opponent. In one, Ms. King says, “Tennis is a weapon for me with arthritis. There’s nothing like it for me to hit a ball, run to the ball. Any time, any court, I’m ready, let’s go.”

Cliff Skeete, a creative director in the New York office of YR Advertising, part of the Young Rubicam Brands division of WPP, who oversees the Arthritis Foundation’s campaign, said the latest ads deliberately showed “real people, not all physically fit, not all Jack LaLanne types. They’re shaped more like an everyday person who can inspire the people at home watching.”

Similarly, Ms. King, a member of the President’s Council on Fitness, Sports and Nutrition, said, “I’m a little chubby, I think people are going to relate. I’m not just somebody who won a championship. I’ve overcome arthritis, I deal with it.”

Print, television and online advertising featuring Ms. King will appear during the U.S. Open, on screens at stadiums, throughout the grounds, and in collateral material; the U.S.T.A. also will feature content about the campaign and advertising on its Web site and in social media. In addition, the King advertising will run on U.S. Open broadcasts on ESPN2 and the Tennis Channel.

The execution of the campaign was questioned by some marketing and advertising experts, although they praised its intent.

Rick Burton, a professor of sports management at Syracuse University, said while Ms. King’s participation in the campaign is notable, “I don’t know if she fits it. I don’t take her personality to be militaristic. There seems to be a disconnect between the engagement of Billie Jean and advertising using generic weekend warriors.”

Yoram Wind, a professor of marketing at the Wharton School at the University of Pennsylvania, said the campaign is “too rational. Most effective ads are emotional. They’re relying on one celebrity, Billie Jean King.”

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Adam Alter, an assistant professor of marketing at New York University’s Stern School of Business, said the campaign’s use of “weapon as a metaphor seemed difficult to grasp.”

However, Dorothy Dunlop, an associate professor of medicine at the Feinberg School of Medicine at Northwestern University and an author of a recent study on physical activity and osteoarthritis, commended the new campaign for focusing on “everyday activity.”

Ms. Dunlop, who has received financing for research from the Arthritis Foundation and reviews its research proposals, said the “ads will help people not think of this as an exercise regimen, but part of their daily experience.”

Article source: http://feeds.nytimes.com/click.phdo?i=0a16dfceb3409205724d52f7b31bf313

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Bucks Blog: Why It Shouldn’t Have Been a Lost Decade for Investors

August 31, 2011 by Leave a Comment

Carl Richards

When people talk about being a buy-and-hold investor these days, they are often confronted by others who declare that the last 10 years were a “lost decade.”

When I wrote about the power of compound interest a few weeks ago, many of the comments focused on this idea that the decade ending on Dec. 31, 2010 was the decade of lost money for most investors. Not surprisingly, people then take the next step and say that it could continue, and the United States could end up looking like Japan — 25 years of negative or flat stock market performance.

I know this isn’t the first time this issue has been addressed. Allan Roth wrote about it on the CBS Marketwatch Web site in December 2009, and Ron Lieber wrote a Your Money column about it in January 2010. But it seems like we need yet another reminder that the lost decade is a myth.

The lost decade claim starts with the assumption that whenever we talk about investing, we’re talking about owning just American stocks, often using the S.P. 500-stock index as the proxy for our investment experience.

And if that’s your frame of reference, then the lost decade feels very real. If you had invested in just the S.P. 500 over that 10-year period (2000-2010) your annualized return, including dividends, was 1.4 percent per year.

But much of the widely accepted research about portfolio design does not involve putting all your money in an S.P. index fund then letting it sit.

The point of being diversified is that you have a mix of different asset classes included in your portfolio. A properly designed portfolio is not a random collection of individual investments but rather a mix of investments you choose carefully based on the way they interact with the others. If you do it properly, the goal is to have some investments that zig when others zag.

When you view this 10-year period from the perspective of a diversified and balanced portfolio, 2000-2010 was anything but a lost decade. Consider the following (all numbers reflect annualized returns over 10 years and include reinvested dividends):

  • U.S. large stocks (the S.P. 500) = 1.4 percent
  • U.S. small stocks (the Russell 2000 Index) = 6.3 percent
  • U.S. real estate stocks (the Dow Jones US REIT index) = 10.4 percent
  • International stocks (MSCI EAFE Index) = 3.9 percent
  • Emerging markets stocks (MSCI Emerging Markets Index) = 16.2 percent

I’m not recommending that anyone should have all their money invested in a single index. And we also know that no one could have predicted back in 2000 which class would be the best performer.

But let’s assume that we decided to be broadly diversified at the beginning of the 10 years. We didn’t get terribly scientific about it, and since there are five broad asset classes, we simply put 20 percent into each of the five indexes I listed above. This sort of split is standard practice among professionals and amateur investors who know just a bit about how markets tend to work.

Then we just sat there. We did nothing! No rebalancing, no rethinking. Nothing.

The return for this diversified stock portfolio for the same 10-year period was an annualized 8.35 percent. That is a far cry from a lost decade.

It’s also worth noting that earning the 8.35 percent annualized return would have required behaving and not reacting badly during a painful 2008 and early 2009. Resisting the temptation to get out during that period was the cost of earning the 8.35 percent.

That said, most real people wouldn’t (or shouldn’t) have all of their long-term money invested in stocks even if they’re broadly diversified among many different indexes. So what happens if we add bonds to our long-term portfolio to act as ballast to the equity exposure?

Including bonds (sometimes referred to as fixed income) in the portfolio means you’ll have something that’s stable or even gains value slightly when your stocks fluctuate wildly. For our purposes, when I talk about fixed income exposure, I’m referring to intermediate-term bonds with an average maturity of around five years. And for this next example, I use the most widely accepted bond index, the Barclays U.S. government intermediate-term index.

So we build a portfolio that looks like this:

  • 60 percent equities (evenly split among our five categories)
  • 40 percent fixed income (Barclays U.S. government intermediate-term index)

    • The 10-year annualized return for this portfolio was 7.83 percent. Again, that’s a far cry from a lost decade. And of course the purpose of including these bonds would be to make 2008, for example, a little less painful. While it was still painful, this 60-40 portfolio was down 24.06 percent in 2008 versus the S.P. 500, which was down 37 percent. That was still painful, but at least it would have been a little more emotionally manageable.

    Too often when we hear the market report for the Dow, the S.P. 500 and even the tech-heavy Nasdaq, we let those numbers become our investing reference point. We often fail to look past those daily reports to what’s happening in markets and investing as a whole.

    Clearly things were bad for the S.P. 500 during the past decade, but singling out one market to declare a decade of investing as “lost” ignores the reality: a broadly diversified portfolio can deliver respectable returns even if individual classes perform poorly.

Article source: http://feeds.nytimes.com/click.phdo?i=c4ea1ef3075a1a35315a8d26f165f4fe

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Bucks Blog: Hurricane Damage Questions, Part 2: Flooding and Food

August 31, 2011 by Leave a Comment

A flooded basement in Hoboken, N.J., after Hurricane Irene.ReutersA flooded basement in Hoboken, N.J., after Hurricane Irene.

Bucks readers have raised questions about hurricane claims for water damage and for food that spoiled due to a loss of electricity.

Hurricane Irene is expected to be one of the costliest storms in history, according to an article in Wednesday’s paper. But insurance may not pay for much of the damage because so many homes lack flood coverage. Just 17 percent of homeowners nationally carry flood insurance, said Loretta Worters, vice president of the Insurance Information Institute.

Q. Does homeowners’ insurance typically cover damages from basement flooding that arises from a loss of power to the sump pumps?

A. Generally, no, although there are a handful of exceptions, Ms. Worters said. For instance, she said, a standard homeowner’s policy from Peerless Insurance may cover damage due to flooding that results specifically from a failed sump pump.

But in most cases, flood damage is excluded from standard homeowners’ policies. To have flood protection, you must buy a separate flood insurance policy. While you can buy these policies through your agent, the carrier in most cases is the federal government’s National Flood Insurance Program.

The average flood insurance premium is about $600 a year, although costs in high-risk areas can be significantly higher, and premiums in low-risk areas lower, according to the flood insurance program. There’s usually a 30-day waiting period before coverage becomes effective after you buy it.

Even flood insurance doesn’t cover everything, however. There are often exclusions for damage to basements, Ms. Worters said. Typically, flood policies cover your foundation and mechanical equipment like furnaces and hot water heaters, as well as appliances like washers and dryers. But improvements to your basement, like finished walls and ceilings, and personal belongings you store there, aren’t covered, according to the flood insurance program.

You can find information about policy pricing here and read more background on the evolution of the flood insurance program here.

Q. Does insurance cover the loss of food in refrigerators/freezers due to extended power outages?

A. Yes, if the outage is storm-related, Ms. Worters said. Most homeowner policies include a set amount for food spoilage — typically, $250 to $500 per appliance. So if you have a refrigerator in your kitchen, and a deep freezer in your garage for stockpiling meat, you’d have $500 to $1,000 of coverage.

Article source: http://feeds.nytimes.com/click.phdo?i=110bbadd2afcfa35bfae99027831add0

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DealBook: Sony, Hitachi and Toshiba to Merge LCD Units

August 31, 2011 by Leave a Comment

From left, Norio Sasaki, chief of Toshiba, Hiroaki Nakanishi, president of Hitachi, and Hiroshi Yoshioka, a Sony executive unveiled their venture on Wednesday in Tokyo.Issei Kato/ReutersFrom left, Norio Sasaki of Toshiba, Hiroaki Nakanishi of Hitachi and Hiroshi Yoshioka of Sony on Wednesday in Tokyo.

TOKYO — Sony, Toshiba and Hitachi announced on Wednesday that they would work with a government-backed fund to spin off and merge their liquid crystal display businesses, joining forces in the face of rising global competition.

The deal could create the world’s biggest maker of LCDs for mobile phones and cameras, with 22 percent of the market for small and
midsize screens, according to DisplaySearch.

The fund, the Innovation Network Corporation, will invest 200 billion yen ($2.6 billion) in the new company for a 70 percent stake, while the three manufacturers will equally split the other 30 percent, they said in a statement.

The Japanese government has long encouraged the nation’s manufacturers to consolidate as a way to increase their presence in global markets and better fight mounting competition from rivals like Samsung Electronics of South Korea, which is now far bigger and profitable than any single Japanese electronics maker.

But the use of public money to invest in private companies, especially in volatile industries, could draw fire at a time the government is struggling to pare down its burgeoning public debt. Sony, Hitachi and Toshiba have lost money in their LCD businesses, though Toshiba’s returned to profitability last year.

Still, the overall market for small and midsize LCD screens is booming. Sales are likely to jump 22 percent this year, to $24 billion, according to DisplaySearch, an industry research firm.

“By integrating each partner company’s wealth of display expertise and know-how, I am confident the new company will become a driving force for technological innovation and new growth in the rapidly expanding” market, Howard Stringer, Sony’s chief executive, said in a statement.

The newly formed business, named Japan Display, will hire managers from outside the three companies and invest in new production lines, the statement said. The companies, which expect to complete the merger by the spring, plan to increase sales by then to 750 billion yen ($9.8 billion yen), up from the expected 570 billion yen ($7.4 billion) for the three units collectively.

The venture must gain approval from antitrust regulators in Japan. Authorities here have been supportive of the government push to
consolidate Japanese industry, however.

Since 2009, the Innovation Network Corporation, 90 percent of which is owned by the government, has helped Japanese companies make acquisitions abroad and invested in promising new businesses in the manufacturing and new energy sectors.

This year, the fund took a 33.3 percent stake in Japan’s first low-cost international airline, a joint venture between All Nippon Airways and a fund based in Hong Kong.

For Sony, Japan’s largest exporter of consumer electronics, spinning off its LCD business will help the struggling company focus on areas where it is more competitive, like advanced sensors for digital cameras and mobile phones. In July, Sony reduced its annual profit forecast by 25 percent, to 60 billion yen ($771.24 million), as a result of lackluster sales.

Article source: http://feeds.nytimes.com/click.phdo?i=145f4dda3c4d840018df924bff8065bc

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Wall Street Gains Push Dow Up for the Year

August 31, 2011 by Leave a Comment

On the last day of one of the most tumultuous months for equities this year, the only dip in stocks came from the telecommunications sector, which was dragged down nearly 3 percent by shares of ATT after the news broke that the United States Justice Department would seek to block its proposed acquisition of T-Mobile USA.

Otherwise, new data on factory orders and jobs set investors up for a higher trading session that carried over gains from markets in Asia and Europe. The markets finished higher on Tuesday, despite reports on consumer confidence and housing that showed a mixed economic recovery.

On Wednesday, the three main indexes were more than 1 percent higher in the first hour of trading, although their gains were soon tempered by the news of government efforts to block ATT’s $39 billion acquisition of T-Mobile, which would create the largest carrier in the country.

In early afternoon trading, ATT shares dipped more than 4 percent, dragging down the overall telecom sector by about 1.5 percent. A rival, Sprint Nextel, was up by more than 7 percent and was the most widely traded share in that sector.

The news about ATT came at the end of a month characterized by high volatility, as choppy economic data renewed discussions about whether the economy was headed for another recession. Concerns about euro zone debt problems and fiscal uncertainty in the United States were among the factors adding to the rough trading.

Wild swings of hundreds of points have set back the three main indexes 3 to 5 percent in the month to date. But on Wednesday, the Dow gained enough ground to turn positive for the year, and in the early afternoon was up 86.96 points, or 0.8 percent, to 11,646.91. The Standard Poor’s 500-stock index, up almost 0.9 percent, and the Nasdaq composite index, up 0.5 percent, were still negative for the year through August, however.

The gains were played out in a market that has been oversold in the past month, said Anthony G. Valeri, a senior vice president and market strategist for LPL Financial.

“It was due for a bounce,” he said of Wednesday’s trading. Whether the gains can be sustained, though, “depends on data and events out of Europe,” Mr. Valeri said.

On Wednesday, a report from the United States Commerce Department showed that factory orders for July rose sharply, at 2.4 percent the largest increase since March. Demand for automobiles and commercial airplane orders propelled the orders.

A report on jobs on Wednesday, this one from ADP Employer Services, showed new jobs on private payrolls totaled 91,000 for August, below forecasts.

Those reports were released ahead of one of the most closely watched data releases the Labor Department’s national report on the job situation on Friday. Analysts were forecasting 70,000 in new nonfarm payroll jobs for August, compared with 117,000 the previous month, while the unemployment rate of 9.1 percent was not expected to change, according to a survey by Bloomberg News. “We are still not seeing job losses, which is what you would see in a recession,” Mr. Valeri said.

Goldman Sachs economists said in a research report that the A.D.P. report, which is used to help estimate the outcome of the national report, could mean lower forecasts for Friday’s numbers.A Federal Reserve report this week that said policy makers earlier this month considered changing the size or composition of the Fed’s balance sheet and reducing the interest rate paid on banks’ excess reserve balances has refocused investors’ attention on the Fed’s next meeting in September. Fed policy makers have agreed to consider other options at that meeting. But some analysts said the Fed might need more information before deciding on further stimulus.

“I think the Fed will want to see more data to prove inflation is stabilizing and the economy might be weaker than expected,” said Mr. Valeri.

The yield on the Treasury’s benchmark 10-year note was little changed at 2.195 percent.

Crude futures for October traded in New York were up 46 cents, or 0.5 percent, to $89.36 a barrel. Gold on the Comex was up 0.4 percent at $1,834 an ounce.

In Europe, Britain’s FTSE 100 and Germany’s DAX each gained 2.4 percent. In Paris, the CAC 40 rose 3.1 percent. Asia closed broadly higher.

Article source: http://feeds.nytimes.com/click.phdo?i=ed77311c76998c66dd157a38b2cfbb21

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DealBook: Sprint Shares Surge on AT&T Setback

August 31, 2011 by Leave a Comment

1:26 p.m. | Updated Sprint Nextel may get its way — or at least that is what investors are thinking.

Shares of the nation’s third largest cellular carrier were up nearly 8 percent in early afternoon trading on Wednesday, after the Justice Department moved to block ATT’s proposed merger with T-Mobile USA.

Sprint was quick to defend the government’s action on Wednesday.

“Sprint applauds the DOJ for conducting a careful and thorough review and for reaching a just decision – one which will ensure that consumers continue to reap the benefits of a competitive U.S. wireless industry,” Vonya B. McCann, the company’s senior vice president of government affairs, said in a statement. “Contrary to ATT’s assertions, today’s action will preserve American jobs, strengthen the American economy, and encourage innovation.”

Sprint has been a vocal opponent of the deal from the outset. At an industry conference in March, its chief executive, Dan Hesse, criticized the merger, fearing it would hurt consumers. A week later, Sprint formally objected to the deal and called on regulators to block the acquisition.

“The wireless industry has sparked unprecedented levels of competition, innovation, job creation and investment for the American economy, all of which could be undone by this transaction,” Sprint said in a statement in late March.

Sprint has reason to be concerned about the potential merger of ATT and T-Mobile. If the deal went through, the merged company would have nearly 130 million subscribers, leaving Spring a distant No. 3 player with about 50 million customers.

It has been a tough position for Sprint.

Mr. Hesse has made some improvements during his tenure. He has invested in customer service and bolstered the product lineup, including signing an agreement to sell the iPhone 5, the next version of Apple’s popular smartphone. Such moves have helped keep customers from switching to other carriers.

But the company continues to struggle. In the quarter ended June 30, the company lost $847 million, compared with a loss of $760 million the period a year earlier. Meanwhile, shares of Sprint are off more than 35 percent from their 52-week high in June.

Article source: http://feeds.nytimes.com/click.phdo?i=0f92cfec03ad0c0cbfedaab42d5d9528

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India Measures Itself Against a China That Doesn’t Notice

August 31, 2011 by Leave a Comment

At a recent panel discussion to commemorate the 20th anniversary of India’s dismantling parts of its socialist economy, a government minister told business leaders to keep their eye on the big prize: growing faster than China.

“That’s not impossible,” said the minister, Palaniappan Chidambaram, who oversees national security and previously was finance minister. “People are beginning to talk about outpacing China.”

Indians, in fact, seem to talk endlessly about all things China, a neighbor with whom they have long had a prickly relationship, but which is also one of the few other economies that has had 8 percent or more annual growth in recent years.

Indian newspapers are filled with articles comparing the two countries. Indian executives refer to China as a template for development. Government officials cite Beijing, variously as a threat, partner or role model.

But if keeping up with the Wangs is India’s economic motive force, the rivalry seems to be largely one-sided.

“Indians are obsessed with China, but the Chinese are paying too little attention to India,” said Minxin Pei, an economist who was born in China and who writes a monthly column for The Indian Express, a national daily newspaper. (No Indian economists are known to have a regular column in mainland Chinese publications.)

Most Chinese are unconcerned with how India is growing and changing, because they prefer to compare their country with the United States and Europe, said Mr. Pei, a professor at Claremont McKenna College near Los Angeles. He says he has tried to organize conferences about India in China but has struggled to find enough Chinese India experts.

Liu Yi, a clothing store owner in Beijing, echoed the sentiments of a dozen Chinese people interviewed in Beijing and Shanghai, in dismissing the idea that the two countries could be compared. Yes, he said India was a “world leader” in information technology but it also had many “backward, undeveloped places.”

“China’s economy is special,” Mr. Liu said. “If China’s development has a model, you could say it’s the U.S. or England.”

It might be only natural that the Chinese would look up the development ladder to the United States, now that it is the only nation in the world with a larger economy, rather than over their shoulders at India, which ranks ninth. And while China is India’s largest trading partner, the greatest portion of China’s exports go to the United States.

So for India, China represents the higher rung to strive for.

Like India, China traces its civilization back thousands of years and has a population of more than 1 billion people. And China has lessons to offer because, under Deng Xiaoping in the late 1970s and early ’80s, it started the transition to a more open and competitive economy more than a decade before India. Before Deng took power, India’s economy was bigger on a per-capita basis than China’s.

Whatever the reasons, Indians compare virtually every aspect of their nation with China. Infrastructure (China is acknowledged as being many kilometers ahead). The armed forces (China is more powerful). Universities (China has invested more in its institutions). The software industry (India is far ahead). Proficiency in the English language (India has the historical advantage, but China is catching up).

Evidence of the Indo-Sino interest disparity can be seen in the two countries’ leading newspapers. The People’s Daily, the Chinese Communist Party’s house organ, had only 24 articles mentioning India on its English-language Web site in the first seven months of this year, according to the Factiva database. By contrast, The Times of India, the country’s largest circulation English-language newspaper, had 57 articles mentioning China — in July alone.

Xu Yan contributed reporting from Shanghai and Joshua Frank from Beijing.

Article source: http://feeds.nytimes.com/click.phdo?i=86edc3d52ed506bff336cbb3ee3c1498

Filed Under: Economy News Tagged With: , ,

Wall Street Posts Gains Early

August 31, 2011 by Leave a Comment

On the last day of one of the most tumultuous months for equities this year, the only dip in stocks came from the telecommunications sector, which was dragged down nearly 3 percent by shares of ATT after the news broke that the United States Justice Department would seek to block its proposed acquisition of T-Mobile USA.

Otherwise, new data on factory orders and jobs set investors up for a higher trading session that carried over gains from markets in Asia and Europe. The markets finished higher on Tuesday, despite reports on consumer confidence and housing that showed a mixed economic recovery.

On Wednesday, the three main indexes were more than 1 percent higher in the first hour of trading, although their gains were soon tempered by the news of government efforts to block ATT’s $39 billion acquisition of T-Mobile, which would create the largest carrier in the country.

In early afternoon trading, ATT shares dipped more than 4 percent, dragging down the overall telecom sector by about 1.5 percent. A rival, Sprint Nextel, was up by more than 7 percent and was the most widely traded share in that sector.

The news about ATT came at the end of a month characterized by high volatility, as choppy economic data renewed discussions about whether the economy was headed for another recession. Concerns about euro zone debt problems and fiscal uncertainty in the United States were among the factors adding to the rough trading.

Wild swings of hundreds of points have set back the three main indexes 3 to 5 percent in the month to date. But on Wednesday, the Dow gained enough ground to turn positive for the year, and in the early afternoon was up 86.96 points, or 0.8 percent, to 11,646.91. The Standard Poor’s 500-stock index, up almost 0.9 percent, and the Nasdaq composite index, up 0.5 percent, were still negative for the year through August, however.

The gains were played out in a market that has been oversold in the past month, said Anthony G. Valeri, a senior vice president and market strategist for LPL Financial.

“It was due for a bounce,” he said of Wednesday’s trading. Whether the gains can be sustained, though, “depends on data and events out of Europe,” Mr. Valeri said.

On Wednesday, a report from the United States Commerce Department showed that factory orders for July rose sharply, at 2.4 percent the largest increase since March. Demand for automobiles and commercial airplane orders propelled the orders.

A report on jobs on Wednesday, this one from ADP Employer Services, showed new jobs on private payrolls totaled 91,000 for August, below forecasts.

Those reports were released ahead of one of the most closely watched data releases the Labor Department’s national report on the job situation on Friday. Analysts were forecasting 70,000 in new nonfarm payroll jobs for August, compared with 117,000 the previous month, while the unemployment rate of 9.1 percent was not expected to change, according to a survey by Bloomberg News. “We are still not seeing job losses, which is what you would see in a recession,” Mr. Valeri said.

Goldman Sachs economists said in a research report that the A.D.P. report, which is used to help estimate the outcome of the national report, could mean lower forecasts for Friday’s numbers.A Federal Reserve report this week that said policy makers earlier this month considered changing the size or composition of the Fed’s balance sheet and reducing the interest rate paid on banks’ excess reserve balances has refocused investors’ attention on the Fed’s next meeting in September. Fed policy makers have agreed to consider other options at that meeting. But some analysts said the Fed might need more information before deciding on further stimulus.

“I think the Fed will want to see more data to prove inflation is stabilizing and the economy might be weaker than expected,” said Mr. Valeri.

The yield on the Treasury’s benchmark 10-year note was little changed at 2.195 percent.

Crude futures for October traded in New York were up 46 cents, or 0.5 percent, to $89.36 a barrel. Gold on the Comex was up 0.4 percent at $1,834 an ounce.

In Europe, Britain’s FTSE 100 and Germany’s DAX each gained 2.4 percent. In Paris, the CAC 40 rose 3.1 percent. Asia closed broadly higher.

Article source: http://feeds.nytimes.com/click.phdo?i=9017821925f27179688c6b506c049c9a

Filed Under: Economy News Tagged With: , ,

Economix Blog: Job Insecurity Remains High

August 31, 2011 by Leave a Comment

For the last couple of years, the problem plaguing the job market was that companies have been in a holding pattern: Companies weren’t laying off workers in high numbers. But if you were already laid off, finding a company willing to expand was impossible.

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

Even so, workers still employed remain anxious about their job security, according to new survey data from Gallup.

A USA Today/Gallup Poll conducted in mid-August, based on a survey of 489 adults employed full or part time, found that 30 percent said they were worried about being laid off, similar to the 31 percent who answered this way in August 2009.

DESCRIPTION


The survey also found that workers were concerned that their hours, wages and benefits would be cut back. Benefit cuts were the most common worry, with 44 percent of workers surveyed saying they thought benefits might be on the chopping block.

Lower-income workers were especially likely to be concerned about their job security:

DESCRIPTION

As you can see, workers in households earning less than $50,000 annually were about twice as likely as their counterparts in households making at least $75,000 to be concerned about layoffs, shorter workweeks and off-shoring.

Maybe the anxiety is unfounded, and companies are not planning layoffs at any increased pace. But such worries can become self-fulfilling if workers start cutting back in preparation for potential job losses. If they cut back their spending, companies don’t sell as much and then starting paring down their own staffs.

Article source: http://feeds.nytimes.com/click.phdo?i=89cbc6e17f2f6d26c2618fa6e0577c02

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Case Study: Why Red Iguana Built Red Iguana 2 Next Door

August 31, 2011 by Leave a Comment

The Red Iguana 2: We didn't even think of doing a different concept.Jeffrey D. Allred for The New York TimesThe Red Iguana 2: “We didn’t even think of doing different concepts,” said Bill Coker, a co-owner.

Case Study

What would you do with this business?

Last week, we published a case study that looked at a choice facing Red Iguana, a Salt Lake City Mexican restaurant that was deciding where, and how, to expand. Founded in 1985 by Ramón and María Cardenas, the 130-employee company offers sit-down restaurant service as well as catering and fast-food operations.

Now owned by Ramón and María’s daughter, Lucy, and her husband, Bill Coker, the 100-seat Red Iguana was facing two problems, one that most restaurateurs would die for and another that most would die to avoid. In September 2008, the restaurant was featured on the Food Network’s “Diners, Drive-ins and Dives,” and soon there was an hour-and-a-half wait for seating almost every night. Then came word that the city would be building a light-rail line down the middle of the restaurant’s street, construction that could potentially force the restaurant to close occasionally, or at least eat into its revenue by dissuading some of the 700 diners who came every day, 363 days a year.

When regular customers started telling Mr. Coker that they were being turned off by the long lines as much as by the construction, he and Ms. Cardenas decided to expand. But how? Conventional wisdom held that they should open a second Red Iguana at some distance so as not to cannibalize their current business, and several nearby towns approached them about doing just that. But while searching for a location, they heard about a warehouse for sale for $259,000 just two blocks from their first restaurant, replete with a concrete pad that could be used for patio dining.

In the end, Mr. Coker and Ms. Cardenas opted to ignore conventional wisdom, at least mostly. They bought the nearby warehouse, as well as neighboring properties for parking and catering, and opened a 119-seat copy of Red Iguana — with the same menu — in December 2009. Soon after they bought the warehouse, a developer who was building a downtown mall approached them about opening a fast-food version, and in March 2010 Taste of Red Iguana opened at the City Creek Center.

Opening Red Iguana 2 two blocks from the original was a tough sell to the bank loan committees Mr. Coker approached. “I convinced them that our daily anecdotal evidence was that we had a large customer base that was no longer coming in because we had gotten too busy, too crowded, too successful and that they would indeed fill the new restaurant,” Mr. Coker said. “And that in fact the two-block proximity gave us a valuable business advantage over distant additional locations because we could literally push large reservation parties and large walk-in groups to the restaurant that was the least busy.”

Ms. Cardenas and Mr. Coker’s counterintuitive bet paid off. Annual revenue has grown to more than $6 million today from $4 million in 2009, and both restaurants are regularly full. Surprisingly, perhaps, it is the fast-food branch that is not yet making money, though mall construction will not be complete until next year. Ms. Cardenas and Mr. Coker discussed their decisions, and the results, in an interview:

Q: How bad has the disruption caused by the light-rail project been?

Mr. Coker: We estimate we lost about $300,000 over the last 12 months. Primarily it impacted our lunch numbers because a lot of our business, probably 10 to 20 percent during the week, was business meetings from downtown. We’d call them the “suits.” We’d look through the room and you’d see a sprinkling of suits.

Ms. Cardenas: Afterwards, you didn’t see so much. Before the construction, we’d have a waiting list for lunch of two to three rows of names; afterward, it would be one row.

Q: Is that over?

Mr. Coker: The bridge on our street that connects the west side with downtown was closed on April 17, 2010, and opened again on Aug. 17, 2011. We’ve definitely seen an impact since it’s reopened — at both restaurants, actually. During a recent convention, we got a lot more activity than we would have when the bridge was closed.

Q: Why didn’t you give the second restaurant a slightly different concept, as our outside experts advised?

Mr. Coker: I understand why that would make sense to people. But we didn’t even think of doing different concepts. This is one of the strongest concepts in the country. Over the years, even with multiple locations and different names, Ramón and María’s restaurants always served their same food. When we first took over, I ran into a couple who’d known Lucy since she was 7 and had been coming weekly. They know exactly what they wanted. Our anecdotal evidence is that 70 percent of the customers always order the same dish. When you have that kind of loyalty, it’s much safer to bet on the same restaurant with different decoration than on inventing a new concept. And that’s been borne out by the numbers.

Q: What are the numbers?

Mr. Coker: In 2010, the brand made $6.4 million. The original Red Iguana made $3.9 million, the new one made $2.1 million, and Taste of Red Iguana another $350,000.

Q: With a popular restaurant’s “magic” being the hardest thing to replicate during an expansion, how do the customers and the atmospheres compare?

Mr. Coker: The second restaurant has several streams of clients. First, those who try to go to No. 1 but find it’s too crowded so they’re directed to No. 2. Then, there are loyal customers that actually prefer the second location because it has a patio and diner-style seating at a bar. It’s a quieter location. Parking’s easier, it’s a larger location, and it has indoor waiting for when it’s raining, hot or cold.

Ms. Cardenas: We have a lot of families coming into Red Iguana No. 2. We’re putting a lot of tables together. They bring their kids, in part because the train goes right by there and they like to watch, and in part because they don’t have to wait as much as at No. 1.

Q: What are your plans?

Mr. Coker: The concept of multiple locations grew out of logistics concerns but also to position the brand to go for a large platform expansion. We wanted to prove the brand had enough strength to be in a new building, to be two blocks away. And then when the City Creek offer came up, we realized it was a good opportunity to create a dual-tiered franchisable brand that could roll out with quick service and full-service version, very much like the UNO pizza chain from Chicago.

Q: Are you thinking of opening other locations now?

Mr. Coker: No plans now. We’ve been offered to open at Salt Lake airport by four or five airport management chains. We’re not ready for that, but it’s an indication that we have that strength. This is still a mom-and-pop operation. Aside from dining room and kitchen managers, there are only four of us in the office managing these three locations — Lucy and I and the finance and H.R. mangers we hired. We like the In-N-Out Burger expansion theory: pay as you go. Our preference is to not take on any more debt and pay down things.

Article source: http://feeds.nytimes.com/click.phdo?i=1a9ad8ffde1a40748d51d495b0fc7bf5

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