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Archives for August 2013

Consumer Spending and Income Rose a Faint 0.1% in July

August 30, 2013 by

After rising 0.3 percent in June, income was held back in part by steep government spending cuts that reduced federal workers’ salaries. Overall wages and salaries tumbled $21.8 billion from June, with a third of the decline coming from forced furloughs of federal workers.

Consumers cut their spending on long-lasting manufactured goods, like cars and appliances. Overall spending had risen 0.6 percent in June.

The tepid gains suggested economic growth was off to a weak start for the quarter.

A measure of consumer confidence slipped this month from a six-year high in July, as Americans expressed less optimism about the coming months. Americans said they were less confident that the job market would improve, but more confident that their income would rise.

Consumer spending drives roughly 70 percent of economic activity. So the weak spending report led some economists to sound a more pessimistic note on growth in the current quarter.

“This is a disappointing report on a number of levels,” said James Marple, senior economist at TD Economics. “Prospects for a pickup in economic growth in the third quarter hinge on a broad-based acceleration in spending by households and business to offset the ongoing drag from government. The data for the first month of the quarter are not following this script.”

Several analysts said that economic growth was unlikely to match the 2.5 percent annual rate reported Thursday for the April-June quarter. That was more than twice the growth rate in the first quarter and far above an initial estimate of a 1.7 percent rate for April through June.

The Federal Reserve will consider the latest data at its September meeting, when it decides whether to begin pulling back on its stimulus efforts. The most critical factor the Fed will weigh is the August employment report, due out next Friday.

Another concern is that rising interest rates could dampen consumer spending, particularly on homes and cars. Mortgage rates have already risen more than a full percentage point since May.

The small rise in spending was driven by a 0.9 percent gain in purchases of nondurable goods, like clothing. Purchases of durable goods like cars fell 0.2 percent, while money spent on services like utilities and doctor’s visits was unchanged in July.

A price gauge tied to consumer spending was up 0.1 percent in July compared to June. Prices excluding volatile food and energy are up just 1.4 percent compared to a year ago, significantly below the Federal Reserve’s 2 percent target for inflation.

Article source: http://www.nytimes.com/2013/08/31/business/economy/consumer-spending-and-income-rose-a-faint-0-1-in-july.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

New Ad Organization to Promote Cross-Cultural Marketing

August 30, 2013 by

Five big names on Madison Avenue are joining forces to start an organization devoted to promoting what is known as cross-cultural marketing: pitches directed at a general market whose demographic makeup is becoming much more diverse.

The organization, called the Cross Cultural Marketing and Communications Association, is being started by the American Association of Advertising Agencies; Draftfcb, part of the Interpublic Group of Companies; PepsiCo; and two divisions of WPP, Ogilvy Mather Worldwide and the Millward Brown research company.

The new association plans to introduce itself at the Total Market Industry Conference, which is set for Sept. 9 and 10 at the Ogilvy Mather headquarters on the West Side of Manhattan. Speakers are to discuss subjects like demographic trends, how to engage new kinds of consumers, technological trends and how to attract and keep talented employees.

Cross-cultural marketing tries to reach diverse consumer groups, addressing similarities rather than differences. An example would be a recent commercial for Cheerios cereal, sold by General Mills, which featured an interracial family. That approach diverges from multicultural marketing, which is directed at specific demographic groups like Hispanics or African-Americans.

“The industry says you have to be in the general market box or in the multicultural marketing box,” said Jeffrey L. Bowman, the founder of the new organization. “Cross-cultural is inclusive of both boxes.”

Mr. Bowman’s day job is as the cross-cultural practice lead at Ogilvy Mather, where he is also a managing director and senior partner. He has long advocated an approach that recognizes a “total market” rather than more narrowly focused marketing messages; before speaking to a reporter, he said this week, he had attended “a total market summit with Kimberly-Clark.”

The new association is “not a commercial for Ogilvy” or its cross-cultural practice, Mr. Bowman said. “We should think of the total market as a new revenue vertical for the industry.”

A member of the advisory board of the new association, Vita Harris, executive vice president and chief global strategy officer at Draftfcb, said one of its goals was “to start to ignite a community of people taking the total market seriously.”

A total market approach requires agencies and advertisers to have their “fingers on the pulse of consumers,” she added, and “a lot of that comes out of hiring people who reflect the consumer base” — that is, having a work force that is more diverse.

Ms. Harris and Mr. Bowman acknowledged that the new association joined a lengthy list of industry associations and organizations.

“We want to complement the other associations out there” rather than compete with them for attention and resources, Mr. Bowman said, adding: “If we’re successful, other organizations will adopt the total market approach. If we go away, great, it would mean we’ll have been successful.”

Article source: http://www.nytimes.com/2013/08/31/business/media/new-ad-organization-to-promote-cross-cultural-marketing.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: , ,

A Top Banker’s Image, Clouded

August 30, 2013 by

But the dying words of a distraught subordinate may prove the most damaging.

Shortly before Pierre Wauthier, a 53-year-old father of two, took his life on Monday in a placid lakeside community south of Zurich, he wrote a letter blaming pressure from Mr. Ackermann for his despair.

Mr. Wauthier was the chief financial officer of the Zurich Insurance Group. Until his resignation on Thursday, Mr. Ackermann was the chairman and was forcefully trying to lift profits at one of the world’s largest insurers.

Mr. Ackermann’s abrupt resignation a few days after Mr. Wauthier’s death interrupted a career spent fearlessly shaking up the European business world and advocating American-style standards of corporate performance. For many Europeans, the suicide raised questions about how far hard-charging captains of industry should go in their quest for profits.

“There is no doubt that these tragic events have cast a shadow over Zurich,” Tom de Swaan, who was named acting chairman of the insurer, said on Friday in a conference cal
l with analysts.

Mr. de Swaan confirmed the existence of a suicide note by Mr. Wauthier that alluded to a tense relationship with Mr. Ackermann, and he said the board would look into whether the chief financial officer had been under undue pressure. Mr. de Swaan added, though, that there was no indication Mr. Ackermann had behaved inappropriately toward Mr. Wauthier or anyone else.

It is not the first time, though, that Mr. Ackermann, 65, has been at the center of the debate over how to reconcile European values of social equality with the need to remain competitive in the global economy.

As chief executive of the German giant Deutsche Bank, a post he held for a decade until last year, Mr. Ackermann was vilified by left-wing politicians for being Germany’s highest-paid corporate executive. He was even prosecuted for his role in awarding what prosecutors considered an illegal bonus to the executive of a German mobile communications company. Mr. Ackermann, who was on the supervisory board of the company, eventually settled the case by paying a fine.

Mr. Ackermann grew up in a small town in Eastern Switzerland before departing for Zurich, where he rose to be president of Credit Suisse. He then moved to Frankfurt, where he won plaudits for leading Deutsche Bank to the upper ranks of global investment banks.

But since Mr. Ackermann’s retirement from Deutsche Bank, his legacy has suffered. The bank, Germany’s largest, continues to struggle with many lawsuits from aggrieved investors, as well as official investigations related to conduct that took place before the beginning of the financial crisis, when Mr. Ackermann was in charge.

And Deutsche Bank continues to face criticism that it takes too much risk, a practice that stems from Mr. Ackermann’s determination to equal the profitability of Wall Street titans like JPMorgan Chase and Goldman Sachs.

Mr. Ackermann’s sudden departure from Zurich Insurance puzzled insiders and seemed only to heighten stress on a company already rattled by Mr. Wauthier’s death. Martin Senn, the chief executive, struggled on Friday to try to convince analysts that Mr. Wauthier’s suicide did not signal deeper problems at the company.

“I want to make it crystal clear that there is no link between this news and Zurich’s business and financial results,” Mr. Senn said in a brief conference call on Friday with analysts.

With 60,000 employees and revenue last year of $73 billion, Zurich is one of the world’s largest insurers. It earns about half its revenue in the United States through subsidiaries like its Farmers unit.

Mr. Ackermann has not spoken to reporters, but in a statement on Thursday, he suggested that he had resigned as chairman, a part-time supervisory post, because after the suicide he would no longer be able to push for change as forcefully as he was accustomed.

“I see the possibility of a continued successful board leadership to the benefit of Zurich called into question,” Mr. Ackermann said.

He also alluded to accusations from Mr. Wauthier’s widow that he should take some blame for the suicide but called them “unfounded.”

This article has been revised to reflect the following correction:

Correction: August 30, 2013

An earlier version of this article misstated the surname of the acting chairman of the Zurich Insurance Group. He is Tom de Swaan, not de Swann.

Article source: http://www.nytimes.com/2013/08/31/business/global/zurich-insurance-to-investigate-circumstances-of-suicide.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Subordinate’s Suicide Clouds a Titan’s Image

August 30, 2013 by

But it the dying words of a distraught subordinate may prove the most damaging.

Shortly before Pierre Wauthier, a 53-year-old father of two, took his life on Monday in a placid lakeside community south of Zurich, he wrote a letter blaming pressure from Mr. Ackermann for his despair.

Mr. Wauthier was the chief financial officer of the Zurich Insurance Group. Until his resignation on Thursday, Mr. Ackermann was the chairman and was forcefully trying to lift profits at one of the world’s largest insurers.

Mr. Ackermann’s abrupt resignation a few days after Mr. Wauthier’s death interrupted a career spent fearlessly shaking up the European business world and advocating American-style standards of corporate performance. For many Europeans, the suicide raised questions about how far hard-charging captains of industry should go in their quest for profits.

“There is no doubt that these tragic events have cast a shadow over Zurich,” Tom de Swaan, who was named acting chairman of the insurer, said on Friday in a conference cal
l with analysts.

Mr. de Swaan confirmed the existence of a suicide note by Mr. Wauthier that alluded to a tense relationship with Mr. Ackermann, and he said the board would look into whether the chief financial officer had been under undue pressure. Mr. de Swaan added, though, that there was no indication Mr. Ackermann had behaved inappropriately toward Mr. Wauthier or anyone else.

It is not the first time, though, that Mr. Ackermann, 65, has been at the center of the debate over how to reconcile European values of social equality with the need to remain competitive in the global economy.

As chief executive of the German giant Deutsche Bank, a post he held for a decade until last year, Mr. Ackermann was vilified by left-wing politicians for being Germany’s highest-paid corporate executive. He was even prosecuted for his role in awarding what prosecutors considered an illegal bonus to the executive of a German mobile communications company. Mr. Ackermann, who was on the supervisory board of the company, eventually settled the case by paying a fine.

Mr. Ackermann grew up in a small town in Eastern Switzerland before departing for Zurich, where he rose to be president of Credit Suisse. He then moved to Frankfurt, where he won plaudits for leading Deutsche Bank to the upper ranks of global investment banks.

But since Mr. Ackermann’s retirement from Deutsche Bank, his legacy has suffered. The bank, Germany’s largest, continues to struggle with many lawsuits from aggrieved investors, as well as official investigations related to conduct that took place before the beginning of the financial crisis, when Mr. Ackermann was in charge.

And Deutsche Bank continues to face criticism that it takes too much risk, a practice that stems from Mr. Ackermann’s determination to equal the profitability of Wall Street titans like JPMorgan Chase and Goldman Sachs.

Mr. Ackermann’s sudden departure from Zurich Insurance puzzled insiders and seemed only to heighten stress on a company already rattled by Mr. Wauthier’s death. Martin Senn, the chief executive, struggled on Friday to try to convince analysts that Mr. Wauthier’s suicide did not signal deeper problems at the company.

“I want to make it crystal clear that there is no link between this news and Zurich’s business and financial results,” Mr. Senn said in a brief conference call on Friday with analysts.

With 60,000 employees and revenue last year of $73 billion, Zurich is one of the world’s largest insurers. It earns about half its revenue in the United States through subsidiaries like its Farmers unit.

Mr. Ackermann has not spoken to reporters, but in a statement on Thursday, he suggested that he had resigned as chairman, a part-time supervisory post, because after the suicide he would no longer be able to push for change as forcefully as he was accustomed.

“I see the possibility of a continued successful board leadership to the benefit of Zurich called into question,” Mr. Ackermann said.

He also alluded to accusations from Mr. Wauthier’s widow that he should take some blame for the suicide but called them “unfounded.”

This article has been revised to reflect the following correction:

Correction: August 30, 2013

An earlier version of this article misstated the surname of the acting chairman of the Zurich Insurance Group. He is Tom de Swaan, not de Swann.

Article source: http://www.nytimes.com/2013/08/31/business/global/zurich-insurance-to-investigate-circumstances-of-suicide.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Wealth Matters: Fertility Treatments Produce Heirs Their Parents Never Knew

August 30, 2013 by

While this may sound bizarre, posthumously conceived children can become a quandary for the rich and the not-so-rich alike. The problem is always about money. The rich worry about who will get their assets after they are dead, while people of more meager means have turned to the courts in the hope of collecting federal benefits.

“We’re going to see a flurry of activity on this, because new technologies are ballooning,” said Sharon L. Klein, managing director at Wilmington Trust and chairwoman of the trusts, estates and surrogate’s courts committee of the New York City Bar Association.

“You read about women in their late 20s and early 30s who are saving their eggs and want to focus on their careers and haven’t met the right partner yet,” she said. The woman’s eggs could be used to produce a child even if the woman never wanted the eggs used after her death.

The law is clear on one thing: when a trust document does not address the issue, Ms. Klein said, “children born with the new technology are entitled to inherit with the same rights as a natural-born child.”

Consider the example of a sick person who, before undergoing chemotherapy that will cause sterility, donates sperm or eggs to be frozen, in hopes of having children later. The patient intends to have the children after recovery. But should the patient die without something in writing stating this intent, the surviving partner could have a claim on that genetic material and could use it to produce a child.

Other possibilities exist. A couple who has embryos left over after having children through in vitro fertilization could, instead of destroying them, donate them to a woman, essentially giving her a child they created. That could have unintended consequences. “It’s not inconceivable now that if the father and mother of that embryo were to strike it rich, the child born of that other woman could say, ‘Those are my genetic parents,’ ” said John M. Olivieri, a partner at White Case. And if the child says that, chances are he or she would ask for a share of the genetic parents’ wealth.

“Posthumous reproduction is the perfect storm of competing interests,” said Susan M. Wolf, professor of law, medicine and public policy at the University of Minnesota School of Law. “There’s the surviving partner who wants to reproduce, the interests of the deceased while they were alive or as they memorialized them, the pre-existing kids who don’t want their interest diluted and finally the kids who are brought into the picture but who may be financially most at risk.”

Several lawsuits have already tested this issue, and many more have been settled privately, lawyers said.

In 2007, the New York County Surrogate’s Court decided in the case In re Martin B. that two posthumously conceived children could benefit from a trust created by their grandfather, Martin B., for his two sons and any grandchildren. (Real names were not used in the suit to protect the children.)

The case was brought jointly by Martin B.’s wife and the widow of their son, whose frozen sperm had been used to conceive two children three and five years after his death. They wanted to know whether the posthumously conceived children were descendants for the purpose of the trust.

The answer decided whether tens, if not hundreds, of millions of dollars from the estate of Martin B. went to those children or if all of it was divided among the surviving son and his children.

What made this case even more intriguing was that Martin B.’s wife had the ability to divide the assets in the trusts her husband set up as she saw fit. Lawyers on both sides said even if her posthumously conceived grandchildren were not considered, she could have cut her living son out of his inheritance.

This article has been revised to reflect the following correction:

Correction: August 30, 2013

An earlier version of this article included outdated information about the status of New York legislation that would set guidelines for the inheritance rights of posthumously conceived children. The state Senate did not take up the legislation in the most recent session, which ended in June; it is not awaiting Senate action in this session. 

Article source: http://www.nytimes.com/2013/08/31/your-money/fertility-treatments-produce-heirs-their-parents-never-knew.html?partner=rss&emc=rss

Filed Under: Your Money Tagged With: , ,

Number of Jobless People Declines Slightly in Europe

August 30, 2013 by

PARIS — While unemployment remained at record levels in percentage terms, the actual number of jobless people in the euro zone fell slightly in July, according to data published on Friday, offering fresh evidence that Europe’s struggling economy was taking tentative steps toward a recovery.

The tiny improvement in employment — which came alongside declining inflation and a survey showing improved confidence among European consumers and business managers — was welcomed as additional evidence that the worst of the region’s downturn was probably over. Still, officials and economists cautioned that the economic health of Europe remained fragile and the pace of recovery highly uneven within the region, underscoring the challenge for policy makers and central bankers.

“The recent improvements are minimal,” said Laszlo Andor, the European Union’s commissioner for employment. “This is no time for celebration or complacency.”

The jobless rate in the 17 countries that share the euro was 12.1 percent in July, adjusting for seasonal effects, according to a report from Eurostat, the European Union statistics agency. That figure has remained unchanged for several months. A year earlier, it was 11.5 percent.

Eurostat estimated that 19.2 million people in the euro area were jobless in July, 15,000 fewer than in from June.

For all 28 countries in the European Union, the number of unemployed fell by 33,000, to 26.7 million, for a rate of 11 percent. The European bloc expanded from 27 members to 28 on July 1, when Croatia joined.

Joblessness in the euro zone has been marching higher almost without interruption for more than five years, declining only briefly at the beginning of 2011. The July data showed the first back-to-back monthly decline in the number of jobless since April 2011.

But while some countries, like Germany, Austria and the Netherlands, have managed to weather the crisis with relatively little human cost, their Southern European neighbors — crippled by the euro zone’s debt crisis — still confront devastating levels of joblessness, particularly among the young.

“Against the background of what we’ve seen over last 18 months, yes, this is good news,” Carsten Brzeski, an economist at ING Bank in Brussels, said of the employment figures. “But tell that to the people who are still unemployed in places like Spain.”

The figures released on Friday again demonstrated the large disparity in growth and unemployment rates.

Unemployment in Germany stood at 5.3 percent in July, while Austria’s rate was 4.8 percent — less than one-fifth the levels recorded in Greece and Spain.

Andrea Broughton, principal research fellow at the Institute for Employment Studies in Brighton, England, emphasized the high levels of youth unemployment in many parts of Europe. In Greece, where the jobless rate is already among Europe’s highest at nearly 28 percent, youth unemployment was 62.9 percent in May, the latest month available for that country. In Spain and Croatia, more than half the young people remain out of work.

Nonetheless, Mr. Brzeski of ING said there were growing signs that Europe’s downturn had bottomed out and that structural reforms introduced in Spain, Portugal and other pockets of Europe’s “periphery” had begun to bear fruit.

He pointed to the European Commission survey of business and consumer confidence for August, which was also released on Friday, showing that optimism among company managers had reached its highest level in two years.

“Unit labor costs in many peripheral countries really have been improving,” he said. There was a nascent sense among businesses in those countries, he added, that “finally, something has been done and it’s showing some effect.”

The confidence survey, conducted by the executive agency of the European Union, showed that sentiment was improving not only in relatively healthy economies like Germany and the Netherlands but also in Italy and Spain, which have been among the hardest hit by the downturn.

The index of sentiment within the euro zone, based on factors including business orders, industrial confidence and hiring plans, rose 2.7 points to 95.2, the European Commission said. Across the European Union, the measure rose 3.1 points to 98.1.

Consumer confidence also improved, thanks mainly to brighter expectations about the economic situation over the next 12 months. Expectations about employment, however, remained unchanged.

Europe’s stagnant economy continued to keep a lid on prices. Eurostat on Friday forecast that annual consumer price inflation would decline to 1.3 percent in August from 1.6 percent a month earlier, largely because of a drop in energy prices.

This low-inflation trend, economists said, provides useful ammunition to the European Central Bank, which remains reluctant to raise its benchmark interest rate from a record low of 0.5 percent.

“As long as inflation remains well behaved and clearly below 2 percent,” Mr. Brzeski said, “I think the E.C.B. can sit very comfortably where it is right now.”

Article source: http://www.nytimes.com/2013/08/31/business/global/optimism-on-european-economy-continues-to-rise.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Major Surge Is Unlikely for Prices of U.S. Gas

August 30, 2013 by

But energy experts say that a major jump is unlikely for the 29.2 million Americans whom AAA expects to travel 50 miles or more on the road this weekend — up from 28 million last year — despite the summer of unrest across the Middle East and North Africa.

In fact, Americans will pay considerably less for gasoline than they did last Labor Day weekend, when refinery shutdowns and Hurricane Isaac, which hit the coast of the Gulf of Mexico, heightened fears of gasoline shortages.

“Gasoline prices are going to be surprisingly temperate,” said Tom Kloza, chief oil analyst at GasBuddy.com. “In California drivers will be spending 30 to 40 cents less than last Labor Day weekend for a gallon of regular and much of the rest of the country will be between 5 and 15 cents lower than last year.”

According to the AAA daily fuel gauge report, the national average price of a gallon of regular gasoline on Friday was just over $3.58, still only 5 cents higher than a week ago and 4 cents cheaper than a month ago. Gasoline prices are just beginning to catch up with the rise in global crude oil prices, which had climbed roughly $6 a barrel in just a few days as the United States and allies prepared to attack Syria in retaliation for what they suspect was a government chemical weapons attack on Syrian civilians.

Oil prices retreated by about $2 a barrel on Thursday and slumped a bit more on Friday. Experts said prices could easily jump back up after an expected attack on Syria.

Oil experts say gasoline prices could rise as much as 10 cents a gallon over the next week or two, as higher oil prices gradually push up wholesale and retail prices. But few expect a big, lasting jump unless there is a major expansion of conflict across the Middle East that seriously threatens oil production and shipments.

The Energy Information Administration projects that the national average price for a regular gallon of gasoline will be $3.59 during the third quarter and $3.52 for the entire year, 11 cents below the average 2012 price. It expects an even lower 2014 annual price of $3.37 a gallon.

“Gas prices are probably going to be spiking over the next few days,” said Michael Green, a spokesman for AAA. But he added: “It’s not horrendous. We’re looking at the lowest Labor Day gas prices since 2010.”

One reason, according to a report by the Energy Department on Wednesday, is a surprise weekly jump of three million barrels in national oil inventories. The report also showed a much lower-than-expected drop in inventories of gasoline, which remained particularly well supplied on the heavily populated East Coast. Several East Coast refineries that curtailed operations last week for unplanned maintenance are expected to be back up in the next few days, which should further increase supplies.

Summer driving normally tapers off after the Labor Day weekend, and that should help keep a lid on prices. Demand for gasoline should drop by about 15 million gallons a day in September from August levels, according to government statistics.

Most important, the country is better prepared for any shocks if the instability in the Middle East and North Africa escalates much further. United States gasoline inventories are up nearly 10 percent from a year ago, while demand is up by only about 1 percent.

Mostly because of a frenzy of shale drilling and expansion of oil sands production, the United States and Canada are producing two million barrels of oil a day more than when the turmoil in the Middle East and North Africa broke out two years ago. That, along with the decline in consumption since 2007, has meant that the Strategic Petroleum Reserve and other inventories now have the capacity to replace about nine months of imports, about 40 percent more than only five years ago.

Article source: http://www.nytimes.com/2013/08/31/business/energy-environment/moderate-rises-in-us-gasoline-prices-expected.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Moderate Rises in U.S. Gasoline Prices Expected

August 30, 2013 by

But energy experts say that a major jump is unlikely for the 29.2 million Americans whom AAA expects to travel 50 miles or more on the road this weekend — up from 28 million last year — despite the summer of unrest across the Middle East and North Africa.

In fact Americans will pay considerably less for gasoline than they did last Labor Day weekend, when refinery shutdowns and Hurricane Isaac, which hit the coast of the Gulf of Mexico, heightened fears of gasoline shortages.

“Gasoline prices are going to be surprisingly temperate,” said Tom Kloza, chief oil analyst at GasBuddy.com. “In California drivers will be spending 30 to 40 cents less than last Labor Day weekend for a gallon of regular and much of the rest of the country will be between 5 and 15 cents lower than last year.”

According to the AAA daily fuel gauge report, the national average price of a gallon of regular gasoline on Friday was just over $3.58, still only 5 cents higher than a week ago and 4 cents cheaper than a month ago. Gasoline prices are just beginning to catch up with the rise in global crude oil prices, which had climbed roughly $6 a barrel in just a few days as the United States and allies prepared to attack Syria in retaliation for what they suspect was a government chemical weapons attack on Syrian civilians.

Oil prices retreated by about $2 a barrel on Thursday and slumped a bit more on Friday. Experts said prices could easily jump back up after an expected attack on Syria.

Oil experts say gasoline prices could rise as much as 10 cents a gallon over the next week or two, as higher oil prices gradually push up wholesale and retail prices. But few expect a big, lasting jump unless there is a major expansion of conflict across the Middle East that seriously threatens oil production and shipments.

The Energy Information Administration projects that the national average price for a regular gallon of gasoline will be $3.59 during the third quarter and $3.52 for the entire year, 11 cents below the average 2012 price. It expects an even lower 2014 annual price of $3.37 a gallon.

“Gas prices are probably going to be spiking over the next few days,” said Michael Green, a spokesman for AAA. But he added: “It’s not horrendous. We’re looking at the lowest Labor Day gas prices since 2010.”

One reason, according to a report by the Energy Department on Wednesday, is a surprise weekly jump of three million barrels in national oil inventories. The report also showed a much lower-than-expected drop in inventories of gasoline, which remained particularly well supplied on the heavily populated East Coast. Several East Coast refineries that curtailed operations last week for unplanned maintenance are expected to be back up in the next few days, which should further increase supplies.

Summer driving normally tapers off after the Labor Day weekend, and that should help keep a lid on prices. Demand for gasoline should drop by about 15 million gallons a day in September from August levels, according to government statistics.

Most important, the country is better prepared for any shocks if the instability in the Middle East and North Africa escalates much further. United States gasoline inventories are up nearly 10 percent from a year ago, while demand is up by only about 1 percent.

Mostly because of a frenzy of shale drilling and expansion of oil sands production, the United States and Canada are producing two million barrels of oil a day more than when the turmoil in the Middle East and North Africa broke out two years ago. That, along with the decline in consumption since 2007, has meant that the Strategic Petroleum Reserve and other inventories now have the capacity to replace about nine months of imports, about 40 percent more than only five years ago.

Article source: http://www.nytimes.com/2013/08/31/business/energy-environment/moderate-rises-in-us-gasoline-prices-expected.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Common Sense: ‘Cuckoo’s Calling’ Reveals Long Odds for New Authors

August 30, 2013 by

Mystery solved? Maybe not. It’s no surprise that “The Cuckoo’s Calling,” a detective story set in a London populated by supermodels and rock stars, shot to the top of best-seller lists once the identity of the author was revealed. But if the book is as good as critics are now saying it is, why didn’t it sell more copies before, especially since the rise of online publishing has supposedly made it easier than ever for first-time authors?

“It makes me sad,” Roxanne Coady, founder of R. J. Julia Booksellers in Madison, Conn., and the online retailer JustTheRightBook.com, told me last week from Maine, where she said she was sitting near a stack of unread new books. “Because not everyone turns out to be a J. K. Rowling. It reminds me how difficult it is for even good books to succeed.”

It’s not entirely clear why Ms. Rowling decided she wanted “to fly under the radar,” as she put it on the Robert Galbraith Web site, other than to say that “being Robert Galbraith has been all about the work, which is my favorite part of being a writer.” Writing under a pseudonym obviously ruled out any tedious book signings or publicity appearances, but Ms. Rowling doesn’t have to do anything she doesn’t want to.

And it wasn’t about money, since Ms. Rowling is donating all royalties to charity. “If sales were what mattered to me most, I would have written under my own name, and with the greatest fanfare,” she said. (A spokeswoman in London for Ms. Rowling responded to my questions by directing me to the Galbraith Web site, and said Ms. Rowling would have no further comment.)

Ms. Rowling’s last book, “The Casual Vacancy,” an adult comedy of manners published under her name and the first since the end of the Potter series, was met with high expectations and withering reviews from prominent critics. Michiko Kakutani wrote in The New York Times, “the real-life world she has limned in these pages is so willfully banal, so depressingly clichéd that ‘The Casual Vacancy’ is not only disappointing — it’s dull.” The Los Angeles Times faulted “Rowling’s inability to engage us, to invest us sufficiently in her characters.”

Still, with hardcover sales of just over 1.3 million copies, it was the No. 1 hardcover fiction title of 2012, according to Publishers Weekly’s annual ranking, outselling John Grisham, James Patterson and Danielle Steel.

Ms. Rowling may well have felt that the reaction, both critical and commercial, was distorted by her fame, and hence decided on a pseudonym for “The Cuckoo’s Calling.” It’s not clear exactly who was in on the secret: her agent, of course, and at least someone at Little, Brown Company, her publisher, including her editor, who also edited “The Casual Vacancy.” (“The Cuckoo’s Calling” was published by Mulholland Books, a Little, Brown imprint.) “Few people within the publishing house knew the true identity of Robert at the time,” Nicole Dewey, a Little, Brown spokeswoman, told me, declining to be more specific about who knew.

But that already distorted the experiment to some extent. Given how difficult it is for first-time fiction authors, especially in a crowded genre like mystery, to find both an agent and publisher, it’s not clear “The Cuckoo’s Calling” would have made it off the slush piles. At least one other publisher, Orion Books, which like Little, Brown, is a subsidiary of the Hachette Book Group, rejected the manuscript. An editor there told The Telegraph in London that the book “didn’t stand out.”

In any event, a publishing contract is hardly a guarantee of critical or commercial success. Much depends on how a new manuscript is treated by the publisher. Morgan Entrekin, the president and publisher of Grove Atlantic, is widely viewed as a master at introducing new literary talent to the marketplace. He published “Cold Mountain” by then first-time novelist Charles Frazier, which went on to win the National Book Award and sell over 11 million copies.

“There’s no question, if a publisher decides to get behind a book, to invest its publishing capital, to use its traction with the chains, with Amazon, fight for the promotion money to get the book into the front of stores, you can do a lot to bring attention to a worthy first novel,” he said.

Mr. Entrekin cited “Matterhorn,” by first-time novelist Karl Marlantes, which he published in 2010. The author “worked on the book for over 20 years and couldn’t find a publisher,” Mr. Entrekin said. Then, as the book was about to be published in a tiny first edition, Mr. Entrekin got a copy from a buyer at Barnes Noble, loved it, and bought out the first printing.

He re-edited it, cut 300 pages, got advance quotes from prominent authors, introduced the author to booksellers and hosted a media lunch in Manhattan. Amazon.com gave the book a glowing review, chose it as a best book of the month, and got an exclusive review from Mark Bowden, author of “Black Hawk Down.” “ ‘Matterhorn’ is a great novel,” his review began. It sold over 400,000 copies.

Article source: http://www.nytimes.com/2013/08/31/business/cuckoos-calling-reveals-long-odds-for-new-authors.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: , ,

Off the Charts: Five Years After Chaos, Shares of Many Big Banks Are Still Struggling

August 30, 2013 by

Two weeks later, Lehman Brothers failed and a panic began. The crisis demonstrated how interconnected the world financial system had become and how vulnerable even apparently healthy banks were when their competitors began to crumble. In the weeks that followed, most large banks around the world had to be bailed out. Their share prices plummeted.

Since then, however, some big banks have performed much better than others — a difference based to a significant extent on just how well, or badly, each bank had been run in the months and years leading up to the crisis.

The accompanying charts show the performance of 25 large banks around the world. As the crisis began, each of them ranked in the top 20 in the world in at least one of three measurements — market capitalization, book value or total assets.

In the weeks and months that followed, all but one of them lost at least half of their market value, as measured in the local currency of the bank’s primary market. The exception was a Chinese bank, the Industrial and Commercial Bank of China, whose shares lost less than a third of their value.

The charts also show the performance of the Bloomberg World Bank Index, which comprises more than 140 banks and has done better than most of the large bank stocks. This was a crisis where bigger was not necessarily better, and where some of the largest banks proved to be far from adequately capitalized, notwithstanding what their books had indicated before Lehman collapsed.

This spring, the world bank index got back to within 3 percent of its level at the end of August 2008, although it has since slipped back and is now 11 percent lower. Few of the large banks shown have done as well.

But a handful of banks turned out to be profitable long-term investments that August. Shares of both JPMorgan Chase and Wells Fargo in the United States are now more than 40 percent higher than they were. Shares of two of the three Chinese banks shown — Bank of China and China Construction Bank — are higher now than they were five years ago, while the third is approximately unchanged. In Britain, HSBC is up about 13 percent, a much better performance than was shown by other large European banks. It did not hurt that HSBC had a significant presence in many developing countries, most of which rode out the recession reasonably well even though some have stumbled this year.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

Article source: http://www.nytimes.com/2013/08/31/business/economy/some-big-banks-thrive-despite-chaos-of-2008.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,
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