September 22, 2023

DealBook: Hunch About Bloomberg Brought Rivals Together

Bloomberg’s TV studio in Manhattan. The news and financial data company has recently begun expanding into new businesses like stock and bond trading.Hiroko Masuike for The New York TimesBloomberg’s TV studio in Manhattan. The news and financial data company has recently begun expanding into new businesses like stock and bond trading.

Goldman Sachs and JPMorgan Chase are usually bitter rivals, competing for lucrative banking and trading business. But one day in April, the Wall Street titans found common ground: frustration with the Bloomberg news and financial data empire.

Goldman’s public relations chief, Jake Siewert, a former Treasury official, called his counterpart at JPMorgan Chase, Joe Evangelisti, with a simple question: “Do you have any issues with Bloomberg?”

Before he could finish his sentence, Mr. Evangelisti began rattling off his grievances, say people briefed on the call. At the top of the list was a Bloomberg News article in 2011 that likened the strife in an Italian town after a bad deal with JPMorgan to the fallout from the Nazis’ occupation in World War II. He also mentioned another episode when a Bloomberg reporter surreptitiously obtained an access code to listen to a private conference call for senior executives.

The two men shared one major concern: they believed that Bloomberg reporters were using the company’s data terminals to monitor Wall Street sources — the executives at the banks that were spending thousands of dollars a year to use the data-rich machines.

That phone call lifted the lid on a long-simmering, but seldom discussed, tension between Bloomberg and Wall Street. This article is based on interviews with many of the people with whom Mr. Siewert spoke.

There had long been suspicions among public relations executives that Bloomberg reporters might be using terminals to check up on bank executives. But one Wall Street chief executive, who spoke on the condition that he not be named, said recently, “I hate it when something happens that hadn’t occurred to me, and this situation certainly hadn’t.”

The grumbling and gossiping never amounted to much until Mr. Siewert, who joined Goldman last year, began his mission.

Through its lucrative terminal business, Bloomberg provides firms with intricate financial information. And while the company is not alone in providing data to the big banks — Reuters and others offer similar services — Bloomberg terminals have become so ubiquitous on Wall Street that they are essentially a prerequisite for traders. They come at a steep price: each machine can cost an average of more than $20,000 a year.

Adding to the tension between Wall Street and the data provider, many bank executives have grown to resent the fact that Bloomberg will not reduce the cost of the terminals, as other vendors have. After reports of Bloomberg’s monitoring emerged, some Wall Street executives sought concessions on the cost of the terminals, but those efforts failed, according to people briefed on the matter.

At the same time, Bloomberg is also expanding into businesses like stock and bond trading, a lucrative sector that is still largely dominated by banks like Goldman. The company has put more resources into offering fresh methods of trading stocks, bonds and some more complex financial instruments.

As a result, some at Bloomberg have privately accused Goldman Sachs of creating a firestorm over the terminal surveillance. Goldman executives bristle at that assertion.

Still, the business initiatives at Bloomberg, which has reporters around the globe, exacerbates the tensions that any news organization has with the people it covers.

“Bloomberg has to walk a fine line between selling a service to firms like Goldman Sachs on the one hand and hammering them on the other with stories,” said Paul A. Argenti, a professor of corporate communications at Dartmouth’s Tuck School of Business.

Bloomberg reporters had a limited window into what terminal users were doing, according to people close to Bloomberg. For instance, they knew when a subscriber was logged in or out, and could see help-desk chats, which might give clues about what a subscriber was interested in.

Mr. Siewert said in a statement that Bloomberg representatives had told Goldman that they would get to the bottom of the issue.

“We’ve got a lot of respect for Bloomberg reporters, and the company is making sure that the news desk has no special access to client information, so they’re on top of it,” he said.

A spokeswoman from JPMorgan declined to comment.

Ty Trippet, a spokesman for Bloomberg, said, “We always want to hear from our clients and others about our editorial coverage, and we take substantive concerns very seriously.”

Goldman’s response began when a press officer in Hong Kong received a call from a Bloomberg reporter about the whereabouts of a partner who the reporter noted had not logged into his terminal in a few weeks.

The Goldman employee felt the call crossed the line, and she immediately mentioned it to her boss in Hong Kong, who in turn raised it with Mr. Siewert in New York.

His first move was to find out whether Bloomberg had guidelines prohibiting reporters from using terminals to further their reporting. Mr. Siewert is probably best known for his years working for President Clinton, including as his press secretary.

Mr. Siewert called a reporter at Bloomberg who covers Goldman. He was directed to an editor, who assured him that Bloomberg had a policy aimed at preventing exactly the sort of behavior Mr. Siewert was concerned about.

This response surprised executives at Goldman because the reporter who called the Hong Kong office had admitted monitoring an executive’s whereabouts through the terminal.

Mr. Siewert then called more than half a dozen former Bloomberg reporters, most of whom now work at The Wall Street Journal. Most of those acknowledged using the terminal to further their reporting, or said they knew people who had done so.

At the same time, Mr. Siewert contacted a number of public relations executives on Wall Street and in Washington. Several executives told Mr. Siewert that they too had previous episodes of Bloomberg reporters’ checking the whereabouts of employees, but had not been concerned enough to take the issue up with Bloomberg.

Goldman held a series of meetings on Bloomberg’s monitoring. Goldman’s legal department pulled out the bank’s contract with Bloomberg, which prohibits Bloomberg from using confidential information it might glean from its relationship with Goldman for purposes not contemplated by the contract.

Mr. Siewert’s work culminated in a meeting on April 29 at Goldman’s headquarters in Lower Manhattan. In a conference room on the 43rd floor overlooking the Hudson River, Daniel L. Doctoroff, the chief executive of Bloomberg, met with Gary D. Cohn, the president of Goldman Sachs.

“This data is sensitive,” Mr. Cohn told Mr. Doctoroff, according to others present at the meeting. Mr. Doctoroff assured Goldman officials that Bloomberg was concerned about the breach and had cut off the ability of reporters to access client information, according to attendees of the meeting.

“They were very responsive and didn’t pretend it was an isolated incident,” said one executive at the meeting.

Mr. Cohn told Mr. Doctoroff that Goldman was considering notifying its clients of the breach, but before it did it wanted to be able to tell them what remedial action Bloomberg was taking. The two men agreed to talk again soon.

Bloomberg executives left the meeting feeling things were moving in a positive direction and were surprised by the subsequent news media attention.

Still, Mr. Siewert’s calls had piqued the interest of reporters, and The Wall Street Journal and The New York Post began reporting.

On the afternoon of May 9, Mark DeCambre, a reporter for The Post, called Bloomberg. His article, with the headline “Goldman Sachs employees concerned Bloomberg news reporters are using terminals to snoop,” broke the news.

Mr. Doctoroff responded in a note to Bloomberg clients.

“A Bloomberg client recently raised a concern that Bloomberg News reporters had access to limited customer relationship management data through their use of the Bloomberg terminal. Although we have long made limited customer relationship data available to our journalists, we realize this was a mistake,” he wrote.

A version of this article appeared in print on 06/01/2013, on page B1 of the NewYork edition with the headline: Hunch About Bloomberg Brought Rivals Together.

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Former I.B.M. Chief, Palmisano, to Lead Bloomberg Privacy Review

In a continuing effort to address concerns that reporters at Bloomberg L.P.’s news division looked at terminal subscribers’ data, the company on Friday appointed Samuel J. Palmisano, the former chairman and chief executive of I.B.M., to review its privacy and data standards.

Mr. Palmisano, who joined I.B.M. in 1973 and served as chief executive until 2011, will report to Bloomberg’s board and will initiate a review of the company’s handling of its vast troves of subscriber data and how that data is used internally. He sits on the board of Bloomberg Philanthropies, the cheritable group of Michael R. Bloomberg, who founded Bloomberg L.P.

The appointment follows reports that Goldman Sachs executives complained to Bloomberg L.P. that a Bloomberg News reporter monitored terminal logon information for one of the firm’s partners to investigate his employment status.

Bloomberg leases its high-speed financial data-splicing terminals for about $20,000 a year; with that cost comes presumed assurance that subscribers’ financial data and chat conversations that take place on the terminals are kept private. Instead, some Bloomberg reporters had used a terminal function, now disabled, to find a subscriber’s personal contact information, to monitor whether a subscriber was logged on and to read chats between subscribers and customer service. Reporters could not see specific securities or trades.

The Goldman Sachs complaint set off a wave of inquiries from subscribers on Wall Street, including JPMorgan Chase, Bank of America and Deutsche Bank, and in government, including the Federal Reserve, the Treasury Department and the European Central Bank.

In addition to announcing the new appointment, Bloomberg also said on Friday that Clark Hoyt, an editor at large at Bloomberg News and a former public editor at The New York Times, would conduct a review of the news division’s relationship with the terminal business. That job will include assessing how subscriber data is handled and if necessary, formulating new rules. Mr. Hoyt will report to Daniel L. Doctoroff, chief executive of Bloomberg L.P.

“The review will be completed expeditiously, thoughtfully and thoroughly,” Mr. Doctoroff said in a statement. Last week, Bloomberg said it had appointed Steve Ross, a senior executive, to the newly created position of client data compliance officer.

In a statement, James P. Gorman, the chairman and chief executive of Morgan Stanley, said, “The appointments Bloomberg announced today show that they are taking the right steps to maintain the confidence of their customers. They have been very open and proactive in terms of outreach, communication and dialogue with our firm.”

The Bloomberg board has also hired the law firm Hogan Lovells and the Promontory Financial Group to assist in the review. The company, founded by Mr. Bloomberg in 1982, has over 315,000 terminal subscribers generating about 85 percent of its $7.9 billion in revenue in 2012.

Although some subscribers praised Bloomberg’s hiring of outside advisory groups, additional question may arise about the independence of the newly named advisers, Mr. Palmisano is a close friend of Mr. Bloomberg’s, and Promontory has faced scrutiny from Congress over its heft on Wall Street and influence in Washington. (Promontory has said the firm remains independent by reporting to a company’s board rather than its management.)

Peter T. Grauer, chairman of the Bloomberg board, said it was “committed to getting the best possible advice from experts with impeccable reputations in their respective fields.”

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Economix Blog: On Federal Reserve Policy, No More, No Less

A speech on Tuesday by Eric Rosengren, president of the Federal Reserve Bank of Boston, underscores that debate within the central bank once again is shifting from whether to do more to when to do less.

This should not suggest that the Fed is on the verge of doing less. It seems clear that a strong majority of the Fed’s policy-making committee supports the current round of stimulus, announced in September and December. The Fed’s chairman, Ben S. Bernanke, said on Monday that the persistence of high unemployment “motivates and justifies” those steps, which he called “extraordinarily important.”

But an account of the committee’s most recent meeting in December, released earlier this month, showed participants already debating whether the Fed should end the bond purchases as early as this summer.

Mr. Rosengren, who holds one of the four rotating seats on the committee this year, pushed back against calls for an early end. The Fed is buying $85 billion a month in Treasuries and mortgage bonds to drive down borrowing costs, which it hopes will encourage spending and foster job creation. Mr. Rosengren said the campaign was working and that it should continue for some time.

“I consider it imperative that monetary policy continue to actively support the economy at present — since we continue to have an unacceptably high unemployment rate while, at the same time, inflation is undershooting the Federal Reserve’s 2 percent target,” Mr. Rosengren said.

But Mr. Rosengren – who has been one of the strongest advocates for the Fed to act more aggressively to reduce unemployment — did not argue that the Fed should expand its efforts, even though he and other Fed officials expect that unemployment will remain higher than they would like, and that inflation will remain lower.

After the speech, in an interview with Bloomberg News, Mr. Rosengren made clear that the Fed could do more – he just doesn’t think it should, at least not for now.

Another strong supporter of the asset purchases, Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, did call Tuesday for additional action to reduce unemployment, but his views are less significant because he does not hold a vote on the policy-making committee this year.

“Monetary policy is currently not accommodative enough,” Mr. Kocherlakota said, noting that inflation is projected to remain below the 2 percent annual pace the Fed regards as most healthy, so the central bank is failing both in its obligation to reduce unemployment and to control inflation.

Mr. Kocherlakota said the Fed should announce its intention to keep short-term interest rates near zero until the unemployment rate falls below 5.5 percent, rather than the 6.5 percent threshold the central bank adopted in December.

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Central Bank Loans Ease Euro Credit Strain, for Now

The E.C.B., making an offer too good for Europe’s banks to refuse, reported Wednesday that it had doled out almost half a trillion euros in low-cost three-year loans to keep credit flowing at a time when European banks are finding it all but impossible to finance their operations through normal market channels.

The lending reduces the “risk of a Lehman-type situation, where banks go into the new year facing a wave of refinancing and are unable to access the market,” said Jacques Cailloux, the chief euro zone economist at Royal Bank of Scotland.

But it is probably only a temporary solution. By acting essentially as a lender of last resort to the European financial system, the E.C.B. managed mainly to buy time for Europe to work out its longer-range problems of excessive debts, lagging economic competitiveness and limited fiscal unity.

The E.C.B. allocated €489.2 billion, or $639 billion, to 523 institutions, well above the roughly €300 billion estimate of analysts polled by Reuters and Bloomberg News.

Even as Mario Draghi, the new E.C.B. president, continues to resist calls to stand directly behind sovereign debtors without limit, the scale of the liquidity injection suggested that the E.C.B. is prepared to indirectly support them through the banking system.

Carl B. Weinberg, chief economist at High Frequency Economics and a self-described bear on the European outlook, said he was stunned by the size of the monetary operation, saying it suggested Mr. Draghi had “shown a path toward averting catastrophic collapse in Europe.”

Coupled with an easing of reserve requirements announced this month, Mr. Weinberg said, the results suggested that the E.C.B. had injected around €400 billion into the financial system so far in December.

“This is exactly what happened in the United States with the Fed in 2008,” Mr. Weinberg said. “They bought toxic assets and withdrew them from the market, and gave the money they printed to the banks, who put that money into the government bonds that were sold to fund TARP.” (TARP is the acronym for one of the U.S. bailout funds used to protect the U.S. banking system from failure.)

Mr. Draghi has been reluctant to involve the E.C.B. directly in the market for sovereign debt, saying the bank is forbidden by treaty from financing governments or engaging in the sort of “quantitative easing,” or pumping money into the economy, carried out by the U.S. Federal Reserve and others.

But Carsten Brzeski, an economist in Brussels with ING Group, said the infusion of funds Wednesday nonetheless “amounted to a bit of a backdoor Q.E.,” because the funds made available to the banks could then be lent to European governments at higher rates with little risk. That should ease the strains within both the banking system and the market for European government bonds.

In exchange for collateral, lenders borrowed at the E.C.B.’s benchmark interest rate, currently 1 percent. Mr. Brzeski noted they could then use the funds to purchase the debt of euro zone governments, pocketing the difference as profit. Spanish bonds of two-year duration, for example, yield around 3.4 percent; in Italy rates are even higher.

Mr. Draghi acknowledged during a speech to the European Parliament on Monday that banks might be doing just that. “We don’t know how many government bonds they are going to buy,” he said.

Strong demand at recent Spanish debt auctions has driven down yields, suggesting that banks are loading up on the debt to use as collateral for the E.C.B. loans, analysts said. But there are limits to their appetites for sovereign debt at a time when they are trying to reduce their vulnerability to a potential debt default by a country like Greece or Italy, and protect themselves against the possibility of a breakup of the euro zone.

The injection of three-year funds was one of the new measures announced by the E.C.B. on Dec. 8 to calm European credit markets. It was the first time that the E.C.B. had extended such loans for longer than about a year.

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Merkel Urges Change to Fix Euro Crisis, Calls Effort a ‘Marathon’

Mrs. Merkel was speaking to the German Parliament as Europe’s leaders prepare for yet another round of talks on the issue, which has roiled markets across the continent and forced the collapse of governments in Greece, Italy and elsewhere. Mrs. Merkel spoke in sober and serious tones, and her words drew sustained if not overly enthusiastic applause from lawmakers.

She advocated quick agreement on changes in treaties that would prevent overspending — an important contributor to the debt crisis threatening the euro’s future. But she also said “resolving the sovereign debt crisis is a process, and this process will take years.”

Marathon runners believe that their efforts become particularly difficult after the “35 kilometer mark,” she said, adding, “but they also say that you can get to the finish if you are conscious of the magnitude of the task from the very start.”

“The future of the euro is inseparable from European unity. The journey before us is long and will be anything but easy,” she said. “But I am convinced that we are on the right path. It is the right path to take to reach our common goal: a strong Germany in a strong European Union that will benefit the people in Germany, in Europe.”

Mrs. Merkel’s assessment of what was needed appeared to be well received by European financial markets, which had been strengthening this week anyway, partly on hope that European leaders would address the problem. The Stoxx 600 index, a broad barometer, rose 1.2 percent for the day and 9 percent for the week, its biggest gain in three years, Bloomberg News reported. The euro was trading at $1.348 , vs. $1.346 on Thursday.

Mrs. Merkel mixed her sober appraisal of the challenge with some words of encouragement, sounding like the European stateswoman her position as the leader of the largest economy in the bloc makes her, and not just the German chancellor. She touched on the sacrifices made in Spain, Portugal and “above all in Greece” and as such their contributions to the stability of the euro.

“We are not only talking about a stability union, but we are beginning to create it,” she said. “We in Europe have already come extremely far.”

Later on Friday, President Nicolas Sarkozy of France met in Paris with British Prime Minister David Cameron — whose country is not part of the single currency but belongs to the European Union and whose economy is heavily dependent on continental trade.

“We need the euro zone to resolve their crisis. We need the countries of the euro to stand behind their currency,” George Osborne, Britain’s chancellor of the Exchequer, said shortly before Mr. Cameron traveled to Paris. “We do need the countries of the euro to work more closely together to sort out their problems.”

“Britain doesn’t want to be a part of that integration — we’ve got our own national interests — but it is in our economic interest that they do sort themselves out. The biggest boost that could happen to the British economy this autumn would be a resolution of the euro crisis,” Mr. Osborne said.

Mr. Cameron’s discussions in Paris came in advance of talks between Mr. Sarkozy and Mrs. Merkel on Monday to be followed by a summit of European leaders in a week’s time.

Mrs. Merkel’s speech came after Mr. Sarkozy said on Thursday night that Europe could be “swept away” by the euro crisis if it does not change. He said that Europe would “have to make crucial choices in the next few weeks,” and that France and Germany together were supporting a new treaty to tighten fiscal discipline and promote economic convergence in the euro zone.

The European Union needs “an overhaul,” Mr. Sarkozy said, to remain relevant and competitive, but he was vague about the details of what needs to be done.

“If Europe does not change quickly enough, global history will be written without Europe,” he said. “Europe needs more solidarity, and that means more discipline.”

On Friday, Mrs. Merkel again appealed for a strengthening of fiscal cooperation across the euro zone in what she called a “union of stability” able to enforce controls on individual European economies.

“Where we today have agreements, we need in the future to have legally binding regulations,” she said.

Mrs. Merkel said it was time to fix the “mistakes of construction” in the euro zone. “We must strengthen the foundations of the economic and monetary union in a sustainable way.”

Evoking the spirit of German leaders past, from Konrad Adenauer to Helmut Kohl, Mrs. Merkel said Germany wanted to “avoid divisions” by creating a two-speed Europe split between those inside the euro zone and those outside it.

She again ruled out so-called euro bonds backed by all 17 members of the existing currency union, which embraces many different levels of economic strength ranging from struggling Greece to the export-driven German economy which is seen as the powerhouse of Europe. She called the idea of euro bonds “unthinkable.”

Germany, she said, did not wish to dominate Europe. “That is far-fetched,” she said.

“Germany and European unity are two sides of the same coin,” she said. “That is something we will never forget.”

Frank-Walter Steinmeier, parliamentary leader of the opposition Social Democrats, accused Mrs. Merkel of “talking past the heart of the matter” and said her “tactical approach was not making things stable.”

But Rainer Brüderle, the head of the parliamentary group of Mrs. Merkel’s junior coalition partner, the Free Democrats, offered an important token of support, saying Mrs. Merkel was “fighting for the future of Europe and we stand behind her.”

Nicholas Kulish reported from Berlin, and Alan Cowell from London. Steven Erlanger contributed reporting from Paris, and Victor Homola from Berlin.

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European Leaders’ Promises Lift Asian Markets

PARIS — Stocks fell modestly in Europe on Tuesday, after a rally in Asia, as the European Central Bank’s departing chief warned of an increasing risk of financial contagion from the euro zone debt crisis.

The broad European market was off less than 1 percent, and trading in index futures suggested Wall Street would start the day marginally weaker.

Jean-Claude Trichet, who is stepping aside from the top E.C.B. post to make way for Mario Draghi, told the European Parliament in Brussels on Tuesday that the financial crisis “has reached a systemic dimension,” Bloomberg News reported.

“Sovereign stress has moved from smaller economies to some of the larger countries,” Mr. Trichet said. “The crisis is systemic and must be tackled decisively.”

Mr. Trichet was speaking in his capacity as head of the European Systemic Risk Board, a body created last year to ensure supervision of the E.U. financial system. He steps down as E.C.B. chief on Nov. 1.

Investors were awaiting the outcome of a vote in Bratislava, where Slovakian lawmakers were scheduled to hold a debate later Tuesday on whether to back the European Financial Stability Facility. The Slovak government is divided on the bailout mechanism, and a failure of the vote could, at the very least, further complicate plans to shore up the euro zone.

On Monday, the European Council president, Herman Van Rompuy, said a European Union summit meeting on the debt crisis would be delayed by a week to Oct. 23 to give the bloc time “to finalize our comprehensive strategy on the euro area sovereign debt crisis covering a number of interrelated issues.”

Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France have promised a plan to recapitalize European banks before a Group of 20 summit meeting on Nov. 3.

“The sense of urgency among European officials that became apparent two weeks ago appears to be gathering steam,” analysts at DBS wrote in a note to clients. “One can’t be unhappy about that.”

In early trading, the Euro Stoxx 50 index, a barometer of euro zone blue chips, fell 0.5 percent, while the FTSE 100 index in London gave up 0.2 percent. Energy companies posted the largest declines as oil prices fell.

Standard Poor’s 500 index futures were down slightly, suggesting the U.S. market would be slightly weaker at the opening bell. The S. P. 500 powered 3.4 percent higher on Monday.

“The pressure on euro zone officials has ratcheted higher, and risks of failure are now too significant to jeopardize with half measures,” analysts at Crédit Agricole CIB said. “Weekend promises of banking sector capitalization by Germany and France have helped but will not be enough should such promises prove empty.”

Asian shares were higher across the board. The Tokyo benchmark Nikkei 225 stock average rose 2 percent. The Sydney market index S. P./ASX 200 rose 0.6 percent.

Chinese stocks initially rose a day after the country’s sovereign wealth fund bought shares in China’s four main banks in a show of support
, but the Shanghai composite index gave up all but 0.2 percent of the gain by the end of trading.

The Hang Seng index in Hong Kong also pared an early surge of more than 4 percent but ended the day up 2.4 percent.

The dollar was higher against other major currencies. The euro slipped to $1.3637 from $1.3642 late Monday in New York, while the British pound fell to $1.5646 from $1.5668. The dollar ticked up to 76.69 yen from 76.68 yen, and to 0.9043 Swiss francs from 0.9037 francs.

U.S. crude oil futures for November delivery fell 1.9 percent to $85.06 a barrel. Comex gold futures rose 2.1 percent to $1,670.80 an ounce.

Sei Chong reported from Hong Kong. Stephen Castle contributed reporting from Brussels.

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Wholesale Costs Increased More Than Expected in July

The 0.2 percent advance in the producer price index followed a 0.4 percent decline in June, the figures showed. Economists forecast a 0.1 percent increase, according to the median estimate in a Bloomberg News survey. The so-called core measure, which excludes the sometimes volatile prices of food and energy, climbed 0.4 percent, the most since January.

The report showed the cost of crude goods fell in July for a third consecutive month, led by declining petroleum and food prices. Slowing sales and a decline in raw materials mean companies will be less likely to raise prices, which may give Federal Reserve policy makers more room to act to spur growth after the nation’s economy almost stalled.

Compared with July 2010, companies paid 7.2 percent more for goods last month after a 7 percent rise in June.

Excluding volatile food and energy costs, wholesale prices were projected to rise 0.2 percent from the previous month, the Bloomberg survey showed. Core wholesale prices climbed 2.5 percent in the 12 months ended in July, the biggest year-to-year increase since June 2009.

Fuel costs fell 0.6 percent as gasoline prices dropped 2.8 percent, the report showed. The cost of finished consumer foods increased 0.6 percent, led by potatoes and cheese.

Expenses for intermediate goods increased 0.2 percent from the previous month, while prices of crude goods dropped 1.2 percent.

Companies were charged 1 percent more for light motor trucks, while pharmaceutical prices climbed 0.4 percent. The cost of tobacco products rose 2.8 percent, the most since March 2009.

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Import Prices Fall for First Time in a Year

Prices of goods imported to the United States fell in June for the first time in a year as oil and food expenses retreated, the Labor Department said Wednesday.

The 0.5 percent fall in the import-price index followed a revised 0.1 percent gain in May, the figures showed. Economists projected a 0.6 percent decrease for June, according to the median estimate in a Bloomberg News survey. Prices excluding petroleum fell 0.2 percent, the first decline since July 2010.

“The drop is really reflective of what we’re expecting for the second half of the year with weaker energy and food prices,” said David Semmens, a United States economist at Standard Chartered Bank in New York. “This really feeds into the transitory story that you’ve been hearing from the Fed.”

Compared with a year earlier, import prices rose 13.9 percent, the biggest 12-month advance since August 2008, the report showed.

The cost of imported petroleum fell 1.6 percent from the previous month, the largest one-month drop since June 2010. Even with the decrease, the cost was still up 50 percent from a year earlier.

Excluding all fuels, import prices decreased 0.1 percent from the previous month and were up 4.8 percent from June 2010. The 12-month gain was the biggest since October 2008.

Imported food was 1.9 percent cheaper last month, the largest decline since February 2009. A 2.6 percent drop in unfinished metals also helped hold down nonfuel import costs.

Rising costs for automobiles limited the overall decline in prices. Costs of imported automobiles, parts and engines climbed 0.3 percent, and were up 2.9 percent over the last 12 months. It was the biggest yearly gain since August 2008.

Consumer goods excluding vehicles rose 0.1 percent after increasing 0.3 percent in May.

The cost of goods from China climbed 0.1 percent, the smallest gain since September, while those from Japan were little changed, the report showed. Goods from Latin America fell 1.1 percent, and those from the European Union increased 0.1 percent. Prices of Canadian imports dropped 1 percent, and goods from Mexico fell 2.2 percent, the biggest decline since November 2008.

Export prices increased 0.1 percent after advancing 0.2 percent the previous month, the figures showed. Prices of farm exports rose 0.7 percent, while those of nonfarm goods were little changed.

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DealBook: Morgan Stanley’s Next No. 2, the Guessing Game

From left, Colm Kelleher and Paul J. Taubman, the co-presidents of institutional securities; and Gregory Fleming, the president of Morgan Stanley Smith Barney and Morgan Stanley Investment Management.Morgan Stanley, via Bloomberg News; Morgan Stanley; Andrew Harrer/Bloomberg NewsFrom left, Colm Kelleher and Paul J. Taubman, the co-presidents of institutional securities, and Gregory Fleming, the president of Morgan Stanley Smith Barney and Morgan Stanley Investment Management.

Wall Street has a new guessing game: whom will James P. Gorman choose to be his No. 2?

Mr. Gorman, the Australian-born chief executive of Morgan Stanley, is not expected to take over as chairman until early next year, after John J. Mack steps down.

But inside the investment bank, speculation is already swirling about the next president, a title now also held by Mr. Gorman. It is a crucial position, and the person filling it is usually seen as the heir apparent to the top spot.

While there are several long shots, the odds favor three senior executives. Insiders are betting on the co-presidents of institutional securities, Colm Kelleher and Paul J. Taubman, as well as Gregory J. Fleming, the president of Morgan Stanley Smith Barney and Morgan Stanley Investment Management.

They could be waiting a while to get the nod from Mr. Gorman. People close to the chief executive say he has no intention of filling the spot right away and could even wait years.

Mr. Gorman, 52, is still a young chief executive and does not see the need to publicly anoint a second in command, the people say. Choosing one would most likely ruffle the feathers of the executives passed over — a situation Mr. Gorman does not want so early in his tenure. By waiting to pick a president, Mr. Gorman can also monitor the performance of each deputy, keeping them in healthy competition with one another.

“It’s too early to give anyone that type of promotion,” said a UBS stock analyst, William Tanona. “Mr. Gorman needs to get some decent quarters behind him before doing anything like this. The company is going through a transition phase with new people, and there is still a lot to be worked out.”

It is not unusual for a Wall Street chief executive to keep the job empty. Jamie Dimon of JPMorgan Chase and Brian T. Moynihan at Bank of America both have several senior deputies but no president.

But a strong No. 2 can be useful. Goldman Sachs’s president, Gary D. Cohn, is often called to attend investment banking pitches and step in when the firm’s chief executive, Lloyd C. Blankfein, is busy.

The rumor mill at Morgan Stanley is starting in anticipation of a board meeting this month. The directors are scheduled to meet in Japan, where a top shareholder is based, to discuss management changes at the top. The current chairman, Mr. Mack, is widely expected to retire this year. If he does, it will pave the way for Mr. Gorman to step into the role.

Morgan Stanley has a deep bench of executives from which Mr. Gorman can pick a president — when he eventually does. Mr. Taubman and Mr. Kelleher, who have been running institutional securities since late 2009, are natural choices.

The two top executives played crucial roles in guiding the company through the financial crisis. Mr. Taubman, 50, helped secure a lifeline from the Japanese bank Mitsubishi in 2008 shortly after Lehman Brothers collapsed, and he is now focused on investment banking. Mr. Kelleher, 54, was Morgan Stanley’s chief financial officer during the rocky period. He is now charged with turning around sales and trading, a crucial unit that has not fully recovered from the depths of the disaster.

Both have long histories at Morgan Stanley, too. Mr. Taubman, who has been with the firm for 29 years, is one of the largest individual shareholders, with almost 1.1 million shares, valued at roughly $25 million. Mr. Kelleher, an outgoing Irishman who has eight siblings, is an accountant by trade, having worked at Arthur Andersen before joining Morgan Stanley in 1989.

As can be common with co-heads of a division, their professional relationship is tense, according to colleagues who spoke on condition of anonymity because they were not authorized to talk publicly. It is sometimes uncomfortable in meetings with the two executives, since it is readily apparent they do not get along, the colleagues say. Through a spokeswoman for the firm, Mr. Taubman and Mr. Kelleher declined to comment for this article.

The relative newcomer of the group, Mr. Fleming, 48, has known Mr. Gorman since their days working together at Merrill Lynch. Hired in late 2009 to run the firm’s asset management division, he quickly improved the group’s profitability, in part by selling noncore assets and cutting costs. This year, Mr. Gorman added the retail brokerage unit to his duties. Expanding the unit’s lower-risk, fee-based business is a crucial part of the firm’s broader strategy.

There are also dark-horse candidates to consider, like the chief financial officer, Ruth Porat, 53, and Jim Rosenthal, 58, head of corporate strategy. Both are senior executives and members of Mr. Gorman’s inner circle. Mr. Gorman could also look outside to fill out his corporate suite.

As is usually the case in these races, it is too early to call. Of course, that has never stopped Wall Street from talking.

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Cost of Imports Rises, Despite Dip in Fuel Costs

The 0.2 percent increase in the import-price index, its eighth consecutive gain, followed a revised 2.1 percent climb in April, Labor Department figures released Friday showed. Economists projected a 0.7 percent decrease for last month, according to the median estimate in a Bloomberg News survey. Costs advanced 12.5 percent from May 2010, the biggest 12-month increase since September 2008.

Growing demand from economies in Asia and Latin America, paired with a weaker dollar, is pushing up the cost of goods from abroad for businesses. At the same time, Ben Bernanke, the chairman of the Federal Reserve, has reiterated that he expects elevated commodity costs to moderate.

“Higher prices given the weaker dollar are something that the economy is going to have deal with going forward,” said Russell T. Price, a senior economist at Ameriprise Financial in Detroit. “Retailers and food vendors are seeing their costs rise.”

Projections in the Bloomberg survey of 55 economists ranged from decreases of 2 percent to increases of 0.3 percent.

Compared with a year earlier, import prices rose 12.5 percent, the biggest 12-month gain since September 2008. They were forecast to increase 11.2 percent over the last 12 months.

The cost of imported petroleum decreased 0.4 percent from the prior month and was up 45 percent from a year earlier.

Excluding all fuels, import prices increased 0.4 percent from the prior month. They were up 4.4 percent from May 2010, matching the year-over-year gains in the prior two months as the largest since October 2008.

Costs of imported automobiles increased 0.5 percent from the prior month, Friday’s report showed. Consumer goods excluding vehicles showed a 0.3 percent gain, led by a 0.7 percent gain for cotton apparel.

Imported food prices fell 0.5 percent, the first decrease since June 2010.

The cost of goods from China rose 0.3 percent, while those from Japan were unchanged.

American export prices increased 0.2 percent after rising 0.9 percent the previous month. Prices of farm exports fell 2 percent, while those of nonfarm goods climbed 0.5 percent.

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