April 1, 2023

Auto Sales Showed Powerful Gains Across the Board in June

Sales of new models were up across the board, from families replacing older-model sport utility vehicles to businesses buying pickup trucks and fuel-conscious consumers snapping up small cars.

The broad demand in all segments of the market is another sign that the industry’s recovery is sustainable and could improve further in the second half of the year.

The auto companies said that overall sales in the United States grew 9.2 percent during June to 1.4 million vehicles, compared with about 1.28 million in the same month a year ago, according to the Autodata Corporation.

But the bigger surprise was the closely watched seasonally adjusted annual sales rate, which came close to 16 million vehicles during the month — the highest level recorded since 2007.

Analysts said the results were an indication of an industry hitting a sweet spot in its comeback, because of a combination of pent-up consumer demand, more available credit and a plethora of new products.

“The recent surge in consumer demand is real and not going anywhere,” said Jesse Toprak, an analyst with the auto research site TrueCar.com.

All three American automakers benefited from a growing need for new pickups by companies in the housing, construction and energy industries.

“Pickup sales in particular continue to grow nearly three times the pace of overall sales,” said Joseph Spak, an analyst with RBC Capital Markets.

Yet manufacturers also reported big gains in some smaller cars, compact S.U.V.’s and hybrid gas-electric models. The strength of so many models also reflected the financial health of most of the major automakers and their ability to invest in new products and technology.

General Motors, the nation’s largest auto company, said it sold about 265,000 vehicles in June, a 6.5 percent increase from a year ago and its best month since September 2008 — just before the financial crisis began.

Most of the gains came from G.M.’s biggest brand, Chevrolet. The company said its top-selling vehicle, the Silverado pickup, had a nearly 29 percent gain.

G.M. also reported sizable increases in its Cruze compact and the new Spark minicar. And the company continued to build sales in its Cadillac luxury brand, primarily with its ATS model.

“We’re in an economy that gets a little stronger each and every month,” said Kurt McNeil, G.M.’s vice president for United States sales operations.

Ford Motor, the second-biggest American manufacturer, turned in another stellar month in June. Ford said it sold about 235,000 new vehicles in June, a 13.4 percent increase from last year’s total.

Ford said combined sales of its small cars soared 39 percent during the month, with the Fiesta subcompact posting a 104 percent increase from a year ago.

Sales of the F-Series pickup, the top-selling vehicle in America, grew about 24 percent in June, its 23rd consecutive monthly sales increase.

Chrysler, the smallest of the Detroit car companies, said it sold more than 156,000 new vehicles in June, an 8.2 percent improvement over last year.

All of Chrysler’s brands gained sales, led by the Ram pickup with a 24 percent increase, and the Jeep Grand Cherokee, which improved by 33 percent.

“The fundamentals for continued industry gains remain intact,” said Reid Bigland, head of Chrysler’s United States sales.

The large Japanese automakers all did well in June, mostly because of sales of their bread-and-butter passenger cars and small sport utility vehicles.

Toyota said it sold 195,000 new vehicles during the month, a 9.8 percent increase from a year ago. Both the Camry sedan and the Prius line of hybrid cars had double-digit gains, and sales of the revamped RAV4 S.U.V. improved nearly 36 percent.

Honda had a similar month, reporting that sales increased 9.7 percent to about 137,000 vehicles.

The third major Japanese car company, Nissan, said it had its best June sales performance in the United States. It sold 104,000 new vehicles during the month, a 12.9 percent improvement over a year ago.

The rising sales industrywide did little to bolster the German automaker Volkswagen and the South Korean company Hyundai.

Both V.W. and Hyundai have enjoyed big gains in recent times as they have added new models to their lineups. But their growth appears to have stalled in the face of intense competition.

Hyundai said it sold 65,000 vehicles during June, a 1.9 percent increase from a year ago. And V.W. reported that sales, including its Audi luxury brand, fell 0.3 percent during the month.

One unlikely segment that made big gains in June was battery-powered cars, which had been lagging the overall market.

Nissan said that sales of its all-electric Leaf rose 315 percent during the month, and G.M. reported that sales of the Volt, its plug-in hybrid, climbed 53 percent. Those gains were heavily subsidized by sales incentives and lower sticker prices intended to spur demand.

Article source: http://www.nytimes.com/2013/07/03/business/a-stronger-economy-lifts-june-auto-sales.html?partner=rss&emc=rss

You’re the Boss Blog: This Week in Small Business: Firing the Founder


A weekly roundup of small-business developments.

What’s affecting me, my clients and other small-business owners this week.


Google Fiber spawns a start-up renaissance in Kansas City. Floyd Norris explains how a brilliant tax-avoidance strategy for S corporations went terribly wrong. And Scott Horsley believes rock ‘n’ roll explains the economy.

Economy: Still Grumpy

Builder confidence reaches its highest level since 2006, and the Architecture Billings Index rebounds strongly. Housing starts were up 6.8 percent in May, but Steven Hansen’s analysis paints a slightly different picture. Manufacturing conditions in the New York (pdf) and Philadelphia regions improved, household financial health is looking up, and people are spending more on weddings. Dun Bradstreet advises that: “While the outlook is brighter, it’s important to understand this recovery remains uneven depending on geography, vertical and individual company health.” Key measures also show low and falling inflation, and a prominent economist is now predicting growth to be 3 to 3.5 percent. But the number of Standard Poor’s 500 companies that have issued earnings guidance below consensus analyst estimates is running higher than normal. And Harvard’s Niall Ferguson is still grumpy.

The Fed: Stepping Off the Gas

Ben S. Bernanke prepares to step off the gas, and Wall Street throws a tantrum. Justin Wolfers helps explain what the Federal Reserve is saying. Eduardo Porter makes the case for a rise in inflation, and Matthew Yglesias believes that with inflation low, the Fed should stay far away from tighter money. This chart shows how bad the Fed is at predicting the future, and these three charts show that the recent stock market rally is not all about the Fed.

Management: Firing the Founder

Mike Martel explains why you should not “eat the elephant” one bite at a time: “The real problem with taking it step by step is that most people lose interest and end up quitting.” This is how an old barn and a cider press became a thriving small business and a local institution. Rafi Mohammed explains how Microsoft “blew it” on the price of Xbox One. Here are 10 books every entrepreneur should read. Michael Dillon thinks franchisees should take it upon themselves to make changes. The founder of Men’s Wearhouse is fired (it’s tricky when the founder is also the face of the brand). Here are seven reasons you need a business plan. Maria Konnikova demonstrates how caffeine can cramp your creativity, and another report finds that dim lighting sparks it. Were these small businesses misled by a credit service’s sales pitch?

Small Business Week: It’s Getting Harder

President Obama proclaimed last week National Small Business Week. The Latino Coalition, Citizens Bank, the National Association of Small Business Professionals, Chrysler, and Google all sent their regards. The Small Business Administration celebrated its champions in Illinois, and Ernst Young used the occasion to name its American and worldwide Entrepreneurs of the Year. Brock Blake thinks a Micro Business Week might be more appropriate. A survey from Capital One Bank says small-business conditions are improving, and another from Citibank reveals a three-year high in how owners view business conditions. However, almost half of small-business owners say access to credit is still a problem. A Constant Contact survey finds that the majority of small businesses say it’s harder to run a business today than five years ago, and this infographic explains how running a start-up has changed. But have faith: a UPS Store survey finds that 48 percent of Americans dream of starting a business, while 71 percent of small-business owners say they would start their businesses all over again.

People: Reinventing H.R.

Here’s how Google is reinventing human resources — but the company acknowledges its infamous brainteasers were completely useless for hiring, and a former Google and Microsoft engineer explains why he would have hired Edward Snowden: “elitist, arrogant rebels often make the best employees.” A 30-year-old explains why he took an internship. There’s much to be learned from the best employers for baby boomers. Bob Phibbs has suggestions for empowering employees. This is how eight retail workers make the most of their free time. Data show that people joining the work force today are less educated than those leaving it. Two Dunkin’ Donuts employees get rave reviews for handling a racist rant. ADP says the number of franchise jobs grew by 19,160 in May, and surprise: an analysis says that the more applications you fill out, the better chance you have of getting a job. Shawn Stefani hits a hole-in-one at Merion.

Entrepreneurs: Learn to Code

Steve Mariotti interviews Maria Jimenez, a top youth entrepreneurship educator. Kylie Toh believes all entrepreneurs should learn to code because it enables you to be self-sufficient. The House Committee on Small Business highlights a few “made in the U.S.A.” stories of small manufacturers. Entrepreneurs are impressive, but not as impressive as these new astronauts. A social media app from Deluxe uncovers the secret identities of America’s small-business owners.

Social Media: Harder Than You Think

Here are a few creative ways to use Pinterest for your business. Barbara Findlay Schenck has nine tips to power up your social media. Chris Marentis warns that effective social media marketing is more difficult than most people think. Facebook passes one million advertisers and brings video to Instagram. Tom Andel shares stories of manufacturers succeeding by using social media. A satirical Taylor Swift Twitter feed gains 80,000 followers in six days. This is how a two-star Amazon review makes thousands of sales. This infographic shows why going viral online is big business. A webinar will help you measure and improve your internal e-mail.

Sales and Marketing: Dueling E-Mail Services

Giancarlo Massaro shares advice for how to get leads and sales. Here are 34 research reports on content marketing. SendGrid picks an e-mail marketing fight with MailChimp. These were the top 10 ideas from marketing and advertising over the last 12 months. This is how to offer smarter customer support on the go. Scott Anthony explains what 10-foot noodles have to do with competitive advantage.

Around the Country: Free Power

In New York, a restaurant abolishes tips, residents get free power-charging stations, and apartment dwellers may have to start collecting food scraps for composting. Delta and JetBlue lead airline service rankings (and this hedgehog leads an adventurous life). The Congressional Budget Office estimates that the Senate’s immigration bill would reduce the deficit by $197 billion over 10 years. An Entrepreneur Center opens near Nashville.

Around the World: Giant Balloons

Joe Weisenthal thinks it’s hard to look at these photos from Indonesia and Brazil “and not worry about a much bigger emerging market blow-up.” British students get fooled by a “Star Wars” prank. Diana Ransom explains what it takes to start up in Turkey after the recent protests. China’s factory activity hits a nine-month low, job prospects for China’s grads are getting bleaker and a credit bureau says China’s credit bubble is unprecedented in modern world history (but that’s not deterring General Motors from investing $11 billion there). Google’s plans to beam the Internet from giant balloons sent to the stratosphere could help small businesses in rural parts of Asia.

Ideas: Better Air

A Zipcar-style service for airplanes is introduced. A teenage scientist designs a sustainable and cost-effective biofilter to remove chemical pollutants from indoor air streams. Here’s how to add the integers from 1 to N quickly.

Technology: Bug Bounties

General Electric is hiring thousands of engineers to build an “industrial Web.” Here are three cloud-based surveillance options that will help keep an eye on your business. A survey finds many small businesses are in the dark about the potential impact of a data breach. With “bug bounties,” Microsoft extends an olive branch to the hacker community. Two of the biggest names in 3-D printing merge. Erica Ogg reports that everybody loves the new MacBook Air’s battery. A search engine alternative to Google hits 3.1 million queries. Google, Office 365 and Dropbox lead in cloud growth.

Tweet of the Week

@danmartell – Free advice is often overpriced.

The Week’s Best Quotes

Margie Warrell says you should take the risk because the odds are better than you think: “We are neurologically wired to exaggerate how bad things could be if our plans didn’t work out, and we fail to appreciate our ability to intervene to ward off further impact.”

Andrew Dowling explains why parents make better entrepreneurs: “Anyone launching themselves into a new business quickly finds they’re dealing with lots of things which are unfamiliar to them. From the moment you discover you’re going to become a parent, your trajectory is remarkably similar. Your life suddenly changes in a big way forever. You find yourself dealing with concepts and terminology you’ve never had an interest in before. And once your kids are born, you’d better get used to dealing with change, because that’s what your life is going to consist of for the next couple of decades.”

This Week’s Question: Do you think it’s harder to run a business today than it was five years ago?

Gene Marks owns the Marks Group, a Bala Cynwyd, Pa., consulting firm that helps clients with customer relationship management. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/06/24/this-week-in-small-business-firing-the-founder/?partner=rss&emc=rss

Delta Views New Terminal as Symbol of Modern Age of Air Travel

Rather than compete on the lowest fares — a race to the bottom over the last decade that just weakened them — the airlines are now seeking to lure passengers with better amenities and service. That new strategy points to the improving financial health of the industry, a turnaround that can be traced to both the string of mega-mergers among the big carriers and the industry’s single-minded emphasis on cutting excess capacity since the depths of the recession.

Delta, the first of the major carriers to go into a merger — with Northwest in 2008 — is also in the strongest position to reshape its goals. And the $1.2 billion investment in a new terminal in New York, which will replace two 50-year-old grim, 50-year-old and woefully inadequate terminals at the end of the month, is the latest and most visible sign of its new approach.

The airline has already been flexing its muscles. In the last two years, it has focused on improving its balance sheet as well as its operations, expanded its global partnerships, invested in airlines like Virgin Atlantic and even bought an oil refinery. On Wednesday, it said it would reward shareholders with $1 billion in quarterly dividends and share repurchases over the next three years.

“The airline industry has been broken for decades,” Edward H. Bastian, Delta’s president, said in a recent interview. “It was fragmented. People worried if the airlines were going to make it or if they were going to be bankrupt. Today, everybody has scale, customers have choices and people have seen that service matters.”

In this new world of fewer airlines and less capacity, airline executives hope to achieve a level of stability that has eluded them since the federal government deregulated air travel in 1978. While Delta’s merger is complete, more work remains on United Airlines’ merger with Continental Airlines and Southwest Airlines’ tie-up with AirTran. American Airlines and US Airways, which announced in February that they would merge, are just starting the process. But most have begun putting Wi-Fi and individual TVs aboard their planes, installing more comfortable seats for business passengers and investing in mobile technology that gives passengers more control over their travel plans.

Not all the changes have been welcomed by travelers. Airlines charge more fees than ever, requiring passengers to pay for services that were once free, including checking bags or booking seats with more legroom. These fees are also rising and account for a bigger share of the airlines’ revenues. In the latest of these, United increased its ticket-change fee to $200 from $150, a move that was matched by most airlines this month.

Airline executives argue that the industry needs to be profitable for service to improve. Fares have risen in recent years, but they remain lower than they were in the 1990s when adjusted for inflation.

Delta, which left its 19-month bankruptcy in 2007, has also been financially conservative, reducing capital expenses and using cash to cut debt. The carrier posted a net profit of $1.6 billion last year, up 30 percent from the previous year, giving it four years of rising profits despite high fuel costs.

The company said on Wednesday that it would start to pay a quarterly dividend of 6 cents a share and buy back $500 million of its shares in the next three years.

The airline also said it would continue to reduce its debt in the next three years, to $7 billion from $17 billion in 2009. In the next five years, it also plans to spend $2 billion to $2.5 billion a year on its fleet, airports and technology.

Paying a dividend is rare in an industry with losses of $60 billion in the last decade, although there have been exceptions. Southwest Airlines now pays a quarterly dividend of one penny a share, while Alaska Airlines and Allegiant Air buy back their own shares.

Delta’s shares rose more than 3 percent to $18.66 a share on Wednesday. They have gained 70 percent in the last 12 months, outpacing United and US Airways but trailing Southwest.

Hunter Keay, an airline analyst with Wolfe Trahan, said investors were looking at the airline industry with more interest since airlines merged and cut their combined capacity substantially.

“Delta is clearly establishing itself in a leadership role in terms of cash generation, returning cash to shareholders and profit margins,” Mr. Keay said.

Article source: http://www.nytimes.com/2013/05/10/business/delta-views-new-terminal-as-symbol-of-modern-age-of-air-travel.html?partner=rss&emc=rss

Europe’s Debt Problems Stir Wall Street Worry

Renewed worries about Europe’s debt crisis weighed on the stock market on Wednesday and held the Standard Poor’s 500-stock index back from reaching a nominal high.

Investors are watching to see if Cyprus can shore up its banking system. They are also concerned about Italy, where political parties are struggling to form a new government.

The Standard Poor’s 500-stock index slipped 0.92 point to 1,562.85, less than three points short of its high set in October 2007.

The Dow Jones industrial average fell 33.49 points to close at 14,526.16, a loss of 0.2 percent. It had dropped as much as 120 points in morning trading, then spent the rest of the day climbing back.

The Nasdaq composite index edged up 4.04 points, or 0.1 percent, to 3,256.52.

Bad news from Europe and good news from the United States have tossed the stock market around over the last week. Stocks slumped on Monday as Cyprus scrambled to rescue its banks. They rallied on Tuesday on stronger home prices and an increase in factory orders.

“There are still plenty of worries about the banking system” in Europe, said J. J. Kinahan, chief derivatives strategist at TD Ameritrade. “But the U.S. really is on a nice little roll.”

Cyprus is preparing to reopen its banks on Thursday after a nearly two-week shutdown. An international bailout requires people with large bank balances to help pay for the rescue.

In Italy, a leading political party failed in its attempt to form a new government. The stalemate has raised fears that the country will be unable to manage its deep debts. Italy has one of the largest economies of the 17 countries that use the euro.

Worries also hit Europe’s bond markets especially hard. Borrowing rates for Italy and Spain shot higher, a sign of weaker confidence in their financial health. Rates for Germany and France, two of Europe’s more stable countries, sank as traders shifted money into their bonds.

Four of the 10 industry groups in the S. P. 500 index edged higher. Utilities and health care, which investors tend to buy when they want to play it safe, made the biggest gains.

Health care is the best-performing industry in the S. P. this year, up 14 percent. That compares with a 10 percent rise for the S. P. 500.

Kim Forrest, a senior equity analyst at Fort Pitt Capital, said it appeared that many investors were treating certain stocks as if they were bonds.

“There’s a recognition that bonds are overpriced, so people are moving into health care and utilities that pay a nice dividend,” she said. “Those are pretty boring investments, and by that I mean their prices don’t move a lot.”

News about Italy also helped drive traders into the safety of United States government bonds, pushing benchmark yields to their lowest level this month. The price of the 10-year Treasury note rose 19/32, to 101 13/32, while its yield dropped to 1.85 percent, from 1.91 percent late Tuesday.

Among the stocks on the move, Cliffs Natural Resources, an iron ore mining company, plunged 14 percent, the biggest loss in the S. P. 500. Analysts warned that falling iron ore prices would most likely sink the company’s stock. Cliffs fell $2.97 to $18.46.

Science Applications International surged 5 percent after the security and communications technology provider reported a fourth-quarter profit that was better than analysts were expecting. The company also announced a special dividend of $1 a share, and its stock gained 50 cents, to $13.32.

Article source: http://www.nytimes.com/2013/03/28/business/daily-stock-market-activity.html?partner=rss&emc=rss

Junk Bonds Grow More Popular and Turn Even Riskier

Companies with junk credit ratings have been increasingly issuing bonds for riskier purposes that could hinder their ability to pay back bondholders.

Demand for junk bonds has touched record levels this year as investors reach for their rich yields, a stark contrast to the meager returns available on Treasury securities and money market accounts. But the voracious demand has allowed companies to easily raise money for things that may actually end up weakening them.

For most of this year, the bond issuers were at the higher end of the junk credit-rating spectrum, and were using the money to refinance old debt at lower interest rates, thereby solidifying their economic footing. That made many analysts feel more comfortable about the flood of new junk bonds.

But in recent weeks, there has been a decline in the average credit rating of the companies issuing junk bonds, to C ratings nearer the bottom of the junk rankings from the BB ratings at the top. And companies have been using more of the proceeds for the sorts of risky projects that were common before the financial crisis and in the go-go days of the 1980s — paying dividends to private equity owners and financing mergers and leveraged buyouts.

Jo-Ann Stores and Petco, for instance, both with junk ratings of CCC, sold a combined $875 million of bonds this month, with some of the money set to quickly leave the companies through dividend payments to their private equity owners. Many analysts say that the practice can hurt the financial health of the companies by increasing their regular interest payments to bondholders without strengthening the underlying business.

“Companies that were having difficulty coming to the market, or who want to be more aggressive, have now gotten the opportunity to do so,” said Kingman Penniman, the founder of a junk bond research firm. “Clearly it’s a disturbing trend.”

The shift is particularly worrying to Mr. Penniman and others because so much of the money going into these bonds is coming from individual investors who may be unaware of the declining credit quality.

Over the first three quarters of the year, retail and institutional investors piled into junk bonds with equal alacrity. The record for junk bonds issued in the United States in a single year was broken on Oct. 18, and now stands at $293 billion, compared with $249 billion in all of 2011, according to Dealogic. But in recent weeks, as the bonds have grown risker, figures from the data company EPFR show that wiser institutional investors have begun to shift money out of junk bonds, as individual investors have continued to pour in. Retail investors added about $2.1 billion to their portfolios in the first three weeks of October, compared with a net outflow of $256 million from institutional investors.

The flows into junk bond mutual funds are pushing the managers of these funds to buy up whatever junk bonds are being issued — even if they worry that the bonds could eventually run into trouble.

“The inflows are forcing people to look at these things, even though they might want to hold their nose,” said Mark Hudoff, a portfolio manager at Hotchkis Wiley, a mutual fund management company.

The most commonly cited reason for the recent surge of risky new bonds is the monetary stimulus program announced by the Federal Reserve in early September. By buying up safer mortgage-backed bonds, the Fed is trying to push investors to take on more risk. This would generally lead to big purchases of stock, but after the financial crisis, stocks still carry a stigma for many investors.

Because bonds, whether investment-grade or junk, do not lose all their value when a company goes bankrupt, they carry a greater aura of safety than a company’s stock, which can be wiped out in a Chapter 11 filing. This year, retail investors have put about $22 billion into junk bond funds, compared with the $8.3 billion that went into these funds in 2011 from all sources, according to EPFR.

Because of the minuscule interest rates being offered on other types of bonds, some analysts say junk bonds still represent a good deal. Even as the interest rates on junk bonds have fallen to their lowest levels ever, the yields on Treasury bonds have fallen even more quickly. The total return on high-yield bonds this year has been 12.8 percent, compared with 9.6 percent on investment-grade bonds and 14.1 percent on the Standard Poor’s 500-stock index, according to the Royal Bank of Scotland.

Article source: http://www.nytimes.com/2012/10/29/business/junk-bonds-are-growing-more-popular-and-turning-even-riskier.html?partner=rss&emc=rss

DealBook: Santander’s Mexican Arm Said to Price Its I.P.O. at $12.18

A branch of Banco Santander in Mexico City in 2010.Susana Gonzalez/Bloomberg NewsA branch of Banco Santander in Mexico City in 2010.

The Mexican arm of Banco Santander priced the American portion of its initial public offering at $12.18 on Tuesday, within its expected price range, according to a person briefed on the matter who declined to be identified.

The unit, Grupo Financiero Santander México, sold additional shares on the Mexican Stock Exchange at 31.25 pesos each, at the middle of that offering’s expected range. The lender hoped to raise up to $4.2 billion through the dual listing, one of the biggest stock sales ever by a Mexican company.

When it begins trading on the New York Stock Exchange on Wednesday under the ticker symbol BSMX, Santander México will become the only Mexican lender listed on the Big Board. The offering was largely seen as a way to tap into Mexico’s growth prospects as investors hunt for ways to gain greater exposure to international markets.

The offering for the unit was also seen as a test for investors on a number of fronts. Its size, trailing only Facebook’s $18 billion stock sale for the year, was seen as potentially daunting at a time when the I.P.O. market has stagnated. The number of initial offerings priced this year has slid nearly 50 percent from 2011, according to data from Renaissance Capital.

And Santander México will still be closely tied to its parent, one of Spain’s biggest banks and a closely watched proxy of that country’s financial health. Banco Santander is expected to control about 75 percent of the company, raising the prospect that it may flood the market with additional shares if it needs to raise more capital.

Neither its size nor its Spanish parent appeared to be a major hurdle for investors. Santander México’s offering was about two times oversubscribed, according to Scott Sweet, the senior managing partner of IPO Boutique.

“Originally, I was concerned about the size,” Mr. Sweet said. “But as the road show took place, the conversion rates on orders was excellent.”

Investors appeared to be enticed by Santander México’s financial performance, which has outstripped that of the parent company. Its profit for the first half of the year rose 14.4 percent, to 556 million euros, as it benefited from improvements in the Mexican economy.

“There are very few quality banks that hit the I.P.O. front, whether they be in the U.S. or abroad,” Mr. Sweet said.

Profit at its parent, Santander, slid 51 percent in the first half from the year-ago period, to 1.7 billion euros, as it continued to grapple with Spain’s depressed economy.

Underwriters for Santander México sold about 20 percent of the bank’s shares in Mexico; the rest were sold internationally.

Santander has already taken its Brazilian arm public, raising about $7.5 billion, and said that it planned to hold I.P.O.’s for all of its biggest foreign subsidiaries within the next five years.

The Mexican stock sale is expected to bolster Santander’s capital ratios by about half of a percentage point.

The offering was led by Santander, UBS, Deutsche Bank and Bank of America Merrill Lynch.

Article source: http://dealbook.nytimes.com/2012/09/25/santanders-mexican-arm-said-to-price-its-i-p-o-at-12-18/?partner=rss&emc=rss

U.S. Stocks Reverse Back, Up 4%, on Economic Data

Stocks surged on Thursday, with the broader market rising more than 4 percent. It was the fourth day this week of major swings in stocks, following a drop on Monday, a sharp rise on Tuesday and steep declines on Wednesday.

Stocks have zigzagged to an extent that has not been seen for years. Thursday’s close was the first time that the S. P. 500 had a change of at least 4 percent for four straight trading sessions since 2008. It closed up 51.88 points, or 4.63 percent, at 1,172.64.

It was also the first time that the Dow Jones industrial average closed with a net change of 400 points or more for four straight sessions. It closed 423.37 points higher, or 3.9 percent, at 11,143.31.

Apart from calculating the records, analysts sought explanations. Some noted that the declines had reached such a point this week that stocks were buoyed by bargain-hunting investors. Others pointed to scraps of positive economic data. And some said the upturn in the market could have been caused by an easing of concerns about the financial health of some of Europe’s banks and what their problems might mean for banks in the United States.

Brad Sorensen, director of market and sector analysis at the Schwab Center for Financial Research, said those concerns appeared to have waned a bit.

“I think that has taken a little of that fear off the table,” he said.

The financial markets this week have been held hostage to worries about the global economy, Europe’s troubles and the implications of a ratings agency’s unprecedented downgrade of the United States’ credit rating. Benchmark United States bond yields have hit lows, while gold has swung above $1,800. On Thursday, the VIX index, also known as the “fear” index because it represents expectations of volatility, was down to 39 from 48 at the beginning of the week.

The market is “just a yo-yo,” said Myles Zyblock, chief institutional strategist and managing director for capital markets research at RBC Capital Markets. “I think the primary structure is still in place, and that is a structure of concern.”

“People are trying to bottom-pick today, and it might be the bottom,” said Mr. Zyblock. “I would like to see the collective message start to stabilize to give me confidence there is a hardened floor underneath this market.”

Eric Thorne, an investment advisor at Bryn Mawr Trust, called it a “shoot first, ask questions later” market.

“It is a very, very tense, emotional and momentum-driven market right now,” he said.

“Yes, the economy is slowing, but it is not anywhere near as bad as investors are acting right now,” he added. “Emotional selling that happens in periods like this is not pinpoint specific.”

Even as new economic data was released on Thursday, showing, for example, that weekly jobless claims were lower at 395,000, investors were hesitant to read too much into one piece of data in the bigger economic picture.

Some corporate results bolstered the broader market, like those of Cisco Systems. Its shares were up nearly 16 percent, helping to lift the technology sector.

The yield on the United States 10-year Treasury was at 2.33 percent, compared with 2.1 percent on Wednesday. A $16 billion auction for 30-year Treasury bonds on Thursday showed the first cracks in investor demand since Standard Poor’s downgraded the nation’s debt earlier this month. Foreign central banks, asset managers and other investors had been flocking to the safety of Treasury bonds amid the turbulent markets of the last few weeks.

Thursday’s auction suggested the buying binge was over. Yields on 30-year bonds were 3.75 percent, about 0.13 percentage points higher than the preauction estimate of 3.62 percent. American money managers sharply cut back their purchases of 30-year bonds amid concerns about the economy and the fallout from the European debt crisis, according to market participants.

Demand was stronger for the two previous auctions of shorter-dated government securities. Earlier in the week, the government sold $32 billion of three-year notes and $24 billion of 10-year securities at record low yields.

The announcement that the leaders of Germany and France would meet might have helped stocks strengthen, said Paul G. Christopher, chief international investment strategist for Wells Fargo Advisors.

“The markets need to have reassurance from governments that they are going to take care of their budget deficits and going to backstop their banks,” he said.

European indexes had been mixed, but rallied after the market opened higher in the United States.

The FTSE 100 rose 3.1 percent. The CAC 40 in Paris closed 2.89 percent higher, and the Dax in Germany gained 3.28 percent. Société Générale shares rose 3.7 percent after earlier declines. On Tuesday the stock gave up almost 15 percent of its value amid worries about the debt and economic woes of Europe and the United States.

Frédéric Oudéa, the bank’s chief executive, told Le Figaro in an interview published Thursday that the bank had “suffered a series of attacks in the market,” on the basis of rumors about its financial condition that he denied “most vigorously.”

Société Générale called Thursday on French market regulators to “investigate the origin of these rumors that have gravely impacted the interest of its shareholders.”

Christian Noyer, the governor of the Bank of France and a member of the European Central Bank’s governing council, addressed the market concerns in a statement, saying the first-half results of French banks had “confirmed their solidity in a difficult economic environment, thanks to rigorous risk management and a universal banking model based on diversified businesses.”

In Asia, the Hang Seng index in Hong Kong fell almost 1 percent, while the Nikkei 225 in Japan closed down 0.6 percent.

Gold futures briefly topped $1,817.60 an ounce, its highest ever in nominal terms, before receding to about $1,738.60. Adjusted for inflation, the record gold price would be closer to $2,400 an ounce, according to Capital Economics.

Crude oil futures in the United States were up 2 percent at $84.89 a barrel.

Eric Dash contributed reporting.

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Stocks & Bonds: Shares Suffer Again in a Blow to Market Confidence

After the rebound in the markets a day earlier when the Federal Reserve promised to keep interest rates near zero for two years, investors appeared to pay closer attention to the Fed’s grim assessment of the prospects for the economic recovery and jobs growth.

Investors fled any form of risk and poured into safe-haven investments like Treasury securities and gold, resuming the trend of the last few weeks. Confidence was shaken in the financial health of some of Europe’s banks and what their problems might mean for banks in the United States. Bank stocks led the sell-off in the United States, shedding nearly 7 percent.

Most European markets have entered bear territory, dropping more than 20 percent from recent highs, and the S. P. 500-stock index is not far behind, lopping off 18 percent since its recent April 29 peak.

Meanwhile, signs of stress are emerging in the short-term financing markets in Europe, where banks borrow billions of dollars everyday from one another and other lenders to finance loans and investments. 

Although borrowing costs for banks in the United States and Britain have  risen modestly, those for European banks that lend dollars to one another have doubled in the last 10 days to their highest level in the last two years. Still, borrowing costs are roughly one-fourth of where they were during the peak of the financial crisis.

On Wednesday, concerns about Europe’s debt crisis swirled across trading floors in New York. For yet another day, the stock market swung back and forth with ranges of hundreds of points. Stocks tried a late afternoon rally, only to plunge anew toward the close.

They finished steeply lower on Wednesday as each of the three main indexes dropped more than 4 percent, generally wiping out the gains of the previous day.

The last time there were three consecutive days of 4 percent moves in the S. P. was in October 2007.

The Standard Poor’s 500-stock index lost 4.4 percent to close at 1,120.76. The Dow Jones industrial average ended down 519.83 points, or 4.6 percent, at 10,719.94.

Few are risking a prediction that the market has hit a bottom. It will take a strong dose of rosy economic reports to start to pull stocks up. But instead of being buoyed by positive sentiments, investors are increasingly worried that governments in the United States and in Europe are unable to solve economic problems that may now be getting out of hand.

The fear is that policy makers have few weapons left to reignite growth now that United States interest rates have been pushed close to zero and any fiscal stimulus appears to be off the table in Washington.

“The market psychology is such that investors no longer seem to know who or what to root for, and all that they do know is, according to the Fed, that rates will remain low until the middle of 2013,” said Kevin H. Giddis, the executive managing director and president for fixed-income capital markets at Morgan Keegan Company.

As Europe’s debt crisis has spread into nations at the heart of the euro zone like Italy and France, it has added a new level of anxiety to markets. There are concerns that France could be overwhelmed if it is called upon to participate in any support for heavily indebted nations like Spain or Italy, and also bail out some of its own banks that hold large amounts of government debt from those shaky countries.

Some French bank stocks fell sharply after there were signs of some stress in bank funding rates in Europe.

Borrowing costs for European banks that lend to one another have doubled to 60 basis points since the end of July, although that is still well below the nearly 200-basis-point level hit at the height of the financial crisis.

Nevertheless, banks were the hardest hit sector in the United States stock market over fears of how vulnerable they are to the troubles in Europe.

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I.E.A. Says World Will Increasingly Turn to Americas for Oil

The Paris-based organization estimated that the world would increase total oil production every year between 2010 and 2016 by an average 1.1 million barrels a day — roughly 100,000 barrels short of the expected increase in global demand over the period.

“After the sharp increase in oil demand in the second part of 2010 as the global economy recovered more quickly than anticipated from the recession, we now foresee higher mid-decade demand,” the report said.

Tightening oil markets along with spreading unrest in the Middle East have driven oil prices 25 percent higher in the last year. But on Wednesday, concerns about a weakening economy sent prices sharply lower. The benchmark light sweet crude oil in the United States fell $4.56 a barrel to close at $94.81. If a major global downturn occurs and begins a more lasting decline in energy demand and prices, as happened in late 2008 and 2009, it could throw off forecasts.

The report warned that high oil prices “are weighing down on an already-fragile macroeconomic and financial situation” in the developed countries, while burdening the financial health of developing countries and pushing up inflation.

The energy agency predicts that 40 percent of demand growth over the next few years will come from China, with most of the rest coming from elsewhere in Asia and the Middle East. The agency expects Europe and the United States to have generally flat energy demand, in large part because their economies are expected to grow less robustly than those in the developing world, while their vehicles should become increasingly efficient.

Saudi Arabia and a handful of other mostly Middle Eastern countries with excess production capacity will have to supply more oil, but global markets will need to rely increasingly on producers outside the Organization of the Petroleum Exporting Countries. With production declining in Mexico and the North Sea, the energy agency suggested that Canada, Brazil, the United States and Colombia would need to take up the slack.

The report projected that by 2016, Canada, already the most important source for United States oil imports, would produce 1.3 million additional barrels a day as it expanded production from the oil sands in Alberta. Brazil is projected to increase production by a million barrels a day because of major new offshore fields in deep waters.

The United States, despite the slowdown in oil drilling in the Gulf of Mexico after the Deepwater Horizon disaster last year and declining production in Alaska, will produce an additional 500,000 barrels a day largely from expanded drilling in oil shale fields in North Dakota and Texas, the agency said.

And Colombia is expected to increase production by 300,000 barrels a day, as a guerrilla insurgency’s decline encourages international oil companies to return.

The energy agency cautioned that its optimistic outlook for Canada depended partly on the United States government’s approval of the Keystone XL pipeline, which would take more than 500,000 barrels a day of partly refined Canadian crude from the oil sands to Texas and Louisiana refineries for eventual distribution to the Northeast. Canada will most likely sell the excess crude to China if the pipeline is not approved, but the switch could produce years of delays.

Environmentalists oppose the pipeline because they argue that production of oil from oil sands, which requires the burning of large amounts of natural gas, emits more greenhouse gases than production of most oil products used in the United States.

OPEC will remain a vital source of world oil, the report said, noting that Iraq in particular held the potential to significantly increase exports over the next several years.

In a separate report released last week, BP noted that world oil production rose 1.8 million barrels a day last year, with OPEC and non-OPEC producers each roughly responsible for half the growth.

In a projection for 2030 made earlier in the year, BP said OPEC would be “primarily” responsible for meeting growing demand for liquid fuels, although it mentioned Canadian oil sands, deepwater drilling off Brazil, and the countries that made up the former Soviet Union as promising sources of future supplies.

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