Monday Business Edition

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Monday Business Edition is an Open Thread

1 Strauss-Kahn casts shadow over EU debt crisis talks

by Roddy Thomson, AFP

Mon May 16, 3:41 am ET

BRUSSELS (AFP) – The storm over the IMF chief’s sex assault case threw a giant cloud Monday over a European finance ministers’ meeting aimed at easing the euro debt crisis and considering a new bail-out for Greece.

Domininque Strauss-Kahn, who has played a key role in striving to tame Europe’s debt crisis, had been due at the talks that start from 1300 GMT.

Replaced by his number two John Lipsky as acting International Monetary Fund chief as he battles to clear his name, Strauss-Kahn’s arrest — just as he was leaving to meet German Chancellor Angela Merkel — saw the euro wobble badly before recovering in Asian trade.

AFP

2 IMF chief charged with sex assault, rape attempt

by Paola Messana and Stephane Jourdain, AFP

Sun May 15, 4:08 pm ET

NEW YORK (AFP) – IMF chief Dominique Strauss-Kahn was charged Sunday with attempting to rape a New York chambermaid, unleashing a scandal which could bury his long-held ambitions to be elected the president of France.

The bombshell news of the veteran French politician’s arrest left the International Monetary Fund reeling, coming ahead of critical talks grappling with the painful fallout of the debt crisis sweeping the euro zone.

Strauss-Kahn, 62, was expected to be arraigned later Sunday by a New York judge, after being yanked off an Air France flight on Saturday minutes before take-off and grilled through the night in a Harlem police cell.

3 IMF chief vows to fight sex assault charges

by Sebastian Smith and Stephane Jourdain, AFP

Mon May 16, 2:06 am ET

NEW YORK (AFP) – IMF chief Dominique Strauss-Kahn was scheduled to appear before a judge Monday vowing to fight charges of sexually assaulting a hotel chambermaid — a scandal that is likely to bury his dreams of becoming the next French president.

The veteran French politician denies allegations of attempting to rape the maid in a luxury hotel, lawyer Benjamin Brafman told reporters.

“He intends to vigorously defend these charges and denies any wrongdoing,” Brafman said outside the courthouse where the IMF chief will appear on Monday.

4 Obama warns on debt ceiling risk

AFP

Sun May 15, 10:11 pm ET

WASHINGTON (AFP) – President Barack Obama warned the United States risked plunging back into recession if a standoff over the US debt ceiling lingers, as a top Republican said he was ready to cut a deal.

The United States is due to hit the $14.29-trillion ceiling set by Congress on Monday, creating a cash crunch that puts the country’s credit standing at risk as politicians battle over its long-term deficit.

“If investors around the world thought that the full faith and credit of the United States was not being backed up, if they thought that we might renege on our IOUs, it could unravel the entire financial system,” Obama warned at a CBS town hall meeting last week that was broadcast on Sunday.

5 Money-hungry US to hit borrowing cap

by Paul Handley, AFP

Sun May 15, 12:11 pm ET

WASHINGTON (AFP) – The debt-laden US government’s credit card will hit its limit Monday, creating a cash crunch that puts the country’s credit standing at risk as politicians battle over its long-term deficit.

US President Barack Obama warned if no deal is brokered on raising the $14.29 trillion debt ceiling set by Congress then the United States risked plunging back into recession.

“If investors around the world thought that the full faith and credit of the United States was not being backed up, if they thought that we might renege on our IOUs, it could unravel the entire financial system,” Obama warned at a CBS town hall meeting broadcast on Sunday.

6 Europe’s trade unions set to meet in Athens

AFP

Sun May 15, 3:29 pm ET

ATHENS (AFP) – European trade unions gather Monday for their confederation’s 12th congress, held this year in Athens because of its economic crisis with unionists saying austerity measures are not working.

“We selected Athens as the venue for our 12th Congress because it is the eye of the storm which threatens Europe and the euro,” confederation secretary general John Monks, a British national, told journalists Sunday.

“Greece was the cradle of Western civilisation, now it’s the cradle of Europe’s economic crisis,” Monks, 66, added.

7 Finance ministers tackle Greek bailout No. 2

by Roddy Thomson, AFP

Sat May 14, 2:50 am ET

BRUSSELS (AFP) – European finance ministers will huddle Monday for discussions certain to centre on a second Greek bailout, while anointing an Italian to head the pivotal European Central Bank.

The 17-nation eurozone and the other 10 European Union states will hold a series of meetings alongside International Monetary Fund managing director Dominique Strauss-Kahn during which a 78-billion-euro ($110 billion) rescue package for Portugal — like Greece mired in debt — is also expected to be voted through.

The European ministers are also set to recommend Italian central bank governor Mario Draghi as the successor to France’s Jean-Claude Trichet as president of the European Central Bank.

8 Euro growth eclipses rivals despite north-south divergences

by Roddy Thomson, AFP

Fri May 13, 12:44 pm ET

BRUSSELS (AFP) – Eurozone growth topped US and pre-crisis levels in powerhouse Germany, EU figures showed Friday, but divergences between accelerating northern output and the debt-laden southern nations increased.

Economic expansion across the 17-country currency bloc almost trebled to 0.8 percent in the first quarter of 2011, from 0.3 percent in the last three months of 2010 — compared to US growth of 0.4 percent quarter-on-quarter.

However, Italy, the eurozone’s third-largest economy, fell in with Mediterranean laggards, growing by just 0.1 percent in the first quarter, as the outlook for crisis-hit Greece worsened amid talks on a second Athens bailout due in Brussels on Monday.

Reuters

9 Canada banks’ TMX bid tops LSE

By Pav Jordan, Reuters

1 hr 35 mins ago

TORONTO, May 15 (Reuters) – A group of Canadian banks and pension funds are hoping their C$3.6 billion ($3.7 billion) offer for TMX Group will keep the nation’s largest stock market from falling into foreign hands, but questions remained on Sunday whether that is reason enough to succeed.

The C$48 per share offer for TMX from a consortium calling itself the Maple Group Acquisition Corp topped a $3 billion friendly bid for the exchange operator from the London Stock Exchange.

Maple Group includes banks that have opposed the LSE deal, arguing it would put control of TMX into foreign hands and threaten Toronto’s growing status as a world financial center.

10 Maple’s rival bid for TMX puts LSE in tight spot

By Luke Jeffs and Victoria Howley, Reuters

Sun May 15, 4:09 pm ET

LONDON (Reuters) – The London Stock Exchange will find itself in a tight spot trying to fend off a rival bid for Canada’s TMX Group, a deal it badly needs to rejuvenate its centuries-year old business.

If LSE boss Xavier Rolet were to better his terms, it would undermine any claim that the LSE and TMX are equal merger partners in the $3 billion deal, something he has stressed in the past to soothe nationalist nerves in Canada.

“If the LSE puts cash in, or takes a stake in TMX, it feels less like a merger of equals. That is a red flag for regulators,” said a banker familiar with the transaction, speaking on the condition of anonymity.

11 Canada banks propose TMX deal to rival LSE bid

By Pav Jordan and Claire Sibonney, Reuters

Sat May 14, 7:12 pm ET

TORONTO (Reuters) – Canada’s TMX Group, operator of the Toronto Stock Exchange, has received a takeover proposal from a group of Canadian banks and pension funds that could trump a friendly $3 billion bid from the London Stock Exchange.

A bid from the Canadian financial institutions could represent a more palatable alternative for opponents of the LSE proposal, many of whom are concerned about control of the country’s largest stock market falling into foreign hands.

Legislators and other elected officials in Ontario, the province where Toronto is located, want assurances that the city will not lose its status as a world financial center. The latest proposal, announced by TMX in a statement on Saturday, could address those concerns.

12 Euro zone to back Portugal aid, with new caveats

By Jan Strupczewski, Reuters

Sun May 15, 7:04 pm ET

BRUSSELS (Reuters) – Euro zone finance ministers are likely to back a bailout package for Portugal on Monday, with new conditions set by Finland, in talks overshadowed by charges against IMF chief Dominique Strauss-Kahn for attempted rape.

Strauss-Kahn’s place in the Brusssels talks will be taken by International Monetary Fund Deputy Managing Director Nemat Shafik, the organization said.

The meeting was also expected to pressure Greece to announce more austerity steps to secure further emergency funding. A senior Greek official said on Sunday the arrest of Strauss-Kahn may cause some delays to its EU/IMF bailout plan.

13 Spyker turns to China’s Pangda for Saab rescue

By Sara Webb, Reuters

19 mins ago

AMSTERDAM (Reuters) – China’s largest listed car distributor has come to the rescue of Saab in a deal worth as much as 110 million euros, staving off the collapse of one of Sweden’s best-known brands.

Spyker Cars (SPYKR.AS), the Dutch owner of Saab, announced a deal with China’s Pangda Automobile Trade Co Ltd (601258.SS) on Monday which it said would secure Saab’s medium-term funding needs and allow production to resume within days.

Saab will immediately receive 30 million euros from Pangda for vehicles destined for sale in China, allowing it to repay suppliers and restart production soon, CEO Victor Muller said.

14 Chrysler may restructure refinancing terms: sources

By Michelle Sierra, Reuters

Sun May 15, 10:29 pm ET

NEW YORK (Reuters) – Chrysler Group LLC, seeking to raise $6 billion in new debt to repay government loans, is expected to restructure its proposed refinancing package this week after investors showed hesitation over the loan portion of the transaction, people familiar with the matter said.

Chrysler executives, led by Chief Executive Sergio Marchionne, have been meeting with potential investors since early March to market a $3.5 billion term loan and $2.5 billion of second-lien bonds, with the target of completing the loan transaction by May 18.

But the U.S. automaker is likely to reduce the size of the loans from $3.5 billion after potential investors have been slow to commit as they weigh up the facility’s large size and the company’s business prospects, people familiar with the matter said.

15 A storm gathers over equities markets

By Edward Krudy and Rodrigo Campos, Reuters

Sun May 15, 12:15 pm ET

NEW YORK (Reuters) – The big money is calling a halt to the surge in stock prices.

Declines in oil and metals prices are being seen by an increasing number of fund managers and strategists as a signal to get out of riskier areas of the equity market. And that means avoiding things like Chinese IPOs and sticking to the boring stuff, like utilities.

The growing concern is that stocks had priced in an overly optimistic economic path, and the recent breakdown in commodities and shift in equities to safer industries such as health care, suggest a reckoning in coming months.

16 Oil slump vindicates Fed doves

By Pedro Nicolaci da Costa, Reuters

Sun May 15, 4:23 pm ET

WASHINGTON (Reuters) – A sharp retreat in oil prices has lent fresh credibility to Federal Reserve officials’ predictions that the spike in energy and commodity prices would be a passing phenomenon.

As that view, espoused by Chairman Ben Bernanke himself, gains support, investors may find further hints this week in minutes from the Fed’s April meeting that officials intend to keep official rates at record low levels for quite a while.

The prospect of continued easy money from Washington may help offset concern among investors, already anxious about signs of slower economic growth in many countries, that the weekend arrest of the head of the International Monetary Fund will further complicate the euro zone’s debt crisis.

17 Citi CEO addresses MBA grads on post-crisis rehab tour

By Maria Aspan, Reuters

Sun May 15, 4:25 pm ET

PHILADELPHIA (Reuters) – Citigroup Inc Chief Executive Vikram Pandit, whose bank barely survived the financial crisis, on Sunday stepped into a once-unlikely position: role model to America’s future financial leaders.

“Over the last two years, I too, received a great education, facing crises and making decisions — many of them very difficult,” Pandit told graduating business students at the University of Pennsylvania’s Wharton School on Sunday.

He told the students the only way they could have learned more about the American economy and global economics over the last two years “is to have lived it — an experience, that I can assure you, was not full of pure enjoyment.”

18 Sony begins restoring PlayStation after security breach

By Isabel Reynolds, Reuters

Sun May 15, 7:27 am ET

TOKYO (Reuters) – Sony said it had begun restoration of its PlayStation Network games service on Sunday, almost a month after a massive security breach of the network forced the company to shut it down.

Gamers and security experts had criticized Sony for its handling of the incident, which sparked lawsuits and cast a shadow over its plans to combine the strengths of its content and hardware products via online services.

The Japanese electronics and entertainment giant apologized to customers for the outage, and said a range of new security measures had been introduced. These included an early warning system that could alert the company to any attempt to penetrate the network.

19 Yahoo battle with China’s Alibaba intensifies

By Jennifer Saba and Jonathan Stempel, Reuters

Fri May 13, 3:25 pm ET

NEW YORK (Reuters) – Yahoo Inc’s battle with Alibaba Group intensified on Friday as they issued contradictory statements over the Chinese company’s transfer of a major Internet asset to its chief executive.

Analysts said the handover of Alipay, an online e-commerce payment system similar to eBay Inc’s PayPal, to Alibaba Chief Executive Jack Ma has reduced the value of Yahoo’s 43 percent Alibaba stake. Alibaba also operates China’s largest e-commerce company, Alibaba.com Ltd.

Yahoo said it had been blindsided by the deal, while Alibaba countered that Yahoo was aware of the transaction by virtue of having a board seat, now held by former Yahoo Chief Executive Jerry Yang, who is also a Yahoo director.

AP

20 US businesses reluctant to open in Mexico

By MARTHA MENDOZA, AP National Writer

33 mins ago

MCALLEN, Texas – Dozens of Mattel Inc. employees were on their way to another day of work making Power Wheels in Mexico’s industrial heartland when gunshots erupted around them and a grenade ripped into one of their buses, killing one worker and wounding five.

The battle between drug traffickers and the army near the city of Monterrey last week was the sort of violence that is frightening U.S. companies away from new investments south of the border, where organized criminals are increasingly turning to kidnappings, extortion and cargo thefts despite a government offensive against drug cartels.

“These acts of violence are not happening in a vacuum; they’re happening in the street that could be right out in front of your building. Bullets get shot and they have to stop somewhere,” said Dan Burges, a senior director at Freightwatch Inc., an Austin-based cargo security firm.

21 As stock market slows down, defensive stocks shine

By DAVID K. RANDALL, AP Business Writer

Sun May 15, 2:01 pm ET

NEW YORK – After sailing through its best first quarter since 1998, the stock market is starting to lose some momentum. The Standard and Poor’s 500 stock index, a broad market benchmark, is up just 1 percent this quarter after jumping 5.4 percent in the first three months of the year, in large part because of conflicting data about the health of the economy.

One group – defensive stocks – is doing just fine. Utilities, health care and consumer staples are all considered a good defense against a slowdown because they tend to have stable profits no matter what happens in the broad economy. The items they sell aren’t ones people stop buying when their budgets are tight. And for the last six weeks, investors have been putting money into stocks of companies like Aetna or Kraft Foods that cater to everyday needs, like health insurance or coffee.

Each of the defensive industry groups has gained more than 5 percent this quarter. Health care – the best of the three – is now up 14.2 percent for the year, after lagging sectors like energy and industrials during the first quarter. What’s more, the number of shares exchanging hands in defensive industries is also increasing. Higher volume often signifies that a stock on the rise will continue to rise – or that a declining stock will keep falling – because it reflects increased investor interest in a stock. The daily trading volume of the SPDR Consumer Staples Select ETF, for example, is double the rate it was in January.

22 IMF chief’s arrest rocks French presidential race

By ANGELA CHARLTON, Associated Press

Sun May 15, 2:46 pm ET

PARIS – Allegations of sexual assault in a New York hotel have torn France’s presidential race asunder and savaged the reputation of the suave and self-assured Dominique Strauss-Kahn, chief of the International Monetary Fund.

The 62-year-old Strauss-Kahn has topped French opinion polls for months as the man most likely to become this nation’s next president, consistently outshining the little-loved conservative incumbent, Nicolas Sarkozy.

Yet on Sunday, Strauss-Kahn’s allies and rivals alike struggled with shock at news that he was hauled off an Air France flight minutes before takeoff, arrested and facing charges of attempted rape and a criminal sex act. In cafes and outdoor markets, French voters shared that disbelief.

23 As water creeps closer, residents warned: Get out

By MICHAEL KUNZELMAN, Associated Press

Sun May 15, 5:42 pm ET

KROTZ SPRINGS, La. – Deputies warned people Sunday to get out as Mississippi River water gushing from a floodgate for the first time in four decades crept ever closer to communities in Louisiana Cajun country, slowly filling a river basin like a giant bathtub.

Most residents heeded the warnings and headed for higher ground, even in places where there hasn’t been so much as a trickle, hopeful that the flooding engineered to protect New Orleans and Baton Rouge would be merciful to their way of life.

Days ago, many of the towns known for their Cajun culture and drawling dialect fluttered with activity as people filled sandbags and cleared out belongings. By Sunday, some areas were virtually empty as the water from the Mississippi River, swollen by snowmelt and heavy rains, slowly rolled across the Atchafalaya River basin. It first started to come, in small amounts, into people’s yards in Melville on Sunday. But it still had yet to move farther downstream.

24 Massive Puerto Rico pipeline triggers debate

BY DANICA COTO, Associated Press

Sat May 14, 1:34 pm ET

SAN JUAN, Puerto Rico – Puerto Rico’s governor is proposing to solve soaring energy prices on this oil-dependent U.S. island with a massive natural gas pipeline that would cross some of the territory’s most fragile ecosystems and archaeological sites.

Gov. Luis Fortuno has made the $450 million project a central goal of his administration and he insists it is a safe, environment-friendly way to lower utility bills. Critics say the 92-mile (148-kilometer) pipeline will tear up lush green mountains and expose people living near it to deadly explosions.

The pipeline proposal, which Fortuno has dubbed “The Green Way,” also has sparked corruption allegations. The largest contract so far has gone to an engineering firm with no pipeline construction experience that is owned by a childhood friend of the governor. Fortuno has denied any conflicts of interest.

25 Twitter feed lawsuit underscores power of a tweet

By MARCUS WOHLSEN, Associated Press

Sat May 14, 4:53 pm ET

SAN FRANCISCO – When Adorian Deck was home sick from high school, he entertained himself like countless other teenagers have in recent years: He started a Twitter account.

Unlike other teenagers, Deck’s account became a sensation. Deck, under the handle (at)OMGFacts, tweeted random bits of celebrity gossip and quirky trivia. In less than a year, he had attracted more than 300,000 followers.

Now Deck, 17, is suing a business partner who promised to take OMG Facts to the next level, but who the Northern California teen says deceived him into turning over the rights to his creation.

26 Consumer inflation may be peaking, economists say

By CHRISTOPHER S. RUGABER, AP Economics Writer

Fri May 13, 6:34 pm ET

WASHINGTON – After weeks of pain at the gas pump and the grocery store, the worst appears to be over.

Oil prices have fallen, with gas soon to follow. Demand for farm commodities, like the corn used in everything from cereal to soda, has dropped. And businesses remain slow to pass along higher costs because customers aren’t getting raises and might walk away.

Inflation may be approaching its peak.

27 Factory closure draws scrutiny of NJ’s biz climate

By JOSH LEDERMAN, Associated Press

Sat May 14, 4:10 pm ET

BORDENTOWN, N.J. – A stone embedded in the sidewalk outside City Hall commemorates the good will and generosity of Ocean Spray Cranberries, a major economic force since the farmer-owned cooperative opened a 60-acre juice-manufacturing plant here almost 70 years ago. The company is known for the truckloads of juice it donates to local fundraisers, and this city overlooking the Delaware River even hosts a cranberry festival each October.

But the sense of good will has quickly dried up as the community reacts to news that the company will close the plant in September 2013 and move its operations to a new facility in neighboring Pennsylvania. Bordentown, with almost 4,000 residents, will lose about $1 million in tax revenues and utility contributions, according to the city’s commissioner.

The factory’s 250 employees will have to decide whether to move with the company or find new jobs.

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