World financial news

Australian bank lending rose by the most in 11 months, adding to signs of an economic rebound that may prompt central bank Governor Glenn Stevens to raise interest rates next week for a record fourth straight meeting.

Loans provided by banks and other finance companies advanced 0.3 percent in December from November, when they rose 0.1 percent, the Reserve Bank of Australia said in Sydney today. Lending increased 1.5 percent from a year earlier.

Today’s report may increase pressure on Stevens to boost the benchmark lending rate by a quarter percentage point to 4 percent as early as Feb. 2. The nation’s economy, which skirted the global recession in 2009, is forecast to accelerate this year, driven by a surge in consumer confidence and the biggest hiring boom in more than three years.

“It’s very heartening,” said Savanth Sebastian, an economist at Commonwealth Bank of Australia in Sydney. “Consumers are quietly rejoicing in the improving economic environment and are a bit more willing to borrow and spend.”

Credit growth “will continue to track higher this year, and in the second half of the year business credit will start to strengthen,” he said.

The Australian dollar rose to 89.07 U.S. cents at noon in Sydney from 89 cents just before the report was released. The two-year government bond yield was unchanged at 4.22 percent.

Rate Bets

Traders are betting there is a 62 percent chance of a quarter-point increase in Australia’s overnight cash rate target to 4 percent at the central bank’s meeting next week, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 11:58 a.m. Prior to today’s report, the chances of a move were 60 percent.

Lending in December rose three times more than the 0.1 percent median estimate of economists surveyed by Bloomberg News. Loans to consumers to buy houses climbed 0.7 percent from November and 8.2 percent from a year earlier.

Credit provided to consumers for purchases other than housing advanced 0.7 percent from a month earlier for an annual decline of 0.4 percent.

Demand for credit rose after employers added 135,700 jobs in the four months through December, the biggest four-month gain since 2006, pushing down the jobless rate to an eight-month low of 5.5 percent, a report showed on Jan. 14. Consumer confidence jumped in January by the most in six months, a survey by Westpac Banking Corp. showed last week.

The International Monetary Fund said this week that Australia’s gross domestic product will expand 2.5 percent this year and 3 percent in 2011. In October, it forecast 2 percent growth in 2010.

Lending to companies dropped 0.2 percent in December from the previous month, taking the annual decline to 7 percent, today’s report showed.

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SunPower Corp. hired Jim Pape to run its residential and commercial business group as part of a reorganization of responsibilities at the company.

Howard Wenger, to whom all SunPower’s business units previously reported, is now president of just the utilities and power plants business group.

The San Jose solar power company (NASDAQ: SPWRA) gave both Pape and Wenger greater responsibility for all profits and losses in their business units.

“Our new business groups have full responsibility for the business results for their groups, not just sales, or just construction,” said company spokeswoman Helen Kendrick no fax needed payday loans.

Pape’s position — president of residential and commercial — is a new job at the company. No one else was hired directly as part of the reorganization, Kendrick said, although existing employee teams will be assigned to the new business groups.

Pape worked previously at Trane Commercial Systems.

SunPower, led by CEO Tom Werner, has a large facility in the rehabbed Ford Point factory in Richmond.

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Charter Communications Inc. President and Chief Executive Neil Smit, the highest-paid executive in St. Louis, plans to leave the company to run rival Comcast Corp.

Smit, whose resignation from Charter is effective Feb. 28, will become president of Comcast Cable Communications in Philadelphia, The Wall Street Journal reports.

He will be replaced at Charter on an interim basis by Chief Operating Officer Michael Lovett.

Smit joined St. Louis-based Charter as CEO in 2005 and recently led the company’s financial restructuring through a Chapter 11 bankruptcy fast cash advance.

Smit ascended to the top of the Business Journal’s annual list of St. Louis’ highest-paid executives. With $7.4 million in cash compensation for 2008, Smit unseated Edward Jones Managing Partner James Weddle from the perch he’s held for the past two years. Smit rang up his chart-topping payday despite Charter’s staggering $2.45 billion loss last year and subsequent bankruptcy filing.

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Only 20 percent of Oregonians have earthquake insurance, even though Oregon is among the states at highest risk for a major earthquake, according to a survey by the state Department of Consumer and Business Services.

Standard home owner policies do not cover earthquakes, but optional earthquake coverage is readily available and relatively inexpensive, the department said.

“Consumers may want to think about their ability to rebuild if their house is destroyed in an earthquake,” said Cory Streisinger, director of the Department of Consumer and Business Services. “Insurance should be weighed as part of other earthquake preparations.”

Jan. 25 will mark the 310th anniversary of the last major Cascadia Subduction Zone earthquake, magnitude 9.0, centered 75 miles offshore. That temblor damaged the coastline from Northern California to Southern British Columbia, according to the Oregon Department of Geology and Mineral Industries.

A 10,000-year geologic record shows these mega-quakes occur every 300 to 600 years, putting Oregon within the window of a major earthquake, said James Roddey, state earth sciences information officer.

Damaging earthquakes have also occurred within the past 16 years in different parts of the state, causing tens of millions of dollars worth of damage.

The Department of Consumer and Business Services Insurance Division last year surveyed 20 insurance companies that account for 80 percent of the home owner insurance premiums in the state.

It found:

• Home owners generally can buy earthquake insurance as an addition to their policy or as a separate policy. The few companies that do not offer earthquake insurance in Oregon typically refer clients to a company that sells stand-alone earthquake policies.
• Earthquake coverage is relatively inexpensive — often less than $300 a year for a $300,000 wood-frame home. Masonry homes are more expensive to insure.
• Owners of older houses may need to bolt their homes to the foundation or make other seismic upgrades before they can buy earthquake insurance.

Earthquake coverage generally features high deductibles. These typically amount to 10 percent or 15 percent of the amount covered by insurance. A home owner with a house insured for $300,000 and a 10 percent deductible would pay $30,000 before the policy would pay. Coverage for contents is separate.

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In the aftermath of a severe earthquake in Haiti late Tuesday, Twitter is playing a critical role in collecting donations to help disaster victims.

Fundraising efforts by the American Red Cross and rapper Wyclef Jean were two of the top 10 trending topics on Twitter early Wednesday. Both organizations asked Twitter users to text a number to make a donation that would be added to their cell phone bills.

The International Federation of the Red Cross estimated that 3 million people were affected by the 7.0-magnitude quake, the center of which was located near capital city Port-au-Prince.

Twitter lit up with posts from around the globe, including some tweets from Haitians who had no other way to communicate amid the chaos. Donation efforts on the site mobilized quickly amid the first natural disaster to strike since the social media site took off.

At about 6:30 p.m. ET Tuesday, the American Cross tweeted that it was pledging an initial $200,000 to assist those affected.

Shortly after midnight, @RedCross updated: "You can text "HAITI" to 90999 to donate $10 to Red Cross relief efforts in #haiti." The "hashtags" denote topics, and users can search the Twitterverse for keywords.

Wyclef Jean, a musician formerly of the popular group The Fugees, used his account @Wyclef to post news updates and quickly raise funds low interest rate personal loans.

Jean, who is from Haiti, founded Yéle Haiti in 2005 to build global awareness for the country, the poorest in the Western Hemisphere. At about 6:30 p.m. ET, he tweeted: "Please text "Yele" to 501501 to donate $5 to YELE HAITI.Your money will help with relief efforts. They need our help..please help if you can."

About an hour later, it seemed the system had been overwhelmed with people looking to give aid. @Wyclef posted a message: "Our 501501 Yele donation system is down. It will be fixed shortly please standby."

As the day progressed, more celebrities tweeted to urge their followers to donate. Actor Rainn Wilson of "The Office" posted on his Twitter account to support the organization Planting Peace, which works primarily with orphanages in Haiti.

"House" star Olivia Wilde tweeted that she will send personalized videos to those who donate $100 or more if they email her their electronic receipts.

To follow CNN’s Twitter feed devoted to breaking news in Haiti, click: http://twitter.com/cnnbrk/haiti  

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I’ve been writing about investing for nearly a quarter of a century. And if I’ve learned one thing after counseling Money readers through three recessions, three stock market crashes, and two derivatives debacles (yes, two: 14 years before the recent flare-up with mortgage-backed securities, derivatives tripped up several government income and money-market funds), it’s this: Savvy investing need not be complicated. Just focus on what’s most important to stay on the path to financial success and filter out all the noise along the way.

To do just that, follow this four-step program:

1. Don’t obsess over the "best" investments.

Cable-TV investing shows may make you feel like a slouch if you’re not constantly searching for hot new investments. But I’ve seen too many Next Big Things turn into the Next Big Letdowns — limited partnerships in the ’80s and, recently, mutual funds that replicate hedge fund strategies, to name two.

In reality, smart investing is more about assembling a group of tried-and-true assets that give you diversification than trying to predict tomorrow’s top gainers. "I’d rather have mediocre funds in the right mix of categories than great funds without an underlying allocation strategy," says Charlottesville, Va., financial planner David Marotta.

The reason is that asset classes, more than individual picks, drive your long-term returns. Creating a well-rounded portfolio isn’t that hard. Marotta figures you need only five or six funds that cover key assets such as large and small U.S. stocks, foreign shares, and bonds — plus maybe another that invests in natural resources, real estate, or other inflation hedges.

2. Think long term, not year to year.

Birthdays and anniversaries are the milestones of our lives. So it’s not surprising that we tend to think in annual terms when gauging our portfolios. Yet it’s dangerous to think of investing as a sprint rather than a marathon.

Why? If you’re seeking the best gains over the next 12 months, you’ll naturally gravitate toward more volatile investments because they’ll give you a better shot at big short-term gains. But your odds of picking those winners year in and year out are extremely slim.

"It’s like someone on a hot streak at the roulette wheel," says York University finance professor Moshe Milevsky. "You know it’s not going to last." What’s more likely to happen is that you’ll end up in investments that go down just as quickly as they went up.

3. Keep a tight rein on costs.

When was the last time you heard someone brag about his razor-thin mutual fund expenses? Probably never. That’s because high returns are a lot sexier than low fees.

Still, you’re better off paying as much attention, if not more, to what your funds charge than to past performance. "The probability of a manager outperforming going forward is small," says Financial Engines chief investment officer Christopher Jones. "But fees are far more predictable." And remember that every dollar you pay in fees reduces the returns you get to keep — and that can add up over the long haul.

To gauge the effect of costs, I used Morningstar’s database to sort all large-cap stock funds with 15-year records into four groups, based on expenses. I then compared each group’s average annualized 15-year returns. Result: The higher a group’s fees, the lower its average return. This mirrors an analysis that Burton Malkiel and Charles Ellis (two heavyweights in the investing world) include in their new book, The Elements of Investing.

4. Keep a tighter rein on yourself.

During my career at Money, I’ve seen stock prices fall more than 20% in a single day (Oct. 19, 1987) and twice drop by roughly half over longer periods (March 2000 to October 2002 and October 2007 to March 2009).

But if those crashes led to similarly steep losses in your portfolio, you can’t blame the market entirely for your misfortune. More often than not, to paraphrase Shakespeare, the fault is not in the markets, but in ourselves. When things are going well we tend to get overconfident and plow more money than we should into risky assets, making us overly vulnerable to downturns. And when a setback inevitably arrives, says Santa Clara University economist Hersh Shefrin, "We bail out and focus so much on safety that we’re not positioned to capture gains when the market turns around, which it typically does very quickly."

Rather than swinging between euphoria in up markets and depression in down ones, you’re better off keeping your emotions — and strategy — on an even keel. Granted, achieving that Zen-like outlook is easier said than done. But the more you can maintain your equanimity and resist Wall Street’s entreaties to fiddle with your investments, the fewer mistakes you’ll make — and the more wealth you’ll end up with in the long run.  

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The U.S. economy is in much more serious trouble than news reports, policy makers and pundits might lead you to believe. Cam Harvey explains in his blog payday loans guaranteed no fax.

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Since cratering at 12-year lows in March, the S&P 500 has staged a powerful rebound as investors turned what could have been an abysmal 2009 into the second best year of the decade for stock returns.

Between war, recession, corporate malfeasance, and the collapse of the housing market, investors have had a tumultuous 10 years. The S&P 500 plunged 23%, seeing its first losing decade in close to a century.

But the decade could have been even worse, if not for the turnaround in 2009.

In the just-completed year, the S&P 500 gained 23.4%, the Dow industrials gained 18.8% and the Nasdaq added 44%. That’s trumped only by 2003, when the S&P 500 gained 26.4%, the Dow added 25.3% and the Nasdaq climbed 50%.

Like 2009, 2003 marked a big turnaround for the stock market as the economy emerged from a recession brought on by the 9/11 attacks and the collapse of the tech bubble.

For 2009, the big recovery has come in the aftermath of the housing market collapse and credit crisis and the worst recession since the Great Depression.

Although 2009 gains are strong historically, gains are even more substantial since stocks bottomed in March at the height of the financial market crisis. Since closing at a 12-year low on March 9, the Dow has gained 59% and the S&P 500 has gained 65%. Since closing at a 6-year low on the same date, the Nasdaq has risen 79%.

All 10 S&P 500 economic sectors managed gains this year, with technology the leader, rising 62% versus a year ago. Materials took second place, rising 47.1% from a year ago. The biggest losers were telecom, up just 3.6% and utilities, up just 8.4%.

Gains this year were driven by several factors, notably the government injection of trillions in fiscal and monetary stimulus into the economy.

A weak dollar also played a big role, boosting commodity prices and shares as well as the stocks of big blue chips that do a lot of business overseas who benefit when the U.S. currency is weaker.

Investor psychology also contributed, as investors went from factoring in another Depression to a recession to an eventual recovery.

But the year ahead is unlikely to see similar gains, either for the major indexes or the individual sectors, as investors look for signs that the slow-growing economy can charge ahead without unusual assistance.

"The biggest question is employment and whether the economy can start creating enough jobs to create a sustainable economic recovery," said Michael Sheldon, chief market strategist at RDM Financial Group business card design.

He said that as this issue works its way through the market, stocks could be vulnerable, particularly if the dollar continues to firm up, as it has through most of December. The other potential catalyst for a selloff later in the year ahead could be rising interest rates, although the Ben Bernanke-led Federal Reserve is unlikely to change its policy stance until the second half of next year.

"I think that prices will drift moderately higher in the year ahead, at least until Ben Bernanke decides to land the helicopter," said Mark Travis, president and CEO at Intrepid Capital Funds. "We could end up as much as 8% higher by this time next year."

Next year also starts what is likely to be a better ten-year period for Wall Street, after a rough decade.

The awful 00s: A tumultuous 10 years brought two recessions, two major wars, one contested presidential election, terrorist attacks in the U.S. and abroad, the credit crisis, the housing market bust and the near collapse of the financial market.

In light of the events that took place, perhaps its unsurprising that the stock market experienced its worst decade in nearly a century. The S&P 500 plunged 23%, seeing its first decade of losses in 90 years. Compare that to the 1990s, when the S&P 500 gained 316%.

The Dow lost 8% this decade after gaining 418% in the 1990s and the Nasdaq, still reeling from the bursting of the tech bubble, is down 44% in the 10-year period. In the 1990s it gained 794%.

For a look at the best and worst stock performers of the decade, click here

The best-performing sector of the decade was energy, up 104%, according to Standard & Poor’s. That’s roughly the same gain it made in the 1990s, but in that decade, nine of the S&P’s 10 sectors added at least 100%, with utilities the lone exception. Utilities gained 37%.

In this decade, only half of the ten sectors gained, with the rest sliding. Telecom and technology were the two worst performers of the decade, notable in that both were stars of the 1990s, in particular tech. Telecom lost 66% in this decade after gaining 223% in the 1990s. Technology lost 57% this decade after gaining 1,148% in the 1990s, the decade it defined. 

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Bombardier

$405M contract awarded

Bombardier Inc. has received an order from Spain’s national rail operator to maintain a fleet of high-speed trains for 14 years, the Montreal-based transportation equipment maker announced Thursday.

RENFE will pay $917 million (U.S.) to Bombardier and Spanish railway vehicle maker Talgo to maintain the new trains. Bombardier’s share of the contract comes to $405 million.

The maintenance work will take place at RENFE’s depots in Spain.

Rusal

$2.6B U.S. IPO planned

Russian aluminum giant UC Rusal will try to raise as much as $2.6 billion (U.S.) by selling shares in Hong Kong in late January to reduce its mountain of debt, the company said Thursday.

Moscow-based Rusal – run by tycoon Oleg Deripaska – is seeking to sell more than 1.6 billion shares at a price between 12.50 Hong Kong dollars ($1.61 U.S.) and $9.10 (Hong Kong), according to the filing with Hong Kong’s stock exchange.

The potential proceeds range from $1.9 billion (U.S.) to $2.6 billion.

Washington Times

Paper to axe 40% of staff

The Washington Times will slash newsroom staff by more than 40 per cent and eliminate its sports section as it revamps to focus on politics, business and investigative reporting.

The newspaper’s Thursday edition announced the layoffs and said the last sports section would appear Friday. Among those let go was managing editor David Jones.

A new print edition will be launched Monday.

Diners Club

BMO completes buyout

BMO Financial Group announced Thursday that it has completed the acquisition of the Diners Club North American franchise from Citigroup. The acquisition, announced in November, puts BMO among the top commercial card issuers in North America.

BMO said the purchase will accelerate the bank’s expansion into the travel-and-entertainment card sector, particularly in the United States.

Marvel

Holders okay Disney deal

Shareholders of Marvel Entertainment Inc., home of Spider-Man and the Hulk, have approved the company’s acquisition by The Walt Disney Co., as expected.

Shareholders of the 70-year-old comic-book company voted at a special meeting Thursday.

With the $4.3 billion (U.S.) deal, Disney gets Marvel’s stable of more than 5,000 characters. Most of them are obscure, but several have been the basis for blockbuster movies in recent years.

From the Star’s wire services

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