MEXICAN AUTO PARTS INDUSTRY STRUGGLING TO COMPETE GLOBALLY

Mexico is learning the same lesson that the United States did decades ago - jobs will shift to the lowest cost country that can produce the product at an acceptable quality. In the case of the United States, some of the early production jobs that left the country went to Mexico where wages were a fraction of those paid in the U.S. Today, those Mexican jobs are leaving for even lower-cost countries like China and Honduras. Mexico can seem attractive to companies with wages of $1.50 per hour, but cannot compete with Honduran wages that are less than $1.00 (74 cents for Alcoa workers in that country).

From The Chicago Tribune:

Not so long ago, Mexico floated along as a low-cost producer to the auto parts world. But now its niche is threatened by global rivals who can trump it with lower salaries or superior quality and productivity. As a result, Mexican auto parts firms keep pressing to trim costs, and Mexican workers find themselves working longer, harder and sometimes for less.

Consider Alcoa Inc.'s move into Honduras. Several years ago the Pittsburgh-based firm opened some auto parts facilities with a base wage of 74 cents an hour in that country, according to the National Labor Committee, a small New York-based group that tracks workers' conditions globally. That compares with Alcoa's auto parts operations in Ciudad Acuna, Mexico, where workers' average weekly salaries and other benefits for a 48-hour week come to $76.22, according to company spokesman Kevin Lowery.

CRISIS MANAGEMENT LESSONS FROM THE NFL

In September, the New England Patriots were fined $250,000, head coach Bill Belichick $500,000, and the team lost a first-round draft pick in the upcoming draft as penalties for videotaping the New York Jets sideline signals from coaches, a clear violation of National Football League rules.

The NFL required the Patriots to submit all videotapes (from the Jets game and anyt other game in which they had violated the taping rules) to the league office.  Within days of receiving the tapes, the NFL destroyed all of the tapes.  Why?  Why destroy the tapes unless something damaging, such as tapes of playoff and Superbowl opponents, was on them?  That is a question that is leading to a bit of a scandal, and quite possibly a full-blown crisis for the NFL.

Every business, and make not mistake, the NFL is a business, will encounter crisis at some point.  Many are handled well (Tylenol), many are not (Firestone).  Crisis consultants are available to guide businesses through crisis situations, minimizing the damage and helping the firms move past the the crisis as soon as possible.

The New York Times has an outstanding article regarding this NFL scandal that includes comments from crisis management experts.  Here are some excerpts:

Greg Wilson, a crisis counselor and senior vice president at Levick Strategic Communications in Washington, said: “They’re rolling the dice that the whole thing is just going to go away. And here’s the thing — a lot of this could be avoided.”

Wilson sees a crisis that requires managing, a “clear-cut case of all the parties needing to rip off the Band-Aid as soon as possible.” The goal of managing any crisis, he said, is to acknowledge the black eye and compress the time it lasts.

Wilson says the American public generally wants to hear what he calls the Big Three of crisis management: I am sorry. I take responsibility. And I will fix it.

He recommended that the league respond with more transparency, explaining in detail what the tapes contained and why they were destroyed.

“When you destroy evidence, most people assume guilt,” Wilson said. “The N.F.L. is cashing in on its trust bank. They can weather the storm, but they are stringing it out longer than most companies or people can afford to.”

Tortorella points to the N.B.A. in comparison. When the referee scandal surfaced earlier this year, Commissioner David Stern went on national television and gave a sincere-sounding apology. In these different reactions, Tortorella said the N.B.A. came down on its crisis like a “ton of bricks” — the N.F.L. like a “ton of feathers.”

“Roger Goodell learned what Richard Nixon did not,” Tortorella said. “If the tapes are destroyed, you keep your job.”

The N.F.L. said the Patriots signed a statement that the league was in possession of the only copies of the evidence, all of which have been destroyed. Tortorella said they should not be so sure.

“That might come back to haunt them,” he said. “I know this: nobody ever makes one Xerox copy. Nobody ever makes one tape. Nobody ever makes one set of anything. Based on that, I’m not sure this crisis is over yet.”

Tortorella said what surprised him most was how little scrutiny resulted from the destruction of the tapes. (Gregg Easterbrook of espn.com looked into the issue in September.)

Tortorella said between Spygate and the Michael Vick dogfighting case — a crisis that experts said Goodell managed superbly — “the league gets two black eyes, but neither belongs to him.” Wilson dismissed the Vick scandal as an N.F.L. crisis, but added to the list the health problems retired players are experiencing.

“The problem is the Patriots keep winning,” Wilson said. “That is both a blessing and a curse. By winning, they are vindicating themselves, showing this whole Spygate thing did not matter. But they are also shining a spotlight, over and over again, on what happened earlier this season.

“Spygate will be the biggest story if they win the Super Bowl.”

The Patriots’ perfect season so far, and the taping controversy, have made football fans only care more about the team, said David Carter, the executive director of the Sports Business Institute at the University of Southern California.

“Love them or hate them, you care,” Carter said. “Some people think they represent everything wrong with sports. The N.F.L. walks a fine line here. A certain amount of controversy is helpful. But if it looks like they are not coming down hard enough, they undermine the very credibility they are hoping to promote.”

LETTERMAN SEEKS DEAL WITH HIS WRITERS

David Letterman is seeking a deal with writers to put his show back on the air before his competitors.

From The New York Times:

In what may be the first break in the entertainment writers’ strike, David Letterman is pursuing a deal with the Writers Guild of America that would allow his late-night show on CBS to return to the air in early January with the usual complement of material from his writers, even if the strike is still continuing.

Executives from Mr. Letterman’s production company said Saturday that they were hopeful they would have an interim agreement in place with the guild as early as this week. That could potentially put Mr. Letterman at an enormous advantage over most of his late-night colleagues.

MICROSOFT HIT WITH ANOTHER EU ANTITRUST SUIT

This post mixes news with my opinion.  I welcome the thoughts and opinions of others.

From PC World:

Opera [browser company] is asking the [European] Commission, the executive branch of the European Union, to force Microsoft to unbundle IE from Windows, or include other browsers as a standard part of its operating system. It also wants it to require Microsoft to adhere to industry standards with its Web browser.

The issue of standards is seen as important because if all Web browsers do not use the same standards, Web site developers are likely to design their Web sites to work with the most widely-used browser, which is Internet Explorer. That gives people a disincentive to use other browsers.

"By tying its Internet Explorer product to its monopoly Windows operating system and refusing to faithfully implement industry accepted open standards, Microsoft deprives consumers of a real choice in internet browsers. Browsers are the gateway to the internet. Microsoft seeks to control this gateway," said Thomas Vinje, speaking for ECIS [European Committee for Interoperable Systems].

Let's review.  

1. Microsoft has created the world's most popular browser.
2. Opera has created a competing browser that is preferred by a few users and has a tiny market share. 
3. Opera has sued Microsoft in the E.U. claiming that (1) bundling IE with an operating system is unfair and (2) that Microsoft should be FORCED to use "standards" spelled out by others in the creation of their product.
4. The ECIS spokesperson claims that consumers are being denied a choice of browsers.

The implications of points one and two should be obvious to everyone; Microsoft is the big market share winner, Opera cannot compete in a free market, so Opera goes crying to the European courts for help and protection.  I have an idea.  Why don't they invest the time and money they will spend on this suit creating a better browser that can compete more favorably with Internet Explorer?

As for points three and four, who believes that any company should be forced to adhere to other's "standards" in creation of their product?  It is absurd and would crush the creativity it is supposedly designed to protect.  Microsoft, along with any other company, should be free to design its software any way it chooses.  If users and designers do not like it, they will avoid it and choose another product.  The ECIS spokesperson is way off base.  Consumers are not being denied a choice of browsers.  How do I know?  Well, as I write this, I'm using Apple's Safari browser on my Microsoft Windows Vista computer.  And, in other window, I'm running Firefox.  And, yes, I do have Internet Explorer and Opera installed, as well.  I use each browser for different tasks.

You have to question the motive and sincerity of anyone who would suggest that consumers are being denied a choice when Safari, Firefox, and Opera are all free and easy to download and install.  While you are at it, question the motive of a company that files a lawsuit because it is unsuccessful in competing in a free and open market.

BUSINESS NEWS IN BRIEF

NOVEMBER RETAIL SALES UP 1.2% - Reuters

Sales at retailers posted a much stronger-than-expected 1.2 percent rise in November, government data showed on Thursday, as holiday shoppers coped with high energy costs and the fallout from a housing slump.

Excluding autos, retail sales gained 1.8 percent, the Commerce Department said.

ILLINOIS INVESTIGATING COUNTRYWIDE FINANCIAL - The New York Times

The Illinois attorney general is investigating the home loan unit of Countrywide Financial as part of the state’s expanding inquiry into dubious lending practices that have trapped borrowers in high-cost mortgages they can no longer afford.

The inquiry follows an investigation by Ms. Madigan’s office into One Source Mortgage, a Chicago mortgage broker that recently closed its doors. Ms. Madigan sued One Source on Nov. 27, contending that the company misled borrowers by promising low rates on mortgages without advising them that their payments would jump sharply shortly after the loans were made. Countrywide was One Source’s primary lender, according to the lawsuit.

PRODUCER PRICE INDEX JUMPS 3.2% - Reuters

Producer prices surged 3.2 percent in November, the biggest rise in 34 years, on a record rise in gasoline prices, the Labor Department said on Thursday.

Excluding food and energy prices, the producer price index rose an unexpectedly large 0.4 percent, the heftiest gain since February, the report showed. When cars and light trucks also were stripped out, core producer prices rose 0.1 percent.

CONGRESS VOTES TO MOVE RETIREMENT FOR AIRLINE PILOTS TO 65 - USA Today

The Senate approved a measure late Wednesday allowing airline pilots to continue flying past age 60.

Final passage of the bill first approved unanimously on Tuesday by the House answers pleas by older pilots who have lost their pensions because of airline bankruptcies. The bill now awaits President Bush's signature.

STATE INTERESTED IN BUYING WRIGLEY FIELD - Chicago Tribune

City and state officials have had discussions with Cubs executives about possibly selling historic Wrigley Field to a state government entity that currently owns and operates the White Sox's home, U.S. Cellular Field, sources close to the Cubs told the Tribune.

The talks with state and city officials centered on selling the 93-year-old facility to the Illinois Sports Facilities Authority, the government unit the Illinois General Assembly created in 1987 for the purpose of building new Comiskey Park, now U.S. Cellular Field.

SLOW, STEADY APPRECIATION OF CHINESE YUAN CONTINUES

U.S. Treasury Secretary Henry Paulson wrapped up his now twice yearly meetings with Chinese officials yesterday. Some progress regarding the appreciation of the Chinese currency, the yuan, and food and product safety for Chinese exports to the United States seems to have been made.

From Reuters:

"The Chinese recognize growing inflationary pressures in their economy and that a more flexible currency expands their ability to use monetary policy to stabilize their economy," Paulson said at a closing news conference.

China's central bank, which keeps the currency on a tight leash, let the yuan rise on Thursday to its highest level since it was revalued and depegged from the dollar in July 2005. The bank is battling inflation of 6.9 percent, an 11-year high.

A highlight of the talks was an agreement to increase safety standards for Chinese food and product exports to U.S. markets -- a highly sensitive topic after millions of Chinese-made toys were recalled and American indignity over tainted food and pharmaceuticals from China ran high.

I find it interesting that Paulson is stating that the Chinese recognize that a flexible currency allows them to better fight inflationary pressures. That is a concept that freshman business students seem to grasp, so I would hope that one of the world's economic powers understands it. They have tried fixing prices on some goods and raising the bank reserve rate to slow inflation. When will they try the more economically sound principle of a flexible currency?

As for the increase in safety standards for Chinese food and other products that are exported to the United States, there was plenty of room for improvement. We will have to wait and see if the reports of unsafe Chinese products decrease.

CUBS EXPECTED TO FETCH $1 BILLION IN 2008

The Cubs have announced that they expect to complete the sale of the team in the first half of 2008 and plan to use the proceeds to pay down some debt and complete the $8.2 billion buyout from Chicago billionaire Sam Zell.

From Reuters via MSNBC:

Publisher and broadcaster Tribune Co said on Wednesday it now expects to complete the sale of the Chicago Cubs baseball team, Wrigley Field and other assets in the first half of 2008.

Analysts believe the assets, which include a stake in sports cable TV network [Comcast] SportsNet Chicago, could attract bids topping $1 billion.

TRADE DEFICIT RISES EVEN AS EXPORTS INCREASE

From AP via MSNBC:

The U.S. trade deficit rose to the highest level in three months, with record oil prices and a flood of toys and other imports from China swamping a solid gain in American exports.

The Commerce Department reported Wednesday that the deficit for October increased to $57.8 billion, the highest level since July and 1.2 percent above the September imbalance.

The widening deficit was slightly worse than expected and occurred even though U.S. exports of goods and services rose for an eighth consecutive month, climbing 0.9 percent to an all-time high of $141.7 billion. This gain was offset by a 1 percent rise in imports to $199.5 billion, also a record, as a surge in global oil prices sent America’s oil bill soaring.

FACEBOOK BACKS DOWN ON BEACON PROGRAM

From MTV.com:

Facebook has been forced to make a major about-face on its controversial new Beacon ad program after more than 50,000 users signed a petition objecting to the initiative. Beacon sends messages to users' friends about their purchases on sites like Travelocity, Blockbuster, eBay and Fandango. According to The New York Times, the petition's signers want to be able to opt out of the program completely with one click.

After the uproar, the company announced late Thursday that it was amending its policy and would no longer send messages about users' activities without getting explicit approval each time, the Times reports. The move by the site, which has more than 50 million active members, brought praise from a spokesperson for MoveOn.org, the political action group that started "Petition: Facebook, stop invading my privacy" 10 days ago.

OIL PRICES RISE AFTER PIPELINE EXPLOSION

From Bloomberg:

Oil surged more than $4 a barrel, the most in a month, after an explosion cut Canadian oil shipments through Enbridge Inc. pipelines that typically provide about 15 percent of U.S. crude imports.

Enbridge closed four pipelines that supply an average of 1.5 million barrels a day after a blast yesterday killed two workers. The company said today a fire is still burning at the Clearbrook terminal in Minnesota where the pipelines meet.

``It's an important pipeline and it's also where it's being hit, these pipeline junctions are a nightmare,'' said Rob Laughlin, a senior broker at MF Global Ltd. in London. Oil ``could go up further if it's shut for some time.''

Crude oil for January delivery gained as much as $4.55, or 5 percent, to $95.17 a barrel in electronic trading on the New York Mercantile Exchange. That's the biggest gain since Oct. 31. The contract, which gained for the first time this week, traded at $94.24 at 10:45 a.m. in London.

``All our lines are shut down until we can safely start up the system,'' Denise Hamsher, a spokeswoman for Calgary-based Enbridge, said today by telephone. ``At least one or two lines will be shut down for quite sometime.''

FED OFFICIAL'S CANDID REMARKS CAUSE STOCKS TO RISE

From The New York Times:

Stocks soared on Wall Street today after a top Federal Reserve official appeared to open the door for additional interest rate cuts, pledging to follow “flexible and pragmatic policy making” as the central bank decides how to cope with the current financial upheaval.

The unusually candid remarks by the Fed’s vice chairman, Donald L. Kohn, were taken as a sign that the Fed would give serious consideration to a rate cut at its Dec. 11 meeting. The Dow Jones industrial average jumped more than 330 points.

FORD SETTLES IN ROLLOVER CASES

Keep in mind while reading this that the Ford/Firestone controversy occured in August of 1990.

From USA Today:

Ford Motor on Wednesday agreed to settle class-action lawsuits covering plaintiffs in four states who claimed its Explorer sport-utility vehicles were prone to rollovers, the company and an attorney for the plaintiffs said.

The settlement applies to about 1 million people in California, Connecticut, Illinois and Texas, said Kevin P. Roddy, a New Jersey attorney and co-counsel for the SUV owners who brought the lawsuit.

He said the settlement will be filed later Wednesday in Sacramento County Superior Court.

It will allow vehicle owners to apply for $500 vouchers to buy new Explorers or $300 vouchers to buy other Ford or Lincoln Mercury products, Roddy told The Associated Press.

The settlements apply to Explorers in model years 1991 through 2001, he said.

CONSUMER CONFIDENCE DROPS FOURTH CONSECUTIVE MONTH

From CNNMoney:

A key barometer of consumer sentiment dropped for a fourth consecutive month, sending the index near its lowest level in two years.

Rising gasoline prices, falling home sales and unstable financial markets have weighed on consumers' spending, the Conference Board reported.

The New York-based Conference Board said Tuesday that its Consumer Confidence Index fell to 87.3 from a revised 95.2 in October. The reading marked the lowest level since October 2005 when it was 85.2. Analysts had expected 91.5.

"We expected a downward trend but it was significantly down," said Anika Khan, an economist at Wachovia.

Economists repeatedly pointed to the worsening housing crisis, tougher lending standards and rising energy prices for the dampened attitudes.

MORE BAD NEWS FOR EXISTING HOMES IN OCTOBER

From Reuters:

Existing home sales fell 1.2 percent in October to a record low 4.97 million-unit pace, according to a report on Wednesday that showed the downturn in the U.S. housing market was deepening.

Home prices fell at a record pace and the inventory of homes for sales increased as the housing market felt the pinch of tighter lending standards.

The median existing home price fell 5.1 percent from a year ago to $207,800 and the total housing inventory rose 1.9 percent in October to 4.45 million existing homes for sale, a 10.8 month supply at the current sales pace.

The sales pace was the lowest since the realty trade group began tracking both single-family and condo sales jointly in 1999.

CITIGROUP SELLS 4.9% STAKE TO ABU DHABI FUND

From The New York Times:

Citigroup announced last night that it was selling a $7.5 billion stake to a Middle Eastern sovereign fund in the latest bid to shore up its balance sheet.

The fund, the Abu Dhabi Investment Authority, has agreed to buy a 4.9 percent equity stake in a complex transaction that has been approved by federal regulators. It will have no role in the management or governance of Citigroup, nor any presence on Citigroup’s board.

Abu Dhabi’s 4.9 percent stake will make it Citigroup’s single largest shareholder, overtaking Prince Walid bin Talal of Saudi Arabia. He has owned close to a 5 percent stake since the early 1990s, when he made a similar investment to bail out the company. Together, their holdings will mean that nearly 10 percent of the Citigroup will be owned by Middle Eastern investors.

“This investment reflects our confidence in Citi’s potential to build shareholder value,” said A.D.I.A.’s managing director, Sheikh Ahmed bin Zayed al-Nahyan.

The investment from Abu Dhabi underscores Citigroup’s precarious capital position, and also highlights the growing petrodollar wealth of Mideast countries, which are buying up assets and taking stakes in numerous American companies.

BEIKOKU BANARE = QUITTING AMERICA

From The New York Times:

Many in Japan are starting to speak of “quitting America,” but they are not talking about a rise in anti-American political fervor. Rather, they mean a move away from American investments that is altering global capital flows and helping to weaken the dollar.

Japanese individuals are diverting more and more of that money away from the United States and the dollar and into higher-yielding global investments, ranging from high-interest Australian government bonds to shares in fast-growing Indian construction companies. Partly this “quitting America” — called beikoku banare in Japanese — reflects an increasing sophistication of Japan’s investors, who embraced mutual funds only a decade ago and are still learning to diversify. But it also offers one more sign that the world does not depend as much on the American economy as it once did.

In October alone, Japanese individuals pulled 33.9 billion yen, or about $300 million, out of mutual funds that invested solely in North American stocks and bonds, according to Daiwa Fund. In the same month, it said, Japanese individuals put 175.2 billion yen, or $1.6 billion, into funds investing in stocks and bonds in emerging countries.

In the last 12 months, Japanese individuals invested 1.97 trillion yen, or $17.5 billion, into emerging market mutual funds, according to Daiwa Fund, and during the same period, they removed 447 billion yen, or $4 billion, from North America-only mutual funds.

To be sure, some analysts caution that the popularity of emerging markets may prove to be a fad, especially if stock markets in China or India start falling as quickly as they rose. Analysts also say the dollar’s greater familiarity gives it an enduring appeal among many Japanese, who may return once the United States mortgage problems subside.

Some analysts predicted the eventual revival of short-term currency trading between the dollar and the yen, which had been an important support for the dollar’s value before August’s market turmoil.

“A lot of dollar-buyers are just sidelined now,” said Tohru Sasaki, chief exchange strategist in the Tokyo office of JPMorgan Chase Bank. “They’ll be back once currency markets settle down.”

TOPPS MEAT FILES CHAPTER 7 LIQUIDATION BANKRUPTCY

From USA Today:

Topps Meat, which issued the nation's second-largest beef recall ever, has filed papers to liquidate the company.

Topps was one of the largest makers of frozen hamburgers before potentially fatal bacteria were found in its patties, compelling it to halt production and issue the recall on Sept. 29.

Six days later Topps said it was closing its business, after it was forced to issue the recall of 21.7 million pounds of frozen hamburger, which is one year's worth of production.

In September, the USDA said three people were confirmed as getting E. coli from Topps products, with 22 other cases under investigation. Cases were found in Connecticut, Florida, Indiana, Maine, New Jersey, New York, Ohio and Pennsylvania.

Topps has up to 10,000 creditors and liabilities of $1 million to $100 million, according to its Chapter 7 filing in U.S. Bankruptcy Court in Newark. The company put its assets in the same range.

Topps recalled a year's worth of production — 21.7 million pounds of frozen hamburgers — after some meat was found contaminated with E. coli O157:H7, a potentially fatal bacteria. To date, 40 people in eight states have been sickened after eating Topps beef, the Centers for Disease Control said.

In late October, the USDA said a now-defunct Canadian firm, Rancher's Beef of Balzac, Alberta, was the likely source of bacteria-contaminated meat used by Topps.

The recall prompted the USDA to announce changes in how it will inspect meat plants. After being criticized for foot-dragging, the USDA also said it would move faster to encourage recalls. The agency cannot issue recalls.

Topps burgers contained at least three versions of the O157:H7 strain of E. coli bacteria, which can be fatal to humans. The strain is harbored in the intestines of cattle and can also get on their hides. Improper butchering and processing can cause the E. coli to get onto meat. Thorough cooking, to at least 160 degrees internal temperature, can destroy the bacteria.

AUTO ENTHUSIASTS MUST CHECK OUT THIS SPECIAL SECTION

For those who love automobiles, The New York Times has an excellent special section online reviewing the cars and trucks at the Los Angeles Auto Show. Last year, attending the Chicago Auto Show was one of the highlights of Business Club and on February 8, 2008, we will make the trip downtown for opening day. It's not too late to join. Go to wccbusinessclub.com for an application.

U.S. DOLLAR EROSION PUSHES EURO TO THE FOREFRONT

From USA Today:

Despite squeals of pain from European exporters, the strength of the euro is fast propelling Europe's single currency into a juggernaut.

Currency traders from Egyptian street hawkers to Asian central banks are looking to the euro as a better store of value as the U.S. dollar erodes. The shared 13-nation currency hit $1.4966 on Friday, another record high against the once steadfast dollar.

As well as being the world's currency of choice in central bank reserves, the dollar has long been the de facto second currency in street markets and on tourist menus around the world.

Today, market traders in Luxor — site of the ancient Egyptian city of Thebes — snub dollars in favor of euros or local currency. In Russia, shops, restaurants and hotels that once listed prices in the mighty dollar rather than the unstable ruble have increasingly pegged prices to the euro.

While these trends are unlikely to perturb currency markets, concern is growing that foreign investors may start dumping their dollar-holdings. In particular, traders are watching China's central bank for changes in its portfolio.

Most of China's $1.43 trillion reserves are in dollar-denominated assets such as U.S. Treasuries, and officials aren't happy about the U.S. currency's decline. Zhou Xiaochuan, head of China's central bank, urged U.S. Treasury Secretary Henry Paulson on Thursday to boost the dollar, according to the Xinhua government news agency.

The euro — introduced to financial markets in 1999 and in notes and coins form in 2002 — has risen as a share of global official reserves from 17.9% in 1999 to 25.8% in 2006, according to the International Monetary Fund. In the same period the dollar's share has fallen from 71% to 64.8%

INDEX OF LEADING ECONOMIC INDICATORS FALLS IN OCTOBER

From The New York Times:

The economy may continue to slow into 2008, according to a measure of its performance over the next three to six months.

The Conference Board said yesterday that its index of leading economic indicators fell 0.5 percent in October after a 0.1 percent September increase that was smaller than previously estimated. A separate report showed consumer confidence weakened this month.

The figures, coming a day after the Federal Reserve lowered its growth forecast for next year, added to concern that the credit collapse is causing consumers and businesses to cut spending.

“There is a definite pattern of weakening here,” said Edward McKelvey, a senior economist at Goldman Sachs in New York, who correctly forecast the decline in the leading index. “It’s all consistent with deceleration in the economy and that includes some deceleration in the labor market.”

Ken Goldstein, a Conference Board economist, said in a statement: “The data are pointing to a continued slow economy. It might even slow a little more after the holidays.”

SMART CAR AVAILABLE IN U.S. IN JANUARY

From MSNBC:

The 8-foot, 8-inch Smart Fortwo micro car comes to U.S. shores in January, and even with gasoline prices well above the $3-a-gallon mark it remains to be seen whether Americans will flock to buy the tiny, two-seater car.

Ranging in price from $11,590 for the base version to $16,590 for a fully loaded Fortwo Passion convertible, the 1,800-pound car boasts 40 miles per gallon — a big draw for drivers worried about high gas prices.

Smart has already sold more than 770,000 Fortwos in 36 countries, and Smart USA is banking on robust sales in the United States. The Smarts on sale here will be made in France and sold through 73 U.S. dealers, including Mercedes dealers and dealerships that are part of the Penske Automotive Group owned by racing icon Roger Penske. Penske is chairman of Smart USA, a division of Daimler AG’s Mercedes-Benz brand.

Smart says more than 30,000 consumers have put down a refundable $99 deposit to reserve a Smart car. Those deposits do not guarantee sales, but the company is hoping to move at least 30,000 units in the first year, said spokeswoman Jessica Gemmara.

FEWER SMALL EMPLOYERS OFFERING HEALTH INSURANCE

From USA Today:

Fewer small employers offered health insurance this year, despite the widespread availability of new, lower-cost high-deductible insurance plans, a survey released today by benefit firm Mercer shows.

Advocates of the high-deductible plans touted them as one solution to the growing number of uninsured, expecting the plans to appeal to small employers, who would continue to offer health insurance as a result.

"That's not happening," says Blaine Bos, a Mercer partner and one of the study authors. "In fact, the reverse is happening."

The study of nearly 3,000 employers found that the percentage of employers with 200 workers or fewer offering any kind of health insurance fell to 61% this year from 63% in 2006.

That drop came even as the cost of high-deductible plans with tax-free savings accounts averaged $5,970 per worker per year. That was $700 less than a comparable plan without a savings account and far lower than the $7,120 for the average HMO, the study says.

The finding bolsters concern that one of the biggest hurdles any state or national health reform effort will face is the question of what is affordable, says Bos. "Defining that number will be a real political and public policy issue as this debate stays on the table."

MIDDLE EASTERN INVESTMENTS IN U.S. INCREASE DRAMATICALLY

From AP via MSNBC:

Middle Eastern investments in U.S. companies has increased more than fivefold in 2007, leaping from $4.5 billion on 32 deals last year to nearly $25 billion on 42 deals so far this year, according to data compiled by Thomson Financial.

The money invested in the past two years is more than the entire total invested from 1990 to 2005, according to the latest Thomson data. During that period, $24.8 billion in investments were made in 258 deals.

Oil-rich countries have been enriched further in recent months by a run-up in the price of a barrel of oil, which has been hovering in the $90 range while many U.S. stocks continue to suffer from the housing and lending morass that's led some banks to absorb billions of dollars in losses.

The biggest deal so far this year involving Middle Eastern firms was General Electric Co.'s $11.6 billion sale of its plastics division, completed in August, to petrochemicals manufacturer Saudi Basic Industries Corp., a public company based in Riyadh that is 70-pecent owned by the Saudi Arabian government.

Firms based in the United Arab Emirates, a federation of seven oil-rich states, have invested nearly $10 billion in real estate, financial, power generation and other types of companies in the United States.

Earlier this year, Mubadala bought a 7.5 percent stake in the management operations of private-equity firm Carlyle Group for $1.35 billion, and this week unveiled a partnership with military contractor Northrop Grumman Corp. to collaborate on aerospace and aviation technologies.

BUFFETT URGES CONGRESS TO KEEP ESTATE TAX

From The New York Times:

Warren E. Buffett urged Congress yesterday to maintain the estate tax, saying that plans to repeal the tax would benefit a handful of the richest American families and widen income disparity in the United States.

Mr. Buffett, the billionaire chairman of Berkshire Hathaway, told the Senate Finance Committee that advocates of repeal were “dead wrong” to call the tax a “death tax.”

It would be more appropriate to call it a “death present,” Mr. Buffett, 77, said. “A meaningful estate tax is needed to prevent our democracy from becoming a dynastic plutocracy.”

Congressional Democrats are likely to seize on Mr. Buffett’s comments to bolster their argument that repeal of the estate tax amounts to a windfall for a few wealthy families. Republicans have pushed to eliminate the tax permanently or reduce the rate and exempt more estates by raising the value at which the tax takes effect.

Mr. Buffett said that in the last 20 years, tax laws have allowed the “superrich” to become richer.

“Tax law changes have benefited this group, including me, in a huge way,” he said. “During that time the average American went exactly nowhere on the economic scale: he’s been on a treadmill while the superrich have been on a spaceship.”

The chairman of the finance committee, Max Baucus, a Montana Democrat, said yesterday that fewer than 1 percent of United States households currently pay the tax. He said repeal lacked support in the Senate and the purpose of the hearing was to solicit ideas for replacing the shifting rules and uncertainty of the current system.

UNITED AND DELTA IN MERGER TALKS?

From USA Today:

UAL Corp.'s United Airlines and Delta Air Lines Inc. have been discussing a combination between the nation's second- and third-largest carriers that would keep the United name and the corporate headquarters in Chicago, The Associated Press has learned.

But Delta issued a statement denying "published reports that it had engaged in merger talk with United." CEO Richard Anderson was quoted as saying, "There have been no talks with United regarding any type of consolidation transaction and there are no such ongoing discussions."

United called the report of recent talks "wholly inaccurate."

However, on Oct. 12, 2006, then- Delta CEO Gerald Grinstein said during a stop in New York that he had previously received "feelers" from United about a possible merger.

The Wall Street Journal's online edition, citing unidentified people, said Andersen has informally talked about consolidation possibilities with counterparts at other airlines, including senior executives at United and Northwest Airlines.

Earlier Wednesday, Delta said in a statement that its board has established a special committee to work with management to review and analyze strategic options for the airline. Top executives have said recently they are trying to determine whether consolidation makes sense for Delta.

There is a sense of urgency in the most recent talks, which have been going on for some time and continued as recently as a week or so ago, an official with knowledge of the talks said Wednesday. The official spoke on condition of anonymity because the person was not authorized to speak publicly. The official stood by the assertions about the talks after learning of the statements by Delta and United.

"They want to get something done before a new administration gets in and so they get the clock ticking on" federal regulatory approval, the official said.

EUROPEANS FLOCK TO U.S. FOR CHRISTMAS SHOPPING

From USA Today:

Record numbers of Europeans are flocking to New York this fall — prime holiday shopping season — as the dollar sinks to new lows against the euro and British pound.

New York expects roughly 1 million western Europeans this month and December, 5% more than last year, says George Fertitta, CEO of tourism agency NYC & Co. Helping to boost Big Apple tourism: killer deals on merchandise because of an exchange rate that favors euros and pounds.

"A new class of Europeans are coming to America totally because of currency," says George Malkemus, president of luxury shoe retailer Manolo Blahnik USA.

Malkemus says he's selling more shoes from his Manhattan store than ever to Europeans despite there also being a London store. Shoppers can pay $600 for a pair of shoes that in London would cost the equivalent of $823.

Last week, the dollar sank to its lowest level ever against the euro, and to its lowest level against the pound in 26 years. One euro is worth $1.47. One pound is worth $2.06.

Foreigners also are snapping up U.S. real estate and could target U.S. companies if the dollar continues to erode, says Omer Esiner, a market analyst at currency trader Ruesch International.

RETAIL SALES SHOW SMALL GAIN IN OCTOBER

From AP via MSN:

Retail sales managed a small increase in October as consumers struggled with falling confidence caused by a steep slump in housing and tighter credit conditions.

The Commerce Department reported Wednesday that retail sales edged up 0.2 percent in October, compared to the previous month. It was the weakest showing since a 0.1 percent rise in August and represented a significant slowdown from a 0.7 percent jump in September sales.

CHINA EXPERIENCING PROBLEMS TAMING INFLATION

From The New York Times:

Consumer prices unexpectedly surged again last month in China despite price controls on a wide range of industries, and this month holds the prospect of even higher inflation.

For years, flat or falling prices for Chinese goods helped restrain inflation in the United States. But now rising costs for American imports from China are complicating the task of the Federal Reserve. The Fed has been cutting interest rates to help weak housing and credit markets in the United States, but has been wary that low rates might permit inflation to creep back into the economy.

Prices were 6.5 percent higher in October than a year earlier, accelerating from 6.2 percent in September, China’s statistical agency announced on Tuesday. The October inflation rate matched an increase of 6.5 percent in August, China’s highest inflation rate in nearly 11 years.

Rising prices are an especially dangerous problem for China, where public acceptance of one-party rule depends to a considerable extent on ever-rising prosperity. With food prices increasing the fastest — they were up 17.6 percent in October from a year earlier — many poor and working-class families are struggling to make ends meet.

Just this past Saturday in Chongqing, people began lining up before dawn when a Carrefour store offered a discount on large jugs of cooking oil, an essential for a lot of Chinese cooking. When the doors opened, a stampede ensued, killing 3 people and injuring 31. China’s commerce ministry responded on Monday by ordering a ban on limited-time sales promotions.

PPI INCREASES SLIGHTLY IN OCTOBER

From Reuters via USA Today:

Producer prices advanced by a smaller-than expected 0.1% in October as prices for energy and light trucks fell, Labor Department data showed Wednesday, while a key measure of core inflation at the producer level was flat with September.

The October gauge of prices paid at the farm and factory gate was below economists' forecasts for a 0.3% rise after a 1.1% increase in September.

Energy prices fell 0.8% in October after a 4.1% rise in September, while prices for light trucks, which include slow-selling sport-utility vehicles and pickups, fell 2.7% in October.

Core producer prices, which strip out volatile food and energy costs, were unchanged from September. They had been forecast to rise 0.2% after a 0.1% rise in September.

Core prices excluding cars and light trucks, however, rose 0.2% in October.

WAL-MART POSTS SURPRISINGLY GOOD RESULTS

From AP via Yahoo:

Wal-Mart Stores Inc. posted third-quarter earnings Tuesday of $2.86 billion, an 8 percent rise that beat Wall Street expectations as the world's largest retailer heads into the holiday shopping season.

The company earned 70 cents per share, up from 62 cents per share in the same period a year ago. The 70 cents includes an after-tax gain equal to 1 cent per share. Analysts surveyed by Thomson Financial had forecast earnings of 67 cents per share on revenue of $91.67 billion

Third-quarter sales at stores open at least a year, not counting fuel, were up 1.5 percent in the company's U.S. stores, same as a year ago. The company expects same-store sales for the fourth quarter to rise no more than 2 percent.

UPS PREDICTS SMALL INCREASE IN SHIPPING THIS HOLIDAY SEASON

From Reuters via MSN:

Package delivery company United Parcel Service Inc said on Sunday it expects to handle 22 million packages on its peak day ahead of the holidays this year, an increase of less than 5 percent from its forecast of 21 million in 2006.

UPS’ peak day is on December 19 this year.

Officials at the Atlanta-based company have predicted that package volume growth in this year’s peak holiday season will be “less robust” than in the previous four years, reflecting slowing U.S. economic growth, the housing sector slowdown and expectations for low fourth-quarter retail sales growth.

Main rival Memphis-based FedEx Corp has said it expects package volumes to reach 11.3 million on its peak day of December 17. Last year the company predicted a peak 9.8 million packages. A company spokesman said this year’s forecast includes a low-cost service that did not figure in last year’s prediction. A comparable forecast for this year would be 10.4 million, a gain of 6.1 percent.

PROGRESSIVE ADDS PETS TO AUTO INSURANCE

From AP via MSN:

Progressive Corp. is providing collision coverage for customers' dogs or cats at no additional premium cost. It will pay up to $500 if a customer's dog or cat is hurt or dies in a car accident.

There are over 150 million pets in the U.S., and Americans spend over $40 billion on their pets annually, according to a recent Insurance Information Institute study.

The Progressive benefit has been in place since Sept. 6, and it's still too soon to determine if the company's undetermined cost of offering it will be offset by better sales, Progressive spokeswoman Leah Knapp said.

Progressive is the third-biggest auto insurer, ranking behind State Farm and Allstate and slightly ahead of National Indemnity (Berkshire Hathaway), which includes GEICO.

MERCK MAKES SETTLEMENT PROPOSAL TO VIOXX PLAINTIFFS

From The New York Times:

Three years after withdrawing its pain medication Vioxx from the market, Merck has agreed to pay $4.85 billion to settle 27,000 lawsuits by people who claim they or their family members suffered injury or died after taking the drug, according to two lawyers with direct knowledge of the matter.

The settlement, one of the largest ever in civil litigation, comes after nearly 20 Vioxx civil trials over the last two years from New Jersey to California. After losing a $253 million verdict in the first case, Merck has won most of the rest of the cases that reached juries, giving plaintiffs little choice but to settle.

The settlement will help put Vioxx behind Merck, as well as sharply reduce its Vioxx-related legal defense fees, which are now running at more than $600 million annually.

Based on the fact that the 27,000 suits cover about 47,000 sets of plaintiffs, the average plaintiff will receive just over $100,000 before legal fees and expenses, which usually swallow between 30 and 50 percent of payments to plaintiffs. Plaintiffs who do not want to accept the settlement can pursue their own claims, but with so many of the top trial lawyers in the United States agreeing to the deal, they may have difficulty doing so.

AQUA DOTS TOYS RECALLED AFTER CAUSING COMAS

From CNN.com:

Millions of Chinese-made toys have been pulled from shelves in North America and Australia after scientists found they contain a chemical that converts into a powerful date rape drug when ingested. Two children in the U.S. and three in Australia were hospitalized after swallowing the beads.

With only seven weeks until Christmas, the recall is yet another blow to the toy industry -- already bruised by a slew of recalls this past summer.

In the United States, the toy goes by the name Aqua Dots, a highly popular holiday toy distributed by Toronto-based Spin Master Toys. They are called Bindeez in Australia, where they were named toy of the year at an industry function earlier this year.

It could not immediately be learned whether Aqua Dots beads are made in the same factories as the Bindeez product. Both are sold by Australia-based Moose Enterprises.

The toy beads are sold in general merchandise stores and over the Internet for use in arts and crafts projects. They can be arranged into designs and fused together when sprayed with water.

Scientists say a chemical coating on the beads, when ingested, metabolizes into the so-called date rape drug gamma hydroxy butyrate. When eaten, the compound -- made from common and easily available ingredients -- can induce unconsciousness, seizures, drowsiness, coma and death.

Naren Gunja from Australia's Poisons Information Center said the drug's effect on children was "quite serious ... and potentially life-threatening."

The recall was announced by the Consumer Product Safety Commission on Wednesday several hours after published reports about the recall in Australia.

The two U.S. children who swallowed Aqua Dot beads went into nonresponsive comas, commission spokesman Scott Wolfson said Wednesday afternoon.

In Australia, the toys were ordered off store shelves on Tuesday when officials learned that a 2-year-old boy and a 10-year-old girl were hospitalized after swallowing the beads. A 19-month-old toddler also was being treated.

CHICAGOANS CAFFEINE CHAMPS

Sure the Bears are in last place in the division, the Bulls have not won a game (0-4), the Cubs got bounced from the first round of the playoffs, and the White Sox were just plain horrible, but Chicagoans can hold their heads up high as a survey has shown the people in Chicago are the biggest consumers of caffeine in the United States. We're #1, we're #1, we're #1!

From Reuters via Yahoo:

The windy city is also the most wired, according to a survey that showed people in Chicago are the most caffeinated in the United States.

Chicagoans eat more chocolate and drink more cola than other U.S. urbanites, and are among the top consumers of energy drinks and coffee.

They are also likely to say caffeine is good for you, according to the poll conducted by Prince Market Research.

Tampa, Miami, Phoenix and Atlanta rounded out the top five most caffeinated cities, while residents of San Francisco, Philadelphia, New York, Detroit and Baltimore consumed the least caffeine.

Seattle took the top spot in just caffeinated coffee consumption. Nearly 60 percent of residents in the city said coffee would be the most difficult caffeine product to give up.

Half of all the people questioned in the poll said they drank coffee every day, followed by 21 percent who drank caffeinated cola.

BUSH ADMINISTRATION TO PUT FORWARD CONSUMER SAFETY PROPOSALS

From The New York Times:

The Bush administration on Tuesday will propose a significant expansion of the authority of the federal drug and consumer product safety agencies to inspect and certify imports, White House and other administration officials said Monday.

A White House official said a major part of the plan would entail stationing inspectors in foreign countries to examine drugs, food and other potentially dangerous products before they were shipped to American shores. The official said that with $2 trillion in imports annually, inspections at the ports had become ineffective.

The official said the plan would give the agencies the authority to certify the safety of products and to list certified products on a Web site that could be viewed by consumers.

Officials said that the plan would require significant budget increases for the Consumer Product Safety Commission and the Food and Drug Administration.

In Congress last Tuesday, the Senate Commerce Committee approved without objection legislation that would increase penalties, let the product safety agency publicly disclose reports of defective products and increase the maximum penalty on violations to $100 million, from $1.8 million.

Senior Democrats in both houses called for the resignation of Nancy A. Nord, the acting head of the Consumer Product Safety Commission, after she sent letters to Congress vigorously opposing the legislation. Ms. Nord’s letters closely resembled complaints raised by a coalition of manufacturing associations.

At the urging of industry groups, the White House has objected to a provision that would reward industry whistle-blowers for reporting defective products and another that would give state prosecutors the authority to enforce federal safety laws.

Consumer groups and Democratic lawmakers say those provisions are vital in restoring the credibility of federal safety efforts, while White House officials say the measures would encourage frivolous litigation.

CITIGROUP PUSHES PRINCE OFF OF CLIFF, WRITES DOWN ANOTHER $8-$11 BILLION

From USA Today:

With firm determination, Citigroup CEO Charles Prince declared earlier this year that 2007 was going to be the "year of no excuses."

Now he's run out of them.

Amid growing losses from subprime mortgages at the giant financial services firm, Prince, 57, retired under pressure on Sunday. He said it was "the only honorable course for me to take." Former Treasury secretary Robert Rubin, a board member and chairman of the company's executive committee, will serve as chairman of the board. Sir Win Bischoff, chairman of Citi Europe, will serve as acting CEO, the company said.

Citigroup also is lowering the value of some of its securities tied to subprime mortgages. It estimates the value of those securities, at fair market value today, would be $8 billion to $11 billion less than it expected just Sept. 30. That write-down would be in addition to a $6.5 billion write-down it has already taken. The company also said a special unit has been set up to handle the subprime mortgage problems. Citi said it has no plans to reduce its dividend.

UNIONIZED MOVIE AND TV WRITERS TO STRIKE MONDAY

From The New York Times:

Hollywood’s two decades of labor peace shattered Thursday night, as movie and television writers declared they would embark on an industrywide strike for the first time since 1988, when both writers and Teamsters walked out.

The writers’ union announced this afternoon that the strike would begin on Monday morning.

Unless there is a last-minute settlement, the strike will pit union writers, whose position has been eroded by reality television and galloping technological change, against studios and networks that are backed by big corporate owners like General Electric and News Corp., but are also unsure of the future.

The walk-out threatens an instant jolt to television talk shows like “Late Show With David Letterman,” which rely on guild writers to churn out monologues and skits. “The Daily Show With Jon Stewart,” “The Colbert Report,” “Late Night With Conan O’Brien,” and “The Tonight Show With Jay Leno” will all revert to repeats on Monday, at least for the time being.

And if the strike drags on, audiences could see the eventual shutdown of soap operas, TV series and movie productions, as they exhaust their bank of ready scripts.

In the near term, a writers’ strike will have an immediate impact on more than 200,000 workers in the movie and TV industry here and the thousands more who produce or sell entertainment elsewhere in the United States and abroad. The dispute may also signal more labor trouble to come, as directors and actors face similar issues when their contracts expire next June.

UAW AND FORD REACH TENTATIVE AGREEMENT

From The New York Times:

The United Automobile Workers union reached a tentative agreement with the Ford Motor Company early this morning after a 41-hour marathon bargaining session, completing a series of new contracts with the American auto companies.

No details of the deal were released, but it is expected to resemble contracts reached earlier this fall for General Motors and Chrysler LLC.

Unlike the G.M. and Chrysler contracts, the agreement at Ford was reached without a strike. Analysts say that Ford, which lost $12.6 billion last year, is the weakest of the Detroit auto companies.

"Our bargaining committee came through for our active and retired members," the U.A.W.'s president, Ron Gettelfinger, said in a statement. He said that its bargaining team had "encouraged Ford to invest in product and people while addressing the economic needs of our active and retired members."

"We face enormous challenges – and we also have enormous potential," said U.A.W. Vice President Bob King, who directs the union's National Ford Department. "Our goals for this contract were to win new product and investment, to enhance job security and protect seniority – and we made progress in all these areas."

Any job guarantees will be closely scrutinized by union members at Ford, who have watched G.M. and Chrysler cut jobs since their new contracts were reached.

Ford had no immediate comment. Union leaders will review the contract next week, before it is presented to members for a vote.

MIXED EMPLOYMENT REPORT ISSUED

From The New York Times:

Two distinctly different views of the economy emerged today in a single report: the crucial employment survey issued by the Labor Department.

The economy added 166,000 jobs in October, the fastest pace in five months, according to employers. Payrolls grew at a pace more than twice what analysts had predicted, led by a sharp increase in the service sector.

But a survey of consumers showed that fewer Americans were employed last month over all. The labor force shrank by 211,000 jobs, and 465,000 Americans said they were no longer working.

The mixed employment report underscores the uncertainty on Wall Street, as analysts insist the fourth quarter will include a broad slowdown in growth and spending even as some recent reports suggest a sunnier outlook.

“You’ve got what’s good and what’s scary about this economy in this one report,” said Jared Bernstein, an economist at the Economic Policy Institute.

The estimate of job growth, which beat even the highest estimates, follows a downwardly revised 96,000 gain in September and a 93,000 gain in August, the Labor Department said. Still, payrolls are increasing at the slowest annual rate since June 2004.

The unemployment rate held steady at 4.7 percent in October, the highest rate since August 2006, but only because the survey found that more people stopped looking for work and were therefore not counted by the government as unemployed.

Manufacturing and retail jobs dropped sharply in October, underscoring analysts’ expectations that consumer spending and business activity will slow in the fourth quarter as problems in the housing market affect the broader economy.

Wages ticked up 0.2 percent, to $17.58, slightly below expectations, and are up 3.8 percent compared with those a year earlier. The length of the average workweek stayed flat at 33.8 hours.

Adding to the uncertainty about the report, most of the job gain — 103,000 of the 166,000 net new jobs — came from an estimate that the Labor Department makes each month about how many jobs were added by new businesses. The Labor Department did not actually find evidence of these jobs; it assumed they were created based on historical patterns.

NARDELLI SWINGS AX, CHOPS 11,000 CHRYSLER WORKERS

As we've discussed previously, Robert Nardelli was brought in to Chrysler to tame the labor union and fire thousands of workers. In his short tenure, he has negotiated a controversial contract that was barely ratified and less than a week later cut 11,000 jobs. Nardelli and Cerberus will be ruthless in cutting costs to make Chrysler more attractive for a future sale. Building the brand for the long term is not what Nardelli and Cerberus are about. They are only interested wringing every last penny of value from a once proud brand and extracting as much profit in as short of a time period as possible. When they are finished with Chrysler, they will sell what is left, likely a shell of the former company, and look for their next victim.

From The New York Times:

Chrysler LLC said today that it would cut up to 10,000 more hourly jobs, eliminate 1,000 salaried positions, and discontinue shifts at five assembly plants in the United States and Canada, in the first major steps under its new private owners.

The company also is dropping four models from its lineup, including the convertible version of its PT Cruiser sport wagon, as well as the Chrysler Pacifica, a crossover vehicle criticized as being too big and too expensive for family buyers.

Also leaving the lineup are the Dodge Magnum, a low-slung station wagon, and the Chrysler Crossfire two-seater. Both those vehicles are based on underpinnings from Mercedes-Benz, which is owned by Chrysler’s former parent, Daimler.

The job cuts, which will take effect through 2008, are in addition to a plan announced in February that would eliminate 13,000 North American positions. Altogether, they represent a 30 percent reduction in Chrysler’s 2006 work force of 80,000.

Today’s cuts, though expected, were more than twice as deep as some industry analysts anticipated.

Chrysler said the cuts at its factories would affect 8,500 to 10,000 workers. It said it would eliminate third shifts at plants in Belvidere, Ill., Toledo, Ohio, and Brampton, Ontario.

It also is eliminating the second shift of workers at the Jefferson North plant in Detroit and its plant in Sterling Heights, Mich.

The company also said it would reduce a shift at its Mack Avenue engine plant in Detroit, which has been working on three shifts.

The Canadian Auto Workers union president, Basil Hargrove, called the job cuts an “absolute disaster.”

“This is a huge hit to us,” he said during a news conference this morning in Toronto.

PERSONAL INCOME AND CONSUMER SPENDING REPORT ISSUED

From The New York Times:

Personal income and spending continued to grow in September, a government report showed today, suggesting strength in the economy even as analysts fear widespread troubles in the next few months.

Still, consumption began to slow, and manufacturers may be starting to feel the effects of a tightening housing market.

Personal spending, which accounts for two-thirds of the gross domestic product, grew at 0.3 percent in September, a slight deceleration from the 0.5 percent growth in August, the Commerce Department said today.

Spending is up 5.6 percent over the last 12 months, probably bolstered by a comparable rise in personal income, which has increased 6.8 percent over the last year.

Income rose 0.4 percent last month after an identical gain in August. Disposable income, a measure of the money employees take home after taxes, dipped to 0.4 percent from 0.5 percent in August.

Today’s report offered few surprises, though it could provide some comfort to economists who predict a decline in economic growth in the fourth quarter. Analysts are waiting for a worsening housing recession to make its way into the broader economy, but for now consumers appear to be comfortable with opening their wallets.

The personal consumption expenditures index, an inflation gauge closely watched by the Federal Reserve, also stayed steady. Core inflation, which excludes volatile food and energy prices, rose 1.8 percent on an annual basis, keeping pace with a downward trend over six months.

But overall inflation, as measured by the P.C.E. deflator, is up 2.4 percent for the year, above the Fed’s so-called comfort zone of 1 percent to 2 percent. That rise, compared with 1.8 percent in August, likely reflected the surging cost of crude oil, which pushes up gasoline and energy prices.

HOMES FACING FORECLOSURE DOUBLES IN 3RD QUARTER

From USA Today:

A soaring number of U.S. homeowners struggled to make mortgage payments in the third quarter, with properties in some stage of foreclosure more than doubling from the same time last year, a mortgage data company said Thursday.

A total of 446,726 homes nationwide were targeted by some sort of foreclosure activity from July to September, up 100.1% from 223,233 properties in the year-ago period, according to RealtyTrac.

The current figure was 33.9% higher than the 333,731 properties in foreclosure in the second quarter.

There was one foreclosure filing for every 196 households in the nation during the most recent quarter, RealtyTrac said.

WILL GOVERNMENT CREATE A DO-NOT-TRACK LIST FOR INTERNET?

From The New York Times:

A coalition of privacy groups asked the government today to set up a mandatory do-not-track list for the Internet.

The groups — which include the Consumer Federation of America, World Privacy Forum and several others — are worried that online advertising companies are collecting too much data about consumers’ Web habits.

For a few years, advertisers have been using information about what Web sites people visit to deliver ads to them later on. The practice is called behavioral targeting, and the Federal Trade Commission is hosting a forum tomorrow and Friday about the privacy issues it raises.

While advertisers often say that consumers like receiving ads that are relevant to them rather than generic, privacy advocates say that most people do not realize the amount of personal information they are sharing with marketers.

FEDERAL RESERVE CUTS KEY RATE QUARTER POINT

From The New York Times:

The Federal Reserve gave investors what they wanted today, lowering short-term rates for the second time in two months.

But it quietly warned Wall Street not to expected to assume that more reductions are ahead.

The move, to reduce short-term rates by a quarter point to 4.5 percent, was aimed at preventing the meltdown in housing from crippling the rest of the economy. But the vote was not unanimous, reflecting disagreement among policymakers about the risks that confront the economy.

Investors were generally pleased, and stocks were up modestly after briefly giving up most of their gains for the day immediately after the announcement. But Treasury prices fell, reflecting some concerns that lower interest rates could stoke inflation. Oil prices surged nearly 4 percent and gold futures were up about 1 percent. The dollar modestly weakened against other major currencies.

GOOGLE'S CONTINGENCY PLAN: TAKE ON FACEBOOK WITH ORKUT & A NEW STRATEGY

From The New York Times:

Google and some of the Web’s leading social networks are teaming up to take on the new kid on the block — Facebook.

On Thursday, an alliance of companies led by Google plans to begin introducing a common set of standards to allow software developers to write programs for Google’s social network, Orkut, as well as others, including LinkedIn, hi5, Friendster, Plaxo and Ning.

The strategy is aimed at one-upping Facebook, which last spring opened its service to outside developers. Since then, more than 5,000 small programs have been built to run on the Facebook site, and some have been adopted by millions of the site’s users. Most of those programs tap into connections among Facebook friends and spread themselves through those connections, as well as through a “news feed” that alerts Facebook users about what their friends are doing.

For Google, the effort could breathe new life into Orkut, which is popular in Brazil and other countries, but not in the United States.

Facebook’s success with its platform has proved that the combination of social data and news feeds is a powerful mechanism to help developers distribute their software. They are now seen as must-have functions for many Internet companies. Other social networks and Web companies, including MySpace and the instant messaging service Meebo.com, have announced plans to open their sites in similar ways.

GDP COMES IN AT SURPRISING 3.9% FOR 3RD QUARTER

From AP via The New York Times:

The economy picked up speed in the summer, growing at a brisk 3.9 percent pace, the fastest in 1 1/2 years and an impressive performance even as a credit crunch plunged the housing market deeper into turmoil.

The latest snapshot of the country's economic health, released by the Commerce Department on Wednesday, suggested that the economy is demonstrating much resilience and thus far holding up well to the strains in the housing and credit markets, which had intensified during the third quarter and rocked Wall Street.

Individuals ratcheted up their spending. U.S. businesses sold more goods abroad and boosted some investment at home. Those were some of the main factors helping to push up overall economic activity in the July-to-September quarter.

The third quarter's growth rate was up slightly from a 3.8 percent pace logged in the second quarter. It marked the strongest showing since the first quarter of last year.

The increase in third quarter gross domestic product exceeded analysts' forecasts for a 3.1 percent growth rate for the period. Gross domestic product is the value of all goods and services produced within the United States and is considered the best barometer of the country's economic fitness.

Consumers, whose spending is an important ingredient for the economy's good health, actually rediscovered their appetite to spend in the third quarter. Their spending rose at a 3 percent pace, a considerable improvement from the second quarter's rather weak 1.4 percent growth rate.

CONSUMER CONFIDENCE HITS TWO-YEAR LOW

From USA Today:

A key barometer of consumer sentiment dropped to the lowest level in two years, igniting concern that the upcoming holiday shopping season would be lukewarm.

The Conference Board said Tuesday that its Consumer Confidence Index fell to 95.6 from a revised 99.5 in September. The reading marked the lowest level since October 2005 when it was 85.2. Analysts had expected 99.5.

Economists closely monitor confidence since consumer spending accounts for two-thirds of U.S. economic activity.

OVER 18,000 DIED FROM MRSA IN U.S. IN 2005

MRSA, methicillin-resistant Staphylococcus aureus, a staph infection that is drug resistant, is rapidly spreading, and can kill. Several cases have been confirmed in the Chicagoland area. When we discussed this in a class this morning, several people were unfamiliar with this deadly infection, so I'm posting a link to the story here.

From the Houston Chronicle:

About 18,700 people die in this country each year from drug-resistant staph infections, according to a federal study released Tuesday — more deaths than the United States sees from AIDS annually.

The study by the Centers for Disease Control and Prevention, scheduled to be published in today's edition of the Journal of the American Medical Association, is the first of its kind to track methicillin-resistant Staphylococcus aureus, known as MRSA.

Based on data from 2005, the agency estimated that about 94,400 patients nationwide suffer an invasive MRSA infection each year. And in the vast majority of cases, the infections originated in health care settings.

CONSUMER PRODUCTS SAFETY COMMISSION CHAIR: DO NOT INCREASE BUDGET OR STAFF

From The New York Times:

The nation’s top official for consumer product safety has asked Congress in recent days to reject legislation intended to strengthen the agency, which polices thousands of consumer goods, from toys to tools.

On the eve of an important Senate committee meeting to consider the legislation, Nancy A. Nord, the acting chairwoman of the Consumer Product Safety Commission, has asked lawmakers in two letters not to approve the bulk of legislation that would increase the agency’s authority, double its budget and sharply increase its dwindling staff.

Ms. Nord opposes provisions that would increase the maximum penalties for safety violations and make it easier for the government to make public reports of faulty products, protect industry whistle-blowers and prosecute executives of companies that willfully violate laws.

The measure is an effort to buttress an agency that has been under siege because of a raft of tainted and dangerous products manufactured both domestically and abroad. In the last two months alone, more than 13 million toys have been recalled after tests indicated lead levels that sometimes reached almost 200 times the safety limit.

Ms. Nord’s opposition to important elements of the legislation is consistent with the broadly deregulatory approach of the Bush administration over the last seven years. In a variety of areas, from antitrust to trucking and worker safety, officials appointed by President Bush have sought to reduce the role of regulation and government in the marketplace.

GAP LINKED TO CHILD LABOR IN INDIA

From USA Today:

The Indian children reportedly found making clothes for Gap Inc. should be reunited with their families and compensated by the government, activists said Monday amid a spreading scandal about the use of child labor by the international clothing chain.

The reported discovery of children as young as 10 sewing clothes for clothing retailer Gap Inc. in a New Delhi factory has renewed concerns about child labor in India, but government officials offered no comment Monday.

"The biggest responsibility here lies with the Indian government — they don't develop a way of monitoring" factories, said Bhuwan Ribhu, a lawyer who works with Bachpan Bachao Andolan, or the Save Childhood Movement.

"International companies hire subcontractors and then forget about it. There is no monitoring at all," Ribhu added. "Where the Gap is concerned, at least they've taken a good pro-active stand against the subcontractors."

Britain's Observer newspaper on Sunday reported that it had found children making clothes with Gap labels in a squalid factory in New Delhi. It quoted the children as saying they were from poor parts of India and had been sold to the sweatshop by their impoverished families. Some said they were not paid for their work.

Child labor remains a widespread problem in India, despite the country's economic boom and its growing wealth.

The government has repeatedly tried to ban the use of child workers — in 1986 outlawing them from working in dangerous industries, such as glassmaking, and last year banning them being employed as domestic servants or in restaurants.

But the prohibitions have had only a minimal impact and children's rights activists estimate that 13 million children are still working in India, with many being used in labor-intensive businesses like carpet-weaving and in dangerous industries, such as making fire crackers.

FCC TO CHANGE RULES, ALLOW COMPETITION IN CABLE TV FOR APARTMENT DWELLERS

From The New York Times:

The Federal Communications Commission, hoping to reduce the rising costs of cable television, is preparing to strike down thousands of contracts this week that gave individual cable companies exclusive rights to provide service to an apartment building, the agency’s chairman says.

Commission officials and consumer groups said the new rule could significantly lower cable prices for millions of subscribers who live in apartment buildings and have had no choice in selecting a company for paid television. Government and private studies show that when a second cable company enters a market, prices can drop as much as 30 percent.

“Exclusive contracts have been one of the most significant barriers to competition,” Kevin J. Martin, chairman of the commission, said in an interview. Cable prices have risen “about 93 percent in the last 10 years,” he said. “This is a way to introduce additional competition, which will result in lower prices and greater innovation.”

UAW RATIFIES CHRYSLER DEAL

From USA Today:

UAW members have ratified the national labor agreement with Chrysler LLC, the union said in a statement [Saturday].

The announcement comes shortly after voting ended at Chrysler's Belvidere Assembly Plant in Illinois. Workers there voted to reject the agreement with 55% of voters against it, a person familiar with the results said.

Belvidere's Local 1268 was the final union local to vote but the defeat was apparently not enough to overcome the number of yes votes already logged.

According to a statement issued by the UAW, the contract passed overall with 56% in favor among production workers and 51% in favor among skilled trade workers.

In addition, 94% of office and clerical workers and 79% of engineering workers voted to approve the deal.

INDEX FUND INVESTING: NOT EXCITING, BUT VERY EFFECTIVE

I get many questions from students regarding investing. I do not consider myself to be an expert in the sense that I am a guru who can pick the hot stock or outperform the market.

What I can do is give what I believe to be good advice for investing for retirement. Put your money in index mutual funds and let compound interest take care of setting you up for a fantastic retirement.

Many investment professionals push investors to buy actively managed funds instead of index funds? Why? Well, the fees associated with index funds are very low (typically about 80-90% less than actively managed funds) and many investment professionals steer clients to the investments that pay them the most (trust me, that isn't index funds).

Check out the article below for more information about index fund investing.

And, if you are interested in taking a class that should help you to make smart moves with your money and plan for a wonderful retirement, consider signing up for FIN205.920, Personal Finance and Investing, in the spring semester.

From The New York Times:

IS it worth the risk to try to outperform the market?

“I have yet to meet a retiree that couldn’t have met his or her retirement goals just with market returns — and this is over a 40-year career,” said Paul Merriman, the editor of FundAdvice.com and an investment adviser at Merriman Berkman Next in Seattle.

In his experience, most retired people regard an 8-to-12-percent compounded annual return as satisfactory for their needs. Any investor who simply bought and held a no-load mutual fund that replicated the Standard & Poor’s 500 stock index would have had an 11.2 percent compounded return from 1970 to 2006. So why keep trying to pick stocks and time a volatile market when you can own the market through low-cost index funds?

Index funds are not just for the little guy who can’t take the heat, either. Theodore R. Aronson, an institutional money manager at Aronson Johnson Ortiz in Philadelphia, is paid by his clients to beat various benchmarks like the S.& P. 500 or the Russell 1000 — not to match them. His family’s money, by contrast, goes into 11 Vanguard index funds allocated 80 percent to equities and 20 percent to bonds. “Statistically it is so hard to prove that active managers can outperform, and that any outperformance is due to skill and not luck,” Mr. Aronson said.

His one-year return from indexing as of Oct. 2 was 23.5 percent; his three-year annualized return is 18.8 percent.

CONSUMER SENTIMENT AT 17-MONTH LOW

From USA Today:

Consumer sentiment fell more than expected in late October to its lowest in more than a year as concerns about the housing slump darkened the economic outlook, a survey released Friday showed.

The Reuters/University of Michigan Surveys of Consumers said its late October figure on consumer sentiment was 80.9, down from the month's preliminary reading of 82 and the final September reading of 83.4. It was the lowest reading since May 2006 when the index stood at 79.1.

Economists polled by Reuters had expected the final October figure to remain unchanged from early in the month at 82.

Consumer sentiment is often seen as a proxy for future spending, which accounts for two-thirds of the U.S. economy.

OIL CLOSES OVER $90

From The New York Times:

Oil prices shot past $90 a barrel today on what one analyst described as a “perfect storm” of economic news, ranging from tensions in the Middle East to growing anticipation of a Fed rate cut.

Crude oil futures jumped $3.36 to close at $90.46 a barrel, exceeding the highs reached last week, though still shy of the inflation-adjusted record price of $101.70 set in 1980.

Concerns over supply levels spurred the price increase after the Energy Department reported yesterday that crude oil stockpiles fell last week and investors learned that OPEC shipments from the Middle East were expected to slow. Fewer oil supplies and steady demand mean that oil prices will go up.

Military tensions between Turkey and Iraqi Kurds also contributed to the sudden spike, along with a decision by the United States to impose sanctions against oil-rich Iran. Prices were also pushed up by a weak dollar and expectations that the Federal Reserve will cut its benchmark interest rate next week, analysts said.

“It’s almost like a perfect storm,” said Fadel Gheit, managing director of oil and gas research at OppenheimerFunds.

CHINESE ECONOMY POSTS 11.5% THIRD QUARTER GROWTH

From USA Today:

China's sizzling economy registered more double-digit growth in the third quarter, but the expansion slowed slightly amid efforts to avert overheating, the government said Thursday.

Economists said the peak of the latest boom may have passed.

The 11.5% annual growth rate in economic output for the July-September period kept China on track to surpass Germany as the world's third-largest economy by early 2008.

The figure, a decline from the 11.9% rate reported for the previous quarter, suggests China's expansion has peaked, economists said. They said growth is expected to slow further, but still stay above 10% next year.

Also in September, inflation eased slightly, with consumer prices up 6.2% over the same month last year, down from an 11-year high of 6.5% in August, the government said.

Authorities have blamed a recent spike in inflation on a shortage of food items, especially pork. They say it should ease as government efforts to encourage farmers to raise more pigs take effect.

MICROSOFT EARNINGS UP 23%, STOCK RISES

From USA Today:

Microsoft registered a sharp rise in financial results Thursday, propelled by brisk sales of its Vista operating system, Office 2007 software suite and Halo 3 video game.

The software giant said earnings increased 23% in its fiscal first quarter, to $4.3 billion, or 45 cents a share. Revenue climbed 27% to $13.8 billion.

In the year-ago quarter, Microsoft earned $3.5 billion, or 35 cents a share. The results beat analyst forecasts of 39 cents per share on sales of $12.6 billion, according to a poll by Thomson Financial.

It was Microsoft's best first quarter since 1999, when Microsoft's Windows 98 operating system was launched in Japan and several European countries. The news sent Microsoft soaring 11%, to $35.53, in after-hours trading Thursday.

NEW INCOME TAX PROPOSAL UNLIKELY TO BE ADOPTED NOW

From The New York Times:

The House’s leading Democratic tax writer will propose a sweeping overhaul of the tax code on Thursday that would increase taxes on many people with incomes above $200,000 but cut them for most others.

The bill, to be introduced by Representative Charles B. Rangel of New York, chairman of the Ways and Means Committee, would also overhaul corporate taxes by eliminating many major tax breaks and lowering overall tax rates.

Mr. Rangel has acknowledged that he does not expect to enact such a bill this year, and President Bush would almost certainly veto legislation that raises taxes on the wealthy.

The plan is probably most important as a preview of what Democrats are likely to pursue after the 2008 elections, especially in rolling back a good part of Mr. Bush’s tax cuts for people at the top of the income ladder.

MICROSOFT BUYS PIECE OF FACEBOOK

From USA Today:

Microsoft said Wednesday it would pay $240 million for a small slice of Facebook in a deal that values the red-hot social networking website at $15 billion.

In selling a 1.6% stake to the software giant, Facebook rebuffed a competing offer from search-engine giant Google. Google had no comment.

Microsoft also will sell ads on Facebook outside the USA, extending a marketing relationship that began last year. The deal, announced after several weeks of negotiations, is considered a coup for Microsoft as it slugs it out with Google for online ad sales. Facebook, founded in 2004, has more than 47 million users.

The hefty price paid by Microsoft validates the gambit by Facebook CEO Mark Zuckerberg to spurn a $1 billion takeover bid from Yahoo last year. In 2005, News Corp., parent of Fox News, paid $580 million to acquire Facebook rival MySpace.

Microsoft covets the data Facebook collects about its members' tastes and preferences. Microsoft wants to sell ads based on those preferences, ads that appear when Facebook members use Windows Live services, Windows Mobile smartphones — even its Xbox Live online-gaming service, says online search expert Kevin Lee, chairman of Did-it.com.

NEUMANN HOMES FILES FOR BANKRUPTCY

From the Chicago Sun-Times:

The crash in the Chicago area market for new homes has claimed its biggest casualty. Suburban builder Neumann Homes Inc. said Monday it will file for bankruptcy and has laid off most of its employees.

Warrenville-based Neumann, the Chicago area's ninth largest builder, blamed its predicament on a drop of more than 50 percent in annual sales within the Chicago and Denver markets. It also pointed to a decision in 2005 to invest in the Detroit market, a move it said cost the company more than $60 million.

Neumann said it will file for Chapter 11 bankruptcy and that its lenders have agreed to provide limited additional funding so that its assets can be evaluated and sold.

It also said the earnest money of customers whose new homes haven't started construction is safe in escrow. Neumann said it will ask a bankruptcy judge to approve refunds from those accounts.

It also said it will work with lenders to ensure that homes will be completed if construction has started.

APPLE POST 67% EARNINGS GAIN FOR QUARTER

From The New York Times:

Apple reported earnings on Monday that leapt ahead of analysts’ already optimistic expectations on record sales of its Macintosh computers.

The numbers showed that the company was slowly climbing back into the league of the dominant personal computer makers, Hewlett-Packard and Dell.

Apple reported fourth-quarter profit of $904 million, or $1.01 a share, up from $542 million, or 62 cents, in the quarter a year ago, an increase of 67 percent. Analysts had predicted profit of 85 cents a share.

Sales rose to $6.22 billion, from $4.84 billion. Gross margin also surged, to 33.6 percent, from 29.2 percent a year ago.

Apple said it sold 2.16 million Macintosh computers worldwide in the quarter, an increase of 400,000 over the previous record. It does not break out domestic and foreign sales.

The market research firm Dataquest estimated last week that Apple sold 1.3 million computers in the United States, and IDC put the figure at 1.1 million. In the same period, Dell sold 5 million computers and H.P. sold 4.3 million in the United States, according to the IDC report.

CALIFORNIA WILD FIRES DESTROY OVER 700 HOMES, FORCE 250,000 TO EVACUATE

From Reuters:

Wildfires burned unchecked on Tuesday in Southern California from Santa Barbara to the Mexican border, with hundreds of thousands of people forced to evacuate, at least 700 homes destroyed, and little hope for relief from the hot desert winds fanning the flames.

The National Weather Service said "strong and damaging winds" will continue near Los Angeles through mid-afternoon, and high wind warnings may be issued for some areas Tuesday night. In San Diego, the hot, dry winds fanning the flames were expected through Wednesday.

At least 13 fires, whipped by hot, gale-force Santa Ana winds have swept unchecked over the lower half of the state over the past two days, overwhelming fire crews and state emergency services. Some 200,000 acres were torched, one person killed and more than three dozen injured.

Gov. Arnold Schwarzenegger summoned aid from 1,500 National Guard troops, including 200 from the Mexican border, to help with firefighting, evacuations and crowd control.

Meanwhile, some 250,000 people who had been ordered to evacuate ahead of the flames spent the night out of their homes, about 10,000 of them at a San Diego area football stadium that had been converted to an emergency shelter.

WOMEN NARROW PAY GAP, BUT STILL LAG BEHIND MEN

From The New York Times:

When it comes to the advancement of women in the workplace, progress is almost never sudden. But often it is steady. And so it is with women’s wages.

In 1979, women working full time made only 63 percent as much pay as men, according to data compiled by the Bureau of Labor Statistics. Now working women make 81 percent as much as men.

Yes, that’s an improvement, but it still means that median weekly earnings were $600 for women last year, compared with $743 for men.

What is the reason for the disparity? Discrimination? Choices that women and men have made? That is not entirely clear.

What is clear is that wage differences vary by age group. Among workers aged 45 to 64, women made 73 percent as much as men. But in the 25-to-34 group, the number rises to 88 percent.

SEC INVESTIGATING COUNTRYWIDE FINANCIAL CEO FOR INSIDER TRADING

From USA Today:

The Securities and Exchange Commission is examining stock sales of the chief executive of Countrywide Financial, the nation's largest mortgage lender, a person familiar with the matter said Wednesday.

The informal SEC inquiry of stock sales by CEO Angelo R. Mozilo has been underway for a while, the person said, speaking on condition of anonymity because the probe has not been made public.

The inquiry was reported online Wednesday afternoon by The Wall Street Journal.

Mozilo sold some $130 million in Countrywide stock in the first half of the year through a prearranged 10b51 trading plan. These plans allow a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of material non-public information.

North Carolina's state treasurer last week asked the SEC to investigate Mozilo's stock sales. He raised questions about changes made to Mozilo's plan in the months before the company's stock plunged, allowing Mozilo to significantly increase his sales of Countrywide shares.

CRUDE OIL SURGES AS TURKEY VOTES TO USE MILITARY FORCE AGAINST KURDS

From Bloomberg:

Crude oil rose to a record $89 a barrel in New York after Turkish lawmakers voted to allow the use of military force against Kurdish rebels in northern Iraq.

The assembly in Turkey's capital of Ankara backed the motion by 507 votes to 19, Parliament Speaker Koksal Toptan told lawmakers. An Energy Department report today showed that U.S. oil, gasoline and heating-oil supplies rose last week.

``The Turkish vote has scared traders,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. in Wakefield, Massachusetts. ``The doomsday scenario is that things will spiral out of control and lead neighboring countries like Iran and Saudi Arabia to become involved. This isn't likely but it encourages people to be long oil.'' Longs are bets prices will rise.

Crude oil for November delivery rose 31 cents, or 0.4 percent, to $87.92 a barrel at 1:20 p.m. on the New York Mercantile Exchange. Futures reached $89, the highest since the contract was introduced in 1983. Prices are up 49 percent from a year ago. This is the seventh straight daily gain.

On Oct. 15, prices passed the previous all-time inflation- adjusted record reached in 1981, when Iran cut oil exports. The cost of oil used by U.S. refiners averaged $37.48 a barrel in March 1981, according to the Energy Department, or $84.73 in today's dollars.

CONSUMER INFLATION UP 0.3% IN SEPTEMBER

From The New York Times:

Inflation stayed steady in September, indicating that the Federal Reserve has room to cut interest rates again, but most likely not this month.

Prices of consumer goods ticked up 0.3 percent in September, slightly faster than expectations and a reversal of a 0.1 percent decline in August. The core rate, a key gauge of inflation that excludes more volatile food and energy prices, held at 0.2 percent, where it has stood since June, the Labor Department said this morning.

Core inflation rose 2.1 percent since last September — the lowest year-over-year growth in 18 months — suggesting that pricing pressures have stayed in check. But the Fed, which keeps close tabs on inflation to determine its benchmark interest rates, prefers a rate between 1 percent and 2 percent. A bubbling-up of inflation, coupled with recent reports that point to a more resilient economy than analysts had expected, makes it more likely the Fed will keep rates unchanged when it issues its decision on Oct. 31.

APPLE TO RELEASE NEW OPERATING SYSTEM ON OCTOBER 26TH

From the San Jose Mercury News:

Leopard is ready to leap into the computing world.

Apple announced Tuesday that its newest operating system, one in a long line named after cats, will be released at 6 p.m. Oct. 26. That should please Macintosh enthusiasts, who have followed development of the delayed system through blogs and online discussion groups.

The new system will include 300 new features, including Stacks, which will allow users a new way to access files. They will spring up accordion-style from a redesigned, three-dimensional dock. Another highlight is Time Machine, a quick way to automatically backup everything on the Mac.

Boot Camp - software that lets users of Macs running on Intel chips to choose at start-up whether to run the Mac OS or Windows operating system - will be built into Leopard. Apple will also ship a complete set of Windows drivers with Leopard, so that Windows applications will be able to use the Web cameras and other hardware features built into the Macintosh computers. There's also a parental control content filter and the ability to limit the times children can use the computer.