Target Grants $32,500 To Salvation Army

Inland Empire

 

The Salvation Army’s Hospitality House, which moved into a newly-renovated building in February, will soon see even more improvements, because a grant awarded by Target Corporation has recently increased to $32,500.

“We are grateful to be able to do even more to serve our homeless children and families, said Capt. Stephen Ball, director of the San Bernardino Corps of the Salvation Army.

The initial $25,000 grant awarded in 2009 allowed The Salvation Army to create an attractive media center and computer lab as it was renovating the new shelter building at 925 W. Tenth Street. These two rooms are primarily used by school-age children during a tutoring program, and as they complete their homework.

The grant required The Salvation Army use the money to renovate a library, media center or other educational facility.

Target actually awarded this grant to the Sierra del Mar Division (San Bernardino, Riverside, San Diego and Imperial counties) of The Salvation Army, which in turn awarded it to the San Bernardino Corps.

Target also awarded similar $25,000 grants last year to each of the 39 other geographical divisions of The Salvation Army’s worldwide ministry, some of which did not spend all of their grant funds. When more money became available, The Salvation Army reallocated some of it to the Hospitality House project in San Bernardino.

Capt. Ball said this additional $7,500 will allow the San Bernardino Corps to replace the doors on the media center and computer lab, renovate the adjacent bathroom with shower enclosures, and purchase additional books, educational software and educational DVDs for children.

“The new doors will have small viewing windows for better safety and supervision, and will replace old wooden doors that were left in place during the building renovation,” Capt. Ball said.

“Additional California bathroom renovation will widen the doorways making them easier to access,” he said. “We weren’t able to do much with these two bathrooms last year because renovating the bathrooms in the guest rooms was a higher priority. We will replace a drinking fountain in the center as well.”

The original $25,000 grant allowed The Salvation Army to equip two poorly-lit rooms with good lighting, attractive tables and chairs for study and television viewing and eight computer stations, Capt. Ball said.

About the Salvation Army San Bernardino Corps
The Salvation Army may be able to provide emergency services including food; lodging for homeless or displaced families; clothing and furniture; assistance with rent or mortgage and transportation when funds are available. The Salvation Army Team Radio Network assists rescue workers and evacuees in such disasters as fires.

Airport `Naked Image' Scanners in U.S. May Get Privacy Upgrades‏

Bloomberg

 

Holli Powell, a Phoenix medical- software consultant who flies every week, says she avoids getting into airport security lines that end at what she calls a humiliating full-body scanner.

“Those scanners, I feel, are above and beyond,” Powell, 35, said in an interview. They generate “nearly naked images.”

The concerns of travelers such as Powell, which led privacy advocates to sue the government, may soon be eased. L-3 Communications Holdings Inc. and OSI Systems Inc.’s Rapiscan, makers of the scanners for U.S. airports, are delivering software upgrades that show a generic figure rather than an actual image of a passenger’s body parts. The new display would mark sections of a person’s body that need to be checked.

The revisions “certainly address most of the privacy concerns,” Peter Kant, a Rapiscan executive vice president, said in an interview. Every passenger will generate an avatar that “looks like a guy wearing a baseball cap,” he said.

The Transportation Security Administration aims to add the software to the machines, which sparked complaints, as more airports get the scanners. As of Aug. 27, 194 of the devices were in use at 51 U.S. airports, an almost fivefold increase from six months ago,

“TSA continues to explore additional privacy protections for imaging technology,” Greg Soule, a spokesman for the security agency, said in an e-mail. “Testing is currently under way.”

The agency is accelerating use of the scanners after the U.S. said Nigerian Umar Farouk Abdulmutallab tried to blow up a Northwest Airlines flight on approach to Detroit Dec. 25 by igniting explosives in his underpants. The 1,000 scanners due at airports by the end of next year will put the devices at more than half the security lanes at major U.S. airports.

28 Airports

The 28 airports getting scanners in the second half of this year include New York’s Kennedy and Philadelphia, San Francisco, Las Vegas, Houston, Miami, Baltimore, Minneapolis and Seattle, Homeland Security Secretary Janet Napolitano said in July.

New York-based L-3, which already has one of its revised scanners in use at Amsterdam’s Schiphol airport, presented its upgrade to the U.S. security agency Aug. 31, and the technology is now being reviewed in a federal laboratory, according to the company.

“We look forward to a successful trial and certification process with the TSA this fall,” Bill Frain, an L-3 senior vice president for government sales, said in a statement.

OSI’s Rapiscan, based in Torrance, California, plans to present software for its machines this month, Kant said. The software change will be tested by the agency, he said.

302 Scanners

L-3 and Rapiscan shared a $47.9 million contract in April for 302 of the scanners. L-3 will get $31.7 million to build 202 machines and Rapiscan $16.2 million for 100. The funds were to come from last year’s $814 billion stimulus law.

The software changes are “a pretty substantial development” for the companies and “something that TSA has wanted,” said Jeffrey Sural, an attorney for Alston & Bird LLP in Washington and a former assistant administrator at the security agency. “There’s still a long way to go,” and months will be spent testing the technology, he said.

Using full-body imaging technology is voluntary, though passengers who refuse to be scanned may be frisked by U.S. security employees. The agency said data show when passengers were offered the choice of the scanner or alternate screening such as a pat-down, more than 98 percent chose scanners.

Separate Room

Machines now at airports are monitored by a TSA employee in a separate room, to prevent passengers and security workers at the checkpoint from viewing the full-body image that sees through undergarments. The software upgrade would replace the images with an avatar and alert authorities to a potential hidden threat, eliminating the need to keep an employee in a remote room.

The upgrade “really reduces the personnel costs,” Rapiscan’s Kant said. The Government Accountability Office estimated in March that agency staffing costs could climb $2.4 billion over seven years from expanded use of scanners, assuming current staffing requirements.

Marc Rotenberg, president of the Electronic Privacy Information Center, a civil liberties group that sued the agency in July over the devices, said revising the machine software “makes a lot of sense” from an engineering standpoint.

Linking, Saving Images

The upgrades don’t resolve privacy questions, said Rotenberg, whose Washington-based group objects to the use of the devices as a primary screening tool. The agency may someday decide it wanted to record passenger images or link scan results to traveler names, he said.

“Over time there’s every reason to believe TSA would want to know the identities of passengers, because it would make threat detection more informed,” Rotenberg said.

Powell said she will continue to allow extra time before her flights to find the line that won’t force her to walk through the body scanners, even if they are upgraded. The devices are still capable of transmitting and storing images, she said, and that “is scary.”

KFC tries to Revive Founder Colonel Sanders' Prestige

USA Today

 

 

Our cultural connection to Colonel Sanders seems to have been lost in the deep-fryer of time.

Colonel Harland Sanders, the goateed founder of KFC known for his white suits, string ties and "finger-lickin' good" punch line, would have turned 120 years old today.

But young adults don't know him from beans. More than six in 10 Americans ages 18 to 25 — the chain's key demographic — couldn't identify him in the KFC logo, according to a survey last week by the chain.

Worse, five in 10 believe he's a made-up icon and three in 10 haven't a clue who he was.

That's why KFC is taking action. Today, the world's largest chicken chain, with 15,000 outlets in 109 countries, unleashes an online PR blitz aimed at bringing the Facebook generation eye-to-eye with the venerable colonel.

"As time has gone by, the younger generation didn't get to see and experience him like other generations did" in ads and personal appearances, says spokeswoman Laurie Schalow. "We plan to celebrate the fact that our founder was a real person."

KFC will be using its Facebook presence, Twitter, MySpace, the KFC website and other digital outreach to introduce them to Sanders and prod them to create and upload a piece of art that could become a painting to hang (temporarily) next to the famous Norman Rockwell painting of Sanders at the company's headquarters in Louisville.

The image confusion is in part KFC's own doing.

In the past few decades, it ping-ponged back-and-forth from fried-chicken-maker to grilled chicken specialist. In the logo, it put the colonel in a red apron instead of his iconic white suit. And it turned its Kentucky Fried Chicken name into KFC.

"I wonder if most kids know what the initials KFC stand for?" poses brand guru Steven Addis. "It's just an alphabet soup now."

But Addis likes it that KFC is now essentially fessing up.

"It's a desperate but smart act to re-educate a generation," he says. "It's a clever way to embrace the problem rather than hide from it."

On a vaguely similar but much larger scale, Domino's late last year tossed out its pizza formula and mocked itself in ads that conceded the old pizza tasted like cardboard. Sales zoomed.

For KFC, it's been a rough year domestically. KFC's same-store sales fell 7% in the U.S. in the second quarter, facing a difficult comparison with the same quarter in 2009 when a new grilled chicken product was launched.

KFC has basically stopped growing in the U.S., and almost all growth is pegged to come internationally in 2010.

Now, KFC's trying to paint a new picture — actually asking its core consumers to paint it for them.

Through Sept. 30, artists can upload their sketches of the colonel at kfc.com/portrait.

The winning artist will receive $1,100 ($100 for each of the 11 herbs and spices used for the Colonel's Original Recipe chicken) and get to paint a new portrait of the colonel.

One last twist: The artist will be using paint into which KFC has blended the secret 11 ingredients.

Credit Card Use Continues to Fall amid Economic Uncertainty

USA Today

 

Americans have sharply reduced their use of credit cards, and some analysts believe the trend will continue even after the economy has fully recovered.

The Federal Reserve Board reported this week that credit card borrowing fell at a 6.3% annual rate in July. The last time borrowing with credit cards increased was in August 2008.

Separately, a survey by Javelin Strategy & Research found that 56% of consumers used credit cards in 2009, down from 87% in 2007. Credit card usage could fall as low as 45% this year, the report said.

Reasons for the decline:

•Economic uncertainty. "People are being extraordinarily cautious because of concerns about a double-dip recession, and jobs not being returned," says Javelin President James Van Dyke. Consumers are opting for debit cards, because they're "one of those mechanisms that allows you to spend what you have," says Martha Doran, an accounting professor at San Diego State University.

•Less available credit. To reduce their risks, lenders have slashed consumers' credit limits, in some cases by as much as 90%, says Robert Livingstone, president of IdealCost.com, a consulting firm based in West Palm Beach, Fla. Under a provision in the credit card reform bill, most college students can't get a credit card without a co-signer.

•Incentives to use debit over credit. Some cash-strapped businesses, unwilling to pay transaction fees associated with credit cards, are giving consumers incentives to pay with a debit card or cash. Livingstone says he received a 7% discount on his wife's engagement ring by paying with a check rather than a credit card.

•A generational shift. Young consumers who are accustomed to having up-to-date information at their fingertips don't want to wait 30 days to see how a credit card purchase will affect their bank account, Van Dyke says. "Younger people have an inherent preference for real-time payment methods like debit," he says. They are also more inclined to be aware of credit risk management practices, having come of age during this economic downturn.

In 2009, payment volume for debit cards exceeded credit cards for the first time, a trend that's expected to continue in 2010, Javelin says.

Many banks are responding to the trend by adding rewards programs and other features to their debit cards, says Ken Lin, chief executive of Credit Karma, a website that provides free credit scores. Banks "realize the new cash cow is going to be on the debit side of the business," he says.

The American Bankers Association says it's too soon to determine whether the trend will continue after the economy has recovered. "Consumers are clearly reacting to an uncertain economy right now, so it is unclear what they will do in the future when it comes to choosing between debit and credit card use," says Kenneth Clayton, ABA senior vice president and general counsel.

Home Depot, Dell Drive Issuance to 7-Month High: Credit Markets

Bloomberg

 

Home Depot Inc., Dell Inc. and Burlington Northern Santa Fe LLC led the busiest day for U.S. corporate bond issuance in more than seven months as investment- grade borrowing costs hover near the lowest on record.

Companies sold $15.4 billion of the debt as yields fell to 3.83 percent yesterday and reached as low as 3.74 percent on Aug. 24, according to Bank of America Merrill Lynch’s U.S. Corporate Master index. In Europe, banks sold 8.5 billion euros ($10.8 billion) of bonds as lenders rushed to refinance almost a quarter-trillion euros of debt due this year.

U.S. investment-grade sales soared following signs last week the economy won’t slip back into recession. Private payrolls climbed more than economists expected and pending home sales rose from a record low, even as the unemployment rate rose to 9.6 percent last month. Treasury yields are rising from this year’s low on Aug. 25.

Yields on investment-grade debt are “probably as low as they’re going to get,” said Anthony Valeri, a market strategist in San Diego at LPL Financial Corp., which oversees about $277 billion of assets. “This level is an ideal trade-off of investors recognizing the fundamentals of a slow-growth economy are OK for corporate bonds.”

Home Depot, the largest-home improvement retailer, sold $1 billion of debt due in 10 and 30 years in its first offering since December 2006, according to data compiled by Bloomberg.

Dell, Burlington

Round Rock, Texas-based Dell, the third-biggest personal computer maker after Hewlett-Packard Co. and Acer Inc., raised $1.5 billion in a three-part sale.

Burlington Northern, the Fort Worth, Texas-based railroad company acquired this year by Warren Buffett’s Berkshire Hathaway Inc., sold $750 million of debt in a two-part offering, according to data compiled by Bloomberg.

Issuance may set a record for the week and month, said Tom Murphy, a money manager who helps oversee more than $25 billion of investment-grade credit at Columbia Management in Minneapolis.

“You’re seeing people definitely want to be invested in the market and definitely put money to work,” Murphy said. “The first week after Labor Day is considered the beginning of the push toward the end of the year.”

Elsewhere in credit markets, the extra yield investors demand to own company debt instead of similar-maturity government bonds was unchanged at 178 basis points, or 1.78 percentage point, according to Bank of America Merrill Lynch’s Global Broad Market Corporate index. Yields averaged 3.516 percent, down from 3.585 percent.

Bondholder Protection

The cost of protecting corporate bonds in the U.S. from default rose after falling for four straight days.

The Markit CDX North America Investment Grade Index Series 14 increased 3.3 basis points, the most since Aug. 11, to a mid- price of 107 basis points as of 5:37 p.m. in New York, according to Markit Group Ltd. In London, the Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 4 basis points to a mid-price of 109.5, also the first increase after four trading days of declines.

The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan rose 3 basis points to 125 basis points as of 8:40 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show.

The indexes typically rise as investor confidence deteriorates and fall as it improves. Credit swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of investments.

Most-Traded Bonds

Bonds from Atlanta-based Home Depot were the most actively traded U.S. corporate securities by dealers, with 182 trades of $1 million or more. Ranked second was New York-based Goldman Sachs Group Inc., the most profitable firm in Wall Street history, with 79 trades.

Dearborn, Michigan-based Ford Motor Co., with 35 trades, was the most active in junk bonds, which are rated below Baa3 by Moody’s Investors Service and lower than BBB- by Standard & Poor’s.

The Canada Pension Plan Investment Board and Onex Corp. plan to raise $1.6 billion of leveraged loans to help fund their buyout of Tomkins Plc. Potential lenders were invited to a meeting today in New York to discuss a six-year $1 billion term loan, according to two people familiar with the situation who declined to be identified because the matter is private.

The rest of the financing will be raised through a $300 million term loan and a $300 million revolving credit line, both maturing in five years, one of the people said.

Loan Prices

Leveraged loan prices fell, with the S&P/LSTA US Leveraged Loan 100 Index declining 0.14 cent to 89.43 cents on the dollar, the first drop after three days of increases. The index, which tracks the 100 largest dollar-denominated first-lien leveraged loans, returned 4.3 percent this year.

In emerging markets, the extra yield investors demand to own company debt rather than government bonds climbed the most in a week. Spreads widened 13 basis points to 288 basis points, according to JPMorgan Chase & Co. index data.

U.S. corporate borrowers are taking advantage of yields to raise “very inexpensive” money, said Zane Brown, fixed-income strategist at Lord Abbett & Co. in Jersey City, New Jersey.

“It reflects investors’ preference for risk and companies that want to take advantage of low absolute levels on yields,” said Brown, who helps oversee $53 billion of debt.

The yield on the benchmark 10-year Treasury note was at 2.60 percent at 10:17 a.m. in Tokyo today, 18 basis points higher than this year’s low, according to data compiled by Bloomberg.

Bond Issuance

U.S. investment-grade issuance yesterday was the most since $17.6 billion on Feb. 4, Bloomberg data show. There was one sale of high-yield debt as Richardson, Texas-based MetroPCS Communications Inc. issued $1 billion of notes due in 2018. It was the third-busiest day for corporate bond issuance this year with $16.4 billion of sales.

Companies sold $10.1 billion of dollar-denominated debt on the day following the Labor Day holiday last year, and $29.7 billion of notes in that week, Bloomberg data show.

Pending sales of existing houses unexpectedly climbed in July from a record low, figures from the National Association of Realtors showed Sept. 2. The index of purchase contracts rose 5.2 percent after a revised 2.8 percent drop the prior month.

Companies in the U.S. added more jobs than economists forecast in August, Labor Department figures in Washington showed Sept. 3. Private payrolls climbed 67,000 after a revised 107,000 increase in July.

‘Stay Very Busy’

“It’s going to stay very busy as long as the markets are this receptive to new issuance,” said Jim Kochan, the chief fixed-income strategist at Wells Fargo Funds Management, which oversees $175.6 billion of debt assets. “It’s been extremely busy on a trend basis all year, as yields kept coming down.”

Commerzbank AG and UniCredit SpA led the most bank bond sales in Europe in five weeks, Bloomberg data show. The cost of insuring bank debt against default rose by the most in a month on speculation the Basel Committee on Banking Supervision will propose higher capital requirements.

France Telecom SA sold $1.39 billion of bonds in euros and dollars. The nation’s biggest phone company issued $750 million of five-year notes that were priced to yield 82 basis points more than similar-maturity Treasuries and 500 million euros of 12-year bonds priced at 75 basis points more than swaps, Bloomberg data show.

Cash or Credit? More Consumers Turning to Debit Cards

CNBC

 

Wary of the economy, shoppers are increasingly shying away from credit cards, opting to use cash, checks or debit cards rather than to "pay later" on a credit card.

In fact, use of debit cards surpassed that of credit cards last year, according to a new study released by Javelin Strategy & Research.

The study found that in 2009, only 56 percent of consumers surveyed during a particular month had used a credit card, down sharply from 87 percent in in 2007.

What's more, if this trend persists, credit card usage in 2010 could fall to 45 percent, the market research firm said.

"People are extremely wary," said James Van Dyke, president and founder of Javelin. "They can't tell which way the economic winds are blowing. They are just incredibly uncertain."

Van Dyke sees this as "a sea change" in consumer behavior.

Javelin suspects debit card usage will continue to grow in the years to come. Based on Javelin's research, the total purchase value for debit cards rose between 3 percent and 7 percent depending on the card brand from 2007 to 2009.

Consumers in their twenties helping to drive the trend as they are more likely to use a debit card than other forms of payment, Van Dyke said. One reason is that some consider it a better way to budget their money.

"Credit cards don't make sense for many young people," Van Dyke said.

Then, there are lower-income consumers, some of whom are being paid their salaries on reloadable prepaid cards rather than by getting a paycheck deposited into an account, Van Dyke said.

One danger here is that reloadable prepaid cards is a payment category that remains largely unregulated under the new credit card laws.

That's more bad news for the nation's biggest credit card issuers. These companies are already seeing a less profitable future as consumers spend less and pay off their credit card bills. And, raising interest rates and imposing new types of fees isn't likely to fill the gap.

Instead, credit card issuers will need to come up with new types of products to encourage card-spending.

MasterCard, for example, announced last month that it plans to offer its Citi cardholders a new card that allows users to set spending controls and receive real-time spending alerts aimed at helping them avoid overspending. The program, dubbed inControl, also will allow customers to determine where, when, how and for what types of purchase their cards may be used.

This type of product goes right to the heart of why some cardholders are refraining from using their credit cards—they want to be in control of their spending.

Roughly 16,000 companies in the U.S. issue credit cards, but the six largest lenders are Citigroup, JP Morgan Chase, Bank of America, Capital One Financial, American Express and Discover Financial Services.

Credit-card loan balances at these six lenders have dropped 20 percent since their peak in the second quarter of 2008, to $544 billion, according to Credit Suisse.

The decline reflects not only moves by consumers to pare back debt, but also bank efforts to weed out risky borrowers.

A month look at consumer credit will be issued later Wednesday by the Federal Reserve.

Obama Calls for $50 Billion in Infrastructure Spending

Reuters

President Barack Obama, scrambling to jump-start job creation in a sluggish economy, proposed a six-year plan on Monday to rebuild aging roads, railways and runways with an initial $50 billion investment.

"We are going to rebuild 150,000 miles of our roads -- that's enough to circle the world six times. ... We're going to lay and maintain 4,000 miles of our railways -- enough to stretch coast-to-coast," Obama told a labor rally in Milwaukee where several thousand supporters cheered his every line.

The infrastructure plan, one of several initiatives Obama is due to unveil this week, was immediately rejected by Republicans, who many analysts predict could win control of the House of Representatives in November 2 congressional elections.

With fellow Democrats facing punishment from recession-weary voters in November, Obama is under pressure to do more to create jobs and bring down the stubbornly high 9.6 percent unemployment rate, even as economists agree he has few good options left.

Economists are skeptical any measures Obama takes now will make a significant difference in the $13.2 trillion U.S. economy and point out that investments in infrastructure typically do not stimulate the economy quickly.

A centerpiece of his new plan is a proposal for the U.S. Congress to increase and permanently extend a tax credit for business research and development.

The tax credit proposal, which was widely expected by investors, would cost $100 billion over 10 years. He is to lay out the plan on Wednesday in Cleveland.

While Obama declared some jobs would be created immediately by the infrastructure overhaul, a senior administration official told reporters the plan would not create jobs until 2011.

"This is not a stimulus, immediate-jobs plan," the official said.

DOUBTS FROM DEFICIT HAWKS

The White House stressed the plan would not add to the record U.S. deficit, a key issue for voters.

"One thing (Obama) is willing to put on the table is closing some of the tax loopholes for big oil and gas companies that currently get subsidies from taxpayers that they certainly don't need. He thinks that is a perfectly good 'pay-for' to get this up and running," the administration official said.

The American Petroleum Institute, which represents major U.S. oil and gas companies, said additional taxes would drive energy investment, including jobs, overseas. "Now is the time to create American jobs, not eliminate them," API spokeswoman Cathy Landry said.

Obama told the Milwaukee rally he would work with Congress to make sure the plan was fully paid for.

He could face an uphill battle in getting Congress to approve the plan, especially if Republicans make big gains in November.

Senate Republican leader Mitch McConnell called it a "last-minute cobbled-together stimulus bill" and the Republican leader of the House, John Boehner, was equally dismissive.

"We don't need more government 'stimulus' spending -- we need to end Washington Democrats' out-of-control spending spree, stop their tax hikes, and create jobs by eliminating the job-killing uncertainty that is hampering our small businesses," Boehner said.

DETAILS OF PLAN

Under the infrastructure plan, Obama is proposing to:

- Rebuild 150,000 miles of roads;

- Construct and maintain 4,000 miles of rail;

- Rehabilitate or reconstruct 150 miles of runway and modernize the air traffic control system and;

- Set up an infrastructure bank to leverage private, state and local capital to invest in projects.

Transportation construction spending would likely help companies like equipment maker Caterpillar Inc, privately held engineering firm Parsons Corp, and conglomerate General Electric Co.

The administration official said a "substantial number of jobs" would be created by the infrastructure projects. Transportation experts say 35,OOO jobs are created for every $1 billion in transportation construction investment.

The administration said the proposal unveiled on Monday would be part of a long-term transportation reauthorization that traditionally includes highway and rail funding. The $50 billion would represent a significant portion of the spending in the first year of any new transportation funding measure, an administration official said.

Congress has yet to comprehensively address new transportation legislation. The previous measure expired in 2009. One plan floated in the House would spend about $500 billion over six years.

Obama used his appearance in Milwaukee to set the tone for the fall campaign. Monday's Labor Day holiday marks the informal start of the election campaign season.

He argued that Democratic policies had stopped the bleeding and produced some economic growth, while Republicans had opposed him every step of the way.

"If I say the sky is blue, they say no," he said.

Obama's visit to Cleveland promises to be more strategic. It is the city where Boehner, who would be House speaker if Republicans win the House, recently urged Obama to fire his economic team.

Other items that Obama could talk about this week are a payroll tax holiday, extending tax cuts for the middle class and increasing money for clean energy.

Unemployment in U.S. May Rise Toward 10% on ‘Feeble’ Growth

Bloomberg

The jobless rate in the U.S. is likely to approach 10 percent in coming months as the economy fails to grow quickly enough to employ people rejoining the labor force, according to economists at BofA Merrill Lynch Global Research and Morgan Stanley.

Private payrolls climbed 67,000 in August, after a gain of 107,000 the previous month, and the unemployment rate rose to 9.6 percent, Labor Department figures showed Sept. 3. The economy expanded at a 1.6 percent annual rate in the second quarter, down from 3.7 percent in January through March.

Employers including government agencies have added 723,000 workers to payrolls so far in 2010, showing it’ll take years to recoup the 8.4 million jobs lost during the recession, the biggest employment slump in the post-World War II era. Still, the August employment report eased concerns the economy will falter and may postpone action by Federal Reserve policy makers aimed at bolstering the recovery.

“Growth is too sluggish to successfully bring down the unemployment rate,” said Michelle Meyer, a senior economist at BofA Merrill Lynch in New York. “At this stage, about one year into the recovery, this was still quite feeble job growth.”

BofA Merrill Lynch says the jobless rate will peak at 10.1 percent next year, up from a previous projection of 9.5 percent, with growth slowing to 1.8 percent for all of 2011, down from an earlier estimate of 2.3 percent.

Federal Reserve

The employment report, together with figures last week showing manufacturing expanded faster than forecast in August, reduces the odds that the Federal Open Market Committee will ease policy at its next meeting on Sept. 21, economists said. The data also bolstered Fed Chairman Ben S. Bernanke’s view that the conditions are in place for a pickup in growth in 2011.

Neal Soss, chief economist at Credit Suisse in New York, said in a Sept. 3 note to clients that the economy will expand at a 2 percent rate this quarter, compared with a previous projection of 2.5 percent. He also revised his forecast for the unemployment rate, saying it will end the year at 9.6 percent instead of 9.2 percent.

Unemployment, which reached a 26-year high of 10.1 percent in October, will average more than 9 percent through 2011, according to a Bloomberg News survey last month.

President Barack Obama yesterday proposed spending at least $50 billion to rehabilitate the nation’s transportation infrastructure to help spur the economy.

At a Labor Day rally in Milwaukee two months before midterm congressional elections, Obama called for a six-year program to fix roads, railways and runways, and to modernize the air- traffic control system.

“All of this will not only create jobs now, but will make our economy run better over the long haul,” Obama said.

Tax Credit

The president will also urge Congress to permanently extend and expand a research-and-development tax credit for businesses, according to two administration officials. The plan, which he’ll announce in Cleveland tomorrow, would cost about $100 billion over a decade.

Obama’s approval ratings have slipped and support for the Republican Party has grown during the summer months amid signs the economy was cooling. A USA Today/Gallup Poll completed Aug. 30 found Americans believe Republicans in Congress would do a better job on the economy than Democrats, by 49 percent versus 38 percent plurality.

Overall employment, including government agencies, fell 54,000 for a second month, the Labor Department report showed. The decrease reflected a 114,000 drop in temporary workers hired by the government to conduct the 2010 census.

Census Winds Down

The unwinding of census employment distorts the payroll figures for months as the government dismisses workers as the count winds down. For that reason, economists say private payrolls, which exclude government jobs, are a better gauge of the state of the labor market.

U.S. Stocks rose and Treasuries fell following the Sept. 3 employment report. The Standard & Poor’s 500 Stock Index rose 1.3 percent to close at 1,104.51 in New York. Ten-year Treasury yields climbed to 2.71 percent from 2.63 percent the day before.

Economists at Morgan Stanley in New York, led by Richard Berner and David Greenlaw, are forecasting growth at a 2 percent pace for the last three quarters of 2010.

“Such tepid growth implies a higher unemployment rate at year-end, perhaps 9.7 percent rather than the 9.4 percent we had assumed,” the economists said in a research note.

The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- increased to 16.7 percent in August from 16.5 percent.

The figures also showed long-term unemployment dropped. The number of people unemployed for 27 weeks or more fell as a percentage of all jobless to 42 percent from 44.9 percent.

Some export-oriented companies are boosting staff as the global economy shows stronger signs of growth than the U.S. Peoria, Illinois-based Caterpillar Inc., the world’s largest maker of construction equipment, said last month it may add as many as 9,000 workers worldwide this year as sales climb in developing markets.

Estée Lauder Touches Up Makeup Push

The Wall Street Journal

Cosmetics Company Touches Up Department-Store Sections With Express Lanes, Browsing Areas

 

 

To lure shoppers to its department-store beauty counters, Estée Lauder Cos. Chief Executive Fabrizio Freda is tossing aside generations-old traditions like hidden price tags, nagging consultants and glass cases that keep makeup out of reach.

The moves are an attempt to hold the attention of increasingly fickle cosmetics shoppers, which has become an escalating challenge for beauty-industry executives.

Younger consumers don't want to be hostage to department-store sales staff. Meanwhile, websites, television shopping networks and even grocery stores have become tougher competitors for consumers' beauty dollars.

In an effort to reshape Estée Lauder's U.S. department-store base, which is nearly one-third of the company's revenue, executives from the company's Clinique, Estée Lauder and MAC brands have been testing new counter designs that allow shoppers to browse on their own, new promotions and express lanes for busy shoppers.

"There is huge opportunity to restart sales growth and shopper traffic in department stores," says Mr. Freda.

The cosmetics industry turned to U.S. department stores around World War I, in part for a reputational boost. "Cosmetics weren't entirely respectable then," says Geoffrey Jones, a Harvard Business School professor of business history. "They were more associated with actresses, or worse."

But the rise of competitors in recent years has seen upscale department stores' share of the $58.9 billion U.S. beauty market shrink.

The recession also took a bite: Beauty-product sales in U.S. department stores declined 9% to $8.1 billion in 2009 from the prior year, compared to a drop of just 1% for the U.S. beauty industry as a whole, according to market-data firm Euromonitor International Inc.

Executives at Estée Lauder, based in New York, have worked to offset the decline by opening more of their own stores, selling products on TV and boosting online selling. Mr. Freda spent much of his just-completed first year as CEO aggressively pushing the company overseas, including a focus on skin care in Asia.

Now, faced with mounting competition from cheaper drug-store brands and upstart niche brands touted by retailers such as Sephora, owned by LVMH Moët Hennessy Louis Vuitton SA, Estée Lauder executives are refocusing on their main sales channel.

Shaking up beauty departments involves cooperation between cosmetics manufacturers and retailers, because the counters and sales staff is typically funded jointly in closely guarded agreements. Mr. Freda says the economic downturn has helped ease negotiations.

"The recent recession has opened up many companies—for sure ourselves and many of our retail partners—to be willing to put more dynamic change into the way we go to market," he says. "We are cooperating, I believe, better than in the past in the area of change."

U.S. department-store chain Macy's says the changes at Estée Lauder brands' counters are part of broader adjustments to its beauty section, including offering shoppers more opportunities to browse independently.

"We see younger consumers in particular who like to test and play on their own, so we're working closely with manufacturers to accommodate that," says Muriel Gonzalez, Macy's chief beauty merchant.

Department stores have much to gain from improving their beauty business, typically the most profitable section of the store, says Citigroup analyst Deborah Weinswig. Attracting beauty shoppers is also critical to creating customer traffic. Some 80% of women who use mascara replace it at least two to three times a year, according to an NPD Group survey. At least two-thirds of women say they replenish their facial cleansers and moisturizers every two to three months.

"If you can get a consumer to love a brand and product, they will keep coming back to your store to replace it," says Karen Grant, an analyst for NPD.

Central to Mr. Freda's strategy is offering shoppers new reasons to visit department stores. The Estée Lauder brand declared the evening of July 22 "America's Night to Repair" and spent four hours giving away some 400,000 samples of its Advanced Night Repair eye treatment or face serum across some 2,200 stores.

When handing over a sample, beauty advisers collected consumers' names and phone numbers and phoned them 10 days later to see how they liked the product.

Overall sales of the Estée Lauder brand increased by a double-digit percentage the week of the event, says Jane Hertzmark Hudis, global president of the Estée Lauder brand.

Walking through Clinique's new counter in Bloomingdale's New York flagship, Lynne Greene, president of Estée Lauder's Clinique, Origins and Ojon brands, demonstrated the new ways women can now shop for the brand's cosmetics: An express line for consumers who already know what they want, areas to browse on their own, and seats for those who want a full consultation.

Employees who staff Clinique's express line try to deliver the product in 60 seconds and are coached not to offer shoppers other products unless they seem especially curious.

"If a shopper isn't asked to see any other products, we see them physically relax," says Ms. Greene. "Then, sometimes, they start browsing. Frequently, we get another purchase because of that."

Signs now list Clinique's prices, a practice adopted during the recession. "Consumers didn't want to ask, 'How much is it?'" says Ms. Greene.

Even Estée Lauder's MAC brand is rethinking its approach. The brand, whose selling space resembles a photo studio, has been testing new hand-held devices that let staffers ring up purchases.

"People today are looking for real know-how, but they want to be served in the way they choose," says John Demsey, group president of several Estée Lauder brands, including MAC.

10 Mistakes That Start-Up Entrepreneurs Make

The Wall Street Journal

When it comes to starting a successful business, there's no surefire playbook that contains the winning game plan.

On the other hand, there are about as many mistakes to be made as there are entrepreneurs to make them.

Recently, after a work-out at the gym with my trainer—an attractive young woman who's also a dancer/actor—she told me about a web series that she's producing and starring in together with a few friends. While the series has gained a large following online, she and her friends have not yet incorporated their venture, drafted an operating agreement, trademarked the show's name or done any of the other things that businesses typically do to protect their intellectual property and divvy up the owners' share of the company. While none of this may be a problem now, I told her, just wait until the show hits it big and everybody hires a lawyer.

Here, in my experience, are the top 10 mistakes that entrepreneurs make when starting a company:

1. Going it alone. It's difficult to build a scalable business if you're the only person involved. True, a solo public relations, web design or consulting firm may require little capital to start, and the price of hiring even one administrative assistant, sales representative or entry-level employee can eat up a big chunk of your profits. The solution: Make sure there's enough margin in your pricing to enable you to bring in other people. Clients generally don't mind outsourcing as long as they can still get face time with you, the skilled professional who's managing the project.

2. Asking too many people for advice. It's always good to get input from experts, especially experienced entrepreneurs who've built and sold successful companies in your industry. But getting too many people's opinions can delay your decision so long that your company never gets out of the starting gate. The answer: Assemble a solid advisory board that you can tap on a regular basis but run the day-to-day yourself. Says Elyissia Wassung, chief executive of 2 Chicks With Chocolate Inc., a Matawan, N.J., chocolate company, "Pull in your [advisory] team for bi-weekly or, at the very least, monthly conference calls. You'll wish you did it sooner!"

3. Spending too much time on product development, not enough on sales. While it's hard to build a great company without a great product, entrepreneurs who spend too much time tinkering may lose customers to a competitor with a stronger sales organization. "I call [this misstep] the 'Field of Dreams' of entrepreneurship. If you build it, they will buy it," says Sanjyot Dunung, CEO of Atma Global, Inc., a New York software publisher, who has made this mistake in her own business. "If you don't keep one eye firmly focused on sales, you'll likely run out of money and energy before you can successfully get your product to market."

4. Targeting too small a market. It's tempting to try to corner a niche, but your company's growth will quickly hit a wall if the market you're targeting is too tiny. Think about all the high school basketball stars who dream of playing in the NBA. Because there are only 30 teams and each team employs only a handful of players, the chances that your son will become the next Michael Jordan are pretty slim. The solution: Pick a bigger market that gives you the chance to grab a slice of the pie even if your company remains a smaller player.

5. Entering a market with no distribution partner. It's easier to break into a market if there's already a network of agents, brokers, manufacturers' reps and other third-party resellers ready, willing and able to sell your product into existing distribution channels. Fashion, food, media and other major industries work this way; others are not so lucky. That's why service businesses like public relations firms, yoga studios and pet-grooming companies often struggle to survive, alternating between feast and famine. The solution: Make a list of potential referral sources before you start your business and ask them if they'd be willing to send business your way.

6. Overpaying for customers. Spending big on advertising may bring in lots of customers, but it's a money-losing strategy if your company can't turn those dollars into life-time customer value. A magazine or web site that spends $500 worth of advertising to acquire a customer who pays $20 a month and cancels his or her subscription at the end of the year is simply pouring money down the drain. The solution: Test, measure, then test again. Once you've done enough testing to figure out how to make more money selling products and services to your customers than you spend acquiring those customers in the first place, roll out a major marketing campaign.

7. Raising too little capital. Many start-ups assume that all they need is enough money to rent space, buy equipment, stock inventory and drive customers through the door. What they often forget is that they also need capital to pay for salaries, utilities, insurance and other overhead expenses until their company starts turning a profit. Unless you're running the kind of business where everybody's working for sweat equity and deferring compensation, you'll need to raise enough money to tide you over until your revenues can cover your expenses and generate positive cash flow. The solution: Calculate your start-up costs before you open your doors, not afterwards.

8. Raising too much capital. Believe it or not, raising too much money can be a problem, too. Over-funded companies tend to get big and bloated, hiring too many people too soon and wasting valuable resources on trade show booths, parties, image ads and other frills. When the money runs out and investors lose patience (which is what happened 10 years ago when the dot-com market melted down), start-ups that frittered away their cash will have to close their doors. No matter how much money you raise at the outset, remember to bank some for a rainy day.

9. Not having a business plan. While not every company needs a formal business plan, a start-up that requires significant capital to grow and more than a year to turn a profit should map out how much time and money it's going to take to get to its destination. This means thinking through the key metrics that make your business tick and building a model to spin off three years of sales, profits and cash-flow projections. "I wasted 10 years [fooling around] thinking like an artist and not a business person," says Louis Piscione, president of Avanti Media Group, a New Jersey company that produces videos for corporate and private events. "I learned that you have to put some of your creative genius toward a business plan that forecasts and sets goals for growth and success."

10. Over-thinking your business plan. While many entrepreneurs I've met engage in seat-of-the-pants decision-making and fail to do their homework, other entrepreneurs are afraid to pull the trigger until they're 100% certain that their plan will succeed. One lawyer I worked with several years ago was so skittish about leaving his six-figure job to launch his business that he never met with a single bank or investor who might have funded his company. The truth is that a business plan is not a crystal ball that can predict the future. At a certain point, you have to close your eyes and take the leap of faith.

Despite the many books and articles that have been written about entrepreneurship, it's just not possible to start a company without making a few mistakes along the way. Just try to avoid making any mistake so large that your company can't get back on its feet to fight another day.

Denver: Power Plants, Residents Weigh in on Coal Ash Plan

Bloomberg / BusinessWeek

More than 100 speakers signed up to comment Thursday on whether the Environmental Protection Agency should regulate the disposal of coal ash under rules for hazardous waste.

Several power producers told the EPA that such regulation could threaten jobs and raise electricity rates, while business owners said it could affect their livelihoods.

But some ranchers and residents from New Mexico and Montana who live near coal ash waste ponds said they're worried for their health and that it's time for tough federal regulation.

The disposal of coal ash gained national attention after 5.4 million cubic yards of coal ash at a Tennessee Valley Authority plant breached a dike and spilled into and around the Emory River in 2008.

The EPA has proposed measures such as requiring liners and groundwater monitoring at new coal ash landfills, but it's trying to decide between two options for implementing the rules.

One option is for direct federal enforcement, under rules for hazardous waste. The other option is to regulate under rules for non-hazardous waste. The second option relies on lawsuits by states and citizens for enforcement.

Coal ash, which is left over from the burning of coal at power plants, contains such substances as arsenic, cadmium and mercury.

The EPA isn't looking to end its "beneficial use" in concrete, roofing or other applications, but some business owners fear the stigma of coal ash being regulated as a hazardous waste will be enough to discourage people from recycling it in that manner.

David Goss of McDonald Farms Enterprises Inc. in Longmont, Colo., helps utilities manage their ash. One utility customer recently asked his company to obtain liability insurance of $6 million to protect against lawsuits, then asked for indemnification if any ash were to be included in even "beneficial uses," he told the EPA.

Goss estimated that regulating coal ash as hazardous would triple his company's insurance costs. He pushed for regulation as a non-hazardous waste.

Sheep rancher R.G. Hunt Jr. of Waterflow, N.M., scoffed at the notion that coal ash should be regulated as non-hazardous. His family blames the nearby power plant in the Four Corners area for sullying their water, which in turn killed 1,400 of his sheep and harmed his family's health, from drastic weight loss, to muscle spasms, kidney trouble, diarrhea, headaches, and hair and memory loss.

His wife, Carla Logan, said six family members died before the age of 40, with doctors saying their health problems could have been linked to heavy metal poisoning in the water.

"Have a glass of it," Hunt told the EPA. "I guarantee you it'd make you want to puke."

Paul Reynolds of Sunflower Electric Power Corp. of Hays, Kan., said regulation under rules for non-hazardous waste would still offer the same level of protection for health and the environment, without the economic burdens to power producers who might have to raise rates or cut jobs to fulfill requirements under hazardous waste rules.

For instance, Kansas law prohibits landfill disposal of certain hazardous wastes, meaning his company would likely have to ship it out of state, he said.

Regulation under rules for hazardous waste wouldn't allow for flexibility in liners or managing leaching to allow for local soil conditions, precipitation and distance from surface water either, he said. "The one-size-fits-all approach unnecessarily ties the hands of state regulators," he said.

Outside the hearing, a handful of people held signs with the words "coal ash" crossed out. Inside, some people with opposing views wore buttons that said, "Recycle first."

The EPA plans more hearings before making a decision.

Cameron's Austerity Plan Makes U.K Debts World Beater

Bloomberg

 

British companies are beating the world in the bond market as investors bet Prime Minister David Cameron’s efforts to tame the budget deficit will preserve the U.K.’s top credit rating.

U.K. corporate debt denominated in all currencies returned 3.25 percent last month, the most in a year and the best among the 10 countries making up almost 90 percent of the $6.2 trillion Bank of America Merrill Lynch Global Broad Market Corporate Index. Bonds of Banco Santander SA’s Abbey National unit and Tesco Plc, the nation’s largest supermarket chain, led the gains, returning as much as 12.7 percent.

Cameron’s coalition government is pushing cuts and austerity measures worth 30 billion pounds ($46 billion) a year to shrink the U.K.’s 11 percent deficit to 2.1 percent by 2015. Investors are speculating this will preserve Britain’s AAA credit rating without slowing the economy too much that it curbs the ability of companies to meet their debt payments.

“Investors are happy with the measures taken by Cameron,” said Christian Weber, a senior credit strategist at UniCredit SpA in Munich. “The perception has spread that it’s better to actually tackle budget deficits than just keep spending and spending and spending, because that limits your ability in the future to help your economy stabilize.”

The extra yield investors demand to hold U.K. corporate bonds instead of benchmark government securities narrowed 4 basis points to 237 basis points in August, or 2.37 percentage points, compared with an increase of 6 basis points for U.S. company debt, according to Bank of America Merrill Lynch’s global index. Spreads widened an average 4 basis points across all countries in the index last month and were unchanged yesterday at 180 basis points. Yields averaged 3.558 percent.

Government Bonds

U.K. government bonds are also rallying. They returned 4.7 percent last month, second only to Denmark’s 4.75 percent, according to the Bank of America Merrill Lynch Global Sovereign Broad Market Plus index.

Elsewhere in credit markets, the cost of protecting corporate bonds from default in the U.S. fell after a report showed companies added more jobs than forecast in August. Auto- parts supplier Continental AG sold Europe’s first high-yield bond in a month and Citigroup Inc. will hold a meeting next week with investors to discuss the financing for the acquisition of Tomkins Plc.

Credit-default swaps on the Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, fell 1.25 basis points to a mid-price of 105 basis points as of 11 a.m. in New York, the lowest since Aug. 10, according to index administrator Markit Group Ltd.

August Payrolls

The measure fell after private payrolls that exclude government agencies climbed 67,000, after a revised 107,000 increase in July that was more than initially estimated, Labor Department figures in Washington showed. The median estimate of economists surveyed by Bloomberg News called for a gain of 40,000. Overall employment fell 54,000 for a second month and the unemployment rate rose to 9.6 percent as more people entered the labor force.

The Markit iTraxx Europe Index of 125 companies with investment-grade ratings decreased 2.5 basis points to 106, and the Markit iTraxx Crossover Index of credit-default swaps on 50 companies with mostly high-yield credit ratings dropped 8 basis points to 483, according to Markit.

Continental Sale

The indexes typically fall as investor confidence improves. Credit swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.

Continental, Europe’s second-largest auto parts supplier, sold 1 billion-euros ($1.3 billion) of seven-year bonds. The debt from the Hannover, Germany-based company priced to yield 7.625 percent, compared with 8.75 percent on five-year securities it sold on July 9, according to data compiled by Bloomberg.

Banco Bilbao Vizcaya Argentaria SA and Telefonica SA also sold bonds, putting this week on track to be the highest for European debt issuance in a month, Bloomberg data show. Sales of corporate and covered bonds total 15 billion euros this week, the most since the period ended July 30 and up from 12.6 billion euros last week.

Tomkins Financing

Citigroup will hold a meeting Sept. 8 at 10 a.m. New York time for the Tomkins financing, said a person familiar with the transaction, who declined to be identified because the talks are private.

Canada Pension Plan Investment Board and Onex Corp. have agreed to buy London-based Tomkins, a maker of auto parts and building materials, for 2.89 billion pounds, according to a July 27 statement. They will fund the acquisition with $3 billion of underwritten debt.

Leveraged loan prices rose for the second day to the highest since Aug. 23. The Standard & Poor’s/LSTA US Leveraged Loan 100 Index increased 0.09 cent to 89.51 cents on the dollar. Loans have returned 4.1 percent in 2010, based on the index, which tracks the 100 largest dollar-denominated first-lien leveraged loans.

Most-Traded Bonds

Bonds from Fairfield, Connecticut-based General Electric Co., the world’s biggest maker of jet engines, were the most actively traded U.S. corporate securities by dealers, with 87 trades of $1 million or more, Bloomberg data show. The most active in junk bonds was Anadarko Petroleum Corp., the U.S. partner in BP Plc’s damaged Gulf of Mexico well, with 78 trades.

Junk bonds and leveraged loans are rated below Baa3 by Moody’s Investors Service and lower than BBB- by S&P.

Bonds of Apache Corp. declined by the most since they were issued after an explosion aboard a Mariner Energy Inc. platform in the Gulf of Mexico yesterday.

Apache’s $1.5 billion of 5.1 percent debt due in 2040 declined 3 cents to 98.9 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The Houston-based energy company sold the bonds on Aug. 17 at 98.936 cents on the dollar, Bloomberg data show.

In emerging markets, the yield spread narrowed by 4 basis points to 281 basis points, according to index data from JPMorgan Chase & Co. The spread has decreased 15 basis points since Aug. 30.

Best Performers

French bonds were the second best-performing notes of the 10 countries after U.K. company debt gaining 2.46 percent, with Canadian securities third at 2.38 percent, according to Bank of America Merrill Lynch indexes. The global average was 2.14 percent. For the year, Britain’s company debt has handed investors 9.56 percent, overtaking U.S. corporate notes, which returned 9.55 percent.

Abbey National’s 167 million pounds of zero-coupon notes due 2038 were the best-performing U.K. corporate bonds in August, with a 12.7 percent return, while Cheshunt, England- based Tesco’s 287.5 million pounds of 5.2 percent notes due 2057 gained 10.5 percent, Bank of America Merrill Lynch index data show. The 135 million pounds of zero-coupon bonds due in 2038 issued by Barclays Plc, the third-largest U.K. lender, were the third-best performers, returning 10.2 percent.

“The benefit of the doubt has been granted to U.K. companies for the time being” in terms of the economy, helping the bonds, said Lucette Yvernault, who helps oversee the equivalent of about 7 billion euros as a money manager at Schroders Investment Management Ltd. in London.

Austerity Measures

Austerity measures in the wake of Europe’s sovereign deficit crisis in April will weigh on economic growth and increase the risk of credit rating cuts for some nations, Moody’s said in its semi-annual European Sovereign Outlook on Aug. 23.

The U.K., along with Germany and France, is likely to keep its top rating, Moody’s said. S&P affirmed the U.K.’s AAA rating on July 12, saying planned budget cuts supported the top grade.

The U.K. will announce measures to slash most departments’ budgets by about 25 percent in October as it seeks to tackle a deficit that as a percentage of the economy is greater than the U.S.’s 9.1 percent and the 6.3 percent average for euro-region nations. A total 490,000 public-sector jobs will be lost by April 2015 under the measures being carried out by Chancellor of Exchequer George Osborne, according to Treasury estimates.

Currency Markets

Bonds sold by British companies have returned 5.17 percent since a June 22 emergency budget weeks after Cameron’s Conservative-Liberal coalition came to power replacing the Labour Party’s 13-year reign. Bank of America Merrill Lynch’s broader index gained 3.71 percent in the period.

Credit-default swaps measuring perceptions of sovereign credit quality also show the U.K. outperforming its peers, with the cost of five-year debt insurance tumbling $17,500 since the start of the year to $65,000 annually for a $10 million contract. In the same period, the swaps on the Markit iTraxx SovX Western Europe of 15 countries climbed $72,000 to $141,000, according to CMA.

Currency markets are speculating Cameron’s cuts will hurt economic growth and weaken the pound, which fell to $1.5327 today, down from last month’s high of $1.5999 on Aug. 6.

Spreads on company bonds of only two other nations besides the U.K. narrowed in August, with a 4 basis-point drop on Netherlands securities and a 2 basis-point decline for Japanese corporate notes, Bank of America Merrill Lynch indexes show.

A lack of supply of new bonds in pounds has also helped British company debt, and means any increase in demand boosts the securities “disproportionately,” said Suki Mann, head of credit strategy in London at Societe Generale SA, France’s second-largest bank.

Companies sold 119 million pounds of bonds in the U.K. currency in August, the second-slowest month since at least 1998, according to data compiled by Bloomberg. The month with the least issuance was May, with 34 million pounds of bonds.