JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon won more shareholder support this year than in 2012 to remain chairman, surviving a campaign to split the roles after a record trading loss at the biggest U.S. bank.
The proposal to divide Dimon\u2019s duties won 32.2 percent of the votes, down from 40 percent last year, the bank said today at its annual meeting in Tampa, Florida. Dimon, 57, had told some investors he might quit if the non-binding measure passed, according to a person with knowledge of the conversation, who requested anonymity because the discussion was private.
The vote to back Dimon, who guided JPMorgan to three straight years of record profit, is a defeat for investors who say companies need the balance of a separate chairman and CEO. While Dimon can keep both jobs, the vote may spur JPMorgan\u2019s directors to tighten how they oversee the company after last year\u2019s $6.2 billion \u201cLondon Whale\u201d trading loss and identify a future successor.
\u201cJPMorgan changes after this annual meeting season, even if all the votes go in the direction\u201d JPMorgan wanted, Michael Mayo, an analyst at CLSA Ltd., told Bloomberg Television\u2019s Erik Schatzker in Tampa today. The bank could give more authority to lead director Lee R. Raymond, the former chairman and CEO of Exxon Mobil Corp., or split Dimon\u2019s roles after he leaves, a person with knowledge of the matter said.
The board also might alter its own makeup even among those who won re-election, with Raymond telling investors today that the risk committee may get new faces.
\u201cIn terms of the composition of the risk committee, you should stay tuned,\u201d he said during the meeting.
If directors wind up with less than 60 percent of the vote, \u201cI don\u2019t think they will keep them in the face of such stark shareholder disapproval,\u201d said Bill Patterson, the former director at the CtW Investment Group advisory firm and now a consultant.
The AFSCME Employees Pension Plan, which was among investors sponsoring the vote to separate Dimon\u2019s jobs, will keep pressing the bank for a more independent chairman, said Lisa Lindsley, director of capital strategies at the Washington-based union group.
The proposal drew more attention after last year\u2019s trading loss at the London-based chief investment office, which the board blamed partly on Dimon and spurred directors to cut his pay by 50 percent.
\u201cWe do not see this measure as a panacea, but rather a badly needed first step to strengthen the board,\u201d Lindsley told Dimon at today\u2019s meeting. While the vote wasn\u2019t a referendum on his leadership, Lindsley criticized the firm for its lack of succession planning. \u201cNo one person should be indispensable,\u201d she said. AFSCME says it represents about 1.6 million members.
The threat of Dimon\u2019s departure caused some analysts to predict the stock could fall 10 percent or more in the absence of a clearly identified replacement.
\u201cIf an operation the size of JPMorgan depends on one person, that is itself a sign of board failure,\u201d said Erik Gordon, a business and law professor at the University of Michigan in Ann Arbor. The company\u2019s lack of rebuttal shows \u201cthere is no strong independent lead director, there is no strong special committee or independent group on the board that\u2019s looking out for the interests of shareholders,\u201d he said.
JPMorgan\u2019s first priority is developing a \u201ccompetent and capable successor,\u201d Raymond said. \u201cI hope that time is much into the future and I have no illusions that we will be able to clone Jamie,\u201d he said. Dimon attributed turnover in his top ranks in part to the board pressing him to put people in tough jobs to see if they could be future CEOs.
The last time shareholders of a large U.S. bank opted for divided oversight was in April 2009, when Bank of America Corp. investors voted to strip the chairman\u2019s title from CEO Kenneth Lewis in the aftermath of the Merrill Lynch & Co. takeover and federal bailout. Lewis had no successor in place when he announced later that year he would step down as CEO.
Lloyd C. Blankfein, chairman and CEO of Goldman Sachs Group Inc., avoided a similar vote on his firm\u2019s proxy statement this year by agreeing with CtW Investment Group to expand the duties of lead independent director James Schiro.
Calls for Dimon to cede the chairmanship mounted since last May, when JPMorgan disclosed lapses in risk controls at its chief investment office that led to last year\u2019s losses on derivatives. Bruno Iksil, the trader who made the bets, was nicknamed the London Whale because his position was so big.
Dimon received backing from investors including Home Depot Inc. founder Ken Langone, who called the banker the \u201cfinest\u201d CEO in the U.S., and billionaire Warren Buffett, the Berkshire Hathaway Inc. chairman and CEO who has described Dimon\u2019s annual letter to shareholders as a must-read.
Raymond and former Johnson & Johnson Chairman and CEO William C. Weldon, who heads the bank\u2019s corporate governance and nominating committee, publicly lobbied for Dimon, writing in their first-ever direct appeal to shareholders that splitting the chairman and CEO jobs \u201ccould be disruptive\u201d and against the best interests of investors.
\u201cAn inflexible approach to the question of whether one person can serve as both chairman and CEO is not the right answer,\u201d the men wrote in a May 10 letter.
Proxy advisers at Glass Lewis & Co. and Institutional Shareholder Services advised investors to vote for a separate chairman as well as to oust some directors.
Both recommended that shareholders oppose re-election of the three of the board\u2019s four risk-committee members, including David M. Cote, CEO of Honeywell International Inc., James S. Crown, president of Henry Crown & Co. and Ellen V. Futter, president of the American Museum of Natural History in New York. Futter was the lone board member absent from today\u2019s meeting.
Glass Lewis also had urged shareholders to vote against all three members of JPMorgan\u2019s audit committee: James A. Bell, former chief financial officer at Boeing Co., Crandall C. Bowles, chairman of Springs Industries Inc., and Laban P. Jackson, CEO of Clear Creek Properties Inc.
Incumbent directors who fail to win enough votes in an uncontested election must resign immediately, according to JPMorgan\u2019s bylaws. The board, through a process managed by the corporate-governance committee, must decide whether to accept the resignation at its next regularly scheduled board meeting, the bylaws show.
To contact the reporter on this story: Dawn Kopecki in New York at dkopecki@bloomberg.net
To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net
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Chief Executive Officer Jamie Dimon, who guided JPMorgan to three straight years of record profit, is a defeat for investors who say companies need the balance of a separate chairman and CEO. Photographer: Victor J. Blue/Bloomberg","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/ia0opMQW2V_Y.jpg","width":640,"height":427},"thumbnail":{"url":"http://www.bloomberg.com/image/iPVGcCTS4VKY.jpg","width":190,"height":127},"featured_thumbnail":{"url":"http://www.bloomberg.com/image/iwcb2w.3zd_w.jpg","width":"120","height":"120"},"headline_thumbnail":{"url":"http://www.bloomberg.com/image/iaZZKmxUf2cc.jpg","width":"80","height":"80"},"sidebar_thumbnail":{"url":"http://www.bloomberg.com/image/iyoJawVaex7Q.jpg","width":"200","height":"133"}}}],"videos":[{"description":"32% Voted Against Dimon Keeping Chairman/CEO Roles","caption":" May 21 (Bloomberg) -- Bloomberg\u2019s Erik Schatzker reports on the vote to retain Jamie Dimon\u2019s dual role at JPMorgan. He speaks on Bloomberg Television\u2019s \u201cIn The Loop.\u201d (Source: Bloomberg)","video_id":"kP9d331~TWKdDj_OBnhMnw","embed_code":"ZwbGpzYjoWvHTO0UPMO9kcZ93DBYgcUt","url":"http://www.bloomberg.com/video/32-voted-against-dimon-keeping-chairman-ceo-roles-kP9d331~TWKdDj_OBnhMnw.html","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/itjIADDtO0Oc.jpg","width":200,"height":113},"thumbnail":{"url":"http://www.bloomberg.com/image/iFL5J1VWGolA.jpg","width":190,"height":107}}},{"description":"Dimon Will `Be Around a Long Time': Mayo","caption":" May 21 (Bloomberg) -- Mike Mayo, an analyst at CLSA Ltd., talks about today's vote by JPMorgan Chase & Co. shareholders on the separation of Jamie Dimon's chairman and chief executive officer roles. Dimon won more shareholder support this year than in 2012 to remain chairman, surviving a campaign to split the roles.\n Mayo speaks at the bank's annual shareholder meeting in Tampa, Florida, with Erik Schatzker on Bloomberg Television's \"Lunch Money.\" (Source: Bloomberg)","video_id":"0bjO_s~3RbSL394s4hnA8Q","embed_code":"t0Z2tzYjpNVpXZB6LT9NSZUbbu_ClgSX","url":"http://www.bloomberg.com/video/mayo-on-shareholder-rejection-of-dimon-split-roles-0bjO_s~3RbSL394s4hnA8Q.html","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/ixrXMcmNx2bA.jpg","width":200,"height":113},"thumbnail":{"url":"http://www.bloomberg.com/image/iJbV93f7qzNc.jpg","width":190,"height":107}}}],"documents":[],"audio":[],"charts":[]}},{"published_at":"2013-05-21T13:14:36-04:00","byline":"Stephen Kirkland and Lu Wang","headline":"S&P 500 Index Rebounds to Record as Treasuries Climb While Yen Pares Loss","summary":"The Standard & Poor\u2019s 500 Index\nreturned to a record as a Federal Reserve official said bond\npurchases should continue and Goldman Sachs Group Inc. forecast\nthe stock rally will last at least through 2015. Treasuries rose\nand the yen pared earlier losses while grains and gold fell.","lead":false,"metadata":{"person_codes":[],"tickers":[{"country":"JP","ticker_symbol":"8301"},{"country":"HK","ticker_symbol":"1398"},{"country":"JP","ticker_symbol":"9501"}],"ni_codes":["ALLTOP","ASBNX","ASIACURZ1","ASIAEMBOND","ASIAEMSTK","ASIATOP","ASIATOPZ1","BIZNEWS","BNALL","BNCOPY","BNSTAFF","BNTEAMS","EMERMRKTME","GLOBALMACR","GLOBEWRP","GOWEB","HCX","ONWEB","ORIGINAL","READ","SSX","TOP","TOPBIZMKT","USCURZ1","USTOP","USTOPZ1","WWCURZ2","WWTOP","WWTOPBIZ","WWTOPZ2","IDCURZ1","IDTOP","IDTOPZ1","MATOP","UPDATE","WEBHOME","SENT","IDCURZ2","IDTOPZ2","ISTOP","MOSTREAD","ABONDS","ASIASTAFF","ASIASTORY","DEBTME","EUROSTORY","TYO","PLCURZ2","PLTOP","PLTOPZ2","ISTOPSTG","ASTOCKS","PLTOPSTG","STKME","WWTOPSTG","MOSTSENT","MATOPSTG","BON","BUSINESS","CDRV","CEN","CREDIT","DRV","EBONDS","ECB","EMU","EU","EUBNX","EUCORPFIN","EUROEM","EUROPE","FINNEWS","FRX","GOV","GOVMISC","LST","MARKETS","NEWSWORD07","OPTOUTLINK","ASIA","JAPAN","LONGCOUNT","MSCIDVAS","MSCIWORLD","WEPFSI","USCURZ2","USTOPZ2","ECOCURZ3","ECOTOP","ECOTOPZ3","CMDME","ESTOCKS","EUCMDMKT","EUROPEME","NYX","USBNX","GRPLNK","USTOPSTG","ECOTOPSTG","USSTOCKS","USSTORY"],"news_categories":[{"url_id":"worldwide","name":"Worldwide News"},{"url_id":"economy","name":"Economy News"},{"url_id":"asia","name":"Asia News"},{"url_id":"us","name":"U.S. News"},{"url_id":"homepage","name":"Top Headlines"},{"url_id":"personal-finance","name":"Personal Finance"},{"url_id":"saving-and-investing","name":"Saving & Investing"}]},"body":"The Standard & Poor\u2019s 500 Index (SPX)\nreturned to a record as a Federal Reserve official said bond\npurchases should continue and Goldman Sachs Group Inc. forecast\nthe stock rally will last at least through 2015. Treasuries rose\nand the yen pared earlier losses while grains and gold fell.
\nThe S&P 500 climbed 0.4 percent to 1,673.41 at 1:10 p.m. in\nNew York, while the Stoxx Europe 600 Index erased a 0.7 percent\ndrop to close little changed. Japan\u2019s currency was 0.2 percent\nweaker against the dollar, paring a 0.6 percent drop. The pound\ndepreciated 0.6 percent to $1.5164 after U.K. inflation slowed\nmore than economists forecast in April. Corn, wheat and gold\nlost at least 0.5 percent. The yield on the 10-year Treasury\nnote fell three basis points to 1.94 percent.
\nGoldman Sachs said the market\u2019s rally may last at least\nanother 2 1/2 years and send the S&P 500 up 26 percent to 2,100\nas valuations increase amid improving confidence in the economy.\nFed Bank of St. Louis President James Bullard said bond buying\nis policy makers\u2019 best available option to boost growth. The\nearlier weakness in the yen came as Japan\u2019s Economy Minister\nAkira Amari backed away from comments that drove the currency to\nits biggest gain in three weeks yesterday.
\n\u201cWhile the market does not expect the Federal Reserve to\nstop its $85 billion a month in asset purchases at once and,\nlike the Fed itself, continues to mull an exit strategy, few\nconsider the same in terms of Japan,\u201d Brown Brothers Harriman &\nCo. currency strategists led by Marc Chandler wrote in a note to\nclients. \u201cAmari\u2019s comments can be understood as tapping on the\nbrakes, or blowing air under a parachute to help create the\nconditions of a soft landing to the yen.\u201d
\nThe S&P 500 has rallied 17 percent this year and more than\n145 percent from its bear-market low in 2009 as Fed stimulus\nmeasures and earnings growth fueled a four-year rally.
\nThe benchmark index slipped 0.1 percent yesterday,\nretreating from an all-time high, amid concern an improving\neconomy will cause the Fed to taper its bond purchases. Chicago\nFed President Charles Evans said yesterday the U.S. economy is\n\u201cimproving quite a lot.\u201d Fed Chairman Ben S. Bernanke\ntestifies on the economy in Congress tomorrow.
\nEnergy, consumer and health-care stocks rose at least 0.5\npercent for the biggest gains among the 10 main industries in\nthe S&P 500 today.
\nHome Depot Inc., the largest U.S. home-improvement\nretailer, jumped 2.9 percent after reporting earnings that beat\nestimates and raising its full-year forecast in a report that\nadded to evidence the housing market is improving. JPMorgan\nChase & Co. rose 2.1 percent as shareholders voted for Jamie\nDimon to keep his dual chairman and chief executive officer\ntitle. Apple Inc. added 0.4 percent, reversing a loss of as much\nas 2 percent, as the company faced a Senate panel that yesterday\nreleased a report saying the iPhone maker used loopholes to\navoid paying taxes.
\nDavid Kostin, Goldman Sachs\u2019s chief U.S. equity strategist,\nboosted his year-end forecast for the S&P 500 by 7.7 percent\nfrom 1,625 to 1,750. He raised his 2014 projection to 1,900 and\nhis 2015 forecast to 2,100. He kept his estimates for combined\nearnings by S&P 500 companies at $108 a share in 2013 and $116\nfor next year.
\nPrice-to-earnings multiples will expand amid \u201cconfidence\nin the medium-term outlook for U.S. economic growth and the wide\ngap between equity and persistently low bond yields that we\nassume will be closed more by stocks than bonds,\u201d New York-based Kostin wrote in a note dated yesterday.
\nThe Stoxx Europe 600 Index was little changed after a four-week rally drove the gauge to the highest level since June 2008.\nCarnival Corp., the world\u2019s biggest cruise operator, plunged 5.9\npercent in London trading after lowering its profit target.\nSonova Holding AG fell 1.1 percent as the world\u2019s largest\nhearing-aid maker forecast slowing profit growth this year.
\nThe MSCI Emerging Markets Index was little changed. The\nHang Seng China Enterprises Index of mainland companies listed\nin Hong Kong dropped 0.9 percent, the most in a week, led by\nIndustrial & Commercial Bank of China Ltd. (1398) after Goldman Sachs\nwas said to have sold its stake in the lender. Russia\u2019s Micex\nIndex rose 1.2 percent, extending its three-day rally to 3.6\npercent.
\nIn currency markets, the yen weakened against 11 of 16\nmajor peers. Japan\u2019s Amari said today the overly strong yen is\nin the process of being corrected and can\u2019t say when it will end\nafter commenting two days ago that the weakness may hurt\n\u201cpeople\u2019s lives.\u201d
\nThe Japanese currency has slumped 19 percent in the past\nsix months, the most among 10 developed-nation currencies\ntracked by Bloomberg Correlation-Weighted Indexes, as Prime\nMinister Shinzo Abe pledged to beat deflation and the Bank of\nJapan doubled monthly bond purchases. It tumbled to 103.31 per\ndollar on May 17, the weakest level since October 2008, after\nstrengthening to a post-World War II record of 75.35 in October\n2011. The BOJ started a two-day policy meeting today.
\n\u201cThey need a weaker yen to help the economy and what they\ndon\u2019t want is the unintended consequences of big volatility that\ncomes with it,\u201d said Nizam Idris, head of currency strategy in\nSingapore at Macquarie Group Ltd. \u201cGrowth is improving and we\nwill need to see more of the impact of the weak yen on the macro\neconomy. The yen weakness will continue, though the pace should\nbe slower toward year-end.\u201d
\nAmari said he hoped the yen would stabilize at a level that\nmatches the nation\u2019s economic fundamentals.
\n\u201cI have previously said that the overly strong yen is in\nthe process of being corrected,\u201d he told reporters in Tokyo.\n\u201cI will not say it has been corrected, or where it will\nfinish.\u201d
\nThe pound weakened against all but one of its 16 major\npeers. Consumer prices climbed 2.4 percent from a year earlier,\nless than the 2.6 percent median forecast in a Bloomberg survey,\ndata from the Office for National Statistics showed. The Bank of\nEngland releases minutes of its May 8-9 meeting tomorrow.
\nThe Swiss franc fell against 10 of 16 major peers, touching\na four-month low versus the euro, as the International Monetary\nFund said the introduction of negative interest rates on banks\u2019\nexcess deposits may help the Swiss National Bank cool the\nnation\u2019s real-estate market.
\nThe rand tumbled 0.8 percent to the weakest against the\ndollar since 2011 as violent protests erupted at a South African\nchrome mine.
\nCorn dropped 2.1 percent and wheat declined 1.3 percent as\nfarmers accelerated planting. Gold was 0.4 percent lower at\n$1,378.40 an ounce, after fluctuating between gains and losses\nduring the day.
\nThe cost of insuring European corporate bonds rose for the\nfirst time in six days. The Markit iTraxx Europe Index of 125\ninvestment-grade companies added 1 basis point to 91.1 basis\npoints.
\nCredit-default swaps insuring subordinated European\nfinancial debt fell to the lowest in almost three years\nyesterday amid speculation changes to rules governing the\nsecurities will devalue existing contracts. The Markit iTraxx\nFinancial Index linked to the junior debt of 25 banks and\ninsurers declined to 181.9 basis points yesterday and was at 190\ntoday.
\nThe International Swaps & Derivatives Association is\nplanning the biggest overhaul of the $24 trillion credit\nderivatives market since 2003. Investors are selling outstanding\nswaps in anticipation new contracts will include greater\nprotection against so-called bail-ins, in which governments\nforce bondholders to share the cost of bank rescues.
\nTo contact the reporters on this story:\nStephen Kirkland in London at \nskirkland@bloomberg.net;\nLu Wang in New York at \nlwang8@bloomberg.net
\nTo contact the editor responsible for this story:\nLynn Thomasson at \nlthomasson@bloomberg.net
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He speaks in Hong Kong with Susan Li on Bloomberg Television's \"First Up.\" (Source: Bloomberg)\n","video_id":"ls0jJ9JPR5Ov9hSZLCIdOg","embed_code":"xubDRyYjrNQGzz61bN5HhGsLPy1O0LA4","url":"http://www.bloomberg.com/video/japanese-stocks-may-rise-another-15-matthews-says-ls0jJ9JPR5Ov9hSZLCIdOg.html","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/imIABwjdKIX0.jpg","width":200,"height":113},"thumbnail":{"url":"http://www.bloomberg.com/image/iCl9ihDBQW8o.jpg","width":190,"height":107}}},{"description":"Mellon Capital `Overweight' Japan Stocks","caption":" May 21 (Bloomberg) -- Vassilis Dagioglu, managing director and head of asset allocation at Mellon Capital Management, talks about the fiscal policy of Japanese Prime Minister Shinzo Abe, the outlook for the nation's markets and economy, and his investment strategy.\n He speaks from San Francisco with Susan Li on Bloomberg Television's \"First Up.\" (Source: Bloomberg) ","video_id":"4sT3dNEsS7G5hzAPw4OmMA","embed_code":"V0bTBzYjp06fh_wqnnAYJL9eruDLnSJ7","url":"http://www.bloomberg.com/video/mellon-capital-overweight-japan-stocks-4sT3dNEsS7G5hzAPw4OmMA.html","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/isP7q.eZXetE.jpg","width":200,"height":113},"thumbnail":{"url":"http://www.bloomberg.com/image/iJ4PDb7Ldj1Y.jpg","width":190,"height":107}}},{"description":"China Cyclical Stocks Favored Over Short Term","caption":" May 21 (Bloomberg) -- Viktor Shvets, head of Asian strategy at Macquarie Securities Group, talks about the economic outlooks for Japan and China.\n He speaks with Susan Li on Bloomberg Television's \"First Up.\" (Source: Bloomberg)","video_id":"~VHUtMd3TuuFSKIo9hHKdw","embed_code":"AxdjFzYjq1E-hMh1inQCTHmEaOQ_3t51","url":"http://www.bloomberg.com/video/china-cyclical-stocks-favored-over-short-term-~VHUtMd3TuuFSKIo9hHKdw.html","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/iKe1rWBU8pjI.jpg","width":200,"height":113},"thumbnail":{"url":"http://www.bloomberg.com/image/iefzMlMIZnAY.jpg","width":190,"height":107}}}],"documents":[],"audio":[],"charts":[]}},{"published_at":"2013-05-21T10:34:58-04:00","byline":"Chris Burritt","headline":"Best Buy Has $81 Million First-Quarter Loss as Online Rivals Drive Pricing","summary":"Best Buy Co., the world\u2019s largest\nconsumer-electronics retailer, posted an $81 million first-\nquarter net loss as the company lowers prices to compete with\nonline rivals.","lead":false,"metadata":{"person_codes":[],"tickers":[{"country":"US","ticker_symbol":"AMZN"},{"country":"US","ticker_symbol":"BBY"},{"country":"US","ticker_symbol":"NFLX"},{"country":"US","ticker_symbol":"WMT"}],"ni_codes":["ALLTOP","BIZNEWS","BNALL","BNCOPY","BNGREEN","BNSTAFF","BNTEAMS","BUSINESS","CEO","CH","CONCURZ2","CONS","CONTOP","CONTOPZ2","COS","FINNEWS","GOWEB","GRPLNK","MMN","NYX","ORIGINAL","READ","TOP","TOPBIZMKT","USBNX","USCOMPNEWS","USCONSUME","USCURZ2","USTOP","USTOPZ2","WWCURZ3","WWTOP","WWTOPBIZ","WWTOPZ3","ONWEB","WEBHOME","WWTOPSTG","SENT","WEPFSI","ONYAHOOJP","ELE","ERN","HOU","MN","MSCINAMER","MSCIWORLD","NORTHAM","RET","UPDATE","US","USMW"],"news_categories":[{"url_id":"worldwide","name":"Worldwide News"},{"url_id":"us","name":"U.S. News"},{"url_id":"retail","name":"Retail News"},{"url_id":"homepage","name":"Top Headlines"},{"url_id":"personal-finance","name":"Personal Finance"},{"url_id":"saving-and-investing","name":"Saving & Investing"}]},"body":"Best Buy Co. (BBY), the world\u2019s largest\nconsumer-electronics retailer, posted an $81 million first-quarter net loss as the company lowers prices to compete with\nonline rivals.
\nThe loss of 24 cents a share in the quarter ended May 4\ncompares with net income of $158 million, or 46 cents, a year\nearlier, the Richfield, Minnesota-based company said today in a\nstatement. Sales by stores at least 14 months fell 1.3 percent.
\nChief Executive Officer Hubert Joly, hired in August to\nturn Best Buy around, made permanent its holiday policy of\nmatching Internet competitors\u2019 prices to win back sales from\nAmazon.com Inc. (AMZN) That contributed to the company\u2019s gross margin -\n- the portion of sales left after subtracting the cost of goods\nsold -- shrinking about 1.8 percentage points to 23.1 percent.\nAnalysts projected 24.3 percent.
\n\u201cThe magnitude of the gross margin decline is likely to\ngive investors pause around the pace of the overhaul,\u201d Colin McGranahan, an analyst at Sanford C. Bernstein & Co. in New\nYork, wrote today in a note. He rates Best Buy market perform,\nthe equivalent of a hold.
\nBest Buy slipped 3.1 percent to $25.99 at 10:19 a.m. in New\nYork. The shares more than doubled this year through yesterday,\nthe second-best performance in the Standard & Poor\u2019s 500 Index\nbehind Netflix Inc. (NFLX)
\nWhen Joly took over in September, Best Buy was resisting a\ntakeover bid by founder Richard Schulze and was headed for its\nfirst-ever annual revenue decline. Analysts project another two\nyears of falling sales, signaling Joly, 53, has yet to prove the\nretailer won\u2019t lose relevance as consumers evaluate goods at\nstores and go online to buy them cheaper.
\n\u201cFor all of Best Buy\u2019s attractiveness, it\u2019s speculative,\u201d\nsaid Jerry Bruni, who manages about 337,000 Best Buy shares as\nfounder and chief investment officer of J.V. Bruni & Co. in\nColorado Springs, Colorado. \u201cThey are making all the right\nsteps. But it\u2019s really early in the game in terms of an\noperational turnaround.\u201d
\nBest Buy cut $175 million in expenses in the quarter, in\npart by eliminating workers across the company, Matt Furman, a\nspokesman, said today by telephone. He declined to specify the\nnumber of job cuts and said store employees weren\u2019t among the\nreductions. The company trimmed costs by $150 million in the\nprevious quarter.
\nExcluding the company\u2019s discontinued European operations,\nrestructuring charges and asset impairments, Best Buy had a\nfirst-quarter profit of 32 cents a share. Analysts projected 24\ncents, the average of 23 estimates in a Bloomberg survey.
\nLast year, Best Buy halted the expansion of test stores\ndressed up with skylights and other improvements after Joly\nconcluded they weren\u2019t delivering enough sales to justify the\ncosts, he told reporters last month in New York. Instead, he\nmade less-expensive changes in existing stores, giving more\nspace to the biggest sellers such as smartphones, tablets,\nappliances and accessories.
\nBest Buy shares hit a 12-year closing low of $11.29 on Dec.\n28, capping the fourth annual decline in the previous five\nyears. Then the shares began rebounding as holiday sales\nstabilized with discounts on smartphones and the price-matching\npolicy.
\nSchulze, who owns 20 percent of Best Buy, failed in his\ntakeover bid in February. A month later, he returned to the\nboard as chairman emeritus, with an office for life, regular\nmeetings with Joly and a requirement to notify the CEO when he\nplans to visit the office.
\nTo contact the reporter on this story:\nChris Burritt in Greensboro at \ncburritt@bloomberg.net
\nTo contact the editor responsible for this story:\nRobin Ajello at \nrajello@bloomberg.net
","attachments":{"images":[{"description":"Best Buy Has $81 Million First-Quarter Loss as Joly Cuts Prices ","caption":"Excluding some items, Best Buy\u2019s first-quarter profit was 32 cents a share. Photographer: David Paul Morris/Bloomberg ","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/iuVzXtWg9rLs.jpg","width":640,"height":426},"thumbnail":{"url":"http://www.bloomberg.com/image/iVItpuOtUu0M.jpg","width":190,"height":126},"featured_thumbnail":{"url":"http://www.bloomberg.com/image/ihn9CDUAu43o.jpg","width":"120","height":"120"},"headline_thumbnail":{"url":"http://www.bloomberg.com/image/iqt4MQqt_wPM.jpg","width":"80","height":"80"},"sidebar_thumbnail":{"url":"http://www.bloomberg.com/image/iiKrYxkvh5Nw.jpg","width":"200","height":"133"}}}],"videos":[{"description":"Best Buy CEO Says Stores Match Amazon.com Prices ","caption":" Nov. 14 (Bloomberg) -- Hubert Joly, chief executive officer of Best Buy Co., talks about the company's growth strategy, plan to expand its online business and competition with Amazon.com Inc.\n He speaks with Adam Johnson on Bloomberg Television's \"Street Smart.\" (Source: Bloomberg)","video_id":"PeDkuuOLQriv~9jGRtQjuA","embed_code":"FqajF4NjrX6crnlhl4dYg80O8NTbNs6d","url":"http://www.bloomberg.com/video/best-buy-ceo-says-stores-match-amazon-com-prices-PeDkuuOLQriv~9jGRtQjuA.html","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/idtN6Nh8hUys.jpg","width":200,"height":113},"thumbnail":{"url":"http://www.bloomberg.com/image/iEz5Anmzm0oo.jpg","width":190,"height":107}}}],"documents":[],"audio":[],"charts":[]}},{"published_at":"2013-05-21T13:22:27-04:00","byline":"Joshua Zumbrun","headline":"Dudley Says He Can\u2019t Be Sure If Next QE Move Is \u2018Up or Down\u2019","summary":"Federal Reserve Bank of New York\nPresident William C. Dudley said he has not decided whether the\nFed\u2019s next move should be to enlarge or to shrink its bond\nbuying program as he called for a fresh look at its eventual\nretreat from record asset purchases.","lead":false,"metadata":{"person_codes":[],"tickers":[{"country":"JP","ticker_symbol":"8301"}],"ni_codes":["ALLTOP","ASIA","BGOVALL","BGOVFINAN","BIZNEWS","BNALL","BNCOPY","BNK","BNSTAFF","BNTEAMS","BOJ","BUSINESS","CECO","CEN","COS","DCAA","DEFLATION","ECO","FED","FEDCURZ1","FEDTOP","FEDTOPZ1","FIN","FINMIN","FINNEWS","FOMC","FRX","G7ECOS","GOV","GOVME","GOVMISC","GOWEB","INF","JAPAN","JGOV","JNECO","MARKETS","MINFIN","MOSTSENT","MSCIDVAS","MSCINAMER","MSCIWORLD","NORTHAM","ONWEB","ORIGINAL","POLNEWS","READ","READSPIKE","SENT","SENTSPIKE","TOP","TOPBIZMKT","TRE","US","USBNX","USECO","USECONOMY","USGOV","USSTORY","UST","WWCURZ3","WWTOP","WWTOPBIZ","WWTOPZ3","NEWSWORD07","OPTOUTLINK","UPDATE","USCURZ3","USTOP","USTOPZ3","WWCURZ2","WWTOPZ2"],"news_categories":[{"url_id":"worldwide","name":"Worldwide News"},{"url_id":"us","name":"U.S. News"},{"url_id":"markets-bonds-key-rates","name":"Key Rates"}]},"body":"Federal Reserve Bank of New York\nPresident William C. Dudley said he has not decided whether the\nFed\u2019s next move should be to enlarge or to shrink its bond\nbuying program as he called for a fresh look at its eventual\nretreat from record asset purchases.
\n\u201cBecause the outlook is uncertain, I cannot be sure which\nway -- up or down -- the next change will be,\u201d Dudley said in\nprepared remarks for a speech today in New York.
\nDudley adds his voice to a debate on the Federal Open\nMarket Committee about what to do with its program of bond\npurchases, designed to lower the 7.5 percent unemployment rate.\nWhile many Fed officials have voiced support for shrinking\npurchases as the next step, Dudley, who is also vice chairman of\nthe FOMC, signaled willingness to increase purchases.
\nOfficials last week expressed a range of views on the\nprogram. Philadelphia Fed President Charles Plosser called for\nshrinking purchases at the Fed\u2019s next meeting; San Francisco\u2019s\nJohn Williams favored a reduction \u201cperhaps as early as this\nsummer.\u201d By contrast, Boston\u2019s Eric Rosengren said low\ninflation and high unemployment suggest there may be a need for\neven more stimulus, not less.
\nStocks extended gains after Dudley\u2019s comments. The Standard\n& Poor\u2019s 500 Index climbed 0.4 percent to 1,672.81 at 1:12 p.m.\nin New York after earlier declining as much as 0.2 percent. The\nyield on the 10-year Treasury note fell to 1.94 percent from\n1.97 percent late yesterday.
\nEarlier today, Fed Bank of St. Louis President James Bullard said the central bank should continue its bond buying\nbecause it\u2019s the best available option for policy makers to\nboost growth that is slower than expected.
\nThe purchases known as quantitative easing should be\nmaintained because financial markets indicate that they are\nimproving financial conditions and can be adjusted based on how\nthe economy changes, Bullard, who votes on the policy-setting\nFederal Open Market Committee this year, said in the text of\nremarks prepared for delivery in Frankfurt.
\n\u201cQuantitative easing is closest to standard monetary\npolicy, involves clear action and has been effective,\u201d Bullard\nsaid. The panel should continue the program while \u201cadjusting\nthe rate of purchases appropriately in view of incoming data on\nboth real economic performance and inflation.\u201d
\nIn discussing the next steps for the stimulus program,\nDudley said the Fed may need to overhaul its plan to eventually\nnormalize monetary policy, which was adopted in 2011.
\n\u201cWe may need to update our thinking with respect to the\nso-called exit principles,\u201d Dudley said. The strategy said the\nFed would stop reinvesting the assets on its balance sheet,\nraise short-term interest rates, and finally sell mortgage-backed securities. \u201cThis seems stale in several respects,\u201d he\nsaid.
\nDudley said that the strategy is outdated because policy\nmakers have since pledged to hold their target interest rate\nnear zero until unemployment falls to 6.5 percent. He also said\nthe central bank may want to abandon its plan to sell mortgage-backed securities eventually.
\n\u201cTo the extent that the committee wants to reduce the risk\nof disrupting market functioning during normalization, it could\ndecide to indicate that it will avoid selling the MBS portfolio\nduring the early stages of the normalization process,\u201d Dudley\nsaid. \u201cMoreover, to the extent that the committee wants to\nmitigate the risk of a sharp increase in long-term rates, it\ncould judge that it would prefer not to commit to agency MBS\nsales.\u201d
\nDudley spoke to the Japan Society in New York, and his\nremarks offered reflections on the experience of central banks\nsuch as the Fed and the Bank of Japan that have lowered their\ntarget interest rates near zero and still been unable to\ngenerate a full-fledged economic recovery.
\nThe Bank of Japan, led by Governor Haruhiko Kuroda,\nannounced last month that it would double the monetary base as\npart of a plan to end more than a decade of deflation that has\nweighed down the world\u2019s third-largest economy. Prices excluding\nfresh food haven\u2019t risen 2 percent in any year since 1997, when\na sales tax was increased.
\nDudley also said the Fed\u2019s policy approach has been \u201cfar\nfrom perfect,\u201d and that the central bank was overly optimistic\nabout growth prospects in the 2009-2012 period.
\n\u201cWith the benefit of hindsight, we did not provide enough\nstimulus,\u201d he said. \u201cPerhaps, if we had paid more attention to\nthe persistent divergence between growth forecasts and outturns\nin Japan in the 1990s, we might have been more skeptical about\nthe prospects for a strong economic recovery, even with a more\naggressive monetary policy regime.\u201d
\nTo contact the reporter on this story:\nJoshua Zumbrun in Washington at \njzumbrun@bloomberg.net
\nTo contact the editor responsible for this story:\nChris Wellisz at \ncwellisz@bloomberg.net
","attachments":{"images":[{"description":"New York Fed President William C. Dudley ","caption":"Federal Reserve Bank of New York President William C. Dudley adds his voice to a debate on the Federal Open Market Committee about what to do with its program of bond purchases, designed to lower the 7.5 percent unemployment rate. Photographer: Scott Eells/Bloomberg ","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/iMb5EHwK5Ong.jpg","width":640,"height":427},"thumbnail":{"url":"http://www.bloomberg.com/image/irJiO3F70MpU.jpg","width":190,"height":127},"featured_thumbnail":{"url":"http://www.bloomberg.com/image/i9gUthmDcHDw.jpg","width":"120","height":"120"},"headline_thumbnail":{"url":"http://www.bloomberg.com/image/iM5ZhREhtsZI.jpg","width":"80","height":"80"},"sidebar_thumbnail":{"url":"http://www.bloomberg.com/image/ihR5GMu9_Mzc.jpg","width":"200","height":"133"}}}],"videos":[],"documents":[],"audio":[],"charts":[]}},{"published_at":"2013-05-21T00:00:01-04:00","byline":"Alexis Leondis","headline":"Bond Affair Endures for U.S. Fund Investors Unconvinced Rally Is Near End","summary":"Bill Gross, the world\u2019s largest\nfixed-income manager, says the bull market for bonds may have\nended last month. Investors are staying put.","lead":false,"metadata":{"person_codes":[],"tickers":[{"country":"GR","ticker_symbol":"ALV"},{"country":"US","ticker_symbol":"BLK"},{"country":"US","ticker_symbol":"BRK/"},{"country":"US","ticker_symbol":"MORN"},{"country":"US","ticker_symbol":"PTTRX"},{"country":"US","ticker_symbol":"LM"}],"ni_codes":["ADVISE","ALLFND","ALLTOP","ANNOTATED","BESTTOP","BIZNEWS","BNALL","BNCOPY","BNSTAFF","BNTEAMS","BON","BTX","BUSINESS","CA","CACURZ3","CATOP","CATOPZ3","COS","ERN","EUROSTORY","EXCLUSIVE","FINANCEME","FINNEWS","FLOWS","FND","GBN","GEN","GENNEWS","GOWEB","MARKETS","METRO","MKTMISC","MSCINAMER","MSCIWORLD","NORTHAM","NYX","ONWEB","ORIGINAL","STK","STKME","TOP","TOPBIZMKT","US","USBNX","USCURZ2","USINVEST","USSTOCKS","USSTORY","USTOP","USTOPZ2","USWE","WWCURZ3","WWTOP","WWTOPBIZ","WWTOPZ3","ISTOP","FNDCURZ2","FNDTOP","FNDTOPZ2","INSCURZ3","INSTOP","INSTOPZ3","READ","SENT","USCURZ3","USTOPZ3","ISTOPSTG","WEPFSI","WTOP5","MXTOP","MXTOPSTG","CATOPSTG","LACURZ2","LATOP","LATOPZ2","BPFTOP","INSTOPSTG"],"news_categories":[{"url_id":"worldwide","name":"Worldwide News"},{"url_id":"personal-finance","name":"Personal Finance Homepage"},{"url_id":"canada","name":"Canada News"},{"url_id":"us","name":"U.S. News"},{"url_id":"bonds","name":"Bonds News"},{"url_id":"funds","name":"Funds News"},{"url_id":"insurance","name":"Insurance News"}]},"body":"Bill Gross, the world\u2019s largest\nfixed-income manager, says the bull market for bonds may have\nended last month. Investors are staying put.
\nFour years into the biggest rally in U.S. stocks since\n2000, bond mutual funds are attracting more money than their\nequity counterparts. After at least three warnings from Gross\nthat the fixed-income market has peaked, there\u2019s no evidence of\nwhat strategists including Michael Hartnett of Bank of America\nCorp. have predicted would be a ``great rotation'' out of fixed\nincome into stocks.
\n\u201cFor the past 25 years, you\u2019ve seen the stable decline of\ninterest rates and a level of comfort that bonds are the stable\nasset,\u201d Rick Rieder, New York-based BlackRock Inc.\u2019s co-head of\nfixed income in the Americas, said in an interview. \u201cMoney will\nstill flow into bond funds for the next couple of years because\nof the tremendous need for income by an aging population.\u201d
\nInvestors are piling into fixed income as aggregate mutual-fund returns drop to a two-year low and money managers from\nGross to DoubleLine Capital LP\u2019s Jeffrey Gundlach say that bond-market yields are shrinking. Berkshire Hathaway Inc. (BRK/A)\u2019s Warren\nBuffett said this month that he \u201cfeels sorry\u201d for fixed-income\ninvestors and Bridgewater Associates LP\u2019s Ray Dalio has called\nbonds a \u201cterrible\u201d investment. Investors addicted to bonds\nhave missed a more than doubling of stock prices since 2009.
\nGross, co-chief investment officer of Pacific Investment\nManagement Co., said on May 10 that the bull market for bonds,\nincluding Treasuries, corporate debt and mortgages, probably\nended in the last week of April as yields reached a low and\nprices peaked. In March 2010, he said bonds may have seen their\nbest days and then eight months later that a renewal of asset\npurchases by the U.S. Federal Reserve may signify an end to the\nthree-decade-long rally.
\nSince his first warning, investors have poured about $800\nbillion into bond mutual funds and exchange-traded funds\nindustrywide. Pimco, which manages $2.04 trillion, had record\ndeposits during the first quarter.
\nThe extra yield over the safest government-backed debt that\ninvestors demand to hold investment-grade corporate, government\nand securitized debt fell to 53 basis points on April 29, the\nday Gross said the bull market in bonds \u201clikely ended,\u201d from\n78 basis points a year earlier, according to the Bank of America\nMerrill Lynch Global Bond index. The narrowing gap, which stood\nat 53 basis points on May 17, shows that investors are willing\nto pay more for bonds. Spreads fell to 52 basis points on May 3,\nthe least since July 2010.
\nThe Barclays U.S. Aggregate Index, among the most widely\nused fixed-income benchmarks, advanced 0.01 percent this year\nthrough May 17. The average intermediate-term bond fund in the\nU.S. rose 0.3 percent in the three months ended March 31, the\nworst quarterly performance since the fourth quarter of 2010,\naccording to Chicago-based Morningstar Inc. (MORN)
\nThe Standard & Poor\u2019s 500 Index (SPX), by contrast, has surged 17\npercent this year and has increased 146 percent since a low on\nMarch 9, 2009. That\u2019s the biggest rally since the 50 months\nthrough March 27, 2000, when the index advanced 149 percent,\naccording to data compiled by Bloomberg.
\nBlackRock, the world\u2019s biggest money manager with $3.94\ntrillion in assets, and Western Asset Management Co., a unit of\nLegg Mason Inc. (LM), said investors will keep their money in bond\nfunds for at least the next two years as they continue to think\nof them as a safe haven. After getting burned by equities in\n2008, when the S&P 500 plunged 38 percent, investors have been\nslow to warm up to stock funds again. In the four years ended\n2012, investors pulled $307 billion from equity mutual funds in\nthe U.S., according to the Washington-based Investment Company\nInstitute.
\n\u201cIt\u2019s basic human psychology if you go through a year like\n2008 it will take a while to get comfortable with equities\nagain,\u201d said Lee Spelman, head of U.S. equity client portfolio\nmanagers at New York-based J.P. Morgan Asset Management, who has\ngiven a presentation to clients entitled \u2018Triskaidekaphobia,\u2019\ncomparing the irrational fear of the number 13 to the fear of\nthe equity markets. \u201cEvery year for the last four years, people\nhave said the bond trade is over and yet it keeps going.\u201d
\nLarry Swedroe, a 61-year-old managing principal at the BAM\nAlliance, a partnership of about 145 registered investment\nadvisory firms, said he has about 70 percent of his portfolio\ninvested in municipal and taxable bonds and isn\u2019t going to\nadjust it.
\n\u201cI don\u2019t want to shift from very safe bonds whose purpose\nis to dampen risk of the overall portfolio, protecting me in\nyears like 2008 so I don\u2019t get hammered,\u201d said Swedroe, who\u2019s\nbased in St. Louis. \u201cYou just have to live with low interest\nrates and think of that as an insurance premium against those\nevent risks.\u201d
\nEquity mutual funds attracted an estimated $71 billion this\nyear through May 8, according to data from ICI. The deposits\nhaven\u2019t come at the expense of bond mutual funds, which received\nan estimated $86.3 billion. Investors are pulling money out of\nmoney-market funds, which had redemptions of $101 billion in the\nfirst quarter, ICI data show.
\nBlackRock (BLK) said its clients won\u2019t exit core bond funds and\nwill probably put new money into shorter-duration and more\nflexible bond strategies. Western Asset, with $460 billion under\nmanagement, said the central bank\u2019s accommodative policies will\nhelp to keep interest rates from going above 2.5 percent, and\nits stock affiliate, ClearBridge Investments, said without a\nmeaningful change in rates there won\u2019t be a big transition to\nstocks. Pimco\u2019s parent Allianz SE (ALV) said it doesn\u2019t see any\nevidence of a so-called great rotation out of bonds.
\n\u201cBecause money-market outflows are the source of equity\ninflows, there is no rotation from bonds into equities visible\nso far,\u201d Dieter Wemmer, chief financial officer of Allianz, a\nMunich-based insurer, said May 15 in a presentation to analysts.
\nAt Newport Beach, California-based Pimco, investors\ndeposited about $52 billion into its products in the first\nquarter, an 84 percent jump from a year earlier, and the most\nclient deposits ever in a quarter, according to the Allianz\npresentation. Pimco, which has more than 90 percent of its\nassets in bond-related strategies, added a stock-fund unit as it\nanticipated diminishing returns from the fixed-income market.
\nU.S. bond mutual funds more than doubled their assets to\n$3.5 trillion as of March 31 from $1.56 trillion before the\nfinancial crisis six years earlier, according to TrimTabs\nInvestment Research in Sausalito, California. That compares with\nan increase of only 6.5 percent for U.S. stock mutual funds to\n$6.5 trillion.
\n\u201cDespite numerous stock markets records, the excitement\nthat has accompanied the markets\u2019 solid returns has not, and is\nnot, anxiety free for investors,\u201d Mohamed El-Erian, Pimco\u2019s\nchief executive officer and co-chief investment officer with\nGross, said in an e-mail. \u201cThis is a reflection of the large\ndisconnect between the exuberance of markets and the more\nsluggish real economy, the experimental policies of a growing\nset of central banks, political dysfunction and pockets of geo-political risk.\u201d
\nThe bond market is entering a \u201c12-month period of time\nahead in which, combined, Treasury, corporate and high yields\ndon\u2019t move much,\u201d Gross said in a May 16 Bloomberg Television\ninterview. He said May 10 that fixed-income returns will\nprobably be in the range of 2 percent to 3 percent.
\nPimco doesn\u2019t expect the end of the 30-year rally to be\nlike the drop in 1994, when the Federal Reserve raised interest\nrates more than forecast and Treasuries lost 3.35 percent. The\nfirm is advising clients to consider emerging-market debt and\nstrategies that are unconstrained by maturity, credit quality or\nregion.
\nBridgewater\u2019s Dalio told CNBC on May 17 that central bank\nasset purchases have made cash and bonds poor investments.\nDoubleLine\u2019s Gundlach said in April he expects broad fixed-income benchmarks to return just more than 1 percent in the 12\nmonths ending July. Buffett said at Berkshire Hathaway\u2019s May 4\nshareholder meeting he sympathizes with people who stuck with\nbonds amid low interest rates.
\nDeleveraging by developed economies coupled with central\nbank purchases means there will be a limited supply of bonds\navailable to investors, which will keep rates low for at least\nfive years, said BlackRock\u2019s Rieder.
\nOnly a dramatic change in global growth, inflation or\ncentral bank policies would result in investors pulling out of\nbond funds in a big way, said Steve Walsh, co-chief investment\nofficer for Pasadena, California-based Western Asset. That isn\u2019t\nlikely to happen as the Fed has said it will continue\nquantitative easing, or bond purchases to stimulate the economy,\nuntil mid-2015 or 2016, he said.
\nFed policy makers will meet on June 18-19 and Fed Bank of\nPhiladelphia President Charles Plosser reiterated his view on\nMay 16 that the central bank should begin to curtail bond\npurchases this year.
\nA gradual increase in interest rates correlated to a better\neconomic environment will be beneficial for stock deposits, said\nVinay Nadkarni, head of financial-intermediary distribution at\nNew York-based equity manager ClearBridge Investments, which has\n$68.1 billion in assets. ClearBridge had the most net deposits\nin the first quarter since it was acquired by Legg Mason in\n2005, which are coming mostly from investors moving out of cash,\nNadkarni said.
\n\u201cThere\u2019s the cumulative fatigue of the trillion on\ncorporate balance sheets and in retail money-market funds\nearning zero,\u201d he said. \u201cFixed income doesn\u2019t have to lose for\nus to win.\u201d
\nA trigger for money flowing into stock funds from money-market funds as well as bond funds may be from investors who buy\ndividend-paying stocks for the yield component and then are\npleasantly surprised by the capital appreciation, said Brian\nHogan, president of the equity group at Boston-based Fidelity\nInvestments, the second-biggest U.S. mutual-fund company.
\n\u201cThe last 30 years have been a very favorable environment\nfor fixed-income investing,\u201d Hogan said. \u201cSome of the macro\nconcerns still persist, so I think the backdrop we\u2019ve seen in\nthe fixed-income landscape has created an environment where\nfolks are very comfortable with their fixed-income exposure.\u201d
\nTo contact the reporter on this story:\nAlexis Leondis in \u0432 \u041d\u044c\u044e \u0419\u043e\u0440\u043a\u0435 at \naleondis@bloomberg.net
\nTo contact the editor responsible for this story:\nChristian Baumgaertel at \ncbaumgaertel@bloomberg.net
","attachments":{"images":[{"description":"PIMCO Co-CIO Bill Gross ","caption":"Co-Chief Investment Officer of Pacific Investment Management Co. Bill Gross said on May 10 that the bull market for bonds, including Treasuries, corporate debt and mortgages, probably ended in the last week of April as yields reached a low and prices peaked. Photographer: Scott Eells/Bloomberg ","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/ikt0pmAK2hRI.jpg","width":640,"height":427},"thumbnail":{"url":"http://www.bloomberg.com/image/ivrta5zsOky8.jpg","width":190,"height":127},"featured_thumbnail":{"url":"http://www.bloomberg.com/image/i83e6hfkosh8.jpg","width":"120","height":"120"},"headline_thumbnail":{"url":"http://www.bloomberg.com/image/idoAhUifWxds.jpg","width":"80","height":"80"},"sidebar_thumbnail":{"url":"http://www.bloomberg.com/image/iFVC4j1tpVJg.jpg","width":"200","height":"133"}}}],"videos":[],"documents":[],"audio":[],"charts":[]}},{"published_at":"2013-05-20T19:01:00-04:00","byline":"Zachary Tracer and Robert Wall","headline":"Buffett Jets Chief Says U.S. Luxury Travel Demand Rebounds as Europe Lags","summary":"The U.S. is leading a recovery in\ndemand for private flights while Europe remains weighed down by\neconomic weakness, the head of billionaire Warren Buffett\u2019s jet-\nmanagement company said.","lead":false,"metadata":{"person_codes":[],"tickers":[{"country":"CN","ticker_symbol":"BBD/"},{"country":"US","ticker_symbol":"BRK/"},{"country":"BZ","ticker_symbol":"EMBR3"}],"ni_codes":["AIRLEASE","ALLTOP","AMERICAME","AMINTERN","ANNOTATED","ARO","BIZNEWS","BNALL","BNCOPY","BNSTAFF","BNTEAMS","BUSINESS","CEO","CONS","COS","DSX","EUAVIATEAM","EUBNX","EURCURZ3","EUROPE","EUROSTORY","EURTOP","EURTOPZ3","EXCLUSIVE","FIN","FINANCEME","FINNEWS","GOWEB","INS","LST","LUX","MSCINAMER","MSCIWORLD","NORTHAM","NYX","ONWEB","ORIGINAL","SF","TOP","US","USBNX","USCURZ3","USIND","USINSURANC","USSTORY","USTOP","USTOPZ3","WWTOPSTG","INSCURZ3","INSTOP","INSTOPZ3","TRN","TRNCURZ1","TRNTOP","TRNTOPZ1","READ","CONCURZ3","CONTOP","CONTOPZ3","EURTOPSTG","WEBHOME","FINCURZ3","FINTOP","FINTOPZ3","LACURZ2","LATOP","LATOPZ2","LATOPSTG"],"news_categories":[{"url_id":"europe","name":"Europe News"},{"url_id":"us","name":"U.S. News"},{"url_id":"finance","name":"Finance News"},{"url_id":"insurance","name":"Insurance News"},{"url_id":"retail","name":"Retail News"},{"url_id":"transportation","name":"Transportation News"},{"url_id":"homepage","name":"Top Headlines"}]},"body":"The U.S. is leading a recovery in\ndemand for private flights while Europe remains weighed down by\neconomic weakness, the head of billionaire Warren Buffett\u2019s jet-management company said.
\n\u201cThe U.S. from our perspective is coming back and doing\nrelatively well,\u201d Jordan Hansell, chief executive officer of\nBerkshire Hathaway Inc. (BRK/A)\u2019s NetJets, said by phone yesterday from\nGeneva, where he is attending the European Business Aviation\nConvention & Exhibition. \u201cEurope has remained difficult.\u201d
\nNetJets caters to wealthy individuals and business clients\nwho take a stake in planes in exchange for flight hours. When\nthe U.S. financial crisis sapped luxury flying, the company cut\njobs and planes before embarking on $17.6 billion of orders\nstarting in 2010 on a bet that the market would recover over the\ncoming decade.
\nThe number of new NetJets owners increased 55 percent in\nthe first quarter from a year earlier, Hansell said. Regarding\nthe U.S. market, he said: \u201cI wouldn\u2019t say it\u2019s a huge upswing,\nbut it\u2019s year over year over year, from 2009, been an\nimprovement.\u201d
\nBuffett promoted Hansell, 42, to CEO of Columbus, Ohio-based NetJets in 2011. He has helped revitalize the business,\nwhich lost money from when Berkshire purchased it in 1998\nthrough the recession.
\nIn 2009, the unit became \u201cthe major problem\u201d for Omaha,\nNebraska-based Berkshire as the recession made it more difficult\nto fill planes, Buffett said in that year\u2019s annual report.
\nEurope, where NetJets operates an affiliate, remains a\nchallenging market, Hansell said. The euro-area economy\ncontracted 0.2 percent in the first quarter, its sixth straight\ndecline. Gross domestic product in the U.S. grew at a 2.5\npercent annualized rate in the first quarter.
\nNetJets said it will be the first operator of Bombardier\nInc. (BBD/B)\u2019s\u2019s Challenger 350 midsize jet, for which the company\nplaced 75 firm orders in June. The plane features leather and\nwood trim and a single-service beverage maker, NetJets said in a\nstatement.
\nTo contact the reporters on this story:\nZachary Tracer in New York at \nztracer1@bloomberg.net;\nRobert Wall in London at \nrwall6@bloomberg.net
\nTo contact the editors responsible for this story:\nDan Kraut at \ndkraut2@bloomberg.net;\nBenedikt Kammel at \nbkammel@bloomberg.net
","attachments":{"images":[],"videos":[],"documents":[],"audio":[],"charts":[]}},{"published_at":"2013-05-21T13:23:10-04:00","byline":"Ian King","headline":"Intel CEO Krzanich Takes Control of Chip Division in Mobile Push","summary":"Intel Corp. Chief Executive Officer\nBrian Krzanich, trying to speed up the company\u2019s push into\nmobile markets, took direct control of the division that is\nresponsible for designing chips.","lead":false,"metadata":{"person_codes":[],"tickers":[{"country":"US","ticker_symbol":"INTC"},{"country":"US","ticker_symbol":"QCOM"}],"ni_codes":["ALLTOP","AMERICAME","BIZNEWS","BLCTECH","BLCTECHENT","BLCTECHMOB","BNALL","BNCOPY","BNSTAFF","BNTEAMS","BUSINESS","CA","CALCURZ2","CALTOP","CALTOPZ2","CEO","COEVNT","COS","ELE","FINNEWS","GOWEB","HANDHELD","MGMTCHG","MOBILE","MSCINAMER","MSCIWORLD","NORTHAM","ONWEB","ORIGINAL","SEM","SEQ","SF","SFCURZ2","SFTOP","SFTOPZ2","TEC","TECHCURZ2","TECHTOP","TECHTOPZ2","TECHTOPZ3","TOP","US","USBNX","USCURZ3","USSTORY","USTECH","USTOP","USTOPZ3","USWE","WEBDELAY0","WNEWS"],"news_categories":[{"url_id":"us","name":"U.S. News"},{"url_id":"technology","name":"Technology News"},{"url_id":"technology-home","name":"Technology"},{"url_id":"technology-mobile-and-wireless","name":"Mobile & Wireless"},{"url_id":"technology-enterprise-tech","name":"Enterprise Tech"}]},"body":"Intel Corp. (INTC) Chief Executive Officer\nBrian Krzanich, trying to speed up the company\u2019s push into\nmobile markets, took direct control of the division that is\nresponsible for designing chips.
\nThe former factory manager, promoted to the company\u2019s top\njob last week, now has the Intel Architecture Group reporting\ndirectly to him, Intel said today in a regulatory filing. Under\nformer CEO Paul Otellini, the unit was run by David Perlmutter,\nwho will now lead a \u201cmanagement transition effort.\u201d
\nIntel will accelerate a push to get its chips used by\nmakers of smartphones and tablets, Krzanich told Intel\nshareholders at the annual meeting last week, when he became\nCEO. He takes over as the company struggles to cut into Qualcomm\nInc. (QCOM)\u2019s lead in the $85.4 billion mobile-chip market.
\n\u201cThese changes reflect the imperatives that Brian outlined\nlast week at the stockholder meeting,\u201d said Chuck Mulloy, a\nspokesman for the Santa Clara, California-based company. \u201cThey\nare designed to clarify management roles and accelerate Intel\u2019s\nmarket performance.\u201d
\nNewly promoted President Renee James will oversee Intel\u2019s\nmanufacturing operations. Mike Bell, co-leader of the company\u2019s\nmobile-phone chip business, is being moved to a new position\nwhere he will be responsible for \u201cnew devices,\u201d according to\nMulloy. Vice President Hermann Eul will continue on as head of\nthe mobile and communications group that Bell is leaving.
\nChief Financial Officer Stacy Smith, who reports to\nKrzanich, has been given additional responsibility for Intel\nCapital and the company\u2019s internal use of information\ntechnology.
\nIntel shares rose less than 1 percent to $24.12 at 1:18\np.m. in New York. The stock had gained 17 percent this year\nthrough yesterday.
\nTo contact the reporter on this story:\nIan King in San Francisco at \nianking@bloomberg.net
\nTo contact the editor responsible for this story:\nTom Giles at \ntgiles5@bloomberg.net
","attachments":{"images":[],"videos":[],"documents":[],"audio":[],"charts":[]}},{"published_at":"2013-05-21T13:15:47-04:00","byline":"Dina Bass and Cliff Edwards","headline":"Microsoft Debuts First Xbox in Eight Years as Entertainment Battle Expands","summary":"Microsoft Corp. unveiled its first\nnew Xbox in almost eight years, seeking to position the console\nat the center of games and home entertainment against a growing\nroster of competitors that includes Apple Inc. to Facebook Inc.","lead":false,"metadata":{"person_codes":[],"tickers":[{"country":"JP","ticker_symbol":"7974"},{"country":"US","ticker_symbol":"AAPL"},{"country":"US","ticker_symbol":"AMZN"},{"country":"US","ticker_symbol":"FB"},{"country":"US","ticker_symbol":"GOOG"},{"country":"US","ticker_symbol":"MSFT"}],"ni_codes":["*DELETE*","ALLFEA","ALLTOP","AMERICAME","ASIA","BIZNEWS","BLCGAMEMOV","BLCTECH","BNALL","BNCOL","BNCOPY","BNSEATTLE","BNSTAFF","BNTEAMS","BUSINESS","CA","CO","CONS","COS","CPR","ECOM","ELE","FINNEWS","GOWEB","INTERNET","JAPAN","JNCURZ3","JNTOP","JNTOPZ3","LAX","MEDTOP","MSCIDVAS","MSCINAMER","MSCIWORLD","NORTHAM","NP","NYX","ONWEB","READ","RET","SF","SOCIALNET","SOF","TEC","TOP","TOPBIZMKT","UPDATE","US","USBNX","USCOMPNEWS","USCURZ3","USENT","USPN","USSTORY","USTECH","USTOP","USTOPZ3","USWE","WA","WEBDELAY0","WWCURZ3","WWTOP","WWTOPBIZ","WWTOPZ3","SENT"],"news_categories":[{"url_id":"worldwide","name":"Worldwide News"},{"url_id":"japan","name":"Japan News"},{"url_id":"us","name":"U.S. News"},{"url_id":"media","name":"Media News"},{"url_id":"technology-home","name":"Technology"},{"url_id":"technology-tv-games-and-movies","name":"TV, Games & Movies"}]},"body":"Microsoft Corp. (MSFT) unveiled its first new Xbox in almost eight years, seeking to position the console at the center of games and home entertainment against a growing roster of competitors that includes Apple Inc. (AAPL) to Facebook Inc. (FB)
The new device is called Xbox One, Don Mattrick, president of Microsoft\u2019s Interactive Entertainment division, said today in Redmond, Washington, where Microsoft unveiled the product. The device will use voice commands and motion sensing to recognize individuals, letting them switch seamlessly between games, live TV and Skype video calling.
Microsoft, the top seller in U.S. consoles for more than two years, will face fresh competition from Sony Corp. (6758)\u2019s PlayStation 4, scheduled for release near year-end, and Nintendo Co. (7974)\u2019s Wii-U, introduced last November. It also must fend off a larger threat: companies including Apple, Facebook (FB), Google Inc. (GOOG) and Amazon.com Inc. (AMZN) offering an array of entertainment services, software and products.
\u201cTeam Xbox is on a new mission: design and build an all-in-one system to light up a new generation of games, TV and entertainment,\u201d Mattrick said.
The company didn\u2019t immediately disclose pricing or packaging or say when the product will go on sale.
The Kinect controller will be included with each Xbox, said David Dennis, a spokesman, allowing Microsoft and developers to create products around the device\u2019s motion, voice and visual recognition capabilities. The Kinect will recognize users and show them a customized TV guide and a dashboard with the last five things they\u2019ve done.
Microsoft was little changed at $35.06 at 1:06 p.m. in New York. The stock had gained 31 percent this year as of yesterday, compared with 17 percent for the Standard & Poor\u2019s 500 Index.
Shifts in the market, especially in mobile, are pressuring Microsoft to make the new Xbox capable of delivering more programming, entertainment and services, moving it further from video games.
\u201cThis has to last them in the living room for four to 10 years,\u201d said Brian Blau, an analyst at Gartner Inc. in San Francisco. \u201cThey have to think about what\u2019s coming in five years and compete against the two generations of tablets which will come out during that time.\u201d
Industry leadership is no guarantee of future success. In November 2005, when Microsoft took the wraps off the Xbox 360, Sony led in console sales, only to came up short with the PlayStation 3 after Nintendo\u2019s Wii upended the market with a motion-activated controller.
Nintendo has sold 41.2 million of its first-generation Wii players in the U.S., compared with 39 million Xbox 360 consoles and 24.2 million Sony PlayStation 3s, according to NPD Group Inc., the Port Washington, New York-based researcher.
This time Xbox comes in with 28 months of market-leading sales in the U.S., according to NPD, outgunning Sony and the Wii-U, which is selling below Nintendo\u2019s projections. Microsoft has sold 76 million Xbox 360 consoles worldwide and has 46 million subscribers to the Xbox Live online service.
Worldwide the video game industry generated hardware and software sales of $37.4 billion last year, according to Gartner.
To contact the reporters on this story: Dina Bass in Seattle at dbass2@bloomberg.net; Cliff Edwards in San Francisco at cedwards28@bloomberg.net
To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net; Anthony Palazzo at apalazzo@bloomberg.net
","attachments":{"images":[{"description":"Microsoft Unveils New Xbox in Widening Home Entertainment Battle ","caption":"Attendees exit after an XBOX media briefing at the E3 trade show in Los Angeles, California. Photographer: Jonathan Alcorn/Bloomberg","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/iNmqZBT2IdBM.jpg","width":640,"height":387},"thumbnail":{"url":"http://www.bloomberg.com/image/iL3nTQZ7TwWw.jpg","width":110,"height":83},"featured_thumbnail":{"url":"http://www.bloomberg.com/image/iM.Tw7xuwa7g.jpg","width":"120","height":"120"},"headline_thumbnail":{"url":"http://www.bloomberg.com/image/i2YAI3cqoCjI.jpg","width":"80","height":"80"},"sidebar_thumbnail":{"url":"http://www.bloomberg.com/image/iNFL4qngdj2U.jpg","width":"300","height":"400"}}}],"videos":[{"description":"The New Xbox: An Exclusive Look at How It Was Made","caption":" May 21 (Bloomberg) -- Bloomberg Television's Cory Johnson gets an exclusive inside look at how Microsoft designed and tested the new Xbox. (Source: Bloomberg)","video_id":"wjoUDgSXTKq1tWQrqsFOew","embed_code":"ZraWxzYjq9iE8uAWvySicuTwf39sljOY","url":"http://www.bloomberg.com/video/the-new-xbox-an-exclusive-look-at-how-it-was-made-wjoUDgSXTKq1tWQrqsFOew.html","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/iLYAPEE96hn0.jpg","width":200,"height":113},"thumbnail":{"url":"http://www.bloomberg.com/image/ilVFN5HFLQKo.jpg","width":190,"height":107}}}],"documents":[],"audio":[],"charts":[]}},{"published_at":"2013-05-21T13:17:18-04:00","byline":"Todd Shields","headline":"Cook Tells Congress Apple Pays \u2018All the Taxes We Owe\u2019 Under U.S. Statutes","summary":"Apple Inc. Chief Executive Officer\nTim Cook defended his company\u2019s use of offshore tax shelters\nbefore U.S. senators who castigated the most-valuable technology\ncompany for avoiding $9 billion and more in payments.","lead":false,"metadata":{"person_codes":[],"tickers":[{"country":"US","ticker_symbol":"AAPL"},{"country":"US","ticker_symbol":"HPQ"}],"ni_codes":["ALLTOP","AMERICAME","BBEXCLUDE","BESTTOP","BGOVALL","BGOVTECH","BIZNEWS","BLCTECH","BNALL","BNCOPY","BNSTAFF","BNTEAMS","BRST","BUSINESS","CA","CALCURZ1","CALTOP","CALTOPZ1","CATOPSTG","CNG","CNGTEAM","CORRECT","COS","CPR","DCAA","DCCURZ1","DCTOP","DCTOPZ1","ELE","EMC","EUBNX","EUROPE","FACTCX","FINNEWS","GEN","GENCURZ2","GENNEWS","GENTOP","GENTOPZ2","GOV","GOVCURZ2","GOVTOP","GOVTOPZ2","GOWEB","IPHONE","IRELAND","LAWCURZ4","LAWTOP","LAWTOPZ4","MMN","MSCIDVEUR","MSCINAMER","MSCIWORLD","NORTHAM","NRGREG","ONWEB","POLNEWS","SF","TAX","TEC","TECHCURZ2","TECHTOP","TECHTOPZ2","TOP","TRANSREG","US","USBNX","USCURZ6","USGOV","USSTORY","USTECH","USTOP","USTOPZ6","USWE","WASHNEWS","WEBDELAY0","WHOCURZ2","WHOTOP","WHOTOPZ2","WNEWS","WWCURZ6","WWTOP","WWTOPGEN","WWTOPZ6","WEBHOME","UPDATE","MOSTREAD","SFCURZ1","SFTOP","SFTOPZ1","BLCPOL","LAWTOPSTG"],"news_categories":[{"url_id":"worldwide","name":"Worldwide News"},{"url_id":"executive","name":"Executive News"},{"url_id":"law","name":"Law News"},{"url_id":"us","name":"U.S. News"},{"url_id":"technology","name":"Technology News"},{"url_id":"homepage","name":"Top Headlines"},{"url_id":"technology-home","name":"Technology"},{"url_id":"politics-home","name":"Politics"}]},"body":"Apple Inc. Chief Executive Officer Tim Cook defended his company\u2019s use of offshore tax shelters before U.S. senators who castigated the most-valuable technology company for avoiding $9 billion and more in payments.
\u201cWe pay all the taxes we owe -- every single dollar,\u201d Cook said in testimony today to the Senate Permanent Subcommittee on Investigations. \u201cWe not only comply with the laws, we comply with the spirit of the laws.\u201d
Senator Carl Levin used the hearing to say Apple used \u201cloopholes\u201d to avoid paying $9 billion in U.S. taxes in 2012.
\u201cApple executives want the public to focus on the U.S. taxes the company has paid, but the real issue is the billions in taxes it has not paid,\u201d said Levin, a Michigan Democrat. Apple employs \u201coffshore tax strategies whose purpose is tax avoidance, pure and simple,\u201d he said.
Today\u2019s hearing was called to air accusations the iPhone maker has created a web of offshore entities to avoid paying U.S. taxes.
Apple, in written testimony, denied any wrongdoing and said the company was one of the largest taxpayers in the U.S., having paid $6 billion last year. Cook called for a simplified U.S. corporate tax code that would allow capital to flow back to the U.S., \u201cfully recognizing that this would likely result in an increase in Apple\u2019s U.S. taxes.\u201d
He told lawmakers that he didn\u2019t feel pressured to testify. \u201cI think it\u2019s important to tell our story,\u201d Cook said.
In the last four years, Apple has avoided paying taxes on $44 billion in income, said Senator John McCain of Arizona, the panel\u2019s top Republican. He called the company \u201cone of the biggest tax avoiders in America.\u201d
Three entities set up in Ireland hold 60 percent of Apple\u2019s profits and claim to be tax residents \u201cnowhere in the world,\u201d McCain said. \u201cIt\u2019s completely outrageous.\u201d
Not all lawmakers supported summoning Apple executives to the hearing. Senator Rand Paul, a Kentucky Republican, said Apple was dealing with an \u201cawful\u201d tax code.
\u201cI\u2019m offended by the spectacle of dragging in executives from a company that is not doing anything illegal,\u201d Paul said. \u201cI frankly think the committee should apologize to Apple.\u201d
Levin said there would be no apology. \u201cApple\u2019s a good company but no company, no company should be able to determine how much it\u2019s going to pay in taxes,\u201d Levin said.
Cook and two other executives -- including Chief Financial Officer Peter Oppenheimer -- appeared before the subcommittee. The panel, led by Levin, in a report yesterday said Apple\u2019s subsidiaries include three entities that have no home country for tax purposes.
Apple said its cash is largely held in U.S. banks in dollar-denominated assets, segregated into a portion that can be used for domestic operations and a portion that can be used only for international investments, the company said. The company doesn\u2019t use foreign subsidiaries or gimmicks to avoid U.S. taxes, said the testimony.
The company also said the Irish subsidiaries, which are cost-sharing arrangements, have helped fund Apple\u2019s research and development activities and taken on risks, leading to bigger profits and higher-paying jobs in the U.S.
Apple shares were down $1.57 or 0.4 percent, to $441.36, at 12:12 p.m. New York time.
The Senate committee has been examining companies that use various maneuvers to reduce their tax bills, in addition to Apple including Microsoft Corp. (MSFT) and Hewlett-Packard Co (HPQ).
Some of the largest U.S.-based companies -- including those in technology, energy and pharmaceutical industries -- expanded their untaxed offshore stockpiles by $183 billion in the past year, increasing such holdings by 14.4 percent, according to data compiled by Bloomberg.
Microsoft , Apple and Google Inc. each added to their non-U.S. holdings by more than 34 percent as they expanded on prior tax maneuvers to earn and park profits in low-tax countries. The build-up of offshore profits -- totaling $1.46 trillion for the 83 companies examined -- has increased because of incentives in the U.S. tax code for booking profits offshore and leaving them there. This has complicated attempts by Congress to overhaul the corporate tax system.
Apple has said in filings with the U.S. Securities and Exchange Commission that it has $40.4 billion in earnings outside the U.S. on which it hasn\u2019t paid U.S. taxes. If Apple brought that money back to the U.S., the company would owe $13.8 billion, according to the filings.
The panel\u2019s report is designed to be a \u201ccase study\u201d of how a company is able to pay an effective tax rate much lower than the 35 percent U.S. corporate rate, according to staff members on the subcommittee.
The bipartisan probe found Apple, through cost-sharing arrangements, has transferred offshore the profits powered by economic rights to its patents and other intellectual property - - aspects like licensing and sales. At the same time, the legal rights to its patents remain in the U.S., the panel found.
Apple\u2019s relationship with the offshore affiliates isn\u2019t arms\u2019 length, the probe found. Apple has $102 billion in offshore accounts and shifted billions in profits out of the U.S. into affiliates based in Ireland, where it negotiated a tax rate of less than 2 percent, according to a report by the panel. Levin today labeled them \u201cghost companies.\u201d
The offshore entities of the Cupertino, California-based company have paid little or no tax in recent years, the congressional report said.
One affiliate -- Apple Operations International --generated net income of $30 billion between 2009 and 2012. It declined to declare a tax residence, filed no corporate tax return and paid no income taxes to any nation, the report said. AOI is Apple\u2019s principal offshore holding company.
One of the Irish entities, Apple Sales International, before 2012 had no employees, and two of its three directors are Apple Inc. (AAPL) employees located at its California headquarters. All 33 ASI board meetings between May 2006 and March 2012 took place in Cupertino, the report found.
ASI buys Apple\u2019s finished products from a Chinese manufacturer, resells them at a higher price to Apple affiliates and retains the profits, the report said.
Apple has a low tax rate on products it sells outside the U.S., Cook said. \u201cThere\u2019s no shifting going on that I see, at all,\u201d he said.
Lawmakers in both parties are seeking a bipartisan agreement on how to tax income that U.S.-based corporations earn outside the country. Democrats and Republicans on the panel say Apple\u2019s tax maneuverings, while not illegal, will help frame debate about how to make corporate taxes more fair.
McCain said he and Levin are seeking to craft a bipartisan proposal that would end some of the tax benefits, although the timing of an agreement isn\u2019t clear. He said both parties in Congress should seek to address the matter, even if it isn\u2019t in the context of a broad rewrite of the tax code.
\u201cWhen you see egregious behavior like this, why wait?\u201d McCain said.
To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net
To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net
","attachments":{"images":[{"description":"Apple Inc. CEO Tim Cook ","caption":"Apple Inc. Chief Executive Officer Tim Cook called for a simplified U.S. corporate tax code that would allow capital to flow back to the U.S., \u201cfully recognizing that this would likely result in an increase in Apple\u2019s U.S. taxes.\u201d Photographer: Andrew Harrer/Bloomberg","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/iFMZ.S_OwsiU.jpg","width":640,"height":427},"thumbnail":{"url":"http://www.bloomberg.com/image/iOQpmIKnSQcw.jpg","width":190,"height":127},"featured_thumbnail":{"url":"http://www.bloomberg.com/image/iEkSrqDoVHEs.jpg","width":"120","height":"120"},"headline_thumbnail":{"url":"http://www.bloomberg.com/image/iCds1cc.Fl0o.jpg","width":"80","height":"80"},"sidebar_thumbnail":{"url":"http://www.bloomberg.com/image/iPi0CmNvp.0k.jpg","width":"200","height":"133"}}}],"videos":[{"description":"Apple's Cook: U.S. Tax Code Handicaps Companies","caption":" May 21 (Bloomberg) -- Tim Cook, chief executive officer of Apple Inc., said the iPhone maker doesn't use \"gimmicks\" to avoid taxes.\n Cook, testifying before the Senate Permanent Subcommittee on Investigations in Washington, said the current U.S. tax code \"handicaps\" American companies. (This is an excerpt from the hearing. Source: Bloomberg)","video_id":"XQUeWKpeRce5rjIlzuT84g","embed_code":"NmbmpzYjokHpLug-wcbNnLZc74McwYg4","url":"http://www.bloomberg.com/video/apple-s-cook-says-u-s-tax-code-handicaps-companies-XQUeWKpeRce5rjIlzuT84g.html","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/iVj11sPCYRxo.jpg","width":200,"height":113},"thumbnail":{"url":"http://www.bloomberg.com/image/ikVnl1VnIpxo.jpg","width":190,"height":107}}}],"documents":[],"audio":[],"charts":[]}},{"published_at":"2013-05-21T12:51:26-04:00","byline":"Kathleen Hunter","headline":"Tentative Accord on Visas for High-Skill Workers Said Reached by Senators","summary":"Senators Orrin Hatch and Charles\nSchumer reached a tentative deal on changes to a high-skilled\nvisa program, two aides said, clearing an impediment to\nRepublican support for legislation revising immigration law.","lead":false,"metadata":{"person_codes":[],"tickers":[],"ni_codes":["ALLTOP","AZ","BBEXCLUDE","BNALL","BNCOPY","CA","CNG","CNGTEAM","DCAA","GEN","GENCURZ2","GENNEWS","GENTOP","GENTOPZ2","GOV","GOWEB","MSCINAMER","MSCIWORLD","NM","NORTHAM","ORIGINAL","POLNEWS","READ","TAX","TOP","TX","US","USBNX","USCURZ6","USGOV","USSW","USTOP","USTOPZ6","USWE","UT","WASHNEWS","WRKDIVERSE","WWCURZ6","WWTOP","WWTOPGEN","WWTOPZ6","ONWEB","BIZNEWS","BUSINESS","COS","FINNEWS","TEC","UPDATE","WEBHOME","BLCPOL"],"news_categories":[{"url_id":"worldwide","name":"Worldwide News"},{"url_id":"us","name":"U.S. News"},{"url_id":"homepage","name":"Top Headlines"},{"url_id":"politics-home","name":"Politics"}]},"body":"Senators Orrin Hatch and Charles Schumer reached a tentative deal on changes to a high-skilled\nvisa program, two aides said, clearing an impediment to\nRepublican support for legislation revising immigration law.
\nThe aides, who spoke on condition of anonymity to describe\nprivate negotiations, said Hatch, a Utah Republican, and\nSchumer, a New York Democrat, had reached an agreement in\nprinciple. One aide said the Judiciary Committee may consider\nthe compromise later today.
\nThe plan would change the formula for calculating the\nnumber of visas for foreign technology workers while keeping the\nbill\u2019s limit of 180,000 a year. It would lift a requirement that\ncompanies look for a U.S. worker before hiring a foreign visa\nholder for all companies except those whose workforce is more\nthan 15 percent foreign.
\nSchumer and other authors of a bipartisan Senate\nimmigration proposal have been courting Hatch\u2019s vote. Hatch has\nsaid he will oppose the measure unless Democrats agree to\namendments favoring technology companies that seek to hire more\nhigh-skilled foreign workers.
\nThe agreement reached today includes Hatch\u2019s proposal to\nrequire employers to show that a U.S. worker wasn\u2019t available\nonly when they initially hire a foreign employee, not with each\nvisa extension.
\nHatch told reporters late yesterday at the Capitol that\nboth parties were \u201cworking in good faith\u201d to reach a\ncompromise. He said at the time he would vote for the bill in\nthe Judiciary Committee if lawmakers reached what he viewed as\nan acceptable compromise on the issue.
\nUnions led by the AFL-CIO labor federation said technology\ncompanies are trying to undermine job security and opportunities\nfor U.S. workers.
\nThe Judiciary Committee is in its fifth day of considering\namendments to the immigration proposal and may wrap up work as\nsoon as tomorrow.
\nThe Senate bill would initially raise the annual H-1B visa\nlimit for high-skilled foreign workers to 135,000 from 85,000.\nCaps in future years could increase to 180,000, depending on\neconomic conditions.
\nThe bill also would require companies to recruit U.S.\nworkers before hiring foreign ones. Technology companies say\nthat invites bureaucratic scrutiny by the government and\nlawsuits from U.S. workers.
\nIf Hatch were to support the bill in the Judiciary\nCommittee, he has made clear it will take more than a deal on\nhigh-skilled visas to win his backing when the measure is\nconsidered by the full Senate.
\nFor his vote then, Hatch said lawmakers must agree to his\nproposed changes regarding the taxes immigrants must pay and\nsocial benefits they receive.
\n\u201cIt won\u2019t be going anywhere without these amendments,\nbecause you\u2019re not going to get any Republicans,\u201d Hatch told\nreporters.
\nHatch said he wants to require immigrants who seek\ncitizenship to pay additional taxes and to make clear that\nunauthorized employment can\u2019t count toward eligibility for\nSocial Security benefits. He is proposing a five-year waiting\nperiod before people on the path to citizenship can receive\nsubsidies under the 2010 health-care law.
\nTo contact the reporter on this story:\nKathleen Hunter in Washington at \nkhunter9@bloomberg.net
\nTo contact the editor responsible for this story:\nJodi Schneider at \njschneider50@bloomberg.net
","attachments":{"images":[{"description":"U.S. Senator Orrin Hatch ","caption":"U.S. Senator Orrin Hatch, a Republican from Utah, told reporters late yesterday at the Capitol that both parties were \u201cworking in good faith\u201d to reach a compromise on immigration law. Photographer: Joshua Roberts/Bloomberg ","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/iuQcoD9cUlFM.jpg","width":640,"height":450},"thumbnail":{"url":"http://www.bloomberg.com/image/iQPkRL74BVVs.jpg","width":190,"height":134},"featured_thumbnail":{"url":"http://www.bloomberg.com/image/ihS9p6qBTK_k.jpg","width":"120","height":"120"},"headline_thumbnail":{"url":"http://www.bloomberg.com/image/i6NS3skIFLI0.jpg","width":"80","height":"80"},"sidebar_thumbnail":{"url":"http://www.bloomberg.com/image/ijO3HHBogIdY.jpg","width":"200","height":"141"}}}],"videos":[],"documents":[],"audio":[],"charts":[]}},{"published_at":"2013-05-21T11:31:55-04:00","byline":"Angela Greiling Keane","headline":"Crumpled Railcars Led to New Designs Saving Lives in Crash","summary":"The Kawasaki Heavy Industries Ltd.\nrailcars credited with saving lives during a derailment in\nConnecticut May 17 had crush-resistant frames developed after a\n1987 accident in which cars caved in, trapping people who\notherwise might have lived.","lead":false,"metadata":{"person_codes":[],"tickers":[{"country":"JP","ticker_symbol":"7012"},{"country":"US","ticker_symbol":"STOCT1"},{"country":"US","ticker_symbol":"UNP"}],"ni_codes":["ALLMUN","ALLTOP","AMERICAME","ANNOTATED","BBEXCLUDE","BGVTTOP","BIZNEWS","BNALL","BNCOPY","BNSTAFF","BNTEAMS","BON","BUSINESS","CT","DCAA","DCCURZ2","DCTOP","DCTOPZ2","DEBTME","EXCLUSIVE","EXE","FINNEWS","GEN","GENCURZ2","GENNEWS","GENTOP","GENTOPZ2","GENTOPZ3","GOV","GOWEB","GRPLNK","MARKETS","METRO","MSCINAMER","MSCIWORLD","MUN","MUNTCURZ6","MUNTTOP","MUNTTOPZ6","NORTHAM","NTSB","NY","NYC","NYCCURZ2","NYCTOP","NYCTOPZ2","NYCTOPZ3","NYX","ONWEB","ORIGINAL","POLNEWS","RAILCRASH","READ","TOP","TRANSREG","US","USBNX","USCURZ6","USGOV","USMA","USMUNIBON","USNE","USSTORY","USTOP","USTOPZ6","WASHNEWS","WWCURZ6","WWTOP","WWTOPGEN","WWTOPZ6","BLCWSUS","SUSTPOP","SENT","MOSTREAD","GENCURZ3","NRGREG","UPDATE","USREG"],"news_categories":[{"url_id":"worldwide","name":"Worldwide News"},{"url_id":"us","name":"U.S. News"},{"url_id":"municipal-bonds","name":"Municipal Bonds News"},{"url_id":"homepage","name":"Top Headlines"},{"url_id":"sustainability","name":"Sustainability"},{"url_id":"sustainability-health-population","name":"Health & Population"}]},"body":"The Kawasaki Heavy Industries Ltd (7012). railcars credited with saving lives during a derailment in Connecticut May 17 had crush-resistant frames developed after a 1987 accident in which cars caved in, trapping people who otherwise might have lived.
The Connecticut crash between two Metro-North Railroad commuter trains injured 76 people out of about 700 passengers with no immediate fatalities. Casualties would have been worse if lawmakers and regulators hadn\u2019t acted to improve car safety in recent years, said a safety advocate who helped write the laws.
\u201cCertainly we saved many, many lives coming out of that tragic crash\u201d 26 years ago, said Joyce Rose, a former U.S. House staff member who helped write rail legislation. She\u2019s now chief executive officer of Operation Lifesaver, based in Alexandria, Virginia, which works to prevent accidents at rail crossings.
Passengers in the Connecticut crash were protected by strengthened railcar frames and designs intended to absorb and dissipate crash energy through the structures, rather than transferring it to passengers.
Cars such as Kawasaki\u2019s, which Metro-North began receiving in 2011, have corner posts that help them withstand crashes at high speeds without crushing like a metal can or piling onto cars in front. They also feature larger windows to help people escape in emergencies.
\u201cThis accident really could\u2019ve been much more devastating without the standards, in this case for corner post strengths,\u201d Martin Schroeder, chief engineer for the American Public Transportation Association, whose members include commuter-train operators, said in an interview.
The association, based in Washington, helps develop safety standards for passenger cars.
The trains that collided in Connecticut, after one derailed during evening rush hour and was hit by another traveling the opposite direction on an adjacent track, were going about 70 miles per hour (113 kilometers per hour) when they struck, according to the U.S. National Transportation Safety Board.
The design changes, which have been made over the past two decades, were prompted by lessons learned from crashes including one in Chase, Maryland, on Jan. 4, 1987.
Sixteen people were killed and 174 injured when an Amtrak passenger train collided with a Conrail Inc. freight train, whose crew members had smoked marijuana and missed a rail signal, according to a safety-board report on the accident.
The inability of the Amtrak car interiors to withstand a crash was one factor that led to the accident\u2019s severity, the board said.
\u201cThat was a very landmark collision in the United States,\u201d said Allan Zarembski, director of the railroad engineering and safety program at the University of Delaware. \u201cThat did bring focus on crashworthiness. One of the things crashworthiness does is it reduces the after-the-crash damage.\u201d
The NTSB, in its report on the crash, recommended studying the relationship between railcar design and passenger injury and applying those findings to future designs.
The three lead passenger cars plus the two locomotives pulling the train were destroyed with the third passenger car crushed between the cars in front of and behind it, the board said in its report. More people would have died had the first passenger car, a food-service facility, been occupied, the board said.
\u201cMany passengers were pinned or otherwise trapped between dislodged seats, luggage and structural members of the cars, yet some occupants were able to free themselves and leave the cars before rescuers arrived at the scene,\u201d the board said.
Other safety advancements focus on preventing crashes by more carefully inspecting rails to detect defects that can lead them to break, Zarembski said.
Railroads drive ultrasonic machines along their tracks to inspect rail for internal cracks and weaknesses that might lead it to break. The higher the speeds on a section of rail, and the heavier its loads, the more often it\u2019s supposed to be inspected.
Broken rail causes about 200 derailments per year, mostly of freight trains, said Zarembski, who has written a book on the topic.
A section of the eastbound track in last week\u2019s wreck \u201cfractured at a rail joint\u201d and is \u201cof interest\u201d to NTSB investigators, the board said in Twitter postings May 18. Broken rail can cause a derailment, though the reverse is also true, Zarembski said.
Derailments involving passenger railroads are down 24 percent in the past decade and collisions have been reduced 77 percent, said Kevin Thompson, a spokesman for the U.S. Federal Railroad Administration, which regulates rail safety.
Metro-North, overseen by the Metropolitan Transportation Authority, said last month it had put its 200th Kawasaki M-8 railcar into service out of the 405 it ordered in 2009. It\u2019s receiving about 10 of the cars each month, with 54 percent of the trains on its New Haven line in weekday service being comprised of the new cars.
As of 2011, there were 7,193 commuter rail cars and locomotives in the U.S. with 658 on order, according to the public transportation group.
With rail cars designed to last about 30 years, many now in service in the U.S. don\u2019t have the safety benefits of the Kawasaki cars. Safety changes to railcars generally apply to new vehicles, not to those already in service.
Railcar improvements have been \u201cevolutionary,\u201d Schroeder said.
The railroad administration, which regulates interstate freight and passenger operators, updated its crashworthiness standards in 2010. It said further strengthening passenger railcars would cost $4.1 million over 20 years, mostly for engineering and testing development.
The agency is working on its next generation of standards, called for under a 2008 rail-safety law. That legislation was passed after a Metrolink commuter train in Los Angeles crashed head-on with a Union Pacific Corp. (UNP) freight train, killing 25 people.
The regulator is \u201cvery close\u201d to issuing crashworthiness rules for high-speed trains that President Barack Obama hopes to bring to the U.S., and for trains operating up to 125 miles per hour, said Zarembski, a member of a committee advising the rail regulator on rail safety.
Amtrak, which plans to seek bids this year to replace its Acela train fleet operating in the Northeast, is seeking regulations that would allow it to use lighter trains than allowed under the current crashworthiness standards, Chief Executive Officer Joseph Boardman said in December.
Lighter trains would be justified because high-speed passenger services won\u2019t share tracks with freight trains in the future, he said.
Existing standards apply to trains traveling as fast as 150 miles per hour. Writing new rules that relax railcar structural-strength requirements for faster trains \u201cwould allow for less use of fuel, quicker acceleration, a different performance profile,\u201d Boardman said then.
To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net
To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net
","attachments":{"images":[{"description":"Crumpled Railcars Led to New Designs Saving Lives in Connecticut ","caption":"Emergency personnel work at the scene where two Metro North commuter trains collided, on May 17, 2013 near Fairfield, Conn. Bill Kaempffer, a spokesman for Bridgeport public safety, told The Associated Press approximately 49 people were injured, including four with serious injuries. About 250 people were on board the two trains, he said. Photographer: Christian Abraham/The Connecticut Post/AP Photo","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/ixH8myCwkOvQ.jpg","width":640,"height":425},"thumbnail":{"url":"http://www.bloomberg.com/image/iz4HXfXi02XI.jpg","width":110,"height":83},"featured_thumbnail":{"url":"http://www.bloomberg.com/image/iL10ackAq1aQ.jpg","width":"120","height":"120"},"headline_thumbnail":{"url":"http://www.bloomberg.com/image/iKNt2RMI2Xpg.jpg","width":"80","height":"80"},"sidebar_thumbnail":{"url":"http://www.bloomberg.com/image/iXQdYyczYsXo.jpg","width":"300","height":"400"}}}],"videos":[],"documents":[],"audio":[],"charts":[]}},{"published_at":"2013-05-21T09:43:02-04:00","byline":"Hugh Son","headline":"U.S. Bank Mergers Seen Less Likely With Sellers Holding Out","summary":"Bank managers in the U.S. are less\nlikely to engage in mergers and acquisitions this year as\nregulators heighten scrutiny on potential deals and sellers wait\nfor higher valuations, according to a KPMG LLP survey.","lead":false,"metadata":{"person_codes":[],"tickers":[{"country":"US","ticker_symbol":"BAC"},{"country":"US","ticker_symbol":"C"},{"country":"US","ticker_symbol":"COF"},{"country":"US","ticker_symbol":"FITB"},{"country":"US","ticker_symbol":"GS"},{"country":"US","ticker_symbol":"JPM"},{"country":"US","ticker_symbol":"KEY"},{"country":"US","ticker_symbol":"MS"},{"country":"US","ticker_symbol":"PNC"},{"country":"US","ticker_symbol":"RF"},{"country":"US","ticker_symbol":"STI"},{"country":"US","ticker_symbol":"USB"},{"country":"US","ticker_symbol":"WFC"}],"ni_codes":["AL","ALLFND","ALLTOP","BIZNEWS","BNALL","BNCOPY","BNK","BNSTAFF","BNTEAMS","BON","BUSINESS","CA","CACT","CARD","CNG","COEVNT","CORPFIN","COS","CRUNCH","DC","ERN","EUROSTORY","EXCLUSIVE","EXE","FIN","FINANCEME","FINNEWS","GA","GOV","GOWEB","HEDGE","INS","LOANS","MARKETS","MN","MNA","MOR","MSCINAMER","MSCIWORLD","NC","NORTHAM","NY","NYX","OH","ONWEB","PA","POLNEWS","PREMNA","SCR","SF","STK","TARP","TOP","TOPBIZMKT","UPDATE","US","USBNX","USFINANCE","USGOV","USINSURANC","USMA","USMW","USSE","USSO","USSTORY","USWE","VA","WASHNEWS","WWCURZ3","WWTOP","WWTOPBIZ","WWTOPZ3","FINCURZ1","FINTOP","FINTOPZ1","BESTTOP","USCURZ2","USTOP","USTOPZ2","FINCURZ2","FINTOPZ2","INSCURZ3","INSTOP","INSTOPZ3","NYCCURZ2","NYCTOP","NYCTOPZ2","READ","BGOVALL","BGOVFINAN","DEALCURZ2","DEALTOP","DEALTOPZ2","SENT","WEBHOME","MXTOP","MXTOPSTG","NYCCURZ1","NYCTOPZ1","FINCURZ3","FINTOPZ3","NYCTOPSTG","WEPFSI","BWEBTOP","MOSTREAD","MOSTSENT"],"news_categories":[{"url_id":"worldwide","name":"Worldwide News"},{"url_id":"exclusive","name":"Exclusive News"},{"url_id":"us","name":"U.S. News"},{"url_id":"finance","name":"Finance News"},{"url_id":"insurance","name":"Insurance News"},{"url_id":"homepage","name":"Top Headlines"},{"url_id":"personal-finance","name":"Personal Finance"},{"url_id":"saving-and-investing","name":"Saving & Investing"}]},"body":"Bank managers in the U.S. are less\nlikely to engage in mergers and acquisitions this year as\nregulators heighten scrutiny on potential deals and sellers wait\nfor higher valuations, according to a KPMG LLP survey.
\nAbout 13 percent of executives said they were \u201cvery\nlikely\u201d to take over another firm in the next year, compared\nwith 21 percent in 2012, according to a report today from the\naudit, tax and advisory firm. Respondents also are less apt to\nsell assets, with 8 percent saying they anticipate divestitures,\ndown from 13 percent last year.
\n\u201cThe regulatory risk of getting a deal nixed at the 11th\nhour is certainly higher than a year ago,\u201d Brian Stephens, head\nof KPMG\u2019s banking and capital markets practice, said in a phone\ninterview. Leaders of smaller lenders that may sell themselves\nare saying, \u201cI\u2019ve gotten through the worst of times, and I see\nbetter times coming, so why do a deal now?\u201d
\nWhile shares of banks that survived the financial crisis\nhave rebounded along with profits, the firms won\u2019t avoid\nincreased scrutiny from regulators, according to the survey.\nMore than half of the rules mandated by the 2010 Dodd-Frank Act\nhaven\u2019t been completed and the Consumer Financial Protection\nBureau is stepping up oversight of the industry, Stephens said.
\nRegulators were deemed the single biggest barrier to\nmergers, at 57 percent, up from 40 percent a year earlier,\naccording to the survey. Respondents also cited regulatory and\nlegislative scrutiny as the biggest impediment to growth, at 72\npercent, compared with 69 percent in 2012.
\n\u201cThe potential acquirer is put through a lot of scrutiny\nbefore any deal happens,\u201d Stephens said. \u201cRegulators are\nlooking at this as a simple question of risk -- is it increasing\nor decreasing the risk profile?\u201d
\nMost respondents, 76 percent, said their companies will\nreport revenue increases fueled by growth in lending, asset\nmanagement and so-called cross-selling of financial products,\naccording to the survey. About 31 percent said they anticipated\nhaving more employees a year from now, compared with 39 percent\na year earlier.
\nKPMG said it surveyed 100 bank executives online in March,\nand that about 80 percent worked at firms with at least $1\nbillion in annual revenue.
\nTo contact the reporter on this story:\nHugh Son in New York at \nhson1@bloomberg.net
\nTo contact the editors responsible for this story:\nDavid Scheer at \ndscheer@bloomberg.net;\nRick Green at \nrgreen18@bloomberg.net
","attachments":{"images":[{"description":"Bank Mergers in U.S. Seen Less Likely With Sellers Holding Out ","caption":"Regulators were deemed the single biggest barrier to mergers, at 57 percent, up from 40 percent a year earlier, according to a survey. Photographer: Gianluca Colla/Bloomberg ","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/ih5C3aazVUW0.jpg","width":640,"height":432},"thumbnail":{"url":"http://www.bloomberg.com/image/iCfoirsDBuNo.jpg","width":190,"height":128},"featured_thumbnail":{"url":"http://www.bloomberg.com/image/iA9.3NHdg9Po.jpg","width":"120","height":"120"},"headline_thumbnail":{"url":"http://www.bloomberg.com/image/iCjE4_s5utz8.jpg","width":"80","height":"80"},"sidebar_thumbnail":{"url":"http://www.bloomberg.com/image/iqnmQVtAank0.jpg","width":"200","height":"135"}}}],"videos":[],"documents":[],"audio":[],"charts":[]}},{"published_at":"2013-05-21T11:57:33-04:00","byline":"Jeff Kearns","headline":"Bullard Says Fed Should Maintain \u2018Effective\u2019 Bond Buying Program","summary":"Federal Reserve Bank of St. Louis\nPresident James Bullard said the central bank should continue\nits bond buying because it\u2019s the best available option for\npolicy makers to boost growth that is slower than expected.","lead":false,"metadata":{"person_codes":[],"tickers":[],"ni_codes":["ALLTOP","BIZNEWS","BNALL","BNK","BNSTAFF","BNTEAMS","BON","BUSINESS","CECO","CEN","COS","DCAA","DRV","ECO","ECOCURZ2","ECOTOP","ECOTOPZ2","FED","FEDCURZ2","FEDTOP","FEDTOPZ2","FIN","FINNEWS","G7ECOS","GOV","GOVME","GOVMISC","GOWEB","GRPLNK","INF","LABOR","MARKETS","MOSTREAD","MOSTSENT","MSCINAMER","MSCIWORLD","NEWSWORD07","NORTHAM","ONWEB","OPTOUTLINK","ORIGINAL","POLNEWS","READ","READSPIKE","SENT","SENTSPIKE","TOP","TOPBIZMKT","US","USBNX","USCURZ3","USECO","USECONOMY","USGOV","USSTORY","USTOP","USTOPZ3","WWCURZ3","WWTOP","WWTOPBIZ","WWTOPZ3","WEBHOME","FRX","UPDATE","FRX","UPDATE","ONYAHOOJP"],"news_categories":[{"url_id":"worldwide","name":"Worldwide News"},{"url_id":"economy","name":"Economy News"},{"url_id":"us","name":"U.S. News"},{"url_id":"homepage","name":"Top Headlines"},{"url_id":"markets-bonds-key-rates","name":"Key Rates"}]},"body":"Federal Reserve Bank of St. Louis\nPresident James Bullard said the central bank should continue\nits bond buying because it\u2019s the best available option for\npolicy makers to boost growth that is slower than expected.
\nThe purchases known as quantitative easing should be\nmaintained because financial markets indicate that they are\nimproving financial conditions and can be adjusted based on how\nthe economy changes, Bullard, who votes on the policy-setting\nFederal Open Market Committee this year, said today according to\nthe text of remarks prepared for delivery in Frankfurt.
\n\u201cQuantitative easing is closest to standard monetary\npolicy, involves clear action and has been effective,\u201d Bullard\nsaid. The panel should continue the program while \u201cadjusting\nthe rate of purchases appropriately in view of incoming data on\nboth real economic performance and inflation.\u201d
\nFed officials are debating how and when to eventually\ncurtail the purchases that have expanded the central bank\u2019s\nbalance sheet to a record $3.35 trillion. The FOMC said May 1 it\nwill keep buying $85 billion in Treasuries and mortgage bonds\nper month to boost employment and spur the economy.
\nU.S. stocks erased losses after Bullard\u2019s comments. The\nStandard & Poor\u2019s 500 Index added 0.1 percent to 1,668.33 at\n11:53 a.m. in New York after declining as much as 0.2 percent.\nThe yield on the 10-year Treasury note fell to 1.95 percent from\n1.97 percent late yesterday.
\nThe FOMC said that it is prepared to accelerate or slow the\nmonthly purchases of $40 billion a month in mortgage securities\nand $45 billion of Treasuries in response to changes in the\nlabor market and inflation. It also left unchanged its statement\nthat it plans to hold its target interest rate near zero as long\nas unemployment remains above 6.5 percent and the outlook for\ninflation doesn\u2019t exceed 2.5 percent.
\nPayrolls expanded by 165,000 workers last month and the\nunemployment rate fell to a four-year low of 7.5 percent, Labor\nDepartment data show. Revisions added a total of 114,000 jobs to\nthe employment count in February and March.
\nQuantitative easing is the best among five policy options\nthat also include doing nothing, giving guidance about future\nactions, charging banks to hold reserves and swapping short-term\ndebt for long-term bonds, Bullard said at the Institute for\nMonetary and Financial Stability.
\nThe world\u2019s largest economy expanded at a 2.5 percent\nannualized rate in the first quarter, the Commerce Department\nsaid last month. The gain followed a 0.4 percent fourth-quarter\nadvance, the slowest since the first quarter of 2011.
\nChairman Ben S. Bernanke tomorrow may provide clues as to\nwhether he sees the Fed making enough progress toward its goal\nof a substantial improvement in the labor market when he\ntestifies on the economic outlook before the Joint Economic\nCommittee of Congress. The same day, the Fed is scheduled to\nrelease minutes from the April 30-May 1 FOMC meeting.
\nOfficials last week expressed a range of views on when to\nbegin winding down their purchases. Philadelphia Fed President\nCharles Plosser called for shrinking purchases at the Fed\u2019s next\nmeeting; San Francisco\u2019s John Williams favored a reduction\n\u201cperhaps as early as this summer,\u201d and Boston\u2019s Eric Rosengren\nsaid low inflation and high unemployment suggest there may be a\nneed for more stimulus, not less.
\nBullard, 52, joined the St. Louis Fed\u2019s research department\nin 1990 and became president of the regional bank in 2008. His\ndistrict includes Arkansas and parts of Illinois, Indiana,\nKentucky, Mississippi, Missouri and Tennessee.
\nTo contact the reporter on this story:\nJeff Kearns in Washington at \njkearns3@bloomberg.net
\nTo contact the editor responsible for this story:\nChris Wellisz at \ncwellisz@bloomberg.net
","attachments":{"images":[{"description":"St. Louis Fed President James Bullard ","caption":"Federal Reserve Bank of St. Louis President James Bullard joined the St. Louis Fed\u2019s research department in 1990 and became president of the regional bank in 2008. Photographer: Sam Hodgson/Bloomberg","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/ilpRA_6_J0eQ.jpg","width":640,"height":427},"thumbnail":{"url":"http://www.bloomberg.com/image/iYrOQ8EkyV7s.jpg","width":190,"height":127},"featured_thumbnail":{"url":"http://www.bloomberg.com/image/iQGpiU9dx6SE.jpg","width":"120","height":"120"},"headline_thumbnail":{"url":"http://www.bloomberg.com/image/iLyfuyqxsyFg.jpg","width":"80","height":"80"},"sidebar_thumbnail":{"url":"http://www.bloomberg.com/image/iAteDOOrnjn0.jpg","width":"200","height":"133"}}}],"videos":[],"documents":[],"audio":[],"charts":[]}},{"published_at":"2013-05-21T09:58:31-04:00","byline":"Mary Jane Credeur","headline":"United Airlines Partner SkyWest Agrees to Buy $4 Billion of Embraer Jets","summary":"United Airlines partner SkyWest Inc.\nagreed to buy more than $4 billion of Embraer SA jets as new\npilot contracts at the largest carriers allow commuter operators\nto fly bigger planes.","lead":false,"metadata":{"person_codes":[],"tickers":[{"country":"US","ticker_symbol":"BA"},{"country":"FP","ticker_symbol":"EAD"},{"country":"BZ","ticker_symbol":"EMBR3"},{"country":"US","ticker_symbol":"SKYW"},{"country":"US","ticker_symbol":"UAL"},{"country":"CN","ticker_symbol":"BBD/"},{"country":"US","ticker_symbol":"RJET"}],"ni_codes":["AIR","ALLTOP","AMERICAME","ARO","BIZNEWS","BNALL","BNCOPY","BNSTAFF","BNTEAMS","BUSINESS","COS","DSX","EMC","EUROPE","FINNEWS","FRA","GOWEB","IL","LICENSE","MARKETS","MSCIDVEUR","MSCINAMER","MSCIWORLD","NORTHAM","NYX","ORIGINAL","SMALLCAP","STK","TRN","TRNCURZ2","TRNTOP","TRNTOPZ2","US","USBNX","USIND","USMW","USPN","USSTORY","USWE","UT","WA","ONWEB","SCAPTOP","READ","ATX","BRNEWS","BZA","BZCURZ2","BZTOP","BZTOPZ2","CH","UPDATE","USCOMPNEWS","LATCURZ3","LATTOP","LATTOPZ3","TOP","TOPBIZMKT","USCURZ3","USTOP","USTOPZ3","WWCURZ3","WWTOP","WWTOPBIZ","WWTOPZ3","SENT","WWTOPSTG"],"news_categories":[{"url_id":"worldwide","name":"Worldwide News"},{"url_id":"latin-america","name":"Latin America News"},{"url_id":"us","name":"U.S. News"},{"url_id":"transportation","name":"Transportation News"}]},"body":"United (UAL) Airlines partner SkyWest Inc. (SKYW)\nagreed to buy more than $4 billion of Embraer (EMBR3) SA jets as new\npilot contracts at the largest carriers allow commuter operators\nto fly bigger planes.
\nThe accord comprises 40 firm orders for 76-seat E175 jets\nwith two-class cabins that will be flown for United for 12\nyears, St. George, Utah-based SkyWest said today in a statement.
\nThe aircraft will be the first 76-seat regional jets in\nUnited Express\u2019s fleet after parent company United Continental\nHoldings Inc. joined AMR Corp.\u2019s American Airlines and Delta Air\nLines Inc. in crafting labor agreements allowing the larger jets\nto be used that way. Regional airlines pay less, which reduces\ncosts for the carriers.
\n\u201cIn this very competitive business of operating regional\njet aircraft, we are appreciative to have been given the\nopportunity and we are committed to providing an outstanding\nlevel of service to United,\u201d SkyWest President Bradford Rich\nsaid in the statement.
\nThe order also marks another win for Sao Jose dos Campos,\nBrazil-based Embraer after United agreed to buy 30 of the E175s\nin April and American and its regional partner Republic Airways\nHoldings Inc. (RJET) agreed on an order of 47 Embraer E175 jets earlier\nthis year.
\nBig airlines are seeking 76-seat jets as they retire aging\nsingle-class 50-seaters that guzzle fuel. The larger aircraft\nlet them lower operating expenses and charge higher fares for\nbusiness class tickets.
\nSkyWest also has a conditional purchase agreement for 60\nmore of the E175 jets pending operating agreements with other\nairlines, plus options for 100 more, Embraer said in a separate\nstatement. That gives the whole order a value of $8.3 billion at\nlist prices, though airlines typically get a discount.
\nThe firm deliveries for United Express will begin in next\nyear\u2019s second quarter and run through mid-2015, SkyWest said.
\nIn December, Delta agreed to buy as many as 70 Bombardier\nInc. (BBD/B) CRJ-900 jets with 76 seats, rebuffing Embraer. Montreal-based Bombardier is helping Delta get rid of 60 50-seat CRJ200\nplanes as part of that accord.
\nEmbraer gained 2.8 percent to 19.42 reais at 10:56 a.m.\nlocal time in Sao Paulo, while SkyWest climbed 1.1 percent to\n$14.34 at 9:53 a.m. in New York. Chicago-based United dropped\n1.1 percent to $33.92.
\nUnited previously rose 47 percent this year, outpacing a 43\npercent increase by the Bloomberg U.S. Airlines Index, while\nSkyWest added 14 percent. Embraer jumped 31 percent, outpacing\nBombardier\u2019s 25 percent advance in Toronto.
\nTo contact the reporter on this story:\nMary Jane Credeur in Atlanta at \nmcredeur@bloomberg.net.
\nTo contact the editor responsible for this story:\nEd Dufner at \nedufner@bloomberg.net
","attachments":{"images":[],"videos":[],"documents":[],"audio":[],"charts":[]}},{"published_at":"2013-05-21T09:54:20-04:00","byline":"Christopher Palmeri","headline":"Carnival Falls Most in 16 Months as Mishaps Force Cuts in Prices, Forecast","summary":"Carnival Corp. fell the most in more\nthan 16 months after the world\u2019s largest cruise operator lowered\nits forecast for the rest of the year, saying price cuts\nundertaken following a series of mishaps will hurt margins.","lead":false,"metadata":{"person_codes":[],"tickers":[{"country":"US","ticker_symbol":"CCL"}],"ni_codes":["ALLTOP","AMERICAME","BIZNEWS","BNALL","BNCOPY","BNSTAFF","BNTEAMS","BUSINESS","CONCURZ2","CONS","CONTOP","CONTOPZ2","COS","ENT","ERN","EST","FINNEWS","FL","GOWEB","LAX","LEI","MED","MSCINAMER","MSCIWORLD","NORTHAM","ONWEB","TOP","TRN","UPDATE","US","USBNX","USCURZ3","USENT","USSE","USSO","USSTORY","USTOP","USTOPZ3","WARN","WEBHOME","CONCURZ3","CONTOPZ3","MARKETS","MOV","NYX","STK","USCOMPNEWS","GRPLNK","TOPBIZMKT","TRNCURZ3","TRNTOP","TRNTOPZ3","WEPFSI","WWCURZ3","WWTOP","WWTOPBIZ","WWTOPZ3","WWTOPSTG"],"news_categories":[{"url_id":"worldwide","name":"Worldwide News"},{"url_id":"us","name":"U.S. News"},{"url_id":"retail","name":"Retail News"},{"url_id":"transportation","name":"Transportation News"},{"url_id":"homepage","name":"Top Headlines"}]},"body":"Carnival Corp. (CCL) fell the most in more\nthan 16 months after the world\u2019s largest cruise operator lowered\nits forecast for the rest of the year, saying price cuts\nundertaken following a series of mishaps will hurt margins.
\nCarnival dropped 5.2 percent to $33.47 at 9:45 a.m. in New\nYork and earlier fell 6.8 percent for the biggest intraday\ndecline since Jan. 17, 2012, after delivering the lower view for\nthe second half of 2013 yesterday. Before today, the shares had\nfallen 3.9 percent this year while the Standard & Poor\u2019s 500\nIndex added 17 percent.
\nThe lower forecast demonstrates the continuing fallout from\nseveral incidents at sea involving ships operated by Miami-based\nCarnival that attracted news coverage. They included an engine-room fire on the Triumph in February that left 3,100 passengers\nwith limited food and toilet service for several days.
\nFull-year profit will total $1.45 to $1.65 a share,\nCarnival said yesterday in a statement. That\u2019s down from a\nprevious forecast of $1.80 to $2.10. Analysts were projecting\n$1.99, the average of 27 estimates compiled by Bloomberg.
\nThe company began cutting prices to fill cabins, dropping\nthe fare for some trips in April to as little as $38 a night per\nperson. While bookings increased, the amount of revenue captured\nfrom each customer has declined, Carnival said yesterday.\nCancellations were also higher than expected, the company said.
\nHigher fuel and marketing costs, as well as less-favorable\nexchange rates, will also crimp profit, the company said.
\nTo contact the reporter on this story:\nChristopher Palmeri in Los Angeles at \ncpalmeri1@bloomberg.net
\nTo contact the editor responsible for this story:\nAnthony Palazzo at \napalazzo@bloomberg.net
","attachments":{"images":[{"description":"Carnival Declines Most in 16 Months ","caption":"A fire and engine failure on the Carnival Corp. Triumph in February left 3,100 passengers adrift with limited food and toilet service for several days. Photographer: Dan Anderson/AFP via Getty Images ","thumbnails":{"image":{"url":"http://www.bloomberg.com/image/ikcfWz8xjvSo.jpg","width":640,"height":427},"thumbnail":{"url":"http://www.bloomberg.com/image/iHqwgYcWWAOA.jpg","width":190,"height":127},"featured_thumbnail":{"url":"http://www.bloomberg.com/image/iXIIQicd21Qw.jpg","width":"120","height":"120"},"headline_thumbnail":{"url":"http://www.bloomberg.com/image/iBgxNN9iclJY.jpg","width":"80","height":"80"},"sidebar_thumbnail":{"url":"http://www.bloomberg.com/image/i1hiNH_e1V90.jpg","width":"200","height":"133"}}}],"videos":[],"documents":[],"audio":[],"charts":[]}}]}