Wednesday, February 27, 2013

Reuters: Small Business News: Business spending plans gauge hits one-year high

Reuters: Small Business News
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Business spending plans gauge hits one-year high
Feb 27th 2013, 17:38

Auto assembly line robots weld on the frame of 2009 Dodge Ram pick-up trucks at the Warren Truck Assembly Plant in Warren, Michigan September 12, 2008. REUTERS/Rebecca Cook

Auto assembly line robots weld on the frame of 2009 Dodge Ram pick-up trucks at the Warren Truck Assembly Plant in Warren, Michigan September 12, 2008.

Credit: Reuters/Rebecca Cook

By Lucia Mutikani

WASHINGTON | Wed Feb 27, 2013 12:38pm EST

WASHINGTON (Reuters) - A gauge of planned U.S. business spending recorded its largest increase in just over a year in January, suggesting businesses were becoming more confident in the durability of the economic recovery.

The case for the economy's resilience was further bolstered by another report on Wednesday showing that contracts to buy previously owned homes approached a near three-year high last month. Housing is expected to underpin growth this year.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, jumped 6.3 percent, the biggest gain since December 2011. Orders for so-called core capital goods had slipped 0.3 percent in December.

"The encouraging tone of this report suggests that the business sector is beginning to feel sufficiently confident about the improving economic outlook to commit to investment activity," said Millan Mulraine, a senior economist at TD Securities in New York.

Economists had expected core capital goods orders to rise only 0.2 percent.

In a separate report, the National Association of Realtors said its pending home sales index increased 4.5 percent to the highest level since April 2010 - just before the expiration of the home-buyer tax credit.

The rise in signed contracts, which become sales after a month or two, added to data such as building permits and home prices that have suggested a decisive turnaround in the housing market.

Housing is no longer a drag on the economy and home building added to growth last year for the first time since 2005.

Still, the reports are unlikely to change the Federal Reserve's very easy monetary policy stance.

U.S. stocks pushed higher on the data, while the dollar weakened against a basket of currencies. Prices for U.S. government debt rose, with benchmark yields trading near one-month lows.

FACTORY ACTIVITY COOLING

Business spending regained its footing in the fourth quarter after slipping in the prior period.

Although shipments of core capital goods, used to calculate equipment and software spending in the gross domestic product report, fell last month, economists were little worried.

"The balance between orders and shipments of capital goods is looking healthier as backlogs of core capital goods orders rose for the first time in eight months," said John Ryding, chief economist at RDQ Economics in New York.

"Our take is that manufacturing activity - especially in the capital goods area - is bouncing back after cautious behavior ahead of the fiscal cliff."

Factory activity has cooled in recent months after helping to lift the economy from the 2007-09 recession. Sluggish domestic demand, tighter fiscal policy and slowing global growth are holding back manufacturing.

The Commerce Department report also showed durable goods orders excluding transportation increased 1.9 percent last month, also the largest gain since December 2011, after increasing 1 percent in December.

They were buoyed by orders for machinery, which notched their largest increase since May 2010. There were also gains in orders for fabricated metal products and electrical equipment and appliances.

But overall orders for durable goods - items ranging from toasters to aircraft that are meant to last at least three years - tumbled 5.2 percent as demand for civilian and defense aircraft fell sharply. Last month's drop was the first since August.

Overall orders for durable goods were depressed by a 19.8 percent drop in transportation equipment as demand for civilian aircraft dived 34 percent.

Boeing received orders for only 2 aircraft, down from 183 in December. The decline in orders was probably not related to the grounding of Boeing's 787 Dreamliners after problems with overheating batteries.

Aircraft orders are very volatile and typically tend to fall at the start of the year.

"I haven't heard any reports about airlines canceling their orders. This could be a one-month lull rather than something greater," said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Connecticut.

Defense aircraft orders collapsed 63.8 percent after soaring 58.5 percent in December, likely as orders were pushed forward ahead of $85 billion in government-wide spending cuts.

Defense capital goods orders plunged 69.5 percent in January, the sharpest fall since July 2000. Orders for motor vehicles were flat.

The spending cuts, which are part of a plan to reduce the budget deficit, are set to kick in on Friday unless Congress and the Obama administration come up with a last-minute deal. Defense will bear much of the cuts.

Fed Chairman Ben Bernanke on Tuesday urged lawmakers to avoid the sharp spending cuts and warned they could combine with earlier tax hikes to create a "significant headwind" for the modest recovery.

(Reporting by Lucia Mutikani; Editing by Neil Stempleman and Dan Grebler)

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Reuters: Small Business News: Corporations urge Supreme Court to embrace gay marriage

Reuters: Small Business News
Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com
Corporations urge Supreme Court to embrace gay marriage
Feb 27th 2013, 15:11

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The U.S. Supreme Court building seen in Washington May 20, 2009. REUTERS/Molly Riley

The U.S. Supreme Court building seen in Washington May 20, 2009.

Credit: Reuters/Molly Riley

By Lawrence Hurley

WASHINGTON | Wed Feb 27, 2013 10:11am EST

WASHINGTON (Reuters) - More than 200 businesses will urge the U.S. Supreme Court on Wednesday to strike down a federal law that restricts the definition of marriage to heterosexual unions.

Lawyers representing the businesses said they would file a brief in the case.

Companies including Microsoft Corp, Google Inc, Starbucks Corp and Pfizer Inc are among those that joined the brief. Others included Aetna Inc, Amazon.com, Inc and Citigroup Inc.

Thomson Reuters Corp is another signatory. The Reuters news agency is part of Thomson Reuters.

The companies want the Supreme Court to strike down a key provision of the federal Defense of Marriage Act (DOMA) that defines marriage as a union between a man and a woman.

Separately, lawyers representing another group of employers, including some of the same companies, had said already that they planned to file a brief on Thursday in a related case that questions a California law that bans gay marriage.

The two cases are to be argued before the Supreme Court on March 26 and 27.

In the brief filed on Wednesday, attorney Sabin Willett wrote that DOMA "requires that employers treat one employee differently from another, when each is married, and each marriage is equally lawful."

DOMA does not create any uniformity nationwide, Willett said, because 12 states in total either authorize same-sex marriage or recognize marriages that have been performed in other states.

That creates a burden for employers, particularly those who do business nationwide, he added.

Willett also wrote that the law forces companies to discriminate, sometimes in contravention of their own internal policies and local laws, when dealing with healthcare plans and other benefits.

"We must do all of this in states, counties and cities that prohibit workplace discrimination on the basis of sexual orientation and demand equal treatment of all married individuals," he added.

In briefs already filed in support of marriage being restricted to heterosexual unions, business interests have not been represented. The U.S. Chamber of Commerce has not taken a stand on the issue.

(Reporting by Lawrence Hurley; Editing by Howard Goller and Cynthia Osterman)

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We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

Comments (14)

Headline should read: Corporate leaders [not corporations] urge …

Feb 27, 2013 7:53am EST  --  Report as abuse

It is interesting that the GOP is writing a brief as well asking to repeal the ban on gay marriage. They were the ones who adamatly insisted that marriage is between heterosexuals only. Now they want to have it repealed. These companies are more conservative that not, yet are now stepping up efforts to undo what was started. I wonder where this will end up.

Feb 27, 2013 8:19am EST  --  Report as abuse

I totally support what these corporations are trying to do. However I question why a couple hundred corporations pull more weight with the supreme court than an equal number (or more) of individual citizens.

Feb 27, 2013 8:43am EST  --  Report as abuse

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Tuesday, February 26, 2013

Reuters: Small Business News: PayPal co-founder Levchin launches new mobile payment start-up

Reuters: Small Business News
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PayPal co-founder Levchin launches new mobile payment start-up
Feb 27th 2013, 01:01

A page from the PayPal website is seen in Singapore July 21, 2011. REUTERS/Tan Shung Sin

A page from the PayPal website is seen in Singapore July 21, 2011.

Credit: Reuters/Tan Shung Sin

By Alistair Barr

SAN FRANCISCO | Tue Feb 26, 2013 8:01pm EST

SAN FRANCISCO (Reuters) - Max Levchin, co-founder of online payment giant PayPal, launched a rival business on Tuesday called Affirm that will compete in the crowded but fast-growing mobile payments business.

Affirm's technology helps shoppers complete online purchases more quickly and easily when they are using smart phones and other mobile devices, according to the firm's website.

PayPal, owned by eBay Inc, is the leader in online payments, however, the company is being challenged by a host of start-ups, including Square Inc, that focus on new opportunities and problems created by the boom in mobile commerce.

Affirm is focusing on streamlining the mobile checkout process online, which can involve typing in lots of information, such as an address and card numbers, using a small type pad.

Affirm said it has whittled the online buying process down to two taps on a smart phone screen - one to tap the Affirm button on participating merchant websites and a second to confirm the order.

Affirm is using Facebook Inc to confirm users' identities, so for first-time users the process includes a third step which involves logging into their Facebook accounts and accepting the Affirm application.

Levchin co-founded PayPal with Peter Thiel and was its Chief Technology Officer for four years, before it was acquired by eBay. He designed and built PayPal's pioneering online security and fraud-prevention systems.

While PayPal led the way on security, its service has been criticized as not very user-friendly. That has left room for new rivals to develop more consumer-focused payment services.

"This is a very big market therefore it's extremely attractive for a lot of players," Bob Swan, chief financial officer of eBay, said during a presentation to investors on Tuesday.

As more consumers shop using mobile devices, it is very important for PayPal to have a fast mobile checkout service that is "brain-dead simple," Swan added.

Affirm said it gives users 30 days to pay for their purchases, comparing the service to a charge card. It makes money by charging participating merchants a small fee.

However, if users do not pay their balance, Affirm can charge "reasonable" fees on delinquent accounts, according to the company's terms of service.

Affirm users can pay off their balances using credit cards, bank transfers or physical checks. PayPal was not included as a method of payment in its terms of service.

(Reporting By Alistair Barr; Editing by Tim Dobbyn)

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Reuters: Small Business News: Analysis: Morning in America? U.S. economy poised to accelerate

Reuters: Small Business News
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Analysis: Morning in America? U.S. economy poised to accelerate
Feb 26th 2013, 15:18

Traders work on the floor of the New York Stock Exchange February 21, 2013. REUTERS/Brendan McDermid

Traders work on the floor of the New York Stock Exchange February 21, 2013.

Credit: Reuters/Brendan McDermid

By Jason Lange

WASHINGTON | Tue Feb 26, 2013 10:18am EST

WASHINGTON (Reuters) - Famed U.S. economist Milton Friedman once observed that a recovery from recession is like plucking a guitar string: The harder the economy is pushed down, the faster it snaps back.

That didn't happen when America began to exit a deep downturn in 2009. Now, though, after years of paltry growth and despite a government austerity drive that could batter the economy for months, signs are emerging that a more robust recovery is around the bend.

The main reason is an improvement in household finances, which by some measures are looking more solid than they have in decades. This is allowing consumers to ramp up purchases of homes and cars, the sort of spending that usually leads an economic rebound but that until recently had been held back by heavy debts and tight credit.

"We finally are getting something that looks more like a normal recovery," said Nigel Gault, an economist at IHS Global Insight in Lexington, Massachusetts.

This hint of normalcy suggests the slow improvements in the labor market over the past few years can now provide a bigger boost to consumer spending, which will in turn create more jobs.

Gault and others expect this increasingly self-reinforcing cycle will lead growth to pick up substantially by the end of the year, even if Washington goes forward with $85 billion in budget cuts scheduled to begin on Friday.

Economists polled by Reuters this month predicted the economy will expand at a 2.8 percent annual rate in the fourth quarter, up from the 1.8 percent rate expected in the first quarter, when higher tax rates enacted in January are expected to hit growth temporarily.

If the forecasters are right, the fourth-quarter performance will mark a big improvement from the average annual rate of 2.1 percent clocked since the end of the recession. Better still, most analysts expect further acceleration in 2014.

FALSE STARTS

Of course, economists have predicted for several years that stronger growth lies just a few quarters away. As 12 million unemployed workers can attest, that hasn't panned out.

Yet there are several reasons to think this time really is different.

First, a pickup in hiring last year has helped families earn more money. Economists at Goldman Sachs estimate wages and salaries grew by almost 3 percent in the 12 months through December, even when factoring out inflation and unusual payments made to help workers avoid January's tax increase.

That's about twice the growth rates clocked in mid-2012, and might explain why higher taxes appeared to take only a small bite out of retail sales last month.

Second, families may be turning a corner in their long struggle to reduce their debt burden. A housing bubble that burst in 2006 left Americans awash in debts taken on during the boom. It also set off panic on Wall Street. Many analysts believe the bust left behind scars that made the recovery weaker than a normal rebound. Even rock-bottom interest rates didn't persuade debt-shy consumers to spend more, while banks were hesitant to lend.

But slowly, households have reduced their debts by either defaulting or taking out fewer loans as they pay off existing ones. At the same time, incomes have grown and the Federal Reserve has kept borrowing costs exceptionally low. By the third quarter of last year, U.S. household debt payments were 10.6 percent of their after-tax income, the lowest ratio since 1983 and down from a record high 14.1 percent in late 2007. A wider measure of financial obligations that includes rent has also slowly declined and stands at its lowest since the mid-1980s.

Economists at Deutsche Bank project outstanding household debt relative to income will be back in line with its long-term trend by mid-2014. That could once again make consumers more comfortable about borrowing.

BRIGHT SPOTS

Already, areas of spending that usually respond to low interest rates have become the brightest spots in the economy, a sign the recovery is assuming a more normal path.

The pace of auto sales in January would have Americans buying 15.3 million vehicles a year, just below pre-recession levels. In 2012, auto sales were the highest in five years.

The surge has led Michigan Precision Swiss Parts, which makes fuel-system components for Ford and Navistar engines, to expect its sales to climb by 8 percent to 12 percent this year.

"We're busier than hell," said Gerald Meldrum, chief executive officer of the company, which is based in St. Clair, Michigan.

Steam is also gathering in the housing market. Home builders large and small are reporting big gains in new orders as prices rise and the supply of homes on the market dwindles. In January, the inventory of existing homes fell to a 13-year low.

"We think the market has taken on a recovery," said Mark Gray, a vice president of Quadrant Homes, a builder in Bellevue, Washington.

Home building added to economic growth last year for the first time since 2005 and is seen giving a bigger boost in 2013.

"Early cycle indicators like housing now look like they typically do in the early stages of a recovery," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank in New York. "The economy could definitely surprise to the upside this year."

The next few months could nevertheless be rough.

Executives from retail giant Wal-Mart (WMT.N) and restaurant companies such as Olive Garden owner Darden Restaurants (DRI.N) warned last week that higher taxes have hurt customers' spending power.

The scheduled federal budget cuts already have government agencies planning to slash the workweeks of hundreds of thousands of workers. This could shave half a percentage point from economic growth in 2013, and gross domestic product is seen growing just 2 percent in the full year.

Even after the austerity shock recedes, nobody is expecting a boom. Housing remains a smaller share of the economy than it was before the bubble years, so its ability to pump up growth is smaller as well. Credit is still hard to come by, especially for the millions of Americans who defaulted on their debts during the recession. Europe's debt crisis and higher gasoline prices also pose constant threats to the recovery.

But the improvement in household finances means underlying momentum in the economy might continue to gather. Increased home construction should boost demand for materials made by factories, which are also getting help from a boom in U.S. oil and gas production.

All told, this year's austerity-bound growth should morph into a beefier rate of at least 3.3 percent in 2014, according to respected forecasting firm Macroeconomic Advisers. That would be the fastest pace in a decade.

After years in which the lingering effects of the housing bust dampened the recovery, the guitar string is starting to make a more familiar sound.

(Reporting by Jason Lange; Additional reporting by Michelle Conlin in New York and Paul Lienert in Detroit; Editing by Dan Burns and Douglas Royalty)

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Monday, February 25, 2013

Reuters: Small Business News: Inmates go high-tech as startup mania hits San Quentin

Reuters: Small Business News
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Inmates go high-tech as startup mania hits San Quentin
Feb 25th 2013, 14:08

Inmates in the Last Mile program at San Quentin State Prison prepare to present their startup ideas in San Quentin, California February 22, 2013 . REUTERS/Gerry Shih

1 of 2. Inmates in the Last Mile program at San Quentin State Prison prepare to present their startup ideas in San Quentin, California February 22, 2013 .

Credit: Reuters/Gerry Shih

By Gerry Shih

SAN QUENTIN, California | Mon Feb 25, 2013 9:08am EST

SAN QUENTIN, California (Reuters) - One by one, the entrepreneurs, clad in crisp blue jeans and armed with PowerPoint presentations, stood before a roomful of investors and tech bloggers to explain their dreams of changing the world.

For these exuberant times in Silicon Valley, the scene was familiar; the setting, less so.

With the young and ambitious flocking again to northern California to launch Internet companies, there were signs one recent morning that startup mania has taken hold even behind the faded granite walls of California's most notorious prison.

"Live stream has gone mainstream. Mobile video usage went up and is expected to increase by 28 percent over the next five years," said Eddie Griffin, who was pitching a music streaming concept called "At the Club" and happens to be finishing a third stint for drug possession at San Quentin State Prison, near San Francisco, after spending the last 15 years behind bars.

Griffin was one of seven San Quentin inmates who presented startup proposals on "Demo Day" as part of the Last Mile program, an entrepreneurship course modeled on startup incubators that take in batches of young companies and provide them courses, informal advice and the seed investments to grow.

According to business news website Xconomy, incubator programs - which it tracks - have tripled in number for each of the past three years, proliferating from Sao Paulo to Stockholm at a pace that has fueled talk in tech circles of an "incubator bubble".

Last Mile founder Chris Redlitz, a local venture capitalist, says his goal was never to seek out a genuine investment opportunity inside a prison but to educate inmates about tech entrepreneurship and bridge the knowledge gap between Silicon Valley's wired elite and the rest of the region's population.

Inmates, after all, are not allowed to run businesses. They do not have access to cellphones â€" much less Apple Inc's latest iPhone developer toolkits â€" and they use computers only under close supervision.

A LOT TO LEARN

After his presentation in San Quentin's chapel, which received a rousing reception from an audience that included prison warden Kevin R. Chappell, Griffin told a reporter it was unlikely he would launch his startup idea immediately after being released this summer.

"I still have a lot to learn," said the soft-spoken Detroit native. "I've never used a cellphone. Technology is kind of foreign in this environment."

But to hear the inmates use jargon such as "lean startup" and "minimum viable product" speaks to an unmistakable truth about the Bay Area zeitgeist, where startups, for better or worse, have come to embody upward mobility, ambition, and hustle.

"If they were doing this in the '80s there may have been a different theme or model," said Wade Roush, Xconomy's chief correspondent. "But in this day and age, becoming an entrepreneur or starting a business is a form of self-actuation."

Situated on prime waterfront land, San Quentin is perhaps California's most storied prison and home to the state's only death row. But it has also kept a longstanding progressive reputation, boasting a rare college degree-granting program and vibrant arts courses.

The Last Mile accepted 10 inmates out of 50 applicants for its latest batch. The program, which graduated its first class of inmates last year, meets twice a week to discuss startups and lasts six months, although the most recent class took seven months due to a prison lockdown last year.

Some Last Mile participants, under official supervision, have also joined the online question-and-answer site Quora to respond to questions about prison life or describe what it felt like to commit murder.

The latest batch of startup ideas included a fitness app that would motivate drug addicts to exercise, a cardiovascular health organization, a social network for sufferers of post-traumatic stress disorder, a food waste recycling program, and an e-commerce site for artists in prison.

DIFFERENT PERSPECTIVE

Because the likelihood is not great that these companies will become funded and succeed, Redlitz said he was also working to place the inmates in jobs at tech companies after their release.

Rocketspace, a startup co-working space in downtown San Francisco, has agreed to host an internship. Rally.org, a crowd-funding site that counts Redlitz among its investors, said it hoped to begin a program to seek micro-investments from the public for the inmates' ideas.

Sitting in the Demo Day audience was John Collison, the 22-year-old co-founder of online payments startup Stripe, who noted some stark differences between the inmates' proposals and the fashionable startups du jour in Silicon Valley.

"What's frustrating is that all these companies in the Valley, they're ideas for the 1 or 10 percent," Collison said. "You have startups like Uber or Taskrabbit, that's like, ‘Oh, here's something to help you find a driver or find someone to clean your house.' Are they solving real problems?"

The San Quentin inmates "were talking about urban obesity, or PTSD", Collison said. "It's a completely different perspective. We actually really need that."

(Reporting by Gerry Shih; Editing by Dale Hudson)

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Friday, February 22, 2013

Reuters: Small Business News: Analysis: U.S. companies plan to spend, a boost for the economy

Reuters: Small Business News
Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com
Analysis: U.S. companies plan to spend, a boost for the economy
Feb 22nd 2013, 20:57

Job applicants listen to a presentation prior to the opening of a job fair for veterans and their spouses held by the U.S. Chamber of Commerce and the Washington Nationals baseball club at Nationals Park in Washington December 5, 2012. REUTERS/Gary Cameron

Job applicants listen to a presentation prior to the opening of a job fair for veterans and their spouses held by the U.S. Chamber of Commerce and the Washington Nationals baseball club at Nationals Park in Washington December 5, 2012.

Credit: Reuters/Gary Cameron

By Caroline Valetkevitch

NEW YORK | Fri Feb 22, 2013 3:57pm EST

NEW YORK (Reuters) - U.S. companies' capital spending plans are holding up, and mostly exceeding Wall Street forecasts, in the face of policy concerns created by arguments in Washington over the fiscal cliff, the debt ceiling and now automatic spending cuts.

Their willingness to spend on new offices, plants and machinery, as well as a pickup in deal making, shows that they are starting to dig into the massive amounts of cash that has been collecting more dust than interest on their balance sheets. That could prove a welcome counterpunch to a softer outlook for spending by consumers and government.

A Thomson Reuters analysis shows that for 2013, more Standard & Poor's 500 firms are forecasting capital expenditures that exceeded analysts' expectations than at any time in the past four years. Recent U.S. government data showed a rise in equipment and software spending in the final quarter of 2012.

If companies ratchet up spending, that could help unleash more hiring and extend the early-year rally in stocks, which tend to rise along with business spending.

"Once businesses start spending, that really means not only are they going to be buying goods, but they're going to be hiring Americans, and those things are really what's going to be the multiplier that helps to take this recovery and move it into greater expansion mode," said Burt White, managing director and chief investment officer at LPL Financial in Boston.

Not all the money will be spent on new projects, of course. And the spending plans announced so far are only slightly above last year's average. But they comfortably exceed the expectations of analysts, whose capex forecasts fell this year.

Part of the reason may have been the dire predictions about the "fiscal cliff" late last year when analysts were putting together their capex forecasts. At least some chief executives, including DuPont's (DD.N), blamed uncertainty over U.S. government budget and tax policy for a reluctance to invest and hire.

"A number of companies said we're planning our budget cycle on worst-possible conditions," said Fred Dickson, chief market strategist, D.A. Davidson & Co. Lake Oswego, Oregon.

That companies have turned more optimistic than analysts heartens investors because it amounts to a vote of confidence in the U.S. economy, which has been hobbled by high unemployment and household debt, and now faces curbs in government spending.

Another sign of confidence is the recent flurry of merger and acquisition activity. The $173 billion in U.S. deals announced so far in 2013 is more than double the volume seen last year at this time, according to Thomson Reuters Deals Intelligence.

After the financial crisis began in 2007, companies slashed expenses and jobs, and they remained diligent about keeping costs down even as the economy exited recession in mid-2009.

Federal Reserve data shows non-financial U.S. companies had $1.7 trillion of liquid assets, or cash, on their books as of the end of the third quarter of 2012.

MOVING OFF THE SIDELINES

The U.S. economy grew at a 2.2 percent clip in 2012 and is expected to slow to 1.9 percent this year as higher payroll taxes and government spending cuts take a bigger bite. Yet even with the economic outlook cloudy, things seem to be changing.

Of the S&P 500 companies that have issued capex guidance so far in 2013, 66 percent have spending plans that exceed analysts' expectations, the Thomson Reuters analysis showed. That's up from 57 percent in 2012, 59 percent in 2011, 55 percent in 2010, and 40 percent in 2009.

Those that have issued guidance are expecting to spend $1.59 billion on average in 2013. While that's only a modest increase from the 2012 average of $1.57 billion, it is above the analysts' estimates. Those estimates went down, to $1.48 billion in 2013 from $1.51 billion on average in 2012.

The 2013 data is based on 221 companies that have reported, while the 2012 average was based on guidance from 279 firms.

"I think companies are getting a little bit more urgency to actually go ahead and proceed with their plans despite some of the remaining uncertainties around the fiscal cliff," said Natalie Trunow, chief investment officer of equities at Calvert Investment Management whose firm manages about $13 billion in assets. "They have to remain competitive long term."

Some large firms, including Apple (AAPL.O), have already announced plans to increase capex, and sectors with the highest percentage of companies exceeding capex estimates so far in 2013 include health care, consumer discretionary and energy, the Thomson Reuters data showed.

To be sure, some expenditures will go toward maintenance of existing equipment rather than new plants, said S&P analyst Howard Silverblatt.

Clearly some will also be overseas. But there has been a surge in investment in oil and gas production in the United States, and there are signs that some manufacturing is returning, thanks to the promise of a cheaper energy supply.

Apple, the biggest U.S. company by market capitalization, said it will spend $10 billion on capital improvements this year, about $2 billion more than last year. It ranked sixth in terms of capex projections for 2013.

Oil and gas producer Chevron (CVX.N) tops the list with about $33.4 billion of capex planned, followed by AT&T (T.N), ConocoPhillips (COP.N), Wal-Mart (WMT.N) and Intel (INTC.O), the Thomson Reuters data showed.

This spending could be crucial at a time when consumer and government spending are likely to decline. A rise in the payroll tax, higher gasoline prices and a delay in tax refunds slowed retail sales in January, a worrisome sign for the year. At the same time, a slate of across-the-board government spending cuts are set to take effect on March 1, barring a deal between the White House and Congress.

PROFIT MARGINS VULNERABLE?

Of course, big capital expenditures can take a toll on earnings. And investors have worried about the effect slower profit growth could have on the stock market, which started 2013 on a tear and briefly notched a five-year high.

Energy and other commodity areas have had big increases in capital spending over the last decade, a trend that could eventually hurt margins, said Vadim Zlotnikov, chief market strategist for AllianceBernstein in New York.

"I expect this very aggressive capital spending to create the type of cost inflation that would make it very difficult for profit margins to expand," he said.

But John Carey, portfolio manager at Pioneer Investment Management in Boston, said the positives tend to outweigh the negatives. "There's always a risk when companies invest, but without investment there can't be any long-term growth."

(Reporting by Caroline Valetkevitch; Editing by Steven C. Johnson, Daniel Burns, Martin Howell and Tim Dobbyn)

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Thursday, February 21, 2013

Reuters: Small Business News: "Keep your so-called workers," U.S. boss tells France

Reuters: Small Business News
Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com
"Keep your so-called workers," U.S. boss tells France
Feb 21st 2013, 14:28

Maurice ''Morry'' Taylor (L), chairman and chief executive of Titan International, Inc., is pictured working with an employee at Titan's bull wheel facility in Quincy, Illinois, in this undated handout photograph. Taylor has delivered a crushing summary of how some outsiders view France's work ethic in a letter saying he would have to be stupid to take over a factory whose staff only put in three hours work a day. REUTERS/Courtesy of Titan International/Handout

1 of 6. Maurice ''Morry'' Taylor (L), chairman and chief executive of Titan International, Inc., is pictured working with an employee at Titan's bull wheel facility in Quincy, Illinois, in this undated handout photograph. Taylor has delivered a crushing summary of how some outsiders view France's work ethic in a letter saying he would have to be stupid to take over a factory whose staff only put in three hours work a day.

Credit: Reuters/Courtesy of Titan International/Handout

By Emmanuel Jarry and Catherine Bremer

PARIS | Thu Feb 21, 2013 9:28am EST

PARIS (Reuters) - The CEO of a U.S. tire company has delivered a crushing summary of how some outsiders view France's work ethic in a letter saying he would have to be stupid to take over a factory whose staff only put in three hours work a day.

Titan International's Maurice "Morry" Taylor, who goes by "The Grizz" for his bear-like no-nonsense style, told France's left-wing industry minister in a letter published by Paris media that he had no interest in buying a doomed plant.

"The French workforce gets paid high wages but works only three hours. They get one hour for breaks and lunch, talk for three and work for three," Taylor wrote on February 8 in the letter in English addressed to the minister, Arnaud Montebourg.

"I told this to the French union workers to their faces. They told me that's the French way!" Taylor added in the letter, which was posted by business daily Les Echos on its website on Wednesday and which the ministry confirmed was genuine.

"How stupid do you think we are?" he asked at one point.

"Titan is going to buy a Chinese tire company or an Indian one, pay less than one Euro per hour wage and ship all the tires France needs," he said. "You can keep the so-called workers."

As the leaked letter drew outrage in France, Montebourg penned a scathing response, spelling out the reasons why France routinely ranks as a leading destination for companies to invest, beating China and India in mid-2012.

"Can I remind you that Titan, the business you run, is 20 times smaller than Michelin, the French (tire) technology leader with international influence, and 35 times less profitable," Montebourg wrote, in a two-page letter in French.

"This just shows the extent to which Titan could have learned and gained, enormously, from a presence in France."

Montebourg's letter, a copy of which was sent to Reuters, said Taylor's comments, "as extremist as they are insulting", illustrated his ignorance of France.

Union leaders also reacted furiously. CGT official Mickael Wamen said Taylor belonged more "in an asylum" than in the boardroom of a multinational and noted his views were based on a visit to a troubled plant whose operations had been cut back.

The vicious exchange made for another public knock to France's business image after verbal attacks last year by Montebourg on firms seeking to shut ailing industrial sites prompted international derision.

Combined with concern over plans for a 75-percent "millionaires' tax", Montebourg's antics drove London Mayor Boris Johnson to tell an international business audience that it seemed France was being run by left-wing revolutionaries.

Socialist President Francois Hollande may take some comfort in the view Taylor expressed of Washington: "The U.S. government is not much better than the French," he wrote, saying Western leaders were failing to halt state-subsidized Chinese exports.

TWO TOUGH-TALKERS

The row has pitted an outspoken former anti-globalization campaigner, the loose cannon of Hollande's government, against a right-winger who revels in provocation and tough-talking.

Proud of being "The Grizz" -- his group's logo features a cartoon bear and its website opens to the roar of a grizzly -- Taylor has clashed with unions before and once suggested that a U.S. judge was "smoking dope" after a ruling against his firm.

He built up Illinois-based Titan over 23 years into a global brand in tires for tractors and other off-road machinery and ran for the White House in the 1996 Republican primary, campaigning on a pro-business ticket.

At that time, he admitted to being "abrasive" in order to "get the job done": "The politicians, they all want you to like them," he told an interviewer. "I don't care if people like me."

To Montebourg, the author of "Kill All the Lawyers and Other Ways to Fix the Government" wrote: "You're a politician so you don't want to rock the boat ... France will lose its industrial business because its government is more government."

Taylor's letter was a response to Paris having approached Titan as a possible buyer of U.S. group Goodyear's Amiens Nord factory in northern France. Montebourg told reporters earlier on Wednesday that he would put his answer in a letter.

In it, he noted the United States is the No. 1 investor in France with 4,200 U.S. subsidiaries employing nearly half a million people in the country. He said those firms appreciated French productivity and "savoir-faire" and warned that Paris would fight others which exploit cheap labor.

Montebourg has often lashed out at cheap imports of manufactured goods from low-wage countries such as China and last year told the boss of Indian steelmaker ArcelorMittal he was unwelcome in a spat over a shuttered plant in France.

Despite having per-head productivity levels that rank among the best in Europe, economists blame France's rigid hiring and firing laws for a long industrial decline that has dented exports. Many also fault the country's 35-hour work week for diminishing competitiveness with Germany.

Goodyear Tire & Rubber Co's Amiens Nord plant employs 1,250 people, who have been battling demands they work more shifts or accept layoffs. The site now faces closure.

Talks last year with Titan over a possible rescue fell down after a failure to reach a deal with unions on voluntary redundancies.

Taylor accused France of being at fault. "Titan is the one with the money and the talent to produce tires. What does the crazy union have? It has the French government."

(Additional reporting by Christian Plumb and Elizabeth Pineau; Writing by Catherine Bremer; Editing by Alastair Macdonald and Giles Elgood)

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Wednesday, February 20, 2013

Reuters: Small Business News: Timeless suits from London's Savile Row back in fashion

Reuters: Small Business News
Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com
Timeless suits from London's Savile Row back in fashion
Feb 20th 2013, 14:01

Cutter Finnan Lane cuts cloth for a suit at bespoke Savile Row tailors Anderson & Sheppard in central London February 14, 2013. Anderson & Sheppard had a 2012 turnover of 4 million pounds and growth has been over 13 percent every year since 2009. A number of other houses on Savile Row have also enjoyed over 10 percent growth in recent years with total revenue for the informal group of suitmakers now estimated to be 30-35 million pounds. Photograph taken February 14, 2013. REUTERS/Andrew Winning

1 of 14. Cutter Finnan Lane cuts cloth for a suit at bespoke Savile Row tailors Anderson & Sheppard in central London February 14, 2013. Anderson & Sheppard had a 2012 turnover of 4 million pounds and growth has been over 13 percent every year since 2009. A number of other houses on Savile Row have also enjoyed over 10 percent growth in recent years with total revenue for the informal group of suitmakers now estimated to be 30-35 million pounds. Photograph taken February 14, 2013.

Credit: Reuters/Andrew Winning

By Stephen Eisenhammer

LONDON | Wed Feb 20, 2013 9:01am EST

LONDON (Reuters) - With a blazing fire, leather sofa, and a half-empty bottle of single malt whisky by the door, London bespoke suit-maker Anderson & Sheppard feels more like a gentlemen's club frozen in time than a 21st century luxury retailer.

At the back of the shop a number of impeccably dressed tailors cut cloth on wooden work benches much like they have been doing for the last 100 years. One can almost imagine past customers like Charlie Chaplin, Pablo Picasso or some faded Victorian gentleman turning up at any moment.

This Savile Row tailor, where first names are banned and customers are always "sir", may feel like a museum to Britain's faded imperial glory but the bespoke menswear business on "the Row" is enjoying a remarkable resurgence.

Anderson & Sheppard is just one of the names on London's most renowned street for high-end tailors.

Alongside Gieves & Hawkes, Dege & Skinner, Henry Poole & Co and others, tailors on "the Row" have been dressing royalty, aristocrats, statesmen, great warriors and the wealthy since British dandy Beau Brummel first introduced trousers to fashionable London society at the start of the 19th century.

Behind the fusty facade "the Row" is attracting a new generation of less exclusive young clientele despite suit prices starting at 3,800 pounds ($5,900) with a combination of client discretion, a subtle online presence and absolute attention to detail and quality.

Anderson & Sheppard had a 2012 turnover of 4 million pounds and growth has been over 13 percent every year since 2009.

A number of other houses on Savile Row have also enjoyed over 10 percent growth in recent years with total revenue for the informal group of suitmakers now estimated to be 30-35 million pounds.

"We're doing very well actually. We've found that business has picked up in the last few years, and we couldn't be busier," Anderson & Sheppard manager Colin Heywood said as he showed Reuters around the shop.

RENAISSANCE

The renaissance of classic British menswear is a dramatic turn-around for an industry that was left on the ropes by the rise of decent quality ready-to-wear suits and shirts in shops during the 1970s and 1980s.

Clothes that were then dismissed as old fashioned, over-priced and going the way of bowler hats, are now the subject of renewed interest reflected in sartorial blogs and forums from India to the United States.

"We've noticed that we get a lot more younger customers coming in. I think that's particularly the result of the internet. There's so much more written about bespoke tailoring now in books, magazines and online," Heywood said.

The celebration of Savile Row's handcrafted suits in online forums, top men's magazines and promoted by its own association on the Savile Row Bespoke website (www.savilerowbespoke.com) has allowed tailors on the Row to make a centuries-old tradition irresistible to well-off modern men seeking top quality.

"People find it a lot more accessible and I think it takes away that fear element of people coming in for the first time," Heywood said.

One customer, 38-year-old James Massey who runs a public relations firm, said a bespoke suit was impossible to match.

"I could probably go and spend the same amount of money in Selfridges on a Zegna suit that's made in a factory in Italy with a bit of handstitching, but this is actually made specifically for me," he said.

Dylan Jones, editor at GQ UK, puts the renaissance of British tailoring down to the way men now shop for clothes.

"It's a generational shift. Men today consume far more like women. They're far more sophisticated consumers than they used to be and they expect very good produce at every entry level," he said.

"Menswear is starting to approach 50 percent of a lot of people's business. It's a real growth industry."

Savile Row is particularly popular in international circles where the classic British look is increasingly fashionable.

"One thing that plays fantastically well with foreign press and buyers is the heritage aspect of what we do and there is so much interest in Savile Row," Jones said, referring to the events he runs as chair of the menswear committee for the British Fashion Council.

Within this overall growth market where men are spending more on clothes and demanding higher quality, Savile Row remains uniquely placed in a global industry which luxury consultants Bain & Company estimated was worth more than $34 billion in an October 2012 note.

"London is the home of menswear. We invented the suit and Savile Row is the most important men's shopping street in the world which offers a quality and aspect of heritage that you simply can't get anywhere else," Jones said.

COTTAGE INDUSTRY

While big fashion brands such as Tom Ford, Dior, and Paul Smith, invest heavily in marketing, distribution and staff, Savile Row tailors remain a cottage industry employing only a few dozen people who produce suits on site.

With fewer overheads and an international reputation from generations of suit-making which does not cost a penny in advertising, Savile Row is a surprisingly competitive and durable business model.

"Any of these big fashion brands will have a much bigger mark-up than the Savile Row tailors. No one goes into bespoke tailoring to get rich," said James Harvey-Kelly the menswear designer for French brand Vicomte A who also runs his own made-to-measure company.

"The quality is sensational and that's what Savile Row trades off. They use sensational cloths and its sewn together by absolute experts. They last for generations."

On the other side of Piccadilly the manager of traditional shirtmaker Budd, Andrew Rowland, said his company was reaping rewards for sticking by its principles through the tough times.

"We've never done anything different, but the others have weakened," he said in the cosy shop just off Jermyn Street above which bespoke shirts are still scissored by hand.

Jermyn Street used to be the home of London's bespoke shirt-making industry, but many of the old stores such as T.M. Lewin and Hawes & Curtis expanded into mass sales, pushing down the price by producing shirts in Vietnam and Turkey.

One long-term customer is British actor Edward Fox, who played the title role in "Day of the Jackal". Before sitting down to a cup of tea with Rowland, he explained why he has been coming back for 55 years.

"This is a Budd shirt. It must be at least 10 years old. Just as good today as it was 10 years ago. You don't actually have to spend that much on clothes, you have to look after clothes and you have to buy well originally".

However, traditional tailoring is not always ideal for more design-conscious people, according to Harvey-Kelly.

"Everything for them (Savile Row) is about it falling perfectly with no creases. But in the modern day people sometimes want it to look a bit uncomfortable. They want it to be slim and curl on the sleeve and a lot of tailors refuse to do that".

Heywood at Anderson & Sheppard when asked about modern fashion trends said he had noticed a "slight lean towards narrower trousers".

"We're not fashion-led. Fashions change very quickly and what we like to do is create a suit that's a timeless classic that you can wear in any decade".

(Reporting by Stephen Eisenhammer)

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Tuesday, February 19, 2013

Reuters: Small Business News: Mortgage lender Quicken bets on downtown Detroit's revival

Reuters: Small Business News
Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com
Mortgage lender Quicken bets on downtown Detroit's revival
Feb 19th 2013, 20:34

A large ''Opportunity Made In Detroit'' banner is seen on the side of one of the buildings owned by Quicken Loans founder Dan Gilbert in downtown Detroit, Michigan January 30, 2013. REUTERS/Rebecca Cook

1 of 6. A large ''Opportunity Made In Detroit'' banner is seen on the side of one of the buildings owned by Quicken Loans founder Dan Gilbert in downtown Detroit, Michigan January 30, 2013.

Credit: Reuters/Rebecca Cook

By Nick Carey

DETROIT | Tue Feb 19, 2013 3:34pm EST

DETROIT (Reuters) - Dan Gilbert has a vision for downtown Detroit that many would find hard to square with the long, painful decline commonly associated with this city: a vibrant urban core full of creative, innovative and talented young people.

Yet Quicken Loans, the mortgage lender Gilbert co-founded in 1985, has invested $1 billion over three years, bought some 2.6 million square feet of commercial space in the downtown area and moved 7,000 employees there in a bid to make that vision a reality.

The company is in talks with 80 to 100 retail outlets and restaurants to open downtown space, and Gilbert and other business leaders have fronted most of the money for a $140 million light rail line in the heart of the city. Quicken has also invested in an incubator for technology startups, which now number 17.

Gilbert, who grew up in a Detroit suburb, wants to brake the exodus of educated young people from the only state in the country that lost population between 2000 and 2010. Among those who set up home elsewhere in recent years are two founders of daily deal marketer Groupon Inc, University of Michigan graduates from the Detroit area whose startup took root in Chicago.

"Young people are fleeing the state and we need to give them a reason to be here," Gilbert, 51, said in a recent interview in the Madison Theatre, one of many buildings his firm has bought.

Part of his zeal comes from his own need to attract top talent to Quicken Loans, which runs a nationwide online lending business that Gilbert says makes it "a tech company that happens to sell mortgages." Having avoided the subprime mortgages that crippled many of its competitors in the housing crash, the company has grown rapidly in recent years.

Quicken Loans moved downtown from the suburbs in 2010. Home loan volume went from $30 billion in 2011 to $70 billion in 2012; Gilbert sees it rising to $100 billion this year. He anticipates Quicken will surpass JP Morgan Chase as the country's No. 2 retail home loan provider during this quarter.

The company gives employees who buy property in the city a gift of $20,000 on condition they live in the city for five years. Residential real estate occupancy rates in the downtown and midtown areas are close to 100 percent.

That's helping to fill in the public services, cut as part of Detroit's attempt to stave off bankruptcy. Quicken has installed cameras and hired security teams to ensure employee safety.

'DE FACTO RACISM'

Gilbert's deep pockets have their detractors. In a recent op-ed in the New York Times entitled "Detroit, the Billionaire's Playground," author Mark Binelli said residents worried that Michigan may install an unelected emergency financial manager to fix the city's finances "shouldn't forget the ways in which power has already been ceded to an unelected oligarchy, whose members might, no matter how ostensibly well intentioned, possess questionable ideas about urban renewal."

There is also some criticism that the downtown redevelopment is creating an island of prosperity detached from the city's black inhabitants, who make up 83 percent of the population.

Hard data does not exist for the racial makeup of downtown, but it is generally whiter and wealthier than Detroit's poor neighborhoods. "We're focused on downtown - that's where we can make a difference," Gilbert says.

While there may be security and other menial jobs for Detroit's African American population downtown, Mayor Dave Bing, who is black, says the city needs investment in retraining and educating workers who in the past held automotive or manufacturing jobs for jobs in the city's new economy.

For others, the focus on downtown is a slap in the face for Detroit's poor blacks. "This is de facto racism," said Pastor D. Alexander Bullock, a local leader of Jesse Jackson's Rainbow PUSH Coalition. "There is clearly a plan to invest in the downtown area, but there has been no urban reinvestment in poor black neighborhoods."

Mayor Bing, who is cutting spending to try to avert the state's takeover of the city's dismal finances, is grateful for the assist.

"Downtown is coming back very strong, and that has been driven by the private sector," he said.

Sarah Brithinee, 26, is one of those who sees a "land of opportunity" in her hometown of Detroit, the opposite of the crowded marketplace she found during three years in Los Angeles.

Having returned in 2011, she is chief executive of Wedit, which rents out digital cameras for wedding parties, then edits the footage into commemorative videos.

"I feel for the first time in my life I am making a real difference by coming back to Detroit," Brithinee said.

Gilbert's father and grandfather both owned businesses in Detroit before much of the city's white population began moving to the suburbs 80 years ago, where there were federal subsidies for land. That exodus accelerated after race riots in 1943 and 1968 and was compounded by the slow decline of automotive jobs.

On the walls of some of the office space Quicken has taken over in Detroit there are giant black and white reproductions of photos of the city in all its glory, a hustling, bustling city with a dynamic core.

For Elizabeth Rose those images are part of her childhood in the 1960s when her father worked as a mortgage banker in the First National Building downtown, a building Quicken Loans now owns. Rose runs the first branch of coffee emporium Roasting Plant outside New York on the ground floor, where beans are piped up from the basement and roasted.

"For me, coming back was all about Quicken Loans and the commitment they have made to Detroit," Rose said. "I wouldn't have come back if they weren't doing this."

(Editing by Mary Milliken and Prudence Crowther)

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