Archive for October, 2013

Wholesale Inventories in U.S. Increase by Most in Seven Months

Inventories at U.S. wholesalers increased in August by the most in seven months as merchants tried to keep pace with stronger demand.

The value of unsold goods increased 0.5 percent after a revised 0.2 percent gain in July that was larger than previously reported, the Commerce Department said today in Washington. The median forecast in a Bloomberg survey of economists called for a 0.3 percent increase. Sales jumped 0.6 percent in August after no change the month before.

Wholesalers had enough goods on hand to last 1.17 months at the current sales pace, matching the previous two months as the lowest since September 2011. With inventories already running lean, companies would need to increase production or import more amid signs of increased demand.

Estimates of the 28 economists surveyed by Bloomberg for wholesale inventories ranged from no change to a 0.6 percent increase. Distributors’ sales were also projected to climb 0.3 percent, the survey median showed.

Wholesalers’ stockpiles of durable goods — those meant to last three years or more — increased 0.6 percent in August, outpaced by a 0.9 percent jump in sales. Inventories of imported automobiles rose 2.4 percent as purchases eased 0.9 percent.

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HSBC unit to pay $2.5 billion in fraud case

A division of Europe’s HSBC has been ordered to pay about $2.46 billion in a class action lawsuit claiming it violated federal securities laws.

Lawyers for the plaintiffs said that the judgment, which includes $1.48 billion in damages and nearly $1 billion in prejudgment interest, was the biggest ever following a securities fraud class action trial.

HSBC Holdings, Europe’s biggest bank by market value, said in a statement on Friday that it will appeal, noting that it was “the next step in an 11-year-old case and we believe we have a strong argument.”

James Glickenhaus of Glickenhaus & Co., one of the three lead plaintiffs appointed by the court in 2002 to represent the class, said in a statement that the judgment “shows that the fraud committed by Household International and the individual defendant officers will not go unpunished, and we look forward to having the judgment affirmed on appeal.”

The lawsuit named Household International Inc., which is now HSBC Finance Corp., and former executives William Aldinger, David Schoenholz and Gary Gilmer. It claimed that the company fraudulently misled investors about its predatory lending practices, the quality of its loans and its financial accounting from March 23, 2001 through Oct. 11, 2002.

HSBC acquired consumer lender Household International in 2003. The acquisition made HSBC the biggest subprime lender in the U.S. at the time, which resulted in billions of losses to HSBC leading up to the financial crisis of 2008.

A jury in Chicago found in favor of the plaintiffs in May 2009. In the final judgment entered in the U.S. District Court Northern District of Illinois Eastern Division on Thursday, Household International, Aldinger, and Schoenholz are held jointly and severally liable for the judgment. Gilmer is held severally liable for 10 percent of the judgment.

HSBC’s U.S. shares shed 8 cents to $55.08 in premarket trading. They are up less than 2% for the year.

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Jump in Jobless Claims Flashes Warning on U.S. Shutdown: Economy

“The economic costs of a shutdown are going to increase the longer the shutdown occurs,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester,Pennsylvania and the second-best claims forecaster over the past two years, according to data compiled by Bloomberg. “If this drags along for the next couple of weeks, the economic toll will be even more significant.”

Shares surged today amid signs lawmakers were moving to reach agreement on increasing the nation’s debt ceiling to avoid a government default. Absent a deal, the possibility that federal agencies will need to slash spending once the borrowing limit is reached probably means hiring plans will be put on hold as business leaders prepare for an economic slump.

Shares Jump

The Standard & Poor’s 500 Index climbed 1.6 percent to 1,683.21 at 11:42 a.m. in New York. President Barack Obamasaid he would accept a short-term increase in the debt limit without policy conditions and that he would negotiate on broader fiscal and health-care policy after the ceiling is raised and the shutdown ends.

Other news today showed the world’s third-biggest economy was strengthening. Machinery orders in Japan jumped in August to the highest level since 2008.

A partial U.S. federal government shutdown lasting through the end of the week could cost the economy 0.2 percentage point in growth, according to the median estimate in a Bloomberg survey of economists issued today. The damage escalates to a 0.5-point loss if the shutdown carries through Oct. 25.

Last week’s surge in the number of jobless claims was the biggest since the aftermath of superstorm Sandy in November. The median forecast of 47 economists surveyed projected an increase to 311,000 from the prior week’s 308,000. Estimates ranged from claims of 304,000 to 340,000.

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Investors take big bite of Potbelly IPO

Potbelly, which raised $105 million from the stock sale, is the latest in the a hot streak of initial public offering. It is on track to be the fourth to more than double on its first day of trading this year.

Fellow restaurant chain Noodles & Co. (NDLS) also doubled on its first day in June. Organic food companySprouts (SFM) and software firm Benefitfocus(BNFT) also rose more than 100% on their market debuts. That’s a pretty rare feat following the bursting of the Internet bubble. Only six companies doubled on their first day of trading between 2001 and 2012, according to Renaissance Capital.

Related: Twitter-hungry investors rush to wrong Tweet shares

If Potbelly closes above $33, it would be the biggest first-day gain for a U.S.-listed IPO since a 161% surge for Chinese online video firm Youku.com (YOKU) in December 2010. (Youku has since merged with rival Tudou.)

Potbelly started in 1977 as a small antique shop in the Windy City that began serving toasted deli sandwiches to boost sales.

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