Mixed GOP response to WH health summit invite

Republicans sent mixed signals after President Barack Obama challenged them to participate in a one-of-a-kind televised summit with Democrats to come up with health care legislation.

House Republicans derided the Feb. 25 event, casting doubt on whether it would produce any bipartisan agreement to extend coverage to millions of people and rein in medical costs.

"Are they willing to start over with a blank sheet of paper?" said Kevin Smith, a spokesman for House GOP leader John Boehner of Ohio. "We need answers before we know if the White House is more interested in partisan theater than in facilitating a productive dialogue about solutions."

Senate Minority Leader Mitch McConnell, R-Ky., was more receptive, saying he would work with the White House "to maximize the effectiveness of the meeting."

The summit is considered a last, best attempt to revive Obama's yearlong health overhaul quest, now stalled after Democrats lost their filibuster-proof Senate majority.

Yet since Obama proposed the summit last weekend, Republicans and Democrats have voiced skepticism. Some in the GOP wondered if it would be nothing but a spectacle that could benefit the president at their expense. Democrats viewed Republicans' insistence that Obama trash existing bills and start over as evidence they weren't sincere about bipartisanship.

By presiding over a meeting with three dozen lawmakers trying to get a word in edgewise, Obama may be able to dominate the conversation and the visual images. That's what many Democrats say he did at a Jan. 29 session when he faced a roomful of GOP House members in Baltimore.

In its invitation, the White House argued that remaking health care was imperative, and Obama challenged Democrats and Republicans to come up with comprehensive bills before the event at Blair House, across the street from the White House.

The White House named 21 lawmakers the president wants to attend the summit: the top leaders in the House and Senate and of the committees with jurisdiction over the health legislation. Obama also invited the top four leaders to invite four more lawmakers each, bringing the total to 37 — 20 Democrats and 17 Republicans.

Obama will offer opening remarks, followed by comments from a Republican leader and a Democratic leader, according to the format detailed in a letter Friday by Obama's chief of staff, Rahm Emanuel, and Health and Human Services Secretary Kathleen Sebelius. Obama will then moderate a discussion covering four topics: insurance reforms, cost containment, expanding coverage and the impact of health legislation on the deficit.

The letter stands as a challenge not just to Republicans but also to Democrats, who have yet to finalize a deal on sweeping overhaul legislation. They were on the verge of doing so last month before the special election victory of Republican Scott Brown in Massachusetts deprived Democrats of the filibuster-proof 60 votes they need to move forward in the Senate.

That threw the undertaking into disarray and congressional leaders have been struggling to pick up the pieces. Some hope the summit will break the logjam one way or the other.

Democratic leaders are working toward a package that could pass the Senate under rules that require only a simple majority vote, not 60 votes — a strong-arm partisan approach infuriates Republicans and makes moderate Democrats uneasy.

Democrats and Republicans are far apart in their aims. Democrats' legislation would cover more than 30 million uninsured, while a House Republican plan would cover only 3 million. Members of both parties say they see a few areas for common ground, including revamping the medical malpractice system and finding ways to allow consumers to shop for insurance plans across state lines.

Anthem to delay insurance rate hike amid criticism

Health insurer Anthem Blue Cross will postpone its much-criticized plan to raise rates for some California residents who buy insurance on their own, after reaching a deal Saturday with state regulators.

Anthem's planned rate hike, which the state estimates would affect about 700,000 customers, averaged 25 percent and would have been as high as 39 percent for some.

Anthem Blue Cross of California, based in Thousand Oaks, agreed to postpone the increase from March 1 until May 1 so California could have outside experts review the company's complex and detailed plan filing, including data on the medical costs it expects to incur.

The California Department of Insurance had been working with Anthem since mid-November to get more information about the increase, Insurance Commissioner Steve Poizner said. He wanted to have experts comb through the company's figures to confirm the new rates comply with a 2006 state law that insurers spend 70 cents of every premium dollar on medical care.

"Medical cost inflation in California is in the 10 to 15 percent range, so I have a healthy skepticism how they can get to 39 percent" and comply with the law, Poizner said.

If they don't, he said, he will direct the company to reduce its prices, "or I will take away their license to sell insurance" in California.

He officially requested the delay on Monday, but said Anthem stuck to its position that the individual insurance plan had lost money last year and the rate increases were justified — until Saturday. The change of heart came after a week of extensive media reports about the rate hikes, harsh criticism from the Obama administration and two Congressmen scheduling a hearing to look into the rates on Feb. 24.

"They did the right thing today," Poizner said during a conference call. "These are huge, massive rate increases, very concerning to me and my team."

The insurance department, which doesn't have legal authority to regulate the rates insurers set, has hired consulting firm Axene Health Partners LLC of Southern California to work with actuaries within the department, review Anthem's rate proposal and determine whether it complies with the 70-cent rule. They should finish by mid-April.

Anthem, a subsidiary of insurance giant WellPoint Inc. of Indianapolis, said its proposed rates reflect anticipated medical costs.

"They are actuarially sound and in full compliance with all requirements in the law," said Brian Sassi, president of Anthem Blue Cross of California.

The company has blamed the increased rates on the recession, rising medical costs and more healthy people dropping out of the plan, leaving fewer premium dollars to cover costs. It has insisted that the situation shows the need for a health-care overhaul that requires everyone to have health insurance.

But Health and Human Services Secretary Kathleen Sebelius said Thursday "it remains difficult to understand" how premium increases of that size can be justified when WellPoint Inc. reported a $4.75 billion profit in the last quarter of 2009.

"While a two-month delay offers some temporary relief, what California families need is long-term health insurance security, so that they don't face sharply higher prices or fewer benefits," Sebelius said Saturday. "This rate increase underscores the urgency of passing real health insurance reform."

Anthem's plan comes as more people lose employer-sponsored health insurance — and more insurers start raising rates on individual customers.

"We are seeing some significant price increases from other companies" filing new rates for individual insurance plans, which cover about 30 percent of Californians, Poizner noted. He said he did not have details.

Consumers in at least three other states who buy their own health insurance are getting hit with premium increases of 15 percent or more. The Anthem Blue Cross plan in Maine is asking for increases of about 23 percent this year for some individual policyholders. Last year, they raised rates up to 32 percent.

Kansas had one recent case where an insurer wanting to raise most individual rates 20 percent to 30 percent was persuaded by state insurance officials to reduce the increases to 10 percent to 20 percent. The insurance department would not identify the company but said it was not Anthem.

And in Oregon, multiple insurers were granted rate hikes of 15 percent or more this year after increases of around 25 percent last year for customers who buy individual health insurance, rather than getting it through their employer.

While the California insurance department oversees individual plans and another California agency oversees managed care health plans, Anthem said the postponement would pertain to customers getting either type of insurance from the company.

Truck recall adds to Toyota's troubles

Toyota was facing more unwanted publicity Saturday after the world's biggest automaker said it was voluntarily calling in about 10,000 pickups in North America, the latest in a series of recalls.

The Japanese giant has recalled millions of vehicles worldwide in past months due to problems linked to accelerator and brake functions, sullying the company's safety reputation.

The latest vehicle cast into the spotlight is the 2010 model of Tacoma four-wheel drive pickups in the North American market, including 8,000 in the United States and 1,500 in Canada.

The voluntary recall was to inspect their front drive shafts, which may include a component that contains cracks that developed during the manufacturing process, the company said.

Earlier global Toyota recalls covered models with "sticky accelerators" that can cause cars to race out of control, a defect cited in several deadly crashes, and later widened to brake system problems in the Prius and other hybrid models.

On Friday a US woman filed a federal lawsuit in Los Angeles against Toyota, blaming the company for the death of her husband when the Prius she was driving suddenly accelerated.

The Tacoma recall came as the company suspended production of two hybrid models -- the Sai sedan and the Lexus HS250h -- in Japan on Saturday as it develops a fix for those vehicles' faulty brakes.

Embattled Toyota president Akio Toyoda on Saturday visited a Tokyo dealer where Prius repairs were underway.

"It will be absolutely okay from now on," the scion of the founder family assured as he deeply bowed to a couple who brought their Prius in for a software fix.

Japanese media have said Toyoda is prepared to testify at US congressional hearings if he is formally asked to do so, with the automaker facing intense pressure in the United States over the rash of recalls.

Outspoken Tokyo Governor Shintaro Ishihara accused the United States of using Toyota's safety troubles to "bash" Japan because of jealousy of the Japanese automotive industry's fast rise.

Amid accusations in the US that Toyota had been slow to respond to safety concerns, President Barack Obama warned all carmakers that their brands were at risk if they dragged their feet on safety recalls.

In his first public remarks on Toyota's deepening defect crisis, Obama noted that Toyota was now under federal investigation over its recalls but predicted the company, which has supplanted the bailed-out US giant General Motors as global industry leader, would recover from its present troubles.

"Every automaker has an obligation when public safety is a concern to come forward quickly and decisively when problems are identified," Obama said in an interview with Bloomberg BusinessWeek magazine, which went on sale Friday.

Toy makers' crystal ball: High-tech on the cheap

If the Zhu Zhu Pets taught a lesson, it's that a bit of technology and a low price tag can go a long way. Toy makers are taking that experience to heart.

From a digital Scrabble game that checks the words to a hovering UFO to miniature radio-control cars, toy makers are amping up the tech quotient but not prices.

Zhu Zhu Pets, the furry mechanical hamsters that zoom around, were the runaway hit of the holiday season. One key to their success: a price tag under $10.

The American International Toy Fair begins Sunday. This is the annual event where toy makers show off new offerings that will make their way into next year's stockings. Previews from toymakers and interviews with analysts make clear that the focus is on innovation and price. Few toys will retail for more than $100, and most will be priced below $30.

"There's still going to be some hesitancy to raise prices too much," said Needham & Co. analyst Sean McGowan. "Last year the feeling was under $30 is where you needed to be. This year there may be more willingness to be $30 to $50. But I don't think we'll see a wave of $300 stuffed horses again."

The toy industry performed a bit better during the holidays than it did in 2008, but the season was far from a bonanza. The NPD Group, which does market research, said toy revenue was flat because of discounts during the fourth quarter, but the industry sold 4 percent more toys. For the year, sales edged down 1 percent to $21.47 billion.

Tough times can spawn creativity.

"I've seen some really innovative products," said Jim Silver, an analyst at Timetoplaymag.com. He pointed to radio-control vehicles as combining innovation and low prices. One reason they're cheap: The cars themselves have shrunk, Silver said.

"What the industry has learned is that kids don't necessarily want 'bigger.' It's about the features, not the size of the vehicles," he said.

For $24.99, Mattel is offering tiny Hot Wheels radio-control Stealth Rides cars that fit in a case that doubles as the remote control. Spin Master has several radio-controlled offerings, including the Air Hogs Vectron Wave UFO flying saucer that can sense objects below it and hover above them. That also costs $24.99.

"Consumers like radio control, they just didn't want to spend $70," Silver said.

Prices have fallen as technology has advanced, much like the price drops in flat-screen TVs or laptops.

Some other technology-infused toys planned for 2010:

• Mattel is offering Sing-a-majigs, plush characters whose mouths move as they sing and who harmonize when activated together; available for $12.99 each; and a World Wrestling Entertainment Belt that contains a screen with animated light shows for $39.99.

• Hasbro developed Scrabble Flash Cubes. The word game uses cubes that each display one letter digitally. When players fit cubes together, the game can recognize whether they form valid words. And it can keep score.

• Hasbro also expands its Furreal Friends line with smaller Snuggimals that wag their tails and move when you pet them, retailing for about $7.99.

• Jakks Pacific is offering some high-tech spying gear for kids in its Spy Net line, including a video spy watch for $54.99 and a Pen Audio Bug for $24.99. Yes, they're just what they sound like — miniature video and audio recorders.

• Wowwee has developed a line of guitars and drum sets that are only about 1 inch thick called Paper Jamz. They're also $24.99.

 

Calif. co. expands meat recall due to E. coli fear

 A Southern California meatpacking firm has significantly expanded its recall of ground beef and veal that might be contaminated with E. coli.

The recall includes approximately 4.9 million additional pounds of products by Huntington Meat Packing Inc. under the Huntington, Imperial Meat Co. and El Rancho brands, the Department of Agriculture's Food Safety and Inspection Service said Friday.

The original recall was announced Jan. 18 and was for 864,000 pounds of meat.

E. coli is a potentially deadly germ that can cause bloody diarrhea, dehydration and, in severe cases, kidney failure. The germ can be killed by cooking fresh and frozen meat products to an internal temperature of 160 degrees.

There have been no reports of illnesses associated with consumption of the products, the food safety agency said.

The affected beef and veal was sold in 10, 20 and 50-pound boxes to distribution centers, restaurants and hotels in California between Jan 4. and Jan. 22, 2010. Each box bears the establishment number "EST. 17967" inside the USDA mark of inspection.

The products include ground beef patties, diced beef, veal patties and beef burrito filling mix.

The original recall was expanded based on evidence collected in an ongoing criminal investigation being conducted by the Office of the Inspector General, according to FSIS. Inspectors found the products were prepared in a manner that did not follow rules to prevent food safety hazards.

The agency also said the investigation found Huntington's food safety records to be unreliable.

A call to the Montebello-based company was not immediately returned Saturday.

FSIS inspectors conduct regular checks to make sure firms that have recalled products notify their customers of the problem and take steps to make sure the products are off the market.

US: Airline venture should clear antitrust hurdle

A plan by American Airlines, British Airways and other carriers to work more closely together coordinating schedules and sharing revenue on trans-Atlantic flights should win approval, the U.S. government said Saturday.

But to protect competition, the joint venture must make four pairs of takeoff and landing slots available to competitors for new service between the U.S. and London's Heathrow Airport, the Department of Transportation said.

There's been a surge over the last few years of U.S. carriers seeking joint ventures with foreign airlines to share costs and revenue on certain flights, regardless of which company owns or flies the aircraft. Those tie-ups could affect fares.

The Justice Department has said that allowing the American-British Airways venture could cause fares to rise up to 15 percent on some trans-Atlantic routes. A final decision by the DOT on the carriers' antitrust immunity application will follow a 60-day public comment period.

Despite the antitrust concerns, the DOT said that it believes allowing the deal between American, British Airways, Iberia Airlines, Finnair and Royal Jordanian Airlines would provide travelers and shippers with lower fares on more routes, increased services, better schedules and reduced travel and connection times. It would also create competition with other carrier alliances.

Delta Air Lines Inc., the world's biggest airline, and Air France-KLM already have antitrust immunity as part of their trans-Atlantic joint venture.

Joint ventures differ from codesharing agreements where one airline bears all the costs but another might get a share of the revenue for booking a customer on a flight.

American said in a statement Saturday it was pleased with the decision, though it didn't specifically address the conditions the DOT said it would require. American said it would respond in more detail later. It added that it is continuing discussions with European regulators.

The American plan could harm competition on select routes between the U.S. and Heathrow, where the availability of takeoff and landing slots is limited, the DOT said. That's why the department is requiring some of the carriers' slots be given up.

A slot is an interval of time during which an airline can takeoff or land its aircraft at an airport.

DOT also would require changes to the agreement to ensure capacity growth, and require the carriers to submit traffic data and implement the proposed alliance within 18 months of a final decision.

Separately, American, a unit of AMR Corp., based in Fort Worth, Texas, is seeking antitrust immunity with Japan Airlines to form a joint venture across the Pacific. Delta had tried to lure JAL to join its SkyTeam alliance, but was unsuccessful.

Greek crisis could force change in EU economy pact

EU officials on Saturday pledged a toughening of monetary policy in the wake of Greece's economic crisis, raising the possibility of modifying the bloc's stability pact.

The EU Energy Commissioner Guenther Oettinger said protecting the stability of the euro was crucial, and if member states refused to start cutting their deficits in 2011, European bodies should be given powers to intervene.

The lesson to draw from the Greek crisis was that members of the 27-nation bloc should pay more attention to public finances and develop new budget structures, Oettinger told Germany's Welt am Sonntag newspaper.

"EU states must start reducing their deficit in 2011. If they refuse, the stability pact must be changed to allow European authorities to intervene better in national policy. The stability of the euro must be guaranteed," he said.

"It is not possible for public debt to explode and for growing debts to be paid by a small number of taxpayers."

Jean-Claude Juncker, the chairman of the Eurogroup panel of finance ministers, said the group had failed to pay enough attention to the Greek crisis, calling it "quite a serious error".

Juncker told the German daily Sueddeutsche Zeitung that "uncontrollable" consequences would follow if Greece were to quit the eurozone, and pledged to keep Athens up to the mark in its efforts to reduce its yawning deficit.

Juncker, who is also Luxembourg's prime minister, said the Eurogroup, the panel of finance ministers whose countries use the euro, would monitor "much more intensively and severely" the performance of its members.

He also warned "a monetary zone cannot last for long if the differences in performance of the various national economies get too great."

If Greece were forced to abandon the single European currency, "the effects would be like an earthquake, uncontrollable", he said, triggering an "extremely negative" reaction from the markets."

Bank of Italy Governor Mario Draghi warned Saturday that the return to economic growth remained fragile in the euro region.

The European Commission said Friday it was preparing new measures to boost coordination among eurozone member countries and supervise their economic policies in light of the Greek debt crisis.

A pledge Thursday by EU leaders to help Athens battle its debt failed to convince currency markets, with the euro falling to 1.3532 dollars, its lowest level in nearly nine months, on Friday in London.

While other eurozone members, notably Spain, Portugal and Ireland, are struggling under a debt mountain, most fears centre on Greece, which had a deficit of 12.7 percent of output in 2009 and debt of 113 percent.

New figures also showed economic growth in the 16-nation bloc had slowed to a meagre 0.1 percent in the fourth quarter of 2009, data agency Eurostat said.

The figures showed that recovery in Germany, Europe's biggest economy, had stopped, the Italian economy went back into contraction, and in Greece recession deepened to shrink by 0.8 percent.

Mixed GOP response to WH health summit invite

Republicans sent mixed signals after President Barack Obama challenged them to participate in a one-of-a-kind televised summit with Democrats to come up with health care legislation.

House Republicans derided the Feb. 25 event, casting doubt on whether it would produce any bipartisan agreement to extend coverage to millions of people and rein in medical costs.

"Are they willing to start over with a blank sheet of paper?" said Kevin Smith, a spokesman for House GOP leader John Boehner of Ohio. "We need answers before we know if the White House is more interested in partisan theater than in facilitating a productive dialogue about solutions."

Senate Minority Leader Mitch McConnell, R-Ky., was more receptive, saying he would work with the White House "to maximize the effectiveness of the meeting."

The summit is considered a last, best attempt to revive Obama's yearlong health overhaul quest, now stalled after Democrats lost their filibuster-proof Senate majority.

Yet since Obama proposed the summit last weekend, Republicans and Democrats have voiced skepticism. Some in the GOP wondered if it would be nothing but a spectacle that could benefit the president at their expense. Democrats viewed Republicans' insistence that Obama trash existing bills and start over as evidence they weren't sincere about bipartisanship.

By presiding over a meeting with three dozen lawmakers trying to get a word in edgewise, Obama may be able to dominate the conversation and the visual images. That's what many Democrats say he did at a Jan. 29 session when he faced a roomful of GOP House members in Baltimore.

In its invitation, the White House argued that remaking health care was imperative, and Obama challenged Democrats and Republicans to come up with comprehensive bills before the event at Blair House, across the street from the White House.

The White House named 21 lawmakers the president wants to attend the summit: the top leaders in the House and Senate and of the committees with jurisdiction over the health legislation. Obama also invited the top four leaders to invite four more lawmakers each, bringing the total to 37 — 20 Democrats and 17 Republicans.

Obama will offer opening remarks, followed by comments from a Republican leader and a Democratic leader, according to the format detailed in a letter Friday by Obama's chief of staff, Rahm Emanuel, and Health and Human Services Secretary Kathleen Sebelius. Obama will then moderate a discussion covering four topics: insurance reforms, cost containment, expanding coverage and the impact of health legislation on the deficit.

The letter stands as a challenge not just to Republicans but also to Democrats, who have yet to finalize a deal on sweeping overhaul legislation. They were on the verge of doing so last month before the special election victory of Republican Scott Brown in Massachusetts deprived Democrats of the filibuster-proof 60 votes they need to move forward in the Senate.

That threw the undertaking into disarray and congressional leaders have been struggling to pick up the pieces. Some hope the summit will break the logjam one way or the other.

Democratic leaders are working toward a package that could pass the Senate under rules that require only a simple majority vote, not 60 votes — a strong-arm partisan approach infuriates Republicans and makes moderate Democrats uneasy.

Democrats and Republicans are far apart in their aims. Democrats' legislation would cover more than 30 million uninsured, while a House Republican plan would cover only 3 million. Members of both parties say they see a few areas for common ground, including revamping the medical malpractice system and finding ways to allow consumers to shop for insurance plans across state lines.

Businesses Cutting The Growth Cushion

Many mainstream analysts believe it won’t be long before things return to “normal.” But they are deluding themselves, especially as far as the job market is concerned.

For one thing, it now seems pretty clear that the economy that existed before the financial crisis hit had been artificially pumped up by years of cheap money and unsustainable levels of debt.

Those factors also led to significant malinvestment and allowed some parts of the economy — think finance and real estate — to grow too large relative to others. Now that the bubble has burst, many of the jobs that used to exist in those areas are never coming back.

There’s another reason why the labor market will remain under pressure. According to two small businesspeople who were kind enough to post their comments at Financial Armageddon, the difficult conditions that owners have experienced over the past few years is leading many of them to eliminate or reduce the cushion of underutilized staff they keep on their books to cope with future growth.

From “Chip”:

As a small business owner in advertising/marketing I interface with hundreds of others in the “small business” realm. For most of the past 30 years it has made sense to operate a small business with excess personnel capacity because of upward trending growth (at varying rates, but almost constant growth). This “excess capacity” need exerted an unseen pressure on hiring practices. We hired for two reasons: today’s need and the ability to smoothly handle growth which was sure to come.

Now that all of the businesses have faced two or more years of downward trending, it makes zero sense to have any excess manpower capacity. The ranks of the unemployed are swelled by both those directly affected by lowered sales but also the lack of need for any of us to prepare for growth and have excess capacity on board. I have not seen anything written on this aspect of shedding extra capacity which was a an integral part of decades of growth. Are you aware of anything on the topic?

I guess another way of saying it is that we used to consider lower productivity a cost of the growth curve. Now productivity is studied more closely by us small guys because growth will not bail out wasteful practices in today’s market. I’m in Austin Texas, supposedly one of the “less affected” areas. I’m extreemly concerned about the slow velocity of money, the dismal sales reports I hear first hand, and the total lack of expansion in any sector. Of the hundreds of business owners I know NONE are hiring. Most feel fortunate when someone resigns. No one wants to send anyone into this awful job market so those who quit provide the easy way to shrink the payroll. Small businesses are often run like family so many owners hold out as long as they can so that they don’t have to be “cruel”.

So, my forecast, with a grain of salt is “nothing cheerful on the horizon” for quite a while…..

And “Angryfutureexpat”:

Chip’s exactly right. In my business (before it failed recently) we would strive for approximately 10-15% underutilization so that a burst of business could be handled smoothly.

I can’t even imagine anyone out there operating a business along those lines in this environment.

 

Businesses Cutting The Growth Cushion

Many mainstream analysts believe it won’t be long before things return to “normal.” But they are deluding themselves, especially as far as the job market is concerned.

For one thing, it now seems pretty clear that the economy that existed before the financial crisis hit had been artificially pumped up by years of cheap money and unsustainable levels of debt.

Those factors also led to significant malinvestment and allowed some parts of the economy — think finance and real estate — to grow too large relative to others. Now that the bubble has burst, many of the jobs that used to exist in those areas are never coming back.

There’s another reason why the labor market will remain under pressure. According to two small businesspeople who were kind enough to post their comments at Financial Armageddon, the difficult conditions that owners have experienced over the past few years is leading many of them to eliminate or reduce the cushion of underutilized staff they keep on their books to cope with future growth.

From “Chip”:

As a small business owner in advertising/marketing I interface with hundreds of others in the “small business” realm. For most of the past 30 years it has made sense to operate a small business with excess personnel capacity because of upward trending growth (at varying rates, but almost constant growth). This “excess capacity” need exerted an unseen pressure on hiring practices. We hired for two reasons: today’s need and the ability to smoothly handle growth which was sure to come.

Now that all of the businesses have faced two or more years of downward trending, it makes zero sense to have any excess manpower capacity. The ranks of the unemployed are swelled by both those directly affected by lowered sales but also the lack of need for any of us to prepare for growth and have excess capacity on board. I have not seen anything written on this aspect of shedding extra capacity which was a an integral part of decades of growth. Are you aware of anything on the topic?

I guess another way of saying it is that we used to consider lower productivity a cost of the growth curve. Now productivity is studied more closely by us small guys because growth will not bail out wasteful practices in today’s market. I’m in Austin Texas, supposedly one of the “less affected” areas. I’m extreemly concerned about the slow velocity of money, the dismal sales reports I hear first hand, and the total lack of expansion in any sector. Of the hundreds of business owners I know NONE are hiring. Most feel fortunate when someone resigns. No one wants to send anyone into this awful job market so those who quit provide the easy way to shrink the payroll. Small businesses are often run like family so many owners hold out as long as they can so that they don’t have to be “cruel”.

So, my forecast, with a grain of salt is “nothing cheerful on the horizon” for quite a while…..

And “Angryfutureexpat”:

Chip’s exactly right. In my business (before it failed recently) we would strive for approximately 10-15% underutilization so that a burst of business could be handled smoothly.

I can’t even imagine anyone out there operating a business along those lines in this environment.

Stocks To Watch On Monday 15 February: Motorola, ADC Telecommunications, DryShips, Hemispherx Biopharma

Motorola (MOT: 7.15 +0.50 +7.52%) - On Friday, the stock surged more than 7% after the company said it plans to split into two separate units in the first quarter of 2011. One entity will include the company’s mobile devices and home businesses, and the other will include enterprise mobility solutions and networks businesses. MOT broke out of a trading range, closing up near the highs for the day. I’m watching the stock on Tuesday for a continuation move. MOT has now a good upside potential, so keep the stock on your radar on Tuesday.

( click to enlarge )

Hemispherx Biopharma (HEB: 0.7105 +0.0405 +6.04%) - After touching a high of $0.84 a few weeks ago, the stock has been in a corrective phase. The technical daily chart shows the rally is back again as K line has just crossed on top over D line and stock is back above 50 day moving average, a positive signal. The outlook is positive and a move to 0.80-0.84 appears likely.

( click to enlarge )

DryShips (DRYS: 5.44 -0.08 -1.45%) - The recent slide in the market has taken a toll on DRYS as well. There is scope for a rally to the immediate resistance level of 5.67-5.84. The technical chart shows bullish signal in short-term as K line is on top of D line and MACD is near zero. Hold with a stop-loss at 5.31.

( click to enlarge )

ADC Telecommunications (ADCT: 6.65 +0.12 +1.84%) - The short-term outlook for ADCT is bullish. Fresh long should be made only when the stock closes above 6.68 with an up candle.

Other stocks to watch:

List of stocks where MA 13 crossed below the MA 50 ( Bearish Cross ) on Friday

SNDK - SanDisk Corporation
NBR - Nabors Industries Inc
SNMX - SENOMYX INC
ISIS - Isis Pharmaceutical
GIS - GENERAL MILLS INCOR
DAN - Dana Corp
EPIX - Epix Pharma
PPDI - Pharmaceutical Prod
TKC - TURKCELL ILETISIM H
GPI - GROUP I AUTOMOTIVE INC
DOV - DOVER CORP
VECO - Veeco Instruments Inc.
RKH - Regional Banks HOLD
HP - HELMERICH & PAYNE INC
SNI - SCRIPPS NETWORKS INT
EOPI - Itec Environmental
FAST - Fastenal Company
BRKL - Brookline Bancorp
CRUS - Cirrus Logic, Inc.
KIE - SPDR KBW INSURE
SBIB - Sterling Bancshares
WBC - Wabco Holdings Inc
MRNA - Nastech Pharmaceutical
GMO - General Moly Inc

List of stocks where MA 13 crossed above the MA 50 ( Bullish Cross ) on Friday

OSK - Oshkosh Corp
VSH - VISHAY INTERTECH INC
ATHX - BTHC VI Inc
GETA - GENTA INC
ANN - ANNTAYLOR STORES CORP
BKS - BARNES & NOBLE INC
MCZ - Mad Catz Interactiv
KOG - KODIAK OIL & GAS CP
STV - CHINA DIGITAL TV HO
OPEN - Opentable Inc
BKD - BROOKDALE SENIOR LI
CLYW - CALYPSO WIRELESS INC
ACAD - ACADIA PHARMACEUTICAL
RGS - RGS ENERGY GROUP INC
AAV - Advantage Oil&Gs
IVC - INVACARE CORP

New 52-week High stocks

SKIL - SkillSoft Corporation
BNI - BURLINGTON NORTHERN
LCC - US AIRWAYS GROUP INC
LUV - SOUTHWEST AIRLINES CO
JDSU - JDS Uniphase Corporation
UAUA - UAL CORP
NYB - New York Community
PIR - Pier 1 Imports Inc
SLE - SARA LEE CORP
DNDN - Dendreon Corporation 31
TSN - TYSON FOODS INC CL A
CAKE - Cheesecake Factory
CMI - CUMMINS ENGINE CO INC
RVBD - Riverbed Technology
VSH - VISHAY INTERTECH INC
GSIC - GSI Commerce, Inc.
CMG - CHIPOTLE MEXICAN GR
PRGO - Perrigo Company
KLIC - Kulicke and Soffa
APKT - Acme Packet Inc
PNRA - Panera Bread Company
NDN - 99 CENTS ONLY STORES
HAR - HARMAN INTL INDS INC
NETL - Netlogic Microsystems
VCI - VALASSIS COMM INC
NVO - NOVO NORDISK A S
PVA - PENN VIRGINIA CORP
HEK - Heckmann Corp
RMD - RESMED INC
REGN - Regeneron Pharmaceutical
PFCB - P.F.Chang’s China B
PDM - Piedmont Office Rea
LNCR - Lincare Holdings Inc.
LII - Lennox International
BEZ - BALDOR ELECTRIC CO
VRX - I C N PHARMACEUTICAL
MSPD - MINDSPEED TECHNOLOG
RAH - RALCORP HOLDINGS INC
FFBC - First Financial Ban
RCI - ROGERS COMMUNICATIO
NFP - NATL FINCL PARTNERS CP
VLTR - VOLTERRA SEMICONDUC
CITP - COMSYS IT PARTNERS INC
RISK - RiskMetrics Group Inc
CHD - CHURCH & DWIGHT CO INC
MEI - Methode Electronics
SFLY - SHUTTERFLY INC
PLT - PLANTRONICS INC
PBT - PERMIAN BASIN RLTY

Top 5 Economic Graphs For The Week Ended 13 February 2010

This week we look at the EU GDP numbers showing a pretty fragile and mixed recovery, then US retail sales showing a back-loading of holiday spending. Then we look at some of the China data that came out over the week, focusing on inflation data, and international trade stats. Finally we look at Aussie employment stats which shows continuing strength down under.

The key takeaways or themes to pull out of this edition are probably first of all that things are continuing to recover, but at a very gradual pace - and at a very mixed pace. Some positive signs could almost be called false positives, and some arguably negative signs could in fact be pointing to stronger long term growth.

1. EU GDP - gradual improvement

The EU saw 0.1% growth q/q in Q4 2009, this was against expectations of 0.4% (the same as in Q3). Year on year the declines moved closer to -2% than the previous -4%. Of course it was a mixed picture again too. The leading economies of Germany and France even differed this time with Germany recording 0 growth q/q while France recorded its 3rd quarterly gain. Of course you’re probably wondering about Greece; the numbers were -0.8% q/q and -2.6% y/y, which on both case was the 3rd quarter of worsening results. So the overall message from the EU is a recovery; but a slow one, a fragile one, and an uneven one.

2. US Retail Sales - back-loaded holiday spending?

The US just released retail sales figures for January, month on month retail sales were up 0.5%, matching consensus, and showing possible back-loading of holiday spending as people went to town to spend their gift vouchers and cash presents. Year on Year the growth rate slipped slightly to 4% (versus 5.7% in December). Overall retail sales figures show consumer spending recovering at a gradual pace - and this is good, in fact the last thing you want to see is a rapid increase in consumer spending in the US; what’s more important is that the personal savings rate starts to pick up, this is a requirement of more sustainable long term growth…

3. China CPI - signs of inflation coming through

China released its CPI figures this week with the January figure up 1.5% year on year, this was below consensus of 2% and less than the previous 1.9%. This is the 3rd positive figure in a row, and when juxtaposed with a few other data points leads to a view of increasing inflation. Indeed it matches up with the moves made on the tightening front so far with the increases in the required reserve ratio, government bond issues, and words of caution by the authorities to the banks. If this trend persists we could even see a lift in the official interest rate sometime in the first half of 2010.

4. China International Trade - recovery strengthening

China also released its trade stats for January, showing a continued recovery, albeit with slightly lower figures due to the whole January/February Chinese new year period. Exports came in at 109.5 and imports 95.3, which compare to January figures in 2009 of 90.5 and 51.3 respectively. Distortions aside, the story told in the chart below is one of visible improvement. Though some of it can be explained by the inventory cycle and low currency driving exports, and stimulus spending and commodity price recovery driving imports. This plays into the debate about the yuan; will the authorities let the yuan appreciate a little this year? 3%? 6%? or will they increase wages instead as a means of encouraging domestic demand over exports?

5. Australian Employment - the Aussies have still got it
Australia beat estimates again, and showed further acceleration of jobs growth with 52.7k new jobs vs consensus of 15k, and December figures of 37.5k. The unemployment rate also shrank to 5.3%, from 5.5% in December and off of the peak of 5.8%. Thus things are still looking pretty good in Australia. It’s also worth noting that the RBA paused on its tightening cycle in February, opting instead to leave rates at still stimulatory levels, due to the banks passing on all the increase and a little bit more, and views that inflation had been kept relatively in check for the time being. Figures like this though will only add pressure for the RBA to return to its tightening path from still “below average levels” sooner or later.

Summary
To sum up, the EU economies are gradually recovering, but at a very subdued, fragile, and mixed pace across the member states. There’s still many risks to the recovery over there, including the most talked about, Greece fiscal situation. Over in the US, meanwhile, retail sales are pointing to a continued yet below trend recovery in consumer spending, however the US consumer is still relatively weak.

In China, the CPI figures are showing a pick up in the pace of inflation, confirmed with other data points, and gradual moves toward tightening. China has also seen a steady improvement in international trade volumes since the lows of 2009, and while the drivers may be temporary it has the potential to push forward momentum, and adding to the case for a potential move on the yuan. Meanwhile in Australia - a country increasingly coupled to the Chinese economy, rapid and continued job growth points to a strengthening recovery and likely continuation of tightening in the medium term.

So there you have it, a tale of a gradual recovery, a fragile recovery, and an uneven recovery. It’s also one of opportunity, that is, opportunity for change. It’s possible that the recovery will herald some rebalancing and structural changes. For example it may lead to the Chinese looking more internally for growth, likewise it could lead to higher savings rates in the US; and less reliance on external financing.

Sources:
1. Eurostat http://epp.eurostat.ec.europa.eu
2. US Census Bureau http://www.census.gov/retail/
3. National Bureau of Statistics http://www.stats.gov.cn/english
4. Trading Economics http://www.tradingeconomics.com
5. Australian Bureau of Statistics http://abs.gov.au

 

US Stock Market Earnings Calendar For Next Week

Earnings Announcements for Monday

Chemed Corporation - CHE - 0.94 - After Market Close
Curtiss-Wright Corp. - CW - 0.74 - After Market Close

Earnings Announcements for Tuesday

Aaron’s Inc. - AAN - 0.43 - After Market Close
Abercrombie & Fitch Co. - ANF - 0.87 - Before Market Open
American Campus Communities Inc - ACC - 0.1 - After Market Close
American Medical Systems - AMMD - 0.34 - Time Not Supplied
Arch Capital Group - ACGL - 2.51 - After Market Close
Capella Education Company - CPLA - 0.86 - Before Market Open
Fmc Technologies, Inc. - FTI - 0.74 - After Market Close
Fossil, Inc. - FOSL - 0.91 - Time Not Supplied
Healthways - HWAY - 0.22 - After Market Close
InnerWorkings, Inc. - INWK - 0.06 - After Market Close
Innospec Inc. - IOSP - (-0.26) - Before Market Open
Jarden Corporation - JAH - 0.77 - After Market Close
LECG Corp - XPRT - (-0.09) - After Market Close
Meadowbrook Insurance - MIG - 0.2 - After Market Close
Merck & Co., Inc. - MRK - 0.78 - Time Not Supplied
Montpelier Re Holdings Ltd. - MRH - 0.74 - After Market Close
Nabors Industries - NBR - 0.16 - After Market Close
NEUTRAL TANDEM INC - TNDM - 0.32 - Time Not Supplied
OTIX Global, Inc - OTIX - (-0.13) - Time Not Supplied
Photronics - PLAB - (-0.04) - Time Not Supplied
Qwest Communications - Q - 0.08 - 07:00 am ET
Ramco-Gershenson Properties Trust - RPT - 0.3 - After Market Close
Teva Pharmaceutical - TEVA - 0.95 - Time Not Supplied
The PMI Group, Inc. - PMI - (-1.67) - 06:00 am ET
TUCOWS INC - TCX - 0.01 - Time Not Supplied
Valmont - VMI - 1.09 - After Market Close
Valspar - VAL - 0.27 - Time Not Supplied
Waste Management - WM - 0.48 - Before Market Open
Whole Foods Market - WFMI - 0.26 - After Market Close
Winn-Dixie Stores - WINN - (-0.16) - After Market Close

Earnings Announcements for Wednesday

Advance Auto Parts - AAP - 0.46 - After Market Close
Agnico-Eagle Mines Limited - AEM - 0.25After Market Close
Analog Devices Inc. - ADI - 0.38 - Time Not Supplied
Brush Engineered Materials - BW - 0.05 - Time Not Supplied
CALUMET SPECIALTY PRODUCTS - CLMT - 0.29 - Before Market Open
Career Education - CECO - 0.33 - After Market Close
Chesapeake Energy Corporation - CHK - 0.69 - After Market Close
Cimarex Energy Co. - XEC - 0.91 - Before Market Open
Commercial Vehicle Group, Inc. - CVGI - (-0.49) - After Market Close
Community Health Systems, Inc. - CYH - 0.69 - After Market Close
Deere & Company - DE - 0.18 - Time Not Supplied
Devon Energy Corporation - DVN - 1.25 - Before Market Open
Donegal Group - DGICA - 0.24 - Before Market Open
Endurance Specialty Holdings - ENH - 1.56 - After Market Close
Federal Realty Investment Trust - FRT - 0.89 - After Market Close
Fundtech Corporation - FNDT - 0.2 - Before Market Open
Genzyme Corporation - GENZ - 0.29 - Time Not Supplied
Glimcher Realty Trust - GRT - 0.31 - After Market Close
Guidance Software, Inc. - GUID - (-0.05) - After Market Close
Health Grades, Inc. - HGRD - 0.05 - Time Not Supplied
Hewlett-Packard - HPQ1.06 - After Market Close
Host Hotels & Resorts Inc. - HST - 0.19 - Before Market Open
IAMGOLD Corporation - IAG - 0.16 - Before Market Open
Investors Title Company - ITIC - 0.34 - Time Not Supplied
iRobot Corp. - IRBT - 0.16 - After Market Close
Itron, Inc. - ITRI - 0.6 - 4:00 pm ET
ITURAN LOCATION & CONTROL - ITRN - 0.22 - Time Not Supplied
Kinross Gold - KGC - 0.16 - After Market Close
Kite Realty Group Trust - KRG - 0.12 - After Market Close
Koppers Holdings Inc. - KOP - 0.33 - Before Market Open
Martha Stewart Living Omnimedia - MSO - 0.3 - Before Market Open
NCI, Inc. - NCIT - 0.42 - After Market Close
NetApp, Inc. - NTAP - 0.38 - After Market Close
Newfield Exploration - NFX - 1.35 - Time Not Supplied
NICE Systems - NICE - 0.42 - Time Not Supplied
O’Reilly Automotive - ORLY - 0.51 - After Market Close
Oceaneering International, Inc. - OII - 0.81 - After Market Close
OfficeMax - OMX - (-0.07) - Time Not Supplied
Otelco - OTT - (-0.06) - After Market Close
Owens Corning - OC - 0.24 - Time Not Supplied
Platinum Underwriters Holdings Ltd - PTP - 1.51 - After Market Close
Priceline.com - PCLN - 1.68 - Before Market Open
Rimage Corporation - RIMG - 0.21 - Time Not Supplied
Rockwood Holdings, Inc. - ROC - 0.18 - Time Not Supplied
Rogers Communications Inc. - RCI - 0.58 - Before Market Open
Sinclair Broadcast Group - SBGI - 0.18 - 07:30 am ET
Skechers USA, Inc - SKX - 0.52 - After Market Close
Sovran Self Storage - SSS - 0.28 - Time Not Supplied

Earnings Announcements for Thursday

ABB - ABB - 0.27 - Time Not Supplied
Ameren Corporation - AEE - 0.27 - Before Market Open
Apache Corporation - APA - 1.96 - Before Market Open
Arbitron Inc. - ARB - 0.32 - Before Market Open
AuthenTec Inc. - AUTH - (-0.08) - After Market Close
Avista Corporation - AVA - 0.42 - 07:05 am ET
Barrick Gold - ABX - 0.59 - Before Market Open
Build A Bear Workshop Inc. - BBW - 0.1 - Time Not Supplied
Cabela’s Inc. - CAB - 0.76 - Before Market Open
California Pizza Kitchen - CPKI - 0.17 - 4:00 pm ET
CBS Corporation - CBS - 0.25 - Time Not Supplied
CLEARWATER PAPER CORP - CLW - 1.33 - Before Market Open
CryoLife, Inc. - CRY - 0.08 - Before Market Open
Daimler AG - DAI - 0.02 - Time Not Supplied
Developers Diversified Realty Co. - DDR - 0.31 - After Market Close
Eclipsys - ECLP - 0.12 - After Market Close
Gen-Probe - GPRO - 0.5 - 4:00 pm ET
Harleysville Group - HGIC - 0.78 - After Market Close
Hittite Microwave Corporation - HITT - 0.4 - After Market Close
Home Properties, Inc. - HME - 0.77 - After Market Close
Hormel Foods Corporation - HRL - 0.69 - Before Market Open
Ingram Micro - IM - 0.52 - After Market Close
j2 Global Communications - JCOM - 0.45 - After Market Close
K-Swiss Inc. - KSWS - (-0.31) - Before Market Open
Key Energy Services - KEG - (-0.13) - Time Not Supplied
Life Time Fitness - LTM - 0.44 - Before Market Open
LUMBER LIQUIDATORS HLDGS INC - LL - 0.25 - Time Not Supplied
Marchex, Inc. - MCHX - 0.03 - After Market Close
MORNINGSTAR INC - MORN - 0.42 - After Market Close
Nanometrics - NANO - 0.03 - After Market Close
Newpark Resources, Inc. - NR - (-0.01) - After Market Close
Nexen - NXY - 0.5 - Time Not Supplied
Noble Energy, Inc. - NBL - 1.03 - Time Not Supplied
Occam Networks - OCNW - (-0.02) - After Market Close
OGE Energy - OGE - 0.34 - Before Market Open
Penn West Energy Trust - PWE - (-0.06) - Time Not Supplied
PGT, Inc. - PGTI - (-0.07) - Time Not Supplied
Pool Corporation - POOL - (-0.24) - Before Market Open
Pride International Inc. - PDE - 0.17 - Before Market Open
PSEG - PEG - 0.6 - Before Market Open
Reliance Steel & Aluminum Co. - RS - 1.01 - Before Market Open
School Specialty - SCHS - (-1.01) - Time Not Supplied
State Auto Financial - STFC - 0.36 - Time Not Supplied
Stewart Information Services - STC - 0.02 - Time Not Supplied
Swift Energy - SFY - 0.26 - Before Market Open
TC PipeLines, LP - TCLP - 0.65 - Time Not Supplied
Universal American - UAM - 0.96 - After Market Close
VASCO Data Security International - VDSI - 0.07 - Time Not Supplied
VCA Antech, Inc. - WOOF - 0.28 - 4:00 pm ET
Vectren Corporation - VVC - 0.53 - Time Not Supplied
Ventas - VTR - 0.65 - Before Market Open
VERAZ NETWORKS INC - VRAZ - (-0.03) - After Market Close
Wal-Mart Stores, Inc. - WMT - 1.12 - 07:00 am ET
Washington Real Estate Investment Trust - WRE - 0.47 - After Market Close
WellCare Health Plans, Inc. - WCG - 0.44 - Before Market Open
Williams Companies Inc. - WMB - 0.33 - Before Market Open
WILLIAMS PARTNERS L.P. - WPZ - 0.86 - Before Market Open
Windstream Communications - WIN - 0.2 - Time Not Supplied

Earnings Announcements for Friday

AMERIGROUP Corporation - AGP - 0.28 - Before Market Open
Brady Corporation - BRC - 0.33 - Time Not Supplied
Brookfield Asset Management - BAM - 0.1 - 08:00 am ET
Bucyrus International, Inc. - BUCY - 0.92 - Time Not Supplied
Grupo Aeroportuario del Sureste (ASUR) - ASR - 0.59 - Time Not Supplied
HMS Holdings Corp - HMSY - 0.33 - Time Not Supplied
JCPenney - JCP - 0.82 - Time Not Supplied
LIN TV Corp. - TVL - 0.09 - Time Not Supplied
PG&E Corporation - PCG - 0.74 - Time Not Supplied
Pinnacle West Capital Corporation - PNW - (-0.11) - Time Not Supplied

China’s Tightening Is A Good Thing

China sees a bubble ahead and is trying to avoid it – is that such a bad thing?

Isn’t this what we expect Ben Bernanke and the Federal Reserve to do here at home – take clear and decisive action to drain off excess liquidity in the economy before inflation takes hold?

The People’s Bank of China did just that after it saw that 1.4 trillion yuan ($204 billion) worth of bank loans were issued in January, more than the total loaned in the three previous months combined.

For all of 2010, the target loan amount is 7.5 trillion yuan, so it’s easy to see why the government might want to slow the pace a bit.

Forbes’ online headline was “China Tightens the Screws,” but let’s have a little perspective.

Barclays Capital predicts that the 0.5 percent increase in bank reserve rates (from 16.5 percent of deposits to 17 percent) will remove 300 billion yuan from the Chinese economy. That’s only 20 percent or so of the amount loaned in January.

And it’s not like cash is going to dry up – the People’s Bank plans to increase the nation’s M2 money supply by 17 percent this year. January’s M1 money supply report showed a 39 percent increase (chart above). Not exactly a screw-tightening.

China’s CPI rose 1.5 percent in January, which is not extreme, and the chart above from BCA Research shows that real estate prices in terms of per-capita income had not entered a bubble phase as of year-end. But perhaps the more telling number was wholesale prices – up 4.3 percent year over year and more than double the increase seen in December. This signals that higher inflation at the consumer level could be around the corner.

Markets are taking a hit based on this news – this shows how important China has become to the world economy. It surpassed Germany as the top exporting country by value at $1.2 trillion, and in January its exports were up 20 percent compared to a year earlier. Even better, its imports were up 85 percent year over year.

What we may actually have is a classic bull market in the making – one that climbs the proverbial wall of worry, which suggests that investors buy on corrections. The table below shows the standard deviation (sigma) over 10 years for the main stock markets in mainland China and Hong Kong. The weekly sigma for the Shanghai A-share market is plus or minus 5 percent, while its normal quarterly swings can be nearly 25 percent up or down.

It’s nearly impossible to pick exact tops and bottoms – adding to core positions after any correction greater than one sigma is a safer and more prudent way to invest.

Beijing is tending to its economy so it performs over the long term. This is central to its goal of social stability through economic prosperity, and it seems to be working – millions of households join China’s middle class every year.

We all know what can happen when an asset bubble grows huge and then bursts – we’re still recovering from 2007-08.

China is a long-term growth story, and how well it manages that growth will have an impact on all of us. A little caution now should be seen as preventative maintenance, and we all know that when we’re talking about cars or economies, that’s a good thing.

You can visit my blog, Frank Talk, for more daily insight and commentary. In July, I’ll also be speaking at Agora Financial’s Investment Symposium in Vancouver. You can find more details here.

Berkshire Hits The (Rail)Road And Bags Burlington

The legendary old sage has done it again.

Warren Buffett’s Berkshire Hathaway (NYSE: BRK-B) has now officially added another big American outfit to its already impressive stable of holdings.

And in record-setting fashion, too…

This time, the company splurged $26.4 billion to snap up the remaining 77.4% of railroad firm Burlington Northern Santa Fe (BNI: 100.21 -0.02 -0.02%) that it didn’t already own. It was the biggest acquisition in Berkshire’s history.

In a vote, 70% of Burlington shareholders approved the deal, which values the firm at $100 a share and $34 billion overall – a price that Buffett calls “the absolute hilt.” But he’s a renowned railroad bull, with stakes in fellow rail firms, Union Pacific Corporation (UNP: 63.41 -0.20 -0.31%) and Norfolk Southern Corporation (NSC: 48.48 -0.10 -0.21%).

He says the Burlington deal is an “all in” bet on America’s future prosperity: “If you look at the next 50 years, this country is going to grow, it’s going to have more people, more goods moving, and the rails should benefit. It’s the logical way for many of those goods to travel.” He’s got a point…

• In 2009, the four major railroad firms hauled more than 40% of all the freight in the United States.
• Rail transportation is more than three times as efficient as trucks. For example, you can move one ton of freight an average of 400 miles on one gallon of diesel. Compare that to trucks, which move one ton a mere 130 miles on a gallon.
• Hauling capacity is relatively cheap, too. The average cost for a new freight car runs about $81,000 – roughly one-third the cost of a new tractor-trailer truck. And you can string as many as 150 of them together behind a few diesel locomotives, which adds to the operating efficiency.
• Most of the railroad infrastructure is already in place, without the need for much addition. According to the American Association of Railroads, there are about 24,000 locomotives and 460,000 freight cars in the United States. They move around on 140,695 miles of maintained track. The system has plenty of excess capacity and serves all major cities and towns across America.

With around 80 firms already under Berkshire’s wing, the Burlington acquisition expands its diverse range of holdings even further.

You can also bet that it’s not a decision that was taken lightly at Berkshire HQ, since the enormous outlay of cash led to the loss of Berkshire’s triple-A credit rating.

The deal makes sense for Burlington, too – a company currently struggling to produce short-term shareholder value. Despite the economy notching up 6% GDP growth during the fourth quarter, Burlington’s profits fell by 13%. But with Buffett’s keen eye for long-term shareholder value, it could mark a significant point in Burlington’s history.

Individual insurance rates soar in 4 states

Consumers in at least four states who buy their own health insurance are getting hit with premium increases of 15 percent or more — and people in other states could see the same thing.

Anthem Blue Cross, a subsidiary of WellPoint Inc., has been under fire for a week from regulators and politicians for notifying some of its 800,000 individual policyholders in California that it plans to raise rates by up to 39 percent March 1.

The Anthem Blue Cross plan in Maine is asking for increases of about 23 percent this year for some individual policyholders. Last year, they raised rates up to 32 percent.

Kansas had one recent case where one insurer wanting to raise most individual rates 20 percent to 30 percent was persuaded by state insurance officials to reduce the increases to 10 percent to 20 percent. The insurance department would not identify the company but said it was not Anthem.

And in Oregon, multiple insurers were granted rate hikes of 15 percent or more this year after increases of around 25 percent last year for customers who purchase individual health insurance, rather than getting it through their employer.

Premiums are far more volatile for individual policies than for those bought by employers and other large groups, which have bargaining clout and a sizable pool of people among which to spread risk. As more people have lost jobs, many who are healthy have decided to go without health insurance or get a bare-bones, high-deductible policy, reducing the amount of premiums insurers receive.

Steep rate hikes in this sliver of the insurance market — about 13 million Americans, as of 2008 — have popped up sporadically for years. Experts see them becoming increasingly common.

"You're going to see rate increases of 20, 25, 30 percent" for individual health policies in the near term, Sandy Praeger, chairwoman of the health insurance and managed care committee for the National Association of Insurance Commissioners, predicted Friday.

Most states don't have the legal authority to block or reduce health insurance rate increases, Praeger noted.

"When you see stories like (Anthem's), you can almost guarantee there's going to be increased consumer protection activity" in state legislatures, she said.

Her group doesn't track rates state by state, but Praeger said it likely will start doing so, "if we don't get any kind of meaningful reform at the federal level."

Politicians and even some health insurers, including Anthem, are urging a revival of the stalled effort in Congress to overhaul the health care system, arguing everyone needs to be covered by health insurance in order to prevent such premium spikes.

In Maine, where Anthem dominates the market, its proposal has several consumer groups planning big rallies at two public hearings on the rates, on Feb. 22 and 24.

Under Anthem's proposal, a family of four could be charged up to $1,876 per month if the proposed rates are allowed to take effect in July.

"The rate request should be denied on its face. It's outrageous," said Greg Howard, spokesman for Maine Change That Works. "We are in the middle of ... this record-breaking type of recession, and they're doing what they need to guarantee profit margin."

On Friday, Maine House Speaker Hannah Pingree and Senate President Elizabeth Mitchell wrote to two congressmen who have scheduled a Feb. 24 hearing on Anthem's pending rate hikes in California, asking them to also look into the proposed hike in Maine.

"We frankly have been very frustrated by the size of these increases," Pingree told The Associated Press. "Obviously, they are attempting to price certain people out of the market."

Last year, Maine's Superintendent of Insurance Mila Kofman rejected Anthem's initial requests, which would have increased individual rates an average of 18.5 percent. She allowed an average increase of 10.9 percent, with the highest increase at 32.4 percent.

Anthem sued the state. Oral arguments in the case are to be scheduled before the Maine Superior Court for mid-March.

Anthem spokesman Chris Dugan said Friday evening the company wants the court to review Kofman's decision because it didn't allow the company an operating profit. He said the rates requested for 2010 are needed "to make sure that we have adequate resources to cover the remaining members" in the insurance plans.

WellPoint, based in Indianapolis, has said it needs to raise rates so much because the weak economy has resulted in fewer people remaining in the individual market in California, and many who do have serious health problems. It says costs of caring for them have been rising due to higher provider prices and more use of diagnostic tests.

In Oregon, state insurance officials have concluded that rising costs justify the higher individual premiums, particularly because most insurers cut rates too much in 2006 and then got hit with significant losses. So double-digit increases, some 25 percent or higher, have been approved, or reduced a bit from 2007 to 2010.

Insurance Division spokeswoman Cheryl Martinis said the agency has started posting details of all proposed increases on its Webspace site and e-mailing customers want a proposal comes in so they can comment.

"People are extraordinarily upset in Oregon, as they are nationwide, about health care costs," she said.

Toyota answers Congress questions before hearings

Toyota Motor Corp. offered concessions Friday to congressional investigators ahead of planned hearings later this month on the company's safety woes, saying it would re-examine some customer complaints and weigh new safety measures.

The automaker will consider expanding the installation of a braking system that can override a vehicle's throttle, a company attorney said in a letter to the House Committee on Oversight and Government Reform. Toyota also plans to take another look at consumer complaints of unwanted acceleration in late-model versions of its Tacoma pickup trucks.

Toyota on Friday also recalled a small number of 2010 model year Tacomas to fix potential problems with their drive shaft that could cause the pickups to lose control. The recall only involves 8,000 trucks, but it is the latest safety concern at the automaker that has already recalled millions of vehicles in the past several months.

The oversight committee is expected to hold the first of three congressional hearings to take testimony from top Toyota executives on the company's safety recalls stemming from problems with acceleration on some of the automaker's most popular vehicle models.

Investigators are probing whether Toyota acted quickly enough to deal with safety issues and if federal regulators did enough to hold the company accountable.

When Toyota announced in November a plan to fix gas pedals that could become stuck in the floor mat on about 4 million vehicles, the automaker said it would install a brake override system on some vehicles as a precaution. The system automatically allows the brake to override the throttle and safely bring the vehicle to a stop.

Toyota said in November it would install a brake override system onto the involved Toyota Camry, Avalon, Lexus ES350, IS350 and IS250 models. The letter Friday said the company is "actively identifying additional models that may be able to be reprogrammed."

The brake override system is expected to be standard equipment beginning with 2010 ES350 and Camry vehicles and incorporated into most new Toyota and Lexus vehicles by the end of 2010.

Asked by the committee if the override system would be provided to existing models, Toyota attorney Theodore Hester said the company would consider expanding it to additional vehicle models and report back to the committee on its evaluation.

Investigators also pushed Toyota for more details on reports of unwanted acceleration in Tacoma trucks that didn't appear to be related to floor mat or pedal issues. Toyota's letter stated that the roughly 100 reports received by the National Highway Traffic Safety Administration did not suggest any major safety concerns.

But the company said it would revisit the complaints "in the spirit of the recent commitment made by Mr. (company CEO Akio) Toyoda."

Finally, Toyota reiterated its belief that the electronics of its gas pedal systems were not to blame for cases of sudden acceleration. Many analysts have suggested that faulty electronic sensors could also be to blame.

Toyota hired an outside consulting firm, Exponent, which tested Lexus and Toyota vehicles and concluded electronics were not a potential source of the problem.

In Friday's Tacoma recall, Toyota told dealers that a crack could develop that could lead to the front drive shaft separating and falling from 4-wheel drive trucks, causing the vehicles to lose control. A notice to dealers says the part was manufactured by Dana Corp. and the recall involved Tacomas built from mid-December 2009 to early February 2010.

Toyota spokesman Brian Lyons said the problem was first noticed by the supplier and most of the vehicles were still on dealer lots or in the distribution chain.

A Renewed Sense Of Energy

The global coal industry is in the midst of a permanent structural shift in the form of the emerging dominance of the Asia-Pacific region.

China and India are at the heart of the transformation, firmly placed as the world's No. 1 and No. 3 biggest coal producing nations, respectively. (The U.S. is No. 2.)

And demand in the world's two most populous nations is growing rapidly.

India's imports of thermal coal, used in power generation, rose 60% in 2009 to 57 million tons. China shifted to a net importer last year to the tune of 70 million tons of thermal coal, despite large domestic resources of the black rock.

Both countries are also experiencing a spike in demand for metallurgical coal, a main ingredient of steel, as their economies continue to mushroom.

At the end of January, Peabody Energy (NYSE:BTU - News) said it is expanding a mine in Australia at a cost of $70 million to boost capacity by 1 million tons within several years to meet growing demand for metallurgical, or met coal, used by steel companies in China, India and other Asian nations.

"China and India have permanently changed the seaborne metallurgical and thermal coal market landscape," CEO Gregory Boyce said. Peabody enjoyed a 37% increase in Australian coal shipments in the second half of 2009.

Alpha Natural Resources (NYSE:ANR - News) said it sees much strength in the metallurgical markets in 2010. It raised its metallurgical shipment guidance by about 1 million tons, to 11 million to 13 million tons for this year.

Meanwhile back in the U.S., the enormous stockpiles of coal racked up by utilities during the depths of the recession are starting to shrink after extremely cold weather in December and January.

According to U.S. utilities, which use coal to generate nearly half of America's electricity, roughly 50 to 60 gigawatts of coal will go offline over the next 10 years or so.

The U.S. will need to replace that energy, and renewables such as solar, wind, small hydro, modern biomass, geothermal and biofuels are one of the paths to take to fill that void.

1. Business

IBD's Energy-Other group includes any energy source that is not oil or natural gas. The group's 800-pound gorilla is coal.

Coal mining, especially underground, is a capital- and labor-intensive business. It is also a very high fixed-cost business.

Electricity demand has been the primary value driver for thermal and steam coal for a long time, with steel being the other big driving force.

In 2009, the U.S. produced 1.08 billion tons of coal, mined primarily from four major coal basins with smaller ones spread across the country. The four are the northern and central Appalachian basins, the Illinois basin and northern Wyoming's Powder River Basin.

Peabody is the largest U.S. coal miner, producing 215 million tons last year. It is the only U.S.-based company in the group with international mining operations, in this case Australia.

Arch Coal (NYSE:ACI - News) is the second-largest company in the group; Alpha Natural Resources moved into the No. 3 slot with last year's acquisition of Foundation Coal for $1.4 billion in stock. Consol Energy (NYSE:CNX - News) and Massey Energy (NYSE:MEE - News) are fourth and fifth, respectively.

The U.S. is capable of generating roughly 1,000 gigawatts of electricity per year. Coal generates some 325 gigawatts, natural gas kicks in 400 and nuclear makes up another 100, according to Brian Gamble, an analyst at Simmons & Co. The rest, he says, is split between hydropower, solar, wind, geothermal and biomass.

"The segment of the U.S. power grid that is made up of renewables is quite small," Gamble said. "It is a growing market, albeit from a small base, but we don't expect solar, wind or any other renewable to gain significant market share for some time."

The group includes several solar companies, including Chinese firms like Trina Solar (NYSE:TSL - News) and Suntech Power (NYSE:STP - News).

First Solar (NMS:FSLR) is the largest U.S.-based solar company by market share. Other American firms include Real Goods Solar (NMS:RSOL), GT Solar International (NMS:SOLR) and SunPower (NMS:SPWRA).

While multinationals such as GE (NYSE:GE - News) and Siemens (NYSE:SI - News) have made a strong push into wind power, those diversified industrial giants are listed in other stock groups. In the Energy-Other group, Danish company Vestas Wind Systems (OTCBB:VWDRY.ob - News) is the largest wind-power company.

Ormat Technologies (NYSE:ORA - News) and U.S. Geothermal (AMEX:HTM.a - News) operate plants of geothermal energy, power generated from heat stored in the Earth.

Name Of The Game: It's simple: produce and supply coal, wind, solar, hydropower and other renewables to fulfill the world's energy needs, which are expected to grow rapidly over the next 20 to 30 years, says Michael Dudas, an analyst with Jefferies & Co.

2. Market

U.S. utilities are the biggest customers for coal producers and renewable energy alike.

Steel makers are the next biggest consumers of coal.

The entire coal market, which is dominated by the publicly traded miners and small mom-and-pops, is estimated at roughly north of $52 billion. The U.S. is expected to produce 1.07 billion tons of coal this year, with public coal companies churning out more than half that output.

The renewables market is a bit tougher to size as the adoption of these alternative energies is still in early phases. But rough estimates for the global wind and solar market is roughly $100 billion, with 70% of that produced by wind. The U.S. wind market is roughly $20 billion, according to Simmons' estimates.

3. Climate

The biggest issue facing the coal industry is permits being held up by the Environmental Protection Agency that are needed to continue producing coal. Environmentalists contend coal mining is destroying landscapes where these basins are located.

"The problem here is that we are going to experience energy usage growth of 50% over the next 25 years, and we can't do it without coal, which is one of the cheapest forms of energy," Dudas said.

Coal stockpiles rose last year as demand fell. Businesses were forced to close and shutter production, while consumers used less heat to save on their energy bills, Dudas says.

"Coal producers will have to manage their output and in some cases shut mining operations down until the stockpiles begin to decline, which has already begun," he said.

Last week, U.S. industry executives from the wind, solar, hydropower, geothermal and biomass sectors pushed for a federal renewable energy standard, which would set a percentage of how much energy must come from renewable sources in the U.S.

The group wants an extension of tax incentives and said stimulus funds powered most renewable expansion last year. President Barack Obama has urged Congress to set a national standard that would require 25% renewable power by 2025.

A federal standard, which they say will foster economic growth and create jobs, could spur these industries at a time when China is moving swiftly into alternative energy production.

4. Technology

Most technological advances in this industry group have occurred in renewables.

For example, ethanol producers, such as BioFuel Energy (NMS:BIOF) and Pacific Ethanol (NMS:PEIX), use corn oil extraction technologies to produce the biofuel.

Companies such as Hy-Drive Technologies provide natural gas or hydrogen-generating systems for diesel and commercial fleets.

And FuelCell Energy (NMS:FCEL) makes stationary fuel cells, which electrochemically produce electricity directly from hydrocarbon fuels for commercial, industrial, utility and government customers.

Solar power companies have to be tech-savvy to generate electricity from sunlight. This can be direct as with photovoltaics, or indirect as with concentrating solar power, where the sun's energy is focused to boil water, then used to generate power.

5. Outlook

Over the next decade, coal plant retirements will take roughly 50 to 60 gigawatts of coal generation offline.

The U.S. will need to replace that lost energy, and renewables are the answer, Gamble says.

"It will take a mix to fill the void, and there will be a shift, but renewables won't fill that need overnight," he said. "In order to make this happen, there will have to be additional infrastructure built, which becomes an expensive proposition no matter how you slice it."

Nuclear, natural gas and renewable energy can each fill part of that role, but additional coal assets must be built in the meantime.

Upside: The world has unquenchable thirst for energy as emerging economies continue their rapid growth and populations in developed nations continue to swell. That demand should fuel business for traditional sources like coal as well as renewables.

Risks: Another recession could further sap demand for coal, which could increase stockpiles and restrain mining operations. Also, tougher regulation in the U.S. would make starting new projects difficult.