Entries from June 2009 ↓

TEL AVIV (MarketWatch) — Israel stocks were poised to end the month of June on a mixed note, with strength in Bezeq and Teva as well as certain technology stocks offset by weakness in the banks and Israel Chemicals.

The Tel Aviv Stock Exchange’s benchmark TA-25 Index will change members beginning July 1, with Delek Group and Koor Industries joining the benchmark and Shufersal and Gazit Globe leaving.

Late in the trading day, the TA-25 Index fell 0.53% to 863.81, while the TA-100 Index also declined 0.53%, to 805.64.

The Tel-Tech 15 Index of top technology issues edged higher by 0.21% to 197.28.

The most-active issue was telecom provider Bezeq, trading up 0.4%.

The company’s rivals in the cellular sector, Cellcom and Partner, were up 1.3% and 0.5% respectively.

Teva Pharmaceutical shares were next on the active list, up 0.7%. The Jerusalem drugmaker and a partner, Antares Pharma Inc., said the U.S. Food and Drug Administration cleared them to market the human growth hormone Tev-Tropin, generically somatropin, with a needle-free administration technology.

Teva’s peer drugmaker in the TA-25, Perrigo, eased 1.4%.

Compugen shares added 3.9%. The company, which develops pharmaceuticals and licenses drug-development technology, said it sold 1 million shares of Evogene Ltd. for $3.6 million.

The company continues to hold 1.15 million shares of TASE-listed Evogene, which was established in 2002 to apply Compugen’s discovery technology within agriculture. A single buyer purchased the shares; Compugen didn’t identify the buyer. Evogene shares rose 2.9%.

Delek Group shares lifted 0.4%. Barclays Capital urged investors to own the shares because if the results from an appraisal well at the Tamar 2 reservoir exceed expectations, the stock could make “a significant move to the upside.”

Analyst David Kaplan reiterated his overweight rating on the stock and raised his price target to 535 shekels from 490. He said the target reflects a reservoir size of 5 trillion cubic feet. “For every one trillion cubic feet change, our implied price target changes by 34 shekels,” the analyst wrote.

He also noted that Delek will rejoin the TA-25 Index on July 1. The members of the benchmark index “have better volumes and attract more interest from global investors than those in the various other market-capitalization-weighted indices,” the analyst wrote.

The banks were weaker, with Hapoalim falling 0.4%, Leumi off 1.1%, Mizrahi Tefahot down 3% and Discount down 1.5%.

Bank Hapoalim said it completed the sale of 1.7 billion shekels of capital notes, including 1.3 billion to institutions and 400 million to the public. In June overall, the bank raised 3.3 billion shekels of capital.

The Israeli business daily Globes reported that the interest on the notes was set at 5.75% for the institutions and 5.65% for the public. So the bank canceled 200 million shekels of subscriptions from institutional investors and offered more to the public, Globes reported.

And the Israeli daily Maariv reported that Discount’s top shareholder, Matthew Bronfman, is in discussions to find a strategic investor for the bank.

Shufersal shares rose 0.4% while Gazit Globe lost 1.5%. Holding company Koor Industries rose 0.7%.

Israel Chemicals shares eased 0.5%.

Within the technology benchmark, AudioCodes, the provider of technology and products to transmit voice, data and fax over packet networks, slumped 4.9%; while Mellanox, and provider of technology to facilitate transmission of data among servers, communications infrastructure and storage, lost 4.1%. Strong on the upside was Gilat, the provider of satellite-based communications networks, up 6.5%.

Off the technology index, Tower Semiconductor Ltd. shares leaped 8%.

The semiconductor foundry said that using its technology, Panavision Imaging, the Homer, N.Y., imaging-technology company, produced a new line of advanced CMOS image sensors with applications in spectroscopy, bar-code technology, touch screens, optical character recognition, machine vision, measurement and more.

Israel Stocks: Israel stocks mixed; Delek gets lift at Barclays

Hot News: Economic Report: Euro-zone June annual CPI turns negative

NEW YORK (Reuters) – Bernard Madoff was sentenced on Monday to 150 years in prison — the maximum penalty the judge could give him for "extraordinarily evil" crimes in Wall Street's biggest and most brazen investment fraud.

Fleeced investors in the courtroom cheered and applauded as the judge handed down the penalty.

Madoff, 71, stood passively with his hands clasped at his waist, showing no reaction when he heard the sentence that will send him to prison for the rest of his life.

The former nonexecutive chairman of the Nasdaq stock market has been jailed in a Manhattan cell since he pleaded guilty to 11 charges including securities fraud, money laundering and perjury in March.

"Here the message must be sent that Mr. Madoff's crimes were extraordinarily evil," U.S. District Judge Denny Chin said in rejecting defense pleas for a lenient, 12-year sentence. "The breach of trust was massive.

"I simply do not get the sense that Mr. Madoff has done all that he could or told all that he knows."

The gray-haired money manager was dressed in his signature dark gray suit, white shirt and tie instead of a prison jumpsuit.

The disgraced financier sat passively throughout the hour-and-a-half hearing as his victims called him a "beast," an "animal" and a "lowlife."

He apologized to them, at one point turning toward the 250 people in the courtroom.

"I will live with this pain, with this torment, for the rest of my life," he calmly said. "I live in a tormented state knowing the pain and suffering I have created."

Madoff, who has been accused of bilking investors worldwide out of as much as $65 billion, said, "In my business, when you make a trading error, you're expected to make a trading error, it's accepted. My error was much more serious. I made an error of judgment."

CAUGHT OUT BY FINANCIAL CRISIS

Madoff's December arrest came as investors were feeling the brunt of the worst financial crisis since the 1930s Great Depression.

The case has triggered widespread criticism of the U.S. Securities and Exchange Commission, which has been accused of missing red flags that could have brought the curtain down on his asset management business.

It was not known where Madoff will serve his sentence for what prosecutors described as a worldwide fraud of small and wealthy investors, charities and financial institutions.

Judge Chin heard wrenching statements from nine of Madoff's victims, some of whom said they had lost their life savings, were forced to sell their homes, or had to apply for government assistance to buy food.

"I only hope that his prison sentence is long enough so that his jail cell will become his coffin," said Michael Schwartz, 33, who said his family had been robbed of savings earmarked for the care of his mentally disabled brother.

The White House said that the judge had sent a strong signal to those who handle other people's money.

"My guess is that that message will be heard loud and clear," said President Barack Obama's spokesman Robert Gibbs.

Madoff was arrested in December after his two sons told authorities that he had confessed to them that his investment empire was a sham.

Prosecutors have said that Bernard L. Madoff Investment Securities showed $65 billion in customer accounts weeks before his arrest, but the trustee winding down the firm has so far only been able to collect $1.2 billion to return to investors.

As much as $170 billion flowed through the principle Madoff account over decades. Madoff was symbolically ordered to pay that amount in restitution.

While a much lower sentence would have sent Madoff to prison for life, Chin said he deserved the maximum, typically handed down to organized crime bosses.

"The fraud here was staggering," the judge said.

One law professor said she was surprised by the sentence but uncertain whether it would serve as a deterrent.

"I'd love to think that the mini-Madoffs out there would think that what happened today has something to do with them, but I suspect most of them do not," said Jayne Barnard of the College of William and Mary in Williamsburg, Virginia.

Madoff's lawyer said no decision had been made on whether to appeal the sentence.

None of Madoff's relatives came to court. They have not attended any of his prior court appearances.

The judge said he had not received a single letter on Madoff's behalf, testifying to any good deeds or charitable works. "The absence of such support is telling," Chin said.

Madoff's wife Ruth, 68, has not been charged with any crimes but she has been vilified by defrauded investors, shunned by friends, and pursued by the media. Breaking her long silence, she said in a statement on Monday that she had been "betrayed and confused" by her husband's scam.

"From the moment I learned from my husband that he had committed an enormous fraud, I have had two thoughts — first, that so many people who trusted him would be ruined financially and emotionally, and, second, that my life with the man I have known for over 50 years was over," she said.

Madoff has said he acted alone. The only other person charged criminally is his outside accountant.

Madoff's brother, Peter, and his sons, Mark and Andrew, were executives in his firm's brokerage unit. They have said that they were not aware of or involved in the crooked asset management side.

Madoff and his wife have agreed to the sale of three luxury properties and other assets and valuables. Proceeds from asset sales will be distributed to defrauded investors.

Ruth Madoff will be left with $2.5 million, after forfeiting claim to some $80 million in assets including the couple's Manhattan penthouse apartment.

Madoff told investors in the courtroom that he could offer no excuses, saying he tried to undo his crimes but "the harder I tried, the deeper a hole I dug for myself."

Investors said the apologies left them cold.

"There's something very pathological. He is still making excuses for himself," said George Nierenberg, 57.

(Reporting by Grant McCool, Martha Graybow, Daniel Trotta, Mike Erman and Christine Kearney; Editing by John Wallace, Toni Reinhold)

Madoff gets 150 years for massive investment fraud

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Helen Davis Chaitman is a victim of Bernard L. Madoff’s multibillion-dollar Ponzi scheme. So is Burt Ross.

That would seem to make them natural allies in their fight to recover their lost millions.

Instead, as Mr. Madoff prepares to be sentenced in Federal District Court in Manhattan on Monday, they are rivals warring over who should get how much from the government-chartered agency that insures customers of failed brokerage firms.

Some investors are angry that they could get less favorable treatment than others, depending on how they invested with Mr. Madoff — directly, or indirectly through so-called feeder funds — and how much they withdrew before the Ponzi scheme collapsed.

“It’s been your typical reality-show kind of fighting,” said Jen Meerow Berniker, 32, a second-generation Madoff customer whose retiree parents lost their life savings through a feeder fund. “It’s every man for himself right now.”

Indeed, while Monday’s sentencing of Mr. Madoff will satisfy the desire by victims that he be punished for stealing their money, it will take months or even years longer to resolve their claims.

Federal prosecutors are seeking a 150-year sentence, the maximum under federal guidelines. Ira Lee Sorkin, a lawyer for Mr. Madoff, 71, has argued for a 12-year term.

The central problem being played out among Madoff victims is that only a small fraction of the nearly $65 billion that disappeared has been recovered. While insurance will fill some of that gap, it is clear that many people will not come close to recouping their losses — meaning that whatever one group of investors get will affect how much is available for another group.

Ever mindful that the claims process is, in effect, competitive, some groups of investors are jockeying for favorable treatment from the Securities Investor Protection Corporation, the government-chartered insurance agency.

Ms. Chaitman disapproves of the way Irving H. Picard, the court-appointed trustee overseeing the claims process, is calculating investor losses — on the basis of “net equity,” or simply the difference between the total amount invested in the fund and the total withdrawn before it collapsed.

Ms. Chaitman, who represents more than 100 others in a lawsuit against Mr. Picard, is adamant that they should be reimbursed for the total value of their accounts with Mr. Madoff, even if their withdrawals exceeded their deposits and even though the balances reflected on their statements were based on fake trades.

“Fictitious trades are exactly what SIPC was intended to protect against — a dishonest broker who steals the securities or a broker who never buys the securities,” Ms. Chaitman says, even though she says she never took money out of her Madoff account and therefore has a claim under Mr. Picard’s rules.

Her argument on behalf of those who did withdraw money before Mr. Madoff’s scheme was uncovered in December provokes outrage from Mr. Ross, a former mayor of Fort Lee, N.J., who says his Madoff losses totaled $5 million.

“In terms of morality, it’s not really fair,” he said. “For those of us who never took money out, these people who did are at an advantage, and now they want to get money again.”

For his part, Mr. Picard defended his methodology in an interview last month, saying that valuing cash losses on the basis of the fraudulent transactions would essentially “allow the thief to pick the winners and losers.”

The infighting among some investor groups has been building ahead of the July 2 deadline for filing compensation claims with SIPC.

The tension was palpable at a meeting of more than 150 Madoff victims on June 16 in Port Washington, N.Y. Richard Friedman, an accountant and Madoff victim who addressed the audience, joked that because SIPC has talked about “spreading around the pain,” he would be circulating a sign-up sheet for anybody interested in kicking Mr. Picard. The room, filled largely with senior citizens, laughed heartily.

A large majority of the people who invested money with Mr. Madoff did so through an intermediary agent like a feeder fund, making them ineligible for SIPC coverage. Mr. Picard has encouraged victims in this group to file claims nonetheless; their fate will probably be decided by the courts years from now.

Some of these indirect investors say they resent that the big investor groups are fighting over Mr. Picard’s definition of net equity without regard to those who have been excluded entirely from the claims process.

Ms. Berniker, whose retiree parents lost their life savings through a feeder fund, said: “When we first learned that the indirects weren’t covered, I had this feeling of being violated again. It’s sort of a question of, ‘How many times can this happen to me?’ ”

The indirect customers who have been outspoken say they are being treated as members of a lower caste, in that many of them went through feeder funds because they lacked the requisite $1 million or $2 million minimum to go straight to Mr. Madoff.

Initially, those who were invested in the largest feeder funds, like J. Ezra Merkin’s Gabriel Capital and the Fairfield Sentry fund, were thought to be better positioned to recover their losses, in that those firms, unlike Mr. Madoff, would at least have assets to sue for. But several of the feeder funds are themselves being sued by Mr. Picard and are not likely to emerge with their money intact.

What is more, those who invested their individual retirement accounts in Mr. Madoff’s fund through feeder funds have been unable to obtain a theft-loss deduction on their federal taxes. They have had similar difficulties qualifying for an adjustment in their Medicare premium, which is based on income figures they now know to have been falsely inflated.

To date, three complaints against SIPC have been filed by victims disputing Mr. Picard’s methodology.

But SIPC, which is financed by the brokerage industry, has only so much money to immediately hand out to Madoff victims. The agency’s maximum upfront compensation is $500,000 for each eligible customer.

While many will eventually receive reimbursement beyond the $500,000, when that will happen and at what fractional rate depends entirely on lawsuits Mr. Picard has filed seeking more than $10 billion from large investors who withdrew money before Mr. Madoff’s scheme collapsed.

The agency has so far recovered $1.25 billion, including recent settlements with two offshore hedge funds. But that exceeds only slightly the $972 million in loss reimbursements that SIPC had approved as of last week, from just 441 claims.

In all, about 8,800 claims have been filed, and even conservative estimates place the total number of Madoff victims in the tens of thousands.

Those daunting numbers have not stopped some investor groups from arguing for a larger share of Madoff claims. A few have invoked socioeconomic differences.

Sherry Morse, an active member of several Madoff victim groups whose husband’s family was among Mr. Madoff’s earliest investors, said she felt Mr. Picard’s interpretation of net equity amounted to a sort of fake-populist class baiting.

“People who took money out are being penalized for being normal,” she said. “But whether you have $10 or $100 million, it’s not a crime to make money in America. Somehow everybody came to think it’s nothing but rich people who are all getting what they deserved.”

Mr. Ross, the former Fort Lee mayor who did not withdraw money from his Madoff account before the Ponzi scheme was uncovered, said of Ms. Morse and her allies: “If they do get more money out of the trustee, it means he’s going to have to split the pie into pieces that much smaller for all of us.”

Mr. Ross, whose $5 million in losses were divided between a direct account with Madoff and a feeder fund, said he had stopped participating in online discussions about the Madoff scandal “because I need to give myself distance from the self-righteousness and the people who have anger.”

He said that he had received a $500,000 SIPC check, which he used to pay off his house.

“Without the SIPC check, keeping the house would have been more of an issue, so it’s easy for me to say this,” he said. “But I still don’t like that the groups wouldn’t discuss the indirects.”

Diana B. Henriques contributed reporting.

Investors Compete for a Piece of the Madoff Pie

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SHENYANG, June 27 (Xinhua) — China’s steel giant, Ansteel, had got government approval to increase its stake in Australian iron ore explorer Gindalbie Metals, a spokesman with Ansteel said Saturday.

The approval came Tuesday, allowing the Anshan Iron and Steel Group (Ansteel) in northeast China’s Liaoning Province to increase its interest in Gindalbie from 12.6 percent to 36.28 percent to become its biggest shareholder, according to the spokesman of Ansteel.

The purchase will be finished within a week. Then the two sides will invest a 534-million-Australian dollar in Karara iron ore project in western Australia, with a 50-50 ownership.

Gindalbie proposed Ansteel buy more of its shares in August last year. The application was approved by the board of Gindalbie early February.

Chinese firm approved to raise stake in Australian steelmaker as largest holder

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Ever since two middle-aged men with Japanese passports were caught in Italy this month trying to smuggle a purported $134.5 billion in United States government bearer bonds into Switzerland, the Internet has been abuzz with theories.

Was the Japanese government, or some other creditor nation, secretly trying to dump Treasury bonds to drive down the value of the dollar? Had the Italian mafia stolen the equivalent of 1 percent of the American gross domestic product, using the paper, which supposedly was instantly convertible into cash, to run a giant scam?

Adding spice was the whole Bond — James Bond — aspect of the tale. A crowded customs checkpoint near the Alps; two men traveling on a local train, professing that they had nothing to declare; and a false-bottom suitcase containing United States government bonds made out in stratospheric denominations.

In all, the Italian financial police and customs guards confiscated 249 paper bonds, each supposedly worth $500 million, and 10 bonds with a face value of $1 billion each.

Too bad the bonds were fake.

“The whole thing is a total fraud,” Stephen Meyerhardt, a spokesman for the Treasury Department, said Thursday. “They don’t look anything like real securities, which in any case were never issued in any of those denominations.”

The highest denomination ever issued by the Treasury Department was $10,000, he said. The Italian financial police claimed some of the paper was “Kennedy bonds” from the 1930s, but no such bonds ever existed. And the total of Treasury bearer bonds still outstanding is a mere $105 million; the Treasury has been issuing bonds in electronic form since 1986.

But none of this has stopped the rumor mill from grinding away. After reports of the seizure began to trickle out of Italy, the blogosphere sprang into action, the ponderings fueled by suspicions that the mainstream media was willfully ignoring the tale.

The story took on greater life after Italian authorities — who have refused to talk about the scandal — declined to declare the bonds fakes until they were examined by Washington. After all, although the Guardia di Finanza suspected the bonds were false, if they were not, the Italian treasury stood to profit from a law that permits the government to pocket up to 40 percent of the total value of cash or securities smuggled into the country over the legal export limit, which is 10,000 euros.

Repeated telephone calls to the prosecutors’ office in Como, Italy, that is handling the investigation were not returned.

Darrin Blackford, a spokesman for the United States Secret Service, which was contacted by the Italian financial police and the prosecutor’s office to determine the “legitimacy of the seized financial instruments,” said that his agency had verified the bonds were “fictitious instruments and were never issued by the United States government.”

Col. Rodolfo Mecarelli, the provincial commander of the financial police in Como, said the investigations were focused on “understanding who these men were and where they were from.”

Or where they might have been going. “Switzerland may not have been their final destination,” he said in a recent interview. “They could have taken a plane anywhere.”

Also unknown are the whereabouts of the two men, who were released after being stopped in early June. Italian law does not call for the criminal arrest of persons found to be taking funds without permission to another country. It might have been another matter if the police had determined immediately that the bonds were false.

“The men were questioned, but not arrested,” said Naoki Oyakawa, an official at the Japanese consulate in Milan, which contacted judicial officials in Como after reading about the seizure in the Italian papers.

He said the two men had valid Japanese passports, but he would not elaborate further on their identities. “We don’t know where they are now,” he said. “We have had no contact with the two men. They have not asked us for our help.”

What the bonds were for remains unclear. “It’s not the sort of thing that you can just go into a bank and convert,” said Colonel Mecarelli. “But they may have been useful to guarantee business deals among people who don’t use cash.”

Agencies that deal with financial crimes, including Europol, declined to comment while the Italian investigation was still under way.

The Treasury Department says it is stumped, too.

“I can’t speak to the motives of the person or persons who tried to do this,” Mr. Meyerhardt said. “I would guess that they were trying to find someone foolish enough to buy the securities for real money.”

Italy Intercepts Billions in Fake Treasuries

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WASHINGTON (MarketWatch) — A key accounting rules regulator on Friday raised concerns about congressional pressure exerted on the Financial Accounting Standards Board as it considered changes to audit rules for mortgage-backed securities.

“I’ve testified maybe 20 times on the Hill and lawmakers and other policy makers here have a natural interest and responsibility to understand what we’re doing,” said FASB Chairman Robert Herz at the National Press Club in Washington. “I don’t particularly welcome when people try to exert political pressure on us to get us to change accounting rules.”

In March, as the financial crisis expanded, lawmakers in the House Financial Services Committee put concentrated pressure on Herz and the accounting agency to quickly move and change so-called “mark-to-market” rules by giving auditors’ new guidance and more flexibility in valuing illiquid mortgage assets that have a long-term value.

Key lawmakers, including a subcommittee chairman, Paul Kanjorski, D-Penn., said they would consider introducing legislation to make FASB make the changes if the agency didn’t do it on its own. They demanded that FASB provide flexibility within three weeks.

Herz said he had planned to produce guidance in time for financial institutions to use in the second quarter of 2009. After the congressional pressure, FASB, on April 2, provided that flexibility when it approved new guidance that helped banks boost their operation profits in time for their first quarter report. Banks are expected to use it also when they report second quarter results in July.

Herz said FASB was in the process of responding to recommendations made by the Securities and Exchange Commission on mark-to-market rules, also known as fair-value regulations. After the hearing, the agency expedited its efforts. The agency read through over 700 comment periods and met many investors and businesses to discuss potential changes before putting out new regulations, Herz said.

“A number of the folks on the [Congressional] committee strongly urged us and the SEC to expedite guidance,” Herz said. “We went to an accelerated process but within our existing timeframes. It was intensive and extensive.”

Critics of changes to mark-to-market rules argue that eliminating a daily revaluing of assets such as mortgage backed securities, as the guidance permits, makes it more difficult for shareholders to understand the state of banks balance sheets. Banks could provide fuzzy accounting and commit fraud without the standard, critics argue.

Herz also said he took issue with pressure imposed on lawmakers by “certain major corporations,” in recent years that sought to have Congress press FASB to make changes to accounting standards.

“While that is their right, and while we certainly welcome active dialogue with lawmakers, politicization of accounting standards setting by special interests risks undermining public confidence in the integrity of financial reporting, Herz said.

Herz’s comments come as FASB seeks to improve its image as an independent agency, based in Norwalk, Conn., a quiet, sea-side town. To improve the perception of FASB on Capitol Hill, the agency’s parent organization, The Financial Accounting Foundation, in the spring hired law-firm and lobbyist K&L Gates to promote its interest among policymakers in Washington.

Regulatory reform

Herz also expressed support for a wide variety of regulatory reform initiatives promoted by the Obama administration.

He backed a White House proposal that would create a Consumer Financial Protection Agency that would review financial products before they are made available to consumers, such as types of mortgages, and also provide more transparency around financial products.

He also supported endeavors by the White House to bring greater transparency to the opaque derivatives market. However, he indicated that the government proposal may not go far enough. He said he would like to see all over-the-counter derivatives, including both standardized and customized, swaps, be cleared through clearinghouses.

Otherwise, he argued, many existing standardized derivatives would migrate into the customized derivative world. The Obama proposal seeks to have all standardized OTC derivatives be cleared through clearinghouses, but it still would permit tailored swap products to be traded through more-opaque OTC markets.

FASB: Congress pushed us to rush our audit rules

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WEST CARROLLTON, Ohio — In the tight-knit, middle-class communities surrounding Dayton, many members of the class of ’09 knew exactly what they would do when they grew up.

They would get a good-paying job at the General Motors factory or at one of the Delphi auto parts plants, get married and start families.

But the deep recession and the downsizing of American manufacturing have bulldozed those plans, leaving many of these young people confused and rudderless, with some contemplating a path that might be new to their families: college.

“It used to be kids would say, ‘I don’t need to go to college. I can go to work with my dad at G.M. and have a good life,’ ” said Carol Romie, the chief guidance counselor at West Carrollton High School in this blue-collar Dayton suburb. “With G.M. closed, that’s not an option nowadays.”

Brandon Abney, a newly minted high school graduate, would have loved to work at the G.M. truck plant in Moraine, a neighboring suburb, but it closed last December.

So he is enrolling in an 18-month college program to become a firefighter. “After what happened at G.M., you have to go to college to find a job,” he said.

Dezaraé Austin, of the class of ’09, moved in with a friend after her father lost his job at G.M. and left the state in search of employment. With the job market offering high school grads little beyond $7.50-an-hour fast-food and supermarket jobs, she is enrolling in community college to become a physician assistant.

Nick Salyers would like to follow in the footsteps of his grandfather, whose 36-year career at a Delco auto parts plant (before it became Delphi) enabled him to buy a spacious house and raise five children. But with that factory closed and his mother and father laid off in recent plant closings, he has chosen a career in the military.

“I needed something secure,” he said. “No matter what happens, I’ll always have a job in the Army. I don’t have to worry about getting laid off. I don’t have to experience what my parents experienced.”

Call them Generation R — Generation Recession — the millions of teenagers and twenty-somethings struggling to carve out a future for themselves when the nation’s economy is in its worst shape in decades. Many are settling for second choices or pursuing low-cost detours because the recession has wiped out hoped-for jobs.

Far beyond Dayton — where the huge, shuttered G.M. plant not long ago employed 4,000 people — millions of young Americans are facing the reality that manufacturing will no longer serve as a conveyor belt to the middle class.

Dayton is a vortex of that economic and social change. The area’s job total has fallen 12 percent since 2000, while about half of its factory jobs — 38,000 out of 79,000 — have disappeared this decade. Not only have large G.M. and Delphi plants closed, but NCR, long the city’s corporate jewel, recently announced that it would move its headquarters to the Atlanta area.

These are body blows to a can-do city long known for innovation. (Dayton was the Wright Brothers’ hometown and a G.M. boomtown because of Charles Kettering, who invented the electric starter and founded Delco — originally the Dayton Engineering Laboratories Company — before G.M. acquired it.)

“In the ’60s and ’70s you could get a good job at Delco, NCR, Frigidaire, Inland, Dayton Press, the Standard Register, Chrysler,” said David Hicks, Moraine’s city manager. “They came with good benefits and good pay.”

Fred Gehron, the principal of West Carrollton High School, remembers what happened when he graduated from high school in 1966 and told his parents he wanted to go to college. “I remember them rolling their eyes,” he said. “My father asked, ‘Are you sure that’s necessary? Why not get a job at the steel mill where your brother works?’ ”

Rob Alsept, financial secretary for the G.M. union local here, says he took a job at the plant in 1989 at age 19, and bought a house and had a family the next year.

The G.M. plant’s basic wage was $28 an hour when it closed. “For the laid-off guys, the highest-paying job I’ve heard anyone find was $13 an hour,” Mr. Alsept said.

The brightest spot in Dayton’s economy is Wright-Patterson Air Force Base, which planned to add 1,000 jobs, one-third of them requiring Ph.D.’s.

“I would adamantly say the days of finding good-paying jobs that will support an individual or family with just a high-school education are gone,” said Matt Massie, director of career services at Sinclair Community College in Dayton.

Since the recession began, enrollment at Sinclair has jumped 14 percent, largely because many laid-off workers have returned to school and because the uninviting job market has pushed many high school grads into college.

Adam Smith, who is studying linguistics at Sinclair, went for another reason: it’s cheap. Mr. Smith, who hopes to become translator, could have gone to a four-year college, but knew he could save money by spending his first two years at Sinclair, where courses cost $43 a credit.

To pay for his courses and car, he is busing tables 30 hours a week at a Smokey Bones, a barbecue restaurant. Because many students work such long hours, community college degrees often take them three years to attain.

Thomas Kokenge, the guidance counselor for West Carrollton High’s graduating seniors, advised them not to let the hard times change their goals. “I tell them, ‘Do something that you have a passion for,’ ” he said. “I don’t see them lowering their horizons. But maybe they have to take a longer way to get there.”

Guidance counselors say that the nearly 40 percent of Dayton-area graduates who attend four-year colleges should do fine once the economy rebounds.

Todd Salyers, who lost his job when the Delphi plant closed, is proud, but a bit worried that his son, Nick, is joining the Army.

Said Todd Salyers, “My father always told us, ‘As long as you put in an honest day’s pay and are an honest person, you’d be O.K.’ That’s not even close to being right anymore.”

Erik Newton, who just graduated from West Carrollton High, will be going to Sinclair to study firefighting with Brandon Abney. His mother, a laid-off G.M. worker, will also be there, studying to become a social worker.

In Mr. Newton’s view, the dream of landing a good factory job has definitely not died.

“I’m sure if any big factory had openings, there’d be a line all the way into Dayton,” he said.

Recession’s Children

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NEW YORK (MarketWatch) — Treasury prices moved mostly higher Thursday, sending yields lower for the fourth session in five, as traders readied themselves before the Federal Reserve makes its latest foray into the bond market and before the last of the government’s three debt sales scheduled for this week.

Yields on 2-year notes , which move inversely to prices, fell 4 basis points to 1.16%. A basis point is 0.01%.

Ten-year note yields eased 1 basis point to 3.67%.

Also supporting Treasurys, the Federal Reserve will be buying U.S. debt maturing between 2026 and 2039 later in the session. See more on purchases on the Fed’s Web site.

The last two times the Fed bought from this maturity range, it took $3.51 billion and $2.5 billion.

To date, the Fed has made $177 billion of its planned $300 billion in Treasury purchases, according to Morgan Stanley. The U.S. central bank’s also bought $98 billion of the promised $200 billion in housing-agency debt and $575 billion of the $1.25 trillion in planned mortgage-backed securities.

Traders’ focus will turn to the government’s sale of $27 billion in 7-year notes. That’s the most in at least 20 years, though none were issued between 1993 and 2009.

Bids in the 7-year’s auction are due at 1 p.m. Eastern time.

While this week’s sales of $40 billion in 2-year notes and $37 billion in 5-year debt have received very strong demand, traders note that the gains haven’t lasted long and that yields on the securities are already above the auction yield. That may make traders more aggressive in selling existing holdings to push up the auction clearing level.

“We look for some concession as the setup should allow for some weakness into the bidding,” said John Spinello, Treasury strategist at Jefferies & Co., the newest of the 17 primary government security dealers required to bid at Treasury auctions.

Analysts have paid more attention to the government’s debt sales in the last few months for signals of whether investors are still willing to step up and buy U.S. debt in light of rising deficits and concerns about the effect of inflation on the dollar.

The proportion of the sales going to indirect bidders, a class of investors that includes foreign central banks, has been exceptionally high at this month’s auctions.

Analysts attribute at least some of that increase to a change in how central banks can bid. The new rule makes it so that even if they buy through primary dealers, they get classified as indirect bidders.

Debt-friendly data

Treasurys also gained ground Thursday after the Labor Department said first-time jobless claims unexpectedly rose to the highest since mid-May, up 15,000 to 627,000 in the week ended June 20. Economists had expected unemployment claims to moderate to 600,000, continuing a recent trend of declining initial filings. See more on jobless claims.

A separate report showed that the final revision to U.S. gross domestic product for the quarter was less negative than predicted, with contraction in the economy pegged at a 5.5% annualized, inflation-adjusted rate. See more on GDP revision.

On a broader level, Treasurys’ gains may be limited, especially in longer-dated debt, as investors around the world mull over the Fed’s decision late Wednesday to stick with its current bond-buying plans. Treasurys sold off after the ccentral bank’s policy statement struck a rosier note on prospects for the U.S. economy, the world’s largest, and gave no indication of an exit strategy from its stimulus plans to rein in the risk of inflation.

“With the Fed putting a rosier face on the economic outlook, while at the same time expressing little concern about inflation, investors in effect have been given a green light to look elsewhere for returns,” said Joe Balestrino, fixed-income market strategist at Federated Investors, in a statement.

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SAN FRANCISCO (MarketWatch) — Among the companies whose shares are expected to see active trade in Thursday’s session are ConAgra Inc., Palm Inc., and McCormick & Co.

ConAgra is expected to report fiscal fourth-quarter earnings of 41 cents a share, according to analysts surveyed by FactSet Research.

Palm is estimated to report a loss of 62 cents a share in the fiscal fourth quarter, according to analysts surveyed by FactSet Research.

McCormick is likely to report a fiscal second-quarter profit of 41 cents a share, according to analysts surveyed by FactSet Research.

Lennar Corp. is forecast to post a loss of 64 cents a share in the fiscal second quarter, according to analysts surveyed by Thomson Reuters.

Tibco Software Inc. is expected to report earnings of 8 cents a share in the fiscal second quarter, according to analysts surveyed by FactSet Research.

Accenture Ltd. is projected to post a fiscal third-quarter profit of 65 cents a share, according to analysts surveyed by FactSet Research.

Micron Technology Inc. is expected to report a fiscal third-quarter loss of 43 cents a share, according to analysts surveyed by Thomson Reuters.

After Wednesday’s closing bell, Nike Inc. reported fiscal fourth-quarter net income fell 30% to $341.4 million, or 70 cents a share, compared to net income of $490.5 million, or 98 cents a share, a year ago. Excluding items, Nike said it earned 99 cents a share. Analysts polled by FactSet had pegged the athletic shoe and apparel maker to earn 96 cents a share. Sales fell 7% to $4.7 billion. Nike said worldwide futures orders for Nike brand athletic footwear and apparel, scheduled for delivery from June 2009 through November 2009, was $7.8 billion, down 12% from a year ago.

Watch list

Bed Bath & Beyond, Inc. reported a first-quarter net income of $87.2 million, or 34 cents a share, up from $76.8 million, or 30 cents a share, a year ago. Sales rose 2.8% to $1.69 billion. Analysts polled by FactSet Research were looking for a profit, on average, of 24 cents a share with sales of $1.68 billion. Same store sales for the home furnishings retailer fell 1.6%.

CKE Restaurants Inc. said its first-quarter profit fell to $14.4 million, or 26 cents a share, from $16.6 million, or 31 cents a share, in the year-ago period. Revenue rose to $446.8 million from $466.2 million last year. Analysts surveyed by FactSet Research estimated a quarterly profit of 25 cents a share on revenue of $343.1 million.

Paychex Inc. said that earnings fell 16% for its fourth fiscal quarter on a decline in payroll services. The provider of payroll processing services reported earnings of $113.8 million, or 32 cents a share, for the quarter ended May 31, compared to earnings of $135.5 million, or 38 cents a share, for the same period the previous year. Total revenue fell 4.5% to $495.9 million.

Red Hat Inc. said its fiscal first-quarter net income rose to $18.5 million, or 10 cents a share, from $17.3 million, or 8 cents a share in the same period a year earlier. The business software provider said revenue for the period ended in May rose 11% to $174.4 million. Excluding special items, Red Hat said earnings for the quarter were 15 cents a share. Analysts on average had expected Red Hat to post earnings excluding special items of 14 cents a share, on $171.8 million in revenue, according to data from Thomson Reuters.

Seagate Technology said that it expects its current, fiscal fourth-quarter revenue to between $2.2 billion and $2.3 billion, up from its prior forecast of $1.9 billion to $2.2 billion. The computer hard-disk drive maker said it believes the total addressable market for hard-disk drives to be 120 million units, up from its earlier estimate of 114 million units. Seagate also said that for its fiscal first quarter it expects revenue to be in a range of $2.35 billion to $2.5 billion.

Stocks to Watch: Stock in focus for Thursday

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Filed at 1:42 a.m. ET

HONG KONG (AP) — Asian stock markets recovered modestly Wednesday as investors awaited the outcome of the U.S. Federal Reserve meeting later in the day.

Markets fluctuated in early trade before turning mostly green after tumbling Tuesday amid a World Bank forecast for a deeper recession this year. Crude oil prices weakened, while the dollar rose against the yen.

The Fed is widely expected to keep its key interest rate near zero, but investors will be watching closely the central bank’s assessment of the economy for clues about any recovery and whether interest rates might be raised to head off inflation.

Analysts say if the Federal Reserve’s statements are more gloomy than expected, that could lead investors to unload shares as they lower their expectations for an economic recovery. Optimism about a recovery from the worst global recession in decades has lifted markets dramatically in recent months.

Markets ”are pricing in a clear recovery story in the U.S. and the global economy, but I think the Fed will be less upbeat,” said Dariusz Kowalczyk, chief investment strategist for SJS Markets in Hong Kong.

”If the Fed does show cautiousness … equities and commodities could suffer a little bit because investors would be more afraid they’ve gotten ahead of themselves.”

Japan’s Nikkei 225 stock average added 52.75, or 0.6 percent, to 9,602.36 even as new figures showed the export-dependent country’s trade continued to sag. Exports in May dropped 40.9 percent from a year earlier as consumers overseas bought fewer of the country’s cars, electronics and other mainstay products.

Elsewhere, Hong Kong’s Hang Seng rose 233.38, or 1.3 percent, to 17,771.75 and South Korea’s Kospi was up 0.6 percent.

Australia’s benchmark gained 0.1 percent, Taiwan’s index jumped 3 percent and Singapore’s market was higher by 1.8 percent.

Wall Street also tread cautiously ahead of the Fed’s announcement after it finishes its two-day policy meeting on Wednesday.

The Dow fell 16.10, or 0.2 percent, Tuesday to 8,322.91. The Standard & Poor’s 500 index rose 2.06, or 0.2 percent, to 895.10, and the Nasdaq composite index fell 1.27, or 0.1 percent, to 1,764.92.

U.S. futures pointed to a higher open. Dow futures rose 23, or 0.3 percent, to 8,280 and S&P futures gained 1.8, or 0.2 percent, to 892.

Oil prices fell below $69 a barrel, partially reversing gains sparked by a weakening U.S. dollar. Benchmark crude for August delivery was down 75 cents to $68.49. The contract gained $1.74 overnight.

The dollar strengthened to 95.62 yen from 95.26. The euro rose to $1.4097 from $1.4066.

Asian Stocks Recover Ahead of Fed Announcement

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