My finance view

UPDATED 1:20 P.M.

Three weeks after InBev completed its $52 billion takeover of Anheuser-Busch, the new company said today it would slash 1,400 salaried jobs, or 6 percent of its U.S. workforce in an effort to reduce costs.

About three fourths of the job losses will come at the company’s St. Louis headquarters. The rest will occur at other locations and breweries, the Leuvens, Belgium-based Anheuser-Busch InBev said in a statement issued around lunchtime on Monday.

The company will also leave 250 open jobs unfilled and eliminate 415 contractor positions. Most of the job cuts will occur by year-end, the company said.

InBev has long promised to keep all of A-B’s U.S. breweries operating. At the same time, analysts predicted that deep cost cuts would be needed to justify the deal. Rumors about job losses grew louder in weeks leading up to and after the Nov. 18 acquisition, especially given Chief Executive Carlos Brito’s reputation for a relentless focus on costs.

"To keep the business strong and competitive, this is a necessary but difficult move for the company," David A. Peacock, president of Anheuser-Busch, said in a statement. "We will assist in the transition for these employees as much as possible."

 PHOTOS: Touring the Anheuser-Busch brewery

fast payday loans.stltoday.com/stltoday/images/bullet.gif” width=”5″ height=”5″ alt=”bullet” border=”0″/> MEMO: Read the layoff memo from A-B InBev (PDF file)

A-B InBev said it will provide severance pay and pension benefits to affected employees based on age and years of service. They will also be offered outplacement services and other benefits during the transition, the company said.

The cuts come on top of more than 1,000 U.S. salaried employees who accepted early retirement. The retirements were part of a $1 billion cost-cutting plan called Blue Ocean that was announced by A-B during the summer.

"Managing our costs is important in building and maintanining a successful business, especially in a challening ecomony," Peacock said.

Anheuser-Busch InBev will record $197 million in pre-tax expenses related to Monday’s job cuts. About $150 million will come from severance payments and the rest of the amount is related to pension benefits.

Anheuser-Busch employs about 6,000 in St. Louis, and some of the jobs overlap with corporate functions elsewhere in the company.

Check STLtoday.com for more on this breaking story.

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President-elect Barack Obama said he’ll make the “single largest new investment” in roads, bridges and public buildings since the Eisenhower Administration to lift the sagging economy and create jobs.

Obama, in his weekly radio speech today, said his plan to create or preserve 2.5 million jobs will also include making public buildings more energy efficient, repairing schools and modernizing health care with electronic medical records.

“We won’t just throw money at the problem,” he said. “We’ll measure progress by the reforms we make and the results we achieve — by the jobs we create, by the energy we save, by whether America is more competitive in the world.”

Obama spoke a day after a government report showed employers in the U.S. slashed 533,000 jobs last month, the biggest decline in 34 years. The losses are “another painful reminder of the serious economic challenge our country is facing,” Obama said.

The speech offered the first details of Obama’s job- creation program. He said the investment in infrastructure will be the largest since President Dwight D. Eisenhower created the interstate highway system a half-century ago.

“When Congress reconvenes in January, I look forward to working with them to pass a plan immediately,” he said. Obama takes office as the 44th president on Jan. 20.

Congressional Democrats

With the economy heading toward the longest and deepest recession since World War II, pressure is rising for a spending program that will create new jobs. Congressional Democrats have said they will send Obama an economic stimulus package as soon as he takes office. New York Senator Charles Schumer late last month put the size of such a program at between $500 billion and $700 billion payday loan online.

In addition to investing in infrastructure, requiring energy standards on public buildings and updating health-care practices, Obama said that he will start a “sweeping effort to modernize and upgrade school buildings” and will boost broadband access across America.

To the states that will be the conduits for the funding, he had a simple message: “use it or lose it.”

“If a state doesn’t act quickly to invest in roads and bridges in their communities, they’ll lose the money,” he said.

Obama’s plan to make public buildings more energy efficient should reduce the government’s energy bill, which he called the highest in the world. He plans to replace heating systems and install energy-efficient light bulbs.

Internet Upgrade

Obama also plans to upgrade Internet infrastructure, calling it “unacceptable that the United States ranks 15th in the world in broadband adoption.”

Upgrading health care is the final component of the plan. By introducing new technology and electronic medical records, he said health-care workers could “prevent medical mistakes, and help save billions of dollars each year.”

Obama, in Chicago for the weekend, has no public events scheduled for today. Tomorrow, he will mark the anniversary of the 1941 attack on Pearl Harbor with a news conference in Chicago, according to a statement from his transition team.

Obama will announce his choice to lead the Department of Veterans Affairs at the news conference, according to a Democratic aide who spoke on the condition of anonymity.

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Forced by softening demand from its customers, Belden Inc. announced Wednesday evening that it planned to reduce its worldwide work force by 20 percent, or about 1,800 people, by late next year.

Clayton-based Belden, which makes electronic cables for data networking and other markets, employs about 40 salaried and hourly workers locally at its corporate headquarters. But Dee Johnson, the director of investor relations, could not say how many of those workers would be affected.

Belden’s products are used in a range of markets, including manufacturing and broadcasting. As tough economic conditions have weighed on those industries, demand for products has fallen, Johnson said.

"As we reported in October, we have seen softening of our major markets globally, and we expect that economic conditions will remain challenging for some time," said John Stroup, president and chief executive, in a statement. "We regret the hardship these actions will impose on our (employees)."

The company already has started to streamline manufacturing, sales and administrative functions, eliminating some jobs, and will complete the cuts by late 2009, Johnson said.

The restructuring plan will include some plant closures among Belden’s plants worldwide, which number more than 30, Johnson said cash advance loans. She couldn’t name specific plants but said some U.S. plants probably would be on the shutdown list.

Workers will get severance and benefits, depending on the country where they work.

Altogether the job cuts will save Belden about $50 million annually, with 2011 as the first year of full impact, the company said. Belden said it would save $30 million next year from these actions.

Belden expects to report one-time charges — stemming from severance packages, asset impairment and other costs — of between $55 million and $65 million pre-tax, or $0.85 to $1 a share. The company said it would incur about $35 million to $40 million of that amount this quarter.

The restructuring follows job cuts announced earlier this year. Based on slower demand, Belden cut 132 jobs in March and shifted production from a plant in Manchester, Conn., to Mexico. The company also has had some layoffs and recalls since the start of the year, Johnson said.

atablac@post-dispatch.com | 314-340-8140

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COLUMBUS, Ohio – Oil and U.S. retail gasoline prices dipped to new three-year lows today with the United States officially in a recession.

Analysts believe prices at the pump may finally be bottoming out after a precipitous decline from record highs this summer, though demand could fall even further in January with job losses reducing the number of people who drive to work.

Gas prices in the United States fell for the 20th week since the July 4th holiday and hit US$1.811 per gallon, according to the government's Energy Information Agency.

Auto club AAA, the Oil Price Information Service and Wright Express said prices fell 0.8 cents overnight to $1.812, down 62.4 cents in the past month and $1.249 in the past year.

Prices in some parts of the country were much lower. On the website GasBuddy.com, where motorists post gas prices, a BP station in Independence, Mo., outside Kansas City, was selling fuel for $1.29 per gallon.

Daily declines posted for the last two months have begun to narrow. The U.S. average for a gallon of gas peaked at $4.11 in July.

In Canada, the price of gas averaged 83.4 cents Canadian per litre, according to Gasbuddy.

"The big move for 2008 is over," said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service. Prices may fall a few more cents this month and then likely waver into February before beginning to move higher, he said.

Kloza said demand will weaken further in early 2009 as job losses mount amid what may be an extended recession.

"January could be really, really ugly," he said.

The U.S. government reported last month that the unemployment rate shot up to a 14-year high of 6.5 per cent in October, and many economists believe it will top eight per cent before the economy mounts a sustained rebound. November's unemployment rate will be released Friday.

The U.S. National Bureau of Economic Research, a private, non-profit research organization, said Monday that its group of academic economists who determine business cycles pegged December 2007 as the start of the U.S. recession.

Light, sweet crude for January delivery fell more than four per cent, or $2.32 to settle at $46.96 a barrel on the New York Mercantile Exchange. Earlier today prices briefly fell to $47.36, the lowest level since hitting $46.20 intraday on May 20, 2005.

In London, January Brent crude slid 40 cents to $47.57 on the ICE Futures exchange.

Analyst Peter Beutel of Cameron Hanover said traders are searching for the bottom in the oil market free credit score.

"Right now, everyone is wondering when is this market going to rally," he said. "At some point it should."

Beutel said colder-than-expected temperatures across much of the country, increasing demand for gas and expected further cuts in production by OPEC make a strong case for oil prices to rally.

"That doesn't mean we're going back to $4 gas," he said.

Backing up Beutel's claim on demand is the SpendingPulse report by MasterCard released this afternoon.

The report's four-week moving average shows demand of 63.9 million barrels a week. That is down 2.1 per cent from the year-ago moving average and the smallest decline since May.

"It looks like we're getting back to a more normal level from demand and price," Michael McNamara, vice president of MasterCard SpendingPulse.

MasterCard's report is based on aggregate sales activity in the MasterCard payments network, coupled with estimates for all other payment forms, including cash and check.

The Organization of Petroleum Exporting Countries, which accounts for about 40 per cent of global supply, cut output by 1.5 million barrels a day in October, bringing total cuts to around 2 million barrels a day this year.

The slowing economy has cut into energy demand, leaving OPEC's power to control prices through production cuts diminished.

OPEC Secretary-General Abdullah El-Badri said the group would likely reduce output quotas by between one million and 1.5 million barrels at a meeting on Dec. 17 in Algeria, according to a report on Iranian state television Monday.

The head of OPEC said he hopes oil producing nations such as Russia will join the organization, or at least agree to output cuts to help spark a rally in prices.

Chakib Khelil, also Algeria's oil minister, said oil producers such as Russia, Norway and Mexico should express their solidarity with OPEC, either by joining the cartel or by following its reductions of output quotas.

In other Nymex trading, gasoline futures fell 5.29 cents to settle at $1.0583 a gallon. Heating oil fell 3.19 cents to settle at $1.5832 after hitting a 52-week low of $1.5778 a gallon. Natural gas for January delivery fell 18 cents to settle at $6.424 per 1,000 cubic feet.

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The Toronto stock market plunged about 600 points in early trading Monday as tumbling oil prices helped persuade investors to take profits after a huge run-up last week.

New York markets were also hit with profit-taking amid weak expectations for the U.S. holiday shopping season.

Toronto's S&P/TSX composite index fell 601.6 points to 8,669. The sell-off followed a huge surge of almost 14 per cent last week on a revival of TSX oil, financial and mining stocks that had been severely beaten down as the financial crisis deepened during October and November.

The TSX Venture Exchange declined 7.47 points to 758.88.

New York's Dow Jones industrial average fell 288.6 points to 8,540.5 after powering ahead almost 10 per cent last week. The Nasdaq composite index fell 54.97 points to 1,480.6 while the S&P 500 index gave back 37.2 points to 859.05.

The Canadian dollar was down 0.22 cent to 80.62 cents US as oil prices gave up more ground and political turmoil continued in Ottawa.

Statistics Canada reported that economic growth expanded 0.1 per cent in September, which most economist believe was the last month of growth before what could be a prolonged period of decline. The third quarter of the year showed 0.3 per cent growth in gross domestic product.

Sources said the Liberals and NDP have drafted a blueprint for Canada's first coalition government since the First World War, aiming to govern jointly until the middle of 2011. But they would need support from the Bloc Québécois.

Meanwhile, the Conservative minority government on Sunday moved the budget date ahead to Jan. 27.

The energy sector was a major loser in early TSX action, down almost nine per cent as the January crude contract fell $3.80 to US$50.63 a barrel on the New York Mercantile Exchange after OPEC did not cut production at a weekend meeting in Cairo same day payday loans. OPEC meets again Dec. 17.

EnCana Corp. (TSX: ECA) fell $5.50 to $54.50 while Petro-Canada (TSX: PCA) surrendered $4.24 to $29.49.

Financial stocks were down 6.6 per cent ahead of earnings reports from four of the six big banks later this week. Royal Bank fell $2.59 to $40.59 while TD Bank lost $2.69 to $43.31

The gold index pulled back 10 per cent as bullion fell $35.30 to US$780.90 an ounce. Barrick Gold Corp. (TSX: ABX) was down $4.17 to $33.55

Base metals also gave back 10 per cent with Teck Cominco Corp. (TSX: TCK.B) off 59 cents to $5.41.

Fairfax Financial Holdings Ltd. (TSX: FFH) slipped $6.78 to $353.22 after it said it plans to buy up the stake in commercial insurer Northbridge Financial Corp. (TSX: NB) it doesn't already own for $686 million.

On the retail side, initial reports on holiday shopping point to sales better than some retailers and analysts expected, but consumers are cautious and analysts are still forecasting a very difficult season.

Overseas, London's FTSE 100 index fell 2.4 per cent, while Frankfurt's DAX and the Paris CAC 40 slid 2.7 per cent.

Earlier, Asian markets closed lower with the Nikkei 225 stock average in Tokyo down 115.05 points, or 1.4 per cent, at 8,397.22 after advancing 7.6 per cent last week.

Markets in South Korea, Australia and Singapore also fell, while India's benchmark Sensex index reversed early gains and closed with a loss of 2.8 per cent to 8,839.87 in the wake of the terrorist attacks in Mumbai that left 172 people dead.

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Nobody from Detroit got a particularly warm welcome in Washington last week, but the reception was coolest for General Motors, the largest and most vulnerable automaker.

As GMers admit off the record, Chairman and CEO Richard Wagoner turned in a dismal performance during two days of congressional testimony.

He served up the same kind of boilerplate that GM (GM, Fortune 500) has been offering analysts and journalists for months: We promise to make better cars, more economical cars, more alternative fuel cars.

And he presented a laundry list of steps the company has taken to regain profitability, like reducing manufacturing capacity, suspending dividend payments and eliminating health care coverage for salaried retirees.

But with a straight face, he blamed GM’s problems not on its products, its business plan or its long-term strategy but on "the global financial crisis." He didn’t bother to acknowledge that GM has lost an astonishing $72 billion in the past four years on his watch - including $51 billion before the crisis hit in 2008.

Wagoner also flunked the public relations part by arriving in Washington on board his corporate jet - couldn’t he at least have hitched a ride with Ford (F, Fortune 500) or Chrysler? - and failed to step up when asked to demonstrate a sign of financial sacrifice.

With the company in danger of running out of cash before the inauguration of President-elect Obama, what should Wagoner do now?

Start burning the deck chairs. GM needs to make some visible and effective efforts to cut costs and raise cash. Mounting a bare-bones exhibit at the Los Angeles auto show is a start. But GM has been dangerously slow about identifying surplus assets like Hummer and putting them up for sale.

Show some sacrifice. GM is currently planning to go ahead with its scheduled Christmas shutdown from Dec. 24th until January 5th. That’s great - GM employees will be on paid holiday while the rest of us are working. GM should get them back to their jobs and have them come up with more ways to raise cash.

Develop a plan and sell it hard. Wagoner tried to bluff the government into a bailout without showing any of his cards. That didn’t work, so now he needs to up the ante. When Chrysler was on the ropes in 1979, CEO Lee Iacocca put together a display of new models and took it on the road to demonstrate that Chrysler had a future business cards. Wagoner needs to do the same thing.

He’s working on it. A GM spokesman says, "We intend to deliver a plan to Congress that shows them a viable General Motors."

But what is GM’s future? Certainly not as a manufacturer selling eight - count ‘em eight - brands of cars at a time when Toyota (TM), its closest competitor, gets by with three. GM needs to address that issue immediately, even if it secretly believes that eliminating brands and their dealers is the wrong thing to do.

Some have suggested that GM become, in effect, an arm of the federal government, performing the energy independence work that Obama has promised. But having seen GM fail at profitably making and selling automobiles, something it has been doing for 100 years, I’m frightened about the possibility that it should try its hand at something new.

By now, it is clear to almost everyone that the U.S. doesn’t need three independent car companies any longer. There isn’t enough business for all of them.

What Wagoner should do is design a new structure that will allow the three of them to combine forces. It is clear that Cerberus is anxious to give up its ownership of Chrysler at any price. The hard part will be convincing the Ford family to relinquish its control of Ford Motor.

Here is how Wagoner can do it: Looming in 2020 are stringent new federal fuel economy regulations that will require cars that get 35 miles per gallon. The current mandate is 27.5 mpg.

Meanwhile, California and a dozen other states are licking their lips in anticipation of a waiver from the Environmental Protection Agency that will allow them to demand cars that get 43 miles per gallon.

Having underinvested for years, it is going to be exceedingly difficult for Ford to meet that target. But by sharing technology with GM, it may have a chance.

If he can turn the Detroit Three into the Big One with a new environmental mandate, Wagoner will have developed a compelling rationale for a Congressional bailout.

It is worth a shot. Nothing else has succeeded so far. 

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Hong Kong's inflation slowed for a third month as commodity prices fell and the government waived public-housing rents and subsidized electricity bills.

Consumer prices rose 1.8 percent in October from a year earlier, the government said today on its Web site, after gaining 3 percent in September. That compared with the 1.9 percent median estimate of 14 economists surveyed by Bloomberg.

Inflation has eased from July's decade-high level of 6.3 percent because of smaller gains of food prices in China, Hong Kong's major supplier, and lower global energy prices. Hong Kong slipped into its first recession last quarter since the severe acute respiratory syndrome epidemic in 2003.

“Inflation has cooled on the back of lower food and energy prices,'' said Kelvin Lau, an economist at Standard Chartered Bank Plc in Hong Kong. “Looking ahead, inflation will continue on a downward trend along with the economic cycle.''

For the first 10 months, Hong Kong's consumer prices rose 4.6 percent from a year earlier, the government said.

Gross domestic product shrank 0.5 percent in the third quarter from the previous three months, as exports and domestic demand cooled.

In China, the world's fastest-growing major economy, consumer prices climbed 4 percent in October from a year earlier and food prices increased 8 fast cash in one hour.5 percent. Both were the least in 17 months.

Oil's Drop

Crude oil has fallen more than 40 percent this year, prompting utility companies and gas stations to cut prices. CLP Holdings Ltd., Hong Kong's biggest power supplier, lowered the average net electricity tariff by 3 percent on Oct. 1.

The government has subsidized household electricity by taking HK$300 off bills every month for one year starting September. It has also distributed food allowances for the poor and waived rents for public-housing residents for three months starting August.

Food prices rose 9.4 percent in October from a year earlier, the government said. Utility costs slumped 32.3 percent and rents slipped 0.8 percent.

“Looking ahead, with the international commodity prices retreating and U.S. dollar strengthening, inflationary pressures from the external front are receding,'' the government said in the statement. “These factors, coupled with the slowdown in domestic demand and government's relief measures, should be conducive to progressive easing in inflation going forward.''

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Weighed down by debt, media giant CanWest Global Communications Corp. isn’t ruling out possible asset sales after buying itself some wiggle room by renegotiating debt covenants and cutting 560 jobs across the company.

Leonard Asper, the chief executive of CanWest, said the conglomerate is "continuing to look at our asset base," but warned that observers shouldn’t assume that oft-cited properties such as the money-losing National Post or Australian TV network TEN would be on the block.

"We have to look at where the biggest bang for the buck is," he said during a conference call to discuss third-quarter earnings.

"There’s been some speculation about whether we should sell this TV channel or that newspaper … but in some places it doesn’t really help us to sell assets because we lose (operating income)."

CanWest yesterday posted a loss of $1 billion, or $5.73 a share, for the three-month period ended Aug. 31.

The loss was attributed in part to a $1.01 billion non-cash writedown on the goodwill and broadcast licences related to the company’s Canadian conventional television business – a move Asper said had been taken by other big media companies.

Revenue, meanwhile, rose to $725.9 million from $678.4 million a year earlier as the company benefited from last year’s acquisition of specialty TV-operator Alliance Atlantis Communications Inc.

CanWest, which also owns the Global television network and big city newspapers across the country, has come under increasing pressure in recent weeks as an economic recession threatens to further sap advertising revenue.

Analysts have expressed concern that the company is in danger of running out of cash to service its $3.7 billion worth of debt obligations creditscore.

"Given the high degree of operating and financial leverage across CanWest’s operations, we believe a deteriorating economy will remain a major headwind for the company," said Drew McReynolds, an analyst at RBC Capital Markets.

The debt load accumulated over the years as the conglomerate built its media empire.

It paid $3.5 billion in 2000 for Hollinger’s newspaper assets and last year partnered with Goldman Sachs in a complicated deal to buy Alliance Atlantis for $2.3 billion, although Goldman shouldered most of the upfront cost.

In a bid to fix its balance sheet, CanWest said this week it is cutting 560 jobs, or about 5 per cent of its global workforce. The company said the move would save $61 million a year.

As well, CanWest took steps earlier this month to improve the performance of the National Post, its flagship newspaper, by focusing more on profitable markets and cutting back on deeply discounted circulation.

The company has also renegotiated its debt covenants, allowing it a higher ratio of debt versus operating earnings through next year, according to John Maguire, CanWest’s chief financial officer.

Asper said certain parts of the business were poised to weather an economic storm better than others.

"Digital and specialty channel revenue is good, strong, and publishing revenue is a little more challenging. Conventional television revenue is the real tough one," he said.

Shares of CanWest dropped seven cents yesterday to close at 73 cents on the Toronto Stock Exchange.

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OTTAWA–The International Energy Agency is warning that the oil companies are sowing the seeds of a new supply crisis and a return to sky-high prices.

The agency says oil producers are delaying expensive projects that would bring in much need supply, including some in Canada’s oil sands.

I.E.A chief economist Fatih Birol says he is worried that when demand rebounds, there may be another supply crunch like the one that occurred last summer.

The Paris-based agency, which advises rich countries on energry policies, says in a report released Wednesday it the world’s energy system is on an unsustainable path short-term cash loans.

It warns the result could be both oil shortages and “catastrophic and irreversible" climate damage.

The agency predicts oil demand will climb to 106 million barrels a day from the current 85 million.

It says to meet rising energy demand over the next two decades, the industry would have to invest a minimum of $26 trillion.

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Americans began pumping money into mutual funds for the first time in 15 weeks, as global equities started rallying at the end of October, according to a report released Thursday.

Investors poured $2.2 billion into equity-based mutual funds during the seven days ended Nov. 5, compared to an outflow of $9.2 billion the week before, according to TrimTabs Investment Research. The last time stock-based mutual funds saw net gains was during the week ended July 23.

Stocks surged as October drew to a close, leading many investors to put money back into their mutual funds. But the moves may have been premature as markets turned sour earlier this week, said Conrad Gann, president and chief operating officer of TrimTabs.

"Retail investors don’t have the best timing. They basically got burned over the last few days," said Gann.

Over the two days following Tuesday’s presidential election, concern about the state of the economy sent the Dow Jones industrial average down some 929 points, marking its biggest two-day point loss ever.

Downward pressure. Funds that invest primarily in U.S.-based stocks saw an increase of $2.3 billion versus a decline of $7 billion in the prior week. However funds that focus on non-U.S. stocks continued to see declines, with investors pulling out a net $140 million compared to $2.2 billion last week.

"Foreign [funds] have the double whammy of a dollar rebound and the falling market," said Gann Faxless pay advances.

The dollar has gained significantly against most major currencies over the past several weeks as many investors try to hedge their bets against the volatile stock market.

As the dollar increases, the value of foreign funds decreases because the value of the stocks they hold, which are denominated in foreign currencies, goes down, Gann explained.

Bond-based funds saw a net increase of $518 million in investments compared to a decline of $5.9 billion last week, and hybrid funds, which try to strike a balance between stocks and bonds, saw a net influx of $184 million compared to net withdrawals of $2.8 billion.

Meanwhile exchange-traded funds (ETFs), unmanaged bundles of stocks that trade as a single unit on normal exchanges, saw a net inflow of $885 million, down from an inflow of $903 million last week.

Over the past several months, money flowing into ETFs has gotten a boost from the economic weakness, since it allows investors to spread their risk across a whole range of stocks.

Despite the apparent turnaround in mutual fund confidence, "we’ll continue to see outflows," said Gann. The economy is still struggling, especially overseas, he pointed out. 

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