My finance view

Raymond James Financial is nearing a $930 million cash deal to buy Morgan Keegan, a Memphis-based brokerage owned by Regions Financial, Bloomberg News is reporting.

The Bloomberg report, citing a source close to the deal, said St. Petersburg-based Raymond James may announce the deal as early as this afternoon. The deal would include a $250 million from Morgan Keegan to Regions prior to the sale, bringing the total price to about $1.2 billion.

If the deal finalizes, it will make Raymond James among the largest underwriters of municipal bonds and boost its roster of financial advisers from 5,100 to about 6,300.

St business cards. Louis-based Stifel Nicolaus has pursued efforts to buy Morgan Keegan since Birmingham-based Regions put the unit up for sale in June. Bloomberg reported that Stifel’s most recent bid, made on Jan. 8, was $875 million in cash and stock. Stifel has 2,000 financial advisers and has grown its geographic footprint and adviser ranks through acquisitions in recent years.

Check back on stltoday.com for updates to this story.

Source

Hungary

Retails sales in the 17-nation eurozone dropped in November, official statistics showed Friday, as consumers felt the bite of austerity measures and feared the currency union could slip deeper into crisis.

Retail sales in the eurozone fell 0.8 percent compared with October and were down 2.5 percent from November 2010, according to Eurostat, the EU’s statistics agency.

The steepest declines were seen in Portugal, which had to be bailed out in April and where sales fell 2.6 percent during the month and were down a massive 9.2 percent from a year earlier.

But even in richer states like Germany and the Netherlands, consumers were more reluctant to part with their money, with retail sales slipping 0.9 percent in both countries during November. That shows how the eurozone’s worsening debt crisis is taking its toll even on countries with strong economies.

For the whole European Union, which includes non-euro members like the U.K. and Sweden, November retail sales dropped 0.6 percent from October and 1.3 percent compared with a year earlier.

Consumers appear worried by high unemployment, which remained stuck at 10.3 percent in November _ unchanged from October but above the 10 percent seen a year earlier _ and a darkening outlook on the economy easy pay day loans.

The weak data also underlines how many people found themselves in a worse position at the end of 2011 than at the end of 2010 _ when there were hopes that the continent was turning a corner after two difficult years brought on by the collapse of U.S. investment bank Lehman Brothers in 2008.

Spain’s unemployment rate was highest at 22.9 percent, up from 20.4 percent a year earlier. That’s more than four times as high as in Austria, where only 4 percent of people were looking for work. For the whole EU, the unemployment rate remained at 9.8 percent.

The dark mood is set to continue in the eurozone, with a Eurostat economic sentiment indicator falling 0.5 of a point to 93.3 in December, far below the long-term average of 100.

Italy and Spain, the eurozone’s third and forth largest economies which have been pulled into the eye of the crisis in recent months, grew especially pessimistic about the economy. Economic sentiment fell 4.6 points in Italy and 1.3 points in Spain.

In the 27 EU countries, economic sentiment was down 0.8 point at 92.

Source

Shares in UniCredit, Italy’s largest bank, slid Wednesday after the company priced its euro7.5 billion ($9.8 billion) cash call from shareholders at the bottom end of market expectations.

UniCredit shares dropped 14.5 percent lower at euro5.42, as investors were spooked by the scale of the discount in the company’s rights issue. Other European banks, many of which are looking to raise money to plug financial holes, also saw their share prices take a hit amid concerns that they too would be forced to price their cash calls at low levels too.

The aim of UniCredit’s rights issue _ shareholders have been asked to buy two new shares for every one they hold _ is to help the bank shore up its capital reserves, in line with European regulatory demands. Last month, industry regulator, the European Banking Authority, said the bank needed to raise around euro8 billion.

Earlier in the day, UniCredit shares were briefly suspended after the cash call was priced at a 69 percent discount to Tuesday’s close, much lower than most predictions. So far, only 24 percent of the shares on offer have been taken.

The discount was bigger than those that have been offered by UniCredit’s peers recently and knocked sentiment in Europe’s banking sector as a whole, notably of Germany’s Commerzbank AG, which has been asked to raise euro5.3 billion ($6.9 billion) by the European Banking Authority. Its share price fell 4 percent.

Last month, the EBA said European banks have to raise about euro115 billion ($150 billion) to meet a new standard meant to inoculate the lenders against market turmoil, including bad government debt.

European banks have billions of euros of risky government bonds on their books, and, as the continent’s crisis has deepened, investors have become increasingly concerned the lenders won’t be able weather all of the expected losses on those loans.

That, in turn, has made banks wary of lending to one another _ since they worry that one of their number could go under at any moment. When banks stop lending to one another and businesses, the entire economy seizes up.

Much of the current focus in Europe’s debt crisis has centered on Italy, the third-largest economy in the eurozone.

International markets have punished Italy in recent months for failing to come up with a coherent strategy to deal with its euro1.9 trillion ($2.5 trillion) debt mountain. That drove up the borrowing rates for the eurozone’s third-largest economy and effectively forced Silvio Berlusconi from office.

Source

Reflecting on a challenging year, President Barack Obama says he’s hoping for more economic progress following action by Congress to prevent tax increases at the start of 2012.

“It was good to see members of Congress do the right thing for millions of working Americans,” said Obama, using his weekly radio and Internet address Saturday to deliver a New Year’s message.

He said the public made itself heard on a Social Security payroll tax cut and that was one big reason that lawmakers agreed to extend it for two more months.

The American people, Obama said, “had the courage to believe your voices could make a difference.”

The president said he expects Congress to finish the job when lawmakers return to Washington in January and extend the tax cut through the end of the year.

Reflecting on 2011, Obama said it was a time of great challenge and progress, including the end of the war in Iraq, the death of Osama bin Laden and signs of an economic recovery.

“There’s no doubt that 2012 will bring even more change,” Obama said. “And as we head into the new year, I’m hopeful that we have what it takes to face that change and come out even stronger _ to grow our economy, create more jobs and strengthen the middle class.”

On the eve of an election year, Obama said the months ahead will help determine “what kind of country we want to be and what kind of world we want our children and grandchildren to grow up in.”

Sen. Johnny Isakson, delivering the GOP address, outlined his party’s commitments to the American people for 2012.

The Georgia lawmaker said his party’s No. 1 goal is to make it easier for small businesses to create jobs.

“We’ll accomplish this by focusing on three things: fundamental tax reform, regulatory reform and energy security,” he said.

Isakson said that while some people may think Congress will be too consumed with the 2012 elections to accomplish anything significant, the public deserves better.

“Americans cannot wait until after the November election,” he said. “They need us to do our job and do it right now to create an economic climate that makes it easier to put people back to work.”

Source

U.K. house prices (UKNBAAMM) may decline in 2012 as economic turmoil emanating from the euro area

Standard & Poor’s is threatening to downgrade the credit rating of 15 eurozone countries, saying the worsening debt crisis is affecting the bloc’s strongest economies.

The decision Monday to put 15 eurozone countries, including AAA-rating nations such as Germany and Luxembourg, on watch for a possible downgrade piles pressure on eurozone leaders to find a solution to the currency union’s debt troubles at a summit later this week.

S&P said its decision was “prompted by our belief that systemic stresses in the eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the eurozone as a whole.”

The only two euro nations not put on credit watch were Cyprus, which was already under review, and Greece, which already holds the world’s worst rating.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

BRUSSELS (AP) _ Efforts to stabilize Europe’s financial crisis were thrown into disarray late Monday as the 17 countries that use the euro braced for a possible downgrade of their credit ratings.

The leaders of France and Germany sought to restore confidence in the troubled European currency during the day with a joint call for changes to the European Union treaty so that countries using the euro would face automatic penalities if budget deficits ran too high.

Stock prices rose and borrowing costs for European governments dropped sharply in response to the changes proposed by French President Nikolas Sarkozy and German Chancellor Angela Merkel. They said their proposals would prevent the kind of out-of-control spending and borrowing that led to the debt crisis that is engulfing Europe and threatening the global financial system.

But on Monday night two people familiar with the matter said Standard & Poor’s is examining the credit rating of all 17 eurozone countries for a possible downgrade as the continent’s debt crisis lingers. They said S&P is likely to make an announcement on putting the euro countries on “credit watch” after the closing of markets in the U.S. on Monday.

The people were speaking on condition of anonymity because of the sensitivity of the matter.

The threat to downgrade all 17 eurozone countries _ including the ones that enjoy the stellar AAA-rating _ comes ahead of a crucial summit of EU leaders later this week. If there is widespread support at the summit, it is assumed that would be an important first step in bringing an end to the crisis, which has dragged on for more than two years.

“Our wish is to go on a forced march toward re-establishing confidence in the eurozone,” Sarkozy said at a news conference in Paris, with Merkel at his side. “We are conscious of the gravity of the situation and of the responsibility that rests on our shoulders.”

EU treaty changes could take months, if not years, to implement and don’t wipe away the mountains of government debt dragging down Europe’s economy. But preliminary buy-in Friday from the 17 countries that use the euro could set the stage for further emergency aid from the European Central Bank, the International Monetary Fund or some combination.

“The onus is still on the ECB to print money to make huge loans or bond purchases and draw a line under the crisis,” said Jennifer McKeown, senior European economist at Capital Economics. “Perhaps if other member states sign up to Merkel’s and Sarkozy’s proposals this week the (ECB) will step in.”

Sarkozy pledged to have a revised EU treaty ready for signing by March. It would then need to be ratified in each country, which could mean lengthy parliamentary debates or national referendums in some cases.

“A lot depends on the specifics and how these are going to be framed by lawyers,” said Piotr Maciej Kaczynski, an expert on EU constitutional issues at the Center for European Policy Studies in Brussels.

At the very least, it could take at least 18 months to ratify a new treaty once it has been signed by all heads of state, said Kaczynski. “That is a much longer timeline than what markets might want,” he said.

Bond-market analysts said they remain skeptical of Europe’s ability to prevent future profligacy. “If you say it strong enough and often enough maybe people will believe it,” said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott. “But I don’t think the markets believe ‘Merkozy’ at this point.”

EU governments reacted with caution.

No other EU leaders came out against the Franco-German proposals, but no strong statements in favor were immediately forthcoming. The reaction from Austrain Finance Minister Harald Waiglein was fairly typical: “There is nothing here that contradicts our position,” although more details are needed, he said.

The modern EU is based on a set of treaties, dating as far back as the 1950s, when the project of consolidating the continent began payday loan lenders. The treaties detail the rules that countries must follow and outline the mandates of institutions like the ECB. The most recent was the Lisbon Treaty, which was ratified in 2009, giving additional powers to the European Commission and European Parliament.

Sarkozy said he and Merkel would prefer that the treaty changes they’re proposing be agreed to by all 27 members of the EU. But he left the door open to an agreement only among the 17 euro countries and anyone else “who wants to join us.”

Sarkozy and Merkel discussed several broad changes for the EU treaty, but failed to provide much detail. The changes they outlined included:

_ Introducing an automatic penalty for any government that allows its deficit to exceed 3 percent of GDP. A majority of nations would need to oppose automatic sanctions for a country to avoid them.

Governments are supposed to abide by the deficit limit under existing rules, but many, including France, have flouted it. Further, punishment only occurs after a majority of euro countries votes to impose them.

_ Requiring countries to enshrine in law a promise to balance their budgets.

A key issue for the proposal’s final approval will be how much flexibility countries can have to run temporary deficits during economic downturns.

_ Pledging that any future bailouts would not require private bond investors to absorb a part of the costs, as was the case for the Greek bailout.

Germany had earlier insisted that Europe’s permanent bailout fund would demand private investors take losses if a country in the future needs rescuing.

_ Promising to not criticize or otherwise comment on the work of the ECB.

This is intended to ensure the bank’s independence and its ability to act without pressure from European leaders.

Sarkozy said more details would be included in a letter sent Wednesday to European Council President Herman Van Rompuy.

After Sarkozy and Merkel spoke, stocks rose and borrowing rates for governments across Europe plunged, indicating a sharp rise in investor confidence in the continent’s ability to resolve the crisis.

France’s CAC-40 index climbed 1.2 percent, Germany’s DAX rose 0.4 percent and markets outside of Europe also pushed higher, with the Dow Jones industrial average up 1.2 percent.

French banks, which have been hit hard this year over fears about their large exposure to the government bonds of financially weak countries like Greece, saw some of the biggest gains.

Societe Generale’s stock price climbed 6.2 percent while BNP Paribas rose 4.9 percent. In Italy, shares of Unicredit rose 5.4 percent while Spain’s Santander rose 3.6 percent.

Worries about the stability of the euro reached a fever pitch in recent weeks as the yields on Italy’s bonds _ in a nutshell, its borrowing costs _ jumped above 7 percent. That is the level that eventually forced Greece, Ireland and Portugal to require bailouts. By comparison, bond yields in Germany, Europe’s largest and most stable economy, are roughly 2 percent.

Italian and Spanish bond yields fell sharply on Monday, an indication of growing investor confidence in their financial future. The yield on Italy’s benchmark 10-year bond fell from 6.65 percent to 5.93 percent.

Italy, whose government debt is equivalent to 120 percent of the country’s annual economic output, needs to refinance $270 billion of its $2.6 trillion of outstanding debt by the end of April.

The size of the problems facing Italy and Spain are considered too large for the existing funds available to the European Financial Stability Facility ($590 billion) and the IMF ($389 billion.) To boost the firepower of the IMF, several economists have proposed that the ECB lend to it.

The big threat to the global financial system is that Europe’s debt crisis could spiral out of control.

If governments default on their bonds, banks that own them could take a significant hit. It could become very difficult for these banks to borrow and nervous depositors could flee with their cash. In the worst case, a global financial panic could be triggered, in which banks all over are too skittish to lend to each other. That would cause a credit crunch that deprives businesses of the short-term financing they depend on for day-to-day operations.

With such fears in the air, the United States is ratcheting up its involvement.

Geithner will meet Tuesday in Germany with ECB President Mario Draghi and German Finance Minister Wolfgang Schauble. On Wednesday, he travels to France for talks with Sarkozy and the prime minister-elect of Spain, Mariano Rajoy Brey.

Source

UPDATED at 7:15 a.m. with more stories from early morning shoppers.

HAZELWOOD

Unemployment rates fell in three-quarters of U.S. states last month, a sign that many parts of the country are experiencing modest job gains.

The Labor Department says unemployment rates fell in 36 states in October and rose in only 5. Rates were unchanged in 9 states. That’s the best showing since April, when rates fell in 39 states.

Nationally, the unemployment rate ticked down to 9 percent in October, from 9.1 percent the previous month. Employers added a modest 80,000 net jobs last month and the previous two months were revised to show much stronger gains payday advance lender.

Still, at least 125,000 jobs a month are needed to keep up with population growth, and at least double that amount to rapidly reduce the unemployment rate.

Source

Italian Premier Silvio Berlusconi resigned Saturday after parliament’s lower chamber passed European-demanded reforms, ending a 17-year political era and setting in motion a transition aimed at bringing the country back from the brink of economic crisis.

A chorus of Handel’s “Alleluia,” performed by a few dozen singers and classical musicians, rang out in front of the president’s palace as thousands of Italians poured into downtown Rome to rejoice at the end of Berlusconi’s scandal-marred reign.

Hecklers shouted “Buffoon, Buffoon!” as Berlusconi’s motorcade entered and exited the presidential palace, where he tendered his resignation to President Giorgio Napolitano, the palace said in a statement.

Respected former European commissioner Mario Monti remained the top choice to try to steer the country out of its debt woes as the head of a transitional government, but Berlusconi’s allies remained split over whether to support him.

Their opposition wasn’t expected to scuttle Napolitano’s plans to ask Monti to try to form an interim government as early as Sunday, but it could make Monti’s job more difficult.

Napolitano will hold consultations Sunday morning with all Italy’s political forces. The back-to-back, 10-minute meetings he has scheduled indicated the talks wouldn’t drag on and that Monti would be nominated by the end of the day. Late Saturday, Berlusconi’s party said it would support Monti, albeit with conditions.

Berlusconi’s resignation was set in motion after the Chamber of Deputies, with a vote Saturday of 380-26 with two abstentions, approved economic reforms which include increasing the retirement age starting in 2026 but do nothing to open up Italy’s inflexible labor market.

The Senate approved it a day earlier and Napolitano signed the legislation Saturday afternoon, paving the way for Berlusconi to leave office as he promised to do after losing his parliamentary majority earlier in the week. He chaired his final Cabinet meeting Saturday evening and thanked his ministers.

Berlusconi stood as lawmakers applauded him in the parliament chamber immediately after the vote. But outside his office and in front of government palazzos across town, hundreds of curiosity-seekers massing to witness the final hours of his government heckled him and his ministers.

“Shame!” and “Get Out!” the crowds yelled, many toting “Bye Bye Silvio Party” posters as they marched through downtown Rome in a festive indication that for many Italians, like financial markets, the time had come for Berlusconi to go.

Berlusconi supporters were also out in force, some singing the national anthem, but they were outnumbered.

Earlier in the day, Berlusconi lunched with Monti in a clear sign the political transition was already under way, news reports said.

While the euroskeptic Northern League remained opposed to Monti’s nomination, some lawmakers suggested they could support a Monti-led government for a few months to enact the additional EU-demanded reforms before elections are held in early 2012.

In a statement issued late Saturday, Berlusconi’s Peoples of Liberty party said its members would support Monti, but added that they would also ensure that Monti’s Cabinet, legislative agenda and the timeframe of his government meets their requirements.

Napolitano appealed for lawmakers to put the good of the country ahead of short-term, local interests _ an indirect appeal to members of Berlusconi’s party and the allied Northern League to work with the new government.

“All political forces must act with a sense of responsibility,” he said.

It was an ignoble end for the 75-year-old billionaire media mogul, who came to power for the first time in 1994 using a soccer chant “Let’s Go Italy” as the name of his political party and selling Italians on a dream of prosperity with his own personal story of transformation from cruise-ship crooner to Italy’s richest man pay day loan lenders.

While he became Italy’s longest-serving post-war premier, Berlusconi’s three stints as premier were tainted by corruption trials and accusations that he used his political power to help his business interests.

His last term has been marred by sex scandals, “bunga bunga” parties and criminal charges he paid a 17-year-old girl to have sex _ accusations he denies.

In the end, his downfall came swiftly: Just last week Berlusconi boldly told a G-20 summit in Cannes, France, he was the only one who could steer Italy out of its economic morass. A week of battering on the markets and the defection of several party members later, his fate was sealed.

Italy is under intense pressure to quickly put in place a new and effective government to replace him, one that can push through even more painful reforms and austerity measures to deal with its staggering debts, which stand at euro1.9 trillion ($2.6 trillion), or a huge 120 percent of economic output. Italy has to roll over a little more than euro300 billion ($410 billion) of its debts next year alone.

Markets battered Italy this past week amid uncertainty that Berlusconi would really leave and questions over whether Italy’s notoriously paralyzed parliament could rally around a replacement. But Italy’s borrowing rates pulled back after Napolitano made clear he intended to tap the politically neutral economist Monti to try to head an interim government to push the reforms through.

The yield on benchmark Italian 10-year bonds fell to 6.48 percent Friday, safely below the crisis level of 7 percent reached earlier this week.

Greece, Ireland and Portugal all required international bailouts after their own borrowing rates passed 7 percent. The Italian economy would not be so easy to save. It totals $2 trillion, twice as much as the other three countries combined.

An Italian default could tear apart the coalition of 17 countries that use the euro as a common currency and deal a strong blow to the economies of Europe and the United States, both trying to avoid recessions.

The head of the International Monetary Fund, Christine Lagarde, said Saturday that Italy’s political transition over the next few days should send a “clear sign of clarification and of credibility” that the country is now on the right path to get its finances back in order.

Speaking to reporters in Tokyo, Lagarde had high praise for Monti, saying she had great esteem for the “quality” economist with whom she had long enjoyed a “extremely warm” and effective relationship.

The IMF has a key role to play over the next few months in overseeing Italy’s efforts to pull itself back from a Greek-style economic disaster, monitoring how it implements reforms to rein in debt and spur growth, which is projected at a scant 0.6 percent this year and 0.3 percent next year.

Amid market turmoil last week, Berlusconi was forced to ask for IMF monitoring of Italy’s finances, a humiliating prospect for the eurozone’s third-largest economy and an embarrassment for the long-defiant Berlusconi.

The premier, however, received a warm sendoff from one of his closest pals, Russian Prime Minister Vladimir Putin, who called Berlusconi “one of the last Mohicans of European politics” who had brought political stability to Italy.

Source