Money world

Ralcorp Holdings is two months away from completing the spin-off of its branded cereal business, Post Holdings, yet company officials say they remain in buy mode.

In a conference call with analysts today, St. Louis-based Ralcorp’s executives said the spin-off of Post as a separate, publicly traded company will occur by the end of January 2012. Ralcorp, which has grown through acquisitions over the past decade, plans to focus on private label cereal, pasta, frozen bakery goods and other foods.  

“As the leader in private brand foods, we continue to be excited about the opportunities that exist in the private brand, or store-brand market,” Kevin Hunt, Ralcorp’s co-chief executive and president said in the call. 

Ralcorp completed its acquisition of Kansas City-based American Italian Pasta Co. for $1.2 billion in July 2010, which helped boost Ralcorp’s net sales to $4.7 billion in fiscal 2011, up from $4 billion in 2010.

In October, Ralcorp closed on its $545 million purchase of the North American refrigerated dough business from Sara Lee, which included Sara Lee’s private label biscuits, crescent rolls, pizza and pie crusts and toaster pastries cash advance now.

More acquisitions may be on the horizon. “When we look at the current acquisition pipeline, we’ve identified approximately $10 billion in additional annual sales representing 50 individual companies that meet our initial criteria for strategic acquisition, ranked by margins and synergies with our existing business,” Hunt said in the call.

Morningstar analyst Erin Lash wrote in a research note today that Ralcorp faces competitive pressures in the private label cereal business, however. “Branded firms like General Mills and Kellogg are prioritizing investments behind product innovation and marketing that resonate with consumers, which could further pressure Ralcorp’s cereal sales, in our view,” Lash wrote.

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Japan’s jobless rate climbed for the first time in three months in October while household spending and incomes fell, adding to evidence that the country’s post-disaster rebound is waning.

Government figures released Tuesday showed the unemployment rate adjusted for seasonal variations had jumped to 4.5 percent from 4.1 percent in September. Other recent indicators show slowdowns in exports and industrial production in the face of a strong yen and a sputtering global economy.

Japan’s economy expanded at an annualized rate of 6 percent in the July-September quarter in an impressive comeback from the March earthquake, tsunami and nuclear accident. But economists have said such robust growth in the world’s No. 3 economy is unsustainable.

The Organization for Economic Cooperation and Development said in a report Monday that Japan’s “pace of recovery is now moderating.”

The latest labor report is the second since September to include data from the three prefectures hardest hit by the disaster _ Iwate, Miyagi and Fukushima. Between March and August, the government omitted the regions because of difficulties in gathering data.

Separately, the government’s monthly report on households showed that families are tightening their budgets.

Average household spending in October retreated 0.4 percent from a year earlier to 285,605 yen ($3,650). Average monthly household income declined 1.8 percent in real terms to 479,749 yen ($6,135).

The OECD said Japan’s economy should benefit next year from improved financial conditions and the government’s planned reconstruction spending. It expects the gross domestic product to grow 2 percent in 2012.

“Soft global growth and the appreciation of the real exchange rate are, however, likely to check the pace of the upturn,” the OECD said.

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On the eve of landmark elections, Egypt’s military ruler warned Sunday of “extremely grave” consequences if the turbulent nation does not pull through its current crisis _ an attempt to rally the public behind his council of generals in the face of pressure from protesters to step down immediately.

Field Marshal Hussein Tantawi urged voters to turn out for the start of parliamentary elections Monday despite the chaos in the streets after nine days of protests and clashes that some have dubbed a “second revolution.” The vote will be the first since Hosni Mubarak was ousted in February in a popular uprising and it was meant to usher in democracy after decades of dictatorship. However, it has already been marred by the new wave of demonstrations.

Tantawi claimed “foreign hands” were behind the latest wave of unrest. His assertions were similar to those made by Mubarak in the final days before he was ousted. Mubarak frequently warned chaos would ensue if his regime fell, presenting his authoritarian rule as the alternative of order and security. Tantawi was Mubarak’s defense minister for 20 years.

“We will not allow troublemakers to meddle in the elections,” he said in comments carried by the nation’s official news agency. “Egypt is at a crossroads _ either we succeed politically, economically and socially or the consequences will be extremely grave and we will not allow that.”

The military took power when Mubarak stepped down. But it has come under intense criticism for most of the past nine months for its failure to restore security, stop the rapid worsening of the economy or introduce the far-reaching reforms called for by the youth groups behind Mubarak’s fall and the ongoing protest movement. Tantawi rejected calls for the ruling military council to immediately step down.

His warning came as thousands of protesters were filling Cairo’s Tahrir Square for another massive demonstration demanding the military give up power in favor of a civilian presidential council and a “national salvation” government to run the country’s affairs until a president is elected.

It was the ninth straight day of a revival of the protest movement that toppled Mubarak. At least 41 protesters have been killed in and more than 2,000 have been wounded, most of them in Cairo.

At the same time, Egyptians were preparing to vote amid the chaos. With protesters in the streets, there are fears of violence at polling stations. And the population is sharply polarized and confused over the nation’s direction.

Islamic parties are expected to dominate the election, but the political crisis casts doubt on the legitimacy of the vote and could render the parliament that emerges irrelevant.

“I am not going to vote tomorrow because everyone who is running is a thief and only cares for the seat they want to sit in,” said Abu Ahmed, a 36-year-old fruit vendor in the Mediterranean port city of Alexandria. “Many times they’ve tried to buy my vote with a bag of food or money. They know that I’m poor and they want to take advantage of me. I don’t read or write, but I know that Tantawi needs to go,” he said.

The Muslim Brotherhood, the largest and best organized political group in Egypt, is expected to dominate the elections along with its Islamist allies. The group has stayed away from the current wave of protests, careful not to do anything that would derail the vote.

However, the military has said the next parliament will have limited powers, and suggested that it will retain the right to appoint and dismiss the Cabinet. The issue promises to put the military and the Brotherhood on a collision course. A dispute between the two could destabilize the country further, adding to economic and security woes.

“The next parliament will have no power,” predicted accountant Said Younis in Tahrir. “What we want is a salvation government or even a revolutionary government.”

Heavy limitations on the next parliament undermine the very relevance of the vote. The next government will not be determined by legislators but by the head of state, which at the moment is the military, though the protesters want it to step aside. If the military clings to its status, there are likely to be stormy negotiations over the formation of a government, and the protesters will try to influence events by bringing numbers to the streets. In any case, lawmakers at best will be on the sidelines trying to make their voice heard.

The other main duty of parliament _ creating an assembly to draft the next constitution _ may also be largely out of its hands. The military has insisted on the power to name a large part of the assembly, and there is enormous pressure on all sides to form an assembly that represents all factions no matter what their proportions in the parliament.

It is not even clear how long this parliament will be in place. The multi-stage election for the two houses stretches on until March. Then, under the latest timetable put forward by the generals, the constitution must be written and approved by late June. No one has addressed the question of whether the parliament being created now could continue in place under a new constitution or whether a new election would be needed.

A high turnout in the elections, staggered over three stages scheduled to conclude in March, will likely benefit the standing of the military since the vote is a crucial part of a road map it proposed for the transfer of power.

In some ways, a high turnout could undermine the cause of the tens of thousands of anti-military protesters. A low turnout would give credence to the protesters’ claims that the vote lack relevance and legitimacy and, some contend, should wait until the military are back in the barracks.

Tantawi said the military will follow through with its somewhat vague road map for handing over power. The ruling council never set a precise date for transferring authority to an elected civilian administration, only pledging that presidential elections _ the last step in the handover process _ will be held before the end of June, 2012.

Tantawi also accused foreign powers he did not name of meddling in Egypt’s affairs.

“None of this would have happened if there were no foreign hands,” he said. “We will not allow a small minority of people who don’t understand to harm Egypt’s stability,” he said, apparently alluding to the protesters in Tahrir, epicenter of the 18-day uprising that toppled Mubarak.

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Al-Shalchi reported from Alexandria, Egypt.

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Egypt’s central bank has raised interest rates for the first time in three years. It follows months of political unrest that have led to an economic slowdown, putting the country’s currency under pressure.

The bank said in a statement posted late Thursday that its Monetary Policy Committee decided to raise the overnight deposit rate by 1 percentage point to 9.25 percent.

Also, it raised the overnight lending rate 0.5 percentage points to 10.25 percent and the 7-day repo by 0 bad credit payday advance.5 percentage points to 9.75 percent.

The Standard & Poor’s ratings agency on Thursday pushed Egypt’s sovereign credit ratings deeper into junk status, citing the country’s deteriorating fiscal situation.

Egypt’s last interest rate hike came in September 2008.

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The former chief executive of Olympus Corp. spoke with Japanese investigators Thursday, reiterating his determination to get to the bottom of one of Japan’s biggest financial scandals involving a cover-up of massive investment losses.

Michael Woodford, 51, plans to confront the board of the Japanese camera and medical equipment maker at a meeting Friday _ a day after speaking with the Tokyo District Public Prosecutors Office, the Tokyo Metropolitan Police Department and the Securities and Exchange Surveillance Commission.

Woodford, who was fired last month after questioning dubious accounting at Olympus, remains on the board and can only be removed by shareholders. He declined comment on what he was going to tell prosecutors. He returned to Japan on Wednesday.

Under intense pressure, the embattled company has admitted that a $687 million payment to an obscure Wall Street firm for financial advice and expensive acquisitions were used to cover up investment losses dating to the 1990s.

The board abruptly ousted Woodford last month for questioning the deals and payment. At the time, Olympus said Woodford was sacked because his management style was incompatible with the company’s culture.

The scandal has cast a harsh light on corporate governance in Japan, which has been repeatedly criticized as falling behind global standards. Recent media reports have also pointed to possible ties between Tokyo-based Olympus and organized crime.

A third-party panel created by Olympus to investigate its accounting has said it has so far found no evidence of any ties with the underworld.

Woodford told the throngs of media gathered at Narita International on Wednesday that he is not afraid to be back in Japan and would press for answers during his stay.

“This isn’t going to go away, the truth will come out,” he said. “Please now have the dignity, at least the dignity, to accept that the game is up.”

Woodford went public with his concerns after his sacking, and has become a hero among circles hopeful for better corporate governance in Japan payday advances.

Tsuyoshi Kikukawa resigned as president on Oct. 26 and was replaced by Shuichi Takayama. The company blamed the accounting scheme on Kikukawa, former executive vice president Hisashi Mori and ex-auditor Hideo Yamada.

Prosecutors are questioning the executives, according to Kyodo news agency.

Olympus now risks being delisted from the Tokyo Stock Exchange unless it can rectify past filings with regulators by reporting revised earnings by Dec. 14.

The company’s shares lost four-fifths of their value after the scandal erupted in mid-October, but have since recovered on optimism that Olympus will avoid removal from the stock exchange.

The issue gained 17 percent Thursday, its maximum gain allowed for a single day, to finish at 1,019 yen.

The Tokyo Stock Exchange was closed Wednesday for a national holiday. Olympus shares surged 20 percent Tuesday after the panel said it had found no evidence of links to organized crime.

The practice of hiding investment losses through funny bookkeeping and paper companies has surfaced before in Japan, especially in the 1990s, when mergers and acquisitions became a way for companies to survive in the depressed economy that followed the bursting of Japan’s real estate bubble.

Such scandals have previously ensnared other major names in Japan Inc., such as Yamaichi Securities Co., which went bankrupt in 1997, and cosmetics maker Kanebo, which was forced to undergo a government-backed bailout in 2005.

Woodford is speaking on a panel and with reporters Thursday evening, and has a press conference Friday at the Foreign Correspondents’ Club of Japan in Tokyo.

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Phone hacking by the media cost me my job advising Elle Macpherson, a business adviser told a U.K. inquiry Tuesday, describing how the Australian supermodel wrongly blamed her for leaking intimate secrets to the press.

Mary-Ellen Field told an inquiry into British media ethics that the leaks cast a shadow of suspicion over her, with Macpherson becoming convinced that Field was an alcoholic and ordering her to an American rehabilitation clinic. Field said she was shocked by the allegations that she was a drunk who’d been blabbing about her employer, but went along with Macpherson’s recommendation because she needed her job.

“I have a severely disabled child who can never look after himself so walking away from a high-paying position is not a good idea,” Field said.

The rehab was grueling _ she described it as being “like one of those CIA renditions, except they don’t put you in chains” _ but it didn’t do her much good.

Even though staff at the clinic said she was not an alcoholic, Macpherson fired her anyway, and Field lost her job at her firm shortly afterward. She told the inquiry there was no doubt the sacking was the result of what happened with Macpherson.

Field said her employer told her that “I’d been indiscreet, that the clients didn’t trust me.”

Although it has since emerged that the media leaks were the result of phone hacking not indiscretion, Field said she has not heard from fellow Australian Macpherson in years.

Field was one of several victims of press intrusion testifying Tuesday at Britain’s Royal Courts of Justice. The inquiry was set up after the scandal over phone hacking and other underhanded tactics used at the News of the World, which was closed in July amid allegations of widespread criminality no credit check payday loans.

Among those due to testify Tuesday were British comedian Steve Coogan, soccer player Garry Flitcroft, and Margaret Watson, whose daughter Diane was stabbed to death at her Scottish school two decades ago.

The parents of murdered British schoolgirl Milly Dowler and film star Hugh Grant were the first victims to testify on Monday, with Grant being particularly scathing.

He described mysterious break-ins, leaked medical details and hacked voice mails. Grant attacked the Mail on Sunday tabloid, accusing it of spying on his conversations. The paper denies the charge, but lawyers at the inquiry said Tuesday the tabloid’s response smacked of an attempt to intimidate witnesses.

David Sherborne and Neil Garnham pointed to an article on the Mail’s website describing Grant’s allegations as “mendacious smears driven by his hatred of the media.”

“(Is) everyone who has the temerity to give evidence critical of the press is going to face this the following morning?” Garnham asked.

Sherborne also invoked the Mail article when he said many witnesses were worried about “the sort of intimidatory tactics that we’ve seen in the press this morning.”

The Mail’s lead counsel was not at the hearing but was expected to reply later Tuesday.

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Aubrey Dan is a Tony award-winning producer and president of the Dancap Group of Companies. In our series on the financial habits of notable Canadians Dan told the Toronto Star’s Emily Mathieu about his wise investment in water, his strategic approach to selling popcorn at his first job and how he convinced his dad to let him buy a motorcycle at 13.

How did your family influence your attitude toward money?

My family had a huge influence on my attitude toward money. They taught me I had to work very hard to earn every dollar, while at the same time to donate money as well. The more we make, the more we can afford to give away.

What is the best financial advice you ever received?

My grandfather told me to not waste my time investing in penny stocks as they are very speculative. Instead, I should invest my money into companies that people need, versus want they want. Companies that have a solid foundation where the demand (for their product or service) increases over time, therefore increasing the value.

Describe your first job, what did it teach you?

My first job was at the Exhibition Stadium with the Toronto Blue Jays. I became the No. 1 popcorn salesman because I had limited competition from the other sellers, and I would target customers between 1st and 3rd base, sitting near the home plate, as they were the most expensive seats and presumably had the most disposable income. I would shout out at the top of my lungs a sales message that created the demand for popcorn and encouraged people to buy from me.

What was the first item you purchased with your own money?

I bought a Yamaha 60cc motorcycle that cost me $200 when I was 13 years old. I had to do a real sales job to convince my dad that I should own one. Since I had my own money that I had earned from working, and he rode one when he was young, it was hard for him to disagree.

What has been your savviest investment?

Investing in a small water power generation business in Ontario. There were long-term supply agreements that guaranteed the revenue so all I had to do was focus on managing the operations efficiently and eventually I sold it for a handsome profit.

What is your best money-saving advice?

It’s very important to understand your own risk tolerance when investing in a company, while trying to control your downside protection. Don’t get greedy. Take money off the table once you have reached your targeted ROI expectation, even if there is further upside.

What is your worst spending habit?

I like going to the occasional Toronto Raptors game with my son, sitting in the press box beside the team bench as there is no better seat to see the game. I pay an insane amount for this luxury, but I value the premium location.

What hard financial lessons did you learn throughout your career?

I could write a book on the lessons that I’ve learned, but the one that sticks out the most is knowing when to stop investing in a company and calling it quits if it has stopped making money after a period of time. This is emotionally hard to do as one can look at it as a failure, but in fact it can be a very smart move.

What advice would you give to young people about to enter the business of entertainment?

Make sure that you can afford to lose the money that you invest; the entertainment business is one of the riskiest businesses. It takes more than hard work and good luck to be successful.

How do you prefer to pay, cash, card or debit?

I prefer to pay by credit card as I collect all the points that I use for my FREE travel, but I always pay off the balance at the end of the month, as I hate to be in debt.

Do you bank online?

Yes, I use online banking extensively so I can manage my funds effectively anywhere in the world.

What is your retirement plan?

Retirement is a word that is not in my vocabulary. I don’t ever see myself not working in some capacity. My Dad is 83 years old and he’s still a going concern who has yet to really slow down. Since I come from the same gene pool, I don’t see anything different for my future.

Are money and success the same thing?

Money is a tool that can be used to achieve your goals and dreams, but it’s not the end game. It’s what you do with money that makes you successful. To me the definition of success is how you can help the world by giving back as much money as possible, while building for the next generation.

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Italian Premier Mario Monti urged lawmakers Friday to not “pull the plug” on his government before elections in 2013, no matter how politically painful the measures in his plan to save Italy from its debt crisis.

Monti also told the lower Chamber of Deputies ahead of a confidence vote in his new government that he would travel to Brussels next week to the European Commission and would meet with the French and German leaders to map out strategy.

“The job that I have had the honor of receiving is nearly impossible, but we will succeed,” Monti said.

On Thursday, Monti’s government won a confidence vote 281-25 in the Senate after he warned all Italians would need to make sacrifices to get the country out of its massive debt hole.

Monti is under enormous pressure to boost growth and bring down Italy’s high debt, which at 120 percent of GDP is among the highest in the eurozone. The aim is not only to save Italy from succumbing to the debt crisis but to prevent a catastrophic disintegration of the common euro currency.

Monti told lawmakers his strategy had three main pillars: Budgetary rigor, economic growth and social fairness. He pledged to reform the pension system, re-impose a tax on homes annulled by Berlusconi’s government, fight tax evasion, streamline civil court proceedings, get more women and youth into the work force and cut political costs.

On Friday, his remarks were more aimed at answering lingering doubts among those who voted against his government, have conditioned their approval on how long it lasts, or took to the streets Thursday to protest his cabinet of bankers, university professors and CEOs.

“We won’t be around for long,” Monti said. “We won’t last a minute longer than the time this parliament gives us their confidence.”

But he stressed that he never would have gathered together such a high-caliber government if the intent wasn’t to govern until the natural end of the legislative term, in spring 2013. He has said anything less than that would undermine the government’s credibility.

While acknowledging the absolute dependence of his government on parliament, he jokingly asked to avoid using terms like “pull the plug” because it implied the government was some kind of an “artificial lung” when in fact it is leading the country through a profound crisis online payday loan lenders.

“We’re not asking for blind trust, but vigilant trust,” Monti said.

But he also issued a warning of sorts, noting the sense of desperation among ordinary Italians about Italy’s economic mess: “In giving us confidence or taking it away, you must also realize the consequences for yourselves among Italians.”

It was a clear message to Berlusconi’s People of Freedom party, which has said it would only support Monti’s government for as long as needed to pass the measures demanded by the EU.

Party secretary Angelino Alfano told state television Thursday that the party hadn’t given Monti a deadline. “But what is certain is that we are making the link between the government and its program, and once the program is finished we’re heading to the polls.”

Europe has already bailed out three small countries _ Greece, Ireland and Portugal _ but the Italian economy, the third-largest in the 17-nation eurozone, is too big for Europe to rescue. Borrowing costs on 10-year Italian bonds were at 6.75 percent Friday, after spiking briefly over 7 percent Thursday, a level that forced those other countries into bailouts.

In a conference call Thursday, German Chancellor Angela Merkel, French President Nicolas Sarkozy and Monti agreed that their countries have a special responsibility to the eurozone as its three largest economies and founding members of the European Union.

Monti said his meeting with Sarkozy and Merkel would mark the start of “a permanent Italian contribution to the solution of the debt problem.”

Still, it’s not clear how many sacrifices Italians are willing or able to make. Students demonstrated across the country on Thursday under the banner: “Save the schools, not the banks.”

Monti’s ambitious plans overhaul just about every aspect of the Italian economy _ from the organization of local governments to the selection process for teachers. Monti indicated he would seek to lower taxes on labor, while raising those on consumption. And he pledged measures _ such as setting a limit on cash transactions _ to tackle tax evasion, which he estimated is worth 20 percent of GDP.

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Stock indexes fell in afternoon trading Thursday as spiking bond yields in Spain brought new worries Europe’s debt crisis and overshadowed the latest signs of growth in the U.S. economy.

Technology stocks led the market lower after two companies disappointed investors with weaker earnings predictions. NetApp Inc. plunged 12 percent, the most in the S&P 500 index, after the data storage company forecast earnings that were below Wall Street’s estimates.

Applied Materials Inc. also said its earnings for the current quarter would be weaker than analysts’ forecasts. The company’s income fell 3 percent last quarter on lower demand fell for the semiconductor equipment it makes.

The Dow Jones industrial average dropped 159 points to 11,746 as of 1 p.m. Eastern time. It had wavered between gains and losses earlier in the day. Cisco Systems Inc. had the largest fall of the 30 stocks in the Dow, 2.7 percent. Intel Corp. dropped 2.4 percent.

In Spain, an auction of 10-year government bonds left the country paying interest rates of nearly 7 percent. That’s the highest rate since 1997 and a level that economists see as unsustainable. Greece and Ireland received rescue loans from the European Union after their bond yields jumped above the same level.

Spain has much more debt than either Greece or Ireland, which would make it difficult for other countries to rescue. Like Italy, whose main borrowing rate also spiked above 7 percent in the last week, the country is burdened with high debts and slow growth.

Concerns about Europe’s debt crisis contrasted with better economic reports in the U.S. The number of people seeking unemployment benefits last week fell to the lowest level in 7 months, a sign layoffs are easing.

“The economic data in the U.S. has been improving,” said Michael Sheldon, chief market strategist at RDM Financial in Westport, Conn. “If it weren’t for Europe, I think equity markets would be doing much better right now.”

The Spanish bond auction came a day after Fitch Ratings warned that major U.S. banks could be “greatly affected” if Europe’s debt crisis continues to spread beyond the financially troubled Greece, Ireland, Portugal, Italy and Spain.

Building permits jumped 10.9 percent, much higher than economists expected. That’s another sign that the U.S. may not be headed for another recession.

The Standard & Poor’s 500 index lost 21, or 1.8 percent, to 1,214. The Nasdaq composite slid 57, or 2.1 percent, to 2,582.

In corporate news:

_ Consumer review site Angie’s List soared 21 percent on the company’s first day of trading. Angie’s List Inc., which runs reviews of veterinarians, plumbers and other local services, priced its initial public offering of 8.8 million shares at $13 late Wednesday.

_ Sears Holdings Corp. fell 4.6 percent after its third-quarter results missed Wall Street’s expectations. The retailer’s sales were dragged down by declining consumer electronics sales and softer sales at its Kmart stores.

_ J.M. Smucker Co. lost 2.4 percent after reporting that rising costs for ingredients were cutting into profits.

_ Boeing Co. slipped 1 percent after the market turned lower in the afternoon. The company had traded higher after announcing its largest commercial airplane order. Lion Air, a private carrier in Indonesia, ordered a total of 230 airplanes at a list price of $21.7 billion.

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Clayton-based Brown Shoe Co. said today that it will close a distribution center in Sun Prairie, Wis. next year to reduce excess capacity in its network as part of its ongoing portfolio realignment.

The facility will be closed in phases with the process beginning in January and ending in April, the company said.

“This decision was based on the result of changes in our industry and our continued portfolio realignment efforts, which are focused on shifting resources to our strategic consumer platforms,” Mike Kauffman, the company’s senior vice president of global supply chain management, said in a statement.

Brown Shoe chief executive Diane Sullivan launched a portfolio review when she took over the company earlier this year. As part of that process, the company also recently sold the basketball brand AND 1.

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