In the news:
The Associated Press
Goldman exec resigns with a blistering farewell
NEW YORK (AP) - Goldman Sachs, arguably the most storied investment bank on Wall Street, has been compared to a money-sucking vampire squid and called the evil empire of finance. On Wednesday it got an entirely different kind of black eye - delivered by one of its own.
Greg Smith, an executive director at the bank, resigned with a blistering opinion piece that accused the bank of losing its "moral fiber," putting profits ahead of customers' interests and dismissing customers as "muppets."
The decline of the bank's culture, he wrote, threatened the bank's survival after 143 years.
The stinging rebuke, "Why I Am Leaving Goldman Sachs," appeared in The New York Times, was the talk of Wall Street on Wednesday and was widely circulated online. Smith became a trending topic on Twitter, the social network website.
Bond market sees a stronger economy
WASHINGTON (AP) - The bond market is betting on a stronger economy.
Prices for U.S. Treasury debt plunged for the fifth straight trading session Wednesday, and the yield on the benchmark 10-year note spiked to its highest level since October.
Money poured out of bonds and into stocks after rosy words on Tuesday from the Federal Reserve gave traders confidence that the economic recovery is strengthening. Major stock market averages are at or near four-year highs.
Treasury yields - and interest rates that take their cues from Treasury yields, including mortgage rates - remain near all-time lows. So while mortgage rates may creep up, they should remain historically low.
Citi disappointment on Fed test raises questions
NEW YORK (AP) - Everyone expected Citigroup to pass the Federal Reserve's latest stress test easily.
It had just posted two years of profits, and CEO Vikram Pandit said as recently as March 7 that he was "confident" about rewarding shareholders with more dividends. Pandit himself was handsomely rewarded with a $14.8 million pay package last year.
But in a shock to Wall Street, Citigroup failed the Fed's annual checkup for banks. It said Citi, unlike its peers, does not have enough capital to raise its stock dividend and still withstand a financial crisis worse than 2008.
Analysts were left wondering Wednesday what lies inside of Citi's loan portfolios and whether the nation's third-largest bank had fully recovered from the meltdown three and a half years ago.
Fed now tweeting, but keep expectations in check
WASHINGTON (AP) - The Federal Reserve isn't known for its brevity. Now, it has no choice.
At least when it comes to the tweets it will issue through its official Twitter channel which it launched Wednesday.
Like other Twitter users, the Fed will have to limit its tweets to 140 characters. Just listing the official name of its policymaking panel, the Federal Open Market Committee, would consume roughly a quarter of that space.
Don't expect too much excitement from Chairman Ben Bernanke's august institution. After all, it's not like following Lady Gaga or Ashton Kutcher.
Unless, of course, excitement is defined by a tweet like, "Watch a video of Chairman Bernanke explaining the structure of the Federal Reserve."
Or one that directs you to a report on mobile financial services. Or to a Bernanke speech on community banking.
Those were among the Fed's first four tweets.
Investors push to know Warren Buffett's successor
OMAHA, Neb. (AP) - A group of Berkshire Hathaway investors from the AFL-CIO wants to require the company to reveal Warren Buffett's successor.
The labor union's AFL-CIO Reserve Fund submitted a proposal that Berkshire shareholders will vote on at the annual meeting this May.
The union wants to require the Omaha-based company to disclose a written succession plan that includes the criteria for the next chief executive and the identities of promising internal candidates.
The proposal would address something many Berkshire shareholders have worried about for years because so much of the company's success is attributed to the 81-year-old Buffett.
US trade deficit rose to $124.1 billion
WASHINGTON (AP) - A slight drop in exports and a rise in imports widened the broadest measure of the U.S. trade deficit at the end of last year. The increase pushed the gap to its widest point in three years.
The Commerce Department said Wednesday that the current account trade deficit increased 15.3 percent in the October-December quarter, to $124.1 billion.
A higher trade deficit acts as a drag on growth. It means more goods and services are being purchased from overseas, while U.S. companies are making fewer sales overseas.
Exports decreased slightly to $380.4 billion, in part because of a drop in overseas demand for U.S. airline tickets. Imports ticked up to $566.7 billion. The increase was partly driven by increased purchases of imported airplanes.
Bernanke says community banks strengthening
WASHINGTON (AP) - U.S. community banks are gaining strength even though the economy is improving only moderately, Federal Reserve Chairman Ben Bernanke said Wednesday.
The Fed chief delivered prerecorded remarks to a convention of community bankers in Nashville. The speech was similar to one he gave last month in Arlington, Va.
Bernanke said community bank profits were higher in 2011 than the previous year and bad loans were decreasing. He also said they have built up cushions against loan losses. Community banks have assets below $10 billion.
Reynolds American to cut 10 percent of jobs by 2014
RICHMOND, Va. (AP) - Reynolds American Inc., the second-biggest U.S. tobacco company, said Wednesday that it will eliminate about 10 percent of its workforce, or about 540 jobs, by the end of 2014 to cut costs.
The move will reduce spending by $70 million a year for the Winston-Salem, N.C.-based maker of Camel, Pall Mall and Natural American Spirit brand cigarettes.
Reynolds, which also sells Kodiak and Grizzly smokeless tobacco products, said most departures will be voluntary.
The company expects to take about $110 million in severance and other charges in the first quarter, and it expects to save about $25 million from the cuts this year. It thinks that will rise to $70 million annually by 2015.
J&J CEO gets 8 percent pay boost in 2011, to $23 million
TRENTON, N.J. (AP) - Johnson & Johnson raised compensation 8 percent last year for outgoing CEO William Weldon, despite a seemingly endless string of product recalls, mediocre 2011 results and ongoing lawsuits and government probes into some products and marketing practices.
Weldon, who will step down next month after a decade as CEO but remain chairman of the board for the time being, raked in total compensation valued at $23.4 million last year. That's up from $21.6 million in 2010. The total includes salary of $1.91 million and more than $20 million in stock awards, option awards, performance bonus and other compensation.
The health care giant, based in New Brunswick, N.J., disclosed the compensation package Wednesday in a Securities and Exchange Commission filing.
Zynga holders plan to sell up to $400 million in stock
SAN FRANCISCO (AP) - Zynga shareholders may sell up to $400 million of stock through a public offering, three months after the online game maker went public, to try to avoid a drop in its stock price.
The San Francisco-based company said Wednesday that shareholders are selling stock to "facilitate an orderly distribution of shares." This means the company wants to make sure its stockholders don't sell a lot of stock all at once when the post-IPO "lock-up" period expires. Early investors typically must wait about six months to sell off parts of their stakes after an initial public offering. The expected wave of share sales can weigh on a newly public company's stock price.
The company said it is releasing selling stockholders from the lock-up, which was set to end on May 28. In exchange, the sellers, which could include company directors and executives, will agree to longer lock-up agreements for shares they are not selling, staggering sales over a longer period.
By The Associated Press(equals)
The Dow Jones industrial average rose 16.42 points to 13,194.10, up 0.1 percent. The Standard & Poor's 500 edged down 1.67 points to 1,394.28. The Nasdaq composite inched up 0.85 point to end at 3,040.73.
Benchmark West Texas Intermediate crude, which sets the price of much of the oil produced in the U.S., fell by $1.28 to $105.43 per barrel in New York. Brent crude, used to price oil imported by U.S. refineries, fell by $1.25 to finish at $124.97 per barrel in London.
Heating oil and gasoline futures both lost less than a penny to end at $3.2618 and $3.347 per gallon, respectively. Natural gas futures fell by 1.5 cents to end at $2.2840 per 1,000 cubic feet.