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The number of Americans filing for initial unemployment insurance climbed last week, the government said Thursday.

There were 464,000 initial jobless claims filed in the week ended July 17, up 37,000 from a revised 427,000 the previous week, the Labor Department said.

The number of claims was much higher than expected. A consensus estimate of economists surveyed by Briefing.com expected new claims to rise to 445,000.

"It’s very disappointing to have this leading indicator of economic conditions jump higher," said John Lonski, chief economist at Moody’s Economy.com. "This is the latest reminder of a weak labor market, and the jump preserves worries regarding the adequacy of economic growth."

The 4-week moving average of initial claims, which is calculated to smooth out volatility, was 456,000, up 1,250 from the previous week’s revised average of 454,750.

Continuing claims: The government said 4,487,000 people filed continuing claims in the week ended July 10, the most recent data available. That’s down 223,000 from the preceding week’s upwardly revised 4,710,000 claims.

Economists surveyed by Briefing.com expected ongoing claims to edge lower to 4,600,000 from the unrevised 4,681,000 in the previous week.

The 4-week moving average for ongoing claims fell by 21,500 to 4,567,000 from the preceding week’s revised 4,588,500 no fax payday loans.

Outlook: Lonski said the latest rise in jobless claims is consistent with worries about the labor market, consumer spending and the general health of the U.S. economy.

"The jump in jobless claims signals more coming in the way of a slack labor market that will curb the growth of wages and employment income, and thereby consumer spending," he said. "And this just reinforces a mediocre or lackluster outlook for job growth going forward."

Earlier this month, the government said the U.S. economy lost jobs in June for the first time this year. And Lonski said that given the lack of improvement in the labor market and consumer sentiment, we could be in store for another gloomy jobs report next month.

"This is a warning that we are unlikely to receive an upside surprise in the form of a better-than-expected reading on July payrolls," said Lonski. "Despite doing better in terms of profitability and sales, companies have not stopped laying off staff and are not yet in an expansionary mode." 

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Los Alamos National Laboratory and its employees donated a combined $113,000 to the United Way of Santa Fe’s 2009-2010 giving campaign, making LANL the top donor for the ninth consecutive year.

LANL and its management company, Los Alamos National Security LLC (LANS), will receive the 2010 Top Workplace Contributor Award, along with the lab’s Community Programs Office. In addition, Debbi Wersonick – who coordinates community-giving programs for LANL – will receive a Community Ambassador plaque cashadvance.

LANL employees raised more than $2 million in its most recent giving campaign for the United Way of Santa Fe County and United Way of Northern New Mexico. The total included a dollar-for-dollar match from LANS.

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are widely regarded as being in much better position than the top banks in the U.S..

"The recession was milder since Canada’s banking system is fairly healthy," said Paul Ashworth, senior economist with Capital Economics, a research firm based in Toronto. "Canada never had a housing downturn that was anything like what happened in the U.S."

Some Canadian companies have even tried to capitalize on this image of financial strength in their ad campaigns. Toronto-based insurer Sun Life Financial (SLF), which has a big presence in the U.S. and even has the naming rights for the Miami stadium where the Dolphins and Marlins play, boasts in commercials that it didn’t take any government bailout money.

That’s all well and good. But will Canada keep attracting strong investor interest or is the fact that Canada isn’t the U.S. already priced into their currency, stocks and bonds?

Ashworth said that the rise in gold, which is partly a fear trade, has certainly helped Canada. So if gold prices cool, that could hurt the Canadian dollar.

But he said that if gold falls on hopes that the global economy is going to avoid another major meltdown, the trade-off would probably be higher oil prices. That could offset any weakness in gold.

"The bottom line is that the loonie is still a petro currency," he said.

So as long as the Canadian economy holds up, there is a good chance that Canadian assets could continue to perform well. After all, Canada’s central bank took the first step towards bringing interest rates back to normal earlier this month.

The Bank of Canada boosted rates by a quarter-of-a-point to 0.5%. That makes Canada the first of the so-called G-7 group of industrial nations to raise rates since the onset of the global financial crisis in 2008.

Stefane Marion, chief economist and strategist with National Bank Financial Group in Montreal, points out that the Bank of Canada is likely to raise rates again next month. And that’s lifting bond rates in Canada.

The difference between the yield on 2-year Canadian bonds and the 2-year U.S. note is about a full percentage point. In other words, investors believe they’ll be able to get a better rate of return in Canada because the economic fundamentals look stronger.

"Gone are the days when foreign investors thought of North America as only the U.S.," Marion said. "People are discriminating between Canada and the U.S. There’s probably limited downside for the Canadian dollar and other assets unless there’s a major global economic relapse."

Reader comment of the week. To quote Hannibal from "The A-Team" (and did they really need to make a movie of the TV show?), I love it when a plan comes together. This week’s best reader retort fits perfectly with the theme of today’s column.

I wrote on Monday about how Brazilian oil company Petrobras could benefit from the BP fiasco in the Gulf of Mexico. Paul Dupuis took issue with that.

"Why would you suggest Brazil when there is over a trillion barrels in oil reserves in Alberta??? No drilling in water here and we are already are the largest supplier of oil to the U.S.," he wrote.

Well said.

- The opinions expressed in this commentary are solely those of Paul R. La Monica.  

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A private equity group has paid $5.4 million to Union Credit Bank for nearly an acre of land in the heart of Miami’s financial district, the site of a planned 42-story condominium tower.

The June 11 sale pegged the purchase price of the 36,000-square-foot property at $150 a square foot.

Union Credit Bank repossessed the site, at 1100 S. Miami Ave., from development company Brickell Village Partners and principal J. Kevin Reilly. Reilly planned to build Pointe at Brickell Village on the property.

At the time of the foreclosure, the bank was owed $7.6 million in principal, plus $1.2 million in interest, fees, and court costs, according to the final judgment of foreclosure signed by Miami-Dade County Circuit Court Judge Gerald D. Hubbart on Jan. 22.

Peter Zalewski, managing principal of Bal Harbour-based real estate consultancy Condo Vultures, said the deal is a sign that investors are looking beyond condo management and resales as revenue models – another sign of the local market’s recovery.

"Nearly 10 high-rise condo development sites in greater downtown Miami have been sold in the last two years, and several more are for sale," he said. "Private equity groups have been buying up deeply discounted condos in greater downtown Miami with great velocity for the last 18 months. As the oversupply of new condos is whittled down, buyers are increasingly broadening their criteria. Land is starting to become acceptable at the right price once again."

Adam Greenberg, managing director of Miami-based BayBridge Real Estate Group, which handles real estate sales and financing, agrees that the deal is another sign that the market is turning.

“Investors are buying up strategic sites so they can build on the next go around,” he said.

But, Jack McCabe, of McCabe Research & Consulting in Deerfield Beach, said there are variables on the horizon, including Amendment 4, which could create obstacles to future investment.

On the November ballot, Amendment 4 would require the public to vote on large development projects that would need changes to government master plans. He also noted that there is still significant unsold inventory, financing challenges and another wave of foreclosures that will likely tamp down demand for new construction for five to seven more years.

“Miami will come back strong. It’s only a matter of time,” he said. “But, I think some developers are overly optimistic about how fast the turnaround will be.”

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Treasurys rallied Thursday as stocks plunged and investors worried about European debt and its effect on the global economy.

What prices are doing: The benchmark 10-year note rose 1-10/32 to 102-13/32, pushing the yield down to 3.22% from 3.36% on Wednesday. Bond prices and yields move in opposite directions.

The 30-year bond added 2-18/32 to 104-25/32 and yielded 4.1%, while the 2-year note edged up 4/32 to 100-18/32 with a 0.72% yield. The 5-year note rose to 102-13/32, yielding 2.99%.

What’s moving the market: Investors flocked to the safety of government-backed bonds on Thursday as stocks dropped more than 10% from the session’s highs.

"We’re seeing a massive flight to quality," said Kim Rupert, fixed income analyst at Action Economics. "Equities are really losing a grip, and Treasurys are the beneficiary."

Markets have been rattled over the past month as investors worry about European debt, despite a $1 trillion rescue package aimed at stabilizing the euro and helping troubled nations such as Greece reduce their debt loads.

On Wednesday, the euro was briefly lifted by Germany’s announcement that it would ban so-called naked short selling of debt securities issued by euro zone countries and 10 large financial firms cash advance companies.

But because investors were still skeptical of the health of European banks, Treasurys rallied following the announcement.

By the end of the day Wednesday, however, bonds pared gains and ended the day slightly lower after the Federal Reserve raised its outlook for economic growth and lowered its unemployment rate forecast.

Economy: Investors were also digesting several disappointing economic reports from the government on Thursday.

The Labor Department reported that weekly jobless claims rose unexpectedly by 25,000 to 471,000 last week, while economists expected a drop to 440,000 claims.

After the start of trading, the Conference Board said its index of leading economic indicators fell 0.1% in April after rising 1.3% in March. Economists surveyed by Briefing.com expected the index to rise 0.2%.

A regional manufacturing survey for May was also released Thursday. The Philadelphia Fed index rose to 21.4 in May from 20.2 in April, beating the estimated rise to 20.7. 

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Albany Molecular Research Inc. reported a drop in net income for the first quarter.

The Albany, New York-based drug discovery firm had net income for the three months of $66,000, or less than a penny a share. That includes expenses from AMRI’s February purchase of Excelsyn Ltd, a chemical development company in Wales. Without those costs, first quarter income would have been $641,000, or 2 cents a share.

In the first quarter of 2009, AMRI had net income of $1.9 million, or 6 cents a share.

Revenue for the first quarter was $49.3 million, down from $54.0 million a year earlier. Contract revenue declined 10 percent, and recurring royalties from sales of the prescription antihistimine Allegra, and some generic forms of that drug, dipped 3 percent.

Mark Frost, chief financial officer of AMRI (Nasdaq: AMRI) said the company expects second quarter contract revenue to be up 11 percent from a year ago, to about $43 million. He put second quarter revenue at between $7 million and $8 million.

Frost expects the company to report a second quarter loss of between 3 cents and 7 cents a share.

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Arch Coal sued the U.S. Environmental Protection Agency on Friday over the planned veto of a permit for the largest mountaintop coal mine in West Virginia.

The EPA doesn’t have the authority to revoke a Clean Water Act permit once it has been issued, Arch alleges in its federal lawsuit filed in Washington, D.C., according to media reports. Arch received a permit for its Spruce No. 1 mine three years ago.

This is the first time in 37 years the EPA has vetoed such a project, prompting praise from environmentalists.

St. Louis-based Arch Coal (NYSE: ACI), headed by Chairman and CEO Steven Leer, is the second-largest U.S. coal producer with revenue of $2.6 billion in 2009.

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Sales of new homes dropped to a record low last month, dimming prospects for a swift recovery for the housing market.

Overall, sales were down 2.2 percent, to a seasonally adjusted annual rate of 308,000, the Commerce Department said Wednesday. Economists had forecast a 1.9 percent rise.

Those numbers followed a similarly bleak report on Tuesday that showed sales of existing homes dropped last month, despite a generous government tax credit meant to lure buyers.

Taken together, the data resurrected concerns that the market could fall into another downturn, with new downward pressure on prices as the supply of houses increases but demand dwindles.

"It was dismal no matter how one tries to slice and dice it," Joshua Shapiro, an economist for MFR Inc cash advance no faxing. wrote.

Sales of new homes have fallen 23 percent since October. Sales rose at a rapid pace last fall as buyers rushed to take advantage of an $8,000 tax credit before its original expiration date. The credit has since been extended to April 30, but there has been no evidence of a buying frenzy.

The drop in February was partly the result of stronger results the previous month: the government said sales reached a rate of 315,000 units in January, better than the 309,000 rate originally forecast. Economists said a series of snowstorms in February may also have contributed to the decline.

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The U.K.’s unemployment rate would be almost double and its recession would have been deeper if Britain had joined the euro, according to the Centre for Economics and Business Research.

Gross domestic product would have contracted 7 percent last year and unemployment would currently be 15 percent if the nation had signed up to the single currency, CEBR’s Chief Executive Officer Douglas McWilliams said today in an e-mailed statement. The economy shrank 4.8 percent last year.

At 7.8 percent, the U.K. jobless rate is below that of the U.S. and the average of the euro region, which are both at 10 percent. Prime Minister Gordon Brown decided to keep Britain out of the European single currency when he was finance minister in 2003 after an assessment of the potential benefits of joining. Many euro members have struggled, McWilliams said personal business card.

“Most European economies have found keeping up with a German-inspired exchange rate a problem,” he said. “For those European countries that have a propensity to borrow, a single interest rate, kept low by frugal Germany, was a step too far and they over borrowed. Ireland and Spain are the most spectacular examples, but Portugal and Greece also had interest rates that were far too low for their economic circumstances.”

If the U.K. had joined the euro in 1998, economic growth would have been “slightly higher” and inflation would have been faster by about 0.6 percent through 2006, McWilliams said.

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The Federal Reserve is in talks with money-market mutual funds on agreements to help drain as much as $1 trillion from the financial system as policy makers prepare for the first interest-rate increase since June 2006, according to a person familiar with the discussions.

The central bank is looking to the money-market mutual fund industry which manages $3.2 trillion in assets because the 18 so-called primary dealers that trade directly with the Fed have a capacity limited to about $100 billion, estimates Joseph Abate, a money-market strategist at Barclays Capital in New York.

Money-market funds may welcome the opportunity to trade with the Fed after the financial crisis reduced the supply of safe assets in which they can invest. In one example of demand for such assets, auctions on four-week Treasury bills have attracted an average of $5.47 in bids for every dollar sold this year, compared with an average of $3.77 last year, according to Bloomberg data. Yields on the four-week bill were quoted at four basis points at 3:47 p.m. in New York trading from 18 basis points a year ago.

“There are lots of great credit stories, but the option of going with the Fed and the government — it takes away part of the risk,” said Deborah Cunningham, a chief investment officer at Federated Investors Inc. in Pittsburgh, which manages $318 billion in money-market investments. Conversations with the Fed “seem pretty positive,” she said, adding that the Fed and the industry should be in a position to conduct operations before the end of the year.

Fannie, Freddie

Chairman Ben S. Bernanke yesterday charted ways the Fed might withdraw record monetary stimulus pumped into the economy to fight the recession. Among the central bank’s tools are reverse repurchase agreements, in which the Fed sells securities with the intention of repurchasing them at a later date.

The Fed is also considering reverse repurchase agreements with mortgage lenders Fannie Mae and Freddie Mac, said the person familiar with the discussions. Freddie Mac spokeswoman Sharon McHale declined to comment. Fannie Mae spokesman Brian Faith also declined to comment.

“To further increase its capacity to drain reserves through reverse repos,” Bernanke said, the Fed is “in the process of expanding the set of counterparties with which it can transact” beyond primary dealers of government securities.

The primary dealers, which are required to bid at auctions of Treasury notes and trade directly with the New York Fed’s markets desk, include BNP Paribas Securities Corp., Banc of America Securities LLC and Goldman Sachs & Co.

‘Extended Period’

Bernanke repeated yesterday that while interest rates are likely to stay low for an “extended period,” the Fed in “due course” will need to “begin to tighten monetary conditions to prevent the development of inflationary pressures paydayloan.”

The central bank has created more than $1 trillion in excess reserves in the banking system through its purchases of $300 billion of Treasury debt and $1.25 trillion of mortgage- backed securities. To put upward pressure on the federal funds rate, the Fed may need to drain as much as $800 billion, Abate estimates.

One potential tightening tool is the interest rate on reserves that commercial banks keep on deposit at the Fed. By raising that rate, the central bank “will be able to put significant upward pressure on all short-term interest rates,” Bernanke said.

The Fed can also use reverse repos to shrink the quantity of reserves, which in turn gives it “tighter control over short-term interest rates,” he said.

Risk for Fed

Fed officials face the risk that when they start to tighten policy by raising the rate they pay banks on reserves, other market rates may not follow. That would keep monetary conditions too loose in an expansion.

“They still seem nervous that they might not be able to control short rates, and if they can’t control short rates, how do they tighten?” said Mark Spindel, chief investment officer at Potomac River Capital LLC, which manages $200 million in Washington.

The Fed has sought to keep the benchmark rate in a range of zero to 0.25 percent since December 2008. The federal funds rate is now 0.13 percent, even though banks can earn 0.25 percent by keeping their money on deposit at the Fed.

One reason for the discrepancy is that Fannie and Freddie have become “significant sellers” of funds in the overnight market and aren’t eligible to place cash on deposit at the Fed, according to a December research paper by the New York Fed.

Some hurdles remain in the Fed’s efforts to secure bigger repo capacity. Fed officials and mutual-fund industry representatives are working on a structure that would allow funds to invest in relatively liquid assets that can be sold in seven days, while allowing the central bank to avoid having to renew billions of dollars in transactions each week.

“There needs to be liquidity,” said Cunningham of Federated. “A reverse repo contract is not considered to be liquid in the context of anything beyond seven days.”

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