The U.S. unemployment rate rose to a 26-year high of 9.5% last month, according to a Labor Dept. report released on July 2. Employers cut a larger-than-anticipated 467,000 jobs, while average weekly earnings fell to $611.49, their lowest level in nearly a year. While there are signs that the recession is starting to ease, economists are still predicting that the jobless rate will hit 10% by year-end and keep rising into 2010.

Today’s unemployment report looks even uglier when one drills beneath the headline number, which doesn’t include so-called discouraged workers. Those are people who’ve quit looking for work altogether. If those folks were counted, the jobless rate in June rose to 10%, Labor Dept. figures show. Look for unemployment to jump once the economy starts growing again, as the once-discouraged regain hope and start job hunting again.

Source: Associated Press, The Atlantic

Oil and Gas Prices Drop

News that U.S. unemployment hit 9.5% in June drove prices for crude and gasoline to a five-week low on July 2. Oil fell by more than $2 a barrel, to $66.75, as of morning trading on the New York Mercantile Exchange, while gasoline futures declined 3.3% to $1.80.

Source: Bloomberg

U.S. Factory Orders Up in May

Orders at U.S. factories rose 1.2% in May, the Commerce Dept. reported on July 2. The May increase was the largest since June 2008 and marked the fourth consecutive months of gains. Yet analysts cautioned that the sector is still in distress, as manufacturers continue to cut inventories rather than revving up production.

Source: Bloomberg

U.S. Car Sales Down 28% in June

June car sales stabilized somewhat in the U.S. But the pain was spread unevenly among carmakers and types of vehicles, as fears of gas price increases continued to slaughter purchases of big sport-utility vehicles. Overall, total auto sales were down 27.7% last month compared with June 2008, according to Autodata. Ford posted a decline of just 10.7% in June, the lowest drop of any major automaker. Ford also outsold Toyota in June for the third consecutive month, while sales fell 33% at GM and 42% at Chrysler.

Source: BusinessWeek, New York Times

SEC Moves to Make Companies More Accountable

The Securities and Exchange Commission announced steps on July 1 to give shareholders new powers to shape corporate boards, as well as more information about how companies pick their directors and pay their management. Among the changes: Retail stockbrokers will no longer be allowed to submit proxy votes on behalf of their customers without the assent of the shareholders they represent, a move the SEC says could make it easier for activist investors to effect change.

Source: Washington Post

Telefónica Could Join Pursuit of T-Mobile UK

A potential bidding war may be heating up for the British unit of Deutsche Telekom's T-Mobile, the fourth-largest operator in Britain's crowded and competitive mobile services market. Reports emerged last week that Vodafone is considering a run at the business, and now both France Telecom's Orange unit and Telefónica-owned O2—the countries No. 1 provider— are reportedly weighing competing offers.

Source: Financial Times

Challenges for BP-Led Group in Iraq

British Petroleum and its Chinese partner have won a bid to be the first foreign partners let back into Iraq to rehabilitate its floundering oil industry. But with the contract win out of the way, now the tough work begins. The success of the venture to exploit one of the world's biggest oil fields will be a test of how outside companies are received in Iraq.

Source: BusinessWeek, Wall Street Journal

Rio Tinto Sees Strong Demand for Rights Issue

The world's largest iron ore producer and third-largest miner overall sold 97% of a $15.2 billion rights issue in Britain as part of a plan to reduce its huge debt and get back to business as usual. Among the buyers was China's Chinalco, which snapped up $1.5 billion in shares to maintain its 9% holding in Rio, despite recently-soured relations between the companies after Rio scotched a larger planned investment in the firm by the Chinese aluminum giant.

Source: Reuters

H&M Stays Upbeat in Tough Times

No retailer can entirely escape the effects of the downturn. But Swedish discount fashion chain H&M is faring better than many, with sales up 23% in its most recent quarter and plans to continue international expansion by adding 159 additional stores by November.

Source: BusinessWeek

Crabtree & Evelyn Files Chapter 11

The British maker of soaps and other bath products sought bankruptcy protection on July 1 for its U.S. business, making it the latest retail chain to be laid low by the recession. The company, which operates 125 stores in the U.S., says it will continue to operate under Chapter 11 and hopes to restructure its debt and reevaluate its real estate portfolio. The company's non-U.S. operations aren't affected by the filing.

Source: Los Angeles Times

Virgin Atlantic to Trim Winter Service, 600 Jobs

Facing travel cutbacks due to the recession, Richard Branson-led Virgin Atlantic airline said July 1 that it will cut about 10% of its service next winter, including daily flights from Heathrow to Chicago and one of its two daily Hong Kong flights, and lay off up 600 workers. Meanwhile, rival British Airways is nearing a standoff with its unions as it scrambles to slash costs.

Source: Guardian

Toyota Builds Patent Wall Around Prius Hybrids

Since it started developing the gas-electric Prius more than a decade ago, Toyota has kept its attorneys just as busy as its engineers, meticulously filing for patents on more than 2,000 systems and components for its best-selling hybrid. Toyota's goal: to make it difficult for other auto makers to develop their own hybrids without seeking licenses.

Source: Wall Street Journal

June car sales stabilized somewhat in the U.S. But the pain was spread unevenly among carmakers and types of vehicles, as fears of gas price increases continued to slaughter purchases of big sport-utility vehicles. Overall, total auto sales were down 27.7% last month compared with June 2008, according to Autodata. Ford posted a decline of just 10.7% in June, the lowest drop of any major automaker. Ford also outsold Toyota in June for the third consecutive month, while sales fell 33% at GM and 42% at Chrysler.

Pain continues to spread through other parts of the industry, though. On July 1, auto seat maker Lear said it plans to restructure under the umbrella of bankruptcy protection. One vague sign of hope for the future: General Motors, now operating under bankruptcy protection and in the process of selling most of its assets to the U.S. government, could file for an initial public offering of shares as soon as 2010.

Source: BusinessWeek, New York Times, MarketWatch, Bloomberg

SEC Moves to Make Companies More Accountable

The Securities and Exchange Commission announced steps on July 1 to give shareholders new powers to shape corporate boards, as well as more information about how companies pick their directors and pay their management. Among the changes: Retail stockbrokers will no longer be allowed to submit proxy votes on behalf of their customers without the assent of the shareholders they represent, a move the SEC says could make it easier for activist investors to effect change.

Source: Washington Post

Telefónica Could Join Pursuit of T-Mobile UK

A potential bidding war may be heating up for the British unit of Deutsche Telekom's T-Mobile, the fourth-largest operator in Britain's crowded and competitive mobile services market. Reports emerged last week that Vodafone is considering a run at the business, and now both France Telecom's Orange unit and Telefónica-owned O2—the countries No. 1 provider— are reportedly weighing competing offers.

Source: Financial Times

Challenges for BP-Led Group in Iraq

British Petroleum and its Chinese partner have won a bid to be the first foreign partners let back into Iraq to rehabilitate its floundering oil industry. But with the contract win out of the way, now the tough work begins. The success of the venture to exploit one of the world's biggest oil fields will be a test of how outside companies are received in Iraq.

Source: BusinessWeek, Wall Street Journal

Rio Tinto Sees Strong Demand for Rights Issue

The world's largest iron ore producer and third-largest miner overall sold 97% of a $15.2 billion rights issue in Britain as part of a plan to reduce its huge debt and get back to business as usual. Among the buyers was China's Chinalco, which snapped up $1.5 billion in shares to maintain its 9% holding in Rio, despite recently-soured relations between the companies after Rio scotched a larger planned investment in the firm by the Chinese aluminum giant.

Source: Reuters

H&M Stays Upbeat in Tough Times

No retailer can entirely escape the effects of the downturn. But Swedish discount fashion chain H&M is faring better than many, with sales up 23% in its most recent quarter and plans to continue international expansion by adding 159 additional stores by November.

Source: BusinessWeek

Crabtree & Evelyn Files Chapter 11

The British maker of soaps and other bath products sought bankruptcy protection on July 1 for its U.S. business, making it the latest retail chain to be laid low by the recession. The company, which operates 125 stores in the U.S., says it will continue to operate under Chapter 11 and hopes to restructure its debt and reevaluate its real estate portfolio. The company's non-U.S. operations aren't affected by the filing.

Source: Los Angeles Times

Virgin Atlantic to Trim Winter Service, 600 Jobs

Facing travel cutbacks due to the recession, Richard Branson-led Virgin Atlantic airline said July 1 that it will cut about 10% of its service next winter, including daily flights from Heathrow to Chicago and one of its two daily Hong Kong flights, and lay off up 600 workers. Meanwhile, rival British Airways is nearing a standoff with its unions as it scrambles to slash costs.

Source: Guardian

Toyota Builds Patent Wall Around Prius Hybrids

Since it started developing the gas-electric Prius more than a decade ago, Toyota has kept its attorneys just as busy as its engineers, meticulously filing for patents on more than 2,000 systems and components for its best-selling hybrid. Toyota's goal: to make it difficult for other auto makers to develop their own hybrids without seeking licenses.

Source: Wall Street Journal

Mozilla's Crowdsourcing Mystique

The maker of the Firefox Web browser relies on volunteer developers, leaving for-profit companies such as Google and LinkedIn straining to copy the Mozilla model. How Mozilla channels those efforts is a model for a growing number of companies trying to tap into the collective talents of large pools of software developers and other enthusiasts of a product, brand, or idea.

Source: BusinessWeek

Investors took heart from new data that seems to show that manufacturing sectors in the U.S., China and elsewhere have seen the worst of the crisis. The Institute for Supply Management reported on July 1 that its index of U.S. manufacturing activity climbed to 44.8 in June, from 42.8 in May (any reading below 50% indicates contraction). In China, an official purchasing manager’s index, an equally important barometer of economic activity, rose for the fourth month in a row in June. Britain and the euro zone also showed some improvement, although overall European manufacturing remain in contraction mode.

The various reports bolstered stocks on three continents. The FTSE 100 closed up more than 2%, while the Shanghai index rose 1.65%. Stateside, the Dow was up nearly 1% in afternoon trading in New York, while the S&P rose three-quarters of a percentage point.

Source: Wall Street Journal

Mixed Picture of the U.S. Jobs Market

With the official unemployment rate for June due out tomorrow, all eyes today were on two private-sector jobs reports. Data from ADP Employer Services showed that companies cut 473,000 jobs in June—a smaller number than in the previous month, but higher than economists had been expecting. Meanwhile, placement firm Challenger, Gray & Christmas said that announced layoffs fell 9% for the month, to 74,393—the lowest figure in more than a year. Tomorrow’s Labor Dept. report is expected to show that unemployment last month climbed to a 26-year high of 9.6%.

Source: Bloomberg

U.S. Mortgage Applications Plummet

The Mortgage Bankers Association reported on July 1 that its index of applications to purchase a home or refinance an existing home loan fell 19% in the week ended June 26 from the prior week—the biggest drop since February. Although rates on 30-year fixed-rate mortgage have edged down a bit in the last couple of weeks, they remain lodged above 5%. Economists are worried that rising rates will delay a housing market recovery.

Source: Bloomberg

Wal-Mart Supports Employer-backed Healthcare

U.S. mega-retailer Wal-Mart on June 30 told federal authorities it supports requiring employers to provide health insurance to workers. The company's support could give momentum to one of the most-contentious aspects of legislation taking shape in Congress to fix the U.S. health system.

Source: Wall Street Journal

California to Set Own Auto Emissions Targets

The U.S. Environmental Protection Agency on June 30 granted California's request to set its own limits on greenhouse gases from autos. The move represents a long-sought victory for the state, but may have limited impact because the federal government has pledged to impose national limits. California can now impose a limit on the emissions from new cars, when no such rules now exist in federal law.

Source: Washington Post

California Issues $3 Billion of IOUs

California will issue more than $3 billion in IOUs to pay its bills after local lawmakers failed to reach an agreement to bridge a $24 billion budget deficit in America's most-populous state. Without budget changes to fill a recession-driven 20% drop in state revenue, California doesn't have enough money to meet its debts and will issue IOUs beginning on July 1.

Source: Bloomberg

Iraqi Oil Auction Misses Mark

Iraq's historic auction on June 30 of contracts to develop major oil fields didn't go according to plan. So far, only BP and Chinese partner CNPC have struck a deal on Rumaila, Iraq's most important field. The Iraqis certainly hoped for more. So why weren't deals reached on other fields? The Iraqis are almost paranoid about being taken for a ride. They drove a hard bargain, forcing the companies into the role of service contractors -- not the equity investors they prefer to be.

Source: BusinessWeek

IMF to Issue $150 Billion of Bonds

The International Monetary Fund is planning to issue as much as $150 billion of bonds for the first time in an attempt to develop new sources of funds. The bonds are part of a wider effort to seek new funding as the IMF helps countries from Iceland to Pakistan combat the global financial crisis.

Source: Bloomberg

U.S. Takes on UBS Over American Customers

U.S. officials are ramping up efforts to force Swiss financial giant UBS to release the names of thousands of American customers holding offshore accounts with the European bank. The Department of Justice, in a filing with a Miami district court on June 30, said UBS must be ordered "to comply in full" with an Internal Revenue Service summons asking for the identity of 52,000 undisclosed accounts.

Source: Financial Times

Citigroup Raises Credit Card Charges

Struggling U.S. bank Citigroup has increased interest rates on up to 15 million American credit card accounts months before limits on such practices take effect. The move is expected fuel anger over the treatment of U.S. consumers by government-funded banks.

Source: Financial Times

GE to Use Stem Cells in Research

Biotech company Geron will provide stem cells to General Electric's healthcare division for use in tools testing for the toxic effects of drug treatments. The announcement takes GE further into stem-cell research. It's also the first time a company of GE's size has announced a business venture involving the controversial field of embryonic stem cells.

Source: Wall Street Journal

Crashes Focus Attention on Airbus Safety

The crash of an Airbus A310 off the African coast is focusing further scrutiny on the safety of Airbus planes. The accident comes just after another Airbus plan, an A330, crashed off the coast of Brazil on its way to Paris. Aviation safety experts, though, caution against drawing a link between the two crashes. The A310 is a far different aircraft from the A330.

Source: Washington Post

Major U.S. automakers will report the highest sales rate of 2009 when they post results for June. Deep discounts in recent months are expected to limit industry-wide sales to a mere 30% annual decline. The massive yearly drop may not sound like good news, but analysts and executives say it supports the view that sales are bottoming out after a punishing decline in auto sales.

Ford expects to report sales declines in the 10% to 20% range in June, which would be the best result of the top six selling automakers in the U.S. Analysts expect Chrysler sales to drop 29.1%, General Motors 28.9%, Honda Motor 31.4%, Toyota 28.7%, and Nissan 24.2%. U.S. auto sales may top the 10 million vehicle mark last month.

Source: Reuters

California to Set Own Auto Emissions Targets

The U.S. Environmental Protection Agency on June 30 granted California's request to set its own limits on greenhouse gases from autos. The move represents a long-sought victory for the state, but may have limited impact because the federal government has pledged to impose national limits. California can now impose a limit on the emissions from new cars, when no such rules now exist in federal law.

Source: Washington Post

California Issues $3 Billion of IOUs

California will issue more than $3 billion in IOUs to pay its bills after local lawmakers failed to reach an agreement to resolve a $24 billion budget deficit in America's most-populous state. Without budget changes to fill a recession-driven 20% drop in state revenue, California doesn't have enough money to meet its debts and will issue IOUs beginning on July 1.

Source: Bloomberg

Iraqi Oil Auction Misses Mark

Iraq's historic auction on June 30 of contracts to develop major oil fields didn't go according to plan. So far, only BP and Chinese partner CNPC have struck a deal on Rumaila, Iraq's most important field. The Iraqis certainly hoped for more. So why weren't deals reached on other fields? The Iraqis are almost paranoid about being taken for a ride. They drove a hard bargain, forcing the companies into the role of service contractors -- not the equity investors they prefer to be.

Source: BusinessWeek

Oil Hits $70 a Barrel

Oil prices climbed back above $70 a barrel on July 1 after an industry inventory report showed a larger-than-expected fall in U.S. crude stocks, which increased hopes of a demand recovery and encouraged buying. The American Petroleum Institute said domestic crude stocks fell 6.8 million barrels to 349.7 million barrels last week, against analysts forecast for a much smaller drawdown of just 2 million barrels.

Source: Reuters

Mixed Report Card for Asian Economies

Data released across Asia on July 1 showed a gradual stabilization in some economies, a muted recovery in others, but overall there's still a long way to go before the region pulls itself out of the global recession. In Japan, the closely watched Tankan survey of big manufacturers, conducted quarterly by the Bank of Japan, bounced back from a record low it hit in March. In China, an official purchasing managers' index, an equally important barometer of economic activity, rose for the fourth month in a row in June.

Source: New York Times

IMF to Issue $150 Billion of Bonds

The International Monetary Fund is planning to issue as much as $150 billion of bonds for the first time in an attempt to develop new sources of funds. The bonds are part of a wider effort to seek new funding as the IMF helps countries from Iceland to Pakistan combat the global financial crisis.

Source: Bloomberg

U.S. Takes on UBS Over American Customers

U.S. officials are ramping up efforts to force Swiss financial giant UBS to release the names of thousands of American customers holding offshore accounts with the European bank. The Department of Justice, in a filing with a Miami district court on June 30, said UBS must be ordered "to comply in full" with an Internal Revenue Service summons asking for the identity of 52,000 undisclosed accounts.

Source: Financial Times

Citigroup Raises Credit Card Charges

Struggling U.S. bank Citigroup has increased interest rates on up to 15 million American credit card accounts months before limits on such practices take effect. The move is expected fuel anger over the treatment of U.S. consumers by government-funded banks.

Source: Financial Times

GE to Use Stem Cells in Research

Biotech company Geron will provide stem cells to General Electric's healthcare division for use in tools testing for the toxic effects of drug treatments. The announcement takes GE further into stem-cell research. It's also the first time a company of GE's size has announced a business venture involving the controversial field of embryonic stem cells.

Source: Wall Street Journal

Wal-Mart Supports Employer-backed Healthcare

U.S. mega-retailer Wal-Mart on June 30 told federal authorities it supports requiring employers to provide health insurance to workers. The company's support could give momentum to one of the most-contentious aspects of legislation taking shape in Congress to fix the U.S. health system.

Source: Wall Street Journal

Crashes Focus Attention on Airbus Safety

The crash of an Airbus A310 off the African coast is focusing further scrutiny on the safety of Airbus planes. The accident comes just after another Airbus plan, an A330, crashed off the coast of Brazil on its way to Paris. Aviation safety experts, though, caution against drawing a link between the two crashes. The A310 is a far different aircraft from the A330.

Source: Washington Post

U.S. home prices showed a “striking improvement in the rate of decline” in April, said economist Robert Shiller of Yale, one of the creators of the S&P Case-Shiller home price index. Prices in April fell 18.1% from a year earlier, following an 18.7% decline in March. Economists had expected the April number to be 18.6%.

It’s true that an 18.1% annual fall is still steep. But home prices actually rose from the previous month in 8 of the 20 cities surveyed, adding to hopes that the bottom has been reached. And the overall Case-Shiller index declined in April by just 0.6% from the month before, the smallest drop since June, 2008. “My guess would be that home prices are going to level off—they’re not going to keep falling,” said Shiller.

Source: Bloomberg

Gloomier Consumers

Offsetting the encouraging housing news, consumer confidence took a dive in June, and that helped send stocks down on Wall Street. The Conference Board said its index of consumer sentiment slid to 49.3 from 54.8, as more Americans said that jobs are “hard to get.” Partly as a result, stocks traded lower, with the Dow down about 110 points at 2:15 p.m.

Source: Reuters

China Postpones PC Filter Rule

In the face of a global outcry, Beijing said it will put off a rule that all PCs sold in the country carry Web-filtering software. The rule had been set to go into effect tomorrow. China says the software will filter out pornography, but critics point out that it can also be used to censor sites for political reasons. The dispute had threatened to turn into a major trade dispute between China and other nations including the U.S.

Source: Wall Street Journal

Steve Jobs Back in the Office

The CEO and co-founder of Apple has officially returned from a five-month medical leave and will split his time between the office and working from home, Apple said on June 29. In typically tight-lipped fashion, the company wouldn't comment on Jobs' medical condition or say when or if he might come back to the office full time. Jobs originally took leave in January to battle what was described then as a "hormone imbalance" that may have emerged in the wake of his earlier treatment for a rare form of pancreatic cancer. But in June it emerged that Jobs had received a liver transplant two months ago in Tennessee. While Apple's legion of fans are delighted that their hero is on the mend and back in charge, the company's handling of its disclosures over his medical condition has provoked controversy among investors and experts in corporate governance. It's not clear whether Apple violated any securities laws with its scant disclosures, but the company's board has hired outside counsel to represent it in any shareholder litigation that could emerge from the situation.

Source: New York Times, Wall Street Journal

California Dreamin' of IOUs

A sharp decline in tax revenues and an ongoing budget battle between Republican California Governor Arnold Schwarzenegger and the Democrat-controlled legislature have left the U.S.'s largest state with an unprecedented cash crunch and a $24 billion deficit. If no solution emerges over the next few days, California will run out of money and have to start issuing IOUs on July 2 to creditors such as students, the aged, and the disabled. Once the richest state in the U.S., California now has the nation's worst credit rating. The Obama Administration shows no inclination to engineer a bailout.

Source: Financial Times, BusinessWeek

Another Bump in Porsche/VW Merger

The fiendishly complex effort to merge German automakers Porsche and Volkswagen suffered another setback June 29 when Porsche rejected as "unfeasible" VW's proposal to acquire 49% of the sportscar maker for $5.6 billion. Both companies are controlled by the same wealthy German families, but their efforts to engineer a merger have been hampered by Porsche's $9 billion debt, which it racked up acquiring VW shares in a takeover bid. A solution to the conundrum likely will involve a major investment in either or both Porsche and VW by a Qatari investment group.

Source: New York Times, Wall Street Journal

European Banks: More Pain on the Way?

Rising bank stocks and growing indications of an economic turnaround may have lulled investors into a false sense of hope over the fortunes of big European banks such as Barclays, BBVA, Deutsche Bank, and UBS. A recent report from the Frankfurt-based European Central Bank warns that growing loan defaults could force European banks to take as much as $400 billion in additional writedowns by the end of 2010 to clean up their books.

Source: BusinessWeek

Jury Returns $1.67 Billion Verdict Against Abbott

A U.S. federal jury in Marshall, Tex. ruled June 29 that Abbott Laboratories violated patent rights held by rival Johnson & Johnson for an arthritis drug and ordered Abbott to pay $1.67 billion. The case involved Abbott's latest blockbuster drug, called Humira, which J&J argued violated patents on its competing product, known as Remicade. Abbott said it will appear the verdict.

Source: Reuters

Facebook Hires Former Genentech Exec as CFO

The world's largest social networking site beefed up its management ranks by hiring David Ebersman, the former chief financial officer of biotech giant Genentech, to be its new CFO. The appointment was well received by analysts, who saw it as a potential step towards a public stock offering by Facebook.

Source: Financial Times

Motorola's New Smartphones May Not Dazzle

The troubled handset maker is counting on a new line of high-end phones runing the Android operating system from Google to lift its fortunes in the market. But early previews of the devices suggest they'll do little to boost Motorola's standing in the hot—and hotly-contested—smartphone category, where it faces off against devices from Apple, Palm, RIM, and Nokia.

Source: BusinessWeek

Mobile Phone Makers Agree to Standard Charger

In a boost to consumers, ten of the world's top makers of handsets, including Apple, Motorola, Nokia, Samsung, and Sony Ericsson have agreed to support a standard recharger starting in 2010. The voluntary action, which came after the European Commission threatened to dictate a solution, should reduce costs for both makers and customers, while helping reduce electronic waste.

Source: Times of London

Court Okays Cablevision Network DVR Service

Rejecting an appeal from film studios and television networks, the U.S. Supreme Court on June 29 cleared the way for New York-based cable operator Cablevision to offer a so-called "network digital video recorder" service that will allow subscribers to store recorded programming in the company's network to watch at their leisure. Content producers argued that the service could violate their copyrights, but the court disagreed. Other cable operators such as Comcast and Time Warner have said they might follow Cablevision's lead, pending the outcome of the protracted litigation.

Source: Reuters