My OPTION TRADES..... part 2

Shares Rise After Fed Chairman’s Speech and End Month Higher


Stock indexes finished higher on Friday and posted big enough gains to put them into positive territory for August after a positive statement from Ben S. Bernanke, the Federal Reserve chairman.

Stocks gyrated after his speech Friday morning. They first gave up their morning gains, then bolted to their highs for the day, before finishing in between. The Dow Jones industrial average ended the day up 90.13 points, or 0.69 percent, at 13,090.84.

A half-hour after trading began, Mr. Bernanke declared that the Fed was ready to take more action to help an economy that’s “far from satisfactory.”

Investors have been watching to see whether the Fed will buy more bonds to further lower long-term interest rates. Stocks fell initially, however, after it became clear that no such announcement was coming Friday and that Mr. Bernanke had stopped short of committing the Fed to any specific move.

Still, he said the Fed “should not rule out” new policies to improve the job market.

Stocks rebounded once investors parsed his comments. At one point the Dow was up as many as 151 points.

In terms of volatility, “it’s been the most action we’ve seen in a couple of weeks,” said Ryan Larson, a senior equity trader at RBC Global Asset Management. He noted that pre-Labor Day volume was light, with many investors and traders on vacation, which can contribute to bigger price swings.

The Standard & Poor’s 500-stock index rose 7.10 points, or 0.51 percent, to 1,406.58. The Nasdaq composite index gained 18.25 points, or 0.60 percent, to 3,066.96.

The Dow finished the month of August up by 0.63 percent. The S.& P. 500 rose more than 2 percent for the month, and the Nasdaq increased more than 4 percent.

Investors looking for help from the Federal Reserve may have only one more chance before the election, said Frank Fantozzi, the chief executive of Planned Financial Services in Cleveland. The Fed’s policy-making arm meets on Sept. 13. If it does not announce some form of stimulus then, it probably will not until after the election, he said.

“He’s waiting until the last possible minute,” Mr. Fantozzi said of Mr. Bernanke. “I think in the next two weeks they’re going to really digest the economic data and say, ‘O.K., do we get involved or not?’ ”

Mr. Bernanke said at a Fed meeting in Jackson Hole, Wyo., that it’s “probably not a coincidence” that stock prices have risen since March 2009, when the Fed first announced its plan to buy Treasuries and other securities. The Dow is up 77 percent since the 2009 announcement.

Mr. Bernanke’s comments on Friday received a more uniform reception in energy markets, which tend to rise on bullish signs for the economy. Oil prices jumped $1.85, to $96.47 a barrel on the New York Mercantile Exchange. Natural gas and heating oil both rose more than 1 percent.

Stocks rose in nine out of 10 industry groups in the S.& P. 500. Energy stocks and materials stocks had the biggest gains, each up 1 percent. Utility stocks declined slightly.

Also Friday, the Commerce Department said factory orders rose 2.8 percent in July on surging demand for autos and commercial planes. However, orders for core capital goods — a key measure of investment spending — dropped 4 percent. It was that figure’s fourth decline in five months.

Investors seemed more focused on Mr. Bernanke’s comments and the overall higher factory orders, though.

Stocks in Europe were mixed. The German DAX and the CAC 40 in France both rose, while the FTSE 100 in Britain fell.

Interest rates were lower. The Treasury’s benchmark 10-year note rose 24/32, to 100 23/32, and the yield fell to 1.55 percent from 1.63 percent late Thursday.

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From Physician Glut to Physician Shortage

By UWE E. REINHARDT
Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.

In my most recent post, I made light of the argument that the Affordable Care Act would lead to a major shortage of physicians in this country. I was unpersuaded in part because the newly insured are likely to present only a marginal added demand for physician services. More important, I am not sure what we mean by “physician shortage.”


Today’s Economist
Perspectives from expert contributors.
.Forecasters looking at the health work force have never reached a consensus on the ideal physician-population ratio for this country.

Indeed, widespread worries over a looming physician shortage are a relatively new phenomenon. They come at the time when experts are also lamenting an “epidemic of overtreatment” of patients, said to cost America $210 billion a year.

Throughout the 1980s, however, and until the late 1990s, the dominant narrative among experts on the American health work force was that, with the exception of primary care physicians, the United States faced a large overall future physician surplus. There were only a few demurrals from that dominant narrative.

The problem is that forecasting the future supply of and demand for any type of health professional is a highly complex and nuanced enterprise with wide margins of error (see, for example, Figures 9-1 and 9-6 in my 1991 paper).

Crucial in such forecasts is the assumption one makes about the average annual physician productivity in future years. That variable depends chiefly on two factors: the number of hours per year that physicians typically devote to patient care, and the degree to which physicians delegate to others tasks for which an M.D. degree is not required – for example, administrative tasks to clerks or business managers and certain medical tasks to physician assistants or nurse practitioners trained to perform tasks now performed by physicians.

How crucial that assumption is can be inferred from a once highly influential paper written in 1994 by Jonathan Weiner, a Johns Hopkins University health services researcher. In that study, Professor Weiner sought to estimate the impact of the then-impending Clinton health reform on the country’s future work force situation.

Professor Weiner noted that, in 1992, well-managed, clinically integrated, staff- or group-model health maintenance organizations that were compensated by prepaid capitation (an annual lump-sum fee per patient) required an average of only about 120 or so physicians per 100,000 enrollees, while the overall ratio of patient-care physician per 100,000 population in the United States was as high as 180 (about 220 in 2011; see Table 2 in this publication).

It appeared that the H.M.O. had pushed task delegation to nonphysician personnel further than had the rest of the health system. Furthermore, H.M.O.’s freed clinicians substantially from many administrative chores that physicians elsewhere must perform. Such H.M.O.’s, incidentally, would be the ideal form of the accountable care organizations called for in the Affordable Care Act of 2010.

Assuming, when he made the forecast in 1994, that as a result of the Clinton health reform some 40 to 60 percent of the United States population would be enrolled in such H.M.O.’s by 2000, Professor Weiner projected that the demand for and supply of primary care physicians would be more or less in balance in 2000, but that the supply of specialists would exceed the demand for them by more than 60 percent (a projected surplus of 165,000 physicians).

This prospect – widely accepted at the time — subsequently led the prestigious Council of Graduate Medical Education to recommend in its report of 1996 that “that the number of physicians entering residency be reduced from 140 percent to 110 percent of the number of graduates of allopathic and osteopathic medical schools in the United States in 1993.”

And why were health policy makers and work force specialists so worried at the time about an impending physician surplus? Did not standard economic theory predict that an imminent surplus would drastically drive down physician fees – particularly specialists’ fees — and thus make health care more affordable and accessible?

The problem is that this theory has found little empirical support in the data, in part because third-party payment intervenes. Furthermore, there has always been a strong belief, especially among policy makers, that modern medical practice, when coupled with third-party payment, is subject to an analogue of Parkinson’s Law. It is named after the British historian Cyril Northcote Parkinson (1909-93), who promulgated the law more or less in jest in 1955, then with regard to the British civil service.

According to Parkinson’s Law, “work will expand to fill the time available for its completion.” In medicine, its manifestation is feared to be the overtreatment of patients – sometimes harmful – even though individual physicians may sincerely believe that more care implies superior quality of treatment.

As the late economist Eli Ginzberg, an early pioneer in work force studies, noted as early as 1966: “Physicians are in a position to create their own demand.” He added that the effective use of physician manpower “depends in the first instance on a taut supply of physicians.”

Academic economists since that time have tied themselves into analytic knots over whether or not Ginzberg was right, in exercises reminiscent of medieval scholasticism. At the theoretical level, their models are mathematically elegant but lack predictive power. The data available at the empirical level does not allow economists to distinguish between health care actively demanded by patients and health care passively accepted on the doctor’s recommendation, nor between services prescribed by doctors in good conscience and those rendered mainly to shore up doctors’ incomes.

As on so many other areas of the real world, the views of economists on this matter cancel one another out.

Policy makers in the real world, however, seem to have no doubt that Parkinson’s Law applies to medical practice, as well. Consequently, they prefer paying physicians by annual capitation or bundled payments instead of “inflationary” fee-for-service, and they often seek to impose global budgets on physicians.

If Eli Ginzberg was right – and often he was – the suspected physician shortage now imputed by critics of the Affordable Care Act may actually drive our health system into more efficient medical practice. Step No. 1 in that direction, of course, would be to lighten the enormous administrative load now heaped by our health insurance system onto physicians devoted to rendering patient care.
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German drug firm makes 1st apology for thalidomide


BERLIN (AP) -- The German manufacturer of a notorious drug that caused thousands of babies to be born with shortened arms and legs, or no limbs at all, issued its first ever apology Friday — 50 years after pulling the drug off the market.

Gruenenthal Group's chief executive said the company wanted to apologize to mothers who took the drug during the 1950s and 1960s and to their children who suffered congenital birth defects as a result.

"We ask for forgiveness that for nearly 50 years we didn't find a way of reaching out to you from human being to human being," Harald Stock said. "We ask that you regard our long silence as a sign of the shock that your fate caused in us."

Stock spoke in the west German city of Stolberg, where the company is based, during the unveiling of a bronze statue symbolizing a child born without limbs because of thalidomide. The statue is called "the sick child" — a name German victims group object to since all the victims are now adults. In German, the name also implies cure.

The drug is a powerful sedative and was sold under the brand name Contergan in Germany. It was given to pregnant women mostly to combat morning sickness, but led to a wave of birth defects in Europe, Australia, Canada and Japan. Thalidomide was yanked from the market in 1961 and was also found to cause defects in the eyes, ears, heart, genitals and internal organs of developing babies.

Thalidomide was never approved for use in pregnant women in the United States.

Freddie Astbury, of Liverpool, England, was born without arms or legs after his mother took thalidomide. The 52-year-old said the apology was years long overdue.

"It's a disgrace that it's taken them 50 years to apologize," said Astbury, of the Thalidomide U.K. agency, an advocacy group for survivors. "I'm gobsmacked (astounded)," he said. "For years, (Gruenenthal) have insisted they never did anything wrong and refused to talk to us."

Astbury said the drug maker should apologize not just to the people affected, but to their families. He also said the company should offer compensation. "It's time to put their money where their mouth is," he said. "For me to drive costs about 50,000 pounds ($79,000) for a car with all the adaptations," he said. "A lot of us depend on specialist care and that runs into the millions."

Astbury said he and other U.K. survivors have received some money over the years from a trust set up by thalidomide's British distributor but that Gruenenthal has never agreed to settle.

"We invite them to sit around the table with us to see how far their apology will go," he said. "I don't think they've ever realized the impact they've had on peoples' lives."

Gruenenthal settled a lawsuit in Germany in 1972 — 11 years after stopping sales of the drug — and voiced its regret to the victims. But for decades, the company refused to admit liability, saying it had conducted all necessary clinical trial required at the time.

Stock reiterated that position Friday, insisting that "the suffering that occurred with Contergan 50 years ago happened in a world that is completely different from today" and the pharmaceutical industry had learned a valuable lesson from the incident.

"When it developed Contergan Gruenenthal acted on the basis of the available scientific knowledge at the time and met all the industry standards for the testing of new drugs that were known in the 1950s and 1960s," he said.

A German victims group rejected the company's apology as too little, too late.

"The apology as such doesn't help us deal with our everyday life," said Ilonka Stebritz, a spokeswoman for the Association of Contergan Victims. "What we need are other things."

Stebritz said that the 1970 settlement in Germany led to the creation of a €150 million fund for some 3,000 German victims, but that with a normal life expectancy of 85 years the money wasn't enough. In many other countries, victims are still waiting for compensation from Gruenenthal or its local distributors.

In July, an Australian woman born without arms and legs after her mother took thalidomide reached a multimillion dollar settlement with the drug's British distributor. Gruenenthal refused to settle. The lawsuit was part of a class action and more than 100 other survivors expect to have their claims heard in the next year.

Attorneys for Lynette Rowe said in a statement released Saturday that Grunenthal's apology rang hollow.

"To suggest that its long silence before today ought to be put down to 'silent shock' on its part is insulting nonsense," the statement reads. "For 50 years Grunenthal has been engaged in a calculated corporate strategy to avoid the moral, legal and financial consequences of its reckless and negligent actions of the 1950s and 1960s."

Thalidomide is still sold today, but as a treatment for multiple myeloma, a bone marrow cancer and leprosy. It is also being studied to see if it might be useful for other conditions including AIDS, arthritis and other cancers.
 
Things the Postal Service Won't Tell You

Your failure to send your Mother a proper birthday card is the least of our problems.

For four days at the end of June, retired letter carrier Jamie Partridge and nine other current and former postal workers didn't eat. They were on a hunger strike to protest what the group saw as the biggest threat to the U.S. Postal Service's continued existence: Not e-mail's steady encroachment on snail mail's territory, not a prolonged economic downturn or the growing popularity of corporate shipping services, but government-mandated payments to pre-fund health care benefits for postal retirees -- 75 years into the future. "To call out that Congress was starving the postal service, we were starving ourselves," Partridge says. Private-sector companies -- and even most other branches of the federal government, like, say, the Army -- aren't required to fund their health benefits so far in advance. It's an albatross of a financial burden on the Postal Service, hidden beneath the more striking headlines about shrinking mail volume -- down more than 21 percent since its 2006 peak -- and plummeting revenue. Indeed, in the first three quarters of 2012, the Postal Service lost $11.6 billion, more than twice what it lost during the same period in 2011.

Publicly, the Postal Service has blamed its financial woes on a waning interest in old-fashioned mail (exacerbated by the financial crisis). And it has cited that reason when it announced staff reductions -- about a quarter of its workforce, or 150,000 postal jobs, will be eliminated by 2016 -- as well as when it talked about closing post offices and when it proposed ending Saturday mail delivery, a measure currently pending in Congress. But some in the postal industry say that declining mail is just an excuse: "There is red ink -- but the overwhelming share has nothing to do with mail volume, the Internet, or other factors related to the mail," says Fredric Rolando, president of the National Association of Letter Carriers. The retiree health payments account for nearly 80 percent, or $9.2 billion, of the first three quarters' losses, and they "not only have exhausted the Postal Service's profits, savings and borrowing authority, they also have distracted the USPS from addressing the structural issues that do indeed exist as society changes," says Rolando, adding that there are "plenty of opportunities" in mail, including e-commerce shipping. "The prefunding of retiree health benefits for future retirees is a major cause of our financial crisis -- but not the only cause," says a USPS spokesman, citing decline in first-class mail as another major cause.

While many industry groups, including the Postal Regulatory Commission, have recommended that the health care payments -- the result of a congressional mandate passed in 2006, before the Postal Service's problems started -- be reduced to alleviate the burden, there is one massive roadblock: the federal budget. Because the retiree health prefunding payments are counted in federal funds, they are tied into the nation's budget, which some experts say amounts to the USPS subsidizing government operations. "So the Postal Service has been a kind of cash cow for the federal government for the last 40 years," says Postal Regulatory Commission chairman Ruth Goldway.

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On Aug. 1, for the first time since the 2006 mandate, the Postal Service did not pay its $5.5 billion annual retiree health benefits bill, and announced that it's likely to default on the next payment too, due Sept. 30. While the announcement raised red flags of concern for the welfare of retiring postal workers, experts, including postal employee unions, contend that the retirees will be fine -- or may even be better off -- if the USPS doesn't pay another cent into the fund for a long time. Indeed, Postal Service inspector general David Williams wrote a letter to the Senate earlier this year recommending just that -- eliminating the annual payments and letting the $44 billion fund grow with interest. Despite the Postal Service's debt, its retiree benefit coffers are beyond full. Its pension funds are more than 100% funded, compared with 42% for all federal pension funds and 80% for the average Fortune 1000 pension plan. That "astonishingly high figure," according to Williams, amounts to a "war chest" of resources that will take care of older workers for decades to come.

"The irony," says the NALC's Rolando, is that "today's postal retirees, and future retirees, are well protected," while the Postal Service's financial status is in jeopardy. If it continues to struggle financially, it will likely cut back on post office locations and hours as well as delivery service -- which some experts say could disadvantage retirees and other Americans who rely on the Postal Service for efficient correspondence.

3. Anybody want to buy an ailing government agency?

As a federal agency, the Postal Service is something of a platypus: It is bound by law to perform certain functions -- the old postman's motto goes, "Neither snow or rain nor heat nor gloom of night will stay these couriers from their swift completion of their appointed rounds" -- but it also has to report financial results like a business. Some economists say turning the postal service into a corporation with a board of directors and a fiduciary duty to shareholders would allow it to make sound financial decisions based on market conditions, rather than falling prey to political motivations and bureaucratic red tape. Under the current system, "managers are hamstrung," says Richard Geddes, Cornell University professor of policy analysis and management and a visiting scholar at the American Enterprise Institute for Public Policy Research.

But closing unprofitable post offices and stopping delivery on low-volume days would undermine the original equality-minded mission of the Postal Service to keep the country connected through the mail and to enable efficient communication to the most remote corners of the nation. "It would do things beneficial to the bottom line but not to the country," says Steve Hutkins, a New York University professor who advocates for the protection of the Postal Service through his site SaveThePostOffice.com. Even proponents of privatization admit that it would be difficult. "Any change is like shifting the direction of a battleship," Geddes says. When the idea was first floated in the 1990s, "the comment that I got was, Who would buy it?" says PRC chairman Goldway. "I don't think the market realities are there now."

A USPS spokesman says privatization isn't the answer, adding that it would be hard for even a private company to profit serving rural areas, and that the Postal Service has a business plan to become "financially sound and continue universal service to all Americans."

4. We're hiring our competitors to do our jobs for us.

The Postal Service increasingly relies on outside corporations for everything from sorting mail and transporting it by air and ground to advertising and I.T. consulting: Last year, the agency spent more than $12 billion on such contracts, according to Husch Blackwell, a law firm that represents Postal Service contractors. The USPS even hires some of its competitors to help it do its job, including the United Parcel Service and FedEx, which was the Postal Service's highest-paid supplier in 2011. "The postal service essentially has privatized everything but the last mile of delivery," Goldway says. The number of mail delivery routes served by outsourced carriers increased 84 percent to nearly 10,000 between 1998 and 2012, according to a recent report by the Congressional Research Service. There is now a thriving industry of third-party companies contracting with the USPS, including large publicly traded corporations such as presorting mail firm Pitney Bowes.

Postal worker unions generally oppose the practice of contracting, which dates back to the 18th century, saying that outsourcing Postal Service functions is less reliable and takes jobs away from postal employees who are already being laid off in droves. The National Association of Letter Carriers has referred to the practice as a "cancer" that must be stopped before it spreads. Still, contractors deliver mail on just 4.4% of routes, up from 2.3% in 1998, according to an analysis by the Congressional Research Service. The Postal Service, for its part, says it will continue to use contractors, as long as doing so is cost-effective and consistent with their contractual obligations.

5. We're addicted to junk mail.

Like Big Oil and Big Pharma, the Big Mailers -- including banks and catalog publishers as well as presort mail companies -- are a powerful force on Capitol Hill, and the Postal Service courts their business because the vast breadth of envelopes buoys mail volume. Through its workshare discounting program, the Postal Service offers reduced postage rates to companies with large stakes in the mail -- from mass mailers like AT&T and Bank of America to mail-handling specialists like Pitney Bowes -- that presort mail or deliver it part of the way.

In theory, the benefits should be mutual: Working with outside service providers increases efficiency and saves money, as contractors are often cheaper to hire than unionized postal employees. But the postage discounts the Postal Service offers contractors occasionally exceed the amount it saves in the deal; last year, 35 of these workshare arrangements were under water, according to the Postal Regulatory Commission's annual compliance report. (A spokesman for the USPS says the wokshare arrangements comply with the law.)

Some experts believe the pricing mismatch is partially a result of politics. Bulk junkmailers like ValPak lobby forcefully against moves that would increase their postage rates. The National Association of Pre-Sort Mailers acknowledges that its members do a lot of the same tasks as the Postal Service -- just better, providing a higher profit margin and faster service. "When the Postal Service is doing it themselves, it doesn't perform as well as the mail that's already prepared," says the association's executive director Bob Galaher.
 
The Class of 2012 may have few reasons to celebrate this year. Along with the long-term unemployed, experts say their prospects are the bleakest among all job-seekers.

The U.S. economy added a lower-than-expected 80,000 jobs last month, according to data Friday from the Labor Department. Though the overall unemployment rate remained unchanged at 8.2%, experts say this year’s 1.8 million college graduates have a rough job search ahead. “Over the last five years, the jobs situation has gotten increasingly intense for each successive graduating class,” says Paul T. Conway, president of Generation Opportunity, a non-profit think-tank based in Arlington, Va. “Their concern is now palpable.”

The last half-decade has not been good to graduates. Only a half of those who graduated since 2006 are now employed full time, according to a recent Rutgers University survey. More college graduates are settling for jobs that in years past would have gone to those without degrees, while people in their 30s are now occupying jobs once taken by recent graduates, says Carl Van Horn, professor of public policy and director of Rutgers’ John J. Heldrich Center for Workforce Development.

But if all the young people who’ve already given up looking for jobs are included — the 1.7 million people aged 18-29 who’ve been out of work for more than a year — the latest 8.2% unemployment figure would be closer to 16.8% for that age group, Conway says. That’s the highest unemployment rate for that age group since World War II. “Their story is one of few opportunities, delayed dreams, and stalled careers,” he says.

[Related: High-paying jobs for new graduates]

The faltering economic recovery prompted students from the class of 2012 to apply for jobs much earlier than graduates of earlier years. More than half of college seniors reported they applied for a job prior to graduating, according to a survey of 48,000 graduating seniors by National Association of Colleges and Employers, and more than a quarter of those that applied for a job found one, the survey found.

Some majors fared far better than others: Over half of those who accounting, engineering, computer science, economics and business administration graduates received at least one offer.

But faced with competition from older workers, young professionals are accepting jobs for less money. College graduates who obtained their first job between 2009 and 2011 earned $27,000 a year or 10% less than those who entered the workforce in the two previous years, the Rutgers survey found. Van Horn says many of this year’s graduates lucky enough to find employment will be disappointed with their salary. Mark Mulholland, 22, a history major from the University of Virginia, graduated in May 2012 and is now looking for work in communications. “My hope is to gain valuable experience rather than a massive salary,” he says. His target? $40,000 a year.
 
......Investors who have favored emerging markets like China in recent years should pay attention to another growing manufacturing center. It boasts plenty of skilled workers; cheap and abundant energy; stable institutions; and a large middle class that likes to shop.

It is the U.S., where a long industrial decline might be in reverse.

In March, manufacturing expanded for the 32nd straight month, and contributed 37,000 of the 120,000 U.S. jobs added, the government reported. That's partly because of the ongoing recovery from the Great Recession. But the economy is also changing.

Manufacturing's share of gross domestic product plunged to 11% in 2009 from 26% in 1947, according to the Commerce Department. In 2010, it rose to 11.7% -- the biggest yearly gain in more than 50 years. The 2011 numbers will be released on April 26, and the anecdotal evidence is promising; companies like Caterpillar (CAT), Ford Motor (F) and NCR say they are moving some operations back to the U.S.

Three trends suggest America's "manufacturing renaissance" is just getting started, says Neil Dutta, U.S. economist at Bank of America Merrill Lynch. First, the cost advantages of outsourcing factory work are narrowing. Emerging market wages, while still much lower than U.S. wages, are rising, and high oil prices have made shipping more expensive. That is expanding the range of goods U.S. factories can produce at competitive prices (think sophisticated machines, not toys).

Second, a weakening dollar makes U.S. goods more attractive to foreign buyers. The dollar has fallen by nearly one-third over the past decade against a basket of currencies including the euro, British pound and yen.

Third, energy production is booming in the U.S., and domestic natural-gas prices have recently plunged. That gives an edge to U.S. producers of fabricated steel, transportation equipment, machinery and chemicals, which use natural gas extensively, according to a recent report from Citigroup (C) .

Of course, a sudden rise in the dollar or a spike in natural-gas prices or wages could slow U.S. manufacturing gains. But for now, at least, that scenario appears unlikely. Wall Street expects earnings for the S&P 500 industrial sector to rise 13% this year, versus 9% for the broader index.

There are several ways to invest in the U.S. manufacturing resurgence. An index fund that tracks the Standard & Poor's 500-stock index has a 10.6% weighting for industrials. Investors should try to increase their allocations to about 16%, says Chuck Severson, a portfolio manager at Baird Investment Management.

Mr. Severson prefers U.S. companies that supply manufacturers, because they stand to gain from a broad rise in factory activity. His favorites include Danaher, a conglomerate with an industrial technology division; Roper Industries, whose pumps and valves are used in factories and refineries; and industrial suppliers W.W. Grainer and Fastenal.

BofA's Mr. Dutta, meanwhile, favors U.S. companies whose goods and services are used to automate and monitor factories. Examples include Rockwell Automation and Emerson Electric.

U.S. Steel and Nucor are the largest U.S. steelmakers, and analysts say both can reduce their domestic production costs by switching from coal to natural gas where possible.

Jerry Swank, founder of Swank Capital, a Dallas investment firm specializing in energy, says U.S. chemical makers such as Dow Chemical and DuPont should profit from turning natural-gas liquids into materials used in fabrics, pipes, food packaging and other items.

Exchange-traded funds also offer easy exposure, notes Jeff Sica, president of Sica Wealth Management in Morristown, N.J. Vanguard Industrials and iShares Dow Jones U.S. Industrial Sector cost $19 and $47 a year per $10,000 invested, respectively, plus trading commissions. Both count General Electric (GE) as their largest holding. The Guggenheim S&P 500 Equal Weight Industrials is more spread out among smaller companies. It costs $50 a year per $10,000 invested, plus trading commissions.

When it comes to U.S. manufacturing, says Kristina Hooper, head of portfolio strategies at Allianz Global Investors, "It's time to stop looking in the rearview mirror and start looking ahead."

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Johnson & Johnson announced Thursday that its pharmaceutical unit had reached a $181 million consumer fraud settlement with 36 states and the District of Columbia over its marketing of Risperdal, an antipsychotic drug.

The company’s pharmaceuticals subsidiary, Janssen, has been under scrutiny for years over its promotion of Risperdal, which treats symptoms of bipolar mania and schizophrenia. State and federal authorities have said that Janssen promoted the drug for uses it did not have approval for, including dementia in elderly patients, bipolar disorder in children and adolescents, depression and anxiety. Prosecutors have also accused the company of minimizing or concealing the risks associated with the drug.

In resolving the allegations by the states, Janssen did not admit wrongdoing or that it violated the law and said it settled to avoid “unnecessary expense and a prolonged legal process.”

“We have chosen this path to achieve a prompt and full resolution of these state claims and to ensure we continue to focus on our mission of providing medicines to meet the significant unmet needs of many people who suffer from mental illness,” Michael Yang, president of Janssen, said in a statement Thursday.

The company’s decision to settle the cases with the states follows several other large state settlements and court decisions involving Risperdal. In April, a judge in Arkansas ordered it to pay more than $1.2 billion in fines. Last year, a South Carolina judge levied civil penalties of $327 million. Janssen is appealing the fines in both states. Two cases against Janssen in Pennsylvania and West Virginia were eventually dismissed.

New York’s attorney general, Eric T. Schneiderman, applauded the settlement in a statement Thursday. New York will receive nearly $9 million as part of the agreement. “This landmark settlement holds the companies accountable for practices that put patients in danger, and serves as a warning to other pharmaceutical giants that they must play by one set of rules,” Mr. Schneiderman said. Other states involved in the settlement include Florida, Pennsylvania, Colorado, Arizona and Texas. California and Kentucky, which were part of the negotiations, did not take part in the final agreement, said Terri Mueller, a spokeswoman for Janssen.

Ms. Mueller said Janssen officials had seen some of the filings made by state attorneys general Thursday and “our company strongly disagrees with many of the allegations and the characterization of the evidence in the state complaints.”

As part of the agreement, Janssen agreed not to make false or misleading claims about Risperdal and a related drug, Invega, and not to present conclusions from studies that are not scientifically sound. It also agreed to disclose payments that it makes to doctors and other health care professionals.

The announcement Thursday was not related to a larger pending settlement with the federal Justice Department over three whistle-blower lawsuits that also involve sales of Risperdal. Johnson & Johnson said earlier this month that it had reached an agreement in principle to settle those matters. The company said Thursday that agreement is still being completed.

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Strike by Lufthansa Attendants Grounds Flights


Lufthansa flight attendants walked off the job for eight hours on Friday at the Frankfurt airport, causing the cancellation of more than 220 flights. Their union warned of more stoppages unless the airline gave in to its demands. Lufthansa, Germany’s largest airline, said it canceled more than 220 short- and medium-haul flights from and to Frankfurt, including routes across Europe, after about 1,000 cabin crew members went on strike. A small number of long-haul flights were canceled as well, among them services to and from New York, Boston, Atlanta, Philadelphia and Seattle. An airline spokesman, Klaus Walther, accused the union of putting its demands “on the back of the customers.” The union called the strike after 13 months of negotiations for higher pay and guarantees on conditions failed to produce an agreement.
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When I used to go to Germany quite frequently I usually flew into Frankfort airport and then took a train out to Gottingen where our research facilities were located.

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That was when there was an east germany and a west germany and the train from Frankfort to Gottingen passed through a part of east Germany.

Just as we entered East Germany the train would stop and East German soldiers with machine guns would get on the train... one to each car and watch all us passengers while we passed through East Germany. It was pure harassment and very scary.

http://www.youtube.com/watch?v=hH6nQhss4Yc

http://www.youtube.com/watch?v=WjWDrTXMgF8

http://www.youtube.com/watch?v=wnYXbJ_bcLc
 
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