Missouri Gov. Nixon signs vehicle tax legislation

JEFFERSON CITY, Mo. (AP) — Some Missouri residents no longer can gain a tax break by buying a vehicle from an out-of-state dealer or an individual with a for-sale sign in the window.

Gov. Jay Nixon enacted a law Friday that immediately reinstates local vehicle taxes for numerous cities and counties that have been unable to tax some cars, trucks and boats since a state Supreme Court ruling more than a year ago.

Nixon twice vetoed previous bills that sought to re-impose the local vehicle taxes. His office said in a brief written statement that the previous bills “did not sufficiently protect Missourians’ right to vote on tax policy” but that the most recent version “addresses these concerns by requiring a public vote in local jurisdictions without a local use tax.”

Some Illinois vehicle dealers in the St. Louis area had targeted Missouri consumers with the prospect of a tax break. Retailers in some other Missouri border cities also had seen more customers go elsewhere.

“We were the only state where there was an advantage for the citizens of the state to not make purchases in the state,” said Sam Barbee, president and CEO of the Missouri Automobile Dealers Association.

Cities and counties also had backed the legislation, because they had been losing tax revenues. But Friday marked only a partial victory for the Missouri Municipal League. That’s because the governor also signed a bill limiting the ability of governmental entities to restrict cellphone towers, which it had urged him to veto.

The vehicle tax legislation is a response to a January 2012 state Supreme Court ruling. The court said Greene County could not charge a local sales tax on a man who bought a boat from a dealer in Maryland. The ruling drew a distinction between sales taxes, which are collected from in-state retailers, and use taxes, which are levied on products used in Missouri but bought either from an out-of-state retailer or from someone who does not run a business.

The Supreme Court said Greene County could not tax the boat because it wasn’t covered by the local sales tax and county voters had not approved a local use tax.

The ruling had broad implications because a little less than half of Missouri’s 114 counties and most of its municipalities had no voter-approved use tax.

The new law seeks to sidestep questions about the location and manner in which a vehicle is bought by redefining vehicle sales taxes to apply to the act of titling vehicles. The newly defined tax kicks in immediately. Within the next two years, local governments that did not previously have a voter-approved use tax must give voters a chance to repeal the titling sales tax for vehicles bought out of state or from individuals.

Though legislative supporters are confident about the new approach, some attorneys have raised concerns that the measure still could violate state constitutional provisions by imposing a local tax prior to voter approval.

Nixon also signed bills Friday that limit the ability of cities, counties and state entities to regulate cellphone towers.

Bill sponsors said the legislation was prompted by concerns from cellphone service providers that have encountered a hodgepodge of local requirements as they expand their high-speed networks to accommodate customers who use wireless devices to access the Internet.

The legislation sets deadlines for public entities to act upon applications for cellphone towers and lists 18 things they cannot do when regulating the towers.

For example, governments will be barred from evaluating cellphone tower applications based on whether there were other possible locations or whether a company could have added its equipment to an existing tower used by a competitor. They also will not be able to require companies to remove existing wireless facilities as a condition of building new ones. And the bill limits the charges that governments can pass on to wireless companies for their cost of hiring consultants.

Dan Ross, the executive director of the Missouri Municipal League, said the legislation “pretty well gives a special deal to one industry and moves their applications to the head of the line.”

Nixon’s office said the law will expand access and improve service “through more rapid deployment of broadband and wireless network infrastructure.”


Vehicle tax bills are SB23 and SB99.

Cellphone tower bills are HB331 and HB345.


Legislature: http://www.moga.mo.gov


US airlines cancel more flights for Mexico volcano

MEXICO CITY (AP) — U.S. airlines canceled more flights in and out of Mexico City’s airport on Friday as a precautionary measure as the nearby Popocatepetl volcano continued to emit vapor and ash.

Alaska Airlines, United, Delta and AirTran canceled about a dozen flights, fewer than the number on Thursday, said Jorge Gomez, spokesman for Mexico City International Airport.

He noted that the airlines made the decision, and said normal operations continued at the airport without restrictions. No ash has fallen at the airport, Gomez said, though dust particles have been detected from the volcano that is about 40 miles (65 kilometers) away.

At least six U.S. airlines canceled more than 40 flights on Thursday as the volcano spewed a mile-high (1.5 kilometer-high) plume of ash that drifted over large parts of Mexico City. The volcano also spewed a hot shower of glowing rock around its crater.

Mexico’s National Center for Disaster Prevention reported that there had been 99 tremors and exhalations of medium and high frequency from the volcano on Friday afternoon.

Activity has increased this week from the volcano that towers more than 15,000 feet (5,450 meters) high in central Mexico where the states of Mexico, Puebla and Morelos meet.

Ash has fallen on towns at the volcano’s base and as far away as some neighborhoods in Mexico City.

The Environment Ministry called on residents to take preventive measures Friday against the falling ash, including wearing dust masks, covering water supplies and staying indoors as needed.

SF Bay Area commuter rail service resumes

OAKLAND, Calif. (AP) — Commuter rail service has resumed in the San Francisco Bay Area after unions called off a strike and agreed to extend a labor contract for a month while bargaining continues.

The Bay Area Rapid Transit agency said 35 trains were put into service at 3 p.m. Friday.

Dozens of commuters were lined up awaiting the first trains at the West Oakland station after nearly five days without service due to the strike.

BART and its two largest labor unions agreed to an extension of the current contract. Both sides repeatedly said they were far apart in efforts to reach a new deal.

Illnesses prompt wide Whole Foods cheese recall

NEW YORK (AP) — Whole Foods Market Inc. is recalling Crave Brothers Les Freres cheese in response to an outbreak of a bacterial infection that has sickened people in several states and killed at least one person.

Whole Foods says the cheese may be contaminated with Listeria monocytogenes. It was sold in 30 states and Washington DC under names including Les Freres and Crave Brothers Les Freres. The cheese was cut and packaged in clear plastic wrap and sold with Whole Foods Market scale labels. The company is posting signs in its stores to inform customers about the recall.

Officials said cases have been identified in at least three states. Public health officials in Illinois said Wednesday that one resident became sick after eating contaminated cheese in May. Minnesota officials said Thursday that one elderly person in the state died and another was hospitalized after illnesses linked to the cheese. Both of those illnesses happened in June.

Listeria can lead to severe illness for women who are pregnant or people who have weakened immune systems. In healthy individuals, it can cause symptoms including high fever, severe headache, stiffness, nausea, abdominal pain and diarrhea.

Crave Brothers is based in Waterloo, Wis. The company announced a voluntary recall of Les Freres, Petit Frere, and Petit Frere with Truffles cheese made on July 1 or earlier. It said the cheeses were distributed around the country through retail and food service outlets and mail order.

Whole Foods said customers should throw the cheese away and bring in their receipts for a full refund.

Morningstar: Client credit card data may be leaked

NEW YORK (AP) — Morningstar Inc. says it discovered an illegal intrusion into its systems that may have compromised some of its clients’ personal information, including email addresses, passwords, and credit card numbers.

The Investment research provider said the breach took place around April 3.

The intrusion affected about 2,300 users whose credit card information was stored in the Morningstar Document Research system, formerly known as 10-K Wizard. An additional 182,000 clients who had email addresses and user-generated passwords in the system may have been affected, the company said in a filing with the Securities and Exchange Commission.

Morningstar said it shut down old servers and moved data to a more secure system earlier this year in a move unrelated to the incident. It maintains it has taken additional steps to prevent unauthorized access to its systems to protect client information. The company said it is also working with law enforcement officials and credit card companies, as well as investigating the incident on its own.

Morningstar sent notices to clients and reset their passwords. It is offering 12 months of free identity protection to clients whose credit cards may have been compromised.

“At this point, we don’t have any evidence to suggest that any of the information that was compromised has been misused,” the company said in the filing. It doesn’t believe any other Morningstar products were affected.

Shares of Morningstar Inc. closed Friday unchanged at $78.07.

China Enters Nomura Danger Zone as Fed Tapers: Cutting Research

China, Hong Kong and India are in a “high-risk danger zone” because their monetary policies have stayed too loose over the past four years, according to Nomura Holdings Inc.

A June 28 report by the bank’s economists and strategists showed the average ratio of domestic private debt to gross domestic product across Asia had ballooned to 167 percent in 2012 and most of the region’s property markets are “frothy.” The debt ratio has increased by over 50 percentage points in Hong Kong and Singapore and between 30 and 40 points in Malaysia, South Korea, China and Thailand.

A measure of monetary policy based on output gaps and inflation shows that interest rates have also been persistently below what economic models suggest, and even more so if the financial cycle is accounted for, the report said.

That leaves countries financially vulnerable. Indonesia is at the lower end of the high-risk zone, while South Korea, Malaysia, Singapore and Thailand are in the middle-risk range, ahead of Japan. The Philippines and Taiwan seem the least prone to any economic crisis. Hong Kong is a Special Administration Region of China although it pegs its currency to the dollar.

Investors are set to begin differentiating between economies throughout the region once the Federal Reserve begins pulling back stimulus, the Nomura report said. Their preference will be for sustainable expansion rather than fast growth.

The risk is Asian policy makers are falling into the same trap as their U.S. and European counterparts did prior to the global financial crisis and as Asia did in the 1990s: “That is, keeping policies too loose by focusing too much on the standard business cycle and low inflation and not enough on the financial cycle,” said Nomura.

* * *

Egypt has a 3 percent chance of losing democracy in any given year because of its low income levels, according to Renaissance Capital Ltd.

An army-appointed interim president took office in Cairo yesterday, hours after Mohamed Mursi was ousted as the country’s first democratically elected civilian leader. In a June 22 report, Renaissance economists led by Charles Robertson said the risk that democracy can’t be taken for granted is because Egypt’s per capita GDP of $5,000 leaves it in a similar position to Tunisia in 2003 or Turkey in 1975. Based on a study of 150 countries with a population above 500,000 from 1950 to 2009, democracy is only “immortal” once income tops $10,000 per head.

“Egypt at least has energy to export, but its high budget deficit and public debt ratios represent risks, and these may worsen as newly elected governments may not feel comfortable reducing subsidies,” Robertson and colleagues said.

As with Turkey in the 1970s, any Islamic-minded government may find it hard to manage relations with a more secular military, the report said.

* * *

How much competition there is among euro-area banks helps determine how well the European Central Bank’s low interest rates flow to consumers and companies, according to a Bank of Finland study.

Using a group of banks from 12 euro-area members from 2002 to 2010, Bank of Finland economists Zuzana Fungacova and Laura Solanko, along with the University of Strasbourg’s Laurent Weill, analyzed the reaction of loan supply to monetary policy decisions.

They found that the transmission of monetary policy through the bank lending channel is less pronounced for banks with market dominance, according to their June study.

“These results suggest that the bank market power has a significant impact on monetary policy effectiveness,” said the economists. “Therefore, wide variations in the level of bank market power may lead to asymmetric effects of a single monetary policy.”

* * *

Becoming a chief executive officer is enough for business leaders to increase their political contributions 137 percent.

A study of U.S. elections from 1991 and 2008 published this week found 1,556 campaign donors who had become CEOs during that period. Economists Adam Fremeth, Brian Kelleher Richter and Brandon Schaufele concluded that on becoming the top boss of a Standard & Poor’s 500 Index (SPX) company, an executive increased personal giving by an average $4,029 per election cycle.

“While some fraction of CEOs’ contributions can be attributed to long-standing preferences, the striking changes in behavior cannot be explained by these factors alone,” the economists wrote in this month’s American Economic Journal: Applied Economics.

* * *

The Bank of Japan may replace the Fed as the world’s leading provider of liquidity as soon as the first quarter of next year.

While the Fed is signaling it may begin tapering its $85 billion in monthly bond by the end of this year, the Bank of Japan is aiming to double its monetary base to 270 trillion yen by the end of 2014 from 138 trillion yen.

That suggests monthly net asset purchases of 5.5 trillion yen, about $56 billion at current exchange rates, Capital Economics Ltd. economist Julian Jessop said in a June 27 report.

The question is then whether additional BOJ purchases will offset the slowing Fed buying. While a dollar’s worth of additional liquidity at a Japanese bank has the potential to support markets as much as a dollar at a U.S. financial institution, there are some caveats, said Jessop.

The BOJ’s buying was announced in April, so some of the support should already be reflected in markets. The dollar value of the Japanese program will also fall as the yen does and also Japanese banks may have a lower propensity to recycle funds into riskier assets than U.S. counterparts.

“Nonetheless, the Bank of Japan’s plans are another example of how global monetary conditions are set to remain loose even if the Fed scales back its own purchases,” said Jessop.

* * *

Emerging markets need to ramp up infrastructure investment as they approach middle-income status or risk seeing their development surge run out of steam, according to Ashmore Investment Management.

Such economies need to take heed because they are exhausting their scope to grow as they close in on industrial rivals, said head of research Jan Dehn in a June 28 report.

Countries that have successfully transitioned to high income status have typically invested between 30 percent and 40 percent of GDP in roads, bridges, railways and other projects when their GDP per capita ranged from $2,000 to $15,000.

The average in emerging markets today is 32 percent, ranging from 21 percent in eastern Europe to 37 percent in Asia.

To aid the shift up, governments should welcome inflows of cash from capital markets and reduce red tape that restricts investment, said Dehn.

“How well each individual emerging market adapts to the new global reality will largely determine who succeeds and who does not,” said Dehn.

* * *

Italian banks that have the fewest women in top decision-making positions, such as chief executive officer or chairman, may be making riskier decisions as a result, according to a Bank of Italy working paper.

The study by Silvia Del Prete and Maria Lucia Stefani found the number of women at the top is greater in banks belonging to major banking groups with larger and younger boards and in banks that are more cost-efficient.

The data show “credit policies are more stringent when women are on the board, possibly due to their higher risk aversion,” Del Prete and Stefani said.

* * *

There is no global currency war under way if the price of Apple Inc. (AAPL)’s iPad Mini is any indication.

A June 27 blog by Benn Steil and Dinah Walker of the Council on Foreign Relations sought to test the so-called law of one price, which says identical goods should trade for the same price in an efficient market.

This is the rule tested by The Economist magazine’s Big Mac Index, which uses the price of burgers in a common currency to estimate whether various exchange rates are overvalued or undervalued. Bloomberg News similarly monitors the price of Ikea bookshelves.

The weakness in that approach is that the absence of cross-border flows of burgers means prices won’t align internationally, said Steil and Walker.

The iPad mini has more modern characteristics than a burger because it is a global product that travels, they said. Apple is also highly attuned to shifting currency values: Spokesman Takashi Takabayashi said May 31 that the company raised its Japanese prices in May to offset the sliding yen, for instance.

The study of 33 countries found excluding sales taxes, “there are no major violations of the law of one price in the global market for iPad Minis.”

The Swiss franc may be overvalued and the Malaysian ringgit undervalued, but the scale in which they are wrongly valued is much less than the Big Mac index. In China, an iPad mini sells for 5.6 percent more in dollar terms than in the U.S., suggesting the yuan may be closer to a correct level than Big Macs imply.

To contact the reporter on this story: Simon Kennedy in London at skennedy4@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

Tomohiro Ohsumi/Bloomberg

The Oriental Pearl Tower, center left, stands at night in the Lujiazui district of Shanghai.

The Oriental Pearl Tower, center left, stands at night in the Lujiazui district of Shanghai. Photographer: Tomohiro Ohsumi/Bloomberg

July 3 (Bloomberg) — Tim Riddell, the Singapore-based head of global markets research at Australia & New Zealand Banking Group Ltd., talks about the impact of Federal Reserve monetary policy on Asian markets. Riddell also discusses China’s economic growth and credit outlook. He speaks with Rishaad Salamat on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)

Trades Rival University Degrees for Canada Labor Market

Ellie MacRae is taking summer classes to accelerate a four-year degree in early childhood studies, even as she worries her efforts won’t pay off like her boyfriend’s electrical training.

“Undergraduate degrees don’t get you a job,” said MacRae, 21, who is in her second year at Toronto’s Ryerson University. Her boyfriend “will have an easier time finding a job than me – – there’s just a lot more opportunities in the trades.”

Canadian mining and resource companies such as Calgary-based TransCanada Corp. (TRP) say they are struggling to find skilled workers while the country’s education system focuses more on preparing high school students for university instead of colleges where trades are taught. Finance Minister Jim Flaherty is increasing funding for training with youth facing joblessness that’s more than twice as high as other workers.

One historical advantage of a university degree has been fading: the jobless rate for those with bachelor degrees was 4.7 percent in June, compared with 5.2 percent for trade school graduates, according to Statistics Canada. Twenty years ago, university graduates had 6.2 percent unemployment, compared with 10 percent for those with trade school certificates.

Producing skilled workers and matching them to the best jobs is critical for Canada, where exports make up one-third of output, shipments that are threatened by lagging productivity and a strong currency.

Right Education

Choosing the right education is also more important now. Canadians 24 years old and younger faced an unemployment rate last year that was 2.4 times that of workers ages 25 to 54, the highest differential in more than three decades, Statistics Canada data show.

The jobless rate for Canadians between 15 and 24 was 14.3 percent in 2012, up from 11.2 percent in 2007 before the last recession, according to data from the Paris-based Organization for Economic Cooperation and Development. In the U.S., youth unemployment was 16.2 percent in 2012, up from 10.5 percent five years earlier.

Mimosa Kabir learned first-hand the relative value of education in the job market. After earning her four-year bachelor of arts degree in development studies in 2010, she decided to enroll at Toronto-based Humber College for a one-year fundraising certificate because she said she was “very apprehensive about finding work.” She was offered a job before graduation.

‘Proven Experience’

“Employers still value the idea of a B.A., but because everyone these days seems to have one, it’s no longer enough,” said Kabir, 24, a fundraising coordinator at the Toronto Public Library Foundation. “There’s just no way to get ‘proven experience’ when everything you’ve been learning is theoretical.”

The country’s education system is the most skewed toward preparing students for university instead of the trades, according to the Conference Board of Canada study of 16 economies. Some 94 percent of high school students were in academic programs in 2010, with the remaining 6 percent in vocational training, according to the board’s annual competitiveness report. In nine of Canada’s peers, the rate of vocational training was more than 50 percent. Comparable U.S. figures were not available because the country defines vocational training differently.

Fewer Prepared

“It means there are fewer people prepared for the jobs that exist in the economy,” said Michael Bloom, vice-president of organizational effectiveness and learning at the Ottawa-based Conference Board. “In Canada, we don’t have language that conveys the idea of high prestige in a trade. In Europe, I think there is more of a vocabulary. We have to find a way to create an opportunity in the school system for kids to make those choices.”

The Petroleum Human Resources Council of Canada said in a May 30 report their industry needs between 125,000 and 150,000 workers by 2022, a staffing level exacerbated by “significant challenges in the availability of skills and talent required.”

The economy is struggling with a “mismatch” between jobs and skills and “it exists in many regions and industries,” Citizenship and Immigration Minister Jason Kenney said in an interview last month. He cited needs beyond resource firms, such as software companies in Waterloo, Ontario and computer game makers in Montreal.

Companies in resource-rich Alberta and Saskatchewan are recruiting nationwide and overseas. Finance Minister Flaherty told reporters in a March 8 press conference he would focus this year’s budget on skills training after he met a university graduate on a Toronto subway who was bagging groceries because he couldn’t find a better job.

Training Programs

Flaherty’s fiscal plan allocated C$1.4 billion ($1.33 billion) for investment-tax credits and C$500 million in grants to train workers, even as other programs were cut in a bid to reduce Canada’s deficit. Some of the measures depend on provincial governments agreeing to renegotiate terms of joint labor-market agreements.

Opposition lawmakers have criticized the government for not doing more to ease unemployment for young Canadians.

“Young Canadians have been left behind in the economic recovery, and the lack of job opportunities is taking a heavy toll on our youth and their parents who are supporting them,” Liberal Party Leader Justin Trudeau said at a press conference June 26.

Statistics Canada reported today that the unemployment rate was unchanged at 7.1 percent in June, still above the 6.2 percent recorded before the last recession began in the fourth quarter of 2008. Youth unemployment was 13.8 percent in June.

Wage Data

Some economists, including Toronto-Dominion Bank’s Derek Burleton, say wage data doesn’t suggest there is a skills crisis. “There is no real smoking gun on a crisis with respect to skills,” he said. He researched wages over 10 years ending in 2010 for a February report that found occupations in highest demand – trade, technicians and professional groups – have not recorded above-average pay increases.

The Bank of Canada’s quarterly survey of businesses reports labor shortages also remain below the pre-recession mark. Twenty-two percent of companies surveyed in the first quarter said they faced shortages, down from 41 percent at the start of 2007.

University of Ottawa President Allan Rock, a former Canadian industry minister, defended the value of four-year degrees in a speech May 9 entitled “The ‘Skills Mismatch’ and the Myth of the Irrelevant University.”

Liberal Arts

Rock cited Canadian banks seeking students taking arts instead of business, and Canadian schools being asked by Chinese and Indian educators for advice on how to widen offerings of liberal arts and humanities courses.

Still, he said, there is “insidious and unfair” pressure in Canada for students to go a university instead of a trade school. “There may be students in university who would be better served by college, just as the reverse is no doubt true,” Rock said.

MacRae agrees. College “is a really good option for some people,” she said. “You can save money and get a job quicker.” Finding a teaching job with her early childhood education degree would be difficult right now, she said, though she’s hopeful opportunities will open in a few years.

The applied nature of her degree and the way it is being taught is also helpful, she said. “It’s a college-style program, more practical.”

To contact the reporters on this story: Greg Quinn in Ottawa at gquinn1@bloomberg.net; Lauren S Murphy in Toronto at lmurphy48@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; Kevin Costelloe at kcostelloe@bloomberg.net

Galit Rodan/Bloomberg

Job-seekers wait in line to meet with career advisors at the Canada Job Expo held at North York Memorial Hall in Toronto.

Job-seekers wait in line to meet with career advisors at the Canada Job Expo held at North York Memorial Hall in Toronto. Photographer: Galit Rodan/Bloomberg