Fed: Obama nominates Yellen as new chief
President Barack Obama has picked Janet Yellen to lead the Federal Reserve, said Jackie Calmes in The New York Times. If confirmed, Yellen, the Fed’s vice chairwoman since 2010, “would be the first woman to run the central bank.” Her nomination ends “an unusually prolonged and public search” to succeed current Chairman Ben Bernanke, whose term ends on Jan. 31, 2014. The earlier front-runner, Lawrence Summers, dropped out of the running last month under pressure from liberal Democrats. One of “the most important decisions” Yellen would face is “how quickly to wind down the expansionary monetary policy” that Bernanke engineered and she supported.
Expect some “squabbling” before she’s confirmed by the Senate, said Jon Hilsenrath and Peter Nicholas in The Wall Street Journal. Republicans “are likely to question her resolve to contain inflation” and “whether she did enough as a bank regulator before the 2008 financial crisis to prevent the housing bubble and its fallout.” If Yellen secures the job, don’t expect the Fed to “make any unusual lurches in its easy-money policy” anytime soon. She “has been a proponent of the Fed’s efforts to spur economic growth with near-zero short-term interest rates and experimental bond-buying programs,” and will likely stay the course until employment growth speeds up.
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Economy: IMF offers pessimistic outlook
The global economy is weakening, said Paul Davidson in USA Today. The International Monetary Fund cut its global economic forecast this week, citing fears over the U.S. debt-ceiling crisis, slowed growth in China and emerging markets, and a sluggish recovery in the euro zone. The IMF reduced its global growth forecast for 2013 from 3.2 percent in July to 2.9 percent; for 2014, it lowered its growth forecast from 3.8 percent to 3.6 percent. “The world economy has entered yet another transition,” said IMF chief economist Olivier Blanchard.
Wholesale: Walmart calls off Indian joint venture
Walmart is going it alone in India, said Nandita Bose in Reuters.com. The retail giant is splitting from its Indian partner, Bharti Enterprises, and will take over that company’s 50 percent stake in Walmart’s Indian wholesale operations, the first stage in the company’s ambitious plans in the region. Walmart’s expansion has been hindered by foreign investment rules and a bribery investigation, but some analysts say that “focusing on the wholesale business for now will enable Walmart to build up its supply chain to support future retail stores.”
Mergers: Men’s Wearhouse rejects buyout bid
Men’s Wearhouse has turned down a $2.3 billion buyout offer, said Lindsey Rupp in Bloomberg.com. Jos. A Bank Clothiers made an unsolicited bid last month to acquire Men’s Wearhouse for $48 per share—36 percent higher than the stock’s current closing price. The offer came shortly after the menswear chain cut profit forecasts and removed founder and pitchman George Zimmer “over strategy disagreements.” Men’s Wearhouse turned down the acquisition offer, calling it “opportunistic” and “inadequate” for shareholders.
Retail: Starbucks invests in juice
Starbucks Corp. hopes to squeeze more out of its juice business, said Tiffany Hsu in the Los Angeles Times. The coffee giant opened a $70 million factory in Southern California this week that will “churn out 140,000 gallons of Evolution Fresh juice each week.” The new factory marks a renewed focus on Starbucks’s juice brand, “which it bought in 2011 for $30 million.” Starbucks says it’s seen a “huge revenue spike” from the brand, and has even opened standalone juice stores in Seattle and San Francisco. “We’re selling substantially more juice than we did a year ago,” said Chris Bruzzo, general manager of Evolution Fresh.
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