• International Survey of Business Confidence
• Business confidence is stable and very similar across the globe. Sentiment has remained largely unchanged for nearly six months at a level consistent with growth that is just below the global economy’s potential. There are some hints of renewed optimism, including more positive expectations regarding the outlook six months hence and the winding down of a modest inventory cycle. The downdraft in confidence among real estate and transportation companies that was evident most of last year also appears to be over. Pricing pressures are abating, with the lowest percentage of respondents saying they have recently raised prices for their wares in two years. After a lull late last year, equipment investment has also picked up early this year. Sales and hiring remain soft, however.

• CHINA
• The People's Bank of China (PBOC) wants to establish a reasonable value for the yuan to help reduce China's trade surplus and contain economic growth, according to a fourth-quarter monetary report released by the PBOC. The yuan has grown 6.7 percent since the Chinese government ended a fixed peg to the U.S. dollar in July 2005.

• MBA Mortgage Applications Survey
• Mortgage demand decreased 0.2% in the week ending February 2. Purchase applications decreased 0.8% and refinance applications increased 0.2%. The market is flat and may coincide with forecasts inherent in the NAHB traffic of potential buyers surveys.

• Senior Loan Officer Opinion Survey
• According to the January Senior Loan Officer Opinion Survey, loan demand weakened over the three prior months and lending standards were mixed across different loan types. The ongoing slowdown in the housing market was reflected in weaker demand for residential mortgage loans. Tighter lending standards on residential mortgages reflect concern about deteriorating credit quality.

• Chain Store Sales
• Chain store sales grew 3.7% in January, up from 3.3% (revised) in December, according to the ICSC chain store index. Results were above expectations in total although a significant number of retailers surprised on the downside. Colder temperatures, gift card redemptions, lower gasoline prices, large bonus payments and the Super Bowl were all supports to sales.

• Oil and Gas Inventories
• Crude oil inventories declined by 0.4 million barrels for the week ending February 2, according to the Energy Information Administration, well below expectations of a 1.4 million barrel build. Distillate inventories fell by 3.7 million barrels, greater than the 3.2 million barrel draw expected. Gasoline stocks rose by 2.6 million barrels, which exceeded expectations of a 1.8 million barrel build. Refinery activity inched up higher, which supported the drop in crude oil inventories. The report will provide fuel for the oil bulls to take energy prices higher.

• Weekly Natural Gas Storage Report
• Underground storage of natural gas decreased by 224 billion cubic feet during the week ending February 2. This was slightly above expectations of a 218 Bcf draw. Inventories are now 19% above the five-year average. This report will have a modestly bullish effect on prices.

• Wholesale Trade (MWTR)
• Wholesale trade inventories dropped a considerable 0.5% in December, posting their largest month-to-month decline since May 2003 and bucking an expected modest increase for the month. November's gain was revised down slightly to 1.1%. December sales grew 1.8% and the I/S ratio came in at 1.17

• Quarterly Household Credit Report
• Credit quality deteriorated further in the fourth quarter as borrowing remained strong. The aggregate dollar delinquency rate jumped to its highest level in over three years. The deterioration in credit quality last year was widespread, although it is being led by mortgages and auto loans. Borrowing in the quarter was led by student and auto loans. Subprime lending accelerated more than prime lending.

• Consumer Credit (G19)
• Consumer credit increased in December by $6 billion to $2.4 trillion. The details of the report show that the latest jump in consumer credit was primarily driven by a sharp gain in nonrevolving credit, which increased 4.3% at an annual rate. On the other hand, revolving credit rose a scant 0.8% at an annual rate.

• Productivity and Costs
• Nonfarm business productivity growth bounced back in the fourth quarter, coming in at 3.0% (SAAR). This was well above consensus, and much better than the 0.1% decline in the third quarter. Despite the strong fourth quarter number, productivity growth has slowed in recent quarters. Nonfarm unit labor costs grew an annualized 1.7% in the fourth quarter, below consensus. Inflationary pressures from the labor market have faded a bit, but remain a concern.

Source: Economy.com, Financial Times

• Bloomingdale’s and Macy’s Northwest
• Federated Department Stores trades as Bloomingdale’s and Macy’s Northwest.
• Bloomingdale’s operates 38 locations throughout CA, FL, GA, IL, MA, MD, MN, NJ, NV, PA and VA.
• The upscale department stores occupy spaces of 150,000 sq.ft. to 230,000 sq.ft. in freestanding locations and malls.
• Growth opportunities are sought nationwide in major metro markets.
• Macy’s Northwest operates 70 locations throughout ID, MT, OR, UT, WA and WY.
• The department stores occupy spaces of 100,000 sq.ft. to 150,000 sq.ft. in malls, power, specialty and strip centers. Growth opportunities are sought throughout the existing markets during the coming 18 months.
• Typical leases run 20 years.
• Preferred demographics include a population of 50,000 within 15 miles earning $45,000 as the average household income.
• For details, contact
  • Carl Goertemoeller,
  • Federated Department Stores,
  • 7 West 7th Street,
  • Cincinnati, OH 45202;
  • 513- 579-7666,
  • Fax 513-579-7513;
  • Web site: www.federated-fds.com

• Bachrach
• Bachrach Clothing, Inc. trades as Bachrach at 34 locations nationwide.
• The men’s apparel stores occupy spaces of 4,000 sq.ft. to 5,000 sq.ft. in malls.
• Plans call for five to 10 openings nationwide during the coming 18 months.
• Typical leases run 10 years.
• For more information, contact
  • Adam Cummings,
  • Bachrach Clothing, Inc.,
  • 4 Causeway Road, Vineyard Haven,
  • MA 02568;
  • 508-693-3300,
  • Fax 508-693- 7316;
  • Web site: www.bachrach.com.

• Bostonian / Clarks Outlet and Clarks Shoes
• The Clarks Co. of North America trades as Bostonian / Clarks Outlet and Clarks Shoes.
• The company trades as Bostonian / Clarks Outlet at 73 locations nationwide.
• The shoe stores occupy spaces of 3,000 sq.ft. in malls, lifestyle, outlet and tourist centers.
• Plans call for five to 10 openings nationwide in upscale major metro markets during the coming 18 months.
• Typical leases run 10 years. Preferred cotenants include Ann Taylor, Chicos and Coldwater Creek. Competition is cited as Factory Brands, Naturalizer and Nine West.
• The company also trades as Clarks Shoes at 86 locations nationwide.
• The men and women’s shoe stores occupy spaces of 2,400 sq.ft. to 2,700 sq.ft. in malls and lifestyle centers.
• Plans call for 25 to 35 openings throughout upscale markets in Gilbert, AZ; Santa Monica, CA; Orlando, FL; Columbia, MD; MI, Bloomington, MN; Old Bridge, NJ; Las Vegas, NV and Lancaster and Philadelphia, PA during the coming 18 months.
• Typical leases run 10 years.
• Preferred cotenants include Ann Taylor, Chicos and Coldwater Creek.
• Competition is cited as Factory Brands, Naturalizer and Nine West.
• For details, contact
  • Criss Nigro,
  • The Clarks Co. of North America,
  • 156 Oak Street,
  • Newton Upper Falls,
  • MA 02464;
  • 617-243- 4194,
  • Fax 617-243-4210,
  • Web site: www.clarksusa.com

Strategic Management

The Auto Industry: On the Road to Disaster or Recovery?

Last May, Knowledge@Wharton spoke with John Paul MacDuffie, a management professor at Wharton and co-director of the International Motor Vehicle Program, about the state of the auto industry. It seems that not much has changed since then, except maybe for the worse. 2006 was the first year since 1991 that Detroit's Big Three were all in the red. Ford's situation seems direr than ever; Chrysler, which was profitable until mid 2006, is now preparing a restructuring plan to roll out this month; and Toyota has claimed the number-two spot in the U.S. auto market, just behind GM. Knowledge@Wharton asked MacDuffie whether he expects any surprises, or new strategies, in 2007.

http://knowledge.wharton.upenn.edu/article/1656 .cfm

Law and Public Policy

It's Not Easy Going Green: Environmentalism May Help Your Corporate Image, but Will It Keep You in the Black?

On February 2, a long-awaited report from the Intergovernmental Panel on Climate Change (IPCC) was released citing "unequivocal" proof of global warming. Meanwhile, some of the biggest corporations in the world, including Wal-Mart, Ford, General Electric and BP, have adopted highly visible "green" strategies. But what does "going green" mean for the bottom line? Whether motivated by desire to do what is right, or to polish their public image and fend off government regulation, companies can profit from environmental initiatives, according to Wharton faculty and analysts.

http://knowledge.wharton.upenn.edu/article/1653 .cfm

Managing Technology

Why Software Business Models of the Future Probably Won't Come in a Box

Microsoft's Vista operating system should give the company a revenue stream that will run for years, but experts at Wharton say the January 30 launch of the consumer versions of Microsoft's flagship software may be among the last of its kind -- a product sold for a flat fee in a shrink-wrapped box. Indeed, many wonder if the software business model that has made Microsoft so dominant may begin to fade as new software business models -- from open source to advertising supported -- gain increasing traction.

http://knowledge.wharton.upenn.edu/article/1651 .cfm

Leadership and Change

The World Economic Forum: A Call to Exercise Global Leadership, Not Just Self Interest

This year's convening of The World Economic Forum in Davos, Switzerland, brought together approximately 2,400 corporate executives, heads of government and leaders of organizations like the World Bank and Human Rights Watch to debate issues ranging from global warming to the rise of the Internet and the future of the Middle East. Michael Useem, director of Wharton's Center for Leadership and Change Management, attended the five-day event. He offers his report on what he calls Davos' "culture of transcendent leadership," which he defines as "a willingness by those with company or country responsibilities to make decisions that benefit those far beyond the decision maker's own organization or nation."

http://knowledge.wharton.upenn.edu/article/1649 .cfm

Finance and Investment

Do Americans Save Enough? It Depends on What Calculator You Use

Every week one financial services firm or another releases findings of its latest retirement study: Americans aren't saving enough. Americans are saving too much. The savings rate is abysmal. People are borrowing against their homes to pay for luxuries, and so forth. Who's right? It turns out, not surprisingly, that the future is hard to predict, and that many calculators designed to make those predictions are flawed in their basic assumptions. Wharton experts try to help navigate the challenges of planning for retirement. http://knowledge.wharton.upenn.edu/article/1650.cfm

Sports and Entertainment

Fantasy Sports: The Players, the Platforms and the Profits

According to some industry estimates, fantasy sports is now a $4 billion industry and growing quickly. What is fantasy sports, who provides fantasy sports platforms, what are the most popular fantasy sports, and -- coming off the Indianapolis Colts' recent Super Bowl win -- can we assume there will be a Super Bowl for fantasy football, or for baseball, basketball or hockey? Knowledge@Wharton asked Kent Smetters, professor of insurance and risk management, to bring us up to speed on the future of this industry.

http://knowledge.wharton.upenn.edu/article/1655 .cfm

Innovation and Entrepreneurship

Mike McCue's Vision for the Convergence of the Phone and the Web

When Mike McCue founded Tellme in 1999, its initial product was a voice-driven information service, what might be termed a "voice portal." Today, the company's voice-recognition systems power directory assistance services from AT&T, Verizon and Cingular along with automated 800-number customer help lines at companies like Merrill Lynch and Federal Express. But McCue still harbors dreams of a broader voice-driven web, one which will provide consumers with new ways of using the phone to interact with the universe of information. He discussed this vision, and others, during a recent interview with Knowledge@Wharton in Tellme's Mountain View, Calif., offices.

http://knowledge.wharton.upenn.edu/article/1652 .cfm

Source: The Wharton School