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Fed’s Williams sees June 2015 ‘reasonable’ for rates liftoff

SAN FRANCISCO (Reuters) – U.S. inflation will likely still be “well below” the Federal Reserve’s 2-percent target next year, but that won’t stop the central bank from raising interest rates, a top policymaker said on Friday.

“I would say at this point that June 2015 seems like a reasonable starting point for thinking about when liftoff could happen,” San Francisco Federal Reserve Bank President John Williams, who will rotate next year into a voting spot on the Fed’s policy-setting committee, told Bloomberg Radio.

The Fed has kept interest rates near zero for six years, and Williams and other Fed officials had previously said they want to see signs of inflation moving back toward their 2-percent goal before lifting rates.

But a dramatic drop in oil prices has put downward pressure on prices and looks set to deliver a boost to consumer spending, so Fed officials are backing away from that earlier judgement.

“You have to look through the short-term fluctuations of things, look to the next year or two ahead and think about where is the economy going to be,” he said. “Monetary policy as we know takes a year or two to have its full effects.”

That means, he said, the Fed will probably be raising rates even before core inflation – often considered a gauge of future headline inflation – rises back to 2 percent.

Better-than-expected jobs growth will bring the U.S. economy to full employment by the end of next year, Williams projected, adding that he sees early signs of a pickup in wage growth.

The Fed on Wednesday said it would be “patient” in raising rates next year, a term that Fed chair Janet Yellen said means rates will stay at their near-zero level for at least the next two policy-setting meetings.

Williams, typically seen as a centrist whose views are in line with those of Yellen, said the language was meant to suggest the Fed is closer to raising rates, but not in the next few months.

Williams projected 2.5 percent to 3 percent growth for the U.S. economy next year, adding that such above-trend growth is possible “even if conditions abroad weaken further.”

And while downside risks from Europe, Japan, and emerging markets could impact the timing of the Fed’s first rate hike, he said, more importantly it could impact “the pace at which we tighten.”

(Reporting by Ann Saphir; Editing by James Dalgleish and Chizu Nomiyama)

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Thai Union Frozen to buy U.S. tuna firm Bumble Bee for $1.5 billion

BANGKOK (Reuters) – Thai Union Frozen Products PCL (TUF.BK), the world’s biggest producer of canned tuna, has agreed to buy U.S. competitor Bumble Bee Seafoods for $1.5 billion as part of a plan to double revenue through overseas acquisitions.

The purchase will give Thai Union control of some of North America’s best-known seafood lines, including two of the three biggest canned tuna brands in the United States, in its quest to reach revenue of $8 billion by 2020.

“The deal is the largest acquisition in the history of our company and one of the most exciting external growth propositions,” Thai Union President and Chief Executive Thiraphong Chansiri told reporters on Friday.

The deal marks the latest instance of consolidation in the global seafood industry, which analysts say has been in flux over the past few years as companies change the way they manage supplies and costs to better cater to shifting consumer demand.

The transaction is likely to be completed in the second half of next year, subject to approval by U.S. antitrust authorities, said Thai Union, whose clients include Wal-Mart Stores Inc (WMT.N) and Costco Wholesale Corp (COST.O).

Thai Union has operated in the United States for over 17 years, and Thiraphong said he expects a “positive response” from the authorities.

Thai Union’s Chicken of the Sea is the third-biggest tuna brand in the United States behind Bumble Bee. The top brand, Starkist, is owned by South Korea’s Dongwon Industries Co Ltd (006040.KS).

With so few canned tuna producers, major asset sales will be needed to persuade U.S. antitrust authorities to allow the deal to proceed as tuna consumption is declining, antitrust experts said.

“This potential merger will raise concerns with U.S. regulators and may lead to an agreement to a divestiture of U.S. assets if they can find a willing buyer. I don’t think this merger would breeze through,” said Jeffrey Jacobovitz, an antitrust expert at Arnall Golden Gregory LLP.


Bumble Bee is the largest canned tuna and sardine producer in North America, with brands including Brunswick and Sweet Sue. It is owned by pan-Atlantic private equity firm Lion Capital, which bought the seafood maker from another private equity firm for $980 million in 2010.

It has annual sales of about $1 billion and estimated EBITDA of $145 million for 2014. Its purchase should boost Thai Union’s sales next year to $5 billion from $4 billion, Thiraphong said.

The transaction is valued at 8.6 times Bumble Bee’s 2014 estimated EBITDA, Bumble Bee said in a separate statement.

The acquisition would be Thai Union’s third this year after the purchase of Norwegian canned fish producer King Oscar and French smoked salmon supplier MerAlliance. Analysts said Thai Union’s rising debt means the company will need to sell shares to raise capital to expand further.

Thai Union is open to funding options to bring down its debt-to-equity ratio, which will rise after the Bumble Bee purchase to 2.0 times, or double the company’s target, Thiraphong said.

But the acquisition should boost Thai Union’s 15 percent to 17 percent gross margin, Thirapong said, as Bumble Bee’s margin is more than 20 percent.

Shares of Thai Union closed down 3.5 percent after Friday’s Bumble Bee announcement, compared with a 0.2 percent decline in the benchmark index .SETI.


Thiraphong, 49, is the eldest son of Thai Union co-founder and Chairman Kraison Chansiri, and took over as president when he was 30.

Kraisorn was born in Guangdong province, China, and started the business 37 years ago with a tuna cannery in the Thai province of Samut Sakhon, southeast of Bangkok. Tuna now makes up 47 percent of sales, with shrimp 24 percent and the rest from sardines, salmon, pet food and other products.

As well as Thailand and the United States, Thai Union has been active in Europe since its 2010 purchase of MW Brand PLC [MWBND.UL].

For its latest acquisition, Thai Union has hired UBS as adviser while Bumble Bee is being advised by Morgan Stanley and Rothschild.

Thai Union is financing the purchase with the help of a one-year bridge loan from Bangkok Bank and Siam Commercial Bank, executives from the two banks said.

(Additional reporting by Diane Bartz in Washington; Editing by Muralikumar Anantharaman, Simon Webb, Christopher Cushing and Peter Galloway)

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Family Dollar to delay shareholder vote on Dollar Tree deal: CNBC

(Reuters) – Family Dollar Inc (FDO.N) will delay a shareholder vote on the potential acquisition by Dollar Tree Inc (DLTR.O), CNBC said, citing sources.

Family Dollar will start the shareholder meeting and then adjourn it, CNBC said. (

A Family Dollar spokesman said the special shareholder meeting to vote on the Dollar Tree deal remains scheduled for Dec. 23.

The company had earlier set the meeting for Dec. 11, but postponed it to Dec. 23.

Family Dollar has agreed to be acquired by Dollar Tree for $8.5 billion in cash and stock after twice rejecting higher all cash bids from bigger rival Dollar General Corp (DG.N), citing antitrust concerns.

Dollar General took its $9.1 billion offer directly to Family Dollar’s shareholders in September.

Dollar General said on Friday it was actively engaged in discussions with the Federal Trade Commission on the number of stores it will have to divest to gain regulatory approval. It did not give further details.

Family Dollar’s shares were down 0.4 percent at $79.15, while Dollar General’s shares were down 1.7 percent at $70.07. Dollar Tree’s shares were down 1 percent at $68.43.

(Reporting by Sruthi Ramakrishnan in Bengaluru, Editing by Siddharth Cavale and Don Sebastian)

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Sears Canada speeding up investments in turnaround effort: CEO

TORONTO (Reuters) – Sears Canada Inc (SCC.TO) is stepping up spending on areas such as its website and profitable merchandise categories while looking to exit unprofitable product lines as part of its turnaround plan, the retailer’s new acting chief executive said on Friday.

“We’re going to make some of those tough decision about businesses in short order,” Ron Boire told Reuters in an interview, adding that the company was in a very strong liquidity position, with no short- or long-term debt.

“We have all of the … capital capability that we need to fund the transformation and operation of the business. We’re very comfortable with that.”

He declined to reveal which long-time product lines may be cut, but said details will be given at the shareholders meeting in April.

Sears Canada, which has seen its fourth CEO in three years, has been working on turning around operations, but posted another loss during the third quarter on declining sales.

The company, which terminated its leases in several prime locations in a C$400 million deal and has cut some 3,000 employees since late last year, has seen its market share erode for years.

Boire, who took the helm in October, would not disclose how Sears Canada has performed so far this holiday season, but noted products like some of its Alpinetek parkas have sold out.

He said he has spent the last two months focusing on the long-term future of the department store chain, which has positioned itself to target middle-income Canadians.

Boire, who acknowledged the company has not been good at marketing its strengths, said he wants the chain to build on the popularity of house brands like Kenmore and Craftsman.

Sears Canada is launching a new website in the new year and is working to integrate its inventory and logistics systems. Boire says the upfront costs of the changes are material, but the long-term savings should be significant.

Earlier this year, Sears Holdings Corp (SHLD.O) failed to sell its 51 percent stake in the Canadian operation and instead lowered its stake to about 12 percent through a rights offering.

In the United States, concerns about Sears Holdings’ finances have rattled suppliers and forced insurers and banks to raise the cost of guaranteeing payment to vendors.

Boire said large insurance firm are evaluating Sears Canada as a stand-alone entity for the first time, but added that it would not have a material impact on its merchandise flow.

(Editing by Jeffrey Hodgson and James Dalgleish)

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Icahn offers $20 million to keep Atlantic City Trump casino open

(Reuters) – Billionaire investor Carl Icahn offered $20 million in financing on Thursday to keep the Trump Taj Mahal from becoming the fifth casino to close this year in New Jersey’s troubled Atlantic City, was once the only major destination for gamblers on the U.S. East Coast.

The Taj, owned by bankrupt Trump Entertainment Resorts Inc., is slated to close on Saturday. It is not clear how long the additional financing from Icahn, who holds the mortgage to the property, could keep the Taj operating.

The offer came after the union representing casino workers claimed that Icahn had “gone back on his word” by scrapping a more far-reaching, last-minute deal – signed by both the union and the company – to save the Taj.

“We are disappointed that Mr. Icahn’s whims are going to add to the feelings of uncertainty and instability that the workers have had to live with and have to endure during this holiday season and beyond,” Unite-Here President Bob McDevitt said in an interview with Reuters.

Trump Entertainment and Icahn did not respond to requests for comment on Thursday.

In his letter to Trump’s chief executive, Robert Griffin, Icahn said he was responding to Griffin’s request for further aid and that the $20 million would keep the Taj open “through bankruptcy.”

“I will also commit to work collaboratively with the State, the City and the Union to try to forge a global settlement that will bring real stability to the Taj and its employees,” he said. (

Icahn previously said he would inject $100 million into the casino, but sought tax breaks from the state and wanted to terminate employees’ healthcare and pension plans.

Atlantic City’s fortunes have faded fast as competition from Pennsylvania and other neighboring states has cut into the monopoly it once held on East Coast gaming.

The city just faced down yet another threat: the potential for a new casino in New York state’s Orange County, just along the New Jersey border. New York gaming regulators decided on Wednesday not to locate a casino there, opting for other locations farther from the New York City area.

(Reporting by Daniel Kelley in Philadelphia and Sagarika Jaisinghani in Bengaluru; Writing by Hilary Russ in New York; Editing by Savio D’Souza and Leslie Adler)

Russian ruble weakens as traders see no major measures in Putin speech

MOSCOW (Reuters) – The ruble weakened against the dollar and euro on Thursday with traders saying President Vladimir Putin had so far offered no concrete measures to pull Russia out of a crisis at his end-of-year news conference.

At 0954 GMT (04:54 a.m. EST), the ruble was around 3 percent weaker against the dollar at 62.04 RUBUTSTN=MCX after opening more than 1 percent higher. The rouble was also around 2 percent weaker versus the euro at 76.50 EURRUBTN=MCX on the Moscow Exchange.

Traders said they saw no major measures from Putin so far to address the crisis that has seen the ruble collapse around 45 percent against the dollar so far this year amid slumping oil prices and Western sanctions over Ukraine.

They said market moves were exacerbated by thin liquidity and that small volumes were capable of moving the market by several percent, including trades not related to Putin’s speech.

(Reporting by Alexander Winning and Vladimir Abramov, editing by Elizabeth Piper)

U.S. consumer prices fall on gasoline; rate hike likely in 2015

WASHINGTON (Reuters) – U.S. consumer prices recorded their biggest drop in nearly six years in November as gasoline prices tumbled, but did little to change views the Federal Reserve would start raising interest rates in mid-2015.

The Labor Department said on Wednesday its Consumer Price Index (CPI) fell 0.3 percent, the largest decline since December 2008, after being flat in October. The CPI increased 1.3 percent in the 12 months through November, the smallest gain in nine months, after advancing 1.7 percent in October.

Fed officials shrugged off the disinflationary trend as transitory in a statement at the end of a two-day meeting. The U.S. central bank offered an upbeat assessment of the economy and signaled it was on track to raise borrowing costs in 2015.

“Conditions could be in place to raise rates during the first half of next year,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

The Fed said it expected inflation to rise gradually toward its 2 percent target. It has kept its short-term interest rate near zero since December 2008.

Wall Street had expected the CPI to dip only 0.1 percent from October and increase 1.4 percent from a year earlier.

While inflation is trending lower, job growth has shifted into higher gear and the pace of slack absorption in the economy has accelerated in recent months. The Labor Department report also showed average weekly earnings, adjusted for inflation, recorded their biggest gain in six years in November.

U.S. stocks rallied on the Fed’s vote of confidence in the economy, while prices for U.S. Treasury debt fell. The dollar jumped against a basket of currencies.

Plunging crude oil prices, which hit a new 5-1/2 year low this week on increased shale production in the United States and slowing global demand, are likely to keep overall inflation in check for while.

Underlying price pressures are also ebbing a bit after showing some signs of creeping up in October, but this could also be temporary as the cost of rental accommodation continues to push higher.

Stripping out food and energy prices, the so-called core CPI edged up 0.1 percent after rising 0.2 percent in October. In the 12 months through November, the core CPI rose 1.7 percent after increasing 1.8 percent in October.

“If they (Fed policymakers) delay tightening due to low oil prices, it will be out of caution for the potential economic impact,” said Jay Morelock, an economist at FTN Financial in New York.

“If the fall in energy prices continues, the loss of capital spending by energy companies could cause GDP to fall in the first half of the year.”

Gasoline prices have recorded their biggest drop since December 2008. They have now declined for five straight months. Within the core CPI, shelter costs increased 0.3 percent last month after rising 0.2 percent in October.

There were also increases in airline fares, medical care and alcohol prices. But new motor vehicle prices fell as did the cost of household furnishings, apparel and used cars and trucks.

(This story adds dropped word “they’ to 12th paragraph)

(Reporting by Lucia Mutikani; Editing by Andrea Ricci and Jeffrey Benkoe)

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Fed confident on U.S. growth, opens door wider to rate hike

WASHINGTON (Reuters) – The Federal Reserve on Wednesday offered a strong signal that it was on track to raise interest rates sometime next year, altering a pledge to keep them near zero for a “considerable time” in a show of confidence in the U.S. economy.

Closing out a two-day meeting against a backdrop of solid domestic growth but trouble overseas, the U.S. central bank said in a statement it would take a “patient” approach in deciding when to bump borrowing costs higher.

Fed Chair Janet Yellen told a news conference that “patient” meant the policy-setting Federal Open Market Committee was unlikely to hike rates for “at least a couple of meetings,” meaning April of next year at the earliest.

U.S. stock markets and bond yields rose as investors digested a statement that evinced faith in the economy while still projecting a slow-going approach to rate hikes. The dollar rallied broadly against major currencies.

After some initial volatility, futures markets continued to point to an increase in rates in September, and many economists look for a move even sooner. The Fed has held benchmark overnight rates near zero since December 2008.

“Based on its current assessment, the committee judges that it can be patient in beginning to normalize the stance of monetary policy,” the Fed said. Significantly, it also said the statement was “consistent” with its statement that it would wait a “considerable time” before hiking rates.

Eric Green, an analyst with TD Securities in New York, said Yellen’s definition of “patient” was “less dovish than a reading of the statement would suggest. In effect, it is open season after the March FOMC meeting.”

Yellen told reporters that even with a sharp drop in energy costs, the Fed felt confident inflation would eventually turn higher and approach the central bank’s 2 percent target, and she suggested officials would feel comfortable raising rates as long as other economic signals stayed strong and expectations of future inflation held firm.

“By the time of liftoff, participants expect to see some further decline in the unemployment rate and additional improvement in labor market conditions,” Yellen said.


After a week of turbulence in global financial markets, the U.S. central bank looked firmly beyond economic difficulties in the euro zone, Japan and Russia and offered a mostly upbeat assessment of the U.S. economy’s prospects.

Updated quarterly projections, presented as ranges that exclude the three highest and lowest individual forecasts, showed policymakers continue to expect the economy to grow between 2.6 percent and 3.0 percent next year.

They foresee the unemployment rate, currently at a six-year low of 5.8 percent, moving down to an average of between 5.2 percent and 5.3 percent toward the end of next year, a bit lower than in their prior forecasts in September and in line with what they think is in keeping with full employment.

Fed officials, however, acknowledged inflation was likely to slow next year to between 1.0 percent and 1.6 percent, the result of a cratering in oil prices. But core inflation, which excludes volatile food and energy costs, is projected to dip only a bit next year before turning higher to close in on the Fed’s target by the end of 2016.

Balancing optimism on growth and jobs with the reality of low inflation, policymakers indicated they would take a slower approach to the pace of future rate hikes.

The median projected federal funds rate – the Fed’s main economic lever – was 1.125 percent for the end of 2015, a quarter percentage point lower than the last projection. Officials also lowered projections for 2016 and 2017.

Despite the sharp drop in oil prices and the collapse of the Russian rouble, the Fed’s statement excluded any mention of the recent global economic turmoil.

Asked whether spillover from Russia’s crisis could harm the U.S. economy, Yellen said the two countries were too loosely linked to expect any appreciable impact.

“I see the spillover as pretty small but we’re obviously watching that closely,” she said.

The vote to back the statement was seven to three, with dissents from both ends of the policy spectrum.

(Reporting by Howard Schneider and Michael Flaherty; Editing by Tim Ahmann and Paul Simao)

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Top Herbalife salesman acknowledges high failure rate in video

BOSTON (Reuters) – A top Herbalife salesman said that most people who sell the company’s weight loss and nutrition products are doomed to fail, adding fresh grist to accusations by a hedge fund manager that the company is a fraud.

“We sell people on a dream business that they can make it yet deep down inside what do we really know? Yeah we know that the reality is that most of them are not going to make it,” Stephan Gratziani said at a 2005 distributor training session.

Gratziani is a member of Herbalife’s elite Chairman’s Club sales team.

The video of that training session was released publicly on Wednesday on hedge fund Pershing Square Capital Management’s website Facts about Herbalife. (

The video would appear to bolster long-running accusations from Pershing Square’s founder William Ackman that Herbalife is running an illegal pyramid scheme where members make more money in bringing in new members than they do in selling the actual product. Herbalife has denied allegations that it is a fraud.

A Herbalife spokesman was not immediately available for comment.

Several federal and state agencies, including the Federal Trade Commission and Securities and Exchange Commission, are probing the Herbalife and its business practices, Reuters and other media have reported.

Herbalife distributors can be seen on other videos on the Internet telling potential recruits that it is easy to live a life filled with fast cars, big mansions and yachts if they follow a simple blueprint for selling the products.

In its 2013 statement of average gross compensation paid to members, Herbalife said: “There is no shortcut to riches, no guarantee of success” but added that the opportunity for “attractive” part-time or full-time income exists.

It said that the majority of members earn between $1 and $1,000 and that only 0.3 percent of the distributors make more than $250,000.

(Reporting by Svea Herbst-Bayliss; Editing by Lisa Shumaker)

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