The Irish Independent reports that teachers, nurses, gardai and other public service workers will not go on all-out strike even if the Government cuts their wages.
An investigation by the Irish Independent shows there is little or no appetite for open-ended industrial action among the majority of public service employees.
Thousands of workers will stage demonstrations in eight centres across the country today, with most choosing to march during their time off.
Union chiefs have warned there could be strikes within weeks if calls made at today's 'National Day of Action' are ignored.
But officials privately admit that the current pressure on individual and family incomes means the majority of employees could not survive financially during any long, drawn-out strike.
It has also emerged that several key unions have little or no provision for strike pay, which would push thousands of workers into a huge debt spiral should they take long-term industrial action.
Unions remain confident they can stage selective one-day stoppages which could cause considerable public inconvenience and affect the popularity of the Government, but the likelihood of open-ended strike action is remote.
Gardai are not permitted by law to take any form of industrial action, with representatives insisting they will stay within the law and that a return of the "blue flu" or other strike action is not on the agenda.
Nurses are cautious of any action that could lead to a prolonged loss of earnings after getting burned in the past. So far, the only protests about which the nursing unions have definite plans are two marches involving off-duty staff.
Among the teaching unions, ballots are largely focused on influencing the Government ahead of the December 9 Budget and teachers will certainly hope that any stoppage on November 24 would, at worst, be the beginning and end of action.
None of the teaching unions -- ASTI, INTO or TUI -- would provide strike pay which would put severe pressure on members' personal finances.
Larger unions representing the core civil service have, however, amassed healthy war chests running into millions.
SIPTU, which represents up to 30,000 firemen, engineers, binmen, street cleaners and parks staff, is understood to hold €16m in its kitty.
It is prepared to pay €200 per week if there is prolonged strike action.
IMPACT represents 20,000 local authority members and had €26.69m in a "dispute fund" at the end of 2007. However, the CPSU, whose 13,000 lower-paid members would be especially susceptible to financial losses, only has €5m.
The Public Service Executive Union, which has €4m in reserves, is only prepared to pay its 10,500 mid-ranking civil servant members in areas where a strike would have most impact.
Problems
Translating action in the civil service unions into an all-out public sector strike presents its own problems.
A major issue for the unions is the conflicting range of interests throughout the state and semi-state sector.
This is classically borne out with inbuilt allowances to top up basic wages for frontline employees such as nurses and gardai.
Reducing allowances would severely affect some workers, but would not affect the income of the broad mass of public and civil servants.
The Government's opening salvo will be to cut about €4bn from public spending in December's Budget, including €1.3bn from the public sector pay bill.
Taoiseach Brian Cowen yesterday gave a clear signal that the Government intends to cut jobs in the public sector and reduce it in size.
Mr Cowen told the European Foundation Forum in Dublin that the country "simply cannot afford to long-finger debt-reduction" and that the public sector must share private sector pain.
But arriving for talks at Government Buildings yesterday, IMPACT chief Peter McLoone said unions were still trying to see if a solution could be found to "easing the payroll problems" without cutting wages.
Government officials told unions that public service numbers could fall by 25,000 over the coming years, if the recruitment freeze, early retirement and career break schemes were fully applied.
Sources close to the talks last night claimed there had been no direct engagement on figures during a meeting in Government Buildings yesterday.
Talks are not expected to resume until next week.
The Irish Independent also reports that the big investment banks must be split up to prevent another collapse similar to Lehman Brothers, which came close to bringing down the world's financial system last year, a top economist told the International Financial Services Summit 2009 in Dublin yesterday.
Professor Willem Buiter of the London School of Economics also called for a European-wide regulator "with hairs on his chest" who can do "very brutal things" to banks which grow too big.
The former member of the Bank of England's Monetary Policy Committee praised some aspects of the National Asset Management Agency but said it "appears designed to maximise the cost to the taxpayer".
Another participant, 'Financial Times' economics commentator Martin Wolf, said central banks would have to be far more cautious when estimating fiscal positions in future.
Countries such as Ireland and Spain had seemingly enjoyed good fiscal positions before the downturn, but this had not been enough to protect these countries from severe recessions, Mr Wolf said.
The present bank bailouts had left the banking system more fragile than ever because all banks now believed they were too big to fail, he said. This meant regulators had to create a new financial infrastructure that ensured the collapse of any single bank did not destroy the entire system.
Mr Wolf, who said he didn't "envy" Ireland, called the present recession the "most remarkable sudden stop" which had effectively discredited all economic thought developed over the past 30 years and returned us to the theories of John Maynard Keynes, who died in 1946.
As for homegrown warnings, the entire financial system must be overhauled if we are to escape another, even more serious banking crisis within years, Finance Minister Brian Lenihan said.
He told the meeting that the current regulatory system had been "thrashed".
Anglo Irish Bank director and former Fine Gael Finance Minister Alan Dukes said innovation in financial products should be limited, a call that was echoed by Prof Buiter, who urged regulators to test innovations in much the same way health officials test and regulate pharmaceuticals.
Pessimistic
"That will slow down innovation but not stop it," Prof Buiter said. Mr Dukes was pessimistic about the prospects for reform, noting banks had immense power, and said it was "almost certain" there would be another crash within 20 years.
The concept of moral hazard was also discussed by Minister Lenihan who told the conference that "if you eliminate moral hazard, you have to have more regulation".
The calls for more rules were echoed by Nicholas Veron of the Bruegel Institute in Brussels who said the European Union's member states had some way to go before they created a system of regulation that would share the burden in the event of a banking failure.
The Irish Times reports that Seán FitzPatrick and Lar Bradshaw sat in on the board meeting of the Dublin Docklands Development Authority (DDDA) that approved its investment in the €412 million Irish Glass Bottle site deal in 2006, despite the involvement of Anglo Irish Bank.
Mr FitzPatrick was at the time chairman of the bank and a non-executive director of the DDDA, while Mr Bradshaw was chairman of the authority and a non-executive director of the bank, which financed the deal.
The conference-call meeting was held at 8am on October 24th, 2006. The only item on the agenda was the joint deal with developer Bernard McNamara.
Mr Bradshaw said at the outset he had been told by Mr McNamara the previous evening that he was “in discussions with the Bank of Ireland and Anglo Irish Bank in order to secure the acquisition funding”.
Mr Bradshaw advised the board of his non-executive role with Anglo, as did Mr FitzPatrick. They said they would not be involved in executive decisions in the bank.
Another director, Declan McCourt, said he was a non-executive director of Bank of Ireland and was not involved in any credit decisions.
“The board concluded that no material conflict of interest existed in respect of the participation by the directors in the discussion and decision on the proposed acquisition,” say the minutes of the board meeting.
The minutes have been sourced by Phil Hogan, Fine Gael’s spokesman on the environment, heritage and local government, using the Freedom of Information Act.
“Members were concerned that to some people there might be a perception of conflict, but following further discussion, it was agreed that such perceived conflict, if it was ever alleged, would have to be dealt with by declaring the facts of the situation,” said the minutes.
The then chief executive of the authority, Paul Maloney, confirmed that all of the negotiation had been “virtually completed” by the executive before the issue arose. He had only learned which banks were involved at the meeting with Mr McNamara he attended with Mr Bradshaw, he said.
The board was told the valuation of the site had been discussed with Mr McNamara, who had suggested he would fund a higher bid himself, while leaving the authority’s shareholding in the joint venture at 26 per cent.
Mr McNamara this week had a case entered in the Commercial Court where he is seeking to have the authority indemnify him against a potential claim from Anglo, as well as from investors organised by Davy Stockbrokers who put more than €60 million into the deal.
Mr McNamara’s potential exposure exceeds €140 million.
The investors have taken a case seeking the return of their investment, which carries an interest rate of 17 per cent.
The joint venture, Becbay, involving Mr McNamara, the DDDA, and property financier Derek Quinlan, bought the Ringsend site for €412 million. A recent survey for the authority has valued the site at €60 million.
When funding of the venture came up for discussion at a subsequent board meeting in November 2006, both Mr Bradshaw and Mr FitzPatrick left the meeting.
They did so again at a December 7th meeting.
Mr Bradshaw and Mr FitzPatrick resigned from Anglo in December 2008. It emerged that a joint loan they had was transferred to Irish Nationwide at year’s end, so it would not appear in the bank’s published accounts.
The Irish Times also reports that a panel of international economists addressed delegates from the Irish business community yesterday, at the inaugural International Financial Services Summit at the Four Seasons Hotel in Dublin.
Nouriel Roubini, Martin Wolf and Willem Buiter joined a panel of experts to ponder the future of the global financial services regulatory framework and consider the original errors that had thrown the world’s economy into chaos.
Willem Buiter, professor of European political economy at the London School of Economics,greeted the audience by quipping: “It’s always interesting to be in the eye of the storm.”
Mr Buiter warned that the Government was protecting creditors and exposing the public to great financial risk in its Nama plan.
Mr Buiter said: “The Irish Government’s approach to the banking crisis appears designed to maximise the cost to the taxpayer.”
He said that stripping out the balance sheet of failed banks and effectively creating “good” banks holding good assets and value creditors, such as depositors, and “bad” banks holding toxic assets and equity in the “good” banks, was the international best practice solution to the collapse of lending institutions across the globe.
Mr Buiter said there was little chance that such a model could be implemented in Ireland, as there was no unsecured debt left.
Mr Roubini, who was dubbed “Dr Doom” by the New York Times, struck a characteristically pessimistic note, warning of dire consequences should governments and non-state actors fail to embrace the current opportunity to design and implement a powerful new global financial regulatory system.
“The next time we encounter a new financial bubble, the economic cost, the fiscal cost will be too dear; this time around we have to get it right or it will detrimentally effect the forces of both capitalism and globalisation,” he said.
“We had a ‘too big to fail’ problem in the past, but now the ‘too big to fail problem’ has become bigger . . . We are creating a bigger monster,” he said referring to the mergers between large US banks. “We have no way to deal with insolvency in an orderly way . . . If a financial institution is too big to fail, it’s too big. If it’s too big, we should break it up."
Economic commentator Martin Wolf also struck a downbeat note, saying the current wave of government intervention in the banking sector will only encourage bad lending again, as institutions will have the benefit of either an explicit or implicit government guarantee.
“These institutions know they are going to be rescued, and if they don’t know it, their creditors sure do and the lower cost of funding may lead another bubble to expand substantially,” he said.
Mr Roubini concurred: “These large institutions know that if they get into trouble, they will be bailed out, because they are too big to fail.”
Mr Wolf endorsed the concept of narrow banking, whereby normal deposit banking is stripped away from the current integrated banking system.
This sentiment was echoed throughout the afternoon, with both Nouriel Roubini and Willem Buiter advocating the disassociation of public utility banking from investment banking, or what Mr Buiter dubbed “casino banking”.
Mr Roubini said that the world had to reject the idea of the “financial supermarket” system which has been the norm for the past eighty years, where interdependence had exposed shareholders in commercial banks to risks not associated with the actual business of commercial banking.
“Banks should provide credit to the real economy, and the separation of commercial banking from investment banking has to be considered,” he said.
The Irish Examiner reports that December will see the first of the severest budgets the State has ever experienced: €16.35 billion in savings and tax increases must be found over four years to get the State’s finances back in order.
NCB Stockbrokers economist Brian Devine said yesterday it is often forgotten the fiscal consolidation effort is a multi-year project. "The €4.75bn in savings that needs to be generated in 2010 is just the start. A further €4.6bn, €4bn and €3bn needs to be found in the years 2011, 2012 and 2013 respectively. This equates to approximately 7% of 2009 GDP.
"These savings will need to be found; year-to-date Ireland has borrowed €28.6bn or approximately 16% of 2009 GDP."
Mr Devine said Charles Haughey’s derided words of 1980, "As a community, we are living away beyond our means", are once again apt.
"I do not mean that everyone in the community is living too well. Clearly many are not. But taking us all together, we have been living at a rate which is simply not justified by the amount of goods and services we are producing."
The NCB economist noted that people are shouting "foul" that they did not cause the problem and never saw any of the benefits of the boom years. "Granted, a large part of the blame can be levelled at developers, bank directors, economists, regulators and the Government, but the reality is that nearly everyone was complicit. Free education, higher public service pay, lower taxes, no income taxes, increased welfare payments, higher return-on-equity, child benefit increases, larger tax credits, etc . . . all stemmed from an unsustainable property boom.
"Given the current operating system of Government, if these benefits had not been passed onto the public, the Government would have been voted out of office and replaced by the opposition who would have duly obliged the public."
However, Mr Devine believes the burden of adjustment is not being shared fairly across the economy.
"The private sector has seen both large pay cuts and employment cuts. As we have said on numerous occasions, upward-only benchmarking is unjustifiable. Costs need to come down right across the entire economy. Public sector service and pay cuts will have a deflationary effect, but it would be less deflationary than going after taxes in Budget 2010 and such measures will improve competitiveness. Ultimately, this will be beneficial for growth and jobs. The unions, by opposing pay cuts in the public sector, are pulling up the drawbridge and protecting those with jobs to the detriment of the economy and, in particular, the young."
The Financial Times reports that the European Central Bank moved significantly closer on Thursday to implementing a softly-softly “exit strategy” to unwind the exceptional measures it has taken to combat continental Europe’s severe recession.
Jean-Claude Trichet, ECB president, signalled that an offer of unlimited emergency one-year liquidity planned for December would be the last. He left open the possibility that the interest rate charged for the funds would be higher than in previous offers this year – or linked to future ECB official policy rates.
With the ECB also expected to take decisions next month on future liquidity-boosting operations, the central bank’s strategy appears to be at a turning point.
“It is like when a plane starts its descent and the fasten-your-seat-belt signs come on,” said Julian Callow, European economist at Barclays Capital.
Mr Trichet stepped up his appeals to eurozone governments to draw up “ambitious” fiscal exit strategies. Massive government borrowing could trigger rapid changes in market mood and hit growth prospects by driving up interest rates, he warned.
Speaking after the ECB’s governing council left its main interest rate unchanged at 1 per cent, Mr Trichet agreed its strategy of providing unlimited liquidity to eurozone banks risked creating asset bubbles and excessive bank profits if left in force too long.
He was also noticeably more upbeat on eurozone economic prospects, saying recent data pointed to “an improvement” in the second half of this year. However, the ECB president remained cautious on the outlook: stronger lending to households and in purchasing managers’ indices were encouraging, but poor eurozone retail sales data on Thursday pointed to continuing weakness.
Some governing councils fear the strong euro will hit growth prospects next year.
Moreover, Mr Trichet insisted the ECB would “be gradual in our phasing out” of the exceptional measures it has taken since the collapse of Lehman Brothers investment bank last year. Even after ending the 12-month liquidity offers, the ECB will continue to match in full banks’ demand for liquidity in its regular weekly operations.
The offers of unlimited 12-month liquidity, at the 1 per cent policy interest rate, have dominated the so-called “enhanced credit support” strategy, and in June saw the ECB pumping €442bn ($653bn, £396bn) in one-year loans into the banking system – the largest amount ever provided in a single market operation.
Mr Trichet did not want to “dispel” market expectations that December’s would be the last.
One risk of imposing a higher interest rate is that it could be seen as a monetary tightening step, which explains why an “indexed” interest rate, linked to the main policy rate, is also being considered. Financial markets do not expect the main policy rate to be lifted until at least next September.
The FT also reports that UBS has been hit with the third-biggest fine levied by the UK financial watchdog after senior employees were discovered using money taken from customer accounts to speculate in foreign currencies and commodities.
An internal investigation launched by the Swiss Bank after an employee blew the whistle on the practice found a desk head and three other employees in the international wealth management business had been placing up to 50 unauthorised trades a day in 2006 and 2007.
According to a notice from the UK’s Financial Services Authority, the employees exploited loose reporting controls to allocate their losses to customer accounts, repeatedly moving money around to hide their activities. Their trades lost clients nearly £26m (€29m) over two years.
UBS was fined £8m and paid restitution of the losses to 39 customers. The employees involved no longer work at the firm.
Steven Francis, law partner at Reynolds Porter Chamberlain, said the case served as a “what not to do manual for a compliance department ... This is a truly massive fine”.
The FSA said the UBS traders took advantage of rules that allowed the international desk to wait up to 24 hours before specifying which account number they were trading for.
The employees were able to consolidate groups of trades into a single trade with an average price, hiding the number of trades and true prices, and also cancel transactions already been booked to one account and rebook book them to another.
The Swiss bank said in a statement that it “deeply regrets this incident”, had co-operated with the FSA and was pleased that the matter had been settled. UBS qualified for a partial early settlement discount on its fine of 20 per cent.
The fine comes at a difficult time for UBS, which is haemorrhaging client funds from its private banking division and had to pay US authorities $780m to settle a criminal tax case and hand over the names of more than 4,500 clients.
Margaret Cole, FSA director of enforcement and financial crime, said the big fine was part of the FSA’s effort to provide “credible deterrence”.
The FSA would not comment on the employees’ status and the final notice did not say whether they personally profited from the trading.
The New York Times reports that after weeks of speculation on Wall Street, prosecutors brought a fresh round of insider trading charges on Thursday that left no doubt they were aiming at hedge funds and the networks of market gossip that are endemic on trading floors.
The charges, against 14 money managers, lawyers and other investors, followed the arrest last month of a hedge fund billionaire, Raj Rajaratnam, on charges that he had profited from inside information.
In the latest criminal complaints, prosecutors described a network that used prepaid cellphones to avoid detection, and that was pierced in part through surveillance and wiretaps.
One law enforcement official, speaking on condition of anonymity because the investigation is continuing, said the authorities expected to make more arrests in the coming weeks. The investigation is part of a broad Federal Bureau of Investigation push into crimes related to hedge funds, including the addition of a third securities fraud unit in New York, the official said.
And for the first time, the authorities hinted that they might be brushing against the pinnacle of the hedge fund world, S.A.C. Capital Management, a $12 billion Connecticut fund company. Neither S.A.C. nor any current employee has been charged with wrongdoing.
The broadest of Thursday’s complaintsnames seven defendants, including Arthur J. Cutillo, a lawyer at the prestigious firm of Ropes & Gray, who is accused of offering tips on impending takeovers that the firm worked on. The tips were then passed among a group of lawyers and traders.
Prosecutors also announced five guilty pleas from hedge fund managers in Massachusetts and California, including one from Roomy Khan, the witness at the center of the case against Mr. Rajaratnam.
As part of a plea agreement made public on Thursday, prosecutors agreed not to charge Richard Choo-Beng Lee, a California fund manager who worked at S.A.C. from 1999 through January 2004, on any insider trading he committed at S.A.C. as long as he had disclosed the insider trading to them. Mr. Lee pleaded guilty in October to insider trading while running his own hedge fund last year.
Jeffrey L. Bornstein, Mr. Lee’s lawyer and a partner at K&L Gates, said Mr. Lee was cooperating with the authorities and could not comment on the letter or what information Mr. Lee might be able to provide.
A spokesman for S.A.C. said he could not comment on the letter.
Preet Bharara, the United States attorney for the Southern District of New York, said the investigation, which began more than two years ago, was continuing. He added that investors who believed they were at risk of being charged should come forward voluntarily.
“I urge you to come knocking on our door before we come knocking on yours,” Mr. Bharara said.
In all, 20 defendants have now been charged in the overlapping cases, and five have pleaded guilty.
Defense lawyers who were not involved in the case said the government’s tactics, which included phone taps and wiring cooperating witnesses, were more typically used in organized crime than in securities fraud cases.
Still, the investigation has not publicly ensnared any of the biggest hedge funds. And the total profits that the schemes are said to have produced are relatively modest, about $60 million so far.
Mr. Rajaratnam is not named in any of the complaints or pleas announced on Thursday. But Galleon, his company, appears to be at the center of the investigation. The two men identified as leaders of the ring, Zvi Goffer and Craig Drimal, are former employees of Galleon.
Mr. Goffer worked at Galleon from January to August 2008, while Mr. Drimal had an office at Galleon, according to the complaint. A person knowledgeable about Galleon said that Mr. Goffer had been laid off last year as part of a broader staff reduction, while Mr. Drimal was once an employee.
Thursday’s complaint does not claim that the men used insider information on Galleon’s behalf. Instead, it claims that they traded for their own accounts, making millions of dollars buying stocks in companies that were about to be taken over. Mr. Drimal made the largest profits, earning $8 million, according to the complaint.
The defendants were concerned about the possibility of wiretaps and informants and frequently talked about ways to avoid being caught, according to the complaint. It said that in February 2008, Mr. Goffer warned Jason C. Goldfarb, another defendant, against making trades that were too obvious.
Referring to someone who had bought options that would be valuable only if a stock made a large gain in a few weeks, he was quoted as saying: “You know what that means? Someone’s going to jail, going directly to jail, so don’t let it be you, O.K.?” Adding an expletive, he then said, “That’s a ticket to the big house.”
The other defendants charged Thursday are Emanuel Goffer, Michael Kimelman, and David Plate. All worked at Incremental Capital L.L.C., a trading company that Zvi Goffer started in 2008. Incremental did not return requests for comment. Lawyers for the men declined to comment.
In a statement, Ropes & Gray said it was disappointed “to learn about this situation” and would cooperate with investigators. A lawyer for Mr. Cutillo declined to comment.
Two other defendants, Ali Hariri and Deep Shah, were charged in other complaints.
Thursday’s arrests overshadowed an afternoon hearing in which Mr. Rajaratnam asked United States Magistrate Judge Theodore H. Katz to lower his bail and loosened his travel restrictions. Judge Katz ruled that Mr. Rajaratnam, who had been required to remain within 110 miles of New York City, could now travel throughout the United States. But Judge Katz declined to reduce Mr. Rajaratnam’s bail to $25 million from $100 million, as his lawyers had asked.
Mr. Rajaratnam has vowed to fight the charges against him.
The five guilty pleas announced on Thursday include Mr. Lee and Ali Far, former Galleon fund managers who set up their own hedge fund, Spherix Capital, in 2007; Steven Fortuna, managing director of S2 Capital, a hedge fund in Boston; Gautham Shankar, a trader at the Schottenfeld Group, a broker in New York; and Ms. Khan, who once worked at Galleon and pleaded guilty to a federal wire fraud charge in 2001.
Richard Schaeffer, Mr. Fortuna’s lawyer, said Mr. Fortuna had closed his hedge fund. He declined to say whether Mr. Fortuna was cooperating with investigators but said Mr. Fortuna “is hopeful of the fact that he accepted responsibility for his conduct at a very early stage will bear upon the sentence he receives.”
Lawyers for Mr. Far, Mr. Shankar and Ms. Khan either declined to comment or did not return calls or e-mail messages seeking comment.
The complaints represent a significant expansion of a case that has gripped the hedge fund community.
Researching a company’s prospects is a crucial part of investing, and hedge fund managers, stock analysts and other investors regularly swap information about the companies they own. But they are not allowed to buy and sell stocks based on important information that has not been disclosed to the public, such as the news that a company is about to be taken over, or word from a corporate executive that a company’s earnings will fall short.
The tips described in the broad complaint on Thursday appear to fit into the classic definition of insider trading more clearly than the case against Mr. Rajaratnam. In each example, the stocks rose quickly and predictably after the announcement of a deal, enabling conspirators to make large and low-risk profits in a matter of days.
In contrast, much of the complaint against Mr. Rajaratnam focuses on his habit of swapping tips and rumors in advance of quarterly earnings reports and other corporate announcements, a practice on Wall Street that has been routine — at least until now.
The NYT also reports that of all the retailers hurt by the recession, no group has been pummeled as badly as luxury chains. For months, high-end stores have posted double-digit declines, even as other types of retailers have begun clawing their way toward sales gains.
But new numbers released Thursday show that some of the nation’s upscale chains came back from the dead in the weeks before Halloween.
“The improvement in the stock market has had a significant impact on the affluent shopper’s willingness to spend,” Michael P. Niemira, chief economist and director of research for the International Council of Shopping Centers, said in a statement on Thursday. He added that “the luxury market has shown its first positive reading since May 2008.”
In October, sales at stores open at least a year, a measure of retail health known as same-store sales, increased 6.5 percent at Nordstrom, the high-end department store chain. That was one of the industry’s top results for the month.
In a research note this week Bill Dreher, a senior research analyst with Deutsche Bank Securities, upgraded the stock, writing that Nordstrom’s strategy of introducing some lower prices had resonated with customers and that the chain had benefited from pent-up demand and stabilization in the California market.
After months of double-digit declines, Saks, the luxury department store chain, also posted a refreshing number: a 0.7 percent sales increase. The chain, a purveyor of $600 shoes and $2,000 suits, said in a news release that it had “relative strength” in some of its merchandise categories, like women’s designer sportswear, outerwear, jewelry and accessories, and in its e-commerce business and outlet stores, Saks Off 5th.
“It’s showing that there’s stabilization in the marketplace,” said Stephen I. Sadove, chairman and chief executive of Saks, “and I think it shows there was some responsiveness on the part of the consumer.”
Referring to the stock market, he added: “The high-end consumer is feeling better at 10,000 than they did at 6,500.”
On Thursday, shares of Saks rose 33 cents, nearly 6 percent, to $5.90. Shares of Nordstrom rose $1.32, or 4 percent, to $33.92.
Not all upscale chains fared as well, but Craig R. Johnson, president of Customer Growth Partners, said that even the 6 percent decline at Neiman Marcus was “a vast improvement from past 16 to 25 percent declines.”
Predictions of better Wall Street bonuses this year bode well for luxury retailers. And with the dollar down substantially, Mr. Johnson said, foreign tourists might begin shopping again. Also, robust sales at chains like Anthropologie and Banana Republic — not high-end but costlier than many other stores — may indicate better days ahead.
“The patient is out of critical intensive care,” Mr. Johnson said, “but is not in full-bloom health yet.”
The first signs of hope in the upscale market came as the nation’s chains posted a second consecutive month of sales increases in October, the retailing industry’s best performance in more than a year. Over all, the industry reported a 1.8 percent same-store sales increase, according to Thomson Reuters.
Retailers have not reported an increase that large since June 2008, when the industry’s sales rose 2 percent. Most sectors had sales gains in October, with the exception of teenage-clothing retailers and department stores.
The chains, of course, were greatly helped by easy comparisons with the dismal results of a year ago. This time last year, Saks was experiencing an unprecedented shutdown in consumer spending. Sales were also driven by October’s cool weather and Columbus Day sales.
Retailing analysts digested the good numbers with a large grain of salt. Demand for luxury goods is still at 2005 levels, well below the peak. And a month’s worth of robust sales cannot undo a year’s worth of declines. What retailing professionals are monitoring now is whether consumers are loosening their purse strings.
“There is a general consumer willingness to begin to spend again,” Mr. Johnson said.
Consumers are still demanding value, however. Clothing chains selling designer names at low prices were October’s top performers. Same-store sales at TJX, which owns TJ Maxx and Marshalls, increased 10 percent. A TJX competitor, Ross Stores, also thrived, turning in a 9 percent sales increase.
Other discounters reported healthy numbers, including Costco (up 5 percent) and Kohl’s (up 1.4 percent). Kohl’s reported signs of broader recovery, saying in a news release that its strongest year-over-year gains were in the home goods category, a retailing sector hit hard by the recession. And the company said same-store sales increases were notable in the Southwest, a region that was hurt more by the recession than other parts of the country.
Sales at BJ’s Wholesale Club declined 1.1 percent, though customer traffic was up. Sales at Target dipped by 0.1 percent, yet its sales of clothing were slightly stronger.
In October, retailers catering to teenage shoppers posted the worst results, with same-store sales declining 5.8 percent, according to Thomson Reuters. Sales fell 15 percent at Abercrombie & Fitch, 8.9 percent at Zumiez, and 6 percent at American Apparel.
Analysts attributed those results to high gas prices and unemployment. Some said that retailers were also hurt because Halloween fell on a Saturday — when teenagers do most of their shopping — so stores lost a day’s worth of sales.
