Consumers, beset by a credit crunch, rising energy and food costs and a prolonged housing slump, boosted spending only slightly in March. The gain reflected soaring gasoline costs rather than any real strength in demand, however. The Commerce Department reported Monday that retail sales edged up 0.2 percent in March after a 0.4 percent decline in February. However, without a 1.1 percent jump in sales at gasoline service stations, retail sales would have been flat last month. Last week, the University of Michigan's consumer sentiment index for early April plunged to the lowest reading in 26 years, reflecting in part a third straight month of job losses in March and a rise in the unemployment rate to 5.1 percent.
Hedge-fund chief gets 20 years in prison A federal judge in New York on Monday sentenced former hedge-fund chief Samuel Israel III to 20 years in prison for defrauding investors out of more than $450 million. Judge Colleen McMahon called Israel the "mastermind" of the fraud and ordered that he also pay $300 million in restitution. "People who commit crimes while wearing a tie do not get a break," she said. Israel's sentencing closes the door on a prosecution that has already sent two of his top associates to lengthy stays in prison. In January, Bayou Fund LLC's former chief financial officer, Daniel Marino, and James G. Marquez, co-founder of several of Bayou's hedge funds, were sentenced to 20 years and 51 months in prison, respectively. Marino and Israel pleaded guilty in September 2005 to conspiracy, investment-adviser fraud and other charges in connection with a scheme to defraud investors by inflating the value of Bayou's funds.
Nissan, Chrysler to combine for truck, car Nissan Motor Co. said Monday it will make a new small car designed by Chrysler LLC and Chrysler will make a full-size pickup truck designed by Nissan. The agreement is part of a growing relationship between Chrysler and the No. 3 Japanese automaker as they attempt to adapt to markets buffeted by the economic slowdown and rising gas prices. Both products will be sold in North America, and the new Chrysler small car will also be sold in Europe and other markets starting in 2010. No financial details were disclosed. The new Chrysler small car will be made at Nissan's Oppama plant in Japan. Chrysler will make the pickup truck at its plant in Saltillo, Mexico, and it will go on sale in 2011, the companies said.
General Re Corp. CEO resigns under pressure The chief executive officer of General Re Corp. resigned Monday amid reports that federal prosecutors were pushing for his removal. Joseph Brandon, who led one of Omaha-based Berkshire Hathaway's largest reinsurance subsidiaries, will be replaced by General Re's President Franklin (Tad) Montross. Pressure for Brandon to step down had increased after four former executives at the company were convicted on fraud charges in February. Last week, the Associated Press reported that prosecutors had met with Berkshire Hathaway attorneys about removing Brandon, who has not been charged with a crime. Brandon did receive a notice from the Securities and Exchange Commission that he was being investigated.
Sharp drop in profits for Royal Philips Amsterdam-based Royal Philips Electronics NV reported a sharp drop in first quarter profits Monday, with falling television sales in North America offsetting growth in its health care and lighting industries. The world's largest maker of lighting said its net income was 219 million euros (U.S. $347 million), down from 875 million euros in the first quarter of 2007. The recent quarter included a gain equal to $131 million for the partial sale of LG Display, Philips said.
Qantas, Vietnam's Pacific to expand together Australia's Qantas Airways and Pacific Airlines of Vietnam announced plans Monday to develop the Asian carrier into a low-cost airline through massive expansion during the next six years. Under a strategic and commercial partnership agreement, the new airline will be renamed Jetstar Pacific and operate as part of the Qantas budget carrier's brand, Qantas said in a statement. Up to 30 Airbus A320 planes will be added to the fleet by 2014, Qantas said. "The first A320 is proposed to enter Jetstar Pacific's operations in August 2008, initially within Vietnam before expanding later this year into markets such as Thailand, Singapore, Malaysia and Cambodia," Qantas said. Pacific will take on its new name on May 23. Qantas hopes to extend Jetstar's international operations to Europe and the United States, but analysts say they are being hampered by delays in the delivery of Boeing's 787 jetliners.
