Starbucks Boosts Profit Forecast Despite Slower Growth

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Coca-Cola’s Net Income Rises Despite a Drop in Revenue

Muhtar A. Kent, the chief executive of the world’s largest soft drink company, said in a conference call with analysts and investors that Coca-Cola would proceed by investing in its brands and seeking acquisitions.

“There’s some headwind in emerging markets, but we believe they are very temporary” because the middle class in those countries is growing, he said.

In the third quarter, Coca-Cola’s net income rose 6 percent to $2.45 billion, or 54 cents a share, from $2.31 billion, or 50 cents a share, a year earlier.

Excluding one-time items, the company reported earnings of 53 cents a share, in line with the expectations of analysts surveyed by Thomson Reuters.

Revenue fell 3 percent, to $12.03 billion from $12.34 billion, slightly below analysts’ estimates of $12.05 billion. The decline was largely a result of weaker-than-expected currencies in many emerging markets and the costs of revamping bottling operations in Brazil and the Philippines.

Coca-Cola’s chief financial officer, Gary P. Fayard, said he expected currency weaknesses to lower operating income by 5 to 6 percent in the fourth quarter.

A Morningstar analyst, Thomas Mullarkey, said he was encouraged by Coke’s global growth, which reached 2 percent overall, as well as the popularity of the Coca-Cola brand in North America.

“Soda is not doing great overall in the U.S.,” he said, “but the Coke brand is the leading soda brand, and so the company continues to push it forward.”

Mr. Kent said the Coke brand was resilient, helping the company deliver a record 181 billion beverage servings in the quarter.

In North America, sales volume increased 2 percent overall, largely because of the strong performance of Coke’s nonsoda offerings. Sales of noncarbonated drinks like juices and bottled water rose 5 percent, and teas, which include Honest Tea and Fuze, had double-digit percentage growth. Sales of sparkling drinks in the region were flat.

Frayed Prospects, Despite a Degree

But the end result was disheartening: Mr. Wells was told, he said, that company policy required him to have at least two years of experience in the field before he could be hired.

If Mr. Wells were a newly minted college graduate, he would not have had that problem. Ernst & Young recruits heavily on college campuses for entry-level positions, no experience required.

But Mr. Wells graduated in 2011, during one of the worst job markets in history, and his work record since then — like countless numbers of his peers — doesn’t measure up to what employers like Ernst & Young demand for “experienced” applicants.

Even as the jobs picture slowly improves, the disadvantage of bad timing follows those who graduated during the worst years. Applicants like Mr. Wells have neither the bright-eyed and bushy-tailed appeal of the class of 2013, nor the benefit of relevant work experience that might give them an edge.

“I’m competing against people that are graduating now,” said Mr. Wells, 27, who worked in construction and other jobs before starting college in 2007. “It’s easier to grab them up, because they’re fresh.”

His problems stem from the fact that companies typically divide their hiring into two pools: entry-level jobs, which are overwhelmingly filled by campus recruits, and experienced workers. Some allow recent graduates to stay in the first category for a year or two after getting their diploma. But recruiters say those applicants may find themselves at a disadvantage, especially if they have not been bolstering their résumés with classes, internships or volunteer work.

“If you’re a 2011 or a 2012 grad, the competition just got fierce — even more fierce — with the let-out of the 2013 class,” said Alexa Hamill, the United States campus recruiting leader for PricewaterhouseCoopers. “It’s like you’re in overtime, and they brought in the fresh team.”

The impact of this is difficult to measure because government statistics do not allow for a comparison of the fate of this year’s graduates with their immediate predecessors, instead lumping all college graduates under 25 into one group. And certainly college graduates as a whole are doing vastly better than those with only a high school degree (young college graduates have an unemployment rate of just over 8 percent, while the unemployment rate for high school graduates within the same age group is close to 20 percent).

But everything that is known about the job market points to the fact that Mr. Wells and his cohort are feeling the pinch. Many of the country’s largest companies make most of their entry level hires on campus, meaning there are no slots for the hapless person who had the misfortune of graduating in 2011. And historically, those who graduate during a recession earn far less than their peers who do not, and it can take a decade or more for them to catch up. Many have been forced to settle for lower-wage, lower-skill jobs, which has in turn helped increase joblessness among the high school graduates who previously held those jobs.

In 2000, about 60 percent of employed college graduates were working in jobs that required a degree, said Andrew Sum, director of the Center for Labor Market Studies at Northeastern University. Now fewer than half are.

Campus recruiters at a variety of institutions said that those who graduated in 2013 have had a relatively easy time finding jobs, in part because the prolonged economic downturn has made them more focused on preparing themselves for the workplace. Alumni who graduated in the previous few years continue to trickle in, asking for help.

“The class of 2009 just got royally screwed, because their first four years in the labor market were this horrible thing,” said Heidi Shierholz, a labor specialist at the Economic Policy Institute, a left-leaning research organization in Washington. “This year’s first four years won’t be that bad.”

Frayed Prospects, Despite a Degree

But the end result was disheartening: Mr. Wells was told, he said, that company policy required him to have at least two years of experience in the field before he could be hired.

If Mr. Wells were a newly minted college graduate, he would not have had that problem. Ernst & Young recruits heavily on college campuses for entry-level positions, no experience required.

But Mr. Wells graduated in 2011, during one of the worst job markets in history, and his work record since then — like countless numbers of his peers — doesn’t measure up to what employers like Ernst & Young demand for “experienced” applicants.

Even as the jobs picture slowly improves, the disadvantage of bad timing follows those who graduated during the worst years. Applicants like Mr. Wells have neither the bright-eyed and bushy-tailed appeal of the class of 2013, nor the benefit of relevant work experience that might give them an edge.

“I’m competing against people that are graduating now,” said Mr. Wells, 27, who worked in construction and other jobs before starting college in 2007. “It’s easier to grab them up, because they’re fresh.”

His problems stem from the fact that companies typically divide their hiring into two pools: entry-level jobs, which are overwhelmingly filled by campus recruits, and experienced workers. Some allow recent graduates to stay in the first category for a year or two after getting their diploma. But recruiters say those applicants may find themselves at a disadvantage, especially if they have not been bolstering their résumés with classes, internships or volunteer work.

“If you’re a 2011 or a 2012 grad, the competition just got fierce — even more fierce — with the let-out of the 2013 class,” said Alexa Hamill, the United States campus recruiting leader for PricewaterhouseCoopers. “It’s like you’re in overtime, and they brought in the fresh team.”

The impact of this is difficult to measure because government statistics do not allow for a comparison of the fate of this year’s graduates with their immediate predecessors, instead lumping all college graduates under 25 into one group. And certainly college graduates as a whole are doing vastly better than those with only a high school degree (young college graduates have an unemployment rate of just over 8 percent, while the unemployment rate for high school graduates within the same age group is close to 20 percent).

But everything that is known about the job market points to the fact that Mr. Wells and his cohort are feeling the pinch. Many of the country’s largest companies make most of their entry level hires on campus, meaning there are no slots for the hapless person who had the misfortune of graduating in 2011. And historically, those who graduate during a recession earn far less than their peers who do not, and it can take a decade or more for them to catch up. Many have been forced to settle for lower-wage, lower-skill jobs, which has in turn helped increase joblessness among the high school graduates who previously held those jobs.

In 2000, about 60 percent of employed college graduates were working in jobs that required a degree, said Andrew Sum, director of the Center for Labor Market Studies at Northeastern University. Now fewer than half are.

Campus recruiters at a variety of institutions said that those who graduated in 2013 have had a relatively easy time finding jobs, in part because the prolonged economic downturn has made them more focused on preparing themselves for the workplace. Alumni who graduated in the previous few years continue to trickle in, asking for help.

“The class of 2009 just got royally screwed, because their first four years in the labor market were this horrible thing,” said Heidi Shierholz, a labor specialist at the Economic Policy Institute, a left-leaning research organization in Washington. “This year’s first four years won’t be that bad.”

Bits Blog: BlackBerry Posts Loss, Despite New Phone

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DealBook: Despite Risks, Brazil Courts the Millisecond Investor

Yasuyoshi Chiba/Agence France-Presse — Getty ImagesThe stock exchange in São Paulo, Brazil, is the largest in South America.

SÃO PAULO, Brazil — At a time when the mere phrase “high-frequency trading” makes some investors queasy, Brazil’s stock exchange is putting out the digital welcome mat.

In recent years, the BM&F Bovespa stock exchange in São Paulo has taken steps to make its market more friendly to high-speed traders, even as many regulators around the world are casting an increasingly skeptical eye on the sector after a series of well-publicized market malfunctions in the United States.

Lawmakers in Canada, Australia and the European Union have been looking at imposing limits on such traders, whose investment time horizons are measured in milliseconds rather than months.

“Given the attention and the political discourse on the perceived dangers of H.F.T., exchanges are very reticent to be aggressive in promoting and attracting high-frequency trading,” said Andy Nybo, an analyst at the Tabb Group.

But in Brazil — as well as in other developing economies like Chile and Mexico — exchanges are actively courting high-speed traders without much resistance from their regulators. The appeal is that the traders can execute thousands of trades a second, resulting in big fees for the exchanges.

The BM&F Bovespa, which closed its open trading pits in 2009 in favor of electronic trading networks, is ramping up efforts to support computerized trading. Last month, the Brazil stock exchange introduced a new lightning-fast computer system, known as Puma, that allows high-speed traders to get in and out of trades more quickly. The exchange has offered these traders discounts since October 2010.

The BM&F Bovespa is “very open about what they are looking to do. They really have been aggressive in welcoming all types of strategies,” Mr. Nybo said.

The stocks on the Brazilian exchange are cumulatively worth $1.2 trillion, but the average daily trading volume on the exchange is only about $3.7 billion. In the United States, a single major stock like Apple can trade more than that each day.

The comparatively low volumes are in part a reflection of the relatively limited involvement of high-speed traders, who still only account for about 10.6 percent of all stock trades in Brazil. Although that is up from 8.5 percent in 2012, it is still a fraction of trading in other large global markets. In the United States, such firms dominate a majority of the trading, and in Europe, they are responsible for about 45 percent of the trading, according to Celent, a research and consulting firm.

The Brazilian exchange’s push seems like a risky gambit to many critics of the acceleration of American markets over the last decade. High-frequency traders have been accused of using technology to move share prices for their own advantage and to trick traditional investors. They have also taken some of the blame for market mishaps like the “flash crash” in May 2010, when stock indexes dropped nearly 10 percent in less than half an hour.

Wallace C. Turbeville, a senior fellow at Demos, a research group in New York, said most offers made by high-frequency trading firms were “illusory”: they exist not to be executed, but to measure, distort and exploit market sentiment, increasing volatility and costs for other investors.

Brazilian executives say they believe they have been able to avoid problems through strict regulation. They are also trying to keep at bay many of the other technological developments that have complicated American and European markets. Brazil has, for instance, banned dark pools, private venues where trades can be executed out of the public eye.

And unlike in the United States, which has 13 public stock exchanges, the BM&F Bovespa remains the only place to trade stocks in Brazil.

Cicero Vieira, the BM&F Bovespa’s chief operating officer, said a single trading environment meant computerized trading firms had fewer opportunities for arbitrage — simultaneously selling high in one place and buying low in another — which should keep high-frequency trading from growing past 20 percent or so of total volume.

“When it comes to H.F.T.’s, there is no such thing as zero risk,” Mr. Vieira said. “Our philosophy is to contain the impact of errors.”

Danielle Tierney, an analyst with the Aite Group, a financial advisory firm in Boston, said that Brazil’s tough regulations, including a prohibition on anonymous trading, and its less complicated market structure had helped prevent the problems that have drawn scrutiny in America.

“Risk controls can always fail, but compared to where we were in the U.S. in 2010, Brazil is much better prepared,” she said. She added that having a single stock exchange with low trading volume makes it easier to spot problems.

Brazil’s market regulator, the Comissão de Valores Mobiliários, has so far left regulations governing high-frequency trading to the exchange, but it says it is observing the segment closely.

For the BM&F Bovespa, the push to attract high-speed traders provides a way to keep out competitors. Direct Edge, a United States exchange with close ties to electronic trading desks, has applied to operate in Brazil, but approval is not expected before 2015. In the United States and Europe, upstart exchanges won market share by being more accommodating to speedy traders.

The BM&F Bovespa is also eager to get the benefits that electronic trading has brought to the United States. Several academic studies have suggested that the competition among the firms has led to smaller differences in the spread between the prices at which traders are willing to buy and sell stocks, making trading cheaper for slower investors.

“That will increase liquidity and reduce spreads and distortions,” Mr. Vieira said.

Brazil has been steadily making its systems more hospitable to high-frequency firms. In 2009, the exchange opened the door to more computerized traders by creating a data center that allowed firms to co-locate within a few feet of the exchange’s server, cutting down the delays associated with data traveling through fiber optic cables.

Chris Concannon, a partner at the New York-based electronic trading firm Virtu Financial, said that the exchange had worked “very hard at encouraging new participants into the market, both electronic and traditional.”

But the exchange ran into the limits of the speed of their own computer systems. The new Puma system cuts the time for order execution to around a single millisecond from 30 while increasing stability and capacity. The technology was developed together with America’s largest futures exchange, the Chicago Mercantile Exchange. The BM&F Bovespa and the CME own 5 percent stakes in each other. Ms. Tierney estimates that Puma cost at least $200 million and perhaps as much as $500 million.

The new technology has been available since 2011 to traders on Brazil’s derivatives markets, which BM&F Bovespa also operates, and is scheduled to include the bond market by early next year.

Mr. Concannon said that they had already noticed a “substantial improvement in the exchange performance with these upgrades.”

The eagerness of high-speed firms to enter Brazil points to their search for new markets as they experience difficulties in sustaining their profits in the highly competitive United States. Most of the high-speed trading activity has so far come from non-Brazilian firms like Virtu. Brazilian brokers have been winning some of this business and consequently welcoming the developments.

Yet, there are still those who sound caution on these initiatives. Felipe Santos, responsible for electronic trading at the São Paulo fund manager Equitas Investimentos, said that although high-frequency trading might make it easier for everyone to buy and sell stock in big companies, especially the largest ones, it had its limits.

“You cannot create volume out of thin air,” he said. “You need real investors, too.”

Dan Horch reported from São Paulo, Brazil, and Nathaniel Popper from New York.

Time Warner Revenue Is Flat, Despite Cable Gains

The parent company of HBO, CNN, TNT and TBS reported revenue of $6.9 billion in the quarter that ended March 31, down 1 percent from the same period last year. Net income grew 23.5 percent to $720 million, or 75 cents a share, compared with $583 million and 59 cents a share in 2012.

“We’re off to a strong start in 2013, making us even more confident in our full-year outlook,” Jeffrey L. Bewkes, chairman and chief executive of Time Warner, told analysts. He specifically pointed to the success of the company’s cable TV business, driven this quarter by an average nightly audience of 10.7 million for the N.C.A.A. basketball tournament broadcast on several Turner channels.

But Time Warner’s legacy businesses continued to lag. Later this year, the company is expected to complete the spinoff of its Time Inc. publishing unit into a separate, publicly traded company. Revenue at Time Inc., which publishes Time, People, Sports Illustrated and InStyle, fell 5 percent to $737 million, reflecting an 11 percent dip in subscription revenues.

Time Inc. eliminated roughly 6 percent of its total worldwide staff of 8,000 in the first quarter, resulting in $53 million in restructuring and severance charges. “We remain very focused on taking costs out of the business,” said John K. Martin, chief financial and administrative officer at Time Warner. Cost cutting, he added, is “an important step in preparing Time Inc. to function as a stand-alone public company.'’

Revenues at the Warner Brothers studio fell 4 percent to $2.7 billion, while operating income increased by 23 percent to $263 million. “Both ‘Gangster Squad’ and ‘Jack the Giant Slayer’ fell below our expectations,” Mr. Bewkes said.

He remained optimistic about the studio’s slate of upcoming films, including “The Great Gatsby” and “The Hangover Part III.” Warner Brothers had a strong television season with “Revolution,” an apocalyptic drama on NBC, and “Game of Thrones,” the HBO fantasy series that averages 13.4 million viewers per episode.

Mr. Bewkes defended CNN under the leadership of Jeff Zucker, the recently named president of CNN Worldwide. But, he said, the channel still needed to evolve from a trusted source of breaking news to a more regularly watched outlet. “CNN can’t just be politics and wars,” Mr. Bewkes said.

He rebuffed questions about whether the HBO Go on-demand app would be made available on an à la carte basis through a broadband connection, making the premium cable channel more like the streaming service Netflix. “We would do it if we thought it was in our economic best interest,” Mr. Bewkes said. “At this point, we don’t think it makes sense.”

DealBook: Despite Cyprus Woes, European Capital Markets Show Strength

LONDON – Despite the banking crisis in Cyprus, Europe’s capital markets are still open for business.

On Friday, the British insurance firm Esure raised £604 million, or $917 million, in one of the largest initial public offerings so far this year in Europe. The European banks, Santander and KBC, also pocketed a combined $1.5 billion through a 21 percent share sale in Bank Zachodni, a Polish subsidiary.

The successful offerings come despite growing uncertainty about how the stalemate in Cyprus will affect Europe’s sluggish recovery from its debt crisis.

The Continent’s policy makers are still trying to hammer out a deal that will force the small European country to contribute 5.8 billion euros, or $7.6 billion, toward a 10 billion euro bailout package for Cypriot banks.

Some analysts have warned that the resurgent euro zone crisis could knock investors’ appetite for new listings. Before Cyprus flared up, money raised from new European I.P.O.’s in the first quarter of the year was expected to jump by almost 70 percent compared with the same period in 2012, according to statistics from the accounting firm Ernst & Young.

“Conditions have improved significantly for the region,” said Maria Pinelli, the global strategic growth markets leader at Ernst & Young’s. “However, the euro zone’s political and economic difficulties are casting a shadow across the capital markets.”

The British insurer Esure shrugged off the dark clouds on Friday after the firm secured its listing close to the top of its expected price range. Trading in Esure, which provides home and car insurance across Britain, started on Friday, and gave the British company a market capitalization of around £1.2 billion.

It is the latest firm to tap London’s capital markets. On Wednesday, the British property company Countrywide raised £200 million from its I.P.O., while the insurance firm Direct Line, which is part owned by the nationalized Royal Bank of Scotland, raised £787 million from the capital markets in October.

In Poland, Santander of Spain and KBC of Belgium also raised a combined $1.5 billion from selling shares in their Polish unit Bank Zachodni, though the firms were forced to price the sale below Bank Zachodni’s closing price on Thursday.

Despite uncertainty caused by Europe’s financial difficulties, some global markets remain strong, as investors bet on growing demand from consumers in emerging economies. Singapore and Japan accounted for almost two-thirds of the money raised from new offerings in the first quarter of the year.

A consortium led by the European private equity firm CVC Capital Partners took advantage of this sentiment on Friday by raising $1.3 billion from a share sale in Indonesia’s largest department store operator, according to a person with direct knowledge of the matter, who spoke on the condition of anonymity because he was not authorized to speak publicly.

CVC and its partners — a unit of the Indonesian conglomerate Lippo Group and the Government of Singapore Investment Corporation – will retain majority control of the Indonesian retailer Matahari, and secured backing from several global investors, including BlackRock and the asset management units of Goldman Sachs.

Neil Gough contributed reporting from Hong Kong.

Conviction Stands Despite Deceit in Obtaining Warrant

The state Supreme Court on Thursday refused to overturn a murder conviction that was based in part on illegally obtained cell phone records.

A Year of Market Gains, Despite Political Turmoil

A year ago, some thought 2012 was destined to be the year that the euro zone — and maybe even the entire European Union — broke up. The banks that supported their governments, and that in turn depended on those same governments for bailouts if they went broke, were deemed to be particularly vulnerable to disaster.

It did not happen, and while the euro zone countries hardly solved their economic problems, the Continent’s stock markets turned out to be good investments in 2012, with bank shares among the best performers. The same could be said about the United States, where the broad stock market posted double-digit gains and Bank of America shares doubled in 2012, albeit from a very depressed level.

Over all, the Standard & Poor’s Euro 350-stock index was up 13 percent for the year, measured in euros, and more than 15 percent measured in dollars. The S.& P. 500 wound up the year with a gain of 13 percent.

It may have been typical of 2012 that it was politicians and central bankers — not economic news or corporate developments — that dominated investor attention. As the year ended, the difference was that it was Washington, not Europe, where the squabbles were taking place.

For much of the year, it appeared that the European squabbles were leading nowhere, and by midsummer, markets were pessimistic about the outcome. Finally, Mario Draghi, the president of the European Central Bank, took decisive action to assure that the banks — and the governments that depended on them — would have access to funds. That did not turn around recessionary conditions in much of the euro zone, but it was enough to turn around financial markets. Prices of government bonds in many of the most troubled countries began to rise. Those who bet that Europe would solve its problems did well in the financial markets.

The accompanying charts show the performance of stocks in 10 economic sectors in both Europe and the United States, both in 2012 and since Oct. 9, 2007, the day that world stock markets peaked before what would turn out to be a world recession and credit crisis.

What stands out is how well financial stocks and consumer discretionary stocks did during 2012. The latter stocks are things purchased by consumers that are likely to do better when the economy is improving. In the United States, the two best such stocks in the S.& P. 500 were PulteGroup, a homebuilder, and Whirlpool, an appliance maker.

But while Europe did better in 2012, it remains much farther from recovering all of the losses experienced since the 2007 peak. The American index is just 9 percent lower than that, while the European index is about a third below where it was then. The only sectors that have completely made up their losses on both sides of the Atlantic are health care and consumer staples. In the United States, the consumer discretionary and information technology sectors have also done so, although the latter sector’s performance is largely because of Apple, whose shares are more than three times as high as they were in 2007.

Manko Gold Opens Central Pa. Office Despite Region's Drilling Lull

Bala Cynwyd, Pa.-based environmental, energy and land use firm Manko, Gold, Katcher & Fox has opened a new office in Williamsport, Pa., with an eye toward better serving its North Central Pennsylvania client base, which has grown in conjunction with the rise of the natural gas industry in the region.

Oil Prices Stay Steady Despite Mideast Conflict

Global oil prices went up and down Wednesday as diplomatic efforts to end the turmoil in Israel and the Gaza Strip faltered and then appeared to succeed. But after eight days of violence, most benchmark prices are little changed from where they began.

A rise in oil and gasoline prices during a Middle East crisis would be no surprise, and there is no telling how long the cease-fire will last. But oil experts say there is little chance of a big price spike since Israel and Gaza are not oil-producing areas and global supplies are currently plentiful.

In addition, while many oil-producing nations in the Middle East and elsewhere are pumping oil at unusually high rates, demand for petroleum products in much of the world has weakened because of the global economic slowdown.

“The global market is well supplied,” said Chakib Khelil, a former Algerian energy minister who was also president of OPEC. “The stocks are pretty good, and the Gulf countries and Saudi Arabia are sustaining supplies while the weak economic situation in Europe is softening demand.”

Many analysts say the global Brent crude oil benchmark price, currently around $111 a barrel, would be $20 to $30 lower if it were not for the persistent instability in the Middle East and North Africa, particularly the tensions surrounding Iran’s nuclear energy policies.

Crude prices have fluctuated since tensions between Hamas and Israel spurred an exchange of rocket fire and bombs over the last week, as some traders feared that a full-fledged war might bring Iran and other regional powers into the conflict.

Prices eased on Tuesday by nearly 2 percent as negotiations for a cease-fire appeared to gain traction, but then rebounded about 1 percent after a bus bombing in Tel Aviv on Wednesday slowed progress. As reports surfaced that a cease-fire was again at hand, crude prices settled back down and then rose slightly.

But drivers in the United States have been minimally affected by the crisis, in part because a boom in oil drilling in North Dakota and Texas has decreased the country’s dependence on foreign oil.

The average price of a gallon of regular gasoline in the United States on Wednesday was $3.43, nearly 2 cents lower than a week ago and 24 cents lower than a month ago.

Compared with a year ago, though, the price was up 8 cents, and the highest on record for Thanksgiving. That is mostly because of the effects of Hurricane Sandy, which interrupted supplies in the New York metropolitan area and on much of the East Coast. In many other states, drivers are paying less for gasoline than they were a year ago.

According to the Oil Price Information Service and AAA, gasoline prices in New Jersey are roughly 30 cents above last year’s levels, while drivers in Massachusetts, New York, Pennsylvania and Rhode Island are paying over 20 cents more. Oil analysts say those prices should begin to ease in the next two weeks as regional refineries and oil terminals that suffered flooding and power failures gradually return to normal operations.

With the exception of temporary, localized problems, oil experts say the country is well supplied with oil and gasoline, despite an Energy Department report on Wednesday showing that crude oil and motor gasoline inventories declined last week.

“Nationally, we have ample gasoline supplies, given where demand is,” said Anthony Rouse, chief economist at Phillips 66, the global refinery giant.

Mr. Rouse said he did not think the Gaza crisis would affect domestic petroleum supplies or prices in any substantial way. “Right now, this looks relatively self-contained in nations that are not really oil-producing areas,” he said, adding that even if Iran became more deeply involved, “the market is already factoring in lower Iranian production because of the sanctions.”

Iran is exporting just over a million barrels a day, down from three million in the summer of 2011 because of sanctions imposed by the United States and Europe. Even so, production by members of the Organization of the Petroleum Exporting Countries has increased over the last year, with Iraq’s output up by 500,000 barrels a day and Libya recovering more than 1.5 million barrels a day lost during its civil war last year. Saudi Arabia and Kuwait are also producing more.

Countries outside of OPEC are also producing slightly more than a year ago, mainly because of increased output from the United States and Canada.

Demand for liquid fuels is down by 1.5 percent in the United States this year, according to the Energy Department, because of the slow economic recovery and a gradual improvement in the efficiency of cars. Demand is falling even faster in Europe, and demand in the developing world is increasing more slowly.

Nevertheless, energy experts warn that a jump in oil prices is possible in the year ahead because so much of the world’s supplies come from politically unstable nations. Pipeline sabotage has caused production delays in Nigeria in recent months. Libyan militias independent of government control can threaten oil production, though so far they have mostly left the country’s oil fields and refineries alone. Sectarian violence is a threat to Iraq’s growing oil industry.

Then there is the possibility that Israel or the United States might attack Iran to stop it from attaining nuclear weapons. Iran has repeatedly threatened to block the Strait of Hormuz, the narrow waterway through which nearly one-fifth of the world’s oil is shipped.

“The Middle East will always be hanging over us,” said Lawrence J. Goldstein, a director of the Energy Policy Research Foundation, which is partly financed by the oil industry.

Amazon Reports Loss Despite Higher Sales

If Amazon were an ordinary company, investors would long ago have strapped its management to a rocket ship and sent it far, far away.

Amazon said Thursday that it lost money in the third quarter, continuing a trend of unimpressive earnings reports for the retailer. Similar disappointments are causing carnage at some of Amazon’s land-based electronics competitors. But Amazon’s many fans seemed largely unfazed.

The earnings report, released after the market closed, sent Amazon shares down as much as 9 percent in after-hours trading, but they quickly recovered. The stock hit a record high earlier this year, and it trades at an astronomical price/earnings multiple.

What separates Amazon from the competition is that it is not trying to make money. It is instead trying to grow as fast as it can, something it has been doing successfully for 15 years. What was once a cute start-up is now one of the country’s biggest retailers.

Third-quarter revenue was $13.8 billion, a little less than the $13.9 billion that analysts expected but up 27 percent from 2011.

Despite all those customers snapping up Kindles and “50 Shades of Grey,” the company had warned that a loss was coming. Amazon said it lost 60 cents a share in the third quarter, but more than half of that was from its investment in the daily deals site Living Social. The consensus estimate was a loss of 8 cents. Amazon earned 14 cents a share in the third quarter of 2011.

In a conference call with analysts, Tom Szkutak, Amazon’s chief financial officer, declined as usual to shed much light on the company’s plans. With regard to the persistent rumor that Amazon will open some pop-up stores during the holidays to sell Kindle devices, for instance, he said that the company’s current practice of selling through other retailers is “not really a driver of our business.”

Amazon’s strategy of selling as cheaply as it can may be tough on its margins but it is tougher on competitors. Radio Shack missed its earnings forecasts this week, prompting doubts about its viability. The specialty home appliance and electronics retailer H. H. Gregg, which operates 200 stores in the Midwest and Southeast, saw its shares drop 13 percent Thursday. Shares of Best Buy fell 10 percent as the store warned that third-quarter profit would be “significantly lower.”

“Amazon is having a major impact on a number of businesses,” said Jason Moser, who covers Amazon for the Motley Fool investment site and owns shares in the retailer. “We know that chief executive Jeff Bezos is quite patient and has plenty of financial resources. It appears his strategy is working. The third-quarter loss was modest and the long-term implications here are as strong as ever. My faith isn’t dented in the least.”

There are Amazon skeptics. Colin Gillis of BGC Partners published a haiku before the earnings report: “So much revenue, and with all those shipping costs, so little profit.” What his verse lacked in poetry it made up in cogent criticism.

Amazon’s operating margins have been about 2 percent or less for the last year. “Amazon has the lowest operating margin and the highest valuation in our technology company coverage,” Mr. Gillis wrote, adding that “the company is not likely to achieve material leverage off its revenue growth as costs associated with investments into its digital platforms build.”

Furthermore, “the nature of Amazon’s core business is that of a discount retailer, which limits margin upside.” In the second quarter, the analyst noted, Amazon increased revenues by $2.9 billion but income from operations declined by $95 million to $107 million.

The third quarter is mere preamble to the fourth quarter, where Wall Street expects significant revenue growth powered by new Kindle tablets and associated downloads. New warehouses are coming, bringing physical goods to customers so quickly that they will, in theory and no doubt in practice, order more.

Asked about same-day delivery, Mr. Szkutak said on the conference call that the warehouses have “helped improve our delivery speed to customers.” He added, “What I would expect moving forward would be more of the same.”

DealBook: Despite Its Problems, Dodd-Frank Is Better Than the Alternatives

Harry Campbell

Repeal Dodd-Frank? It sounds so simple. But repealing the Dodd-Frank Act won’t end “too big to fail” banks, and it may even make things worse.

Mitt Romney raised the issue at the first presidential debate, contending that Dodd-Frank should be repealed and replaced because “it designates a number of banks as too big to fail, and they’re effectively guaranteed by the federal government. This is the biggest kiss that’s been given to — to New York banks I’ve ever seen.”

It’s a seductive idea. Dodd-Frank contains provisions that go much further than regulating banks in order to prevent another financial crisis.

In Section 1,502, to take one example, is a provision requiring public companies to disclose whether they use conflict minerals. What this has to do with the financial crisis is beyond me. So, some parts of Dodd-Frank may already need renovation or even repeal.

But the core of the law dealing with the big banks is another story. Simply repealing Dodd-Frank wholesale will turn back the financial clock to 2006 for these banks. That doesn’t seem very smart given what happened, something that Mr. Romney recognizes when he talks of replacing the act rather than repealing it.

The problem is that possible replacements are unlikely to work or to be politically feasible.

The fundamental issue is that a few banks have grown to be enormous over the last two decades. According to SNL Financial, four banks each had more than a trillion dollars in assets at the beginning of the year. JPMorgan Chase was the largest with $2.3 trillion in assets, while Bank of America had about $2.2 trillion in assets and Citigroup, $1.9 trillion. Goldman Sachs is fourth with about $950 billion in assets.

That’s a lot of money, but not only are the banks big, their share of the market has grown. In the 1980s, the 10 largest banks had less than 30 percent of bank depositary assets. By 2012, this amount had almost doubled to 54 percent.

And size has paid off for these select banking giants. They enjoy a subsidy of reduced borrowing costs because investors believe the government will bail them out if things go awry. The size of the subsidy is debated heatedly by economists, but one recent study estimates that before the financial crisis, the banking behemoths obtained a subsidy that made their financing cheaper by 45 basis points, 0.45 percent. And at least one study has found that banks overpaid in the years leading up to the financial crisis to acquire competitors in order to get bigger and gain this advantage.

So, Dodd-Frank didn’t create “too big to fail” institutions. The banks themselves did because it made them money.

The financial reform law takes two tacks in dealing with these institutions. First, Dodd-Frank tries to figure out who they are and charge them for being too big. This is done by raising their regulatory costs through more oversight and supervision.

It means more governmental red tape for these banks, but also ostensibly fewer problems because of it. Regardless, one purpose of this increased regulation is to impose a regulatory tax on big banks to push them to be smaller.

Second, Dodd-Frank addresses the “Lehman” problem — that bankruptcy may not work for a huge financial failure. Instead, a new regime is created to put big institutions into what is hoped to be an orderly receivership that avoids a general financial panic, something that unfortunately happened when Lehman Brothers filed for bankruptcy in September 2008.

Repealing Dodd-Frank will not make these banks go poof and disappear. Instead the banks, which have only grown larger and more concentrated since the financial crisis, will continue to enjoy a subsidy. After all, when push comes to shove, no president will simply let a $2 trillion institution go down. It would destroy the economy.

The real question then is whether there are any alternatives to Dodd-Frank other than repealing it.

The two options that are most often discussed are to break up the banks or impose a capital charge.

A breakup is the favorite choice of many and has even been mooted by Sanford I. Weill in July, a number of years after he left Citigroup, the behemoth he created. Daniel K. Tarullo, a Federal Reserve governor, recently proposed a simple suggestion: capping the size of a bank’s balance sheet. But in a large financial system, you need large banks as lenders.

Even if you can function without large banks, the political feasibility of a bank breakup in a Democratic administration, let alone Republican one, is unlikely.

Luigi Zingales writes in his provocative book “A Capitalism for the People” (Basic Books) that the Glass-Steagall Act, the Depression-era law that separated investment banking from commercial banking, was good because it led to competition among banks rather than allowing them to bond together to fight for their bigness.

In other words, the big banks would now resist such a solution to the death. (Mr. Zingales, by the way, is a member of the University of Chicago faculty and has been a co-author with Glenn Hubbard, a central Romney economic adviser.) Like it or not, we are probably stuck with large banks. And there will always be smaller institutions that are simply too interconnected to be allowed to fail.

This leaves the second option and probably the one that Mr. Romney is likely to favor: higher capital requirements or leverage limitations for the biggest banks. This may work but essentially does the same thing that Dodd-Frank claims to do — make it more costly to be a “too big to fail” bank.

This solution has the virtue of being easier to administer and certainly requires less regulatory power. But the solution would leave a future administration gasping if one of these banks went down.

And the capital charges would have to be agreed on internationally in order to keep American banks from being outgunned by foreign competitors. This is what the Basel III accords are supposed to do, but raising the capital or leverage limits would require a whole new international bargain.

This is unlikely to happen anytime soon because the European banks lack the wherewithal right now to raise their capital even if they wanted to. Even more problematic is that raising capital and leverage requirements may reduce lending more than the current regulatory provisions do because banks would be forced to keep more money on their books rather than lend it.

The bottom line is that there are real problems with Dodd-Frank. It contains tons of extraneous stuff, and even the provisions dealing with the large banks are sometimes too convoluted and intricate. The mess that the regulatory agencies are in as they try to sort out the Volcker Rule is a good example.

But while it is nice to talk of repealing or watering down Dodd-Frank, the alternatives may not be much better as long as we have big banks. And those don’t seem to be going away any time soon.

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