Black Friday: Wal-Mart in Upland temporarily closes after 'fighting inside'

Black Friday brought out the rowdy side of Wal-Mart shoppers early this morning when the Upland location shut down for more than two hours after customers caused a ruckus inside.

Store management called Upland police at 2:44 a.m., asking for assistance in dealing with customers who were “fighting inside,” said Lt. Jim Etchason.

About 300 people were in the store, which had remained open all night as a security precaution after a Wal-Mart worker on Long Island, N.Y., was trampled to death last year on Black Friday when a surging, impatient crowd rushed the doors after the store opened.

But in Upland, employees said, customers began tearing into merchandise that had been shrink-wrapped and were supposed to be opened at 5 a.m.

“This was without a doubt the worst I’ve ever seen it,” said one employee, who said she has worked a dozen Black Fridays.

“They wouldn’t let people line up,” she added. “They were belligerent. They just bombarded the store.”

Several officers were sent and stood by as shoppers were kicked out and the store closed down, Etchason said. The bargain hunters were told to line up in the parking lot.

Meanwhile, the carts were emptied and all the items returned to the shelves, employees said. But they said that outside, people began “yelling and screaming,” pounding on the glass doors and trying to sneak into the store through the lawn and garden section.

Store managers had to be sent outside to try to calm the crowd, workers said.

“It was scary,” one said.

But when police officers left at 6:15 a.m., “everyone was behaving themselves,” Etchason said. The store had reopened a bit before 6 a.m., allowing customers inside in groups of 30, and “people were proceeding inside in an orderly fashion.”

No arrests were made, and no injuries were reported. By 9 a.m., the store seemed back to normal, with packed shopping carts and long checkout lines.

-- Baxter Holmes

Black Friday: Macy's at South Coast Plaza at 8 a.m.

Sleep seemed very appealing to Donna Bastedo earlier this morning, but the lure of the Black Friday sale at Macy’s in South Coast Plaza was stronger.

So Bastedo, 50, rolled out of bed and into the darkness outside, where she was pleasantly surprised by the absence of pushing and shoving. That made it easier for the Costa Mesa resident to pack her overflowing cart with kitchen novelties, including a crockpot, panini press, buffet warmer and fajita maker.

Others, however, were being a bit more stingy. Caprice Davis gave up a full-time volunteer position to look for a better salary, but has struggled to find bargains to fit her budget.

She was eyeing the same fajita set as Bastedo and decided that the $9.99 price tag was too good to pass up, especially since it was marked down from $39.99.

But she was less than thrilled at the cold weather and long wait, having trekked from her Los Angeles home hoping that an upscale shopping center would be less crowded than most.

"I didn't think there would be as much pandemonium as perhaps a mall closer to home," Davis said.

But even as the morning wore on, the frenzy continued. Security guards directed traffic in the crammed parking lot. Clothes and open shoe boxes were scattered around the store, where countless red discount signs loomed over each aisle.

-- Gerrick Kennedy

Veteran Black Friday family in line at Best Buy since noon Wednesday

Edmund Urquiza’s victory had been years in the making. After about a decade of attempts, he and his family and friends finally scored the first spot in the Black Friday line outside a Best Buy store.

The area around the Burbank location seemed almost desolate in the early afternoon on Thanksgiving Day, where a small, straggly line of shoppers was camped out from the door to the end of the sidewalk, near a pair of portable toilets.

But Urquiza’s crowd of roughly 12 people had been in position since 12:30 p.m. Wednesday. As an added bonus, they had also laid claim to the front of the line at a nearby Target, a spot they had taken since 2 p.m. Wednesday.

“I’m surprised it’s so light,” he said of the Best Buy line. “This is nothing.”

Accompanied by a large bag filled with $400 worth of goods he had just picked up from RadioShack, Urquiza said he plans to spend another $400 at Best Buy. The sports memorabilia salesman is especially hoping to land a $197 HP laptop to replace the one he bought at an earlier Black Friday stakeout.

“I only buy electronics once a year, on Black Friday, because I can be dumb about it and still get a good deal no matter what I touch,” he said. “It’s a no-brainer.”

But with a scattershot economy and a scaled-down Christmas gift list, the group had second thoughts this year. In past years, Urquiza said he has dropped as much as $2,000 at Best Buy alone; this year, he will use only cash or debit.

“We almost didn’t come,” said Urquiza, who had scouted Best Buy stores as far south as Anaheim Hills. “Money’s tight, and the deals didn’t seem worth our time. But once you make the commitment, your perspective changes. Now, it’s like, look at all these laptops!”

The group might trek over to Hometown Buffet for dinner, leaving someone to guard the two large tents and tables blanketed with newspapers, coloring sets, bags of toys, board games and a radio. A proper Thanksgiving feast is scheduled for Friday night, he said.

Among the group: Urquiza’s sister Iberia Brogmus, 37, a librarian, her husband and their two young daughters. Urquiza and Brogmus’ mother relaxed in a lawn chair – she planned to pick up a 32-inch television from Target and a video iPod from Best Buy.

“We all have different motivations,” said Urquiza, who said he often acts as a personal shopper to friends, who put in their purchase reservations early. “It’s almost like a family tradition for us.”

The family members are veterans at “urban camping” – they waited for days outside the Nokia Theatre recently, waiting for the Michael Jackson documentary “This Is It.” But they occasionally camp in the traditional sense too.

“It’s kind of a sport,” Urquiza said. “It doesn’t take a mastermind.”

As he spoke, drivers nearly slowed down and stared. One man in a white car joked, “They don’t do anything like this in England!” and another pulled up and asked to see the newspaper ad for the Playstation 3 system. Earlier in the day, Urquiza said a stranger had bought him hot chocolate as he waited in line.

“You help each other, even people you don’t know,” he said. “Everyone’s trying to get the best deal, and we’re helping with that. It’s the start of the holiday spirit.”

-- Tiffany Hsu

Photo: Barbara Davidson / Los Angeles Times

How to squeeze more out of your cash in a low-rate world

Near-zero short-term interest rates are murder on risk-averse savers who have cash in banks and money market mutual funds. Now imagine that the Federal Reserve might keep rates at these levels not just through 2010 but beyond because of the anemic economy.

Given that possibility, my weekend column in The Times looks at some strategies for savers to squeeze more out of their cash accounts while keeping their principal safe.

That's really the issue for millions of people whose bank and money market accounts add up to trillions of dollars: Yes, they could chase higher returns in stocks, bonds, gold and other investments, but for many their cash is principal that they absolutely can't afford to lose. Plenty of Americans learned the hard way last year that cash provides peace of mind that other assets can't -- even if, in the long run, they know that short-term accounts face the risk of being chewed up by inflation and a falling dollar.

If you've got to stay short, make the most of it. Let someone else subsidize the lowest-yielding banks and money market funds.

Read the column here.

Just FYI, I will be out for the next two weeks, and probably won't be posting much on the blog in that period (though my Times colleagues on Money & Co. will keep it going). Happy Thanksgiving to all.

-- Tom Petruno

Gold market disconnect: Record prices, but not demand

Gold remains in a powerful bull market as measured by prices in the futures market, where speculators can run rampant.

But third-quarter supply and demand data from the World Gold Council show that the surge in the metal’s price to record highs ($1,146.40 an ounce as of Friday) hasn’t been accompanied by record demand for the real thing.

The recent peak in demand for physical gold, in fact, was in the third quarter of 2008 -- before the financial-system meltdown accelerated.

The World Gold Council’s report on supply and demand in the quarter ended Sept. 30 put total global demand for gold at 800.3 tons, down 34% from the 1,205.6 tons purchased in the same quarter a year earlier.

Demand in the recent quarter also was below the 1,029.8 tons bought in the first quarter of this year, though 10% higher than the 724.8 tons of the second quarter.

Gold demand was down in the third quarter versus a year earlier in every major category of consumption, including jewelry (the biggest single source of demand), industrial use, official coins and purchases by exchange-traded funds.

The drop in physical demand partly reflects simple price-sensitivity: As gold goes up, some buyers back away.

Jewelry demand, for example, reached 673.3 tons in the third quarter of 2008, when gold’s price was mostly below $900 an ounce. In the third quarter of this year, with the price mostly above $900 and on its way to $1,009 by the quarter’s end, jewelry demand totaled 473.5 tons.

The global recession also has played a role in depressing jewelry demand this year compared with 2008, of course.

So how can the price of gold be flying when demand for the metal itself is well below recent peaks?

"This has been a speculative fund-driven futures rally," says Jon Nadler, a veteran analyst at Kitco Metals Inc. in Montreal. In other words, traders who play in the futures markets are betting on higher gold prices. But they aren’t interested in owning the actual metal.

This kind of disconnect can happen at any time in commodity markets. Remember oil in 2008?

Besides, in any market the price is set by the last buyer, whether the trade is for a huge sum or a tiny sum.

In the case of gold, it could work out that speculative demand in the futures market will be followed by a big revival in physical demand if more people around the globe decide that they must own the metal as a hedge against paper currencies, inflation, financial calamity or other reasons.

Interestingly, the Austrian government mint is betting otherwise, at least in the near term: The mint, the world’s biggest marketer of gold coins, recently said it planned to cut production by 32% in 2010, figuring that an improving global financial system will slash gold demand from investors.

The U.S. Mint, however, is siding with the bulls: On Dec. 3 it plans to resume production of American Eagle gold coins in half-ounce, quarter-ounce and tenth-of-an-ounce sizes to supplement its production of one-ounce coins.

Production of the smaller coins was suspended in 2008 because the Mint couldn’t get enough blanks from its fabricators, but that supply problem has been solved, said spokesman Michael White.

-- Tom Petruno

Photo credit: Kim Jae-Hwan / AFP/Getty Images

California unemployment rate reaches 12.5%

California's unemployment continued its upward march in October, reaching a post-World War II high of 12.5%, the Bureau of Labor Statistics said this morning. But don't roll your eyes at the never-ending stream of bad news just yet. California actually added 25,700 jobs in October, making this the first month since April of 2008 that the state has gained jobs.

California still has the fourth-highest unemployment rate in the nation, yes, and its unemployment rate is a whopping 4.5 percentage points higher than it was in October 2008. But the job gains are a significant part of a trend that's seen the pace of job loss slow as the economy pulled itself back together again.

The state has lost 687,700 jobs over the last year.

Los Angeles County also saw some gains from last month. The government sector added 19,300 jobs and information, led by motion picture and sound recording, added 2,500.

Still, don't expect much to change in the day-to-day life of people looking for jobs, especially in the Southland. Los Angeles County's unemployment rate climbed to 12.8% in October, with job losses in manufacturing, leisure and hospitality, and construction. The unemployment rate in Riverside and San Bernardino counties reached 14.6% in October, up from a revised 12.3% in September. That region has been particularly hard hit by the construction bust.

-- Alana Semuels

As if interest rates weren't low enough . . .

Uncle Sam is getting yet another break on his borrowing costs.

Suddenly, cash is again fighting to get into the haven of shorter-term Treasury securities, driving yields down to levels last seen after the first stage of the financial-system meltdown a year ago.

It may look like another fear-driven panic, but this time is different: In large part the latest decline in shorter-term yields just stems from moves by banks and other financial firms to bolster their balance sheets with highly liquid assets as 2009 ends, says Tom di Galoma, head of U.S. rates trading at Guggenheim Capital Markets in New York.

"They’re dressing up the books for year-end," he said. The more liquid you can look to your regulators, the better.

Late last year the hunger for Treasuries reflected a deep-seated dread that the financial system would continue to implode. That kind of sentiment is mostly absent this time around.

The annualized yield on three-month T-bills fell to a barely positive 0.01% on Thursday, down from 0.07% at the beginning of the week and the lowest level since last December.

The two-year T-note yield slid to 0.70%, compared with 0.81% a week earlier and also the lowest since December.

Traders said some T-bills were trading at slightly negative yields -- meaning buyers were in effect paying to keep their money in the securities, as opposed to earning a return on them.

Another factor pushing T-bill yields down: Growing demand is facing a smaller supply of new debt, as the Treasury winds down some of the deficit-financing programs that had pumped up T-bill issuance. The Treasury was selling as much as $33 billion a week in three-month bills in August. This week’s auction was for $30 billion.

Meanwhile, the Treasury continues to boost sales of longer-term securities.

As for the drop in the two-year T-note yield, that shows that buyers at these levels believe there’s no risk in locking in a yield of well under 1% on those securities. In turn, that implies growing faith that the Federal Reserve won’t be raising its benchmark short-term rate from near zero anytime soon -- maybe not even in the second half of 2010, which had seemed like a reasonable window for a Fed hike.

The view that the central bank could stay on hold for longer has been buttressed by recent comments from Fed officials including Janet Yellen, James Bullard and Chairman Ben S. Bernanke.

"Fed-speak lately has been pretty dovish" on rates, notes Jim Galluzzo, a Treasury trader at RBS Securities in Stamford, Conn.

Just what the short-term end of the Treasury market loves to hear.

-- Tom Petruno

Ron Paul wins a key battle in war to open Fed's books

Rep. Ron Paul, the Texas Republican who is perhaps the Federal Reserve’s most implacable enemy, scored a big win Thursday on Capitol Hill: The House Financial Services Committee approved adding to a financial-system reform bill Paul’s provision to begin federal reviews of the central bank’s operations, including its interest-rate decisions.

The vote on the audit provision amendment was 43-26.

Paul has for years asserted that the Fed, which by design is independent of  the federal government, was corrupt and that its monetary policy would drive America to ruin by debasing the dollar.

He has sought to abolish the Fed entirely, but because that almost certainly would never fly in Congress, Paul has worked for Plan B: He wants the Government Accountability Office to have full power to audit the central bank’s operations -- a measure the Fed bitterly opposes.

"If we get the audit and get the books open, make them answer the questions, I am convinced that the American people will be so outraged that then we will have reform of the monetary system," Paul has said.

Fed Chairman Ben S. Bernanke told Congress in June that Paul’s audit provision "would effectively be a takeover of policy by the Congress . . . [and] would be highly destructive to the stability of the financial system, the dollar and our national economic situation."

Paul contends that the Fed is overreacting. Here's how he describes what the provision would do:

--- Removes blanket restrictions on GAO audits of the Fed;

--- Allows the audit of every item on the Fed’s balance sheet, all credit facilities, all securities purchase programs, etc.;

--- Retains limited audit exemption on unreleased transcripts and minutes;

--- Sets a 180-day time lag before details of Fed’s market actions may be released;

--- Provides that nothing in the amendment should be construed as interference in or dictation of monetary policy by Congress or the GAO.

The audit-the-Fed measure is part of the financial-system-overhaul bill that the Obama administration has sought. It remains to be seen whether Paul’s Fed provision can make it through the full House and the Senate.

A note to clear up any confusion: The Obama administration wants the financial-overhaul bill, but it isn't clear that it would support the addition of Paul's audit-the-Fed provision.

-- Tom Petruno

Image: Ron Paul's latest book, "End the Fed"

California cuts bond sale over prison legal battle

California today pared back its last big tax-free bond sale of 2009, citing legal questions about funding for a prison project.

Treasurer Bill Lockyer sold $743 million in lease revenue bonds for the state Public Works Board instead of the $1.34 billion that had been planned.

The deal was slashed in size because funding was dropped for a new death-row-inmate complex at San Quentin prison. The fate of that complex is in limbo because of an ongoing legal battle between the Legislature and Gov. Arnold Schwarzenegger over certain budget items that he has vetoed.

"Legal questions arose Wednesday about whether the San Quentin facility could be funded with the bonds," said Tom Dresslar, Lockyer’s spokesman. "The state did not have enough time to address those issues and decided to drop the project from the sale."

The smaller deal size allowed the state to slightly trim the interest rates on some of the bonds. For example, the Series I bonds maturing in 10 years will pay a tax-free annualized yield of 5.10%, a sliver less than the 5.12% the state had preliminarily set.

It helped the state that yield-hungry individual investors put in orders for $447 million of the bonds. That was 61% of the final total sold. A hefty number of individual-investor orders gives the state more leeway in negotiating the final interest rates on its bonds with institutional investors.

The state now has borrowed more than $21 billion since late September via short- and long-term debt for budget-related reasons and to finance voter-approved infrastructure projects. That supply glut has helped to push up tax-free muni bond yields across the board as investors have demanded higher returns to absorb all of the debt.

Fundamentally, tax-free munis remain appealing compared with taxable bonds, as I noted in this earlier post. The jump in yields over the last six weeks should reinforce that appeal.

The state’s borrowing binge is nearly over for the year, which could put downward pressure on California muni yields in the near term.  Lockyer has just one more sale of tax-free bonds planned for 2009: a $200-million issue for the University of California on Dec. 3.

-- Tom Petruno

Photo credit: Ben Margot / Associated Press

Despite fiscal woes, muni bonds' appeal stays strong

The good news in the sell-off that has clipped California tax-free municipal bond prices over the last six weeks is that the market now should be harder to shock.

So for muni investors, the report Wednesday that Sacramento already may be facing a $21-billion budget gap over the current and next fiscal years was more a firecracker than a bomb.

After rallying sharply in August and September, the California muni market has given back some of those gains since early October. Amid a flood of new bond sales by the state investors have demanded higher yields, which in turn has pushed prices of existing bonds down.

California is back in the market this week with a $1.34-billion revenue bond offering from the Public Works Board to finance infrastructure projects. Yields on those bonds will be set today.

All in all, though, the damage to the market from the supply glut has been relatively modest, at least for muni mutual fund investors who have the benefit of wide diversification. Case in point: The per-share net asset value of the Franklin California Tax-Free Income fund, which holds $14.2 billion of state and local debt, was $6.90 on Wednesday, a drop of 4% from the 52-week high of $7.19 on Oct. 5.

That’s unfortunate for anyone who bought near the high, but year-to-date the fund’s total return (share price gain plus interest earned) still is a hefty 15.6%. And that’s even better than it looks, given that the interest earned is exempt from state and federal income tax.

The muni market nationwide has been suffering a bout of indigestion since September, driving yields higher. But nationally and in California the market has been stabilizing over the last week or so.

Despite the dire fiscal outlooks for many state and local governments, there are three main reasons to believe that the muni market is unlikely to fall off a cliff from here and wipe out all of its recovery from the worst of the credit crunch:

--- Big investors just don’t buy the idea that actual defaults by muni issuers in 2010 will match the doomsday predictions that are out there.

"There is going to be a lot of ‘headline’ risk in the market over the next 12 to 18 months," said Chris Sperry, co-manager of the Franklin California fund. But local governments of any size know, he said, that the decision to default would make it impossible to get the basic credit they need to function. The market clearly believes that the vast majority of politicians will get out the cleaver and hack expenses further, not bond payments.

--- Muni yields still are historically high versus yields on taxable bonds. A 10-year California state general obligation bond now yields about 4.55% tax-free, compared with 3.36% for a 10-year U.S. Treasury note that is federally taxable. Muni bond yields normally are below Treasury yields.

"In order for muni yields to get a whole lot [higher] you’re going to have to see the Treasury market sell off," said John Carbone, manager of the Vanguard California Long-Term Tax-Exempt bond fund. That could happen, of course, but it probably would require the backdrop of a robust economic recovery or an inflation surge -- neither of which seems likely in the near term.

--- Many muni investors figure that tax rates at the federal, state and local levels can only go up as governments struggle to close deficits. That would boost munis’ appeal for yield-hungry investors. "Munis are going to become more attractive from a pure income standpoint," Sperry said.

Yes, he’s talking his book. But raise your hand if you think taxes are more likely to go down than up.

-- Tom Petruno