Trust Measurement: How to Measure Smarter

Trust is in the air. It seems that everything you read and every speech you hear refers to trust. We need it, we don't have it and we wonder how to get it back. I've been researching, thinking and writing about trust for a long time, before trust became trendy. Trust is an intangible which we all agree is fundamental to relationships. It is also, however, one of the things with which we struggle. We know it's important but we aren't sure how we can ensure we don't lost it. We are certainly not clear about how to measure trust.

When we look at measuring trust, we enter murky waters. We measure in order to bring certainty to our initiatives. Certainty helps to reduce anxiety about the unknown and and provides us with some degree of control. It provides support (or not) for our decisions.

This is especially important when it comes to with dollars invested in learning and development. Leaders want to know that their investment in L&D is worthwhile; that there is a return.

Trust seems to be amorphous; hard to define, hard to pin down. In discussions with clients who acknowledge the importance of trust and their need to maximize trust in their organization, we invariably come around to discussing trust measurement. When I am discussing an intervention in their organization which will help them improve trust, they want to know how I can reassure them that my program works. How will they know that what I am proposing will result in better outcomes? What type of trust measurement can I offer which can give them the certainty of a return on their investment.

These are tough questions to answer because measuring trust is about measuring changes in attitudes and behaviours. The challenge is how do you measure the effectiveness of a program when you can't control for all factors. For example, the coachability of participants is a critical element in the success of a change program. How open are participants to listening and to making changes? Some of the questions we would ask concern the organizational support systems; Are there organizational supports in place to reinforce the learning? Does the organizational culture and structure support a trust-based culture? If these basic issues have not been addressed, then the program does not have an opportunity to succeed.

My good friend and colleague, Dr. Dean Spitzer, has written what I view as the best book on the subject of Performance Measurement. In his chapter on Transformational Measures, Dr. Dean issues the following cautions.

1. Beware of metricizing. Dr. Dean cautions us not to adopt a pure economic view of whatever it is we are measuring. When we take an economic approach, we are treating measurement as a pure cost analysis when, in fact, these types of measures can be misleading. Trust measures are about behaviour change which, if successful, results in improved individual and organizational improvement. However, if we are looking at a direct and immediate correlation between program cost and economic improvement, we may be disappointed. Behaviour change takes time and isn't always noticeable at first. Trust is based on reciprocity and, as such, depends on the cooperation of the other person. When you change your behaviour, the other person may require time to accept and adjust to your new behaviour. Therefore, trust measurement that doesn't take this into account will be unable to demonstrate positive economic results.

2. Search for new truths. Be cautious that measurement does not represent 'the truth' but is a 'search for truth'. Organizations exist with mental models which sometimes get stuck in a historical reality which is no longer valid. Trust measurement, by its nature, often represents multiple mental models. As my research found, trust is contextually based and means different things to people. Therefore, measurement cannot represent all these meanings. It can, however, bring us closer to an understanding of the different meanings which exist in an organization. Trust measurement helps explain what managers often refer to as 'resistance to change'. I have found that resistance isn't to change itself but to a new context which holds little meaning to an individual or group of individuals in the organization. Measurement can uncover these differences and open the conversation to different ways to view organizational change.

3. Usefulness is key. One of the first things I learned when I was doing my coursework for my doctorate at University of Toronto was the importance that research and measurement to make sense. This is especially true in qualitative research or measurement which is focused on intangibles. Trust measurement falls into that category. There is such an emphasis on reliability and validity (the gold standard of quantitative research) that we have neglected to ask whether the specific measures make sense or offer answers to important questions. As Karl-Erik Sveiby says:" It is not possible to measure social phenomena with anything close to scientific accuracy". In its early stages, it is more important that transformational measurement be relevant and useful. As Dr. Dean says, "it is more important to have the "right" measures in their formative stages than completely accurate measures that are wrong".

4. Overcome skepticism. Many people doubt the value of subjectivity in measurement and I hear this often when I speak about trust measurement. Yes, there are some weaknesses associated with subjective perceptions, but in the hands of a deeply experienced measurement professional, you can find great value in trust measurement. The emergent results can help you to learn, refine and improve your measurement. Innovation takes time and, as Dr. Dean says, requires tolerance; and the ability to live with incomplete certainty.

5. Avoid 'rigor' mortis. Too much rigor kills innovation. I have seen this reaction when clients look at my trust assessments. As a researcher, I make a great effort to ensure validity with my tools. However, I recognize that my tools are not quasi-quantitative assessments and I don't try to make them so.

When reliability and validity are the only standard by which a measurement tool is judged, then we are locked into a means of measurement which doesn't allow for dynamism in trust measurement. Trust measurement involves measuring both attitudes and behaviours and as such, is not fixed and immutable. As I stated earlier, trust is about context and is multi-dimensional. There is not a universal definition of trust and, as such, we need to carefully interpret the results of trust measurement to ensure that the context and the organizational environment are accounted for.

In summary, measurement is critical to ensure that all programs are aligned to very specific goals and outcomes. The key principle is to ensure that evaluation methods and expectations make sense with the goal of measurement. If the measurement is focused on intangibles, then the requirement is for non-traditional evaluation of reliability and validity. It is more realistic and effective to evaluate or the basis of resonance and change over time.Article Source: http://EzineArticles.com/6718496

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Asian Stocks Retreat on Iodine in Tokyo Tap Water, Reactor Woes

Asian stocks fell, with the regional benchmark index set for its first loss in four days, after levels of iodine unsafe for infants were reported in Tokyo tap water as workers struggled to reconnect power to a damaged nuclear reactor.

Tokyo Electric Power Co. slumped 4.5 percent after rising as much as 7 percent before a Tokyo official warned against giving infants tap water to drink. Toyota Motor Corp., the world’s biggest carmaker, declined 1.2 percent after extending production halts. Virgin Blue Holdings Ltd. plunged 6.1 percent in Sydney after Australia’s second-largest airline forecast an annual loss. China Coal Energy Co. slumped 9.1 percent in Hong Kong after earnings missed estimates.

“Investor focus has moved to the medium-term consequences of the natural disaster to the Japanese and global economies,” said Tim Schroeders, a money manager in Melbourne at Sydney- based Pengana Capital Ltd., which manages about $1 billion.

The MSCI Asia Pacific Index fell 0.2 percent to 132.78 as of 7:32 p.m. in Tokyo. About the same number of stocks advanced as declined on the index. The gauge last week recorded its biggest weekly drop since the height of the European debt crisis in May, as Japan fought to prevent a nuclear disaster after the March 11 earthquake and tsunami, and as tensions escalated in Libya.

“There are still a lot of uncertainties surrounding the nuclear fallout, as well as aftershocks, and we won’t be seeing a stable market for a while,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $104 billion. “No one thinks the nuclear crisis has ended completely.”

Iodine Levels

Japan’s Nikkei 225 Stock Average fell for the first time in three days, losing 1.7 percent, having surged 7.2 percent in the previous two days. Hong Kong’s Hang Seng Index declined 0.1 percent. South Korea’s Kospi Index slipped 0.1 percent, while Australia’s S&P/ASX 200 Index rose 0.2 percent.

People in the Tokyo area should avoid giving tap water to infants, a city official said in a televised conference. The advice came after levels of iodine were found to exceed the limits for infants at a water treatment facility in the Japan capital, the official said. Tokyo-listed drinks makers including Kirin Holdings Co. and Asahi Breweries Ltd. surged on the report.

Engineers at Japan’s stricken nuclear plant are unable to connect power to one of four damaged reactors, marring progress to cool the fuel rods. Restoring power is key to ending the crisis at reactors that have leaked radiation into the ocean and air and forced the government to evacuate thousands of local residents.

Battling Meltdown

Fukushima Dai-Ichi Plant operator Tokyo Electric Power Co. has been battling to prevent a meltdown after losing electricity that helps circulate cooling water to the units following the temblor and tsunami. The company’s shares fell 4.5 percent to 1,049.

A series of earthquakes struck Japan’s Fukushima prefecture today, starting with a magnitude 6.0 temblor at 7:12 a.m. local time, according to Japan’s Meteorological Agency. The Japan Nuclear and Industrial Safety Agency said there has been no impact on the Fukushima plant from the latest temblors.

“Anxieties about the nuclear issues aren’t gone yet, but the situation is improving,” said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc. “Some industries and stocks that declined significantly lately will be bought back.”

Europe, Libya

Futures on the Standard & Poor’s 500 Index climbed 0.3 percent today. The index retreated 0.4 percent yesterday as the price of oil rose amid unrest in Libya and concern grew that Europe won’t find an immediate solution to its debt crisis.

The MSCI Asia Pacific Index lost 3.4 percent this year through yesterday, compared with a gain of 2.9 percent by the S&P 500 and a drop of 1.5 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.3 times estimated earnings on average, compared with 13.4 times for the S&P 500 and 10.9 times for the Stoxx 600.

Honda Motor Co. dropped 1.8 percent to 3,090 yen in Tokyo today. Japan’s second-largest carmaker by market value will suspend production at three plants in Saitama, Mie and Kumamoto prefectures until at least March 27. Daihatsu Motor Co. Japan’s biggest minicar maker, lost 1.5 percent to 1,214 yen after extending a production halt until March 24. Toyota slipped 1.2 percent to 3,305 yen.

The Nikkei 225 plunged 10 percent last week on concern the effects of the earthquake and damaged reactors will hurt a recovery in the world’s third-largest economy.

Virgin, China Coal

In Sydney, Virgin Blue plunged 6.1 percent to 31 Australian cents after the airline forecast an annual loss on higher fuel prices and the effects on tourism of from last month’s Cyclone Yasi, which devastated parts of Queensland state, and the New Zealand earthquake, which destroyed much of Christchurch.

China Coal, the nation’s second-largest producer of the fuel, dropped 9.1 percent to HK$10.74 in Hong Kong. Net income increased 1 percent to 7.47 billion yuan ($1.1 billion), China Coal said yesterday, missing a mean estimate of 10.03 billion yuan in a Bloomberg survey of 17 analysts.

Maanshan Iron & Steel Co., China’s second-biggest Hong Kong-traded steelmaker, slipped 2.4 percent to HK$4.15 after reporting that second-half earnings slumped 95 percent.

Among stocks that rose today, Taiheiyo Cement Corp., Japan’s biggest cement maker, surged 3.4 percent to 153 yen in Tokyo and Sumitomo Osaka Cement Co. gained 0.8 percent to 252 yen, as building-materials suppliers rose on speculation they’ll benefit from post-earthquake reconstruction.

Reconstruction Agency

Japan said it may set up a reconstruction agency to oversee earthquake repairs, while data showed the central bank pumped record liquidity into lenders as the nation grappled with its worst disaster since World War II.

Chief Cabinet Secretary Yukio Edano told reporters in Tokyo the government will weigh “some sort of system or organization” to oversee spending following the earthquake, adding that it’s too early to say when a spending bill will be compiled. The Bank of Japan said yesterday lenders’ deposits with the central bank more than doubled since March 11 to 41.62 trillion yen ($513 billion).

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Brazil Mid-Month Inflation Index Slowed Less Than Expected

Brazil’s mid-month inflation slowed less than economists expected, as the cost of transportation and housing accelerated.

Consumer prices as measured by the IPCA-15 index rose 0.6 percent in the month through March 15, their lowest mid-month reading since September, the national statistics agency said in Rio de Janeiro. Economists expected the index to rise 0.53 percent, according to the median of 32 estimates in a Bloomberg survey. The annual inflation rate accelerated to 6.13 percent from 6.08 percent in mid-February.

Brazilian central bank President Alexandre Tombini said in Senate testimony yesterday that policy makers may adopt new measures to curb the consumer credit growth in a bid to cool heated domestic demand and slow inflation. Tombini said he has “confidence” that interest rate increases, fiscal cuts and curbs on credit will slow inflation to 4.5 percent -- the midpoint of the government’s target range -- next year.

The yield on most interest-rate futures contracts due January 2013, the most traded today in Sao Paulo, fell one basis points, or 0.01 percentage point, to 12.84 percent at 8:09 a.m. New York time. The real fell 0.1 percent to 1.6609 per U.S. dollar.

Housing costs jumped 0.39 percent in the month, compared with 0.28 percent in mid-February. Transportation rose 1.11 percent versus 1.04 percent in the previous mid-month reading. Clothing prices fell 0.37 percent.

Rate Increases

Traders are wagering that the central bank will raise borrowing costs by 0.5 percentage point for a third straight meeting April 20 to cool inflation that is close to the top of the central bank’s target range, according to Bloomberg estimates based on interest rate futures.

Economists raised their 2011 inflation forecast to 5.88 percent, from 5.82 percent a week earlier, according to a March 18 central bank survey of about 100 economists. Economists expect inflation to slow to 4.8 percent in 2012, the survey found.

Brazilian economists estimate that the credit curbs have the same impact on inflation as a 0.75 percentage-point interest rate increase.

Data published last week show Brazil’s economy may be cooling more slowly than analysts had expected. Brazil’s economic activity index rose at its fastest pace in nine months in January.

January retail sales, which Tombini yesterday said are the best reflection of the current state of the economy, beat estimates and rose at their fastest pace in five months. Sales rose 1.2 percent in January from December, up from a revised 0.2 percent the previous month.

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U.S. Stocks Gain a Third Week as S&P 500 Rises to 32-Month High

U.S. stocks rose for the third straight week, sending the Standard & Poor’s 500 Index to its highest level since June 2008, as the Federal Reserve raised its forecast for economic growth and most companies reporting earnings topped estimates.

Williams Cos. surged 13 percent, leading energy companies to the biggest advance among 10 S&P 500 industries, after the pipeline operator announced plans to spin off its oil and natural-gas exploration unit. Family Dollar Stores Inc. jumped 19 percent after investor Nelson Peltz offered to buy the retailer. Advanced Micro Devices Inc. gained 11 percent on speculation the semiconductor maker is an acquisition target.

The S&P 500 rose 1 percent to 1,343.01. The index needs to advance 0.7 percent to 1,353.06 to complete a 100 percent rally from its 2009 low. The Dow Jones Industrial Average gained 117.99 points, or 1 percent, to 12,391.25.

“Earnings have come through spectacularly,” said Michael Mullaney, who manages $9.5 billion at Fiduciary Trust Co. in Boston. “Everything from a fundamental standpoint feels as good as it’s felt in quite some time.”

The S&P 500 has advanced 31 percent since last year’s low in July as corporate profit surpasses analysts’ estimates for the eighth straight quarter, according to data compiled by Bloomberg. The Conference Board’s index of U.S. consumer confidence climbed to an almost three-year peak in January, and the Institute for Supply Management-Chicago Inc. said businesses expanded last month at the fastest pace since 1988.

Fed Minutes

On Feb. 16, minutes from the Fed’s Jan. 25-26 meeting showed policy makers raised their projection for economic growth this year to a range of 3.4 percent to 3.9 percent, compared with a November forecast of 3 percent to 3.6 percent. The next day, the Fed Bank of Philadelphia’s general economic index showed regional manufacturing expanded at the fastest pace since 2004 in February.

Williams rose 13 percent to $30.37. The fourth-largest U.S. pipeline operator by market value will sell as much as 20 percent of its oil and natural-gas exploration unit in an initial public offering.

Family Dollar Stores jumped 19 percent to $52.55. Peltz’s New York-based Trian Fund Management LP is proposing a bid of $55 to $60 a share, according to a regulatory filing. The second-biggest dollar chain in the U.S. may draw rival private equity bids, said analysts at Sanford C. Bernstein & Co., Nomura Securities International Inc. and JPMorgan Chase & Co.

AMD Valuation

Advanced Micro Devices gained 11 percent to $9.18. While its management vacuum is fueling speculation of a takeover, a possible price tag of three times the average premium for semiconductor makers may deter any acquirers.

AMD, whose chief executive officer resigned last month, has gained 15 percent since two more departures announced on Feb. 9 reignited bets the second-largest maker of processors for personal computers is vulnerable to a takeover. Acquirers of chipmakers in the past five years offered a median of 14.5 times earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg that includes net debt.

That would value AMD’s equity at $12.8 billion, 120 percent higher than its price the past 20 days. The average premium for chipmaker deals since 2006 is 35 percent. Buying AMD at that level would cost more than has been spent in all semiconductor takeovers combined in the past four years for a company that has reported only five years of profits since 2000.

Economic Reports

Home sales probably fell in January, while orders for long- lasting goods climbed, a reminder that housing lags behind manufacturing as the U.S. recovery strengthens, economists said before reports next week.

Fourth-quarter profit exceeded the average analyst estimate at 72 percent of the 395 companies in the S&P 500 that have reported results since Jan. 10, Bloomberg data show. Dell Inc., the third-largest personal computer maker, iron-ore producer Cliffs Natural Resources Inc., and oil and natural-gas driller Nabors Industries Ltd. advanced more than 9.5 percent this week after beating forecasts.

Companies slated to report results next week include Home Depot Inc., Wal-Mart Stores Inc. and Hewlett-Packard Co., all Dow average companies. Priceline.com Inc., Mylan Inc. and First Solar Inc. also have scheduled earnings releases.

Stocks fell yesterday before rising in the final hour of trading after China’s central bank raised reserve requirements for lenders 10 days after boosting interest rates as Premier Wen Jiabao tackles accelerating inflation. Fertilizer companies such as CF Industries Holdings Inc. slid as wheat declined.

Apple Inc., the maker of iPad tablet computers, fell 1.8 percent to $350.56. The U.S. Justice Department and the Federal Trade Commission are beginning to examine whether Apple’s new media subscription service violates antitrust laws, according to two people familiar with the matter.

--With assistance from Whitney Kisling in New York, Bob Willis in Washington and Ian King in San Francisco. Editors: Nick Baker, Michael P. Regan

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Oil Falls as U.S. Monitors Iran Plan to Send Warships to Suez

Oil fell for the first time in three days as the White House said it was “monitoring” Iran’s plan to send warships through the Suez Canal, calming concern that the move would ratchet up tensions in the Middle East.

March futures slipped 16 cents after rising in earlier trading amid Mideast unrest. The current New York contract expires Feb. 22, and participants who haven’t closed out their positions must arrange for delivery at Cushing, Oklahoma, where supplies are near a record. Crude for April increased 1 percent.

“The White House comments seemed to calm the market down,” said Phil Flynn, vice president of research at PFGBest in Chicago. Oil sellers “are going to have to make delivery into record supplies, and that’s bringing us down despite the fact that there’s all this tension in the Middle East.”

Crude for March delivery settled at $86.20 a barrel on the New York Mercantile Exchange. Earlier, it touched $87.88. Futures gained 0.7 percent this week. The more active April contract increased 87 cents to $89.71 a barrel.

U.S. financial markets will be closed Feb. 21 for the Presidents Day holiday.

Egypt today approved Iran’s request to sail the ships through the canal on their way to Syria, a plan Israel has called a provocation.

“We’re monitoring that, obviously, but we would also say that Iran does not have a great track record for responsible behavior in the region, which is always a concern to us,” Jay Carney, the White House press secretary, told reporters traveling on Air Force One to an appearance by President Barack Obama in Portland, Oregon.

Iranian Ships

The Iranian vessels will anchor in Syria “for a few days” after a trip through the canal that is “routine according to international law,” Iran’s state-run Islamic Republic News Agency said, citing Ahmad Mousavi, the country’s ambassador to Syria.

Oil supplies at Cushing jumped to a record 38.3 million barrels in the week ended Jan. 28. The supply glut there has pressured the price of oil on the Nymex. Cushing inventories gained 250,000 barrels to 37.7 million in the seven days to Feb. 11, according to an Energy Department report Feb. 16.

Brent crude for April settlement slipped 7 cents to $102.52 a barrel on the ICE Futures Europe exchange in London. The contract has risen 1.6 percent this week, its fourth consecutive increase.

The difference between April contracts in London and New York narrowed for a second day. The spread was $12.81 a barrel, compared with a record $15.94 on Feb. 16. Brent was $1.28 a barrel cheaper than Nymex crude a year ago.

New Normal Premium

Brent may trade at a premium of $2 to $3 a barrel above West Texas Intermediate oil, Adam Sieminski, chief economist at Deutsche Bank, said in a note today.

“Global demand is growing faster longer-term for crude streams tied to Brent,” Sieminski said. This is because of rising consumption in Asia of products such as diesel fuel that can be refined more easily from crudes tied to the European benchmark. Brent is an international crude used to price oil in Europe and Africa.

Previously the market had been led by U.S. demand for gasoline from West Texas Intermediate, the benchmark for many North and South American oils, Sieminski said. WTI can more easily be refined into gasoline.

Bahrain, Libya

Futures advanced in earlier trading as escalating protests in Bahrain and Libya fueled concern supplies from oil-producing nations in the Middle East will be disrupted. Demonstrators in both countries called for regime change.

Bahrain, an island in the Persian Gulf, lies off the coast of Saudi Arabia, the world’s biggest oil exporter. Bahrain has a majority-Shiite Muslim population and is ruled by the Sunni Muslim Al Khalifa family. Saudi Arabia has a Shiite minority concentrated in its eastern oil-producing hub that also complains of discrimination.

“Unless problems facing Saudi Arabia are solved, what happened and is still happening in some Arab countries, including Bahrain, could spread to Saudi Arabia, even worse,” Prince Talal bin Abdul Aziz, a member of the Saudi royal family, said in an interview with BBC Arabic TV yesterday.

Twenty people were reported dead in clashes in Libya, Africa’s biggest holder of oil reserves and the eighth-largest oil producer in the Organization of Petroleum Exporting Countries. The North African country has been ruled by Muammar Qaddafi for more than 40 years.

Oil volume in electronic trading on the Nymex was 840,705 contracts as of 3:19 p.m. in New York. Volume totaled 976,236 contracts yesterday, 33 percent above the average of the past three months. Open interest was 1.53 million contracts.

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Obama to Focus on U.S. Competitiveness, Jobs, Deficit

President Barack Obama said tomorrow’s State of the Union address will focus on cutting the deficit, reducing unemployment and ensuring the U.S. can compete with economic rivals.

In a video to supporters that previews the nationally televised Jan. 25 speech, Obama said the economy is growing, corporate profits are rising and more than 1 million jobs have been created in the past year.

Obama said he will be pivoting from responding to the financial crisis that occupied much of the first two years of his presidency to meeting longer-range economic challenges.

“My principal focus, my number one focus, is going be making sure that we are competitive, that we are growing, and we are creating jobs not just now but well into the future,” Obama said in the video, released over the weekend. “I’m focused on making sure the economy is working for everybody, for the entire American family.”

The need to make the U.S. more competitive with emerging economies such as China and India has been part of the president’s focus since his trip to Asia last November.

Sputnik Moment

During a Dec. 6 speech in Winston-Salem, North Carolina, Obama said the nation faces a “Sputnik moment” -- a reference to the Soviet Union’s launch of the first satellite in 1957, ahead of the U.S.

Obama hosted a state visit last week from Chinese President Hu Jintao, the leader of a nation viewed as both an economic rival and a promising export market. Obama also named General Electric Co. Chief Executive Officer Jeffrey Immelt to head a group of outside advisers called the President’s Council on Jobs and Competitiveness.

With more than half of GE’s revenue coming from outside the U.S., Obama said Immelt “understands what it takes for America to compete in the global economy.”

In the video, Obama said that to maintain a competitive edge, the U.S. must stay the most “dynamic economy in the world” and make sure that future generations can “compete with workers anywhere in the world.”

“Now to do that, we’re going to have to out-innovate, we’re going to have to out-build, we’re going to have to out- compete, we’re going to have to out-educate other countries,” Obama said. “That’s our challenge.”

“The president obviously got the message from the November election,” said Senate Republican leader Mitch McConnell said on the “Fox News Sunday” program. “He’s stopped bashing business and has started celebrating business. It’s about time.”

Political Division

With Republicans newly in control of the House of Representatives, the Democratic president urged both parties to find common ground on economic and security issues “even as we’re having some very vigorous debates.”

“He’s got a real chance to lead here,” House Majority Leader Eric Cantor said on NBC’s “Meet the Press” program. “The question is, did he listen and has he learned from the last election,” the Virginia Republican said.

McConnell, a Kentucky Republican, said on Fox that while his party will look at any proposed increases in education, research and infrastructure, “I don’t think anything ought to be off limits in the effort to reduce spending.”

“Anytime they want to spend, they call it ‘investment,’” McConnell said. “You will hear the president talk about investing a lot.”

Lower Corporate Taxes

Obama may support lowering the U.S. corporate-tax rate and should advance trade deals with Colombia, Panama and South Korea, McConnell said.

“To the extent he actually wants to do some of these things, our answer is going to be yes,” McConnell said.

One of the Obama administration’s biggest challenges is reducing the more than $1.2 trillion U.S. budget deficit. Obama didn’t indicate how he would address the recommendations from his bipartisan deficit commission, including a proposal to cut Social Security benefits.

“We’re also going to have to deal with our deficits and our debt in a responsible way,” Obama said. “And we’ve got to reform government so that it’s leaner and smarter for the 21st century.”

Democratic Senator Richard Durbin said on Fox today, “We can’t be so laser-focused on the deficit that we ignore the obvious, that we are still in a recession.”

Obama’s job-approval ratings have been climbing since the November election in which the Republicans took control of the U.S. House and reduced the Democratic majority in the Senate.

In a Wall Street Journal/NBC News poll conducted Jan. 13- 17, after Obama spoke at a memorial service in Tucson, Arizona, urging a more civil political discourse, his job approval reached 53 percent. Among independents, positive views of his performance surpassed negative views for the first time since August 2009.

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Stocks Drop Worldwide as Oil, Dollar Surge After Egypt Protests

Stocks worldwide plunged the most since November, crude oil posted the biggest jump since 2009 and the dollar rose versus the euro after protesters posed the biggest challenge to Egyptian President Hosni Mubarak’s 30-year rule. Egypt’s dollar bonds sank, pushing yields to a record.

The MSCI World All-Country World Index of stocks in 45 countries lost 1.4 percent at 4:59 p.m. New York time. The Dow Jones Industrial Average fell 1.4 percent to 11,823.70, preventing its longest weekly winning streak since 1995. Oil futures increased 4.3 percent to $89.34. The dollar appreciated 0.9 percent to $1.3611. Yields on Egypt bonds due in 2020 surged 22 basis points to 6.51 percent. Gold futures jumped 1.7 percent, the most in 12 weeks.

Egyptian protesters clashed with police throughout the country and into the night, defying a curfew and setting fire to buildings. Mubarak imposed the curfew after tens of thousands of marchers chanted “liberty” and “change.” After U.S. markets closed, Mubarak said he asked the government to resign. The demonstrations offset data showing that growth in U.S. gross domestic product accelerated in the fourth quarter.

“The unrest in Egypt has people concerned,” said Mark Bronzo, who helps manage over $25 billion at Irvington, New York-based Security Global Investors. “When it comes to the Middle East, there’s worries the unrest is going to spread. It has negative implications for the world.”

Beating Estimates

The Dow had to close above 11,871.84 to post a ninth straight weekly gain. Before today, it had risen 1 percent this week, supported by higher-than-estimated earnings. More than 74 percent of the 183 companies in the Standard & Poor’s 500 Index that reported quarterly earnings since Jan. 10 beat the average analyst projection, according to data compiled by Bloomberg.

Egypt overshadowed evidence the U.S. economy, the world’s biggest, is improving. GDP expanded at a 3.2 percent annual pace in the fourth quarter, up from 2.6 percent during the prior three months, as consumer spending climbed by the most in more than four years.

Investors who pushed the Dow above 12,000 for the first time since 2008 this week may be getting ahead of themselves. It surpassed that level the past two days. More U.S. stocks are trading above their 200-day average price than any time since April, when the Dow began a 14 percent slump. The cost to insure against S&P 500 losses with options has fallen to an almost three-year low.

Too Optimistic

The Dow may have surged too fast following its more than 2,000-point jump since August even as analysts forecast a third straight year of profit growth for the S&P 500, said James Investment Research Inc.’s Tom Mangan and BB&T Wealth Management’s Walter “Bucky” Hellwig. Mangan and BGC Partners LP’s Michael Purves see signs investors are too optimistic about the next few months.

Shares of Ford Motor Co. plunged 13 percent as the automaker said profit slid 79 percent. Amazon.com Inc. declined 7.2 percent after saying earnings may miss analysts’ projections. The Chicago Board Options Exchange Volatility Index, which measures the cost of insurance against losses in U.S. stocks, jumped 24 percent, the most since May.

The NYSE Arca Airline Index lost 4.3 percent after oil jumped. Any disruption to Middle East oil supplies “could actually bring real harm,” U.S. Energy Secretary Steven Chu said on a conference call.

The Suez Canal, which connects the Mediterranean and Red Seas, is located in Egypt. One million to 1.6 million barrels a day of oil and refined products moved north to Europe and other developed economies in 2008 and 2009, according to the Energy Information Administration, the statistical arm of the U.S. Energy Department.

Windows Revenue

Microsoft Corp. had the biggest drop in the Dow, retreating 3.9 percent, after a shortfall in Windows revenue raised concerns about demand. The slump drove the Nasdaq Composite Index to a 2.5 percent decline, the most since August. The S&P 500 fell 1.8 percent, the biggest decrease since Aug. 11.

The dollar and Swiss franc advanced the most in three weeks against the euro as a day of clashes in Egypt between police and protesters spurred demand for the safety of the currencies. Egypt’s pound traded at an almost six-year low against the American currency. Fitch Ratings revised the Middle East nation’s outlook to negative.

The Swiss franc advanced 1.4 percent to 1.2806 per euro. Egypt’s currency traded at 5.8575 per dollar after touching the weakest level since January 2005 yesterday. Turkey’s lira sank as much as 2.1 percent to 1.6171 per dollar, falling along with the currencies of other nations near Egypt. Israel’s shekel declined as much as 1.8 percent to 3.7141.

Treasuries rose, pushing two-year yields to a seven-week low of 0.54 percent. Yields on 30-year bonds had reached a nine- month high of 4.64 percent following the report showing U.S. GDP growth accelerated.

Gold futures for April delivery rose 1.7 percent to $1,341.70 an ounce, the biggest gain since Nov. 4. The metal climbed to a record $1,432.50 on Dec. 7.

--With assistance from Jason Webb, Stephen Kirkland, Paul Armstrong, David Merritt, Michael Patterson, Grant Smith, Dan Weeks and Caroline Alexander in London; Bob Willis in Washington; Whitney Kisling, Elizabeth Stanton, Nikolaj Gammeltoft, Allison Bennett, Cordell Eddings and Yi Tian in New York; Dahlia Kholaif in Kuwait; Margot Habiby in Dallas; Vivian Salama and Ola Galal in Cairo; and Pham-Duy Nguyen in Seattle.

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Harper Pressured to Scrap Tax Cuts as Canadian Lawmakers Return

Canadian Prime Minister Stephen Harper will be under pressure from opposition lawmakers to reverse corporate tax cuts and extend government stimulus as a condition for keeping his government in power when Parliament reconvenes today.

Lawmakers from the opposition Liberals and New Democratic Party have called on the government to scrap reductions in the corporate income tax rate that they say are unaffordable. They want more spending on programs to sustain the recovery.

Finance Minister Jim Flaherty has said he’ll present his next fiscal plan in March. The Conservative government holds a minority of seats in the House of Commons and needs support of one of three opposition parties to pass the budget. If the fiscal plan is defeated, elections would follow.

“If the Conservatives persist in their policy of across- the-board blind corporate tax reductions, it is highly unlikely the NDP caucus will vote for it,” Thomas Mulcair, deputy leader of the party, said in a telephone interview.

Canadian policy makers are dealing with the impact of a strong currency and a slowdown in spending by households and governments that are crimping the economic recovery and slowing job growth. The outlook has led Bank of Canada Governor Mark Carney to stop raising interest rates and Finance Minister Jim Flaherty to scale plans to exit stimulus.

Canada’s dollar has gained 6.6 percent against its U.S. counterpart over the past 12 months.

“Not only did their stimulus fail to create the jobs of tomorrow, it also failed to protect the jobs of today,” Scott Brison, the opposition Liberal Party’s spokesman for finance issues, said by telephone. “Investing in training and education now would do more to create jobs than corporate tax cuts.”

Growth Forecast

Canada’s economy will grow 2.4 percent this year, according to the median estimate of 19 economists surveyed by Bloomberg, down from 2.9 percent in 2010. Growth in the U.S. is projected to accelerate this year to 3.1 percent, from 2.9 percent in 2010.

Flaherty said last week his budget will aim for balance between reducing Canada’s budget deficit and sustaining economic growth. “You don’t want to kill a recovery that’s nascent,” Flaherty, 61, said in a Jan. 27 interview with Bloomberg Television in Davos, Switzerland, where he was attending the World Economic Forum’s annual meeting.

Canada had a record C$55.6 billion ($55.6 billion) budget gap in the fiscal year that ended last March. The shortfall will narrow to C$45.4 billion in the current fiscal year, be cut in half in two years and disappear altogether in 2015, according to Flaherty’s prior fiscal plan, as temporary stimulus projects expire, the government implements cost controls and economic growth and higher payroll taxes boost revenue.

Corporate Taxes

The most contentious issue for opposition parties as Flaherty prepares this year’s budget is the reductions in corporate tax rates that are poised to cost the government more than C$6 billion in revenue next year, according to estimates by the Canadian Manufacturers and Exporters, a lobby group that supports the measures.

Canada cut the federal corporate income tax rate by 1.5 percentage points to 16.5 percent on Jan. 1, and it will fall to 15 percent in 2012 under legislation passed in 2007.

Harper’s government last week held a country-wide campaign aimed at pressing opposition lawmakers to support the 2011 budget. Nine ministers appeared at manufacturing sites across the country, saying the tax reductions will spur job creation and support economic growth. Opposition lawmakers say the government should cancel the cuts and use the funds to pay for health and education programs.

Worker Training

While ruling out a reversal in the tax cut plan, Flaherty has said he would consider funding for the forestry industry and worker training in the next budget as grounds for compromise with other parties.

The Conservatives hold 143 of the 308 seats in the House of Commons while the Liberals have 77, the Bloc Quebecois 47, and the New Democrats 36. There are also 2 independents and 3 vacant seats. Harper has turned to all three at various points since taking power in 2006.

The Bloc Quebecois, the second-largest opposition party in Canada’s parliament, said Harper’s government will need to give the French-speaking province of Quebec C$5 billion in the next budget in order to win its support for the fiscal plan.

Statistics Canada revised its job-creation estimates on Jan. 28, erasing an earlier finding the economy recouped losses from the last recession. The revisions brought fresh calls from opposition lawmakers for Harper to rework his stimulus plan.

According to the revised figures, employment fell by 2.5 percent, or 427,900, from its peak in October 2008 to July 2009. Between July 2009 and December 2010, the economy created 398,000 jobs. The changes mean December employment levels were 0.6 percent below the previous estimate, Statistics Canada said.

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