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Some of the world’s largest drugmakers will face an uphill battle next week in their bid to revive a class of experimental arthritis drugs that have been sidelined by safety concerns for nearly two years.

The Food and Drug Administration says there is a clear association between the nerve-blocking medications and incidents of joint failure that led the agency to halt studies of the drugs in 2010.

However, the agency also notes that those side effects were less common when the drugs were used at lower doses, potentially leaving the door open for future use. The agency released its safety analysis ahead of a public meeting.

On Monday Pfizer, Johnson & Johnson and Regeneron will make their case to continue studies of the drugs, with precautions to protect patients.

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TRAVELS WITH CHARLES: Our town’s low-profile, high-finance specialist, Charles Lowenhaupt, flew home from Sydney the other night on a flight loaded with such high-profile Aussies as Nicole Kidman and hubby Keith Urban, Tobey Maguire and Orlando Bloom.

Lowenhaupt, who is recognized worldwide for managing wealth for ultra-high net worth families, was there for meetings at his office, Lowenhaupt Global Advisors Australia.

When he flew home via Los Angeles on Qantas airlines, Lowenhaupt was in first class and found himself seated with the stars. He says all minded their own business while Kidman and Urban had dinner together with one of their children, Sunday Rose, 3. Their younger daughter, Faith Margaret, 14 months, was upstairs in business class with a nanny.

According to the entertainment mags, the family of four spent a stint in Australia visiting their families while Kidman was a judge at Tropfest, an annual festival of short films. Other judges were Cate Blanchett, Geoffrey Rush and Toni Collette.

Urban also had business there, filming an Australian version of “The Voice” with Joel Madden and Delta Goodrem.

On a side note, Bloom’s gorgeous model wife, Miranda Kerr, is an ambassador for Qantas.

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JEFFERSON CITY – A state-sponsored workers’ compensation company has given out huge severance checks to its former executives and hefty bonuses to other employees, according to a state audit released today.

The company, Columbia-based Missouri Employers Mutual Insurance Co., also has bankrolled lavish vacation trips to Hawaii and Mexico as well as paid for sporting events tickets for its board members, executives, employees and guests, the auditor found.

The audit paints a picture of a firm that operates like a private entity, while enjoying federal tax-exempt status and other advantages that its private competitors lack.

Because it is considered an “independent public corporation,” the company has been able to avoid about $50 million in federal taxes since 1993, the audit revealed. That tax exemption has enabled the company to accumulate a surplus of $163 million. The firm has never paid any dividends to its members.

“MEM essentially operates as a private entity, compensates officers and employees at rates that are in excess of public sector entities, incurs expenses that are not considered acceptable in the public sector, and does so without complying with state open records laws,” the audit states.

Missouri Auditor Tom Schweich released the findings today. He undertook the audit after the Post-Dispatch raised questions last year about MEM’s public records policy and the legal status of its board members, along with its executive compensation and other expenditures. The auditor concluded that MEM is a “quasi-public governmental body for purposes of the Sunshine Law” – and thus subject to public records requests.

In a formal response filed with the audit, the company said: “The auditor’s report raises some immaterial, questionable expenditures that MEM already had identified and addressed prior the audit. MEM’s new management has strengthened governmental policies to be sure that expense policies are clearly understood and followed and that the company follows best practices. MEM’s board and management are responsible stewards who operate with integrity.”

The Legislature established Missouri Employers Mutual in 1993 to encourage competition and lower workers’ compensation premiums for employers, particularly small businesses. The state provided a start-up loan of $5 million, which was repaid in 1999 with interest.

Since then, Missouri Employers Mutual has become the leading workers’ compensation insurer in the state, controlling about 16 percent of the market.

The firm’s inner workings drew questions last spring after two former board members were indicted separately for alleged theft and fraud involving other organizations. Questions mounted in June when the company fired its chief executive officer, former Missouri Gov. Roger Wilson, without explanation.

In August, the board agreed to a one-time audit by Schweich. Amid the swirling controversy, both indicted board members – Doug Morgan and Karen Pletz – died late last year. The company is now run by chief executive officer Jim Owen of Chesterfield, a law school classmate and close friend of Gov. Jay Nixon’s.

The 20-page audit sheds light on MEM’s executive compensation, perks, severance benefits, freebies, and political contributions, as well as legal questions surrounding the company’s taxes and refusal to observe public records laws.

According to the audit, MEM also paid about $1.58 million in severance benefits or settlement payments to four former top executives and employees who either resigned or whose employment was terminated in 2009 and 2010.

Schweich’s audit does not name names, so it is impossible to tell who received the severance money. Former state Sen. Dennis Smith served as the company’s first chief executive from 1994 through June 2009, when he became “CEO emeritus.”

The audit called the severance benefits “excessive” and said that “recent discussions with a MEM official indicate that any future severance benefits paid to executives will be substantially reduced, or eliminated.”

Executive compensation at MEM also “appears significantly higher than would be considered appropriate for a public sector entity,” the audit states.

During 2010, MEM’s top 10 compensated employees made salaries totaling $1.8 million. The top salary was $312,820.

In addition to their salaries, MEM paid its top 10 executives a total of $659,405 in incentives, for an average bonus of $65,940. In other words, when bonuses are counted on top of salaries, the top 10 employees were paid an average almost $250,000 apiece.

Lower-level MEM employees also received substantial bonuses, based on the company’s “performance benchmarks” such as premium growth.

“Compensation and employee incentive bonuses for 2010 totaled over $17 million for approximately 200 employees, an average total payout of approximately $85,000 per employee,” the audit said.

MEM executives also received valuable perks such as the use of company automobiles, paid health insurance coverage for a spouse, five weeks paid time off, paid dues in professional societies and paid memberships in golf and athletic clubs.

Responding to the audit, MEM wrote that its “compensation and expenses are reasonable and necessary for a mutual insurance company. … MEM’s employee compensation averages in the 50th percentile” of other private insurers.

The audit also highlights numerous miscellaneous expenditures that MEM paid:

 A total of $300,000 for an all-inclusive “Presidents Trip” for 64 invitees including MEM board members, top executives, top performing employees, and other guests to Lanai, Hawaii, from Feb. 20 through Feb. 25, 2010. In 2009, MEM’s board chairman, vice chairman and their guests attended the company’s President’s Trip to Cabo San Lucas, Mexico. About $17,000 for St. Louis Cardinals suite tickets. The suite was used to entertain insurance agents as an incentive to doing business with MEM. The tickets were purchased from an unnamed associate of a former board member. About $60,000 for a suite, tickets, and parking passes for University of Missouri football games; an additional $12,000 for basketball tickets and parking passes; and about $5,000 to cater its tailgate party at the university’s homecoming in 2010. $80,000 for company functions in 2010, including $10,000 for a board of directors retreat in Ridgeville, Mo.; $16,000 for MEM’s annual golf tournament; about $8,800 for 15-year anniversary jackets; and about $7,000 for a 15-year anniversary luncheon.

In addition, the audit challenges MEM’s $7.2 million purchase of a for-profit subsidiary. Under state law, the auditor concluded, it is unclear whether the company may legally insure workers who work outside the state.

The audit also noted that MEM conducted an internal inquiry, which revealed that company funds were used for $8,000 in political contributions to the Missouri Democratic Party; $7,400 in cash and in-kind donations to the Insurance Coalition Political Action Committee; $4,000 in donations to gubernatorial inaugural festivities in 2005 and 2009; and $8,000 for a former top executive’s personal legal fees.

The audit is likely to raise additional questions in the Legislature about whether Missouri Employers Mutual should continue to enjoy tax-free status and other advantages over private insurers.

Originally, the company was supposed to become a private firm after the governor appointed the original five board members. But instead, the state has retained control. The governor appoints three of the firms’ five board members, based on nominations from the board and policyholders.

The structure is authorized in company bylaws but not in state law. Schweich said he took no position on whether MEM can prolong its public corporation status beyond that allowed by law by amending its bylaws.

MEM contended that it faces special mandates that partially offset its tax advantages. For example, it must let any of the 4,000 workers compensation insurance agents in the state write a policy for MEM. The company also is required to design and monitor work safety programs for policyholders.

Schweich said the firm was unable to quantify the impact of those requirements.

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German business confidence probably rose to the highest in seven months in February as progress in taming Europe

Technology analyst John Kinnucan was arrested Friday on allegations of trading on information about many of the nation’s leading tech companies, resulting in illicit gains of nearly $110 million.

Kinnucan faces both criminal and civil charges. He was arrested at his Oregon home and is awaiting transfer to New York, according to the U.S. Attorney’s office for the Southern District of New York, which is conducting an ongoing probe into insider trading. The Southern District includes the nation’s major stock exchanges and is taking the lead on insider trading probes nationwide.

In January, seven hedge fund managers and investment professionals were indicted in New York, charged with sharing insider information when making trades. Last year, Raj Rajaratnam, founder of the Galleon Group hedge fund, was found guilty and sentenced to 11 years in prison and fined a record $92.8 million. The SEC alleges the Galleon case resulted in $91 million in illicit gains, less than in Kinnucan’s case.

The Securities and Exchange Commission alleges that Kinnucan befriended and rewarded insiders at various technology companies, including Apple (, Fortune 500), Dell (, Fortune 500), Fairchild Semiconductor (), Marvell Technology (), and Western Digital (, Fortune 500), in order to gain information, which the SEC claims he then sold to clients, primarily portfolio managers and analysts at prominent hedge funds and investment advisers.

"The information he obtained and passed along to clients was not the result of research. It was inside information Kinnucan bought from company insiders," said Janice Fedarcyk, FBI assistant director-in-charge. "That kind of information beats research every time. The only problem is it isn’t legal."

In late 2010, Kinnucan took the unusual step of announcing on TV and in an e-mail to clients that he had been contacted by FBI agents, whom he mocked as "fresh-faced eager beavers."

He said he was approached at the end of October 2010 and asked to wear a wire in an insider-trading investigation targeting certain hedge funds. He shut down his Portland, Ore.-based firm, Broadband Research Corp., soon after that disclosure. Kinnucan and members of his former firm could not be reached for comment Friday.

The U.S. Attorney’s office and the SEC would not comment on Kinnucan’s actions in 2010. 

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The number has been repeated so often by presidential prognosticators that it’s an article of faith: No president has been re-elected since World War II with an unemployment rate higher than 7.2 percent.

But the stock market turns out to be a pretty good predictor, too.

The Dow Jones industrial average has soared 62 percent since President Barack Obama took the oath of office during some of the darkest days of the Great Recession. The Dow was just below 8,000 then and stands near 13,000 today.

If a recent study of stock markets and presidential elections is any guide, Obama can start preparing his second inaugural address.

“There’s something to this,” says Phil Orlando, chief equity market strategist at Federated Investors, the $370 billion investment firm.

There are plenty of other signs often consulted for their political forecasting power, like whether a team from the National Football Conference or the American Football Conference wins the Super Bowl.

This one makes a little more sense: When the economy picks up and unemployment falls, confident investors put money into riskier investments and stocks rise. Voters are likely to reward the sitting president with another four years.

“The stock market reflects trends in the economy,” Orlando says. And as any political operative can attest, in a presidential campaign, it’s the economy _ you know the rest.

The study was backed by the Socionomics Institute, a think tank studying how a shared mood among a group sways its members’ actions. Their researchers dug up data on economic output, prices, unemployment and stock-market performance and matched them to presidential elections.

They went all the way back to the first re-election in 1792, when George Washington beat John Adams and won a second term as the president.

The researchers found a solid connection between the stock market’s direction in the three years leading up to Election Day and the election results. Gains of 20 percent or more for the Dow nearly assured victories for sitting presidents. Drops of 10 percent or worse got them tossed out.

Voters returned Calvin Coolidge to the White House in 1924, just as the Roaring ’20s started roaring. They booted Herbert Hoover in 1932 while the stock market suffered through a three-year plunge.

The authors of the Socionomics Institute study say everything can be traced back to the prevailing optimism or pessimism. Their organization studies “the social mood.” But how do you read the mood of a whole country?

The authors say that the stock market is the best available gauge of how the country is feeling, “because investors can act swiftly to express their optimism or pessimism.” Bad day? Time to sell. Things looking up? Time to buy.

“An increasingly positive social mood produces a rising stock market as well as votes for the incumbent, and an increasingly negative social mood produces a falling stock market as well as votes against the incumbent,” they write.

To the authors, it’s the mood that determines the election, not the stock market. The stock market is just a reliable gauge of the national temper, an incredibly accurate mood ring.

In recent successful re-election campaigns, the connection appears clear. Ronald Reagan won re-election in 1984 following the Dow’s 41 percent surge and despite an unemployment rate of 7.2 percent. Bill Clinton was awarded a second term after the Dow gained 63 percent in the three years leading up to Election Day.

But there are misfires. James Madison, for instance, won re-election in 1812 despite a 34 percent drop in the market over three years. George H.W. Bush lost to Bill Clinton even though the Dow rose 51 percent over his term in office.

Doug Wead, a presidential historian who served in the elder Bush’s administration, says the stock market theory sounds suspect.

“The stock market isn’t even a good indicator of the economy,” he says. “You can have the stock market going up while the rich get richer and the poor get poorer.”

There’s also the danger of oversimplifying _ relying on one number, in this case the Dow’s performance, while ignoring everything from scandals and wars to third-party candidates.

In William Howard Taft’s last three years in office, the Dow lost 12 percent, and Taft lost the 1912 election to Woodrow Wilson. But if Theodore Roosevelt hadn’t split from the Republicans and run under the Progressive Party banner against Taft that year, Taft might have returned to office.

It was a similar story with the first President Bush in 1992. The independent candidate Ross Perot siphoned off votes from both candidates, but historians generally believe more came from Bush’s Republican camp. Clinton won with just 43 percent of the popular vote.

The economy also slipped into a recession during Bush’s second year in office, and as he campaigned for re-election, the unemployment rate hovered well above the dreaded 7.2 percent mark.

Orlando, of Federated Investors, says a change in any single statistic won’t guarantee a president gets re-elected. Analysts should consult a range of figures. One that looks less reassuring for Obama is his approval rating, he says.

No president has been re-elected with a Gallup approval rating below 48 percent approaching Election Day. Obama’s numbers are improving, and the election is more than eight months away, but for now he’s teetering on the edge _ 48 percent.

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Builders broke ground on more homes than forecast in January, helped by warmer weather and adding to signs the U.S. residential real estate market is stabilizing.

Starts rose 1.5 percent to a 699,000 annual rate from December

Companies restocked at a faster pace in December, a positive sign that they expect consumers to step up spending.

Business stockpiles grew 0.4 percent in December, the Commerce Department said Tuesday. That followed a similar gain in November. Sales rose 0.7 percent, almost double the November gain.

Companies are building up their stockpiles again after cutting them over the summer amid recession fears. Higher inventories require more production, which boosts economic growth. It also suggests companies expect more sales.

Rising inventories were a key reason growth accelerated in the final three months of last year. Still, some economists expect the restocking to slow this year.

Wholesalers reported a 1 percent increase in inventories. Retailers reported a 0.2 percent gain and manufacturers 0.1 percent.

Inventories rose to a seasonally adjusted $1.56 trillion in December. That is 18 percent above the low point reached in 2009, just after the recession ended.

Rising sales are keeping stockpiles from getting too high. If companies feel their inventories are excessive, they could cut back on orders, slowing the economy payday loans direct lenders.

Overall sales rose in December. Wholesalers reported a 1.3 percent jump in sales, followed by a 0.7 increase for manufacturers and flat sales for retailers. That pushed down the ratio of inventories to sales to the lowest level since March. A lower ratio suggests inventories aren’t out of line with sales.

A separate report Tuesday showed that retail sales rose 0.4 percent in January. Consumers rebounded from a slow holiday shopping season and spent more on electronics, sporting goods, building materials and gas.

The economy expanded at a 2.8 percent annual rate in the fourth quarter. But economists expect companies won’t add as much to their stockpiles in the current quarter. That could push growth down to 2 percent or even below.

Stockpiles held by manufacturers account for nearly 40 percent of total business inventories, while wholesalers and retailers each hold about one third.

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U.K. house prices fell to their lowest level in six months in January as concern increased about the outlook for the economy and the euro-area debt crisis, Acadametrics Ltd. and LSL Property Services Plc said.

The average price of a home in England and Wales fell 0.2 percent from December to 218,992 pounds ($346,840), the groups said in an e-mailed report in London. From a year earlier values fell 1.4 percent, the quickest pace since September.

German exports fell four times more than economists forecast in December as the sovereign debt crisis damped economic growth across the euro region.

Exports, adjusted for work days and seasonal changes, slumped 4.3 percent from November, when they rose 2.6 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a decline of 1 percent, according to the median of 17 estimates in a Bloomberg News survey. Imports dropped 3.9 percent.

While the German economy probably shrank 0.25 percent in the final three months of last year, data this year suggest it may avoid recession, which is commonly defined as two consecutive quarterly contractions. Business sentiment jumped to a five-month high in January and factory orders gained 1.7 percent in December, driven by demand from outside the 17-nation euro area.