Yesterday evening, I had the courage to do something I have not done in a long time. I opened my 401(k) statement. It was a brave, bold move that made me ponder doubling up on my blood-pressure medicine before ripping the seal off the envelope.

In the end, my ticker was fluttering with beats of joy: up 33% so far this year.

My decision to overweight the small-cap sector in March paid off.

Even with those strong gains, the long-term trend line shows my heart is going to have to keep pumping for a couple extra years before my wife and I are going to retire in paradise. Most retirement accounts, mine included, are nowhere close to where they were 24 months ago.

As the recipient of a defined-contribution plan, my retirement savings are in my hands. That is not the case for the folks still holding defined-benefit plans. These pensions, once considered a low-risk path towards a reliable retirement income, are becoming far riskier than many workers ever imagined.

As corporate balance sheets crumble under the weight of massive debt loads and reduced revenues, many companies are having a tough time coming up with their required pension payments.

Read through the financial rags and you will see companies are unleashing new shares of stock just to cover their obligations, skipping payments and backing out of pension obligations all together. It is not good news for the folks that depend on the funds to put food on their table.

It is also equally not good for those of us that rely on the equities markets.

More trouble ahead

Look at it this way. Institutional investors are responsible for about 20% of total equity assets. Out of that $20 trillion or so, pension funds are responsible for 40% of the trades. That is a lot of cash.

Unfortunately, many corporate and government plans are underfunded, meaning they have some major catching up to do.

A recent study shows over 20% of funds have “significantly higher” required contributions coming up. In many of those cases, the obligations add up to an increase of 50% or more.

That’s a big problem when many of those companies and governments are fighting just to make their weekly payroll.

There is no doubt we will see a wave of payment defaults in the near future. That means less money – much less money – will flow into the nation’s equity markets.

It is still too early to tell just how badly this will impact the markets, but there is no question it will be significant.

Dow 14,000 once again? Not anytime soon if corporation pensions fall apart.

Source: Ready to Retire? Think Again

When are the detrimental effects of a nasty recession too much for a company that has done everything right too much to overcome? That is the question YRC Worldwide (NYSE:YRCW) investors are asking these days.

Just a couple of months ago, when the media was abuzz with sightings of economic “green shoots,” the trucking company’s investors were riding a rocket to the top, celebrating as a strong management team helped shares cross the $2 level, then $3, then $5, even $6.

But now that the nation’s trucking demand is far from revved up, investors are realizing YRC’s troubles are not over yet. During the last week, they were forced to endure the pain of seeing their shares drop all the way to a new 52-week low of a paltry $0.89.

The latest pain comes from my arch nemesis… union labor.

In YRC’s case, the Teamsters are maintaining their infamous negotiating might and bargaining themselves right out of a job.

With revenues plunging and fuel costs remaining stubbornly high, the last thing any trucking company needs to do is worry about expensive pension contributions. In YRC’s case, it is forced to pay for employees that never even worked for the company thanks to a regional pooled pension plan. (That’s unions for you).

I will give the Teamsters credit, however. Earlier this year the union agreed to a ten percent pay cut for its employees in exchange for a 15% stake in the company. Unfortunately, that stake is now worth a fifth of what it was in January.

Did they learn?

After getting hit with that punch, it is easy to see why the union showed up at the bargaining table this month with less willingness to compromise.

Earlier this week, the two sides of the contract were so far apart on the company’s plans to defer pension payments that one analyst boldly stated he believes a bankruptcy filing is all but certain.

The less-than-optimistic announcement sent shares plunging by 45% in just two days.

Then came yesterday’s announcement that the Teamsters had reached a tentative agreement (which remains undisclosed). The news sent shares soaring by triple-digit proportions.

Today, the jubilation is dwindling as shares are down by about 10% on the day’s lows.

With any luck, YRC shareholders will become re-familiarized with the bulls next week when union members learn the details of the agreement and prepare to take a vote.

If the deal is signed, YRC will get a major reprieve. It will likely be able to push back major pension obligations for over a year, saving the company half a billion dollars of desperately needed cash.

Investors should look at the company as a high-risk, speculative play, but the rewards could be phenomenal for folks willing to hold onto shares for six months to a year.

The threat of bankruptcy is still out there, but appears far smaller today than it did just 72 hours ago. As the situation improves, so will share price.

Source: YRC Worldwide: Jimmy Hoffa Would Be Proud

The Boeing statement announcing the agreement did not provide details of the union vote. A simple majority of the striking members of the International Association of Machinists and Aerospace Workers union was all that was needed to ratify the deal.

The workers had walked off the job Sept. 6, halting all commercial-aircraft production. After talks broke down – resulting in the two sides not meeting for weeks – contract negotiations resumed Oct. 23. The Chicago-based company and the IAM reached a tentative agreement on Oct. 27.

It was the longest strike in 13 years: The union walked out for 28 days in 2005 and 69 days in 1995.

Both sides claimed victory this time around. The union said that it “won the battle and made some significant gains,” while Boeing claimed it had “retained the flexibility necessary” to manage its business, Reuters reported.
Union workers were to return to work for the third shift yesterday.

The production walked off the job because of a dispute over contract provisions related to health-care benefits and job security. The machinists had initially wanted a 13% pay raise over three years and to rewrite certain language in the contract relating to outsourcing. The agreement reached Monday gives workers a 15% raise over the four-year life of the contract and gives the union more scope for challenging Boeing’s use of outside contractors. The deal also grants lump-sum payouts totaling at least $8,000 per employee over the four years. It also immediately lifts pension payments.

The pact, longer than ones Boeing previously signed with the IAM, “addresses the union’s job-security issues while enabling Boeing to retain the flexibility needed to run the business,” Scott Carson, president and chief executive of the Boeing Commercial Airplanes division, said in a statement.

Boeing now must turn to its labor negotiations with its engineers and technical workers. Boeing’s current contract with the Society of Professional Engineering Employees in Aerospace expires Dec. 1, MarketWatch.com reported.

Boeing originally predicted the strike would last about a month, Money Morning reported. Back in mid-September, Tom Buffenbarger, the union’s national leader, told The Seattle Times that if the strike costs Boeing $100 million a day in lost sales – as many Wall Street analysts estimated – it would take strikers one month and one week to drain Boeing’s $10 billion cash reserve.

The union represents about 25,000 Boeing production workers in and around Seattle, another 1,500 in Gresham, Ore., and 750 in Wichita, Kan, TV station KXMB in Bismark, N.D. reported.

Boeing’s shares jumped $1.72 each, or 3.39%, to close at $52.42 Friday. On Wednesday, when the union announced it would hold the ratification vote Saturday, the shares soared $6.55 each, or 15.5%, to close at $48.91. The company’s shares still are down 47% from their 12-month high of $98.71.

Source: Boeing Union Workers Ratify Four-Year Pact, Ending Eight-Week Strike