Finance and Economic

Wal-Mart Stores Inc. unveiled a $15 billion share buyback program Friday as it sought to reassure shareholders at its annual meeting that the world’s largest retailer is still growing.

The buyback will replace a previous $15 billion repurchase plan begun a year ago. The company bought back 244 million shares worth $12.9 billion under that program.

“This reflects the strong financial performance of your corporation,” said Charles Holley, Wal-Mart’s executive vice prsident and chief financial officer in an address to shareholders and associates packed in a University of Arkansa arena about 30 miles from its Bentonville headquarters.

The news comes after the company increased in March its dividend in its current 2012 fiscal year from $1.21 to $1.46 per share, an increase of 21 percent that returned $1.3 billion to shareholders.

The shareholders’ meeting maintained the tradition of being part pep rally, part business, with actor Will Smith serving as master of ceremonies. The 2011 “American Idol” winner, Scotty McCreary, also appeared.

About 16,000 people packed the arena, including Wal-Mart employees from 15 countries.

“You are legendary for your rowdiness,” Smith bellowed in warming up the crowd.

In Wal-Mart’s business, international sales are sizzling, but the company is still trying to reverse a two-year sales slump at home, with no clear sign of when that will happen.

“We made a lot of progress over the last 11 months,” said Bill Simon, president and CEO of Wal-Mart’s U.S. business in an address to shareholders. “We have the right plan.”

He noted that two-thirds of the business has seen gains in a key measure of sales, most of which is coming from groceries.

But he cautioned, “You certainly can’t predict the weather and the economy.”

Wal-Mart’s flagship business is hurting because it’s still smarting from the mistakes it made on pricing and selection more than two years ago. The company has been racing to restock thousands of items it culled as part of its overzealous bid to clean up its stores two years ago. It’s also gone back to its “Everyday Low Price” roots.

Wal-Mart is also battling increasing threats from competitors, particularly online rivals like Amazon.com and dollar chains, which have expanded their assortments and become more competitive on price.

Wal-Mart’s low-income shoppers have also seen their financial problems shift. A year ago, they were worried about losing their jobs. Now, rising gas prices and other household costs are squeezing their budgets and making it tough to stretch their remaining dollars to the next payday.

Thursday’s reports on May sales from major retailers, including rival Target Corp., provided more evidence that inflationary pressures are causing shoppers to pull back on discretionary items like clothing and home goods.

On Thursday, Simon told a media gathering that low-income shoppers are going through a “prolonged malaise.” Such financial woes could stall Wal-Mart’s campaign to turn its U.S. business around.

Wal-Mart’s fears have deep repercussions, because it’s a bellwether of consumer spending and accounts for nearly 10 percent of all nonautomotive retail dollars spent in the U.S.

Shares of Wal-Mart have tracked closer to its profits than its domestic sales this past year, and its robust international business, fueled by Mexico, China and Chile, has propped up revenue and profits. Wal-Mart shares are up almost 4 percent over the past 12 months. But they peaked in late January and have lost almost 7 percent since the company said it would not predict when U.S. revenue at stores open at least a year will begin growing, after setting a target date for last holiday season and missing it. That revenue measure has had eight straight quarters of declines.

Walmart stores account for 62 percent of the company’s revenue, which reached $418 billion in its latest fiscal year ended Jan. 31; international makes up 26 percent.

Walmart’s CEO of the company’s international division attributes its success to focusing on what shoppers want.

“It’s about finding the right item,” said Doug McMillon.

McMillon noted that the company’s fastest-growing division is working to expand its international Internet shopping business and is also growing through acquisitions.

The company is preparing to close on a $2.4 billion purchase of a majority interest in South African retailer Massmart, which operates in 14 countries.

The company’s overall revenue is also getting a lift from its improving Sam’s Club division, which has enjoyed five straight quarters of improving gains in stores open at least a year. Sam’s Club has benefited from better quality merchandise, from higher grade sirloin steak to trendier fashion labels.

To address the increasing threat of dollar stores, Wal-Mart is also opening its first of up to 20 Walmart Express stores planned for this year. These stores are about the size of a typical drugstore.

Many analysts are eager for Wal-Mart to ramp up the expansion of these small stores. Rivals like Dollar General and others have been blanketing areas around the country with their own stores.

Simon told shareholders he’s confident about Wal-Mart’s comeback.

“You better get ready, because we’re coming,” he added.

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SAN FRANCISCO

Purchases of new houses probably held close to a record low in April, showing the real-estate market remains a weak link in the U.S. expansion, economists said before a report today.

New homes sold at a 300,000 annual pace last month, the same as in March, according to the median forecast of 75 economists surveyed by Bloomberg News. Purchases sank to a 270,000 pace in February, the weakest in 48 years of data.

The prospect that foreclosures will keep driving down property values means that buyers may continue to shun new houses in favor of previously owned dwellings, hurting builders like D.R. Horton Inc. Unemployment at 9 percent, stagnant wages and credit restrictions add to the headwinds, signaling a housing recovery will take years to unfold.

“Until that overhang of existing homes works its way down, new-home sales will remain depressed and construction as well,” said Steve Blitz, a senior economist at ITG Investment Research Inc. in New York.

The Commerce Department’s report is due at 10 a.m. in Washington. Estimates in the Bloomberg survey ranged from 280,000 to 320,000.

Stocks of homebuilders have underperformed the broader market. The Standard & Poor’s Supercomposite Homebuilders Index has fallen 1.4 percent so far this year, compared with a 4.7 percent gain for the S&P 500 Index. (SPX)

Douglas Yearley Jr., chief executive officer at Toll Brothers Inc. (TOL), the largest U.S. luxury-home builder, last week said the spring home-selling season has been “disappointing” and that “people are still scared.”

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Banks must endure financial fitness tests these days, with the results not always pretty or predictable.

This concept isn’t such a bad idea for average citizens either.

The darkest stories of recession involve lost jobs, lost homes and lost hope. It is not uncommon for others, those who avoid dire straits and experience some sense of relief, to overlook their financial responsibilities.

According to financial advisors, Americans too often are unaware of what they spend; most of their savings earn no interest; they pay too many bank fees; they carry too much credit card debt; they don’t invest for retirement; and they have no emergency fund set aside.

Remember: Just because you’re receiving a regular paycheck and no one’s knocking on the door to repossess your car, doesn’t mean that you and your family are financially fit.

“If you exercise a lot but eat horribly and are always stressed, you’re not going to be physically fit because a lot of things must work together,” said Kim McGrigg, manager of community relations for the Money Management International credit counseling agency in Denver. “The same goes for your finances, since you must examine savings balances, liabilities and future goals to see that everything is properly coordinated.”

Give yourself a test: Track your spending and income over a three-month period. Write down all money spent, including cash, using a small notepad or electronic device. Calculate your cash flow, listing all income sources in a basic budget. Don’t include anything as incoming until you are sure of it.

Record all expenses, and not simply obvious mortgage or car payments but also those you track through receipts and credit-account payments. Important additional expenses are food, transportation, medical costs and clothing.

Totaling your incoming and outgoing expenses produces a cash-flow statement. If you had an operating surplus of several thousand dollars, your net worth should have increased by at least as much. A negative income statement isn’t good. There should also be room for conscientious saving and investing.

“People treat ATMs like candy machines and keep going back again as the handful of money disappears,” observed Barbara Steinmetz, certified financial planner with Steinmetz Financial Planning in San Mateo, Calif. “I had one client with $15,000 worth of ATM withdrawals in one year and had no clue whatsoever what she had spent all that money on.”

You may think you are richer than you are.

“It’s not really helpful to make $100,000 a year when you find out that you spend $200,000, for what you make is the input and what you spend is the output,” warned Harold Evensky, CFP with Evensky & Katz in Coral Gables, Fla. “Start with liabilities, striving to minimize or eliminate consumer debt such as credit cards and car loans because they are very expensive, non-deductible forms of debt.”

There are “new kinds” of bills that consumers must cope with, such as for cellphones and cable television, McGrigg noted. Shop for the best deals and carefully go over the breakdown on your statements to see whether you need everything for which you’re being billed. If you receive a cable package in which you don’t watch most channels, weed out what you don’t want and trim that bill, she advised.

“I have clients who simply don’t open their mail every day, just thumb through to see if any envelopes look interesting or important,” said Steinmetz. “They may wait a week or more to open many of them, but you should open them right away because it is all about taking responsibility for your financial life.”

The most common financial mistake is spending beyond one’s means, and in second place is not saving to build up a nest egg, according to Evensky. Don’t focus on the total number of dollars needed at retirement when figuring how much you should save, but simply get started right away even if it is just $50 a month. If you save money now and save continuously, you will never have a chance to miss that money, he believes.

“An emergency fund is important, but remember that there is no magic answer,” said Evensky. “If you have a very secure job, maybe two to three months in emergency funds that could cover staying in your house and paying necessary bills is OK.”

Having adequate life, liability, house, auto and health insurance is also crucial, he said. Even though no one ever wants to think about it, such protection can make a big difference to your family.

Pay yourself before paying your bills, counseled McGrigg. The easiest way to build up an emergency fund, for example, is to deduct money every time you get paid and put it away before you have a chance to spend it. Most banks can do this automatically for you so that you never even get your hands on the money, she said.

“Another mistake is opening lots of new credit card accounts, especially store accounts just to save 10 to 15 percent on that first purchase,” McGrigg concluded. “Taking out credit on a whim or while standing in line is not a good idea, especially if you have larger financial goals.”

Because goals are what being financially fit is all about.

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Confidence among U.S. consumers increased more than forecast in April, signaling the improving labor market is helping Americans weather rising fuel costs.

The Conference Board’s confidence index rose to 65.4 from a revised 63.8 reading in March, figures from the New York-based private research group showed today. The median forecast of economists surveyed by Bloomberg News called projected an advance to 64.5.

Six straight months of job growth along with joblessness at a two-year low in March are helping sustain consumer purchases, which account for about 70 percent of the economy. At the same time, bigger gains in sentiment may be difficult as households spend more for food and gasoline, which is at the highest level in almost three years.

“Confidence is picking up on the back of an improving labor market and rising stock prices, which are offsetting higher gasoline costs,” said Sal Guatieri, a senior economist at BMO Capital Markets Inc. in Toronto. “Consumers will have both the confidence and the income to keep spending.”

Stocks held earlier gains after the report on optimism over improving corporate earnings. The Standard & Poor’s 500 Index rose 0.4 percent to 1,340.8 at 10:17 a.m. in New York. Treasury securities rose, sending the yield on the benchmark 10-year note down to 3.34 percent from 3.37 percent late yesterday.

Home Prices

Another report today showed residential real estate prices dropped in February by the most in more than a year, a sign the housing market is struggling to stabilize.

The S&P/Case-Shiller index of property values in 20 cities fell 3.3 percent from February 2010, the biggest year-over-year decrease since November 2009.

Estimates for consumer confidence ranged from 57 to 68 in the Bloomberg survey of 69 economists. The measure averaged 97 during the expansion that ended in December 2007.

The group’s measure of present conditions increased to 39.6, the highest since November 2008, from 37.5 a month earlier. The gauge of expectations for the next six months rose to 82.6 from 81.3.

The share of consumers who said jobs are currently plentiful rose to 5.2 percent from 4.6 percent. Those who said jobs are hard to get decreased to 41.8 percent, the fewest since January 2009, from 44.4 percent.

Jobs Outlook

The outlook was less rosy. The percent of respondents expecting more jobs to become available in the next six months decreased to 17 cash advance today.5 from 19.6 the previous month. The share expecting incomes to rise over the next six months improved to 16.7 percent from 15.2 percent.

The report contained one positive bit of news for the housing market, which has lagged behind other parts of the economy since the recession ended in June 2009. The share of Americans planning to buy a house over the next six months increased to 5.5 percent, matching the record high reached in January 1978. Data go back to 1964.

Intentions to purchase automobiles and appliances also improved.

Fuel costs may be preventing bigger gains in confidence. The average price of regular fuel climbed to $3.87 a gallon yesterday, the highest level since August 2008, according to AAA, the nation’s biggest motoring organization.

Confidence ‘Fragile’

“The economic climate is still less than ideal, from a slow and uneven recovery to significantly rising commodity costs and fragile consumer confidence,” Jim Skinner, chief executive officer of McDonald’s Corp. (MCD), said on a conference call with analysts on April 21.

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Standard & Poor’s Ratings Service has lowered its long-term outlook for the United States’ sovereign debt to “Negative” from “Stable” due to risks from the country’s growing deficit.

But the agency also reaffirmed the investment-grade credit ratings on country’s long-term and short-term debt.

S&P says the U.S. has a high-income, diversified and flexible economy that has helped it to encourage growth while containing inflation. But the country’s ballooning deficit could offset those positives over the next two years.

The agency noted that the deficit grew to 11 percent of gross domestic income in 2009. That is much higher than the average of 2 percent to 5 percent in the previous six years.

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The U.S. trade deficit probably narrowed in February from a seven-month high as overseas demand for American goods outpaced the rising cost of imported oil, economists said before a report today.

The gap shrank to $44 billion from the $46.3 billion shortfall in January, according to the median of 71 estimates in a Bloomberg News survey ahead of Commerce Department data. Another report may show the price of goods from abroad increased in March by the most in more than a year.

Countries from Russia to Indonesia are ramping up demand for U.S. goods as their economies grow, benefiting manufacturers like Caterpillar Inc. (CAT) The global expansion is also pushing up costs of commodities like fuel, which means it will be difficult for the trade gap to narrow much more in coming months.

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) _ Inflation in the 17 euro countries spiked to the highest level in nearly two and a half years in March, official figures showed Thursday _ cementing market expectations that the European Central Bank will raise interest rates next week.

Eurostat, the EU’s statistics office, said consumer prices in the eurozone were 2.6 percent higher in March than the year before. That’s the highest rate since October 2008 and is way above the central bank’s target of keeping inflation at “close to, but below 2 percent.”

The increase was not anticipated _ the consensus in the markets was for inflation to remain at 2.4 percent.

Since Thursday provided Eurostat’s “flash” estimate for inflation, it included no details as to why inflation rose. Those will emerge in April.

Inflation dropped to zero percent in May 2009, but prices have since pushed higher largely on the back of rising energy and food costs as the global economy starts to grow again following the deepest recession since World War II.

Over the past month, comments from the European Central Bank have been increasingly hawkish on inflation. The bank’s rate-setters, including President Jean-Claude Trichet, have been giving heavy hints that the main interest rate will rise from the current record low of 1 percent at the next meeting on April 7.

The bank cut interest rates sharply from 4.25 percent in October 2008 as it tried to stave off the impact from the financial crisis and has kept borrowing costs unchanged at 1 percent since May 2009.

In many ways, it can argue that its strategy worked and it’s now time to start “normalizing” monetary policy, despite the ongoing debt difficulties and austerity measures in several countries, notably Greece, Ireland, Portugal and Spain. The eurozone economy as a whole has been growing strongly for over a year now, driven by a healthy rebound in Germany, Europe’s biggest economy.

“The ECB will want to move from emergency setup to more normal levels,” said Silvio Peruzzo, an economist at the Royal Bank of Scotland.

Peruzzo predicted the bank will begin the new cycle of interest rate rises next week, but he doesn’t believe that Thursday’s figures will cause undue alarm because much of the increase recorded in March was due to changes in the way food and clothing prices are measured in Italy and Spain.

Expectations that borrowing costs in the eurozone are on their way up have helped support the euro currency over the past few weeks. By early afternoon London time, the euro was trading 0.7 percent higher on the day at $1.4214.

Interest rate increases, or even expected ones, benefit the euro if other central banks don’t do the same.

The U.S. Federal Reserve, for example, is not expected to raise its super-low interest rates until the latter part of this year, while the Bank of England’s rate-setting committee is fretting about the impact of higher borrowing costs on the fragile British economy.

Michael Hewson, market analyst at CMC Markets, said the key now will be how hawkish Trichet is in the aftermath of next week’s “increasingly likely” rate hike and in particular whether he will reiterate his call for “strong vigilance.” Throughout his presidency, that’s been code for a likely rate rise in the following month.

“As far as the single currency is concerned, it continues to benefit from yield differentials as markets factor in multiple rate hikes throughout 2011, while other central banks such as the Bank of England and the Federal Reserve fret about the effect any planned rise in rates could have on consumer spending and growth,” Hewson said.

“It would appear that the ECB has no such worries about that, and seems determined to try and put the inflation genie back in the bottle,” he added.

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Mounting concerns over the impact of the massive earthquake in Japan pushed stocks lower Monday. The earthquake and tsunami along Japan’s northeast coast killed thousands and has raised fears of a slowdown in the world’s third-largest economy.

All 10 company groups that make up the Standard and Poor’s 500 index fell. Utilities companies lost 1.9 percent, the most of any group, on worries that the disaster may lead to increased skepticism over the safety of nuclear power plants.

The S&P index, the basis for most U.S. mutual funds, fell 15 points, or 1.2 percent, to 1,288.

The Dow Jones industrial average fell 122, or 1 percent, to 11,922. The Nasdaq composite fell 29, or 1.1 percent, to 2,686.

Japan’s central bank pumped a record $184 billion into money market accounts to encourage bank lending. Financial analysts said the move could put pressure on Japan to raise interest rates, particularly since the country is saddled with a massive debt that, at 200 percent of gross domestic product, is the biggest among developed nations.

“The fiscal position is deteriorating in Japan,” said Channing Smith, managing director of equity strategies at Capital Advisors Inc. “If we get higher interest rates, that is a major threat to … the global recovery.”

Japan’s benchmark Nikkei 225 index fell 633.94 points, or 6.2 percent, to close at 9,620.49 _ its lowest level in four months. The decline wiped out this year’s gains.

Upscale retailers with large businesses in Japan fell. Tiffany & Co. lost 6 percent, and Coach Inc. lost 6.2 percent. Caterpillar Inc. gained 1 percent on assumptions that it will benefit from large-scale rebuilding efforts.

In the U.S., Warren Buffett’s Berkshire Hathaway Inc. said it would purchase chemical company Lubrizol for $9 billion in cash. Berkshire will pay $135 per share, a 28 percent premium to Lubrizol’s closing stock price Friday of $105.44. Berkshire’s Class B shares fell 1 percent on the news, while Lubrizol rose 27 percent.

Cephalon Inc. fell less than 1 percent after a federal court overturned two of the patents on its painkilling drug Fentora. That could allow competitors to start selling cheaper generic versions of the drug soon.

Oil prices fell 58 cents to $100.56 a barrel. Bond prices rose, sending yields lower. The yield on the 10-year Treasury note fell to 3.35 percent from 3.41 percent late Friday.

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Chinese authorities have arrested 3,001 people in their latest crackdown on rampant product piracy and seized fake or counterfeit medicines, liquor, mobile phones and other goods, officials said Sunday.

The campaign launched in October comes as Beijing faces pressure from the United States and other trading partners to stamp out product copying. China is a leading soure of fake goods despite repeated crackdowns, but Chinese officials have promised the latest enforcement will produce lasting results.

Communist leaders have given the new crackdown special prominence, publicly linking it to efforts to transform China from a low-cost factory to a creator of profitable technology by nurturing companies in software and other fields. China’s fledgling software, music and other creative companies have been devastated by unlicensed copying.

“Intellectual property protection is essential for building an innovation-oriented country and achieving a shift from `China manufactured’ to `China innovated,’” Li Chenggang, deputy director of the Commerce Ministry’s law department, said at a news conference. He was joined by officials of China’s commerce, intellectual property and other agencies.

Trade groups say illegal Chinese copying of music, designer clothing and other goods costs legitimate producers billions of dollars a year in lost potential sales. The American Chamber of Commerce in China says 70 percent of its member companies consider Beijing’s enforcement of patents, trademarks and copyrights ineffective.

Businesspeople have expressed optimism about the latest effort because a rising Communist Party star, Vice Premier Wang Qishan, has been put in charge and an enforcement office set up in the Commerce Ministry payday loans.

A report distributed at Sunday’s news conference said that goods seized in the latest crackdown include 26,000 mobile phones, some with phony Nokia and Apple labels, copies of Louis Vuitton bags and Rolex watches, automotive components, DVDs and clothing.

It said authorities shut down 292 websites selling counterfeit and fake goods.

Also Sunday, the official Xinhua News Agency said 23 people accused of producing fake medicine were detained in the central city of Jingzhou in Hubei province. It said they made more than 100 million capsules filled with sawdust and wheat flour and sold under the brand names of 201 different types of medication.

Xinhua said the medicines were sold by mail and over the Internet but gave no details of whether anyone was injured or which brand names were counterfeited.

Piracy is especially sensitive at a time when Washington and other Western governments are trying to create jobs by boosting exports. In 2009, the World Trade Organization upheld a U.S. complaint that Beijing was violating trade commitments by failing to root out the problem.

Rampant copying also has hampered Beijing’s efforts to attract technology industries because businesspeople say companies are reluctant to do high-level research in China or bring in advanced designs for fear of theft.

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