Finance and Economic

The Toronto stock market closed slightly higher Friday as some investors speculated Thursday’s global sell-off in equities triggered by Dubai’s attempt to delay debt repayments was overdone.

The S&P/TSX composite index advanced 27.61 points to 11,464.41 after tumbling 200 points Thursday in the wake of an announcement that Dubai World, a government investment company, had asked creditors to postpone its forthcoming payments on $60 billion (U.S.) in debt until May.

Thursday’s loss was responsible for a TSX loss of 114.92 points, or 1 per cent, for the week.

New York markets tumbled Friday, catching up with the losses racked up by other global markets after being closed Thursday for the U.S. Thanksgiving holiday.

The Dow Jones industrial average fell 154.48 points to 10,309.92 at the end of a shortened session. The blue-chip index was flat for the week, up a slight eight points.

The Nasdaq composite index lost 37.61 points to 2,138.44. The S&P 500 fell 23.36 points to 1,087.27.

The Dubai announcement Wednesday stoked fears of a potential default and contagion around the global financial system, particularly in emerging markets. But a day later, investors were taking a harder look at what the Dubai debt crisis means.

Finance Minister Jim Flaherty said there wasn’t any reason for “significant concern” about spillover effects from Dubai’s attempt to delay debt repayments and “any effects would be quite mild on the Canadian financial system.”

Blair Falconer, portfolio manager at HSBC Securities Canada, observed that investors felt better Friday knowing that Canadian financials have limited or no exposure to the Dubai debt.

The Canadian dollar fell 0.09 of a cent to 94.21 cents after a flight to the greenback had sent the loonie down 1.35 cents on Thursday.

The financial sector led gainers, up 0.8 per cent. The industrials sector ran ahead 0.91 per cent.

Commodities were also weaker, but well off early lows, with the January crude contract on the New York Mercantile Exchange falling $1.91 to $76.05 a barrel. The energy sector was off 0.12 per cent.

The gold sector was off 1.83 per cent as bullion prices also gave up ground with the December gold contract on the Nymex down $12.80 to $1,174.20 an ounce.

The Canadian Press

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China on Tuesday restated its long-standing policy to maintain the basic stability of the yuan at a reasonable and balanced level, after President Barack Obama said he would discuss the currency when he visits Beijing.

Asked about Obama’s comments, Foreign Ministry spokesman Qin Gang said China would keep improving the currency’s exchange rate mechanism with a view to gradually making the yuan more flexible.

Qin added that China hoped the United States, as the most important economy in the world, would pursue a stable fiscal policy to keep the dollar’s exchange rate steady and ensure its own growth and that of other nations.

“I want to make it clear that the United States is the number-one economic entity in the world,” he told a regular news conference.

“We hope that … the United States can overcome the difficulties brought by the international financial crisis and at the same time maintain the medium-term and long-term sustainability of its fiscal policy,” Qin said.

Obama told Reuters in an interview in Washington that he would raise the issue of the yuan, which many economists and U.S. manufacturers consider to be undervalued, when he comes to China next week.

But Obama also said the two countries share a common interest in helping to rebalance the global economy in order to deliver sustainable growth, a view echoed by Qin payday advance.

“If you ask me how relations between the two countries are right now, my first answer is: the economies of China and the United States are mutually related, integrated, dependent on each other and getting closer to each other day by day.”

But there are tensions between the two.

U.S. manufacturers complain that Beijing artificially holds the value of the yuan down to make its exports cheaper and American goods more expensive for Chinese consumers.

Economists say this has led to imbalances in the world economy by contributing to big trade deficits in the United States and trade surpluses in China.

Leaders of the Group of 20 developed and emerging economies have pledged to aim for policies to ease these imbalances.

But China has also been angered by recent controls slapped on some of its imports, and Qin issued a new warning against barriers to commerce.

“We urge the U.S. side to make positive efforts with China to resolve frictions and questions in trade, including acknowledging China’s status as a full market economy and halting some protectionist measures,” Qin said.

(Reporting by Emma Graham-Harrison and Yu Le; Editing by Alan Wheatley and Ken Wills)

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Australian exports of commodities will benefit from China’s commitment to maintain policies that support economic growth, Australian Treasurer Wayne Swan said.

China’s economy expanded 8.9 percent in the third quarter from a year earlier, the fastest pace in a year, as stimulus spending and record lending growth helped the nation lead the world out of recession. China’s cabinet said Oct. 21 that it will continue with monetary and fiscal stimulus measures even after the economy’s expansion exceeded officials’ expectations.

China’s commitment to stimulate growth “will provide further support to Chinese demand for commodity and capital- goods imports, with implications for exports here in Australia,” Swan said in an e-mailed note. “As a resource-rich nation on Asia’s doorstep, Australia is uniquely placed to capitalize on this Asian century.”

Australia’s proximity to Asia is helping it rebound faster than most other developed economies. Trade figures show the nation’s largest export customers this year are China, Japan, South Korea, India and the U.S. Six years ago, the U.S. was ranked second.

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Citigroup Inc is expected to be fined $600,000 by the Financial Industry Regulatory Authority over derivatives transactions that helped foreign clients avoid taxes on dividends, the Financial Times reported on its website on Sunday.

The fine against Citigroup Global Markets is expected to be announced on Monday, the paper said payday loan lenders.

A Citigroup representative was not immediately available for comment.

FINRA could not be immediately reached for comment.

(Reporting by Paritosh Bansal; Editing by Jan Paschal)

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Amazon.com Inc is introducing Kindle, its wireless electronic reader, for over 100 countries, including China and most of Europe, intensifying a battle for the burgeoning digital book market.

The move, announced on Tuesday, gives the world’s largest online retailer the widest global reach among its competitors, including chief rival Sony Corp.

The Kindle will sell for $279 in other countries.

Amazon also said it would cut prices for its U.S.-only Kindle by 13 percent to $259 from $299, bringing its cost closer to its rivals. The new price is $100 lower than it was a year ago.

Amazon — which regards the Kindle as a pivotal growth driver — said over 200,000 English-language books from a host of publishers as well as more than 85 international and U.S. newspapers and magazines would be available on the international device, which begins shipping October 19.

“Our vision for Kindle is every book ever printed, in print or out of print, in every language, all available within 60 seconds,” Chief Executive Jeff Bezos told Reuters.

“That’s a multi-decade vision,” said Bezos, visiting a Kindle office in the Silicon Valley city of Cupertino.

Analysts have pondered the likelihood of Amazon developing the Kindle into a tablet-like device for tasks like emailing, texting and surfing the Web, thus competing with devices reportedly being developed by Apple Inc.

But Bezos reiterated his intention to optimize the reading experience, saying the company rejects compromise, whether it be a touchscreen that affects legibility or computer displays that eat up too much power.

At the same time, Amazon is working on making Kindle digital books available on more devices. Besides the Kindle, those books can now be accessed on the iPhone or iPod Touch.

“We want you to read your Kindle books on laptops and smartphones, anything with an installed base,” Bezos said. He said he was not “in principle” against making the works available on rival devices like Sony’s, but was focused on platforms with “large installed bases.”

NO MEAN FEAT

E-readers are expected by some to be the hottest gadget this holiday season [ID:nN01298379] and Bezos said he had “a lot of confidence” that it would be a “great holiday quarter for Kindle.”

Forrester Research estimated 3 million e-reader devices would be sold in the United States in 2009, up from an earlier estimate of 2 million. That could double in 2010, bringing cumulative sales to 10 million by end-2010.

The research group predicts that Amazon will take 60 percent market share in 2009, followed by Sony at 35 percent. 

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U.S. bank regulators are expected to propose on Tuesday that banks prepay three years of regular assessments to replenish the dwindling deposit insurance fund, according to a source familiar with the matter.

Such an option would give the Federal Deposit Insurance Corp more liquidity to deal with the sharp increase in bank failures, while banks would not be required to report the expense of the fees until they would normally be due.

The source, speaking anonymously because the regulator discussions have been private, said the FDIC would likely propose for the banking industry to prepay $12 billion per year in assessments, for a total of $36 billion.

The board of the FDIC is meeting on Tuesday to propose alternatives to charging the banking industry hefty emergency fees to avoid having the balance of the insurance fund hit zero.

The industry has said such upfront fees could hurt banks just as their balance sheets are starting to recover from the recent financial crisis.

FDIC Chairman Sheila Bair has said the agency is considering alternatives to the upfront “emergency” fees, including prepayments of regular assessments, tapping the FDIC’s $500 billion line of credit with Treasury, and borrowing from healthier banks to rebuild the fund.

It is unclear what combination of options the FDIC board will propose to put out for public comment on Tuesday, as it seems regulators have narrowed the menu of options.

An FDIC spokesman declined to comment.

The source said the total amount of prepaid assessments could reach higher than $36 billion if the FDIC decides to ask the bank industry to also prepay special assessments.

The FDIC is exploring ways to replenish the insurance fund that safeguards bank deposits after a sharp increase of bank failures has been draining the fund.

So far this year 95 U.S. banks have failed, compared with 25 last year and only three in 2007.

Those failures have whittled the balance of the insurance fund down to $10.4 billion at the end of the second quarter from $45 billion a year earlier. The FDIC notes it has an additional $32 billion in reserves to handle failures over the next year.

(Reporting by Karey Wutkowski; editing by Carol Bishopric and Andre Grenon)

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GlobalGreen Insurance Agency and Great Wall Insurance Agency are partnering to offer brand-name insurance products and services.

The Mid-America Chapter of the National Academy of Television Arts & Sciences announced that Sharon Stevens of KSDK-TV, Tom O’Neal of KTVI-TV, Dan Bowser of WDAF-TV of Kansas City, Randy Dixon of KATV-TV of Little Rock, Ark., and Dr. Michael Murray of UMSL will be inducted into the Silver Circle of the NATAS.

Gourmet to Go on Monday will open a downtown location at Broadway and Olive Street in St. Louis Place across from Metropolitan Square. The new location will open at 7 a.m. on weekdays and will provide carry-out dinner entrees after 3 p.m. each afternoon.

Enterprise Holdings has received LEED certification from the U.S. Green Building Council for its St. Louis Contact Center, the company’s second LEED-certified project.

The Nutrition Clinic has moved to Holloway Center, 116 Holloway Road, Suite B, Ballwin, Mo. 63011. Its telephone number is 636-386-3333.

Hanley’s Grille and Tap has opened a location at 315 St. Clair Square in Fairview Heights. Hanley’s is a full-service restaurant and bar featuring a complete menu of moderately priced American food.

Byrne and Jones Construction recently turned two grass football and soccer fields into turf fields for the St. Charles School District. The district invested $1.1 million in the project.

Diestelkamp Construction has completed construction and renovation of four elementary schools in the Hazelwood School District. Each school received a new or renovated library, classrooms, student service areas and main offices. Diestelkamp provided 27,800 square feet of new construction and the project cost was about $8.8 million.

Inc. magazine named Brentwood-based Argent Capital Management one of America’s fastest growing companies. Argent focuses on large and small capitalization stocks.

The current issue of Remodeling Magazine ranks Mosby Building Arts of Kirkwood as the No. 8 full-service remodeling company in the United States.

The Engineering News Record named the Korte Company of St. Louis to its list of the nations top 100 green contractors.

Tess Niehaus of St. Anthony’s Medical Center in south St. Louis County has been elected president of the board of directors of the American Hospital Association’s Society for Healthcare Strategy and Market Development.

Modern Healthcare named St. John’s Mercy Health Care one of the top 100 places to work in health care, one of only 34 employers to make the list twice.

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St. Louis County residents now have greater shopping choices as Schnuck Markets Inc. and Wal-Mart Stores Inc. add bigger stores this week.

On Tuesday, Schnucks opened its new 74,000-square-foot flagship store at 12332 Manchester Road, near West County Center in Des Peres. It replaces the original Schnucks store in Des Peres, which has been closed.

The new Schnucks store, which includes the grocery chain’s first cooking school, offers a Kaldi’s coffee shop, a walk-in beer cooler, an aged beef cooler, a cheese room and wine display.

Meanwhile, a new Walmart Supercenter opens today at Manchester Highlands, located at the northeast corner of Highway 141 and Manchester free credit report instantly. It replaces a Walmart store in Town and Country’s Manchester Meadows shopping center.

Among the features of the almost 204,000-square-foot store will be a bakery, a deli, meat and dairy products, fresh produce, and a full liquor department.

Margaret Gillerman

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Boeing said it’s prepared to enter the next Air Force tanker competition with one of two planes.

The St. Louis-based defense unit of Boeing Co. on Monday offered details of its tanker proposals that would be either a KC-767 or a larger, converted 777. The latter would be comparable in size to the modified A330 offered by competitor Northrop Grumman Corp. and European Aeronautic Defence & Space Co.

"Boeing is ready to deliver maximum capability at the lowest cost," Boeing program manager Rick Lemaster said in a prepared news release Monday.

The Pentagon is preparing draft guidelines spelling out the rules for a new refueling tanker competition. Boeing will review the request before it decides what it would offer, said Bill Barksdale, a spokesman for Boeing Global Mobility Systems.

In February 2008, the Pentagon chose the Northrop/EADS proposal to build aerial refueling tankers that were larger than Boeing’s proposed KC-767 tanker. Boeing protested and was supported by the Government Accountability Office, which found problems with how the contract was awarded.

The Pentagon decided to start over and reopen the $35 billion tanker competition.

"All that matters is the Air Force and what they want," Barksdale said. "If they want a bigger tanker, we have one that is definitely superior" to the A330.

Part of Monday’s message is that "the other guys don’t have a permanent advantage" with respect to the size of its tanker proposal, said Richard Aboulafia, an analyst with the Teal Group in Fairfax, Va. But converting the 777 into a refueling tanker would likely take time and money, he said.

"This is supposed to be an off-the-shelf procurement," Aboulafia said.

Boeing has produced some of the KC-767s already, including three that are in operational squadrons for the Japanese air force, Barksdale said. If it wins the contract, Boeing projects 50,000 jobs will be dedicated to the tanker. The planes would be built in Washington state.

Boeing officials provided the details at the Air Force Association’s 2009 Air and Space Conference and Technology Exposition near Washington, D.C. The company also has launched a website devoted to its refueling tanker options called UnitedStatesTanker.com

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When Irene B. Rosenfeld, the chief executive of Kraft, was studying marketing at Cornell in the late 1970s, she was determined to get as many people as possible to respond to a survey she mailed out as part of her PhD research on how consumers choose products.

So she attached a crisp $1 bill to the surveys, to entice people to fill them out and mail them back. Rosenfeld now has a much bigger budget, but she is still working hard to persuade people to go along with her plans.

Kraft has just had its $16.7 billion (U.S.) offer for Cadbury, the British candy company, rebuffed – but Rosenfeld, who once headed Kraft’s Canadian operations, appears determined to push the deal forward.

She flew to London last month to lay out her merger plans to Cadbury’s chairman, Roger Carr. After the Cadbury board brushed off the overture, she decided to make the offer public last Monday in hopes of forcing the company’s hand.

In public comments, she has insisted the deal would benefit the shareholders of both companies. And when Cadbury insisted the offer undervalued the company, Rosenfeld said that the chocolate and gum maker had far less potential to grow on its own.

"This announcement just shows how ambitious she is," Erin Swanson, an equity analyst at Morningstar, told The New York Times. "She’s not content with the status quo. She’s striving for continuous improvement and looking to stir growth in what has been a more mature business."

The events have set the stage for a bidding war, meaning Kraft might have to pay substantially more if it wants to acquire Cadbury.

Anticipating that possibility, investors bid down Kraft shares, which dropped nearly 6 per cent last Tuesday. Cadbury shares, as measured in depository receipts, soared almost 40 per cent.

Analysts said that several other companies could also bid for Cadbury, including Nestl? SA and Hershey Co.

The coming battle will certainly test Rosenfeld’s leadership of the company she took over in 2006, vowing to revive sluggish sales of its brands, which include Oreo cookies, Oscar Mayer lunch meats and Velveeta cheese.

Analysts said the company’s results in the past two quarters were promising. "There seems to have been some evidence that she has in fact started to turn things around," said Matt Arnold, a consumer analyst with Edward Jones, a retail brokerage firm based in St. Louis.

Rosenfeld has said she wanted to encourage innovation by giving managers at many different levels of the company more power to make decisions and try new things cheap credit report. Arnold said that appeared to have made the company more nimble and quicker to introduce new or expanded product lines.

He said Kraft had success with an expanded line of DiGiorno frozen pizzas, which the company now sells in single-serve packages and in a premium variety. It has also revamped its Maxwell House coffee blend and packaging and has begun selling Oreo Cakesters, a snack cake based on the cookie.

"They just found ways to cater to consumer wants a little more, and the bet paid off," Arnold said.

Rosenfeld also turned back earlier efforts at cost-cutting that hurt the quality of the company’s products. For instance, she insisted on adding more cheese back into the mix for the company’s signature macaroni and cheese, after it had been cut back to save money.

While the Cadbury deal would be by far her biggest move to date, Rosenfeld has not shied from buying and selling. She sold the underperforming Post cereals division to Ralcorp for $1.7 billion in 2007, and in the same year paid $7 billion for the cookie unit of the French company Groupe Danone.

Several analysts told The Times that a Cadbury acquisition could make sense for Kraft, which would greatly expand its confectionery business. Cadbury would also give it strong sales in emerging markets, such as India, where the chocolate maker has strong sales and has seen impressive growth. But they cautioned that those considerations could change if Kraft winds up paying significantly more.

Rosenfeld, who declined to be interviewed, began working for Kraft in the early 1980s. She soon became a marketing manager with responsibility for Kool-Aid and helped increase sales, in part by changing television ads aimed at children that featured a rock and roll soundtrack. She had similar success with Jell-O and was later made head of Kraft’s Canadian and then North American divisions. But she left the company abruptly in 2003. In 2004 she was hired to be chief executive of PepsiCo’s Frito-Lay division. But two years later, she returned to Kraft, this time as chief executive. She was named chairman in 2007 and now holds both posts.

Rosenfeld’s thesis adviser at Cornell, Vithala R. Rao, still teaches marketing there, and said that he recalled the $1 bills and the innovative way his former pupil conducted her thesis survey nearly three decades ago (she received her PhD in 1980).

Rao said the trick worked, with the survey getting a higher response than might have been anticipated without the incentive.

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