Financial life in a big town

South Korea's department store sales increased at the fastest pace in almost three years in August as outlets lowered prices to attract shoppers.

Sales at the three biggest chains rose 14 percent from a year earlier, more than double July's 5.9 percent gain, the Ministry of Knowledge Economy said in Gwacheon today. Last month's increase was the biggest since December 2005.

Retailers including Lotte Shopping Co. held discount sales in August to woo customers, while shoppers also bought more televisions and sporting goods during the Beijing Olympics. Confidence among consumers rebounded last month from an eight- year low thanks to a drop in oil prices.

“Stores are holding more promotional events to get consumers to open their wallets,'' said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul. “But it's still premature to say consumer spending has recovered as concerns about economic growth slowing and financial markets linger.''

Sales of sports goods climbed 12.7 percent in August from a year earlier, today's report showed. Sales of luxury goods at department stores jumped 38.7 percent easy fast cash.

“The jump in sales of luxury goods show there's a bipolarization of income and spending,'' Hyundai's Lee said. “People with higher income seem to be less affected by what's going on in the economy.''

Economic Growth

The pickup in spending may be temporary as renewed turmoil on global financial markets shakes confidence. The Kospi stock index has dropped 23 percent this year and the currency has slumped 22 percent against the dollar.

Asia's fourth-largest economy expanded 4.8 percent last quarter, the weakest pace in more than a year, as spiraling living costs prompted consumers to cut spending.

Shares in Lotte Shopping, the nation's largest department store operator, have fallen 31 percent in 2008, and those in Hyundai Department Store Co., the second biggest, have dropped 26 percent.

Sales at discount stores rose 1.1 percent last month from a year earlier, moderating from a 2.1 percent gain in July, today's report showed.

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new york — Stocks surged Friday in the biggest two-day global rally in 38 years as the government announced plans to purge banks of bad assets and crack down on speculators who drove down shares of financial companies.

The Standard & Poor’s 500 index jumped 4 percent, capping its steepest two-day gain since the aftermath of the 1987 crash. The Dow Jones industrial average added 929 points from Thursday’s low, and markets from the U.K. to China advanced the most ever.

U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke ignited the rally by proposing to shore up banks’ balance sheets and guaranteeing money-market mutual funds, while the Securities and Exchange Commission banned short sales of financial firms.

Washington Mutual Inc. rose 42 percent, Wachovia Corp. was up 29 percent and Citigroup Inc. added 24 percent among the 15 companies in the in the S&P 500 Financials index to jump more than 20 percent. General Electric Co. added 7.4 percent.

"What the government and its regulatory agencies have tried to do here is restore some confidence and remove some fear," Robert Doll, chief investment officer of global equities at New York-based BlackRock Inc., which manages $436 billion in stocks, told Bloomberg Television. "That will work in the short run and improve psychology."

The S&P 500 advanced 48.57 points to 1,255.08. The Dow surged 368.75 to 11,388.44, capping its biggest two-day jump in six years. The Nasdaq composite index increased 74.80 to 2,273.90.

The S&P 500 erased its decline for the week, ending 0.3 percent higher. The benchmark index for U.S. equities tumbled 4.7 percent twice in the last five days after Lehman Brothers Holdings Inc. filed for bankruptcy, the U.S. government seized control of American International Group Inc. and Merrill Lynch & Co. was forced to sell itself to Bank of America Corp.

The S&P 500 is still down 15 percent this year, poised for its first annual decline since 2002. Until Friday, financial companies led the retreat as losses stemming from the first nationwide drop in house prices since the 1930s surpassed $500 billion.

A record 3 billion shares changed hands on the NYSE, more than double the three-month daily average. Goldman Sachs Group Inc. and Morgan Stanley, the last remaining major independent investment banks on Wall Street, rose more than 20 percent two days after falling the most ever.

Nine of 10 industry groups in the S&P 500 advanced as a better-than-estimated forecast at Oracle Corp. helped boost tech companies by 2.9 percent and higher oil prices helped Chevron Corp. lead an advance among all 39 energy companies in the S&P 500.

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Only consumer staples, the best performing group year-to-date, declined $500 payday loan. Wal-Mart Stores Inc. fell 2.9 percent to $59.70 for the biggest decline in the Dow.

U.S. and European government bonds tumbled, shedding gains that Thursday drove the prices of some Treasury bills higher than their face value. The dollar rose the most since April against the yen, while the cost of default protection on corporate bonds dropped by the most since the bailout of Bear Stearns Cos. in March. Gold fell.

John Bogle, who created the $106 billion Vanguard 500 Index Fund in 1976, said the U.S. government is "punch drunk," given its proposals to rescue the financial system. "We’re playing a game of casino capitalism, interfering with the way the market is working," Bogle, 79, said.

The S&P 500 Financials index climbed 11 percent after a 12 percent gain Thursday, marking the best two-day advance since the gauge was created in 1989.

JPMorgan Chase & Co. rose 17 percent, and Bank of America added 23 percent.

Wells Fargo & Co. and U.S. Bancorp, which avoided making the riskiest types of loans, rose to records. Genworth Financial Inc., the life and mortgage insurer spun off from General Electric Co. in 2004, surged 67 percent to $15.25 after falling 39 percent over the last four days.

Morgan Stanley snapped seven days of losses, advancing $4.66 to $27.21 as the SEC temporarily banned short-selling in shares of 799 financial companies to curtail the market rout. In a short sale, borrowed stock is sold and sellers profit if the shares fall and they can repay the loan with cheaper stock.

Goldman gained $21.80 to $129.80. Goldman, the biggest U.S. securities firm, and Morgan Stanley are seeking to avoid the type of run on their shares that helped trigger emergency sales of Merrill and Bear Stearns and the Sept. 15 bankruptcy by Lehman, once the fourth-biggest.

Bank of New York, the world’s largest custodian of financial assets, rose $4.13 to $35.70, rebounding from its lowest closing price since October 2005.

Oracle advanced $1.32, or 7 percent, to $20.07.

Crude oil for October delivery gained 6.6 percent to $104.33 a barrel on the New York Mercantile Exchange.

Exxon Mobil Corp., the biggest U.S. oil company, added 2.4 percent to $79.61. Chevron Corp., the second-largest, climbed 5.9 percent to $87.80. Halliburton Co., the world’s second-biggest oilfield services provider, increased 8.6 percent to $37.62.

UBS AG, the European bank hit hardest by the subprime market’s collapse, added 32 percent.

Bank of China, the nation’s second-biggest bank, jumped 17 percent to 3.36 yuan. A 24 percent slump in the month through Thursday left it valued at a record low of 10.5 times profit.

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MONTREAL–The Ontario Securities Commission moved Friday to restrict the short sale of 13 financial stocks that are also listed in the United States after regulators in that country and the United Kingdom suspended short selling of financial stocks.

"This order is being issued as a precautionary measure to prevent regulatory arbitrage with respect to short selling in Ontario of the securities of the financial sector issues and to promote fair and orderly markets in Ontario," the provincial regulator said.

The restriction, effective immediately, expires Oct. 3.

The stocks affected included the Big 5 Canadian banks (TSX:BMO, TSX:BNS, TSX:CM, TSX:RY, TSX:TD), Manulife Financial Corp. (TSX: MFC) and Sun Life Financial Inc. (TSX: SLF).

Ontario Finance Minister Dwight Duncan said the ban was consistent with recent steps taken in the United States and U.K.

"We are actively monitoring market developments and working with the OSC as it continues to work closely with other securities and financial market regulators in Canada and other countries as we go forward," Duncan said in a statement.

Short-selling is a form of trading that makes money for an investor when a stock's price goes down, rather than up. Market observers say it is not as widespread in Canada as on Wall Street.

The Canadian Securities Administrators said it supported the decision by the Ontario regulator.

"Other jurisdictions in the CSA will be taking similar action today, or in the coming days," Jean St-Gelais, chairman of the CSA and head of Quebec's securities regulator, said late Friday.

Earlier in the day, St-Gelais noted that some of short-selling techniques that have been occurring in the United States are banned in Canada.

"We are following this like everyone around the world. If we can have a united approach, so much the better," St-Gelais told reporters, adding Canadian regulators are "in the loop" of discussion by global regulators.

The U.S. Securities and Exchange Commission took the unusual move to temporarily ban short-selling of 799 financial stocks. The rule took effect immediately and extends through Oct. 2.

Short-selling is a complicated form of trading that sometimes unnerves even seasoned market professionals because of the potential for losses is potentially huge, while other money managers consider it a routine manoeuvre.

In essence, the trader borrows shares and then quickly sells them, knowing that the shares will have to be repurchased and returned to the lender.

The only way short sellers make money is if the stock price falls significantly before the shares must be repurchased and returned 1500 payday loans. The strategy can backfire and create losses for the trader if stock price goes up.

It is a legitimate method of trading, but there have been allegations of abuse, such as spreading false rumours or manipulating debt derivatives to drag down share prices artificially.

Christopher Cox, chairman of the U.S. Securities and Exchange Commission, said Friday that the SEC is "committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets."

"The emergency order temporarily banning short-selling of financial stocks will restore equilibrium to markets," he said.

The move appeared to work, at least in the short term. North American stock markets rebounded strongly Friday, essentially reversing the losses experience throughout the week.

Chyanne Fyckes, chief investment manager at Stone Asset Management, noted, the situation in Canada is complicated by the presence of 13 provincial and territorial securities commissions – not one national regulator like the Securities and Exchange Commission in the United States.

"I think anybody at this point in time would tell you that the fact that we don't have a single securities regulator is a huge impediment," she said.

"It's completely nonsensical and it makes life very difficult."

Tom Caldwell, chairman of Toronto-based money manager Caldwell Securities Ltd., welcomed the SEC ban, but noted that Canadian markets have a so-called uptick rule which helps control short-selling.

The rule, introduced in the U.S. Securities Exchange Act of 1934 after the stock market crash but eliminated last year, aimed to prevent short-sellers from adding to downward price momentum.

The uptick rule prevents short-selling when the last bid is lower than the previous one, but the SEC scrapped it because it can be circumvented by new financial instruments.

-With files from Canadian Press reporter Kristine Owram in Toronto

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Ailing Washington Mutual Inc. moved into a better position to find a reprieve or rescue from its mounting loan problems Wednesday after a major investor removed a potential stumbling block to a sale or another infusion of capital.

The concession by the private equity group TPG came as government regulators tried to arrange a sale of the nation’s largest thrift, reflecting their worries about another possible bank failure that would drain the already depleted Federal Deposit Insurance Corp.

TPG could have stymied that process because of protection that it got as part of a $7 billion investment made in April. A clause in its investment agreement could have required a buyer or another major investor to pay TPG hundreds of millions, if not billions, of dollars in addition to whatever money was injected into WaMu.

But TPG agreed to waive its anti-dilution clause, according to a Securities and Exchange Commission filing, potentially making it easier for WaMu (WM, Fortune 500) to raise more money or for nervous banking regulators to push for a sale of the Seattle-based company.

"It became clear that it would be in the best interests of Washington Mutual and our investors to waive the … provisions," Fort Worth, Texas-based TPG said in a statement. "Our goal is to maximize the bank’s flexibility in this difficult market environment."

The government’s efforts to find a buyer, though, are being complicated by uncertainty about the magnitude of losses still lurking in Washington Mutual’s home loan portfolio.

"No one knows what’s in their books," said a person briefed on the talks between regulators and banks. The person spoke Wednesday on the condition of anonymity because of the sensitivity on the matter.

Citing unidentified sources, the New York Post said the potential buyers include JPMorgan Chase & Co. (JPM, Fortune 500), Wells Fargo & Co. (WFC, Fortune 500), HSBC Holdings PLC cashadvance. (HBC)

The banks all declined to comment.

After losing $6.3 billion in the past three quarters, Washington Mutual believes it is slowly healing under a new chief executive, Alan Fishman, who will receive an $8 million bonus if he can keep the nation’s largest thrift alive through 2009.

"I think people do know what is in our books and we’ve been pretty transparent," WaMu spokeswoman Olivia Riley said Wednesday, pointing to a financial update that the company released late last week. Those figures suggested WaMu’s loan problems are becoming less severe compared to recent quarters, giving some analysts hope that the company can still be salvaged.

Nonetheless, analysts still expect the company to sustain a loss of about $1.8 billion in the current quarter ending Sept. 30. And investors are showing little confidence in WaMu. The company’s shares fell 31 cents to $2.01 Wednesday, leaving the stock price with a decline of about 85% so far this year.

"Something needs to happen soon because WaMu is twisting in the wind," said Bert Ely, an Alexandria, Va. banking consultant. "It’s a detrimental situation that has become corrosive to the franchise."

Assuming that Washington Mutual either can’t find a buyer or doesn’t want to be sold at the price being offered, the thrift could raise more money to fatten its cushion against the losses that are still expected to come.

In a Monday research note, Keefe, Bruyette & Woods analyst Frederick Cannon estimated Washington Mutual probably needs to raise at least $5 billion in additional capital to protect itself from upcoming losses. Cannon thinks Washington Mutual’s credit costs could run as high as $28 billion through 2009. 

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TOKYO–Shares of Sony Corp slid nearly 9 per cent to a five-year low after Goldman Sachs cut its rating on the electronics maker on concerns over the outlook for its flat TV, mobile phone and digital camera businesses.

The Goldman downgrade came on top of a rating cut on Tuesday by JP Morgan, which also cited worries over the profitability of its liquid crystal display (LCD) TV business and a stronger yen.

Shares of Sony, which also makes PlayStation game consoles and Vaio PCs, closed down 8.7 per cent at 3,270 yen, wiping out about $3 billion in market value. During the session the stock fell as low as 3,210 yen, a level last seen in May 2003.

It was the worst one-day tumble since the "Sony shock" in April 2003, when a huge qunomies in Western countries as well as emerging markets like China and Latin America.

A sluggish performance at its mobile phone joint venture with Sweden's Ericsson and a firmer yen had triggered a 39.5 per cent fall in Sony's profit in the April-June quarter.

JPMorgan cut Sony on Tuesday to "neutral" from "overweight" and lowered its price target to 4,000 yen from 5,450 yen.

It said Sony would likely miss its profit forecasts as it copes with a stronger-than-expected currency and sluggish sales of digital cameras and video recorders easy quick payday loans. Continued losses on LCD TVs may also weigh on its earnings.

"We think Sony can achieve its annual sales target of 17 million LCD TVs, but we are not sure if the firm can make the business profitable," JPMorgan analyst Yoshiharu Izumi told Reuters on Thursday.

Goldman Sachs cut its annual operating profit forecast for Sony to 385 billion yen and JPMorgan forecast it would be 416 billion yen, both sharply lower than the company's 470 billion yen target for the business year to next March.

That compares with a 443 billion yen profit forecast in a poll of 21 analysts by Reuters Estimates.

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Mining stocks took another beating today over concerns about falling demand combined with the financial woes on Wall Street, but the industry remained confident thoat a "long-term commodity bull market" will soon reassert itself.

"I think we can conclude that when everything goes up for sale, then nobody's immune to a market selloff, but the demand for commodities is still extremely robust," said Bradford Cooke, chairman and CEO of Vancouver-based Endeavour Silver Corp. (TSX: EDR).

"We're still firmly in a long-term commodity bull market, and the selloff of the commodities in general and the mining shares in particular is overdone," he added.

The diversified metals index on the Toronto Stock Exchange was down more than five per cent in trading today, after a retreat of more than seven per cent Monday.

Prices for commodities fell over investor concern that the financial crisis in the United States will spark a deep recession in that country and spill over to weaken European, Indian and Chinese economies.

India and China have been growing rapidly in recent years and have been at the heart of soaring demand for everything from oil, steel and coal to nickel, grain, chemicals and other commodities.

As well, traders worry that global market liquidation prompted by the ongoing financial crisis on Wall Street, is also prompting the selloff since many financial companies invested in soaring commodities contracts to cash in on rising prices.

Wall Street was rocked Monday by announcements that Lehman Brothers Holdings Inc., the fourth-largest investment bank in the U.S., had filed for bankruptcy protection.

Further jitters were caused by the US$50-billion takeover of struggling Merril Lynch by Bank of America and news that insurer American International Group Inc. could need billions of dollars to strengthen its balance sheet.

But investors tend to see commodities – particularly precious metals like gold and silver – as a safe bet in times of financial crisis, said Cooke.

"Gold and silver in particular having a historic role as hedges against financial crisis and monetary inflation, they lose that role only temporarily in a market selloff and they certainly should resume that role once the peak selloff is past," he said.

Haytham Hodaly, an analyst with Salman Partners Inc., added that the financial crisis will likely result in a weaker U.S free credit report.com. dollar, which will push investors to the "safe haven" of precious metals.

"I think what's going to happen is the issues that we're seeing in the United States will end up resulting in a weaker U.S. dollar, at least in the near term, which will shed some positive light on owning precious metals, particularly gold and silver as basically a safe haven in this time of economic turmoil," said Hodaly.

Monday's gold and silver prices seemed to confirm this. Gold for December delivery rose $22.50 to settle at $787 an ounce on the New York Mercantile Exchange, after earlier rising as high as $791.40, while December silver rose 34 cents to settle at $11.135 an ounce.

Commodity prices "took off" when the U.S. credit crisis began a year ago, but equities didn't follow, said Cooke.

"I've never seen commodity prices move so high so fast in my life … but the equities did not confirm that upward move," he said.

"So the equities, which never joined the commodity price party, have been nailed on the downside."

But Cooke said he's confident that "the bottom is near" and commodity stocks will respond favourably when it hits.

"I feel that if you look at both the fundamentals and the technical charts on these things, this selloff is way overdone. Gold and silver in particular do have a traditional role to play and they're going to resume it, soon," he said.

"It's not a time to panic, it's a time to reflect."

13:31ET 16-09-08

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50

Percentage of teens who expressed an interest in learning more about managing money

14

Percentage of teens who have taken a personal finance class in school

69

Percentage who say what they know about managing money they learned from their parents

36

Percentage who did not have this discussion last year

Source: Capital One Financial Corp.

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Kohl's Department Stores said Wednesday its same-store sales fell 5.8 percent in August.

Menomonee Falls, Wis.-based Kohl's (NYSE: KSS) said overall sales for the four-week period ending Sept. 1 increased 2.6 percent, to $1.26 billion, compared with $1.22 billion over the similar period in 2007.

For the fiscal year to date, Kohl's said total sales were up 2.6 percent, to $8.6 billion, compared with $8.4 billion in the same period a year earlier. On a comparable store basis, sales for the period decreased 5.6 percent.

Kevin Mansell, Kohl's president and CEO, said some back-to-school business such as footwear and children’s performed well while other areas, such as juniors and young men’s, were more challenging.

“As expected, August was more difficult than our expectations of a 2 to 4 percent comparable sales decrease for the third quarter," Mansell said.

As of Aug faxless payday loans. 30, the company operated 957 stores in 47 states, including Georgia, compared to 834 in 46 states at the same time last year.

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Euro area inflation fell in August from a record high, offering some relief as economic confidence plunged to the lowest level in five years, the European Commission said Friday.

Inflation dropped to 3.8 percent in August, down from a record high of 4 percent in June and July when prices for fuel and food rose sharply from a year ago, the EU statistics agency Eurostat said.

But businesses are gloomy about prospects ahead for the 15 nations that share the euro. Economic confidence fell again in August to 88.8 with industry, the construction sector and retailers more worried than they were last month.

The European economy is slowing as prices at the gas pump and grocery store soar and amid tight borrowing conditions triggered by the global credit crisis as well as a slowdown in major trading partners, Britain and the United States.

The EU figures add pressure on the European Central Bank to hold off an interest rate increase that would make borrowing more expensive and risk hurting a fragile economy payday loans lenders. It raised rates from 4 percent to 4.25 percent in June to try to contain rocketing inflation. 

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Despite Bill Clinton’s powerful endorsement of Barack Obama Wednesday night, there’s still plenty of resentment inside Team Hillary over the fact that she’s not on the ticket and her strategists aren’t on the campaign. But when it comes to economic policy, the Democrats are jelling into one big happy family.

Obama’s inner sanctum now includes Clinton Treasury Secretaries Lawrence Summers and Robert Rubin, former White House chief economist Laura Tyson, and - most recently - Gene Sperling, former White House adviser and chief economic policy wonk for Hillary Clinton during the primary season.

"Everyone who was with Hillary Clinton is now with us," Jason Furman, Obama’s economic policy director, tells Fortune. "The campaign has deepened and broadened its economic bench in the general election."

That bench also includes poverty expert Jared Bernstein of the Economic Policy Institute; Austan Goolsbee, the University of Chicago economist who has been at Obama’s side since the start of the race; and Georgetown University law professor Daniel Tarullo. Investor Warren Buffett and former Fed Chairman Paul Volcker top off the list of regular advisers. A larger circle also includes CEOs Jamie Dimon of JPMorgan Chase (JPM, Fortune 500), Indra Nooyi of PepsiCo (PEP, Fortune 500), and Eric Schmidt of Google (GOOG, Fortune 500).

Managing this team of large and accomplished egos is the 38-year-old Furman, a child of Greenwich Village (and liberal parents) who was so intellectually precocious he had to trek uptown to Columbia University for math and physics because his high school didn’t offer sufficiently advanced courses. He later obtained his PhD in economics from Harvard. Despite his relative youth, Furman so far seems adept at meshing the two campaign cultures. "These are good friends of mine," he says of the Clinton folks. (He could have substituted "former bosses of mine;" Furman once reported to Sperling, and later to Rubin.) After the primary campaign was over, he notes, "I reached out to them and they reached out to me."

Furman’s job is made easier by the fact that Clinton and Obama ran on virtually identical economic agendas. The biggest difference was that Clinton’s healthcare plan mandated that individuals be covered, and Obama’s didn’t cashadvance.com. Since the primary campaign ended, Obama has borrowed one Clinton idea - a healthcare tax credit for small business.

Furman runs the Obama economics shop through regular conference calls with advisers - coupled with ad hoc meetings to respond to news events. On July 13, after the plunge in Fannie Mae and Freddie Mac share prices prompted the Federal Reserve and Treasury Department to consider intervention, Furman’s first call was to Summers. A conference call to a broader group followed. Then Furman reported the results to Obama. Within hours, the campaign issued a statement saying any government plan should "maintain a steady flow of capital to the housing market" and should protect taxpayers rather than bail out shareholders.

The politics of economics is hardly new territory for Furman. He was Kerry’s economic policy director in 2004 and worked on the Gore campaign in 2000. Before joining Obama in June, Furman was running the Hamilton Project, a centrist think tank founded by Rubin and former deputy Treasury Secretary Roger C. Altman.

Furman’s own reputation is as a centrist. When Obama tapped him there was a mini-uproar from the left wing of the party over his defense of Wal-Mart (WMT, Fortune 500) and free trade agreements. Furman reminded his critics of his work opposing efforts to privatize Social Security, and the storm settled.

"When Barack hired me," Furman says, "he told me my job was to be an honest broker and incorporate different points of view."

Now that he’s integrated Team Clinton into the campaign, that job is done. If Obama wins, Furman’s toughest (and potentially most influential) task comes when it’s time to advise the president on how to dole out all those prime government jobs - from Treasury Secretary on down. Those Clinton folks are no dummies on the workings of Washington: Being loyal and visible soldiers now means being front and center for the big titles later. 

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