World stocks fell Friday after credit downgrades slapped on Spanish banks unnerved investors already worried about the stability of the 17-country euro currency union.
The fall in European shares followed a sharp downturn in Asia where markets were also rattled by weak U.S. manufacturing figures.
The nervousness about Spain’s banks comes as the European financial crisis intensifies.
Political turmoil in Greece has increased the likelihood that it could leave the 17-country monetary union, a move that could have ripple effects throughout Europe and the world’s financial markets.
Britain’s FTSE 100 fell 0.8 percent to 5,295.30 and Germany’s DAX was 0.5 percent lower at 6,279.36. France’s CAC-40 lost 0.7 percent to 2,991.85.
But Wall Street looked set for a higher opening on Friday when shares of social media giant Facebook will start trading. Buyer demand is expected to be very strong. Dow Jones industrial futures rose 0.2 percent to 12,439 and S&P 500 futures added 0.2 percent to 1,304.40.
Markets were jolted by Moody’s downgrade Thursday of 16 Spanish banks, said Jackson Wong, vice president at Tanrich Securities in Hong Kong.
Moody’s said it took the action because the banks face a rising tide of bad loans linked to Spain’s recession, a gloomy real estate market and high unemployment.
“It’s very hard to predict how the euro crisis will evolve. All the news is bad, so investors like to stay on the sidelines even though stocks are very attractive right now,” Wong said.
Japan’s Nikkei 225 tumbled 3 percent to close at 8,611.31, its lowest finish in four months as signs of weakness in the U.S., a critical export market for Japanese companies, battered some of the country’s behemoth manufacturers.
Hong Kong’s Hang Seng dropped 1.3 percent to 18,951.85 and Australia’s S&P/ASX 200 slid 2.7 percent to 4,046.50. South Korea’s Kospi tumbled 3.4 percent to 1,782.46. Benchmarks in Singapore, Taiwan and New Zealand also fell.
Mainland Chinese shares lost ground, with the benchmark Shanghai Composite Index losing 1.4 percent to 2,344.52. The Shenzhen Composite Index fell 1.5 percent to 940.91. Shares in ports and trading related companies led the gains, while shares in banks, shipping and defense industry companies weakened.
“The investors are pessimistic over China’s economic outlook, on top of the problems in Europe. It is more like a panic selling,” said Guo Yanhong, an analyst at Huachuang Securities, based in Beijing.
In the U.S., meanwhile, the Federal Reserve Bank of Philadelphia said Thursday that its index of factory activity fell to minus 5.8 from 8.5 in April. Any reading below zero indicates contraction. Measures of new orders and employment also fell in May, the bank said. That suggests manufacturers in the region are cutting jobs.
Among individual stocks, Japanese vehicle makers were hit hard. Yamaha Motor Co. tumbled 5 percent and Mitsubishi Motors Corp. was down 5.1 percent. Toyota Motor Corp. lost 3.7 percent.
Asiana Airlines Inc., South Korea’s second-largest carrier, plunged 5.1 percent after reporting that its earnings slid in the first quarter of 2012 from a year earlier, mainly due to soaring fuel prices, Yonhap News Agency said.
Gold miners were among the gainers. Australia’s Newcrest Mining rose 3.8 percent on rising prices for the precious metal. Hong Kong-listed Zijin Mining Group Co., China’s largest gold miner, rose 3.4 percent.
Benchmark oil for June delivery was down 1 cent to $92.55 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 25 cents to settle at $92.56 in New York on Thursday.
In currencies, the euro fell to $1.2686 from $1.2714 late Thursday in New York. The dollar rose slightly to 79.30 yen from 79.28 yen.
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HumanKind Water, a bottled water company that touts its social conscience, won the most votes — and the top prize — in Wal-Mart’s "American Idol"-like contest.
As grand prize winner, the Philadelphia-based company will soon have its bottled water sold at up to 3,800 Wal-Mart stores nationwide and on Walmart.com.
"I am thrilled," said T.J. Foltz, president of HumanKind Water, which sources its product from the Poconos Mountains. "We knew people were voting for us like crazy. But we had no idea we’d win."
Scoring a deal with the world’s largest retailer is like hitting the jackpot for a small business vendor. For Foltz, it’s especially significant since his product just launched last October.
Wal-Mart challenge draws wacky products
More important to him, though, is the exposure he hopes this win will bring to the cause behind HumanKind Water.
Foltz said 100% of net profits from its sales will go toward developing clean water wells, water filtration systems and rain catchment systems in underdeveloped communities in Haiti, Africa and Asia.
"Ten thousand kids die every day because of lack of clean drinking water and poor sanitation from contaminated water," he said. "Every one of these deaths can be prevented."
Foltz is a Christian minister who witnessed the need for clean water firsthand during trips overseas. That experience inspired him to develop HumanKind Water and devote himself fully to his company.
"Children dying is everyone’s business," said Foltz, adding that there is nothing religious about HumanKind Water. "In our mission to end this, we’re not reaching out to one faith or another."
Wal-Mart (, Fortune 500), the world’s largest retailer, is announcing the winner at a time when it’s also trying to manage the fallout from allegations that it bribed its way to dominance of Mexico’s retail industry.
Wal-Mart tries to recover from Mexico allegations
The retailer launched its "Get on the Shelf" competition January 18, giving three small businesses, entrepreneurs or inventors a first-ever chance at winning virtual shelf space through Walmart payday loans online.com. The grand prize winner also gets a spot on Wal-Mart store shelves nationwide.
More than 4,000 contestants submitted video entries of their product; the retailer let the public vote on their favorites.
The contest drew more than 1 million votes in total, said Wal-Mart spokesman Ravi Jariwala. HumanKind Water captured the highest number of votes, followed by PlateTopper and SnapIt Eyeglass Repair Kit.
PlateTopper is a 100% BPA-free plastic cover that transforms plates into airtight food storage containers. SnapIt is a patented screw kit designed to fix sunglasses and eyeglasses in 30 seconds. These two products will sell on Walmart.com, but not in stores.
All three winning products will have an online banner touting them as the contest winners, said Jariwala. HumanKind will also get a special display in Wal-Mart stores.
Wal-Mart is assessing the three winners’ marketing and production capabilities, he added, and will give the three winners help ramping up if they need it.
Holding a public contest to find a vendor is an unusual departure for Wal-Mart.
The discounter is notoriously strict in selecting products. Prospective suppliers meet with Wal-Mart’s in-house buyers at the Bentonville, Ark., headquarters in small rooms lining a bluish-gray corridor unofficially referred to as "vendor row."
There, they get an hour tops to pitch their products and convince Wal-Mart buyers why they should stock them.
But for vendors of HumanKind Water, PlateTopper and the SnapIt Eyeglass Repair Kit, all this is unnecessary.
PlateTopper will begin selling on Walmart.com on May 3, while SnapIt Eyeglass Repair Kit will start selling online in the near future. HumanKind Water will launch on Walmart.com and in its stores nationwide soon after, the store said.
Wal-Mart hasn’t made any decisions yet whether to repeat the contest in the future, Jariwala said.
"Our focus at this point is on evaluating the success of this contest," he said.
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Signed contracts to buy U.S. homes rose more than forecast in March as low interest rates drew buyers back into the market.
The index of pending home purchases rose 4.1 percent to 101.4, the highest level since April 2010, after a 0.4 percent gain in February that was revised from a previously estimated 0.5 percent drop, the National Association of Realtors reported today in Washington. The median forecast of 43 economists surveyed by Bloomberg News called for a 1 percent rise in the measure, which tracks contracts on previously owned homes.
An improved labor market and mortgage rates near historic lows are helping to stabilize housing. At the same time, the industry remains the economy
India cut its benchmark interest rate more than forecast and highlighted inflation risks that limit the scope for following up on the first reduction in borrowing costs since 2009.
Governor Duvvuri Subbarao lowered the repurchase rate to 8 percent from 8.5 percent, the Reserve Bank of India said in a statement in Mumbai today. The outcome was predicted by three of 25 economists in a Bloomberg News survey. Seventeen expected a 0.25 percentage-point cut and the rest predicted no change.
India joins nations from Brazil to the Philippines in lowering borrowing costs to support domestic demand as political gridlock deters investment and Europe’s debt crisis and easing Chinese expansion dim global prospects. Inflation has slowed to 6.89 percent while remaining the fastest among the biggest emerging economies. The central bank said today price pressures contribute to limiting the room for further rate cuts.
“The RBI is in an unenviable position, but needs to shift focus to supporting growth,” Rohini Malkani, an economist at Citigroup Inc. in Mumbai, said before the decision. Higher oil prices, the fiscal deficit and the rupee’s decline continue to pose the risk of faster price increases, Malkani said.
“The reduction in the repo rate is based on an assessment of growth having slowed below its post-crisis trend rate which, in turn, is contributing to a moderation in core inflation,” the Reserve Bank said. “However, it must be emphasized that the deviation of growth from its trend is modest. At the same time, upside risks to inflation persist. These considerations inherently limit the space for further reduction in policy rates.”
Growth Outlook
Gross domestic product may expand 7.3 percent in the year through March 2013, compared with the baseline projection of 7 percent for the previous 12 months, the central bank estimated today. Inflation will probably be at 6.5 percent by the end of the current financial year, it said.
Uncertainty about global commodity prices, particularly crude oil, India’s fiscal shortfall, a “very high” current- account deficit and food inflation are among risks to the outlook, the Reserve Bank said.
Growth has been hurt by declining investment and moderating consumer spending after the Reserve Bank raised rates by a record 3.75 percentage points from March 2010 to October last year to fight inflation.
Subbarao has already eased monetary conditions by reducing the amount of deposits lenders must set aside as reserves twice this year, by a combined 125 basis points, to 4.75 percent to ease cash shortages in the banking system. He left the cash reserve ratio unchanged today. Liquidity is “steadily moving towards” its comfort zone, the RBI said cheap business cards.
Diminished Trend Rate
Recent patterns of inflation and expansion signal India’s trend rate of economic growth has declined from its peak before the financial crisis, the Reserve Bank said. Significant supply bottlenecks in infrastructure, energy, minerals and labor are among the main reasons why, it said.
March’s climb in the benchmark wholesale-price index exceeded the median 6.65 percent estimate in a Bloomberg News survey of 33 economists, data showed yesterday. While Indian inflation has eased from more than 9 percent in most of 2011, it remains the fastest in the so-called BRIC group of largest emerging economies that also includes Brazil, Russia and China.
Monetary policy will continue to aim to “condition and contain perception of inflation” in the range of 4 percent to 4.5 percent, the monetary authority said.
“The RBI is faced with a very difficult situation as growth is slowing and inflation remains high,” said Rupa Rege Nitsure, an economist at state-owned Bank of Baroda in Mumbai. India needs “efforts from the government’s side to boost the capacity of the economy by accelerating reforms,” Nitsure said.
Petroleum Prices
Higher raw material costs and the rupee’s decline are leading companies including steel makers to raise prices. Steel Authority of India Ltd., the nation’s second-largest producer, increased tariffs in April for the fourth time in three months.
Prime Minister Manmohan Singh’s government, grappling with fiscal and trade gaps and depressed industrial output, faces one of the most challenging periods since taking office in 2004.
In the budget on March 16, the administration announced record borrowing needs to plug a fiscal shortfall estimated at 5.1 percent of gross domestic product in 2012-2013. The current- account deficit reached $19.6 billion in the three months through December, the worst quarterly performance on record.
“From the perspective of vulnerabilities emerging from the fiscal and current account deficits, it is imperative for macroeconomic stability that administered prices of petroleum products are increased to reflect their true cost of production,” the Reserve Bank said.
A current-account gap at 4.3 percent of gross domestic product in the fourth quarter of 2011 is unsustainable, it said.
Policy reversals have further hindered Singh’s economic agenda, including the suspension of plans in December to open India’s retail industry to foreign companies.
The price of oil slipped to near $103 per barrel following weak economic reports out of China and Europe.
Oil, a globally traded commodity, typically swings with investor expectations for economic growth, world oil supply and demand. On Friday, traders saw signs of trouble from two continents.
China, the second-largest oil consumer after the U.S., said its economy grew by just 8.1 percent from January to March. While that would be strong growth for most countries. it was the weakest in three years for China. A slowdown in China could have major implications for oil prices, since its burgeoning cities and factories have been among the primary drivers of world oil demand.
In Europe massive national debts continued to worry investors. Yields rose on government bonds issued by Italy and Spain, meaning those countries will have to pay more to borrow money from investors personal loans for bad credit.
Benchmark U.S. crude fell by 61 cents to $103.03 per barrel on Friday in New York. Brent crude lost 55 cents to $120.97 per barrel in London.
Retail U.S. gasoline prices fell for the seventh day in a row, to a national average of $3.90 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has dropped by about 3.5 cents in the past week.
In other energy trading, natural gas stayed near 10-year lows, unchanged at $1.981 per 1,000 cubic feet. Heating oil was up less than a cent at $3.1682 per gallon and gasoline futures lost a penny to $3.3418 per gallon.
Australia
There are a number of seniors and other retired folk out there who are more than a little confused about what is and isn
President Obama on Friday nominated Dr. Jim Yong Kim, the president of Dartmouth College, to be the next president of the World Bank.
Kim’s background is in medicine, not economics or business as has been the case with most previous World Bank presidents. He has worked with international organizations, serving as a senior official at the World Health Organization.
Kim is particularly known for his efforts addressing health concerns, including AIDS, in developing countries. He was one of the founders and former executive director of Partners In Health, a not-for-profit organization that supports health programs in poor countries.
"Despite its name, the World Bank is more than just a bank. It’s one of the most powerful tools we have to reduce poverty and raise standards of living in some of the poorest countries on the planet," Obama said in introducing Kim in the White House rose garden. "It’s time for a development professional to lead the world’s largest development agency."
The World Bank was created along with the International Monetary Fund in 1944 to help the Allied powers shape the post-World War II economic order. It now includes 187 member states, offering loans and grants as well as technical expertise for development projects around the world.
World Bank to China: Free up your economy or bust
But while the World Bank’s influence is felt most directly in the developing world, it’s the United States that has a stranglehold on its leadership. Under a tacit agreement in place since their inception, an American has always headed the bank while a European has been in charge of the IMF.
The World Bank and the IMF get funding from their members, also known as shareholders, and it is this funding that is the basis for voting power on the organizations’ boards.
The board will vote on the new leader for the bank, but it is widely assumed that the U.S. nominee will be the one confirmed by the full body.
As the largest contributor to the bank and the IMF, the United States has the most voting shares on their boards at roughly 16%. The United States and Europe together have roughly half these shares, and have long been able to impose their will in matters of leadership.
The World Bank announced its short list of nominees late Friday, so Obama was facing a deadline for his pick. The organization expects to pick the new president by its spring meeting the week of April 16.
Earlier Friday, South Africa announced it had nominated Nigerian Finance Minister Ngozi Okonjo-Iweala for the post. Jose Antonio Ocampo, formerly the finance minister of Colombia, has also been nominated.
World Bank chief nixes return to gold standard
One other American who had been lobbying for the job, Columbia University economist Jeffrey Sachs, withdrew his self-nomination Friday, saying he supported Kim 100%.
The World Bank’s projects range from health and education to infrastructure and private sector initiatives. It’s a massive organization, comprising more than 9,000 employees in over 100 locations and offering nearly $250 billion worth of financial assistance over the past five years.
"It’s the premier institution in the development arena," said Colin Bradford, a senior fellow at the Brookings Institution who has also worked at the World Bank and the U.S. Agency for International Development.
Last year, France’s Christine Lagarde took over the top job at the IMF from her countryman Dominique Strauss-Kahn after he resigned in the wake of sexual assault charges that were later dropped.
At that time, however, the so-called BRICS countries — Brazil, Russia, India, China and South Africa — issued a joint statement following Strauss-Kahn’s resignation calling Europe’s leadership of the IMF an "obsolete, unwritten convention."
Some in Washington have argued that it’s important for the World Bank head to continue to be an American to ensure continued Congressional funding for the institution. But there is pressure building internationally for a non-American to take over the post.
Kim might be a seen as a compromise between those two competing pressures.
According to Dartmouth’s Web site, Kim was born in South Korea. His family emigrated to the United States when he was five, and he grew up in Muscatine, Iowa. He had an all-American childhood, becoming valedictorian and president of his high school class, and playing quarterback for the high school football team.
Kim got his bachelor’s degree at Brown and his medical and Ph.D. degrees at Harvard, according to the Dartmouth site.
While many of the previous World Bank presidents have a background in business and finance, it is not always the case. Paul Wolfowitz — a nominee of President George W. Bush — served as the 10th president from 2005 to 2007, coming from a career in academia and government service. His post immediately before joining the bank was Deputy Secretary of Defense.
The position became vacant when current president Robert Zoellick, a former deputy secretary of state who also served as international vice chairman at Goldman Sachs (, Fortune 500), announced in February that he would depart when his term concludes at the end of June.
Pakistan is better known for bombs than bombshells, militant compounds than opulent estates. A few enterprising Pakistanis hope to alter that perception with the launch of a local version of the well-known celebrity magazine Hello!
They plan to profile Pakistan’s rich and famous: the dashing cricket players, voluptuous Bollywood stars and powerful politicians who dominate conversation in the country’s ritziest private clubs and lowliest tea stalls. They also hope to discover musicians, fashion designers and other new talents who have yet to become household names.
“The side of Pakistan that is projected time and time again is negative,” said Zahraa Saifullah, CEO of Hello! Pakistan. “There is a glamorous side of Pakistan, and we want to tap into that.”
But celebrating the lives of Pakistan’s most prosperous citizens is not without its critics in a country where much of the population lives in poverty. Advertising one’s prosperity could be risky as well since kidnappings for ransom are on the rise and attracting attention from Islamist militants can mean death.
Wajahat Khan, a consulting editor at Hello! Pakistan, said they were cognizant of the sensitivity of publishing a glamour magazine in a conservative Muslim country where many people are struggling and planned to be “socially responsible and culturally aware.”
“We are trying to be happy in a war zone,” Khan said Saturday at a news conference with Saifullah and other members of the magazine’s editorial staff. “We are trying to celebrate what is still alive in a difficult country.”
Khan said they would do everything they could to protect the security of the people they profile, but he wasn’t overly concerned.
“I don’t think terrorist networks are going to be reading Hello! anytime soon,” he said.
Pakistan already has a series of local publications that chronicle the lives of the wellheeled in major cities like Islamabad, Lahore and Karachi, especially as they hop between lavish parties guaranteed payday loans. But the producers of Hello! Pakistan hope the magazine’s international brand and greater depth will attract followers.
Hello! was launched in 1988 by the publisher of Spain’s Hola! magazine and is now published in 150 countries. It’s well-known for its extensive coverage of Britain’s royal family and once paid $14 million in a joint deal with People magazine for exclusive pictures of Brad Pitt and Angelina Jolie’s newborn twins.
The market for English-language publications in Pakistan is fairly small. Most monthly and weekly magazines sell no more than 3,000 copies, said Khan, the consulting editor. But they hope to tap into the large Pakistani expatriate markets in the United Kingdom and the Middle East as well.
Hello! Pakistan will be published once a month and will cost about $5.50, twice as much as what many poor Pakistanis earn in a day. The first issue will be published in mid-April and will focus on the Pakistani fashion scene.
Saifullah, who grew up watching her mother and grandmother read Hello! as she hopped between London and Karachi, said it took her two years to convince the magazine to publish a local version in Pakistan.
“They were concerned about whether Pakistan was ready for a magazine like this,” she said.
But Saifullah thinks the timing is perfect to showcase Pakistan’s too often hidden treasures, citing Sharmeen Obaid-Chinoy, who recently became the first Pakistani filmmaker to win an Oscar for a documentary about the plight of female victims of acid attacks in the country.
“We want to tap into the aesthetically beautiful, the athletic, the fashionable,” said Saifullah. “There is so much going on on a daily basis that nobody ever covers. It’s totally unexplored.”
Cisco Systems Inc. is buying digital video technology company NDS Group Ltd. for about $4 billion to enhance its video offerings to pay-TV providers and expand in emerging markets.
The purchase would be Cisco’s biggest since the company bought Norwegian teleconferencing company Tandberg in April 2010 for $3.4 billion.
In the meantime, the networking gear maker has been working on turning its business around. It missed the early stages of the economic recovery and lost out to competitors on rebounding orders.
Cisco said Thursday that buying NDS will speed up the delivery of its Videoscape entertainment platform and help it grow in emerging markets such as China and India, where NDS already does business. Videoscape lets customers watch video on mobile gadgets and laptops along with their TVs.
In addition to the $4 billion it is paying for NDS Group, Cisco will assume $1 billion of NDS debt.
San Jose, Calif.-based Cisco has been narrowing its focus by culling divisions and cutting costs through layoffs. It shuttered its consumer-oriented Flip video camera business last year but video offerings for businesses have remained a big part of its focus. It acquired Scientific-Atlanta, a maker of TV set-top boxes, in 2006 for $7.1 billion and online conference provider WebEx a year later for $3 billion.
Brian Marshall, an analyst with ISI Group, said the deal makes sense for Cisco as it focuses on video offerings for service providers. NDS, which competes with Cisco, counts pay-TV operators such as DirecTV, Vodafone, Cox and BSkyB among its customers.
NDS, based in the United Kingdom, is jointly owned by News Corp. and private equity firm Permira. Its software helps cable and satellite TV companies deliver content to subscribers’ digital video recorders, tablets, smart phones and other devices. It had filed documents as part of a planned initial public offering before agreeing to the deal with Cisco.
Cisco is acquiring NDS’ sites in Britain, Israel, France, India and China and is absorbing its 5,000 employees. The boards of both companies have approved the deal, and it’s expected to close in the second half of this year.
Marshall said that while the acquisition is a “good use of offshore cash” for Cisco, the company is paying a lot. He estimates that Cisco is paying about 25 times NDS’s earnings, while Cisco’s stock trades at about 10 times its earnings.
Cisco stock fell 29 cents, or 1.4 percent, to $19.91 in midday trading Thursday after trading as high as $20.20 earlier in the session. That was near its 52-week high of $20.49 reach about a month ago.
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