Dior phone details surface

Good news, Dior lovers: More pictures, and details, of the upcoming Dior mobile phone have emerged. We knew the fashion house was introducing a luxury handset after images of the phone appeared online, but the pictures didn't really reveal anything about specifications, pricing and color.

Lucky for us, an article on the Wall Street Journal gives us a few more details regarding the designer phone, which will be initially available in Russia and China. The reason for this, according to Dior Chief Executive Sidney Toledano, is there's a bigger demand for luxury goods there, and consumers living in these countries really pay attention to color and design when buying a phone.

But don't be disheartened if you really want one, because this phone will work in most parts of the world, except Japan and Korea, where it isn't compatible with local wireless networks. Specifications are still a bit sketchy, but we do know the features on the Dior phone include a touchscreen, a camera, and special ringtones.

What really makes the Dior handset stand out though is the accompanying clip-on mini-phone that comes with the model. This unusual attachment called "My Dior" is about the size of a USB key and connects to the main handset via Bluetooth to make it easy for the user to answer any incoming calls.

As you can see from the picture above, the phone will be available in pink, red, and white when it goes on sale later this year for $5,000.

Japan panel urges limit on mobile phone use by children

A Japanese government panel called on parents and schools Monday to help limit the use of mobile phones by children to prevent them from accessing "harmful" information on websites.

The advisory council on education made the proposal to Prime Minister Yasuo Fukuda as children become more prone to crimes involving dating websites and bullying on Internet school bulletin boards.

The panel said it would urge "parents, schools and other people concerned to cooperate in preventing elementary and junior high school students from using mobile phones unless it is necessary."

It called for limiting mobile phone use just to calls.

These measures are necessary to "protect children from harmful information and other negative influence involving the use of mobile phones" including "crimes and bullying," the report said.

Press reports have linked some crimes by children to dating websites.

"It is true that the use of mobile phones causes various problems," Fukuda told reporters. "I think the panel has made timely discussions on the problem."

He added: "First of all, I wonder if there is any need for children to possess mobile phones."

The panel also recommended that English be made compulsory for children in their third year at elementary school, instead of the current first year at junior high school.

The government will take the proposals into consideration in working out its policy guidelines next month.

While about a third of Japanese primary school students aged 7-12 use mobiles, by the time they get to high school that figure rises to 96 percent, according to a government survey last December.

There are fears for students' safety as only about one percent of them have blocks on potentially harmful material, meaning they could reveal personal information, making them prey for fraudsters and paedophiles.

But even on protected sites such as school bulletin boards, bullies are able to anonymously post comments without teacher oversight or intervention.

Safest Cars Under $30,000

Before you slap down your plastic for a car with anti-lock brakes, rear parking sensors and active head restraints, you'd better make sure it comes with electronic stability control.

Just like seat belts and air bags, ESC is a revolutionary safety feature. But instead of minimizing a driver's impact during a crash, ESC helps avoid it in the first place. It improves handling by detecting skids, then uses the car's braking system to realign errant wheels.

It's so important that the Insurance Institute for Highway Safety (IIHS) required a vehicle to come equipped with ESC in order to be considered a 2008 Top Safety Pick. Among the under-$30,000 vehicles named this year: the Honda Accord EX-L Coupe, Kia Sedona EX, Hyundai Santa Fe GLS and the 2009 Subaru Forrester 2.5X.

"We've seen ESC reduce fatalities by as much as half in some instances," said Russ Rader, a spokesman for the Virginia-based IIHS. "ESC is especially great at reducing the fatalities for single-car crashes."

Behind the List

The organization's picks were chosen from 2008 cars, minivans, SUVs and pickup trucks. Each vehicle underwent front-, side- and rear-crash tests, and injuries were measured on dummies in the driver's and back seats.

Front-impact crashes are the most commonly fatal accidents, followed by side-impact crashes. While mandatory to be an IIHS Top Pick, side air bags are a standard feature on 65% of vehicles. Rear-impact crash tests generally happen at much lower speeds, resulting in more fender benders than fatalities. Collisions at slow speeds can still be a pain in the neck, though. These accidents are notorious for causing whiplash and a host of other back problems.

Designed to mimic real-world crash conditions, the IIHS front-crash tests run at 40 miles per hour, side-impact tests at 31 miles per hour and rear-crash tests at 20 miles an hour. Tests are graded with either a good, acceptable, marginal or poor rating.

"Crashes don't really happen at 60 or 70 miles per hour," Rader says. "Usually there's just enough reaction time to slow down, but not much."

This year, 34 models made the list, most offering ESC as a standard feature. While luxury makers like BMW, Audi and Mercedes dominate 2008's Top Safety Picks, several ESC-equipped cars under $30,000 joined them.

In compiling our list, we chose cars in each of five classes--large, midsize, minivans, midsize SUVs and small SUVs. The IIHS measures eight classes, but only these five had cars with a manufacturer's suggested retail price under $30,000.

Dollar-a-day pre-paid plans explained

Boost and T-Mobile are touting their new dollar-a-day pre-paid plans, but the practice of charging daily access fees for cheaper pre-paid minutes has been around for years—and it's not for everyone.

Both Boost and T-Mobile made their own respective splashes this month with their new buck-a-day pre-paid plans: Basically, you get daytime minutes for 10 cents each, unlimited nights and unlimited mobile-to-mobile (or in-network) calls—but you also pay a $1 daily access fee. (Boost also offers unlimited weekends and text messages in its pay-by-the-day plan.)

Other major U.S. carriers already offer similar buck-a-day plans. For example, AT&T has Pay As You Go Unlimited Talk, while Verizon Wireless offers INpulse Core—both charge 10 cents a minute and give you unlimited in-network calling, but no unlimited nights or weekends. (You can get unlimited nights from Verizon for $2 a day, plus unlimited weekends for $3/day.)

Meanwhile, regional carrier Alltel has a 75-cents/day access plan that includes 10-cent daytime minutes, plus you can choose and two of the following features: unlimited in-network calls, unlimited nights and weekends, unlimited "favorite number" calling, or unlimited text messages. (You can also pay more per day for more features.)

And here's another variable: Some pre-paid carriers make you pay the access fee every day, not just on the days you use your phone. Both Boost and Alltel ring up the access fee each day, while AT&T, T-Mobile, and Verizon Wireless only charge the fee on days you use your phone.

In any case, think carefully about your phone usage before picking a plan. If you're a heavy—and daily—phone user, the pay-every-day Alltel plan (with its cheap access fees) or the Boost plan (with unlimited weekends and free text messaging) might end up saving you the most money. If you're a moderate chatter and free weekends/texting aren't must-haves, try a daily pre-paid plan that only charges you on days you use your phone. And for those who rarely use their phones, consider the traditional buckets of minutes—you'll pay 25 cents a minute or more, but you won't have to pay daily access fees at all.

For the big picture on pre-paid plans, check out this feature (written by yours truly) over at CNET; the plan breakdowns are a bit out of date (the carriers change their plans on a near-daily basis), but it still gives you a good overview of how the various plans work and which phones are available on a pre-paid basis.

A Tale of Two News Sites: What's up with the Credit Crisis?

So many "credit crisis" headlines are slapping me these days, frankly, my cheeks hurt. I can usually handle a barrage of news, or the over-reporting of a story, if the conclusion is the same. Because I can ignore the retro-rehashing of the same story because I know how it ends.

But the Credit Crisis remains on the front page of all news agencies these days, but the headlines are never consistent. Today, for instance, I brought up Bloomberg.com.. Here are the first four headlines I saw:

"Stocks in U.S. Climb as Oil-Price Drop Helps Retailers; Wal-Mart Advances"
"Money Markets Signal Worst of Credit Crisis Is Over as TED Spread Narrows"
"HSBC Sets Aside $3.2 Billion for Bad Loans, Says First-Quarter Profit Rose "
"Dollar Bulls Gain Control as Futures Signal High-Flying Euro Close to Peak"

Then, I go to CNNMoney.com, and I see these headlines:

"Get ready for more bank failures"
"America's Money: Gas crunch hits home"
"Stuck in an unwanted house"
"Foreclosures: The fight over the fix"
"Barely surviving on credit cards"

What to make of all this as a trader? Is the Credit Crisis really over? Should you fret about it? Will it affect your ability to profit in the forex?

Amazing, that two news organizations can have such different homepage slants on the same economy. But it raises some questions and illustrates a point I want to make.

The CEO of a public company once told me "Don't trust news you get from reporters who make $45K a year." While that may be a little short-sighted, there's something to be taken from that.

Here's my advice: Don't get bogged down by the daily news delivered by economic sites. Read it, and stay informed, but don't spend time trying to apply it to your trading that day. Think longer-term and have a more macro view. News is always reported after the fact, and it's usually slanted in some way.

Once you've developed your trading strategies, stick to the fundamantals you know, and follow your technical analysis. Don't ever try to trade the news. Certainly, you should read it, but with a wary eye. The daily rags can give you a barometer for economic conditions, but it can also slant you faster than you think. Just see Bloomberg.com and CNNMoney.com this morning if you need proof.

As for the Credit Crisis: Can the crisis really be over when the banks are still writing down losses and people are still losing their homes? That's like saying the basketball game is over because you've finalized your game plan. It still has to play out. The banks have figured out their models for handling the crisis, but it's not over.

For a weekly and daily overview of each pair, including charts, videos and data, check out our free pair dashboards:
http://www.pfxglobal.com/free-online...als-forum.html

China's inflation rebounds to 8.5 percent despite efforts to cool price increases

China's inflation rebounded in April to near decade-high levels, adding to pressure on Beijing to cool rapid price rises and avert possible unrest ahead of the Summer Olympics, according to official data reported Monday.

Consumer prices in April were up 8.5 percent compared with the same month last year, the National Statistics Bureau reported. That was up from March's 8.3 percent rate and just short of February's 8.7 percent, the highest inflation in 12 years.

Consumer prices have jumped since mid-2007, driven by rises in food costs that hit 22.1 percent in April. The government has been trying to cool price rises for pork, grain and other items by increasing supplies and has imposed controls on basic goods.

"We believe the April inflation data suggests that it is still far too early to claim success in the battle against inflation," Goldman Sachs economists Yu Song and Hong Liang said in a report to clients.

Also Monday, the government reported that China's trade surplus fell about 1 percent in April from the same time last year to $16.8 billion amid weaker global demand for Chinese goods.

The trade surplus with Europe jumped by 34.8 percent to $12 billion, while that with the United States saw much slower growth, rising by 4 percent to $13 billion, according to the Chinese customs agency.

The growing Chinese trade gap with the 27-nation European Union has prompted the EU to join Washington in lobbying Beijing to ease currency controls and import barriers.

The surge in exports to Europe is due in part to the rise in the euro against China's currency, the yuan, which makes Chinese goods more attractive to European consumers. The dollar, by contrast, has fallen against the yuan, making Chinese goods more expensive for Americans.

Soaring food prices are especially worrisome to Beijing because they hit China's poor majority hardest.

There have been no reports of demonstrations, but bouts of high inflation in the 1980s and '90s set off protests -- an embarrassment that communist leaders want to avoid ahead of August's Beijing Olympics, which they hope will showcase China as a prosperous, stable society.

A senior economic official, Vice Premier Wang Qishan, said Friday that Beijing will stick to tight monetary policies to prevent inflation from escalating. But he announced no new initiatives.

Beijing is trying to cool a boom in lending and investment that it worries could fuel broader inflation. It has raised interest rates repeatedly over the past two years and tried to curb credit growth by forcing banks to set aside more reserves.

Prices began to rise in mid-2007 as China ran short of pork, grain and some other basic goods.

The government has assured the public that China has enough grain and is paying farmers to raise more pigs. But efforts to boost food supplies were hampered by China's most severe winter storms in decades, which wrecked crops and disrupted shipping.

The sharpest inflation has been limited to food but the costs of raw materials and energy are edging up, raising pressure for producers to pass on rising prices to consumers.

April's nonfood inflation was 1.8 percent, matching March, which was the highest in more than a year, according to the government data. The rate stayed at or below 1 percent through 2006 and 2007.

Producer prices rose 8.1 percent in April, driven by rising energy costs, according to the government.

April's 22.1 percent rise in food costs was fueled by a 68.3 percent jump in the price of pork, 46.6 percent in that of cooking oil and 13.6 percent for fresh vegetables.

National Bureau of Statistics (in Chinese): http://www.stats.gov.cn

Can You Live On One Income? It’s Worth a Try

Is it possible for families to go from two incomes to one?

It's something most households with two working parents and young children at home have contemplated at some point. More than 60 percent of families with children under age 18 had both parents employed outside the home in 2005-2006, according to the Bureau of Labor Statistics. That compares to less than a third of mothers in 1975.

Driven to the Edge

You see lots of articles discussing ways to eliminate the second income -- things like clipping coupons, buying second-hand clothes, and cutting out vacations and cable television.

But ultimately, paring those expenses isn't going to cover the gap for most middle-class families, because those aren't the costs that drive them to the economic edge. The real problems are what Harvard Law professor Elizabeth Warren calls "the big five" -- housing, health insurance, child care, a second automobile, and taxes.

Warren, author of "The Two-Income Trap," is an expert on family bankruptcy. She has found that married couples with children are more than twice as likely to file for bankruptcy as childless couples. (More children live in homes that will file for bankruptcy this year than live in homes that will file for divorce.)

Moreover, income volatility has increased sharply among families with children. According to Jacob Hacker, author of "The Great Risk Shift," the volatility in family incomes doubled between 1969 and 2004. Moreover, Americans with at least four years of college experienced a larger increase in family income instability than those with only a high school education over the past generation, with most of the rise occurring in the last 15 years.

More Is Less

The single-income family with two children in the early 1970s earned about $32,000 in inflation-adjusted dollars, compared to $73,000 for the dual-income family in the early 2000s.

Despite the higher income, today's families save less and carry more debt: In 1970, the one-income family saved 11 percent of its take-home pay and allocated 1.4 percent of its annual income to pay revolving debt, such as credit cards. In 2005, the two-income family saved nothing, and allocated 15 percent of its annual income to revolving debt, according to Warren.

In other words, the two-income family spends everything -- the second income, all of its annual savings -- and has piled on debt. Where does the money go? Despite the sticker-shock that goes with buying a gallon of milk these days, they didn't spend it on food, clothing, appliances, electronics, or automobiles -- on an inflation-adjusted basis, those costs actually went down.

The Big Five

Warren found two-earner families today spend three-quarters of their household incomes on five categories (which consumed only half the income of single-earner families a generation ago):

Housing: The cost for families with children has risen 100 percent in inflation-adjusted dollars since 1970.

Health Insurance: For a healthy family that has an employer-sponsored insurance plan, costs have risen 74 percent in inflation-adjusted dollars since 1970. In that year, the demographic group most likely to lack health insurance was a 23-year-old unmarried man with no children; today it's a person age 35 who is married with children.

Cars: Families today spend 52 percent more on automobiles than in 1970, on an inflation-adjusted basis, Warren found. While the inflation-adjusted price of automobiles has dropped since 1970, families are still spending more on this category because they typically need two cars to get to work.

Taxes: The first dollar that the second earner earns is taxed after the last dollar of the first earner, Warren notes. This means that the tax rate for the family unit has risen by about 25 percent between 1970 and today.

Child Care: In 2007, fees in licensed centers ranged from $10,920 a year for 4-year-old children to $14,647 a year for infants, according to a study by the National Association of Child Care Resources and Referral Agencies (NACCRRA). In every region of the United States, annual costs of child care surpass the cost of food.

Reading, Writing, and Retirement

A sixth major expense is education -- both preschool and college -- which most families in 1970 didn't view as necessary to launch their child into the middle class.

The number of children who attend preschool has risen to 45 percent of all 3- and 4-year-olds from about 20 percent in 1970, according to the Census Bureau. On average, parents pay $7,000 a year, according to NACCRRA.

Finally, there's the challenge of saving for retirement. In the late 1970s, 62 percent of workers were covered solely by defined benefit plans, paid for by their employers; in 2005, the number was 10 percent, according to data from the Employee Benefits Research Institute.

Making It on One Income

So is it possible to downscale to one income? It may be, for couples who are willing to make bold changes with their money and in their attitudes, says Judy Lawrence, a financial coach and author of "The Budget Kit."

"You have to be willing to do some soul-searching about the things you're going to change and let go of," Lawrence says, adding that the stay-at-home parent takes on the additional job of planning ahead and investing the time to get the best deal. It's going back to your true priorities, values and goals and saying 'it's the best choice for me, my family, and our future' -- not 'we'll be locked into a life of drudgery and we can't do what we want to do.'"

Jonni McCoy, a Colorado writer and founder of Miserly Moms, agrees. When she left her job as a buyer for Apple Computer in 1992 to stay home with her two children, she was earning more than half the family income. "Make sure you're really clear why you are doing it, because there will be days when this is the last thing on the planet you want to do," she says, drawing an analogy to nutrition: "The average diet lasts 72 hours, but if you have a medical reason, it will stick."

The Single Life

Find a community of like-minded savers, says McCoy. "You have to have people who share your values, who say 'no, I can't afford that,' " she says. "The beginning is so tough, because when you're leaving the working world you may not have that community established."

Bankrate.com offers a calculator to help figure out what a second income is really worth on an after-tax basis, without all the work-related expenses. You need to track your monthly expenses for child care, commuting, work clothes, lunches and coffee breaks, dry cleaning, cash for coworkers' birthdays and other celebrations, and money spent on take-out meals and restaurants because you don't have time to shop and cook. Also consider savings on cleaning and other services the stay-at-home partner could take on, and the possibility of eliminating or downsizing a second car.

Start to tackle grocery expenses before you quit. "Food is the largest unfixed expense in most household budgets, so there's a tremendous amount of money in there," says McCoy. "We tweaked our budget in every way, but the majority of extra money came out of groceries." Basing weekly menus specifically on sale items can cut 30 percent off a grocery bill, McCoy says.

Getting to No

Lawrence, whose budgeting guide was first published in the 1980s, says it's harder to live on one income today because a number of innovations -- such as Internet access and certain prescription drugs -- have become necessities. But just as important, there's so much more choice in luxuries than there used to be -- that is, so much more stuff to say "no" to.

"Children and adults are bombarded unconsciously with media showing them how life is supposed to be; you're unconsciously saying 'no, no, no' all the time -- and that takes energy," Lawrence says. "It's much more of an emotional challenge than it used to be."

Gas jumps nearly 3 cents to record; oil crosses $124

Gasoline and crude oil jumped to new records Thursday, with gas rising 3 cents to an average national price of nearly $3.65 a gallon and oil crossing $124 a barrel for the first time.

At the pump, the average price of a gallon of regular gas nationwide rose 2.7 cents to a record $3.645, according to a survey of stations by AAA and the Oil Price Information Service. Diesel prices also rose, adding 0.9 cent to match a record national average of $4.251 a gallon.

Gas prices tend to lag oil futures, and with crude rising to a new record near $124 a barrel Wednesday and likely headed higher, it's widely expected the average price of gas will soon rise as high as $4. Motorists in many areas, including parts of California and Hawaii, are already paying that much, or more.

"If oil prices go the way that pundits are expecting, there's no way we'll stay under $4 a gallon," said Fadel Gheit, an analyst at Oppenheimer & Co. in New York.

Meanwhile, light, sweet crude for June delivery rose 16 cents to reach a settlement record of $123.69 a barrel on the New York Mercantile Exchange Thursday after spending much of the day in negative territory. But in after-market electronic trading, prices shot to a new trading record of $124.61. Analysts said volume was quite low, making it easy for oil to keep pushing higher.

"This appears to me to be computer-generated buying," said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill Cos. Some investors use software that buys automatically when prices rise to certain levels; Thursday's record settlement may have triggered a flurry of electronic buy orders.

"There is no fundamental news out to cause this market to move like this," Rafield said.

Bullish momentum -- and expectations that the dollar will continue to weaken against foreign currencies including the euro -- are likely to keep pushing oil to new records, he said.

Goldman Sachs analysts recently predicted prices will rise as high as $150 to $200 a barrel within two years. That forecast has driven much of oil's gains in recent days.

Analysts at Goldman and firms such as Barclays Capital believe tight global supplies and growing demand from fast-growing economies in countries such as China and India are driving oil higher. But Gheit and analysts including Tim Evans at Citi Futures Perspective argue that supply and demand fundamentals don't support such high prices.

"There is no reason why oil prices should be above $60," Gheit said, noting that domestic crude supplies are at average levels, and that refineries are cutting gasoline production as high prices cut consumers demand for fuel. "The physical supplies do not justify the price, it just doesn't make sense."

OPEC Secretary General Abdalla Salem El-Badri on Thursday reiterated his position that oil supplies are adequate, and that there is no need for the cartel to boost production. He said several Organization of Petroleum Exporting Countries oil projects are coming on line, but he noted that several member countries are having a hard time finding buyers for their additional supplies.

El-Badri agrees with analysts who feel speculative investment driven by the dollar's protracted decline is the real reason behind higher prices. The dollar fell against the euro Thursday, attracting investors who view commodities such as oil as a hedge against inflation. Also, a weaker dollar makes oil cheaper to investors overseas.

Still, the market sometimes ignores the dollar, as it did Wednesday when oil surged to new records although the dollar advanced. Some analysts say that's a sign that many investors are buying on pure momentum -- believing prices will head higher regardless of negative data, news or dollar movements.

"There's a lot of momentum driving the oil price up," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

In other Nymex trading, June gasoline futures rose 1.96 cents to settle at a record $3.1378 a gallon after earlier rising to a trading record of $3.14, and June heating oil futures rose 6.25 cents to settle at a record $3.5098 a gallon after earlier reaching their own trading record of $3.5152. June natural gas futures fell 6.4 cents to settle at $11.263 per 1,000 cubic feet. The Energy Department said natural gas inventories rose by 65 billion cubic feet last week, but remain slightly below the 5-year average.

In London, June Brent crude futures rose 52 cents to settle at $122.84 a barrel on the ICE Futures exchange.

AP Business Writers George Jahn in Vienna and Thomas Hogue in Bangkok, Thailand contributed to this report.

Gas Prices Expected to Peak in June

Oil jumped to another record on Tuesday, and the government said it expected gasoline prices to peak at a national average of $3.73 a gallon in June, just as the summer driving season kicks off.

The new forecast from the Energy Department came on a day oil futures rose above $122 a barrel in New York trading after rebels in Nigeria renewed their attacks against oil installations. By day’s end, crude oil for June delivery closed at a record $121.84 a barrel, up 1.6 percent from Monday’s close.

Oil prices have nearly doubled in a year. Gasoline is selling for a national average of about $3.61 a gallon, according to AAA, the automobile club, a penny less than the record set on May 1 but 58 cents higher than a year ago.

Some private analysts have gone beyond the Energy Department’s forecasts, predicting that gasoline will surpass $4 a gallon this summer.

Domestic gasoline consumption is likely to fall more steeply than expected this year, the Energy Department said, an indication that higher prices are cutting into the driving habits of many Americans. But gasoline prices are expected to rise nonetheless and should average $3.52 a gallon for the full year, or 71 cents above their average price in 2007, according to the government’s latest estimates.

“In the past, high prices could be offset by borrowing or making more money,” said Adam Robinson, an analyst at Lehman Brothers. “It’s really when you have the triple bite — a weaker economy, less access to credit, and higher prices — that you see the consumer recoil.”

The high cost of fuel has become a major issue in the presidential race, with the Democratic candidates, Senators Hillary Rodham Clinton and Barack Obama, clashing over a summer waiver of the 18.4-cents-a-gallon federal gasoline tax.

The gas tax holiday is supported by Senator Clinton and the presumptive Republican nominee, Senator John McCain, who have both said it would provide some relief in the summer driving season. Senator Obama calls the idea “pandering” and said that cutting the tax would spur more consumption, pushing prices back up.

In its monthly report, the Energy Department projected that domestic petroleum consumption would decline by about 190,000 barrels a day this year, a result of the economic slowdown and high prices. That is a sharper drop than the 90,000-barrel-a-day decline projected by the department last month.

After accounting for increased ethanol use, domestic consumption will fall by 330,000 barrels a day, or less than 1 percent of total gasoline demand. While limited, it would be the first annual decline in gasoline demand since 1991.

The Energy Department expects oil prices to average $110 a barrel this year, about $9 more than its previous outlook.

Despite these higher costs, global oil demand is still projected to rise by 1.2 million barrels a day this year, mostly because of growing consumption in China, the Middle East, Russia, Brazil and India.

China alone will account for a third of the jump in consumption. In March, Chinese imports rose by 800,000 barrels a day, compared with levels a year earlier, a big increase that could mean China is filling its oil reserve needs before the start of the Olympic Games this summer.

Oil supplies, meanwhile, continue to lag behind. After a drop in Nigerian output last month, production by OPEC nations fell 1 percent in April, according to a survey by Bloomberg News.

Members of the Organization of the Petroleum Exporting Countries pumped an average of 32.1 million barrels a day last month, down 320,000 barrels from March, according to the survey of oil companies, producers and analysts.

Nigerian production dropped by 160,000 barrels, to an average of 1.88 million barrels a day, the country’s lowest level since August 1999. The country’s output suffered from a strike by Exxon Mobil workers. Adding to these troubles, rebel militants have apparently resumed their attacks on oil companies in the Niger Delta, forcing Royal Dutch Shell to reduce production.

As demand continues to outpace the growth in oil supplies, analysts expect little relief in prices. A shortfall in supplies over the next two years will probably send oil to $150 to $200 a barrel, Goldman Sachs said in a new report.

Analysts’ forecasts for the price of gasoline over the next few years run as high as $7 a gallon.

The Other Car

Six years ago my wife and I traded in two cars for two new-used ones. Twice in a few weeks, one of us drove an old car up a ramp to the cavernous second floor of the dealership and just left it there. Well, not quite, for later we reported to each other the same experience. Each of us walked away, but then looked back, realizing that this familiar friend would be gone from our lives forever and, more poignantly, that we were abandoning a faithful, if increasingly troublesome, retainer.

These feelings were of course irrational. Inanimate objects do not have emotions (Stephen King’s Christine and Arthur Clarke’s HAL are cautionary exceptions), and it makes no sense to experience guilt at having mistreated them (can you in fact mistreat, except in a technical sense, a machine?), but I am sure that we were not unique in our self-reproaches and misgivings.

Avis Rent-a-Car certainly agrees with me, for that company is now running a series of commercials featuring older cars that are being neglected and fear being discarded in favor of the shiny new and with-it high-tech vehicles available, on demand, for around 45 dollars a day. The genius of the commercials is that they foreground the sexuality that informs the relationship between the car owner and the object of his/her affection.

It is of course a commonplace to note that sex is a staple of automobile advertising, but in most ads the idea is that a car with the right curves will attract the girl with the right curves; the piece of machinery is instrumental to the effort to attain the object of desire. But in the Avis ads, the piece of machinery is the object of desire (there is a hint of the human-cyborg union promised at the end of the first “Star Trek” movie), and the very act of desiring it constitutes infidelity.

In three of these ads, infidelity is not a metaphor; it is literally what is going on; and the parallels between car-adultery and husband/wife adultery are delineated with such precision, point for point, that the experience of watching is uncomfortable for anyone who has been on either the giving or receiving end in this age-old scenario.

My favorite (and a favorite on the blogosphere) is entitled “Look Back.” It features, in the starring and tragic role, a battered red Saab 900 (I own a black one). The scene opens on a sparsely populated airport parking lot. A well-dressed man is getting himself together in preparation for boarding. He puts some trash on the dashboard, gets out of the car, kicks the door shut (wince!) and puts a coffee cup on the roof.

While all this is happening, the car is speaking in a mournful male voice. It/he says, “So, he’s going away with Avis, again. He’ll get something with the GPS so that he can find his lattes and his driving range. If that’s the way he wants it, fine.” But this moment of bravado-dignity doesn’t last. As the philandering driver walks away, he pauses and rummages in his pocket, concerned that he may have left something in the old clunker. Hope revives, and the SAAB says, “Did he just look back? I think he looked back.”

The last shot is of the parking lot, empty except for the forlorn automobile sitting there with an abandoned coffee cup, which it cannot see, on its abandoned “head.” Another voice — here’s where the traditional commercial kicks in — chimes in cheerfully, “One more reason why Avis should be your other car.”

One viewer who rates the ad on the internet likes it, but complains that “the gender of the voice of the vehicle should be the opposite gender of the owner.” No, these ads are indifferent to gender. Lust is lust and betrayal is betrayal, whether the relationship is gay or straight.

In another ad (“Three Days”), the straying partner is a woman who has just returned from a three-day vacation. As she settles into the front seat, the car, a tired-looking, sickly green thing, spots the Avis receipt in her handbag, just as a wife or husband might spy a tell-tale matchbook from a restaurant in a town neither of them has ever visited. The car voice-over comes on, and it is sarcastic: “Who does she think she’s kidding. You know what she’s been doing in Miami. You sit here staring at a cement wall, alone. and she has the gall to just show up three days later and pretend that she doesn’t smell like ‘new car.’” (Another gender reversal: it’s usually the woman who smells perfume on the man.) The ad ends with more sarcasm: “She was with a Prius hybrid. Oh. suddenly, she’s an environmentalist?”

In the third ad, “Conference,” the cuckolded vehicle is a Buick, sitting, iced-over, in a parking lot. A flier for a New Mexico resort is on the seat. The Buick speaks: “He said he had to go to Sante Fe for work. Big Conference. Right! You know what’s happening. He’s driving around with another car. He’ll say he was with a client. He was probably with that red Cadillac CTS from Avis, again.” Just before the word “again” (the equivalent in this series of Poe’s “nevermore”) is intoned, a piece of ice, obviously a tear, falls from the Buick’s tail light.

When the hucksterish voice of the company spokesperson chirps, “With dozens of the hottest cars to choose from, there’s a reason Avis is your other car,” the effect is jarring because the dramatization has been so affecting. We care about these people — I mean cars — and the intrusion of the profit motive is unwelcome.

Strange to say, these are not good ads precisely because they are so good. The point of a commercial is to make the viewer fall in love with the product, in this case the hot cars Avis is pimping. But the viewers of these commercials are more likely to give their affections to the product’s victims, for it is from their point of view that the narrative has been presented.

While Avis’s intention is, no doubt, to advance its corporate fortunes through these commercials, the image the ads project is less than flattering. Avis comes across as the supplier of temptation, the enabler of seduction, a corporate madame. Its stable of “hot cars” lure men and women to default on their responsibilities, to throw away the tried and true, to surrender to the meretricious glitter of the new. But these wiles are defeated by the sympathy we are made to feel for those who have been harmed by them.

Who would have thought that in the early years of the 21st century, advertising would give us a morality tale of such power?

I still wonder whenever I see a car that looks like one of those I have discarded whether it is in fact mine. Forgive me.

Copyright : times.com

Economic Calendar for week 5th - 9th May 2008

All times GMT not BST. BST is +1 Hr.

Monday May 5th :

UK - ALL - May Day Holiday
EU - 08:30 - Sentix Investor Confidence.
US - 14:00 - ISM Non-Manufacturing Composite.
US - 14:00 - Fed Holds TAF Auction.
EU - Tentative - ECB Predient Trichet Speaks.

Tuesday May 6th:

US - 00:30 - Fed Chairman Bernanke Speaks.
EU - 08:00 - Services PMI.
UK - 08:30 - Services PMI.
EU - 09:00 - PMI M/M.
UK - 23:01 - Consumer Confidence Index.

Wednesday May 7th:

FR - 06:45 - Government Budget Balance.
FR - 06:45 - Trade Balance.
UK - 08:30 - Industrial Production M/M.
UK - 08:30 - Manufacturing Production M/M.
EU - 09:00 - Retail Sales M/M.
UK - 09:30 - BRC Shop Price Index Y/Y.
EU - 10:00 - German Factory Orders M/M.
US - 12:30 - Nonfarm Productivity Q/Q.
US - 12:45 - Fed Governor Kroszner Speaks.
US - 14:00 - Pending Home Sales M/M.
US - 14:30 - Crude Oil Inventories.
US - 19:00 - Consumer Credit M/M.
US - 23:01- NIESR GDP Estimate.

Thursday May 8th:

GE - 06:00 - Trade Balance.
GE - 10:00 - Industrial Production M/M.
UK - 11:00 - Interest Rate Statement.
EU - 11:45 - Minimum Bid Rate.
EU - 12:30 - ECB Press Conference.
US - 12:30 - Unemployment Claims.
US - 14:00 - Wholesale Inventories.

Friday May 9th:

FR - 06:45 - Industrial Production M/M.
US - 12:30 - Trade Balance.

EU - Europe wide
FR - France
UK - United Kingdom
US - United States
GE - Germany

The week ahead.

Sell in May says the old stock market adage, but the bulls were in no mood for old wives tales last week. Markets were in rally mode after the better than expected US jobs report, and news of more liquidity injections from the Federal Reserve. The Federal Reserve did what most traders were expecting them to do in cutting rates another quarter percent down to 2%.

" The worst is behind us rhetoric continues to flow from central bankers on both sides of the Atlantic. Markets held the previous weeks gains to close the week higher for the third week in a row. The FTSE rose 2%, but the biggest gainers were tech stocks with the Nasdaq 100 putting on 3% for the week. Volume has been healthy and the twin inflation evils of Gold and Oil are continuing to deflate from their highs. Oil dropped down to near $110 at one stage, but recovered to finish the week down around $3.00 a barrel. Gold faired the worst of the pair, closing at its lowest levels for 2008, just above $850.

It wasnt plain sailing for all of last week. Banks again gyrated as Mervyn Kings testimony before The Treasury Select Committee, provided a steady flow of warnings about the UK economy. Any home owner hoping for a return to attractive rates of recent years will be disappointed after King made it clear that the Bank of Englands recent liquidity plan wasnt aimed at kick starting British Mortgage lending. With UK house prices showing their first year on year decline for decades, and US house prices down 12% by the same measure, it is only going to get worse for house building stocks. UK home builders such as Persimmon and Barratt Homes stemmed the flow last week with small losses, but they may have much further to go if the US housing stocks and dramatic house price collapse are anything to go by. Indeed last week more data was released supporting anecdotal evidence that the housing slump has indeed started.

After the deluge of data that hit last week, the forthcoming week is at least reduced in its intensity. The stand out announcements come on Thursday from a European perspective with the Bank of England announcing their latest interest rate decision. Analysts are expecting the MPC to keep rates on hold as they balance the tricky terrors of inflation and an economic slow down. The ECB are also holding a press conference an hour and a half after the MPC announcement.

If we take a step back from the euphoria, there is certainly room to question the bullish case from here. The jobs numbers were not as bad as expected, but the figures still make for grim reading. Private payrolls have fallen for five straight months, and weakness in the goods producing sector is intensifying. The overall trend of an increasing weakness in US job creation remains.

The VIX Options Volatility Index, a good measure of market fear and complacency, now stands at levels not seen since late December 2007, around the time that the Dow Jones fell nearly 2000 points in less than a month. While another 2000 point drop may not be in the offing, there are growing indications of complacency in this rally.

One rather speculative trade may be to place a one touch bet that the S&P 500 will touch 1350 in the next 16 days. This trade could return 160% if markets pull back significantly from their current levels.

David Evans

Copyright : Betonmarkets

Fixing the Housing Crisis by Fixing the System

The housing finance system, while still functioning, is in a crisis state. Interest rate risk premiums -- the rate increment on mortgages classified as riskier -- are two to four times as large as they were two years ago. Day-to-day rate volatility, which can cause havoc in the relationships between borrowers and loan providers, is larger than I have ever seen it.

Underwriting requirements -- the conditions that lenders require to approve a loan -- have tightened across the board. Loans without a down payment, and loans allowing borrowers to "state" what their income is rather than document it, are pretty much gone. Loans are taking longer to get approved, and sometimes lenders change the rules in midstream.

Recently I heard from a borrower who was scheduled to close on a home purchase in four days, with a mortgage approved by one of the largest lenders in the country. She had just been notified by the lender that her down payment had to be increased from 5 percent to 10 percent.

The reason for the bank's action is instructive. The area in which the property is located was reclassified as one with high potential for property-value decline. And the reclassification was based on a high and rising level of foreclosures in the area. Foreclosures lead to distress sales and downward pressure on prices.

A 180-Degree Change

This is a 180-degree change from two years ago. At that time the prevailing assumption was that rising house prices would generate equity on loans that were originally made with no down payment. Now the concern is that falling prices will wipe out the equity on loans made with down payments that are too small.

For example, if a $200,000 house is purchased with a $200,000 loan and the house appreciates at 5 percent a year, after two years it would be worth $220,500. The borrower in this case begins with zero equity, but the passage of time generates equity of $20,500. (I am ignoring the small change in the loan balance that occurs over the first two years.) If the same house is purchased for $200,000 with 5 percent down and the house value declines 5 percent a year, the borrower begins with $10,000 of equity, but the passage of time reduces it to negative $9,500.

A swing from a prevailing expectation that house prices will rise to an expectation that they will fall causes a major tightening of underwriting requirements. Indeed, the only reason the tightening has not been even larger is that the house price declines expected are temporary. The prevailing view is that they will last only until we get out from under the foreclosure crunch.

This places the foreclosure problem front and center as the critical policy issue. Most of the emphasis has been on the human toll from having families forced out of their homes, which is understandable. But reducing the number of foreclosures also is the key to reestablishing a well-functioning mortgage market going forward.

Finding a Solution

The Bush administration and Congress are trying to find a solution, but none of the proposals swirling around Washington have identified the source of the problem. The core problem is the way the mortgage industry manages default risk.

There are two systems for managing default risk. The first and, unfortunately, the larger of the two is to charge borrowers a risk premium in the interest rate. The risk premium is a rate increment above that charged on a "prime" transaction, which carries the lowest risk. The weakness of the risk premium system is that, with a few exceptions, risk premium dollars not needed to cover current losses are realized as income by investors. They are not available to meet future losses. So risk premiums collected in 2002 that were not needed to cover losses in 2002 became investor income and are not available to cover losses in 2008.

The other system is mortgage insurance, and it has worked well. Borrowers are required to purchase mortgage insurance if their down payment on a home purchase, or their equity in a refinance, is less than 20 percent. The mortgage insurance companies place more than half of every premium dollar they collect from borrowers in reserve accounts. The reserves that accumulate during long periods when losses are small are available when a foreclosure crunch comes -- such as now.

If a significant part of all charges for default risk were placed in reserves, then the system would be much less vulnerable to a major default episode. Future articles will explain how to do this, as well as why, among other benefits, it would provide a way to reduce foreclosures now.

by Jack M. Guttentag

Yahoo CEO Jerry Yang on hot seat after rebuffing Microsoft's $47.5B takeover bid

Yahoo Inc. Chief Executive Jerry Yang has gotten what he wanted: a chance to prove his company is worth more than the $47.5 billion that Microsoft Corp. offered to buy the Internet pioneer.

It will be a daunting challenge, as Yang will be pointedly reminded Monday when investors are expected to show how little they think of Yahoo without a takeover bid on the table. Faced with resistance from Yang and the rest of Yahoo's board, Microsoft withdrew its offer over the weekend.

Many analysts believe Yahoo's stock price, which had climbed nearly 50 percent since Microsoft's initial offer, will surrender most, if not all, of that gain, leaving the Sunnyvale-based company's market value around $30 billion.

Disillusioned shareholders are bound to question whether the rejection of Microsoft's sweetened $33-per-share offer was driven more by emotion and ego than sound business sense.

"Clearly there's frustration," said Darren Chervitz, co-manager of the Jacob Internet Fund, which owns Yahoo stock. "I am not even sure if Yahoo cares about its shareholders because they didn't show much regard for shareholders' best interests in this process."

Despite such negative sentiment, Yahoo shares are unlikely to immediately fall back to their $19.18 pre-bid price, partly because some investors may still be holding out hope that the software maker will renew its takeover attempt if Yahoo continues to struggle.

Yahoo shares finished last week at $28.67, slightly below the $29.40 per share that Microsoft was offering before Chief Executive Steve Ballmer agreed to raise the offer to $33 per share in a last-ditch effort to get a deal done.

Accompanied by fellow Yahoo co-founder David Filo, Yang flew to Seattle Saturday to inform Ballmer that the company wouldn't sell for less than $37 per share -- a price that Yahoo's stock hasn't reached since January 2006.

Analysts and investors were left to wonder why the two sides couldn't compromise at $35 per share.

"They really didn't seem that far apart," Chervitz said. "There is probably blame to go around on both sides, but I think most of it is in Yang's hands."

Monday's anticipated shareholder backlash will put Yang on the hot seat as he tries to execute on a turnaround plan that he began drawing up nearly a year ago after he replaced Terry Semel as CEO amid shareholder angst about the company's financial malaise.

"This squarely puts the pressure on Jerry Yang to deliver results and shareholder value," Standard & Poor's equity analyst Scott Kessler said. "You are going to see a lot of shareholders just throwing in the towel because they are going to realize it's going to take awhile for the stock to get back to where it was Friday."

Ballmer also will be under the gun to prove he can come up with another way to challenge Google Inc.'s dominance of the Internet's lucrative search and advertising markets.

The unsolicited bid was widely seen as Ballmer's admission that Microsoft needed Yahoo's help to upgrade its unprofitable Internet division.

Analysts now expect Ballmer to use the money he had earmarked for the Yahoo acquisition to explore other possible deals with large Internet companies like Time Warner Inc.'s AOL and News Corp.'s MySpace and promising startups like Facebook Inc. and LinkedIn Corp. Microsoft already owns a 1.6 percent in Facebook, the second-largest social network behind MySpace.

But Ballmer is unlikely to be under as much duress as Yang because most analysts believe Microsoft's stock price will rise Monday. The shares had declined 10 percent to $29.24 since Ballmer made the bid, reflecting concerns that the proposed marriage would turn into a complicated mess that would enable Google to grow even stronger.

Yang, 39, has promised that Yahoo's development of a more sophisticated and far-flung Internet advertising platform will produce net revenue growth of at least 25 percent in 2009 and 2010. That would be a dramatic improvement, considering that Yahoo's revenue rose by 12 percent last year and is expected to grow at about the same pace this year.

But analysts are skeptical about whether Yahoo will be able to hit those targets, raising the chances for a shareholder rebellion if the company stumbles during the next few months -- a distinct possibility if advertisers curtail spending in a shaky U.S. economy, as many analysts fear.

As it is, Yang and the rest of Yahoo's board almost certainly will face more lawsuits from incensed shareholders.

Even some of Yahoo's own employees may be irritated because virtually all of them own stock options.

What's more, Microsoft had planned to offer $1.5 billion in retention packages to the thousands of Yahoo employees it wanted to stay on after a takeover.

To help boost its short-term profits and its stock price, Yahoo is widely expected to form a long-term advertising partnership with Google.

Although the final details are still being ironed out, Yahoo wants to hire Google to place some of the text-based ads that appear alongside the search results on its Web site. It's a task that Google already handles for scores of Web sites, including AOL and Ask.com.

Both Yahoo and Google have said they were encouraged with the results of a two-week trial run completed last month.

But turning to Google for help would be a humbling step for Yahoo after spending more than $2 billion to acquire and build its own technology.

An alliance between Google and Yahoo also would face antitrust hurdles because the two companies combined control more than 80 percent of the U.S. search advertising market.

Although Google's superior technology would help boost Yahoo's profits in the short term, some analysts worry it could be a mistake for Yahoo to surrender any control over such a lucrative piece of the online ad market.

Yahoo also has been exploring a possible merger with AOL's Internet operations, but may now have to contend with a competing offer from Microsoft.

Yahoo also might attempt to placate shareholders by buying back stock.

Kessler believes Yang should use some of his estimated $1.9 billion fortune to personally buy more Yahoo stock even though he already owns 54.1 million shares, or 3.9 percent of the company.

"Jerry Yang really needs to put his money where his mouth is," Kessler said. "If he really thinks Yahoo is worth $37 (per share), then he needs to step up and buy some shares when they are in the low $20."