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Thursday, December 27, 2007

Inflation moderate, in line with forecasts

Key price reading up slightly, thanks to lower gasoline prices; economists debate whether it opens door to Fed rate cut.

By Chris Isidore, senior writer

NEW YORK ( -- Consumer prices rose more slowly in July due to lower gasoline prices, according to the government's key inflation reading released Wednesday that was exactly what Wall Street was expecting..

Overall prices for goods rose 0.1 percent in the month, according to the Labor Department's Consumer Price Index, down from the 0.2 percent rise in the June reading. Economists surveyed by had forecast a 0.1 percent increase in prices.

The more closely-watched core CPI, which strips out often volatile food and energy prices, increased 0.2 percent in July, the same as the increase in June and the forecast of economists.

The CPI report is considered a key to whether the Federal Reserve might feel free to cut interest rates in the face of the tightening credit crunch in global markets. Last week the central bank injected $38 billion into the U.S. banking system to deal with the crisis, but concerns about the risk of inflation have so far stopped policymakers from moving to cut rates.

The core CPI is now up 2.2 percent over the last 12 months, which is an increase from the 2 percent rise that had been reported a month earlier. The Fed is widely viewed as being comfortable with the core CPI being up between 1 to 2 percent on an annual basis.

With the 12-month increase in the core CPI rising outside the comfort zone, there was debate among economists over whether inflation is tame enough to green light a Fed rate cut.

Rich Yamarone, the director of economic research at Argus Research who is generally more hawkish on inflation than many other economists, said he believes this report shows price pressures tame enough that the Fed doesn't need to worry about sparking inflation through a rate cut.

"I think this gives the Fed a lot of breathing room, should they have to ease policy because of liquidity issues, even though I don't think it's going to happen," he said. "The core might be outside the comfort zone, but it's not a troubling level that will force the Fed's hand in any direction."

But Jeoff Hall, the chief U.S. economist for Thomson Financial, said he believes the core CPI shows inflation needs to still be a concern for the Fed.

"From a pure economic perspective, inflation is not (low) enough to allow them to cut rates," said Hall. Still, he said that if the liquidity crisis becomes worse than it is, the Fed might have to put those inflation concerns on the back burner and cut rates to assure the markets.

"Those concerns are definitely at the forefront of their mind right now, not inflation," said Hall.

The overall CPI is up 2.4 percent over the last 12 months. That's less than the 4 percent rise in the average hourly wage during the same period, according to a separate Labor Department report, meaning that hourly workers' paychecks have more than kept pace with the rise in prices over the last year.

The overall prices were helped by a 1.7 percent decline in the price of gasoline compared to June. That led to overall energy prices posting a 1 percent decline.

Post-Fed, Wall Street still glowing

Traders set to keep celebrating central bank's decision to cut fed funds rate by a half-percentage point.

NEW YORK ( -- U.S. stock futures were stronger Wednesday as investors continued to cheer a Federal Reserve cut aimed at restoring confidence in the financial markets.

At 7:20 a.m. ET, stocks appeared poised to open higher and extend the previous day's big advance.

The Dow Jones industrial averaged surged about 336 points, or 2.5 percent, on Tuesday after the Fed cut the target on a key interest rate by half of a percentage point.

Many on Wall Street had expected the Fed to be more cautious and lower rates by just a quarter of a percentage point. The bigger-than-expected cut lifted sentiment, as it signaled the central bank is prepared to act in order to keep the mortgage meltdown and credit crunch from derailing the economy.

Peter Cardillo, chief market economist, Avalon Partners, said that he believes that stocks still have some room to climb Wednesday, even after Tuesday's rally. He said the expiration of options on Friday will force those who had taken short positions that bet on a market decline to buy shares to cover those position.

"It looks like the party might be extended today," said Cardillo.

In global trade, Japan's benchmark Nikkei index jumped more than 3 percent on the Fed cut. Major markets in Europe rallied in morning trading.

Investors will be keeping their eye on a fresh set of economic reports due out Wednesday.

The most closely watched report will be the Labor Department's report on consumer inflation, which is set to be released at 8:30 a.m. ET. Economists surveyed by forecast that the Consumer Price Index, which measures retail prices, stayed unchanged in August after a 0.1 percent rise in July.

The more closely watched core CPI, which strips out food and energy prices, is seen posting a 0.2 percent rise, the same gain as in July.

Cardillo said if CPI and core CPI come in worse than expected, it could take some of the wind out of the sails of a market rally, as investors worry that the Fed won't be able to take rates any lower. But he said he doesn't believe it will be enough of a concern to cause a selloff in stocks.

There could be price pressures in the pipeline as oil prices rose above the $82 a barrel mark for the first time in early trading Wednesday, after reaching a record high close for the second straight day Tuesday.

U.S. crude for October delivery rose 62 cents to $82.13 a barrel in electronic trading, ahead of the weekly report on crude inventories, due out at 10:30 a.m. ET.

There could also be price pressures from a lower dollar, which raised the cost of imports. The dollar hit a record low against the euro in early trading Wednesday, although it then rebounded into positive territory. It also gained versus the yen, as the Bank of Japan left rates there unchanged.

Also due out at 8:30 a.m. ET are readings on August housing starts and building permits, which will provide the latest view on the battered housing sector. Economists forecast both readings will fall to 12-year lows, with builders slamming the brakes on new building as they try to work through the glut of already finished new homes on the markets.

Cardillo said he doubts that the weak housing starts number will rattle investors.

"This is old news," he said. "We know housing is in recession. The Fed said as much yesterday."

In major corporate news, the CEO of mortgage lender Countrywide Financial (Charts, Fortune 500) warned Tuesday that the credit crunch threatens to impact the broader economy. But he offered an upbeat outlook for his company, saying he was "very bullish" on the future of Countrywide.

Goldman Sachs Group (Charts, Fortune 500) will not invest its own funds into its flagship Global Alpha hedge fund, according to a report in the Wall Street Journal. But the paper says that the Wall Street firm also will not close the battered fund, which has seen the value of its holdings fall by about 40 percent in the last year.

Goldman rival Morgan Stanley (Charts, Fortune 500) is due to report financial results Wednesday before the opening bell, with analysts forecasting a 12 percent drop in earnings. The report will follow an earnings report Tuesday from Lehman Brothers that showed better than expected results.

Talks continued between the United Auto Workers union and General Motors (Charts, Fortune 500) Tuesday evening, four days after the contract had expired. UAW President Ron Gettelfinger and his bargaining team sent a letter to locals Tuesday saying they may establish a firm strike deadline if the pace of talks don't pick up.

Consumer inflation holds steady

NEW YORK ( -- Inflation pressures stayed steady in October, according to the government's key inflation measure released Thursday that matched economists' forecasts.

The Consumer Price Index, the broad measure of prices paid at the retail level, rose 0.3 percent in October. That matched both the increase in September as well as the consensus estimate of economists surveyed by

The more closely watched core CPI, which strips out volatile food and energy prices, rose 0.2 percent in the month. That also matched the gain in September as well as economists' forecasts.

The inflation reading is particularly important for those trying to judge what the Federal Reserve will do with interest rates at its Dec. 11 meeting. While the Fed has cut rates at its last two meetings due to worries about a slowdown in the economy, concerns about inflation could keep rates unchanged at its next meeting.

The Fed is generally believed to be more concerned with core inflation readings than the change in overall prices, since Fed policy has only limited impact on food and energy prices. But in a statement that accompanied its last rate cut, the Fed policymakers said they were concerned with recent increases in energy and commodity prices, and that the risk of an economic slowdown was balanced by the risk of rising inflation.

Mark Vitner, senior economist with Wachovia, said that the report shows signs that inflation is getting out of the Federal Reserve's so-called "comfort zone." That comes when year-over-year core inflation readings are between 1 and 2 percent. Core CPI was up 2.2 percent in the latest reading after being up only 2.1 percent the previous two reports. Vitner expects that inflation will get worse in the coming months.

"Gasoline prices were barely higher in October. What's going to happen with the November report, when the seasonal adjustment expects gas prices to be falling. We're likely to look at a much larger period of inflation, with the headline number being above 4 or 5 percent," said Vitner.

He said he thinks this report will make it very difficult for the Fed to go ahead with further rate cuts, especially if oil prices stay high.

"We are not in their comfort range," he said. "It calls into question how much the Fed can cut interest rates. They're going to say 'It was hard to bring inflation down. Are we willing to give that up?'"

Tuesday, December 25, 2007

New marketing increasing sales

For years, Native American fishermen hauled in their catch with dip nets from the Columbia River, then loaded wriggling salmon into wet gunny sacks and sold them on the bank for whatever buyers were willing to pay.

Simple, but not too lucrative.

But today, the estimated 500 Indians from the Yakama, Umatilla, Nez Perce and Warm Springs tribes who fish the river are using 21st Century tools to package and market their fish, or are selling at markets in Portland and Seattle.

Dams wiped out the ancient fishing grounds at Celilo Falls nearly 50 years ago, and tribal fishermen now mostly use gill nets set in the river.

And tribal fishermen like Tony Washines say their marketing methods have changed as well. He now spends less time in a fishing boat and more time on the road, selling fish at farmers markets or promoting the business.

Now, Native American fishermen are selling their catch in small, fresh fillets instead of whole fish, or smoked and wrapped in gift boxes with cans of huckleberry jam. They've also launched Web sites to brand and sell their products.

"I've become a large proponent of marketing," said Washines, a Yakama member. "It's a lot easier than a 60-year-old guy getting banged up in a boat."

For the first time in years, native fishermen say that this year they caught fewer fish but made higher profits.

A combination of closed Pacific Ocean fisheries, growing distrust of farmed fish by consumers, better food handling practices and an increase in direct consumer sales helped Indian fishermen realize higher prices for their salmon, said Charles Hudson, spokesman for the Columbia River Inter-Tribal Fish Commission.

Although the run of about 78,000 fish was smaller than last year's, tribal members grossed nearly $4 million for their salmon this year, Hudson said.

An estimate for gross sales from prior years wasn't available because record-keeping procedures have changed and tribal sales are hard to track. But what is clear is the price paid for fish was higher this year.

Some fishermen said they received as much as $4 a pound from processors during a few days in late summer, although prices typically hovered around $2 a pound for salmon.

Last year, Native American fishermen received as little as 10 cents a pound for some runs of fish and averaged about 75 cents a pound for chinook salmon.

The federal government restricted ocean fishing from northern California to central Oregon this year after the Klamath River's population of salmon dipped to extremely low numbers. That closure hurt coastal commercial fishermen, but helped tribal members, Hudson said.

Changing consumer tastes also helped Indian fishermen, Hudson said, particularly because of concerns about farmed fish.

Hudson said farmed salmon hurt wild fish sales in the early 1990s because the farms could produce year-round dependable supplies of uniformly packaged salmon fillets. In 1986, before farmed fish hit the market in force, native fishermen received about 80 cents per pound. In 1996, the average price per pound was 32 cents.

But fish farming operations have come under more scrutiny, with consumers questioning their environmental practices and raising health concerns about farmed salmon.

"There is continued and relentless news about farmed fish," Hudson said. "It seems to be driving more and more people away from farmed fish and back to naturally harvested fish."

Howard Silverman, Portland-based spokesman for Ecotrust -- a nonprofit conservation organization that advocates for wild fisheries -- said recent phone surveys of Oregon residents suggest consumers prefer wild salmon.

Part of that trend may be the public's growing awareness of how fish farms operate, he said.

A survey of 500 people commissioned by Ecotrust and conducted by a Portland-based research firm in 2002 showed 29 percent preferred wild over farmed salmon, he said. In 2005, about 60 percent of consumers preferred wild salmon, according to the survey.

"This is a very new industry, and it's grown very fast," Silverman said.

Mindful of the public's concern about food safety, Indian fishermen also have improved their food handling and packaging practices.

For nearly 10 years, the fish commission has been working with tribal members to improve their techniques. Ice stations also have been set up along the river so fishermen can keep their fish cold.

The tribal agency also has taught native fishermen how to market more effectively. Many have developed company logos, unique packaging -- like holiday gift boxes -- and launched Web sites to sell their fish.

More Indian fishermen also are cutting and packaging their fish, providing traditional smoked fish and selling the roe for human consumption instead of just selling entire fish to wholesale buyers, he said.

Hudson said the tribal agency did a national survey of fishing Web sites and found that many non-native companies were using Native American logos, slogans or claims to sell fish.

"It's working for non-Indians, so why not develop our own that's the real deal?" he said.

Tribal members Alice and Clifford Shippentower of Stevenson had their gift boxes and business logo designed by the fish commission. They've developed a good market for their smoked fish by selling to other tribal members who don't have time to fish for themselves.

The Shippentowers travel to Northwest reservations on pay day to sell gift boxes of smoked salmon and huckleberry jam at roadside stands, Clifford Shippentower said.

Most of their customers are loyal and others come to buy fish because of word of mouth, he said.

Clifford said he and his wife catch the fish, collect the berries and prepare both for sale. "Sometimes it's hard because the fish and the berries come at about the same time," he said.

But he's able to sell gift boxes with two 8-ounce cans of salmon and one jar of jam for about $25, he said -- more than what he could receive from a fish buyer.

The commission also has worked to recruit more fish buyers so one or two companies cannot monopolize fish purchases on the Columbia River and drive prices down. This year for the first time, there were a half-dozen buyers on the river competing for tribal fish, Hudson said.

The popularity of farmers markets also has helped tribal fishermen market their catch directly to customers, he said. Some Indian fishermen traveled to markets in Portland to sell fish caught near The Dalles.

Jon Matthews, commission financial director, said tribal fishermen can expect to sell their catch to a tribal processor next summer.

A $4.5 million, 8,000-square-foot facility is being built near the river at Bingen. The plant will likely be run by a tribal contractor and process fish so the product can be sold worldwide. The Army Corps of Engineers is paying for the facility as part of the federal government's dam mitigation on the Columbia.

It's uncertain if higher prices will hold next year if the ocean fishery is reopened, and some tribal fishermen are still having trouble earning a living for their families on the river.

But Washines said he's been earning double the amount of money for his fish since focusing on quality and selling in specialty farmers markets in the Portland area. He invested in liability insurance and equipment to keep his fish cool.

"I am guaranteeing to my customers that my fish are no more than a day old," he said. "The fish has really sold itself. They could literally taste the difference between ours and everyone else's."

The market season is almost over, but Washines said he sold his fish for as high as $12 a pound this year. Last year, he sold the same quality of fish for a high of about $8 a pound.

Washines said he also earned $14 a pound for his smoked fish this year, up from a maximum of about $12 a pound last year. And he said since he's earning more per fish, he doesn't have to catch as many.

He also left most of the fishing this year to family members while he did the marketing. And he's looking to expand his business by joining a gourmet direct sales agency to market his fish online.

"Most of our fishermen are beginning to learn that they have a quality product that is in demand," Washines said. "Now the story is finally getting told."

By Anna King, Herald staff writer

Nokia Wins UMTS Mobile Patent Ruling

Nokia said it has won afavorable court decision in a battle with wireless firm InterDigital on patents relating to the UMTS mobile standard.

HELSINKI/LONDON, Dec 21 - Nokia (NYSE: NOK) on Friday welcomed what it said was an extremely favourable court decision in a battle with wireless firm InterDigital on patents relating to the UMTS mobile standard.

Nokia, the world's largest mobile-phone maker, won a London High Court declaration that most of the patents in the case are not essential for mobile phone operators wishing to comply with the third-generation (3G) standard, as claimed by InterDigital.

"I consider that three out of the four patents in issue before me are not essential to the standard,"Mr Justice Pumfrey said in his decision on Friday.

He did rule that one patent relating to power control in mobile handsets was essential to the 3G standard. The validity of that patent may be considered at a later hearing and Nokia could be found to have infringed it.

The patents involved in the case relate to power control, increasing capacity of mobile base stations and improved signal quality.

"The result is an extremely favourable outcome for Nokia and other industry participants," Nokia said in a statement.

Nokia filed a complaint in July 2005 asking the High Court to declare that 31 of InterDigital's European patents were not essential to the UMTS standard, saying the it was proactively defending itself from potential infringement suits in Europe by InterDigital.

InterDigital filed a complaint with the U.S. International Trade Commission in August saying Nokia was engaged in unfair trade practice involving two InterDigital patents related to certain 3G handsets and components.

InterDigital also filed a complaint against Samsung Electronics and certain of its affiliates with the Commission in March, alleging patent infringements.

InterDigital said in October the International Trade Commission had consolidated proceedings in the two cases. (Reporting by Sami Torma in Helsinki and Roger Pearson in London; Editing by Quentin Bryar)

Copyright 2007 Reuters. Click for Restrictions

Congress Mulling Ways To Stimulate Economy

Economists like former Treasury Secretary Lawrence Summers on the left and Harvard professor Martin Feldstein on the right, have been urging the government to give the economy a fiscal boost.

WASHINGTON - U.S. lawmakers have begun to consider whether the slowing U.S. economy needs the government's helping hand, but it is not clear what further steps, if any, the White House might be willing to consider.

When President Bush declared Thursday that "all options" would be weighed to counter a housing slump some fear will lead to recession, Democrats and Republicans on Capitol Hill already had been thinking of ways to give the economy a lift.

Over the next month or so, if economic indicators worsen, lawmakers will be eager to jump on legislation to calm voters' jitters just months before presidential and congressional elections are held in November.

"There is no doubt that we are going to deal with an economic slowdown/recession and we need to do what is responsible," said Rep. Rahm Emanuel of Illinois, who holds a high-ranking Democratic leadership job in the House .

Speaking to reporters Wednesday -- two days after some lawmakers had berated Bush for declaring "This economy's pretty good" -- Emanuel previewed Democrats' 2008 legislative priorities. Tax cuts and infrastructure investments were among the items he touched on, but offered no details.

After Bush's "all options" comment Thursday, the White House appeared to try to tamp down speculation the administration would be pushing out a stimulus plan soon.

"All options are always on the table," White House spokesman Tony Fratto said Friday.

A number of prominent economists, from former U.S. Treasury Secretary Lawrence Summers on the left to Harvard University professor Martin Feldstein on the right, have been warning of recession risks and urging the government to give the economy a fiscal boost.

"You have President Clinton's secretary of the Treasury and President Bush both talking about an economic stimulus package. There's more likely to develop some kind of consensus around that, and my belief is the president intends to head in that direction as well," said Rep. Roy Blunt of Missouri, the second-ranking House Republican.

Blunt said discussions with the White House on an economic stimulus plan had not reached a detailed stage yet.

Still, senior administration officials are showing clear signs of concern about how the housing slump and related credit-market strains are being felt around the country.

Treasury Secretary Henry Paulson, on a recent trip to Florida, Missouri and California, heard first-hand from people who had lost their homes and was told by bankers and community activists that worse was to come in 2008, when a wave of subprime mortgage loans are due to reset at higher interest rates that many homeowners are unlikely to be able to bear.

Paulson gamely maintained that the economy remained sound -- "I think and believe we will continue to grow," he told audiences -- but he conceded the housing situation, in which an estimated 1.8 million subprime mortgages face rate resets next year, was "unprecedented."

The administration helped broker a mortgage industry plan to temporarily freeze rates on some mortgages facing resets in coming years, but critics have said it is too little, too late.

The House Budget Committee began an early look at the prospects of a recession with a Dec. 6 hearing. Chairman John Spratt, a South Carolina Democrat, questioned Feldstein's call for tax cuts and wondered whether Congress instead should focus on stemming "a raft of foreclosures" in the housing market if Bush's private-sector remedy falls short.

But broader stimulus legislation, including tax cuts, is obviously on the committee's radar screen.

In a telephone interview Friday, Thomas Kahn, the panel's staff director said, "Clearly a lot of discussions are taking place now. There is an appreciation that some people in this economy are hurting."

He added that January's employment and retail sales reports could provide more clarity on the need for action.

"We would hope that any measure, if adopted, would be targeted, temporary and fully offset over the long-term," Kahn said, adding that it would be "a mistake to take steps that would address a short-term economic problem while making our long-term budget deficits worse." (Additional reporting by Glenn Somerville; Editing by Leslie Adler)

By: Richard Cowan

Copyright 2007 Reuters. Click for Restrictions


Monday, December 24, 2007

Strategy installments Homes with Small Salaries ( Mortgage )

Who does not want to have a home? Each person would have the desire to have their own home. Both are married, or who have not, or who are planning. With home values of course, privatization will be more easily obtained. You also must no longer burden for parents and other family.
For home ownership, the solution is quite easy now, of course with the Home Ownership Loan offered by banks or mortgage. But often the stumbling block is the cost issue. Moreover, if your income or your salary fairly standard or small. Given the means of credit-installment process and no other installment debt. For that, for those who wish to make a mortgage with a small salary, shall have the strategy right. As described below.

Let's say your salary approximately Rp2 million per month, for some people this is no small amount of revenue. With that much income, you have the possibility to make home loans or mortgage. Well, there are important steps you have to do, among them:

1. Determine the amount of house prices.
Determining how much house prices will be credited is very important. You should be able to adjust the amount of income. Because home prices to determine the amount of installments per month. It is recommended to you to take a long period of time, for example, approximately 15 years, in order to fit the size of mortgage you can.

2. Practice of saving.
Since the mortgage for the purchase of this house including installments that will be done in a relatively long time then better before making a home loan, you first do a little experiment to save regularly for Rp600 thousand
for four to five months. If successful, it means you are really ready to apply for mortgage loans.

3. Note the amount of the advance.
In addition to analysis of the ability to repay the mortgage, there is also a need to consider is the amount of the deposit which is usually also required by the bank. For that the bank asks you to pay approximately 20-30 percent of house prices to be credited. That means you need to set up the fund is also quite large for an advance payment of the purchase as a sign so the house.

4. Looking for low mortgage rate.
What is also important to do, is to look carefully at the proposed amount of interest each bank. Try to get the flowers are small, so as not to further incriminate you.

5. Choose a trusted bank.
Do not let your home or simply went along with proposed Home Ownership on bank loans that you did not know his credibility. Better to choose a bank that has become a bank you trust and reliable.

6. Limit the amount of installments.
Assuming, payments per month must be less than Rp600 thousand per month. This is just a rough calculation of where the limit is the maximum mortgage that you can do is 30 percent of the amount of income that you earn each month.

7. Assess the realistic home.
Look at the type of house types and a realistic, meaning that suits your needs and your abilities. Do not let this thing like a 'big pegs than the pole'.

8. Immediately pay administrative costs.

Try not to linger hang settlement administration costs Home Ownership Loan who you ask. The sooner repaid, will further ease the burden of your mortgage.

If these things can have your fill, then you already can be said to have the ability financially and mentally to start asking mortgage. Hopefully useful and can assist you in making decisions in making mortgage loans.