Pakistan, India to carry forward talks’

ISLAMABAD:
Pakistan and India have decided to carry forward the dialogue process and all issues, including the core issue of Kashmir, were discussed with the Indian leadership in Mohali.

Briefing the Senate about his recent India visit, Prime Minister Yousaf Raza Gilani said the cricket match provided an opportunity for bringing closer both the nations and their leaderships.

He said the outcome of this meeting was very positive and both the sides agreed to move forward for resolving various issues, working for peace.

Referring to the recent hike in fuel prices, Gilani said that they were linked with international market and the Oil and Gas Regulatory Authority set the oil prices.

He said that the government had so far given a subsidy of Rs35 billion on petroleum products this year. He said that the government had tried its best to cushion the people against the sharp increase in oil prices in the international market.

Gilani stressed the need for devising a consensus on a national strategy to overcome the menace of terrorism.

The prime minister appreciated the Senate for making useful legislation on various issues, especially a bill regarding bringing transparency in the election process. He said only transparent and free election could ensure a sustainable democratic system.

Referring to various issues confronting Balochsitan, the prime minister said that the government was focusing on the development of this province with an objective to remove the sense of deprivation.

He said government was aware of the deteriorating law and order situation in the province and it was taking all possible measures to bring peace.

Later, the house passed a resolution condemning attacks on Maulana Fazlur Rehman.

The Senate unanimously passed two bills, including the arbitration (international investment disputes) bill of 2010 and the code of criminal procedure (amendment) bill of 2010.

Earlier, the opposition parties staged a token walk-out from the House to register their protest against increase in the prices of petroleum products. link....

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Top banks cut small business lending by $8 billion

President Obama is trying -- again -- to help small business get the cash they desperately need.

The President will visit a small business in Maryland on Wednesday to present a series of initiatives aimed at increasing bank lending to small businesses, according to a White House official.

The programs the President will unveil include an increase in the maximum amount businesses can borrow through the Small Business Administration's primary loan program, which currently stands at $2 million. In addition, the Treasury Department will expand access for smaller banks to the Troubled Asset Relief Program (TARP), a move aimed at spurring more local lending by community banks.

The TARP program was set up to recapitalize banks so that they would bolster their lending to consumers and small businesses. In March, as the administration and the SBA took steps to stimulate small business lending, Treasury Secretary Tim Geithner ordered the top TARP recipients to begin sending the Treasury monthly reports on their small business lending activity.

"We need every bank in the country to do everything in their power to provide the credit that small businesses need to operate, expand and add jobs," Geithner said as he announced the new requirements. "Given the role many banks played in causing this crisis, you bear a special responsibility for helping America get out of it." link.....

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Students Rely on Federal Loans to Pay Rising Tuition

According to reports issued Tuesday by the College Board, the volume of private student loans -- those not made or guaranteed by the government -- fell by 52% in the 2008-09 school year as recession-battered lenders tightened credit standards or abandoned what had been one of the fastest-growing sectors of the financial-aid market.

Associated Press

Students in a chemistry class last month at California State University East Bay in Hayward, Calif.The New York-based college-admissions nonprofit said students and their families took out an estimated $11 billion in private student loans for the 2008-09 school year, down from $22.8 billion in 2007-08. All loan figures were given in constant, or inflation-adjusted, 2008-09 numbers.

The private loans, which generally have higher interest rates and more stringent terms than those made or guaranteed by the federal government, are often the last recourse for students who have maximized borrowing under federal programs.

As credit markets came to a near-halt last year, the government took steps to boost student lending in government programs, but the increase wasn't enough to offset the drop in private credit. According to the College Board, federal-loan volume rose 15% to about $84 billion in 2008-09, and overall lending fell to $95.9 billion in 2008-09 from $96.7 billion.

"I think what we are seeing here reflects the enormous credit tightening that occurred in the economy," said Terry Hartle, senior vice president of the American Council on Education, a college trade group.

Mark Kantrowitz, publisher of FinAid.org, a Web site that tracks financial-aid issues, said in an email that, amid the credit crunch, lenders have been unable to interest investors in buying securities backed by student loans, making it tough to raise lending capital.

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Goldman 'trading huddles' offer tips to top clients

Goldman Sachs Group Inc (GS.N) holds a weekly meeting of its research analysts where they offer trading ideas that are given to top clients, the Wall Street Journal reported on its website on Sunday.

But the paper cited Steven Strongin, Goldman's stock research chief, as saying these meetings did not give anyone an unfair advantage and the tips did not contradict research notes that carry predictions over a longer term.

Goldman's analysts talk about short-term developments around specific stocks during the meeting, called a "trading huddle," which is also attended by some of the firm's own traders, the Journal reported.

The practice started some two years ago, and since then the Wall Street firm has given ideas on hundreds of stocks, the Journal reported, citing internal Goldman documents.

Goldman could not be reached immediately for comment on Sunday night.

The company told the Journal that its own traders were not allowed to use the information until it had been given to clients.

The Journal also cited Goldman spokesman Edward Canaday as saying that a comment that could lead to changes such as those in earnings estimate, ratings or price target must be sent out to all clients. But Canaday told the Journal that it was rare for comments to reach such levels. link......

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Brazil Petrobras Total July Gas, Oil Prod +3.2% Vs Year Ago

With offshore oil platforms returning to production following maintenance, Brazilian energy giant Petrobras (PBR) posted a 3.2% rise in total natural gas and oil production in July against the same month a year ago, the company said Tuesday.

Gas and oil production from both domestic and overseas sites rose 3.2% from July of 2008 to 2.498 million barrels of oil-equivalent, or BOE, per day, the company said.

The company's total domestic oil and gas output in July was 2.254 million BOE, up 2.7% from July of 2008.

Petrobras' domestic production of crude oil in July was 1.938 million BOE, up 3.8% from the same month a year ago.

Overseas, Petrobras enjoyed an 8.5% year-on-year rise in total natural gas and oil output to 243,707 BOE per day, the company said. The increase was due to two new wells in Nigeria.

On the domestic front, Petrobras said production was favored by increased output at the Marlim and Marlim Leste offshore sites in the Campos Basin following completion of routine maintenance at platforms there. link.....

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Gold rises as risk aversion moderates

Spot gold prices rose closer to $940 an ounce on Tuesday as investor risk aversion moderated, after doubts about an economic recovery triggered sharp selling of cross-market assets the day before.

The euro held steady after falling against the dollar on Monday, while Asian stocks were up slightly and commodities broadly turned positive after sinking the previous day when growth concerns led investors to trim risk exposure and buy dollars.

Spot gold prices, which hit a two-month high above $970 in early August, fell to a 2-1/2-week low of $929.70 on Monday.

Traders said the price drop drew a wide range of buyers, helping to offset large-lot selling and push up the market.

"There was quite a large volume of selling, from the Middle East, but the market comfortably absorbed it," said Yuichi Ikemizu, Tokyo branch manager at Standard Bank Plc, noting that wide-ranging buying interest helped support the market.

Spot gold rose 0.6 percent to $938.60 an ounce as of 0237 GMT, compared with New York's notional close of $932.80 per ounce.

U.S. gold futures for December delivery rose 0.5 percent to $940.40 an ounce, compared with $935.80 on the COMEX division of the New York Mercantile Exchange.

Asian stocks were up 0.5 percent while Japan's Nikkei average inched up 0.4 percent. .T .MIAPJ0000PUS

U.S. stocks suffered their worst loss in seven weeks on Monday due to doubts about the economy's growth prospects. .N

The euro inched up 0.3 percent against the dollar on Tuesday, after hitting a two-week low against the dollar the previous day. A firmer dollar typically hurts gold, as it makes dollar-priced bullion more expensive for non-dollar holders and dampens interest in the precious metal as an alternative asset.

Traders have said the rally in stocks and broad commodities on expectations for global economic recovery had run ahead of reality and a correction was due.

"Looking at how stocks are right now, there isn't a sense the markets are bracing for a sharp downturn," Ikemizu said.

But if stock declines accelerate on growing doubts about recovery prospects, industrial metals such as platinum, silver and copper may face selling pressure and benefit gold, he said.

Physical demand was also expected to keep support firm for spot gold above $900, he said.

Investor interest in gold, however, remained slack, with holdings at the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, staying at 1,065.49 tons as of August 17, unchanged from the previous business day. link....

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CitiGroup says two exempt from pay review

Citigroup Inc says two of its traders are exempt from a government review of the bank's top executive pay packages, The New York Times reported on Saturday.

The Times said CitiGroup submitted to the government on Friday documentation on compensation for its 25 senior executives and highest-paid employees.

It cited "people involved in that process" who said CitiGroup told the U.S. Treasury Department that energy trader Andrew J. Hall, with a pay package of $98 million, and a second unidentified trader who was paid more than $30 million, were exempt from review.

A source close to the bank told Reuters on Wednesday that Hall's contract will be exempt from review because it was signed before a cut-off date of February 11, 2009.

But another source familiar with the matter said federal pay czar Kenneth Feinberg, the U.S. official responsible for setting pay for top executives at finance firms that received billions of dollars in government aid, will have flexibility in applying his authority on a case-by-case basis.

Feinberg will take his time and conduct his work in private, a spokesman said on Friday.

"We are not going to provide a running commentary on this process," said Treasury spokesman Andrew Williams.

Compensation plans were expected to be submitted by midnight on Friday, and it may take several weeks to see if they are in order. Feinberg then has 60 days to present his recommendations on compensation for the 25 highest-paid employees at companies that must answer to the government on pay.

Feinberg has been consulting with seven companies that have yet to pay back money borrowed from the government, including Citigroup, American International Group Inc, Bank of America Corp, Chrysler Financial, Chrysler Group LLC, General Motors Co and GMAC Inc, a Treasury spokesman has said. link.....

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Toyota Leads in Cash for Clunkers

The biggest single beneficiary of the $3 billion "Cash for Clunkers" government program so far is the Japanese automaker Toyota, according to federal figures released Friday.

Three of the five most popular vehicles purchased under the program are Toyota models: the Corolla (No. 1), the Camry (4) and the Prius (5).

Controversy over the program has focused in part on how much of the U.S. tax money will go toward stimulating business for foreign automakers.

Halfway through the program, Toyota is getting the largest share of the new purchases under the program with 19 percent, according to the figures released Friday by the National Highway Traffic Safety Administration.

Two U.S. automakers follow closely behind Toyota, however, with General Motors at 18 percent and Ford at 15 percent of the new business. And about 54 percent of top 10 models purchased under the program are manufactured in the United States, according to the figures. The Corolla, Camry and the Honda CR-V 4WD are all manufactured domestically.

"I've always been confused by the 'Buy America' thing when there are plenty of Hondas built in Atlanta," said Neil Kopit, director of marketing at Criswell Automotive which owns Chevrolet, Nissan, Honda and Hummer dealerships in Maryland. "There is a profit leaving and going overseas. But who is it enriching before it goes there? The dealers and the salespeople and the mechanics all live and work in the community."

Designed to revive the economy by stimulating auto sales, the Cash for Clunkers program offers the owners of older cars $3,500 or $4,500 if they turn in their vehicles and buy a new, more fuel-efficient ride. link......

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Stranded air passengers' plight spurs action from Washington

The nation's top transportation official Tuesday demanded answers from Continental Airlines about why 47 passengers were trapped overnight on a grounded jet in Rochester, Minn., this past weekend.

"Reasonable people are outraged at the idea of being stuck on a small plane for [six] hours," Transportation Secretary Ray LaHood wrote in his official blog. Minnesota Sen. Amy Klobuchar also seized on the incident, asking the Federal Aviation Administration for a "swift response" and asking the two airlines involved to give passengers a "complete and candid explanation" for what happened.

The two U.S. Senate sponsors of the Airline Passenger Bill of Rights also weighed in, saying the case underscored the need for Congress to act quickly on the legislation.

Continental Flight 2816 was redirected to the Rochester airport because of severe weather at Minneapolis-St. Paul International Airport late Friday. It arrived from Houston about midnight, and passengers weren't allowed off the 50-seat plane in Rochester until 6 a.m. Saturday. The flight didn't reach its Twin Cities destination until after 11 a.m.

Passenger Link Christin described the experience as a "nightmare," saying that passengers weren't given any food during the wait, and that the toilet and babies on board began to smell.

LaHood said in his blog that he has written to the airline "inquiring into the circumstances [of the] extended delay."

Continental spokeswoman Julie King said the airline is declining to comment for now about LaHood's blog entry but added, "We are working ... to respond quickly to his inquiry." King added that Continental continues "to take full responsibility." link....

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Microsoft pares down by selling Razorfish ad agency

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Microsoft is offloading interactive advertising agency, Razorfish, in a move that could pave the way for the software giant to dispense with other units.

The company announced on Sunday that it was selling its 14-year-old agency to the French advertising conglomerate Publicis Groupe, in a cash-and-shares deal worth $530m (£317m). The news came just months after the two companies agreed to cooperate to create new hi-tech TV advertising systems.

Publicis, which owns agencies including Saatchi & Saatchi and Leo Burnett, will add the company to its roster and inherit a list of high-profile clients including Ford and McDonald's.

"The acquisition of Razorfish is another step forward in realizing our strategic vision of building a world leader in digital communications, a critically important space for our clients," said Maurice Levy, the chairman and chief executive of Publicis.

Speculation had been rife about the future of the agency, which became part of Microsoft in 2007, when the American software giant bought its parent company, aQuantive for $6bn.

But the deal will also stoke speculation that Microsoft could be preparing to divest itself of other parts of its business that it no longer considers core. Among the prime candidates is Massive, the in-game advertising company it bought for around $200m in 2006.

After a difficult year in which Microsoft laid off thousands of staff members and saw a decline in growth - the first in its history - the Seattle company appears keen to sell off some of the assets it has acquired in recent years.

Such deals will also help ease a little of the concern from investors over the recent deal to take over some of Yahoo's search business, with clear indications that the company is attempting to focus its activities more on businesses like search and software.

Under terms of the agreement with Publicis, Razorfish will continue to be a preferred provider to Microsoft for digital strategy, creative and marketing services and Microsoft has committed to spend a minimum amount for those services each year.

Razorfish will continue to operate under its brand name and be part of VivaKi, the new Publicis Groupe entity created in June 2008 to reflect independent operations of Digitas, Starcom MediaVest Group, Denuo and ZenithOptimedia. Razorfish's management team, led by chief executive Officer Bob Lord, will remain unchanged. link.....

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Las Vegas Sands Seeks to Raise $400 Million, Morning Post Says

Las Vegas Sands Corp. is seeking $400 million in short-term funding to ease a cash crunch and possibly restart resort construction in Macau, the South China Morning Post reported.

The company plans to sell convertible bonds with a coupon as high as 16 percent to hedge funds and pension fund managers, the Hong Kong-based English-language newspaper said today, citing people who have seen documents prepared by Sands’ investment bank, Goldman Sachs Group Inc.

The sale is linked to plans to raise $2.5 billion in a Hong Kong initial public offering of the Las Vegas-based company’s Macau unit next year, the Post said. Investors can choose to swap the bonds for those shares or continue to receive interest payments, it said.

Las Vegas Sands’ spokesman Ron Reese declined to comment on the report, referring inquiries to comments Chief Operating Officer Sheldon Adelson made during an earnings conference call yesterday. Goldman Sachs spokesman Edward Naylor had no comment when contacted by phone.

The company posted a $175.9 million second-quarter loss on July 30, including a charge to reflect lower-than-projected proceeds from the sale of its Shoppes at the Palazzo, which opened last year amid a slump in travel to Las Vegas.

Las Vegas Sands’ debt was put under review for possible downgrade yesterday by Moody’s Investors Service, which said in a statement the results raised concerns the company may not remain in compliance with financial covenants. The current Moody’s rating of B3 is six levels below investment grade.

Shares Plunge

Shares of the gaming company plunged 16 percent to $9.35 in New York Stock Exchange composite trading yesterday, the biggest drop since April 7. The stock has gained 58 percent this year.

Las Vegas Sands, which gets more than two-thirds of its revenue from Macau, is seeking funds to restart work on a $12 billion, 20,000-room hotel and casino complex on Macau’s Cotai Strip. Construction of the project was suspended in November.

Canceled projects and laid-off staff at casinos helped push Macau’s unemployment rate to a two-year high of 3.8 percent in March.

Casino operators including Stanley Ho’s SJM Holdings Ltd. and U.S-based competitors Las Vegas Sands and Wynn Resorts Ltd. may get a boost if China loosens its visa rules after last week’s selection of Fernando Chui as Macau’s new leader. link....

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Honda, Nissan Earnings Beat Estimates on Government Incentives

Honda Motor Co. and Nissan Motor Co., Japan’s second- and third-largest carmakers, posted earnings that beat estimates as costs fell and governments offered drivers incentives to buy new autos.

Honda raised its forecast after net income in the first quarter dropped 96 percent to 7.5 billion yen ($79 million) compared with a 40 billion yen loss forecast by analysts. Nissan posted a 16.5 billion yen loss, less than an expected 58.5 billion loss.

The U.S., Germany, Japan and China are giving consumers credits, tax breaks and subsidies to get consumers to trade in old cars for newer fuel-efficient model. The policies are stemming the plunge in auto demand that helped push General Motors Corp. and Chrysler LLC into bankruptcy.

“It will be a very bad year, but it’s getting better,” said Edwin Merner, who helps manage about $3 billion at Atlantis Investment Research in Tokyo. “The general consensus is that things will start to look a lot better from October.”

Honda raised its full-year forecast 38 percent to 55 billion yen for the year ending March. Nissan kept its full-year forecast unchanged at a loss of 170 billion yen.

Honda rose 1.1 percent to 2,770 yen at the 3 p.m. close of trading on the Tokyo Stock Exchange. The automaker has gained 45 percent this year. Nissan rose 0.8 percent to 631 yen, bringing its gains for the year to 97 percent.

‘Cash for Clunkers’

Honda President Takanobu Ito, 55, expects sales to recover in the second half of the year and is raising funds in anticipation of an increased demand for car loans. A “cash-for- clunkers” program in the U.S., which gives consumers as much as $4,500 for trading in an old car, may spark 250,000 new car sales, lawmakers have said.

Japan has implemented tax cuts and subsidies on some fuel- efficient cars to spur auto sales. Consumers can apply for a 250,000 yen subsidy if they scrap a car more than 13 years old to buy a new one and 100,000 yen for a new car purchase without scrapping an old one.

Nissan Chief Executive Officer Carlos Ghosn, 55, is slashing 20,000 jobs this year as the company expects global vehicle sales to slide 9.7 percent to 3.08 million vehicles. The value of Nissan’s overseas sales last quarter was also hurt by the yen’s 7 percent gain against the dollar.

“2009 continues to be a tough year,” said Ghosn in a statement. “We remain cautious in our outlook.”

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Cash-for-clunkers auto eligibility list changed

As it prepared for its "cash-for-clunkers" program, the government rejiggered gas mileage figures on about 100 older vehicles last week in a way that changed whether they would be eligible for up to $4,500 in sales inducements.

The Environmental Protection Agency says the changes resulted from a double-check of its fuel-efficiency ratings on more than 30,000 1984 and newer vehicles in advance of the official start of the clunkers program Monday.

OFFICIAL WORD: Government website on 'cash-for-clunkers'
SEND US YOUR PHOTO: We're searching for America's worst clunker

About half the 100 suddenly did not qualify because their combined mileage rating was revised upward; others unexpectedly got in.

"As a result of the review, roughly an equal number of vehicles became eligible as those found to be not eligible," said the EPA in a statement. "Eligibility for about 100 vehicles was affected."
FIND MORE STORIES IN: Edmunds.com

Car-shopping website Edmunds.com said Monday that it discovered the switcheroo because potential buyers were complaining on its discussion boards.

Some said it made them ineligible at the last minute for car deals they already had on deck.

"We had everything lined up. We had a couple car dealers that had verified our car qualified, and we were ready to purchase a new car this weekend," wrote one potential buyer, identified on the site as John1152. "But it will not happen now because at the last second the EPA updated the information at their web page for a 1993 Toyota Camry wagon ... from 18 mpg to 19 mpg."

Karl Brauer, editor in chief of Edmunds.com, said, "It's unfortunate that consumers who had been researching and planning to trade in their vehicle ... are now left in the dust."

To qualify for the $1 billion program aimed at spurring auto sales and driving gas guzzlers off the road, the clunker must have an EPA city-highway "combined" rating of 18 miles per gallon or lower. link....

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Asia Stocks At 10 - Month High

Asian stocks hit a 10-month high for a seventh day on Tuesday as investors were lifted by improving corporate earnings, though the non-stop pace of the rally caused some to wonder if it was overdone.

The Australian dollar shot to its highest level since last September after the governor of the Reserve Bank of Australia said the central bank does not have to wait for unemployment to peak before raising rates, adding to speculation the next move will be up.

Major European stock markets opened firmer as investors rode the wave of positive sentiment. U.S. stock futures were down 0.2 percent after the S&P 500 closed on Monday at its highest level since November 4.

An abundance of easy money and low bank deposit rates in Asia have been pushing retail investors to shift money from bank accounts to equities, scrambling for higher returns despite increasingly expensive price tags.

"These strong liquidity conditions are pushing Asian equities to stretched valuation levels, in our view. We think a strong recovery in global final demand is now priced in," Henry Hon and Daniel McCormack, strategists with Macquarie in Hong Kong, said in a research note.

They recommended slowly cutting exposure to riskier stocks as prices rise further.

Japan's Nikkei share average edged down just 1.4 points to 10,087.26 after posting a nine-day rising streak, the longest winning run since 1988.

"High-tech shares that had already rallied are pausing for now, and clues to further gains in the overall market will depend on the degree to which investors snap up laggard banking shares," said Takahiko Murai, general manager of equities at Nozomi Securities in Tokyo.

Valuations have been recovering from depressed levels in Japan. However, on a price-to-book basis, the Nikkei is trading at around 1.3 times compared with the five-year average of 1.8 times, suggesting there may still be pockets of value.

The MSCI index of Asia Pacific stocks outside Japan rose 1.3 percent, racking up a 10-month high.

Gains have sharply outpaced global equity markets, with the regional index up 71 percent since March 9, when share markets began a bullish recovery, compared with a 45 percent gain in the MSCI all-country world index.

Hong Kong's Hang Seng index was trading 1 percent higher in a choppy session, with index heavyweight China Mobile up 3.6 percent.

Investors in mainland China awaited the trading debut on Wednesday of China State Construction Engineering Corp, which with proceeds of $7.3 billion, will be the biggest IPO this year.

The IPO market in China has heated up to the point of increasing fears of a stock market bubble -- only months after the worst of the financial crisis has passed.

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WTO Urges Help to Weather Slump Without Curbing Trade

Governments should have contingency measures that help their industries survive the global economic slump without restricting cross-border commerce, World Trade Organization economists said.

Government policies will play “a big part” in influencing how severely the decline in global trade will hurt industries amid the worst financial crisis in 60 years, the economists said in the World Trade Report released today. The Geneva-based WTO expects merchandise trade to shrink 10 percent this year and “we are unlikely to see sustained economic growth until 2010,” Director-General Pascal Lamy said in a foreword to the report.

Protectionism is growing as governments try to shield their industries from the effects of the global slump. While the worst measures have been contained, efforts to prop up struggling industries and curtail unemployment are leading to policies that hinder free trade.

“In times of economic crisis, governments face pressure to adopt measures which may restrict trade and there are real dangers that such pressures, if not addressed adequately, can lead to a dangerous escalation,” economists led by Patrick Low said in the report. “Contingency measures can act as a safety valve in such instances and can play an important role in maintaining a rule-based system of multilateral trade.”

‘Safety Valve’

WTO economists examined measures in trade agreements that governments can use to combat economic difficulties. While steps such as applying safeguards and raising duties restrain trade flows, they also give governments flexibility when political pressure grows, the 172-page report says.

“Contingency measures may be thought of as a safety valve mechanism, a form of insurance or an instrument of economic adjustment,” said Lamy, who is in Singapore at a meeting of Asia-Pacific Economic Cooperation trade ministers.

These include applying safeguards, anti-dumping and countervailing measures, renegotiating tariff accords, raising import duties to their legal maximum levels and imposing export taxes. Some of these steps may strengthen the rule of law or enable governments to open their markets further than they would have otherwise, Lamy said.

While other actions give governments a “political margin of maneuver and can act as a safety valve when political pressures build,” they may threaten to curb global commerce, the report says. The “architectural challenge” is to find an equilibrium so trade deals are both credible and realistic, Lamy said.

Contraction Slows

“Well-balanced contingency measures, designed primarily to deal with a variety of unanticipated market situations, are fundamental to the effectiveness and the stability of trade agreements,” he said.

In a Bloomberg Television interview today, Lamy said trade is shrinking more slowly now than in recent months.

There is “some slowing down” of the global trade contraction, especially in Asia, which will probably bottom out first “and probably more vigorously than average” from the global slump, he said. “But I remain very cautious as we’re still not out of the woods.” link....

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Starbucks tops earnings expectations on cost cutting

Although Starbucks' revenues fell and traffic into its stores continued to slow, investors were thrilled with the company's $151.5 million profit for the quarter ended June 28.

Shares climbed $1.46, or almost 10 percent, to $16.15 in after-hours trading Tuesday after the earnings announcement. During regular trading, shares fell 23 cents to $14.69.

"It was a quarter driven by cost cutting and getting out of unproductive stores and unproductive leases," said Edward Jones analyst Jack Russo.

Of the roughly 900 stores the coffee-shop chain plans to close worldwide, it now has shut 676 in the U.S., 61 in Australia and 28 in other international markets.

Starbucks shops are closing faster than they're opening, a dramatic shift from two years ago, when it opened an average of seven stores a day.

The chain now expects to end its fiscal year, on Sept. 27, with 30 fewer stores than it began the year.

Starbucks cut $175 million from expenses during the quarter. Some savings came from closing unprofitable stores but mostly were through eliminating corporate jobs and exiting corporate-office leases ($60 million), and finding in-store efficiencies like new ways to steam milk that reduce the amount that's thrown away, and better ways to load pastry cases so that less labor is required (another $60 million), Chief Financial Officer Troy Alstead said in a telephone interview.

After Starbucks slashes an expected total of $550 million in costs this fiscal year, it will focus on new ways of supporting its stores and improving the customer experience, "which is more important than cost-reduction efforts," Alstead said.

Starbucks spent $51.6 million in the quarter on restructuring charges, mostly to exit leases and pay other costs associated with store closures. Without the restructuring charges, it earned 24 cents a share during the quarter, 5 cents better than analysts had predicted, according to Thomson Reuters.

A 7 percent drop in quarterly revenue, to $2.4 billion, means Starbucks has not emerged from a financial quagmire that began in 2007 and worsened as the economy slowed.

The only business unit that saw a revenue gain was its smallest, the global consumer-products group that markets products like ice cream and bottled Frappuccino. That unit posted a 17 percent revenue gain to $106.3 million.

Last summer, Starbucks posted its first quarterly loss as a public company and its shares sank to a 52-week low as investors digested news that it would close 600 U.S. stores. Since then, an additional 200 U.S. stores were slated for closure. All 800 are scheduled to close by Sept. 27. link.....

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U.S. offers up to $50 million for Mexican cartel members

WASHINGTON (CNN) -- U.S. authorities have ratcheted up pressure on one of Mexico's most notorious drug cartels, releasing new details about the so-called Gulf Cartel's operations and offering up to a $50 million reward for the arrest of its leaders.

These are weapons that the Mexican army said it seized from the ruthless Gulf Cartel in 2008.

A federal indictment unsealed Monday charged Miguel Trevino Morales, a leader of the northern Mexico-based Gulf Cartel, of operating a criminal enterprise, cocaine distribution and firearms violations.

Concurrently, prosecutors updated a separate indictment against three other top leaders of the Gulf Cartel: Antonio Cardenas Guillen, Jorge Eduardo Costilla and Heriberto Lazcano, for drug trafficking related crimes, all believed to be at large in Mexico.

Fifteen other suspected cartel members are also named in that indictment.

"We have learned that the most effective way to disrupt and dismantle criminal organizations is to prosecute their leaders and seize their funding," Assistant Attorney General Lanny Breuer said in a statement.

To that end, the departments of justice, state and treasury are working together to place pressure on theGulf Cartel and what authorities describe as its ruthless enforcement arm, known as Los Zetas.

The Department of the Treasury designated the four top bosses named in the indictments as Specially Designated Narcotics Traffickers, which authorizes the freezing of any assets they hold in the United States and other sanctions.The Gulf Cartel and Zetas, nicknamed collectively as "The Company," are among the major drug cartels that are behind the drug-related violence that has swept Mexico in recent years, according to authorities. Since taking office in 2006, Mexican President Felipe Calderon has made fighting the cartels a major priority.

The group also operates in cities across the United States, authorities said.

The court documents detail telephone conversations between the four leaders and more than a dozen other cartel members allegedly discussing the transportation and smuggling of cocaine and marijuana into the United States.

"These indictments allege a stunning and sophisticated operation by 'The Company' to move illegal drugs into our communities and cash back to Mexico," Breuer said.

The State Department is offering a rewards totaling up to $50 million for information leading to the capture of four top leaders and six other cartel lieutenants. link....

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Hu Arrested for Crime, Not Spying, Said Australian Minister

SYDNEY -- Australian Foreign Minister Stephen Smith Sunday said Chinese government officials have made clear the detention of Rio Tinto Ltd. executive and Australian citizen Stern Hu is solely related to a criminal investigation surrounding iron ore price negotiations.

Following a meeting with Chinese Vice Foreign Minister He Yafei on Friday, Mr. Smith said Chinese officials have provided further details to the Australian government on the detention of Mr. Hu and three other Rio Tinto employees.

"It is quite clear they are focusing on a criminal or judicial investigation relating to the 2009 iron ore negotiations, that is their clear focus, they are not interested in what we would regard as espionage or national security matters," Mr. Smith told Australian Broadcasting Corp.

Mr. Hu, Rio's head of iron ore in China, was detained on July 5 along with three Chinese nationals employed by Rio on allegations they stole state secrets relating to iron ore price talks.

The foreign minister said "commercial and economic matters" fall under the Chinese definition of state secrets, and expects the full details behind the case to become clearer if the Chinese investigation against Mr. Hu results in charges.

The foreign minister said the government continues to seek further details, and will continue to make representations with Chinese authorities, but said the issue cannot be "magically" resolved.

"[He Yafei] made it clear the Chinese are regarding this matter as an individual matter, they are not treating this as a more general matter so far as the relationship is concerned, they want it to be treated in context of Chinese law and Chinese procedures, and that is from the Australian government point of view, the only option that we have," Mr. Smith said.

Because the detention of the Rio Tinto employees relate to allegations of bribery and criminal conduct, the processing of the case is solely a matter for China, Mr. Smith said. "It needs to be done within Chinese law and Chinese practice, but it needs to be done quickly."

On Friday, Rio Tinto said it firmly denied claims that four of its employees bribed officials at Chinese steel mills, saying it fully supports the men who have been detained without charge by the Chinese. The foreign minister added officials from both governments will continue to discuss the issue.

In an effort to up the pressure on China, Australian Prime Minister Kevin Rudd last week cautioned that government's and corporations around the world are watching the outcome of Hu's detention closely. link....

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VW to pay $11.28 billion for all of Porsche: report

Porsche SE's (PSHG_p.DE) controlling families will agree on Thursday to accept an offer by Volkswagen (VOWG.DE) to buy its sports car business Porsche AG for roughly 8 billion euros ($11.28 billion), Der Spiegel reported on Saturday.

Germany's leading weekly magazine wrote that the rival Porsche and Piech clans, which own 100 percent of Porsche SE votes, will approve the two-stage takeover at a supervisory board meeting on July 23.

Volkswagen would purchase a 49.9 percent stake in Porsche AG and at a later date acquire the rest, in a deal that would create an integrated automotive group with 10 brands under the leadership of the Wolfsburg-based carmaker.

The sale would help Porsche SE pay off most of its debt, which two sources told Reuters has ballooned to considerably more than 10 billion euros.

Der Spiegel also said embattled Porsche SE and Porsche AG Chief Executive Wendelin Wiedeking is negotiating over a severance package that could total more than 100 million euros. In the meantime, production chief Michael Macht will replace him as head of Porsche AG, the magazine reported.

On Thursday, Wiedeking rejected speculation he was about to leave the group.

Asked on Saturday whether the two families have reached a decision for the July 23 board meeting, Porsche spokesman Anton Hunger said "we have not been informed of one," adding that the Spiegel report was speculation that the company would not comment on.

Separately rival German weekly magazine Focus reported that Volkswagen's powerful chairman and part-owner of Porsche, Ferdinand Piech, plans to remove Wiedeking on Thursday from the influential six-man steering committee on the VW supervisory board.

The vacancy could open up the opportunity for Piech's cousin and rival, Wolfgang Porsche, VW supervisory board member and Porsche SE chairman, to replace Wiedeking in the committee as a representative of his side of the family.

The grandfather of Wolfgang Porsche and Ferdinand Piech was Ferdinand Porsche, designer of the Beetle and founder of Volkswagen. link.....

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UPDATE:Bank Of America, Citi Wring Profits; Regionals Beware

NEW YORK (Dow Jones)--Bank of America Corp. (BAC) and Citigroup Inc. (C) both managed to squeeze out second-quarter profits amid stark signs of looming heavy losses from commercial loans.

The two mammoth banking firms were helped by solid revenue from trading and investment banking, and both also booked billions in income during the quarter by selling investment stakes and assets.

In fact, asset sales kept both banks in the black. Bank of America posted earnings of $3.2 billion on asset sales of $9.1 billion, link....

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