My finance view

The dollar rose against the pound Tuesday after a report showed the U.K. economy marching toward recession.

The dollar jumped against the British pound, which sank 1.2 cents to $1.47, but fell slightly against the 15-nation euro, which rose 0.11 cents to $1.396. The dollar also gained ¥0.54 to ¥90.77 against the Japanese yen.

The U.K. government reported that the country’s gross domestic product, the sum of all U.K.-produced goods and services, contracted by 0.6% in the third quarter, revised down from 0.5%. Last quarter, the government reported zero growth.

A recession is loosely defined as two consecutive quarters of negative economic growth. "[The U.K.’s fourth quarter] could also be disappointing," said Gareth Sylvester, senior currency strategist with HiFX.

Investors are watching and waiting to see what the Bank of England will do to combat the "unprecedented" economic downturn, according to Sylvester.

One possibility: The U.K. central bank could follow the Federal Reserve in cutting its key interest rate to near zero to keep cash flowing through the economy pay day loan.

"You don’t want to get caught holding [pound] sterling," Sylvester said.

The GDP of the United States also declined in the third quarter. As economists had expected, according to a Briefing.com poll, the GDP contracted 0.5%.

Concerns about the world’s economic outlook has spurred buying of U.S. Treasurys, which are backed by the U.S. government and considered an ultra-safe investment during times of economic trouble.

Since Treasurys are sold in dollars, investors must first purchase dollars in order to buy Treasurys.

During Tuesday trading, the prices of short-term 1-, 3-, and 6-month Treasurys, usually considered among the most defensive investments, have risen.

That trend has been consistent, Sylvester said. 

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COLUMBUS, Ohio – Oil and U.S. retail gasoline prices dipped to new three-year lows today with the United States officially in a recession.

Analysts believe prices at the pump may finally be bottoming out after a precipitous decline from record highs this summer, though demand could fall even further in January with job losses reducing the number of people who drive to work.

Gas prices in the United States fell for the 20th week since the July 4th holiday and hit US$1.811 per gallon, according to the government's Energy Information Agency.

Auto club AAA, the Oil Price Information Service and Wright Express said prices fell 0.8 cents overnight to $1.812, down 62.4 cents in the past month and $1.249 in the past year.

Prices in some parts of the country were much lower. On the website GasBuddy.com, where motorists post gas prices, a BP station in Independence, Mo., outside Kansas City, was selling fuel for $1.29 per gallon.

Daily declines posted for the last two months have begun to narrow. The U.S. average for a gallon of gas peaked at $4.11 in July.

In Canada, the price of gas averaged 83.4 cents Canadian per litre, according to Gasbuddy.

"The big move for 2008 is over," said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service. Prices may fall a few more cents this month and then likely waver into February before beginning to move higher, he said.

Kloza said demand will weaken further in early 2009 as job losses mount amid what may be an extended recession.

"January could be really, really ugly," he said.

The U.S. government reported last month that the unemployment rate shot up to a 14-year high of 6.5 per cent in October, and many economists believe it will top eight per cent before the economy mounts a sustained rebound. November's unemployment rate will be released Friday.

The U.S. National Bureau of Economic Research, a private, non-profit research organization, said Monday that its group of academic economists who determine business cycles pegged December 2007 as the start of the U.S. recession.

Light, sweet crude for January delivery fell more than four per cent, or $2.32 to settle at $46.96 a barrel on the New York Mercantile Exchange. Earlier today prices briefly fell to $47.36, the lowest level since hitting $46.20 intraday on May 20, 2005.

In London, January Brent crude slid 40 cents to $47.57 on the ICE Futures exchange.

Analyst Peter Beutel of Cameron Hanover said traders are searching for the bottom in the oil market free credit score.

"Right now, everyone is wondering when is this market going to rally," he said. "At some point it should."

Beutel said colder-than-expected temperatures across much of the country, increasing demand for gas and expected further cuts in production by OPEC make a strong case for oil prices to rally.

"That doesn't mean we're going back to $4 gas," he said.

Backing up Beutel's claim on demand is the SpendingPulse report by MasterCard released this afternoon.

The report's four-week moving average shows demand of 63.9 million barrels a week. That is down 2.1 per cent from the year-ago moving average and the smallest decline since May.

"It looks like we're getting back to a more normal level from demand and price," Michael McNamara, vice president of MasterCard SpendingPulse.

MasterCard's report is based on aggregate sales activity in the MasterCard payments network, coupled with estimates for all other payment forms, including cash and check.

The Organization of Petroleum Exporting Countries, which accounts for about 40 per cent of global supply, cut output by 1.5 million barrels a day in October, bringing total cuts to around 2 million barrels a day this year.

The slowing economy has cut into energy demand, leaving OPEC's power to control prices through production cuts diminished.

OPEC Secretary-General Abdullah El-Badri said the group would likely reduce output quotas by between one million and 1.5 million barrels at a meeting on Dec. 17 in Algeria, according to a report on Iranian state television Monday.

The head of OPEC said he hopes oil producing nations such as Russia will join the organization, or at least agree to output cuts to help spark a rally in prices.

Chakib Khelil, also Algeria's oil minister, said oil producers such as Russia, Norway and Mexico should express their solidarity with OPEC, either by joining the cartel or by following its reductions of output quotas.

In other Nymex trading, gasoline futures fell 5.29 cents to settle at $1.0583 a gallon. Heating oil fell 3.19 cents to settle at $1.5832 after hitting a 52-week low of $1.5778 a gallon. Natural gas for January delivery fell 18 cents to settle at $6.424 per 1,000 cubic feet.

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Hong Kong's inflation slowed for a third month as commodity prices fell and the government waived public-housing rents and subsidized electricity bills.

Consumer prices rose 1.8 percent in October from a year earlier, the government said today on its Web site, after gaining 3 percent in September. That compared with the 1.9 percent median estimate of 14 economists surveyed by Bloomberg.

Inflation has eased from July's decade-high level of 6.3 percent because of smaller gains of food prices in China, Hong Kong's major supplier, and lower global energy prices. Hong Kong slipped into its first recession last quarter since the severe acute respiratory syndrome epidemic in 2003.

“Inflation has cooled on the back of lower food and energy prices,'' said Kelvin Lau, an economist at Standard Chartered Bank Plc in Hong Kong. “Looking ahead, inflation will continue on a downward trend along with the economic cycle.''

For the first 10 months, Hong Kong's consumer prices rose 4.6 percent from a year earlier, the government said.

Gross domestic product shrank 0.5 percent in the third quarter from the previous three months, as exports and domestic demand cooled.

In China, the world's fastest-growing major economy, consumer prices climbed 4 percent in October from a year earlier and food prices increased 8 fast cash in one hour.5 percent. Both were the least in 17 months.

Oil's Drop

Crude oil has fallen more than 40 percent this year, prompting utility companies and gas stations to cut prices. CLP Holdings Ltd., Hong Kong's biggest power supplier, lowered the average net electricity tariff by 3 percent on Oct. 1.

The government has subsidized household electricity by taking HK$300 off bills every month for one year starting September. It has also distributed food allowances for the poor and waived rents for public-housing residents for three months starting August.

Food prices rose 9.4 percent in October from a year earlier, the government said. Utility costs slumped 32.3 percent and rents slipped 0.8 percent.

“Looking ahead, with the international commodity prices retreating and U.S. dollar strengthening, inflationary pressures from the external front are receding,'' the government said in the statement. “These factors, coupled with the slowdown in domestic demand and government's relief measures, should be conducive to progressive easing in inflation going forward.''

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Americans began pumping money into mutual funds for the first time in 15 weeks, as global equities started rallying at the end of October, according to a report released Thursday.

Investors poured $2.2 billion into equity-based mutual funds during the seven days ended Nov. 5, compared to an outflow of $9.2 billion the week before, according to TrimTabs Investment Research. The last time stock-based mutual funds saw net gains was during the week ended July 23.

Stocks surged as October drew to a close, leading many investors to put money back into their mutual funds. But the moves may have been premature as markets turned sour earlier this week, said Conrad Gann, president and chief operating officer of TrimTabs.

"Retail investors don’t have the best timing. They basically got burned over the last few days," said Gann.

Over the two days following Tuesday’s presidential election, concern about the state of the economy sent the Dow Jones industrial average down some 929 points, marking its biggest two-day point loss ever.

Downward pressure. Funds that invest primarily in U.S.-based stocks saw an increase of $2.3 billion versus a decline of $7 billion in the prior week. However funds that focus on non-U.S. stocks continued to see declines, with investors pulling out a net $140 million compared to $2.2 billion last week.

"Foreign [funds] have the double whammy of a dollar rebound and the falling market," said Gann Faxless pay advances.

The dollar has gained significantly against most major currencies over the past several weeks as many investors try to hedge their bets against the volatile stock market.

As the dollar increases, the value of foreign funds decreases because the value of the stocks they hold, which are denominated in foreign currencies, goes down, Gann explained.

Bond-based funds saw a net increase of $518 million in investments compared to a decline of $5.9 billion last week, and hybrid funds, which try to strike a balance between stocks and bonds, saw a net influx of $184 million compared to net withdrawals of $2.8 billion.

Meanwhile exchange-traded funds (ETFs), unmanaged bundles of stocks that trade as a single unit on normal exchanges, saw a net inflow of $885 million, down from an inflow of $903 million last week.

Over the past several months, money flowing into ETFs has gotten a boost from the economic weakness, since it allows investors to spread their risk across a whole range of stocks.

Despite the apparent turnaround in mutual fund confidence, "we’ll continue to see outflows," said Gann. The economy is still struggling, especially overseas, he pointed out. 

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So you’re driving to work, sipping on steamy coffee when your cellphone rings.

Instinctively, your knees slide into position to take over the wheel as your free hand reaches to answer the call. You are now executing the highly treacherous chat-sip-and-steer move. If this were competitive diving, the degree of difficulty would equal the reverse-one-and-a-half-somersault-with-four-and-a-half twists.

Glance to the right and left in traffic and witness the burgeoning phenomenon: Drivers all around you are attempting the same unlikely telecommunications stunt while doing 100 km/h on the highway.

News reports last week confirmed the Ontario government is about to outlaw such behind-the-wheel multi-tasking with legislation aimed at the growing hordes of mobile communicators who cannot keep their hands on the wheel and their eyes on the road.

Stiff penalties are in store for anyone talking on a cellphone, holding a GPS device or texting while simultaneously negotiating traffic. Considering the obvious public safety risks associated with driving while under the influence of cellphones, it’s little wonder.

Here’s the irony: Legislation designed to limit use of technology in the car can be skirted by adding more technology in the car.

Wireless devices that harness your cell signal and invisibly transfer it into a speakerphone or transmit it into a hands-free earpiece are now legal loopholes for tech-demanding drivers.

Wireless Bluetooth car speakers clip to your car’s visor or, in some cases, plug into the cigarette lighter. I’ve been testing out Sony Ericsson’s HCB-120 car speakerphone ($100), a sturdy and simple box that sits out of the way directly above your head.

Establishing the connection to your phone is simple with any of these hands-free devices. Settings in your phone allow you to "enable" Bluetooth and "pair" the phone with the speaker. Think of it as instant spiritual connection in which your phone and the hands-free device intuitively understand each other and share everything.

Both my Sony Ericsson and BlackBerry phones paired nicely with the HCB-120. A button on the device lets you retrieve and hang up without ever losing visuals on the road. The only complaint here is the volume levels that left me craning forward, head tilted to one side in order to hear my caller in noisy traffic approved cash advance.

The Parrot Minikit Bluetooth Hands-Free Speaker ($99) has a less boxy look, with curved lines and funky design that doubles as a kind of in-car art installation hanging from your visor. Volume levels are much better here and the pickup and hang-up buttons are larger and colour-coded. In all, very slick.

As for in-ear options, the provocatively dubbed Jawbone and Sony Ericsson’s HBH-PV703 are two examples that tuck into your ear canal and deliver sound from your phone and transmit your voice back.

The Jawbone ($139) has a sleek look, jetting out from one ear as it hugs tightly to your face. When the phone rings, just tap on the device as it sits in your ear and you’ve answered the call. Another taps shuts it down. The big pitch here is the "noise assassin" feature designed to kill surrounding noise and purify your voice to your callers. It works. Sound quality here is remarkable.

Sony Ericsson’s device ($39) has a more standard look and price. Sound quality doesn’t match the Jawbone but it’s perfectly acceptable, given the price difference.

The main issue with earpieces is comfort. I don’t mind wearing them. But there are those who see attaching a plastic appendage to the side of their head for lengthy periods of time as a form of sci-fi torture. As well, you’ll need to be vigilant about recharging. The tiny rechargeable batteries die after a few hours of talk time and any prospects of in-car chatting die with them.

The choice between Bluetooth earpiece and speakerphone is a personal call, so to speak.

Whatever your preference, consider that neither option will address the far more fundamental problem: We talk on our cellphones far too much while driving.

Having narrowly avoided a 12-car pile up while jotting off a text message in downtown traffic recently (I’m not proud of it, I’m just saying …), I am (barely) living testament to the fact that we need saving from our tech-obsessed selves.

Robert Cribb occasionally reviews the latest products on the market. Email him at rcribb@thestar.ca

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The U.S. dollar rose Thursday as investors responded to higher stock prices and a report that showed the nation’s economy shrank in the third quarter.

The euro fell 0.6% to $1.2973 from $1.2956 late Wednesday in New York.

Britain’s pound traded at $1.6444, up from $1.6375.

Against the yen, the dollar rose more than 1% to ¥98.544 from ¥97.235.

The dollar came under pressure earlier in the session as Asian and European markets rallied. But the greenback recovered as the rally’s momentum faded.

"There was some enthusiasm overnight from fed rate cut," said Vassili Serebriakov, currency strategist at Wells Fargo & Company’s foreign exchange division. "But some of that enthusiasm is wearing off," he added.

Currency traders often buy higher yielding currencies such as the euro and the pound when stock prices are rising and sell those currencies in favor of lower yielding currencies like the dollar when markets are volatile.

World markets were bolstered by the Federal Reserve’s decision Wednesday to lower its benchmark interest rate to 1%. Central banks in Asia also cut interest rates freecreditreport.com.

The Fed also announced plans to establish $30 billion swap facilities with central banks in emerging markets.

In Asia, major markets posted double-digit percentage gains. Japan’s Nikkei index climbed 10% while Hong Kong’s Hang Seng index surged 12.8%. In Seoul, the KOSPI shot up a record 12%.

European shares closed mostly higher. Germany’s DAX and the FTSE-100 in London both added more than 1% while the CAC-40 gained 0.15%.

Major stock indexes in the Untied States opened higher but trimmed gains at midday as investors responded to a government report that showed the nation’s economy shrank in the third quarter.

"The market is taking a step back after the weak GDP figures," said Gareth Sylvester, senior currency analyst at foreign exchange brokerage HiFx.

Gross Domestic Product, the broadest measure of the nation’s economy, fell at an annual rate of 0.3% in the third quarter after growing at a 2.8% rate in the second quarter. 

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U.S. consumer confidence plunged to a record low in October amid signs the economy is sliding into a deep recession, threatening to pull the rest of the world along with it.

Investors expect the United States to slash interest rates on Wednesday, with Europe and Britain likely to follow next week, as policy-makers in the world’s major economies fight to head off a prolonged slump.

The Nikkei business daily said the Bank of Japan was also considering a 25 basis-point interest rate cut to underpin the economy, pushing the dollar and the euro up against the yen.

Iceland hiked interest rates massively in a desperate attempt to defend its currency from the global turmoil. The move will help secure aid from the International Monetary Fund, which is also crafting plans for Hungary and Ukraine as the crisis sweeps developing economies.

The Bank of England said financial markets appeared to have priced in losses of $2.8 trillion from the credit crisis, equal to more than two years of U.S. corporate profits, but the BoE said actual losses may be much less than that.

A Federal Reserve cut will be too late to save depressed U.S. consumer confidence, which plunged in October to the lowest in the 40-year history of the Conference Board survey. Companies slashed jobs and retirement savings evaporated during the month, which is on track to be the worst for Wall Street in more than 60 years.

“Consumers are completely shut down at this point,” said Lindsey Piegza, a market analyst at FTN Financial. “They see no end in sight even with all the actions that the government has taken one hour cash.”

ECONOMY DOMINATES U.S. ELECTION

The economy dominates the U.S. presidential election which takes place November 4. Republican presidential nominee John McCain and Democratic candidate Barack Obama traded attacks on each other’s tax plans on Tuesday.

Polls show voters trust Obama more on the economy and he leads in national surveys and important swing states.

The current crisis has its origins in the bursting of the U.S. housing bubble and data showed prices of U.S. single-family homes continue to plummet, falling a record 16.6 percent in August from a year earlier.

Whirlpool Corp, the world’s biggest appliance maker, said it will cut 5,000 jobs, adding to the gloom. It posted lower than expected quarterly profit and slashed its 2008 earnings outlook.

The world’s biggest mutual fund company, Fidelity Investments, said it was reviewing its costs and staffing following an industry report that said as many as 4,000 jobs, 9 percent of its workforce, could be cut.

There were some hopeful signs, including a drop in closely watched rates on loans between banks, showing efforts by central banks to lower borrowing costs were making progress. However, a further reduction was needed to restore the financial system to normal functioning.

Global stocks rallied back from five-year lows, with Wall Street rising more than 5 percent. 

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The Icelandic government said Monday that it has taken control of the struggling Glitnir bank, marking the first major banking nationalization for the country in the current turmoil.

The government said it bought a 75% stake in Glitnir, the country’s third largest bank, for €600 million euros ($878 million) to ensure broader market stability after it suffered liquidity issues.

Central Bank of Iceland chairman David Oddsson said that Glitnir, which has operations in 10 countries, would have collapsed if the authorities had not intervened.

However, the government said that the bank would continue to operate as normal and that it does not intend to hold its share "for an extended period."

Glitnir itself stressed that its core operations "are solid."

"The board and management of Glitnir have diligently worked at securing the bank’s funding in the past months’ turbulent markets, but unfortunately the bank saw adverse development in the past few days," said Glitnir chief executive officer Larus Welding, who will remain in his position.

"Having the government as an owner strengthens the capital base of the bank and removes all doubt about Glitnir’s financial strength," he added.

The Financial Supervisory Authority said that Glitnir’s capital and asset portfolio is solid and its loan book of good quality payday advance. The capital adequacy ratio will be 14.5% after the government’s action, it said.

Glitnir said that the offer was posed Sunday meeting and the bank’s board voted to accept the proposal at a meeting Monday morning. The bank now plans to call a shareholder meeting to approve the deal.

Trading in Glitnir shares was halted on the OMX Nordic Exchange. 

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OTTAWA–Software producer Corel Corp. is cutting its global workforce by about eight per cent, affecting 90 employees, to increase operational efficiency.

The Ottawa-based company said the move will allow it to increase investment in growth opportunities, including emerging markets and e-commerce.

It was not immediately known where the layoffs would fall, but Corel has its largest presence in Ottawa cash advance loan no fax.

Corel says it will take a US$2.8-million restructuring charge in the fourth quarter due to the layoffs.

The company has said it is in talks with for a possible sale of the company, but so far no buyer has emerged.

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Washington Mutual Inc, the largest U.S. savings and loan, ousted Kerry Killinger as chief executive and has been put under special regulatory supervision, following skyrocketing losses from mortgages that are expected to weigh on results for years.

Alan Fishman, 62, chairman of mortgage broker Meridian Capital Group and a former chief operating officer of Sovereign Bancorp Inc, was named to replace Killinger, who had run the Seattle-based thrift since 1990.

Washington Mutual’s expansion into subprime and other risky mortgages led to $6.3 billion in losses over three quarters, and caused the stock to lose nine-tenths of its value in the last year. The thrift has said losses from its one-family residential mortgages could approach $19 billion through 2011.

“WaMu is facing unprecedented housing and market conditions,” Chairman Stephen Frank said on a Monday conference call. “The board felt that new leadership with a combination of deep industry experience and a fresh perspective would be the most effective way to lead the company.”

Washington Mutual’s board in June stripped Killinger of his job as chairman, a role he had held since 1991.

Killinger, 59, joins Citigroup Inc’s Charles Prince, Merrill Lynch & Co’s Stanley O’Neal and Wachovia Corp’s Ken Thompson among financial services chiefs to lose their jobs because of mortgage losses.

On Sunday, the chief executives of Fannie Mae and Freddie Mac were also replaced.

“It seemed like the writing was on the wall,” said Chris Armbruster, an analyst at Al Frank Asset Management, which owns the thrift’s shares http://paydayloans-on.com. “A new leader may take the opportunity for write-downs to rid himself of baggage from former management. The change may indicate bigger write-downs to come. 

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