Stocks fall after another earthquake hits Japan (AP)

NEW YORK ? Stocks fell Thursday after a 7.4-magnitude earthquake struck off the coast of northern Japan. The losses moderated slightly after a tsunami warning was lifted.

The Dow Jones industrial average fell as many as 96 points in morning trading before recovering some of its losses. Japan's stock market had already closed by the time the earthquake struck.

The quake rattled investors, partly since it struck near the same area as the massive earthquake that triggered devastating tsunami on March 11. Stock indexes pared their losses after the impact of the latest quake appeared to be less than initially feared.

The Dow fell 56 points, or 0.4 percent, to 12,367 in afternoon trading. The broader S&P 500 fell 5, or 0.4 percent, to 1,330. The Nasdaq composite index fell 5, or 0.2 percent, to 2,795.

In the U.S., economic news was mostly positive. The Commerce Department said 382,000 people applied for unemployment for the first time last week. That was the third drop in four weeks. The decline in applications suggests layoffs are slowing.

Major retailers also reported better-than-expected sales for March at stores that have been open at least a year. Analysts had predicted declines because of cold weather and higher gas prices.

Costco Wholesale Corp. rose 4 percent after reporting a 13 percent gain in sales. Limited Brands Inc. rose 1 percent after it said its revenue increased 14 percent because of strong sales at its Victoria's Secret stores. Nordstrom Inc. and Macy's Inc. also rose about 1 percent.

Bed Bath & Beyond Inc. rose 11 percent, the most of any stock in the Standard & Poor's 500 index. The home furnishings retailer posted strong results late Wednesday and said it expected earnings to rise 10 percent to 15 percent this year.

Constellation Brands Inc. rose 6 percent. The maker of Robert Mondavi wine and Svedka vodka recovered from a loss in the same quarter a year ago and reported a double-digit increase in wine sales in North America.

KLA-Tencor fell 5 percent, the most out of any company in the S&P 500. The chip manufacturer gets 14 percent of its revenues from Japan.

Netflix, Inc. also fell, dropping 3 percent a day after the home-entertainment company announced its decision to pay nearly $1 million per episode to stream the TV series "Mad Men." Dish Network Corp. emerged as a new competitor after announcing it would buy Blockbuster Inc. out of bankruptcy.

Bond prices rose, sending their yields lower. The yield on the 10-year Treasury note fell to 3.54 percent from 3.55 percent late Wednesday.

The European Central Bank raised its main interest rate by a quarter point to 1.25 percent, a day after Portugal asked for a bailout. The Bank of England kept its main interest rate unchanged at 0.5 percent.

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U.S. foundation giving steady in 2010: report (Reuters)

NEW YORK (Reuters) ? U.S. foundations made $45.7 billion in grants in 2010 and are expected to give away up to 4 percent more this year amid a fragile economic recovery, a top philanthropic research group said on Thursday.

Giving from the country's 76,000 grant-making foundations was almost unchanged last year from 2009, and remained 2.1 percent below a record $46.8 billion in 2008, the Foundation Center said.

Foundation assets grew about 5 percent last year to $621.4 billion, but remain 9 percent below their pre-financial crisis high of $682.2 billion recorded in 2007.

The group's report, "Foundation Growth and Giving Estimates," said that giving held steady for the past couple of years due to a recovering stock market, foundations drawing upon endowments and cutting administrative costs.

The top U.S. foundations by giving include the Bill & Melinda Gates Foundation, the AstraZeneca Foundation, the Ford Foundation, the GlaxoSmithKline Patient Access Programs Foundation and the Susan Thompson Buffett Foundation.

"Foundations provided stability for non-profits during a time of crisis," said Foundation Center President Bradford Smith. "Many made extraordinary efforts to maintain their giving levels, while other, often newer foundations even increased their giving."

Independent foundations gave $32.5 billion in 2010 and corporate foundations gave $4.7 billion, both down less than 1 percent from 2009, while giving by community foundations fell 2 percent to $4.1 billion.

The Foundation Center forecast giving would grow 2 percent to 4 percent this year, with half the 1,065 foundations surveyed expecting to increase their grant-making in 2011. About 17 percent saw grants remaining unchanged and 30 percent expected a decrease.

"These additional dollars will help to seed the many promising endeavors put on hold during the depths of the economic crisis," said Steven Lawrence, director of research at the Foundation Center and principal author of the report.

The report stressed that demand for funds from U.S. foundations had grown considerably in recent years, adding to pressure on philanthropic groups.

"Beyond the long-term challenges foundations regularly address ... the economic downturn slashed government revenues at all levels, leaving political leaders and the organizations they support scrambling to replace lost dollars," it said.

(Editing by Daniel Trotta and Laura MacInnis)

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Free Fragrance from Lacoste

Get a sample of free fragrance from Lacoste when you sign up to receive emails from Lacoste. Share your name, address, email, and date of birth. Then choose from one of four fragrances for men (all the women's perfume seems to have run out). The choices include LACOSTE Challenge, LACOSTE Essential Sport, LACOSTE Essential, and EAU DE LACOSTE.

You may sign up for additional LACOSTE email lists and clubs, but it is not necessary to receive the free fragrance sample.

Caveats: You must be 18 or older to receive this free fragrance from Lacoste. Available to residents of the U.S. only. Once you submit the form, your free sample will arrive in a few weeks.

Check back later today and through the week for more great freebies at WalletPop.

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Jobless claims fall, retail sales stronger (Reuters)

WASHINGTON (Reuters) ? New claims for jobless benefits fell last week and retailers racked up much stronger-than-expected sales in March, signs that high fuel prices have not knocked the economy off its growth path.

Initial claims for state unemployment aid slipped 10,000 to 382,000, the Labor Department said on Thursday, a touch below economists' expectations and firmly beneath the 400,000 level associated with steady jobs growth.

Other data showed shoppers shrugged off higher gasoline prices last month to boost sales at many retailers as improving labor market conditions encouraged discretionary spending.

Same-store retailer sales had been expected to decline for the first time since August 2009, in part because Easter falls three weeks later than last year, delaying some spending.

"The claims report is one more piece of evidence that the general labor market is improving," said Patrick O'Keefe, head of economic research at J.H. Cohn in Roseland, New Jersey.

"The economy is growing and employers are no longer laying off workers because of a weakening in the general economic conditions but rather they doing so for normal business reasons."

The claims data underscored the strengthening labor market tenor and came on the heels of a report last week showing employers added 216,000 jobs in March, with the unemployment rate falling to a two-year low of 8.8 percent.

Last week, the four-week average of unemployment claims, a better measure of underlying trends, fell 5,750 to 389,500.

With the labor market conditions firming, consumers are feeling a little more confident to loosen their purse strings.

Sales at stores open at least a year rose 1.7 percent in a tally of 25 retailers, topping expectations of a 0.7 percent decline, according to Thomson Reuters.

GASOLINE TO DISTORT RETAIL SALES

The stronger-than-expected same-store sales bode well for the government's overall retail sales report for March, which is scheduled for release next week and is expected to be heavily influenced by the high gasoline prices.

They offered some relief after other data on consumer spending suggested a moderation in the pace of economic growth early in the year after a fairly brisk pace in the fourth quarter.

Consumer spending -- which accounts for about 70 percent of U.S. economic activity -- got off to slow start in the first two months of 2011 -- held back by bad weather. Rising gasoline prices also took spending away from other sectors.

The stronger-than-expected same-store sales were little boosted by inflation, given the nature of the merchandise which economists said was less sensitive to the high energy prices.

"Consumers have held back for a long time, there is a certain amount of pent-up demand. Wage growth isn't much, but we are also seeing an increase in income because of an increase in job growth," said Steve Blitz, a senior economist at ITG Investment Research in New York.

"Job growth also means that for those who are employed there is reduced concern about being laid off so the pent up demand is coming out."

With the latest fall, initial claims for jobless benefits are now beneath the 400,000 level, which is generally associated with steady job growth, for four weeks in a row.

The four-week average has held below that mark for the sixth straight week. Economists say both measures need to drop to about 300,000 to signal a strong labor market recovery.

Signs of improvement in the jobs market were also evident in the number of people still receiving benefits under regular state programs after an initial week of aid, which fell in the week ended March 26 to the lowest level since October 2008.

However, long-term unemployment remains a major problem.

A total of 8.52 million people were claiming unemployment benefits under all programs in the week ended March 19, the latest week for which data is available.

"While the labor market has stabilized and employment may be increasing, it's not increasing so rapidly that previously unemployed people who were claiming benefits are returning to work at a fast clip," said J.H. Cohn's O'Keefe.

(Additional reporting by Jessica Wohl in Chicago; Editing by Neil Stempleman)

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As Shutdown Looms, Congress ?Caught Between a Rock and a Hard Place,? Tonelson Says

Odds of a government shutdown rose Tuesday after talks between the White House and House Republicans broke down...and the political rhetoric heated up.

There's "no excuse" to not pass a budget for the remainder of the fiscal year, President Obama said. "Nobody gets 100% of what they want, and we have more than met the Republicans halfway at this point?there's no reason why we should not get an agreement."

In his own impromptu press conference, House Speaker John Boehner said he would continue to fight for "the largest spending cuts possible" and not "allow the Senate and the White House to put us in a box."

With three days to go before the current continuing resolution runs out, and neither side wanting to be blamed for a shutdown, there's still time for Congress to reach a budget deal.

"There's a long, rich tradition of [politicians] being able to reach compromise when time is about to reach out," says Alan Tonelson, research fellow at the U.S. Business and Industry Council.

Tonelson suggests there may be "one or two more continuing resolutions" before a final deal is reached, notwithstanding President Obama's protestations on that issue: "What we are not going to do is once again put off something that should have gotten done months ago," he said.

Still, Tonelson notes there's a "very deep philosophical spilt" between Democrats and Republicans, as well as an internal split between the old-line GOP and freshmen members of the Tea Party. "Given the major philosophical issues at stake, the exact path to compromise is very difficult to see right now."

More importantly, Toneslon ? as with prior guests ? frets the current budget debate is missing the bigger picture of what really ails the U.S. economy. (See: David Walker: Budget Debate "Like Arguing About the Bar Tab on the Titanic")

Between Rock & Hard Place

First, the economy's reliance on government stimulus means budget cuts will result in slower growth and higher unemployment, he says, as has been the case in the U.K. and other European nations that adopted austerity measures.

Congress is "caught between a rock and a hard place," Tonelson says. "As important as taxes, spending and the size of government questions are, you can't forget our fundamental problem is our economy became very unproductive in the 1990s and first decade of this century."

For example, while there a "strong case to be made for more tax cuts," any reform should focus on creating incentives for corporations to create U.S. jobs, rather than on the absolute level of taxation, he says.

If not, "way too much of this tax windfall will be use for investing overseas, and the rest for unproductive activity like stock buybacks," Tonelson warns. "We've been down that road and it doesn't work for the long-term health of the U.S. economy."

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @atask or email him at altask@yahoo.com

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Forecasting the Canadian Election

Forecasting the Canadian Election

The following is a guest post from �ric B�langer and Jean-Fran�ois Godbout.

Canadians will go to the polls on May 2 for a third time since 2006. Although many Canadian bloggers are offering their votes and seats projections during the election campaign (see, for instance, ThreeHundredEight.com), our model is currently the only forecasting tool to predict the outcome of federal elections in Canada using political and economic factors, much like models of American elections (e.g., here).

In this article, we forecast the level of electoral support for the incumbent party in the 19 Canadian federal elections since 1953. Our model is based on three factors: the unemployment rate, the popularity of the incumbent, and the longevity of the government. (The first two factors are measured three months before election day.) The model provides a vote share prediction, which can then be used to estimate the proportion of seats going to the incumbent party in the Canadian House of Commons.

The model offers a very good fit to the data (r-squared=0.70), although not as good as some of the better forecasting models found in the United States or the United Kingdom. The model's mean absolute error is of 4.4 percentage points in incumbent support. In close to half of the cases (seven), the difference between the predicted and the actual incumbent vote share is less than 3 points - the typical margin of error attributed to commercial polls. On the other hand, five other election outcomes are predicted with an error of over 8 percentage points.

For the upcoming election, the unemployment rate is 7.7% (average of November-December-January), the incumbent party's popularity is 38% (average of eight published polls during the month of February), and the longevity measure is equal to 63 months (logged value = 4.143). Hence, the model's forecast gives 34.4% of the vote and 114 seats out of 308 to the Conservative Party.

Our model thus predicts that a minority government will again be elected by Canadians this coming May. To put things in context, the Conservative government currently holds 143 of the 308 seats, while the Liberals have 77, the NDP 36, and the Bloc Quebecois 47 (there are also two vacant seats and 1 independent MP). If we consider the model's margin of error of 4%, we predict a Conservative minority government with 30-38% of the vote and 33-41 percent of the seats, which would mean a 5 percentage point decline for the Conservatives in seat numbers assuming the upper bound of our prediction.

However, it is still possible that the government will be formed by a Liberal minority, or by a coalition of Liberal and New Democratic Party members. Indeed, our model cannot predict the politics of government formation under a minority scenario, meaning that we cannot predict the actual composition of the government and how the opposition will be fragmented (unless of course the incumbent government is predicted to obtain more than 50% of the seats).

This forecast appears lower than what early campaign polls have been reporting so far (with a few even indicating a possible Conservative majority). We believe that the main reason for this difference is the weight of the economy in our model. As discussed in our article, among these three factors, unemployment most affects the election outcome. Historically in Canada, when unemployment is high, popularity stands around 35-40 and a government has been in power for a few years (say 5 years), the incumbent is expected to lose votes and seats. Unemployment in 2008, a few months before the previous federal election, was around 6.1%. Now it stands at 7.7%, thanks in part to the financial crisis.

These observations may appear surprising to people who are following Canadian politics. Indeed, the Canadian economy has performed relatively well since the 2008 recession, especially when compared to the United States and European countries. This actually forms part of the Conservatives' rhetoric in the current campaign, with their emphasis on the relative success of their "Economic Action Plan" and their claim that a change in government could jeopardize the recovery.

It is important to note, however, that our comparison is strictly historical and based on Canadian indicators. Our model is not comparing the economic performance of several different countries. Had we included a comparative measure, perhaps our forecast would have predicted a stronger level of support for the Conservative incumbent government. Normally, according to the model, incumbent governments are predicted to lose votes when a federal election is held in the years following an economic recession; the examples here of the Liberals in 1984 and the Conservatives in 1993 come to mind. Still, these previous recessions were much more damaging to the Canadian economy than the most recent one. We shall see how important a role the economy plays in the outcome of the current election.

TweetPosted by John Sides on April 7, 2011 8:25 AM | Permalink

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Five top share Isa picks

Run by a team led by Devan Kaloo the fund has its largest region exposure in Brazil at 17 per cent. But this concentration does not seem to have affected the fund's performance ? if you had invested in the fund five years ago, you would have seen your money double, while those who jumped in last year would have a return of 22 per cent.

Mark Dampier of Hargreaves Lansdown said: "An emphasis on quality rather than fashion, Mr Kaloo won't lose his head, which means investors can sleep at night. The fund is ideal, too, for monthly savings plans."

The fund is heavily exposed to financials; energy, consumer staples and information technology companies make up the rest.

3 Liontrust special situations fund

This fund can invest in any UK company regardless of size or sector ? aiming to give investors the best opportunities across all the indices. As a "special situations" fund, the managers look for companies they think are under underappreciated by the market.

The fund has returned 68 per cent over the past five years, and 31 per cent in the past 12 months alone. Adrian Lowcock of Bestinvest said: "The team have a unique approach to investing and are pure stock pickers, looking for companies with an economic advantage such as intellectual property, which provides them with a competitive edge and increased profitability."

4 M&G Global basics

Investing in "basic" industries such as commodities equities, consumer goods companies, industrials, oil and gas, this fund is quite specialist.

It has returned an impressive 56 per cent over the past five years, though it has lost 3.7 per cent in the past month.

Philippa Gee, who runs her own wealth management company, said the fund was the perfect way to get specialised exposure ? but you will need to balance your portfolio for diversification.

"You need to understand that this more focused approach for sectors means that it is not truly diversified and you should build up other exposure to balance against this," she said. "This is a popular fund and with good reason, as there has been a consistency that many other funds aspire to."

5 Edinburgh Investment Trust

Launched in 1952, the trust aims to grow at a faster rate than the FTSE All Share index, and increase the dividend each year by more than the rate of UK inflation.

And the fund seems to be hitting its target ? the annual dividend, paid last July, was 6.35p per share, up from 6.13p per share the year before. The top 10 holdings read like the top 10 largest companies of the FTSE 100 ? but the fund does have 15 per cent exposure to overseas equities.

Brian Dennehy, of Dennehy Weller & Co, said: "In a nutshell, this is another Neil Woodford vehicle. The holdings are similar to those in the Invesco Perpetual Income and High Income funds. If you believe the prospects for markets are at least fair, and you are a Woodford fan, this is one for you."

The current share price is 439p.

Discover the top-selling ISAs and get 0% commission when you order online with Telegraph ISA-fund Supermarket.

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ECB Raises Rates for the First Time Since 2008

Inflation fears in Europe have prompted the European Central Bank to raise interest rates for the first time since 2008. The bank hiked their key rate by 25 basis points to 1.25%.

This is unlikely to be a solo rate hike and it signals even more trouble for the PIIGS, since� the rate hike will have a tendency to push up all euro denominated rates, including the rate at which the PIIGS will attempt to borrow money.

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European Central Bank raises interest rates for first time in nearly three years despite Portugal bailout

The ECB also raised its deposit rate by 25 basis points to 0.5pc, and increased its marginal lending rate by the same amount to 2pc.

ECB President Jean-Claude Trichet will talk about the reasoning behind the bank's decision at a news conference starting at 1.30pm London time.

Bank of England policymakers held rates despite a surge in inflation. The majority of the Monetary Policy Committee members continue to judge the economic recovery as too shaky to withstand higher rates.

They are betting that inflation of 4.4pc - more than double the target - will ease once oil and food prices come down.

Most economists were expecting the Bank of England to leave rates unchanged. Simon Ward, Henderson's chief economist, was the only one of 67 forecasters polled by Reuters to forecast a rates rise.

Howard Archer of IHS Global Insight said the decision "indicates that serious concerns and uncertainties over the growth outlook deterred the MPC from acting despite the pressure for higher interest rates coming from elevated and still rising consumer price inflation".

The MPC, which sets interest rates, said last month that a rise in oil prices, fanned by tension in the Middle East and North Africa, had increased risks to both inflation and growth.

Three of the nine MPC members voted to raise interest rates last month, but economist says there is little evidence so far that Britain's economy has enjoyed a strong rebound from the shock contraction at the end of 2010.

Economists believe this is needed to convince Mervyn King, the Governor of the Bank of England, and the majority on the MPC that it is time to raise rates.

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Spain 'won't follow Portugal' with bail-out

Mr Osborne told the British Chambers of Commerce: "If you hear the stories about the cuts and still wonder why our country needs to take these difficult decisions, then look at what is happening around us.

"First Greece, then Ireland, today Portugal. All of them countries that did not convince the world they could pay their debts. Two of them countries with smaller budget deficits than Britain.

"Now all of them being bailed out, at huge costs to their populations.

"Today of all days we can see the risks that would face Britain, if we were not dealing with our debts and paying off our national credit card. These risks are not imaginary - they are very very real.

Few economists think Spain is in line to become the fourth member of the eurozone's bailout club anytime soon following a raft of austerity measures which have included tax increases, public sector wage cuts and the raising of the retirement age from 65 to 67.

Nevertheless, Spain faces extremely difficult times in the years ahead. Unemployment stands at 20pc with grim growth prospects. Thousands of young Spaniards are expected to demonstrate tonight against the austerity measures.

Portugal's caretaker prime minister Jos� S�crates said the country had been taken after the stricken nation had run out of options.

Economists put the UK's involvement in a Portuguese bail?out at up to a potential �4.4bn.

After months of resisting having to apply for a bail?out from the EU and the International Monetary Fund, Portugal's cost of borrowing has reached unsustainable levels.

Addressing the nation last night Mr S�crates, said: "I have always said that asking for aid would be the final way to go, but we have reached the moment."

It is understood that the rescue fund could be as high as �70 billion, or ?80 billion.

Sources close to the Treasury said that Britain would take part in any Portugal?related discussions involving the EU's 27 member states. However, the type of bail?out is yet to be discussed and therefore the extent of the UK's exposure was impossible to gauge, the sources said.

It is understood that a bilateral loan from the UK to Portugal has not been requested and that the Treasury does not foresee any circumstances under which such a request would arise. Britain paid a bilateral loan to Ireland but George Osborne said this was because Ireland was a "friend in need", a major trading partner with a banking sector closely linked to the UK's.

European shares rose on Thursday, led by banking stocks. However, traders were wary ahead of an expected interest rate rise in the eurozone later today and there were worries that the bailout may not signal the end of Europe's sovereign crisis.

Jos� Manuel Barroso, the European Commission president, said that Portugal's request for help would be dealt with as quickly as possible. He assured Mr S�crates that Portugal's request would be "processed in the swiftest possible manner, according to the rules applicable". He also said he had "confidence in Portugal's capacity to overcome the present difficulties".

The Portuguese government had previously said that the country did not need outside help and was able to finance its own debt.

Observers were last night wondering whether contagion from Portugal would spread to other eurozone countries such as Spain, whose economy is significantly larger than that of Portugal, Ireland and Greece combined.

Portugal had earlier promised to pay investors high rates of return to take up government bonds due to be repaid in six and 12 months, its second bond auction in less than a week.

The new economic crisis confronting Europe comes weeks after an EU summit to confirm a new permanent 700 billion euro bail-out facility for eurozone countries in trouble.

The UK will not be liable for any contributions from that fund, but is included in the current temporary ?440bn bail-out fund which was set up to help Greece and which runs until mid-2013.

The temporary fund has already been used to bail out Ireland, and now Portugal is expected to come calling to prop up its economy and shore up the shaky credibility of the euro.

That would oblige the UK to contribute under the terms of the temporary rescue scheme signed up to by then Chancellor Alastair Darling, and which was fiercely opposed at the time by George Osborne, who took his job after the election.

Now Mr Osborne may have to preside over the extension to Portugal of the UK commitment, albeit in the form of financial guarantees rather than actual cash.

UK Independence Party leader Nigel Farage said the UK should refuse to contribute to any bail-out.

Mr Farage said: ''The full tragic reality of the euro is now being seen. Bailing out Portugal is utterly pointless, it only traps them into a system into which they are totally unsuited. Britain should not contribute a single penny to their bail-out.''

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Free Water Bottle From Victoria's Secret

Get a free water bottle from Victoria's Secret when you log in or register this week for PINK Nation, a sub-brand of the lingerie chain, and buy any PINK item in the store. Offer ends April 11, 2011. Your log-in for Victoria's Secret won't work, unfortunately. Click on the link above, then click on the words JOIN in blue on the left side of the screen.

Enter your name, address, and email to sign up. You can opt into receiving PINK Nation's email and texts if you choose. The form also asks for your birth date, college (PINK is geared towards students), graduation date, and your top and bottom sizes -- but this information is not required to join. I received an email confirmation within minutes, which had a link to print the coupon for a free water bottle.

The coupon will have your name on it and a cashier may ask you for ID to verify.

Caveats: Online, catalog, and factory outlet purchases are not valid for the free water bottle. One per person while supplies last. Valid at U.S. stores only. Photocopies not accepted.

Check back later today and through the week for more great freebies at WalletPop.

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Kudos To Paul Ryan And The GOP For Acknowledging Our Budget Mess

Rep. Paul Ryan's (R-WI) plan to cut the budget deficit makes some laughable assumptions and leaves many questions unanswered:
Namely, where the $4.4 trillion of the $6.2 trillion of "savings" are going to come from.

Ryan doesn't have the balls to actually specify these cuts: He just proposes capping federal spending at 20% of GDP. In the absence of specifics, saying that the plan will save $6.2 trillion over 10 years is misleading.

But Ryan and the Republicans deserve a lot of credit for at least acknowledging the huge fiscal mess the United States is in and proposing specific long-term remedies for dealing with it.

For the last several years, the United States has acted as though it can have everything forever: All the services and benefits everyone wants while also cutting taxes. The country's $1.6 trillion ANNUAL deficit, combined with debt approaching 100% of GDP (which doesn't even factor in future healthcare and Social Security liabilities) reveal that this is a pipe dream. (See: A Short Course On Why The US Is Screwed)

What can't go on forever won't. Our leaders have a duty to acknowledge the problem and propose a way out--even if the solutions are temporarily unpopular.

(That's what true leadership is, by the way: Doing the right thing even when it's unpopular, and finding a way to get folks to follow and support you because you can make them understand that it's the right thing).

The Republicans and Paul Ryan are at least taking steps in this direction. They are acknowledging our problem and proposing concrete steps to deal with it.

The Democrats, meanwhile, are just stuffing their heads in the sand.

This year's budget negotiations are pretty much irrelevant. Whether this year's budget cuts $30 billion of spending or $60 billion, the savings will be a rounding error on the overall deficit.

The Democrats have yet to even acknowledge the massive long-term problem the country faces, let alone propose to solutions to it.

We understand and respect the concern about whacking the budget in the midst of a fragile recovery--it's a valid one. If the Democrats were defending the minor cuts in this year's budget by proposing them in conjunction with a compelling long-term plan, we'd be more sympathetic.

As it is, we can only conclude the following: The Democrats are still dreaming of a perpetual free lunch. (And they'll do and say anything to get re-elected.)

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SEC unveils plan to reduce market volatility (Reuters)

WASHINGTON (Reuters) ? The Securities and Exchange Commission unveiled a long-awaited plan designed to protect the markets from volatile price swings following the May 6 "flash crash."

The so-called "limit up-limit down" proposal, announced by the SEC on Tuesday, would require trades in U.S.-listed stocks to be executed within a range tied to recent prices.

If approved, it would replace existing single-stock circuit breakers that were implemented through a pilot program shortly after the flash crash. The circuit breakers halt trading in hundreds of stocks and ETFs when their price moves 10 percent or more during a rolling five-minute period.

The SEC has been working closely with the exchanges and the Financial Industry Regulatory Authority to come up with market structural fixes to prevent a repeat of the May 6 flash crash, which temporarily wiped out about $1 trillion in paper value in the stock market.

"Upgrading our trading parameters will help our markets retain the confidence of investors and companies," said SEC Chairman Mary Schapiro in a statement.

The proposed new limit up-limit down plan, which has been in the pipeline now for awhile, would prevent listed securities from being traded outside of a specific price band.

It is meant to serve as a more sophisticated mechanism for addressing market volatility. Although the circuit breakers have helped, they have also been triggered by erroneous trades.

Most recently, the potential holes in the circuit breaker program were exposed after 10 new exchange-traded funds suffered their own "mini" flash crash last Thursday. The new ETFs were not covered by the circuit breakers and some of them fell by as much as 98 percent.

Nasdaq OMX Group Inc was forced to cancel the trades, and the incident raised concerns that the measures taken by the SEC since the flash crash were not enough to prevent extreme market movements.

Tuesday's proposed price band for the limit up-limit down proposal would be set at a percentage above and below the average price of the security over the preceding five-minute period, the SEC said.

For stocks that are currently covered by the existing circuit breakers, the plan sets the percentage at 5 percent. Other stocks not covered by circuit breakers would be subject to a 10 percent threshold.

The SEC said these percentage bands would be doubled in the opening and closing periods of the market, and broader bands would apply to stocks if they are valued below a $1.00.

If a stock is unable to trade within the designated price band for more than 15 seconds, a five-minute trading pause would kick in.

Traders on Tuesday had a mixed reaction upon hearing about the SEC's plan.

Stephen Massocca, a managing director at Wedbush, said the percentage thresholds for the limit up-limit down plan strike him as " a bit narrow."

"You would need a wider band than that. Overall, I don't see anything dramatically different here," he said.

Others, however, said the plan will be a help.

"These rules, whether good or bad, will bring investors' confidence back to the market," said Larry Peruzzi, a senior equity trader at Cabrera Capital Markets.

The SEC said that the exchanges and FINRA are asking the agency to approve a one-year pilot program for the limit up-limit down plan. The public will get 21 days to comment on it.

Separately, the agency also is continuing to work with the Commodity Futures Trading Commission and the markets to recalibrate market-wide circuit breakers that apply across securities and futures.

(Reporting by Sarah N. Lynch, Additional reporting by Angela Moon, Rodrigo Campos and Jonathan Spicer; editing by Bernard Orr; editing by Carol Bishopric)

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Is it time for hotel boom?

The Indian hotel industry is in an upbeat mood. A slew of major international brands are lining up with open wallets and cheque-books, reports CNBC-TV18's Swati Khandelwal Jain.

International hotel giants want to make Indian hospitality their own. And each one of them, from Carlson to Hilton, to Marriot to Starwood, are ready to jump into what is, for them, one of the most important and fastest growing markets in the world.

Hubert Joly, president and CEO, Carlson, said, "India is our top focus, given the size of the country, the economic expansion, the growth of travel and tourism. Today we have 34 hotels in operation. We are going to open 19 hotels this year and we continue to have a goal to have at least 100 hotels in operation by 2015."

Frits Van Paasschen, president and CEO, Starwood Hotels & Resorts, said, "India is our fourth largest market today around the world as a country and the second fastest growing. We had about 25 hotels a year ago and we expect to be close to 50 by the end of next year. So you would be imagining a doubling from 25 to 50 hotels over a three-year period. We believe that there is another doubling from 50 to 100 hotels in the two to three years after that."

Christopher J Nassetta, president and CEO, Hilton Worldwide, said, "From 5 hotels today we plan to have 10 at the end of this year and 15 at the end of next year and 50 plus over the next four or five years."

Simon Copper, president and MD - Asia Pacific, Mariott International, said, "I would say over the next three years we will double our representation in the market."

Not to be left behind, domestic players are also angling for a bigger piece of the pie. Indian Hotels and Oberio feel 2012 will be a better year in terms of growth and margins. With a revenue target of USD 2 billion, India Hotels, for instance, wants to increase room count to 20,000 over the next 5 years.

Raymond Bickson, MD and CEO, Taj Hotels and Resorts Palaces, said, "I think margins are picking up."

Rattan Keshvani, president, Trident, said, "This year we are all looking at about a 15-20% growth in the topline which is going to be a combination of occupancies and rates. I think the occupancies are stable now and because the occupancies are stable we can expect rates to start climbing."

Funding, which was a big problem, is also melting away. Nearly 50% of the projects are now being financed by big private equity players and investment bankers.

Manav Thadni, Chairman, HVS India, said, "This is the first time we have got around 14-15 bankers out here and they are looking to lend to the industry."

The numbers say it all. With investments of USD 10.3 billion, 82,000 new jobs being created and 60,000 rooms to be added over the next five year, clearly makes India a hot spot for both Indian and international hotel majors.

Also read: Room inventory to grow by 600 keys: Hotel Leela

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Equitable Life: outcome not so equitable for all policyholders

The company says any policyholder who invested �10,000 into Equitable 15 years ago would now have savings worth a modest �14,000. By taking the one-off bonus this would rise to �16,000.

Equitable says it expects to pay out �40m to 30,000 policyholders during the first year, but in reality many more are likely to take advantage of the offer, having been trapped in their low-paying investments for many years.

Whilst this is good news for some people, it serves to remind us of those who were not so lucky.

Paul Weir, of the Equitable Members Action Group (Emag), said the money is a "drop in the ocean compared to the �6bn people have lost over the past two decades". The bonus has also come too late for the thousands of Equitable policyholders who have already died.

Let's just hope ministers and regulators prevent anything like this ever happening again.

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Searching for Value on the High Seas

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These aren't good times to be an ocean shipper.

The Baltic Dry Index, which measures the rates charged by bulk transporters such as DryShips (Nasdaq: DRYS) and Diana Shipping (NYSE: DSX), has fallen from a peak above 4,000 in May to 1,043 today. It has declined by nearly 60% just in the past three months, and it's taken the share prices of many fleet operators down with it.

The following companies have fallen between 12% and 40% in the past year and are likely to report some pretty ugly numbers in the coming quarters. But if you look past the near future, you may find some considerable long-term value in owning a carefully selected ocean carrier. Most now trade for significantly less than the price of their ships, and many can be had for less than the cash flow they generated over the past three years, which was a depressed environment to begin with. And things just may be on the cusp of turning around.

A new beginning?

Company Name	Market Cap	Price/3-Year Average OCF	Price/Book	Debt/Equity	52-Week % Performance
DryShips	$1.5 billion	3.67	0.52	97%	(12%)
Diana Shipping	$945 million	4.80	0.85	30%	(12%)
Navios Maritime (NYSE: NM)	$492 million	4.32	0.48	219%	(22%)
Genco Shipping (NYSE: GNK)	$403 million	1.64	0.37	163%	(40%)
Excel Maritime (NYSE: EXM)	$378 million	1.93	0.23	70%	(19%)
Eagles Bulk Shipping (Nasdaq: EGLE)	$256 million	2.46	0.39	174%	(18%)
Paragon Shipping (NYSE: PRGN)	$161 million	2.09	0.33	72%	(30%)

Data from Yahoo! Finance, Morningstar, and author's calculations. As of 1/30/11.

Even as commodities have continued their strong performance, dry bulk shipping has suffered from a confluence of woes. For starters, the worldwide cargo shipping fleet is estimated to grow by 18% this year, and that forecast has sparked fears of oversupply. It also hasn't helped that Australia, a major exporter of iron and coal, has seen its exports hampered by excessive flooding. Analysts have estimated that these floods may eventually cause more than 30 percentage points of decline in the Baltic Dry.

With any luck, these matters will be temporary, and they will shortly blow over. Some observers are expecting a new record in goods shipped this year, and so long as the demand for commodities continues to soar, shippers should work through this eventually.

Granted, there are considerable risks. Investors looking to navigate through these waters should know that high levels of debt are all too common in this industry. Small changes in value therefore have a disproportionate equity effect. It's also difficult in such an environment to keep up with debt payments during prolonged periods of slowdown.

The industry has also become heavily dependent on China. The Chinese consume more than 50% of the world's iron ore and import more than one 150 million tons of coal each year to satisfy their domestic demand. A slowdown in China could very quickly bring with it a drop in shipping demand.

But despite the potential headwinds, one has to get excited about these historically cheap valuations. Many of these businesses trade at only a fraction of their five-year average price-to-book values. Investors believing in the strength of commodities may find that with a little bit of due diligence, an investment in the shipping industry may turn into a profitable adventure.

For related Foolish content:

• China's Risk to Your Portfolio in 2011
• Is DryShips the Perfect Stock?
• Cliffs Dives Deep Into Iron Ore for Asia

Keep up with the latest Foolish coverage of shipping stocks, or any other stocks you'd like to follow. Just add the stocks you're interested in to My Watchlist.

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More signs of Fed discord on rate policy (Reuters)

ROANOKE, Virginia (Reuters) ? Two top Federal Reserve officials offered conflicting views on interest rates on Thursday, one arguing they should stay low for a long time and another saying a rate hike could be in the cards this year.

Richmond Federal Reserve Bank President Jeffrey Lacker, an inflation hawk, said inflation risks have risen in the last six months, potentially warranting some form of monetary tightening before the end of the year.

"Rate hikes by year end are certainly a possible outcome given what we see with momentum in economic growth and given how inflation risks seem to have evolved," Lacker, an inflation hawk, told reporters after a speech.

In contrast, Cleveland Fed Bank President Sandra Pianalto, speaking in Rome, said the Fed should keep its federal funds target rate very low for a long while to come, and complete its $600 billion bond purchase program as scheduled

Pianalto said she saw no evidence that sharp rises in food and energy prices would lead to lasting inflation, though the Fed is watching for any signs of an unanticipated spillover.

"My outlook for economic growth and inflation assumes that we complete our asset purchase program as originally scheduled, and keep our federal funds rate target at exceptionally low levels for an extended period," Pianalto said.

The Fed's bond purchases are scheduled to end in June.

"I don't expect recent rises in food and energy prices to cause a broad spillover into a wide array of consumer prices, or in other words a lasting increase in inflation," said Pianalto. She said underlying inflation would rise only gradually toward 2 percent by 2013.

Lacker was not as sanguine. He said the Fed should consider selling some of its mortgage bond holdings potentially early in its exit strategy.

"The housing finance market can easily withstand a substantial liquidation of our MBS holdings," Lacker said. "I don't think we should fear tanking the housing market

In response to the crisis and the ensuing recession, the Fed has bought well over $2 trillion in mortgage and government bonds. Lacker favors a return to holding only Treasuries, since he worries that the housing bond buys blurred the line between monetary and fiscal policy.

The U.S. economy expanded 3.1 percent in the fourth quarter, a solid clip but not enough for a country still digging its way out of a deep hole. U.S. unemployment has come down rather rapidly in recent months, but remains at an elevated 8.8 percent.

(Additional reporting by Gavin Jones in Rome; Editing by Neil Stempleman)

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Jobless claims fall, retail sales stronger (Reuters)

WASHINGTON (Reuters) ? New claims for jobless benefits fell last week and retailers racked up much stronger-than-expected sales in March, signs that high fuel prices have not knocked the economy off its growth path.

Initial claims for state unemployment aid slipped 10,000 to 382,000, the Labor Department said on Thursday, a touch below economists' expectations and firmly beneath the 400,000 level associated with steady jobs growth.

Other data showed shoppers shrugged off higher gasoline prices last month to boost sales at many retailers as improving labor market conditions encouraged discretionary spending.

Same-store retailer sales had been expected to decline for the first time since August 2009, in part because Easter falls three weeks later than last year, delaying some spending.

"The claims report is one more piece of evidence that the general labor market is improving," said Patrick O'Keefe, head of economic research at J.H. Cohn in Roseland, New Jersey.

"The economy is growing and employers are no longer laying off workers because of a weakening in the general economic conditions but rather they doing so for normal business reasons."

The claims data underscored the strengthening labor market tenor and came on the heels of a report last week showing employers added 216,000 jobs in March, with the unemployment rate falling to a two-year low of 8.8 percent.

Last week, the four-week average of unemployment claims, a better measure of underlying trends, fell 5,750 to 389,500.

With the labor market conditions firming, consumers are feeling a little more confident to loosen their purse strings.

Sales at stores open at least a year rose 1.7 percent in a tally of 25 retailers, topping expectations of a 0.7 percent decline, according to Thomson Reuters.

GASOLINE TO DISTORT RETAIL SALES

The stronger-than-expected same-store sales bode well for the government's overall retail sales report for March, which is scheduled for release next week and is expected to be heavily influenced by the high gasoline prices.

They offered some relief after other data on consumer spending suggested a moderation in the pace of economic growth early in the year after a fairly brisk pace in the fourth quarter.

Consumer spending -- which accounts for about 70 percent of U.S. economic activity -- got off to slow start in the first two months of 2011 -- held back by bad weather. Rising gasoline prices also took spending away from other sectors.

The stronger-than-expected same-store sales were little boosted by inflation, given the nature of the merchandise which economists said was less sensitive to the high energy prices.

"Consumers have held back for a long time, there is a certain amount of pent-up demand. Wage growth isn't much, but we are also seeing an increase in income because of an increase in job growth," said Steve Blitz, a senior economist at ITG Investment Research in New York.

"Job growth also means that for those who are employed there is reduced concern about being laid off so the pent up demand is coming out."

With the latest fall, initial claims for jobless benefits are now beneath the 400,000 level, which is generally associated with steady job growth, for four weeks in a row.

The four-week average has held below that mark for the sixth straight week. Economists say both measures need to drop to about 300,000 to signal a strong labor market recovery.

Signs of improvement in the jobs market were also evident in the number of people still receiving benefits under regular state programs after an initial week of aid, which fell in the week ended March 26 to the lowest level since October 2008.

However, long-term unemployment remains a major problem.

A total of 8.52 million people were claiming unemployment benefits under all programs in the week ended March 19, the latest week for which data is available.

"While the labor market has stabilized and employment may be increasing, it's not increasing so rapidly that previously unemployed people who were claiming benefits are returning to work at a fast clip," said J.H. Cohn's O'Keefe.

(Additional reporting by Jessica Wohl in Chicago; Editing by Neil Stempleman)

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George Osborne: eurozone crisis shows dangers to UK

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ECB raises interest rates: reaction

"There will be worries about the negative effects on the economy. The hike is unwelcome for peripheral countries, but arguably the core member states were in need of this move already some time ago. In that sense, the timing of the increase is a balancing act, which is part and parcel of the one-size-fits-all monetary policy.

"The ECB should signal that risks to inflation remain to the upside, while interest rates are still historically low. This would confirm that this is not a one-off, but the start of policy normalisation."

Marie Diron, senior economic adviser, Ernst & Young Eurozone Forecast

"The ECB is concerned that the commodity-fuelled inflation rates spread to a wider range of goods and services and eventually to wages.

?We think that tightening monetary policy at this point is a mistake. As Mr Stark reminded us recently, the ECB should not set monetary policy for a few specific countries. Its task is to look at the Eurozone as a whole.

"Tighter monetary policy will only add to the burden of reeling peripheral countries and increase the risk of a much worse debt crisis. Portugal asking for a bailout from the EU and IMF illustrates that this crisis is far from over.?

Howard Archer, IHS Global Insight

"It would have been a major shock if the ECB had not acted, given the stream of senior ECB policymakers out in force recently highlighting the case for an interest rate rise now to contain the risk of second round inflationary effects developing from the current spike up in euro zone consumer price inflation resulting from higher energy and commodity prices.

"What is of critical interest now is whether or not the ECB in its statement and Mr. Trichet in his press conference give any clue as to how quickly interest rates are likely to rise going forward."

Daniel Briesemann, commodity analyst, Commerzbank

"This came as expected, it was definitely a non-event. Everything should have already been priced in so there has been no effect on oil prices. I think Trichet's press conference will at least be more interesting than the decision itself."

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Four Pummeled Stocks for Savvy Investors to Buy

April 03, 2011, 7:05 PM EDT

More From Businessweek

• Tribune, Satmex, Indiana Downs, Lehman, Vitro: Bankruptcy
• Blockbuster, Lehman, Tribune, Windstar, Capmark: Bankruptcy
• Latvia Bailout, Loan ?Deal Killer?, Solvency II: Compliance
• Nortel, WaMu, Lehman, Blockbuster, Borders, A&P: Bankruptcy
• How to Avoid the Pitfalls of a New Tech Bubble: Matthew Lynn

By John Dorfman

April 4 (Bloomberg) -- Last month, Best Buy Co., the world?s largest consumer electronics retailer, reported fourth- quarter diluted earnings of $1.62 a share, 11 percent less than a year ago. Slam! The stock fell 9 percent in two days, and 16 percent in the first quarter.

That lands Best Buy a spot on my Casualty List, a periodic list of stocks that have been pummeled and that I think have excellent potential to show strong gains in the next 12 months.

After being hit in the first quarter, the company?s stock trades for eight times earnings. Its average price/earnings ratio over the past 10 years was 18. I?d say its shares are on sale. Best Buy, based in Richfield, Minnesota, has made a profit every year since 1992.

To be sure, a weakening of the economy could derail the stock. However, I think the economy is still strengthening. A leading retailer of discretionary items seems to me a good stock to own during an ongoing economic recovery.

In the first quarter, the Standard & Poor?s 500 Index rose 5.9 percent, including dividends. To be eligible for the Casualty List, a stock had to decline at least 7 percent for the quarter. Of the 2,339 U.S. stocks with a market value of more than $500 million, 225 dropped that much.

Online Travel

From that black-and-blue group, I?ve selected four to recommend. In addition to Best Buy, they are Expedia Inc., Getty Realty Corp. and ValueClick Inc.

Expedia, which says it is the world?s largest online travel company, fell 9 percent in the first quarter, including dividends. The U.S. Transportation Department told online travel companies in February that they can?t show bias in the display of flight and fare information, even if they have a business dispute with a particular airline.

Expedia had dropped American Airlines fare information from its website on Jan. 1, after the carrier started its Direct Connect system, which seemed likely to reduce the role of online intermediaries such as Expedia.

Fourth-quarter earnings of 25 cents a share fell short of analysts? estimates, compounding Expedia?s problems.

To me, these look like mere speed bumps in the road. I believe that online services will continue to expand their share of the travel business because the traditional travel-agent model is flawed. Agents generally make more money by recommending expensive hotels and flights than cheap ones.

Record Revenue

With the largest market share among the online travel services, Bellevue, Washington-based Expedia should benefit from this growth. Its revenue last year topped $3 billion for the first time.

One of the biggest losers in the quarter was Getty Realty, down 25 percent, even after taking into account its large dividend. The company, with headquarters in Jericho, New York, is a real estate investment trust that owns more than 950 properties. It leases its sites primarily to gas stations, of which about three-quarters are Getty stations.

Getty Realty shares currently yield 8.4 percent in dividends compared with the S&P 500?s average of 1.8 percent. Getty Realty?s problem is a change in control at Getty Petroleum Marketing Inc., its biggest tenant. OAO Lukoil, Russia?s second- biggest oil company, had owned Getty Petroleum Marketing. In February it sold the company to little-known Cambridge Petroleum Holding Inc.

Muddling Along

Investors figure that Cambridge lacks the financial muscle of Lukoil and may need to retrench, leaving Getty Realty scrambling for tenants. It?s a reasonable fear, yet I think Getty Realty will muddle through.

ValueClick, a Westlake Village, California, company that facilitates online advertising, was less severely harmed, down 10 percent for the quarter. Its systems enable advertisers to pay in direct proportion to the number of times consumers click on an ad.

The company?s 2010 earnings set a record, and yet analysts and investors have been cool toward the stock. Of the 20 analysts who follow the stock, only five recommend it. One positive factor to which they don?t give enough weight, in my opinion, is ValueClick?s enviable balance sheet, with no debt and $194 million in cash or near cash.

Some follow-up on the Casualty List recommendations from 12 months ago might be appropriate. Here?s a quick look, in alphabetical order.

Coeur d?Alene Mines Corp., a silver miner based in Coeur d?Alene, Idaho, rose 132 percent in the 12 months through March 31, after tumbling 17 percent in the first quarter of 2010. I wouldn?t chase it at current prices.

Too Early

Goodrich Petroleum Corp. of Houston, on the casualty list a year ago with a 36 percent loss, has bounced back with a 42 percent gain. At about $22 a share, I don?t find it compelling.

Nutrisystem Inc., which dropped 42 percent in the first quarter last year, has fallen an additional 16 percent, taking dividends into account. Being a year early is the same as being wrong, but I still like this Fort Washington, Pennsylvania-based company. Millions of Americans are overweight, including yours truly. Its shares trade at 13 times earnings.

Piper Jaffray Cos., a Minneapolis-based brokerage house and investment bank, fell 20 percent in last year?s first quarter. Since then it has inched up about 3 percent. I still like it, partly because the stock sells for less than book value, or assets minus liabilities per share.

Disclosure note: I own shares in Piper Jaffray for clients and personally. I have no long or short positions in the other stocks mentioned in this week?s column.

(John Dorfman, chairman of Thunderstorm Capital in Boston, is a columnist for Bloomberg News. The opinions expressed are his own. His firm or clients may own or trade securities discussed in this column.)

--Editors: Steven Gittelson, Laurence Arnold.

Click on ?Send Comment? in the sidebar display to send a Letter to the editor.

To contact the writer of this column: John Dorfman at jdorfman@thunderstormcapital.com

To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net

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Stocks fall after new Japan earthquake

Global equities fell after a strong earthquake shook Japan and the euro fell against the dollar as the European Central Bank raised rates but signaled it was not necessarily the start of a round of hikes.

US and European stocks fell after the earthquake measuring 7.4 shook northeast and eastern Japan. A tsunami warning was issued for the northeastern coast, an area badly hit by March's earthquake.

European stocks ended down 0.2% and the dollar extended losses against the yen. Nikkei futures were down 1.8%. Japan is the world's third-largest economy and investors feared the new quake could harm global recovery.

"We started to drop on this earthquake news out of Japan. It seems to be generating a bit of jitteriness and has caused people to take a bit of profit," said Nick Kalivas, senior equity index analyst at MF Global in Chicago.

"In a couple hours from now if it looks like damage is minimal, the market the will go back to trading economics as opposed to earthquakes."

European shares had earlier gained after Portugal's request for aid fostered hopes the region's debt crisis will be staunched. The pan-European European FTSEurofirst 300 stock index was down 0.2%. Portugal's stock market bucked the trend, the PSI 20 index up 1.2%.

The Dow Jones industrial average dropped 36.63 points, or 0.29%, to 12,390.12. The Standard & Poor's 500 Index dropped 2.34 points, or 0.18%, to 1,333.20. The Nasdaq Composite Index dropped 0.95 points, or 0.03%, to 2,798.87.

World stocks as measured by MSCI gave up 0.3%.

Rate hike

The ECB raised rates by 25 basis points to 1.25%to counter firming inflation pressures. ECB President Jean-Claude Trichet said it was not necessarily the start of a series of similar steps, disappointing some who had expected a more hawkish tone.

"This makes the ECB the first major developed economy central bank to hike rates, and the decision will cement its reputation as a single-minded inflation fighter," said ABN Amro economist Nick Kounis.

"The hike is unwelcome for peripheral countries, but arguably the core member states were in need of this move already some time ago. In that sense, the timing of the increase is a balancing act, which is part and parcel of the one-size-fits-all monetary policy," he added.

The euro was down 0.5% on the day at USD 1.4268, off a more than 14-month high of USD 1.4350 touched on Wednesday. Spot gold hit a new record at USD 1,464.80 an ounce following Trichet's comments.

It was the first rate increase since 2008 and followed a day after Portugal's caretaker government requested European Union aid at the urging of leading bankers. They wanted a bailout to help the economy and safeguard its banking system.

Portugal said it will make the formal request for aid later on Thursday. The rescue package could reach 85 billion euros (USD 122 billion).

Spain vowed it would not follow Portugal in seeking a bailout. A successful Spanish bond auction suggested markets do not fear contagion at the moment.

Investors got more signs of a firming labor market as new US claims for unemployment benefits fell slightly more than expected last week. Other data showed March was not as bad as expected for many US retailers even in the face of higher gasoline prices.

Among commodities, spot gold was recently bid at USD 1,464.12 an ounce after hitting a new peak, while Chicago corn futures reached a fresh all-time high at USD 7.73-1/4 before falling from the peak.

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White House sees "very real" impact in government shutdown (Reuters)

WASHINGTON (Reuters) ? A U.S. government shutdown would inflict real harm on ordinary Americans and hinder the country's economy, a top White House aide said Thursday.

A shutdown "would have very real effects on services the American people rely on, as well as the economy as a whole," Jeffrey Zients, deputy director of the White House Office of Management and Budget, told reporters.

(Reporting by Patricia Zengerle and Alister Bull, editing by Will Dunham)

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Bank of England holds rates at record low

The Monetary Policy Committee, which sets interest rates, said last month that a rise in oil prices, fanned by tension in the Middle East and North Africa, had increased risks to both inflation and growth.

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Knowing Buffett's moves not always a money-maker (Reuters)

NEW YORK (Reuters) ? Knowing what Warren Buffett is going to do a few weeks before he does it is not the sure-fire money-maker you might think.

The iconic investor and champion of ethical corporate behavior is under fire over the revelation that his presumed successor, David Sokol, bought shares in Lubrizol Corp (LZ.N) before pushing Buffett to acquire the company.

That $9 billion deal netted Sokol a profit of nearly $3 million. It also raised questions about whether others inside Buffett's holding company Berkshire Hathaway Inc (BRKa.N) (BRKb.N) have ever bought into stocks they knew Buffett might take a shine to later.

A look back at five other high-profile deals Buffett made in the last three years shows the same kind of foresight Sokol had would have been very lucrative at some times -- and at other times a losing proposition.

Reuters looked at the acquisition of railroad Burlington Northern Santa Fe in August 2009 and four investments Berkshire made in 2008 -- Goldman Sachs Group Inc (GS.N), Dow Chemical Co (DOW.N), Wm. Wrigley Jr. Co and Chinese car maker BYD (1211.HK).

In each case, Reuters compared the company's share price in the first trading session after the deal was announced with its closing share price 70 days before the deal -- the precise window Sokol had from his first purchase of Lubrizol shares to the announcement of the acquisition.

An investor who bought 100,000 shares of each company's stock 70 days before the deals were announced would have made money on Wrigley ($1.89 million), Burlington ($1.32 million) and BYD ($46,296).

But that same clairvoyant investor would have lost a fair bit of money on Goldman Sachs ($2.48 million) and Dow Chemical ($788,000).

In other words, getting ahead of Buffett's five biggest deal before Lubrizol was more or less a wash. But getting into Lubrizol before Buffett, like Sokol did, would have netted the investor about $3 million.

That issue -- getting ahead of Buffett's dealmaking -- has become a source of controversy recently for reasons other than the Sokol matter.

Prosecutors in the biggest insider trading case since the 1980s say fund manager Raj Rajaratnam got inside information from Goldman director Rajat Gupta, including a day-ahead tip that Berkshire would invest $5 billion in Goldman. Rajaratnam, prosecutors say, made $1 million on the information.

(Reporting by Ben Berkowitz, editing by Gerald E. McCormick)

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Four Pummeled Stocks for Savvy Investors to Buy

April 03, 2011, 7:05 PM EDT

More From Businessweek

• Tribune, Satmex, Indiana Downs, Lehman, Vitro: Bankruptcy
• Blockbuster, Lehman, Tribune, Windstar, Capmark: Bankruptcy
• Latvia Bailout, Loan ?Deal Killer?, Solvency II: Compliance
• Nortel, WaMu, Lehman, Blockbuster, Borders, A&P: Bankruptcy
• How to Avoid the Pitfalls of a New Tech Bubble: Matthew Lynn

By John Dorfman

April 4 (Bloomberg) -- Last month, Best Buy Co., the world?s largest consumer electronics retailer, reported fourth- quarter diluted earnings of $1.62 a share, 11 percent less than a year ago. Slam! The stock fell 9 percent in two days, and 16 percent in the first quarter.

That lands Best Buy a spot on my Casualty List, a periodic list of stocks that have been pummeled and that I think have excellent potential to show strong gains in the next 12 months.

After being hit in the first quarter, the company?s stock trades for eight times earnings. Its average price/earnings ratio over the past 10 years was 18. I?d say its shares are on sale. Best Buy, based in Richfield, Minnesota, has made a profit every year since 1992.

To be sure, a weakening of the economy could derail the stock. However, I think the economy is still strengthening. A leading retailer of discretionary items seems to me a good stock to own during an ongoing economic recovery.

In the first quarter, the Standard & Poor?s 500 Index rose 5.9 percent, including dividends. To be eligible for the Casualty List, a stock had to decline at least 7 percent for the quarter. Of the 2,339 U.S. stocks with a market value of more than $500 million, 225 dropped that much.

Online Travel

From that black-and-blue group, I?ve selected four to recommend. In addition to Best Buy, they are Expedia Inc., Getty Realty Corp. and ValueClick Inc.

Expedia, which says it is the world?s largest online travel company, fell 9 percent in the first quarter, including dividends. The U.S. Transportation Department told online travel companies in February that they can?t show bias in the display of flight and fare information, even if they have a business dispute with a particular airline.

Expedia had dropped American Airlines fare information from its website on Jan. 1, after the carrier started its Direct Connect system, which seemed likely to reduce the role of online intermediaries such as Expedia.

Fourth-quarter earnings of 25 cents a share fell short of analysts? estimates, compounding Expedia?s problems.

To me, these look like mere speed bumps in the road. I believe that online services will continue to expand their share of the travel business because the traditional travel-agent model is flawed. Agents generally make more money by recommending expensive hotels and flights than cheap ones.

Record Revenue

With the largest market share among the online travel services, Bellevue, Washington-based Expedia should benefit from this growth. Its revenue last year topped $3 billion for the first time.

One of the biggest losers in the quarter was Getty Realty, down 25 percent, even after taking into account its large dividend. The company, with headquarters in Jericho, New York, is a real estate investment trust that owns more than 950 properties. It leases its sites primarily to gas stations, of which about three-quarters are Getty stations.

Getty Realty shares currently yield 8.4 percent in dividends compared with the S&P 500?s average of 1.8 percent. Getty Realty?s problem is a change in control at Getty Petroleum Marketing Inc., its biggest tenant. OAO Lukoil, Russia?s second- biggest oil company, had owned Getty Petroleum Marketing. In February it sold the company to little-known Cambridge Petroleum Holding Inc.

Muddling Along

Investors figure that Cambridge lacks the financial muscle of Lukoil and may need to retrench, leaving Getty Realty scrambling for tenants. It?s a reasonable fear, yet I think Getty Realty will muddle through.

ValueClick, a Westlake Village, California, company that facilitates online advertising, was less severely harmed, down 10 percent for the quarter. Its systems enable advertisers to pay in direct proportion to the number of times consumers click on an ad.

The company?s 2010 earnings set a record, and yet analysts and investors have been cool toward the stock. Of the 20 analysts who follow the stock, only five recommend it. One positive factor to which they don?t give enough weight, in my opinion, is ValueClick?s enviable balance sheet, with no debt and $194 million in cash or near cash.

Some follow-up on the Casualty List recommendations from 12 months ago might be appropriate. Here?s a quick look, in alphabetical order.

Coeur d?Alene Mines Corp., a silver miner based in Coeur d?Alene, Idaho, rose 132 percent in the 12 months through March 31, after tumbling 17 percent in the first quarter of 2010. I wouldn?t chase it at current prices.

Too Early

Goodrich Petroleum Corp. of Houston, on the casualty list a year ago with a 36 percent loss, has bounced back with a 42 percent gain. At about $22 a share, I don?t find it compelling.

Nutrisystem Inc., which dropped 42 percent in the first quarter last year, has fallen an additional 16 percent, taking dividends into account. Being a year early is the same as being wrong, but I still like this Fort Washington, Pennsylvania-based company. Millions of Americans are overweight, including yours truly. Its shares trade at 13 times earnings.

Piper Jaffray Cos., a Minneapolis-based brokerage house and investment bank, fell 20 percent in last year?s first quarter. Since then it has inched up about 3 percent. I still like it, partly because the stock sells for less than book value, or assets minus liabilities per share.

Disclosure note: I own shares in Piper Jaffray for clients and personally. I have no long or short positions in the other stocks mentioned in this week?s column.

(John Dorfman, chairman of Thunderstorm Capital in Boston, is a columnist for Bloomberg News. The opinions expressed are his own. His firm or clients may own or trade securities discussed in this column.)

--Editors: Steven Gittelson, Laurence Arnold.

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To contact the writer of this column: John Dorfman at jdorfman@thunderstormcapital.com

To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net

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