Financial thoughts

What happens when you cross the world’s largest social network with one of the hottest business models in e-commerce? Facebook wants to find out.

Facebook is launching a deals program Tuesday in five U.S. cities, following on the popularity of Groupon and other services that offer deep discounts _ for example: $50 worth of food at a local eatery for $25.

By allowing small businesses to leverage the Internet while helping consumers score great deals, these group-couponing services have become some of the fastest-growing businesses in the world.

Facebook now wants a part of that. It hopes to exploit its existing networks of friends and family when it begins testing offers in San Diego, San Francisco, Atlanta, Dallas and Austin, Texas.

Many deals sites have a social component. For instance, if you get three friends to buy a LivingSocial voucher, yours is free. Groupon’s offers become valid only after a certain number of people purchase them.

But the deals are circulated to users through email, and the community aspect is secondary.

Facebook is hoping to change that.

“We’re building a product that is social from the ground up,” says Emily White, director of local for Facebook. “All of these deals are things you want to do with friends, so no teeth whitening, but yes to river rafting.”

Starting Tuesday, when Facebook users in the five test markets log into the site, they will see a deals insignia at the bottom of the page.

Clicking on it brings up a list of currently available offers. A user can buy one, click the “like” button to recommend it to others or share the offer with friends through Facebook’s private messaging system. When users purchase or “like” a deal, it shows up in their friends’ news feed.

That means “the discovery of the product can happen in lots of different places,” White says.

To get the program started, Facebook has enlisted 11 companies that already supply deals elsewhere. Restaurant reservation service OpenTable will broadcast offers for local eateries, while online ticket seller Viagogo will market events.

Not all offers involve discounts. Some are experiences people may not otherwise have access to, such as a backstage pass to Austin City Limits concerts, a tour of the Dallas Cowboys’ new stadium, or a children’s sleepover at the California Academy of Sciences in San Francisco with live-snake demos.

In some cases, you’ll get a “friend bonus” _ an additional discount _ if at least one other person in your social network buys a deal.

Leveraging social tools and direct sharing among friends will be “a key to success for daily deal companies” going forward, says Lou Kerner, social media analyst at Wedbush.

This is not the first time a social network has made a foray into disseminating deals. Twitter launched its own daily deal program called Earlybird Offers last year but canceled it after just two months. Last November Facebook launched a product called Check-in Deals that allowed users to “check in” via their mobile phones when they visit certain businesses and in turn receive discounts and other special offers. Location-based social network Foursquare has a similar program.

Offers through Facebook can last anywhere from a day to a week. The social network won’t disclose how much commission it takes. (With Groupon and others, the deal site typically takes up to half the revenue.)

There are hundreds of Groupon copycats willing to accept lower commissions, but many small businesses prefer to partner with larger companies such as Groupon and LivingSocial because they reach more potential customers.

Facebook will bring deals to even more people. While Groupon has 70 million members and LivingSocial has 28 million, Facebook has 500 million people worldwide.

Add to that the fact that many small businesses already have a Facebook presence, and the social network becomes a good fit for daily deals, says Greg Sterling, senior analyst for Opus Research.

As a share of overall Web surfing, visits to group-buying sites grew ten-fold over the past year, according to research firm Experian. LivingSocial had 7 million unique visitors in March, up 27 percent from February, making it one of the 10 fastest-growing websites in the U.S., according to ComScore.

“Groupon and LivingSocial have shown how much demand there is out there,” Sterling says. “Facebook, if they do this right, can have a big hit on their hands.”

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In late 2007, facing vocal opposition and a lawsuit from a group of area residents, Wal-Mart Stores Inc. dropped a planned expansion of its Glen Carbon store.

Now, Glen Carbon officials are reviewing a new proposal to expand the Walmart at Cottonwood Plaza, as well as a proposed new Sam’s Club warehouse store nearby at Illinois Route 159 and Center Grove Road.

Mayor Robert Jackstadt said that he was pleased by the interest in new retail investments in the community but that the proposals would be reviewed by village officials before any final decisions.

Jackstadt said such investments “could lead to new construction and other jobs, new property values and sales taxes, which can all benefit all existing village taxpayers.” But he said the proposals would be reviewed for compliance with ordinances and the village’s comprehensive plan.

Glen-Ed Citizens for Fair Growth raised questions about parking, traffic congestion and negative effects on small businesses in opposing the earlier plan to make the Walmart store a 24-hour Supercenter guaranteed payday loans. Village officials gave the project a green light, but the citizens group sued. The lawsuit was pending when Wal-Mart dropped the proposal in December 2007, citing a decision to slow its development of Supercenters.

Karen O’Koniewski still heads the group, now called GlenEd Citizens. She advised members and supporters of the new proposals in an e-mail Monday morning. She said she had not received any responses by mid-day.

O’Koniewski said the group had been largely inactive for about a year. She recently moved from Glen Carbon to Edwardsville.

The village board’s building and development committee approved a site plan for the expansion last week and forwarded it to the village’s planning and zoning commission. The building and development committee will review the Sam’s Club proposal at a special meeting at 5 p.m. today.

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On the cusp of the most commercially romantic day of the year, some retailers are stepping into the exclusive (and profitable) market for all things wedding.

Urban Outfitters Inc., the parent company of Anthropologie, Free People and Urban Outfitters, is debuting a new wedding brand, called BHLDN (that’s pronounced beholden) on Valentine’s Day.

Following in the footsteps of J.Crew, the Urban Outfitters’ collection will feature wedding gowns, bridesmaid and party dresses, vintage-inspired jewelry, headpieces, shoes and lingerie.

But while J.Crew found a successful place in the wedding marketplace with silk taffeta and duchesse satin dresses that range from $285 to $3,000 each, Urban’s new venture is not exactly cheap chic.

Prices range from $1,000 to $4,000 for gowns, and $200 to $600 for event dresses. But spokeswoman Jennifer D’Aponte says that these dresses that are timeless (read: no matchy-matchy bridesmaid dresses in lavender taffeta). There’s even a floral print wedding gown!

In early May, décor and tabletop items like vases, dishes, silverware, tablecloths, candelabras, place cards, chargers, ribbons, cake servers and toasting glasses will round out the collection high quality business cards.

For now, BHLDN will be available through its online boutique, but the first store is expected to open in the second half of the year.

For those still reeling from a recession hangover, famed wedding dress designer Vera Wang also debuts a new collection of more affordable dresses and accessories this week. With prices ranging from $600 to $1,400, her collection for David’s Bridal officially launched in 150 stores on Feb. 11.

It’s not her first foray in mainstream offerings: Wang partnered with Kohl’s on a lower priced clothing and accessories line called Simply Vera Vera Wang in 2006. But this time, Wang is sticking to what she does best: weddings. The White by Vera Wang line will expand to offer bridesmaid dresses and shoes later in the year.

RentTheRunway, which Savvy Spending has covered before, recently launched a wedding section on its site, too. For $50 to $125, members can rent rehearsal dinner, engagement party dresses and a slew of bridesmaid options. But no wedding gown rentals as of yet. 

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China, the largest wheat consumer, says the drought in the country’s main growing region may be prolonged, as prices surge to a record.

About 115.95 million mu (7.73 million hectares) of wheat, or 42 percent of the total planted in the eight major producing provinces, is affected by the dry spell that may last into the spring, Minister of Agriculture Han Changfu said in a statement on the department’s website yesterday.

Rain on the North China Plain has been “substantially” below-normal since October, the United Nations’ Food and Agriculture Organization said Feb. 8. Continued drought could force China, largely self-sufficient in wheat, to buy more grain from overseas suppliers, said Jason Britt, an analyst at Central States Commodities Inc.

“That sends a little bit of a shiver through the market,” Britt said by telephone from Kansas City, Missouri. China may import 1 million metric tons of wheat this year, compared with 9.8 million tons by Egypt, the top buyer, according to the U.S. Department of Agriculture.

Drought-affected provinces including Hebei, Shanxi, Henan, Shandong, Jiangsu and Anhui have received “precious snow” since yesterday which will help relieve some of the dryness, the National Meteorological Center said on its website. Rain and snow are forecast to continue today, it said.

‘One Big Rain’

Wheat futures jumped to 3,064 yuan ($465) a metric ton on the Zhengzhou Commodity Exchange today, a record for the most- active contract. The price on the Chicago Board of Trade, a global benchmark, was little changed at $8.8425 a bushel after jumping to $8.9325 a bushel yesterday, the highest since 2008.

Most crops in China’s wheat region are irrigated and only about 5 percent of the area’s annual precipitation normally falls in the December-February period, said Mike Tannura, a meteorologist at T-Storm Weather in Chicago.

“Even though it’s been dry relative to average, 95 percent of precipitation occurs from March through November,” Tannura said. “It’s a concern, no question about it, but one big rain in March and all of a sudden they’re back above average.”

Major wheat growing areas have received about 0.25 inch (0.6 centimeter) of precipitation since Dec. 1, about 20 percent of the usual amount, he said.

Food Costs

China pledged to spend an extra 6.7 billion yuan ($1 billion) to boost emergency water supply and irrigation resources, according to a government statement. This is in addition to 10 yuan per mu in direct subsidies to encourage farmers to water wheat, and another 10 yuan to fertilize weakened seedlings, it said.

Rising food costs have stoked inflation in emerging economies instant personal loans guaranteed. The past month’s protests in North Africa and the Middle East were partly linked to food costs.

China’s consumer prices advanced 3.3 percent last year, breaching a government target of 3 percent. The January rate may have accelerated to 5.4 percent, according to the median estimate of 26 economists surveyed by Bloomberg, from 4.6 percent in December. Inflation in Indonesia, Southeast Asia’s biggest economy, was 7.02 percent last month, a 21-month high.

The People’s Bank of China on Feb. 8 raised the one-year lending rate by a quarter of a percentage point to 6.06 percent and the one-year deposit rate an equivalent amount to 3 percent.

Top Consumer

The provinces most affected by the drought are Shandong, Jiangsu, Henan, Hebei and Shanxi, representing 67 percent of the country’s wheat production in 2009, the FAO said. China has 14 million hectares (34.6 million acres) planted with winter wheat in those areas, of which about 5.16 million hectares may have been hurt, it said, citing government estimates.

China is the largest wheat consumer, representing about 17 percent of global usage in the year to June 30, the London-based International Grains Council predicts. The country’s wheat output may have dropped to 114.5 million tons at the last harvest from 115.1 million tons a year earlier, the USDA estimates. Macquarie Group Ltd. expects production to drop a further 4 million tons this year.

Premier Wen Jiabao visited Shandong last week during the Lunar New Year holiday to inspect conditions on the ground, according to the Xinhua News Agency. The country has to “prepare for the worst and do our best to combat the drought to ensure a good harvest,” Wen was cited as saying.

While the UN says global food prices climbed to a record in December, grain stockpiles have been replenished since 2007-2009, when the U.S. State Department estimates there were more than 60 food riots worldwide. Combined inventories of corn, wheat, rice and soybeans will end this year at 457.6 million tons, 21 percent more than in 2007, USDA estimates show.

China has abundant wheat stockpiles which will lessen the impact of the drought on supply, Li Qi, an analyst at Everbright Futures Co., wrote in a report. Inventories are the highest in seven years, Li said.

–William Bi, Feiwen Rong. With assistance by Whitney McFerron in Washington. Editor: James Poole

To contact Bloomberg News staff for this story: William Bi in Beijing at +86-10-6649-7578 or wbi@bloomberg.net

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Stocks held onto gains Wednesday afternoon, with the Dow still hovering just below the 12,000 mark, after the Fed kept rates steady and left its bond-buying plan alone.

Earlier in the session, the Dow rose as much as 43 points, or 0.4%, to 12,020.52, hitting its highest intraday level since June 20, 2008 . However, the index is still far from its all-time intraday high of 14,198.10, reached Oct. 11, 2007.

The S&P 500 (SPX) added 6 points, or 0.5%, and the Nasdaq (COMP) gained 21 points, or 0.8%.

Optimism sparked from President Obama’s State of the Union address late Tuesday helped push stocks higher.

"The speech last night created a more business-friendly environment," said Michael Sheldon, chief market strategist at RDM Financial Group. "He emphasized working with businesses to promote investment and jobs, whereas a year ago the White House was criticizing financial institutions."

Sheldon said a better-than-expected report showing new home sales jumped to an 8-month high in December also added support.

Later in the day, the Federal Reserve said it was leaving interest rates unchanged near historic lows, and continuing move forward with its $600 billion bond buying program to stimulate the economy.

Investors weren’t expecting any significant changes in the Fed’s policy, which remains a positive for financial markets, Sheldon said.

On Tuesday, stocks closed mixed after staging a late comeback.

Companies: Toyota (TM) announced it is recalling more than 1.5 million vehicles worldwide for issues that could result in fuel leakage. News of the recall sent shares of the automaker 1.9% lower.

Shares of home improvement retail chain Lowe’s (LOW, Fortune 500) edged up 1.6% after the company said it is cutting 1,700 managerial jobs while adding up to 10,000 part-time workers in order to better staff its stores for weekend shoppers.

Shares of online content creator Demand Media (DMD) rose 37% Wednesday as the company made its public debut, raising $66.5 million in an IPO that valued the company at more than $1 billion. Shares of media conglomerate Nielsen (NLSN) were up 11% as the company also made its public debut.

Xerox (XRX, Fortune 500) was among the biggest losers on the S&P 500, with shares dropping more than 8%. The company logged earnings that fell from a year earlier, but were in line with expectations and announced its Chief Financial Officer Larry Zimmerman will retire next month.

US Airways (LCC, Fortune 500) posted its first quarterly profit since 2006 and widely beat Wall Street forecasts, lifting shares of the airline by almost 10%.

Shares of Yahoo (YHOO, Fortune 500) slipped 2.7% after the company reported quarterly results late Tuesday that missed expectations and announced more layoffs.

Eastman Kodak’s (EK, Fortune 500) stock sank more than 16% after the company posted a fourth-quarter profit that plunged 95% from a year earlier. Revenue dropped 25% and missed expectations.

After the market close Wednesday, coffee chain Starbucks (SBUX, Fortune 500) is slated to report its quarterly earnings. Shares were 2% lower.

World markets: European stocks closed higher. Britain’s FTSE 100 climbed 1%; the DAX in Germany surged 0.9%; and France’s CAC 40 rose 0.7%.

Asian markets ended mixed. The Shanghai Composite gained 1.2% and the Hang Seng in Hong Kong edged up 0.2%, while Japan’s Nikkei slipped 0.6%.

Currencies and commodities: The dollar was flat against the euro, and slipped versus the British pound. It was slightly higher against the Japanese yen.

Oil for March delivery edged up 4 cents to $86.23 a barrel.

Gold futures for February delivery fell $7.20 to $1,325.10 an ounce.

Cocoa prices continued to rally for an eighth straight session Wednesday, rising 0.3% to 3,345 per ton amid a one-month export ban in the Ivory Coast, the world’s largest cocoa supplier. Earlier in the session, prices rose 1.5% to 3,385 per ton.

Meanwhile, cotton futures climbed to an all-time high, rising 3.6% to $1.676 per pound. It later eased to $1.662 per pound.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 3.40% from 3.32% late Tuesday.  

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Government prosecutors got their first conviction of a person accused of defrauding the Troubled Asset Relief Fund Friday.

Charles Antonucci, the former president of the Park Avenue Bank, pleaded guilty in federal court to defrauding the TARP fund, securities fraud, self-dealing, bank bribery and the embezzlement of bank funds.

"Today’s plea marks an important chapter and demonstrates that SIGTARP and its law enforcement partners will ensure that would-be wrongdoers who seek to profit criminally from this historic program will be caught, charged, and brought to justice," Special Inspector General Neil Barofsky said in a statement.

Barofsky heads SIGTARP, the watchdog group charged with prosecuting those who waste, steal or abuse TARP funds.

Antonucci, who was arrested in March, was convicted after misrepresenting his bank’s capital position in the process of trying to secure more than $11 million in TARP funds.

In addition, he pleaded guilty to accepting bribes in exchange for approving various bank transactions. Among the payoffs: use of a private aircraft, a luxury car and over $250,000 in cash payments. 

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Google Inc. has introduced its new Google TV service that combines several new partnerships with media companies including NBC Universal Inc. and Amazon Inc.

The new service will let users access the Internet and search for videos on their television.

Mountain View-based Google (NASDAQ: GOOG) designed the software as a platform for content companies and others to develop TV applications. The company has promised "a new world of apps available for TV."

"One of our goals with Google TV is to finally open up the living room and enable new innovation from content creators, programmers, developers and advertisers," the company said in a blog post Monday.

The service will be available through set-top boxes from companies including Sony, on its Internet TV and Blu-Ray player, and Logitech, which has U.S paydayloan. headquarters in Fremont.

It will include video on demand from Amazon, with access to more than 75,000 movies and TV shows for a fee, and video streaming from Netflix Inc.

Media partners have been working to make content interactive. Websites of companies including Turner Broadcasting System Inc.'s TBS and CNN have been modified so they appear better on television screens.

NBC Universal has worked with Google TV to offer CNBC Real-Time, an app that tracks stocks and accesses news feeds.

HBO will offer hundreds of hours of programming to the Google TV service, and the NBA has developed NBA Game Time, an app that allows users to get scores and highlights in real-time.

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The University of Wisconsin-Madison was awarded five federal grants worth $3,682,798 to work on projects to advance nuclear energy research and development, the U.S. Department of Energy announced Thursday.

U.S. Secretary of Energy Steven Chu announced the selection of 42 university-led projects for awards totaling $38 million to be funded over three to four years through the department’s Nuclear Energy University Program.

“We are taking action to restart the nuclear industry as part of a broad approach to cut carbon pollution and create new clean energy jobs,” said Chu in a press release.

UW-Madison’s five awards include one grant of $616,073 to research and demonstrate technologies that will enable the safe and cost-effective management of the used fuel, focused on developing novel technology options to improve used fuel storage, recycling and disposal.

Three grants totaling $2.5 million were awarded to UW for research and development of the next generation of nuclear reactors that will produce more energy and create less waste with a focus on developing new reactor technologies with higher safety, economic and sustainability performance.

The final grant of $538,032 is for research focusing on creative, innovative and “blue sky” research in the fields of nuclear science and engineering.

“These projects will help us develop the nuclear technologies of the future and move our domestic nuclear industry forward,” Chu said.

Actual project funding will be established during the contract negotiation phase of the projects.

A list of selected projects can be found at: http://nuclear.gov/pdfFiles/NEUP_FY10_RDAwards.pdf.

Additional information on the Nuclear Energy University Program is available at www.ne-up.org.

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For 18-year-old Stephanie Gielarowski, it was a school-sponsored trip to China that sparked her interest in Asia.

“I’ve always liked to travel,” she said, but it was that trip last summer where she saw first-hand the economic importance of the region.

“It’s important to be involved and educated in Asia,” she said, including understanding the region’s history and culture. It’s this newfound awareness that spurred her to pursue international business in college. So far, she says, her plan is to study at the University of South Carolina.

Gielarowski is one of hundreds of students who, over the years, have traveled abroad as part of one of the many programs offered by Upper St. Clair High School. The school’s Asian travel opportunities, which include a summer trip to China and an exchange to Thailand, are relatively new compared with some of the European programs, such as a German exchange that has been offered for 20 years.

Together, the school’s seven different language classes, its international and Asian studies, and its opportunities to travel prepare students for the world beyond western Pennsylvania.

“It really opens their eyes to their magnitude and place in the world,” in addition to preparing them for adulthood, said Principal Michael Ghilani.

Mary Eddins, an 18-year-old senior, participated in the Thai exchange her sophomore year and has taken the Asian Studies class offered by the school. Of her trip to Thailand, she says, “that opened my eyes up globally.”

Her previous foreign travel consisted of vacations to Mexico or the Caribbean, but that only offered the resort experience, whereas staying with a host family, “you’re immersed with the culture more, you learn the culture first-hand.”

That sentiment was echoed by Junior Rachel Amoroso, 16, who went on the exchange earlier this year.

“It was really a life changing experience,” she said. “I had never been out of the country before.”

But that cross culture taste has her hungry for more, and she is planning on studying abroad in college. In fact, she says, most of her questions at college fairs revolve around whether a school offers study abroad.

In addition to sending students overseas, Upper St no fax pay day loans. Clair High School also has foreign students come to Pittsburgh. In the spring, the school hosts Thai students and teachers. This April, 38 Thai students and three teachers arrived in Upper St. Clair.

The Thai exchange not only exposes the students to a new culture, but it also offers the entire community a way to connect. Organizing the program has become a labor of love for Thai native and Pittsburgh transplant Luck Kosoladolkitt. She first put the program together when her son was a junior and she wanted him to have a study abroad experience. From there, it has grown.

“The high school level is the most important time for students to make a decision before they go to university,” she said of the experiences of both the Thai and Upper St. Clair students. “They are in their teens, and they don’t know exactly what they want to do with their own life; this gives them the opportunity” to see other possibilities.

As part of the exchange, all of the students, Thai and American, host a Thai Night Gala in Upper St. Clair where the Thai culture is celebrated. The event also is a fundraiser to help pay for the program.

Many of the students who have gone on the Thai exchange or the summer trip to China also take the Asian Studies class that is offered. The semester-long elective looks at modern Asia as well as Asian history, and the curriculum was developed with the help of the University of Pittsburgh Asian Studies Center.

“We are a global society,” said Lauren Davidovich, who is teaching the current semester’s Asian Studies course. “Asia may not have been addressed as it should have been, and we would be remiss not to study it.”

In addition to personal growth offered by foreign travel, the school’s programs have students looking at careers in international business after they saw the economic importance of Asia.

Davidovich also noted that combining the class plus the real travel experience offers the students a unique perspective.

“Education breeds understanding,” she said.

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AMR Corp.’s American Airlines, once the world’s largest carrier by traffic, may pursue alliances to win more passengers as rivals’ mergers erase its advantage, analysts said.

Possible alliance partners include US Airways Group Inc. and JetBlue Airways Corp., the sixth- and seventh-largest U.S. airlines, said Jeff Straebler, a fixed-income strategist at RBS Securities Inc.

Alliances such as AMR’s Oneworld let members sell seats on each other’s jets, a benefit in an industry where the breadth of airlines’ networks attracts corporate fliers. American, now the second-largest U.S. carrier, would be No. 3 under the United-Continental merger, and said Monday that it is studying a "range of alternatives."

"American helped originate the whole idea of alliances and partnerships," said George Van Horn, an analyst at IBISWorld Inc. "If somebody should be good at it, you could make the argument they should be."

Straebler and Van Horn said an alliance might appeal to AMR by providing many of the benefits of a merger, such as adding passenger revenue and avoiding flight duplication, without the risks and expense of meshing fleets and unions. Ties to US Airways or JetBlue might help American in New York, the world’s busiest travel market, they said.

AMR was under pressure even before the United-Continental deal emerged. The company is the only major U.S. airline that may lose money in 2010, and has the lowest margins and highest costs among its peers, according to Jamie Baker, a JPMorgan Chase & Co. analyst. American and unions representing about 77 percent of its work force are in contract talks, with the pilots’ negotiations dating to 2006.

American’s last merger came in 2001, when it bought Trans World Airlines for $2.8 billion.

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