Financial thoughts

Divers have resumed the search for 21 people still missing after a cruise ship capsized off the Tuscan coast.

Divers were scouring the submerged area of the ship Thursday once officials determined it had stablized after shifting on the rocks a day earlier.

Rough seas were forecast for later in the day, adding an element of uncertainty to the search and plans to begin pumping a half-million gallons of fuel from the vessel.

The missing include a 5-year-old Italian girl and her father. The girl’s mother issued a fresh appeal to speed the search and for passengers who saw the pair to come forward to help determine where they were last seen.

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The worst week for the stock market in two months ended with a whimper in thin trading Friday.

The Dow Jones industrial average lost 4.8 percent this week, while the broader Standard & Poor’s 500 index fell 4.7 percent. Both had their worst weeks since Sept. 23.

Major indexes wavered throughout Friday’s session, which was shortened because it’s the day after Thanksgiving. Worries about Europe’s debt crisis flared up again after Italy had to pay 7.8 percent to borrow for two years at a debt auction. It’s another sign that investors are increasingly hesitant to lend to European countries.

The euro slipped to $1.32, losing 2 percent this week against the dollar. The drop puts the euro at its lowest level since Oct. 4.

Higher interest rates on government debt of Italy, Spain and other European countries have rattled stock markets in recent weeks. When borrowing costs climb above the 7 percent threshold, it deepens investor fears about a government’s ability to manage its debts. Greece, Ireland and Portugal had to seek financial lifelines when their interest rates crossed the same mark.

The Dow fell 25.77 points, or 0.2 percent, to close at 11,231.78. Of the Dow’s 30 stocks, Chevron Corp. lost 1.6 percent Friday, the biggest drop. Travelers Cos. Inc. added 1.2 percent, the largest gain.

The S&P 500 lost 3.12 points, or 0.3 percent, to 1,158.67. The Nasdaq composite dropped 18.57, or 0.8 percent, to close at 2,441.51.

Trading volume was 1.6 billion, less than half the daily average.

Markets were battered this week as governments in Europe and the U.S. struggle to tackle their debts. The Dow lost 248 points on Monday as a Congressional committee failed to reach a deal to cut federal budget deficits. It plunged 236 points Wednesday after investors balked at buying German government debt.

Retailers traded mixed on the Friday after Thanksgiving, the traditional start of the holiday shopping season and usually the busiest day of the year for retailers. Amazon.com Inc. dropped 3.5 percent. Wal-Mart Stores Inc. inched up 0.4 percent.

A record number of people were expected to show up at stores this weekend to take advantage of deep discounts. The National Retail Federation estimates that 152 million people will go shopping over the three days starting on Friday. That would be an increase of 10 percent from last year.

AT&T’s stock dipped less than 1 percent. The company said Thursday that it is budgeting to pay $4 billion in break-up fees if its attempted $39 billion takeover of T-Mobile USA from Deutsche Telekom falls apart.

Four stocks fell for every three that rose on the New York Stock Exchange.

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Former Wall Street Journal publisher Les Hinton is due to give evidence to British lawmakers investigating the tabloid phone-hacking scandal.

Hinton, who also was CEO of Dow Jones & Co., resigned in July after revelations of illegal eavesdropping by Rupert Murdoch’s News of the World tabloid.

He will testify to the House of Commons media committee Monday by video link.

Hinton was Murdoch’s right-hand man until the scandal, which has convulsed Britain’s media landscape business cards.

The tabloid stands accused of illegally hacking into the voice mails of celebrities, politicians and crime victims in search of scoops.

Hinton headed Murdoch’s British newspaper division during some of the years phone hacking took place, but has said he was unaware of the wrongdoing.

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Orders are now being taken for the Kobo Vox, a full-colour seven-inch tablet the same size as the BlackBerry PlayBook.

TORONTO — The Canadian ebook company Kobo is getting into the crowded tablet market and beating a major competitor to the punch.

Orders are now being taken for the Kobo Vox, a full-colour seven-inch tablet the same size as the BlackBerry PlayBook.

It’s selling for about $200 and shipping starts on Oct. 28.

It’s a Wi-Fi only device, runs on the Google Android operating system and has eight gigabytes of memory. Kobo says it has up to seven hours of battery life.

The Vox will compete against a long list of tablets on the market, including Apple’s bestselling iPads, the PlayBook, Samsung’s Galaxy Tabs, Motorola’s Xoom and a host of smaller rivals online payday loans. But the Vox is about 40 per cent cheaper than the most-inexpensive iPad.

Kobo’s largest ebook competitor, Amazon, also announced its own tablet recently with similar specifications.

Called the Fire, it’s not due for release until Nov. 15 and is also selling for $199 in the U.S. There’s no release date set for Canada.

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When realtor Desmond Brown walks into a house that’s just too stunning to be someone’s home, he heads to the fridge.

An empty fridge is his second clue that the home has been super staged to appeal to a new generation of buyers who are looking for more of a showcase than a sound house to call their home.

“Gone are the days that you walk into a house and think, ‘Wow, they really lived in this place,” says Brown.

Brown has seen first-time buyers walk out of well-priced condos because the appliances aren’t stainless steel. Even classic old homes graced with original wood trim and hardwood floors are taking longer to sell, he finds, than those that have “the look.”

Call it the HGTV effect.

“This generation’s expectations of what’s reasonable and livable in a house is significantly different than previous generations,” says John Pasalis, a Leslieville realtor whose office deals with a lot of first-time buyers.

“People have this vision based on what they see on TV. Generally, if a house doesn’t have stainless steel appliances, granite countertops, new bathrooms and pot lights, there’s a sense that you’re slumming it.”

Snazz sells, says realtor Irene Kaushansky who has seen young buyers so blinded by the glint of a Wolf gas stove and Sub-Zero fridge, they’ll drive themselves into heavy debt in bidding wars that skew the market by driving prices wildly out of whack.

“I watch some of those shows and I know that’s not reality,” says Kaushansky. “I warn buyers that after they’ve bought the house and all that stuff is gone, it’s not going to look like the same place.”

Staging used to be largely about refreshing a tired-looking home by removing clutter, painting walls and replacing worn carpeting, says Diane Black, who stages more than 200 homes a year in Peel and Halton regions, as well as Toronto’s west-end.

Now it’s all about evoking a lifestyle and making the home appear move-in ready with the “right” modern furniture, art and accessories.

She’s finding a new generation of buyers — on average 15 years younger than sellers — don’t want to do the work, or don’t have the imagination or the money after scrapping together down payments on pricey homes.

“They want that status,” says Black. “They want labels and instant gratification and they want it all yesterday.”

The stakes have been raised since MLS house listings went online and buyers have been able to do more looking on their own, says Black.

“If I can only do one thing for a seller, I want to give that wow HGTV factor online,” which is why art, accessories, materials have become more critical to setting homes apart.

It’s routine now for agents — even in newer suburban neighbourhoods — to recommend that owners spend at least a few thousand dollars on new counters, flooring and fixtures before staking a for sale sign on the front lawn.

But not everything can be “refreshed.”

“The 1980s (suburban) homes are dying because nobody wants eight-ceilings anymore,” says veteran Oakville agent Dan Cooper. “If a house doesn’t have at least nine-foot ceilings, it’s very tough to sell.”

Super staging is so critical in real estate now, Cooper has hired stager Kathy Wood of Divine Design and is now looking to rent space, buy furniture and hire movers to help sellers turn around their homes quickly for what he calls “the want-now generation.”

“The low interest rates don’t help,” because younger buyers tend to take the view they’ll buy the best now and pay for it later, says Cooper. “That’s a recipe for disaster if rates go up.”

Of course, there is obviously payback for putting in a little work before pricing a home for sale, as Janice Hornick discovered when her parents went into long-term care and needed to get rid of the Burlington home where they’d lived for 25 years.

“I thought let’s just get rid of it as is,” says Hornick. “I didn’t want the bother.”

One agent suggested a list price of $360,000. A second agent suggested Hornick call in Diane Black.

Within a month, Black had pink and blue walls repainted in neutral taupes, old carpeting upstairs was replaced with lush berber and the kitchen got a dramatic stainless and granite makeover. Black even removed window mullions to open up the view into the backyard ravine.

Hornick’s jaw dropped when she saw the $35,000 transformation.

The place sold quickly — for $479,000.

What stagers say is in or out, at least as of today

In

“Depersonalized” décor (get rid of all those family photos)

Neutral taupe colours

Natural stone—granite, travertine, slate

Wide-plank flooring

Stainless steel appliances (a must)

Crown moulding

High ceilings

Spa-like bathrooms

Apothocary jars and Pottery Barn-type accessories

Bedrooms retreats with a chaise lounge or comfy seating area

Berber carpeting

Brushed nickel fixtures

OUT

Black or white appliances

Laminate countertops—even in the bathroom

Ceramic tile

Wallpaper

Pinky-beige, yellow and bold wall colours

Panelling/wainscotting

Plastic venetian blinds

Carpeting (except berber)

Brass fixtures

Original thin-strip hardwood/parquet

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Italian luxury fashion house Prada SpA says first-half profit surged on strong sales of leather goods such as bags and wallets to Chinese and other Asian customers.

Prada said net income jumped 74 percent to euros 179.5 million ($244 million) in the six months to July 31, from euros 103 million the year before. Revenue rose 21 percent to euros 1.13 billion.

Asia-Pacific sales grew an “outstanding” 35 percent to euros 368 million in the first half, with the Greater China region making the biggest contribution, the company said Monday in its first earnings report since listing on Hong Kong’s stock exchange in June.

Asia accounted for the biggest portion of Prada’s sales, ahead of both Italy and Europe as a whole. The company’s other brands _ Miu Miu, Church’s and Car Shoes _ also had strong Asian sales growth.

Prada, which is known for stylish leather handbags, said leather goods played a big role in boosting sales in Asia.

Revenue growth in Asia was boosted by 31 percent sales growth at existing stores as well as the opening of nine new stores in the year to July 31.

Milan-based Prada became the first Italian company to go public in Hong Kong, raising $2.4 billion in an initial public offering aimed at raising awareness of its brand among China’s growing number of wealthy and brand-conscious consumers.

Prada and other foreign companies selling luxury goods are betting that China’s strong economic growth, increasing urbanization and higher spending by the rich will drive sales growth.

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Billionaire investor Warren Buffett is calling on the so-called mega-rich to pay more in taxes.

Buffett says in a New York Times opinion piece that he would immediately raise rates on households with taxable income of more than $1 million, and he would add an additional increase for those making $10 million or more.

He says he and his mega-rich friends have been coddled long enough by Congress, and says it is time for the government to get serious about shared sacrifice.

He says he has yet to see anyone shy away from investments due to potential capital gains taxes, even when capital gains rates were much higher in the mid-1970s.

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President Barack Obama is pressing congressional leaders to accept a $4 trillion debt reduction deal that Republicans have rejected for its tax increases and Democrats dislike for its cuts to programs for seniors and the poor, administration officials said hours before talks resumed Sunday.

Yet they left room for negotiations on a more modest approach.

“He’s not someone to walk away from a tough fight,” White House chief of staff William Daley said. “Everyone agrees that a number around $4 trillion is the number that will … make a serious dent in our deficit.” But embedded among the tough words was rhetoric that acknowledged the “big deal’s” prospects had become uncertain at best.

“We’re going to try to get the biggest deal possible,” said Treasury Secretary Timothy Geithner.

It was an abrupt change from 24 hours earlier. Republicans late Saturday rejected the $4 trillion proposal, the largest of three under consideration, because its tax increases would doom it in the GOP-led House, Speaker John Boehner said.

The Ohio Republican informed Obama that a package of about $2 trillion, which bipartisan negotiators had identified but not agreed to, was more realistic.

Senate GOP leader Mitch McConnell of Kentucky left little doubt that the $4 trillion deal was dead.

“I think it is,” McConnell said. Raising taxes amid 9.2 percent unemployment, he added, “is a terrible idea. It’s a job killer.”

The statements threw into question the extent to which the Sunday meeting, called for 6 p.m. EDT, would move the talks toward a resolution as an Aug. 2 deadline loomed. That’s when the nation would begin to default on its debts, administration officials say, if no deal is reached to raise the borrowing limit from $14.3 trillion.

The International Monetary Fund’s new chief, Christine Lagarde, said she foresees “real nasty consequences” for the U.S. and global economies if the U.S. fails to act.

Republicans have demanded that any plan to raise the debt limit be coupled with massive spending cuts to lighten the burden of government on the struggling economy. Higher taxes, Republicans have said from the start, are deal-killers if not offset elsewhere.

But Obama has a long way to go to satisfy lawmakers in his own party, too. Many Democrats are unnerved by the president’s $4 trillion proposal because of its changes to Medicare and Medicaid.

Political pain is part of the deal and should be worth bearing, Daley said. Obama, he added, was calling on lawmakers to “step up and be leaders.”

He cast Obama as uninterested, for now, in two more modest proposals to raise the debt limit for a shorter time, in exchange for smaller spending cuts.

Geithner cautioned that a package about half the size of the one Obama prefers would be equally tough to negotiate because it, too, could require hundreds of billions in new tax revenue - anathema to Republicans. Lawmakers said that previous bipartisan talks, led by Vice President Joe Biden, identified a fraction of cuts that would be needed even for the more modest packages.

Even so, Boehner insisted the smaller proposals had more realistic chances of passing. One, identified by not signed off-on by the Biden group, would call for about $2 trillion in deficit reductions, most accomplished through spending cuts.

“I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase,” Boehner said.

It was a stark reversal. Boehner, Obama and their aides emerged from a secret meeting a week earlier saying they believed an even bigger figure was attainable if both parties made politically painful, but potentially historic, choices.

A Republican official familiar with the discussions said taxes and the major health and retirement entitlement programs continued to be sticking points.

Obama wanted Republicans to accept closing some corporate tax loopholes and subsidies to corporations, ending a tax friendly inventory accounting system for businesses, as well as reducing the value of tax deductions for wealthy taxpayers.

A senior administration official said the discussion on taxes broke down over the administration’s desire to have the wealthy pick up a bigger share of the tax revenue load than Republicans were willing to accept.

The official, speaking on the condition of anonymity because of the sensitivity of the negotiations, said the $2 trillion to $2.4 trillion in deficit reduction identified by the Biden-led negotiations remains under negotiation and will also require some new tax revenue of up to $400 billion.

Daley was on ABC’s “This Week,” as was Lagarde. McConnell appeared on “Fox News Sunday” and Geithner was interviewed on NBC’s “Meet the Press” and CBS’ “Face the Nation.”

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President Barack Obama says technological innovations can help create jobs and spur growth in clean energy and advanced manufacturing.

In his radio and Internet address, the president promoted a plan he outlined Friday in which the government would join with universities and corporations to re-ignite the manufacturing sector with an emphasis on cutting-edge research and new technologies.

“Their mission is to come up with a way to get ideas from the drawing board to the manufacturing floor to the marketplace as swiftly as possible, which will help create quality jobs, and make our businesses more competitive,” Obama said in the address aired Saturday.

It was taped Friday during his visit to Carnegie Mellon University in Pittsburgh, where he saw a display of mini-robots that explore water and sewer pipes.

He marveled at robots that can defuse a bomb, mow a lawn, even scrape old paint.

With growing interest from the military, businesses and consumers, the Carnegie Mellon Robotics Institute has more than 500 technical experts and a $65 million annual budget.

The $500 million initiative is the latest effort by Obama to promote job creation in the midst of an economic slowdown that has reduced hiring and weakened his job approval standing with the public.

Obama has tried to brave the weak economy by featuring job creation measures during weekly trips outside Washington and in his radio addresses. On Tuesday, he will visit an Alcoa factory in Bettendorf, Iowa.

The goal of his manufacturing plan, he said, is “to help make sure America remains in this century what we were in the last - a country that makes things.”

As he prepares to meet with Senate leaders on Monday in hopes of restarting budget negotiations, Obama said he is “committed to working with members of both parties to cut our deficits and debt.”

But he said he would not cut spending on education or infrastructure or in the type of innovative technologies he witnessed at Carnegie Mellon. “Being here in Pittsburgh, I’m hopeful about the future,” he said.

In the Republican’s weekly address, Rep. Renee Ellmers of North Carolina proposed a different remedy to boost businesses.

Ellmers, who owns a small medical practice with her husband, said the Republican plan would reduce regulations, expand domestic energy production and require the government to consider the effect of federal rules on hiring.

“The job creators we hear from, they don’t have their hand out,” she said. “They don’t want a bailout. All they ask us to do is get government out of the way.”

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