Financial thoughts

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World stock markets mostly rose Monday on the heels of a report showing a rebound in U.S. manufacturing, reinforcing the view that the slowdown in the world’s No. 1 economy was only temporary.

In early European trading, Britain’s FTSE 100 was up 0.1 percent to 5,995.47 and Germany’s DAX advanced less than 0.1 percent to 7,419.91. France’s CAC 40 was fractionally lower at 4,006.23.

U.S. stock markets are closed Monday for Independence Day.

In Asia, Japan’s Nikkei 225 index added 1 percent to 9,965.09, having breached the psychologically important 10,000 mark earlier in the day for the first time since May 5. Sentiment was lifted by optimism about the U.S. economy after manufacturing data for June from the Institute for Supply Management beat expectations.

Exporters were among the index’s major gainers. Honda Motor Corp. jumped 3.5 percent. Toyota Motor Corp. rose 1.5 percent. Consumer electronics giant Panasonic Corp. gained 1 percent.

South Korea’s Kospi added 0.9 percent to 2,145.30 and Hong Kong’s Hang Seng climbed 1.7 percent to 22,770.47.

Mainland Chinese shares extended gains as investors interpreted comments by vice premier Wang Qishan on the slowing economy, and news of stalling growth in non-manufacturing industries, as a sign Beijing may relax monetary policy, analysts said.

The Shanghai Composite Index jumped 1.9 percent to 2,812.82 and the Shenzhen Composite Index surged 2.3 percent to 1,188.91. Shares in lithium battery makers, gold miners and autos led the gains.

Benchmarks in Australia, Singapore, Taiwan and Indonesia also rose.

Thailand’s SET index soared 4.8 percent to 1,091.27 after the party backed by the country’s deposed Prime Minister Thaksin Shinawatra won a landslide election victory. The poll came a year after the government crushed protests by Thaksin supporters with a bloody crackdown that culminated in some of the worst violence in Thailand in 20 years.

Shares of Singapore-based Tiger Airways Holdings Ltd business card. plummeted 16 percent after Australian regulators grounded all Australian domestic flights of a Tiger subsidiary over safety concerns. Australia’s Qantas Airways, one of Tiger’s main competitors, soared 6.1 percent.

On Friday, the surprising rebound in the Institute of Supply Management’s U.S. manufacturing capped a weeklong rally that left the Dow up 5.4 percent for the week, its best week in two years. The Dow rose 1.4 percent to 12,582.77. The Standard and Poor’s 500 index gained 1.4 percent to 1,339.67. The Nasdaq composite added 1.5 percent to 2,816.03.

Also last week, Japan released data showing its industrial production posted the sharpest rise in nearly six decades in May. The improvement adds to signs that the world’s No. 3 economy is rebuilding after a March 11 earthquake and tsunami damaged factories and caused parts shortages for manufacturers.

Those developments came after many economists had began lowering their estimates for U.S. growth in May after a string of negative reports on U.S. manufacturing and hiring. Some analysts continued to caution against too much optimism, given a host of other lingering threats: galloping inflation in China, the European debt crisis and high oil prices.

“I think the environment that we are in _ there are still a lot of headwinds as far as equities go. I suspect this relief rally is going to be short-lived,” said Tey Tze Ming, a trader at Saxo Capital Markets in Singapore. “If growth slows any further, stocks are not going to be doing well.”

Benchmark crude for August delivery was up 16 cents to $95.10 in electronic trading on the New York Mercantile Exchange. The contract declined 48 cents to settle at $94.94 per barrel on the Nymex on Friday.

In currencies, the euro rose to $1.4526 from $1.4511 in late trading in New York on Friday. The dollar weakened to 80.59 yen from 80.84 yen.

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President Barack Obama says being a dad is sometimes his hardest job, but also the most rewarding.

Just ahead of Father’s Day, the president devoted his Saturday radio and Internet address to fatherhood. He talked about growing up without a dad, his own failings as a father and the values he hopes to teach his daughters Malia, 12, and Sasha, 10.

He described the responsibilities that all fathers have to their children and said his administration is trying to help during tough economic times and long deployments for U.S. troops.

The president spoke of helping to coach Sasha’s basketball team. “In the end, that’s what being a parent is all about _ those precious moments with our children that fill us with pride and excitement for their future; the chances we have to set an example or offer a piece of advice; the opportunities to just be there and show them that we love them.”

Obama, who was raised largely by his grandparents in Hawaii after his father left when Obama was very young, also talked about what he wishes he’d done differently.

“I felt his absence. And I wonder what my life would have been like had he been a greater presence,” the president said.

“That’s why I’ve tried so hard to be a good dad for my own children. I haven’t always succeeded, of course _ in the past, my job has kept me away from home more often than I liked, and the burden of raising two young girls would sometimes fall too heavily on Michelle.”

The president said he’s learned that what children need most is their parents’ time and a structure that instills self-discipline and responsibility, noting that even in the White House, Malia and Sasha do their chores and walk the dog. “Above all, children need our unconditional love,” the president said, “whether they succeed or make mistakes; when life is easy and when life is tough.”

Republicans used their weekly address to call for progress on pacts to expand trade with South Korea, Panama and Colombia.

The Obama administration wants lawmakers to expand retraining assistance for American workers who lose their jobs because of foreign competition. Republicans say that issue should be addressed separately by the president.

“For the good of our economy _ and our country _ he needs to send these free (trade) agreements to the U.S. Senate for approval now, so that U.S. workers and businesses can begin to realize their benefits,” said Sen. John Hoeven, R-N.D.

“Our country needs the kind of pro-jobs, pro-growth policies that will help us live up to our vision of a strong, peaceful, prosperous America,” Hoeven said. “We have an opportunity right now to advance that vision and jumpstart the nation’s economy. Robust international trade can help us do it.”

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British jets hit a military barracks in the Libyan capital early Sunday, intensifying NATO pressure on Libyan leader Moammar Gadhafi nearly four months into an uprising to end his erratic 42-year rule.

The airstrikes on the barracks _ repeated targets of NATO strikes _ followed the Western alliance’s first use of attack helicopters Saturday.

By intensifying attacks from the air and using helicopters to target government forces who melt into the civilian population for cover, NATO is providing a major boost to Libyan rebel forces who have seized much of the country’s east and toeholds in the west.

Emboldened rebels in recent days have forced government troops from three western towns and broke the siege of a fourth.

A government official, speaking on condition of anonymity because he was not authorized to speak to reporters, said the Sunday strikes caused no casualties because the barracks were abandoned after having come under repeated NATO attack.

A NATO official, however, said Royal Air Force Tornados fired eight missiles into a surface-to-air missile depot in Tripoli. The early Sunday attacks also hit military sites in the town of Tajoura, west of Tripoli.

Saturday’s strikes by French and British helicopters targeted Libyan troops hiding in populated areas, as well as military vehicles and equipment _ targets often unavailable to higher-flying jet fighters.

Lt. Gen. Charles Bouchard, commander of the Libya operation, said the engagement “demonstrates the unique capabilities brought to bear by attack helicopters.”

Until Saturday, NATO had relied aircraft that typically fly above 15,000 feet (4,500 meters) _ nearly three miles (five kilometers). The jets primarily strike government targets but there have been cases when they missed and hit opposition forces by mistake.

The helicopters give the alliance a key advantage in close combat, flying at much lower altitudes high quality business cards.

At a regional security conference Sunday in Singapore, Russian Deputy Foreign Minister Sergei Ivanov said NATO is “one step” from the start of ground operations in Libya.

Russia abstained from a United Nations Security Council resolution vote in March to impose a no-fly zone over Libya. Ivanov said there has been disagreement over how to interpret the scope of the resolution.

In the Saturday attacks, British Apaches hit two targets near the eastern oil town of Brega, according British Maj. Gen. Nick Pope, and separate Royal Air Force planes destroyed another military installation near Brega and two ammunition bunkers at the large Waddan depot in central Libya.

French Gazelle and Tiger helicopters struck 15 military vehicles and five military command buildings, said Col. Thierry Burkhard. All the helicopters returned safely, the French and British said.

Brega is of strategic importance to Libya’s oil industry and lies on the Mediterranean coastal road to the capital.

In the early days of the uprising against Gadhafi, Brega shifted between rebel and loyalist hands, but later the front line settled to the east of the town and under government control.

Gadhafi’s regime has been slowly crumbling from within. A significant number of officers and several Cabinet ministers have defected, and most have expressed support for the opposition. But Gadhafi shows no signs of leaving power.

Gadhafi has been seen in public rarely and heard even less frequently since a NATO airstrike on his compound killed one of his sons on April 30. That has led to speculation about the physical and mental condition of the 69-year-old dictator, who has ruled Libya since 1969.

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Hormel Foods Corp.’s fiscal second-quarter profit climbed 41 percent despite facing rising food costs, helped by strong performance from refrigerated foods like deli meats and Jennie-O Turkey.

The maker of Spam and Dinty Moore stew also raised its full-year earnings outlook.

Like many food makers, Hormel has been dealing with higher ingredient costs and has raised its prices to help cope. Hormel said it expects to face higher costs for the rest of the year and will continue to raise prices and cut costs to offset this.

“We believe our strong portfolio of brands and our balanced model will allow us to overcome those obstacles,” said CEO Jeffrey Ettinger.

The Austin, Minn.-based company said its net income rose to $109.6 million, or 40 cents per share, for the three months ended May 1, up from $77.9 million, or 29 cents per share, a year ago. Analysts expected a slightly higher 41 cents per share, according to Fact Set.

Revenue increased 15 percent to $1.96 billion from $1.7 billion. That was much better than the $1.82 billion analysts predicted.

All results reflect a two-for-one stock split Hormel implemented Feb. 1.

Shares fell 43 cents to $29.59 in pre-market trading after rising earlier.

Sales of Hormel’s largest segment, refrigerated foods, which make up more than half of Hormel’s total revenue, rose nearly 17 percent. Top sellers were Hormel party trays and deli meats.

Sales of Jennie-O Turkey, which makes up 19 percent of total revenue, rose 25 percent, helped by cost cuts and stronger commodity meat markets.

Grocery products revenue edged up 1.4 percent, boosted by sales of Spam, Hormel bacon toppings, Hormel Kitchen hash and Dinty Moore stew, while sales of microwave products and imported canned meats were weaker.

Specialty foods revenue rose 4 percent, with operating profit hindered by higher raw material costs.

The company now expects full-year net income of $1.67 to $1.73 per share, up from prior guidance of $1.62 to $1.68 per share. Analysts expect $1.71 per share.

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U.S. retail sales probably climbed in February by the most in four months, spurred by job growth and more seasonable temperatures, economists said before a report today.

The projected 1 percent gain would follow a 0.3 percent January increase, according to the median forecast of 82 economists surveyed by Bloomberg News. Other data may show business inventories rose and consumer sentiment declined.

J.C. Penney Co. and Macy’s Inc. (M) were among retailers that topped analysts’ sales estimates, a sign household spending regained momentum after a weather-restrained January. While higher fuel costs may be concerning Americans, bigger paychecks thanks to the tax compromise reached by President Barack Obama and congressional Republicans are probably preventing demand from slipping for now.

“Growing consumer confidence combined with pent-up demand will continue to have a positive influence on industry sales going forward,” Donald R. Johnson, vice president for North American sales at Detroit-based General Motors Co. (GM), said in a March 1 teleconference. “We continue to believe that we’re going to see this slow-but-steady growth throughout the year.”

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Group of 20 countries have agreed to an accord on the measurement of global imbalances that includes private sector finances, public sector finances and the components of the current account, an official with knowledge of the talks said.

The accord will break out the current account into its separate parts: a trade account of goods and services, a “factor” account that includes income from interest and dividends, and a transfer payments account like foreign aid proceeds, said the official. The person declined to be identified because the full agreement hasn’t yet been announced.

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CLAYTON  The Ritz-Carlton in Clayton has agreed to pay a fine of $300 and court costs of $26.50 after being charged with violating Clayton’s smoking ban ordinance, Clayton officials said today.

The Ritz  has also agreed to comply with the city’s ordinance in the future, Clayton officials said in a news release.

The hotel was cited after holding its annual Cigar Club party on Jan. 22.

The hotel had an exemption from Clayton’s ordinance for its Cigar Club lounge, but the ball was held in the hotel’s ballroom to fit the large crowd. The ballroom is not exempt from the ban, Clayton officials said.

To prevent future misunderstandings, Clayton’s Board of Aldermen will review and consider amending the language in the smoking ban, the city said.

For more on this story, see Thursday’s Post-Dispatch or return to STLtoday.com.

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Workers at Fiat’s historic factory in Turin have said “yes” in a referendum on the Italian company’s new flexible work rules.

Officials of the FIOM metalworkers union, which campaigned against the contract, say Saturday that votes of white-collar workers were key to the rules’ approval, 54 percent to 46 percent.

More than 94 percent of workers at the Mirafiori factory voted when they came for their shifts Thursday and Friday.

Fiat CEO Sergio Marchionne had warned if a majority of workers didn’t accept the new contract to produce vehicles in a joint venture with Chrysler, he’d take production elsewhere, possibly abroad.

Left-wing FIOM opposed the deal as weakening Italy’s system of national contracts, but other unions backed it as encouraging investment.

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India’s food inflation slowed for the first time in six weeks after Prime Minister Manmohan Singh’s government banned onion exports.

An index measuring wholesale prices of farm products including milk and lentils rose 16.91 percent in the week ended Jan. 1 from a year earlier, the commerce ministry said in a statement in New Delhi today. The gauge gained 18.32 percent the previous week.

Food-price inflation has remained above 12 percent for four straight weeks in India, threatening living standards among the 828 million people that the World Bank says live on less than $2 a day. The price gains have also exposed Singh’s government to criticism from opposition parties, which are planning nationwide protests from this month.

“Food prices are now a problem and it looks as if the government is not in control,” Prasanna Ananthasubramaniam, the Mumbai-based chief economist at ICICI Securities Primary Dealership, said before the release. “The central bank will hike rates this month.”

The yield on the benchmark nine-year government bond has gained 24 basis points to 8.15 percent this month on speculation Reserve Bank of India Governor Duvvuri Subbarao may boost rates for the seventh time in a year at the Jan. 25 announcement. The RBI’s benchmark repurchase rate is 6.25 percent.

Wage Demands

High food costs for a sustained period will lead to more wage demands, stoking inflation, Chakravarthy Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, said last week as he sought “some action” from the central bank.

Singh, who is planning to import onions from Pakistan and distribute 5 million tons of rice and wheat at subsidized prices, met his top cabinet ministers and advisers on Jan. 11 to find ways to counter rising prices and protect purchasing power.

India on Dec. 21 halted exports of onions, a key ingredient in local cuisine, until further notice. The government this month also raided agriculture traders to prevent hoarding.

The United Nations Children’s Fund, or Unicef, says one in three malnourished children in the world live in India. The National Family Health Survey of 2008 showed the child malnutrition rate at 46 percent, double that in Sub-Saharan Africa.

As a result, protests over inflation have intensified,

The main opposition Bharatiya Janata Party, or BJP, will hold demonstrations and stage sit-ins in India’s major towns for a month starting Jan. 20, party spokesman Ravi Shankar Prasad said in New Delhi on Jan. 11.

Emulate China

India, the second-biggest grower of rice, wheat and sugar, should emulate China in building strategic stockpiles of staples to cool prices, Atul Chaturvedi, chief executive officer for agriculture business at Adani Enterprises Ltd., the nation’s biggest farm goods trader, said in an interview yesterday.

India, unlike China, hasn’t stockpiled cooking oils, sugar and oilseeds, leading to higher prices, Chaturvedi said cash till payday. A rise in wheat and rice costs have been capped by a ban on exports and reserves of 48 million tons at state agencies, he said.

Still, the government measures may not staunch inflation as weather disruptions to crops globally keep prices high.

“Given extreme weather patterns across the globe — floods in Australia, snowstorms in the northern hemisphere — price rises could persist in the coming months,” Rohini Malkani and Anushka Shah, economists at Citigroup Inc., wrote in a Jan. 10 report. “This poses upside risks to our inflation forecasts.”

Global Prices

World food prices reached an all-time high in December on higher sugar, grain and oilseed costs, the United Nations said, exceeding levels reached in 2008 that sparked deadly riots from Haiti to Egypt.

Palm oil, which accounts for 80 percent of India’s annual cooking oil imports worth $8.4 billion, have surged 56 percent in the past six months in Malaysia, while soybean oil climbed 43 percent in 2010, because of adverse weather in the producing nations.

The outlook for higher inflation is prompting local banks in India to join Goldman Sachs Group Inc. in predicting benchmark borrowing costs will climb 1 percentage point in 2011.

Tushar Poddar, a Mumbai-based economist at Goldman Sachs who correctly predicted that the central bank would raise the benchmark repurchase rate by 150 basis points in 2010, said in an interview Jan. 10 that the biggest risk to inflation is higher food and commodity prices. Poddar told reporters in Mumbai on Dec. 8 that he expects the central bank to lift interest rates 100 basis points in 2011.

Slower Growth

Higher borrowing costs may curtail economic expansion in South Asian nations including India, the World Bank said yesterday. India’s $1.3 trillion economy may grow 8.4 percent this year and 8.7 percent in 2012 from 9.5 percent last year, the lender said.

Indian automakers expect passenger-car sales growth to slow from the fastest pace in at least six years because of higher prices and rising rates.

Sales may increase 18 percent this year, Pawan Goenka, head of the Society of Indian Automobile Manufacturers, said in Mumbai this week. Shipments from manufacturers to dealers jumped 31 percent to 1.87 million last year, according to the group, which represents all automakers in the country.

Tata Motors Ltd. and Volkswagen AG have both raised vehicle prices this month to help offset rising prices for steel and other materials.

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