Actual finance blog

A financial-services franchise serving families and downtown Honolulu workers has opened a second location at Fort Street Mall.

Cash Plus — which offers check cashing, payday advances, wire transfers, money orders and serves as a bill payment center for dozens of companies — opened at 1111-A Fort Street Mall, a few doors from McDonald’s and Hawaii Pacific University.

The store doubles as a wireless and high-speed Internet service provider from Mobi PCS and Clearwire.

The Fort Street store is the second franchise for co-owners and Hawaii entrepreneurs Mark Nakatsukasa and Dylan Mabuni paydayloans. They opened their original location in January 2006 at 1130 Middle St.

"There was a need for financial services in different communities," Nakatsukasa said.

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Malaysia's government shelved at least $1.1 billion in public works projects as soaring commodity prices forced it to spend more on food security and raised construction costs, swelling its five-year development budget.

Projects including a monorail and highway in northern Penang state will be scrapped, Sulaiman Mahbob, director general of the government's Economic Planning Unit, said in a press briefing in Putrajaya yesterday. The Southeast Asian nation will spend 230 billion ringgit ($70 billion) on roads, bridges and other works during the 2006-to-2010 period, 15 percent more than it planned earlier.

The changes “take into account additional development requirements and the increase in construction-related materials cost,'' Prime Minister Abdullah Ahmad Badawi told parliament in Kuala Lumpur today in a review of the five-year plan released today. “Development projects will also be reprioritized.''

Surging commodity prices have pushed up building costs and increased government subsidies on food and fuel, leaving Asia's governments with less to spend on public-funded bridges, roads and other works. That's limiting Abdullah's ability to regain support after his coalition lost its two-thirds parliamentary majority in elections this year.

“Given the rising project costs as well as ballooning fuel subsidies, there is a need to reprioritize the projects,'' said Lee Heng Guie, an economist at CIMB Investment Bank Bhd. in Kuala Lumpur. “They will focus on all the people-centric projects'' including food security, rural roads and housing.

Penang Monorail

Scomi Engineering Bhd. had planned to bid for the 2 billion ringgit monorail project on Penang island, a popular tourist destination. Penang, Abdullah's home, was one of five states that came under opposition control after the March 8 elections.

Malaysian Resources Corp. and Melewar Industrial Group Bhd. were also potential bidders for the monorail job cash advance loans.

Other projects put on hold include a public park in the capital Kuala Lumpur, bringing the total value of projects shelved to at least 3.5 billion ringgit.

Instead, the government will spend an additional 1 billion ringgit each for Sarawak and Sabah states on Borneo island, which provided Abdullah's coalition with the parliamentary seats it needed to retain a simple majority in the lawmaking body.

An additional 10 billion ringgit will be spent on five special investment zones Abdullah has introduced across the country. Some 3 billion ringgit will go to food security programs, and 3 billion ringgit to a strategic investment fund for the trade ministry. Spending on low-cost housing, rural infrastructure and public transport will increase.

Political Pressure

Projects that will proceed include an electrified double- tracking rail development in the north of the Malaysian peninsula led by Gamuda Bhd. and MMC Corp., and a similar line being built by Ircon International Ltd. in the south.

Growth in Southeast Asia's third-largest economy may average 6 percent a year from 2006 to 2010, Abdullah said, maintaining the estimate given at the start of the five-year plan in 2006.

Achieving the targeted growth rate would be difficult, said Lee at CIMB.

“We are in trying circumstances,'' he said. Growth may ease from the average 6.1 percent pace of the past two years, as higher domestic fuel prices and “political headwinds'' add to external risks, he added.

The government's budget deficit is forecast to narrow to 3.2 percent of gross domestic product by 2010 from 3.6 percent in 2005, compared with the 3.4 percent estimated earlier. The deficit will total 21.6 billion ringgit this year, or about 3.1 percent of gross domestic product, the central bank said on March 26.

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The Federal Reserve will not allow inflation to get out of control and is aware of the danger that a weaker dollar could feed into higher prices, one of its top policy-makers said on Tuesday.

“We want to make sure the message is clear … that we will not countenance building inflationary expectations,” said Federal Reserve Bank of Dallas President Richard Fisher.

“We are witnessing a negative feedback loop … which is that a weaker dollar can lead to further inflationary pressures which in turn leads to a weaker dollar, et cetera, and to dampened economic activity,” he said in response to questions after a speech at the Council on Foreign Relations.

Fisher, a voting member of the Fed’s interest rate-setting committee this year, has dissented at the last three policy gatherings in favor of either smaller rate cuts than were agreed, or because he wanted no cut at all.

He said he had drawn the line at 3.5 percent, whereas the Fed has gone on to lower its benchmark overnight funds rate to 2 percent to shield the U.S americashadvance. economy from a housing crisis, and made plain he was uncomfortable with inflation expectations.

“The anecdotal evidence, the headlines that we’re reading in the newspapers, and the survey data, is not encouraging,” he told the audience.

“That worries me a great deal. It’s beginning to work its way into expectations, and when you begin to work your way into expectations, business and consumers behave accordingly and then you have a problem.

“So you want to make sure that is not encouraged and we will do the level best we can to do so,” he said. 

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Orders for manufactured goods posted a surprisingly strong increase in April as demand rose across a number of industries.

The Commerce Department reported that orders were up 1.1% in April following a 1.5% increase in March. Orders had fallen in January and March as a spreading slowdown in the overall economy depressed activity in manufacturing.

The April increase came as a surprise. Analysts had been forecasting a small decline faxless cash advance. Orders in the battered auto industry and in the volatile commercial aircraft sector did fall sharply but other areas showed strength, from rising demand for iron and steel to appliances and heavy machinery. Demand for petroleum was also up sharply, reflecting sharply higher prices. 

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Staples Inc. posted a slim 1.5% increase in its first-quarter profit, after posting small declines the previous two quarters amid slow retail sales of office products.

The world’s largest office products supplier said Tuesday its profit rose to $212.3 million, or 30 cents per share, in the three months ended May 3. That compares with a profit of $209.1 million, or 29 cents per share, a year earlier.

The latest profit matches analysts expectations.

Staples (SPLS, Fortune 500) says sales rose 6% to $4.9 billion from $4.59 billion a year ago, slightly beating analysts’ forecast of $4.83 billion.

Staples reaffirms its profit and sales forecast for the full year fast cash now. It expects a weak economic climate throughout 2008. 

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Lowe’s Cos. reported a 17.9% drop in first-quarter earnings on Monday as the slumping U.S. housing market and softer economy hurt sales. Its shares fell almost 3% in premarket trading.

The nation’s second-biggest home improvement retailer said it earned $607 million, or 41 cents per share, in the three months ended May 2. That is down from $739 million, or 48 cents per share, in the first quarter of 2007.

Revenue slipped to $12.0 billion from $12.2 billion a year ago.

Analysts surveyed by Thomson Financial had been looking for net income of 40 cents a share on revenue of $12.4 billion. Estimates usually exclude one-time items.

Comparable-store sales — a closely watched gauge of retail health that measures sales at stores open at least a year — declined 8.4%. The company predicted that number would drop at least 6% in the current quarter and the year.

Lowe’s (LOW, Fortune 500) shares fell 73 cents, or 2.9%, to $24.16 in premarket trading.

"The challenging sales environment we have been experiencing for the past six quarters continued into the first quarter of 2008," said Chairman and Chief Executive Robert A $1500 payday loan. Niblock in a statement accompanying the report. "The generally poor economic outlook, including well-known housing pressures, rising food and fuel prices and a more negative employment picture eroded consumer confidence and impacted discretionary purchases for the home."

The company expects second-quarter total sales to rise about 1% on earnings of about 54 cents to 59 cents a share. Analysts have forecast earnings of 56 cents per share. For the year, total sales are expected to increase about 1%.

Lowe’s and bigger rival Home Depot Inc., which is expected to post first-quarter numbers Tuesday morning, have seen profits slide over the past year as a slump in the housing industry continues.

But the sentiment on Wall Street has been positive recently, and many expect home improvement retailers to benefit from an eventual recovery in the housing market. Shares of Lowe’s have risen 10% so far this year. 

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Chinese Internet firm Alibaba is set to speed up plans to buy back a near 40 percent stake owned by Yahoo Inc (YHOO.O: Quote, Profile, Research), as Microsoft Corp (MSFT.O: Quote, Profile, Research) threatens to go hostile with a lower bid for Yahoo.

Alibaba, keen to calm Beijing’s fears that Microsoft’s planned $42 billion takeover of Yahoo would increase foreign influence over China’s leading Internet firms, wants to fund a buyback of all or part of the 39 percent stake Yahoo owns, said a person familiar with the Chinese firm’s plans.

Analysts said this could come from a mix of foreign and local financial investors, including Chinese pension funds or state-backed firms looking to enter the Internet sector.

“Jack’s number-one thing is to maintain control,” said Hany Nada, managing partner of Granite Global Ventures, an early institutional investor in Alibaba, referring to the group’s Chief Executive Jack Ma.

Alibaba plans to exercise its ‘right of first offer’ on the stake, which is stated in a 2005 agreement with Yahoo, should the two U.S free credit report without a credit card. firms reach a deal, a source told Reuters earlier.

The ‘right of first offer’ states that Yahoo cannot transfer its Alibaba stake without first offering it to other shareholders. Alibaba believes any change of control at Yahoo, including a deal with Microsoft, would amount to such a transfer, the source said.

LOSING OUT

Alibaba may be unwilling to rule out potential business opportunities with Microsoft, for example in advertising or online trading, that would be lost if it were to buy back its stake from Yahoo. 

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Venezuela is preparing a “windfall” oil tax to boost the OPEC nation’s revenues from record crude prices, only months after leftist President Hugo Chavez’s nationalization crusade forced out two of the world’s largest energy companies.

The move extends Chavez’s broad campaign to boost state control over oil operations that led to legal battles with Exxon Mobil (XOM.N: Quote, Profile, Research) and ConocoPhillips (COP.N: Quote, Profile, Research) and helped spark a wave of resource nationalism throughout the Andes.

“Because of high oil prices, oil companies have excessive earnings that go beyond reasonable levels of profitability,” Legislator Angel Rodriguez told state news agency ABN.

“One way to distribute them to our people, who are the owners of the oil, is to create this tax.”

The windfall tax will take 50 percent of oil revenues above $70 per barrel, Rodriguez said, and an additional 60 percent of revenues over $100 per barrel cash advance.

Rodriguez said Congress, completely controlled by Chavez’s allies, would give initial approval to the measure this week.

The move will give Chavez new funds to shore up popularity among the nation’s poor majority that has backed him for almost a decade but is increasingly criticizing his government for nagging food shortages and rampant crime.

Supporters of the firebrand leader generally support his bare-knuckles negotiating style with foreign oil companies, which has spread to Andean allies Bolivia and Ecuador. 

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Fannie Mae, the largest provider of funding for U.S. residential mortgages, has extended forbearances for troubled homeowners in a move the company expects to ease stress on its capital.

The move allows temporary suspensions or reduced payments by borrowers for up to six months, up from four months, said Jason Allnutt, a vice president for credit loss management for Fannie Mae (FNM.N: Quote, Profile, Research) in Dallas.

Giving homeowners greater leeway will help Fannie Mae limit the costly process of purchasing bad loans out of the $2.5 trillion in mortgage-backed securities it guarantees. Under standard accounting rules, buying mortgages out of MBS trusts forces the company to revalue the loans at market levels, which last year boosted fair value losses sevenfold to $1.4 billion.

Fannie Mae is balancing the need to “keep people in their homes … with having to pull loans out of trust,” Allnutt said in an interview. “This is one of those changes that helps us in both ways.”

Longer forbearance for homeowners may give the government-sponsored enterprise more breathing room on capital as lawmakers and regulators pressure it to do more to stabilize the battered U.S. housing market. The program will complement other efforts by the GSEs, lenders and mortgage counselors to slow an epidemic in foreclosures that is threatening to push the U.S easy payday loans. economy into recession.

Heavy losses on loans purchased — whose values are determined based on the worst mortgage market in decades — and increased focus on loss mitigation have resulted in other new programs to keep borrowers in their homes. In February, Washington-based Fannie Mae announced it would begin offering unsecured loans to homeowners in arrears.

The HomeSaver advance and HomeSaver forbearance programs are bets that the loans can be “cured,” or fixed, faster and cheaper than through other loss-mitigation efforts. Such plans will work if servicers use the time to obtain more information from the homeowner, said Rick Smith, chief executive of Marix Servicing LLC in Phoenix, Arizona.

“Fannie Mae is trying to give the servicers as many tools as possible to help homeowners,” he said. But “if a servicer does not gather the financial information, then some plans will just delay the inevitable” foreclosure process and increase costs for investors, he said. 

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AMR Corp (AMR.N: Quote, Profile, Research), parent of American Airlines, took 80 planes out of service and canceled 300 flights on Wednesday after reinspecting wiring on MD-series aircraft, while Delta Air Lines Inc (DAL.N: Quote, Profile, Research) began similar checks on 133 planes, the carriers said.

It was unclear if there would be service disruptions on Thursday at American. Delta said some cancellations were expected but was not more specific.

Tim Wagner, a spokesman for American, said the reinspection at American was not related to any specific safety incident but to an industrywide safety audit launched last week by the Federal Aviation Administration. “This is related to the audit,” Wagner said.

The FAA audit is to assess airline compliance with agency directives, most of which require aircraft inspections.

Some in Congress have sharply criticized FAA oversight of its own orders and a system that allows airlines to self-report problems to regulators payday loans. Maintenance lapses by Southwest Airlines (LUV.N: Quote, Profile, Research) in 2006-07 that were revealed recently triggered the audit as well as investigations by Congress and the U.S. Transportation Department inspector general.

American began reinspections Tuesday night on nearly 300 MD-80 series aircraft. The narrow body planes are a workhorse at the carrier’s Dallas and Chicago hubs.

The checks assessed whether American followed all procedures of a 2006 FAA order to ensure that wiring for an auxiliary hydraulic pump was properly installed and secured.

The directive, affecting more than 730 aircraft in the U.S. commercial fleet, was aimed at preventing electrical shorts that could trigger a fire in the wheel well, a copy of the order showed. 

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