BUSINESS&SPORTS B WEDNESDAY, FEBRUARY 16, 2011
THE MARKETS DOW 30
12,226.64
-41.55
S&P 500
1,328.01
-4.31
NASDAQ
2,804.35
-12.83
3.62
0.00
$84.37
-0.44
10-YR NOTE CRUDE OIL
Retail sales dip pushes stocks lower
INTERNATIONAL EDITION
Germany rejects targeting of trade surpluses BY GABRIELE STEINHAUSER AND GREG KELLER Associated Press
BRUSSELS — Export champion Germany said Tuesday that trade surpluses should not be targeted in the same way as deficits, a sign that the Group of 20 rich and developing countries are likely to clash over how to smooth out global imbalances when they meet this week. Like the G-20, the European Union is trying to even out trade flows, claiming large surpluses by some eurozone nations helped fuel bubbles in deficit countries and
contributed to the debt crisis that has crippled the region over the past year. The EU says surplus countries like Germany should boost internal demand — that is, spending by companies and households — which would raise exports from other countries. At the same time, many economists argue that German banks invested the huge capital surpluses amassed by savers and export companies in overheating economies such as Ireland or Spain, leaving the lenders with dangerous exposures to nowstruggling countries.
But Germany, which like China has been exporting much more than it has been importing in recent years, rejects any claims that its strong export policies are fueling dangerous imbalances. “One has to clearly distinguish deficits from surpluses,” Germany’s Finance Minister Wolfgang Schaeuble said at the sidelines of a meeting of European finance ministers in Brussels. He said Germany’s surplus was “not an obstacle to growth in other countries. Instead we are to some degree assuming the function of a locomotive for the euro area.”
The debate over global imbalances lost some of its momentum after a meeting of G20 leaders in Soul last year failed to come up with clear commitments. However, France’s Finance Minister Christine Lagarde said this week that when G20 finance ministers meet in Paris, Friday and Saturday, her country will aim to reach an agreement on a list of indicators that can be used to measure imbalances. That was one of the key takeaways from the last G-20 meeting • TURN TO GERMANY, 2B
BY CHIP CUTTER AND MATTHEW CRAFT Associated Press
NEW YORK — A surprisingly weak retail sales report drove stocks lower on Tuesday, giving the Dow Jones industrial average its second straight day of losses. The Dow fell 41.55, or 0.3 percent, to close at 12,226.64. That’s only the third day this month the Dow has closed lower. The Standard & Poor’s 500 index fell 4.31, or 0.3 percent, to 1,328.01. The Nasdaq composite index fell 12.83, or 0.5 percent, to 2,804.35. The Commerce Department said Tuesday that retail sales rose just 0.3 percent in January, the smallest increase since June and half of what economists had predicted. Energy companies led the way down. Exxon Mobil lost 2.3 percent, the largest drop among the 30 large companies that make up the Dow. Exxon Mobil said it added 3.5 billion barrels of oil and gas last year to the company’s massive reserves, more than twice what Exxon produced in 2010. The parent company of the New York Stock Exchange agreed to combine with the operator of the Frankfurt stock exchange, Deutsche Boerse AG, creating the world’s largest financial markets company. Shares of both companies fell after the deal was announced. NYSE Euronext’s shares lost 3.4 percent in New York, while Deutsche Boerse’s lost 2.4 percent in Frankfurt. One of NYSE’s biggest competitors, Nasdaq OMX Group, fell 4.6 percent. Limelight Networks jumped 27 percent after the provider of streaming video services narrowed its fourth-quarter loss and issued a better-than-expected forecast for the current quarter. The company is benefiting from consumers turning to the Internet to watch TV and movies; one of its customers is online video company Netflix. Roughly three stocks fell for every one that rose on the New York Stock Exchange. Consolidated trading volume was 4 billion shares. Stocks that moved substantially on the New York Stock Exchange were Marsh & McLennan, up by $1.36 at $30.23 The global insurance broker’s fourth-quarter net income soared on widespread revenue growth as companies felt more confident spending money. United States Steel was up by $1.96 at $62.31, as was Gap which rose by $1.31 at $22.78 Stocks that faced losses on Nasdaq Stock Market were Green Mountain Coffee Roasters which fell down by $2.82 at $43.53. Starbucks announced a single-cup coffee deal with another company despite speculation of a Starbucks-Green Mountain partnership. Capella Education was down by $11.11 at $52.23 Sirius XM Radio also fell down by 15 cents at $1.69. Higher operating costs drove the satellite radio provider to a quarterly loss, and its 2011 revenue outlook disappointed.
MUSADEQ SADEQ/AP
TREASURE TROVE: Last month, Afghan officials proudly presented what they say is $3 trillion worth of rare-earth deposits scattered throughout the country.
MINERAL DREAMS Rare-earth shortage? Afghans think they can help BY ELENA BECATOROS Associated Press
KABUL — As the world faces a shortage of the rare-earth minerals essential to everything from cellphones to hybrid cars, Afghans are dreaming of coming to the rescue with the vast deposits thought to lie beneath their feet. The problem is that they are in one of the country’s most dangerous spots, on the south bank of the Helmand River in southern Afghanistan, where fighting rages in a traditional Taliban stronghold. That Afghanistan sits on vast mineral wealth has been detailed
in several surveys, the most extensive of which were conducted by the Soviets in the 1970s. Mining companies, both Afghan and foreign, already have shown interest, notably in its copper, iron and oil. Last month, Afghan officials proudly presented what they say is $3 trillion worth of deposits scattered throughout the country, more than triple the initial dollar amount estimated by the U.S. Defense Department last June. But with poor infrastructure and security that ranges from precarious to downright prohibitive, there is a limit to how much the
country can hope for, at least in the medium term. Among the most exciting right now are the rare earths, with a spat between China and Japan last fall highlighting China’s nearmonopoly on the minerals. In 2007 the U.S. Geological Survey estimated 1.4 million metric tons of rare-earth elements lie in southwest Helmand. The Afghan Ministry of Mines says there is more elsewhere in the country, “huge deposits” overall, according to Jalil Jumriani, who deals with policy and promotion at the ministry in Kabul. The U.S. Defense Department’s
Task Force for Business and Stability Operations estimates the Khanneshin area in Helmand holds some $90 billion in rare earths and niobium, minerals strategic for high tech and industrial industries. “This deposit could represent a long-term development opportunity for Helmand province that would create jobs across the spectrum from low-skilled laborers to chemists, physicists and engineers,” the task force said in a statement last month. USGS scientists are analyzing samples taken over the past • TURN TO MINERALS, 2B
Price rise on goods to hit shoppers Russia readies BY STEPHANIE CLIFFORD, MOTOKO RICH AND WILLIAM NEUMAN New York Times Service
A package of Oscar Mayer cold cuts. A pair of Nine West boots. A Whirlpool washing machine. By the fall, people will most likely be paying more for each of them, as rising prices hit most consumer goods, say retailers, food companies and manufacturers of consumer products. Cotton prices are near their highest level in
more than a decade, after adjusting for inflation, and leather and polyester costs are jumping as well. Copper recently hit its highest level in about 40 years, and iron ore, used for steel, is fetching extremely high prices. Prices for corn, sugar, wheat, beef, pork and coffee are soaring. Labor overseas is becoming more expensive, meanwhile, and so are the utility bills to keep a factory running.
“There are cost pressures from virtually everywhere,” said Wesley R. Card, the chief executive of the Jones Group, whose brands include Nine West and Anne Klein. After trying to keep retail prices flat or even lower during the recession, Jones says prices for its brands will climb 15 percent to 20 percent by autumn. When commodity prices started to rise last summer, many manufacturers and retailers absorbed the costs, worried that shoppers would not pay • TURN TO PRICE, 2B
ALEXANDRE MENEGHINI/AP
SKY HIGH: Cotton prices are near their highest level in more than a decade.
for offshore Arctic drilling BY ANDREW E. KRAMER AND CLIFFORD KRAUSS
New York Times Service
MOSCOW — The Arctic Ocean is a forbidding place for oil drillers. But that is not stopping Russia from jumping in — or Western oil companies from eagerly following. Russia, where onshore oil reserves are slowly dwindling, last month signed an Arctic exploration deal with the British petroleum giant BP, whose offshore drilling prospects in the United States were dimmed by the Gulf of Mexico disaster last year. Other Western oil companies, recognizing Moscow’s openness to new ocean drilling, are now having similar discussions with Russia. New oil from Russia could prove vital to world supplies in coming decades, now that it has surpassed Saudi Arabia as the world’s biggest oil producer, and as long as global demand for oil continues to rise. But as the offshore Russian efforts proceed, the oil companies will be venturing where other big countries ringing the Arctic Ocean — most notably the United States and Canada — have been wary of • TURN TO RUSSIA, 2B