World financial news

Energy industry executives, investment bankers and academics will meet in Washington Tuesday to discuss energy trading, as oil and gasoline prices remain at record-high levels.

The event is the first meeting of the government’s advisory committee on energy markets, which will offer advice to the Commodity Futures Trading Commission. The 25-member committee includes representatives from J.P. Morgan (JPM, Fortune 500), Goldman Sachs (GS, Fortune 500) and the American Petroleum Institute.

The CFTC on May 29 disclosed that it was six months into an investigation of potential abuses in the way crude oil is purchased, shipped, stored and traded. Regulators also proposed new requirements for large investors aimed at increasing transparency of energy futures markets.

Gas prices have since ballooned and on Monday set a new record-high national average of more than $4.02 a gallon. At the same time, light, sweet crude for July delivery fell $4.19 to settle at $134.35 a barrel on the New York Mercantile Exchange.

But if oil prices remain near last week’s record-high of $139 a barrel, prices at the pump will likely rise another dime in coming days, said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service.

Regulators say they are monitoring the surge, but have not responded with any additional measures paydayloans. "People are aware of what’s happening and are monitoring the markets closely, but beyond that there is no comment," CFTC spokesman R. David Gary said in an interview last week.

Increased speculation by large investment and pension funds has been cited as one of the factors contributing to surging petroleum prices, along with assumptions about new supplies, limited demand growth and possible supply disruptions overseas.

Congress recently voted to give the CFTC more oversight of unregulated electronic exchanges. But some lawmakers continue to question whether regulators are doing enough to oversee activity in U.S. crude oil taking place overseas and in over-the-counter markets. 

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McDonald’s global same-store sales rose 7.7% in May, the world’s biggest hamburger chain said Monday.

The company said U.S. same-store sales, or sales at locations open at least a year, grew 4.3%.

McDonald’s (MCD, Fortune 500) said U.S. sales were helped by its breakfast offerings, new menu items including a Southern Style Chicken biscuit and sandwich and the chain’s "emphasis on everyday affordability."

Same-store sales jumped 9.6% in Europe, led by sales in the U.K., France and Russia.

In the Asia Pacific, Middle East and Africa region, same-store sales climbed 9.7%.

Same-store sales is a key indicator of restaurant performance since it measures growth at existing locations rather than newly-opened ones.

Total systemwide sales jumped 16% for the month ended May 31.

McDonald’s Corp. shares rose 3.5%, or $2, to $58.95 at the open of trade Monday. 

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The European Central Bank has decided to leave its main interest rate unchanged at 4%.

The ECB decision on Thursday came less than an hour after the Bank of England left its main interest rate unchanged at 5%.

The decisions were widely expected because inflation concerns continue to preoccupy bank officials.

The ECB has left its main refinancing rate at 4% since June 13, 2007, as the bank has stressed its strict mandate to fight inflation, even as the U.S. Fed has cut rates to stimulate growth. 

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Philippine inflation accelerated to the fastest in more than nine years in May on surging oil and food prices, putting pressure on the central bank to raise interest rates at its meeting today.

Consumer prices rose 9.6 percent from a year earlier, Economic Planning Secretary Augusto Santos said. That compares with the 8.9 percent median estimate in a Bloomberg survey and central bank Governor Amando Tetangco's forecast of 8.8 percent to 9.6 percent.

Record oil and food costs are fueling inflation across Asia, creating a dilemma for central banks trying to contain price pressures without impeding growth. Higher interest rates may slow lending and boost the peso, damping exports and stalling expansion at a time when President Gloria Arroyo's approval rating is at a two-year low.

“Last year's virtuous cycle of a stronger peso, lower inflation, lower interest rates, has been replaced by a vicious circle for policy makers,'' said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “Inflation pressures are too pressing to ignore.''

Inflation, which averaged 6.9 percent in the first five months, may quicken further, Santos said in a telephone interview today in Manila. The statistics office confirmed Santos's number.

The central bank, which meets today to decide on its benchmark interest rate, said in a statement yesterday that monetary policy “has limited effect'' on price pressures caused by rising food and oil costs.

Act Decisively

Bangko Sentral ng Pilipinas “will act decisively and adjust monetary policy settings accordingly as and when second- round effects of supply shocks become evident,'' the bank said.

Petron Corp. and other oil companies in the Philippines started weekly price increases in May as global demand for commodities pushed crude to a record. World rice costs rose to unprecedented levels in April, boosting local retail prices 37 percent in May from a year earlier http://us-no-fax-payday-loans.com.

The Philippines is the world's biggest importer of the grain, and buys almost all of its oil from abroad.

Food, beverage and tobacco prices surged 13.7 percent last month after gaining 11.4 percent in April. Food prices account for half of the price index.

Fuel, electricity and water inflation accelerated to 8.2 percent from 8 percent. Services costs climbed 7.8 percent, up from 6.9 percent. Clothing and housing costs also rose at a faster pace.

`Lineball Decision'

The government allowed some transport fares to rise starting May 21, and approved minimum wage increases beginning this month. Jollibee Foods Corp., the nation's biggest fast-food company, will raise prices, BusinessMirror reported on May 14.

Faster inflation in the Philippines cut growth in the first quarter to the weakest in a year and a half.

“Tightening would hamper the government's attempts to boost growth,'' Callow said. “There are no easy options'' and the central bank has to make “an absolutely lineball decision.''

Twenty economists surveyed by Bloomberg were evenly divided between those who expect Bangko Sentral to raise its benchmark interest rate for the first time since October 2005 to 5.25 percent today, and those who predict the bank will keep the rate unchanged at 5 percent, a 16-year low.

President Arroyo, who has taken steps to reduce fuel and power prices, yesterday ordered highway regulators to lower toll rates. Her approval rating fell to 27 percent in March, the lowest since Dec. 2005, according to the Social Weather Stations survey organization.

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Hope Now helped 183,000 at-risk borrowers stay in their homes during the month of April, according to numbers released by the coalition on Friday.

The alliance of mortgage lenders, servicers, investors and community advocacy groups also said it has arranged a total of nearly 1.6 million loan workouts since the program began in July, 2007.

The April figure represents 23,000 more workouts than were completed in March, or a 7.6% increase, and is the highest monthly total since Hope Now got started.

"These numbers clearly demonstrate that Hope Now is succeeding at helping homeowners avoid foreclosure and stay in their homes," said the organization’s executive director, Faith Schwartz.

But foreclosure filings are accelerating also. RealtyTrac, an online marketer of foreclosed properties, recently reported that 243,353 households received a foreclosure filing in April, up 65% from that month last year.

And a total of 80,926 families lost their homes to foreclosure in April, according to Hope Now, up 12% from 72,024 in March. That puts the country on pace to see more than a million families lose their homes this year.

Most of the workouts that Hope Now did in April - 105,000 - were repayment plans in which delinquent borrowers were simply given extra time to make up missed payments.

But the proportion of actual mortgage modifications, which permanently lower a struggling homeowner’s monthly payments by cutting a loan’s balance or interest rate, is on the rise. In April, about 77,000 of the total workouts, or 42%, were modifications. That’s up from March, when 36% of the Hope Now workouts were modifications.

Modifications are usually considered more effective, long-term solutions for delinquent borrowers than repayment plans.

"It’s helpful that these folks are getting modifications," said Jared Bernstein an economist with the Economic Policy Institute payday advance. "There are, however, lots of people in trouble who need more help than Hope Now is giving them."

Many homeowners who face severe problems that require more complicated workouts are still not getting enough help, according to Bernstein, which is one reason why foreclosure rates continue to rise.

"I still regard this as low-hanging fruit," he added, "but it is helping a non-trivial number of people."

Meanwhile, the housing markets continue to deteriorate. On Monday Standard & Poor’s/Case-Shiller said its national home price index fell 14.1% in the first quarter compared with a year earlier, to its lowest level since its began tracking prices in 1988.

Falling home prices put even more pressure on homeowners who can’t make their payments, by making it difficult for them to refinance or to sell at a price that will enable them to pay off their mortgage. Areas with declining home values, like parts of California and Florida, are seeing the largest volume of homes go into foreclosure.

But no one wants that to happen, according to Hope Now’s Schwartz.

"Foreclosure benefits no one: the borrower, community, lender and investor all lose," she said. 

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