Economic Calendar

Tuesday, June 19, 2012

Microsoft Tablet Must Shed Office Image to Challenge IPad

By Aaron Ricadela, Dina Bass and Cliff Edwards - Jun 18, 2012 10:32 PM GMT+0700

Microsoft Corp. (MSFT) needs to shed its image as the world’s biggest purveyor of workplace software and draw on its success selling the Xbox gaming console if it wants a shot at introducing a tablet to challenge Apple Inc. (AAPL)’s iPad.

An Asus Eee Slate EP121 tablet computer that runs on Microsoft Windows, on display during the 2011 International Consumer Electronics Show in Las Vegas. Photographer: Andrew Harrer/Bloomberg

The Microsoft Corp. logo is seen at the International Consumer Electronics Show (CES) in Las Vegas, Nevada, U.S. Photographer: David Paul Morris/Bloomberg

Microsoft is expected to preview a company-branded tablet at an event in Los Angeles today, according to people familiar with the matter who asked not to be named because the plans aren’t public. The devices may run Microsoft’s latest operating system, Windows 8, and different versions may be powered by either processors based on designs from ARM Holdings Plc or x86 chips from Intel Corp., the people said.

As the primary pitchman for its own tablets, Redmond, Washington-based Microsoft needs to assemble a compelling lineup of applications at an attractive price, which may be tough given the least expensive current iPad sells for $499. That’s been impossible for challengers such as Hewlett-Packard Co. and Research In Motion Ltd. that have tried to compete with Apple in the tablet market, estimated to reach $78.7 billion this year.

“Telling compelling marketing stories to consumers for the most part is not something Microsoft has demonstrated an ability to do,” said Michael Gartenberg, an analyst at market researcher Gartner Inc., in an interview.

Xbox is the exception, he said. Microsoft has sold 67 million Xbox 360s in seven years on the market, making it the most popular game platform, even appearing in rocker Liz Phair’s song lyrics.

Xbox Entertainment

Sales surged as Microsoft transformed Xbox from a video- game player into a full-fledged entertainment center, starting in 2008 with the addition of Netflix Inc.’s video streaming and the music service Earlier this month, Microsoft unveiled Xbox SmartGlass, an app that will work on Windows 8 to let smartphones, tablets and computers stream media to a screen controlled by the console.

“Obviously, Microsoft is hoping this will be another Xbox,” Gartenberg said.

Microsoft might have a shot at competing with Apple if its tablet includes the content and functionality of Xbox, particularly if the device had a controller letting it work as a gaming platform, said Ed Maguire, an analyst at Credit Agricole Securities USA.

“When you add up all of the relationships Microsoft has through the Xbox, Microsoft has all of the content relationships to compete with Apple,” Maguire said in an interview.

Worldwide shipments of tablets this year will be 107.4 million units, Framingham, Massachusetts-based researcher IDC said in a June 14 report. Worldwide shipments should reach 142.8 million next year and 222.1 million by 2016, the group said.

Apple’s ‘Grip’

Even as companies including Inc. (AMZN) and Samsung Electronics Co. (005930) release new tablets running Google Inc. (GOOG)’s Android operating system, Apple’s iPad continues to dominate the market. IDC predicts the iPad will account for 62.5 percent of global shipments this year, up from 58.2 percent last year. Apple’s share could rise even further if it introduces a smaller, less expensive tablet.

“Apple’s iPad shows few signs of slowing down,” Tom Mainelli, IDC’s research director of mobile connected devices, said in the report. “If Apple launches a sub-$300, 7-inch product into the market later this year as rumored, we expect the company’s grip on this market to become even stronger.”

DisplaySearch, another research firm, said revenue from tablets reached $44.9 billion worldwide in 2011 and will rise to $78.7 billion this year.

Pricing Challenge

Microsoft may not be able to sell tablets running Windows RT, the version of Windows 8 for machines with power-sipping ARM chips, for less than $599, said Bob O’Donnell, an analyst at IDC, in an interview.

“When you look at that pricing compared to Apple, it’s a non-starter,” said O’Donnell, whose price estimate is based on his checks with component suppliers in Taiwan. “It appears pricing is going to be a lot higher than people thought. From a tablet perspective, that’s going to be a challenge.” had to make several tradeoffs to get its Kindle Fire tablet to $199, such as sporting a smaller screen size, forgoing Bluetooth wireless connectivity and reducing on-board memory. Sales of Amazon’s electronic books, movies and music on the device may help make up for the narrower profit margins that will probably result from the low price, according to Brian Blair, an analyst at Wedge Partners Corp. in New York.

“There’s not a whole lot of room to move on price in these devices,” Gartenberg said.

Apps Disadvantage

Then there’s the apps issue. Tablets running Windows RT, the machines that are most comparable to the iPad, may have fewer apps than users are accustomed to because older software won’t work on the devices. There are more than 200,000 apps made specifically for the iPad.

Microsoft will make four programs in its Office suite -- Word, Excel, PowerPoint and OneNote -- available on its tablet- optimized operating system. That may not sway consumers who have gladly snapped up iPads without the availability of Office, said Michael Cherry, an analyst at Directions on Microsoft, a Kirkland, Washington-based market-research firm.

“I don’t believe consumers are going to pay a premium on a tablet to get those Office applications,” he said. Windows RT tablets may not have one feature people do use -- Outlook e-mail -- which could curb demand from corporate information technology departments, Cherry said.

Through a joint venture with Barnes & Noble Inc. (BKS) announced in April, Microsoft is developing a digital reading app for Windows 8 that will offer a catalog of e-books, magazines and newspapers. Barnes & Noble isn’t involved in the Microsoft announcement today, according to a person familiar with the matter who asked not to be named because the plans are private.

Building Apps

The company is also pulling out the stops to debut Windows 8 apps, lining up design firms, recruiting interns and sending engineers on an around-the-world road show to help developers get them built.

Microsoft’s last bid to challenge Apple by building its own device was the Zune music and video player, which was discontinued last year after failing to gain traction with consumers who overwhelmingly prefer the iPod.

Tablets based on Microsoft’s Windows operating system have struggled since their initial release in 2002. The company’s current market share? Zero, according to Gartner.

“The irony is, of course, Apple didn’t create this market -- you could argue Microsoft did 10 years ago when Bill Gates started talking about ‘Tablet PCs,’ ” said Gartenberg.

Those ill-fated machines used a stylus instead of a touch interface, joining the roster of tablet computer flops that includes Hewlett-Packard’s TouchPad -- pulled after just six weeks on the market -- RIM’s PlayBook and the Motorola Xoom.

“Where Apple succeeded was not by trying to force Mac OS onto a tablet,” Gartenberg said. “They created something that was true to the form.”

To contact the reporters on this story: Aaron Ricadela in San Francisco at; Dina Bass in Seattle at; Cliff Edwards in San Francisco at

To contact the editor responsible for this story: Tom Giles at


Most U.S. Stocks Rise as Greece Tempers Spain Concern

By Rita Nazareth - Jun 19, 2012 3:50 AM GMT+0700

Most U.S. stocks advanced, sending the Standard & Poor’s 500 Index higher for a third day, as optimism about Greece’s attempts to form a coalition government tempered concern about a surge in Spanish bond yields.

Apple Inc. (AAPL), the world’s most valuable company, added 2 percent to pace gains in technology shares. D.R. Horton Inc. and Lennar Corp. (LEN) climbed at least 3.9 percent as confidence among homebuilders rose to a five-year high. Facebook Inc. (FB) rallied 4.7 percent in the one-month anniversary of its initial public offering. Energy and financial shares in the S&P 500 declined.

Ten stocks gained for every nine falling on U.S. exchanges at 4 p.m. New York time. The S&P 500 rose 0.1 percent to 1,344.78, after dropping 0.6 percent. The Dow Jones Industrial Average lost 25.35 points, or 0.2 percent, to 12,741.82. The Nasdaq Composite Index added 0.8 percent to 2,895.33. Trading volume for exchange-listed stocks in the U.S. was about 5.8 billion shares, 13 percent below the three-month average.

“We managed not to drive off the cliff in Greece, but we still got flat tires,” said Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion. “The challenges in Spain are very much in front of us. There’s not a lot of conviction.”

Equities rebounded as Antonis Samaras, leader of Greece’s New Democracy party, said he had a constructive discussion with Democratic Left leader Fotis Kouvelis. German Chancellor Angela Merkel’s said Greece shouldn’t be granted leeway on terms for its bailout. Group of 20 chiefs began a two-day meeting as Spain’s borrowing costs soared to a euro-era record. Policy makers are discussing ways to stimulate the economy if necessary, a Canadian official said.

Builder Confidence

Federal Reserve policy makers meet June 19-20 to discuss whether more U.S. stimulus is need. The National Association of Home Builders/Wells Fargo confidence index rose to 29, the highest since May 2007, from a revised 28 in May that was lower than first estimated, a report from the Washington-based group showed today. The gauge exceeded the median estimate of 28 in a Bloomberg News survey.

“It’s somewhat tenuous at this juncture,” said Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion. “With the G-20 meeting going on and the Fed policy meeting this week, investors are somewhat hesitant.”

Concern about a global slowdown and a worsening of Europe’s debt crisis put the S&P 500 on the brink of a so-called correction this month. It fell 9.9 percent from an almost four- year high in April through June 1. Since then, the lowest valuation in six months and bets on global policy action drove the measure up 5.2 percent.

Biggest Gains

Eight out of 10 groups in the S&P 500 rose as consumer discretionary and technology shares had the biggest gains. Apple jumped 2 percent to $585.78. A measure of homebuilders in S&P indexes gained 3.5 percent. D.R. Horton increased 3.9 percent to $16.50. Lennar climbed 4.1 percent to $26.97.

The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against S&P 500 losses, tumbled 13 percent to 18.32, the lowest since May 3.

Facebook, which last week had the first weekly advance since its initial public offering, rose 4.7 percent to $31.41. The shares have jumped 15 percent in three days.

Groupon Inc. (GRPN) rallied 11 percent to $11.15. The largest daily coupon website advanced after Morgan Stanley (MS) analysts upgraded the stock to overweight from equalweight, citing international sales opportunities.

EBay Surges

EBay Inc. (EBAY) rallied 4.5 percent to $42.49. The world’s largest Internet marketplace was rated outperform in new coverage at Keefe, Bruyette & Woods Inc.

Solar manufacturers led by LDK Solar Co. and First Solar (FSLR) Inc. rallied as Japan approved subsidies that will encourage at least $9.6 billion in new installations in the country. U.S. shares of Xinyu, China-based LDK climbed 1.8 percent to $2.21. Tempe, Arizona-based First Solar, the world’s largest maker of thin-film panels, gained 3.7 percent to $14.47.

A measure of energy (S5ENRS) shares in the S&P 500 fell 0.8 percent, the most among 10 groups, as oil slumped amid a stronger U.S. dollar. Halliburton Co. (HAL), the world’s largest provider of hydraulic-fracturing services, declined 1.7 percent to $28.96. Morgan Stanley, owner of the world’s largest brokerage, slumped 3.4 percent to $13.82 to pace losses in financial companies.

SAIC Inc. (SAI) declined 3.1 percent to $11.86 after losing its largest government contract to Lockheed Martin Corp. (LMT) Bethesda, Maryland-based Lockheed on June 15 beat SAIC for a $1.91 billion, seven-year Defense Department contract to operate a communications network known as the Global Information Grid.

Body Central

Body Central Corp. (BODY) plunged 49 percent to $8.22, the lowest ever. The operator of almost 250 women’s clothing stores cut its second-quarter profit forecast amid declining sales at established stores.

DSW Inc. (DSW) slumped 11 percent to $52.13 after the shoe retailer’s second-quarter profit forecast trailed estimates.

The largest U.S. companies are beating the average stock in the S&P 500 by the most in more than a decade, fueled by rising dividends, valuations 31 percent below the historical average and fear.

Companies in the S&P 100 from Apple to Bank of America Corp. (BAC) have gained 7.7 percent in 2012, compared with 5.1 percent for a version of the S&P 500 that strips out weightings for market value, the widest margin since 1999, data compiled by Bloomberg show. With price-earnings ratios down 6.6 percent this quarter to 12.7 and payouts at 2.2 percent of share prices, analysts raised buy recommendations for the group to the highest level since 2007.

Corporate Resilience

The biggest stocks are showing corporate America’s resilience even though Mitt Romney, the presumptive Republican candidate in this year’s national election, criticized President Barack Obama earlier this month for saying the private sector is “doing fine.” A second year of record profits is helping the S&P 100 beat every developed market index in the world as investors seek the relative safety of the U.S. after $5.1 trillion was erased from global equities since March 27.

“The mega-caps are just cheap compared to other segments of the stock market,” Russ Koesterich, the San Francisco-based global chief investment strategist for the IShares unit of BlackRock Inc., said in a June 14 phone interview. His firm oversees $3.68 trillion. “There are a lot of things that are wrong in the economy, to state the obvious, and these are companies that have the wherewithal to survive.”

To contact the reporter on this story: Rita Nazareth in New York at

To contact the editor responsible for this story: Nick Baker at


Dollar Slides Before Fed Meeting on Easing Speculation

By Monami Yui and Mariko Ishikawa - Jun 19, 2012 8:16 AM GMT+0700

The dollar slid against the euro and yen before the Federal Reserve begins a meeting today amid prospects policy makers will consider taking further steps to spur growth in the U.S. economy.

The Japanese currency gained versus most of its 16 major counterparts as Group of 20 leaders meet in Mexico for a second day to discuss Europe’s debt crisis that has spurred investor demand for refuge assets. Spain’s borrowing costs soared to a euro-era record yesterday before the nation sells bills today. Australia’s dollar halted a three-day advance before the Reserve Bank releases minutes of its June meeting when it cut interest rates for a second-straight month.

“There are some expectations that the Fed may extend the Twist program,” Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore, said about the central bank’s operations to lengthen the maturity of its Treasury holdings in a bid to lower borrowing costs. “The Fed may also give some indication that they may do something in the later part of the year. The dollar will come under pressure.”

The dollar declined 0.2 percent to $1.2595 per euro at 10:11 a.m. in Tokyo from yesterday, when it touched $1.2748, the lowest level since May 22. The greenback dropped 0.1 percent to 79 yen. Japan’s currency fetched 99.51 per euro from 99.49. The so-called Aussie bought $1.0120 from $1.0124 yesterday, when it capped a three-day gain of 1.9 percent.

Fed policy makers will bring new forecasts to their two-day meeting starting today and probably will mark down their April central tendency estimate for growth of 2.4 percent to 2.9 percent this year. They will also contend with continuing financial stress in Europe and a U.S. unemployment rate that has remained above 8 percent for 40-consecutive months.

’Risk Management’

All this could prompt them to move away from their outlook for moderate growth and tilt toward a “risk-management” strategy pioneered by former Fed Chairman Alan Greenspan, which puts more emphasis on tracking and containing high-cost threats. Both Janet Yellen, the Fed’s vice chairman, and William C. Dudley, head of the Federal Reserve Bank of New York, used the phrase in the past month.

That insurance may come in the form of extending Operation Twist -- which JPMorgan Chase & Co. and Jefferies & Co. predict -- or an even more aggressive response if Fed officials see high costs in a slowdown of U.S. growth. The $400 billion program, which was announced in September and ends this month, involves selling short-term debt and buying longer-term bonds.

Quantitative Easing

The Fed bought $2.3 trillion of bonds in two rounds of so- called quantitative easing, or QE, from December 2008 to June 2011, seeking to cap borrowing costs and stimulate the economy. The Dollar Index (DXY), which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, tumbled 14 percent during that period. The gauge was at 81.838 today, after yesterday touching 81.161, the lowest since May 22.

G-20 chiefs are in Los Cabos, Mexico for a second consecutive summit to be dominated by the crisis in the euro bloc. With Greek elections over the weekend failing to damp the threat of contagion, policy makers are discussing ways to stimulate the world economy if necessary, a Canadian official said.

The crisis escalated on June 9 when Spain asked for a bailout of as much as 100 billion euros ($126 billion) to prop up its banks, becoming the fourth member of the currency union to request international aid.

Spanish 10-year yields yesterday jumped as much as 41 basis points to 7.29 percent, the most since the euro was introduced in 1999 and above the 7 percent level that pushed Greece, Ireland and Portugal to seek rescue packages. Spain is set to auction 12- and 18-month bills today, followed by an offering of bonds on June 21.

-- Editors: Rocky Swift, Garfield Reynolds

To contact the reporters on this story: Monami Yui in Tokyo at; Mariko Ishikawa in Tokyo at

To contact the editor responsible for this story: Rocky Swift at


Asian Stocks Decline on Record Spanish Borrowing Costs

By Jonathan Burgos and Adam Haigh - Jun 19, 2012 7:34 AM GMT+0700

Asian stocks fell, with the regional benchmark index retreating from a one-month high, as Spain’s borrowing costs climbed to a euro-area record and optimism faded that Greece’s election will calm the debt crisis.

Canon Inc. (7751), a camera maker that depends on Europe for about a third of its sales, slid 1.7 percent in Tokyo. Asahi Co. dropped 1.3 percent after the bicycle retailer said profit fell. Woodside Petroleum Ltd., Australia’s second-largest oil producer, fell 1.4 percent as crude futures declined.

Audio Download: Egan Jones’s Egan Not Confident About Europe’s Debt

The MSCI Asia Pacific Index (MXAP) slipped 0.2 percent to 115.52 as of 9:27 a.m. in Tokyo, with about three shares falling for every two that rose. Over $5 trillion has been erased from global equities since March amid concern growth is slowing in the U.S. and China, and as Europe’s debt crisis intensified.

“We see Europe escalating rather than solving its problems,” said Tim Riordan, of Parker Asset Management Ltd., a hedge fund in Sydney that has about $200 million under management. “The focus is rolling on to Spain, and with bond yields going over 7 percent, this has been a red flag in the past. You’re in a bit of a downward spiral and this leads us to be fairly cautious.”

To contact the reporters on this story: Jonathan Burgos in Singapore at; Adam Haigh in Sydney at

To contact the editor responsible for this story: Nick Gentle at


Obama in Mexico Grabs Sideline Meetings on European Debt

By Hans Nichols and Mike Dorning - Jun 19, 2012 5:57 AM GMT+0700

President Barack Obama, working to help contain Europe’s sovereign debt crisis, pressed leaders of the world’s largest economies today, including Germany’s Angela Merkel, to find a consensus plan as financial markets escalated pressure on Spain.

President Barack Obama with Ambassador Julian Ventura at Los Cabos International Airport to attend the G20 Summit on June 17, 2012, in Mexico. Photographer: Carolyn Kaster/AP Photo

President Barack Obama walks down the steps of Air Force One after arriving at Los Cabos International Airport in San Jose del Cabo, Mexico. Photographer: Paul J. Richards/AFP/Getty Images

Chiefs of the Group of 20 nations are in Los Cabos, Mexico, for two days of meetings as Spanish borrowing costs soared to a euro-era record and elections in Greece failed to damp the threat of contagion that threatens the global and U.S. economies as well as Obama’s re-election prospects.

“We are going to be very busy,” Obama said as he left a morning meeting with the summit’s host, Mexican President Felipe Calderon. “We are confident that this will be a productive summit.”

European leaders, including German representatives, have come to the summit with a “notable shift” in outlook, persuaded by a slowing global economy of the need to place greater Treasury Undersecretary for International Affairs.

In addition to Calderon, Obama was meeting today on the sidelines of the summit with Merkel and Russian President Vladimir Putin, with whom he discussed violence in Syria and other issues.

“We agreed on the need for a cessation of the violence,” Obama told reporters after the Putin meeting today.

‘Common Points’

“We have found many common points on this issue,” Putin said, adding that the two sides will continue discussions.

Putin and Obama also talked about the U.S. missile defense program, a source of friction between the two countries, and the expansion of commercial ties, which are “far below” where they should be, Obama said. He called the two-hour talk “candid and thorough.”

Earlier in the day, Obama welcomed the results of yesterday’s Greek elections as a “positive prospect not only for their forming a government, but also working constructively with their international partners.”

Greek political parties that support a bailout and austerity plan won a majority of seats in the parliament.

Obama met with Merkel for 45 minutes before the formal G-20 sessions began and is scheduled to meet tonight with the leaders of all five European nations at the summit. Tomorrow he meets with Chinese President Hu Jintao.

Pressuring Merkel

While pressure is building on Merkel to be more accommodating to European nations enveloped in the debt crisis, she said this morning that the new Greek government shouldn’t be granted additional leeway on the terms of its international bailout.

“The important thing is that the new government sticks with the commitments,” Merkel told reporters today. “There can be no loosening on the reform steps.”

“I’m definitely not talking about a new aid package. The money we have provided is comprehensive,” she said.

Brainard said at a news conference later in the day that European leaders are prepared to find other ways of easing the burden on Greece, saying “we can expect” flexibility on the timetable for meeting reform goals.

Spanish 10-year bond yields leaped above the 7 percent level that forced Greece, Ireland and Portugal to call for sovereign rescues for the first time since the euro’s creation.

The 10-year Spanish yield jumped as much as 41 basis points to 7.29 percent before paring gains and trading at 7.16 percent at 11:44 a.m. New York time. The euro depreciated 0.6 percent to $1.2567 after rising and falling as much as 0.9 percent.

Debt Crisis

The Standard & Poor’s 500 Index swung between gains and losses while the Stoxx Europe 600 (SXXP) Index ended little changed after surging as much as 1.1 percent.

Europe’s sovereign debt crisis has become a familiar, if unwanted, presence at meetings of world leaders.

“We are heading into the second consecutive G-20 summit that will be dominated by concerns over the euro crisis and a vote in Greece,” said Daniel Price, managing director of Rock Creek Global Advisors LLC, a Washington-based consultancy.

“Tensions are higher this time for several reasons,” he said. “The contagion only feared in Cannes has now in fact materialized in Spain.”

With international markets looking for an indication of how European leaders plan to act, the stakes at the two-day summit in Los Cabos are high for a global economy at a “very dangerous moment,” said World Bank President Robert Zoellick.

European ‘Cloud’

Obama was home in Chicago for two days off from public duties before the summit. He attended a wedding, visited friends and, hours before departing for Mexico last night, played golf.

While Obama has called Europe’s banking and growth crisis a “cloud” hanging over the U.S. economy, administration officials said they don’t expect the summit to resolve the sovereign debt problem that has led to high borrowing costs and economic contraction in much of Southern Europe.

“Let me also just underscore this isn’t a meeting where we expect Europeans to make decisions about Europe,” said Michael Froman, deputy security adviser for international economic affairs, in a briefing for reporters in Washington on June 15. “The G-20 looks forward to hearing more from the European leaders on the progress of their efforts to stabilize their banking system and promote growth, and to hear what their vision is for taking this effort forward toward fiscal and financial union.”

Concrete Steps

Froman said concrete steps are more likely when European leaders meet for a summit June 28-29. America’s ability to force European leaders and institutions to take action is limited, he said.

“This is not an issue of U.S. leverage,” Froman said. “It’s Europe doing what’s in Europe’s interests and what’s in the interest of the rest of the global economy.”

Leaders may use the summit to agree to boost the $430 billion firewall the International Monetary Fund announced in April, Calderon said. “I estimate that there will be a larger capitalization than the pre-accord reached in Washington, which will be finalized here, but I don’t want to speculate by how much,” he told reporters June 16.

Failure to stem the crisis would add to economic uncertainty in the U.S. at a time when Obama and his presumptive Republican rival, Mitt Romney, are squaring off on how to spur growth and create jobs.

Romney Comment

Romney said in an interview aired yesterday that the U.S. isn’t going to bail out European banks if the financial crisis there worsens.

Europe “is capable of dealing with their banking crisis if they choose to do so” with a response heavily dependent on Germany, Romney said on CBS’s “Face the Nation” program. The U.S. is “not going to send checks to Europe. We’re not going to bail out the European banks. We’re going to be poised here to support our economy.”

Obama is in a two-front battle as an incumbent president facing re-election amid flagging economic indicators.

“Obama is running both against Europe as well as” Romney, said Jacob Funk Kirkegaard, a research fellow at the Peterson Institute for International Economics in Washington. “He’s in a bind.”

In addition to Europe’s financial woes, leaders will discuss sectarian violence in Syria, where the United Nations suspended its observer mission on June 16. Russia has defended its delivery of attack helicopters to the Syrian regime, a move the U.S. has said is escalating the 15-month conflict.

With economic uncertainty in Europe, there are signs that the U.S. economy may be cooling at home. More Americans than forecast applied for unemployment insurance payments, with claims for jobless benefits rising by 6,000 to 386,000 in the week ended June 9. The Commerce Department reported that retail sales in the U.S. fell in May for a second month. Employment growth has waned compared with its pace earlier this year, and the jobless rate rose for the first time in 11 months in May, to 8.2 percent.

To contact the reporters on this story: Hans Nichols in Los Cabos, Mexico at; Mike Dorning in Los Cabos, Mexico at

To contact the editor responsible for this story: Steven Komarow at