ABCDE BUSINESS sunday, june 13, 2010 CAR PAGES
It delivers in the city The 2010 Ford Transit Connect carries lots of cargo but has a small footprint, Warren Brown writes.
Plus, ads for thousands of vehicles. Starting on the back page.
FAST FORWARD
Remember Microsoft? With Office Web Apps, it’s the challenger. G2
THE BIG MONEY How BP flunked its risk tests Why the oil giant was unprepared for the big one. G4
MARKETS Picking up lost ground
A rise in China’s exports and a rally in commodity prices push S&P 500-stock index to a gain. G5 YTD: Dow -2.1%
NASDAQ -1.1%
S&P 500 -2.1%
What on Earth happened to your money? Russian ruble
Canadian dollar 0.9506 | 0.9688
U1.9%
How local currencies have changed against the dollar this year
Dec. 31, 2009 | FRIDAY change Mexican peso
(price of 100 pesos in $) 7.6390 | 7.9020
U3.4%
Venezuelan bolívar fuerte 0.4657 | 0.2328
V50%
Brazilian real 0.5738 | 0.5522
V3.8% Chilean peso
(price of 100 pesos in $1) 0.1971 | 0.1858
V5.7% U.S. Dollar Index
The index measures the value of the dollar against a basket of currencies including: euro, yen, British pound, Canadian dollar, Swiss franc and the Swedish krona. The higher the number, the stronger the dollar.
Argentine peso 0.2632 | 0.2554
V3% 120 Jan. 31, 2002
new york — If you have a global portfolio, chances are you’re feeling more pain these days than investors who kept their money close to home. The debt crisis that originated in Greece has
shaken markets around the world, helping to send major stock indices from New York to Sao Paulo to Hong Kong into the red. Unsurprisingly, the deepest sell-offs have been in Europe: Spain’s benchmark index is down 20 percent for the year, Italy’s shares are off 15 percent and France’s, 10 percent.
But these declines are amplified for many in- vestors in the United States, where the dollar’s sharp rise this year is serving as a harsh reminder of the powerful impact currency markets can have on international investments. The MSCI Europe index, designed to track the
equity markets of developed European countries, is off by about 5 percent in local currencies this year. For U.S. investors, it is down more than 17 percent. What accounts for the difference? Mainly the falling euro, which means Amer- icans who want to convert their European hold- ings back to dollars would get less today than they would have six months ago.
March 31, 2008 71 March 9, 2009 89 Nov. 30, 2009 74
And thanks to jittery investors who have been selling off riskier assets in search of safe havens, the dollar, in a reversal from recent years, is strengthening against not just the euro but most other major currencies. So what’s an American investor to do? Finan- cial advisers have been telling us to diversify portfolios globally and get over our home market biases, but it’s not clear whether this is the right time to make the move. “This is an especially good time for people to ask the question,” said Scott Mather, head of glob- al portfolio management at Pimco. “We’re prob- ably entering into a phase where [currencies] are likely to be pretty volatile and have these epi-
Dec. 31, 2009 78 June 11, 2010 88
Volatile currency markets have hurt Americans investing internationally. They can still proceed — with caution. by Tomoeh Murakami Tse
sodes where the dollar strengthens versus every- one in the world. So people need to be careful. It doesn’t mean it’s a bad thing for people to look in- creasingly for sounder investments outside of the U.S. But they need to think about the currency in- dependently of their other decisions.” Ian McCallum, chief investment officer of Bed-
lam Asset Management, says the dollar’s recent surge — unsustainable in his view — presents an opportunity for investors wanting to add interna- tional exposure. “It’s a very fragile recovery in the U.S., and giv- en the problems with the government and do-
currency continued on G3
Australian dollar 0.8977 | 0.8503
V5.3% SOURCE: BLOOMBERG Indian rupee
(price of 100 rupees in $) 2.1490 | 2.1350
V0.7%
British pound 1.6170 | 1.4552
V10% Swiss franc 0.9675 | 0.8701
1.4323 | 1.2112 V10% V15.4%
Euro Japanese yen
Chinese yuan 0.1465 | 0.1463
V0.1 Thai baht
(price of 100 baht in $) 2.9990 | 3.0818
U2.8%
(price of 100 yen in $) 1.0753 | 1.0911
U1.5%
Hong Kong dollar 0.1290 | 0.1284
V0.5%
(price of 100 rubles in $) 3.3290 | 3.1730
V4.7% G AX FN FS LF PW DC BD PG AA FD HO MN MS SM
EZRA KLEIN Economic and Domestic Policy
Think gas is too pricey? Think again.
question. You might ask whether I mean regular or premium, and where in the country I’m buying. Beyond that, though, the price is displayed in giant numbers on most main roads. It’s such com- mon knowledge that we ask poli- ticians to rattle it off to show that they retain some minimal aware- ness of the world they claim to represent.
H
But as the sludge choking the Gulf of Mexico shows, nothing is easy when it comes to oil. Not even the price. In fact, especially not the price. Most of us would call the BP spill a tragedy. Ask an economist what it is, however, and you’ll hear a different word: “externali- ty.” An externality is a cost that’s not paid by the person, or people, using the good that creates the cost. The BP spill is going to cost fishermen, it’s going to cost the gulf’s ecosystem, and it’s going to
klein continued on G4
Outlook: Big oil sticks with the devil it knows.
SOURCES: DYLAN MATTHEWS, U.S. ENERGY INFORMATION ADMINISTRATION AND IAN PARRY AT RESOURCES FOR THE FUTURE; ILLUSTRATION BY JULIE TENINBAUM FOR THE WASHINGTON POST
ow much does a gallon of gasoline cost? It seems like an easy
MICHELLE SINGLETARY The Color of Money
Opportunistic scam artists can be as slick as the oil spill
photos of oil- soaked birds. One poor thing looked like a Holly- wood- inspired alien or a prehis- toric creature. How can you not wonder:
T
What will it take to clean up the mess? BP Chairman Carl-Henric
Svanberg told shareholders on June 4 that the response to the disaster in the Gulf of Mexico is the company’s top priority. “The task is by no means com-
plete, and we have a long way to go,” he said. “This is a tough job.” Svanberg went on to say, “We will also continue to apply all of the necessary resources to the aftermath, both in the cleanup operation and in remediation and payment of legitimate claims.” Those words, and the sad im-
ages of oil-stained waterways, beaches and wildlife, are help- ing some scam artists take ad- vantage of investors who them- selves are looking to make mon- ey as a result of the gushing crude that has been leaking since the Deepwater Horizon drilling rig exploded on April 20.
he magnitude of the BP spill really hit me once I starting seeing front-page
With the stock market still doing its crazy up-and-down thing, people are desperately looking for anything that will produce higher-than-average re- turns. But that desperation is just what slick con artists are counting on. Every disaster brings them out, and this one is no exception. The Securities and Exchange Commission and the Financial Industry Regulatory Authority have issued an investor alert about scams designed to exploit the BP spill. “The sad thing is people ha-
ven’t heard the warnings enough, because these scams continue to happen,” said John Gannon, FINRA’s senior vice president for investor educa- tion. “Today, it’s the BP oil spill; before, it was Hurricane Katri- na. The cover story changes, but the scam is basically the same.” In particular, the SEC and
FINRA are warning investors about the classic “pump-and- dump” practice. In this scheme, company officials, promoters and/or fraudsters will use blogs, e-mail or message boards to pump up the noise on a certain stock that typically is selling on
color continued on G4
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