Business and Finance

Wilfrid Sio was suspicious when he got an email from PayPal, with a subject line saying account verification.

"Congratulations! You have been chosen by the Online Department to take part in our survey. In return, we will credit $99 to your account, just for your time."

Instead of clicking on the link in the email, he wrote to me instead.

Send it to spoof@paypal.com, I told him.

The company’s response: "You’re right – it was a phishing attempt and we’re working on stopping the fraud. By reporting the problem, you’ve made a difference."

Phishing (pronounced fishing) is a fraud designed to steal your identity. It uses false pretenses to get you to disclose sensitive personal information, such as credit card numbers or account passwords.

A common scam involves sending a fraudulent email that claims to be from a well-known company. Phishing can also be carried out in person, over the phone, through fraudulent pop-up windows and websites.

How do you spot a phishing email?

There are some telltale signs, which I verified by comparing Sio’s spoof against a genuine PayPal email I received recently (telling me the credit card used for my account had expired).

• Generic greeting. A typical phishing email will have a generic greeting, such as "Dear User." The spoof was addressed to "Dear client, PayPal." All real PayPal emails will use your first and last name.
• False sense of urgency. A phishing email will try to deceive you by saying you will be in jeopardy if your account is not updated right away. The spoof said the survey deadline was Nov. 30, three weeks after the mailing date, to avoid losing out on the $99 credit.
• Fake links. A phishing email will have a link that looks legitimate, but may send you to a fraudulent website. The spoof had a link to www.xcyg.net, which preceded the PayPal name and led me to Beijing Sunrise Technology Co. Ltd. (almost entirely in Chinese). Always check where a link is going before you click and if it looks suspicious, don’t click it.

Eric Hagedorn, an experienced eBay seller, says you should never sign into your PayPal account from a link provided by an email, no matter what the email says.

"This is how 90 per cent of all PayPal accounts get hacked – the person gives away their password to a fake PayPal site."

Always log into PayPal by opening a new browser and typing in the following, https://www.paypal.com/ca.

The term "https" should precede any web address (or URL) where you enter personal information. The "s" stands for secure. If you don’t see "https," you’re not in a secure web session and you should not enter data.

Now there’s an extra layer of security for the 8 million registered PayPal accounts in Canada – a foolproof system to prevent your account from being hacked.

The PayPal security key, which costs $5, has two forms. You can carry a small device, the size of a credit card, which lets you create a unique six-digit security code each time you log into your account. Or you can sign up to get unique security codes sent by text message to your mobile phone.

"With this in place, you can give your passwords to hackers and they’ll still be unable to break into your account," Hagedorn says.

PayPal, owned by eBay Inc., accounted for 31 per cent of company revenues in the last quarter. It’s now accepted by other online retailers such as Dell and La Senza.

Next Sunday, I’ll look at prepaid credit cards and problems that can arise when using them online.

eroseman@thestar.ca

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An "excessively loud" triceratops and a little girl’s chemical-laced purse were among the items listed in the U.S. Public Interest Research Group’s 2009 list of dangerous toys released Tuesday.

The 24th annual report, "Trouble in Toyland," targeted 16 examples of toys in 3 categories: toys that it considers dangerously loud, or containing small parts that may present choking hazards for small children, or containing toxic chemicals or lead.

The toys are made or marketed by various companies throughout the world.

Small parts

In the first category, the PIRG, a public advocacy organization, listed toys that "pose potential choking hazards." This included three toys that "may violate" the ban on small parts for children under three, such as the Creative Wood Stacking Rings from Zaidy Products, the Real Wood Shape Sorter Barn from P&C Enterprise and an "unnamed play food tray" from World Market.

The PIRG also identified several toys with small parts that come uncomfortably close to violating bans, thereby posing potential hazards. This includes one of the Baby Born toy kids from Zapf Creation, the Pizza Planet Gift Pak from Mattel, the FurReal Baby Bird from Hasbro (HAS) and the Worky tool set from Nemmer.

"Although the toys do not violate the letter of the law, these parts could block a child’s airway given their shape and size," the report said.

The report said that the baby bottle included with the FurReal Baby Bird "barely passes the small parts test." But Hasbro said the "allegations are false."

"The FurReal Friends product does not contain small parts, is properly age graded for kids four and up, and the packaging contains the appropriate labeling," said a Hasbro spokeswoman, in an e-mail.

Excessively loud

The PIRG also listed several toys deemed "excessively loud" at close range, meaning that they match or exceed 85 decibels within 25 centimeters of the toy, presenting a risk of hearing loss.

The organization pegged the loud toys as the Kota and Pals Stompers Triceratops from Playskool, the Secret Saturdays Cryptid Claw from Mattel (MAT, Fortune 500), the Laugh & Learn Learning Phone from Fisher Price and the Bright Lights Phone from VTech.

Hasbro said, in an e-mail to CNNMoney.com, that its triceratops "complies with all sound requirements."

Lead and chemicals

Five products made the list for containing lead or "potentially toxic chemicals."

This includes a Touch and Feel Cloth Book called "Big Rex and Friends" from Priddy Books. The PIRG said that a red dot on one of the pages contains lead. Likewise, the Alligator Cell Phone charm from the Claire’s retail chain also contains lead, the organization said easy payday loan.

The organization also identified a Collector’s Series toy duck that has lead paint on its face and body. The organization said that the manufacturer of this toy was unknown, but that it was purchased at a Dollar Tree store.

A Dollar Tree spokesman told CNNMoney.com that PIRG informed his company of the lead-tainted duck on Oct. 29, and it was removed from stores at that time.

The PIRG identified two toys containing "potentially toxic" chemicals known as phthalates, including Pretty Princess Puppy Purse from Claire’s and the Elmo Lunch Bag from Fast Forward New York. (See correction.)

A spokesman for Claire’s, Steven Anreder, said the retailer is no longer selling the alligator phone charm. He also said the charm and the puppy purse are not toys.

The organization initially reported that Sassy manufactured the Elmo Lunch Bag. But Rick Locker, a lawyer representing Sassy, told CNNMoney.com that Sassy had nothing to do with the product. He sent the PIRG a letter requesting them to "cease and desist from disseminating erroneous information." The PIRG retracted the misidentification and said it regretted the error.

Efforts to reach other companies named in the report were not immediately successful.

A toy industry group reacted to the PIRG list.

"Protecting children will always be the toy industry’s highest priority," said Joan Lawrence, vice president of safety standards for the Toy Industry Association, in an e-mail to CNNMoney.com. "Consumers have every reason to trust the safety of the three billion toys sold in America each year."

Jonathan Samet, publisher of thetoyinsider.com, an industry observer, said that he didn’t want to minimize PIRG’s warnings, but the noise warnings did not concern him as much as choking and lead.

"Choking is obviously the biggest issue," he said. "Right now, I think safety testing is at its highest level that it’s probably ever been. If you are concerned, then take the toy away from the child and either return the toy to the retailer or just throw it away."

The PIRG released its list just three days ahead of Black Friday, one of the busiest shopping days of the year. This year, Black Friday retail sales are expected to outpace 2008, with 16% more shoppers participating.

Correction: An earlier version of this article, because of erroneous information released by U.S. PIRG, listed an incorrect manufacturer of the Elmo Lunch Bag.  

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Mahindra-Satyam shares fell to a 4-month low on Thursday, before recovering, on concerns over its outlook after Indian investigators filed new charges over accounting fraud that hit Satyam earlier this year.

“Investors are playing a blind game until the audited numbers are out. There could be more skeletons hidden in the closet,” said HDFC Securities’ head of private client group V.K. Sharma, who is advising clients to stay away from the stock until there is further clarity.

The stock topped the volume chart, with about 30 million shares traded, nearly three times its average daily volume over the past 90 days. It ended up 2.4 percent at 92.75 rupees.

Mahindra Satyam, earlier known as Satyam Computer Services, was acquired by Tech Mahindra in April after the company was hammered by India’s biggest corporate fraud, which came to light in January.

V. V. Lakshmi Narayana, deputy inspector general of India’s Central Bureau of Investigation, told Reuters the extent of the fraud at Satyam could be much larger than the 71.36 billion rupees ($1.5 billion) that founder Ramalinga Raju had confessed to in a letter in January.

“All investigations into the accounting and auditing part of the business have been completed, and we are now going to look into the money diversion from the company,” Narayana, who is part of the team probing the fraud, said from Hyderabad.

“Whatever Raju said is not the complete reality.”

Narayana said the agency estimated losses suffered by investors in the wake of the fraud could be up to 140 billion rupees.

Mahindra Satyam, which has about 35,000 employees, hoped to restate its accounts by the middle of next year, Atul Kunwar, president of its global operations, said on Wednesday.

Vaibhav Sanghavi, director of Ambit Capital, said, “It’s very difficult to assess the situation until the audited numbers are out.”

Officials at Mahindra Satyam did not respond to requests by Reuters for comment. A Tech Mahindra spokesman declined comment.

Shares in Tech Mahindra, a unit of tractor and utility vehicles maker Mahindra & Mahindra, ended down 1.2 percent, having earlier fallen as much as 6.5 percent to a 3-month low.

Kunwar also told the Reuters India Investment Summit on Wednesday that customer attrition had stopped and the company did not need price cuts to win new deals.

On Tuesday, the CBI said it had filed a supplementary charge sheet containing new allegations against Raju and nine others associated with the outsourcing firm.

New charges included that revenues had been inflated by 4.3 billion rupees by creating fake invoices and customers, and that forged board resolutions were used to get loans worth 12.2 billion rupees. 

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On an overcast English morning, two women from middle England are out shopping. They duck first into the Gucci boutique, fingering discounted handbags and rifling through racks of last season’s fashion lineup. Dolce & Gabbana is next, followed by Armani.

The outlet boutiques — among 136 clustered along a cobblestone outdoor shopping center called Bicester (BIS-ter) Village about an hour’s drive from London — are mobbed with bargain-seekers even at an early hour.

"You get value for money here," says Ann Prentice, who pauses to chat only briefly before her friend hustles her off to Valentino. "My husband is in business, so it’s hard for us just now, but I don’t mind paying more for quality."

Luxury outlet malls are the one bright spot of brisk trade going into the holiday shopping season. In recent weeks, retailers have reported small but still rather anemic signs of recovery. Yet sales numbers show that consumers have been flocking to discount outlets all year long, despite the recession.

Value Retail, the London-based company that owns the largest string of luxury outlets in Europe, including Bicester Village, has seen sales rise 20% to just over 1 billion euro ($1.5 billion) in the first three quarters of this year compared with 2008. (Sales totals are for the nine cities where its Chic Outlet Shopping outlets are located, including Milan, Paris, Dublin, Munich, and Madrid.) Foot traffic also rose 10% in the third quarter to 6.5 million shoppers.

When sales are tabulated for the fourth quarter, the growth is expected to be off the charts given the almost complete retail freeze of the fourth quarter of 2008. That compares with predictions of flat or at most a 2% increase in spending across the retail sector over the holiday shopping period.

Value Retail, whose major investor also owns part of the sprawling Woodbury Common outlet mall outside of New York City, has seen its growth this year double the average over the past 14 years, when sales increased at a rate of about 10% annually, according to Scott Malkin, Value Retail’s chairman.

"It’s human nature to indulge," Malkin says. "I think we’ve gone away from ‘I need more for the sake of more and more,’ to people being more discerning in what they purchase."

That sentiment has benefited luxury outlets in a year when full-priced luxury sales have been forecast to fall as much as 10%, according to Bain & Co. consultants.

Rather than view outlet shopping as cannibalizing from their High Street or Madison Avenue sales, luxury retailers in fact have welcomed the opportunity to sell excess merchandise in a slow time, while reaching a separate segment of customers to whom they wouldn’t normally be able to sell.

"We’re a service to the brand," says Desirée Bollier, the CEO of Value Retail Management low rates payday advance. "The brands have a lot more stock they want to dispose of, elegantly. We’re a platform for them that is quality, with a customer that is aspirational."

These so-called "aspirational" customers — those who may not be as wealthy as the typical elite luxury buyer, but will still purchase a few high-end pieces — now make up 60% of luxury buyers overall, according to Bernstein Research, an arm of AllianceBernstein.

"Before the recession, we were nice to have," says Bollier, referring to luxury outlets. "With the recession we’re a must. Our customers are not your fashionistas. She’s not going to buy the ‘It’ bag, but she recognizes the quality of a timeless piece."

Still, some fashion-forward heavy hitters are among the recent shoppers at these outlet malls: Stars Elizabeth Hurley and Victoria Beckham have been spotted in Bicester Village recently. Over the summer, a Saudi princess arrived with a retinue of 70 people. Tipped off in advance, says Malkin, the luxury brands sent out the Arabic speakers from their stores in London for the day to accommodate the entourage.

Most of Value Retail’s shoppers make the outlets a day-trip destination from the cities they’re visiting, or if they’re local residents, they may drive an average of two to three hours to reach an outlet mall. Some of these customers feel too intimidated to walk into a full-priced luxury boutique for the first time, so buying an item at a discount outlet can build confidence and allow shoppers to trade up. Rather than look for a dress to wear for an upcoming Saturday night, for example, they’re shopping for more enduring or signature items — at discounts of up to 60%.

"We use the expression, ‘guilt-free shopping,’" Malkin says, a particularly important sentiment in a recession. "What we’ve seen in the last 18 months is that women will buy something at full price in the center of Paris or London or Madrid and tell people that they bought the item at one of our villages. It’s a ways of avoiding conflict, of not wanting to seem better off than their friends and create discomfort and guilt."

The hope, of course, is that aspirational customers will be so satisfied with the items they purchase that they will eventually trade up into becoming luxury customers themselves, paying full price.

"People nine months ago said luxury is finished," says Malkin. "That’s nonsense. There will always be luxury, just that the nature of it will always be evolving." 

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Whitney Design Inc. has filed for Chapter 11 bankruptcy after the Commerce Department imposed special anti-dumping duties on one of the company’s Chinese suppliers.

As the importer, the Hazelwood-based company must pay penalties nearly equal to its annual revenue, forcing it to seek protection from creditors.

Formed in 1994, Whitney imports and sells household goods, mainly ironing boards, pads and covers and closet organizers.

Filing on Saturday, Whitney Design said the Commerce Department imposed a "penalty rate" of 157.68 percent of the purchase price on steel-top ironing boards bought from a Chinese manufacturer since 2004.

The Commerce Department took that step in April after the Chinese supplier, named Since Hardware, failed to cooperate with on certain audits and procedures. Since Hardware is appealing the penalty, according to a filing with the bankruptcy court in St. Louis.

As importer, Whitney will have to pay those special duties even though the company declared it was unaware of the Chinese supplier’s actions.

If the appeal isn’t successful, Whitney could owe up to $35 million. Last year, Whitney’s revenue totaled only $40 million, according to the company.

With such a potential liability hanging over the business, Whitney was forced into bankruptcy, said James L. Glenn, the company’s president and CEO.

"Potentially, (the penalties) could be devastating," he said Monday in an interview. "It’s tough. We didn’t have any idea that this was coming."

The bankrupt company now hopes to sell its assets to a new business, Household Essentials, which will be controlled by Glenn and Whitney’s Chief Financial Officer Mark J. Brown. Both men control Whitney.

Glenn said he anticipated that the sale of Whitney’s assets would be completed early in 2010 and that the company’s 46 full-time employees would keep their jobs.

The sale is backed by Whitney’s two key creditors, Enterprise Bank and Eagle Fund I LP, though the transaction will require the court’s approval, the company said.

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Dubai ruler Sheikh Mohammed Bin Rashid Al Maktoum fired one senior aide and removed three others from the board of Dubai’s main holding company as the debt-laden emirate tries to secure a second $10 billion injection of funds.

On Nov. 20, Sheikh Mohammed removed the governor of the Dubai International Financial Centre, Omar Bin Sulaiman, who had led efforts to transform Dubai into a Middle East finance hub. A day earlier, he dropped Mohammad al-Gergawi, Sultan Ahmed Bin Sulayem and Mohammed Ali Alabbar from the board of the Investment Corporation of Dubai. The three were at the forefront of a construction drive that began in 2002 and collapsed last year after the global financial crisis engulfed Dubai.

Sheikh Mohammed’s moves were aimed at exerting more control over the web of competing, state-owned companies that he used to accelerate diversification away from oil and which amassed $80 billion of debts. Shares in Dubai fell to a two-month low yesterday following the reshuffle.

“Dubai is trying to get the maximum investor subscription for this $10 billion bond issue,” said Christopher Davidson, a professor at Durham University in the U.K. and author of the 2008 book “Dubai: The Vulnerability of Success.” “Sheikh Mohammed needs to put new people in who are not tainted by the bubble economy of past years.”

The Dubai Financial Market General Index yesterday lost 2.6 percent, falling to 2,073.66. Abu Dhabi’s measure slipped 2 percent to its lowest since Sept. 2.

The sheikh’s sweeping changes introduced “a degree of uncertainty” which unsettled the markets, said Farouk Soussa, an analyst with Standard & Poors in Dubai.

Bond Issue

The Dubai government is in the final stages of preparing the second half of the bond issue, Alabbar said on Nov. 20. Investors will buy a “reasonable chunk” of the bond, he said. The bonds will be issued before the end of the year, Sheikh Ahmed bin Saeed Al-Maktoum, chairman of the emirate’s Supreme Fiscal Committee, said on Nov. 16.

The remainder is likely to be bought by the federal government in Abu Dhabi, which has 90 percent of the oil in the U.A.E. and bailed out Dubai in February with a $10 billion bond issue subscribed entirely by the U.A.E. central bank.

Dubai’s real-estate market was the worst affected by the global financial crisis. Home prices have tumbled about 50 percent from their peak, and may drop another 20 percent this year, Deutsche Bank AG said in June.

Waterfront Development

Bin Sulayem is chairman of Dubai World, a state-run holding company that has about $59 billion of debt and other liabilities paydayloans. It controls property developer Nakheel PJSC, which has had to cancel plans for a new waterfront development the size of Hong Kong Island. Nakheel has to repay a $3.52 billion bond maturing in December.

Al-Gergawi is chairman of Dubai Holding, which owns developers including Dubai Properties LLC, Sama Dubai LLC and Tatweer LLC. Tatweer has put on hold a project to build “Dubailand,” a Disneyland-style leisure park that would be three times the size of Manhattan. Alabbar is chairman of Emaar Properties PJSC, the largest developer in the U.A.E., which is building the world’s tallest tower.

The cost of protecting Dubai bonds from default rose 3 percent to 313 basis points on Nov. 20, five-year credit-default swap prices show. The contracts, which get more expensive as perceptions of credit quality worsen, traded at 287 basis points on Oct. 20, the lowest in 12 months, Bloomberg data show.

‘More Carefully’

The emirate will study the viability of projects more closely in the future, Sheikh Mohammed said Sept. 9. “We’ll be more careful now,” he said.

In June, Emaar said it was in talks to combine with Dubai Properties, Sama Dubai and Tatweer as it aims to control the supply of new buildings amid a glut of homes.

The replacement of the DIFC governor is part of efforts to improve the efficiency of government institutions and companies, and “consolidate the emirate’s growing importance as an international center for finance, business, trade, tourism and all services,” Mohammed Ibrahim Al Shaibani, director-general of the ruler’s court, said in an e-mailed statement on Nov. 20.

Ahmed Humaid al-Tayer, the new governor of the DIFC, which is home to regional offices of banks including Goldman Sachs Group Inc. and Deutsche Bank AG, said Nov. 21 he would pursue the same strategy as his predecessor. Al-Tayer is also chairman of Emirates NBD PJSC, the U.A.E.’s biggest bank by assets, and remains a member of the ICD board along with Al Shaibani, the head of the ruler’s court.

The other four board members are Sheikh Mohammed, two of his sons and his uncle.

The four sidelined Dubai powerbrokers have to some extent been made scapegoats, said Simon Henderson, an expert on the Gulf monarchies at the Washington Institute for Near East Policy.

“They were given authority and access to capital and told to go out there and expand Dubai, they were given a license and latitude, and to that extent, they were obeying orders,” he said.

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The Federal Reserve’s shield from congressional audits of interest-rate decisions took a blow from lawmakers who want to open the central bank’s books to greater congressional scrutiny.

The House Financial Services Committee yesterday advanced a proposal to remove a three-decade ban on audits of monetary policy and carry out an examination of the central bank. The plan was offered by Representative Ron Paul, a Republican from Texas who has called for the abolition of the Fed, and based on a bill with more than 300 co-sponsors.

Lawmakers say the Fed hasn’t adequately accounted for putting taxpayer funds at risk, including aid to companies such as Citigroup Inc. and American International Group Inc. Fed Chairman Ben S. Bernanke has opposed the Paul legislation, saying it may open the door to interference in monetary policy.

Yesterday’s vote is “probably not going to be helpful in terms of keeping inflation expectations low and supporting the dollar,” said Michael Feroli, a JPMorgan Chase & Co. economist in New York and former Fed researcher. The central bank “should do whatever it takes to stop this from going forward and eroding confidence in the Fed’s independence,” he said.

The broader bill on financial regulation is subject to a vote by the committee, then must be approved by the House and Senate and signed into law by President Barack Obama.

“This is the bill that would allow the people to win over the special interests,” Paul said during debate on the measures yesterday. “There is no doubt that the individuals opposing this amendment represent the secrecy of the Federal Reserve.” An audit “shouldn’t hurt them in any way,” he said.

‘May Be Revisited’

Barney Frank, the Massachusetts Democrat who chairs the committee and opposed the Paul measure, said the issue “may be revisited” when the legislation reaches the House floor.

“It’s going to be seen as weakening the independence of monetary policy with consequent negative implications,” Frank told reporters after the vote. “People are going to be worried about the impact on the dollar, on the interest rate.”

The dollar strengthened to $1.4925 per euro late yesterday from $1.4963. The dollar has weakened 6.5 percent against the euro this year.

Paul, who wrote a best-selling book this year titled “End the Fed,” said provisions in his amendment would limit interference in monetary policy. The measure, co-sponsored by Representative Alan Grayson, a Democrat from Florida, would exclude any unreleased transcripts or minutes of Fed policy meetings. It calls for an audit of the Fed and its 12 regional banks by the Government Accountability Office within a year after enactment.

Limited Audits

The committee voted first, 43-26, to substitute Paul’s proposal for a Democratic measure to retain the ban on audits of monetary policy while requiring more limited audits. About one- third of Democrats joined the unanimous Republicans on the vote. Then, in a voice vote, the committee attached the Paul measure to the broader bill.

Frank said he expects to finish the legislation in committee on Dec. 1, delaying a vote he had scheduled for yesterday until after lawmakers return from the Thanksgiving holiday. He supported a competing measure from Representative Mel Watt, a North Carolina Democrat, to retain the ban on auditing monetary policy.

“Perception is very important in monetary policy,” Frank said. He said he was concerned that “inflationary expectations will be given a boost if we adopt the Paul” measure.

The Fed’s powers and rate-setting independence are under threat on several fronts in Congress. Separately yesterday, the Senate Banking Committee began debate on legislation that would strip the Fed of bank-supervision powers and give lawmakers greater say in naming the officials who vote on monetary policy.

Lax Oversight

Paul and other lawmakers have accused the Fed of lax oversight of banks and failing to avert the financial crisis. He said Watt’s measure instead would put further restrictions on the power of the government to audit the Fed, contrary to its sponsor’s assertion.

“This actually takes away some auditing authority,” said Paul. “This amendment eliminates all the benefits that people see coming from” Paul’s legislation, he said.

Watt cautioned against succumbing to popular anger at the Fed during debate on the measures.

“Everybody would like to beat up on the Fed and call them the bad guys,” Watt said. “So if we make this decision on a political basis, I know what the result will be.”

Also yesterday, lawmakers attached, by voice vote, a separate Republican measure to audit all Fed emergency-loan actions “during the current economic crisis.” Legislators may need to work out how to combine the amendments when the bill goes to the House floor.

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Home builders initiated construction of far fewer new homes in October than the month before, a big and unexpected drop for the struggling industry, according to a government report issued Wednesday.

Homebuilders began construction at an annual rate of 529,000 new homes during the month, 10.6% below the revised September rate of 592,000 and 30.7% below the 763,000 rate during October 2008. It was the lowest level of housing starts since April, when the annual rate was 479,000.

A panel of industry observers compiled by Briefing.com had forecast housing starts of 600,000 during the month. It was the second month in a row of dashed housing start expectations.

"The numbers stink," said real estate analyst Mike Larson of Weiss Research. "They’re negative across the board."

That weakness included the number of building permits issued in October, which fell to seasonally adjusted annual rate of 552,000. That was 4% below the revised September rate of 575,000 and 24.3% below the October 2008 estimate of 729,000.

The slowdown in construction means that there are many fewer new homes for sale, about 251,000 in all. That’s the smallest inventory since 1982, according to Larson.

"The new home market, which was dramatically oversupplied during the boom, is now dramatically undersupplied," he said.

Part of the reason for the lack of building activity is high foreclosure rates cash advance now. Those discourage builders, according to Larson. Many of the foreclosures compete directly with new homes for buyers.

"That’s one reason why builders are not being aggressive," he said. "There are a lot of nearly new homes that banks are holding and trying to sell. That keeps the new home market relatively weak."

Since the tax credit was reinstated, October may represent a deep valley in new home start stats. By then, the credit had ceased to be of value to builders, according to David Crowe, the chief economist for the National Association of Homebuilders.

"By October, there was no way to start a home and have time to finish it and sell it before the credit ended," he said.

Crowe expects to see starts to begin increasing again with the tax credit extension. "November figures should reflect some renewed builder confidence," he said.

New home construction forms a big part of the nation’s economy. When people buy new homes, they also purchase many products to fill them.

Fewer new homes being built may be a bad sign that the impact of the government’s economic stimulus package may be limited. 

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The cost of living in the U.S. rose more than forecast in October as Americans paid more for fuel, while so-called core prices held at a pace that supports the Federal Reserve’s forecast for tame inflation.

The 0.3 percent rise in the consumer-price index followed a 0.2 percent increase in September, figures from the Labor Department showed today in Washington. Excluding food and energy costs, the core index rose 0.2 percent for a second month.

Unemployment at a 26-year high of 10.2 percent and wages that were down 5.2 percent in September from a year earlier are giving companies such as Wal-Mart Stores Inc. little room to raise prices. Fed Chairman Ben S. Bernanke said Nov. 16 that the economic “headwinds” will limit the recovery, allowing interest rates to stay low for an “extended period.”

“I don’t see anything in the report that suggests there’s any real inflation flare-up,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. “The Fed is comfortably on hold.”

Economists forecast the consumer price index would rise 0.2 percent, according to the median of 78 projections in a Bloomberg News survey. Estimates ranged from a decline of 0.2 percent to a rise of 0.5 percent.

The core index was forecast to rise 0.1 percent, according to the Bloomberg survey.

Housing Starts Fall

U.S. stock-index futures erased gains after the Commerce Department said housing starts unexpectedly plunged 11 percent last month to the lowest level since April. Futures on the Standard & Poor’s 500 Index were down 0.1 percent to 1,106.0 at 9:02 a.m. after rising as much as 0.3 percent.

Treasuries remained lower after the consumer price report and before the U.S. announces tomorrow the amounts of 2-, 5- and 7-year notes it will sell next week. The 10-year note yield rose two basis points to 3.34 percent at 8:35 a.m. in New York.

Compared with a year earlier, consumer prices were down 0.2 percent. Core prices rose 1.7 percent from October 2008 after a 1.5 percent year-over-year gain in September.

Energy costs increased 1.5 percent in October, led by fuel oil and gasoline.

The year-over-year declines in the consumer price index are getting smaller as crude oil prices increase from an almost five-year low in December 2008.

Crude Oil

The U.S. on Nov. 10 raised its forecast for crude oil prices this year and next on speculation that demand will rise as the global economy improves. West Texas Intermediate oil, the U loan till payday.S. benchmark, will average $62 a barrel in 2009, up from last month’s forecast of $59.90. Crude oil will average $78.13 in 2010, according to the monthly Short-Term Energy Outlook report from the Energy Department’s Energy Information Administration.

Crude oil traded on the New York Mercantile Exchange averaged $75.82 a barrel in October, compared with $69.47 in September. Prices have continued to increase this month, averaging $78.69.

Gasoline prices in October averaged $2.56 a gallon in October, compared with $2.55 a month earlier, according to AAA.

Food prices, which account for 14.6 percent of the CPI, increased 0.1 percent in October, reflecting higher dairy costs. Prices for meats and fruits and vegetables declined during the month.

Walmart Cost Cuts

Walmart, the world’s largest retailer, is experiencing “ongoing deflation across our businesses,” Michael T. Durke, the Bentonville, Arkansas-based company’s chief executive officer said Nov. 12. Walmart accelerated efforts to cut costs in the third quarter as falling food prices and the worst U.S. unemployment rate in a quarter century muted revenue.

Owners-equivalent rent, one of the categories used to track rental prices, was unchanged. In September, the measure dropped 0.1 percent, the first decline since 1992.

Costs of medical care increased 0.2 percent in October and are up 3.5 percent from the same month last year. Airline fares rose 1.7 percent last month.

The CPI is the broadest of the three monthly price gauges from the Labor Department because it includes goods and services. A report yesterday showed wholesale prices rose 0.3 percent. The cost of imported goods rose 0.7 percent, the government said last week.

Almost 60 percent of the CPI covers prices consumers pay for services ranging from medical visits to airline fares and movie tickets.

The Fed earlier this month repeated that it will keep interest rates near zero for “an extended period” and specified for the first time that policy will stay unchanged as long as inflation expectations are stable and unemployment fails to decline.

“Inflation seems likely to remain subdued for some time,” Bernanke said in a Nov. 16 speech to the Economic Club of New York. The weak labor market and reduced bank lending He also said “significant economic challenges remain.”

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Investors will brace for a spate of economic reports this week with their fingers crossed that there is more good news than bad since that will set the tone for the remaining seven weeks of the year.

With Black Friday less than two weeks away, retailers are hoping consumers will be willing to open their wallets during the all-important holiday sales period, helping fuel the economic recovery.

Kicking off the week will be the government’s monthly retail sales report, which investors hope will shed light on how much consumers will be willing to spend.

"Next week is all about consumer spending and the holiday," said Burt White, chief investment officer at LPL Financial.

Retail sales have shown some improvement recently, suggesting that consumers are suffering from "frugal fatigue" and may be more willing to splurge this holiday season, White said.

A rebound in consumer spending, which accounts for the bulk of U.S. economic activity, could help fuel bets that a recovery is firmly underway.

The outlook for consumer spending remains murky with the national unemployment rate at a 26-year high of 10.2%.

"In this environment, anything associated with jobs is probably the most important thing," said Quincy Krosby, market strategist at Prudential Financial.

To that end, investors will likely pay close attention to Thursday’s report on the number of Americans filing first-time claims for state unemployment benefits.

Investors will also focus on the plight of the U.S. dollar, which wallowed near a 15-month low against the euro for most of last week.

The dollar has been taking a beating recently as investors take advantage of rock-bottom interest rates in the United States to bulk up on more risky assets.

"For now, it’s still sell the dollar and buy risk," White said. "It’s a crowded trade, but a good one."

Stocks ended the week on a high note, logging the second consecutive week of gains as optimism about the recovery gained momentum. The question on investors’ minds this week will be ‘can that momentum be sustained?’

Eyes on Bernanke

Demand for riskier assets, like equities, could hit a speed bump Monday afternoon with Federal Reserve chairman Ben Bernanke scheduled to deliver an economic outlook speech at the Economic Club of New York.

While the central bank is not responsible for managing currency fluctuations, some analysts think Bernanke may strike a more hawkish tone given the severity of the greenback’s recent weakness payday loan companies.

Others expect Bernanke to echo recent official policy statements that interest rates will remain "exceptionally low" for an "extended period" of time.

On the docket

Monday: The week starts with a closely watched report on October retail sales before the opening bell.

Economists expect the Commerce Department to report that sales rose 0.9% last month after 1.5% drop, according to consensus estimates gathered by Briefing.com.

Also due Monday morning, a report on manufacturing activity in the mid-Atlantic region and business inventory data from September.

Federal Reserve chairman Ben Bernanke will speak about the outlook for the U.S. economy in New York at midday.

Tuesday: The government’s producer price index comes out before the market opens. Analysts think prices at the wholesale level ticked up 0.5% in October. Excluding volatile energy prices, the index is forecast to rise 0.1%.

Government figures on capacity utilization and industrial production in October are due out at 9:15 a.m. ET.

The market will also digest quarterly financial results from Home Depot (HD, Fortune 500), Target (TGT, Fortune 500) and TJX Companies (TJX, Fortune 500) before the opening bell.

Wednesday: The housing market will be in focus with reports on housing starts and building permits released before the market opens.

Also before the opening bell, the government’s closely-watched inflation gauge is expected to show that consumer prices were flat in October. Excluding food and energy, prices are expected to have risen 0.1% last month after a 0.2% increase the month before.

Thursday: The Labor Department reports on the number of Americans filing new claims for unemployment benefits at 8:30 a.m. ET.

Jobless claims fell to 502,000 filings last week and analysts say a figure below 500,000 this week could help push the market higher.

A report on leading economic indicators comes out after the market opens.

Sears Holdings (SHLD, Fortune 500) will report quarterly earnings in the morning, while PC giant HP (HPQ, Fortune 500) and apparel-maker Gap (GAP, Fortune 500) will post earnings after the closing bell.

Friday: No economic reports are on the docket. 

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