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Forecasters say Hurricane Hilary has strengthened into a small, but powerful Category 4 storm in the Pacific.

Hilary’s maximum sustained winds were near 135 mph (217 kph) Thursday. The hurricane is not forecast to make landfall, though officials say it is expected to rake Mexico’s coast with wind, rain and heavy surf.

The U.S. National Hurricane Center says a tropical storm warning is in effect for Mexico’s coast from Lagunas de Chacahua to Punta San Telmo. A tropical storm watch is in effect for west of Punta San Telmo to Manzanillo.

Hilary is centered about 85 miles (137 kilometers) southwest of Acapulco, Mexico, and is moving west-northwest.

In the Atlantic, Tropical Storm Ophelia is weakening.

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Isle of Capri Corp. said Mississippi River flooding that disrupted operations at several of its riverside casinos contributed to a first-quarter loss of $2.3 million, or 6 cents per share, compared with a loss of $2.7 million, or 8 cents per share, in the corresponding period last year.

The Creve Coeur-based gambling operator said quarterly revenue fell to $245.8 million from $251.9 last year. Flooding caused Isle of Capri casinos on the Mississippi to close from six to 41 days during the quarter. Nonetheless, work is proceeding on the company’s Cape Girardeau casino, which is scheduled to open late next year. (Tim Bryant)

Short-selling bans extended

Coca Cola Co. said Thursday it plans to invest $4 billion in China as food brands scramble to expand in its fast-growing consumer market.

The investments will take place over three years beginning in 2012 and raise Coca Cola’s total investment in China between 2009 and 2014 to $7 billion, the company said.

Global food brands are investing heavily in China, looking to a relatively healthy economy that expanded by 9.5 percent in the quarter ending in June to drive sales amid global uncertainty.

“China is one of our most important growth markets,” said Coca Cola chairman and CEO Muhtar Kent in a statement announcing the plans.

Chinese retail spending in June rose 17.7 percent over a year earlier, according to the government.

In July, Nestle SA announced the purchase of a 60 percent stake in candy maker Hsu Fu Chi for $1 no fax payday loans.7 billion. Earlier this year, Nestle also bought a controlling stake in Chinese food processor Yinlu Foods Group.

Restaurant chains such as McDonald’s Corp. and Yum Brands Inc.’s Pizza Hut and KFC also are expanding.

Kent said Coca Cola’s sales volume in China for the first half of 2011 was double that of five years ago.

Coca Cola, based in Atlanta, opened five new facilities in China in 2009-10 and this year has opened one and plans to open a second and break ground for a third, according the company.

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Warren Buffett’s company says its second-quarter profit jumped 74 percent because the value of its derivative contracts increased and a number of its non-insurance businesses improved.

Berkshire Hathaway Inc. said Friday that it generated $3.4 billion in net income, or about $1.38 per Class B share. Excluding investment and derivative gains, it earned $1.09 a share.

That’s nearly double last year’s results and better than the adjusted $1.08 per Class B shares analysts had expected payday loans.

The Omaha-based company said its revenue grew to $38.3 billion in this year’s quarter.

Last year, $1.4 billion in paper losses on Berkshire’s derivative contracts clipped the company’s second-quarter profits even though the railroad, insurance and manufacturing businesses performed well.

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A good rule of thumb for investors is to never buy an investment you don’t understand.

Remember that if a broker should offer you a “structured security” such as a “reverse convertible” note. According to the Securities and Exchange Commission, reverse convertibles are “improperly marketed as conservative fixed-income investments when in fact they may be very susceptible to volatile or falling equity prices and may carry considerable risk of loss.”

Just how hard are these things to understand?  Read the SEC’s description:

A reverse convertible is “a security with the sale of a put option embedded in it (some call option structured security products are also offered). The payout for a typical equity-linked reverse convertible note is a high-level interest rate plus a return of principal at maturity if the equity increases in value (or stays the same) over the term of the note. However, if the underlying equity decreases below a set ‘trigger/knock-in’ price at any time during the life of the note (even intra-day for some issues) or if the equity closes below the initial level on the valuation date, instead of receiving the principal at maturity, the customer/investor will have ‘put’ to him by the issuer a predetermined number of depreciated shares whose value on the date of maturity is less than the principal amount - while still receiving the coupon payments over the life of the note.”

Got that?

Basically, it’s a hybrid mixing aspects of a bond and a stock.  If the stock price falls, you may lose money.  It’s the sort of complex derivative that professional investment managers will play with.  But there’s no reason that the typical investor should be expected to understand it, much less invest in it.

Structured products are assembled by big investment firms, which then tell brokers to go out and sell them.

Lehman Brothers was a big issuer of structured products, and investors lost a bundle when Lehman went broke in 2008. Now, sales are on the rise again, up from $34 billion in 2009 to $45 billion last year.

The SEC is on a minor tear about the sale of reverse convertibles and other so-called “structured securities,” such as “principle protected notes” and “performance/market participation notes” and “enhanced income” notes.

After poking around at major brokerage houses, the SEC investigators concluded that many investors didn’t understand what they were buying.  No surprise there, since brokers weren’t explaining them well.  Meanwhile, the brokerages’ profits on the sales was sometimes obscured from investors.

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During her interview for the top job at the International Monetary Fund last week, Christine Lagarde noticed a striking pattern.

All the questions came from men.

“There was not one single woman,” the French Finance Minister said Tuesday on French television.

Now there is.

On Tuesday, the IMF’s 24-member board decided she should become the first woman to lead the global lending organization, which is recovering from a sex scandal involving the man she’ll replace.

When she begins a five-year term next week, Lagarde will take charge of a melting pot of international elites _ one that was known for male-dominated clubbiness well before the scandal involving Dominique Strauss-Kahn, her predecessor.

In her remarks to French television, she spoke to the cultural shift her selection represents.

“While I was being questioned for three hours by 24 men, I thought, `It’s good that things are changing a little,’” she said.

Not everything will change. Lagarde will become the 11th European to lead the IMF, extending a streak that began with the organization’s creation in 1945. Among the challenges that await her, she must prod fellow Europeans to take painful steps to prevent a default by Greece.

She’ll also face pressure from developing nations that want a greater voice at the IMF.

“I am deeply honored by the trust placed in me,” Lagarde said in a statement in Paris after the vote.

Should Lagarde, 55, succeed in changing the IMF’s culture, it may have less to do with her gender and more with her experience in corporate America.

Before she entered politics in 2005, Lagarde led the Chicago-based international law firm Baker & McKenzie for five years. American management tends to be less tolerant of sexual scandals and more likely to educate its staff on reporting harassment. At the IMF, Lagarde is likely to stress accountability and establish channels for reporting workplace grievances.

Her selection became all but assured once the Obama administration endorsed her earlier Tuesday. She had also won support from Europe, China and Russia. Mexico’s Agustin Carstens challenged her, but his candidacy never caught fire.

Lagarde said her first priority is to unify the IMF’s staff of 2,500 employees and 800 economists and restore their confidence in the organization.

She also said she wants to meet with Strauss-Kahn, if permitted to by the U.S. government. Strauss-Kahn resigned last month after being charged with sexually assaulting a New York City hotel housekeeper. He has denied the charges.

“I want to have a long talk with him, because a successor should talk with their predecessor,” Lagarde said in the interview on French television channel TF1. “I can learn things from what he has to say about the IMF and its teams.”

Lagarde will be the first IMF leader who isn’t an economist. She has spent much of her career in the United States and speaks impeccable English.

As one of the longest-serving ministers under French President Nicolas Sarkozy, she made the country’s labor rules more flexible. Forbes has listed her among the world’s most powerful women.

Most urgently, she will be expected to help stabilize Europe’s debt crisis.

“This will put her in the position to work more closely with her European counterparts and push them if needed,” said Domenico Lombardi, a senior fellow at the Brookings Institution and a former member of the IMF’s executive board.

Lagarde probably won’t have much impact on the next round of assistance likely to be provided to Greece, which is currently being negotiated, analysts said.

But eventually, European leaders and the IMF will be forced to forge a permanent solution to Greece’s crisis. That could happen as soon as next year, said Michael Mussa, a senior fellow at the Peterson Institute for International Economics.

It’s likely to involve restructuring some of Greece’s debt, which means that European banks and governments are likely to take losses, he said. That will test Lagarde’s political and negotiating skills.

“There’s going to be a lot of issues that need to be resolved,” Mussa said. “And the question of who will ultimately get stuck with the cost is one of the toughest ones.”

Under an informal arrangement dating to the end of World War II, a European has always lead the IMF and an American has run its sister organization, the World Bank.

Lagarde helped lead negotiations for a bailout package last year that combined European Union and IMF funds in a pool to aid highly indebted European countries. Some experts say Europe’s leaders have been too timid in responding to the crisis and have been discredited by their failure to solve it for good.

“Everyone’s credibility was damaged by advancing a plan that was not viable from the get-go,” said Barry Eichengreen, an economics professor at University of California, Berkeley.

Lagarde moved to address that criticism last week when she met with IMF’s board. She told the board there was “no room for benevolence when tough choices must be made, and there is no option that does not start with difficult but necessary adjustments by the Greek authorities.”

A default by Greece would reverberate well beyond Europe. Such dangers help explain why even some developing countries, like China, backed Lagarde’s candidacy, Lombardi said. China owns billions in euro-dominated bonds. It has no interest in seeing the European debt crisis worsen.

Lagarde is also expected to appoint a Chinese official, Zhu Min, to a top deputy position, Lombardi said. The United States will likely keep the No. 2 spot at the IMF. It was held by John Lipsky, who will leave the IMF in August.

She also will be expected to boost morale among the staff in the wake of the Strauss-Kahn scandal. Strauss-Kahn was also reprimanded in 2008 for having an affair with a subordinate, though he faced no disciplinary action.

Lagarde’s support for gender equality in the workplace might help her put her stamp on the organization, said Susan Schadler, a former IMF deputy director who is a senior fellow at the Centre for International Governance Innovation.

“The IMF’s culture is no different than any institution in the financial sector: It’s dominated by men,” Schadler said. “But I would imagine she would be a good influence and improve the environment.”

Analysts say the IMF’s culture is evolving, however gradually. Lagarde’s appointment puts two women in key roles at the organization. In April, Nemat Shafik, an Egyptian economist, was named a top deputy.

Shafik said last month that the IMF is boosting its efforts to recruit women. The fund wants 25 percent to 30 percent of its management positions to be held by women by 2014, Shafik said.

Other analysts noted that as a European and as a woman, Lagarde is both a conventional and a bold choice to lead the IMF. Like her predecessor, she represents the French elite. But as the first woman to lead the organization, she represents a break with history.

“She’s the old guard and the new guard,” said David Bosco, an assistant professor of international politics at American University.

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Looking west at the intersection of Queen and Bay, you see the grand Shea’s Hippodrome theatre. Various storefronts line the street. A newsboy waves the morning edition.

But remove your iPad from sight and the cold truth of modern-day reality returns. Those buildings no longer exist, demolished during the 1950s to make way for the construction of Nathan Philips Square and New City Hall.

ZeitagTO, a free app available for the iPhone and iPad, aims to pull local history out of climate-controlled government archives and into the hands of those who are curious to see the Toronto that was by showcasing various images based on your location within the city.

Three years ago, while vacationing in New York City, Gary Blakeley and his family visited the site of the former World Trade Center.

“At that point it was just a big construction site,” says Blakeley, a graphic designer who emigrated to Canada from England in 1987. “There was no sign of what had stood there and no sign of what happened on September 11.”

There was a museum, he says, but the long lineup was less than encouraging. “I thought, wouldn’t it be great if you were standing on the spot and you could actually pull up archival photos?”

But the technology wasn’t yet available. With the arrival of the iPhone, Blakeley revisited the concept, hired a developer, and slowly populated the app with more than 500 images from the City of Toronto Archives, which was supportive of the project.

Gary Miedema, chief historian at Heritage Toronto, a city agency that organizes walking tours of the city, says ZeitagTO and similar apps are a “brilliant next step” in terms of making the city’s history more accessible.

“Using historic photos in this manner is a great way of putting it in the hands of residents and tourists, giving it much more immediate access.”

Still in its infancy — Blakeley seeks the help of historians and heritage aficionados to help bring context to the content — the app functions well for self-led tours.

Its possibilities include highlighting lesser-known or purposely forgotten aspects of local history fast cash advance loan.

Last summer, while working on a prototype of the app in Berlin, Blakeley later learned the site he and his wife had chosen for an afternoon picnic was a spot where Adolf Hitler had given a rally in 1938.

“That was really blood-curdling,” says Blakeley, “because you always think these things happened somewhere else. And no, they won’t put up a plaque or a marker for that.”

The stories and images become virtual plaques, travelling along with the user. Physical markers have their place in the cityscape, highlighting specific events — at Dupont Station there are three plaques tracing the history of the ill-fated Spadina Expressway — but even Miedema, who produced 25 plaques for Heritage Toronto last year, contends the city shouldn’t be overrun with them.

“We don’t want the city covered in bronze — there are various platforms to bring information to the public. This way, you can tell as many stories as you want.”

As Blakeley has his sights set on other archival collections, the stories cross city boundaries.

“We’ve just begun working with the City of Mississauga. Down in Long Branch, during World War II there was a small arms factory. Heritage Mississauga has the original photo album for the factory, but they never did anything with it. So we’ve started matching some of those images to the Long Branch map.” Only one of the two buildings housing the former munitions factory remains.

Above all, Blakeley hopes the app, which he has paid for himself, will help keep the city’s rich visual legacy on everybody’s minds.

“There’s a lot of good material out there but it’s hard to get to right now,” he says, referring to the million images held at the City Archives, of which only 50,000 have been scanned. “It’s an issue of funding and timing, which is something we’re also facing, but eventually I want it to be part of the way we just do things.”

ZeitagTO is available in the iTunes store, with an Android version available soon.

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Pakistan extended a six-month pause in interest-rate increases as inflation eased and the central bank awaits the budget for signs the government will tighten fiscal policy and help contain prices pressures.

The State Bank of Pakistan left the discount rate unchanged at 14 percent, among the highest in the world, according to a central bank statement in Karachi today. The decision was predicted by all 10 economists and researchers surveyed by Bloomberg News.

The central bank raised rates in three consecutive meetings from July to November, blaming excess state spending for pushing inflation to more than 15 percent late last year. The government may be forced to cut spending in its budget after the discovery and killing of al-Qaeda leader Osama bin Laden in Pakistan led some U.S. lawmakers to call for a reduction in aid.

“The budget will determine the future outlook for inflation and rates,” Sayem Ali, a Karachi-based economist at Standard Chartered Plc, said before the decision. “The fiscal conditions will be tricky especially after a possible slowdown in external financing with the Osama episode here, and not-so- encouraging developments with International Monetary Fund support.”

The budget may be announced in the first week of June, Dawn newspaper reported today. The finance ministry had said earlier it would be released May 28.

Pakistan’s government needs external aid to support an economic growth target of 4.2 percent for the next fiscal year, as it seeks to reduce the budget deficit to 4.5 percent of gross domestic product. The shortfall is expected to reach 5.5 percent this year, compared with the official target of 4 percent, the Finance Ministry said April 27.

Fiscal Pressures

“The government is mindful of fiscal pressures and has expressed resolve to address these issues in the budget,” the central bank said in its monetary policy statement today.

The International Monetary Fund told Pakistani economic officials in a weeklong review of the economy that ended May 17 that the government needs to keep cutting the deficit to take pressure off monetary policy and allow more credit to companies.

The Washington-based fund stopped disbursing money to Pakistan in May last year after the country failed to meet conditions attached to an $11.3 billion loan first issued in 2008. In December, the IMF approved a nine-month extension of the loan to give Pakistani authorities time to comply with some elements of the agreement, including implementing an overhauled sales tax.

Falling Rupee

The Pakistan rupee has fallen 0.5 percent to 86.18 against the dollar since the current financial year started July 1. The Karachi Stock Exchange 100 Index has advanced 23 percent this financial year after advancing 36 percent in the previous year ended June 30.

The South Asian nation has received $14.6 billion in economic and military aid from the U.S. since 2005 to help revive growth and fight Taliban militants along the border with Afghanistan.

Whether Pakistani government and intelligence officials shielded bin Laden has become an issue on Capitol Hill, where some senators have called for postponing any more U.S. financial aid until Pakistan’s commitment to fighting terrorism can be re- evaluated.

Senator John Kerry, the Massachusetts Democrat who leads the Foreign Relations Committee and was an architect of a 2009 bill committing $1.5 billion annually to Pakistan, said this month many members of the U.S. Congress are questioning that aid after bin Laden was found sheltering in the country. They say President Asif Ali Zardari’s administration must crack down on insurgent groups that target American forces in Afghanistan.

Terrorism, Floods

Pakistan’s $162 billion economy, sapped by terrorism and floods in 2010, is lagging behind emerging markets including neighbors India and China, which helped lead the global economic rebound from the deepest postwar recession.

President Zardari announced in March a 15 percent surcharge on income tax to counter losses from the nation’s worst monsoon flooding last year, and an increase in import duties to 2.5 percent from 1 percent. The government will also withdraw sales tax exemptions on fertilizer, pesticides and tractors.

The government raised domestic fuel prices as much as 12 percent on May 1, after increasing them 13 percent on April 1, to bring charges in line with international oil prices, according to the Islamabad-based Oil & Gas Regulatory Authority.

“The fuel-subsidy reduction and the tax measure indicate the budget will bring tight fiscal policy,” Saad Khan, an economist at Arif Habib Ltd. in Karachi, said before the decision. “Another reason not to raise rates is the easing in inflation last month.”

Pakistan’s consumer prices rose 13.04 percent in April from a year earlier, after a 13.16 percent gain in March, a Federal Bureau of Statistics report showed on May 3.

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Robust economic growth figures for the eurozone helped shore up stock markets in Europe Friday and gave the euro some respite after a savage sell-off over the previous week.

Eurostat, the EU’s statistics office, said the economy of the 17 countries that use the euro grew by a quarterly rate of 0.8 percent in the first three months of the year. That was more than double the 0.3 percent growth posted in the previous three-month period and ahead of analysts’ expectations for a 0.6 percent increase. The eurozone also grew at double the rate of the U.S.

The outperformance was largely due to another stellar performance from Germany, which posted forecast-busting growth of 1.5 percent during the quarter. France, the eurozone’s second largest economy, enjoyed strong growth of 1 percent and even debt-imperilled Greece saw its economy grow by 0.8 percent, though that was largely due to a rebound from a bigger than anticipated contraction in the previous quarter.

The improving picture was not uniform, though, as Portugal dropped back into recession after shrinking for the second straight quarter. Last month, Portugal became the eurozone’s third member after Greece and Ireland to request a financial bailout from its partners in the eurozone and the International Monetary Fund. Growth figures for Ireland are not yet available.

As a result, Portugal’s main PSI underperformed its peers in Europe, trading only 0.1 percent higher, compared with a 0.4 percent rise in the main Athens index. In the larger markets, Germany’s DAX rose 0.2 percent to 7,496 while the CAC-40 in France rose 0.5 percent to 4,043. The FTSE 100 index of leading British shares was up 0.7 percent tat 5,989.

Meanwhile, the euro was trading 0.4 percent higher at $1.4291, having traded as far as $1.4338 earlier.

The growth figures proved a welcome relief to the euro, which had lost about 8 cents to the dollar this week as investors scaled back expectations of interest rate increases by the European Central Bank and worried about Greece’s debt troubles. Last week, it was near 18-months high above $1.49.

The solid figures also shored up commodities after a recent big sell-off. In the oil markets, the benchmark rate of crude as traded in New York rose 89 cents to $99 pay day loans.86 a barrel.

Friday’s statistics came ahead of a meeting of eurozone finance ministers on Monday, when the bailout of Portugal is expected to be agreed upon. More interest is likely to center on what the finance ministers say about Greece and whether it may need to get another bailout this summer.

“The eurozone authorities appear to be sticking to the ‘kick-the-can-down-the-road’ policy and the question then is how long can Germany and France record growth rates to offset the poor conditions in much of the other half of the euro-zone economy,” said Derek Halpenny, European head of global currency research at The Bank of Tokyo-Mitsubishi UFJ.

Wall Street was poised for a fairly steady opening, though that could hinge on monthly inflation figures _ at the moment, the futures markets are pointing to modest 0.1 percent gains on the Dow and the S&P 500.

The consensus in the markets is that consumer prices rose by a monthly rate of 0.4 percent in April and by half when food and energy costs are stripped out. The inflation figures are key to predictions of when the U.S. Federal Reserve will start raising interest rates again.

Earlier, trading in Asia, trading in Japan was lackluster with the Nikkei 225 slipping 0.7 percent to close at 9,648.77 as the country’s currency continued to gain ground against the dollar, posing yet another concern to earthquake-embattled exporters.

By early afternoon London time, the dollar was down 0.5 percent at 80.62 yen.

Hong Kong’s Hang Seng fared better, closing 0.9 percent higher to 23,276.27, while Australia’s S&P/ASX 200 gained 0.3 percent to 4,711.40.

Mainland Chinese shares also advanced, shrugging off yet another central bank increase in the reserve requirement for banks _ the fifth such increase in 2011. That move came after the government announced inflation was at 5.3 percent in April, with food prices surging 11.5 percent.

The benchmark Shanghai Composite Index rose 1 percent to 2,871.03, while the Shenzhen Composite Index of China’s smaller, second exchange added 0.5 percent to 1,201.37.

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More than 400 Ford workers at the company