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Late Edition August 12 2008 at 01:51 PM Chi-Chu Tschang and Harry Maurer

The Trade Deficit Shrinks

U.S. exports jumped sharply, for their biggest gain in four and a half years, as the nation's trade deficit unexpectedly shrank. The deficit narrowed by 4.1%, to $56.77 billion, in June, down from $59.20 billion in May. Economists had predicted the June deficit would come in at $62.70 billion.

Exports, partly spurred by the weak dollar, have proved one of the strong points of the U.S. economy recently, and will probably contribute to an upward revision in second-quarter growth figures. Exports rose in June by 4%, to a new record, and imports also rose, but only by 1.8%.

Source: Wall Street Journal

Oil Still Sliding

Crude oil futures fell for the third day, partly because Russia announced it was suspending military operations in Georgia. Crude for September delivery tumbled as low as $112.48 in trading on the New York Merc, despite BP's announcement that it would shut down an oil pipeline across Georgia for security reasons. The dollar also continued its rise against the euro and the yen.

Source: Bloomberg

Good News on Crops

Back in June, as floods devastated parts of the Midwest, prices of agricultural commodities soared on the assumption that the harvest would suffer. But now the Agriculture Dept.'s monthly crop estimate says that "ideal" weather since then has boosted expected yields sharply. The corn crop will be the second-largest ever and the soybean crop the fourth-largest, says the USDA. The agency cut its estimates for cash prices for the crops, saying that corn will average $5.40 a bushel, down from a previous estimate of $6, and soybeans will average $12.25, down from $12.75.

Source: Bloomberg

UBS To Split Wealth Management, Investment Bank

Swiss bank UBS AG will split its business into three independent units that would separate investment banking and wealth management, after identifying shortcomings in its operations, it said. The announcement came as the bank posted a worse-than-expected second-quarter loss of around $330 million.

Source: Reuters

Whole Foods' Recall Forces Changes

Whole Foods Market said Monday it would tighten oversight of its suppliers to keep substandard products out of stores, after recalling ground beef that apparently sickened customers in two states. Whole Foods is in damage-control mode after acknowledging that it failed to spot a change made by one of its suppliers of ground beef, Coleman Natural Beef. The government has identified Coleman Natural Beef's slaughterhouse as the source of ground beef that has sickened scores of Americans.

Source: New York Times

The Dollar's Comeback: What Investors Should Know

The slumping U.S. dollar has resulted in the best of times for foreign tourists in the U.S.--and for U.S. outfits that export their goods. It's also meant the worst of times for U.S. consumers' purchasing power. The dollar's sustained deterioration over the past six years, and its plunge in the last year, have been all that and more. And that's made the greenback's recent comeback vs. other major currencies all the more remarkable. Some view the dollar's big bounce over the past week as a sign of growing confidence in U.S. growth prospects, but it may turn out to be nothing more than a tale of two (or more) diverging monetary policies.

Source: BusinessWeek

Two Charged in Multimillion-Dollar Fraud

The owners of a Chicago-based real estate investment firm were arrested Monday on federal fraud charges, and U.S. regulators accused them of conducting a quarter-billion-dollar Ponzi scheme going back as far as 2005. Steven Byers, 46, CEO of WexTrust Capital LLC, and Joseph Shereshevsky, 51, a principal of WexTrust, were taken into custody and charged with conspiracy to commit securities fraud, the Justice Department said. The Securities and Exchange Commission also alleged in a lawsuit that the two men had raised $255 million from about 1,200 people, many of them Orthodox Jews, and misappropriated the money.

Source: Chicago Tribune

Conversation of the Day: India R&D Stronghold

Reader Amit writes: "We have to break the stranglehold the government maintains on education. The stranglehold is destructive not just for the shortages it creates but also because it allows old socialist and communist fogeys to dictate what students learn."

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