Charles Payne: 3 Stocks, Charles' Choice

3 Stocks

Gap Stores (GPS)

Gap Stores saw its net income decline 8% to $0.34 on revenue of $4.1 billion, which is -13% year over year. These are sobering results to be sure, but better than the Wall Street consensus of $0.32 earnings per share. Same-store sales storewide -14% and Old Navy -17% (isn’t this the discount brand). The company is closing 100 stores, but will open 50 new stores -- half outside the United States (I wonder if they’ll get penalized for doing that). Management is proud of the $1.8 billion cash it had in the kitty at the end of the fiscal year.

Kohl's (KSS)

Kohl’s had sales of $5.2 billion, -4.6% year over year, as same store sales decreased 9.1%. Revenues were in line with the Street but earnings of $1.10 beat the consensus of $1.02. Still, management calls the current environment “challenging” because of macro conditions. FY09 guidance sees sales -1% to 4% and same-store sales -5% to 8% while earnings will be $2.00 to $2.30. The Street modeled for $2.40.

Decker's (DECK)

Decker’stook a crushing hit in the aftermarket when it initially reported earnings results that actually beat the Street by $0.10 on revenue that increased 5.6% from the year-ago period. Ugg sales were strong and should continue to enjoy robust demand in FY09 but higher marketing costs and stock compensation expenses (plus I told my wife “no more of those ugly boots”) will sees earnings come in at $7.27 against the consensus of $8.05 billion.

Some Democrats May Fight Back

The slow train wreck continues.

(I swear, I don’t know if its just me, but I can move around in this train wreck in normal speed even though the train is moving at 1/1,000 normal speed. I get up and make a drink, read the newspaper, and read messages on my BlackBerry, but I can’t change the course of history. Moreover, at some point I have to brace for impact.)

And the train wreck not only promises to be devastating, but there is the element of fear associated with waiting for the inevitable. Talk about insult to injury this will eventually be injury to insult. Thursday, the battle against Wall Street took another turn toward entities making loans to students. Considering the huge default rate of these loans, many companies were only able to be in the business because of the fees the government was paying.

Not making headlines Thursday but lurking like a radon on steroids waiting to wipe out the little value left on your home is the cram-down bill that the president has already factored into his budget.

Essentially, mortgages will be lowered to current values as determined by a bankruptcy judge and the bank would have to sallow the difference and the borrower would also be allowed to pay a lower monthly payment. This would force banks to try to accommodate borrowers before it reached that stage. This is a crazy idea because it’s going to hurt all home buyers. There is no way a bank or other lending institutions would make loans in the future without adding in this risk.

This is a Pandora’s Box that nobody wants to open. It wasn’t too long ago that liberal democrats were beefing about cram-downs on pension obligations. The great news is this wholesale onslaught on business may have finally awakened the cavalry. The reason the provision wasn’t crammed down our throats yesterday was a concerned group of law makers know as the New Democrat Coalition.

Led by Rep Ellen Tauscher of California the group believes the plan goes too far (what’s next…keep Guantanamo open and ship banking executives there) and could have unintended consequences. According to the Web site this group of moderate, pro-growth lawmakers has 58 members (including an Adam Smith, naturally) and they are pushing for a more reasonable plan that might only include subprime mortgages.

Who knows -- throw in the co-called Blue Dog democrats and maybe there will be some moderation in this otherwise frontal assault on capitalism and success. If the plan isn’t modified at some point experts say it will add an extra 2% onto future mortgage rates. It’s not the best way to turn housing around especially coupled with lower mortgage deductions for the would-be wealthy ($250,000) and no incentives for first time home buyers making more than $75,000 a year.

Talk about moral dilemma. This is scary stuff. I’m really surprised the market didn't come down even more.

That being said, voting across party lines is extremely high and there is incredible pressure on any democrat to step out of the shadow of the White House. I’m against most of the stuff coming out of the White House but what I dislike more than anything else is unevenness when it comes to being fair.

There are two sets of standards that not only promote bad behavior but discourage anyone trying dreaming of moving to the next level. Interestingly that means the president must believe rich people will still make chartable contributions even with smaller deductions.

Doesn’t that imply these folks have hearts and really care? Hmm…doesn’t that mean less fortunate people benefit from those that have been lucky enough (and committed enough and hard working enough and relentless enough and sacrificed enough and never gave up enough) to climb the ladder of success? Gosh, why are these people vilified and ridiculed?


Macy’s to cut 7,000 jobs as consumer spending falls
Net Income Sliced in Half for J.C. Penney, Lowe’s

Market Winners & Losers: Interpublic, Citigroup

Another down day -- and what’s more, a down week and a down month for the markets. The major indices were all trading at levels unseen in years, ending the day down 1.7% on average. With breaking news from Citi and a dismal GDPreport, the last day market session of February was one of the more memorable sessions in recent history.

Here are Friday’s winners and losers:

Winners

Interpublic Group of Cos. (IPG)

The advertising company's better-than-expected earnings results helped prod it away from its yearly lows. Shares gained 25 cents, or 7%, to end the week at $3.81.

CIT Group Inc. (CIT)

News of a deal with the Wellman Group helped the stock surge 7% to end the week. The stock closed the session at $2.45, a gain of 16 cents.

Public Storage (PSA)

Earnings are up and so is the stock. Shares moved up $3.05, or 5.8%, to finish trading at $55.48.

Tyson Foods Inc. (TSN)

The company reported a quarterly dividend of four cents, helping the stock move 5.3% to the green Friday. It closed at $8.43, up 42 cents.

McCormick & Co. Inc. (MKC)

A little seasoning for the chicken, it seems. McCormick reaffirmed its guidance for ’09, causing shares to trade up all day. The stock rose 5%, or $1.50, to close at $31.35.

Losers

Citigroup Inc. (C)

Nothing is going right for the U.S. bank -- and I mean U.S. bank -- as We the People now could own as much as 36% of it. The news sent investors running, causing shares to lose 96 cents, or 39%, on the day. The stock ended the last day of the week at $1.50.

Huntington Bancshares Inc. (HBAN)

Huntington’s free ride has come to an end -- the stock spent much of the week banking on the stress test, but reality set in today, and the regionals dropped like a rock. The stock closed at $1.46, a loss of 52 cents, or 26%.

Bank of America Corp. (BAC)

The latest government intervention moves hampered the stock. Shares dropped $1.37, or 26%, on Friday to close at $3.95.

Principal Financial Group Inc. (PFG)

A number of downgrades hit the insurance sector on Friday, with PFG coming out as the big loser. The stock fell $2.60, or 24.6%, to close at $7.99.

MetLife Inc. (MET)

It may be rough times ahead for the insurer, as uncertainty about possible government intervention in the sector is keeping investors on edge. MET last traded at $18.46, a loss of $5.53, or 23%.


GM, Chrysler situations smack of bankruptcy
Market Winners & Losers: New York Times, Citigroup
Super Bowl ads reflect tough times

Fannie Mae Seeks $15.2B After $25.2B 4Q Loss

WASHINGTON--Mortgage bridging finance company Fannie Mae (FNM)said Thursday it needs $15.2 billion in government aid to make up for losses from the slumping U.S. housing market.

The mortgage finance company, seized by federal regulators in September, posted a loss of $25.2 billion, or $4.47 per share, in the fourth quarter.That compares with a loss of $3.6 billion, or $3.80 a share, in the year-ago period.

Fannie's net worth -- the value of its assets minus the value of its liabilities -- fell below zero at the end of the quarter, forcing the company to request funding from the government for the first time.

The Treasury Department, after seizing control of Fannie Mae and sibling company Freddie Mac (FRE) last fall, pledged up to $100 billion in aid for each company, the largest buyers and backers of U.S. home loans.

Last week, the Obama administration expanded that promise to $200 billion each -- money that's separate from the $700 billion financial industry rescue fund.

Treasury Secretary Timothy Geithner said last week that the beefed-up backing is "not a judgment about the expected losses ahead. It's just a way to make sure people understand that they will be able to play this role going forward."

Fannie Mae said its fourth-quarter loss was driven by $12 billion in credit losses due to declining housing market conditions, $12.3 billion in losses on derivatives and $4.6 billion in writedowns of the value of its mortgage-backed securities.

"We expect economic conditions and falling home prices to continue to negatively affect our credit performance in 2009, which will cause our credit losses to increase," Fannie Mae said in a Securities and Exchange Commission filing.

If the recession deepens, the company said, "more borrowers will be unable to make their monthly mortgage payments, resulting in increased delinquencies and defaults, sharper declines in home prices and higher credit losses."

Sibling company Freddie Mac has said it's likely to require as much as $35 billion in federal support on top of the $13.8 billion it received last year.

The Obama administration also said earlier this month it will continue purchasing mortgage-backed securities from them and would allow each company to hold an additional $50 billion in mortgage securities as investments, expanding their combined portfolios to a total of $1.8 trillion.

Taken together, Fannie and Freddie own or guarantee almost 31 million home loans worth about $5.5 trillion. That's more than half of all U.S home mortgages.


Trifecta of Bad News Slams Motorola Shares
Freddie, Fannie extend eviction freeze a month

Market Winners & Losers: AFLAC, Sallie Mae

The major indices may have had a rousing Thursday morning, but they lost their gains in a late-day selloff. The biggest news of the day was Obama’s rollout of a $3.6 trillion budget that has the financials and banking sector wondering who will survive the coming year.

Here are today’s winners and losers:

Winners

Huntington Bancshares Inc. (HBAN)
HBAN continued to distance itself from its lows in the hopes that it will benefit from the proposed stress tests. Shares rose 19.3%, or 32 cents, to finish the session at $1.98.

SunTrust Banks Inc. (STI)
Another bank looking to benefit from the stress test, SunTrust looks to raises its CEO pay with its chunk of government cheese. The stock rose 18.8% on the day, ending at $12.95 – a gain of $2.05 a share.

Fifth Third Bancorp (FITB)
While it had looked like the end was near for the regional it, too, could benefit from the government’s latest action. The stock gained 18%, or 35 cents a share, on the day, ending the session at $2.29.

AFLAC Inc. (AFL)
The famous AFLAC duck won’t yet become soup after U.K. government’s moves to support RBS bolstered confidence in AFLAC’s investments in hybrid securities. The stock gained 17.7%, or $2.85, on the day, closing at $18.96.

U.S. Bancorp (USB)
Another bank riding the wave of optimism, the stock gained 16.9% during trading Thursday. The stock closed at $14.91, a gain of $2.15 on the day.

Losers

SLM Corp. (SLM)
Sallie Mae got kicked to the curb Thursday by President Obama as he looks to put a stop to privatized student lending. The stock closed down 30.9% at $5.80, a loss of $2.59 on the day.

Integrys Energy Group Inc. (TEG)
Oil went up and TEG went down, falling to 26.7% to hit a new 52-week low. The stock lost $9.77 to close the session at $26.85.

Humana Inc. (HUM)
The health insurers are not happy with the government’s budget plans. Humana shares closed Thursday down 19.5% at $23.64, a loss of $5.72.

Developers Diversified Realty Corp. (DDR)
According to Barron’s there are rumors floating around that a number of REITS could be removed from the S&P 500 – and DDR would be among them. The stock dropped 17.3% to $2.87 a share, a loss of 60 cents on the day.

SUPERVALU Inc. (SVU)
The grocer took a beating today, losing 15.4% to settle at $15.19 – a loss of $2.76 on the day.


Market Winners & Losers: Lennar, AFLAC
Large banks take beating on Wall Street
Market Winners & Losers: Symantec, Textron

Wall Street Can't Catch a Break From the President

Missed tonight's Cavuto ? Catch "The Deal" right here on FOXBusiness.com

Did Wall Street sell off because Wall Street’s just ticked off?

Not at the economy that's hurting.

But the president who can't stop attacking. Them!

Here's the deal:

The president hates Wall Street.

Never liked them. Never will.

You're big in business; he's made it his business to bash you.

Don't believe me?

Believe this:

I could go on. Because the president did go on.

Part of me thinks he's subliminally telling the American people...ignore these selloffs. These guys just hate me.

But I’m looking out for you.

Now, I’m not saying Wall Street is stupid enough to carry a vendetta and hurt itself when it finds itself feeling hurt.

But I am saying, why show faith in the government when the guy who heads it clearly has zero faith in you?

In fact, he attacks you.

Rips you.

Condemns you.

Your pay, your lifestyle.

Your very being.

I'm not saying Wall Street’s had it with this president.

Just that it can't seem to catch a break from this president.

A president who said he wouldn't rescue banks without accountability -- and that might tick off Wall Street.

Ignoring the very fact that Wall Street sold off "because" there was no accountability in those rescues.

Barack Obama all but telling Wall Street to drop dead.

It's no wonder a bummed out Wall Street is just looking at stocks:

And telling 'em to just drop.


Dell’s tax incentives may change with job cuts
Markets Have Final Word on Stimulus
In a world of information, listening is a vital tool
This is Obama’s Make-or-Break Moment

Where Our Billions Are Really Going

Where’s all our money going? It’s a simple question, but tracking money’s not a simple thing. For all the trillions that the Treasury and the Federal Reserve have been putting out there, our leaders seem pretty sanguine about how that money’s being spent.

Here’s an exchange with Democratic Senator Jon Tester of Montana and Fed Chairman Ben Bernanke on Tuesday about money from the Troubled Asset Relief Program.

Lester: "Somebody pointed out to me in the banking industry that the banks are not loaning this money out because they are using it to buy treasury notes with, which is an interesting concept, could you give me any insight into that…is that what's occurring? Is that what you're doing with the TARP dollars?

Bernanke: "Senator, the direct impact of the TARP dollars is to expand the capital bases of these companies which allows them to do all the activities that they do including lending."

So banks are using the billions that they get from TARP to buy U.S. Treasuries, which are issued by the Department of Treasury to pay for an $800 billion stimulus plan. Seems a bit circular, doesn’t it?

Bottom line is, our money’s being bled out of this Ponzi scheme in buckets. TARP monitor Elizabeth Warren found that $78 billion was lost from the first TARP program…That’s enough money to wipe out the fiscal deficits of California, New York, Florida, New Jersey and Connecticut, with $3 billion left over.

Meanwhile, lobbyists are swarming over D.C. right now in record numbers, trying to get rich quick off of your money.

Is there an Elizabeth Warren around to make sure that the extra $650 million spent on digital television doesn’t go to some friend or relative of a politician? Well, we’ll be watching.

“Scoreboard” considers it our duty and privilege to be your eyes to help keep track of your money. That’s why FOX Business sued the Treasury and the Fed for TARP info.

And that’s why we’re staying on top of the lobbying business in D.C. We really are keeping score for you.


GM, Chrysler situations smack of bankruptcy
Government’s proposal for banks comes today
D.C. Bigwigs Should Point Fingers at Selves

This is Obama's Make-or-Break Moment

Missed tonight's Cavuto ? Catch "The Deal" right here on FOXBusiness.com

It's not a State of the Union, but it could very well decide the state of his presidency.

Here's the deal:

This is big.

Very big.

Likely audience to rival his inauguration big.

That big.

That important.

And Barack Obama knows it.

Because anything he has said up to now hasn't worked.

It's not entirely his fault.

Markets are in a foul mood.

He gets his huge stimulus.

They respond with a huge sell off.

He proposes a daring financial rescue.

They respond with an equally daring dive.

He talks up fiscal responsibility.

They respond with a not so responsible freefall.

Such is life in market real time.

When what you say instantly registers with what these folks buy and sell.

And more often than not, they have opted to sell.

On every new initiative, every new appointment, every new promise.

Same old story.

It's a good thing the president is speaking tonight, long after markets have closed here.

Maybe more time for them to assess what he's up to here.

The president says he doesn't pay attention to markets.

Good thing.

But longer term, bad thing.

No less than Bill Clinton realized he had to win over their confidence.

As Bob Rubin told him...Win over Wall Street, you've got Main Street.

Well...Wall Street ain't impressed.

Tonight's your chance to try again...because Main Street's watching, too.


Charles Payne: 3 Stocks, Charles’ Choice
Large banks take beating on Wall Street
Markets Have Final Word on Stimulus

Dow Jumps 236 as Six-Day Slide Ends

After six days of brutal selloffs sent the markets to their weakest levels in twelve years, Wall Street finally received a reprieve on Tuesday as the Dow soared 236 points, its biggest one-day rally in more than a month.

Today’s Markets

The Dow Jones Industrial Average rose 236.16 points, or 3.32%, to 7350.94, the S&P 500 added 29.81 points, or 4.01%, to 773.14 and the Nasdaq Composite picked up 54.11 points, or 3.90%, to 1441.83. The consumer-friendly FOX 50 gained 20.51 points, or 3.69%, to 576.88.

Tuesday's rally wasn't driven by a single headline, rather market participants said it was long overdue because the markets were "severely oversold." The Dow had lost more than 800 points in just over a week and the S&P 500 was stuck in the midst of its longest losing streak since the darkest days of October.

“Despite the wobbly legs that the day started with, I think the bulls finally decided they had enough of the bears controlling the action for the last week and a half,” said Michael James, senior equity trader at Wedbush Morgan Securities. There weren’t any “specific points to justify the rally, which is often times when you get bear market rallies.”

Traders may have been less apprehensive to bargain hunt on Tuesday as there were several relatively positive pieces of news that offered a break from a seemingly never-ending flow of gloomy stories. For example, Federal Reserve Chairman BenBernanke said he sees the year-long recession ending in 2009 and no need to nationalize banks, JPMorgan Chase (JPM) said it sees earnings meeting expectations and Home Depot (HD), Nordstrom (JWN) and Macy’s (M) all reported better-than-expected quarterly results.

'Overdue' Rally

Tuesday's mini-rally does little to ease the pain on Wall Street as the Dow had plummeted 1,150 points since Feb 9. amid regulatory and economic uncertainty. The index's best session since Jan. 21 came a day after the Dow and S&P 500 plunged below their bear market lows to their worst levels since 1997.

“In general, this market is overdue for an up day and is finally getting one today,” said Art Hogan, chief market strategist at Jefferies & Co. “We’ve got a lot of ground to recover before we can call this a sustained rally. But sometimes one day in a row is a welcome change.”

The biggest winners on the Dow were General Motors (GM), Bank of America (BAC) and Citigroup (C) -- three of the index's worst performing stocks over the past year. Microsoft (MSFT) was the only blue-chip stock that didn't join in the rally.

The Nasdaq Composite rose even further than the Dow as tech stock rallied nearly 3%. Yahoo! (YHOO) and Research in Motion (RIMM) were two of the biggest percentage gainers on the Nasdaq 100, canceling out steep losses for Foster Wheeler (FWLT).

Bernanke in Focus

Bernanke appeared to soothe the rattled financial sector as the Fed chief said he doesn’t see the need to formally nationalize banks. He also said banks won’t be wholly or majority-owned by the government and said 2010 could be a turnaround year for the U.S. economy.

"If actions taken by the administration, the Congress and the Federal Reserve are successful in restoring some measure of financial stability -- and only if that is the case, in my view -- there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery," Bernanke said.

Wall Street will keep its attention squarely on Washington as many traders hope for a more optimistic message from President Barack Obama when he addresses a joint session of Congress Tuesday evening.

“I watched Bernanke on TV and we finally had a Washington official with a smile on his face. He seemed sort of relaxed,” NYSE trader Ted Weisberg of Seaport Securities told FOX Business. “I don’t know if that’s the reason why the market is doing better but perhaps the positive message will start to come out of Washington.”

Financials Bounce

Banking stocks were the biggest winners on Tuesday, surging 12% as a sector. Individual names like Goldman Sachs (GS) and State Street (STT) rose even further.

The rally for financials comes after the markets received rare positive news from JPMorgan, which said it sees first-quarter earnings in-line with expectations. Shareholders shrugged off the bank's decision to slash its dividend by 87% to 5 cents per share in an effort to save $5 billion annually and position itself for a steeper recession.

The markets didn't flinch at the Conference Board's latest bleak consumer confidence report, which showed Americans' confidence deteriorated in February. The group's confidence index fell to an all-time low of 25.0, well below the previous record low of 37.7 in December. Economists had been bracing for a more modest decline to 35.5.

In the commodity markets, crude oil futures enjoyed a late-day rally to reach the highest level in nearly three weeks. The price of a barrel of crude settled at $39.96, up $1.52 on the day. Gold prices continued to move away from record territory, ending at $969.50 per ounce, down $25.50 -- the biggest one-day loss since Jan. 12.

Corporate Movers

American International Group (AIG) is trying to revamp its $150 billion government rescue package by repaying a portion of the loan with a combination of debt, equity and businesses ahead of an expected fourth-quarter loss of $60 billion, The Wall Street Journal reported. The move, which would be the third version of the rescue for AIG, is aimed at safeguarding the insurer’s credit ratings.

Microsoft (MSFT) CEO Steve Ballmer said he still wants to team up with Yahoo! (YHOO) to take on Google (GOOG), though he said pooling resources does not mean another takeover attempt. Ballmer also said he sees the economy remaining relatively weak for a relatively long period of time.

Home Depot (HD) beat the Street with an adjusted-profit of 19 cents per share but the largest U.S. home improvement retailer posted weaker-than-expected revenue and warned earnings will decline by about 7% in the fiscal year.

Nordstrom (JWN) saw its shares surge a day after the upscale department store operator exceeded estimates with a profit of 31 cents per share. Nordstrom also sees 2009 earnings potentially exceeding the Street's view.

News Corp. (NWS) President and COO Peter Chernin is leaving the media giant in July after failing to reach a deal on a new contract and nearly two decades with the company. News Corp., which also owns the Journal and FOX Business, did not name a successor but said CEO Rupert Murdoch will take over some of Chernin’s duties.

Bank of America (BAC) former exec John Thain was ordered by a judge to give more testimony about $3.6 billion of bonuses given to Merrill Lynch execs last year while he was the bank’s CEO.

Macy's (M) topped estimates by reporting a fourth-quarter profit of $1.06 per share on $7.93 billion in sales. The retailer also backed its sales and earnings outlook but warned it sees same-store sales falling up to 8% in 2009.

Target (TGT) suffered a 41% plunge in profit to 81 cents per share, two cents shy of what analysts were looking for. The retailer’s sales fell 1.6% during the quarter to $19.56 billion.

Google's (GOOG) email service, Gmail, suffered an outage earlyTuesday that left users without access to their email accounts. Google said the problem has been resolved but did not know what caused the outage.

Office Depot (ODP) plunged to fresh 52-week lows after the office supplies retailer posted a weaker-than-expected fourth-quarter loss of 7 cents per share as sales tumbled 15% to $3.3 billion.

Heinz (HNZ) posted a better-than-expected fiscal third-quarter profit of 76 cents a share but the ketchup maker’s revenue fell 7.5% to $2.41 billion, missing estimates due to the climb in the U.S. dollar.

Data Dump

S&P/Case-Shiller said U.S. home prices fell by a record 18.2% in the fourth quarter and an all-time high 18.5% in December from the year before. For the year, home prices tumbled by 19%, the second straight year of declines.

Global Markets

European markets tumbled again as the Dow Jones Euro Stoxx 50 extended its losing streak to seven days, falling 0.71% to its lowest level since March 2003. London’s FTSE 100 sank 0.89% to 3816.44 and Germany’s DAX fell 1.03% to 3895.75, its lowest level since October 2004.

Asian markets sank overnight. Tokyo's Nikkei fell 1.46% to 7268.56, while Hong Kong's Hang Seng fell 2.86% to 12798.52 and Australia's ASX 200 fell 0.58% to 3331.60.


Large banks take beating on Wall Street
Gaylord expects slow start to ‘09
Market Winners & Losers: Symantec, Textron

Recession Wipes Away Decade of Gains

Recession and financial fears sent the Dow and S&P 500 on Monday to their worst closing levels since 1997 as the worst economic crisis since the Great Depression has now erased more than a decade's worth of gains on Wall Street.

The latest bleeding on Wall Street comes as enthusiasm over a new rescue of Citigroup was quickly drowned out by worries about when the economy will recover and what regulators will do to fix the shaky financial system.

Today’s Markets

The Dow Jones Industrial Average fell 250.89 points, or 3.41%, to 7114.78, the S&P 500 lost 26.72 points, or 3.47%, to 743.33 and the Nasdaq Composite dropped 53.51 points, or 3.71%, to 1387.72. The consumer-friendly FOX 50 sank 18.04 points, or 3.14%, to 556.37.

"Corporate earnings show no signs of turning around, the economy shows no signs of turning around and the consumer shows no signs of turning around. Absent those factors, what reason would stocks have for putting together a sustainable rally?" said Dan Greenhaus, equity analyst at Miller Tabak.

The markets have seen the exact opposite of a sustainable rally as the Dow has plummeted 1,150 points since Feb. 9, the day before the Treasury Department unveiled a financial rescue plan that many have said lacked details about how the government will help banks get rid of their toxic assets. Fears that the government will need to nationalize the most troubled banks have also slammed the markets.

“Without any idea about which course [regulators] are going to take, people are not stepping in. They are moving without a compass,” said Frank Davis, director of sales and trading at LEK Securities. “We’re going nowhere. We are slipping continuously until we get some clarity.”

The markets initially rallied Monday morning after The Wall Street Journal reported the government is in talks to stabilize Citigroup (C) by increasing its stake to up to 40%. While Citi and other financials rose sharply, tech and material stocks like U.S. Steel (X) plummeted to new depths by the time the dust settled.

“The market is just so skeptical of anything the government does given past performances,” said Ryan Detrick, equity analyst at Schaeffer’s Investment Research.

Back to 1997

The downturn on Wall Street hit another landmark on Monday as the S&P 500 set a new bear market closing low, ending at the lowest level since April 1997. The S&P 500 did not breach its November 21 intraday low, though it hovers just above it. The Dow, which last week suffered its worst weekly losses since October, ended at its lowest closing level since May 1997.

“We are in a real critical level right now,” NYSE trader Ted Weisberg of Seaport Securities told FOX Business. “It’s hard to believe that we are at these levels but here we are. Technically, if the market can’t hold these levels, we are going into uncharted territory.”

Market participants and observers said given the fact the Dow hasn't posted a meaningful rally since Feb. 6, it could be due for a short-term bounce in the coming days.

Nearly all 30 components of the Dow ended in negative territory, led by DuPont (DD) and aluminum titan Alcoa (AA). Citi and Bank of America (BAC), which had ended in the red in each of the prior six sessions, posted the index's biggest percentage gains but closed off their best levels.

The Nasdaq Composite, which has yet to breach its November lows, saw even heavier selling than the broader market as tech heavyweights like Apple (AAPL) and Dell (DELL) tumbled.

Without any major economic or earnings reports on the agenda, Wall Street’s focus on Monday remained squarely on the tumultuous financial sector and the government’s efforts to fix it.

Financials in Focus

Citi ended sharply higher as the Journal report indicates the government will avoid fully nationalizing the embattled bank by converting preferred shares it currently owns to common stock. The move would be the third rescue for Citi, which tumbled to 18-year lows last week, and would significantly dilute current common stock.

The potential Citigroup rescue would be aimed at allowing the bank’s tangible common equity, a measure of bank health, to meet more stringent requirements, the Journal reported. Citi execs hope the government will increase its stake to 25%, not 40%, the newspaper reported.

(Click here to read "Government Ups the Ante on Citigroup")

The Treasury Department wouldn’t confirm the talks but regulators released a statement Monday saying the U.S. “stands firmly behind the banking system during this period of financial strain." Regulators also said the new capital assistance program will begin on Wednesday and that new and previous capital injections can be converted to common equity.

Commodities were also hurt by the economic fears as crude oil gave back an early rally by settling at $38.44 per barrel, down $1.59 on the day. Gold prices edged away from all-time highs, falling $7.20 per ounce to end at $995.00.

Corporate Movers

General Motors (GM) and privately held Chrysler could receive up to $40 billion in bankruptcy financing, the Journal reported. The Treasury Department is reportedly scrambling to line up the largest bankruptcy loan ever in case the two auto makers need to file for Chapter 11 restructuring.

Ford (F) surged after the auto maker reached a tentative deal with the United Auto Workers union on how to fund a trust to pay retiree health care expenses.

Bank of America (BAC) is “obstructing and interfering” with New York Attorney General Andrew Cuomo’s probe into $4 billion of Merrill Lynch bonuses, Cuomo alleged in new court documents. Cuomo filed a motion to compel former Merrill CEO John Thain to discuss the bonuses.

Campbell Soup (CPB) beat the Street with a profit of 65 cents per share and the world’s largest soup maker sees its 2009 earnings at the high end of its previous guidance.

Philadelphia Newspapers LLC, the publisher of The Philadelphia Inquirer and Daily News , filed for Chapter 11 bankruptcy protection on Sunday, citing a “rare trifecta” of falling revenue, a steep recession and its ill-equipped debt structure. Journal Register Co., which publishes 20 daily papers, also filed for Chapter 11 over the weekend.

U.S. Airways (LCC) is reinstating its complimentary non-alcoholic beverage service starting March 1 but the airline said it still sees generating up to $500 million in 2009 from a la carte items.

Global Markets

European markets gave back early gains to end solidly in the red. TheDow Jones Euro Stoxx 50, which tracks the 50 largest companies in Europe, fell 1%, its sixth straight decline, to 2038.90. London's FTSE 100 fell 0.99% to 3850.73 and Germany's DAX lost 1.95% to 3936.45.

In Asia, Tokyo's Nikkei 225 closed down 0.54% to 7376.16 while Hong Kong's Hang Seng jumped 3.75% to 13175.10. Australia's ASX 200 fell 1.5% to 3351.20.


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As economy falls, more people put money away in savings

News Corp.'s Chernin Leaving Company

News Corp. (NWS) President Peter Chernin is leaving the company, sources told The Wall Street Journal and The Los Angeles Times on Monday.

Chernin’s contract with the company was to expire on June 30, and he and News Corp. Chairman Rupert Murdoch had been negotiating terms, but were apparently unable to reach an agreement.

Chernin, 57, runs News Corp.’s television and film production businesses in Los Angeles, one of the largest within the company. News Corp. also owns FOXBusiness.com.

An announcement about Mr. Chernin’s departure is expected later Monday, according to people familiar with the matter. A News Corp. spokeswoman did not immediately return a call seeking comment.

One of Chernin’s last jobs at News Corp. earlier this month was reporting the media giant’s previous quarter earnings, a period in which News Corp. lost $6.4 billion, most of due to asset writedowns.

Analysts had predicted he might leave.

“While Chernin has not signaled his intent, we fear the longer time goes by, the less likely he is to renew his contract,” wrote Pali Research analyst Richard Greenfield in a recent report.

Greenfield said Chernin’s departure could foreshadow other shifts in leadership positions at News Corp.

The company’s stock has fallen nearly 70% in the past year.

News Corp. is the parent company of FOXBusiness.com.


Market Winners & Losers: Lennar, AFLAC
Large banks take beating on Wall Street

Markets Have Final Word on Stimulus

Missed tonight's Cavuto ? Catch "The Deal" right here on FOXBusiness.com

Will stimulus work?

The markets have decided.

No. It will not.

Here's the deal:

It stinks.

It ain't going to do diddly.

It won't stimulate.

Or rescue.

Bail out.

Or remotely figure out how to make things better.

It'll likely make things worse.

That's not me saying that -- judging by stocks, that's the markets saying that.

The Dow tumbling to a fresh new bear market low...

Since stimulus was first approved...the Dow is off...nearly 500 points.

And to prove this is a bipartisan attack on government largesse...Consider this:

Since the 700 billion dollar financial rescue was first proposed under the "Bush" administration way back last September...remember that one???

Well, since then the Dow has lost more than 4,000 points.

Now, markets aren't always right.

But they are always selfish.

Looking out for their own interests and their own financial interests...Which because so many of us are invested in them, become "our" interests...So they have selfishly concluded there's nothing for ourselves here.

For maybe any of us here.

Bill Clinton learned early on it was important to win over Wall Street in order to win over Main Street.

Barack Obama seems to be doing things in reverse...Potentially forgetting, these days...Wall Street "is" Main Street.

And neither seems impressed.


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Large banks take beating on Wall Street
Government’s proposal for banks comes today
More Drama for Obama

Net Income Sliced in Half for J.C. Penney, Lowe's

J.C. Penney and Lowe’s made headlines on Friday with dismal fourth-quarter earnings results and bleak forecasts that underscored just how much the nation’s retail sector is feeling the blow of the economic downturn.

J.C. Penney Co. (JCP)

The department store chain saw its profit plummet more than 50% in the fourth quarter as consumers held onto their wallets in what was a markedly less cheery holiday season for retailers. The company also issued a first-quarter forecast weaker than what analysts were predicting.

For the three months ended Jan. 31, the Plano, Texas-based retailer reported a net income of $211 million, or 95 cents a share, compared with a net income of $430 million, or $1.93 a share, during the same period a year ago.

Sales for the quarter came in at $5.76 billion -- a 9.8% drop from $6.39 billion a year earlier. J.C. Penney’s same-store sales, or sales in stores opened at least a year, fell 10.8% despite moves to battle light customer traffic.

The results, although grim, beat Thomson Reuters analysts’ per-share estimates of 92 cents and matched in revenue.

"Throughout the year, we took steps to significantly reduce our inventories and operating expenses in order to withstand the impact of the economic conditions. At the same time, we stepped up the style we offer and focused on effectively communicating the newness, excitement and value in our merchandise,” said J.C. Penney Chairman and CEO Myron E. Ullman III in a statement.

The company is projecting a first-quarter loss of 20 cents to 30 cents. Analysts polled by Thomson Reuters were expecting a loss of 19 cents, on average.

The retailer also said it would hold its annual meeting in New York on April 22 as opposed to in Plano, Texas, given the fact that many firms’ travel budgets have been snipped.

Lowe’s Cos. (LOW)

The nation’s No. 2 home-improvement chain posted worse-than-expected fourth-quarter earnings results and issued a full-year forecast that also fell short of Wall Street’s estimates.

For the three months ended Jan. 30, the Mooresville, N.C.-based retailer said it earned $162 million, or 11 cents a share -- a 60% decline from the $408 million, or 28 cents a share, it earned during the same period a year earlier.

The company said sales fell 4% to $9.98 billion and same-store sales fell 9.9%. Analysts polled by Thomson Reuters were expecting a profit of 12 cents per share on sales of nearly $10.1 billion.

"The economic pressures on consumers intensified in the fourth quarter, resulting in a further decline in consumer confidence and dramatic reductions in consumer spending," said Lowe’s Chairman and CEO Robert A. Niblock in a statement. "As a result, our comparable store sales for the quarter remained weak and fell at the low end of our expectations.”

The company said the “extreme promotional environment” driven by competition and cutbacks in consumer spending led the company to take more markdowns than expected, reducing its inventory, but cutting into its bottom line. The company also said it has taken steps to adjust its staffing needs in response to the “slowing” retail environment.

Going forward, the company said it expects full-year earnings of $1.04 to $1.20 a share -- a drop from the $1.27 analysts were expecting. The company said its revenue could decline as much as 2% or increase as much as 2%, and predicts same-store sales will slide between 4% and 8% for the year.

The company said its first-quarter earnings will fall between 23 and 27 cents a share, compared with analysts’ estimates of 32 cents a share. Revenue for the quarter is expected to decline as much as 3% or increase by as much as 1%.


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Market Winners & Losers: New York Times, Citigroup

Sen. Dodd’s comments that nationalizing the nation’s private banks is a possibility sent the financials plummeting and the market in a nosedive for most of Friday. The markets recovered in the late afternoon after the White House offered some reassuring words. The major indices still settled 0.9% lower on average.

Here are Friday’s winners and losers:

Winners

Huntington Bancshares Inc. (HBAN)
HBAN opened at a 52-week low but ended the day 32% higher as the regional bank began its round of proposed layoffs. Shares last traded at $1.36, a gain of 33 cents on the day.

New York Times Co. (NYT)
A day after announcing the suspension of its dividend and hitting a new 52-week low, NYT surged 16%. The stock closed at $4.07, a gain of 56 cents on the day.

KeyCorp (KEY)
KeyCorp was quite the volatile stock Friday, setting a new 52-week low during trading but recouping its losses to end the day at $6.07, a gain of 71 cents, or 13.3%.

Intuit Inc. (INTU)
The software company bounced off its yearly lows with the announcement of better-than-expected second-quarter results. Shares of INTU ended Friday at $23.99, a gain of $2.72, or 12.8% on the day.

HCP Inc. (HCP)
The stock saw both red and green over the past week but came out one of the winners among the REITs. HCP finished the session at $20.16, a gain of $2.01, or 11.1% on the day.

Losers

Citigroup Inc. (C)
‘New lows’ seems like a bit of understatement – Citi took quite the beating on Friday as nationalization fears swept Wall Street. Shares of Citi closed down 22.3% to finish Friday at $1.95, a loss of 56 cents.

Fifth Third Bancorp (FITB)
This regional wasn’t able to tough it out today, setting a new 52-week low as it closed down 14.9% on the day. The stock settled at $1.03, a loss of 18 cents.

Dynegy Inc. (DYN)
It was a volatile day for oil as it crept towards $40 a barrel only to finish down for the third day out of four. The stock set a new 52-week low to close down at $1.28 a share, a loss of 14.7%, or 22 cents.

Moody’s Corp. (MCO)
The credit-ratings services firm felt the burn as it dropped 13.2% on Friday. It last traded at $19.16 down $2.91.

Tesoro Corp. (TSO)
Another refiner closing down to end the week, shares of TSO dropped 12.8% as oil prices ended lower. The stock last traded at $14.13, down $2.07 on the day.


Market Winners & Losers: Lennar, AFLAC
GM, Chrysler situations smack of bankruptcy
Market Winners & Losers: Symantec, Textron

FOX Business Wins FOIA Lawsuit Against Treasury

FOX Business Network has won a victory against the Treasury Department in its Freedom of Information Act request for details about the government’s bailout plan.

Judge Richard J. Holwell of the U.S. District Court for the Southern District of New York said in a decision Friday that the government is directed to comply with FOX Business’s request under the FOIA “within 30 days and to produce a Vaughn index with 45 days.”

That means Treasury must comply with FOX Business’s request by Monday, March 23, and must produce a Vaughn index by Monday, April 6.

A Vaughn index details which documents have been withheld and why.

FOX Business sued Treasury on Dec. 18 over failure to provide information on the bailout funds or respond to FBN’s expedited requests filed under the FOIA.

The initial request, filed on Nov. 25, sought actual data on the use of the bailout funds for American International Group (AIG) and the Bank of New York Mellon (BK), and an additional request, filed on Dec. 1, sought similar data on the bailout funds for Citigroup (C).

FBN asked the Treasury Department to identify, among other issues, the troubled assets purchased, any collateral extended, and any restrictions placed on these financial institutions for their participation in this program.

The FOIA complaint was filed by FOX News Network, LLC, as owner of FBN. Both FOX Business and FOX News Network are owned by News Corp. (NWSA).

FOX Business Handed Victory in Treasury FOIA

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FOX Business Handed Victory in Treasury FOIA

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Citigroup Denies Nationalization Talks

NEW YORK--Citigroup Inc (C) is not having conversations with the U.S. government about nationalization, two people close to the bank said on Friday. The U.S. Treasury has not disclosed much more to Citigroup
than it has to the broader public about its plans for the banking sector, the people said.

Rumors of nationalization hammered U.S. bank shares on Friday, with Citigroup among the hardest hit -- its shares fell 19.5%on Friday morning to $2.03, and traded as low as $1.94.


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Large banks take beating on Wall Street
Government’s proposal for banks comes today

Madoff Victims: Don't Get Caught in Tax-Filing Mess

Calling all taxpayers affected by the Bernie Madoff Ponzi scheme!

A few weeks ago we detailed the steps you should take to file your 2008 tax return this April. Because unfortunately, you still have to file something with the Internal Revenue Service.

At that time, we were told that Irving H. Picard, the court appointed trustee of the Bernard L. Madoff Investment Securities [BLMIS], said he would issue Form 1099s to all clients who received a 2008 distribution.

Form 1099 is the tax form that reports any distributions, interest and dividends that you received from the fund in 2008. Technically, whatever is reported on that form is taxable income to you and must be then reported on your 2008 Form 1040.

Well apparently Picard changed his mind.

In a recent press release, Picard said he will NOT issue Form 1099s, says Alan Weiner, CPA, JD, former president of the Society and on several tax committees.

Here’s a statement from the release:

“Because there are questions about the accuracy of the BLMIS financial records and the Trustee’s experts and staff have been unable to assure the Trustee of the complete accuracy of those records, the Trustee is not in a position to prepare and furnish information on interest, dividends or securities transactions for the accounts of BLMIS customers for the 2008 tax year.”

My response to that: Duh!

Ok. But more importantly, now what do you do? How do you file your tax return, even if you received income from Madoff Securities in 2008?

You don’t report it. It’s that simple.

Don’t blow it off, though. Attach an explanation to your tax return as to why you are not reporting any of the income you received, suggests Weiner.

Now, things could get a bit more complicated if the trustee decides to issue 1099s later in the year and folks are then forced to amend their returns and report that income. But let’s take one step at a time. Most pros believe it’s going to take years before they figure out if there was any taxable income at all.

These missing 1099s aren’t just headaches for the individuals involved. There are partnerships and feeder funds that are also waiting for 1099s to report their distributions. And they’re not getting them either.

Total mess.

So for now, just know that you don’t have to report the distributions received from Madoff Securities in 2008, but you do need to attach an explanation to your tax return explaining why.

And then be sure to reread the original story we wrote with all the other “taxing” details.

And don’t panic. Things may get a bit thorny as we go forward, but no worries, we’ll be here to help.


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FOXBusiness.com’s Week in Review: Feb. 9-13, 2009

Federal Authorities Sue UBS for Identities of U.S. Customers

WASHINGTON--Federal authorities have filed a lawsuit against Swiss-based bank UBS AG seeking the identities of tens of thousands of U.S. customers.

The suit filed in Miami Thursday seeks to force the firm to turn over information on as many as 52,000 U.S. customers who hid their accounts from the U.S. government in violation of tax laws.

The company said it will fight in court to keep the names private, arguing Swiss bank secrecy laws shield those customers.
The lawsuit comes a day after the Justice Department struck a deal with UBS to get access to some of its customers who used Swiss bank secrecy law to hide billions of dollars in assets.

According to the government's lawsuit, the accounts in question held about $14.8 billion in assets in the past decade.
As part of its deal with prosecutors Wednesday, the bank agreed to pay $780 million in fines and penalties.

After the settlement of the criminal case was announced, the bank's chairman, Peter Kurer, said in a statement the firm accepted "full responsibility" for helping its U.S. clients hide assets from the IRS.

But that does not mean the bank is about to fork over information on thousands of accounts.

"This shows the big fight is yet to come," said George Clarke, a tax attorney based in Washington who is not involved in the UBS case.

A federal judge will now decide whether the U.S. courts can force a bank to violate Swiss bank secrecy laws and provide the account information.

According to U.S. officials, an acquisition in 2000 of a U.S. company brought UBS a host of new American clients. The bank then set about to evade new reporting requirements for those clients. To do so, UBS executives helped U.S. taxpayers open new accounts in the names of sham entities.

Prosecutors contend that UBS executives used encrypted software and other counter-surveillance techniques to prevent anyone from detecting that they were actively marketing such Swiss bank secrecy -- and tax evasion -- to American taxpayers.

The clients, in turn, filed false tax returns that omitted the income they earned in their Swiss accounts, according to the court papers.


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UBS to Shell Out $780M in Tax Case

Swiss-based banking giant UBS (UBS) has agreed to pay $780 million to settle allegations it conspired to defraud the U.S. government of taxes owed by big clients.

As part of the deal struck in federal court in Fort Lauderdale, Fla., UBS has made the unprecedented step of agreeing to immediately turn over to the U.S. government account information for their U.S. customers of the bank's cross-border business.

That means federal authorities have struck a big crack in Switzerland's vaunted bank secrecy laws.
UBS will pay $780 million in fines, penalties, interest and restitution for conspiring to create sham accounts to hide the assets of United States clients from the U.S. government.



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Government’s proposal for banks comes today
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Memo to Washington: Grow Up

Your mother and father probably told you: You can't have everything. But for some reason the folks in Washington didn't get the memo. Politicians want to make sure that everyone can have everything they want, without the possibility of failure.

Start with General Motors (GM)and Chrysler. Like addicts, they keep saying just one last time…just one more shot of federal money. But does anyone doubt if we give GM and Chrysler more billions again that they'll soon be back for more again?

Still politicians are probably going to give them more of your money, because neither the politicians nor the car companies want to admit failure.

Next, there's banking. We keep pouring more of your money into bottomless pits like American International Group (AIG) to no avail.

The geniuses at Treasury and the Fed say that some banks are too big to fail. But before this crisis is over, some big banks will fail -- and we will have wasted more of your TARP money trying to prop them up.

Then there's housing. Politicians tell us that they want to prevent foreclosures and keep housing prices from falling further. But you can't clear the inventory unless prices drop further than they have. And many folks in foreclosure should have never been given a mortgage to begin with.

Finally, there’s the Federal Reserve. It’s supposed to maintain the value of our hard-earned dollars. But it’s printed trillions of dollars trying to juice up the economy. You can’t have both; you can’t maintain the value of the dollar if you keep pumping trillions of cash into the market. Soon the Fed will face massive inflation, and a massive decision: A new Fed leader -- one with backbone -- will have to endure political scorn by jacking up interest rates the way Paul Volcker did in the early 1980s to squeeze inflation out of the economy. It may lead to more failures, but it will secure the integrity of the dollar.

Failure is a part of life. You can't stop it or outlaw it. The longer you try to keep it from happening, the worse will be the day of reckoning. It's time for leaders in the government and at the Fed to grow up. It's time for all of us to insist that they grow up.

And that's the final score.


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Large banks take beating on Wall Street
Federal Regulator Urges Thrifts to Halt Foreclosures
Government’s proposal for banks comes today

RIM Executives in Hot Water With SEC

The SEC alleges that RIM (RIMM), its Co-Chief Executive Officers James Balsillie and Mike Lazaridi, its former Chief Financial Officer Dennis Kavelman and former Vice President of Financial Angelo Loberto “illegally granted undisclosed, in-the-money options to RIM executives and employees by backdating millions of stock options over an eight-year period from 1998 through 2006,” it said in a press release.

The SEC alleged that the four executives backdated option agreements and offer letters, concealing the fact that options were granted in the money. It also alleges that Kavelman and Loberto tried to hide the backdating from regulators, as well as the company’s independent auditor and outside lawyer.

The settlement involves, among other things, payment of fines by the individual defendants and disgorgement of the in-the-money values of backdated options they had exercised, with interest. Kavelman will pay a fine of $500,000 and disgorge $132,914.60; Loberto will pay a fine of $425,000 and disgorge $47,950.56; Balsillie will pay a fine of $350,000 and disgorge $334,250; and Lazaridis will pay a fine of $150,000 and disgorge $328,300.

The SEC noted that the settlement takes into account RIM’s cooperation with its investigation, and that the settlements are subject to the approval of the U.S. District Court for the District of Columbia.

The Ontario Securities Commission had on Feb. 5 brought a related settled action against the same defendants, the SEC noted, which included the total payment of C$76.85 million.

RIM is based in Ontario, Canada, and is listed on both the Toronto Stock Exchange and the NASDAQ Stock Market.


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Medtronic Net Soars, But Sales Miss Estimates

Unburdened by the hefty charges it saw last year during the third quarter, medical technology company Medtronic (MDT) saw its profit soar this year, but its revenue missed Wall Street’s estimates.

The Minneapolis-based device maker posted a net income of $723 million, or 65 cents a share, for the quarter ended Jan. 23, compared with a net income of $77 million, or 7 cents a share, for the same period a year ago. Excluding charges, the company earned 71 cents a share. Sales for the quarter jumped 3% from $3.41 to $3.49 billion.

Analysts polled by Thomson Reuters were expecting a profit of 70 cents a share on revenue of $3.51 billion.

While the company was faced with “global macroeconomic uncertainties,” and unfavorable foreign exchange rates during the quarter, Medtronic Chairman and CEO Bill Hawkins said the company continues to deliver growth.

“Excluding the impact of foreign currency, four of our seven business units reported double digit revenue growth in the quarter and we continue to focus on delivering meaningful operating leverage,” he said.

Among the businesses that saw big gains were the cardiovascular unit, which saw its sales jump 10% to $565 million, and its neuromodulation unit, which saw sales jump 11% to $354 million. The gains were offset by a decline of 4%, or $1.17 billion, in the company’s cardiac rhythm division.


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FOXBusiness.com's Week in Review: Feb. 9-13, 2009

Monday, Feb. 9, 2009

It was quite a “stimulating” week in business news. By a narrow vote Monday, the economic recovery act moved one step closer to passage in the Senate.

Meanwhile, the Treasury continued work on part two of the Troubled Asset Relief Program [TARP]. The department said it plans to spend up to $100 billion to help free up credit in the consumer and business markets. It will spend up to $100 billion for new capital injections for banks and more than $50 billion in a mortgage modification program for homeowners who risk losing their houses.

The Securities and Exchange Commission announced a civil suit settlement with Bernie Madoff, who allegedly scammed $50 billion from investors and is currently under house arrest. In the filing that the case was based, Madoff told an FBI agent his business was a “giant Ponzi scheme.” However, this doesn’t mean Madoff has pleaded guilty or innocent to the crime.

SEC, Madoff Reach Partial Settlement


FOXBusiness.com’s Week in Review: Jan. 19-23, 2009
Frist endowment lost $1M to Madoff scheme
Large banks take beating on Wall Street

Charles Payne: 3 Stocks, Charles' Choice

Not Lincoln -- Yet

Who can take a sunrise, sprinkle it with dew
Cover it with choc'late and a miracle or two
The Candy Man, oh the Candy Man can
The Candy Man can 'cause he mixes it with love and makes the world taste good

Sammy Davis

I realize a lot of folks may have never heard "The Candy Man" by Sammy Davis, but it’s the appropriate song for how President Obama sees his stimulus plan. Unfortunately, few people on the right or left are happy with the plan. One thing that is clear is the plan is designed to get the president re-elected, as a large portion of the spending will happen in 2012 (some of the spending in the plan will stretch out to 2019 -- so much for timely and temporary).

The plan is also designed to make the government bigger -- and oh boy, does it do that -- with 32 new government agencies. The plan redistributes wealth as $100.0 billion in would-be tax cuts go to folks that don’t pay income taxes (yes that money will come right back into the economy but it opens a different can of worms about right and wrong and incentives in a capitalistic society). Only $46.0 billion goes to fix highways, bridges and mass transit construction.

There is $8,000 credit for first time home buyers, but initiallym the plan was $15,000 to any home buyer -- and that was great but I’m sure nixed because someone thought it was unfair for someone with a home and paying their mortgage on time to get a break on another home. It’s that kind of envy that is crushing the spirit of the nation.

The notion that people that are budgeting their incomes, making sacrifices, and looking to get ahead should be hamstrung in a macabre effort to level the playing field. There’s $2,500 tax credit for college that falls short of the market. Its sounds good on the campaign trial but isn’t enough to have a major impact on people that can’t afford to go to college. Then there is the whopping $13 a week that folks are going to get in their checks.

Golly, that is sad.

People should get as much of their own money back from the government as possible and that means all people. It’s admirable to help folks but we must reward hard working folks that want to move up the ladder of success and not be placated into waiting for government handouts. The welfare state creates a welfare mentality and that means little initiative, scares innovation and an eventual loss of our innate desire to achieve.

The president is hoping to duplicate the successes of Abraham Lincoln, but it hasn’t gotten off to an auspicious start. True compromise wasn’t made on the stimulus bill, the Commerce job was a joke even before the Census Department was ripped out (imagine a child going to a neighbors for a play date only to be told to sit in the corner and watch everyone play Guitar Hero and eat cupcakes -- not a lot of fun) and every speech begins with pointing the finger at the previous administration. This isn’t how Lincoln got folks to cross party lines or induced former enemies to become his staunchest allies.

This week we’ll get more on mortgage modification and maybe an update on TARP II.


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Abercrombie & Fitch Hurt by Retail ‘Catastrophe’

Weighed down by big charges and sagging sales, Abercrombie & Fitch Co. (ANF) saw its profit dive 68% during the fourth quarter and failed to offer a full-year profit forecast due to the “tumultuous” retail environment.

The retailer, famous for its brand of casual clothing popular among teens, posted a quarterly profit of $68.4 million, or 78 cents a share, compared with $216.8 million, or $2.40 a share, during the same period a year ago. Revenue for the quarter came in at $998 million -- a 19% decline from $1.29 billion the year prior.

The results include a 21-cent impairment charge tied to store-related assets, as well as an 11-cent tax expense-related charge. Analysts polled by Thomson Reuters were expecting earnings per share of $1 on revenue of $997.7 million, excluding charges.

The company’s same-store sales, or sales in stores opened at least a year, plunged 25% during the quarter as sales softened not only in its namesake division, but in its Hollister Co. and Ruehl divisions as well.

"The fourth quarter proved to be a catastrophe for the retail industry; a nightmare that included unprecedented promotional activity by other retailers in the malls and consumers who continued to show reluctance to spend, especially for premium brands,” said Mike Jeffries, chairman and CEO at Abercrombie & Fitch.

The company said it will maintain its 17.5-cent quarterly dividend. The dividend will be payable on March 17 to shareholders of record as of Feb. 27.

For the full year 2009, Abercrombie & Fitch said it “anticipates a difficult selling environment to persist” and therefore provided no EPS guidance.

The company also said it is in the middle of reviewing operating expenses and has also taken a number of cost-reduction measures.

The retailer laid off about 50 employees at its corporate headquarters in New Albany, Ohio, in January.


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Banks Fail in Florida, Nebraska, Illinois, Oregon

Banks in Florida, Nebraska, Illinois and Oregon became the 10th through 13th banks to fail in the U.S. this year, the Federal Deposit Insurance Corp. announced on Friday.

Riverside Bank of the Gulf Coast, Cape Coral, Fla., Sherman County Bank, Loup City, Neb., Corn Belt Bank and Trust Co. of Pittsfield, Ill., and Pinnacle Bank of Beaverton, Ore., were the victims.

Riverside Bank of the Gulf Coast, Cape Coral, Fla., was closed on Friday and the FDIC was appointed receiver.

TIB Bank, Naples, Fla., will assume all of the deposits of Riverside Bank. TIB also agreed to buy around $125 million in assets -- mainly cash, cash equivalents and marketable securities. However, it won’t assume $142.6 million in brokered deposits held by Riverside Bank.

Riverside's nine offices will reopen on Tuesday as branches of TIB Bank.

The FDIC will retain the remaining assets for later disposition. It estimates that the cost to its Deposit Insurance Fund will be $201.5 million.

As of Dec. 31, Riverside Bank had assets of around $539 million and total deposits of $424 million. TIB Bank agreed to pay the FDIC a premium of 1.3%.

Customers who have questions about Riverside Bank of the Gulf Coast can call the FDIC toll-free at 1-800-823-5028.

The FDIC noted that Riverside Bank of the Gulf Coast is not affiliated with either Riverside National Bank of Florida, in Fort Pierce, Fla., or with Riverside Bank of Central Florida in Winter Park, Fla.

Sherman County Bank, Loup City, Neb., was closed on Friday as well, and the FDIC was appointed receiver.

Heritage Bank, Wood River, Neb., will assume all of the deposits -- as well as approximately $21.8 million in assets, comprised mainly of cash, cash equivalents and marketable securities. The FDIC will retain the remaining assets for later disposition.

Sherman’s four offices, including those that operated under the name Howard County Bank, will reopen on Tuesday as branches of Heritage Bank, the FDIC said.

As of Feb. 12, Sherman County Bank had total assets of approximately $129.8 million and total deposits of $85.1 million. Heritage Bank will pay the FDIC a premium of 6%.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $28.0 million.

Customers who have questions about Sherman County Bank can call the FDIC toll-free at 1-800-823-5346.

Corn Belt Bank and Trust Company, Pittsfield, Ill., was closed, and Carlinville National Bank, Carlinville, Ill., will assume all its deposits.Carlinville National Bank also will buy $60.7 million in assets, comprised mainly of cash, cash equivalents and marketable securities. The FDIC will retain the remaining assets for later disposition.

The two branches of CBBTCwill open as branches of Carlinville National Bank on Tuesday.

Carlinville National Bank will not assume $92 million in brokered deposits held by CBBTC. The FDIC said it will pay the brokers directly for the amount of their insured funds, and said that customers who placed money with brokers should contact them directly for information about their deposits.

As of Dec. 31, Corn Belt Bank and Trust Company had total assets of $271.8 million and total deposits of $234.4 million.

Carlinville National Bank will pay the FDIC a premium of 1.75%.

The FDIC estimates that the cost to its Deposit Insurance Fund will be $100 million.

Customers who have questions about CBBTC can call the FDIC toll-free at 1-800-331-6306.

Pinnacle Bank of Beaverton, Ore., was closed by the FDIC, which entered into a purchase and assumption agreement with Washington Trust Bank, Spokane, Wash., to take all of Pinnacle's deposits.

Pinnacle had only one branch, which will reopen as a branch of Washington Trust Bank on Tuesday.

As of Dec. 31, Pinnacle Bank had $73 million in assets and $64 million of deposits. In addition to assuming all of the deposits of the failed bank, including those from brokers, Washington Trust Bank agreed to purchase approximately $72 million in assets at a discount of $7.6 million. The FDIC will retain the remaining assets for later disposition.

The FDIC said it entered into a loss-share transaction with Washington Trust Bank, in which Washington Trust will share in the losses on approximately $66 million in assets covered under the agreement.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $12.1 million.

Customers who have questions about Pinnacle can call the FDIC toll-free at 1-800-930-1848.


Government’s proposal for banks comes today
TARP 2 Aims to Ease Consumer, Business Credit Crunch
HCA hopes to raise $300 million to repay debt

Al Lewis: Of All the Indignities, Don't Get Minkowed

One of the most embarrassing ways for a key executive to be removed from office is to be Minkowed.

Getting Minkowed begins when you learn that a guy named Barry Minkow has just shorted your stock, betting that information he has just uncovered can make it go down.

Then you learn that Minkow has discovered those lies that you put on your resume.

Sure, you did it many years ago, just to get hired. But you've had to maintain these mischaracterizations ever since, just to remain employed.

Now, your board has to face investors who are asking "Gee, if there's lie on the resume, are there lies on the books, too?"

Your immediate removal is the only good answer to this question.

You've just been Minkowed.

And here's the most embarrassing part of the whole deal: Minkow is a convicted felon who told more lies as a teenager than you could ever dream up in your whole miserable adult life.

Patrick Avery was president and chief operating officer of Intrepid Potash Inc. (IPI) in Denver until he was Minkowed on Wednesday.

His name is now enshrined on a list of nearly a dozen executives who've been Minkowed, too.

Vahid Manian, former senior vice president of global manufacturing operations for Irvine, Calif.-based Broadcom Corp. (BRCM), got Minkowed in December.

Former MGM Mirage (MGM) CEO J. Terrence Lanni, a powerful figure in the gambling industry, was Minkowed in November.

Gregory Probert, who was president and chief operating officer of Herbalife Ltd. (HLF), got Minkowed in April.

The biggest problem with hyping your resume comes when your company files documents with the Securities and Exchange Commission that include your bloated bio.

When Intrepid Potash, maker of fertilizers, became a public company in April, it claimed that Avery received bachelor of arts degrees in biology and chemistry from the University of Colorado.

Turns out, Avery hung out at the school from 1970 through 1975 but never earned these degrees.

Intrepid Potash also claimed he earned a master's in engineering from "Loyola."

Sure, he hung out at Loyola Marymount University in Los Angeles from 1982 to 1985, but there's no record of a degree.

Neither the company nor Avery are doing interviews.

"The company accepted Mr. Avery's resignation because his misrepresentation of his academic credentials was a violation under the company's code of business conduct," said Chairman and CEO Robert P. Jornayvaz III in a statement on Wednesday.

"Pat Avery came to Intrepid with more than twenty years of service with J.R. Simplot and ARCO and his experience was very helpful to our operations since joining our company in 2007," Jornayvaz said.

(Note to Jornayvaz: Thanks for mentioning the other companies that may have fallen for Avery's fake degrees, too. But remember, Avery got Minkowed on your watch.)

Intrepid stock closed at $23.38 on Thursday, down about 28% from it's IPO price of $32. The stock has taken a bounce for the better since Intrepid announced Avery's resignation.

Minkow would not tell me whether he bagged any profits from shorting Intrepid's stock. He said he still holds a position because he is not done.

"We're still in because we think there are more irregularities," he said, promising to enumerate more red flags any day now.

Minkow runs a for-profit enterprise called the Fraud Discovery Institute in San Diego. Some may quibble with the ethics of shorting a stock and then ratting out the company's executives for a profit. But what else is Minkow supposed to do for a living? He's a felon.

And a famous one at that.

When Minkow was a teenager, he'd started a carpet cleaning outfit called ZZZZ Best Co. and took it public with a dizzying array of lies. He even booked mob money as revenue. And when this amazing Ponzi scheme finally blew, he went to prison for nearly eight years, at age 23.

After prison, he earned several degrees from Jerry Falwell's Liberty University, including a master's degree in divinity. And today, in addition to investigating fraudulent statements from companies, he is pastor of Community Bible Church in San Diego.

So I wondered: Wouldn't it be fun to Minkow Minkow? I called Liberty's registrar's office. And guess what? He really did earn all these degrees. I guess the art of Minkowing isn't all that easy.

Minkow says he has built a database from which he can quickly check the degrees that corporate executives claim.

"We look for skin of the truth stuffed with a lie," he said.

So executives with fake degrees, beware.

You may soon be Minkowed.

--Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. He can be reached at 201-938-5266 or by email at al.lewis@dowjones.com.


Market Winners & Losers: Lennar, AFLAC
Investor nominates 4 to board at Gaylord

G7 Leaders Pledge to Strengthen Ailing Economies

The Group of Seven top bridging finance ministers and central bankers issued a statement after its meeting in Rome saying that the global downturn was still of great concern, but that the countries were committed to doing what was necessary to revive the world economy.

In a statement after the meeting, the participants said they would “commit to take any further action that may prove necessary to reestablish full confidence in the global financial system.”

"We will continue to work together and to cooperate to avoid undesirable spillovers and distortions,” the ministers said, noting that the downturn is expected to persist through 2009. They said they believe the country economic-policy responses “will build over time.”

The statement also said the ministers "welcome China's fiscal measures and continued commitment to move to more flexible exchange rate," language the U.S. had specifically sought.

The ministers said their deputies will follow up with another report in four months.

“As we act together to build a strong foundation for recovery, we need to begin the process of comprehensive reform of our financial system and the international financial system, so the world never again faces a crisis this severe,” U.S. Treasury Secretary Tim Geithner said in his own post-meeting statement.

“We will work closely with our colleagues in the G-7 and the G-20 to build consensus on reforms that match the scope of the problems revealed by this crisis,” he continued.

At the close of the meeting, a senior Treasury official said the U.S. delegation tried to let the other G-7 officials know “how we see, where we are in the process, what's working, where we're getting some traction" in U.S. policy responses to the financial crisis.

The official said the team tried to present a balanced message to the other countries to do more themselves -- "the policy has been a bit behind" the crisis -- but without publicly stating what the U.S. is doing and confronting them next with "what are you guys doing?"

"This is hard," the official said. "It is any awkward thing to do. You have to find a balance."

He said that countries are now moving forward and being more responsive than before.

The basic recognition of the problems “is completely different now," he said.

He said this meeting was designed to lay the groundwork for President Obama at the April G-20 meeting, "so as much concreteness" in new policy responses, individually and together, can be adopted and announced at that meeting.

"Everything should build to that moment," he said.

The G-7 countries are the U.S., Canada, U.K., France, Germany, Italy and Japan. The G-20 is a bigger group that includes developing nations such as China and Brazil.


Senate Confirms Geithner as Treasury Secretary
Investor nominates 4 to board at Gaylord

D.C. Bigwigs Should Point Fingers at Selves

Again this week, Treasury Secretary Tim Geithner said that executive pay at companies receiving TARP money would be capped...how much, we don't know. But again this week, not a word was said about the billions raked in by lobbyists, who have ascended on Washington like locusts, drawn to the billions of your tax dollars about to be spent. And listen to what happens when you suggest capping the pay of lobbyists.

Now, I like Rep. Brad Sherman (D-Calif.), but he's wrong when he says that lobbyists don't get money from taxpayers...that's why they're in D.C. Still, at least he's willing to think about capping the millions that his old buddies like Tom Daschle made as a rain-making lobbyist driven around in his tax-free limo.

And at least he'll think about whether Leon Panetta, the President's pick to head to the Central Intelligence Agency, should return the $84,000 he received from TARP recipients Merrill Lynch [now part of Bank of America (BAC)] and Wachovia Bank [now part of Wells Fargo (WFC)]for three speeches.

And then there's Sen. Chris Dodd (D-Conn.), who, as head of the Senate Banking committee, continues to write bills that could benefit the folks at Countrywide, which gave him a sweetheart deal on his mortgage.

The folks inside the Beltway are tone-deaf about their own greed and avarice, which equals or outweighs the greed of those in the private sector, at whom they wag their fingers. Like the wise man said, the hardest thing of all to see...is that which is right before your eyes.

And that's the Final Score.


Government’s proposal for banks comes today
Investment Advisor in Hot Water Over Alleged TARP Fraud