Market News: Juni 2009

Sonntag, 28. Juni 2009

FOXBusiness.com's Week in Review: June 22-26, 2009

Monday

The nation’s health care agenda dominated headlines this week.

According to an independent analysis of the Senate’s proposal for health-care reform, roughly one in eight workers in the U.S. receiving health benefits from their employer could pay higher income taxes on those benefits.That’s nine million workers. FOX Business obtained a presentation that proposes “options to limit allowable tax free health benefits” that was put together by the Senate Finance Committee Chairman Max Baucus (D-Mont.), heading up the Democrats’ efforts to find funding alternatives for the plan.

FOX Business had an exclusive interview with Claudine de la Villehuchet, who blames Bernie Madoff for her husband’s dealth. The widow of feeder investor Rene-Thierry de la Villehuchet said the scheme was what pushed him to kill himself.

Starting the week on a bit of a sour note, the Dow fell 201 points Monday afternoon at close. This was the worst day for the average in two months, closing at 8339.

I Think He’s a Murderer’

No Sympathy for Ruth Madoff

‘He Killed My Husband’

Cavuto's Deal: Bad Deal

Nationwide Average
$2.67 a gallonTuesday

The Justice Department may end up dropping the case against UBS attempting to force the Swiss bank to give up the names of 52,000 Americans who the U.S. suspects to have offshore accounts for evading taxes. This is according to a report in the New York Times Tuesday. Last weekend the Swiss Finance Minister said a deal might be worked out with American authorities now that Switzerland has agreed to a new double taxation treaty to fight tax evasion.

President Obama said at a news conference he’s drawing no line in the sand regarding a public health insurance plan, at least for now. He said he believed such a plan “made sense” in reforming the health-care system, however. But the president would not directly answer a question of whether he’d veto legislation passed that did not have public insurance in it. Insurance companies as well as fiscal conservatives worry that if the government does offer a public plan, it could put health insurance companies out of business and lead to government control over the entire system.

FOX Business Network’s Elizabeth MacDonald broke down a lot of the myths she says are floating round regarding the health care debate. She sets the record straight here.

Dreamliner Delayed… Again Dept.: Boeing (BA) said it will delay a test flight of its new Dreamliner 787 jet because of modifications the company needs to make due to structural weaknesses. Boeing says the delay is “due to a need to reinforce an area within the side-of-body section of the aircraft.”

Madoff’s Lawyer Requests Leniency

Health Net CEO on Health-Care Reform

Cavuto’s Deal: More Czars the Merrier

Mulally: Ford Ahead of the Competition
Wednesday

The Commerce Department released its report on durable goods orders, which said they were up 1.8%. This larger-than-expected increase suggests the economy may be making its way to recovery. Economists predicted a 0.6% decline.

Employee Compensation Dept.: Citigroup (C) will be boosting its employees’ base pay by up to 50%, according to a New York Times report. This is to offset smaller bonuses the company is giving out this year. The bank is doing what it can to keep good employees on board and make up for a drop in their stock holdings’ value, said the report.

The Federal Reserve announced that interest rates would remain at the same level Wednesday afternoon. The Federal Open Market Committee is holding the funds rate at a target range of 0% to 0.25%, but issued a slight concern for inflation.

Buffett on Economy, Inflation

Buffett on Unemployment, Obama

Cavuto's Deal: What Happens in S.C.

TARPed Banks Lower Bonuses, Up SalariesThursday

The weekly jobless claims report said they hit their highest level since mid-May, despite some recent signs the economy is turning around. The Labor Department said the number of people filing for initial claims rose 15,000 last week to 627,000.

GMAC Financial confirmed it is suspending financing for some Chrysler dealers. After the auto maker filed for bankruptcy GMAC took Chrysler Financial’s place as dealers’ preferred lender.

Federal Reserve Chairman Ben Bernanke was grilled by lawmakers Thursday as he defended the central bank’s role in the Bank of America (BAC) merger with Merrill Lynch. He denied he pressured officials to go through with the merger.

Meanwhile, Allen Stanford pleaded not guilty to charges of fraud. The billionaire financier has been accused of running a $7 billion Ponzi scheme.

Ending a four-day slide on Wall Street, the Dow jumped 173 points, closing at 8472. This was the largest rally so far this month.

But any happy thoughts after the rally were quickly erased once reports surfaced that Michael Jackson was rushed to a hospital Thursday afternoon after suffering a heart attack. The pop legend was confirmed to be dead later that night.

Forbes: Bernanke Should Lose Job

Ex-Stanford Employee: Stanford's Guilty

Cavuto's Deal: More Pork, Please

Merrill, the Thorn in BofA's Side?
Friday

Consumer spending rose 0.3% in May. That’s according to the Commerce Department and was in line with expectations. This was the first gain since February.

UBS plans to raise $3.45 billion, but will continue having trouble says Switzerland’s financial regulator FINMA, which will continue to oversee the bank until its legal issues with the U.S. over taxes are cleared up.

iPhone App Dept.: There’s an app for that… unless it has adult content. This is what Apple (AAPL) said after pulling the plug on the first adult application for iPhone that appeared in the App Store on Thursday. The Hottest Girls App had photos of topless women. Apple told FOX Business that it “will not distribute applications that contain inappropriate content” and that the software was a violation of the Developer Program.

And R. Allen Stanford will be staying behind bars after all this weekend. Though he was granted bail, this was appealed by prosecutors and a judge blocked his release deeming him a flight risk due to offshore accounts.

Don’t Do That!

Takes One to Know One

Motown Legend on King of Pop

Gov't Considered AIG Bankruptcy in Jan.

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Market Winners & Losers: Lennar, Paychex

It’s easy being green. The major indices made big gains Thursday, with the three major indices each ending up 2.1%.

Here are Thursday’s winner and losers:

Winners

Lennar Corp. (LEN)
The homebuilder bucked a second-quarter loss with a massive upswing in orders. LEN shares responded positively, soaring $9.19, or 17.5%, to $1.37.

SLM Corp. (SLM)
The student-loan provider gained 10.4% on the back of a JP Morgan upgrade. SLM ended Thursday up 87 cents at $9.20.

Bed Bath & Beyond (BBBY)
The retailer carried Wednesday’s afterhours earnings release into Thursday’s session, as shares surged 9.5%. BBBY finished trading at $31.08, a gain of $2.69.

Cameron International Corp. (CAM)
Cameron International saw its stock gain 8.6% after Goldman Sachs issued an upgrade on the oil equipment provider. CAM ended the session at $29.02, a gain of $2.30 on the day.

KB Home (KBH)
KB Home rode the rally started by fellow homebuilder Lennar, with shares gaining $1.13, or 8.3%, to close Thursday’s session at $14.77.

Losers

Paychex Inc. (PAYX)
Poor quarterly earnings dropped shares of the payroll processing company 6.2% on Thursday. PAYX fell$1.65 to $25.06.

ConAgra Foods Inc. (CAG)
A 13% drop in profit in the fourth quarter cost the stock 4.2% on Thursday. CAG shares sank 85 cents to settle at $19.18.

SUPERVALU Inc. (SVU)
The discount grocer fell for the second day, with shares losing 52 cents, or 3.7%, to settle at $13.29.

Nike Inc. (NKE)
A downgrade by Susquehanna Financial cost Nike’s stock 3.3% on Thursday. Shares of the shoe manufacturer fell $1.74 to $51.28.

Automatic Data Processing Inc. (ADP)
The outsourcing processor got hit hard Thursday as Barclays issued a lower forecast for the company’s earnings estimates through 2010. ADP closed at $34.61, a loss of 82 cents, or 2.3%.

Donnerstag, 25. Juni 2009

Cavuto: Mark Sanford's Future Is Shot

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

The Gov not feeling the love.

And suddenly the grand old party in a grand old mess.

And here's the deal.

A gov feeling the heat.

And not the heat that got him in this heap of trouble.

And lest you think what happens in South Carolina stays in South Carolina, think for a moment who we're talking about in South Carolina.

Republican Governor Mark Sanford.

From "Terminator" sequel to "Love Gov No. 2."

And just when you thought no one could top Eliot Spitzer's fall from fame.

This rising Republican star zips up, or shall I say "down," to give it a shot.

Because Mark Sanford's future is shot.

Resigning as head of the National Governors Association because of a certain "association" with a friend from Argentina...

And a growing throng of disappointed Republicans wishing he would just "go" to Argentina.

Because perhaps the party's best advocate for fighting big government...Is now in the biggest fight of his life.
More focused on his marriage, which looks rocky.

Than a republican challenge to big health care, that increasingly looks doomed.

His peccadillo timing couldn't prove worse.

Just as Democrats rush a healthcare monster pegged at a trillion bucks and growing.

And the field of Republicans able to take it and the president on...Are down and dwindling.

Sanford today...

Nevada senator john ensign almost two weeks ago today.

So today, a mess.

Big healthcare coming. Big opposition melting.

And an already poorly polling Republican party hurting.

None of this is to say healthcare's a sure thing.

Just today, suddenly looking like a "surer" thing.

Because prominent Republicans are dropping like flies.

Not hard to figure.

After all, hard to be the loyal opposition.

When so many of 'em seem to have trouble being loyal...To their wives.

Look, we all know Democrats' eyes wander, too.

It's just a hell of a time for some Republicans' eyes to so publicly wander...Now.

GMAC Suspends Financing for Chrysler Dealers

Chrysler seems to have found its way out of bankruptcy, but its dealers are facing another roadblock as GMAC Financial has confirmed it is suspending financing for some Chrysler dealers.

In May, after Chrysler filed for bankruptcy, GMAC became Chrysler dealers’ preferred lender, taking over for Chrysler Financial, a separate company from Chrysler the car maker.

The approval for new financing provided hope the necessary lending would be provided for many Chrysler dealers to remain in business.

“GMAC has been providing underwriting for individual Chrysler dealers on an interim basis while the credit evaluations are being conducted,” said Beth Coggins, a GMAC representative. “GMAC has begun the process of alerting Chrysler dealers on its decision whether or not to extend permanent financing.”

GMAC originally received $7.5 billion in additional government aid for loans, but the company said it cannot provide for financially unstable dealers. It began reviewing dealerships in May, and the process can take nearly six months.

“GMAC evaluates applications based on our standard underwriting procedures to determine dealer credit worthiness,” Coggins said.

Without the financing, Chrysler dealerships could be pushed out of business, further reducing sales and adding to the 789 dealers Chrysler has already shed.

GMAC declined to say how many of the dealers would no longer get financing, and would not discuss when the process will be completed.

However, the Wall Street Journal reported that about 60% of Chrysler’s remaining 2,400 dealers applied for wholesale financing with GMAC, and about 6% have been informed that their wholesale financing has been temporarily suspended.

“We offer financing for qualified dealers and consumers,” Coggins added. “GMAC is committed to being part of the solution to stabilizing the U.S. auto industry.”

Mittwoch, 24. Juni 2009

Cavuto: Two Czars for Cars

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

This has gotta be serious.

Now we have "two" car czars.

Here's the deal...

Steve, meet Ed.

Because it's more fun than just one.

Two czars for cars are better than one czar for cars.

After all, there are a lot of cars. Might as well have at least a couple of czars.

We don't know where Steve Rattner's been hiding, but it's apparently far away from anything closely resembling a camera...Because pictures are few, and apparently Steve is lonely.

And now Steve has a friend...Ed.

Ed Montgomery, who'll also be looking under the hood.

Even though no less than Lee Iacocca told me just yesterday he wonders whether any of these guys knows what the heck is under that hood.

Before you think that's just lee being ornery, think about from where lee is coming.

The guy who spearheaded the last auto rescue...Back in 1980 for a measly one billion bucks...But all of it, and then some, paid back and with interest, and early at that.

Lee taking pains to say the big difference back then to what is going on now....is the government wasn't getting in the auto business back then, it all but owns it now.

And as Lee points out, czars don't know much about cars.

In 1980, even a reluctant government knew that and gave the wheel to Lee, the auto guy.

Nearly three decades later, they're taking the wheel away from anyone even resembling an auto guy.

I've said it before, I’ll say it again.

The last czar didn't do too well.

We don't need 16 of 'em to compound the point.

Stocks End Flat as Rally Fatigue Continues

Wall Street ended unchanged on Tuesday, failing to bounce back from its worst day in two months, as a mixed housing report and successful Treasury auction failed to jolt the bulls from their recent slumber.

Today’s Markets

The Dow Jones Industrial Average fell 16.10 points, or 0.19%, to 8322.91, the Standard & Poor's 500 rose 2.06 points, or 0.23%, to 895.10 and the Nasdaq Composite lost 1.27 points, or 0.07%, to 1764.92. The consumer-friendly FOX 50 advanced 0.11 points, or 0.02%, to 662.65.

Tuesday’s lethargic session failed to stem the bearish tide that has reemerged on Wall Street in recent days amid concerns stocks have gotten ahead of the still-weak U.S. economy. It’s clear the markets are no longer red hot but what’s less certain is whether this is a minor decline from recent highs or the beginning of something more painful.

“We’re in a pullback phase but you still have a lot of capital that’s looking to get into the market,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald. “It’s nothing close to testing the March lows, when there were all these fears of nationalizing the banks. All of that stuff is behind us at this point. We’re now looking for when the recovery will start and how strong it will be.”

The Dow was led by AT&T (T) and Caterpillar (CAT). On the downside, the index's biggest percentage losers were Home Depot (HD) and Boeing (BA), which announced another delay for its 787 Dreamliner.

The blue-chip index is still well above its March low but recent selloffs have erased a chunk of its 2,000-point surge, including 200 points on Monday alone. Some traders are worried the very low trading volumes that have become the norm over the past several week signal more trouble to come.

“It says the market’s not healthy and we’re going to pull back. The trend is definitely much lower than we are now. It’s a question of how fast we’re going to get there,” NYSE trader Ben Willis of VDM Institutional Brokerage told FOX Business, pointing to 850 on the S&P as the next level of support.

The focus on Wall Street has now shifted to the Federal Reserve’s two-day policy meeting as the markets failed to move on a mixed report on new home sales and the start of the Treasury’s $104 billion weekly spending spree. While virtually no one expects the central back to boost interest rates Wednesday from their unprecedentedly low levels, the markets will be looking to see if the Fed offers any hints of an exit strategy.

Markets Yawn at Auction, Housing Data

Wall Street had little reaction to the Treasury's $40 billion auction of two-year notes, which saw the heaviest demand since Sept. 2007 and strong buying from foreign investors. Even though bond markets rallied on the sale, Wall Street remains cautious as the government still has two more auctions this week, which will see a record $104 billion of note sales. Bond auctions in recent weeks have raised fears that higher interest rates will hamper an economic recovery.

The auction came after Moody’s reaffirmed the U.S. government’s “AAA” credit rating but said the coveted rating could be at risk if public debt doesn’t return to a downward trajectory, Reuters reported.

On the economic front, the National Association of Realtors said new home sales increased by a weaker-than-expected 2.4% in May. While inventories dropped to 9.6 months of supply, the industry group said median new home prices plunged 17% from a year ago, putting further pressure on the depressed housing market.

Energy stocks rebounded from their steep selloff on Tuesday, mirroring the bounce back for crude oil. Thanks to a plunge in the greenback, crude ended at $69.64 a barrel, up $1.74, or 2.58%.

Corporate Movers

Boeing (BA) postponed the first flight of its long-awaited 787 Dreamliner for the fifth time because of structural problems. The aerospace giant, which gave no new timetable for the flight, saw its shares tumble on the latest delay

Google’s (GOOG) Android operating system will launch on Verizon (VZ) and Vodafone’s (VOD) Verizon Wireless and T-Mobile before the end of the year, The Wall Street Journal reported. The Google phones, which are manufactured by Motorola (MOT), will face competition from Apple’s (AAPL) iPhone.

UBS (UBS) rose sharply after The New York Times reported the Justice Department may drop its attempt to force the Swiss bank to disclose the identities of more than 50,000 Americans suspected of offshore tax evasion. The case reportedly could be dropped before a July 13 trial on the matter. However, the Justice Department said there is "no basis" for the report.

Ford (F) is set to receive $5.9 billion in government loans to retool its factories to produce more fuel efficient vehicles, the Energy Department announced. The auto maker will be joined by Nissan (NSANY) and Tesla in becoming the first to receive the government financing.

Boston Scientific (BSX) said a new trial met its primary goal by showing that CRT defibrillators significantly reduced death or heart failure interventions compared to cheaper devices.

Goldman Sachs (GS) received a boost from analysts at FBR Capital Markets, who boosted their earnings outlook and price target on the bank, citing increased market share. FBR now sees a second-quarter loss for Goldman rival Morgan Stanley (MS) due to TARP repayment and more commercial real-estate losses.

Intel (INTC) unveiled a new deal to sell mobile device chips to Nokia (NOK) as the chip maker attempts to enter the phone market.

Global Markets

European markets ended mixed as London's FTSE 100 sank 0.1% to 4230.02, France's CAC 40 dropped 0.21% to 3116.82 and Germany's DAX jumped 0.29% to 4707.15.

In Asia, Japan's Nikkei 225 lost 2.82% to 9549.61 and Hong Kong's Hang Seng dropped 2.89% to 17538.37.

Dienstag, 23. Juni 2009

In English, Please: FOMC Meeting Preview

The Federal Open Market Committee has no where to go but up – and that won’t be happening any time soon for fear it would further slow a tortoise-like economy. Even with low interest rates borrowing has all but stopped and excess cash hasn’t flowed back into the markets. According to the most recent data from the Federal Reserve (weekly statement on assets and liabilities of commercial banks) cash on hand is up about $550 billion – more than was on hand in October (when the FOMC began lowering rates and Congress approved the TARP legislation). The increase itself is more than banks hand on hand in October ($473 billion). Since the last FOMC meeting at the end of May, cash on hand is up $37 billion or about 3.7%.

Loans and leases outstanding are down about $170 billion or 2.3% since October 1 and $36 billion since the last FOMC meeting.

The challenge for the FOMC in its statement Wednesday will be to maintain control while at the same time acknowledging but not over-emphasizing a continuing weak economy. If the FOMC is too pessimistic in its post-meeting statement it could squash any hopes of a near-term recovery, hopes which have been dominating conversation, and send bankers running for cover. If the statement is overly ebullient, it could spark some new rounds of lending, with the maxim that “bad loans are made in good times.” We’re certainly in good times, and the e FOMC has to be careful to not suggest they’re here or near.

So, the FOMC Policy Statement will continue to indicate a weak economy but one that is shrinking much less rapidly than it did earlier in the year. With that, the FOMC will leave the target Fed Funds rate unchanged from the 0.0%-0.25% range set in December and continue its program to buy treasury, agency and mortgage backed securities in an effort to keep rates low and fund flowing.

There will be a lot of interest in the statement for what it says about the FOMC thinking in developing an exit strategy towards inevitably raising rates or constricting the money supply as “green shoots” prompt concerns about inflation.

The economic backdrop the Fed faces does indeed show some improvements since the April meeting, not enough to lead to an immediate change but perhaps enough to start to turn the battleship. While the recession is likely to extend at least until the latter part of this year – and perhaps early next – those improvements won’t stop unemployment from continuing to rise well into 2010. The last two recessions saw the unemployment rise 15 months and 19 months, respectively, after the recession ended. A continuing increase in the unemployment rate will make money supply tightening even more difficult.

For all the worries about inflation, the latest inflation figures showed little cause for concern. The increase in the Consumer Price Index in May was tame both on an overall basis and core basis. The exception was gasoline which served to tamp demand for other goods, continuing to keep those prices low.

Economic Environment (compared with April 28-29 meeting)
Overall Economy
GDP:
GDP: A 5.7% (annualized) decline in the first quarter after a 6.1% decline in the fourth quarter WEAK

Labor Markets

Payroll jobs: Fell 345,000 in May and 504,000 in April, decidedly improved from prior months. The 345,000 jobs lost in May were more than jobs lost in any single month in the last three recessions. LESS WEAKUnemployment Rate: Rose to 9.4% in May from 8.9% in April. WEAKER
Initial Unemployment Insurance Claims: 4 week average: 616,000 compared with 547,000 in advance of April meeting: LESS WEAKWages (Average weekly earnings): Up 1.2% year-year compared with a year-year increase of 1.4% prior to the April meeting: WEAKER

Consumer Activity

Retail sales: Sales (ex auto) were up 0.5% in May after falling 0.2% in April in advance of the April meeting sales fell 3.2% but sales were boosted by higher gasoline prices, not new consumer demand. UNCHANGEDConfidence: Conference Board index 54.9 up from 39.2 in advance of the April meeting; University of Michigan Consumer Sentiment: 69.0, up from 61.9 in advance of the April meeting. STRONGER

Housing

Home sales: New home sales increased in April up just 1,000 from 352,000 in March to 353,000, but when the FOMC met in May, the most recent sales figures were 356,000. UNCHANGEDExisting home sales were 4,680 in April from 4,550,000 in March, boosted by foreclosure sales. STRONGER.
Home values moved still lower in March according to both the Federal Home Finance Agency and Case Shiller: WEAKER

Inflation

CPI: Core inflation per the consumer price index inched down to 1.8% in May from 1.9% in April while was negative for the third straight month. IMPROVEDPCE: The core inflation rate tracked through the personal income and spending report increased in April (most recent data) after increasing from January to February (data available for the April meeting) but the rate remained within the FOMC’s comfort range. HIGHER

Manufacturing:

Both the industrial production index and capacity utilization index are down from levels ahead of the April meeting: WEAKER

What to look for

The FOMC statement typically contains five key paragraphs:A summary of the FOMC decisionA growth assessmentAn inflation outlookA monetary policy / risks outlookA recap of the vote

Here’s how the FOMC statement after the April meeting compared with the statement issued following the March 17-18 meeting at which the Committee announced plans to buy more than $1 trillion in Treasury and other debt instruments and also held the target Fed Funds rate at the 0.0%-0.25% range, followed by a [commentary].

Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

Information received since the Federal Open Market Committee met in January indicates that the economy continues to contract. Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. U.S. exports have slumped as a number of major trading partners have also fallen into recession. Although the near-term economic outlook is weak, the Committee anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth.

[The FOMC acknowledged continued contraction in the economy and that weak sales credit constraints have led businesses to cut back on inventories.]

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

[FOMC offered no change in its assessment of inflation: no immediate or long-term threat.]

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of financial and economic developments.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months. The Federal Reserve has launched the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses and anticipates that the range of eligible collateral for this facility is likely to be expanded to include other financial assets. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of evolving financial and economic developments

[FOMC put a more precise date “by autumn” on its plans to buy longer-term Treasury securities and added its plans to “evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets” but eliminated the reference to expanding the collateral for direct loans.]

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

[The vote was again unanimous.]

Lag Factor: The FOMC Statement is issued at the conclusion of the meeting.

Source:Federal Reserve Board

Release Time: 2:15 PM Eastern

Revision Factor: None.

Market Impact: Substantial. Nothing is more important to financial markets than the Fed's decision on monetary policy.

Mark Lieberman is the senior economist for the Fox Business Network. Prior to joining FOX, he served as first vice president and manager of economic analysis and research at Washington Mutual in New York. Before that, he served as senior vice president at Dime Savings Bank of New York (which was later acquired by Washington Mutual), where he specialized in credit and risk management. He is a member of the Executive Committee of the New York Association for Business Economics. He has a degree in Economics from the Wharton School of the University of Pennsylvania.

Case of the Mondays: Dow Sinks 200 on Crude

Collapsing commodities like crude oil dealt Wall Street another setback Monday, sending the Dow to its worst day in two months and shoving the S&P 500 back into the red year-to-date.

Today’s Markets

The Dow Jones Industrial Average slid 200.72 points, or 2.35%, to 8339.01, the Standard & Poor's 500 sank 28.19 points, or 3.06%, to 893.04 and the Nasdaq Composite lost 61.28 points, or 3.35%, to 1766.19. The consumer-friendly FOX 50 fell 16.89 points, or 2.49%, to 662.54.

With an absence of new economic and earnings reports, Wall Street continues to be dominated by the commodity markets, where crude oil settled at three-week lows and copper suffered its worst one-day dive since February. Energy and basic material stocks plunged in response, dragging the rest of the markets down with them.

“We’ve become remarkably more defensive and are continuing to track what’s going on in commodities,” said Art Hogan, chief market strategist at Jefferies & Co. “This is very reminiscent of the beginning of last week. Hopefully this week plays out in the same fashion where the worst of it gets done in the beginning of the week.”

The ugly opening act to the week comes after the markets ended mixed in each of their last three sessions amid uncertainty about whether or not the stock markets are too bullish. In fact, the Dow's four-week win streak came to an end on Friday, erasing a slice of the index's 2,000-point surge from the March lows.

“There’s a growing sense that maybe the market has gone a little too far, too fast. Maybe some of the optimism is getting a little ahead of reality,” said Michael James, senior equity trader at Wedbush Morgan Securities. “The market has been a little wobbly. Clearly the burden of proof is on the bulls to demonstrate that the buyers are still around.”

The Dow ended at its worst levels of the day, with almost all 30 components closing in the red, led by aluminum company Alcoa (AA) and Bank of America (BAC). Defensive stocks like Verizon (VZ) and Wal-Mart (WMT) saw modest buying.

The Nasdaq Composite plunged much further than the Dow, suffering its worst percentage drop since April 20 as tech stocks like Yahoo! (YHOO) and Research in Motion (RIMM) fell sharply.

Traders were also fretting the fact that the broad S&P 500 pierced its 200-day moving average, an important support level. The index also ended in the red for 2009 for the first time since late May.

“It is a little disturbing. From a trader’s perspective, this gets a little scary. We don’t see support for a little while lower from here,” NYSE trader Ben Willis of VDM Institutional Brokerage told FOX Business.

Economic concerns manifested again on Monday as crude oil settled at its lowest level since June 3 and European markets were washed in a sea of red. The lower oil prices, while a welcome sign for cash-strapped consumers, sent shares of energy stocks like ExxonMobil (XOM) and Hess (HES) tumbling. The sector closed 5% lower.

Crude, which slumped last week for the first time in five weeks, came under heavy pressure as the dollar strengthened and the World Bank lowered its economic forecasts, saying the global economy will contract by nearly 3% this year and grow just 2% next year. Crude settled at $66.93 a barrel after sinking $2.62, or 3.77% -- its worst one-day percentage loss since May 15.

It wasn’t just oil as copper plunged 5.3%, dragging down mining and metal stocks like Freeport McMoran (FCX) and U.S. Steel (X).

While Monday’s schedule was very light, traders are keeping an eye on a pair of multi-day events later this week that are likely to move the markets.

First, the Federal Reserve is set to begin a two-day meeting on Tuesday where the central bank is widely expected to keep interest rates at record lows but could signal an exit strategy.

Also, the bond markets will return to the spotlight as the Treasury Department plans to sell a record $104 billion in notes this week, including $40 billion of two-year Treasuries on Tuesday. If the auctions fail to generate healthy demand, fears about inflation and higher rates could return to the equity markets.

Corporate Movers

Apple (AAPL) CEO Steve Jobs had a liver transplant while on medical leave but is still expected to return to the tech giant later this month, possibly working part-time initially, The Wall Street Journal reported. Separately, Apple said it sold more than one million iPhone 3GS models in the first five days since its release, exceeding the Street’s expectations.

Goldman Sachs (GS) is on track to enjoy its most profitable year ever thanks to a lack of competition and soaring revenue from trading foreign currency, bonds and fixed-income products, according to the Guardian , a U.K. paper. The results could trigger the biggest bonus payments in the bank’s 140-year history, the paper reported. However, a Goldman source downplayed the report to FBN, saying it’s too early to predict profits and compensation.

Merck (MRK) and Schering-Plough (SGP) said U.S. regulators have requested more information on the drug makers' proposed merger. However, the companies said their transaction is still on track to close in the fourth quarter.

Walgreen (WAG) said its third-quarter net income tumbled by a worse-than-expected 8.7% to 53 cents per share. The drug store’s sales grew by an in-line 8%.

Eastman Kodak (EK) announced it will stop making its Kodachrome color film this year as demand has dropped off amid new technology. The iconic film became the world’s first successful commercial color film in 1935.

Global Markets

European markets led the way lower as London's FTSE 100 fell 2.57% to 4234.05, France's CAC 40 sank 3.04% to 3123.25 and Germany's DAX tumbled 3.02% to 4693.40.

In Asia, Japan's Nikkei 225 gained 0.41% to 9826.27, Hong Kong's Hang Seng advanced 0.77% to 18059.55 and China's Shanghai Composite rose 0.55% to 2896.30.

Sonntag, 21. Juni 2009

FOXBusiness.com's Week in Review: June 15-19, 2009

Monday

This week, full of news of financial reforms, started out with Treasury Secretary Tim Geithner and White House economic adviser Larry Summers’s op-ed in the Washington Post , outlining some of those reforms the Obama Administration is proposing. One idea is creating a sort of financial czar to oversee the sector and prevent a future crisis.

Also heavily covered this week was health care. President Obama was in Chicago Monday, appearing in front of the American Medical Association, trying to win the organization’s support for his ideas of reforming the health care system. The reforms he would like to see in place are intended to provide insurance coverage for Americans who don’t have it.

Oil prices, which have been hitting recent highs, fell Monday, taking the Dow down with them. The average fell 187 points, closing at 8612.

Langone on Charitable Giving

Langone on Health-Care Reform

Cavuto's Deal: Big Deals Stink

Cavuto's Capper: Shrek vs. Iran

Nationwide Average
$2.69 a gallonTuesday

The producer prices report was released Tuesday, showing that prices rose 0.2% in May, lower than the expectation of a 0.6% increase. Compared to last year’s number for the same month, however, they fell the most in 60 years. A significant portion of the increase can be attributed to energy costs, which rose 2.9%.

GM Brands Being Sold Dept.: General Motors (GM) said it reached an agreement to sell its Saab brand to a consortium led by Swedish company Koenigsegg. Interestingly, Koenigsegg is a pretty small company compared to the Saab brand. The deal is expected to be finalized by the third quarter, but details on pricing were not released.

The first estimate of health-care reform legislation’s cost puts it at $1 trillion over the next 10 years. That’s according to the Congressional Budget Office and is just an initial estimate for parts of a plan put together by Sen. Ted Kennedy (D-Mass.) aimed at cutting the number of uninsured people in the country by about a third.

Madoff Victims Ask Judge for Max Ruling

Future of BofA’s Blackrock Stake

Cavuto’s Deal: Democrats Are Worried

Capper: Congress in Driver’s Seat
Wednesday

The consumer price index report was released Wednesday, showing that prices were slightly up 0.1% in May. This was below expectations of a 0.3% increase. But at an annual pace, they have fallen at a rate not seen in almost 60 years.

Meanwhile, President Obama continued touting his proposals for reforming the nation’s financial system with new regulations. Some of his plans would include doing away with the Office of Thrift Supervision and creating a new agency to protect consumers. The President said these changes are intended to bolster the free markets, not impede them.

TARP Repayment Dept.: Several big banks announced they had paid back the federal loan money they received under the Troubled Asset Relief Program Wednesday.

These included:

Goldman Sachs, which repaid $10 billionU.S. Bancorp, which repaid $6.6 billionBB&T Corp, which repaid $3.1 billionMorgan Stanley, which pad back $10 billionAnd JPMorgan Chase, which repaid $25 billion

Spitzer: Wouldn't Have Been for Bailout

Spitzer: We All Make Mistakes

Cavuto's Deal: It's Not Just Business

Cavuto's Capper: Fair and Balanced
Thursday

Geithner took over President Obama’s beat Thursday, urging quick action on financial regulatory reform. He was testifying in front of the Senate Banking Committee, addressing the administrations proposals. This was one of several appearances he will make before the committee. Democratic leaders in Congress say they plan to pass reform legislation by the end of the year.

FOX Business obtained a copy of a letter former billionaire Stanley Chais wrote accusing Goldman Sachs (GS) of not complying with agreements to release funds. Chais was a victim of Bernard Madoff’s scheme. His Goldman Sachs account was frozen by bankruptcy trustee Irving Picard, despite that there was no court order to do this. Because of this, he hasn’t been able to pay for medical and living expenses.

Health Care's Expensive Twists and Turns

Beck Brings 'Common Sense'

Richard Simmons: The 'Fat Czar'

Cavuto's Capper: Rewarding Ben?
Friday

Friday was Apple’s (AAPL) big day, as the company officially launched its iconic iPhone 3G S, the newest version of the smartphone. There certainly wasn’t any less hype over the phone this year, but lines and crowds were less than last year’s when many customers had to wait weeks before getting their hands on one. This time around Apple and its exclusive U.S. carrier AT&T allowed customers to pre-order the phone. Some even had it shipped directly to them from Apple on the release date.

Allen Stanford Dept.: The Texas Billionaire Allen Stanford, as well as four co-conspirators, was charged with 21 counts of fraud, said the Department of Justice. Among the co-conspirators are: Laura Pendergest-Holt, the chief investment officer; Gilberto Lopez, chief accounting officer; Mark Kuhrt, global controller; and Leroy King, former chairman of Antigua’s Financial Services Regulatory Commission;

Who’s the joke on now? World Wrestling Entertainment (WWE) and General Electric (GE) may be liable for breaking securities law after the USA Network, owned by GE, put out a fake press release that could have caused shares of WWE to fall 6% on Tuesday. USA Network said one of WWE’s shows was sold to Donald Trump as a joke.

Negotiating Severance Pay

Should Small Biz Rely on Government?

DOJ Tells SEC to ‘Back Off’ Stanford Case

TARP CEO’s Flying on Your Dime?

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Democrats May Give Health-Care Reform Numbers a Tweaking

Frustrated with high cost estimates for health care reform, some Democratic leaders sound ready to turn to a time-honored Washington tradition to push them down: fudge the numbers.

On Thursday, one Senate Democrat managing health care reform legislation, Sen. Christopher Dodd (D-Conn.), and the Speaker of the House, Rep. Nancy Pelosi (D-Calif.), questioned the Congressional Budget Office's preliminary estimates of parts of two reform plans, each put at more than $1 trillion over 10 years. The higher-than-expected projections have given Republican critics new ammunition to attack them -- and created new hurdles for supporters.

“There is no denying that the CBO numbers came as somewhat of a surprise to all us,” one Senate Democratic leadership aide told FOX News on Wednesday. “We had no idea they would be that high. There is a several-hundred billion difference between the numbers CBO came up with and what was expected.”

The aide added that while Democrats were reviewing “policy adjustments” to possibly reduce the cost of a plan, “we are, of course, examining CBO’s assumptions.”

HOUSE DEMS HEALTH CARE PROPOSAL

Public health care plan, exchangesIndividual business mandates2% tax for uninsured individuals8% payroll tax for uninsured businesses

Dodd was more blunt. He is chairing the Senate Health, Education, Labor and Pensions Committee in the absence of Sen. Edward Kennedy (D-Mass.), who is fighting brain cancer.

“Their numbers are helpful, but I'm not going to write a bill only because it has to pass some unnamed people down at CBO,” Dodd said at a press briefing. “Others may decide that's the end all. I don't… The idea that everything gets deferred to CBO or gives them the power to cancel ideas in our bill... I've never heard of that idea before being raised on a legitimate and important piece of legislation like this.”

At the end of the committee hearing Thursday, Dodd announced that members would meet with CBO officials behind closed doors on Monday “so that we can talk to these folks about the numbers.”

In her weekly press briefing, Pelosi said, “You name any positive investment that we make, that we know reduces the cost, brings money to the Treasury... but [it is] never scored positively by the CBO…It’s frustrating.”

The comments could be intended to pressure CBO to revise its estimates, known in budget circles as “scoring.” They also could signal that some Democratic leaders are considering a procedurally easy way to reduce the costs: discard the CBO’s estimates in favor of a more sympathetic analysis. Among other maneuvers, they could turn to the President’s Office of Management and Budget for more optimistic estimates.

“In arithmetic disputes, CBO often takes the more cautious position, estimating somewhat lower economic growth and higher outlays,” wrote Allen Schick, a senior fellow at the Brookings Institution, in a book on the federal budget. “Consequently, Congress sometimes finds itself at a disadvantage using CBO numbers. On occasion, therefore, Congress has directed CBO to use OMB assumptions in scoring legislation. The practice [is] known as ‘direct scoring.’

“There’s ample precedent for this,” said budget expert Stanley Collender of Qorvis Communications LLC in Washington, D.C., adding that for years, politicians on both ends of Pennsylvania Avenue have picked the best numbers to advance policy proposals. “It’s up to Congress to decide what numbers it’s going to use at anytime. They can’t delegate that to an agency.”

But dismissing CBO’s analysis could also open Democrats to new attacks by reform critics on the credibility of the process.

“Obviously, there are huge political implications in this stuff,” Collender said.

The CBO is supposed to be a nonpartisan arbiter of cost estimates of policy proposals, though Congress -- and thus the party that controls it -- picks its director. In January, Democrats selected Douglas Elmendorf, a Harvard economist and veteran Washington budget analyst, as the new CBO head.

In Congressional testimony in March, Elmendorf talked about the difficulty in making projections in health-care reform.

“Savings from some initiatives may not materialize because incentives to reduce costs are lacking,” he said. “In some cases, estimating the budgetary effects of a proposal is hampered by limited evidence.”

At the CBO’s Web site, he has been blogging extensively about his agency’s analysis.

“When CBO evaluates policies, the agency aims to reflect the middle of the range of expert opinion about likely outcomes,” Elmendorf wrote this week. “For any particular policy option, CBO carefully reviews the relevant empirical evidence and examines the incentives that would be created to control costs and the factors that might limit the success of those incentives.”

Donnerstag, 18. Juni 2009

Dow's 3-Day Dive Halted; Techs Prevent Nasdaq Rally

The Dow’s three-day slump came to an end on Thursday as a pair of economic gauges climbed to their highest level since the height of the credit crisis, raising hopes of an economic recovery.

However, tech stocks tumbled amid pre-earnings jitters, sending the Nasdaq Composite to its third down day in the past four sessions.

Today's Markets

The Dow Jones Industrial Average rose 58.42 points, or 0.69%, to 8555.60, the Standard & Poor's 500 added 7.66 points, or 0.84%, to 918.37 and the Nasdaq Composite sank 0.34 points, or 0.02%, to 1807.72. The consumer-friendly FOX 50 climbed 3.47 points, or 0.52%, to 676.96.

Stocks climbed out of the doldrums after the Philadelphia Fed's regional manufacturing index unexpectedly jumped to nine-month highs. While the Dow rallied for the first time since Friday, the gains weren't huge and the index recovered just a portion of this week's 300-point decline.

“It continues along the theme over the last several weeks in that the moves aren’t big. Although we’re still in an uptrend, it just seems to be getting tired,” said Richard Sparks, senior equities analyst at Schaeffer’s Investment Research.

The vast majority of the Dow's 30 members closed in the green, led by banks JPMoragn Chase (JPM) and Bank of America (BAC). The biggest percentage losers on the index included Intel (INTC) and Caterpillar (CAT).

The Nasdaq Composite, which broke a two-day slide on Wednesday, lagged behind the broader markets as some tech stocks like Electronic Arts (ERTS) and Yahoo! (YHOO) slumped ahead of BlackBerry maker Research in Motion's (RIMM) quarterly report.

Financial stocks led the way up for the markets as banks like KeyCorp (KEY) and Wells Fargo (WFC) bounced back after the group sold off Wednesday on a slew of credit ratings downgrades.

Stocks turned solidly positive after the Philadelphia Fed's regional manufacturing survey surged in June to a -2.2 reading, up sharply from -22.6 in May and well above the -18 reading economists had expected. It was the highest level for the survey since September, showing a big improvement in sentiment among manufacturers.

At the same time, the Conference Board's leading economic indicators index jumped by 1.2 points in May -- its largest one-month jump since March 2004. The index climbed to 100.2, the highest level since September.

“These reports today are seemingly indicating a bottoming process as far as the economy is concerned,” said Sparks.

Also, the Labor Department’s new unemployment report revealed continuing jobless claims plunged by 148,000 to 6.69 million -- the first drop since early January and the largest one-week drop since Nov. 2001. The drop in continuing claims, which are filed by those out of work for more than one week, may have less to do with stabilization in the job market and more to do with an exhaustion of benefits, which on average last 26 weeks.

“The decline will be noted as being further evidence the current recession is waning, helping to boost equity prices and bond yields,” Dan Greenhaus, equity analyst at Miller Tabak, wrote in a note. “Extracting a one-week decline and making a larger case is premature; one week does not a trend make.”

The government also said initial jobless claims climbed by 3,000 last week to 608,000, more or less in line with expectations.

Meanwhile, the markets continue to closely mirror the price of crude oil, which tends to boost energy stocks as it rises. A day after breaking a three-day slump, crude climbed 34 cents per barrel, or 0.48%, to settle at $71.37.

Corporate Movers

JM Smucker (SJM) easily beat the Street with an adjusted-profit of $1.02 per share as its sales soared 81% to $1.07 billion. The jelly and preserves company also boosted its 2010 profit guidance.

Liz Claiborne (LIZ) lost one-quarter of its market value after the apparel company forecasted a deeper-than-expected loss in the second quarter.

Discover Financial (DFS) reported a second-quarter profit of 43 cents per share even as it increased provisions for loan losses by 91% to $530 million. Analysts had been expected a loss of 29 cents per share.

WebMd (WBMD) announced an all-stock deal to acquire parent company HLTH (HLTH) eight months after the two companies abandoned a merger due to the credit crisis.

Carnival (CCL)beat the Street with a second-quarter profit of 33 cents per share on $2.9 billion in revenue. The cruise operator said booking volumes for the second half are up 26% from a year ago, though ticket prices are substantially lower.

Winnebago (WGO) reported a deeper-than-expected quarterly loss of 29 cents per share as its revenue tumbled by nearly 33%. The mobile home company said its dealer inventory has tumbled by almost 50% from last year.

Jefferies (JEF) said it became U.S. primary dealer on Thursday, joining 16 other financial companies that can do business directly with the Federal Reserve.

Global Markets

European markets shed earlier losses to end mostly higher. In London, the FTSE 100 climbed 0.06% to 4280.86, France's CAC 40 rallied 1.04% to 3194.06 and Germany's DAX rose 0.78% to 4837.48.

In Asia, Japan's Nikkei 225 slumped 1.39% to 9703.72, Hong Kong's Hang Seng lost 1.7% to 17776.66 and China's Shanghai Composite rose 1.56% to 2853.90.

Market Winners & Losers: Cigna, Harman International

The markets dropped for the second day in a row as concerns about the strength of economic recovery continue to swirl. The Dow lost 1.3%, the S&P dropped 1.3% and the Nasdaq fell 1.1%.

Here are Tuesday’s winners and losers:

Winners

Cigna Corp. (CI)
The ongoing battle over health-care reform benefited Cigna shares on Tuesday, which surged 5.6%. CI came out the big winner, closing at $21.54 – a gain of $1.14.

General Motors Corp. (GMGMQ)
The auto giant made news again as a deal to sell Saab to a Swedish company made headlines. Shares rose 7 cents, or 5.6%, to $1.33.

Aetna Inc. (AET)
The health insurer followed the sector higher, adding 4.7% to close the session at $23.58, a gain of $1.05 on the day.

Hartford Financial Services Group Inc. (HIG)
Hartford reversed much on Monday’s losses, gaining 3.8% on Tuesday. HIG ended the day at $11.94, a gain of 44 cents.

Qwest Communications International Inc. (Q)
Qwest shares climbed 3.8% higher on Tuesday, last trading at $4.13, a gain of 15 cents.

Losers

Harman International Industries Inc. (HAR)
HAR announced it was selling $9 million in common stock and shares flopped. The company’s stock lost $2.91, or 12.5%, closing Tuesday’s session at $20.40.

E*TRADE Financial Corp. (ETFC)
The online financial-services company followed market trends, ending Tuesday at $1.65 – a loss of 16 cents, or 8.8% on the day.

Zions Bancorp (ZION)
Concerns about commercial real estate caused shares to fall 7.7% on Tuesday. ZION last traded at $13.83, a loss of $1.15.

Best Buy Co. Inc. (BBY)
Restructuring charges hampered earnings for the nation’s biggest electronics retailer. BBY shares fell $2.82, or 7.3%, to end Tuesday at $35.84.

Nordstrom Inc. (JWN)
Nordstrom followed the retail sector lower, with shares sliding 6.8% on Tuesday. JWN ended the session at $18.99, a loss of $1.39 on the day.

Mittwoch, 17. Juni 2009

Obama Touts Financial-Regulation Proposals

President Obama said his Administration's proposals for financial-regulatory reform are meant to promote market innovation and long-term economic health without allowing for abuse.

The Administration’s proposals need to be implemented quickly, senior Administration officials said Tuesday evening in a discussion of the plans that include abolishing the Office of Thrift Supervision and creation of a financial consumer-protection agency.

An official said that the proposals would be sent to Capitol Hill imminently, adding that “the costs of inaction are apparent.” Indeed, the Administration released more details on the proposal to Congress with the distribution of an 85-page white paper. See the paper at the bottom of this story.

Much of the information about the proposals and the Administration’s five key elements to reform had already come out.

Those five elements are:
--Strong oversight of financial firms.
--Strengthening the regulation of core markets and infrastructure.
--Strengthen consumer protection.
--Ensure the government has the tools to effectively manage financial crises.
--Ensure high standards, not just in the U.S. but also globally.

The Office of Thrift Supervision will be abolished and taken under the Office of the Comptroller of the Currency, which will be renamed the “National Bank Supervisor,” an official said. That official added that the thrift charter would be eliminated to “eliminated the possibility for arbitrage between federal charters.”

The officials said a financial-services oversight council would be created, and chaired by the Treasury Department. They said firms would face higher capital requirements and higher scrutiny.

The Federal Reserve is slated to serve as the supervisor at the holding-company level.

Also, there would be a “fundamental reassessment of the design and structure of regulatory capital requirements.” Hedge funds and other private pools of capital would be regulated.

The Administration is seeking “appropriate” regulation of derivatives, credit-default swaps and other securities, and wants to make sure the securities “are not marketed incorrectly to unsophisticated parties.”

The Administration will also call for “a new, strong, independent agency with full authority to protect consumers from unfair practices.”

The consumer agency would not have authority over products regulated by the Securities and Exchange Commission, but instead the SEC and that agency would coordinate, which the Administration anticipates “will keep both agencies strong and focused on their core mission.”

All big firms would have to have a plan for orderly resolution to “reduce the impact of failure,” an official said.

Also, the U.S. will work “to make sure there are high standards, not just in the United States but globally,” the official said, adding that the government would continue to work with the G-20, Basel committee and the entire international community to make that happen.

Officials said they “have not done a detailed cost estimate” of the changes.

White Paper

Publish at Scribd or explore others: Law & GovernmentBusiness & Law

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What You Need to Know About Streaming FOXBusiness.com LIVE

What is Apple iPhone OS 3.0?

Apple makes major software updates to its iPhone Operating System that when downloaded and installed by an iPhone user enables new features and capabilities on the device. iPhone OS 3.0 is the third major release of the Operating System. One of the new features Apple has enabled for websites is the ability to live stream directly through the Safari Browser. This enables sites like FOX Business to stream live content to its users. A list of the other enhancements to the software is available at http://www.apple.com/iphone/softwareupdate/.

How do I download iPhone OS 3.0?

The new software is available for download on June 17th. Simply sync your iPhone with iTunes and it should prompt you to download the new Operating System.

Has FOX Business launched an iPhone Application?

No. FOX Business has not launched a downloadable iPhone Application. FOX Business has a dedicated website (http://iphone.foxbusiness.com) that optimizes specifically for the iPhone. For more details see below.

What does FOX Business currently offer on the iPhone?

FOX Business offers an iPhone website that is built specifically for the device. This includes iPhone friendly graphics and navigation and fox business video (on demand and streaming) that plays on the device. The site also includes the Top Stories from FOXBusiness.com and real-time stock information and stock search.

How do I get to FOX Business iPhone Web site?

To access the FOX Business iPhone site simply type in http://www.foxbusiness.com or http://iphone.foxbusiness.com from your mobile safari browser.

How do I access FOX Business Live on the iPhone?

First, you need to download and install the iPhone OS 3.0. Next, go to the FOX Business iPhone website on your Safari Browser. Next click the “LIVE Watch” button in the navigation bar at the top of the page. Please note, FOX Business Live is only available for streaming from 12PM – 1PM.

What network speed do I need to stream FOX Business Live on the iPhone?

If you are connected to WiFi or 3G you should be able to stream FOX Business Live.

On the 3G network the quality of the video is dependent on the signal from your carrier, if the signal is weak the quality may be lower. You cannot stream FOX Business Live with anything less than a 3G signal (ie Edge or other).

Bulls Stay Dormant as Dow Loses 107

The bulls may be slowly losing their grip on Wall Street as Dow tumbled 107 points on Tuesday -- capping its worst two-day slide in nearly three months -- amid sinking energy stocks and an ugly day for the retail sector.

Today's Markets

The Dow Jones Industrial Average lost 107.46 points, or 1.25%, to 8504.67, the Standard & Poor's 500 sank 11.75 points, or 1.27%, to 911.97 and the Nasdaq Composite tumbled 20.20 points, or 1.11%, to 1796.18. The consumer-friendly FOX 50 fell 9.42 points, or 1.38%, to 675.39.

Tuesday's triple-digit tumble came in the face of a pair of better-than-expected economic reports that showed an unexpected surge in new home construction and the largest annual decline in producer prices in 60 years. Instead, the markets closed sharply lower as oil's $2 rally evaporated and retailers soured on Best Buy's (BBY) earnings report.

“The disturbing thing is they look a little tired to me. The kind of [economic] news we had this morning… if that happened a week ago, the market would have been up 200 points. I think we’ve run into this wall,” NYSE trader Ted Weisberg of Seaport Securities told FOX Business, pointing to the 9000 level on the Dow as a major point of resistance.

Stocks ended at session lows, with the Dow losing roughly 50 points in the final 10 minutes alone. The index has lost nearly 300 points this week alone -- the worst two-day slide since March 30. The ugly start to the week drags the index back into the red for 2009 and leaves Wall Street's four-week win streak in doubt.

“I think the market is starting to deteriorate here. It really needs to turn course quickly or we could have a healthy correction with the Dow returning to late-May lows,” said Nick Kalivas, director of financial research at MF Global.

Last week the bulls put the finishing touches on a 14-week surge that pushed the Dow up nearly 33% -- the biggest such move since March 1975. But Kalivas said if the benchmark index is unable to hold the 8500 level, it could sink down to 8250.

Nearly all 30 stocks on the Dow ended with losses, led by Bank of America (BAC), General Electric (GE) and Disney (DIS). On the upside, Microsoft (MSFT) and Pfizer (PFE) eked out minor gains.

Energy stocks like ExxonMobil (XOM) and Schlumberger (SLB) dragged the markets lower as crude closed in the red for the third-straight day. After nearly eclipsing $73 per barrel early in the day, crude settled at $70.47, down 15 cents, or 0.21%. Gold held onto its gains, climbing $4.70 per ounce, or 0.51%, to $931.60.

At the same time, retailers like Abercrombie & Fitch (ANF) and J.C. Penney (JCP) sold off following Best Buy's better-than-expected earnings report. While the electronics retailer beat the Street with a 15% decline in net income, it declined to boost its full-year outlook, citing "limited visibility to consumer spending in the back half of the year." The comments helped send Best Buy's shares down nearly 8%.

Meanwhile, Kevin Warsh, a Federal Reserve governor, warned that just because stocks have surged off their lows doesn’t mean the U.S. economy will follow suit. "The panic's hasty retreat should not be confused with robust recovery," said Warsh. “The rather indiscriminate bounce off the bottom -- across virtually all assets and geographies -- may be more indicative of a one-time reset, which may or may not be complete."

Data Dump

Despite recent inflation fears, the Labor Department said Tuesday its produce price index climbed just 0.2% in May, a softer read on inflation than the 0.6% increase expected by economists.In fact, prices were off by 5% from a year ago, the largest annual decline in 60 years. Excluding volatile food and energy costs, prices were down 0.1% from April -- the first decline in nearly three years.

The Commerce Department said housing starts surged by 17% last month from April’s record low -- more than twice as much as economists expected. Single-family housing, a key indicator of demand in the struggling housing market, rose for the third-straight month. Home-building stocks like Centex (CTX) and Lennar (LEN) closed modestly higher.

Corporate Movers

General Motors unveiled plans to unload its unprofitable Saab unit to Swedish boutique auto maker Koenigsegg Group for an undisclosed sum. Separately, CEO Fritz Henderson told The New York Times that GM plans to reduce its executive ranks by 35% from last year.

La-Z-Boy (LZB) surged by almost 20% a day after the furniture maker surprised the Street with an adjusted-profit of 7 cents per share. Analysts had expected an 11-cent loss for the company, which suffered a 23% plunge in revenue.

News Corp.’s (NWS) social-networking site MySpace released plans to slash its staff by 30% to reduce “bloated” staffing levels. Rupert Murdoch’s News Corp. is also the parent of FOX Business.

BlackRock (BLK) said its deal to buy Barclays Global Investors from Barclays (BCS) has been accepted by the British lender and will close in the fourth quarter.

Matrixx Iniatives (MTXX) lost more than two-thirds of its market cap after the FDA told the drug maker to stop selling the intranasal versions of its cold medicine Zicam due to 130 reports of people losing their sense of smell. While Matrixx called the FDA action “unwarranted,” it said it may remove the products from the marketplace.

Genzyme (GENZ) tumbled after the biotech company said it will stop production at a Boston plant after finding a virus there. The halt will impact two of the drug maker’s best-selling drugs.

Sara Lee (SLE) is blocking private-equity firms, including Blackstone Group (BX) and Kohlberg Kravis Roberts, from taking part in the auction of its household and personal-care business, the New York Post reported. Goldman Sachs (GS), the investment bank in the auction, is reportedly requiring suitors to bid for the entire division.

Global Markets

European stocks were mixed following a two-day dive. London's FTSE 100 gained 0.06% to 4328.57, Germany's DAX climbed 0.02% to 4890.72 and France's CAC 40 slid 0.17% to 3213.95.

In Asia, Japan's Nikkei 225 slumped by 2.86% to 9752.88 and Hong Kong's Hang Seng fell 1.8% to 18165.50. China's Shanghai Composite sank 0.48% to 2776.02.

The National Summit: Day One

The economic future of the U.S. was the topic on everyone’s minds at the three-day National Summit in Detroit. FOX Business Network Anchor Alexis Glick talked with some of the attendees. Here’s what happened on Day One.

Detroit, Mich. Hosts First National Summit

Beth Chappell, president and CEO of the Detroit Economic Club, noted that the discussion topics included everything from technology and energy to environmental manufacturing.

Wayne County, Mich., executive Robert Ficano said Michigan has been facing economic troubles for more than six years.

“Detroit's been downsizing, and the auto industry has been the primary challenge, but we are resilient people, we have great engineers and we have a lot of people that will be able to come back, and I really believe in the area,” he said.

Bob Paul, president and COO of Compuware Corp. (CPWR), believes technology is the bigger part of the industry.

“First off, you have to have something different to bring into the marketplace,” Paul said. “I believe you can run from capitalism, but you can’t hide. At the end of the day, if businesses are doing well, the jobs are going to grow. If we can continue to deliver thought-leadership into technology, it will create a buzz and an ecosystem around Detroit much as it did in the auto industry many decades ago.”

George Jackson, president and CEO of Detroit Economic Growth Corporation, said the group is doing more than throwing money at the problem -- that training people for development, as well as entrepreneurship, is part of the equation to turn around the economy.

In order to bring back Detroit, Paul said fixing the auto industry is the primary goal, which includes bringing in new innovative ideas in order to compete. Also, there is a great source of life sciences, with the best health care capabilities, and lastly, there are unique incentives for the film industry as well as information technology.

“On hope for the people of Detroit --You have to give them a plan that they believe in,” Ficano said. “You have to create leadership that can lay out a long-term strategy that can give them a sense for state and local government and for the companies operating here.”

ArvinMeritor Inc. Less Affected By Economy

Chip McClure, CEO of ArvinMeritor Inc., a manufacturing company, said his business has not felt the economic downfall as much as most would expect.

ArvinMeritor diversification into heavy trucks and specialty vehicles, along with automotives, has likely given it a better chance to survive in this economy.

McClure said people should still get into the manufacturing side of things, because there is exciting technology and innovation leading toward new growth.

“I think one of the things we have an obligation to do, both in the private and public sectors, is to make the U.S. a good place, not only for U.S.-based companies, but foreign companies to manufacture here so it's really creating an environment for people to invest in,” McClure said.

Codexis Inc. Promotes Biofuels

Codexis Inc., a clean-technology company that develops industrial biocatalysts, has recently moved into biofuels like biogasoline and biodiesel, according to CEO Alan Shaw.

“We develop and manufacture super enzymes. These super enzymes can affect cleaner, cheaper and faster processes, which can be deployed across a broader rear of multibillion-dollar industries,” Shaw said.

NALCO Helps the Environment

NALCO (NLC) works to reduce environmental footprints -- and according to CEO Erik Fyrwald, China is one of the company’s largest investments because it seeks environmental change.

“If China can get on the right track for the environment, then that will have a huge impact for the globe and pull along the rest of Asia,” Fyrwald said. “But China getting on the track is a big opportunity for China, the world and for Nalco.”

“The government has to recognize that a strong industrial, environmental and energy policy can enhance the ability of U.S.-based companies to drive the technologies that are really going to meet the world's needs in these areas,” he said.

PatientLikeMe Brings Together People With Similar Health Issues

PatientsLikeMe builds free online communities for patients with life-changing illnesses, and has around 13,000 patients from the Multiple Sclerosis community sharing information on the site. Altogether, the Web site has more than 36,000 patient members across its communities.

“What's different about what we do is we help them share structured health information like outcomes, treatments and symptoms all over time in a way that helps them learn from others like them and ultimately what happens to a patient like them,” said Ben Heywood, CEO of PatientsLikeMe.

The company takes the information it learns from its patients and sells the data to pharmaceutical and medical companies to help them develop better products.

Ford Motor Co. Hopes to Take the Lead in Fuel Economy

Bill Ford Jr., Ford’s (F) executive chairman, says he never imagined he’d see two major competitors in bankruptcy with government ownership.

“I think it's important we have transparency, especially at the decision-making level, with GM as in regards to the government,” Ford says. “I really like where we are. I love the fact that we are independent, that we can make quick decisions, that our executives are not distracted by extraneous things and we have a plan and we are sticking with it.”

Ford said there are competitive issues, but because the company has independence, it has a better advantage.

“I certainly wouldn't trade places with anybody else,” he said.

Ford thinks the company has sufficient funds to get through all of this, and he believes the company can survive without a bailout.

“We want to be the fuel economy leader is everything we participate in… And I do think an energy policy is something this country needs,” he added.

Humana Inc. on Government Plans for Health Care

CEO Michael McCallister of health insurer Humana Inc. (HUM) said he agrees with various things President Obama’s Administration wants to fix, including the need to rising costs and technology issues.

“Costs are rising for lots of reasons,” he said. “We have a non-system. It doesn't have any of the attributes of a system, with money spent in unproductive inefficient ways. It’s about getting at the underlining drivers of costs.”

McCallister believes the U.S. has to work on general wellness, and the underlying health of people, otherwise nothing done in the market is going to make any real difference.

“There are no quick fixes to this,” he said. “It will take a lot of different approaches.”

Humana doesn’t agree with all Obama’s policies and plans, and McCallister think it's important to not disrupt what’s actually working today, because 85% of people that have employer-based health insurance are relatively satisfied with it. However, McCallister told FBN we do have to step up with health care reform this year.

“I want the government to do what they always do best, and that is to set the rules and help the market be successful, but let the market flourish,” McCallister said.

General Motors Seeks Better Future

General Motors (GM) Vice President Tom Stephens thinks the most crucial aspect to selling cars on the lot today goes beyond the quality, reliability and durability. Customers are most interested in the technologies on board for leadership, fuel economy and safety.

“General Motors has an advanced propulsion technology strategy. In that strategy we are trying to reduce the emissions to zero, increase fuel economy significantly and reduce our dependence on petroleum,” Stephens said.

GM is working on conventional power trains and technologies, allowing these products to run on alternative sources of energy.

“We have got the electrification of the automobile,” he said. “What we are trying to do is bring out hybrids, plug-in hybrids, extended-range electric vehicles like the Volt, all the way up to fuel cells. We have a very robust portfolio moving forward.”

GM is a full line manufacturer, hoping to provide customers with a choice to buy whatever vehicle they like to buy and make sure their products have the highest fuel economy in every segment they compete.

“General Motors is going to come out of this a very customer focused, lean, agile, profitable company,” Stephens said.

Montag, 15. Juni 2009

Al Lewis: Picking Up The Pieces for One Chrysler Dealer

David Fitzgerald still loves Chrysler, even if Chrysler doesn't love him.

He'll never get it out of his veins.

"I would bleed Chrysler blue if you cut me," he said.

At 49, Fitzgerald owns Northglenn Dodge, north of Denver, Colo., but he's changing the name to ngdcars.com and selling used cars after the troubled auto maker terminated his franchise along with 788 of its other dealers.

"I was up 14% in sales .. at a time when Chrysler was down 40%," Fitzgerald told me.

So why'd you cut get? I asked.

"It's a mystery, ain't it?"

Chrysler is emerging from bankruptcy with Fiat SpA, the United Auto Workers, and the U.S. and Canadian governments as its owners.

Shedding 25% of its dealer base was a necessary part of the reorganization, a judge ruled, despite dealer protests that went all the way to Congress.

"I can't fix this," Fitzgerald said. "This is a historic bankruptcy. All bets are off. All contracts are off. Why did I get cut? Well, I'm cut. So it doesn't really matter."

He's had to whittle down his work force to 60 from more than 100. He's unloading his inventory of new Dodge cars and trucks from his 10.2-acre lot. He's scrambling together a new business plan. And moving on.

"This is part of my heritage," Fitzgerald said. "My father loved the Chrysler Imperial .. and started selling Chrysler product in 1959."

Fitzgerald remembers when dealers kept service departments on upper floors, accessible by concrete ramps. They were a blast when he was about 3 years old.

"I was just big enough to grab a floor jack," he said, "and I got on top of it and rode it down the ramp. Now, I could have died .. but nothing happened except it bounced off the railing at the end of the ramp."

Throughout his early years, Fitzgerald and his brothers swept floors, picked up trash, mowed lawns and washed cars. "If I wasn't in school, I was at the dealership working," he said.

In the late 1970s, Fitzgerald's father struggled with alcoholism, and Chrysler found itself pleading for government assistance.

"I came in one day and my key didn't fit," Fitzgerald said. "The locks had been changed because my father hadn't paid the sales taxes in nine months."

This quickly became front-page fodder.

"Let's just say the news reports weren't kind," he said. "Chrysler was in all this trouble, and here was a local dealer's store shut, repossessed, cars pulled out and parked in the back -- the worst thing that could ever happen to a car dealer.

"My mother was afraid to go to the grocery store," he recalled. "We left town pretty much in shame."

But from there, the Fitzgerald family made a comeback that was every bit as impressive as Chrysler's.

Fitzgerald's father went into treatment, never had another drink, and with help from an investor, acquired a bankrupt Toyota dealership in Pueblo, Colo.

Japanese cars were no easy sell in a union steel town in the early 1980s, yet the Fitzgeralds turned the dealership's fortunes.

"There wasn't very good salesmanship when we came in," Fitzgerald recalled. "These guys wandered around with sunglasses and cigarettes and talked about how the color of the tires matched the ladies' hair. It was a comedy."

The Fitzgerald's then went into the business of taking over troubled dealerships, boosting their sales, and selling them for a profit.

"I became a dealer when I was 27 years old," Fitzgerald recalls.

Eventually, he wanted a dealership he would operate on his own, as opposed to just flip, so he set his sights back to Northglenn.

"I chose to purchase this dealership in 1992 because it's where I grew up, and I believe in selling American cars," he said.

Over the years, he's collected 54 cars, most of them show-ready.

He's got a 1971 Plymouth 'Cuda with a Hemi; a 1971 Plymouth GTX with a Hemi; a 1969 Dodge Daytona with -- yeah, it's got a Hemi. He's also maintained his late father's enthusiasm for Imperials, even holding five rare Chrysler Imperial Ghia Limousines -- built between 1957 and 1965.

"When I come home at night, I take off my suit, spend time with my family .. and then I go out to my garage and work on my cars."

Fitzgerald said fretting about losing his Dodge franchise is a waste of time. Contracts, agreements and life-long loyalties mean nothing in bankruptcy court.

"This is heart-wrenching for me because I am a Dodge guy. I will always be a Dodge guy, even if I wind up selling something else .. But for me to complain is going to keep me from recovering."

He learned a long time ago that it's better to cheer.

"I'm going to be rooting for Chrysler to make it," Fitzgerald said. "The survival of the company that I still love depends upon it."

(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. The column is published each Tuesday and Thursday at 9 a.m. ET. Contact Al at al.lewis@dowjones.com or tellittoal.com)

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