Summer Rally Takes a Pause; Timothy Geithner Throws a Tantrum – August 4, 2009

Stocks Struggle After Rally

Stocks barely budged Tuesday as investors took a break from a huge rally that propelled Wall Street to nine month highs. Advancing stocks outnumbered decliners by nearly 4-to-3 on the New York Stock Exchange. A pullback was expected by many analysts after such a good run. The day’s economic news was mixed, with a housing report showing improvement. The news did little to move stocks in either direction. The financial sector advanced and commodity-oriented stocks declined. In corporate news, CVS Caremark Corp (CVS) posted a bigger-than-expected jump in quarterly profit. One day after automakers reported an increase in July auto sales, Toyota Motor Corp (TM) said that it lost $819 million in the fiscal first quarter. Bond prices reversed early gains and fell. The dollar remained weak against the euro and the yen.

Today’s Top News

The Commerce Department reported that consumer spending rose slightly in June. This comes on the heels of a GDP report showing that people were actually spending less. Don’t take this as a sign that the economy is improving because the increase in spending was most likely a result of higher prices on goods such as gasoline. Personal income has continued to dip as people deal with record job losses and underemployment.

Congratulations are in order for PepsiCo Inc (PEP). The world’s second largest soda maker has reached a $7.8 billion deal with Pepsi Bottling Group Inc. (PBG) and PepsiAmericas Inc. This news surprised analysts given the recent rejection of the agreement, but nonetheless all appears well between the companies.

Pepsi Bottling Group Follow Up: Is the Current Price Justified?

Goldman Sachs Group Inc (GS) Chief Executive Lloyd Blankfein issued a warning to employees. Avoid big ticket purchases or feel the wrath of my anger. Okay maybe he didn’t say it just like that, but he definitely wants employees to tone down their expensive purchases. This was obviously done to keep the heat off the company after the recent uproar about bonuses.

Video – Why is Goldman Running Scared?

While Goldman Sachs is passing out bonus checks, UBS (UBS) can’t seem to stop the red ink from taking over its balance sheets. The Swiss bank posted its third-straight loss, which totaled $1.3B. Despite the news, shares advanced during morning trading on word that the company received a tax break from the United States. UBS will fork over 5,000 names, so those individuals should probably start consulting their attorneys now.

Timothy Geithner is officially pissed off at financial regulators. The Treasury Secretary unleashed a profanity-laced tirade during a private meeting last Friday. This is not the first time that Timmy has blown his top with regulators. Sheila Bair is holding her ground and could care less about Geithner’s child like tantrum.

The Debate on Health Care is not over

With all the hype over earnings and economic reports, it looks like the health care debate has taken a backseat. People are probably less inclined to talk about it right now since Congress has gone on recess without passing health care reform. Let’s examine the latest talk around the water cooler.

The White House, its Congressional allies, and progressive organizations supporting health care reform have launched a new August offensive to write the narrative of the health care debate. Nancy Pelosi is ready to fight and stated that the “glory days are coming to an end for the health insurance industry in our country.”

Video – Senators Weigh In on Health Care Crisis

4 details you and your congressman need to know about health reform

President Obama appears to maintaining his cool despite finding it hard to deliver one of the biggest promises of his campaign. White House spokesman Robert Gibbs suggested that the White House is not concerned about vocal protestors seeking to create”manufactured anger.”

Video – Will Summer Break Kill Obama’s Healthcare Plan?

With health-care reform packages stalled as Congress leaves for August recess, many lawmakers and experts are weighing in on the issues causing the hold up.

Other Juicy Tidbits

If you are employed by the US Marine Corp, say goodbye to your Facebook, MySpace and Twitter accounts. USMC has banned the use of social networking sites due to security risks. The genius that came up with this plan has to be kidding. Let’s ship off our soldiers to war and then punish them a little more by stripping away one of the easiest ways for them to stay connected.

Trustee to Ruth Madoff: Show me the money and the receipts! Mrs. Madoff will have to report every purchase over $100 to the bankruptcy trustee.

The National Association of Realtors reported that pending home sales rose in June for the fifth straight month. The cheaper stuff is going first, so now may be the time to help the poor buy homes.

Housing Data: Moving Up, but Is It Helping the Economy?