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| Weekly Wrap Up |
Last week started off with a rough Monday session as all the major indices suffered losses. However, the markets quickly recovered throughout the week as stocks rallied into positive territory by Friday’s close. Although it was a short week due to the New Year, the markets’ surprisingly strong performance had investors entering the weekend on a high note. Big news on Monday included billionaire investor Kirk Kerkorian selling all his shares in Ford Motor Company (F: Charts, News, Offers) and Freddie Mac (FRE: Charts, News, Offers) announcing Raymond Romano as its chief credit officer. The government approved the issuance of a $5 billion lifeline to GMAC, LLC. In addition, Lehman Brothers (LEH: Charts, News, Offers) requested a deadline extension for its Chapter 11 bankruptcy filing. The company noted that its plan is very complex and as a result will take more time than anticipated. On Friday, Time Warner Cable (TWC: Charts, News, Offers) and Viacom (VIA: Charts, News, Offers) reached a deal to keep 19 Viacom channels on Time Warner’s cable network. Bank of America (BAC: Charts, News, Offers) officially completed its acquisition of Merrill Lynch. The growing uncertainty of the political situation in the Middle East drove the price for crude oil up $1.47 to $46.15 a barrel on the New York Mercantile Exchange. Overall, the dollar gained on major currencies while the price of gold dropped $4.80. More Market News
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| Economic News |
The financial crisis is a result of many bad decisions, but one of them hasn’t received enough attention: the 1998 bailout of the Long-Term Capital Management hedge fund. If regulators had been less concerned with protecting the fund’s creditors, our current problems might not be quite so bad. Long-Term Capital was advised by finance quants, or quantitative analysts, who made a number of unsound, esoteric bets, including investments in interest rate derivatives. When Russia's inability to pay its debts roiled global markets, the fund, saddled with high-leverage and off-balance-sheet obligations, was near collapse. (Source: New York Times) Full Story
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The year 2008 will be remembered as one that exposed the fatal flaws in free-market capitalism, sending it to an untimely death. Or will it? That capitalism's obituary is already being written suggests the enemies of the free market were waiting to pounce. Last week, Arianna Huffington, co-founder of the Huffington Post, wrote that laissez-faire capitalism, "a monumental failure in practice," should be "as dead as Soviet Communism" as an ideology. On National Public Radio, Daniel Schorr pronounced "the death of a doctrine" in his year-end review. (Source: Bloomberg) Full Story
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The current economic crisis is raising many legitimate questions about the failure of economists and financial analysts to foresee the housing bubble and warn of its collapse. There were, in fact, many warnings dating back more than seven years--but in the euphoria of rising home prices, no one listened. As time went by and no crash occurred, many of those doing the warning lost credibility or decided that perhaps they were wrong and moved on to other issues. I first created a folder on the housing bubble back in 2001 and began collecting material on the subject. (Source: Forbes.com) Full Story
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| Business News |
Longtime investors in chipmaker Advanced Micro Devices (AMD: Charts, News, Offers) are used to disappointment- why not end 2008 with another bleak signpost for the months ahead? The company reported late Monday in a Securities and Exchange Commission filing that it laid off 100 more workers than expected during its most recent quarter (a total of 600), which would also result in a charge of $70 million, $20 million more than previously projected. That's not the really disappointing part -- for investors, not for the additional 100 now without jobs -- and it even led one media outlet to post the unfortunate headline earlier Tuesday " Intel (INTC: Charts, News, Offers), AMD Lead Broad Advance by Chip Issues." (Source: TheStreet) Full Story
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Ford Motor Co (F: Charts, News, Offers) expects industry-wide December U.S. auto sales to drop by some 35 percent from a year earlier with no sign of a turnaround in the first quarter of this year. Ford, the No. 2 U.S. automaker, expects that full-year sales of light vehicles in the world's largest market will drop to near 13.2 million for 2008, down from near 16.2 million in 2007, Ford's chief sales analyst George Pipas said on Friday. The only other time the U.S. auto industry has seen a similar 3-million unit plunge in sales over the course of a single year was during 1974 in the wake of the first oil shock, Pipas told reporters. (Source: Yahoo! Finance) Full Story
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The Federal Deposit Insurance Corp. on Friday was trying to work out a deal to sell failed mortgage lender IndyMac to a group of private investors. The FDIC had hoped to close the deal by the new year. One apparent hang up: a dispute with Fannie Mae (FNM: Charts, News, Offers) over IndyMac's formerly risky lending practices. Fannie, a mortgage finance giant run by the government, said it is negotiating with the FDIC to settle a claim it has about home loans IndyMac sold to Fannie. "Fannie Mae continues to work closely with the FDIC in an effort to resolve matters with regard to IndyMac Bank loans sold to the company and currently serviced by IndyMac Federal Bank," said a statement released by Fannie Mae. (Source: CNN Money) Full Story
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| Technology Focus |
Two top Dell Inc. executives recruited to help turn around the No. 2 PC maker are leaving as part of the second major staff shake-up in the two years since founder Michael Dell returned as CEO. Dell (DELL: Charts, News, Offers), once the top PC maker, has slashed jobs and struggled to regain market share it lost to Hewlett-Packard Co.(HPQ: Charts, News, Offers). Dell's stock has dived more than 60% this year. (Source: CNN Money) Full Story
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Consumer electronics buoyed the technology industry through the aftermath of the dot-com bubble. It outlasted the telecommunications boom, a mania for enterprise software and the end of Enron's bizarre energy trading schemes. It's a boom that Apple Chief Executive Steve Jobs has ridden better than anyone else, broadening Apple's focus to include digital music and movie products and services even as he revived Apple's PC business. Now, however, as falling housing prices crimp consumer spending and job losses mount, even the long boom in consumer electronics is on pause. (Source: Forbes.com) Full Story
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Many Zune owners successfully revived their failed music players Thursday morning, while others were still unable to overcome a leap year-related glitch that caused thousands of the devices to simultaneously stop working on New Year's Eve. "Mine is back up and working as of a minute ago! Thanks Zune Team," a user named "blcknwhte" posted at 9:19 a.m. ET on the Zune Web site's forum."I'm glad things are back to normal but this was a major inconvenience," posted someone named JaximFlash. "I have 2 Zune 30s and I had made a playlist of songs to play during a New Year's Eve party." Microsoft Corp. (MSFT: Charts, News, Offers), maker of the Zune, said a bug in the internal clock driver, related to the way the device handles a leap year, caused the malfunction in older Zune 30GB models. (Source: CNN) Full Story
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| Your Money |
When it comes to retirement, I've got a whole laundry list of issues I wish President-elect Barack Obama and his counterparts in Congress would tackle as soon as they are sworn in this month. But the U.S. deficit has hit record levels, so I'm trying to be realistic about what we can afford. With that in mind, I'm paring down my retirement wish list to three things that can make a big impact - without blowing a hole in the nation's finances. Don't force retirees to sell at the bottom. When you save in a traditional IRA or 401(k), you pay no taxes on the money you contribute and your investment earnings are sheltered from taxes during your working years. Once you reach the age of 70½, though, the IRS comes calling in the form of so-called required minimum distributions (RMDs). At that point you must start taking annual withdrawals from your 401(k) or traditional IRA (based on your life expectancy) and pay income tax on those funds. Fail to do this and the IRS will slap you with a nasty penalty. (Source: CNN Money) Full Story
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