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| Weekly Wrap Up |
Another roller coaster week for the stock markets ended with the major indices all posting losses of around 3-4%. All major indices posted losses early in the week, and despite gains on Thursday and Friday, the markets couldn't rise enough to counteract the earlier losses. On Friday, the Dow Jones was able to recover from losses earlier in the session, which at one point dragged the index below 8,000, before rising again to close at 8,281. This erratic trading pattern simply illustrates that investors and analysts still aren't sure what to expect in the future. Economic news is still bleak, the federal deficit is more than expected, retail sales are continuing to fall, and consumer prices continue to decline. Citigroup (C: Charts, News, Offers) remains in the spotlight, as the company announced a quarterly loss above $8 billion, as well as plans to split off part of the company which isn't doing as well. Technology stocks were another focus this week, with Yahoo (YHOO: Charts, News, Offers) naming a new CEO, and Apple (AAPL: Charts, News, Offers) CEO Steve Jobs announcing that he was stepping down for 6 months to deal with his health issues. Additionally, Nortel (NT: Charts, News, Offers) announced the company was filing for bankruptcy, Circuit City said they are closing the rest of their stores and liquidating their assets, and many companies including both Microsoft (MSFT: Charts, News, Offers) and Intel (INTC: Charts, News, Offers) were rumored to be expecting massive layoffs. Crude oil futures ended the week under $43. This week, the market is closed Monday for the Martin Luther King Jr. holiday, but will reopen on Tuesday. More Market News
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| Economic News |
The federal government already has run up a record deficit of $485.2 billion in just the first three months of the current budget year, the Treasury Department said Tuesday. The deficit is on track to surpass $1 trillion for all of fiscal 2009 and some economists believe it could go much higher. The deficit for December totaled $83.6 billion, a sharp deterioration from a year ago when the government managed a surplus of $48.3 billion. Wall Street economists surveyed by Thomson Reuters expected a slightly lower deficit of $83 billion. (Source: Yahoo! Finance) Full Story
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In another sign of the depth of the global economic slowdown, U.S. consumer prices increased just 0.1% in 2008, the smallest increase in 54 years, the Labor Department reported Friday.
The consumer price index fell 0.7% in December, the third decline in a row, led by an 8.3% drop in energy prices and a 0.1% drop in food prices. Economists surveyed by MarketWatch had given an average expectation for a 0.8% decline.
The CPI hasn't risen since its 0.8% gain in July, after which energy and commodity prices plunged.
Core prices -- which exclude food and energy prices -- were flat in December for the second straight month, as expected. The core CPI hasn't risen since September. (Source: Marketwatch) Full Story
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Sales at U.S. retailers dropped a steep 2.7 percent in December, government data showed on Wednesday, as a deteriorating economy forced consumers to cut back on spending during the key holiday period.
The dour data suggested the economy shrank even more sharply than had been thought in the fourth quarter, setting the stage for another big drop at the start of 2009 and raising chances the more than year-old U.S. recession will be the longest since the Great Depression.
"The U.S. consumer is reeling … the weakness in spending will likely continue through 2009 as households tighten their belts further," said Benjamin Reitzes, an economist at BMO Capital Markets in Toronto. (Source: Reuters) Full Story
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| Business News |
Bank of Montreal will buy the Canadian life insurance business of American International Group Inc (AIG: Charts, News, Offers) for about $305 million, the companies said Tuesday, the latest in a series of asset sales at distressed prices. AIG, which since September has received $152 billion in U.S. government bailout financing to avoid collapse, is scrambling to raise cash through the sale of some of its units. Toronto-based AIG Life of Canada, with 300 employees and 400,000 customers, sells insurance and retirement savings products such as universal and term-life plans, critical illness plans and annuities. (Source: CNN Money) Full Story
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H&R Block Inc. (HRB: Charts, News, Offers) Chief Executive Officer Russell Smyth expects that the largest U.S. tax preparer will have more than $1 billion in cash by April as the recession pushes more Americans to maximize their refunds. The surplus may be used to buy back shares of Kansas City, Missouri-based H&R Block, boost dividends or fund acquisitions, Smyth, 52, said yesterday in an interview. The firm served 20.7 million U.S. retail customers last year, a 2 percent annual gain, and expects faster growth in the season lasting through April. "We are in a cash business and we’ll have a lot of it at the end of this fiscal year," Smyth said. "That’s a tremendous competitive advantage because we’ll be able to make great strategic choices about what to do with that money." (Source: Bloomberg) Full Story
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Citigroup Inc (C: Charts, News, Offers), scrambling to survive losses triggered by the credit crunch, unveiled plans to split in two and shed troubled assets, and reported a quarterly loss of $8.29 billion. The banking giant also said it expected more departures from its embattled board, which is losing former Treasury Secretary Robert Rubin as a director later this year. Still, the bank's shares rose 4 percent in premarket trading, in part because investors hoped the plan to separate its most troubled assets into a new company would help revive the company. (Source: Yahoo! Finance) Full Story
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| Technology Focus |
Yahoo! Inc. (YHOO: Charts, News, Offers), seeking a chief executive officer to chart a new strategy, will name Autodesk Inc. Chairwoman Carol Bartz to the job after a two-month search, a person familiar with the matter said. Bartz, 60, has accepted the offer to become CEO, said the person, who declined to be identified because the situation is confidential. Jerry Yang, who co-founded Yahoo in 1994, agreed in November to step down as head of the company. Bartz, CEO of Autodesk from 1992 to 2006, faces the challenge of reviving Yahoo's growth after the company spurned a $47.5 billion takeover attempt by Microsoft Corp. last year. She also has to learn a new business -- Internet advertising -- a switch from the design software sold by Autodesk. Yahoo ranks second to Google Inc. in Internet searches and online ads. (Source: Bloomberg) Full Story
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The news may turn out to be no more than rumour, but it is telling nonetheless. To cut costs, several blogs recently reported, Microsoft (MSFT: Charts, News, Offers) and IBM (IBM: Charts, News, Offers) would soon both get rid of about 16,000 employees each, 17% and 4% respectively of their workforces. If true, these would be some of the biggest cuts in the history of the information-technology (IT) industry. That such cuts are deemed credible is a sign of the industry’s plight. Hardly a day passes without reports of collapsing revenues and workers being laid off. This week Motorola said it would cut 4,000 jobs, and Seagate, a maker of hard disks, said it would reduce its staff by 800. The earnings season is likely to bring even more bad news. As The Economist went to press, Intel, the world’s largest chipmaker and an industry bellwether, was expected to report a drop in fourth-quarter revenues of more than 20% compared with a year earlier. Is the industry heading for a worse downturn than the one that followed the internet crash in 2001? (Source: The Economist) Full Story
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Nortel Networks Corp. (NT: Charts, News, Offers), North America's biggest telephone equipment maker, filed for bankruptcy Wednesday, hoping to save a once high-flying business whose decade-long decline has accelerated with the global economic crisis. The filing marks a crucial stage in the slow deterioration of one Canada's most prominent companies. Nortel, a stock market darling before the tech bubble burst at the start of the decade and still one of the country's largest employers, has struggled for years in an industry that has changed radically since its heyday in the late 1990s. (Source: CNN Money) Full Story
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| Your Money |
Friends, let's not sugarcoat it: This is an exceptionally lousy time to be looking for a job. We've all heard by now (repeatedly) that about 2 million of them vanished in 2008, more than 250,000 in the financial sector alone, and that hiring at most companies has slowed to a crawl or stopped altogether.
But don't give up. If you happen to belong to the broad category of employees the Bureau of Labor Statistics identifies as "management, business, and financial occupations" - a group that includes white-collar folk whose titles range from office manager to CEO - there may well be a job opening out there somewhere with your name on it. (Source: Yahoo Finance) Full Story
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