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| Weekly Wrap Up |
Don’t let the nearly flat change from last week’s trading to the closing bell Friday fool you; it was another rollercoaster week on Wall Street. Stocks enjoyed gains throughout the first three trading days of the week, only to come to a screeching halt with major selloffs Thursday and Friday. Early in the week, investors helped pull the markets up as they scooped up bargains from last week’s declines. On Monday, reports that December existing home sales rose by 6.5% from the previous month, topping forecasts, and that the index of leading economic indicators rose 0.3% in December also inspired confidence. News of the stimulus package and President Obama's "bad bank" plan gave a much needed boost to financial stocks as the rally continued to its highest level on Wednesday. Throughout the week, however, dismal corporate earnings reports and news of large layoffs across the country plagued investors. Thursday these concerns, along with a double-dose of bad news reporting that new housing sales reached a record low and that new initial unemployment claims reached record highs, sent stocks tumbling once again. The declines continued on Friday as the Commerce Department report showed that the economy contracted at its fastest pace in almost 27 years in the fourth quarter. This week, investors will have their attention fixed on Capitol Hill as the Senate takes up the stimulus package. More Market News
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| Economic News |
The nation's top economic officials are discussing a new way to stabilize the financial system by buying a portion of banks' bad assets and offering guarantees against future losses on some of the remainder, in an effort to help banks while trying to mitigate the cost to taxpayers. This approach, which merges two competing ideas, was discussed this week at a meeting that included Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair, according to people briefed on the meeting. The emerging plan comes as the administration seeks to jolt the economy with an $819 billion stimulus plan and a series of additional moves designed to stem foreclosures, overhaul financial regulation and get credit flowing again. Amid that flurry of activity, President Barack Obama stepped up his rhetorical attacks Thursday on the same banks his officials are planning to aid. Summoning reporters after a closed meeting with Mr. Geithner, Mr. Obama blasted earlier news that Wall Street had paid out $18.4 billion in bonuses, calling it "the height of irresponsibility" and "shameful." (Source: Wall Street Journal) Full Story
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The economy shrank at its fastest pace in nearly 27 years in the fourth quarter, government data showed on Friday, sinking deeper into a recession that the White House said demanded urgent action. In a report that showed a broad-based contraction across nearly all sectors, the Commerce Department said gross domestic product plummeted at a 3.8 percent annual rate, the biggest drop since the first three months of 1982. President Barack Obama, who is pushing Congress to approve a package of spending and tax-cut measures that could cost close to $900 billion, said the report highlighted the need for quick government action. (Source: Reuters) Full Story
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Big banks bleeding money. Fighting over the TARP money. Sinking stock market. A Treasury Secretary (or designate) under fire. Economy in decline. Sound familiar? What a difference three months doesn't make. Though no one one is saying the financial situation is as dire as late September, Happy New Year has quickly turned into déjà vu in the past few days."You don't have one big wave and everything goes back to normal," says independent bank analyst Bert Ely. "A big wave jars a lot of things loose." If the collapse of Lehman Brothers and other events of last fall constitute a tsunami, the current wave may be scary but not nearly as dangerous, say experts. There are some similarities in conditions and circumstances, but also some key differences--both good and bad. (Source: CNBC.com) Full Story
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| Business News |
No. 1 drugmaker Pfizer Inc. (PFE: Charts, News, Offers) said Monday it is buying No. 12 Wyeth (WYE: Charts, News, Offers) for $68 billion in a deal that will quickly boost Pfizer's revenue and profit and transform it overnight into a more diversified company less reliant on its dwindling drug pipeline. New York-based Pfizer managed with one stroke to overshadow a full house of issues: a 90 percent drop in income, a hefty charge to end an investigation, a severe cut in its dividend, a shockingly low profit forecast for 2009 and 8,000 job cuts starting immediately. (Source: Yahoo! Finance) Full Story
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JPMorgan (JPM: Charts, News, Offers) is lending money and but there's confusion as to who is or is not lending said the bank's CEO Jaime Dimon in an interview on CNBC Thursday. "I speak to a lot of bankers, a lot of banks are making loans," said Dimon. "In fact, JP Morgan alone in the last 90 days has made over $150 billion of loans, including $50 billion—which like we have out today in the inter-bank market," Dimon said at the annual meeting of the World Economic Forum in Davos, Switzerland. But Dimon did say not every financial service is lending. "A lot of other people who lent to the markets, money market funds, bond funds, aren't lending," said Dimon. "So I think people get a little confused about who's out there lending and who's not and--we're--we're gonna try to get more information out." (Source: CNBC.com) Full Story
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Delta Air Lines (DAL: Charts, News, Offers), the world's largest air carrier, reported a quarterly loss on merger costs and bad fuel hedges Tuesday, but said falling fuel prices and downsizing would bring profits in 2009. The airline linked the bulk of its $1.4 billion fourth-quarter loss to a noncash charged related to its purchase of Northwest Airlines late last year. Like rivals AMR Corp. (AMR: Charts, News, Offers) and UAL Corp. (UAUA: Charts, News, Offers), which reported losses last week, Delta complained of economic weakness that is eroding travel demand and forcing airlines to cut the number of seats for sale. But Chief Executive Richard Anderson was optimistic. (Source: CNN Money) Full Story
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| Technology Focus |
The genesis of Netflix (NFLX: Charts, News, Offers) came in 1997 when I got this late fee, about $40, for Apollo 13. I remember the fee because I was embarrassed about it. That was back in the VHS days, and it got me thinking that there's a big market out there. So I started to investigate the idea of how to create a movie-rental business by mail. I didn't know about DVDs, and then a friend of mine told me they were coming. I ran out to Tower Records in Santa Cruz, Calif., and mailed CDs to myself, just a disc in an envelope. It was a long 24 hours until the mail arrived back at my house, and I ripped them open and they were all in great shape. That was the big excitement point. (Source: CNNMoney.com) Full Story
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Telecom giant Verizon (VZ: Charts, News, Offers) saw its fourth-quarter profit rise 15%, driven by its rapidly expanding wireless and broadband businesses. The company on Tuesday reported fourth-quarter earnings of $1.24 billion, or 43 cents a share, up from $1.07 billion and 37 cents a share in the same period last year. Excluding charges, Verizon's fourth-quarter earnings were 61 cents, down from 62 cents a year ago, but in line with analysts' estimates. Verizon reported fourth-quarter revenue of $24.6 billion, up 3.4% on the prior year's quarter, although that was slightly below the consensus expectation of $24.74 billion. (Source: TheStreet) Full Story
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AT&T (T: Charts, News, Offers), the telecommunications giant, reported on Wednesday that its fourth-quarter profit fell from a year ago but the figures were clouded by changes to the way it accounts for sales of the iPhone. The company said net income for the fourth quarter was $2.4 billion or 41 cents a share, compared to $3.1 billion, or 51 cents a share, in the period a year earlier. However, about a nickel of that difference was the up-front fee that AT&T pays for each iPhone it sells, rather than spreading that cost over time. AT&T started to install that accounting change this summer with the release of Apple's (AAPL: Charts, News, Offers) latest iPhone model. More broadly, AT&T reported mixed financial results for the fourth quarter. The company benefited by continued growth in the wireless business, and faced declines in the landline business.(Source: NYTimes.com) Full Story
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| Your Money |
Wireless services have become so essential to everyday life that even the recession hasn't forced most consumers and businesses to give them up. And demand has bolstered providers: Verizon (VZ: Charts, News, Offers) posted record numbers last [third] quarter and credited its wireless unit as a primary source of this success. But something doesn't seem to add up. Most subscribers believe they're somehow being taken advantage of when it comes to their wireless services. So with everyone looking for ways to cut back on monthly spending, there's no better time than now to turn the screws on wireless bills. Keep in mind that the wireless industry profits from price obfuscation. Every carrier offers a range of plans with confusing names and rules. Few customers understand when "free" nights and weekends begin and end or under what circumstances they'll incur roaming charges. Most people have no idea how many peak minutes they actually use in a typical month, and carriers don't offer warning systems to tell us when we've exceeded our monthly allotments. AT&T (T: Charts, News, Offers) might offer rollover minutes, but this is just another tactic to steer customers to oversized plans. It haven't stopped charging overage fees. (Source: Forbes.com) Full Story
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What's a nice economy like ours doing in a place like this? As the country descends into what is likely to be its worst postwar recession, Americans are distressed, bewildered and asking serious questions: Didn’t we learn how to avoid such catastrophes decades ago? Has American-style capitalism failed us so badly that it needs a radical overhaul? The answers, I believe, are yes and no. Our capitalist system did not condemn us to this fate. Instead, it was largely a series of avoidable - yes, avoidable - human errors. Recognizing and understanding these errors will help us fix the system so that it doesn’t malfunction so badly again. And we can do so without ending capitalism as we know it. (Source: New York Times) Full Story
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Paul Krugman, winner of the 2008 Nobel Memorial Prize in Economic Sciences, was invited to give a speech at a National Press Club luncheon on the current economic crisis. This 1-hour long video aired on C-Span and begins with Mr. Krugman’s remarks on the current economic crisis and is followed by about 25 minutes of Q&As. Many users have circulated this video on the internet, including the president of a Savings and Loan institution in a personal email to his family. You will find this worth watching if you can spare 1 hour of your time. Click on "full screen" if you can and pay particular attention his body language. (Source: National Press Club) Full Story
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