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| Weekly Wrap Up |
Last week started off on a positive note as the Dow Jones Industrial Average, S&P 500, and Nasdaq all posted gains. The markets saw strong movement in the financial sector after Meredith Whitney's reassuring analysis of Goldman Sachs and Bank of America. However, increasing speculation and anxiety regarding the week's upcoming earnings releases by corporate giants such as Google (GOOG: Charts, News, Offers), Johnson & Johnson (JNJ: Charts, News, Offers), IBM (IBM: Charts, News, Offers), and General Electric (GE: Charts, News, Offers) seemed to keep the markets' upward swing in check. Monday's positive momentum carried over into Tuesday's trading, but at a much more nominal scale. Goldman Sachs (GS: Charts, News, Offers) reported a positive earnings report, and Johnson & Johnson beat out second-quarter earnings predictions despite a drop in profit. The markets' tempo picked up significantly on Wednesday as stocks went soaring. The Dow Jones led the charge with a 256.72 point increase. Intel (INTC: Charts, News, Offers) added to the upward push with a strong earnings report while Gannett posted a profit after suffering a $2.3 billion loss this time last year. Unfortunately, AMR Corporation (AMR: Charts, News, Offers), parent company of American Airlines Inc., reported a $390 million second quarter loss. The markets continued to move into the green on Thursday as JP Morgan (JPM: Charts, News, Offers) beat out Wall Street expectations with its quarterly earnings report. Friday's markets saw continued positive movement but at a much slower pace. Bank of America and Citigroup's positive earnings proved to be an unexpected surprise while Google and IBM managed to beat out expectations with their quarterly performances. However, investors traded with caution in anticipation of the looming stock market "summer slowdown". As a result, the markets advanced slightly higher than Thursday's closing numbers. U.S. light crude oil for August delivery rose $1.89 to $63.91 a barrel on the New York Mercantile Exchange, and the dollar gained against the euro and the yen. More Market News
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| Economic News |
A notable phenomenon of this past year of living dangerously in financial markets has been the triumph of the ultrabears: deeply pessimistic commentators and economists, such as Nouriel Roubini, who previously had only niche followings and have been propelled to rock-star status. Million-dollar book deals, speeches at Davos, celebrities and statesmen lapping up your predictions of woe, gorgeous babes clustering around you--it's nice work if you can get it. Am I jealous? Absolutely. More important, what does this runaway bull market in doom-mongering tell us about current investment prospects? To any contrarians worth their salt, it suggests that sentiment has reached extremes, as it did in the dotcom mania of the '90s. Back then, the talk was of "Dow 30,000" and the coming digital paradise. Now we hear confident forecasts of gold at $3,000, the collapse of the dollar, and the end of capitalism itself. (Source: Newsweek) Click here to read the full article
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With financial Armageddon pretty much off the table, the banks and brokerages left standing have an opportunity to finish the job, clean up the mess and make some needed changes. If successful, Wall Street could be a more profitable and safer place to do business in 2010. So, as we head into the second half of the year, here is a to-do list that the financial community needs to get cracking on. Answer these questions, and maybe we won't parade half the industry before Congress next year to complain about bonuses. (Actually, we probably will do that to make ourselves feel better anyway.) (Source: MarketWatch) Click here to read the full article
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As the economic data continues to send mixed signals about the pace and timing of an economic recovery, we've been treated to a chorus of warnings about the next danger: inflation. An early July client survey done by Credit Suisse showed that investors were "almost unanimously concerned" with inflation. Writing in The Wall Street Journal last month, Arthur Laffer announced that the very policies that stemmed the recession--low interest rates, massive government spending--will provoke an inflationary scenario reminiscent of the 1970s, or worse. Harvard economist Martin Feldstein has said bluntly that inflation is likely to pose a substantial threat to global stability starting next year. And it's not simply conservatives with an aversion to Keynes who are sounding alarmed. Simon Johnson, former chief economist for the International Monetary Fund, has warned that inflation could soon exceed 5 percent and quickly head higher. (Source: The New Republic) Click here to read the full article
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Though Las Vegas is perhaps best known as a tacky City of Sin where what happens within its limits stays there, its fortunes and misfortunes provide us with broad lessons about how economies work. Indeed, if one set out to understand the true workings of supply and demand, employment, inflation and Schumpeterian creative destruction, a tour of Las Vegas would provide living anecdotes that confirm and at times explode many widely held economic viewpoints. (Source: Real Clear Markets) Click here to read the full article
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| Business News |
CIT Group Inc. (CIT: Charts, News, Offers) shares tumbled more than 70 percent Thursday as its inability to get emergency government funding raised expectations that the commercial lender will file for bankruptcy protection. It is unclear how a bankruptcy filing by a company that lends to thousands of small and mid-size businesses would affect shaky financial markets hobbled by an economy in recession and bleeding hundreds of thousands of jobs a month. Small businesses are seen as keys to economic recovery. CIT said late Wednesday that negotiations with regulators about a possible rescue had broken off after days of round-the-clock talks. (Source: Yahoo! Finance) Click here to read the full article
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Eddie Bauer Holdings Inc.’s bankruptcy auction was won by Golden Gate Capital, a San Francisco-based private-equity firm, with a $286 million bid and a plan to keep most of the outdoor-clothing chain’s stores open. Golden Gate plans to keep a "substantial majority" of the retailer's stores and employees, Bellevue, Washington-based Eddie Bauer said in a statement today. Golden Gate’s offer will be presented for court approval July 22, the retailer said. The retailer attracted bidders ranging from Iconix Brand Group Inc., the New York-based owner of the Rocawear clothing brand, to liquidators Hilco Consumer Capital and Gordon Brothers Group LLC, said bankruptcy attorney David Pollack. Eddie Bauer, which opened its first sporting-goods store in Seattle in 1920, has about 370 stores in the U.S. and Canada. (Source: Bloomberg) Click here to read the full article
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The headlines over the last week have reinforced the perception that the country’s financial institutions, or at least some of them, are beginning to rebuild and profit. But resentment and the risk of public backlash against these banks remain, as shown by the recent opinions and editorials complaining about how ungrateful these banks are and suggesting they are once again trying to take advantage of the government and game the system. As Goldman Sachs (GS: Charts, News, Offers) earns $3.4 billion in a single quarter, many Americans continue to suffer from the recession, which was triggered by a financial crisis in which the banks played a part. News reports about banks taking a more assertive approach reinforce this perception. So I’ve decided to look at whether the criticism rings true: Are banks getting too cheeky? (Source: The New York Times) Click here to read the full article
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| Technology Focus |
Dell Inc. (DELL: Charts, News, Offers) said Tuesday that the U.S. personal computer market has reached its low point but that the timing of a global turnaround in the technology industry remains anyone's guess. The pessimism sent Dell shares plummeting $1.04, or 8 percent, to $11.98 in afternoon trading. At a meeting with Wall Street analysts, the world's No. 2 PC maker elaborated on guidance it issued Monday, when it said it expects slightly stronger sales in the current quarter than in the last one. Despite these signs of improvement, Dell executives said Tuesday that many of the conditions that hurt the PC industry over the last several quarters aren't easing. (Source: Yahoo! Finance) Click here to read the full article
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Intel (INTC: Charts, News, Offers) ignited an intergalactic stock fest Tuesday night after winning at beat the number. That its earnings victory was pretty much an open secret on Wall Street before the announcement -- though the extent of smoke blowing and arm waving on the accompanying conference call wasn't -- didn't stop folks from celebrating as if it were one of the greatest achievements of the past couple of decades. Aside from a bigger-than-expected pop in revenue (due to an inventory snapback) and thus a rise in non-GAAP earnings, Intel had nothing that spectacular to report. (Source: MSN Money) Click here to read the full article
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