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| Weekly Wrap Up |
For the first time in four weeks, the stock market posted a weekly loss last week. Granted, the losses were relatively mild, with the Dow and NYSE both down 48 points, and the Nasdaq down only 14 points, but it was still disappointing nonetheless after four weeks of solid gains. The major indices started the week on a low note, as investors worried about what news the Federal Reserve meeting would bring. And although the announcement was well received, pushing the markets up mid-week, the prevailing uncertainty prevented the markets from making a comeback. Economic news was mixed, as the Federal Reserve pointed to signs of a recovery, but retail sales unexpectedly fell and jobless claims continued to rise. By the end of the week, the main topic of conversation was what shape the recovery will take, as analysts predict it could look like a 'V', 'W', or something else altogether. In corporate news, earnings reports were mixed, as usual. On the positive side, Freddie Mac (FRE: Charts, News, Offers) posted its first profit in two years, McDonalds (MCD: Charts, News, Offers) posted a solid increase in same-store sales, Toll Brother's (TOLL: Charts, News, Offers) announced its first increase in home contracts in four years, and Dr Pepper Snapple Group Inc. (DPS: Charts, News, Offers) announced an unexpected jump in profits. On the other side, Dish Network (DISH: Charts, News, Offers) reported a 81% drop in profit, CIT Group (CIT: Charts, News, Offers) delayed its filing as bankruptcy becomes an increasingly unavoidable option, and Macy's (M: Charts, News, Offers) and Wal-Mart (WMT: Charts, News, Offers) both reported a surprising decrease in same-store sales. On Friday, the consumer confidence report was much lower than anticipated, indicating that there is still a rocky road ahead, as consumers are still far from mirroring the optimism levels held by the Federal Reserve. More Market News
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| Economic News |
$70 Billion Isn't The Answer
The economy is improving, but not thanks to the stimulus.
Last Friday morning, just hours before the July employment report, Canada's Globe and Mail published an op-ed by Nobel Prize winner and former World Bank chief economist Joseph Stiglitz. Stimulus spending has been "slow going," he wrote, "…what is needed now is another dose of fiscal stimulus."
According to ProPublica.com only $70 billion out of a total $787 billion (from the February stimulus bill) has been spent. At an annualized rate, this is equal to about 1% of gross domestic product. No wonder Stiglitz, a dyed in the wool Keynesian, is asking for more fiscal stimulus. Nominal GDP fell at a 5% annual rate between October 2008 and March 2009. Stimulus of 1% covers just one-fifth of the drop. Keynesians can't claim that this relatively small stimulus caused a recovery. They need more spending. (Source: Forbes) Click here to read the full article
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Fed says economy leveling out
The Federal Reserve delivered a vote of confidence in the economy Wednesday, saying it would slow the pace of an emergency rescue program and indicating the recession appears to be ending.
The central bank also held interest rates steady at record lows, with a closely watched bank lending rate near zero, and again pledged to keep them there for "an extended period" to nurture an anticipated recovery.
Fed Chairman Ben Bernanke and his colleagues said the economy appeared to be "leveling out" -- a considerable upgrade from their last meeting in June, when the Fed observed only that the economy's contraction was slowing.
"We're no longer at DEFCON 1," said Richard Yamarone, economist at Argus Research, referring to the defense term used to indicate being under siege. "The Fed is pulling in some of its life preservers now that the economy is no longer sinking." (Source: Yahoo Finance) Click here to read the full article
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Initial jobless claims rebound
The number of Americans filing claims for first-time unemployment benefits rose last week, while the total jobless rolls decreased, the government said Thursday.
There were 558,000 initial claims filed in the week ended Aug. 8, an increase of 4,000 from an upwardly-revised 554,000 the previous week, according to the Labor Department's weekly report.
Economists had expected initial claims to fall to 545,000, according to consensus estimates gathered by Briefing.com.
The four-week moving average of initial claims, which smoothes out volatility in the measure, was 565,000. That's up 8,500 from the previous week's revised average of 556,500.
Despite last week's rebound, the number of people filing new jobless claims has eased in recent weeks. (Source: CNN Money) Click here to read the full article
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| Business News |
Wal-Mart 2Q profit beats forecast but sales fall
Tighter inventory controls helped Wal-Mart Stores Inc. (WMT: Charts, News, Offers) earn more than Wall Street forecast in its second quarter, but the key barometer of same-stores sales fell at the world's largest retailer for its U.S. stores - a worrisome confirmation of broad weakness in consumer spending.
Wal-Mart boosted the low end of its annual profit outlook as it accelerates cost-cutting measures, but it said the economy will remain challenging in coming months and force shoppers to keep seeking low prices and small packages. It doesn't expect big improvement in the holiday season either.
"Overall, our customers are more disciplined in their spending," Mike Duke, Wal-Mart's president and chief executive, told investors during a prerecorded call Thursday. He called saving more and spending less "a new normal." (Source: Google News) Click here to read the full article
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GM's Jolt? Chevy Volt to Get 230 Miles Per Gallon
It's the kind of number that makes you stop and say, "What?!!!!!!!!"
230 miles per gallon.
That's the fuel economy GM (GM: Charts, News, Offers) expects the electric Chevy Volt to deliver when it comes out late next year. The company made the announcement this morning in Detroit and already skeptics, fans, and the general public are debating if the Volt's mega-fuel efficiency will be a "game changer" for the industry and General Motors.
My opinion: if the Volt can consistently deliver anything close to that mileage, it will go a long ways toward removing the sting of the expected $40,000 price.
The skeptics believe Volt's mileage will not come anywhere close to what GM is promising. (Source: CNBC) Click here to read the full article
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The gift of TARP keeps giving at Citigroup
Citigroup (C: Charts, News, Offers) said Tuesday it provided $6 billion in new loans backed by taxpayer money in the latest quarter, with most of those funds going to state and local governments and propping up the housing market.
Offering its latest glimpse into how it is spending the $45 billion in government bailout money, Citigroup said it provided $4 billion in letters of credit to a variety of public agencies.
An additional $2 billion went to provide financing to mortgage originators, with the ultimate aim of increasing available credit for new homebuyers and existing homeowners looking to refinance their existing mortgages.
More than half of the money Citigroup has deployed as a result of the Troubled Asset Relief Program, or TARP, has gone toward buying mortgage securities in the secondary market. (Source: CNN Money) Click here to read the full article
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| Technology Focus |
Microsoft offloads digital ad agency for $530m
In a deal worth about $530m in cash and stock, Microsoft (MSFT: Charts, News, Offers) has offloaded its Razorfish digital ad agency to Publicis Groupe, the French advertising giant that purchased a search-engine marketing biz from Google (GOOG: Charts, News, Offers) last year.
Microsoft acquired Razorfish in 2007 as part of its unprecedented $6bn acquisition of the Seattle-based internet advertising firm aQuantive. According to reports, Redmond has been shopping the agency to potential buyers for the past several months.
Razorfish will continue to operate under its own name, and after the deal closes, the agency will be a "preferred provider" to Microsoft, with Redmond agreeing to spend a certain amount with the agency over the next five years. Under an agreement that builds on a previously announced pact between Microsoft and Publicis, Redmond will provide discounted search and display ad rates to Publicis customers - provided such aggregate purchase levels are met. (Source: The Reigster) Click here to read the full article
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Will Apple, RIM and Others Enjoy Happy Holidays?
I'm looking at a spate of market research over the past few days, and when it comes to consumer electronics, it seems like some key companies might be on the verge of a break-out holiday shopping season.
Which might seem counter-intuitive in an economy like this one. The back-to-school shopping season was supposedly going to be a bust; PC sales have been under severe pressure. But then, we got sales data from Gartner earlier this week that shows while cell phone sales globally fell 6 percent last quarter, smart phone sales jumped 27 percent. That's tremendous news for Nokia (NOK: Charts, News, Offers), Research in Motion (RIMM: Charts, News, Offers), Apple (AAPL: Charts, News, Offers) and others. Sales figures were robust, with Nokia once again leading the charge, selling almost 18 million smart phones. Research in Motion came next with almost 8 million, and Apple's gaining ground with over 5 million iPhones sold. Not surprisingly, to at least some of us closely watching this market, Palm (PALM: Charts, News, Offers)came in a distant tenth, selling about 250,000 Pre's. (Source: CNBC) Click here to read the full article
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Dish Network net subscribers rise, shares up
Dish Network Corp (DISH: Charts, News, Offers) added subscribers for the first time in more than a year, sending shares up as much as 11 percent, but its profit fell because of higher marketing expenses to win new customers.
Dish added about 26,000 net new subscribers during the second quarter as it invested more in marketing initiatives and improved customer service. It also benefited from a switchover to digital broadcast signals in the United States last June and less piracy of its signals.
Gross subscriber additions during the quarter fell 3 percent to 731,000, far less than what some analysts expected.
Investors will consider the gross additions especially strong because last year's number included the benefit of a distribution deal with AT&T Inc (T: Charts, News, Offers), Goldman Sachs analyst Ingrid Chung said in a research note.
The AT&T partnership accounted for about 17 percent of gross subscriber additions in 2008, Dish said. (Source: Reuters) Click here to read the full article
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| Your Money |
Video: Do We Need a Second Stimulus?
CNBC's Steve Liesman and Rick Santelli debate whether the US needs a second stimulus package. (Source: CNBC) Click here to read the full article
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Have You Been Devastated By The Recession?
It could be your paycheck, or your political party.
The current economic recession officially began late in 2007. While there are signs that this bad cycle may have bottomed out, we have been in recession now for more than 20 consecutive months.
Zogby International recently conducted an interactive survey with one of the biggest samples of U.S. adults we've ever done. Much of the survey measured how the recession has impacted the lives of people, and their outlook on the future. The quick takeaway is that large numbers of people report a significant impact and most people are not optimistic that they will ever fully recover. But as is always the case, when you look deeper into sub-group responses, generalizations become less clear. (Source: Forbes) Click here to read the full article
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| Trivia Question |
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The Federal Reserve System issues currency through its 12 districts. Which of these fine American cities is not the headquarters of one such district: Chicago, Dallas, Los Angeles, or Richmond?
(answer below) |
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| Market Overview |
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| DJIA |
9,321.40 |
-48.67 |
| S&P |
1,004.09 |
-6.39 |
| NYSE |
6,537.82 |
-48.89 |
| NASDAQ |
1,985.52 |
-14.73 |
| 10Yr |
3.558% |
-0.30 |
| Dollar |
79 |
-0.11 |
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| Trivia Answer |
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| Los Angeles |
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