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| Weekly Wrap Up |
Equities got off to a bad start this week, picking up from the pessimism of the previous week and weakness in overseas stock markets (especially China’s), as the DJIA lost 186 points on Monday. However, stocks then reversed course and put together 4 consecutive days of gains to close out the week on a high note. Overall, the blue chip DJIA gained 1.98% for the week and the broader S&P 500 rose 2.20%. The market is now at its highest level since the fall of last year. The main sentiment driving stocks further is the belief that the recession has basically ended and that the early signs of the pace of recovery are promising. Throughout the week, better than expected data whetted the risk appetite of traders. Numbers on existing home sales, manufacturing activity and retail sales all came in better than expected. On the other hand, jobless claims unexpectedly rose 15,000 to 576,000 indicating that the labor market remains very weak. Major economists including the Fed Chair also struck a very optimistic tone about the economy during their end of the week summit in Wyoming. The key in the next few months will be to see whether the real economy can deliver on all this optimism. The stock market has risen over 50% since its lows and therefore, has priced in an aggressive recovery. Traders could be in for a real disappointment this fall if things don’t pick up substantially. The cash for clunkers programs ends this week on Monday night. Most have called it an unqualified success. Sears (SHLD: Charts, News, Offers) was a major disappointment this past week after reporting a loss for the second quarter and indicating that same-store sales fell 8.6%. Financial stocks were pretty strong all week with AIG (AIG: Charts, News, Offers) leading the way, after some very optimistic comments from its new CEO.
Looking ahead, this will be one of the few remaining slow weeks of the summer before traders return to action in the fall, so expect the trend of light volume trading to continue. Tuesday will see earnings reports from the likes of Staples (SPLS: Charts, News, Offers), Borders (BGP: Charts, News, Offers) and Burger King (BKC: Charts, News, Offers). Data on new home sales and durable good orders is due Wednesday and Friday will provide us with another insight into the wallet of the consumer as data on consumer sentiment and personal income will be released. More Market News
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| Economic News |
World Bankers Suggest Rebound May Have Begun
Central bankers from around the world expressed growing confidence on Friday that the worst of the financial crisis was over and that a global economic recovery was beginning to take shape. "The prospects for a return to growth in the near term appear good," declared Ben S. Bernanke, chairman of the Federal Reserve, offering optimism both about the United States and the worldwide outlook.
Though the Fed chairman repeated his warning that the economic recovery here was likely to be slow and arduous and that unemployment would remain high for another year, he went beyond the central bank’s most recent statement that economic activity was "leveling out." (Source: New York Times) Click here to read the full article
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How Obama miscalculated on health care
For health-care reform, 2009 wasn't supposed to be a repeat of 1993-94.
It would be different this time. That's been the conventional wisdom 15 years after the defeat of First Lady Hillary Clinton's ambitious plan, which badly shook her husband's young presidency.
This time, industry players were at the negotiating table from the outset, instead of plotting a blitz of attack ads. This time, the process of constructing a plan would be completed out in the open, in a half dozen congressional committees, instead of behind closed doors at the White House. This time, a large majority of voters were telling pollsters (repeatedly) that they were ready for universal health care. Even corporate America -- groaning under the weight of employee insurance costs -- was on board for change. (Source: Fortune) Click here to read the full article
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For Volatile US Stock Market, September May Be Real Test
The sun and fun of summertime--and the 8 percent gain in stock prices--is set to give way to the more intense time of September. The beginning of autumn is traditionally a time when volume comes back into the market and hard-core investors get down to business.
"In September it's back-to-school not just for students but investors, too," says Lawrence Creatura, portfolio manager and equity market strategist at Federated Clover Capital Advisors of Rochester, N.Y. "After a summer at half-speed a lot of people look at the data with a more critical eye, and what they see can sometimes be sobering." (Source: CNBC) Click here to read the full article
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| Business News |
Whatever Happened to Buying American?
When Julia Reusch of Blue Bell, Pa., decided to trade in her 1999 Ford Explorer as part of the cash-for-clunkers program, she nixed the idea of purchasing another Ford (F: Charts, News, Offers)product. "I didn't feel compelled to buy American, given my experience with the Ford," says the 28-year-old who noted that her Explorer was problematic even when it was new. Instead, she opted for a Toyota Prius. After only a week, she's hooked. "It's wonderful. I love it," she says.
That's great news for Toyota (TM: Charts, News, Offers), but it's hardly the kind of sentiment Detroit's automakers were banking on when the clunkers program launched at the end of July. The program was originally designed to boost the economy in general and the nation's auto industry in particular. But the latest Department of Transportation statistics, released last week, show that American cars represented a total of 42 percent of vehicles purchased under the $3 billion U.S. government-funded program. Only two U.S. models--the Ford Focus and Ford Escape--were among the top 10 cars sold; Toyota and Honda (HMC: Charts, News, Offers) together hold six of those spots. Even though final sales data isn't yet available, those figures are unlikely to change much now that the program is set to end on Monday, Aug. 24. (Source: Newsweek) Click here to read the full article
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The Untold Story of the Baidu IPO
Much has been said about Goldman Sachs (GS: Charts, News, Offers) by articles like Mr. Matt Taibbi July 2, 2009 Rolling Stone article "Inside the Great American Bubble Machine". But most have not heard about Goldman Sachs' involvement in the initial public offering (IPO) of Baidu (BIDU: Charts, News, Offers) and the subsequent BIDU share price movements back in 2005 and 2006.
Goldman Sachs and Piper Jaffray (PJC: Charts, News, Offers), along with Credit Suisse First Boston (CS: Charts, News, Offers), underwrote Baidu's IPO. The IPO would be the first for a pure-play Chinese search engine company. Baidu American depositary shares (ADS) started trading on August 5, 2005. An initial 4.04 million ADSs were offered at $27 per ADS; opened at $66, more than double its $27 price, climbed, stabilized and then rallied anew before ending its historic opening day at $122.54. (Source: Seeking Alpha) Click here to read the full article
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Dow Jones Puts Index Business Up For Sale: Report
Dow Jones has been talking to potential buyers about the sale of its stock-market indexing business, which includes the Dow Jones Industrial Average, The Wall Street Journal reported on Friday.
The Wall Street Journal, in its online edition, reported that the process is being run by Goldman Sachs, and could result in a sale, joint venture or some other type of arrangement. The report cited people familiar with the matter. (Source: CNBC) Click here to read the full article
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| Technology Focus |
The Days of the Internet Free Lunch Are Numbered
Media billionaire Rupert Murdoch wants to start charging online readers of his newspapers a fee. His decision has launched a fierce debate over the future of the culture of free content on the Internet. It has also posed a difficult question for publishers: How much are we worth to readers?
Rupert Murdoch has no use for computers. The 78-year-old Australian-American media billionaire doesn't like e-mail, he avoids the Internet and he even has trouble using his mobile phone. He doesn't exactly fit the picture of an online messiah.
But in recent weeks, Murdoch startled the publishing world when he uttered a few sentences that were as simple as they were revolutionary, such as: "Quality journalism isn't cheap." That led to his decision to start charging for online use of his many newspapers around the globe in the coming months. If Murdoch has his way, the days of free culture on the Internet will be numbered. (Source: Spiegel Online) Click here to read the full article
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Tech IPO Market Begins to Thaw
Tech IPOs are staging a comeback. Is it time to party like it’s 1999?
Well, no. By all measures, 2009 still has been a pretty miserable year for the U.S. IPO market. It got off to its slowest start since 1975. And though the market has showed sputtering signs of life since the first quarter, the value of U.S.-listed IPOs still stands just north of $5 billion--a far cry from the $30 billion of initial public offerings sold last year, according to Dealogic.
But the one bit of good news in all this has been the market for technology IPOs. This year nine technology companies have raised a combined $1.8 billion through initial public offerings, according to Dealogic. That is a 133% increase from last year. (Source: Wall Street Journal) Click here to read the full article
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Can Twitter Be Saved?
Even by Internet standards of hyper-growth, there has never been a phenomenon like Twitter. Less than a year and a half ago, Twitter hit 1 million users. It now has 44 million, a rate of expansion so rapid that if it could continue growing at that speed it would in another year and a half be used by everyone on Earth. It is impressive not just for the sheer number of users but for the share of mind it has carved out, from the national elections to its starring role in Iran's election protests. Twitter has become so ubiquitous so fast that it's almost impossible to imagine it disappearing.
But it can. The irony of Twitter is that even as it becomes more pervasive, it is in danger of very quickly becoming markedly less useful. Twitter is in danger of collapsing under its own weight. Not because of its problems keeping up with traffic--those are solvable--but because the volume of material that Twitter unleashes now puts impossible demands on its users' time and attention. The problem, in a nutshell, is information overload. The more Twitter grows and the more feeds Twitterers follow, the harder it gets to mine it for what is truly useful and engaging. Even as Twitter reaches a peak in the cultural cred cycle, it's time to start asking how it can be saved from itself. (Source: TheBigMoney) Click here to read the full article
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| Your Money |
Teaching Teens About (Credit) History
Steering your college-age child away from credit cards may sound like a good idea. After all, college seniors carried an average of $4,138 in credit-card debt in 2008, according to a Sallie Mae study. One in five seniors owed more than $7,000. On the other hand, letting your child graduate without a credit history has its own drawbacks.
"There are implications for life being more expensive if you get out of college and haven't established any credit," says Jonathan Fox, associate professor of financial planning and personal finance at Ohio State University. Lack of a credit history may make it more difficult to rent an apartment, for example, or more expensive to get a car loan or car insurance. (Source: Wall Street Journal) Click here to read the full article
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Health insurance debate turns to issue of co-ops
After 30 years of punishing caseloads and never-ending stacks of paperwork, Harry Shriver was getting ready to hang up his doctor's coat and retire when he tried something new.
Shriver's practice, part of a health care cooperative in Washington state, launched a program that allowed him to cut his appointments from 24 to 12 a day, leaving him more time for each patient. He also now handles routine requests such as prescription refills through e-mail and relies more on electronic medical records to track test results and coordinate care.
"For the first time in my career I have the time to think ahead," said Shriver, chief doctor at a clinic run by Group Health Cooperative, one of the nation's last remaining health care co-ops. "I'm doing things that really are making a difference -- and it's fun." (Source: USA Today) Click here to read the full article
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Brokers Aren't Responsible for Bad Bets
A blizzard of new proposed regulation and overzealous litigation is poised to jeopardize the low-cost investing model that tens of millions of investors have enjoyed for decades. In the last 30 years, individual investors have benefitted from huge innovations, including low commissions, online investing, mutual fund supermarkets, and the advent of exchange traded funds. Individuals now have broad access to domestic and global markets at costs lower than institutions enjoyed only a few years ago. This has provided needed capital to our economy and enabled the creation of personal wealth for average Americans.
But today's extraordinary regulatory and political environment is putting all of this at risk.
My company, Charles Schwab (SCHW: Charts, News, Offers), was founded 35 years ago as a reaction to the high cost and inherent exclusivity of traditional Wall Street investing. Today we serve almost 10 million accounts. The majority are what we refer to as self--directed: They make their own decisions about what to buy, sell or hold. We provide them with an efficient platform, tools, assistance, education and, of course, low costs. (Source: Wall Street Journal) Click here to read the full article
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| Trivia Question |
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Most of the currency, or currency-related paper, in circulation in the United States is in the form of?
(answer below) |
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| Market Overview |
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| DJIA |
9,505.96 |
+184.56 |
| S&P |
1,026.13 |
+22.04 |
| NYSE |
6,676.26 |
+138.44 |
| NASDAQ |
2,020.90 |
+35.38 |
| 10Yr |
3.556% |
-0.002 |
| Dollar |
78.10 |
-0.9 |
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| Federal Reserve notes. |
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