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| Weekly Wrap Up |
Stocks managed to finish the week close to where they started after staging a Friday rally to overcome losses suffered earlier in the week. Friday’s surge was spurred by news of a record drop in oil prices as well as a possible Lehman Brothers (LEH: Charts, News, Offers) buyout by the Korea Development Bank. The buyout rumors, along with encouraging comments by Fed Chairman Ben Bernanke about inflation rates helped motivate investors and gave a much needed boost to the financial sector. Earlier in the week, investors grappled with burdensome financial headlines as Fannie Mae (FNM: Charts, News, Offers) and Freddie Mac (FRE: Charts, News, Offers) fell to their lowest levels in nearly 20 years. The news resulted in major sell-offs on Monday, which were continued into Tuesday as a spike in inflation and weak earnings reports from retailers weighed on investors. Stocks managed to make up some of the losses on Wednesday after an erratic session marred by further financial sector concerns and wavering oil prices. Investors continued to speculate over the fate of Fannie Mae and Freddie Mac as government takeover seemed more and more likely. This weekend, media reports swirled that the Treasury Department will have to come to the rescue, which could clean out current shareholders. This week, all eyes will be on reports from the housing market as data on existing home sales is released. More Market News
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| Economic News |
Warren Buffett said the economy is still in a recession and unlikely to improve before 2009 but that stocks appear better valued than a year ago. The billionaire investor also said there is a "reasonable chance" shareholders of Fannie Mae (FNM: Charts, News, Offers) and Freddie Mac (FRE: Charts, News, Offers) may be wiped out in any government bailout of the mortgage financiers. Speaking on Friday on CNBC television, Buffett said some housing-related businesses in his Berkshire Hathaway Inc. (BRK.A: Charts, News, Offers) conglomerate are struggling as the economy works off past excess in making credit available. "You always find out who's been swimming naked when the tide goes out. We found out that Wall Street has been kind of a nudist beach," said Buffett, who in March was called the world's richest person by Forbes magazine. (Source: Yahoo! Finance) Full Story
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Federal Reserve Chairman Ben Bernanke said Friday that the problems in the nation's financial markets persist and still threaten the economy. Bernanke said that the financial woes, coupled with record oil prices and the weakening economy, had created "one of the most challenging economic and policy environments in memory." In prepared remarks at a conference in Jackson Hole, Wyo., Bernanke also said he is encouraged by the recent oil price decline, which may signal that inflationary pressures are on the wane. "Although we have seen improved functioning in some markets, the financial storm that reached gale force some weeks before our last meeting here in Jackson Hole has not yet subsided," Bernanke said. (Source: CNN Money) Full Story
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Indecision and ambiguity can damage a financial company more than bad news. Just ask Lehman Brothers (LEH: Charts, News, Offers), Fannie Mae (FNM: Charts, News, Offers) and Freddie Mac (FRE: Charts, News, Offers). Shares of all three companies have been pummeled by relentless speculation about their fates, a blow to investor psychology that continues to grip the financial sector. Can Ben Bernanke help? We'll see. Confidence (or the market's lack of it) is the issue at hand as the Federal Reserve chairman speaks Friday at the Federal Reserve Bank of Kansas City's annual conference in Jackson Hole, Wyo. The central bank--and Bernanke--find themselves at the center of the debate over how to fix the credit crisis without wrecking the efficiency of financial markets. Bernanke is slated to address the topic of financial stability. Last year, as the credit crisis was erupting, Wall Street was all ears, listening for Bernanke's view on interest rates. (Source: Forbes.com) Full Story
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| Business News |
American Airlines (AMR: Charts, News, Offers), the nation's largest carrier, spent $1.4 million in the second quarter to lobby on air traffic control, aviation security and other issues, according to a recent disclosure report. Fort Worth, Texas-based American lobbied Congress on a bill to reauthorize the Federal Aviation Administration and modernize the air traffic control system. American and other airlines argued that improving the current control system would reduce flight delays and make travel easier. However, estimates for modernizing the system range from $15 billion to $22 billion. The major airlines want private jets to pay more taxes to fund improvements, a position opposed by corporations and private aviation. Congress put off a decision until at least next year. (Source: BusinessWeek) Full Story
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Lehman Brothers Holdings Inc. (LEH: Charts, News, Offers) shares bounced from its lows Thursday after an analyst upgraded his rating on the investment bank to "Buy," and believes it now has become a "hostile takeover candidate." Ladenburg Thalmann analyst Richard X. Bove believes that Lehman Brothers management values the company at a premium, and would be willing to sell at the right price. He believes that a "deep pocket buyer" could emerge to buy the nation's fourth-biggest investment bank. "So the market is at a stand-off," Bove said in a note to clients. "Investors are unwilling to accept any positive view of the company; management is unwilling to sell out at a deeply distressed value. The stage is set for a hostile bid to take over the whole company." (Source: CNN Money) Full Story
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General Dynamics Corp. (GD: Charts, News, Offers) said Tuesday it will buy Jet Aviation for about $2.25 billion in cash, part of the defense contractor's push to expand its private civilian jet business and tap into robust demand for luxury planes overseas. With the purchase, General Dynamic's Gulfstream business jet unit adds a worldwide network of aircraft maintenance and service centers where wealthy individuals and cash-rich governments can outfit private jets with plush interiors and custom features. While General Dynamics is perhaps best known for its tanks, ships, submarines and other military equipment, it has significantly expanded its aerospace unit in recent years and now expects its fleet of flying business jets to double in the next decade to roughly 30,000 planes. (Source: Yahoo! Finance) Full Story
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| Technology Focus |
Hewlett-Packard Co. (HPQ: Charts, News, Offers) weathered economic turbulence remarkably well in the fiscal third quarter but the technology bellwether faces another big challenge -- stiffer personal-computer competition -- that threatens to slow its steady growth. The Palo Alto-based company said Tuesday that its profit for the May-July quarter jumped 14 percent, beating Wall Street's expectations on strong laptop sales and a robust international presence. HP said it earned $2.03 billion, or 80 cents per share, in the latest period, up from $1.78 billion, or 66 cents per share, a year earlier. Excluding one-time charges, HP's profit was 86 cents per share, three cents higher than the average estimate of analysts polled by Thomson Reuters. (Source: Yahoo! Finance) Full Story
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EBay Inc. (EBAY: Charts, News, Offers) is cutting the fees U.S. sellers on its site pay for fixed-price items, in one of the company's boldest moves this year to boost merchandise for sale, lure new buyers and take on competitors. Total sellers' fees will decrease in most cases under eBay's plan to improve the balance between buyers and sellers on the world's largest online auction site, and thereby reduce customer defections to rivals such as Amazon.com Inc (AMZN: Charts, News, Offers). "I'd say this is the most fundamental change we've made, ever, to the marketplace," Lorrie Norrington, president of eBay marketplace operations, told Reuters. "It's a huge shift from where we've been." Instead of charging sellers to list each item separately, eBay will charge 35 cents to list any number of the same types of fixed-price items. Similar changes will be made in Germany and Britain, eBay's second- and third-largest auction markets. (Source: MSNBC) Full Story
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House hunting? Forget the listing agents and classified ads. Now you can find homes for sale with a few taps on a smartphone.
Trulia, one of the Web's most visited home listing sites, on Aug. 25 is introducing a tool available on Apple's (AAPL: Charts, News, Offers) iPhone that can locate all the listings and open houses in a user's vicinity.
The free software application uses navigation technology to summon data and displays the results on an interactive map. It lets users call up such information as price, photos, square footage, and number of bedrooms. Another tap of the screen sends a call or e-mail directly to the listing agent. "It's all about convenience," says Trulia CEO Pete Flint. Full Story
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| Your Money |
Customers bought more Whoppers, Cheesy Bacon BK Wrappers and crispy chicken sandwiches in the fourth quarter, driving Burger King's (BKC: Charts, News, Offers) profit up 42 percent. But investors weren't too impressed by the profit gain at the nation's No. 2 hamburger chain, sending the company's stock down 7 percent as they focused instead on higher food costs and expenses for sprucing up older locations. Miami-based Burger King Holdings Inc. said it earned $51 million, or 37 cents per share, in the April to June quarter, up from $36 million, or 26 cents per share, a year earlier. That beat Wall Street analysts' expectations by 3 cents per share, according to Thomson Reuters. Revenue rose 9 percent to $646 million from $590 million. (Source: Yahoo! Finance) Full Story
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In another indication of growing inflation, wholesale prices increased in July to the highest annual rate in 27 years, according to a government report released Tuesday. The annual Producer Price Index for finished goods rose 9.8% in the 12 months that ended in July. The jump in wholesale prices is the fastest rate of increase since a 10.4% bump-up in June 1981, according to Joseph Kowal, economist at the Bureau of Labor Statistics. The Labor Department also reported that PPI rose 1.2% in July, after increasing 1.8% in June. Analysts polled by Briefing.com had expected an increase of only 0.6%. The surge in producer prices is in large part due to higher energy prices, said Doug Roberts, chief investment strategist for ChannelCapitalResearch.com. (Source: CNN Money) Full Story
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General Motors Corp. (GM: Charts, News, Offers) aiming to boost sagging sales, rolled out a major new promotion to U.S. dealers that includes employee-level discounts on almost all its mass-market Chevrolet vehicles, people briefed on the promotion said on Monday. The sweeping discount offer takes effect on Wednesday and marks GM's return to a strategy from which it had tried to retreat in the last two years, as it sought to make its pricing more transparent - and to wean consumers from fire-sale blowout deals. But the downturn in U.S. auto sales has hit GM hard. Sales through July were down almost 18 percent and the automaker has faced pressure to cut costs amid signs that industrywide sales would remain slack in August despite lower gasoline prices. (Source: MSNBC) Full Story
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