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| Weekly Wrap Up |
Although the week started off positive, with gains across the board on Monday, the markets tumbled the rest of the week, posting a loss for the second week in a row. On Monday investors were looking for a reason to reverse the losses of the previous week, and the market was able to rise as investors cheered a variety of M&A news, including Xerox's (XRX: Charts, News, Offers) purchase of Affiliated Computer Services, Inc. (ACS: Charts, News, Offers). During the week, the primary focus was economic news. A report on holiday sales estimated an increase of 1% this year, which doesn't seem as great when you consider that last year was the worst holiday retail season in 40 years. Add to that the reports that consumer confidence fell in September, home prices increased slightly although the long-term values are still in negative territory, the manufacturing report was worse than expected, there was an unexpected fall in the Chicago Purchasing Managers Index, and job losses continued to increase, and you can see why investors were discouraged. And corporate news was only making the situation worse. Both JP Morgan (JPM: Charts, News, Offers) and Bank of America (BAC: Charts, News, Offers) announced the departure of their CEOs, and CIT Group (CIT: Charts, News, Offers) is getting closer and closer to bankruptcy. In the auto industry, the major US manufacturers all reported declines in sales, General Motors was crushed as Penske Automotive Group (PAG: Charts, News, Offers) pulled out of negotiations to purchase the Saturn brand, and things aren't looking better overseas as Toyota Motors (TM: Charts, News, Offers) was forced to recall 3.8 million vehicles due to a safety risk. Crude oil futures rose throughout the week, gaining approximately $4 to close at $69.95 a barrel. More Market News
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| Economic News |
Pending Home Sales: Worthless
I realize I'm not making friends with the Realtors by trouncing their index today, but I have to say honestly: I've read an awful lot of National Association of Realtor reports in my time on the housing beat (five years+), and never before have I seen them express so much skepticism in such a positive report. Remember, so many of you in the blogosphere refer to the NAR as the "shills" for the industry, which I supposed is what they're paid to be. But I digress.
This month's Pending Home Sales Index from the NAR rose 6.4 percent month to month and is now up for seven straight months. (Source: CNBC) Click here to read the full article
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Why the September Jobs Report Is So Brutal
Employers in the United States continue to be more interested in cutting their payrolls than in keeping their existing employees, let alone adding new ones. Employers slashed another 263,000 jobs last month, the Labor Department reported today. That brings nonfarm employment down to the level of 2004, when there were about 7 million fewer U.S. workers.
Workers are dropping out: The unemployment rate edged up only slightly, to 9.8 percent, but the number of workers in the labor force fell by 571,000, suggesting the unemployment rate could have been much worse. The ranks of the marginally attached - workers who have dropped out of the workforce because they believe they won't find jobs or because they have other responsibilities, such as school - have grown by 615,000 over the year. (Source: US News & World Report) Click here to read the full article
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GDP revision for Q2 suggests economy has turned the corner
U.S. GDP fell just 0.7 percent in Q2, a smaller decline than the previous 1.0 percent estimate, the U.S. Commerce Department announced Wednesday. The revised report lends credence to the argument that the recovery is underway and the economy is very close to expanding.
A Bloomberg News survey had expected Q2 GDP (revised) to decline 1.2 percent. The U.S. economy contracted 6.4 percent in Q1. In 2008, the world's largest economy grew a scant 1.1 percent, well below capacity.
In current dollar terms, U.S. GDP fell 0.8 percent or by $26.8 billion to an annual rate of $14.15 trillion. (Source: Daily Finance) Click here to read the full article
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U.S. Consumer Spending Jumps by the Most Since 2001
Spending by U.S. consumers climbed in August by the most since 2001, indicating the biggest part of the economy is starting to rebound from its worst slump in almost three decades.
The 1.3 percent increase in purchases was larger than forecast and followed a 0.3 percent gain in the prior month that was bigger than previously estimated, Commerce Department figures showed today in Washington. Incomes climbed 0.2 percent for a second month and inflation decelerated.
Automakers including General Motors Co. benefited from the Obama administration's $3 billion :cash-for-clunkers" incentives. A projected drop in auto purchases last month is a reminder that such gains will be hard to sustain as the stimulus programs expire and households grapple with rising joblessness and stagnant incomes. (Source: Bloomberg) Click here to read the full article
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| Business News |
Why Ken Lewis Gave Up
People around Bank of America (BAC: Charts, News, Offers) should have known something was up when its beleaguered CEO, Kenneth Lewis, returned from his August vacation with a beard. For a buttoned-down Southern banker like Lewis, growing a beard in Aspen, Colo., is the equivalent of a full-on existential crisis. And so the announcement of his retirement on Wednesday wasn't such a big surprise.
Analysts may cite several reasons for the seemingly abrupt end to the career of a self-made, homespun banker: the midcrisis acquisition of Countrywide Financial, big credit losses at the bank's core operations, and the hornet's nest of troubles the bank acquired when it purchased Merrill Lynch last fall. To these, I'd add another reason for Lewis' downfall. He wanted - no, needed - to make it big in New York. (Source: Slate) Click here to read the full article
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How CIT saved Christmas: Postponing its collapse gave retailers a chance
After rumors were publicized Tuesday in The New York Post that CIT's (CIT: Charts, News, Offers) creditors, including John Paulson & Co, were considering a merger of CIT into IndyMac, its stock shot up on the hope that a rescue plan was in place. Wednesday morning, The Wall Street Journal killed any remaining hopes for CIT's shareholders with an article reporting that the company's assets would either be turned over to bondholders or the company would face bankruptcy. Either scenario would leave shareholders with nothing.
The bigger question, is what will happen to retailers? Did CIT extend its life long enough when it got the emergency funding last August to avoid a major problem for retailers this Christmas shopping season?
Last July, retailers were worried that if CIT went bankrupt, they would have nowhere to turn for cash. (Source: Daily Finance) Click here to read the full article
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Sun sets on Saturn: GM kills fading star brand
For those who expected General Motors' once-funky Saturn brand to live on with a new owner, there has been a sad twist. Saturn, once billed as a different kind of car company, appears as dead as Pontiac and Oldsmobile.
At the brand's 350 remaining dealers around the country, there were high hopes that a deal would be announced for GM to sell the brand to former race car driver and auto industry magnate Roger Penske.
Instead, Penske Automotive Group Inc. (PAG: Charts, News, Offers) announced Wednesday it is walking away from the deal, unable to find a manufacturer to make Saturn cars when GM stops producing models sometime after the end of 2011. GM then announced it would stop making Saturns and soon would close down the brand, just like it did with Oldsmobile in 2004 and soon will do with Pontiac. (Source: Google News) Click here to read the full article
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| Technology Focus |
Wall Street to Comcast: Are You Serious?
As Yogi Berra once said, it's deja vu all over again. Comcast (CMCS.A: Charts, News, Offers) is rumored to be interested in buying NBC Universal from General Electric (GE: Charts, News, Offers). And just like back in 2004, when Comcast bid $54 billion for the Walt Disney Co. (DIS: Charts, News, Offers), investors are horrified. The Sept. 30 reports sent the cable giant's stock price plunging the next trading day, down more than 6% as of 2:30 p.m. ET, even after the Philadelphia company hustled out denials as fast as its spokeswomen could e-mail reporters.
Why does Wall Street give so little love to Comcast CEO Brian Roberts whenever he's seen to be straying outside his mainstay business of wiring homes with cable and delivering crisp pictures and Internet service? (Source: BusinessWeek) Click here to read the full article
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Xerox snaps up ACS in $6.4 billion takeover; investors think it overpaid
Ursula Burns isn't wasting any time.
Elevated to CEO of Xerox Corp (XRX: Charts, News, Offers) in July, Burns, the first African-American woman to lead an S&P 100 company, has orchestrated a major takeover Xerox hopes will give it a bigger foothold in the business services space. Xerox said Monday that it would pay $6.4 billion in cash and stock for Affiliated Computer Services (ACS: Charts, News, Offers), a large IT and outsourcing firm.
While the deal will surely boost Xerox, investors wondered whether Burns paid too dear a price: Xerox shares were trading down nearly 10 percent in pre-market activity Monday. ACS shares, meanwhile, were up over 20 percent in early trading. (Source: Daily Finance) Click here to read the full article
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Cisco to buy video firm Tandberg for $3 billion
Through its latest acquisition offer, Cisco Systems (CSCO: Charts, News, Offers) is hoping to grab a bigger slice of the growing video communications market.
Cisco announced Thursday that it will offer $3 billion in cash to acquire Tandberg, a global supplier of video communications equipment.
Based in Oslo, Norway, and in New York, Tandberg provides video networking hardware and software to a wide range of companies looking for teleconferencing and telepresence systems. Tandberg's products range from low-cost desktop tools to high-end conferencing systems.
Cisco has already wet its feet in the worlds of video and telepresence. Two of Cisco's many acquisitions in the last several years--Scientific-Atlanta and Arroyo--furthered the company's grasp of this segment. (Source: Cnet) Click here to read the full article
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| Your Money |
Don't bank on your home as an ATM
For generations of Americans, a home was seen not simply as a dwelling, but as an engine of personal wealth. That view was promoted by the home-building and real estate sales industries as well as the U.S. government, which subsidized home loans and provided tax deductions for mortgage interest.
There have been booms and busts along the way, but from the second half of the last century through the start of this one, nothing derailed the real estate locomotive on its uphill climb. The train stalled here and there and rolled back now and then, but each time it roared back up and got homeowners to the mountaintop.
Now, however, the worst housing crash since the Great Depression may mean that a home purchase ought to be considered with the same warning issued to investors in securities: Past performance is not indicative of future results. (Source: Los Angeles Times) Click here to read the full article
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How to Protect Your Portfolio: Seven Ideas for Investing Now
Investors who capitalized on the market's amazing six-month run are now going to want to find a way to protect their profits as a potential correction looms.
Bulls and bears are in a pitched battle over which way the market may run, with some awaiting a seemingly inevitable pullback that has shown only a faint shadow, while others believe the market has more room to grow yet.
The answer, though, may lie somewhere in between, and investment advisors are contemplating a full menu of options on how to proceed for the final quarter of a whipsaw year on Wall Street.
"The coin is in the air," Art Cashin, director of floor operations for UBS, told CNBC. "We don't know where it's going to quite go yet." (Source: CNBC) Click here to read the full article
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| Trivia Question |
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Which three companies have reached the coveted No. 1 spot on the FORTUNE 500 since 1954?
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| Market Overview |
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| DJIA |
9,487.67 |
-177.52 |
| S&P |
1,025.21 |
-19.17 |
| NYSE |
6,674.57 |
-148.94 |
| NASDAQ |
2,048.11 |
-42.81 |
| 10Yr |
3.221% |
-0.11 |
| Dollar |
77.21 |
+0.20 |
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| Trivia Answer |
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| General Motors, ExxonMobil and WalMart. |
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