U.S. stocks closed sharply lower amid fresh worries of a Greek default, the surprise resignation of a European Central Bank executive-board member and concerns about President Barack Obama's jobs plan.
When will this European crisis stabilize? What was the purpose of the Euro anyway?
With the ten year anniversary coming up in days, a great article below on how Cantor Fitzgerald, the financial firm devastated on 9/11, survives and thrives. All companies should follow this loyalty demonstrated by its CEO Howard Lutnick.
A sign of the times, Wal-Mart is bringing back lay aways for the first time since it was disbanded in 2006, just as Sears and Toys "R" Us did earlier this year.
Here are the top financial stories of the day:
1) Europe’s ‘Stark’ Realities Slam Stocks: Dow Slumps 304 Points-From The Daily Ticker
The market ended this holiday-shortened week the same way it started: In free fall over concerns about Europe.
The Dow tumbled 304 points, or 2.7%, to 10,992 after trading as low as 10,936 intraday. The S&P fell 2.7% and the Nasdaq shed 2.4%, wiping out weekly gains generated by Wednesday's big bounce.
Meanwhile the yield on the 10-year Treasury tumbled below 1.90% intraday, the lowest level since World War II, before settling at 1.92%. After falling sharply early Friday, gold rebounded to end the New York session slightly despite the dollar's strength vs. the euro, another sign of investors seeking a haven from the unrest in financial assets. (See: Marc Faber: Gold is "Dirt Cheap" — Could Hit $10,000 per Ounce)
The proximate cause for Friday's rout was the surprise resignation of ECB board member and chief economist Jurgen Stark. The resignation leaves the ECB board with only one German, Jens Weidmann, spurring speculation of a massive upheaval in the eurozone.
"The announcement fuels two paths of speculation," writes BTIG chief global strategist Dan Greenhaus.
"Either the Germans are slowly laying the groundwork for removing themselves from the eurozone or pressure from Germany will eventually lead to the ouster of Greece from the zone."
Despite repeated protests to the contrary from Greek policymakers and politicians, the odds heavily favor the latter outcome. Greek debt yields surged again Friday to almost 98% on the 1-year note and the price of default insurance also jumped. Notably, Stark's resignation followed a Bloomberg report Germany was preparing a bailout fund for its banks in the event of a Greek default.
"We may finally be reaching a point that some in Europe are finally realizing that the money being funneled to Greece to buy time from the inevitable would be better put to use to recapitalize banks to insulate them from sovereign haircuts," writes Miller Tabak equity strategist Peter Boockvar.
2) Cantor Fitzgerald: surviving 9/11, and thriving-From the AP
It's a name inextricably linked with Sept. 11, with huge, catastrophic loss -- Cantor Fitzgerald.
Of the companies and organizations that lost people that day, none was harder hit than the financial services firm that occupied the 101st to 105th floors of the north tower at the World Trade Center. Out of 960 employees in New York, 658 were killed -- no employee in Cantor's offices at the time survived. Whole divisions were decimated.
Led by CEO Howard Lutnick, those who were still alive made a decision -- the company would survive. They wouldn't let what they had worked so hard to create crumble. And they would honor those they had lost.
Ten years later, Cantor has regained its size and then some. The company and a spinoff, BGC Partners, employ 1,500 people in New York City and have other offices in countries around the world.
Cantor has kept its word to the families of those employees lost on 9/11 -- distributing millions of dollars of the firm's profits to them, and covering health care costs for the past 10 years.
"The best way to show someone you love them is to care for the people they love," Lutnick said.
On the day of the attacks, Lutnick was delayed getting to the office because he had taken his son to his first day of kindergarten. That delay spared him. Others escaped the attacks because they happened to schedule an out-of-office trip for that day, or were in the building but hadn't yet made it up to the offices.
When the first plane hit the north tower at 8:46 a.m., it destroyed the stairwells, making it impossible for anyone above the point of impact around the 94th to 98th floors to descend. The north tower collapsed at 10:28 a.m.
Lutnick made it to the scene after the first plane hit and was there when the tower fell. He can still feel and see the horror of that day.
"It was black outside, there was no air outside, so I knew that people inside the trade center couldn't possibly be alive," Lutnick said recently from the company's offices in midtown Manhattan. Among them were his brother, Gary, and his best friend, Doug Gardner, Cantor's CFO.
When the smoke cleared, the towers lay in rubble. So did parts of Cantor.
"What we had was secretaries that had lost their bosses, divisions of 86 who had only four remaining," Lutnick said. "There were many divisions we couldn't rebuild."
But they returned to work, even as families and friends grieved for those who were suddenly gone, to get their systems running again.
"We were faced with that horror in every moment of our day but we had this tremendous task in front of us," said Joseph Noviello, Cantor's executive vice president and chief product architect, who at the time was the chief technology officer and had been scheduled to go on a daytrip on Sept 11.
"You were looking for friends, you were hoping and praying that people were just going to find their way and get in contact with you, and while that was going on we were working around the clock to bring back the systems," he said.
They were back online in days. As Cantor's surviving employees returned to work, it was with a new purpose.
"My goal after 9/11 was to take care of the families of the people we lost, and that was the most important thing," Lutnick said.
That translated into a big financial commitment -- 25 percent of Cantor's profits for five years were set aside to be distributed to the families, which in the end amounted to $180 million. Their health care costs were to be covered for 10 years. And the company marked every Sept. 11 as a day for charity, a day when every dollar made would be given to good causes.
"We all had to commit to doing something different," Lutnick said. "It changed our outlook about what was important about business."
The attacks "just created sort of that bang of what type of human being are you right here, right now," Lutnick said. "I didn't think there was a choice. Either we take care of our friends' families or I'm not a human being."
Of those who survived that day, only about 150 are still at the company.
But the impact of the attacks runs through Cantor, Lutnick said.
The company's yearly commemoration goes a long way toward helping new employees understand that, he said. Every year, family members of those lost are invited to speak about their loved ones.
"Together, we celebrate their lives," Lutnick said.
"At the end of the night, the brand-new employee? They get it," he said. "It's not trying to leave the past behind but it's not allowing the past to define you. It's bringing the families with us and going forward together, not seeking closure but seeking friendship."
3) How Bad Is the Economy? Wal-Mart Revives Layaway-From the Wall Street Journal
Times have gotten so tough for American consumers that Wal-Mart Stores Inc. is bringing back layaway—to help them afford the cost of Christmas.
The layaway plan, a seemingly antiquated sales tactic common in department stores during the 20th century, has made a comeback since the 2008 recession, as consumers avoided turning to credit cards to make purchases. Layaway programs let consumers put aside store merchandise and make payments on it until the full price has been met.
The nation's largest retailer said it is bringing back the payment plan this holiday season in response to consumer requests, five years after it did away with it for everything but jewelry. The hope is to give shoppers under tight budgets or without credit cards a way to secure the gadgets and toys their children want.
Under Wal-Mart's new layaway plan, which begins, Oct. 17, customers will be able to have stores set aside toys and electronics of $15 or more, including dolls, bicycles, videogames and televisions, so long as the total purchase price exceeds $50. Customers will then have until Dec. 16 to pay off the remaining balance and retrieve the orders.
Wal-Mart said focusing on a more narrow assortment should allow the company to avoid the pitfalls it cited when it phased out layaway in 2006, citing diminished demand. The retailer said then that the layaway program created backroom clutter from all the half-purchased items held in storage.
"This gives us another opportunity to help our families deliver a big Christmas," Duncan Mac Naughton, Wal-Mart's U.S. chief merchandising officer, said in a conference call with reporters. He added that the company believes the smaller-scale layaway program should prove easier for workers to manage in backrooms, and could become permanent if it does well this year.
Still, like many layaway plans, the cost is considerable for lower-end shoppers. Customers must make a 10% down payment on the purchase, and pay a nonrefundable $5 fee that would represent a 10% mark-up on a $50 toy. Retrieving partial payments for canceled orders costs an extra $10.
The Bentonville, Ark., retailer finds itself playing catch-up on layaway. Two of Wal-Mart's retail rivals, Sears Holdings Corp. and Toys "R" Us Inc., have resumed layaway programs in recent years and reported a subsequent boost in sales.
The Wal-Mart fee is similar to what other retailers charge. Sears, for example, charges $5 for items put on layaway for eight weeks, and $10 for items put on layaway for 12 weeks. Toys "R" Us charges $10 and requires 20% down.
Wal-Mart will count the sales only after the items have been fully paid. Mobile phones with service contracts and items purchased via Walmart.com are not eligible.
The Better Business Bureau, which says it receives countless complaints about layaway programs, advises consumers to carefully read the details of layaway contracts to understand whether they are at risk of losing their down payments, or can have a popular toy sold to someone else, if they don't make payments by a certain date.
Wal-Mart also shared new details on its holiday strategy Thursday. Mr. Mac Naughton said the company plans to roll out Christmas decorations and other seasonal merchandise about two weeks earlier than usual, starting later this month.
It will also be touting "rollbacks," or planned sales promotions, on $15 toys such as Lego sets, Disney princess dolls and Transformer robots, starting on Monday. The focus on $15 toys, meant to dovetail with the new layaway minimum price, is a slight change from past years, when Wal-Mart hyped $10 toys.
A Wal-Mart spokeswoman played down the $15 toys threshold, saying the company also would be promoting less-expensive items.
Quote of the Day from The American Patriot's Almanac by William J. Bennett and John T.E. Cribb: "I do the very best I know how, the very best I can, and I mean to keep doing so until the end' - Abraham Lincoln
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