Financial Headline News for Tuesday 7/12

Irresponsible out of control spending hit yet more European countries with investors fleeing Italy's bonds and Ireland's being downgraded to junk status.

Good article below about shopping on Wednesday's for certain items. After reading this today strap on your sneakers tomorrow and get out there to get the best deals!

The financial headlines for today are:

1) Stocks fall after Ireland downgrade erases gains-From the AP

Hope that the Federal Reserve might consider more economic stimulus wasn't enough to keep bad news about Ireland from sinking stocks.

Ireland's government bonds were downgraded by ratings agency Moody's to junk status shortly before U.S. markets closed Tuesday, sending stocks sharply lower and erasing the day's gains. Ireland joins Greece and Portugal, whose debt was also recently graded as junk.

The move puts Ireland back on the list of heavily-indebted European countries in danger of default. The country has already received a financial rescue package from other countries. If a European country fails to pay its debts, it could cause widespread disruptions in financial markets and lead to a slowdown in lending.

Worries about debt problems in Europe sent stocks down through the first half of June and appear to be having the same effect in July.

The Standard & Poor's 500 index fell 5.85, or 0.4 percent, to close at 1,313.64. The S&P is now down 0.5 percent for the month and 2.2 percent for the week. The Dow Jones industrial average fell 58.88, or 0.5 percent, to close at 12,446.88. The Nasdaq composite fell 20.71, or 0.7 percent, to close at 2,781. Both the Dow and Nasdaq are still up about 0.3 percent for the month.

Earlier Tuesday, minutes from the Federal Reserve's last meeting on June 21-22 were released. In those minutes, several Fed officials said that the government would have to consider new monetary policy to stimulate the economy, especially if growth remains too slow to reduce the unemployment rate.

2) Italy Fears Jolt Markets- From the Wall Street Journal 

Italy, long a bystander to the euro-zone's debt woes, was thrust into the maelstrom Monday, as investors fled the country's bonds and Europe's leaders struggled to keep the crisis from infecting the Continent's third-largest economy.

Fears over Italy's solvency and political stability were compounded by market frustration that Europe's leaders haven't yet come up with a solution to Greece's deepening debt problems: The gap between the yields on Italy's 10-year sovereign bonds and safer German Bunds jumped by more than 100 basis points, or a whole percentage point, to a record high of 285.6, compared to a week ago.

Stocks across Europe tumbled. In the U.S., investors paid more attention to the worsening situation in Europe after having largely shrugged it off in recent weeks. The Dow Jones Industrial Average lost 151.44 points, or 1.2%, to 12505.76. Markets in Asia fell Tuesday morning, with the Nikkei average down 1.4%.

Trying to stem the panic, embattled Italian Prime Minister Silvio Berlusconi has promised to avoid the political dithering that so often thwarts Italian policy-making, and speedily get through parliament a package of austerity measures unveiled two weeks ago, aimed at balancing Italy's budget by 2014.

The cuts "will be approved in just a few days as the government has a solid majority," Labor and Social Policies Minister Maurizio Sacconi said in an emailed response to questions on Monday evening. In the past, such budget measures have taken months to be approved.

Earlier in the day Italy's main opposition politicians said they wouldn't stand in the way of the austerity push. German Chancellor Angela Merkel also weighed in, saying she was confident the package would be approved, allowing Italy to "send a signal that it feels committed to consolidation and fighting debt."

3) Best Day of the Week to Shop-From Financially Fit

Sometimes, saving money is all in the timing, and Wednesday is the day for discounts on everyday items.

Here's a rundown of four items that usually reach their best prices on Hump Day.

Gas: Industry experts say Wednesday is the best day of the week to buy gas — especially early in the morning. You could save about five cents per gallon. Prices tend to drop by a few cents per gallon at many stations before rising again on Thursday and on through the weekend when there are more drivers on the road.

Groceries: Wednesday is also a great day to shop for groceries, as this is when about half of the country's supermarkets kick off their weekly sales, according to experts at MyGroceryDeals.com. The sales last for at least a few days, but if you want to get there before the shelves get wiped out, arrive on Wednesday.

Online Clothing Deals: Web deals on women's clothes are all the rage on Wednesday. Researchers at Shop It To Me, a free online personal shopper, did a study to prove it. According to their data of more than 340,000 women's items marked down between June 1, 2010 and June 1, 2011, the average discount on women's and kids' clothing is about 40 percent on Wednesdays — the steepest all week.

Airline Tickets: Pricing wars among competing airlines usually start on Fridays for various fares, but by Wednesday, prices have reached their absolute lowest. More specifically, 1 a.m. on Wednesday is reportedly the best time to strike. According to the book, The Travel Detective by Peter Greenberg, at around midnight, airlines usually reload their computers with the most recent low-cost fares that were announced the previous day. But you have to act fast—the deals usually expire after 24 hours.


Quote of the Day from Dave Ramsey.com:

Nothing great will ever be achieved without great men, and men are great only if they are determined to be so. — Charles de Gaulle

Financial Headline News for Monday 7/11

Stocks plummeted today on new concerns of the never ending Euro crisis with Italy and Spain now jumping on board, both possibly needing financial aid.

Having been unemployed for 10 months until getting a job recently, I could relate to the story below about unemployment benefits expiring for the 99er's. As this article says, the economic impact of the unemployment insurance running out for these millions of people have not been factored in to the impending financial disaster that could still happen.

I am confused as anyone about this debt ceiling talk. However there is a very good Q&A article below answering our questions.

The financial headlines for today are:

1) Stocks sink on fresh fears about global economy-From the AP

July doesn't look so promising anymore.

The European debt crisis appears to be widening, with concerns about government debt defaults spreading beyond Greece to much larger countries like Italy and Spain. If that happens companies that do business internationally could see their revenue and profits decline as European countries and companies curtail purchases. What's more, a widespread financial crisis could cause a credit crunch in Europe and elsewhere.
The concerns sent stocks down. After a rally that sent markets up sharply the last two weeks of June, the Standard & Poor's 500 index dropped 24.31 points, or 1.8 percent, to 1,319.49 on Monday.

The Dow Jones industrial average had its biggest percentage drop in nearly a month. It fell 151.44 points, or 1.2 percent, to 12,505.76. And after closing one point off its 2011 high late last week, the Nasdaq composite fell 57.19, or 2.0 percent to 2,802.62.

Italy and Spain, Europe's third and fourth largest economies, have seen bond yields rise sharply. It's the latest sign that investors are less willing to hold the debt of those countries. Italy's largest banks, UniCredit SpA and Intesa, fell sharply on European exchanges. Some investors believe several of Italy and Spain's financial institutions might not pass an upcoming stress-test for European banks.

2) Economy Faces a Jolt as Benefit Checks Run Out-From the New York Times

An extraordinary amount of personal income is coming directly from the government.
Close to $2 of every $10 that went into Americans’ wallets last year were payments like jobless benefits, food stamps, Social Security and disability, according to an analysis by Moody’s Analytics. In states hit hard by the downturn, like Arizona, Florida, Michigan and Ohio, residents derived even more of their income from the government.

By the end of this year, however, many of those dollars are going to disappear, with the expiration of extended benefits intended to help people cope with the lingering effects of the recession. Moody’s Analytics estimates $37 billion will be drained from the nation’s pocketbooks this year.

In terms of economic impact, that is slightly less than the spending cuts Congress enacted to keep the government financed through September, averting a shutdown.

Unless hiring picks up sharply to compensate, economists fear that the lost income will further crimp consumer spending and act as a drag on a recovery that is still quite fragile. Among the other supports that are slipping away are federal aid to the states, the Federal Reserve’s program to pump money into the economy and the payroll tax cut, scheduled to expire at the end of the year.

“If we don’t get more job growth and gains in wages and salaries, then consumers just aren’t going to have the firepower to spend, and the economy is going to weaken,” said Mark Zandi, chief economist of Moody’s Analytics, a macroeconomic consulting firm.

Job growth has remained elusive. There are 4.6 unemployed workers for every opening, according to the Labor Department, and Friday’s unemployment report showed that employers added an anemic 18,000 jobs in June.

In Arizona, where there are 10 job seekers for every opening, 45,000 people could lose benefits by the end of the year, according to estimates from the state Department of Economic Security. Yet employers in the state have added just 4,000 jobs over the last 12 months.

Some other states will also feel a disproportionate loss of income unless hiring revives. In Florida, where nearly 476,000 people are collecting unemployment benefits, employers have added only 11,200 jobs in the last year. In Michigan, employers have added about 40,000 jobs since May 2010, but about 267,000 people are claiming jobless benefits.

Throughout the recession and its aftermath, government benefits have helped keep money in people’s wallets and, in turn, circulating among businesses. Total government payments rose to $2.3 trillion in 2010, from $1.7 trillion in 2007, an increase of about 35 percent.

While some of that growth was in Social Security and disability benefits as the population aged, the majority resulted from payments to people continuing to suffer from the recession, said Mr. Zandi. Unemployment benefits, including emergency and extended benefits, are more than three times their prerecession level, he said. The nearly 20 percent of personal income now provided by the government is close to a record high.

Approved by Congress last December, the final extension of jobless benefits — for a maximum of 99 weeks for each unemployed person — is scheduled to conclude at the end of this year. A handful of states, like Wisconsin and Arizona, have already cut off weeks 80 through 99 for their residents. Meanwhile, more of the long-term unemployed are bumping up against the 99-week limit.

Consumers account for an estimated 60 to 70 percent of the country’s economic activity, but two years into the official recovery, businesses are still complaining that people simply are not spending enough.
“Regardless of why people have less money to spend, it affects all retailers in all industries,” said Michael Siemienas, spokesman for SuperValu, which operates grocery chains including Cub Foods, Shop ’n Save and Save-A-Lot. Mr. Siemienas said that the number of SuperValu’s customers using electronic benefit transfers to pay bills had grown over the last year.

Because benefit payments tend to be spent right away to cover basic needs like food and rent, they provide a direct boost to consumer spending. In a study for the Labor Department, Wayne Vroman, an economist at the Urban Institute, estimated that every $1 paid in jobless benefits generated as much as $2 in the economy.
For many of the nearly 7.5 million people collecting unemployment benefits, those payments are keeping them afloat. Laura Metz, 42, was laid off from a clerical job paying $15.30 an hour at a home health care provider near her home in Commerce, Mich., nearly 15 months ago. She has been collecting $362 a week in unemployment insurance and about $50 a month in food stamps.

That covers the basics. But Ms. Metz stopped making her mortgage payments last year on the modest home she shares with her 19-year-old son. A program that allowed her to make a lower monthly payment has expired, and she is waiting to see if the lender will modify her loan. She can no longer make her student loan payments for her bachelor’s degree or master’s in business administration, and she has downgraded her Internet and cable service and cut back on car trips and snacks.

Ms. Metz, who has been applying for administrative jobs, has been shocked at the dearth of opportunities. A decade ago, when she applied for clerical jobs, “as soon as I walked up, there was a sign saying ‘We’re hiring,’ but it’s not like that now,” she said. “It’s really, really difficult.”

Businesses that rely heavily on low-income shoppers worry that their customers will have little to spend. Najib Atisha, who co-owns two small grocery stores in Detroit, said people receiving government assistance made up about a third of his customers downtown and as much as 60 percent at his store on the west side of the city.

“Of course, we’re hoping that things will turn around, but it’s always easier to lose jobs than it is to gain jobs,” Mr. Atisha said. “I think it’s going to take twice as long to rebound as it took to get where we are now.”

Some business groups argue that extending unemployment benefits has had deleterious effects on employers and potential workers.

“It’s having a chilling effect on hiring,” said Wendy Block, director of health policy and human resources at the Michigan Chamber of Commerce. “At one point, our unemployment taxes were just a blip on the balance sheet, but when you’re talking over $500 a head, this is significant.” Last year, Michigan spent $6.2 billion on jobless benefits, according to the National Employment Law Center.

Some economic studies show that people who collect unemployment benefits are less likely to look for or accept work until their benefits are close to running out.

“Unemployment insurance extends the typical amount of time that people will spend off the job and not looking for work,” said Chris Edwards, an economist at the Cato Institute, a libertarian organization.

In Michigan, Ms. Metz said that if all else failed, she would have to move in with her parents, who live on a fixed income. But she is determined to find work before her benefits run out and plans to expand her search to include light industrial manufacturing. “It’s getting close to the end,” she said. “And I got to do what I got to do.”

3) Questions on How the Deficit Deals Stack Up-From the Wall Street Journal

Q: What did the scotched $4 trillion deal look like?
A: One of its biggest components would have been a revamp of tax rules. This could include lowering tax rates while eliminating scores of deductions, and ending the Bush-era tax cuts for the wealthy at the end of 2012. A larger deal could also have included changes to Social Security benefits and tax brackets. White House officials have said that would allow more fundamental changes to Medicare and Medicaid as part of any such deal.

Q: What happened to it?
A: Depends who you ask. Speaker of the House John Boehner (R., Ohio) said he could not agree to such a deal because the White House wanted to include tax increases. Obama administration officials said Mr. Boehner balked under pressure from GOP rank-and-file.

Q: Mr. Boehner now wants a smaller deal, meaning what?
A: It could be modeled on $2 trillion in deficit reductions identified but never agreed to in talks led by Vice President Joe Biden a few weeks ago. These would include roughly $1 trillion in cuts to discretionary spending, and $300 billion in reductions for such programs as farm subsidies and reducing interest subsidies on student loans. It would likely include only modest changes to Medicare and Medicaid. Any new tax revenue would probably be small, such as changing tax rules for corporate-jet owners and ending ethanol subsidies.

Q: What does the current state-of-play mean for companies and individuals?
A: Big changes to taxes and entitlement programs—including Medicare, a big driver of the long-term budget problem—seem a lot further off than a few days ago. It's possible Democrats would pursue token tax increases as part of a smaller deal, such as raising taxes on corporate-jet owners, but the possibility of a broader reduction in tax breaks appears unlikely. It sets up a major showdown next year over what to do with the expiring Bush-era tax cuts.

Q: What does this mean for the struggling U.S. economy?
A: It's hard to tell. White House officials wants any deal to include an extension of payroll-tax cuts for individuals. They are nervous that Wall Street investors could interpret partisan bickering as a sign the debt ceiling won't be raised in time, which could push up interest rates and move stock and bond markets.

Q: What does a smaller deal mean for the debt ceiling?
A: A smaller deal probably means a smaller increase in the debt ceiling, which means policy makers will have to do this all over again, although most likely not until after the 2012 election


Quote of the Day from Dave Ramsey.com:

Nothing is more common than unfulfilled potential. — Howard Hendricks

Financial Headline News for Friday 7/8

I guess those ADP figures released yesterday were slightly off from reality. Now it appears there was a net effect of only 18,000 jobs in June as the private sector created 57,000 jobs but the government shed 39,000. This caused the unemployment rate to go up from 9.1% to 9.2%. This bad news sent all sectors down today.

This long drawn out recession has really taken a toll on the middle class-a good article below summarizes this backwards economic trend inflicting most Americans.

Now it is Italy's turn to go on the European bail out merry go round.

The financial headlines for today are:

1) Stocks sink after dismal June jobs report-From the AP

An unexpected drop in hiring put an end to the excitement that had been bubbling up on Wall Street over the past two weeks.

Stock indexes fell sharply Friday, erasing most of the week's gains, after the government reported that U.S. employers created the fewest number of jobs in nine months. The 18,000 net jobs in created in June were a fraction of what many economists expected and dampened hopes that the economy was improving. Private companies added jobs at the slowest pace in more than a year. The unemployment rate edged up to 9.2 percent, its highest level this year.

A broader measure of weakness in the labor market was even worse. Among Americans who want to work, 16.2 percent are either unemployed or unable to find full-time jobs. That was up from 15.8 percent in May.

"There's just a lot more evidence than before that we're in an extended weak patch," said Brian Gendreau, market strategist for Cetera Financial Group. He said private economists will likely reduce their projections for overall economic growth this year.

The Standard and Poor's 500 index fell 9.42 points, or 0.7 percent, to 1,343.80. That eliminated the index's gains from Thursday and left it with a 0.3 percent gain for the week.

The Dow Jones industrial average lost 62.29, or 0.5 percent, to 12,657.20. The Dow, which had been down by as much as 150 points Friday, had only its second down day over the past nine. The Nasdaq composite dropped 12.85, or 0.4 percent, to 2,859.81. It was its first loss in two weeks.

Companies whose business would be most affected by a weakening economy were hit hardest. Bank of America Corp., General Electric Co. and Boeing Co. were among the biggest decliners in the Dow average.

2) How the Bubble Destroyed the Middle Class-From Market Watch

A lot of people say they are deeply puzzled by the slow recovery in the U.S. economy. They look at the 9+% unemployment rate and the mediocre growth in national output, and they scratch their heads and wonder: Where is the boom that inevitably follows a deep bust, such as we experienced in 2008 and 2009?
But there is no mystery. What other result would you expect from the financial ruin of the once-great American middle class?

And make no mistake, the middle class has been ruined: Its wealth has been decimated, its income isn't even keeping pace with inflation, and its faith in the American economy has been shattered. Once, the middle class grew richer each year, grew more comfortable, enjoyed a higher living standard. It was real progress in material terms.

But that progress has been halted and even reversed. In some respects, the middle class has made no progress in a generation, or two.

This isn't just a sad story about a few losers. The prosperity of the middle class has been the chief engine of growth in the economy for a century or more. But now our mass market is no longer growing. How could it?

The middle class doesn't have any money.

There are a hundred different ways of looking at the economy, and a million different statistics. But if you wanted to focus on just one number that explains why the economy can't really recover, this is the one: $7.38 trillion.

That's the amount of wealth that's been lost from the bursting of housing bubble, according to the Federal Reserve's comprehensive Flow of Funds report. It's how much homeowners lost when housing prices plunged 30% nationwide. The loss for these homeowners was much greater than 30%, however, because they were heavily leveraged.

Leverage is an amazing thing: When prices go up, the borrower gets all the gains. And when prices go down, the borrower takes all the losses. Some families lost everything when the bubble collapsed, others lost very little. But, on average, American homeowners lost 55% of the wealth in their home.

Most middle-class families didn't have much wealth to begin with — about $100,000. For the 22 million families right in the middle of the income distribution (those making between $39,000 and $62,000 before taxes), about 90% of their assets was in the house. Now half of their wealth is gone and it will never come back as long as they live.

Of course, rich folk lost lots of wealth during the panic as well. Their wealth is mostly in paper not bricks — stocks, bonds, mutual funds, life insurance. The market value of those assets fell further than home prices did during the crash, but they've mostly recovered their value now. The S&P 500 (^GSPC - News) lost 56% of its value when it crashed, but it's doubled since then. Stocks are down about 13% from peak.

The rich recovered; the rest of us didn't.

If losing half your meager life savings weren't bad enough, the middle class has also been falling behind in terms of income for decades. Families in the middle make most of their money the old-fashioned way: Working their fingers to the bone for 40 years for wages and a modest pension.

3) Berlusconi Tries to Allay Market Fears-From The Wall Street Journal 

Italian Prime Minister Silvio Berlusconi on Friday sought to dispel escalating market concerns over a new bout of political instability in Italy, saying comments he made to a newspaper about the country's economy minister not being a "team player" were taken out of context.

The comments attributed to Mr. Berlusconi by Italian daily la Repubblica came as the economy minister, Giulio Tremonti, made the front page of virtually every newspaper in Italy after it emerged late on Thursday that the minister had been using a Rome apartment provided to him by a former top aide who is under investigation for corruption. The two events—plus continuing concerns that debt-laden Italy might be dragged into the European debt crisis—prompted Italian bond yields to rise and Italian bank shares to slide during the day on Friday.

In a statement, Mr. Berlusconi didn't deny the comments made about Mr. Tremonti, but criticized the Repubblica report, saying that "a friendly conversation was transformed into a formal interview." The premier also issued a separate statement saying he and Mr. Tremonti were meeting for lunch to plan out the political agenda for the next few days.

Separately, Mr. Tremonti tried to distance himself from the probe involving his former aide, Marco Milanese.

For months, prosecutors in Naples have been investigating whether Mr. Milanese—a lawmaker who formerly acted as a laison between the Economy Minstry and Italy's tax police—relayed confidential information related to a criminal investigation to a businessman in exchange for cash and gifts. On Thursday evening, a Naples judge filed a request to Parliament for approval to arrest Mr. Milanese; in Italy, parliament has to approve requests for any lawmaker to be arrested. In that request, viewed by The Wall Street Journal, the prosecutor claimed that Mr. Milanese paid €8,500 ($12,209) to rent a Rome apartment for Mr. Tremonti's use.

Mr. Milanese—who resigned from Mr. Tremonti's staff in late June after being questioned in the probe—didn't respond to phone calls to his office in Parliament. Mr. Milanese's lawyers didn't respond to phone calls seeking comment on the matter.

In a statement late on Thursday, Mr. Tremonti said that during his 15 years of commuting to Rome from his hometown northern city of Pavia, he would normally stay in hotels and military barracks. However, Mr. Tremonti said he had occasionally used the apartment rented by Mr. Milanese, "As of tonight ... I will change the living arrangements," Mr. Tremonti added.
Pierluigi Bersani, leader of Italy's leftist Democratic Party, told a press conference on Friday that Mr. Tremonti's ties to Mr. Milanese were "worrying."

"The whole government must resign. It's not a question of adjusting the situation of a single minister. We cannot continue with the made-for-TV movie," Mr. Bersani said.

Mr. Tremonti is one of the most highly respected ministers in Mr. Berlusconi's conservative government. For years, he has been the backbone of Italy's efforts to keep its public spending under control as the sovereign-debt crisis has turned up scrutiny Europe's weaker economies. Mr. Tremonti is the architect of the government's plan to slash €40 billion in cost savings from Italy's three-year budget.

Quote of the Day from Dave Ramsey.com:

Words can show a man's wit, but action shows his meaning. — Ben Franklin

Financial Headline News for Thursday 7/7

It looks like the new job I started in June was one of the 157,000 created.

Stocks rose once again because of this good hiring news as well as first time unemployment claims dipped and retailers surged in June.

A good article below of how so many economic disasters were barely dodged the last few years. However as the full article says, any or all of these calamities could reappear. Please see the whole article which I just retweeted: http://finance.yahoo.com/news/5-Economic-Disasters-That-usnews-2512535671.html?x=0

Here are the top financial stories of the day:

1) Retail sales and jobs reports send stocks higher-From the AP

A rebound in retail sales and strong jobs reports pushed stocks near their highest levels of the year.
U.S. retailers had their best June sales results since 1999 as shoppers were lured into stores by warm weather and deep discounts. Kohl's Corp., Target Corp., and Urban Outfitters Inc. each gained more than 6 percent.

Investors have been concerned that high gas prices would constrain consumer spending as people looked for ways to save money. The higher sales figures reassured markets that consumers were becoming more willing to spend again.

"The closest thing to an unadulterated barometer of our progress is same-store sales," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. Same-store sales for the 28 retailers who reported them on Thursday were up 6.9 percent. "Everything is tied to it: Sales drives profits, profits drive hiring and hiring drives sales. It's a neat, virtuous circle."

An improving job market likely helped. The number of people who made first-time claims for unemployment benefits dropped last week to a seven-week low of 418,000, the government reported. That's a sign that employers are laying off fewer workers.

Separately, payroll processor Automatic Data Processing said companies added 157,000 employees in June. The bulk of the hiring came from small businesses. The tally is more than double the number economists had forecast and far more than the 36,000 added the previous month. The report isn't always an accurate predictor of the Labor Department's monthly unemployment report, but has been more of a bellwether in recent months. The Labor Department's report will be released Friday.

The Dow Jones industrial average gained 93.47 points, or 0.7 percent, to close at 12,719.49. The Standard and Poor's 500 index added 14 points, or 1.1 percent, to 1,353.22. The tech-focused Nasdaq composite closed at 2,872.66 after gaining 1.4 percent. It briefly traded at a new high for the year of 2,877.

2) ADP, Jobless Claims Suggest Improvement-From the Wall Street Journal 

Two new jobs reports indicated that the labor market may be improving from recent weakness, but any rebound remains subdued.

Private businesses added a stronger number of jobs in June than expected, according to a report released Thursday. Separately, the number of idled U.S. workers making new claims for jobless money fell last week.

Private-sector jobs in the U.S. rose by 157,000 last month, according to a national employment report published by payroll giant Automatic Data Processing Inc. and consultancy Macroeconomic Advisers.

Economists surveyed by Dow Jones Newswires had expected ADP to report a job gain of just 95,000 last month. The May data were revised lower to show a rise of 36,000 versus the already meager 38,000 first reported.

The ADP report said "June's figures suggest that the economic recovery, which slipped in the spring, might have found new traction in early summer."

The ADP survey tallies only private-sector jobs, while the Bureau of Labor Statistics' nonfarm payroll data, to be released Friday, include government workers. In recent months, state and local governments have been laying off workers to close budget gaps.

Economists surveyed by Dow Jones Newswires expect total nonfarm payrolls rose by 108,000 in June, double the weak 54,000 reported in May. The ADP number may prompt forecasters to lift their Friday's payroll estimates.

The June unemployment rate is expected to remain at 9.1%.

The latest ADP report showed large businesses with 500 employees or more added only 10,000 new employees, and medium-size businesses added 59,000 workers in June. Small businesses that employ fewer than 50 workers hired 88,000 new workers.

Service-sector jobs increased by 130,000 in June, while factory jobs, which had fallen in May, rebounded by 24,000 in June.

ADP, of Roseland, N.J., says it processes payments of one in six U.S. workers, while Macroeconomic Advisers, based in St. Louis, is an economic-consulting firm.

New claims for unemployment benefits dropped by 14,000 to a seasonally adjusted 418,000 in the week ended July 2, the Labor Department said Thursday.

Economists surveyed by Dow Jones Newswires had forecast a decline of 3,000 new claims.

3) 5 Economic Disasters That Haven't Happened-From US News and World Report

You're in a lousy mood. Justifiably so. It's been two years since the recession ended and a recovery supposedly began, yet the job market still stinks, housing remains a mess, and the bozos in Washington seem to do more harm than good. Consumer confidence is getting worse, not better, and talk of a double-dip recession hovers like a thunderhead over a summer barbecue.

Those are legitimate problems that are showing up in the real economy. Economic growth so far this year has been disappointingly low, and far below levels needed to notch a meaningful pickup in hiring. Many consumers aren't spending because they're worried about jobs, and many companies aren't hiring because consumers aren't spending. Policymakers in Washington, meanwhile, seem to have run out of ideas for how to stimulate the economy. Instead of action, we're settling into a grudging acceptance of stagnation.

The answer is that some of them are already dissipating. And when it starts to look like there's more turbulence behind than ahead, it could mark the moment when the economy turns the corner in earnest. Here are five potential disasters that have worried economists but failed to materialize:

A major spike in oil prices. At the beginning of the year, oil was about $90 per barrel. As unrest in the Middle East intensified, prices peaked at more than $113 per barrel. Economists think that $120 oil might be the tipping point at which a double-dip recession becomes likely. But even below that level, rising energy prices cut into disposable income, which means people have less money to spend on other stuff. And $4 gas in particular tends to depress consumer confidence far more than other types of price increases. So, much of the economic weakness so far this year is due to the real and psychological impact of rising oil and gasoline prices.

Financial panic in Europe. It's beginning to seem like an annual summer ritual: Greece or some other peripheral European nation nearly goes bankrupt, roiling markets until policymakers sweep in at the last second with a bailout. But the longer this goes on, the less likely a crisis actually becomes. One of the big problems with the financial situation in Greece, Ireland, Portugal, and perhaps Spain is that European banks hold much of their debt and would incur steep losses if those nations default on their obligations. That leads to the "contagion" scenario, in which banks across Europe, and perhaps the world, begin to call in their loans and refuse to lend to each other. But every time Europe's bailout barons forestall the day of reckoning by six or 12 months, they give the banks more time to offset potential losses and prepare for a default, if it happens

Runaway inflation. Since the Federal Reserve began "printing money" in 2008--through the huge bond-buying program known as quantitative easing--inflation hawks have been warning that the United States is on its way to becoming Weimar Germany. It hasn't happened, not yet anyway. In fact, the bigger worry for a while wasn't inflation, but deflation, since demand for many products fell so sharply during the recession that some prices plunged. Now, inflation has picked up enough to suggest that deflation isn't a problem. But widespread inflation doesn't look like much of a problem either. It is now about 3.5 percent on an annual basis, with gasoline and some food items rising by more than that over the last year. But many economists expect gas and food prices to come down over the next several months, which ought to produce tamer inflation of 3 percent or so.

A plunging stock market. As it became apparent earlier this year that the Fed would end its second quantitative easing program--"QE2"--on schedule at the end of June, some analysts worried that the stock markets would nosedive. The Fed used quantitative easing to boost demand for stocks and other risky assets, by buying up many safer investments, such as treasury securities and other types of bonds. That left investors with little choice but to put their money into the stock market, and the Fed's program did in fact coincide with a huge bull market in stocks. So it stood to reason that investors would bail out of stocks once the Fed stopped buying bonds.

A housing-led depression. The housing market usually springboards the economy out of recession, since pent-up demand for homes triggers a surge in spending on real estate and everything related to it, from HVAC units to furniture and appliances. Obviously that hasn't happened this time around. The housing bust is now in its fifth year, with average home prices down by more than 30 percent and continuing to fall. Economists have repeatedly underestimated the severity of the housing bust, predicting that prices would bottom out in 2009, then in 2010, and now in 2011. They've been repeatedly wrong, and the falling value of homes is one of the heaviest stones around the necks of consumers right now, since it reduces household wealth and makes people feel gloomy about the future.

Quote of the Day from Dave Ramsey.com:

Knowing is not enough; we must apply. Willing is not enough; we must do. — Johann Wolfgang von Goethe

Financial Headline News for Wednesday 7/6

So far my prediction of investing in the stock market as fool's gold is not panning out. The Dow was up yet again today as well as Nasdaq, the S&P and Gold. Oil fell slightly.

A good article below about buying stocks based on quarterly earnings.

Typical government incompetency-see the last article below.

Here are the top financial stories of the day:

1) Stock market shrugs off weak service sector report-From the AP

Stock indexes managed slight gains Wednesday as investors shrugged off slower growth in the U.S. service sector.

The Institute for Supply Management reported Wednesday that business growth slowed at U.S. service providers in June. Financial companies and health care providers reported the weakest results. On the positive side, June marked the 19th consecutive month of growth at service companies, which employ the majority of American workers.

U.S. stocks opened mixed after a broad sell-off in Europe and another interest rate hike in China.
Major banks fell sharply after Moody's lowered Portugal's credit rating to "junk" status late Tuesday. That raised fresh concerns about the strength of the European financial system and investment banks' exposure to possible bond defaults. Bank of America Corp. lost 2.4 percent. JPMorgan Chase dropped 1.2 percent.
Some investors were surprised that stock indexes held up after the weak economic report. Dorsey Farr, a co-founder of Atlanta investment advisory firm French Wolf & Farr, said attractive stock prices in technology and pharmaceutical companies helped the market rebound.

The Standard & Poor's 500 index rose 1.34 to close at 1,339.22. Rupert Murdoch's News Corp. was among the index's biggest losers, dropping 3.6 percent, as a phone-hacking scandal engulfed one of the media giant's tabloids. Some British legislators called on regulators to block News Corp. from taking over British Sky Broadcasting.

The Dow Jones industrial average rose 56.15 points, or 0.4 percent, to close at 12,626.02. Caterpillar Inc. rose 1.5 percent, the most of any stock in the average, followed by Intel Corp. The Nasdaq added 8.25 points, or 0.3 percent, to 2,834.02.

2) Why You Shouldn't Buy Those Quarterly Earnings Surprises-From the Wall Street Journal

Everyone loves surprises. But perhaps you shouldn't get too excited over them.

This month, market strategists, television commentators and other investing pundits will bombard you with breathless updates on the percentage of companies in the Standard & Poor's 500-stock index that have reported profits even higher than what analysts expected—in Wall Street lingo, a "positive earnings surprise."
The percentage of companies that have beaten expectations often is cited as a barometer of corporate profitability, an indicator of how well the economy as a whole is doing or a predictor of where the stock market is going.

What goes unsaid, however, is that these positive surprises are becoming so common they are nearly universal. They are predetermined in a cynical tango-clinch between companies and the analysts who cover them. And there is no reliable evidence that the stock market as a whole will earn higher returns after periods with more positive surprises.

In the first quarter of 2011, according to Bianco Research, 68% of the companies in the S&P 500 earned more than the consensus, or median, forecast by analysts.

What's more, that quarter was the ninth in a row when at least two-thirds of the companies in the S&P generated positive surprises—and the 50th consecutive quarter in which at least half of the companies surpassed the consensus forecast of their earnings.

Even in the depths of the financial crisis, from the third quarter of 2008 through the first quarter of 2009, between 59% and 66% of companies beat expectations, according to Wharton Research Data Services, or WRDS.

In short, there isn't anything surprising about earnings surprises. They aren't the exception; they are the rule. "All the numbers are gamed at this point," says James A. Bianco, president of Bianco Research.

With trading volumes down on Wall Street and commission rates near record-low levels, brokerage firms are starved for the revenue that stock trading used to provide. Since changes in earnings forecasts encourage many investors to buy or sell, analysts have an incentive to revise their predictions more often. But that hasn't made the forecasts more accurate. On average, according to Denys Glushkov, research director at WRDS, stock analysts are revising their earnings forecasts nearly twice as frequently as they did a decade ago. And while the typical forecast missed the mark by 1% in the 1990s, that margin of error has lately been running at triple that rate.

What's going on here? In what used to be called "lowballing" but now goes by the euphemism of "guidance," an analyst will guesstimate what a company will earn over the next year or calendar quarter. Then the company "walks down" the analyst's forecast by providing a series of progressively lower targets until the analyst's prediction falls slightly below where the actual number is likely to come out.
Voila: The company gets to announce earnings that are better than expected, while the analyst gets to tell his investing clients that his estimate was pretty accurate and conservative to boot.

According to a survey of 269 members by the National Investor Relations Institute, 90% provide guidance in one form or another, most commonly on earnings and revenues over the coming four quarters. No more than 5% offer any guidance on results further than one year into the future.

Refusing to dance this cynical tango isn't always easy. "If you cut back or eliminate guidance, management needs to be prepared for the possibility of more volatility in the stock price and a wider range in analysts' estimates," says Barbara Gasper, head of investor relations at MasterCard, which doesn't give short-term guidance. Instead, it provides three-year targets for sales and profitability, leaving analysts at least partly on their own to form interim forecasts of the company's earnings.

Somehow, the stock has survived.

You might think that positive earnings surprises would be good for future returns of the stock market overall.

Companies that report positive surprises still get a short-term pop in their stock price, even though the smartest investors realize the surprise is a staged event.

In any case, the pop in those stock prices tends to fade over time. And an increase in the proportion of companies reporting positive surprises in one quarter, says Mr. Glushkov of WRDS, "does not have consistent forecasting power for S&P 500 returns in the next quarter."

With analysts playing the guidance game more than ever, their forecasts tell us less than ever about where the stock market is going. So over the next few weeks, don't be fooled into thinking that there is anything surprising about the flood of positive earnings surprises. And don't believe anyone who tries to tell you that these fake surprises mean nothing but good times are ahead for the economy and the stock market.

3) Jobs Study Is Too Late for Debate on Trade-From The Wall Street Journal 

As a divided Congress moves closer to a decision on three big international trade pacts, the Labor Department is four years late in delivering a study that is supposed to measure the efficacy of a program to provide extra benefits to workers who lose their jobs through globalization.

The deals with Colombia, South Korea and Panama, which could add billions in exports, are on a knife-edge over disagreements between Republicans and Democrats over Trade Adjustment Assistance, taxpayer funds paid to workers who lose their jobs as a direct result of trade.

The lack of up-to-date government data on how effective the $1 billion-a-year program is at helping the unemployed find well-paying work has hobbled efforts to identify and make improvements.

With the House and Senate called back into session this week, debate will resume over TAA, which provides training, unemployment payments and health-care subsidies to displaced workers. The program came due for renewal at the end of 2010.

The White House, Democratic leaders and some Republicans say the 50-year-old program helps laid-off workers learn new skills and find jobs in more vibrant industries. Conservatives label it an outmoded giveaway with results that don't justify the annual price tag.

TAA has become a proxy for the wider budget war, in which entitlement programs such as Social Security and Medicare as well as less-prominent matters such as financing the U.S. Patent and Trademark Office have come under scrutiny from budget hawks.

Workers who qualify for TAA get up to 156 weeks of unemployment benefits, compared with a maximum of 99 weeks under standard unemployment benefits for workers in high-unemployment states in a program set to expire at the end of this year. TAA also offers assistance with retraining and health benefits that workers not judged to be idled by trade pacts don't get.

On Tuesday, the House Ways and Means committee said it would hold a hearing Thursday to discuss proposed changes to the trade deals.

But the panel, which has jurisdiction over trade in the House, won't discuss renewing the expired TAA program as part of that process, defying President Barack Obama. Mr. Obama says he won't send the trade agreements to Congress for ratification if lawmakers don't renew TAA.

The president has staked his credibility with U.S. businesses on passing the trade deals, placing them at the heart of his plan to double U.S. exports by the end of 2014.

Hiccups over the pacts' passage damage U.S. credibility with trading partners, at times leading them to seek deals elsewhere. Last week, while U.S. lawmakers bickered, a sweeping trade pact between South Korea and the European Union took effect; one between Colombia and Canada takes force in August.

Labor Department officials say their research on TAA, originally due in 2007, won't be ready until the end of the year. That's likely to be after the fate of the proposed U.S. trade deals has been decided, at least until after the 2012 election. Thus far, the TAA study has cost $8.9 million, the Labor Department estimated.

"The data used for the study is long-term data on individual participants, which was collected over several years; therefore completion of the study is a long process," said Department of Labor spokeswoman Gloria Della.

Howard Rosen, resident visiting fellow at the Peterson Institute for International Economics, helped write 2002 reforms to TAA while he was a congressional aide that also called for a comprehensive evaluation of the program, and he has complained about the Labor Department's failure to deliver it.

"We need to make reforms based on what will work, not what will fly" politically, Mr. Rosen said.
Reports from Labor and the Government Accountability Office have led to changes, for example, in improving worker access to the program. Last year, 235,000 workers—or less than 2% of the nation's 14 million unemployed—were receiving benefits under the TAA program at a cost of $975 million.

In 2009, the program was expanded to include service, not just manufacturing workers, who now make up less than one-fifth of TAA recipients.

More than two-thirds of TAA recipients are over age 40 and three-quarters of them hold at most a high-school diploma. Half of all unemployed workers fall into those two categories. TAA-eligible workers' mean annual wages are $34,000, compared with $28,000 for all unemployed people.

The Labor Department reports that two-thirds of TAA program participants find jobs within three months after leaving the program, and 90% stay in those jobs for at least a year.

According to a Labor-sponsored study of TAA applicants in 2008-09, about one-third of eligible workers belong to a trade union; about half of those in the program are union members.

A deal brokered last week by Senate Finance Committee Chairman Sen. Max Baucus (D., Mont.) would make renewal of TAA hinge on cutting the program's cost.

The Congressional Budget Office has yet to fully determine TAA's new cost under the proposal, agreed to by Mr. Baucus, House Ways and Means Committee chairman Rep. Dave Camp (R., Mich.) and White

House economic czar Gene Sperling. The biggest proposed changes are cutting TAA recipients' unemployment benefits, and increasing their contribution to health-care coverage.

The deal envisions a cap of 130 weeks of unemployment, down from the current 156. That compares with a maximum of 26 weeks of jobless benefits for non-TAA recipients, unless they live in a high-unemployment state.

Under the 2009 program, TAA enrollees could deduct 80% of their health-care costs; the deal would reduce that deduction to 72.5%. The deduction would end completely at the end of 2013, when TAA enrollees gain access to benefits under Mr. Obama's health-care overhaul.

A Republican House aide says GOP leaders aren't sure whether the agreement approved by Mr. Camp has the votes needed to pass.

Quote of the Day from Dave Ramsey.com:

You cannot dream yourself into a character: you must hammer and forge yourself into one. — Henry D. Thoreau

Financial Headline News for Tuesday 7/5

It was a slow day in stocks as investors wait out news of corporate ratings and the unemployment rate, both of which will be released later in the week.

Two good articles below from today's Wall Street Journal analyzing the recovery or lack thereof.

The financial headlines for today are:

1) Rally stalls as Moody's cuts Portugal debt rating-From the AP

The first week of July is off to a much slower start than the last week of June, when stocks had their biggest gains in two years.

Major indexes were mixed for much of the day Tuesday but dipped in afternoon trading after Moody's downgraded Portugal's debt to "junk." The credit ratings agency cited concerns that Portugal will not be able to meet targets to reduce its deficit due to the "formidable challenges" the country is facing in cutting spending.

The Dow Jones industrial average fell 12.90, or 0.1 percent, to close at 12,569.87. The Dow had risen as many as 19 points in morning trading after the Commerce Department reported an increase in orders for manufactured goods.

The Standard & Poor's 500 fell 1.79, or 0.1 percent, to 1,337.88. The Nasdaq composite index rose 9.74, or 0.3 percent, to 2,825.77.

Bond prices rose, sending their yields lower, as investors sought out the relative safety of Treasurys. The yield on the 10-year Treasury note fell to 3.12 percent from 3.19 percent late Friday.
Investors have been worried that Europe's debt problems could slow the global economy and cause a crisis for European banks. "The European debt crisis is going to be with us for a while," said David Kelly, chief market strategist at J.P. Morgan Funds. "There still is a very big issue out there."

Trading volume was light as many traders took vacations. U.S. markets were closed Monday for the July 4th holiday. Many investors are looking ahead to next week, when aluminum maker Alcoa Inc. becomes the first major U.S. company to report financial results.

Last week the Dow rose 648 points, its best week in two years, after Nike reported strong earnings and Greece cleared its final hurdle before receiving another round of loans. Automakers also reported that their sales rose 7 percent in June compared with the same month a year ago.

The gains erased nearly six weeks of losses. Prior to last week stocks had been falling since late April because of concerns about the debt crisis in Europe, weak home sales in the U.S. and slowing manufacturing. By mid-June, stocks had given up most of their gains for the year.

With last week's rally, the Dow is now down just 1.8 percent from April 29, when it reached a three-year high. The Dow is up 8.6 percent for the year. The S&P 500 index is up 6.4 percent and the Nasdaq composite is up 6.5 percent.

Analysts are optimistic about the corporate earnings reports that will start to come in next week. Earnings from companies in the S&P 500 index are expected to rise 14 percent from the same period a year ago, according to FactSet. Revenue is expected to rise 11 percent.

2) Weak Economic Rebound Suggests Statistical Parallels to 1980 and Other Anemic Upturns-From The Wall Street Journal

The U.S. economic recovery that began in June 2009 in many ways mirrors the short-lived one that started in 1980 and was quickly followed by another recession in 1982, induced when the Federal Reserve pushed up interest rates to fight inflation.

The only time unemployment was higher than May's 9.1% rate at this point in a recovery was two years after the 1980 recovery, smack in the middle of the 1982 recession that followed.
Several other indicators in the accompanying chart paint a similar picture of a subpar recovery:
• Inflation-adjusted after-tax incomes of Americans, up 2% since June 2009, haven't grown so meagerly in the early stages of any other post-World War II upturn.
• The nation's annual inflation-adjusted economic output, up 5.5% from where it stood at the recession's end, has advanced by less only one time in the first two years of a recovery—the 1980 recovery.
• Home prices, down 8.8% 18 months into the recovery, adjusting for inflation, are much worse than they were during the 1991 recovery, which was also marked by a lingering real estate downturn in places like California and Massachusetts. They most closely track the aborted 1980 recovery.
• Bank lending to businesses and households, down 4% since the recovery started, is also the worst on record.

To assess how the economy has performed, the Wall Street Journal tracked a range of economic indicators from June 2009, which is when the National Bureau of Economic Research says the recession ended. It then examined how these measures performed over similar post-recession periods determined by the NBER.

The news isn't all bad. Corporate profits, manufacturing employment and exports are performing at least as well as they have in several other recoveries. Profits, for example, were up 47% over the first 21 months of the recovery.

On average since World War II, they have risen 35% during that stretch.

Exports were up 21%, compared with an average of 11% in other recoveries. The problem is the export sector isn't large enough at this point to drive the whole $14 trillion economy.

Taken together many economists agree on how this recovery stacks up: "It is the worst, no question about it," says Robert Gordon, a Northwestern University professor and a member of the National Bureau of

Economic Research's business cycle dating committee, which is widely considered the official arbiter of the beginning and end of recessions.

His colleague, Stanford professor Robert Hall, who runs the committee, says it's "absolutely right" that this is the worst recovery yet.

3) Inside the Disappointing Comeback-From The Wall Street Journal 

Two years ago, officials said, the worst recession since the Great Depression ended. The stumbling recovery has also proven to be the worst since the economic disaster of the 1930s.

Across a wide range of measures—employment growth, unemployment levels, bank lending, economic output, income growth, home prices and household expectations for financial well-being—the economy's improvement since the recession's end in June 2009 has been the worst, or one of the worst, since the government started tracking these trends after World War II.

In some ways the recovery is much like the 1991 and 2001 post-recession periods: All three are marked by gradual output growth rather than sharp snap-backs typical of earlier recoveries. But this recovery may remain lackluster for years, many economists say, because of heavy household debt, a financial system still damaged by the mortgage crisis, fragile confidence and a government with few good options for supporting growth.

There are bright spots. Exports, particularly of manufactured and agricultural goods, are improving, in part because of booming developing-country economies and the weaker dollar. They are expected to pick up in the second half of the year as the temporary shock fades from Japan's earthquake and tsunami. In a hint of this, the Institute of Supply Management on Friday reported an uptick in manufacturing for June. Higher corporate profits, stock prices and business investment also are supporting the expansion.

Still, broader problems are holding the economy back.

Banks are less able or willing to lend than before the recession. Since the recovery started, banks have reduced money they make available through credit card lines from $3.04 trillion to $2.69 trillion and have reduced home equity credit lines from $1.33 trillion to $1.15 trillion, according to the Federal Reserve Bank of New York.

Policy makers, meanwhile, are reluctant to do more to stimulate economic growth. The Federal Reserve has already pushed short-term interest rates to near zero. Two rounds of quantitative easing that including purchasing $1.425 trillion in mortgage bonds and $900 billion in Treasury debt helped to stabilize the economy but failed to spur a vigorous recovery.

Likewise, fiscal stimulus, either in the form of tax cuts favored by Republicans or spending increases favored by Democrats, looks unlikely given large federal deficits and the disappointing results of earlier efforts, including President Obama's $830 billion stimulus program of 2009.

The biggest problem may be household indebtedness. At the peak of the economic boom in the third quarter of 2007, U.S. households collectively had borrowed the equivalent of 127% of their annual incomes to fund purchases of homes, cars and other goods, up from an average of 84% in the 1990s. The money used to pay off that debt means less available for new spending. Households had worked their debt-to-income levels down to 112% by the first quarter, in part because banks have written off some debt as uncollectible.

Quote of the Day from Dave Ramsey.com:

The only way of finding the limits of the possible is by going beyond them into the impossible. — Arthur C. Clarke

Financial Headline News for Friday 7/1

Happy July 1st! The end of QE2 has finally come! Now let us see how this overstated stock market will do without companies and foreign investors gobbling up stocks on a weakened dollar despite high unemployment, low consumer confidence and poor manufacturing output. Despite today's strong results, I am sticking with my position until proven otherwise.

Below is a great article for nerds like me only on Friedman vs Keynes Economic Theory.
A Wall Street Journal blogger agrees with me about Wall Street.

The financial headlines for today are:

1) Stocks continue rally after manufacturing report

So much for that soft patch.

A rebound in U.S. manufacturing surprised investors Friday, sending the Dow Jones industrial average up nearly 170 points. The Dow ended up 648 points, or 5.4 percent, for the week. It was the index's best week in two years.

The rally started Monday after Nike Inc. reported strong quarterly results. Revenue that beat analyst predictions indicated that shoppers are still splurging on pricier sneakers and sportswear, despite the recent run-up in gas prices. Thursday, Greece cleared its final hurdle before it receives its next round of loans to avoid default on its debt. The same day, a report showed that manufacturing in the Chicago region had picked up unexpectedly.

Friday's Institute for Supply Management report showed that manufacturing across the country had expanded, reinforcing the growing perception that the slowdown was temporary. Federal Reserve Chairman Ben Bernanke and a number of prominent economists have argued that the economy will pick up again once the effects of the Japan disaster waned and high gas prices receded.

It's quite a turnaround from May and early June. Many economists and analysts began lowering their estimates for growth in May after a string of negative reports on manufacturing, consumer spending and hiring by private companies. A shortage of computer chips and auto parts from Japan, higher gas prices and severe weather in the South all contributed to what appeared to be a slowdown in the economic recovery. Stocks had lost most of their gains for the year by mid-June.

Todd Salamone, an investment strategist at Schaffer's Investment Research said the recent surge in stocks represents an "unwinding of the tremendous negativity that built up over the past few weeks."

The Dow rose 168.43 points, or 1.4 percent, to 12,582.77, on Friday. The Standard and Poor's 500 index gained 18.94, or 1.4 percent, to 1,339.67. The Nasdaq composite added 42.51, or 1.5 percent, to 2,816.03.

All 30 stocks in the index rose Friday. Companies that do well during times of economic expansion led the index. Alcoa Inc. and Caterpillar Inc. each gained more than 2 percent.

2) Great Recession cooks Friedman and Keynes- From Marketwatch

Some of the biggest names in economics gathered at the University of Chicago in November 2002 for a 90th birthday celebration of the brightest star of them all. Milton Friedman, a Nobel laureate and seminal thinker, was returning to the university where he had made his name.

One of the speakers was a Federal Reserve governor, Ben S. Bernanke. In a scholarly address, he endorsed Friedman’s view that the Fed was instrumental in causing the Great Depression with a tight monetary policy that turned a contraction into something much, much worse.

In concluding, he addressed Friedman and Anna Schwartz, co-authors of the magisterial “A Monetary History of the United States,” in which that thesis originally appeared. “I would like to say to Milton and Anna…regarding the Great Depression: You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again,” Bernanke said.

He kept his word. When the financial crisis and recession descended six years later, Bernanke, now the Fed chairman, followed Friedman’s monetarist playbook to a “T”: He flooded the system with liquidity and stuffed banks full of reserves in a series of desperate efforts to stanch the new Great Contraction.
“Bernanke is following a monetarist depression-prevention model laid out by Nobel laureate and libertarian patron saint Milton Friedman,” the libertarian magazine Reason wrote in 2009. “Trillions of dollars have been staked on the insights of ‘monetarism’… A series of Fed policies many libertarians find repugnant are being championed by a man claiming to take his chief inspiration from the most influential libertarian economist of the 20th century. “

Meanwhile, Presidents Bush and Obama took the route of another legendary economic theorist, John Maynard Keynes. In two, maybe 2 1/2, economic stimulus packages, they used all the Keynesian tools — direct tax rebates, temporary tax cuts, boosting unemployment insurance, bailing out state and local governments and building infrastructure — to boost consumption and thus make up for the sharp plunge in private demand.

The government spent nearly $1 trillion on stimulus programs. The Fed boosted its reserves by $2 trillion. Now, almost three years after the fall of Lehman Brothers, gross domestic product is growing at less than 3% annually, while the official unemployment rate is 9.1%. Add those who are working part time and the total is over 15%.

3) Grim report from blogger about Wall Street-From WSJ Blogs
http://blogs.wsj.com/deals/2011/07/01/mean-street-on-wall-street-its-grim-and-getting-grimmer/

Inspirational Quotes Twitter@Inspire_Us .

People will forget what U said, people will forget what U did, but people will never forget how U made them feel -Maya Angelou