Financial Headline News for Monday 9/12

Stocks soared at the end to overcome a deficit earlier in the day.

Mary Ann Bartels, Bank of America Merrill Lynch’s technical research analyst, has some dire predictions below.

E-Books prices are going up as the publishing industry is trying to access the changes going from Brick and Mortar stores to modern technology.

Here are the top financial stories of the day:

1) Stocks Claw Back-From The Wall Street Journal

Stocks erased a steep loss late in the day amid a report that China may come to the aid of the euro zone.

The Dow Jones Industrial Average closed up 68.99 points, or 0.6%, at 11061.12, its first gain in three days.

It was a volatile session in which the measure fell by as much as 167 points, before an upward burst of 183, or 1.7%, in the final hour of trading. The Standard & Poor's 500-stock index gained 8.04 points, or 0.7%, to 1162.27. The Nasdaq Composite rose 27.10 points, or 1.1%, to 2495.09.

Stocks clawed back into positive territory late in the day after a report in the Financial Times said China was in talks with Italy for "significant" purchases of government bonds, which would help one of Europe's most heavily indebted governments. Earlier in the day, investors had been preoccupied with worries that Greece's sovereign-debt crisis was coming to a head.

"For the Chinese to come in and back their debt [would be] a vote of confidence at a time when confidence is at a shortfall," said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management.

Technology stocks were a source of relative strength throughout the session. Chip stocks fared especially well after Broadcom agreed to acquire NetLogic Microsystems for $3.7 billion. NetLogic soared 16.21, or 51%, to 48.12, while Broadcom shed 38 cents, or 1.1%, to 33.06.

Intel gained 58 cents, or 2.9%, to 20.28, leading the Dow. Micron Technology led the S&P 500, rising 34 cents, or 5.3%, to 6.69.

Meanwhile, stock markets in Europe and Asia ended sharply lower, with some shares hitting multiyear lows, amid fears about euro-zone sovereign debt and a possible Greek default.

Banks bore the brunt of the selloff in Europe, while financial firms and exporters led the declines in Asia. French bank stocks plunged amid worries that Moody's Investors Service could downgrade them this week due to their holdings of Greek government debt.

"Many banks, if they truly write down their Greek debt to where it probably should be, may have a capital problem," said Bernard Horn, president of Polaris Capital Management in Boston.

The Stoxx Europe 600 index ended down 2.5%, at 218.93, having hit an intraday low of 216.76, its lowest level in over two years. The U.K.'s FTSE 100 closed 1.6% lower, at 5129.62. Germany's DAX slumped 2.3%, to 5072.33, falling below the 5000-mark during the session for the first time since July 2009 before recovering. France's CAC-40 closed down 4%, at 2854.81, its lowest point since April 2009.

Japan's Nikkei Stock Average fell 2.3%, to 8535.67, its lowest closing level since April 2009, while Hong Kong's Hang Seng index fell 4.2%, to 19030.54, its lowest close since May 2010. Australia's S&P/ASX 200 lost 3.7%, to 4038.50, Singapore's Straits Times Index fell 2.9%, to 2743.58, and India's Sensex fell 2.2%, to 16501.74. South Korean, Taiwanese and mainland Chinese markets were closed for holidays.

In the U.S., Bank of America Chief Executive Brian Moynihan said the company would save billions through cost cuts in the coming years. The news provided a respite from the drumbeat of negatives on bank stocks.

The shares gained seven cents, or 1%, at 7.05.

NYSE Euronext fell 25 cents, or 1%, to 25.42, after a senior company executive said no private deal has
been struck among European regulators to bless the exchange operator's planned combination with Deutsche Börse.

Global Industries leapt 2.63, or 51%, to 7.78, after France's Technip said it was buying the construction and undersea services company in a deal valued at $1.07 billion.

McGraw-Hill said it planned to separate its markets and education businesses into two public companies and accelerate its share repurchases. The stock rose 1.54, or 4%, to 40.26.

Tenet Healthcare said it now expects 2011 adjusted earnings before interest, taxes, depreciation and amortization to be at the lower end of its previous forecast. Shares fell 50 cents, or 10%, to 4.52.

Online-dating company FriendFinder Networks added 15 cents, or 5.5%, to 2.86. The company plans to pay up to $65 million to acquire BDM Global Ventures in a move that will give it ownership of BDM's JigoCity deals site.

M&F Worldwide jumped 3.88, or 19%, to 24.25. The company agreed to be acquired by closely held MacAndrews & Forbes Holdings.

Darling International lost 40 cents, or 2.6%, to 15.15. Goldman Sachs analysts downgraded their stock-investment rating on the rendering and food recycling company to "neutral" from "buy," citing a lack of near-term catalysts for the stock.

2) S&P Could Fall 20%, 2-Year Treasury Hit 0%: Analyst-From CNBC

Rising risk aversion, a surging U.S. dollar, historical seasonal weakness and a climb in bonds could send the S&P 500 down as much as 21 percent from Friday’s close, according to Mary Ann Bartels, Bank of America Merrill Lynch’s technical research analyst.

The 2-year Treasury yield could drop to zero, Bartels added

“There is still a chance that 1100-1020 holds, but the risk is now higher, or a 50 percent probability, that the S&P [.SPX  1172.87    10.60  (+0.91%)   ] tests 985 – 910,” wrote Bartels, who is often chosen among the top chart analysts in an annual survey by "Institutional Investor" magazine. “September historically is the worst performing month in the year, while October traditionally marks important market bottoms.”

The S&P 500 is already down 15 percent from its bull market high hit at the start of May. Bartels believes that the benchmark will retest the 1100-1020 area and if it fails there, then look out below. She gets her target in the 900s using a combination of commonly-used factors, most notably a 61.8 percent Fibonacci retracement of the March 2009 to May 2011 rally.

As for bonds, Bartels makes a simple channel around the past highs and lows of the two-year yield. The bottom part of the channel leads right down to zero percent, meaning investors will keep buying these notes and expect nothing in return except their principle. She sees a similar drop in the long-end of the curve with the 10-year Treasury yield going as low as 0.3 percent.

This flattening of yield curve will only hurt banks’ ability to make money on lending over time.

“I fear she is right on point,” said Chris Verrone, a chart analyst for Strategas Research, who correctly got bearish for his clients recently. “The biggest takeaway from me over last few weeks is continued deterioration in credit.”

3) E-Book Prices Prop Up Print Siblings-From The Wall Street Journal

Even as readers grow more comfortable with digital books, some continue to question why so many of the most popular new e-books are priced so high.

Michael Connelly's recent legal thriller, "The Fifth Witness," has more one-star reviews on Amazon than five-star reviews in part because some angry reviewers focused on the e-book's $14.99 price.

As physical book sales fall, publishers' fixed costs are becoming more cumbersome. One area major publishers can cushion the blow is by keeping e-book prices higher. "If e-book prices land at 99 cents in the future we're not going to be in good shape," said one New York publishing executive, who asked not to be identified.

Read more: http://online.wsj.com/article/SB10001424053111904875404576532353109995700.html#ixzz1Xrtz0Rsy

Quote of the Day from Dave Ramsey.com:
Nurture your mind with great thoughts, for you will never go any higher than you think. — Benjamin Disraeli

Financial Headline News for Friday 9/9

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

Financial Headline News for Thursday 9/8

The stock losses of today cut yesterday's gains in half as Fed Chairman Bernanke offered no new stimulus policies in his afternoon speech.

The rate on the 30-year fixed mortgage hit 4.12 pct., 15-year falls to 3.33 pct. which are both record lows.

However getting a mortgage at these rates aren't as easy as it once was unless you have pristine credit.

Here are the top financial stories of the day:

1) Stocks End Lower After Bernanke's Talk-From The Wall Street Journal 

Stocks declined Thursday, eroding some of the prior session's advance, as Federal Reserve Chairman Ben Bernanke's remarks failed to calm investor jitters over the state of the economy.

The Dow Jones Industrial Average dropped 119.05 points, or 1%, to 11295.81, following Wednesday's 276-point surge. The Standard & Poor's 500-stock index ended down 12.72 points, or 1.1%, to 1185.90. The Nasdaq Composite dropped 19.80 points, or 0.8%, to 2529.14.

After bouncing between small gains and losses for much of the session, stocks turned lower after Mr. Bernanke's speech in Minneapolis largely mirrored what was said at Jackson Hole, Wyo., at the end of last month. Many traders had been hoping for more insight into the central bank's plans to support the economy at the meeting of the Fed's decision-making body Sept. 20-21.

"The markets were hoping to hear something upbeat from Bernanke, especially in terms of what the Fed's intentions might be. It was wishful thinking, quite frankly," said David Joy, chief market strategist for Ameriprise Financial.

Financial and industrial stocks were weakest. Defensive utility and consumer-staple stocks were the S&P 500's strongest-performing sectors, finishing with small losses.

Technology shares helped limit the blue-chip Dow index's losses. Cisco Systems was the measure's strongest component, gaining 2.6% after the technology bellwether got an investment-rating upgrade to "buy" from "hold" by stock analysts at Auriga. The analysts said the company was "well positioned" to gain market share in business segments such as switching, routing and servers.

Two big financial stocks, J.P. Morgan Chase and Bank of America, led the Dow's led decliners, each falling 3.7%.

Another batch of weak employment data contributed to the session's cautious tone. The number of people filing initial jobless claims rose to a seasonally adjusted 414,000 for the week ended Sept. 3.

"I think [the market] would be significantly worse if there wasn't this false expectation that there's a quick [policy] fix out there. In my opinion, there is no quick fix," said Jeffrey Sica, president and chief investment officer of Sica Wealth Management.

In corporate news, shares of online restaurant-review and reservation company OpenTable slumped 8.3% after Google agreed to buy restaurant-review firm Zagat for an undisclosed price, highlighting Google's turn to local businesses like listings and maps for restaurants.

Caliper Life Sciences soared 41% after the diagnostics-technologies company agreed to be acquired by PerkinElmer for about $600 million in cash.
Men's Wearhouse lost 9.5% after the apparel retailer reported that fiscal second-quarter earnings rose above estimates but that gross margins declined.
G-III Apparel slumped 17%. The clothing company said Wednesday its fiscal second-quarter profit slid 48% as it discounted merchandise to help stimulate demand. The company also posted higher expenses and cut its full-year earnings outlook.
Valero Energy gained 4.1%. Oppenheimer stock analysts sharply raised their third-quarter and 2011 earnings targets, predicting higher refining margins for the company.
Smith & Wesson Holding lost 7.8%. The gun maker's fiscal first-quarter profit slumped 87% amid weaker gross margins and lower security solutions sales, although firearm sales increased sharply. The company also cut its full-year sales view.

In separate data, the U.S. trade deficit in July posted its biggest drop in nearly 2½ years, as exports surged to a record. The sharp narrowing in the July trade gap—its biggest contraction since February 2009—came as oil prices have pulled back from nearly three-year highs reached in May.

2) 30-year mortgage falls to 4.12 pct., record low-From the AP

Fixed mortgage rates fell this week to the lowest levels in six decades. But few Americans can take advantage of the rates to refinance or buy a home.

The average rate for the 30-year fixed mortgage fell to 4.12 percent, down from 4.22 percent, Freddie Mac said Thursday. It's the lowest level on records dating back to 1971. Freddie Mac said the last time rates were cheaper was 1951, when most long-term home loans lasted just 20 or 25 years.

The average rate on a 15-year fixed mortgage, a popular refinancing option, fell to 3.33 percent from 3.39 percent. That's the lowest on records dating to 1991 and likely the lowest ever, according to economists.

Mortgage rates tend to track the yield on the 10-year Treasury note, which fell to an all-time low this week. An uncertain outlook for the U.S. economy has led many investors to shift money out of stocks and into the safety of Treasurys, lowering the yield.

Record-low mortgage rates have done little to energize the depressed housing market.

Over the past year, the average rate on the 30-year fixed mortgage has been below 5 percent for all but two weeks. That compares with five years ago, when the average 30-year fixed rate was near 6.5 percent.

Yet sales of new homes are on pace to finish the year as the lowest on records dating back a half-century. The pace of re-sales is shaping up to be the worst in 14 years.

Many Americans are in no position to buy. High unemployment, scant wage gains and large debt loads have kept them away.

Others can't qualify for the lowest rates. Banks are insisting on higher credit scores and 20 percent down payments for first-time buyers. Many repeat buyers have too little equity invested in their homes to meet loan requirements.

"Low rates are great, but the real issue is that the pool of people who can get a loan or refinance is small," said Greg McBride, Bankrate.com's senior financial analyst."

Roughly 40 percent of U.S. households have the necessary credit scores above 700 to get a prime mortgage rate, according to an Associated Press analysis of Fair Isaac Corp., or FICO, data.

A bigger issue is just half of Americans say they'll ever be able to save enough money for any type of down payment, let alone one as high as 20 percent, according to a survey by the National Foundation for Credit Counseling.

Nearly a third of homeowners have nearly zero equity or are underwater in their mortgage, according to the real estate research firm CoreLogic. That leaves then unable to refinance because of lender-imposed limits and the cost of extra fees.

Increased refinancing activity isn't providing much economic benefit. Without much equity, few are drawing money out for home-improvement projects or other big expenditures.

Many people must also pay extra fees to get the low mortgage rates. Those fees are known as points. One point is equal to 1 percent of the total loan amount.

The average fees for the 30-year held steady at 0.7 point. The 15-year fixed loans and 5-year and one-year adjustable rate loans were all at 0.6 point.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rate on a five-year adjustable-rate mortgage was unchanged at 2.96 percent. That's the lowest rate on records dating to January 2005. It was the sixth straight week of record lows for this type of loan.

The average rate for the one-year adjustable-rate mortgage fell to 2.84 percent. That's the lowest on records going back to 1984.

3) Where's My Super-Cheap Mortgage? From SmartMoney

With mortgage rates at a 50-year low and banks near his Brookline, NH, home touting offers of 4% or less,

Tom Rogers thought it would be a perfect time to refinance. But in spite of a solid credit score, after an exhaustive survey of lenders in the area and online, Mr. Rogers couldn't find a single one willing to give him such a rock-bottom rate. He eventually settled for a mortgage almost a full percentage point higher than what he had hoped for.

"I was annoyed," he says. "We're someone they should want to do business with."

It is an increasingly common frustration. The gap between the lowest advertised mortgage rate and the average rate that borrowers actually get is as high as it has been in two years, save a single week last September. As of last week, the lowest available rate — according to a survey of more than 200 lenders by LendingTree.com — was 3.75% for a 30-year fixed mortgage, but the average rate was 4.39%. At the current 0.64 percentage-point spread, the difference in rates could mean an extra $53,000 in interest payments over the life of a 30-year, $400,000 mortgage.

While there is always a spread — not all borrowers qualify for the lowest rate, after all — it is usually much smaller: An average spread is usually around 0.40 percentage point.

The bigger discrepancy of late has little to do with borrowers' credit scores, which historically have largely decided what rates lenders choose to offer. Instead, it is more reflective of changes in the way lenders approach their business. Lenders have raised their profit margins by 1.5 to 2 percentage points in the past month, according to Informa Research Services, by offering borrowers slightly higher rates.

Lenders say they haven't lowered rates further because, simply, they don't have to. The mortgage market is not the cut-throat business of years past. Most lenders are happy to make mortgages but not at any cost.

And there is still plenty of demand given that rates are still historically very low. As it is, lenders are able to make loans that, while still cheap, are more profitable, says Michael Fratantoni, vice president of research and economics at the Mortgage Bankers Association, a trade organization that represents mortgage lenders.

The lowest advertised rates are available for only those borrowers with pristine credit. Anyone else could consider waiting, as the rates they get may be lower as soon as the current surge in demand ebbs, possibly as soon as the end of September. For those looking to refinance or buy a home now, mortgage analysts suggest taking the lowest rate offered and shopping it around to other lenders. In particular, regional, rather than national, outfits, may be more willing to negotiate.

Quote of the Day from Dave Ramsey.com:
Luke 8:15 — But the seed on good soil stands for those with a noble and good heart, who hear the word, retain it, and by persevering produce a crop.

Financial Headline News for Wednesday 9/7

Stocks rallied from the opening bell and continued their surge all day to chip into the earlier losses for the month of September.

The housing market showed a glimmer of hope last month as most markets showed a little uptick in prices.

As you hear everyday by callers nearing retirement age on the Dave Ramsey Show, more and more couples who should be retiring are caught up in debt due to the financial crisis.

Here are the top financial stories of the day:

1) Stocks rally after Germany upholds bailout plan-From The AP

U.S. stocks rallied for the first time in three days Wednesday after a German court backed the country's role in bailing out other European countries. The ruling renewed hopes that Europe will find a solution to its long-running debt problems.

The Dow Jones industrial average jumped 253 points, or 2.3 percent, to 11,392 at 2:30 p.m. EST. The

Dow and other U.S. indexes fell over the previous three days on worries about Europe's debt woes and weakness in the U.S. jobs market. All 30 stocks in the Dow rose.

"The market has been pricing in an out-and-out recession, so any hints that policy issues might be solved is a plus," said Brian Gendreau, market strategist at Cetera Financial Group

The Standard and Poor's 500 index jumped 31, or 2.7 percent, to 1,197. All 10 company groups that make up the S&P index rose. The Nasdaq composite shot up 70, or 2.8 percent, to 2,544.

European indexes rose broadly after the German court ruling eased fears that Europe's bailouts of Greece and Ireland could be stalling. Germany's DAX index surged 4.1 percent; France's CAC-40 jumped 3.6 percent.

The ruling also pushed the prices of Treasury securities lower as investors were more willing to hold risky assets like stocks. Treasury prices have been rising over the past week, sending their yields lower, as demand for lower-risk investments increased.

The yield on the 10-year Treasury note rose to 2.04 percent. It traded at 1.97 percent late Tuesday, one of the lowest rates since the Federal Reserve Bank of St. Louis began keeping daily records in 1962. Gold, another traditional safe haven, fell $56, or 3 percent, to $1,817 an ounce. It closed at $1,891 on Aug. 22.

Historically low Treasury rates are prompting some institutional investors to see stocks as a better value. The yield on the benchmark 10-year Treasury note began plunging from just over 3 percent on July 27 to 2.2 percent by the end of August. Investors were piling into lower-risk assets as the stock market swung wildly.

The yield has hovered around 2 percent this week. An investor who buys the S&P 500 index, meanwhile, earns a 2.38 percent yield in the form of dividends.

"Market sentiment has actually been worse than economic data lately, and now you are seeing institutional investors saying, `I can get a better yield from the S&P 500 than I can from a 10-year Treasury'," said Howard Ward, portfolio manager of the GAMCO Growth Fund.

Yahoo and Bank of America rose sharply after announcing the departures of key executives after the market closed Tuesday. Yahoo gained 5 percent, to $13.57, after announcing that CEO Carol Bartz had been fired. Some analysts said the move made the company a takeover target. Bartz spent nearly three years steering the company.

Bank of America jumped 7.5 percent, to $7.51, after the bank announced a management reorganization that will result in two top officers leaving. The changes were seen as one of chief executive Brian Moynihan's most dramatic moves to reshape the embattled bank. Bank of America shares have fallen 48 percent this year through Tuesday, compared with a 7 percent drop in the S&P 500 index.

Financial companies were the top performing group in the S&P 500 index. JP Morgan Chase & Co., Goldman Sachs and Wells Fargo each rose more than 2 percent.

Urban Outfitters fell 3 percent, to $25.14, after the retailer said its sales were slipping in the current quarter. Computer graphics company Nvidia Corp. jumped 10 percent, to $14.47, after the company said it expects its revenues to be higher than Wall Street analysts forecast.

A Federal Reserve survey found that that the economy grew modestly in its 12 bank regions in July and August as consumers spent more.

2) Has the Housing Market Finally Found Its Footing? The US News and World Report

For those looking for a bright spot amid the barrage of depressing data recently, news that housing prices were up for the third month in a row might have buoyed morale a bit.

The latest data from the Standard & Poor's/Case-Shiller home price index showed that home prices in the nation's largest metropolitan areas ticked up 1.1 percent, on average, in June, following a 1 percent increase in May.

Chicago and Minneapolis saw the largest month-over-month increases, both recording 3.2 percent increases in home values, on average. Even metro areas hit hard by the foreclosure crisis saw incremental gains: Atlanta posted a 1.5 percent increase, while Phoenix saw a 0.3 percent gain.

So has the housing market finally found its footing?

Maybe not. While prices have been on the rise for a few months, experts don't expect the upward trend to continue. Most predict home values will fall in the coming months, not bottoming out until the first half of next year. "I would expect that prices fall a little bit more," says Celia Chen, senior director at Moody's Analytics.

"Any improvement in stability is temporary."

U.S. News talked to experts about why the housing outlook might not be so rosy after all:

Seasonal bump. One reason home prices have seen a temporary bump has to do with the time of year. Even in this weak market, more homes tend to be bought and sold in spring and summer, which boosts demand and gives real estate values a lift. "A seasonal kick accounts for the recent strength in the indexes," wrote Patrick Newport, economist at IHS Insight, in a recent report. "The kick will wear off in the fall when demand weakens and sellers have to give way on price, and prices will start dropping again."

Even with the seasonal uptick, prices are down 4.1 percent compared with June 2010, and down 33 percent from their 2006 peak, meaning the housing market still has a lot of ground to make up. And it faces stiff headwinds. More foreclosures and excess supply coupled with weak demand could drive prices down another 10 percent, Newport predicts. The outlook is even worse if the economy slips into another recession--a 40 percent probability, he says. "The unemployment rate will climb, driving foreclosures up, leading to an even larger drop in home prices."

Underwater mortgages, distressed properties. The housing market meltdown has left millions of Americans owing more on their mortgages than their homes are worth, and until sagging prices stop draining home equity, that debt overhang will continue to bottleneck the housing market. The number of Americans facing serious delinquency on their mortgages is rising as well, another troubling fact that could translate into even more foreclosures flooding the market.

On top of fresh foreclosures expected to hit the market, properties held up for legal reasons are likely to stream onto the market in the coming months as well. Finally, abandoned or vacant homes--the product of overbuilding--only add to the glut of supply and will pull down home prices for the foreseeable future.

Index methodology. Although Case-Shiller numbers have become one of the most popular metrics used to measure house prices, critics argue that the indices shouldn't be used to gauge the health of housing market from a consumer point of view, primarily because they lag signed contract data by about six months.

"It's equivalent to waking up in the morning at the end of August and deciding what clothes you're going to wear based on the average temperature in February," says Jonathan Miller, president of New York City-based Miller Samuel Real Estate Appraisers. "If that's what you want to know, then it's helpful, but that's not how the index is being applied."

Since the end of June--as far as the data goes back--the country has endured a slew of natural disasters, a debt downgrade that shook consumer confidence, and reports that America could be slipping into another recession, none of which have been factored into the most recent Case Shiller numbers.

What does this forecast mean for consumers? According to experts, sellers shouldn't hold out for better times in the coming months. If your goal is to make a profit off the sale of your home, now is probably not the time to sell, says Daisy Kong, spokeswoman for Trulia, a real estate information website.

But if you have to move, the key is price your home aggressively to attract what little demand there is in the market. "Make sure [your home is] priced to sell based on [comparable homes] from the local neighborhood. Maybe price it even a little lower," Kong says. "Don't focus so much on trying to make a profit as much as just trying to recoup costs."

3) Debt Hobbles Older Americans- From The Wall Street Journal

More Americans are reaching their 60s with so much debt they can't afford to retire.

Most people used to pay off their debts before retiring. But as wages have barely kept up with rising prices over the past 35 years Americans have pushed debt higher, living beyond their means. Now, people are postponing retirement, cutting living standards or both.

All kinds of debt held by this age group have risen, but the big problem is mortgages. Thirty-nine percent of households with heads aged 60 through 64 had primary mortgages in 2010 and 20% had secondary mortgages, including home-equity lines, according to research group Strategic Business Insights' MacroMonitor. That was up from just 22% and 12%, respectively, in 1994.

The housing crash has made things worse. A few years ago, homeowners in their 60s with big mortgages could sell their homes for a profit and buy smaller places or rent. But the drop in housing values means that many homeowners have little equity, and some now owe more than their houses are worth.

People have tried to reduce debt since the financial crisis, with limited success. Americans of all ages owed $11.4 trillion at the end of the second quarter, based on data from the Federal Reserve Bank of New York.

That's down about 15% from 2007 but nearly double what they owed in 1999, adjusted for inflation and population.

Older Americans also have struggled to dig out in the past four years. "Relative to the value of their homes, the amount of indebtedness if anything has gone up because house prices have fallen faster than mortgages have been reduced," says Christopher Herbert, director of research at Harvard's Joint Center for Housing Studies.

Many have little choice but to keep working. "I imagine I'll be working until I'm 70," says Christine Shiber, a 59-year-old Methodist minister in California's Bay Area, struggling to pay off her mortgage, credit-card debt and a loan she took against her retirement account.

Debt isn't the only issue clouding retirement prospects. People aren't saving enough either. As calculated in a Wall Street Journal article earlier this year, the typical American household nearing retirement with a 401(k) retirement account has less than one-quarter of what it needs in that account to maintain its standard of living in retirement.

Four out of five households with heads in their early 60s and with mortgages had too little savings in 2008 to pay off debts without dipping into retirement accounts, according to Boston College economist Anthony Webb.

Instead of boosting their savings as they approach retirement, a period when people usually make their largest retirement contributions, some older people are stopping contributions in order to service debts.

Some who had already retired are going back to work because they can't make the financial numbers add up.

The combination of easy credit, low interest rates and a consumption-oriented culture helped fuel a spending binge for Americans until the financial crisis. People with problems aren't just those who took subprime loans or spent foolishly on lavish lifestyles. They are people from all backgrounds, including some with six-figure incomes.

"We have gotten into this 'debt's OK' mentality and it is going to be very hard to get out of it," says financial planner Greg Heller of Heller Capital Resources in Los Angeles, who says he has wealthy clients in their 50s with problems.

The Rev. Shiber and her husband borrowed to buy a home and for their children's education, something many Americans have done. They divorced in 2007 and sold the home, repaying debts.

But Ms. Shiber needed a place to live. In 2008, she took out a fresh mortgage to buy a condominium. The down payment, together with her son's college costs, used a big chunk of her remaining savings.

Soon, Ms. Shiber realized that she wasn't making ends meet. She had trouble paying credit-card bills and started running a balance. Her 2001 Ford Focus needed a big, unexpected repair. She borrowed against her retirement account.

To her relief, Ms. Shiber negotiated a raise late last year. She then got a letter from her bank saying it had under-calculated her property-tax obligations. It raised her monthly mortgage bill, including property taxes, by an amount slightly more than the raise.

To Ms. Shiber, the debt burden began to seem biblical. "Even with Job, there weren't these coincidences," she laments. "I said, 'Now, God, you are really messing with me!'"

After consulting with a financial adviser, Ms. Shiber cut living expenses. She travels less to visit her mother and daughter in New York and has fewer meals out. To her adviser's dismay, she also has cut most of her contributions to her retirement plan.

Christine and Mark Nordell, a couple in their 60s, have put off retirement for at least two more years as they struggle to pay down their mortgage and credit-card debt and a daughter's student loan.

Their plan was to sell their house in a Minneapolis suburb, pay off their debt and retire to a second home near a lake. But the Minneapolis home's value plunged in the housing collapse and their plans went on hold.

Then Mr. Nordell lost his job when the nonprofit entity he founded to help African immigrants in the U.S. lost its funding. His new job as a part-time minister provides less income. The family lives mainly on Ms. Nordell's income as a speech pathologist.

Despite efforts to cut spending and pay down debt, their credit-card debt sometimes has crept higher. Their home requires improvements before it can be sold, and they can't afford them. They refinanced the mortgage and increased the loan balance to reduce high-interest credit-card balances.

They have retirement savings and a pension, which they think will cover retirement needs, but only after they get rid of the debt. Ms. Nordell hopes that the housing market recovers enough so they can sell their Minneapolis home, which would solve some problems.

"We did have some good stock investments, which have really saved us," she says. "I have gradually had to cash them all in to help us with living expenses."

Debt levels of older Americans have been rising for more than two decades. Of households with heads aged 62 through 69 and with mortgages, the median amount of mortgage debt hit $71,000 in 2007, five times the 1987 inflation-adjusted median, according to a study by William Apgar, then at Harvard's Joint Center for Housing Studies.

Most people make their biggest salaries in their 50s and 60s, which should permit them to make their biggest retirement-savings contributions. But partly because of debt payments, many are missing out on the end-of-career push that is supposed to boost retirement savings to where they need to be.

Fidelity Investments, one of the largest managers of 401(k) retirement accounts, says participants aged 55 to 60 contributed a median 8% of salary in the first quarter of this year, down from 10% in the same quarter of 2006. Some cut contributions to zero. Even the 8% level is well below the double-digit contribution rate financial planners recommend for older workers.

In addition, some people, like Ms. Shiber, have borrowed against existing retirement savings. Others have withdrawn savings early. TIAA-CREF, another large retirement-money manager, says that new loans taken out by participants of all ages against retirement accounts rose by 18.8% in 2010 over 2009.

Debt problems are so pervasive that they are affecting retirement expectations even of people far from retirement.

Rob Salvaggio of Glencoe, Ill., won't turn 50 until later this month, but he already is expecting a financial hit when he retires.

Mr. Salvaggio, who works for a real-estate manager, once dreamed of retiring at 55, but his mortgage, auto and credit-card debts are so high that he is aiming now at something more like 65. Because of heavy monthly debt payments, his wife has stopped contributing to her 401(k) and he is making only minimal contributions to his.

"We aren't going to be able to maintain or increase our standard of living in retirement," he says. "We are going to go backwards."

Mr. Salvaggio and his wife, Wendi, make good incomes and their financial adviser has urged them to cut back on their standard of living to reduce their debt. But Mrs. Salvaggio, who works for a multinational technology company, went through a difficult divorce before they married. Now, to provide stability for her son, they are determined to remain in the neighborhood where they live, even though it is expensive. When the landlord took back their rental home, they decided to buy another home, take on a mortgage and cut back on retirement savings.

"We all agreed that it wasn't the optimal idea," he says, although he hopes his home's value will rise, permitting him to sell at a profit when he retires. "We thought it was better for our son to stay here."

Quote of the Day from Dave Ramsey.com:

You've got to think about big things while you're doing small things, so that all the small things go in the right direction. — Alvin Toffler

Financial Headline News for Tuesday 9/6

Stocks dropped for a third straight session, as investors continued to flee risky assets and the Standard & Poor's 500-stock index notched its worst-ever three-day start to September.

Michael Kahn who writes the Getting Technical column for Barron’s Online, predicts in the column below that the Dow is headed below 10,000.

Retail hiring looks to be less this Holiday season than last according to survey released today.

Here are the top financial stories of the day:

1) Wall Street down on Europe; bear market fears grow-From Reuters

Wall Street fell for a third day on Tuesday on fears Europe still has failed to tackle its debt crisis, prompting worries the market is headed to new lows for the year.

Investors channeled cash into less risky assets as doubts resurfaced over the political will of Italy and Greece to push through tough budget measures and as Germany hardened its stand against providing more aid. The worries over the European debt crisis renewed fears that the global economy could fall into recession.

The S&P 500 is now down 14.5 percent from its highest point in 2011, reached at the end of April. Though investors have periodically taken heart from signs that Europe has carved out a plan to deal with its festering crisis, confidence has been repeatedly walloped every time there is a development showing that the problems have not been solved.

"We have got a shot at trading the S&P under 1,100 again," said Nick Kalivas, an equity index analyst at MF Global in Chicago. "I don't sense that people are really going to defend the market until something like that occurs."

A similar pattern of fractured confidence exists in bank stocks. Major U.S. banks were among the biggest decliners on Tuesday, with the KBW Bank index off nearly 2 percent. Late on Friday, the Federal Housing Finance Agency sued 17 large U.S. banks over subprime mortgage-backed bonds, compounding fears about the health of the sector.

JPMorgan and Bank of America, both subjects of the suit, fell more than 3 percent on Tuesday.

The CBOE Volatility Index, or Vix, a measure of expected market turbulence, posted its biggest gain in nearly two weeks, climbing 9.4 percent to 37.08.

"Right now there is a tremendous amount of uncertainty," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut. "There is a decent chance that we are in a bear market."

The Dow Jones industrial average dropped 100.96 points, or 0.90 percent, to 11,139.30. The Standard & Poor's 500 Index fell 8.73 points, or 0.74 percent, to 1,165.24. The Nasdaq Composite Index lost 6.50 points, or 0.26 percent, to 2,473.83.

Traders are monitoring lows set by major global indexes during the selloff in the first half of August. So far, only Germany's DAX, down nearly 25 percent this year, and Japan's Nikkei have fallen below those levels.
The S&P 500 hit a 2011 low of 1,101 on August 9.

European shares extended losses on Tuesday, after falling more than 4 percent on Monday, hitting their lowest close in more than two years on worries the euro zone debt crisis was deteriorating. The PHLX Europe sector index slumped 3.5 percent. U.S.-listed shares of Credit Suisse fell 12.9 percent to $23.84.

Gold stocks got a lift as the price of gold jumped to a record high above $1,920 after Switzerland pegged its currency to the euro in an effort to prevent its rapid appreciation in an extended spat of safe-haven buying.

The precious metal then retreated 2 percent from that level as investors took profits.

The Arca Gold Bugs index, which measures the performance of 16 U.S.-listed gold miners, rose 0.6 percent. Eldorado Gold Corp was the biggest percentage gainer, up 2.4 percent to $21.36.

The Financial Times reported several big U.S. banks, in talks with state officials on settling claims of improper mortgage practices, were offered a deal to limit legal liability in return for a multibillion-dollar payment.

Several brokerages including Nomura cut their price targets on big lenders.

Bank of America Corp lost 3.6 percent to $6.99 and JPMorgan Chase & Co fell 3.4 percent to $33.44.

Among gainers, Sunoco Inc rose 5.3 percent to $38.03 after the energy company said it plans to exit its refining business and focus on its logistics operations.

Packaging company Temple-Inland Inc jumped 25 percent to $30.85 after International Paper Co agreed to buy it for $32 per share. International Paper rose 8.9 percent to $27.77.

Trading volume was lower than usual at 7.9 billion shares on the New York Stock Exchange, the American Stock Exchange and Nasdaq.

Decliners beat advancers by nearly than three-to-one on the New York Stock Exchange. On Nasdaq, decliners beat advancers by about two-to-one.

2) Dow headed below 10,000 as cyclical bear begins-From MarketWatch

A strange technical pattern chronicled here in June suggests that the stock market still has unfinished business to the downside. Given that it correctly forecast the summertime peak, it might be a good idea to pay it heed.

Without rehashing the details from my June 15 column, the “three peaks and a domed house” is a multipart pattern that can describe the ebb and flow at the end of a bull market. See ‘Market’s chart pattern shows trouble in the house.’

At that time, I quoted the work of Ed Carlson, CMT, that concluded, based on the pattern and other factors, that “the stock market has either just peaked or is within one month of peaking to end the two-year old bull market.”

Given that the Dow Jones Industrial Average notched its high-water mark in May and then its final, albeit slightly lower peak in July, Carlson’s was a prescient call.

According to George Lindsay, the master chart reader who discovered the pattern in the late 1960s, there are 28 distinct twists and turns to follow. Just as a porterhouse steak contains two other cuts so too does this pattern. Its second half traces out the same shape as the ubiquitous “head-and-shoulders.” Indeed, the latter pattern dominated much of 2011 trading through July and gave us turns 21 through 25.

The August plunge took the Dow to number 26 leaving but two more milestones to reach.

As of this writing in late August, it appears that the market has reached or is just about to reach number 27 — the peak of a corrective rally in a major decline.

Where does that leave us now? The way Carlson, author of the recently released “George Lindsay and the Art of Technical Analysis :(FT Press 2011), sees it: on our way to number 28 to complete the pattern.

Where will that point be? Technical analysts, including yours truly, are often hesitant to forecast specific price and date combinations. But Carlson is looking for the Dow to drop to its summer 2010 low in the 9,650 area in the middle of next year. Not a pretty picture although thankfully not apocalyptic, either.

There are other factors now in play to keep the bears happy. For starters, this is September and it is the only month to show a net loss over the decades. And given that the past two Septembers have been positive, the odds are stacked fairly high against the bulls this year.

Even nuts and bolts chart reading is serving up bad news. The trend line that supported the bull market from its March 2009 origin has been soundly broken to the downside. So has solid support in existence most of 2011 on the Standard & Poor’s 500, the Nasdaq and the small capitalization Russell 200 index.

In my view, a cyclical bear market has begun.

The good news, according the Lindsay analysis, is that it looks to be of shorter duration than the previous bear market from 2007 to 2009. That means patient investors will have another chance to make some money on the long side starting next year.

3) Tidings Are Gloomy for Holiday-Job Seekers-From The Wall Street Journal

The outlook is dimmer than it has been in several years for workers hoping to get a part-time retailing job for the holiday shopping season, according to a survey of 21 store chains

About two-thirds of the chains polled by consulting firm Hay Group said they would add the same number of workers for their busiest sales period as they did last year, even though many said they expect better holiday sales this year. About 25% said they planned to hire fewer seasonal employees than last year.

The participants ranged from Macy's Inc. to crafts chain Michaels Stores Inc. and home-furnishings retailer Pier 1 Imports Inc. to Coldwater Creek Inc., which sells women's apparel.

The consultants who conducted the survey said they were surprised by the results. "We keep hearing that retailers want to create a more engaging environment for customers," said Maryam Morse, retail practice leader with the Hay Group. "That seems inconsistent with hiring fewer seasonal workers."

DSW Inc., which operates the Designer Shoe Warehouse discount chain, recently reported double-digit sales growth for the fiscal second quarter ended July 31, but it doesn't plan to increase its seasonal hires from last year. Instead, it will give its permanent sales force more hours, if needed, said Carrie McDermott, executive vice president of stores and operations. She said both part-time and full-time workers at the chain have been asking for more work.

Stores are trying to hold down labor costs as they head into the holidays, because they fear they can't pass on other cost increases, such as more expensive cotton, to their customers, said Craig Rowley, vice president and global practice leader for Hay Group's retail practice.

Retailers also point to a double-digit increase in Internet sales as a reason they don't need more in-store sales help. About a fifth of those surveyed said they were expanding their work force in distribution centers, which fill and ship Internet orders and often pay better than stores do.

During the boom that preceded the recent recession, stores routinely added hundreds of thousands of workers before Christmas to handle a surge of shoppers. At the boom's peak, in 2005, retailers added more than 600,000 temporary workers to their rolls. Though seasonal hiring waned during the recession, falling to a low of 231,000 workers in 2008, retail jobs have been a rare bright spot in the national employment picture. Retail jobs account for about 16% of total U.S. employment.

But last year's modest gain in hiring appears to have ended. On Friday, the Labor Department reported that the retail sector lost 8,000 jobs in August as overall U.S. employment remained flat.

Retailers posted mixed sales figures in August, a heavy back-to-school shopping period that often foreshadows sales prospects for the holidays. Hurricane Irene damped sales for the month, while inflation accounted for some of the sales gains.

Meanwhile, the stubbornly high unemployment rate, plummeting consumer confidence and a gyrating stock market have made it difficult for retailers to predict holiday sales. As a result, some retailers say they are still finalizing their seasonal hiring plans. Though Macy's participated in the Hay Group survey, a spokesman said it won't be ready to discuss its plans until the end of September.

Industry experts caution, however, that retailers might hurt their sales by cutting workers. If anything, sales personnel will have to become even more knowledgeable and savvy, if retailers hope to distinguish themselves from online competitors, said Leslie Hand, research director of consulting firm IDC Retail Insights.

"People like to shop, to browse and touch and feel things," Ms. Hand added. "If they can come in your store and get that personal shopper who helps them pick a wardrobe and does it well, there is value in that."

As more retailers control labor costs by scheduling their workers for the stores' busiest times, the percentage of retail workers working part time has risen. So far this year, 59% of hourly retail staff work has been part time, up from 53% in 2009, according to the Hay Group

Quote of the Day from Dave Ramsey.com:

Bad excuses are worse than none. — Thomas Fuller

Financial Headline News for Friday 9/2

The stock market went down after the government released the monthly unemployment rate which stayed at 9.1%. This says that hiring halted in August, adding to recession fears

Unbelievably, employers added no jobs in August, signaling the economy is still at risk of another recession

Europe has been quiet as of late but today Greek bonds tanked.

Here are the top financial stories of the day:

1) Stocks plunge after US hiring dries up in August-From the AP

Stocks plunged after a dismal jobs report renewed fears of another recession.

No jobs were added in the U.S. last month, the government said early Friday. The unemployment rate held steady at 9.1 percent.

Treasury yields fell sharply and gold jumped $48 an ounce as cash flowed into investments considered less risky than stocks.

The Dow Jones industrial average lost 253 points, or 2.2 percent, to close at 11,240.

The S&P 500 index fell 30, or 2.5 percent, to 1,174. The Nasdaq fell 66, or 2.6 percent, to 2,480.

2) Employers added no jobs in August, stirring fears-From the AP

Employers added no jobs in August -- an alarming setback for the economy that renewed fears of another recession and raised pressure on Washington to end the hiring standstill.

Worries flared Friday after release of the worst jobs report since September 2010. Total payrolls were unchanged, the first time since 1945 that the government reported a net job change of zero. The unemployment rate stayed at 9.1 percent.

The stock market plunged in response. The Dow Jones industrial average fell 253 points, or more than 2 percent, in mid-afternoon trading.

Analysts say the economy cannot continue to expand unless hiring picks up. In the first six months of 2011, growth was measured at an annual rate of 0.7 percent.

Companies are mostly keeping their payrolls intact. They're not laying off many workers, but they're not hiring, either. Without more jobs to fuel consumer spending, economists say another recession would be inevitable. Consumer spending accounts for about 70 percent of economic growth.

Like a wobbling bicycle, "you either reaccelerate or you fall over, said James O'Sullivan, chief economist at MF Global. "Something has to give."

Consumer and business confidence was shaken this summer by the political standoff over the federal debt limit, a downgrade of long-term U.S. debt and the financial crisis in Europe. Tumbling stock prices escalated the worries.

Even before it stalled last month, job growth had been sputtering. The economy added 166,000 jobs a month in the January-March quarter, 97,000 a month in the April-June quarter and just 43,000 a month so far in the July-September period.

"Underlying job growth needs to improve immediately in order to avoid a recession," said HSBC economist Ryan Wang.

The dispiriting job numbers for August will heighten the pressure on the Federal Reserve, President Barack Obama and Congress to find ways to stimulate the economy.

So far, the Fed has been reluctant to launch another round of Treasury bond purchases. Its previous bond-buying programs were intended to force down long-term interest rates, encourage borrowing and boost stock prices.

On Thursday, Obama will give a televised speech to a joint session of Congress to introduce a plan for creating jobs and spurring economic growth.

Even for people who do have jobs, income growth is stalled. That will hold back their ability to spend. The only sure way to reduce the risk of recession is with more hiring, economists say.

"The importance of job growth cannot be overstated," said Joshua Shapiro, chief U.S. economist at MFR Inc.

The economy needs to add roughly 250,000 jobs a month to rapidly bring down the unemployment rate. The rate has been above 9 percent in all but two months since May 2009. Roughly 14 million Americans are unemployed.

The weakness was underscored by revisions to the jobs data for June and July. Collectively, those figures were lowered to show 58,000 fewer jobs added than previously thought. The downward revisions were all in government jobs.

The average workweek and hourly earnings also declined in August. Cutbacks by federal, state and local governments have erased 290,000 government jobs this year, including 17,000 in August.

"There is no silver lining in this one," said Steve Blitz, senior economist at ITG Investment Research. "It is difficult to walk away from these numbers without the conclusion that the economy is simply grinding to a halt."

The unemployment rate for black men jumped a full percentage point in August to 18 percent. That's the highest level for that group since March 2010. And unemployment for black people as a whole surged from 15.9 percent to 16.7 percent even as unemployment for white Americans ticked down to 8 percent from 8.1 percent.

Obama has faced doubts within his own party, including black lawmakers who say he hasn't done enough to help chronic unemployment in black communities.

Yet Obama is unlikely to win support for any new stimulus spending from congressional Republicans, who oppose further spending and argue that the president's economic policies have failed. They favor deeper spending cuts and less government regulation.

On Friday, Obama took a step toward winning their support. He directed the Environmental Protection Agency to abandon rules that would have tightened health-based standards for smog. Republicans and some business leaders have said the proposed rules would have cost jobs.

Kurt Karl, chief economist for the Americas at Swiss Re, said the August jobs report "implies a rising probability of recession."

Still, he noted, employment fell for six quarters after the 2001 recession -- and the economy kept chugging along at an annual rate of 2.1 percent over that time.

The economy's 0.7 percent growth rate in the first half of 2011 was the slowest six months of growth since the recession officially ended in June 2009.

Most economists expect growth to improve to about a 2 percent annual rate in the July-September quarter.

Lower gasoline prices have provided some relief to consumers. And factories are revving up again after being interrupted by Japan's earthquake and nuclear crisis.

Before Friday's jobs report, the economy had been showing signs of better health. Consumer spending was strong in August. Auto sales were brisk. Manufacturing expanded. And fewer people applied for unemployment benefits.

Yet even 2 percent growth isn't fast enough to generate many jobs. And the economy remains vulnerable to outside shocks -- a worsening European debt crisis or more political brinkmanship in Washington.

"The economy's perforated at this point," said Sean Snaith, director of the University of Central Florida's Institute for Economic Competitiveness. "Any additional strain on it will tear it apart."

The Obama administration has estimated that unemployment will average about 9 percent next year, when Obama will seek re-election. The rate was 7.8 percent when he took office.

The White House Office of Management and Budget projects overall growth of just 1.7 percent this year.

"The economy continues to stagger," said Sung Won Sohn, economist at California State University Channel Islands. "It wouldn't take much (of a) shock to tip it onto a recession."

3) Greek Bonds Plunge on Aid Deal Worries-From The Wall Street Journal 

Greek bonds fell sharply with two-year and five-year yields hitting euro-era highs as investors trained their guns back on the cash-strapped country amid signs of discord over a bailout package.

Bonds issued by other highly indebted euro-zone countries also fell as traders fretted over the Italian government's ability to push through fiscal tightening measures.

The two-year Greek bond yield rose by 2.64 percentage points to 45.92%, widening the yield spread over similarly dated German schatz by 2.47 percentage points to 45.39%. The five-year yield rose by 0.83 percentage point to 28.56%, while the 10-year yield climbed by 0.16 percentage point to 17.54%.

A Greek official had said earlier Friday that a visiting troika of international inspectors has been suspended amid a dispute over the country's ability to meet its deficit targets,

The delegation of European Union, International Monetary Fund and European Central Bank officials is expected to return in about 10 days after the Greek government has prepared the draft outlines of its 2012 budget, the official added.

Quote of the Day from Dave Ramsey.com:

Hebrews 12:1 — Let us run with perseverance the race marked out for us.

Financial Headline News for Thursday 9/1

After a 4 day rally, all indexes were down significantly today as September began just like August ended with another over 100 swing in the Dow.

Manufacturing activity largely unchanged in August as the sector expanded for 25th straight month.

Unemployment claims came in almost exactly as expected with first time claims being 409,000.

Here are the top financial stories of the day:

1) Payroll worries end Wall Street's four-day rally-From Reuters

Wall Street's four-day rally ground to a halt on Thursday, with major indexes falling 1 percent on caution ahead of a key labor market report expected to underscore fears the economy is headed for another recession.

Financials were the biggest losers, selling off sharply in the afternoon, led by Goldman Sachs Group Inc (NYSE:GS - News). Goldman's shares fell 3.5 percent to $112.16 after agreements with the Federal Reserve and New York state's banking regulator over wrongful foreclosures raised concerns that Goldman is still not yet off the hook.

JPMorgan Chase & Co (NYSE:JPM - News) and Bank of America Corp (NYSE:BAC - News) were the two biggest losers on the Dow, both falling more than 3 percent.

A day ahead of the government's release of monthly payrolls data, a decline in the employment component of the Institute for Supply Management's factory activity index heightened worries that August jobs growth will be weaker than feared. ISM's factory activity index came in only just above the level that indicates growth.

Recent employment indicators suggest "zero growth in private payrolls," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "If that comes to pass we are going to have some big disappointments tomorrow."

In another discouraging sign, the White House, already struggling to turn around the high U.S. unemployment rate, cut its economic growth outlook for the next two years.

After dropping more than 17 percent from early July to early August, the S&P 500 had risen by 9 percent heading into Thursday's session, leaving investors reluctant to place big bets a day ahead of the August labor report, which is expected to show an increase of 75,000 jobs.

"The news over the past few days hasn't been conducive to the rally continuing, said Randy Bateman, chief investment officer of Huntington Asset Management in Columbus, Ohio.

Bateman, who helps oversee $14.5 billion, said he was not optimistic about the payroll report being strong.

The Dow Jones industrial average (DJI:^DJI - News) was down 119.96 points, or 1.03 percent, at 11,493.57. The Standard & Poor's 500 Index (^SPX - News) was down 14.47 points, or 1.19 percent, at 1,204.42. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was down 33.42 points, or 1.30 percent, at 2,546.04.

The benchmark S&P gained more than 5 percent during the four-day rally that ended on Wednesday on increasing hopes for a new stimulus plan from the Federal Reserve at its meeting in late September.

Ciena Corp (NasdaqGS:CIEN - News), a communications equipment maker, jumped 20 percent to $14.71 after posting a profit for the first time in three years. Cisco Systems Inc (NasdaqGS:CSCO - News), the network equipment maker, gained 1 percent to $15.82 and led the Dow.

The S&P retail index (Chicago Options:^RLX - News) fell 1.2 percent as retailers reported August same-store sales that were slightly below expectations as Hurricane Irene drove business away from some stores.

Target Corp (NYSE:TGT - News) fell 1.2 percent to $51.06 while Costco Wholesale Corp (NasdaqGS:COST - News) added 1.2 percent to $79.48.

U.S. construction spending fell unexpectedly in July as public outlays dropped to their lowest level since December 2006 and private spending also sagged, separate data showed.

Weekly jobless claims declined by 12,000 in the latest week, while nonfarm productivity was weaker than previously thought in the second quarter.

Eleven stocks fell for every four that rose on the New York Stock Exchange while on the Nasdaq one stock rose for every four that fell.

Volume was light, with about 7.49 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 8.47 billion.

2) Factory activity cools, but still expands in August-From Reuters

U.S. manufacturing unexpectedly grew in August and fewer Americans filed new claims for jobless aid last week, defying a slump in confidence that threatened to push the economy back into recession.

The Institute for Supply Management (ISM) said on Thursday its index of national factory activity ticked down to 50.6 from 50.9 in July. The modest slowdown confounded economists' expectations for a fall to 48.5.

Any reading below 50 indicates a contraction in the nation's factory sector.

A separate report from the Labor Department showed initial claims for state unemployment benefits dropped 12,000 to 409,000, showing little sign of a pick-up in layoffs in the wake of declining business and consumer confidence.

"We've gotten a few better reads from data, and my general sense is that things aren't as bad as the headlines read. Companies aren't seeing dramatic change," said Tom Porcelli, U.S. economist at RBC Capital Markets in New York.

U.S. stocks erased losses on the manufacturing data, while Treasury debt prices trimmed gains. The dollar rose against a broad basket of currencies.

However, key details of the ISM survey were soft and initial claims remained perched above the 400,000 level usually associated with a stable labor market.

That indicated the pace of economic growth would remain slow, but further reduced the odds of a second recession.

"The net result is a slowdown, disappointing growth for the third quarter but not a recession," said John Silvia, chief economist at Wells Fargo in Charlotte, North Carolina.

Data ranging from consumer spending to industrial production have showed some strength in the economy after output barely grew in the first half of the year.

While the claims data has no bearing on August's nonfarm payrolls count to be released on Friday, it showed no evidence that businesses responded to the recent financial market turmoil by aggressively laying off workers.

Other reports suggested consumers also did not pull back in August. Many top U.S. retailers on Thursday reported better-than-expected sales last month, despite sagging consumer confidence and Hurricane Irene.

Nonfarm employment is expected to have increased 75,000 in August, according to a Reuters survey, dampened by a strike at Verizon Communications. Payrolls rose 117,000 in July.

About 45,000 Verizon workers went on strike during the survey period for August payrolls. Because they did not receive a paycheck that week, they would be counted as jobless in the government's payrolls count.

A Labor Department official said there were no special factors influencing last week's claims report. The Verizon strike helped to push up claims in the last two weeks.

The four-week moving average of claims, considered a better measure of labor market trends, rose 1,750 to 410,250 last week. The number of people still receiving benefits under regular state programs after an initial week of aid dropped 18,000 to 3.74 million in the week ended August 20.

A second report from the Labor Department underscored the economy's lingering weakness, with nonfarm productivity falling at a 0.7 percent annual rate in the second quarter -- the biggest decline since the fourth quarter of 2008.

That was a downward revision to the previous estimate of a 0.3 percent fall and the second straight quarterly decline.

A slowdown in productivity usually suggests that businesses have to add new workers to meet production, but against the backdrop of an economy growing at a near stall-speed, it implies businesses might have to cut costs to protect profits.

The report showed unit labor cost growth much stronger than previously estimated.

Unit labor costs grew at a more sturdy 3.3 percent rate in the second quarter rather than 2.2 percent. Some economists said this suggested that firms were starting to face some cost pressures. The rise in unit labor costs may be puzzling given a 9.1 percent unemployment rate.

"In our view, the rise reflects a labor market that has less spare capacity than may be commonly perceived, in which case, rising labor costs are likely to continue," said Troy Davig, an economist at Barclays Capital in New York.

But the revised pace is still slower than the 6.2 percent rate in the first quarter, indicating wage pressures remain too well contained to stoke a broader rise in inflation.

3) Jobless Claims Fall, but Still Elevated-From The Wall Street Journal

The number of people claiming new jobless benefits dropped last week, but the still-elevated level reflects a continued weakness in the U.S. labor market.

Separately, U.S. labor costs rose last spring even more than first thought as worker productivity fell, threatening to hurt corporate profits and job growth amid the economy's fight to recover.

Initial jobless claims fell by 12,000 to a seasonally adjusted 409,000 in the week ended Aug. 27, the Labor Department said Thursday. Claims filed in the previous week were revised to 421,000 from an originally reported 417,000.

Economists had forecast claims would drop by less than they did. A Dow Jones Newswires survey put the expected decline at 7,000. However, the level remains too high: economists generally think the economy is adding more jobs than it is shedding when claims drop below 400,000.

The four-week moving average of new claims, a more reliable indicator of the labor market's recent performance because it smooths out volatile weekly data, rose by 1,750 to 410,250.

A Labor Department official said there was nothing unusual in last week's data. Some economists were expecting hurricane Irene to start impacting claims. The previous two weeks of increases were largely blamed by the Labor Department on a 15-day strike at Verizon Communications Inc.

The persistent weakness in the jobs market prompted the Federal Reserve to make a conditional pledge Aug. 9 to keep interest rates close to zero for another two years to try and boost the economy. The Fed expects the unemployment rate, now at 9.1%, to remain high until the end of 2012, when President Barack Obama will try to get reelected for a second term. Obama will lay out his jobs agenda in a speech to Congress next week.

Thursday's report showed the number of continuing unemployment benefit claims -- those drawn by workers for more than a week -- fell by 18,000 to 3,735,000 in the week ended Aug. 20. Continuing claims are reported with a one-week lag.

The unemployment rate for workers with unemployment insurance for the week ending Aug. 20 was unchanged at 3.0%.

The state-by-state breakdown in claims, which is also released with a lag, showed the biggest gain the week ended Aug. 20 was in Pennsylvania, where claims grew by 1,904. The state cited increased layoffs in construction and services.

Massachusetts, with a decline of 1,627 the week ended Aug. 20, had the largest drop in claims. No details were provided.

Productivity Revised Lower

Nonfarm business productivity dropped at a 0.7% annual rate in April through June, revised down from a previously estimated decrease of 0.3%.

Productivity is output per hour of all workers, and the second-quarter decline of 0.7% followed the first-quarter unrevised drop of 0.6% amid the economy's sharp slowdown.

At 9.1%, unemployment is high, holding the economy to a listless pace two years after the recession ended.

The Federal Reserve has cut its projection on economic growth into 2012 and expects joblessness to remain elevated at the end of next year.

With worker efficiency falling and costs rising, companies have less incentive to add employees as they try to protect their margins.

The second-quarter productivity decline was greater than expected. Economists polled by Dow Jones Newswires had forecast a 0.6% drop.

The revision was caused by the government's earlier downward adjustment to economic growth. Gross domestic product grew only 1.0% April through June. That meant nonfarm business output rose just 1.3% in the second quarter, revised down from an originally estimated 1.8% gain. Hours worked rose by an unrevised 2.0%.

Unit labor costs climbed at a 3.3% annual rate in the second quarter, revised up from an originally reported increase of 2.2%. Economists had expected the revised data would show a 2.5% increase. First-quarter costs surged an upwardly revised 6.2%.

Labor costs make up a big part of a company's expenses and are considered an important gauge of inflation. However, due to the economy's weakness, prices are expected to rise at a subdued pace in 2012.

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