Financial Headline News for Monday 7/18

Stocks took a beating from the opening bell, rallied a little towards days end but were still down big. Investors are stocking up on gold with all of this economic uncertainty as it hit another record high today.

The Debt Ceiling deadline continues to tick down towards August 2nd with still no agreement in sight.

A rare positive story on the housing market recovery.

The financial headlines for today are:

1) Debt worries drag down the stock market- From the AP

Not even a string of better earnings reports could stave off worries about debt on Monday.

Europe's banking troubles and an impasse over lifting the U.S. government's borrowing limit helped drag down stock markets in the U.S. and Europe. Gold rose above $1,600 an ounce as investors sought safe places to park money.

The S&P 500 index dropped 10.70 points, or 0.8 percent, to close at 1,305.44.

The Dow Jones industrial average and Nasdaq composite index gave up their gains for the month. The Dow fell 94.57 points, 0.8 percent, to 12,385.16. The Nasdaq fell 24.69 points, or 0.9 percent, to 2,765.11.

The results of stress tests on European banks released last week came under deeper scrutiny. Eight banks failed the test aimed at measuring how well they would hold up under additional financial strain.

But the tests didn't take into account how banks would fare if Greece or Italy defaults, says Dan Greenhaus, chief global strategist at BTIG. Greece and Italy are among the countries most at risk of defaulting on their debts.

Italy not only has Europe's third largest economy but also the world's third-largest bond market at 1.8 trillion euro ($2.5 trillion). "So far European officials have failed to stabilize a country as small as Greece," Greenhaus said. "So we have little reason to have faith they'll fix a country as big as Italy."

In the U.S., the debt limit debate remains at a standstill in Washington. The Treasury Department says the limit must be raised by Aug. 2 or the government risks defaulting on its debt.

But a deal needs to be reached soon, possibly as early as Friday, to have legislation ready for President Barack Obama to sign by the deadline. Rating agencies warned last week that the impasse puts the country's triple-A credit rating grade at risk.

House Republicans are preparing to vote Tuesday on their plan that would lift the debt ceiling but also slash spending. The proposal includes a balanced-budget amendment to the U.S. Constitution. President Barack Obama pledged to veto the bill.

The latest delay in reaching a deal is beginning to weigh on markets.

U.S. banks stocks, which would get hit hard in the event of a default, fell sharply. Bank of America slid 2.8 percent, to $9.72, the biggest drop for the 30 stocks in the Dow average. The bank recently announced an $8.5 billion settlement with a group of mortgage bond investors and reports earnings Tuesday. It's the only major bank trading in the single digits.

Gold rose for the tenth day in a row, jumping 0.8 percent to $1,602.40 an ounce. That's another record in dollar terms, but it's still below the high reached in the early 1980s once inflation is taken into account

2) Moody's Suggests US Eliminates Debt Ceiling-From CNBC

Ratings agency Moody's on Monday suggested the United States should eliminate its statutory limit on government debt to reduce uncertainty among bond holders.

The United States is one of the few countries where Congress sets a ceiling on government debt, which creates "periodic uncertainty" over the government's ability to meet its obligations, Moody's [MCO  36.02    -0.43  (-1.18%)   ] said in a report.

"We would reduce our assessment of event risk if the government changed its framework for managing government debt to lessen or eliminate that uncertainty," Moody's analyst Steven Hess wrote in the report.

The agency last week warned it would cut the United States' AAA credit rating if the government misses debt payments, increasing pressure on Republicans and the White House to come up with a budget agreement.

Moody's said it had always considered the risk of a U.S. debt default very low because Congress has regularly raised the debt ceiling during many decades, usually without controversy.

However, the current wide divisions between the House of Representatives and the Obama administration over the debt limit creates a high level of uncertainty and causes us to raise our assessment of event risk," Hess said.

Stepping further into the heated political debate about U.S. debt problems, Moody's suggested the government could look at other ways to limit debt.

It cited Chile, widely praised as Latin America's most fiscally-sound country, as an example.

"Elsewhere, the level of deficits is constrained by a 'fiscal rule,' which means the rise in debt is constrained though not technically limited," Moody's said, adding that such rule has been effective in Chile.

It also cited the example of the Maastricht criteria in Europe, which determines that the ratio of government debt to GDP should not exceed 60 percent.

It noted, however, that such a rule is often breached by the governments.

In the United States, Moody's said the debt limit had not effectively curbed the rise in government debt because lawmakers regularly raise it and because that limit is not related to the level of expenditures approved by Congress.

3) Beginning of the End of the Entire Crisis? From Yahoo Finance

The time to buy is when the blood is running the streets, right?

Well, what about housing? It's been dead for so many years that its blood long ago stopped flowing. Surely this famous piece of advice from Nathan Rothschild doesn't apply to that sector?

Don't be too quick to dismiss the possibility.

Consider the iShares Dow Jones U.S. Real Estate Index fund (IYR - News), an ETF that is designed to represent the real-estate sector. Just one week ago, it traded at a 52-week high. The same goes for the iShares Cohen & Steers Realty Majors fund (ICF - News) .

What does the market know that the rest of us don't?

For answers, I turned to an investment service called Sound Advice, which is edited by Gary Cardiff and Steve Horwitz. The service regularly devotes a couple of pages of each issue to an in-depth analysis of the real-estate market.

And we should pay attention to their analysis because their service has a superb long-term record: Over the last 15 years, according to the Hulbert Financial Digest, it has outperformed a buy-and-hold by two percentage points per year on an annualized basis.

According to Cardiff and Horwitz, there are several good fundamental reasons for not dismissing the real-estate market out of hand.

A key one is the steady decline in foreclosure rates. They say that this is an early indication that the real-estate recovery is about to begin. Indeed, they point out, "in the late 1980s [in the wake of the S&L crisis], this was the best indicator for knowing when the recovery was near. As foreclosure rates dropped, the ensuing recovery began."

According to these two advisers, foreclosure rates began to ease in last year's fourth quarter. To be sure, that decline has been dismissed by many as being merely temporary, caused by various banks' freezes on foreclosure actions and massive delays in the processing of foreclosures.

But Cardiff and Horwitz detect at least one straw in the wind that suggests the declining foreclosure rate might be more enduring.

This straw is the falling number of new default filings. Since a foreclosure has to begin with a default filing, such a decline must eventually translate into a more lasting drop in the number of foreclosures.

Compared to around 100,000 new default filings that were recorded each month in the spring and summer of 2010, they dropped to less than half that level beginning last October and have remained that low each month since.

In light of this, Cardiff and Horwitz say that they "believe we are witnessing the beginning of the end of the entire crisis."

This, then, may be what the recent 52-week highs among real-estate ETFs are reflecting. Though those highs may seem counterintuitive, given how awful the news headlines about real estate have been in recent months, it's worth remembering that the stock market is forward looking. By the time we read about something in the newspapers, it has long since been reflected in stock prices.

Of course, the market is not a perfect discounting mechanism, by any means. But it's also true that most who bet against the market end up regretting it.

So don't be surprised if the news in the real-estate sector is better than expected in coming months.

Inspirational Quotes Twitter @Inspire_Us:

You are never too old to set another goal or to dream a new dream. -CS Lewis

Financial Headline News for Friday 7/15

Stocks were up today on good news from Google. However the DJIA was down for the week and for 8 out of the last 11 weeks as the choppy recovery goes on.

Another example that the economy is going in reverse was the release of the July consumer sentiment today.

Yet another story on the European crisis is below.

Here are the top financial stories of the day:

1) Google, M&A Boost Stocks- From the Wall Street Journal

Stocks advanced, as blowout earnings from Google and a big corporate takeover overshadowed another warning about the U.S.'s credit rating and a depressed reading on consumer sentiment.

The Dow Jones Industrial Average rose 42.61 points, or 0.3%, to 12479.73. The blue-chip index bobbed between positive and negative territory much of the day before the late rise. Caterpillar led the industrials higher, rising $1.78, or 1.7%, to 109.36, on the New York Stock Exchange

For the week, the DJIA fell 1.4%, the worst weekly decline since the week ended June 10 and the eighth decline in the past 11 weeks.

The Standard & Poor's 500-stock index rose 7.27 points, or 0.6%, to 1316.14, leaving it down 2.1% for the week.

The energy sector was the biggest advancer on Friday, rising 2.3%, boosted by rising crude oil prices and merger-and-acquisition activity.

Petrohawk Energy soared 14.68, or 62%, to 38.17, after Australia's BHP Billiton agreed to buy the company in a deal valued at more than $15 billion, including debt.

The Nasdaq Composite Index rose 27.13 points, or 1%, to 2789.80, fueled by Google's upbeat quarterly report. The technology-oriented index fell 2.5% this week to snap a three-week win streak.

The Internet-search giant late Thursday posted a surprisingly robust 36% jump in quarterly profit on record revenue. Google experienced strength in its core search business and gained traction with its newer operations, including its new social network Google+. Shares surged 68.68, or 13%, to 597.62, on the Nasdaq Stock Market.

2) July consumer sentiment worst since March 2009-From Reuters

Consumer sentiment deteriorated in early July to the lowest level since March 2009 on increasing pessimism over falling income and rising unemployment, a survey released on Friday showed.

Confidence in government economic policies also curdled, the Thomson Reuters/University of Michigan survey showed. U.S. lawmakers are wrangling over a budget deal that would allow the government to raise the debt ceiling -- needed so the United States can fund its obligations next month.

The preliminary reading for the consumer sentiment index dropped to 63.8 in July from 71.5 the month before, falling far short of expectations of an increase to 72.5, according to a Reuters poll of economists.

The survey's barometer of current economic conditions fell to 76.3, the lowest since November 2009, from 82.0. The gauge of consumer expectations was also at its lowest since March 2009, tumbling to 55.8 from 64.8.

"Whenever the Expectations Index has been this low in the past, the economy has been in recession," survey director Richard Curtin said in a statement.

"Nonetheless, one month's data is insufficient to signal a renewed downturn, particularly if a last-minute agreement on the debt ceiling results in a partial restoration of confidence."

U.S. stocks cut gains immediately after the report, while Treasury prices pared losses and the euro fell to a New York session low against the dollar.

Overall, the data suggests real consumer spending in the second half of the year may be barely higher than the first half, the survey said.

Twice as many consumers reported hearing about new job losses compared with job gains, while half of all consumers said the economy had recently worsened. Last week, data showed the economy added a scant 18,000 jobs in June.

"We remain in a very slow recovery with extraordinarily grudging employment. The public at large still feels the recovery is, at best, a neutral factor," said Patrick O'Keefe, director of economic research at J.H. Cohn in New York.

"They're not seeing a lot of benefits."

The proportion of consumers that rated government economic policies as poor rose to 52 percent in early July, up from 40 percent in June.

The inflation outlook improved with the survey's one-year inflation expectation easing to its lowest level since February at 3.4 percent from 3.8. The five-to-10-year inflation outlook fell to 2.8 percent from 3.0 percent.

3) 8 banks flunk European stress test-From the AP

Eight of 90 banks have flunked stress tests that project how they would fare in another recession, and 16 more barely passed, Europe's banking regulator said Friday.

The failing banks should "promptly" take steps to strengthen their financial cushions against losses, the

European Banking Authority said as it released the results. They now have to raise a total of euro2.5 billion ($3.5 billion).

Spain, whose many local savings banks have been closely watch by analysts, fared worst, with five banks failing to prove that their capital buffers were strong enough to sustain the regulator's stress scenario. The banks were Catalunya Caixa, Caja de Ahorros de Mediterraneo, Banco Pastor, Unnim and Grupo Caja.

Two Greek banks, EFG Eurobank and ATEBank, also flunked, as did Austria's Oesterreichische Volksbank AG.

The banks that barely passed have been asked to strengthen their finances along with the ones that failed.
The EBA lacks the power, however, to force banks to raise more capital -- whether from investors or governments -- or to make them merge or sell businesses. Only their national governments can do that.

The tests are a key element in Europe's fight against the debt crisis. With most market watchers expecting Greece -- and possibly the other bailout victims Ireland and Portugal -- to eventually reneg on part of their massive debt piles, concerns over what such a default would do to banks around the continent has triggered panic on financial markets in recent weeks.

Officials hope that the stress tests identify weak banks and make them strengthen their finances. While the test scenarios did not include a default by a European country, each bank had to report its exposure to sovereign debt, allowing economists to run their own anlyses.

The test, run by national banking regulators, simulated what would happen to bank finances during a recession where growth falls more than 4 percentage points below EU forecasts. For the 17-country eurozone, that would be a drop of 0.5 percent this year and 0.2 percent next year.

The banks were required to maintain a financial pad of at least 5 percent of their loans, investments and other assets. The financial pad -- dubbed Core Tier 1 capital -- stands ready to absorb unexpected losses and is therefore a key measure of a bank's stability.

One bank, Germany's Helaba, pulled out of the tests in a dispute with the EBA over whether large part of the bank's capital in the form of non-voting holdings by government would count.

Inspirational Quotes Twitter @Inspire_Us

Nobody really cares if you’re miserable, so you might as well be happy. -Anonymous

 

Financial Headline News for Thursday 7/14

It was an up and down day on the Street. However all three sectors fell at the close while oil and gold, which is setting an all time record high everyday it seems like lately, rose.

1st time filers for unemployment claims remained over 400,000 for the 14th consecutive week but dropped 22,000 from last week's figure.

The daily gloom and doom story on the housing market lack of recovery is below.

Here are the top financial stories of the day:

1) Stocks fall after Bernanke dims stimulus hopes-From the AP

Stocks are closing lower after remarks from Federal Reserve Chairman Ben Bernanke dimmed hopes for a third round of bond-buying.

In a second day of testimony Thursday, Bernanke told lawmakers that the Fed expected the economy to improve. He said the central bank had no immediate plans to step in with more economic stimulus. Stocks turned immediately lower after he made the remarks and fell for much of the day.

The Standard & Poor's 500 index is down 9 points, or 0.7 percent, to close at 1,309. The Dow Jones industrial average fell 54, or 0.4 percent, to 12,437. The Nasdaq composite fell 34, or 1.2 percent, to 2,763.

About four stocks fell for every one that rose on the New York Stock Exchange. Volume was light at 3.8

2) Unemployment aid applications fall for 2nd week-From the AP

Fewer people sought unemployment benefits last week, an encouraging sign the job market may be slowly improving.

Weekly applications dropped 22,000 to a seasonally adjusted 405,000, the Labor Department said, the lowest level in almost three months.

The government said the total was increased by 11,500 state workers from Minnesota, who have filed applications because of that state's government shutdown.

Even with last week's decline, applications have now topped 400,000 for 14 weeks, evidence that the job market has weakened since earlier this year.

Applications had fallen in February to 375,000, a level that signals healthy job growth. They stayed below 400,000 for two months, then surged to an eight-month high of 478,000 in April and have declined slowly since then.

The economy has faltered this year as consumers cut back on spending in the face of higher gas prices. Manufacturing output also declined after Japan's March 11 earthquake disrupted global supply chains, particularly in the auto industry.

Employers responded by cutting back sharply on hiring. The economy added only 18,000 net jobs in June, the second straight month of dismal hiring. The unemployment rate rose to 9.2 percent, the highest this year. That's far below the average job gains of 215,000 per month in the February-April period.

3) New Mortgage Limits: Another Hurdle for the Housing Market? US News and World Report

Prospective home buyers and sellers could run into additional roadblocks in coming months as new mortgage regulations set to take effect this fall filter into the system. Although the new limits on conforming loans--mortgages eligible for government guarantees--won't officially roll out until October 1, buyers and sellers alike could feel the pinch of even tighter credit availability much sooner as lenders start gearing up for lower loan caps.

"As these regulations are rolled out, every individual lender takes a different amount of time to implement and get the changes into the pipeline," says Mona Marimow, senior vice president at LendingTree.com. "Many lenders might start implementing and affecting their rates prior to the October 1 rollout."

To shore up a faltering housing market, Congress increased the maximum loan amount that government-sponsored enterprises Fannie Mae and Freddie Mac could guarantee, to a high of $729,750 in some markets. That made it easier for borrowers in pricier markets to get loans because lenders and investors were guaranteed to receive payment regardless of whether the homeowner defaulted.

Now, as the government begins to gradually reduce its footprint in the housing market, limits on government-backed loans are scheduled to reset to prior levels--a high of $625,500 in some markets--which experts say could ultimately lead to higher mortgage rates and more downward pressure on home prices.

The brunt of the impact will fall on middle-of-the-market buyers and sellers in pricier housing markets, says Paul Bishop who heads up research at the National Association of Realtors. "The biggest change could potentially happen in higher-cost areas, because for a number of buyers in higher-cost areas [such as] New York, Washington, Los Angeles, a home that would require a mortgage above $625,000 is not an unusual purchase," Bishop says. "It's really going be a hit for those buyers in those areas right at the middle of the market, and what we've seen over the last several months is that the middle segment of the market have really been the weakest."

Prospective borrowers could face higher mortgage interest rates for loans that exceed the new caps--also called jumbo loans--which would increase the overall cost of owning a home. That, in turn, would likely discourage the house hunters the economy desperately needs to jump-start the housing market. "It's a concern for home buyers thinking about whether they want to move forward in an economic environment where there's one more type of uncertainty in the decision making process," Bishop adds.

House hunters might also be drawn to less-expensive properties as a result of the change, which could exacerbate existing weakness in the middle-priced segment of the market. "When you consider the new jumbo rate plus you have to put a greater amount down, it's going to have implications for consumers who are probably going to decide to take a home with a lesser value," Marimow says.

But buyers aren't the only ones who will feel the ripple effects of a drop in conforming loan limits. Sellers, too, are likely to feel the impact, especially if their asking price is above the new limits. "If home sellers want to make their sale attractive to potential buyers, then there may be some downward pressure, such that it's more likely that the buyer walking in the door would be able to get a conforming loan at the new level," Bishop says. That means that if normally a house might sell for $750,000, for example, the seller might find it in their best interest to push down the price to accommodate buyers seeking mortgages under the new limits.

That's not good news for the housing market or the U.S. economy, neither of which can afford fresh obstacles to recovery. "At this point, the timing in reduction of any loan limits is probably not good in any real way, simply because the housing market is struggling," Bishop says. "In terms of the big picture, it's still fragile, but we would like to see that move forward because history shows the rest of the economy really doesn't recover in any meaningful or robust way unless the housing market is also on stable footing."

Nevertheless, consumers can start preparing for the shift now, ahead of the October 1 transition. "The good news is that there is information being shared about this now," Marimow says. "This is the right time to be talking about it because once the changes do take effect, the people who are affected will already not have other options."

The best thing consumers can do now is evaluate their needs and do their research, especially in an environment as frenetic as this one. "Consumers should look for a closing guarantee and lenders that are going to be able to lock in your rate as quickly as possible, because your rate could float even over the time [it takes] to close your loan," Marimow says. "You truly need to shop around as much as you can to make sure you're comparing and contrasting to know you're getting the best one."

Inspirational Quotes Twitter @Inspire_Us

Pray, forgive yourself, appreciate others, listen to your gut, do things you enjoy, & remind yourself that we are all loved & connected.

Financial Headline News for Wednesday 7/13

The Stock rally fizzled late in the day as hopes faded for more Fed stimulus despite Ben Bernanke's earlier comments. However the Dow, S&P broke a 3-day losing streak.

What a surprise-Ben Bernanke was talking QE3 only two weeks after QE2 ended. Another manipulation and devaluing of the dollar will be under way shortly thanks to him.

With all of this debt ceiling back and forth disputing, Moody's threatened to lower its AAA rating for the US for the first time since it was instituted in 1917

Here are the top financial stories of the day:

1) Wall Street rallies, snaps 3-day slide on Bernanke's view-From the AP

Comments from Fed Chairman Ben Bernanke set off a stock market rally early Wednesday, but it wasn't long before another Fed official helped cut it short.

In testimony before Congress, Bernanke said the central bank would be open to new economic stimulus measures, but only if the economy gets much worse. The remarks were far from a promise for more Fed action, but markets reacted immediately nonetheless. The Dow Jones industrial average jumped as many as 164 points, or 1.3 percent.

Most of those gains evaporated later in the day after Federal Reserve Bank of Dallas President Richard Fisher said in a speech that the Fed had already "pressed the limits of monetary policy."

The Standard & Poor's 500 index rose 4.08, or 0.3 percent, to close at 1,317.72. The Dow Jones industrial average rose 44.73, or 0.4 percent, to 12,491.61. The Nasdaq composite rose 15.01, or 0.5 percent, to 2,796.92. Indexes had fallen over the previous three days.

Stocks also took a hit in the afternoon when House Speaker John Boehner called into question whether lawmakers would agree to raise the government's borrowing limit by an Aug. 2 deadline. Failure to meet the deadline could result in a U.S. debt default, which would have disastrous effects for the economy and financial markets. Boehner, a Republican, said that dealing with Democrats on the issue has been like "dealing with Jell-O."

On Wednesday Moody's Investors Service threatened to cut the United States' credit rating. It said there is a small but rising risk that the government will default on its debt.

2) Bernanke: Fed Prepared to Act if Needed-The Wall Street Journal 

The Federal Reserve is prepared to act if economic weakness persists, Chairman Ben Bernanke said Wednesday, leaving open the possibility of a third round of bond purchases by the U.S. central bank.
"The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might re-emerge, implying a need for additional policy support," Mr. Bernanke said, suggesting the central bank had several ways to ease financial conditions, if necessary.

Appearing on Capitol Hill to deliver the central bank's semi-annual report on the state of the economy, Mr.
Bernanke also offered a stern warning to policy makers about the repercussions if negotiations to raise the U.S. government's debt limit by Aug 2 fail. The effects would be almost immediate, he said, throwing the financial system into "enormous disarray," worsening the employment situation and causing "shockwaves" throughout the global economy.

Speaking to a U.S. House panel, Mr. Bernanke offered a mixed assessment of the economy amid concerns about unemployment and a looming deadline to boost the nation's debt limit. U.S. economic growth has been only modest so far in 2011, he said, suggesting Fed officials remain in a holding pattern as they seek to gain more clarity about the state of the economy
"We don't know where the economy is going to go and if we get to a point where the recovery is faltering and we're looking at inflation dropping down towards zero...then we have to look at all the options," Mr. Bernanke said.

Asked if that means the Fed could engage in a third round of bond purchases, known as quantitative easing, Mr. Bernanke replied, "Yes."

3) Moody’s Places U.S. on Review for Downgrade As Debt Talks Stall-From Bloomberg
Moody’s Investors Service put the U.S. under review for a credit rating downgrade as talks to raise the government’s $14.3 trillion debt limit stall, adding to concern that political gridlock will lead to a default.

The Aaa ratings of financial institutions directly linked to the U.S. government, including Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks, were also put on review for cuts, Moody’s said in a statement today.

The U.S., rated Aaa since 1917, was put on review for the first time since 1995 on concern the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes even though the risk remains low, Moody’s said. The rating would likely be reduced to the Aa range and there is no assurance that Moody’s would return its top rating even if a default is quickly cured.

“It certainly underscores the importance of passing the debt ceiling and not putting us in default status, and making sure there’s a longer term fiscal plan to contain spending and the deficit we’ve been running up over the last few years,” said Anthony Cronin, a Treasury bond trader at Societe General SA in New York, one of the 20 primary dealers that trade with the Federal Reserve. “Maybe it’s the impetus to say we’ll need more of a concession.”

Quote of the Day from Dave Ramsey.com:

The talent of success is nothing more than doing what you can do, well. — Henry W. Longfellow

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