Jill Schlesinger: Tuesday Market Note
People walk past an electronic stock indicator of a securities firm in Tokyo, on Tuesday, Aug. 24, 2010.
/ AP/Shizuo KambayashiThe U.S. stock market is set to open lower this morning as economic slowdown fears continue to outweigh the recent rash of merger activity.
Asian and European markets were down, following a disappointing session in the U.S. Japan's Nikkei average touched a 15-month closing low of 8995, below the psychological 9,000 threshold, and has technically qualified as a bear market, having fallen more than 20 percent from its high point in April.
The Japanese yen hits its highest level against the U.S. dollar in 15 years, a trend that negatively affects exporters and could potentially stymie Japan's economic recovery.
Yesterday, the Dow Jones Industrial Average was down 39 to 10,174, after being up more than ninety points earlier in the session. The NASDAQ dropped .9 percent to 2159 and the S&P 500 was off 0.4 percent to 1067, a five-week low.
Investors are waiting for this week's data before making firm commitments. Today, existing home sales are due at 10 a.m. ET. If the consensus estimate of 4.65 million homes is correct, it would be the weakest reading since March 2009, when 4.61 million existing homes were sold.
That would mean that despite multi-decade low mortgage rates, the housing market will essentially be at the same level that was seen at the crisis low.
In other words, the government's homebuyer tax credit simply delayed the painful process of clearing out excess inventory that occurs after every boom and bust.
Jill Schlesinger: Monday Market Note
AP Photo/Richard Drew
The data were consistent with this struggle: the housing sector continues to be weak, consumers are saving more and spending less, and companies are seeing healthy profit margins, low borrowing costs and strong balance sheets.
Instead of increasing payrolls, some companies are using the extra cash for buying sprees (BHP Billiton, Intel, First Niagara Financial), reviving hopes for the beaten-down mergers and acquisition market.
In the end, the bears won out last week, though most traders admitted, "It could've been worse."
Women: Take Control of Your Money
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
On my very first outing on the Staten island Ferry, I met this lovely women who candidly said she really doesn't know what's going on in her financial life. It took only a a few moments before we were pinky-swearing that she would investigate where her money is invested, rather than leave all of the details solely to her husband.
Click here to watch the video on CBS MoneyWatch.com.
(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
How to Talk to Your Kids About Money
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
Our newest blogger, Dan Kadlec, author of "Bank of Dad," joined us on "Ask The Experts" to educate us about how to talk to your kids about money. The good news is that the answer may be simple: play poker!
Click here to watch the video on CBS MoneyWatch.com.
(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
What International Investors Need to Know
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
If you invest in international funds, ETF's or stocks, you need to watch this interview with Ian Bremmer, author of the new book The End of the Free Market.
Click here to watch the video on CBS MoneyWatch.com.
(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
3 Culprits for Sagging Employment
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
Another morning of data, another reminder that our current economic woes boil down to one word: jobs. This morning, the Labor Department reported that in the week ending July 24th, weekly jobless claims fell by 11,000 to a seasonally adjusted 457,000, from the previous week's revised figure of 468,000. The four-week moving average was 452,500, a decrease of 4,500 from the previous week's revised average of 457,000.
iStockphoto
While market participants are eager to latch on to any indication of good news on the labor front (US stocks are trading higher this morning, but mostly due to earnings, I think), the sad truth is that the 4-week average has been stuck at a stubbornly high level for the past eight months and the 4-week average is high relative to historic norms. In other words, it's what you already know: the jobs market still stinks.
A friend recently asked me, "Why is this 'the jobless recovery?'" I think the answer is pretty clear. Imagine you are a business-owner who actually survived the Great Recession. You may have had to reduce your income or even lay off workers during the downturn. Now as the economy is finally growing, you are finding that (a) your income is inching back up, though not at the level it was pre-recession and/or (b) your company is running just fine with fewer employees.
Continue »Market Note: Is Manufacturing Signaling a Double Dip?
In has thus far been a pretty quiet summer week on Wall Street, despite being smack in the middle of earnings season. Volume has been low, indicating that investors aren't willing to wager that the economy is simply slowing, versus headed for a double dip.
The news this morning doesn't clarify the outlook: durable goods - items meant to last longer than three years - tumbled one percent, from -0.8 percent in May. It was the largest drop since August, 2009. Economists also measure durable goods without transportation because that sector is so volatile. Without transportation, the decrease was 0.6 percent from up 1.2 percent in May.
The report begs the question: can the economy recover with weakening manufacturing? The durable goods report, along with yesterday's Richmond Fed survey, paint a picture of slowing growth in the manufacturing sector is slowing. Manufacturing has been touted as one of the leading sectors of the economic recovery.
But there was one bright spot in the durable goods report and that was capital orders. Orders and shipments for non-military capital goods, excluding aircraft climbed 0.6 percent in June, after jumping 4.6 percent in May. This could be a signal that business investment could see improvement over the next two quarters.
Bottom line: with growth slowing at an as-yet undetermined rate, investors are taking the wait and see approach
Skimp or Splurge?
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
Looking to trim costs? Sometimes it makes sense to skimp, while there are plenty of times when you should splurge. Here are three examples:
Our bloggers have been busy identifying other areas to skimp and splurge-check out these suggestions!
(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
Financial Infidelity on the Rise
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
When I saw this post by Kathy Kristof, I knew that I had to share it with CBS3. Kathy is on to something when she says that money turns some spouses into liars. Watch the whole video-at the end I give couples a tip that comes from personal experience!
(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
Jill Schlesinger: Tuesday Market Note
BP CEO Tony Hayward, right, followed by BP Managing Director Bob Dudley, leave the White House in Washington, June 16, 2010.
/ AP/Manuel Balce CenetaThe announcement came after BP reported a $17.15 billion second quarter loss due to the more than $32 billion in charges related to the spill in the Gulf of Mexico. The company plans to sell about $30 billion in assets to replenish its coffers. Shares of BP are up 0.7% in the premarket.
Tony Hayward Out at BP?
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
Nearly 100 days after the Deepwater Horizon explosion and oil spill (April 20th, to be exact), BP will likely replace its PR-challenged CEO Tony Hayward. (My favorite of his gaffes was: "There's no one who wants this thing over more than I do, I'd like my life back.")
Tony Hayward
/ AP Photo/Haraz N. GhanbariThe company just posted this denial of the change, but it stands to reason that Hayward probably should have been axed a while ago. Will Hayward's ouster matter? The short answer is YES.
The company must move into the post-spill era with a new tone from the top. Of course Hayward wasn't the sole cause of the disaster, but he is the embodment of it. In many ways, it's reminiscent of some Wall Street executives-Merrill Lynch's Stan O'Neal or Bank of America's Ken Lewis come to mind. While the Board of Directors and senior management of every embattled company is responsible for the steering the company through a crisis, only the CEO can take the fall.
It's expected that Managing Director Robert Dudley will replace Hayward as CEO and the announcement will likely come when the company releases its earnings tomorrow. If so, Dudley would be the first American to run the company. Currently, Dudley, is charged with managing the company's cleanup in the Gulf and more importantly, to repair the firm's shaky reputation. Dudley ran Amoco Corp.'s Russian operations from 1994 to 1997, before its 1998 acquisition by BP.
From the individual investor's perspective, the lessons from BP are clear. Now we have a management lesson to boot: when a crisis emerges, the CEO must articulate the facts clearly; accept responsibility on behalf of the company; and provide solutions for how the company plans to address the crisis. Hayward failed on all three, which is why he should lose his job.
(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
Monday Market Note: Investors' Anxiety over Recovery (Somewhat) Soothed
Specialists Evan Solomon, left, and Mario Picone watch their screens on the floor of the New York Stock Exchange, Friday, July 23, 2010.
/ AP Photo/Richard DrewInvestors are beginning to consider that there will be enough growth in the second half of the year to maintain the economic recovery.
Nerves were also soothed when the results of the European bank stress tests were better than anticipated: 7 of 91 banks failed, although the tests appeared to be rigged, or at the very least flawed, because they didn't measure the risk of a sovereign default. How would these banks do if a country like Greece defaulted? That answer will have to wait ...
7 European Banks Fail Stress Test
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
AP
7 of 91 European banks failed the stress tests with an overall capital shortfall of 3.5 billion euros ($4.5 billion). Coming into the day, it was expected that 10 banks would fail.
Investor reaction was muted for a good reason: the tests were rigged! The CEBS stress tests didn't include a risk that many believe still persists: that of a sovereign default. How would these banks do if a country like Greece defaulted? Perhaps we'll never have to know, but when the game is rigged for a specific outcome, it sure is tough to trust the box score.
(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
Friday Market Note: European Economy Not Dead Yet
This morning, there's more evidence that the death of the European economy is overstated. Britain's Office for National Statistics said U.K. GDP rose 1.1 percent in the second quarter, nearly twice the consensus estimates for 0.6 percent growth. The result was nearly four times the pace of 0.3 percent in the first quarter, and the highest in four years. The uptick was due mainly to increases in business services and finance and a dramatic rebound in construction.
Today at noon, the Committee on European Banking Supervisors (CEBS) will release the results of the European bank stress tests, both on an aggregated and on a bank-by-bank basis. Ninety-one banks were poked and prodded to determine whether they had to raise additional money. It's expected that banks in Greece, Spain, Portugal and Germany will need the most money.
A few companies reported earnings before the bell: both Ford and Verizon beat profit and sales estimates. Continue »
Analysis: Fed Can Still Help the Economy
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
"No Fed Plans To Provide More Support, Bernanke says," so said The New York Times. The article described Federal Reserve Chairman Ben Bernanke's semi-annual testimony before the Senate Finance Committee yesterday.
Ben Bernanke
/ CBSWith a good night's sleep, investors are rethinking their reaction to Bernanke's comments this morning, driving stock indexes higher. In fact, the Fed still has plenty of ammunition to stimulate the economy and Helicopter Ben is just the guy to do it. (This is a reference to Bernanke's famous 2002 speech, when he said that to fight deflation, "the U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost." He was referring to a statement made by economist Milton Friedman about using a "helicopter drop" of money into the economy to fight deflation.)
With interest rates at zero, some argue that the Fed is out of bullets. Really? Not to Helicopter Ben! To wit, the Fed can:
buy other government debt, which would lead to lower interest rates
delay selling $1.25T of mortgage-backed securities it owns
announce long-term intentions regarding short-term rates
raise the long-term inflation target
Don't count out Ben's ability to be creative. This was the guy that pulled out all the stops in the heat of the financial crisis and who has spent his career preparing to fight the bogey man called deflation. When Bernanke says that the Fed is prepared to act, perhaps we ought to trust that short of a helicopter, the Fed Chief will do everything he can to infuse the economy with money.
(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
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