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Best Buy Cuts Profit Outlook

Thu, 13 Nov 2008 21:00:00 EST

A warning from Best Buy has renewed concerns about the economy. Best Buy CEO Brad Anderson says this is "the most difficult climate" ever seen by the company. The only good news behind that is it could mean consumers will be treated to big discounts this holiday reports the AP.

"Rapid, seismic changes in consumer behavior have created the most difficult climate we've ever seen," Chief Executive Brad Anderson said in a statement. "Best Buy simply can't adjust fast enough to maintain our earnings momentum for this year."

But Best Buy's misfortunes may spell opportunity for deal-seeking shoppers, especially during the traditional Black Friday shopping extravaganza on the day after Thanksgiving.

Morningstar analyst Brady Lemos said he expects Best Buy to offer deep discounts on products to try to drive sales and keep customers coming into stores.

"It's big news for consumers," he said. "I think they'll want to sell as much as possible."

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Stocks Fall Over 5%

Thu, 6 Nov 2008 21:00:00 EST

The news that Barack Obama is the President-Elect was not enough to motivate people to buy stocks again. Reuters report that Wall Street suffered a 5 percent retrenchment. Concern about the economy is also causing a continued downward movement in oil prices.

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Warren Buffett on Fear an Investing

Sat, 25 Oct 2008 18:00:00 EST

Katie Couric reports that despite continued signs of an economic downturn Warren Buffett thinks it is a good time to buy. Warren Buffett says "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."

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Grim Bear Market Continues as Dow Plummets

Thu, 9 Oct 2008 16:53:00 EST

A year ago the stock market was at a healthy 14,164.53. Today the story is much different. The DOW is down about 40% from its high a year ago. That is a lot of value lost in this terrible bear market.

Today was another down day. The DOW fell over 650 points and the Nasdaq fell over 95 points. It went under 9,000 and just kept falling.

Dow: 8,579.19 -678.91 (-7.33%)
Nasdaq: 1,645.12 -95.21 (-5.47%)
S&P 500: 909.92 -75.02 (-7.62%)

GM was one of the big losers today. GM shares were down over 30% on the day.

This graphic from Marketwatch tells the story of the huge difference for investors between today and one year ago.

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Dow Plummets Over 500 Points

Tue, 7 Oct 2008 22:15:00 EST

Stocks tanked today despite the recent bailout and the likelihood of a interest-rate cut. The Dow sank over 500 points and the Nasdaq continued to get beat-up by the ongoing bear market. Here's today's ugly numbers

Dow: -508.39 points (-5.1%) to 9,447.11
Nasdaq: -108.08 points (-5.8%) to 1,754.88
S&P 500: -60.66 points (-5.7%) to 996.23

Marketwatch quotes Tony Crescenzi, chief bond market strategist at Miller Tabak & Co., who says investors are "clamoring for interest rate cuts."

Equities remained sharply lower as minutes from the Federal Reserve's last formal meeting revealed rate cuts were put on the table at the mid-September gathering, and after Fed Chairman Ben Bernanke in a speech opened the door for a possible interest-rate cut soon.

"Despite its scale, the Federal Reserve's massive injection of financial liquidity of late and its announcement of a new facility that will purchase commercial paper is not registering with investors who appear to be clamoring for interest rate cuts instead," said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co.

Reuters recaps today's ugly day on Wall Street.

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Worst Week For Wall Street Since September 2001

Sat, 4 Oct 2008 21:00:00 EST

U.S. stocks had their biggest weekly decline since September 2001 as we head into Monday. The Dow fell over 7% and the Nasdaq lost over 8%. This is despite the bailout rescue plan passing in the House on Friday. It has also already being signed by President Bush. Worries remain about the economy and there are still concerns we will enter a recession.

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Is Your Money Safe?

Fri, 3 Oct 2008 18:30:00 EST

CNBC's Erin Burnett explains how safe your money and offers analysis on the safety of FDIC-backed bank accounts, 401(k)s, and IRAs. The advice is still the same says Burnett. She says to pay down debt and put a couple months salary in a savings account in case you lose your job. She also says to max out your contributions to your 401k.

Update 10-6-08: Some more bank savvy advice here from the Boston Herald.

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Can you Bear the Bear Market?

Wed, 1 Oct 2008 21:00:00 EST

Here's a Wallstrip video about whether or not you can bear the recent economic downturn. This was recorded back in August before the stock market became even more unbearable.

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Dow Plummets After Congress Rejects Bailout Bill

Tue, 30 Sep 2008 15:40:00 EST

It was an ugly day on Wall Street. The day started in negative territory with more negative economic news. The losses dramtically grew after the House rejected the $700 billion bailout bill. This sent stocks down rapidly and the Dow ended up falling a record 778 points. The Nasdaq was also pounded - it fell 199+ points and lost over 9% on the day. Here are some of the headlines about the huge stock drop.

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Stocks Tumble Again; Nasdaq Loses Nearly 5%

Wed, 17 Sep 2008 17:30:00 EST

Stocks tumbled again today despite the Fed's $85 billion monster loan to AIG yesterday. There are concerns about Goldman Sachs Group Inc. and Morgan Stanley. There are also worries that there could be another problem oustanding like AIG or Lehman Brothers.

Dow: -449.36 (-4.06%)
Nasdaq: -109.05 (-4.94%)
S&P 500: -57.20 (-4.71%)

Washington Mutual (WM) has apparently put itself up for sale. An MSNBC article discusses the fear that is gripping the marketplace as investors worry another shoe could drop.

"People are scared to death," said Bill Stone, chief investment strategist for PNC Wealth Management. "Who would have imagined that AIG would have gotten into this position?"

He said the fear gripping the markets reflects investors' concerns that AIG wasn't able to find a lifeline in the private sector and that Wall Street is now fretting about what other institutions could falter. Over the past year, companies including Lehman and AIG have sought to reassure investors that they weren't in trouble, and now the market isn't sure who can and can't be trusted.

"No one's going to be believing anybody now because AIG said they were OK along with everybody else," Stone said.

The two independent Wall Street investment banks left standing - Goldman Sachs Group Inc. and Morgan Stanley - remain under scrutiny, as does Washington Mutual Inc., the country's largest thrift bank. Morgan Stanley revealed its quarterly earnings early late Tuesday, posting a better-than-expected 7 percent slide in fiscal third-quarter profit. It insisted that it is surviving the credit crisis that has ravaged many of its peers.

A Bloomberg story says some of the problems today have to do with bank lending seizing up.

"It's ugly," said Michael Mullaney, a Boston-based money manager for Fiduciary Trust Co., which oversees $10 billion in stocks and bonds. "It's about the worst I've seen it in 25 years. You have to have free-flowing credit to lubricate the system. That's not happening right now."

Marketwatch is reporting that the Wall Street Journal says Citigroup and Wells Fargo may be interested in buying WaMu.

One bright spot on the day was gold which scored its biggest 1-day increase ever. Gold prices climbed $70 to settle at $850.50 in the regular session. Gold prices also climbed another $20 in after-hours trading.

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Fed Bails Out AIG With Monster Loan

Tue, 16 Sep 2008 18:00:00 EST

The U.S. Federal Government is lending $85 billion to save struggling insurance giant AIG. Reuters reports that the Fed will receive a near 80% equity interest in AIG in return.

The Fed said under the two-year facility the U.S. government will receive a 79.9 percent equity interest in AIG and has the right to veto payment of dividends to common preferred shareholders in the deal, which has the full support of the Treasury Department.

"The Board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said in a statement.

The Fed said the loan, secured by all assets of AIG and its primary non-regulated subsidiaries, was designed to assist the insurance giant in meeting its obligations as they come due.

There were concerns that if AIG had continued its downward spiral and filed bankruptcy that the repercussions may have ricocheted around the financial world. However, the deal raises questions about how much of a helping hand the Fed should be lending. The Reuters story does say that the AIG loan is expected to be repaid by proceeds from sales of AIG's assets. CNN/Money also has a story about the FED's loan to AIG.

Shares of AIG were still down 17% on the day. But the stock market ended up closing higher on the news of the deal. The DOW climbed +141.51 regaining some of yesterday's losses. The Fed also left insurance rates unchanged today. The Nikkei has also rebounded upon news of the Fed intervention to save AIG.

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Dow Plunges 500 Points

Mon, 15 Sep 2008 16:42:00 EST

Everyone was expecting a bad day today and they were right. The Dow plunged 500 points on the news that Lehman Brothers would be near bankruptcy and on the news that Bank of America would be acquiring Merrill Lynch. There are also major concerns about insurer AIG and WaMu. AIG's shares lost over 50% on the day. Hurricane Ike slamming the southeast Texas coast and forcing the shutting of several oil refineries may also have helped exacerbate the downward spiral in the stock market today.

Fox Business called it an epic selloff. Bloomberg says it is the biggest drop since 9/11. Time says the drop was the sixth largest ever for the Dow.

The stock market has suffered one of its worst days in years as investors reacted to a stunning reshaping of the landscape of Wall Street that took out two storied names: Lehman Brothers Holdings Inc. and Merrill Lynch & Co.

The Dow Jones industrials are down more than 504 points, their sixth-largest point drop ever and their worst showing since they lost 508 in the October 1987 crash.

Investors were shaken by Lehman's bankruptcy filing and what was essentially a forced sale of Merrill Lynch to Bank of America for $50 billion in stock.

The DOW was not the only index in negative territory.

Dow: -504.48 (-4.42%)

Nasdaq: -81.36 (-3.60%)

S&P: -59.01 (-4.71%)

Politically, Barack Obama was quick to blame the financial woes on Bush policies that he says John McCain also supports. President Bush says the economy will be able to handle the financial turmoil. Some positive news came at the end of the day when New York Governor David Paterson announced that AIG would be allowed to use $20 billion of assets held by its subsidiaries.

More coverage of today's stock plunge can be found at MarketWatch, CNBC, MSNBC, AP, TheSTreet.com, SmartMoney and CNN Money.

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Greenspan Says This is the Worst Economy He Has Ever Seen

Sun, 14 Sep 2008 20:30:00 EST

The Huffington Post reports that former Fed chairman Alan Greenspan was on ABC News and when he asked about the economy he said it was the worst economy he had ever seen his his career.

"Oh, by far," Greenspan said, when asked if the situation was the worst he had seen in his career. "There's no question that this is in the process of outstripping anything I've seen and it still is not resolved and still has a way to go and, indeed, it will continue to be a corrosive force until the price of homes in the United States stabilizes. That will induce a series of events around the globe which will stabilize the system."

Appearing on ABC's This Week, Greenspan would not definitively say whether the government should come to the rescue of Lehman Brothers, which has been forced to consider a possible sale after its stock shares plunged drastically this past week. Instead he called the situation surrounding the investment bank -- and the bailout that occurred this past spring of Bear Stearns -- as a "once in a half century, probably once in a century type of event."

The latest news is that there will not be a buyer for Lehman Brothers as previously hoped. Lehman Brothers will likely file for bankruptcy protection. There is also the possibility that Bank of America steps in to buy Merrill Lynch. Monday will be a franctic day on Wall Street as the stock market tries to make sense of the financial turbulence.

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Talks Continue in Search for Lehman Brothers Buyer

Sat, 13 Sep 2008 22:00:00 EST

Talks are continuing this weekend to try and secure a buyer and rescue Leman Brothers. The Fed is expediting the discussion. A couple companies mentioned that might rescue Lehman Brothers by buying Lehman's "good assets" include Barclays PLC and Bank of America. The Wall Street Journal reported that the day ended without a resolution.

After 6 p.m., the formal meeting ended for the day with no resolution, though some participants stayed behind to continue talking. "Senior representatives of major financial institutions reconvened on Saturday with U.S. officials at the New York Fed. Discussions are expected to continue tomorrow," said a spokeswoman for the Federal Reserve.

At about 8 p.m., New York Fed President Timothy Geithner was still at the bank's headquarters. Officials from the New York Fed and various banks were expected to continue working through the night.

Under one plan, either Barclays PLC or Bank of America Corp. would buy Lehman's "good assets", such as its equities business, people familiar with the matter say. Lehman's more toxic, real-estate assets would be ring-fenced into a "bad" bank that would contain about $85 billion in souring assets. Other Wall Street firms would try to inject some capital into the bad bank to keep it afloat for a period of time so that a flood of bad assets don't deluge the market, damaging the value of similar assets held by other banks and insurers. The banks are also looking for the government to somehow financially backstop the bad bank.

Reuters reports in the video below that United States Treasury Secretary is adamant that a deal be found and that there not be a government bailout.

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WaMu Shares Tumble 30%

Wed, 10 Sep 2008 18:00:00 EST

Washington Mutual (WAMU) shares plummeted 30% today over concerns the company may collapse. SFGate reports that stock price of the troubled bank has dropped over 90% in the past year.

"They are a company with fundamental problems that is getting the worst of the brunt of the market," said Jaime Peters, an analyst with Morningstar in Chicago. "That is scary because finance is all about confidence. "

The worst-case scenario would be WaMu failing - or coming to the brink, if Uncle Sam swooped to the rescue a la Bear Stearns. A collapse of the nation's largest S&L would be devastating. But Peters and others said they don't think the situation is that dire yet.

While WaMu has appeared troubled for months - its shares have plunged more 90 percent over the past year - recent events have brought it to the forefront of Wall Street's concerns. Since Monday, the stock price has been halved. On Wednesday it closed at $2.32 a share, down 98 cents or 30 percent.

SeattlePI.com says a couple issues contributing to the steep decline include a credit outlook downgrade from Standard & Poor's and concern that accounting rule changes will make it harder for WaMu to find a buyer.

The 98-cent a share loss, leaving the stock at $2.32 a share, came after drops of 82 cents a share Tuesday and 15 cents a share Monday, all following the naming of a new chief executive and disclosure of an agreement with federal regulators calling for a new business plan.

News service reports attributed the fall to factors such as Standard & Poor's lowering its credit outlook on the company from stable to negative, speculation that accounting rule changes will discourage potential buyers, the Office of Thrift Supervision order, and Lehman Brothers' $4 billion loss and plan to sell all or parts of the company

ABC's headline asks "Is WaMu Next?" implying that WaMu may be the next bank to fail in what has been a troubling series of bank failures resulting from the credit crisis. It wasn't a very good day for other financials either but the day was the worst for WaMu. More discussion of the WaMu's troubles can be found here, here, here, here, here, here, here, here, here, here, here and here.

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Lehman's Plunges Over 40%

Tue, 9 Sep 2008 14:00:00 EST

Reuters is reporting that shares of Lehman Brothers Holdings Inc (LEH) have plunged over 40%. The plunge has erased $4 billion of market value. The plunge began after Dow Jones Newswire broke the news that a potential acquirer of Lehman's had ended talks with the brokerage firm.

Shares began falling after a Dow Jones Newswires report that the chairman of South Korea's top securities regulator, Jun Kwang-woo, had said talks between Lehman and KDB had ended. A spokesman for the regulator denied the report, telling Reuters that Jun never made any such declaration.

The Dow article also quoted an unnamed government official as saying KDB had decided not to invest in Lehman.

"The market fears that no one will inject capital in the company," said Nick Kalivas, equity market analyst at MF Global Research in Chicago.

In afternoon trading, Lehman shares were down $5.95, or 42 percent, at $8.20 on the New York Stock Exchange.

The slide wiped out more than $4 billion of market value, based on reported shares outstanding, and was a factor in broad declines in major U.S. stock indexes. Prices of safe-haven U.S. Treasuries rose. Lehman shares touched their lowest level since October 1998, Reuters data show.

Lehman's plunge has also impacted the Dow which is currently down over 200 points. There is said to be concern about a Lehman's downgrade. More coverage of the Lehman Brothers news can be found at Bloomberg, Deal Journal, Barrons, Guardian, Forbes and Motley Fool.

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Stocks Plummet on Negative Retail News

Thu, 4 Sep 2008 23:14:00 EST

Hopes that the economy was going to rebound from its long slump and from the credit crisis were shattered Thursday by negative retailer reports and concerns about Friday's jobs report. The Dow fell over 340 pounds as investors sold on the negative news. It looks like the bears have returned until we can get some good news again.

The market was already nervous as it waited for the government to release its August employment report on Friday. So news from the nation's major retailers that shoppers curtailed their spending last month due to higher gas and food prices came as a heavy blow.

Wal-Mart Stores Inc., the world's largest retailer, beat expectations because of its big discounts, but many teen retailers and luxury chains did poorly, a sign that consumers are spending mostly on essentials and putting discretionary buying on hold.

Meanwhile, the Labor Department said new applications for unemployment insurance rose by 15,000 last week from the previous week. That broadly missed expectations for a fourth-straight week of declines, heightening worries that the average American -- already feeling the effects of the weak housing market -- will have even less means to spend.

Here's a look at the damage:

The Dow fell 344 points to 11,188.

The S&P 500 fell 38 points to 1,236.

The Nasdaq fell 74 points to 2,259.

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FDIC Report Finds Number of Troubled Banks is Growing

Tue, 26 Aug 2008 16:00:00 EST

The AP reports that new data released by the Federal Deposit Insurance Corp. shows that there are 117 banks in trouble - the highest level in nearly five years.

Federal Deposit Insurance Corp. data released Tuesday show 117 banks and thrifts were considered to be in trouble in the second quarter, up from 90 in the prior quarter and the biggest tally since mid-2003.

The FDIC also said that federally-insured banks and savings institutions earned $5 billion in the April-June period, down from $36.8 billion a year earlier. The roughly 8,500 banks and thrifts also set aside a record $50.2 billion to cover losses from soured mortgages and other loans in the second quarter.

"Quite frankly, the results were pretty dismal," FDIC Chairman Sheila Bair said at a news conference, but they were not surprising given the housing slump, a worsening economy, and disruptions in financial and credit markets.

The majority of U.S. banks "will be able to weather" the economic and housing storms, with 98 percent of them still holding adequate capital by the regulators' standards, Bair said.

This weak report comes just a week after former IMF chief economist Kenneth Rogoff warned that a major U.S. banks would fail within months. Rogoff warned that, "We're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks."

Last Friday, Kansas-based Columbian Bank and Trust became the ninth bank failure this year. It sounds like we are not out of the woods yet. Here's a video about the bank failures and the new FDIC report.

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U.S. Oil Demand Plummets Says EIA

Tue, 12 Aug 2008 18:00:00 EST

Reuters reports that U.S. demand for oil fell 800,000 barrels per day (bpd) during the first half of 2008 compared with the same period a year ago. This was the biggest volume decline in 26 years according to the Energy Information Administration (EIA). You can see the EIA's report and outlook here.

In its latest monthly energy forecast, the EIA said the huge drop in demand was due to slower U.S. economic growth and the impact of high petroleum prices.

The drop in U.S. oil demand helped offset a 1.3-million bpd increase in petroleum consumption in nonindustrial countries during the first half of the year.

As a result, preliminary data shows that global oil consumption rose by 500,000 bpd in the six-month period, the EIA said.

The Energy Department's analytical arm sees continued falling oil demand, and for the first time is predicting that U.S. petroleum consumption in 2009 will be lower than this year, which would mark a drop in annual demand for three years straight.

Gas prices have also been falling according to the EIA's website and the AAA's Fuel Gauge Report. However, as the AAA's site indicates gas prices are still over a $1 above prices from a year ago. This means the trend of high gas prices remains high and that so far gas prices are probably just falling because the peak summer driving season has passed.

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Wall Street Cutbacks Impacting Restaurants?

Fri, 8 Aug 2008 15:40:00 EST

Fox Business reports in the video below that Wall Street firms are cutting back on perks. They had restaurant entrepreneur Alan Stillman on to discuss how this could impact his business and industry. Stillman said the cuts would be more likely to impact purchases of expensive bottles of wine than decrease restaurant visits.

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Federal Reserve Leaves Interest Rates Unchanged

Tue, 5 Aug 2008 21:00:00 EST

As expected the Federal Reserve has decided to leave interest rates unchanged. The New York Times reports that the Fed seemed to back away from its concerns about inflation which is surprising considering how much inflation has been rising over the past twelve months. It could be that lower oil prices are helping to ease the Fed's inflation worries.

Emphasizing the dangers to the economy, the Fed said in its statement that a substantial easing of interest rates in recent months, "combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth."

By a vote of 10 to 1, policy makers declared that inflation remained "of significant concern" - a description that seemed to give less importance to the inflationary risks of keeping rates low than the policy makers had at their meeting on June 25. The lone nay vote came from Richard W. Fisher, president of the Federal Reserve Bank of Dallas, who sought an immediate increase in the federal funds rate, a short-term rate that influences the cost of mortgages, car loans and a host of other consumer credit.

Mr. Fisher has maintained for weeks that the danger of an inflationary spiral warrant a rate increase even at the risk of further slowing a damaged economy.

But in a nod to Mr. Fisher's concerns, the policy makers' statement gave considerable recognition to his point of view that "the upside risks to inflation are also of significant concern."

"Inflation has been high," the statement also said, "spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain."

Marketwatch reports that retail shares jumped on the news. More discussion of the Fed's decision can be found at FoxBusiness.com, Forbes, Reuters, Bloomberg, AFP, CNNMoney.com and the Guardian.

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Stocks Climb as Bush Signs Housing Rescue Bill

Wed, 30 Jul 2008 22:00:00 EST

President Bush has signed a housing rescue plan into law. Home prices have been continuing to fall during the housing crises while foreclosures are still rising. A Marketwatch report says some Republican lawmakers were urging Bush to reject the rescue bill. Here are three of the main components of the new bill from Marketwatch.

allowing homeowners who cannot afford their monthly payments to refinance into government-backed loans through the Federal Housing Administration;
extending a line of credit to Fannie (FNM) and Freddie (FRE), the government-sponsored mortgage-finance titans;
modernizing the FHA, increasing the loan limit for FHA loans and increasing conforming-loan limits for Fannie and Freddie.

Stocks were up today even though oil prices starting climbing once again. The Dow climbed 186 points to 11,583 while the Nasdaq managed just a 10 point gain.

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Stocks Rally as Oil Falls to Two Month Low

Tue, 29 Jul 2008 21:00:00 EST

Today's stock market was almost a complete reversal of what occurred on Monday. The DOW climbed over 260 points and the Nasdaq rose over 55 points. Each index was up about 2.5% on the day.

U.S. stocks staged a solid rally Tuesday to more than recoup the prior day's steep losses, as consumer confidence rose and crude prices declined, offering some respite to ongoing concerns about the economy.

"These are good things and when you combine that with relatively low rates, maybe we can be happy at least one day this week," said Kevin Giddis, managing director, Morgan Keegan & Co.

The major stock indexes built on gains to end at or near session highs after data showing a better-than-forecast rise in consumer confidence and the price of crude fell nearly $4 a barrel.

The main reason for the optimism today was the fact that oil prices fell again. Oil closed at $122.19 a barrel on the New York Mercantile Exchange. It was a two-month low for oil as Reuters reports in the video below. If oil were to continue falling maybe the market could sustain something longer than a single day rally.

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Warren Buffett Thinks College Students Should Avoid Credit Cards

Sat, 26 Jul 2008 18:00:00 EST

Youngsters wanting to make money got some valuable advice from Warren Buffett who was visiting his local Dairy Queen for the launch of the new Girl Scouts Thin Mint Blizzard earlier this month. One of his suggestions to the young girls was to avoid credit cards - that's advice some adults would also be wise to follow.

Surrounded by a group of Girl Scouts in his hometown of Omaha, Buffett offered this tip for college students: "The biggest suggestion I have is to avoid credit cards. Interest rates are very high on credit cards. Sometimes they are 18 percent. Sometimes they are 20 percent. If I borrowed money at 18 or 20 percent, I'd be broke.... So if I had one piece of advice for young people generally it would be to just avoid credit cards," he said.

And what advice does Buffett have for a new investor? "I would do a lot of reading before I invested," he replied. "In other words I would prepare for it. I wouldn't jump in the water until I know how to swim.... I read every book the Omaha Public Library had about investing by the time I was 11."

On qualities Buffett looks for in employees? "The biggest thing I look for is if they have a passion for whatever they are going to do," he said.

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June Housing Slump Renews Fears of Recession

Thu, 24 Jul 2008 15:00:00 EST

Reuters reports in the video below that the biggest drop in existing home sales in 10 years has reignited concerns about the economy. Stocks were hammered today on news that existing home sales fell 2.6 percent in June. Weekly jobless claims also climbed past the 400,000 mark. The Dow dropped 283 points; the Nasdaq fell 45 points and the S&P 500 lost 29 points.

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Stocks Fall as Dollar Hits New Low

Tue, 15 Jul 2008 10:25:00 EST

The Dow dropped well below the 11,000 mark as Fed Chairman Bernanke warned that the economy faces numerous difficulties.

Bernanke told Congress the U.S. economy is faced with "numerous difficulties," such as strains in financial markets, a shaky job market and ongoing weakness in the housing market. These difficulties are persisting despite the Fed's massive interest rate cuts and expanded lending efforts over the past year.

U.S. officials' comments come only days after the Fed and the Treasury said they would lend financial support to mortgage financiers Fannie Mae and Freddie Mac if necessary. The well-being of the government-chartered companies has drawn Wall Street's attention in recent weeks as the companies together hold or guarantee more than $5 trillion in mortgages -- nearly half the nation's total.

Investors are worried about a number of things - among them the weak dollar that just hit another new low according to Bloomberg.

"The markets are reacting negatively to the renewed credit crisis in the U.S. and that's hurting the dollar across the board," said Roberto Mialich, a Milan-based currency strategist at Unicredit Markets & Investment Banking, a unit of Italy's largest lender. "The market is speculating that Bernanke will offer a gloomy outlook for the U.S. economy."

The dollar fell to $1.6038 per euro, the lowest since the euro's inception in 1999, and was at $1.6006 as of 7:22 a.m. in New York, from $1.5908 yesterday. The U.S. currency also dropped to 104.61 yen, the lowest level since June 9, from 106.14 yen yesterday. The yen traded at 167.69 per euro, from 168.89 yesterday, when it weakened to 169.75, the lowest since the single currency's debut.

The dollar may fall to between $1.62 and $1.63 in the coming month, Mialich said.

Lately its been financial stocks getting the biggest drubbing. Stocks opened lower and they have remained in negative territory so far this monring.

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Dow Falls Under 11,000

Fri, 11 Jul 2008 14:00:00 EST

Concern over Fannie Mae and Freddie Mac combined with rising oil prices has helped push the Dow below the 11,000 mark for the first time in over two years. Shares of Fannie Mae and Freddie Mac have plunged nearly 50% today. The AP reports that investors were not impressed with remarks by Treasury Secretary Henry Paulson. Some investors were hoping for a government bailout.

Investors seemed unimpressed by a statement from Treasury Secretary Henry Paulson, who said the government's focus is ensuring that Fannie Mae and Freddie Mac remain as presently constituted to carry out their mission.

The government-chartered companies at times each lost more than 40 percent on growing speculation that a government bailout is needed. A collapse of the two financiers would cause further shock to the financial system, and trigger more losses to banks and brokerages with significant holdings of mortgage-backed securities.

The troubles at Fannie Mae and Freddie Mac are just the latest depressing turn in a year-old credit crisis that shows no sign of ending, disappointing stock traders who just months ago who thought the worst was perhaps over.

The Dow fell as low as this morning 10,980.37. The last date the Dow traded below 11,000 was on July 25, 2006. Since falling below the 11,000 mark the Dow has climbed back just barely above it again.

Oil prices also remain near record highs. Concern that Israel may launch an attack on Iran are helping to boost oil prices.

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Vanguard Group Founder Jack Bogle Tells Investors to Stay the Course

Wed, 9 Jul 2008 18:00:00 EST

The Dow dropped more than 230 points today as concern over financials continued. The Vanguard Group Founder Jack Bogle told investors to change nothing in the video from Fox Business below. He dismissed the idea of "doubling down" and said investors should focus on staying the course. Bogle also said the market today is being driven by speculation.

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Starbucks to Close 600 Stores in U.S.

Tue, 1 Jul 2008 18:00:00 EST

MSNBC.com reports that leading coffee retailer now plans to close 600 stores in the U.S. Previously, they planned to close just 100 stores. It's a clear sign the economy is moving in a negative direction and that some consumers are cutting back on spending. The company may also let 12,000 employees go that work both full and part-time jobs.

The company said it now plans to close 600 company-operated stores in the United States, up from its previous plans to close 100 stores. The company also said it now plans to open fewer than 200 stores in its coming fiscal year.

The Seattle-based gourmet coffee retailer said the company used several criteria in deciding which stores to close, including whether they were profitable or expected to become profitable in the near future. In a statement, it added that "consideration was given to the impact of current and anticipated economic trends."

Starbucks, known for sometimes going so far as to open stores across the street from one another, has recently acknowledged that it may have lost some of its luster during a long period of rapid store openings and expansion into everything from breakfast sandwiches to movie promotions. The company also has been feeling the pinch from a down economy, which has made $4 coffee drinks less palatable for many Americans.

MSNBC also says Starbucks runs 16,000 Starbucks stores worldwide.

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Bank for International Settlements Foresees Deeper Downturn

Mon, 30 Jun 2008 11:40:00 EST

The Bank for International Settlements says that we could be in for a deeper downturn than most people are expecting. They point to the credit crisis and rising inflation as the reason for their gloomy view.

"In the aftermath of a long credit-driven boom, it would not be surprising to see turmoil in financial markets, slowing real growth and temporarily rising inflation," the BIS said in its annual report.

"While difficult to predict, their interaction does appear to point to a deeper and more protracted global downturn than the consensus view seems to expect."

The Basel-based bank added that the current "consensus view is still that the global economy will slow only modestly further in 2008" and that growth continued to be strong in the euro zone, Japan, and major emerging market economies.

Often called the central bank of central banks, the BIS said during its last fiscal year central banks worldwide reacted to the financial and monetary policy situation differently, and that given their countries' different economic situations, a "one size fits all" monetary policy can't necessarily be predicted or suggested.

The bank said that with inflation rising, a global bias toward higher interest rates was probably appropriate. Higher interest rates can cool inflation, but run the risk of lower growth.

An article in Bloomberg suggests that today's stock market situation is more like 1974 than it is like 1994. Everything seems to point toward a significant downturn.

"Between inflation and the liquidity crisis, this is one of the toughest markets I've seen," said Dreman, who oversees about $15 billion in Jersey City, New Jersey. "But it's not a market you sell into. Any losses you take by being too early will be more than offset by buying cheaply."

Asian stocks were down again recently. Oil prices opened higher again today setting another new record.

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Consumer Confidence Index at 16-Year Low

Tue, 27 May 2008 18:00:00 EST

The BBC reports that the Consumer Confidence Index is at a 16-year low. The index is currently at 57.2 - a fall from the 62.8 mark in April. The graph on the right from the Conference Board's release shows just how much the Index has fallen.

The Conference Board blamed the pessimism on the short-term outlook for the US economy as well as weakening business and job conditions.

The figures tell a similar story to the University of Michigan's Index, which hit a 28-year low in May.

"There is a fear the economy is in a recession or going into one and people may find their jobs in jeopardy," said David Coard from the Williams Capital Group in New York.

"When you talk to people on the street they seem to be really being squeezed at the pump and the supermarket while their income isn't keeping up."

Sadly, a turnaround in the short term is unlikely.

"Consumers' inflation expectations, fuelled by increasing prices at the pump, are now at an all-time high and are likely to rise further in the months ahead," said Lynn Franco, director of the Conference Board Consumer Research Center.

"As for the short-term outlook, the Expectations Index suggests little likelihood of a turnaround in the immediate months ahead."

Warren Buffett has also been gloomy on the economy lately saying that the recession will be "long and deep."

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Dark Pools Growing in Popularity

Fri, 16 May 2008 18:00:00 EST

Reuters says anonymous trading via dark pools is growing in popularity. Pension and hedge funds are some of the biggest users of dark pools. These funds use dark pools to move large amounts of stock without revealing who they are.

When pension funds and hedge funds want to sell or buy shares...usually thousands at a time...they prefer to do it anonymously....and usually.. on an electronic trading system. These so called "dark pools" are changing the face of trading but could systems designed to make trading more efficient have the opposite effect?

Reuters says these dark pools make up about 10% of the trade. Reuters explains how they work in the video below. Wikipedia lists several of these dark pool crossing networks.

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Baby Boomers Feeling More Financial Stress

Mon, 12 May 2008 18:00:00 EST

An article from U.S. News published on Yahoo's website says that many baby boomers are concerned about retirement. Even those with $1 million saved for retirement are getting more concerned. This concern is growing as the economy worsens. The article says a survey from Bell Investment Advisors and Opinion Research Corp. found that nearly 30% of 60-year-old baby boomers with investable assets of $1 million or more say they "feel more financial stress now than six months ago."

But even millionaires aren't immune to making irrational investment choices as the media endlessly report a looming recession. Some 23 percent of affluent boomers say they are planning to change their investment strategy in response to a potential recession, with 69 percent seeking more conservative investments like money market funds and bonds. Only 21 percent said they would invest more in stocks or stock mutual funds.

That could be a mistake, says Jim Bell, founder and president of Bell Investment Advisors. In many cases, these conservative investments barely keep pace with inflation, especially as interest rates on consumer products like certificates of deposit have dropped with each Federal Reserve cut in interest rates.

"Bonds and cash have the false allure of safety since their principal fluctuates less than that of equities, but equities along with commodities will better allow boomers to maintain their standard of living over decades," Bell says. "Boomers must learn to live with the volatility of equities if they want to keep their purchasing power intact."

You can find a couple retirement calculators online here and here. What is probably fueling concerns is the rising prices in basics like gasoline and food. Inflation like this can quickly overtake the pace of a slow-growing CD. Even a solid investment strategy can be thwarted by rapidly growing inflation. This is why the government needs to get a handle on it and get these fuel costs in check.

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Falling Dollar Equals Rising Oil Prices

Thu, 17 Apr 2008 08:00:00 EST

Josh Landis and Mitch Butler of the "Fast Draw" team take a close look at what determines the price of oil and the impact price fluctuations have on the overall U.S. economy. The main factor driving up the prices is falling value of the U.S. dollar. Since 2001 the value of the U.S. dollar has been plunging against currencies like the Euro. Speculators also help to drive up oil prices.

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1st Quarter Was Brutal

Wed, 2 Apr 2008 08:00:00 EST

The 1st Quarter of 2008 is gone and that will be a relief to investors. Here's a look at the damage done in Q1.

Dow fell 7.6%

Nasdaq fell 14%

S&P 500 fell 9.9%

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