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3M Lowers Year Outlook on Slowing Global Growth

Americans are buying less LCD TV's and electronics, putting pressure on companies like 3M, who rely heavily on those types of products to drive their business. 3M lowered its expectations for earnings this year mainly because of decreasing imports from Asia. Many of the company's products are made overseas and sold here in the U.S., making up 70 percent of the company's sales.

Outlooks from 3M show that earnings in the third-quarter fell about 2 percent. However, revenue rose 10 percent, which was mostly due to gains and acquisitions from foreign exchange. The company's biggest revenues come from its transportation and industrial unit, which grew in double-digits. 3M also experienced double-digit growth in its sales in health care, security, safety and protection services.

Post-its and Scotch tape are the products most familiar to consumers, as well as other office products, and showed a 4.6 increase in revenue. The gains in office products were not enough to balance the loss in graphics sales for the LCD TV market, which fell 14 percent.

See Link : http://finance.yahoo.com/news/3M-lowers-year-outlook-on-apf-3130734585.html?x=0

Wall St. Down on Rising Concerns over Europe

Stocks are falling in reaction to the news that the meeting by the euro zone finance ministers has been cancelled. Once again, economists are having doubts about European leaders' efforts on minimizing the regions debt. This puts more fear in the market with people worrying about income and job prospects.

Larry Peruzzi, senior equity trader at Cabrera Capital Markets in Boston, stated, "This comes as a shock because we thought they were nearing an agreement."

Shares are dropping as people react to Europe's inability to make a plan of action on the regions debt. Netflix shares continue to fall at an alarming rate to $75.99, more than 36%. Netflix is losing more customers than what was expected due to its price increase and cancelled plans to split the company.

See Link: http://beta.finance.yahoo.com/news/stock-index-futures-seen-mixed-104653385.html

Home Building Jumps 15 Percent in September

September was a good month for home builders who started new projects at the fastest pace in over a year. This shows to be a promising sign for the economy.

Volatile apartment construction has been a driving force for most of the gain. Although this could encourage economic growth and create more jobs, it doesn't necessarily mean that the housing market is coming out of its slump. According to the National Association for Home Builders, for every home that is built, an average of three jobs is created for the year and about $90,000 in tax revenue.

Despite the jump in home building, builders with low collateral are struggling to compete with foreclosures and short sales.  Consumers find it is a better deal to buy a previously occupied home rather than a new home by at least 30%. Plus, many Americans who have lost their jobs have been forced to move into apartments and abandon their homes, continuing the vicious cycle.

See Link: http://finance.yahoo.com/news/Home-building-jumps-15-apf-2196751386.html?x=0

Violence Erupts as 2-Day Strike Shuts Down Greece

Greek citizens are livid from more than a year and a half of austerity bills. Hundreds of young adults vandalized stores in central Athens and had altercations with riot police during an egregious government rally against new austerity policy's that were voted in approval by Parliament on Wednesday. The rioting started instantaneously during a nationwide 48-hour strike that temporarily put a halt on services from flights, banks, customs offices, stores and ferries.

The Austerity bill holds measures including tax hikes, more salary and pension cuts for public servants and suspensions on collective labor contracts. Greek officials have been saying that that the government will run out of money to pay its debt by mid-November and needs help from other European Banks. However, European banks won't give Greece more money without measures being put into place to control the countries debt.

Nikos Anastasopoulos, head of workers' union for an Athens municipality, stated, "We just can't take it anymore. There is desperation, anger and bitterness."

The bill won its first round of voting from a 300-member parliament, a second round of votes must be done before the bill is passed and put into effect. The Parliament has received threats from a communist party-backed union that they will encircle it and attempt anything to prevent members from entering the building for the second round of votes.

Violence still continued long after the strike was over. Police were fighting burning barricades created by the young rioters that came close to the tourist town of Monastiraki.The capital's streets were filled with debris and thick black smoke coming from burning bus-stops and trash.

European leaders are still cultivating a strategy to Greece's debt crisis. Leaders are starting to realize that the current bailout for Greece has not helped as much as they hoped and a second bailout will be needed. However, before a second bailout is given, measures will need to be taken on how the private sector will be affected from the bailout.

See Link: http://finance.yahoo.com/news/Greece-Riots-as-austerity-apf-4013630638.html?x=0

Stocks Slide as Germany Cools Hope for Debt Deal

Last week stock markets rose in reaction to hopes that a strategy to fix the debt crisis in Europe was being developed. Yesterday, the stock market fell as German leaders showed little progress on plans to minimize Europe's debt. 

Expectations that a plan of action would be completed by October 23rd showed to be too optimistic, resulting in emotional let downs and dropping stocks. The U.S. stock index hit an all time low for the year on Monday, making it the worst day since Oct. 3rd. 

Jason Pride, the director of investment strategy at Glendale, a wealth management firm in Philadelphia, stated, "It's completely a reaction to Germany. The reality is everybody is hanging on to what Europe's doing."

French and German leaders gave false hope by promising to create a solution to Europe's debt crisis by the end of October, exciting stock markets around the world. Some German leaders are planning to have a strategy formulated by Sunday, while other leaders say plans to tackle to debt crisis could last well into the next year. 

Everything relies on Greek government bonds, which have been the driving force behind the dramatic swings in the stock markets lately. If Greece defaults on its debt, then the premiums on Greek bonds plummet, and will cause the banks who own them to take heavy losses. This could result in banks not being able to lend to each other, which would result in another crisis similar to that experienced in 2008. The European debt crisis holds the global financial system in its hands, which could fall through its fingers like sand.

Source: http://finance.yahoo.com/news/Stocks-slide-as-Germany-cools-apf-2139606591.html?x=0

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Wells Fargo 3Q Profit Up 21 Percent but Revenue Slips

Wells Fargo & Co. reported that profits rose 21 percent during its third-quarter. However, the bank reported that its revenue for the period was lower than they predicted, resulting in shares slipping in pre-market trading.

This has caused for concern for banks, as new banking procedures are coming into effect, such as lower overdraft fees and making it more difficult to raise interest rates on credit cards. Money earned from fees and charges provide banks’ with non-interest profits. Wells Fargo's service charges on their deposit accounts fell 3 percent in the quarter and mortgage banking fees dropped 27 percent.

Interest rates are at record lows, which also contributes to lower revenue for banks. Net interest income has dropped 5 percent, which means banks are earning less money from deposits and loans. Wells Fargo is also putting less money aside to pay for uncollected loans. This dropped 47 percent shows that both consumer and commercial clients are getting better at paying back their debt.

View Source: http://finance.yahoo.com/news/Wells-Fargo-3Q-profit-up-21-apf-192339940.html?x=0

Companies Posted Fewer Job Openings in August

Fewer jobs were advertised in August by employers then the previous month. Employers may be limiting the amount of hiring due to the unstable stock market and fears that another recession is around the corner. 

Not only are fewer jobs being offered, competition for these jobs is rising. In a good economy, the ratio of people applying to jobs and jobs being offered is 2 to 1. Currently it is 4.6 to 1.

Jeff Joerres, Chief Executive of ManPowerGroup, which is currently the world's largest staffing agency, stated, "As soon as companies hear talk of a 'soft patch,' they hit the pause button on hiring."

This is causing employers to fill available positions at a slower rate; due to not finding "qualified applicants" to fill the position. Employers are also offering less pay for the positions available. This also may be a reason why employers cannot find qualified candidates to fill the positions. These days it may take up to 3 months to fill a position, if it is filled at all. 

See Link: http://finance.yahoo.com/news/Companies-posted-fewer-job-apf-2714889148.html?x=0

PepsiCo 3Q Profit Climbs on Snack and Beverage Sales

PepsiCo Inc. has gained revenue due to raising its prices and growing overseas.

Higher costs of fuel, packaging and ingredients have caused many companies in the United States to raise prices. Along with raising prices, many companies in the U.S. have had to cut back on spending, forcing them to expand overseas. This has turned out to be a recipe for success for PepsiCo Inc. who has shown higher revenue in the 3rd quarter, despite a shaky economy. The company has shown a 4 percent profit for the 3rd quarter, which beat Wall Street's predictions.

PepsiCo showed its largest gains in Europe, which showed a 37 percent increase. Asia, Africa and the Middle East all showed gains of 25 percent while Mexico and Brazil showed gains of 19 percent. In North America, snack foods like Frito lay, Doritos, Cheetos and Ruffles all showed gains of 2-4 percent despite higher prices and cost controls.

The company is brainstorming, trying to think of new ways to attract the customers in the U.S. who have cut back on their spending but still want to buy Pepsi products. The Company has also stated that they will be raising prices further on select products during the fourth quarter.

See Link: http://finance.yahoo.com/news/PepsiCo-3Q-profit-climbs-on-apf-1516145140.html?x=0

ECB Slows Down Government Bond Buying Further

Last week in Frankfurt, Germany, the European Central Bank bought 2.3 billion euros ($3.1 billion) in government bonds in an effort to keep pressure off the shaky governments suffering from the eurozone debt crisis.

In response to the debt crisis, the ECB has been lending substantial amounts of cash against collateral to the banks so that they can operate day to day.

Despite the effort to keep the banks afloat, the bond purchases have caused controversy between bank officials, resulting in the resignation of Juergen Stark, the bank’s chief economist.

The bond purchases are a high risk for banks. If they cannot be paid off, it will put the ECB in an uncomfortable position of supporting faltering governments.

This has forced Beligum, Luxembourg, and France to rescue Dexia because of their ownership in large amounts of Greek and Italian bonds. Greece's Proton Bank has already been taken over and is under reconstruction from the country's bank rescue fund.

Banks are fearful that the debt crisis could spiral out of control if Greece and other governments default on their payments.
Consequently, banks are depositing more and more money into the ECB. European banks have already deposited 255.6 billion euro ($347.1 billion), this is the highest it has been all year, and has surpassed the previous year’s amount.

European banks feel more secure after depositing money into the ECB rather than lending it to each other.

If Greece can’t pull itself out of debt, how could this affect the price of gold? 


Call in for our Collapse of Gold Prices report to find out.

See Link: http://finance.yahoo.com/news/ECB-slows-down-government-apf-4128206917.html?x=0

Stocks Jump on European Pledge to Help Banks

The leaders in France and Germany have promised to strengthen the European banks, trying to stop a global debt crisis caused by Greece not having enough money to pay its debt. In response, U.S. and Europe stocks have risen sharply.

Micheal Sansoterra, a portfolio manager for Silvant Capital management in Atlanta, stated "The more we can put our arms around the problem with a little more detail, the better; and time frames usually help."

With the new help from France and Germany, the Euro strengthened against the U.S. dollar, showing improvement after the most recent wave of aid. One bank desperately seeking rescue is the Franco-Belgian bank, Dexia. Dexia owns large amounts of government bonds, which rely on the financial status of Greece. If Greece defaults on its debt, then Greek bonds lose their value, resulting in detrimental losses. U.S. banks would also be affected if Greece defaults on its debt because of their close ties to European banks and ownership in large amounts of Greek bonds.

European banks are so apprehensive that another credit crunch could happen, they are not lending to each other, putting more pressure on overextended banks, like Dexia.  This scenario led to the ECB offering unlimited one-year loans to the regions banks until 2013 so they can still have credit.

See Link: http://finance.yahoo.com/news/Stocks-jump-on-European-apf-1432038199.html?x=0

ECB Offers New Emergency Support To Banks

The European Central Bank is lending an unlimited amount of short term loans to banks to keep the region from entering a credit crunch like the one that started the recession two years ago. The 12 to 13 month loans provided to the banks by the ECB will help European banks to keep lending between banks possible. The ECB is also buying euro40 billion ($53 Billion) in covered bonds in an effort to help banks raise funding.

The government debt crisis from Greece has exposed European banks to threatening losses and shaky finances. It is essential for daily business for banks being able to borrow between each other. However, the fear  is that the money being borrowed will not be repaid. These fears have become reality for Franco-Belgian Bank Dexia, who was bailed out once before and is now struggling again to raise funds to pay its debts.

The Eurozone economy has only grown 0.2 percent resulting in the worst crisis since WWII. Consumer and business spending is suffering due to lower incomes, higher taxes and governments having too much debt that will not be able to be paid.

See Link: http://finance.yahoo.com/news/ECB-opens-cash-taps-to-avoid-apf-2139268920.html?x=0

Retailers Report Solid Gains For September

Americans are shopping, but only when they are getting a deal. Consumers are taking advantage of big sales and discounts buying affordable luxuries last month. According to the International Council of Shopping Centers, revenue rose 5.5 percent in the month of September showing strong gains for big retailers like Target, Macy's and Limited brands.

Ken Perkins, President of Retail Metrics, stated, "Bargains drove the month. There were lot of deals to be had, and we expect to see that follow through the rest of the year."

Despite these strong increases in September, many retailers are showing concerns that shoppers are worried about unemployment, a weak housing market, and a tumultuous stock market. Thus, causing shoppers to look for the type of bargains that result in a significant drop in retailers' profits. 

See Link: http://finance.yahoo.com/news/Retailers-report-solid-gains-apf-814454991.html?x=0

Stocks Rise As Service Sector, Private Hiring Growing

Stocks rose for the second day in a row today after the U.S. service sector showed a continual increase, inspiring private companies to increase hiring. The U.S. service sector employs 90 percent of the workforce, which includes jobs in health care providers, banks, real estate and business other than manufacturing.

ADP, a payroll possessing company, stated that private companies added 91,000 jobs in September. ADP's numbers do not necessarily predict what the government's employment report will be, however, they do influence trader's expectations. Economists are still predicting that unemployment will remain current at 9.1 percent, despite the increase in stocks.

Some financial analysts are stating that the increase in the Stocks is because of a late day rally that was influenced by European officials implementing new efforts to support the region's struggling banks. If Greece defaults on their debt payments, then the European banks will take a huge loss causing Greek bonds to plummet in value. Many European banks have substantial holdings in Greek bonds. 

Rob Stein, head of Astor Asset Management, stated "The market is trading on sentiment right now, not fundamentals. People are hoping that the bounce yesterday means that we've hit a bottom, but the problems that were in the economy Monday haven't changed since then. 

See Link: http://finance.yahoo.com/news/Stocks-rise-as-service-sector-apf-3845343497.html?x=0

 

Greece Has Until Mid-Nov to Get Bailout Loans

Global markets are sinking due to worries that European banks will default causing another global recession. Greece is projecting to have enough money to pay pensions, salaries and bondholders through mid-November. Greece has continued to threaten that it would run out of funds in mid-October if it does not receive a rescue package of eurp8 billion.

If Greece is unable to pay European banks then this could cause a major credit crunch, pushing the global economy into another recession. The Greece government has implemented new measures to try and stall the default, including higher property taxes and civil service worker suspension with reduced pay. Greeks are outraged at these methods from the government. Even Greece government officials are voicing their concerns.

Most economists are predicting that it is highly unlikely that Greece will climb out of its debt hole which could cause European banks to take higher losses then presently planned in a second bail out deal.

See Link: http://finance.yahoo.com/news/Greece-has-until-midNov-to-apf-1533046240.html?x=0

Daily Economic Articles

1. China warns of trade war if U.S. bill passes:

http://news.yahoo.com/senate-takes-first-step-china-yuan-bill-001119095.html

Bring it on. It is easy to beat up on the U.S. from the shadows, let’s see how they like a face to face confrontation.

2. S&P 500 enters bear market on Europe worries:

http://news.yahoo.com/p-500-enters-bear-market-europe-worries-142523281.html

Socialism is great until you run out of money. Europe is out of money.

3. US futures fall ahead of Bernanke testimony:

http://finance.yahoo.com/news/Stocks-slip-ahead-of-Bernanke-apf-4010127047.html?x=0

If you listen to the Democrats in the meeting, you can hear them begging Bernanke to do a QE3.

4. Greece has until mid-Nov to get bailout loans:

http://finance.yahoo.com/news/Greece-has-until-midNov-to-apf-1533046240.html?x=0

Good chance they will default in December, Ireland also.

5. Gov't report: Fannie knew of 'robo-signing' in '03:

http://finance.yahoo.com/news/Govt-report-Fannie-knew-of-apf-3965362442.html?x=0

Fannie and Freddie are the most responsible for the recession and foreclosures.

6. Oil below $76 as Greece crisis gnaws at confidence:

http://finance.yahoo.com/news/Oil-below-76-as-Greece-crisis-apf-3090038261.html?x=0

Oil heading to $65 in next 6 months.