Financial News 02/29/2012

• NYT: Era of low borrowing rates nearer end than beginning
• Bank Rate: National average mortgage rate 3.85%,
• S&P: Case-Schiller national Q4, 2011 home price composite down 3.8%
• BEA: Q4, 2011 GDP 3%, for the year national GDP was 1.625%
• Business Insider: Interest rate swaps net JP Morgan $12k per transaction
• Bloomberg: LTRO 3 less likely as ECB lending nears $1.35 trillion
• Reuters: Indian Q4,  2011 economy slowed to 6.1%, a three year low
• RT: G20 FSB does not like fact rating agencies have influence

Reasons to join a credit union

 Image attribution: Kenneth Allen. CC BY-S.A. 2.0

The benefits of joining a credit union are actually quite good because it's like banking with perks. With banks the managerial priority is usually to serve its shareholders by gaining profit from banking services. With credit unions the shareholders are members so the result becomes a more affordable banking experience. Credit Unions often serve their members with free services, lower borrowing costs, higher lending rates, and personalized service.

 • Free online bill pay

Online bill pay is a convenient way to pay bills and saves on stamps, time and gas going to the post office. Many credit unions offer free online bill paying services that allow members to literally pay bills through the credit union. Some bill payer services such as the one available at CINCO Credit Union can also be automated to withdraw a fixed amount of money from a pre-specified account every month as bills become due.  

• Free cashiers checks

Another benefit of banking with some credit unions is free cashiers checks. For those who only require one to three checks a month, this can save the cost and hassle of purchasing and managing a check-book. Cashiers checks are also guaranteed so the payee has greater financial assurance of the payers ability to pay. These types of checks are useful for important purchases such as down-payments, but can also be used for other transactions typically involving checks. The Navy Federal Credit Union is an example of a credit union that not only provides members with free cashiers checks, but also allows them to be ordered online. 

 • Free online banking 

Apart from online bill pay, free online banking allows a credit union member to track and monitor banking transactions easily and affordably. Some credit unions such as NIH Federal Credit Union offer free online financial software, free electronic statements or e-statements and have free  tax preparation software built in. Free online financial software can benefit members with financial planning and secure online financial record-keeping.  

• Lower cost credit cards

Credit cards can be expensive, but they can be less financially costly with no annual fees, lower interest rates and fewer surcharges. Credit unions tend to provide their members with competitive interest rates that are useful for consolidating credit card debt or re-directing credit card expenses normally put on higher interest cards. According to Bankrate, Inc. penalty fees on credit union credit cards are also lower. 

• Personalized service

Since credit unions are often relatively small in comparison to banks. This is helpful when seeking to develop a banking relationship with credit union staff and employees. Personalized financial services through a credit union can also assist with speedier and more helpful service. For example, obtaining help with the loan application process, with opening accounts and choosing between different financial products is facilitated through personalized financial assistance.

Cheap Scottish Themes in Corporate America

Scottish people are stereotyped as being spendthrifts. Whether or not they are is somewhat beside the point as they are cast as such. If you keep your eye out you might see where in corporate America this theme is capitalized upon. Below are a few examples starting with McDonald's which is known for its dollar menu, value meals and unquestionably Scottish sounding name. 

Times Square New York McDonald's US-PD

Ronald McDonald is the trademark mascot of McDonalds, he also could be of Scottish descent as red hair and whitish skin is a feature of some Scottish people. The highlander reenactor on the right also has red hair. Why Ronald McDonald is also a clown is up for speculation, but there you have it. 

Ronald McDonald by Ru K, GFDL, CC BY-SA 3.0, Highlander by David Ball GFDL, CC BY-SA 3.0

Scottrade supposedly got its name from its starting headquarters in Scottsdale, Arizona according to its founder Roger Riney. In this case it is a striking coincidence that the name matches the firms role as a discount broker quite nicely and conveniently.

Image source: Dwight Burdette, CC BY-SA 3.0

Here's another one with two ts, maybe it's named after a guy called Scott who is Scottish. Scott toilet paper is one of the cheaper brands in terms of cost. A roll of the most affordable Scott brand could last a while and save you a few dimes.

If all the above seem somewhat questionable or have alternate themes that coincide with low priced products there is another one that makes the case. McFrugal, a tool shop that claims it has "Quality Tools at a Frugal Price", right next to the image of a very Scottish looking man with bagpipes.

MacFrugal's furniture is more corporate Canadian, but all the same when it comes to stereotyping Scottish people. If the red haired Scotsman does not give it away, the name does. Too bad the furniture isn't tax free aka scot-free, which allegedly has less symmetry with Scottish "frugalism" as much as the English language; another stereotypically fitting coincidence that inadvertently reinforces the belief.

Financial News 02/28/2012

• Bloomberg: Research shows wealthy prefer to lie, and cheat
• IBD: Next debt ceiling breach to move forward on lower tax revenue
• Census: January Durable goods orders declined 4% or $8.6 billion
• CNBC: Governmental measures to restrict oil price already implemented
• GMO: Avoid over-management, leverage and impatience when investing
• USA Today: Riot police have disbanded an Occupy London camp 
• MW: World Bank finds incestuous economics could collapse China
• Reuters: Greek sovereign debt rating downgraded to "selective default" 

Financial News 02/27/2012

• BH: Non-taxable modified mortgage forgiveness to vanish in 2013
• NYT: Study finds high IQ investors pick better stocks
• Bloomberg: Student loans lower 29-34 age group mortgages 8% in 10 yrs
• Reuters: New factory automation to replace more workers in manufacturing 
• Business Insider: High oil price mostly due to low supply and refining 
• CNBC: Oil expected to rise further this week per 12 of 16 analysts
• EUB: LTRO 2 to launch February 29 and allow banks unlimited cheap loans
• Tapai Times: Greek bailout dependent on investor majority bond swap

Financial News 02/24/2012: Market Models Honey Badger

This week's stock market action models the fearless honey badger, scary to short-selling leopards, immune to a venomous depreciating dollar, and unhampered by multiple earnings stings. The honey badger market's strength is attributable to systemic resistance courtesy of HFT, FED, and unbridled optimism in the face of unsustainable national debt growth, decreasing work force, and slowing U.S. share of global GDP.

• eBay: Nike Foamposite Galaxy shoes, 54th bid price $60,100
• Oil-Price.net: Sweet crude reaches $108/brl, brent $123.00/brl
• Reuters: EMMA helps bond investors assess municipal bonds
• Bloomberg: U.S. home prices fell 2.4% in Q4,  2011
• IBT: G-20 meeting this weekend to discuss IMF funding
• Options Queen: Bullish trend cancerous like ultra-violet light
• Euronews: BoE aggressive amid Lloyds $4.4 billion profit pit
• Telegraph: German finance minister realistic about Greek debt

Financial News 02/23/2012

• KLEWTV: Hidden readers still being used to steal financial data at ATMs
• RealtyTrac: 210,941 foreclosures in January, 2012
• DOL: 351,000 jobless claims were filed the week ending 02/18/12
• Bloomberg: S&P 500's price/earnings ratio is 14, 2.4% growth since 2009
• FT via CNBC: Volcker Rule too restrictive on U.S. financial institutions
• NYT: Eurozone recession confirmed by European Commission
• AP via Economic Times: European austerity has not yielded growth
• Reuters: European banks lose money from Greek debt they held

Financial News 02/22/2012

• Business Insider: Dividend tax to rise to 43% in 2013
• Bloomberg: Private tax lien funds plagued by fees, and low transparency
• Reuters: Mortgage applications declined 4.5% last week
• USDA: This week is America Saves Week, financial literacy promoted
• AP: Greek debt rating downgraded again, this time to 'C' by Fitch
• Bloomberg: February manufacturing and services shrank in the Eurozone
• HSBC: Emerging Markets Index for Q4, 2011 52.2, slow, but up .2%
• WSJ: Manufacturing in China contracted for second month in January

Financial News 02/21/2012

• NYT: Mortgage settlement does not stem fears of empty financial pledges
• ABC7: Revenue from D.C. speed cameras, $30 million for 7 months in 2011
• Chicago Fed: Chicago Fed economic index down to .22 for January, 2012
• Associated Press: Walmart's Q4, 2011 income declined 4.2%
• Bloomberg: €130 billion to be escrowed to Greece, Spain's debt to double
• Reuters: Asian loans from U.S. banks lower as China lowers bank reserves
• BBC: Recent ECB bond buying lowered the yield on sovereign bonds
• RT: Apple iPad banned in China because of trademark court ruling

Financial News 02/20/2012: Fiscal and Monetary Economic Centralization On The Rise

A trend of fiscal and monetary centralization seems to be rebuffing capitalist ideals for an economic heel digging. As Western nations deleverage private assets, governments are doing the opposite by leveraging monetary and fiscal policies. Central bank bailouts, and easing of monetary policy have been in fashion across the world. A look at the balance sheets of central banks, and the global debt map published by the Economist should make this clear enough.

The expense of all this money bathing is credibility. How much money can governments print, and how many sovereign bonds can be restructured at the expense of private bondholders before businesses and investors doubt the effectiveness or benefits of such policy? The more money that flows, the higher the equities climb. Higher 401(k) balances are more appealing than lower inflation and systemic fiscal functionality, and placing Southern Europeans in financial rehabilitation will be good for Europe even if it comes at the expense of nationality.

The economic debate about such policies exists, but traditional mainstream economics is not the approach of choice per Dylan Matthews of the Washington Post. Moreover, according to Matthews a good number of influential economists either support aggressive fiscal or monetary policy or both. Anything can be rationalized with sound reasoning, that does not make it valid logic however. In the case of economic policy, all this spending could be an echo of Reaganomics where outspending competition leads to advantages. Problem is that is a tactic not a strategy.

• Reuters: Corporate earnings reports less than spectacular
• Bloomberg: Oil price rises as Iran cuts off exports to U.K, France 
• WP: Government and employers penalize military reservists seeking work
• NCPPHE: American wealth to decline based on current education trends
• DOL: Advanced manufacturing growing, but labor is scarce per WP
• OECD: Q4, 2011 GDP in OECD Area declined .1%
• IBI: China seeks to boost lending by lowering bank reserves to 20.5%
• UK Guardian: Hundreds of thousands protest spending cuts in Spain

Financial News 02/17/2012

 Image attribution: Colin Brown. CC BY-SA 2.0

• Miami Herald: Pump and dump investment fraud is real
• Reuters: Market manipulation by major banks proven in Canadian court
• BLS:  Consumer prices rose .2% in January
• FBI: An average of 6,345 banks were robbed annually in 2003-2011
• Forbes: Egan-Jones downgraded Germany's credit to AA- in January
• Bloomberg: $6 trillion in U.S. Treasuries seized in Switzerland
• Mobile Bloomberg: Eurozone GDP contracted .3% in Q4, 2011
• IHT: Foreign Direct Investment in China declines for third month

Financial Crime Is a Larger Problem Than You Might Think

Each year financial crime quietly occurs without a whole lot of limelight.  In 2011, the IRS was investigating tax fraud, investment schemes, tax evasion, and mail fraud among other things. Similarly the FBI investigates hundreds of corporate fraud cases each year. The Securities and Exchange Commission 'brought' 735 'enforcement actions' in 2011. How much credibility is given to actions that have to be worded so carefully is debatable.

There's also the Department of Justice, Federal Trade Commission, Office of the Comptroller of Currency and Consumer Financial Protection Bureau. Those are a lot of organizations to protect against various forms of financial misconduct. According to the FBI chart below, you are least safe when in the street or on the highway. 58.1% of these robberies occurred in the Northeast USA, 45.9% were in the Midwest, and 44.2% were in the West making the South the safest from robberies.

FBI Crime Files US-PDGov

FBI Corporate Fraud Cases 2005-2009

Consumer financial crimes are a problem. According to the Coalition Against Insurance Fraud $80 billion dollars were defrauded from insurance companies each year. Those costs are passed back at least in part via higher premiums. Essentially lack of financial integrity and trust costs Americans hundreds of billions of dollars each year. Gives pause for Libertarian ways of thinking in terms of cost cutting.

Financial News 02/16/2012: Dollar Value a Key Component In Market Pricing

Global Reserve Currencies

 Image attribution: Spitzl. GFDL, CC BY SA 3.0

With the dollar still accounting for more than 60 percent of global reserve currency, its value has a significant impact on global trade including equity prices. Today the dollar index, a measure of the dollar's value against a basket of other currencies temporarily rose above 80 per Bloomberg. This financial relationship is clarified by Sentra Commerce that claims since the dollar impacts commodities prices, which then affect bond prices that affect equity prices. For example, if the dollar increases in value, then the price of oil drops because it is priced in dollars, and bond rates drop because interest rise with inflation, then stocks go down.

According to Investopedia Intermarket Analysis is an indicator not an immediate signal to buy and sell. In other words it can take time for the chain events to occur, and any break in the sequence nullifies or dampens the influence of the dollar on stocks. For example, a stronger dollar causes oil to drop, but a global event, or central bank decision can counteract that pressure. For instance, when the Federal Reserve Bank implemented massive open market operations it seemed as though the treasury market was influencing the currency price and not the other way around.

When the Federal Reserve expanded its balance sheet it was effectively lowering interest rates on government securities as demand causes price to rise and rates to lower. Since lower interest rates are not inflationary, yet massive central bank purchases are in terms of dollar valuation, the traditional sequence proposed by Intermarket Analysis is vulnerable to being misinterpreted. For this reason it is important to be aware of additional market and economic factors. Today the dollar rose in value, presumably because of Europe's financial crisis causing the Euro to decline in value. The effect of this is a short-term flight to safety such as U.S. Treasuries, and the dollar.

Is today's market action reflecting initial events or future results of the Intermarket price sequence? Or is it due to other factors such as overbought equities, increased rehypothecation of assets in international markets, or cash flow out of U.S. equities? In any given day it is the big picture, comprised of a multitude of related variables that causes the trading decisions of financial institutions and private equity firms to either buy or sell. Not all these decisions are based on the same time horizon, short-term traders take advantage of immediate price events, whereas long-term investors navigate a course. Still more do both.

• BLS: 348K jobless claims for 02/11, producer price index up .1%
• Moodys: Multiple credit reviews and downgrades on Euro bonds
• NYSE: Seller ratio was 3.28% by 01/31/12, near 4 year resistance
• FED: Industrial production unchanged, business equipment key
• Bloomberg: Market-linked CDs offer weak assurance of growth
• FED: National home prices down inflation adjusted 40% since peak
• Reuters: World Bank Chief to resign, U.S. replacement in queue
• BBC: Eurozone requires more details to issue €130 billion bailout

Late Retirement Planning Tips

Image attribution: Bixexe, US CBO. GFDL, CC BY-SA 3.0

According to the above graph the bottom 80 percent of income earners account for approximately 78 percent of the U.S. working population. This can make retirement planning more difficult for lower earning demographic groups and be a contributing factor in late retirement planning. Even so, retirement planning is still possible across income levels when future retirees have a will to exercise retirement planning principles.

Complete article link: http://www.helium.com/items/2292742-how-to-save-for-retirement-in-later-years

Financial News 02/15/2012

• NYT: Financial planner explains personal finance on napkins
• IRS: Non-profit employers receive SS reductions for hiring Vets  
• Reuters: Federal Reserve Bank could raise interest rates before 12/2014
• WCF: $5 per gallon gasoline nears, Iran cuts oil exports to 6 Euro nations
• IRS: Taxpayer Assistance Centers offer free tax advice
• Bloomberg: China assists Europe by holding European assets
• BBC: Italy and Netherlands in recession, UK unemployment hits 8.4%
• China Post: China may allow banks to postpone debt payments

Assessment of universal health care

Image attribution: Kborer. US-PD

Universal Health Care likely means lower and slower quality of health care services, increases in taxes, bureaucracy, and unnecessary government spending. A Los Angeles Times article entitled 'Universal healthcare's dirty little secrets' illustrates these points. It is a lack of faith in the ability of American citizens to make informed decisions for themselves in addition to an unconsidered write off of any private/public hyrbrid health care solution and the principles of capitalism in and of itself. "So what is potentially fiscally functional solution?" you may ask.

Government can regulate what isn't in its control, it has done this before with anti-trust, federal approval of drugs, federal oversight of building code etc. The Government does not have to have absolute control of health care to assist in a solution. Possible solutions include, cost caps, legalized private insurance, co-op insurance, partially subsidized insurance, federal investment insurance and so on. The amount of solutions are as many as a creative bureaucrat can think of.

To illustrate further, think of a small community of around 100 people. 2 within the community are doctors. Let's assume the average income is 30k and the tax increase is 10 percent or $3000/year. Even if the tax increase were only 5 percent that would be $1500 or $125/month per person. Incidentally that could get you fairly decent private insurance. Given there would be a tax increase of 5-10% does it make more sense to have more or less control of one's health care? If one pays the taxes, the Government decides for you, if you pay for private insurance you decide.

The next point in this opposition to universal health care is in regard to high hospital bills and ever increasing private medical costs. This is clearly and issue and has the potential to wipe out many families savings. It does not mean a thoughtful fiscally conservative solution to the problem does not exist, and it is unreasonable to assume that such a solution does not exist.

Economically, the healthier a nation is, the less health insurance individuals should need. This being the case the Government may be better off spending one percent of taxes to promote healthier lifestyle than 5 percent fixing the problems created by poor lifestyle choices. Even if only 25 percent of the population becomes healthier from a healthy living campaign that's a net savings of 10 percent off the five percent of taxes since only one percent was spent and 25 percent of five percent is 1.25 percent. Subtract the one percent healthy living campaign expenses from the 1.25 percent and that's 25 basis points the Government saved itself and tax payers. On a grand scale of say a billion dollars, that would mean savings of two and a half million dollars.

Yet another reason universal health care should be avoided is because people often know more about their health than the Government or its potential doctors ever will. An optimized plan that doesn't increase taxes, decreases Government spending and allows for affordable contributions from employers and individuals could be as follows. 

Every individual in the country is legislated to pay $20.00/month to a private health insurance plan and subsidized for this payment by a decrease in personal vehicle property taxes at the State level, and a federal subsidy paid for by a fractional decrease in some of the less useful Government programs. Furthermore, additional funds can be generated from mandated sliding scale minimum contributions from employers based on employer profitability calculations. 

In theory this type of system would pay for itself and probably generate a surplus if managed well. Under such a system individuals would still have the freedoms associated with private health insurance and pay less for it. Similar health care systems are currently being proposed by legislators and Governors nationally.

Lastly, when Government takes things over, things get slowed down. In the Canadian health care system people often have to wait for longer periods to get crucial surgery and vital medical attention. With a private system, if someone has the insurance, they get the medical attention they need. Why sacrifice a perfectly good system with a few glitches for a complete overhaul. It's simply not necessary.

To summarize the positions made henceforth, the following points have been made in this opposition:

• Universal Health Care implies there is no hybrid or private solution as good.
• Health Care problems can be repaired without system overhaul.
• Responsible regulation yield better results both fiscally and medically. 
• Health care is a personal issue and should be an individual choice.
• Federalization of services often leads to a decline in quality.

The evidence is clear, a simple deferment to Universal Health Care is negligent of sound Capitalistic principles that have the potential to yield outstanding health care to many if not all Americans. Federal regulation is not universal health care but can adjust the benefits of a universal system so long as many interest groups priorities are considered and no doorway to universal health care is left open. In other words an advantageous health care system emphasizing private coverage under a moderate position can be nationally beneficial. In order to be beneficial it would ideally lowers cost, expands availability, enhances public health and benefits the country as a whole without being a stepping stone to Universal Health Care.

Are Greek Bondholders Protected from 'Credit Events'?

Greek bondholders such as hedge funds are faced with possible restructuring by the Greek Government. If those bonds are insured not by the Greek Government, but rather with separate credit default swaps, a credit event must occur in order for that insurance to be claimed. Determining whether or not insurers will pay out in such scenarios depends on what is considered a credit event if the bonds are even insured.

According to Allen & Overy, Global Intelligence Unit most of Greek Sovereign Bonds are governed by Greek law allowing the bonds to be restructured via a Governmental resolution of bondholder options via collective action clause within the bond terms. How those collective action clauses are worded can mean the difference between a credit event and voluntary rescheduling of bond payments. In the event of involuntary restructuring, that debt is considered in default and would allow buyer protection to be issued per Allen & Overy.

Thing is, if the bond restructuring is legally administered by the Greek government to be 'voluntary' as defined by collective action clauses, then it is not considered a credit event per Forbes. Moreover, why didn't Greek bondholders collect on credit default swaps in the last Greek bond 'haircut'? or did they? It does not set much of a precedent for a credit event now if CDS sellers did not pay out the last time. This is because the same reasoning that was used to not pay bondholders the last time could be used again to protect their financial interests. Why wouldn't they?

Financial News 02/14/2012

• EI: Only 33% of delinquent real estate will be repossessed by year end
• NFIB: Small Business optimism at recession levels
• Reuters: 2.9 million Americans could be affected by USPS closures
• Census: Retail sales for January were $401.4 billion, up .4%
• WP: PIMCO Chief Executive states U.S. unemployment at crisis level
• NYT: Payroll tax cut extension favored by Republicans if cuts added
• Reuters: FHA's losses mount as defaults rise, $1 billion on tap
• BW: Greek Politicians could redefine bond terms via vote
• Moody's: Credit ratings of 9 European nations downgraded or adjusted

Financial News 02/13/2012: Greek Rioters Burn Banks As Government Fires Dissenting Members

The protests in Greece are a sad reminder of the divide between public sentiment and fiscal policies around the world. Multiple banks and retailers were set ablaze after the Greek Parliament passed a vote posing further austerity on Greek people in a clearly Euro-zone guided agenda. This time the cuts will knock off 20 percent of the Greek minimum wage and lay off 15,000 government employees per the WSJ.

Past cuts have not led to the intended financial goals because the GDP keeps declining as people lose their jobs and the economy shrinks. In a weekend speech, the unelected prime-minister of Greece said the alternative of bankruptcy is worse. The images and news from the streets of Greece give pause for thinking twice on that, and the firing of dissenters within the Greek Parliament seems a tad un-democratic.

Image attribution: Athens Indymedia. CC BY-SA 2.0

• Kiplinger: Top IRS audit flags: income, office deduction, and donations
• CNN Money: With a $13,360 tax credit, adopted kids are cheaper
• Investor Place: Market pullback more likely than not
• Reuters: Fed minutes to illustrate reasoning in monetary policy decisions
• BR: French financial transactions tax could lead banks offshore
• BusinessWeek: Australian Reserve Banks lowers economic forecast .5%
• Bloomberg: Greek parliament fire members that voted against party lines
• Telgraph: Japanese Q4 economic growth fell .6%, twice the estimate

Financial News 02/10/2012

• BEA: December national trade deficit was $48.8 billion, up from $47.1 billion
• Bloomberg: $25 billion housing settlement excludes 92% of borrowers
• MW: IAEA lowers global oil demand estimate, but price stays near $100/brl
• Investor Place: $310 million Powerball lottery jackpot a record high
• Telegraph: French economic model unlikely to be adopted by Eurozone
• DT: Indian account deficit 3.5% of its GDP
• ET: China's imports shrank 15.3% from a year ago, surplus up $27.3 billion
• Reuters: Greece to become 'Euro lite' or exit Euro per investment director

Tax Reform's Affects on America

Image attribution: OECD: Sugar-baby-love/Wikimedia Commons. CC0 1.0

As complex as tax reform is the bottom line never changes. Americans, the U.S. economy, global competitiveness, the budget deficit, tax gaps etc. are all affected by how well tax reform takes place. It is likely some type of tax reform will take place, who it will benefit remains to be seen.

Complete article link: http://www.helium.com/items/2290284-pros-and-cons-of-tax-reform

Financial News 02/09/2012

• DOL: 358,000 jobless claims were filed the week ending 02/04/2012
• Asset International: S&P 1500 pensions underfunded by 22%
• WPC: 830,000 households experienced foreclosure in 2011
• MW: Corporate insider selling indicates bearish sentiment going forward
• NYT: Bank & state foreclosure settlement may cost banks $26 billion
• Reuters: Brent oil near 6 month high, sweet crude near $100/brl
• WSJ: Japan 2011 account surplus ¥9.629 trillion, trade deficit ¥2.49 trillion
• MW: Chinese inflation rises to 4.5% year over year, .4% above estimates
• Reuters: Greece has days to secure budget deal for national financing

Why Apple Products Would Cost More If Not Manufactured In Asia

Image attribution: Apple, Inc. US-PD

Apple, Inc. products are expensive, but they would cost even more if they were mostly manufactured in  the  United States. Almost 70  million  iPhones were made  outside the U.S.  per the New York Times. In China, a combination of government subsidies, cheaper labor, market proximity and lower overhead all make the production of Apple products cost effective.

Complete article link: http://www.helium.com/items/2289860-why-apple-computer-parts-are-made-in-asia

Financial News 02/08/2012

• BLS: Hiring rate unchanged despite job opening increase
• CBS: Internet sales tax loophole under scrutiny
• DOL: Management jobs to increase as industry grows 83% by 2018 
• Kiplinger: If payroll tax hikes in 22 days, it will shrink take home pay
• WP: Fed Chairman Bernanke warns against budget cuts
• Reuters: SEC proposition would limit 100% withdrawal amid crisis
• Telegraph: German exports declined 4.3% in December
• Bloomberg: China allows first Western bank to issue credit cards

Financial News 02/07/2012

• Chicago Tribune: Romanian Government collapsed yesterday
• Bloomberg: Fed influencing corporate borrowing costs via Operation Twist
• FB: Financial strategy more important to investment success than math
• AP: Nearly all the S&P 500's 2011, 4Q rise came from Apple and AIG
• Reuters: Portland Occupy protest led to 10 arrests
• MW: German industrial output fell 2.9% in December 
• AP: Swiss central bank forecasts slowing economic growth
• Telegraph: EU Commissioner contemplates Greek dropout from Euro

Advantages and disadvantages of BJs credit cards

A BJ's Visa card adds two percent to the savings already garnered through having a membership at BJ's and any use of manufacturers coupons, and store coupons. In other words, provided a BJ's credit card balance is paid off before the end of each billing cycle, the potential for cheap groceries rises. The overall savings can be well over 10 percent if all the potential benefits of shopping at BJ’s are considered.

Pros:

• Increases potential savings

To illustrate a potential money saving transaction using a BJ’s credit card the following example is used. To purchase 3lbs of coffee $15.00, 1 gallon of milk $4.00, grapefruits $5.00 and various brand name items $30.00 with no savings would cost $54.00 before tax. After applying manufacturer and store coupons the savings is 15 percent for a new total of $45.90. After using the BJ’s credit card the additional savings is  .91 BJ's bucks for a total of $43.99 before tax if one transfers the value of BJ's bucks to the purchase.

• Temporarily lowers existing credit expense on balance transfers

For people with existing credit card balances looking to consolidate and benefit from a BJ’s credit card, a 0 percent Annual Percentage Rate applies for the first six billing cycles following credit balance transfer. If a responsible shopper can pay that balance off within the six billing cycle allowance, the remaining cost of that credit card debt can be potentially reduced to little or nothing of the original cost.

• Good for frequent BJ’s shoppers

With no annual fee and bonus points on BJ's specials and promotions, the BJ’s Visa card may be just the credit card for families and budget conscious consumers who regularly purchase items in bulk or through the BJs wholesale club, BJ's online, or at BJ's gas stations. For example, if  a BJ’s shopper spends an average of $295 at BJ’s every two weeks, that’s $7,670 or 76.7 BJ’s Bucks per year. Although it doesn’t seem like much, this type of saving habit can be multiplied when used across a higher percentage of household purchases.

Cons:

• High interest rate

The BJ’s Visa credit card is still a credit card and inherently carries risks associated with credit card use. These risk include accumulation of high interest credit balance, overspending, and potential for a lower credit score. The interest rate on BJ’s Visa card is quite high,  13.99-24.99 percent on purchases not paid before interest is assessed. The penalty APR for late payments, spending over the credit limit and bad payments is a 30.24 percent APR so paying off balances in a timely manner is important with the BJ’s credit card.

• Can cause credit issues

If the possibility of not being a responsible credit card user exists, it may be better to not use a BJ’s Visa credit card as the savings are relatively small in comparison to the savings acquired through the use of coupons. Moreover, since coupons can save 10 percent or more on an already discounted item, the use of a credit card is really more of an added bonus on future purchases than the majority of one’s savings. Potential credit issues include, high interest rate balances, overspending, and credit score damage.

• 30 BJ's bucks must be earned

In order to redeem BJ's bucks, 30 BJ's bucks have been earned. This is the equivalent to $1,500 in spending at a rate of .02 BJ's bucks per dollar spent. For shoppers who don't plan on spending this much on BJ's gas, or other retail items, the card's benefits may be lost. The potential for accumulating enough BJ's bucks may also lead to overspending on un-needed items in order to benefit from the BJ's card and bonus BJ's buck program.  Also, if a BJ's membership expires, a non-member surcharge can negate the advantages of spending with the BJ's credit card.

Source: http://tinyurl.com/34gdro8 (Barclaycard U.S.)

Financial News 02/06/2012

• Reuters: Law school grads facing financial difficulties file for bankruptcy
• NASDAQ: Dollar increases in value as Greek default possibility looms 
• WP: Occupy D.C. protestors disbanded with some arrested by police
• Bloomberg: Companies switching to non-profit can bypass millions in taxes
• IRS: 70% of all U.S. taxpayers having AGIs of less than $57,000
• NYT: Tax breaks on business equipment costing government billions
• Telegraph: Queen's Diamond Jubilee whiskey costs £100,000
• Speigel: China bans airlines from paying EU emissions tax on treaty caveat

What an ex-gratia payment Is

Ex-gratia payments are made without legal acknowledgement of fault or liability. These types of payments are used in lieu of financial settlements that imply wrongdoing or contractual responsibility. The reasoning behind ex-gratia payments is by not admitting fault or wrongdoing, a defending litigant, accused or contractually obliged entity can avoid higher costs arising out of acknowledgement of responsibility, or fault.

In the insurance industry, ex-gratia payments may be assessed retroactively through legal process, or preemptively to bypass lawsuit, or additional financial obligations. If a company is not insured for particular liabilities, it may be to its advantage to issue ex-gratia payment in instance of undue hardship or circumstances beyond reasonable control of contractors. For example, irrespective of whether or not a business is insured for particular hardship of a contractor, according to Dr. Chundana Jayalath, a Chartered Quantity Surveryor, ex-gratia payments may be offered to contractors experiencing unforeseen adversity to avoid escalating costs.

In some circumstance ex-gratia payments may be simpler than others. For example, when elaborate insurance contract terms become involved, the possibility of misinterpretation of rights and responsibilities may arise. According to Robert M. Hall, a consulting lawyer and reinsurance expert, reinsurance companies may sometimes want to more closely examine their insurance settlements as ex-gratia payments may be unknowingly made under terms of contract.

The reason for Hall’s comments are due in part to renegotiation of insurance terms. In insurance, risk from insurance polices may be diversified by selling policies to reinsurers. Since an insurance settlement involves acknowledging contractual obligation to compensate the insured if the terms require such, a reinsurer is essentially agreeing to those responsibilities. However, in legal cases discussed by Hall, insurance terms that were re-negotiated did not warrant settlement making payment of such claims ex-gratia.

Sometimes, a court ruling may be required to determine if a payment is a settlement, an ex-gratia settlement or an ex-gratia payment. This is evident in the court cases discussed by Robert M. Hall. Moreover, Hall claims, a reinsurer, or company that obtains an insurance policy from an insurer looking to diversify its risk may not always be liable for insurance claims. Consequently, the inspection of legal contracts to avoid unintended ex-gratia payment may be justified in some instances.

In summary, ex-gratia payments constitute liability free compensation or imbursement for reasons of bypassing higher settlement expenses, legal costs or future liability for which non-ex gratia payment would create precedent or argument for. Employers or contractors may be able to avoid higher expenses by providing timely ex-gratia payment for reasons such as waiver of liability, undue hardship, or for contract mismanagement. The need for ex-gratia payment may be established internally within a corporation, or retro-actively as determined by a legal authority.

Assessment of January's Drop In Unemployment

Unemployment is a number widely quoted and reported in news headlines all over the national and around the World. It influences stock markets and is used as gauge of economic progress. Good as it is, it is also based on a sample comprising less than 4/100ths of a percent of the U.S. population and gets lower when people drop out of the workforce.

Complete article link: http://www.helium.com/items/2287822-unemployment-rate-at-new-low

Financial News 02/03/2012

• BLS: January unemployment rate 8.3%, participation rate down to 63.7%
• CNN Money: U.S. average 30-yr mortgage rates hit 3.87%
• Fox 10: Linking checking and savings accounts avoids costly overdraft fees
• Telegraph: Shell warns geopolitical events could lower oil to $70/bl
• NPR: Eurozone holiday season sales dropped .4%, yr over yr down 1.6%
• MW: Greek debt write offs may affect central banks
• BBC: Recording expenditures as stock sales magically removes debt
• Reuters: Norway in housing bubble, so is Canada per the Economist

Possible Reasons For January's Stock Market Rally

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A compounding of auspicious financial events quite possibly contributed to January's large stock market rally. Factors include central bank activity, market psychology, high frequency stock trading and the January effect.

Complete article link: http://www.helium.com/items/2287464-january-stock-market-rally

How to pick lower risk stocks

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Picking lower risk stocks involves finding good returns on investment for low risk. Ideally low-risk stocks are as safe as a savings account insured by the Federal Deposit Insurance Corporation (FDIC). A good starting point in knowing how to pick conservative stocks is understanding how much stock to invest in, and for how long as even invested money in conservative stocks becomes risky if that investment may be needed in the short-term.

• Protect against risk

A 'conservative stock' that maintains or grows value during most parts of an economic cycle doesn’t necessarily mean it's conservative during a recession; this possibility makes the whole concept of conservative stock somewhat fallacious. That is to say, since market and economic conditions can change relatively quickly, unless one has picked conservative stocks able to withstand share price volatility, then the value of those shares can drop.

• Identify low-risk

If there is such a thing as a conservative stock, one’s chances of picking the right one might be somewhere between finding the holy grail and spotting a $1 bill in a parking lot. In other words, be prepared to do some research. An important step in performing due diligence on investments is defining low-risk. This could mean a number of things; high dividend, low beta, and consistent profit margin are what some might look for. Moreover, according to Investopedia, low beta measures the risk of volatility a stock's price experiences relative to movements in the broader market. 

• Forecast future risk

Just because a company is low risk in the present doesn’t mean it will be a conservative stock in the future. It is not impossible for a large, stable blue chip stock to take a turn for the worse. To illustrate how a blue chip stock can decline, according to Yahoo Finance.com, Merck & Co,. Inc. (MRK), the large pharmaceutical firm, dropped from an all time high over $80.00 per share in the early 2000’s, to the low $30s in 2011. A part of the risk for Merck might of included expiration of drug patents and not enough high demand patent protected drugs to grow revenue.

• Assess capital gains

To pick a conservative stock, the value of the company’s shares, or total investment in the stock, should also rise over time. The conditions for long-term capital gains are quite diverse and vary by industry, economy, and market conditions. An investor can increase the  chance of capital gains by locating a well managed company with strong financial statements. Companies that have a high percentage of market share and consistent product or service demand  have a potentially increased chance of consistent capital gains.

• Evaluate capital structure

The capital asset management of a business is also an indicator of how 'conservative' a stock is. This is because use of capital in part indicates how a company plans to grow, maintain revenue stream, and improve profit margin. Companies that invest in projects with high internal rates of return, and operate with low costs and efficient  cash conversion cycles are examples of potentially good capital structure.

Summary

Selecting conservative stocks is not really a fool proof endeavor as stocks themselves do not provide guaranteed returns nor are they insured financial instruments. For this reason, picking conservative stocks is more akin to choosing lower risk stocks. Lower risk stocks sometimes share a few characteristics, some of which include profitability under adverse conditions, strong and proven business models, and legacies of success that help ensure at least medium-term investment stability.

Financial News 02/02/2012

• Forbes: Bribery and corruption on the rise per forensic accountants
• DOL: 367,000 unemployment claims were filed the week ending 01/28/12
• Reuters: Indiana now a right to work state along with 22 others
• WP: American Airlines to cut 13,000 jobs
• BLS: Labor costs increased 1.2% in Q4 2011, more than productivity
• Fox: Congressional house votes to extend Federal worker pay freeze
• MSN: Obama's R.E. refinancing plan unlikely to curtail foreclosures
• LA Times: UCSF Doctor advocates sugar tax due to health concerns
• Bloomberg: Japan may use currency intervention to lower Yen's value

Financial News

• ADP: 170,000 private jobs were added Jan-Dec. Previous revised down.
• Reuters: New-York reporter scores a 74% income tax via toxic tax combo.
• S&P: Home prices declined 1.3% in November per the Case-Shiller Index
• Bloomberg: 1 million homes estimated to be foreclosed in 2012
• MW: Swt. Crude Oil hovering short of $100/brl, Dollar nearer 2 month low
• Moody's: Uruguayan and Indonesian credit outlook and rating revised up
• UK Guardian: U.K. manufacturing up 2.4%, economy contracts .2%
• BBC: Chinese exports declined 1.7%, imports also down 2.4%