Subscribe to Money Morning get daily headlines subscribe now! Money Morning Private Briefing today's private briefing
Category

U.S. Economy

The Global Double-Dip Recession: Which Markets to Hold… And Which Ones May Fold

Last week's stock-market meltdown was a worldwide affair, and was touched off by trader fears of a global "double-dip" recession.

However, the truth is that the odds of a recessionary reprise are high in just a few countries – primarily those that have experienced excessive fiscal and monetary "stimulus," or that have real inflation problems.

The rest of the world is recovering just fine.

To find out which markets to hold - and which ones may fold - please read on...

Consumers Buck Economic Trends to Help Retail Sales Post Fastest Growth in Four Years

The American consumer bucked strong economic headwinds to help retail sales post the fastest growth in four years, a report is expected to show today (Thursday), boosting optimism that shoppers are overcoming concerns about unemployment and a slumping housing market.

Sales are expected to come in at the upper end of a range between 3-4% for the first five months of the retail fiscal year that began Jan. 31, the biggest gain since 2006, the International Council of Shopping Centers (ICSC) said in advance of its June report.

The biggest gain in retail sales since 2006 could be a signal that consumers are weathering last month's drop in consumer confidence and are not as concerned as analysts feared about the economic rebound.

Read More…

With "Risk Off" Trades Waning, U.S. Stocks Could Be Ready to Reverse Course

There are new signs that institutional traders are preparing for a change in direction of the U.S. dollar and European euro that may have big implications for U.S. stocks.

For months, the winning trade was to short stocks, the euro, and commodities, while buying gold, bonds and the dollar. Commentators labeled this the "risk off" trade since gold and bonds were seen as safe-haven assets. But when crowd mentality is at work, and sentiment – not fundamentals – is driving the bids, there really isn't such a thing as a "safe" trade. It's all speculation.

Take yesterday (Tuesday), for example: After surging 131 points, or 1.4%, out of the gate, the Dow Jones Industrial Average relinquished most of its advance to close just 16 points higher at 9,702.98. Meanwhile the Standard & Poor's 500 Index, which had climbed 1.5% to 1,038 in early trading, ended the day just 0.18% higher.

Read More…

Question of the Week: Readers Respond to Money Morning's Financial Reform Query

With U.S. consumers still feeling the sting of the global financial crisis, consumer advocacy groups are claiming that they snagged a win with the financial reform measure approved last month by a joint House-Senate congressional committee.

The bill next goes to U.S. President Barack Obama, who is expected to sign the measure into law.

"It's historic legislation," Michael Calhoun, president of the Center for Responsible Lending, told ABC News. "It's a big win for consumers."

Read More…

Government Spending Cutbacks Increase Odds of Double-Dip Recession

The odds of slower economic growth or even a double-dip recession are increasing as industrial countries, led by the United States & United Kingdom, embark on the most aggressive government spending cutbacks and tightening of fiscal policy in four decades.

As they reduce or eliminate stimulus programs installed in reaction to the Great Recession that began in December 2007, governments are gambling they can pare debt without strangling an economic recovery.

Nations will reduce their primary budget deficits, excluding interest payments, by 1.6 percentage points next year, the most since the Organization for Economic Cooperation and Development (OECD) began keeping records in 1970, according to JPMorgan Chase & Co. (NYSE: JPM) economists. The budget squeeze will lop 0.9 percentage point off growth in 2011.

Read More…

We Want to Hear From You: Are Retailers' Stimulus Measures Persuading You to Spend?

Faced with a wheezing economy that can't seem to heal, big U.S. retailers like Target Corp. (NYSE: TGT) and Office Depot Inc. (NYSE: ODP) are creating their own stimulus measures to lure hesitant shoppers back into stores.

Through such tactics as loan programs, credit card rebates and gift card giveaways, top retail chains are rolling out promotional strategies, hoping to break consumers out of their anti-spending doldrums.

"A lot of the government programs have come to an end," David Bassuk, an expert from financial consultancy AlixPartners, told The New York Times. "So retailers are taking it upon themselves to do everything they can to get the consumer to spend, even opening up their wallets to give money back to the consumer."   

Sam's Club is taking an unusual approach: It's offering loans of $5,000 to $25,000 to its members, backed by the Small Business Administration. Superior Financial Group is managing the loans and will give Sam's members a $100 discount on the loan application fee and lower interest rates.

Read More…

Unemployment Report Shows Sluggish Recovery Will Take Years to Replace Jobs Lost in Great Recession

Unemployment figures released Friday confirmed that the U.S. economy is still recovering, but they also showed it will take years to replace the 8 million jobs lost during the Great Recession.

And until meaningful hiring takes place, consumers are unlikely to loosen their purse strings, the key to putting the economy back on track to full recovery.

Employment fell in June for the first time this year, reflecting a drop in federal census workers and a smaller-than-forecast gain in private hiring.

Payrolls declined by 125,000 as the government cut 225,000 temporary workers conducting the 2010 census, Labor Department figures in Washington showed. Economists projected a decline of 130,000, according to the median forecast in a Bloomberg News survey. Private employers added 83,000 to their payrolls.

Read More…

U.S. Economy: Headed For a Second-Half Slowdown

Constant stock market volatility, a crippled job market and the troubles plaguing the European markets are starting to take their toll on the U.S. economy. After the major market rally of 2009, is the U.S. economy headed for a second-half slowdown… or, worse, the dreaded double-dip recession? Read this report to find out exactly what’s in store for the U.S. economy…

Read More…

High-Yield Hangover: Cash Pouring Into Junk-Bond Funds May Signal Stormy Seas For Stocks

Investors are plowing money into junk-bond funds, which leveraged borrowers at private equity funds are using to pay dividends to themselves and to buy out more public companies.

The huge-and-growing overhang of debt-laden portfolio companies that private-equity shops want to take public – when combined with additional leveraged deals in the pipeline – will keep a lid on U.S. stock prices and could even spark a sell-off for stocks in both the United States and Europe.

Let me explain…

To understand how this push into junk bonds is magnifying stock-market risk, please read on...

We Want to Hear From You: How Do You As A Consumer Feel About the Financial Reform Bill?

With U.S. consumers still feeling the sting of the global financial crisis, consumer advocacy groups are claiming that they snagged a win with the financial reform measure approved last week by a joint House-Senate congressional committee.

The bill goes next to President Barack Obama, who is expected to sign the measure into law.

"It's historic legislation," Michael Calhoun, president of the Center for Responsible Lending, told ABC News. "It's a big win for consumers."

Read More…