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  • Stock Market

  • Stock Market Today: Why We'll Continue to "Drift Sideways" The stock market today opened higher before falling once again as fiscal cliff concerns continue to weigh on investors' minds.

    • Stocks continue to slide- After Cisco Systems Inc. (Nasdaq: CSCO) reported its fiscal first-quarter earnings the markets started the day positive, but quickly turned red. One week after the election, fiscal cliff concerns continue to mount as the president and Congress meet later this week to hopefully negotiate a deal. So far no progress has been made on the debt reduction talks and until that happens don't expect the markets to change course. "We will continue to drift sideways until we see some progress on the fiscal cliff negotiations," Peter Jankovskis, co-chief investment officer for Oakbrook Investments told Bloomberg News in a phone interview.
    A major reason for the post-election sell-off is the prospect of higher taxes next year, and yesterday U.S. President Barack Obama made it clear his agenda on that issue has not changed.

    • President calls for $1.6 trillion more in revenue- When President Obama meets with congressional leaders on Friday he will ask for double the amount of revenue that was discussed at budget talks in 2011. On Tuesday, the president met with union leaders and other liberal groups and stated he will now seek $1.6 trillion in additional revenue over the next decade. That will be accomplished partially through higher tax rates, something Republicans have not yet said they would agree to. But Republicans have offered to accept extra revenue if Democrats can agree to making structural changes to entitlement programs. "New revenue must be tied to genuine entitlement changes," Senate Minority Leader Mitch McConnell, R-KY, said Tuesday. "Republicans are offering bipartisan solutions and now it's the president's turn. He needs to bring his party to the table." An agreement, which included $800 billion of extra revenue, between House Speaker John Boehner, R-OH, and President Obama failed when the President asked for $1.2 trillion in additional revenue. That deal would have lowered the deficit by $4 trillion over ten years, and now President Obama is seeking $1.6 trillion, a number much higher than Republicans will likely agree to.
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  • What Happens to the Stock Market in an Election Year? With just about six weeks to go until Nov. 6, many investors are wondering how Election 2012 will affect the stock market as a whole and their portfolios in particular.

    There are many theories about what can happen to the stock market following a presidential election - although the performance spread is pretty wide.

    The highest election year return for the Standard & Poor's 500 Index takes us back as far as 1928, when Herbert Hoover beat Al Smith. The S&P 500 returned 43.6%.

    But the heady atmosphere just before the 1929 stock market crash probably had more to do with that high return than Hoover's election-or Smith's loss.

    The lowest return in the 80-year period came in 2008, when now-President Barack Obama beat John McCain. The S&P 500 dropped 37%. Once again, the 2008 financial crisis probably had a greater impact on that result than who won or lost the election.

    So what is likely to happen four years later, with the economy still struggling to recover and the S&P 500 ahead about 15%?

    Let's take a look.

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  • Who Says Money Can't Buy You Love? Not the Banksters Remember Tim Pawlenty, the former two-time Governor of Minnesota?

    Remember when he made a bid for the Presidency this go-round, but bowed out after a poor showing in Iowa?

    Remember that during his brief run he acted like he was a Wall Street critic, admonishing the Street to "get its snout out of the trough?" Remember that?

    Remember that T.P. became national co-chair of Republican presidential candidate Mitt Romney's run for the roses?

    Do you remember that T.P. was a top contender for the V.P. slot that eventually went to Paul Ryan?

    Don't worry if you don't remember any of that stuff about T.P. because none of his past politics matter (he's a Republican don't you know?) now that he has a new job.

    Oh yeah, with less than 45 days before his buddy Mitt faces off against a resurgent incumbent named Obama - you probably don't remember because it just happened a few days ago - T.P. quit the campaign for a new gig.

    You can't blame him. Everybody loves money, and the lure of a reportedly near $2 million salary is mighty enticing. So he took the job.

    Guess what he's up to now?

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  • Stock Market Today: Markets in the Red Ahead of Jackson Hole Here are the major headlines in the stock market today.

    • Consumer spending gains most in five months- Consumer spending rose for the first time in three months, increasing 0.4% in July from June but slightly below expectations of 0.5%. This follows no change in June and a slight drop in May. The gain was the best in five months for consumer activity which accounts for roughly 70% of the economy. Even though it was a good monthly gain, U.S. consumers' purchases advanced at a 1.7% annual rate in the second quarter, the smallest increase in a year. "The quarter is getting off to a decent start," Gus Faucher, a senior economist at PNC Financial Services Group Inc. told Bloomberg News. "The consumer's situation is slowly improving, but the job growth isn't there to support really big gains in future spending."
    • Jobless claims remain unchanged- The number of people filing for initial unemployment claims matched last week's upwardly adjusted figure of 374,000. Economists on average expected this week's initial claims to be 370,000 and the data suggests that hiring is not improving. The unemployment rate, which moved up to 8.3% in July, has been stuck above 8% for more than three years, the first time this has happened since the Great Depression.
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  • Stock Market Today: GDP, Home Sales Fail to Lift Market Here are the major headlines in the stock market today.

    • GDP revised slightly higher in second quarter- Even though U.S. gross domestic product (GDP) was adjusted to 1.7% from 1.5% during the second quarter, the fact remains that it was depressingly low. Since the U.S. officially exited the recession in mid-2009, GDP growth levels have been stagnant and economists do not expect the rest of 2012 to be any different. The U.S. is projected to grow 2.0% in the third quarter and 1.9% in the final three months of the year. The government will issue its third and final estimate of second quarter GDP in several weeks. "It shows slightly better government spending and consumer spending but overall the data suggest the economy stays in slow growth mode and is not likely to change," Peter Cardillo, chief market economist at Rockwell Global Capital in New York told Reuters." This certainly strengthens the hands of the Fed to aid the economy."
    • Gas prices rise 5 cents nationwide- AAA reported that gas prices will be a nickel higher on average when consumers head to the pump Wednesday, sparked by the destruction of Hurricane Isaac. Prices on average are $3.804, the highest level since May. Today's spike is the biggest one-day move since February 2011 when concerns over Libya caused prices to rise. Some states, particularly those in the Midwest who receive most of their oil or gas from the Gulf, saw the largest increases. Ohio had the largest rise with a 13.9 cent increase, followed by a 13.2 cent rise in Indiana and a 12 cent rise in Michigan.
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  • Just Another Summer on Wall Street Another week slipped by on Wall Street, and it was a quiet one. For summer, that is.

    And thank goodness. All the scandals, all the negative news, all the time, always something. I'm getting tired of writing so much.

    It's my summer too, you know.

    So, when my extraordinary good fortune led me into the company of a spectacular woman this past week, I escaped the Street reality, enjoyed the beach, the Hamptons... and did I mention a spectacular woman?

    But just because I was out of touch (from reality) last week doesn't mean the surreal wasn't spilling out all over the Street.

    Okay, so it was little stuff, but it's still stuff. And it's still surreal...

    Like finding out that Vikram Pandit, CEO of that little banking outfit Citigroup, got paid more last year than the bank paid in taxes.

    That's news you ask? No. Granted, we know that all those poor banks that suffered deep losses on account of a lot of sore-loser homebuyers who got the Street mantra wrong (it's "buy high, sell low," right?) won't have big tax bills for a while because they saddled the good-guy banks with huge tax loss carry-forwards.

    Besides, Vik (can I call you that?) deserves it.

    Can you imagine all the negative press he gets? He deserves more; I say give it to him and the other banksters who have to work so hard to keep their jobs while their firms don't have to work nearly as hard to not pay taxes.

    And then I heard that Jon Corzine was thinking about yet another career move.

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  • What Skirt Lengths Tell You About The Stock Market Over the years I've written a number of articles about trading indicators.

    They have ranged from the commonly used variety - like moving averages, crossovers, the VIX, death crosses, and Bollinger Bands - to the esoteric, including the tallest buildings, Big Money Polls, financial astrology and, more recently, magazine covers.

    You'd think the tools market technicians typically use would generate the most interest. But inevitably, it's the more unusual indicators that people are most attracted to.

    Why?... I have no idea. I am not a social scientist.

    But I can tell you this - having spent tens of thousands of hours computer modeling almost every indicator you can conceive of, the most consistent and best performing indicators are almost always behaviorally-based.

    What I mean by that is that there is inevitably an element of human behavior that is either: a) responsible for the indicator itself; or b) contributes significantly to how it functions and why it's relevant.

    My grandmother, Mimi, a seasoned successful investor in her own right after being widowed at a young age, used to chalk this up to what she called the "complexity problem" - as in, if it's too complex for me to understand, it's a problem.

    She didn't use the term like I do today in a non-linear sense. She simply reasoned that if something was too complex to explain to her, it wasn't worth her time or her money.

    Skirt Chasing and the Stock Markets

    And that brings me to women's skirts.

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  • Beware the Distorted Reality of the Stock Market Money Morning's Keith Fitz-Gerald appeared on Fox Business' "Varney & Co." this morning (Friday) and offered his take on whether the markets are ignoring economic and social moods.

    He was asked about stocks that in a way represent the American Dream and if these stocks' recent rise is disconnected from reality.

    "Four stocks suggest the American Dream is alive and well in the markets," said today's host Charles Payne. "What do you make of it? And, is the market a leading indicator?"

    Keith offered up a unique way to assess the current situation....

  • Don't Expect the Obamacare Ruling to Calm the Markets Even before the Supreme Court decision on Obamacare was handed down yesterday the markets were selling off hard.

    They were tanking on news that the latest European summit was unlikely to be a game-changer, that U.S. gross domestic product was a paltry 1.9% in the first quarter, and a New York Times story that JPMorgan Chase's derivatives loss could top $9 billion.

    Then came the long-awaited decision from the country's highest court on the divisive healthcare law, the Patient Protection and Affordable Care Act, which unhinged markets further.

    The Court's historic decision shook the markets for several reasons.

    But the single overriding effect of the mixed-bag decision will be its impact on markets going forward.

    That's because the divided decision further fuels partisan politics going into the November elections and sets the stage for an all-or-nothing battle between Republicans and Democrats.

    The chances of there being any compromise anywhere on any divisive issues before the elections is now mathematically zero, where before it was somewhere between slim and none.

    The Bigger Issues Behind the Obamacare Ruling

    What the markets now face aren't just healthcare, tax and spending issues.

    As a result of the Court's stunning decision, we face something much bigger -- Constitutional issues of the highest and deepest order.

    The High Court, with Chief Justice John Roberts unexpectedly siding with the Court's four liberal justices, rendered a 5-4 victory for President Barack Obama's prized legislation.

    The ruling upholds the "individual mandate" that requires citizens to either pay for "minimum essential" health insurance or pay a "penalty" through the IRS as a "tax" towards offsetting the shared costs of national healthcare.

    But the Court also struck down the Act's provision allowing the Federal Government to effectively "hold a gun to the head" of states if they failed to increase Medicaid benefits, largely expanded under the new law.

    In its original form, states could lose all Federal funding of Medicaid for non-compliance with Federal demands.

    By its decision the Court effectively admitted that the Commerce Clause argument underpinning the individual mandate's Constitutionality was null and void.

    But while they said that the individual mandate that "forced" citizens to buy health insurance wasn't intended as a "command" that fell under the Commerce Clause, they incongruously flipped the argument on its head and agreed (by a one-vote majority) that the mandate was legal under Congress' authority to "tax" citizens for the benefit of the nation.

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  • The Best of the Best Dividend-Paying Stocks Over the past few years there have been unprecedented swings in the major indexes, scaring some investors out of the markets altogether.

    What people don't realize is that successful investing is a matter of continuous performance, not instantaneous performance.

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  • Stock Market Today: Who to Avoid, Who to Consider In a volatile trading session two companies are making news in the stock market today (Thursday): mobile phone provider Nokia Corp. (NYSE ADR: NOK) and supermarket chain The Kroger Co. (NYSE: KR).

    Nokia Corp. (NYSE ADR: NOK) struggles continue: On Thursday Nokia announced it would cut 10,000 jobs, or one out of five workers, worldwide by the end of the year. It also warned of lower-than-expected financials for the second and third quarters.

    The Finnish company had been the leading cell phone maker for 14 years and just last year was the leader in smartphones. Competition from rival companies, especially in the smartphone sector, has been a driving downward force for Nokia.

    "The job cuts and profit warning underline the seriousness of the challenges Nokia is facing, particularly in light of the eye-watering competition from Apple and Samsung," Ben Wood, head of research at CCS Insight, told Reuters.

    Prior to this announcement Nokia stock had taken a beating, down more than 50% in the past three months and has been down more than 15% today.

    The stock's performance looks even worse going back three years. In June 2009 it traded around $15 a share, and has now fallen below $2.40.

    Nokia's CEO Stephen Elop hopes these cuts can turnaround the company's prospects as many investors worry about Nokia's ability to stay afloat amid their cash problems.

    "These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength," Elop said in a statement.

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  • Stock Market Today: What Investors Can't Miss Companies making headlines in the stock market today include Dell (Nasdaq: DELL), Johnson & Johnson (NYSE: JNJ), and JPMorgan Chase (NYSE: JPM).

    After Tuesday's closing bell Dell (Nasdaq: DELL) gave shareholders good news: it will begin paying a dividend later this year.

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  • Will the Facebook Stock Price Overcome This Latest Concern? Facebook (Nasdaq: FB) and its struggling stock price have been in the spotlight since the company's IPO, but rarely for good news. This week started no differently.

    Besides its poor stock performance, Facebook already has been blamed for halting this year's IPO market. There hasn't been an IPO since Facebook debuted on May 17.

    Facebook also is taking heat for wreaking havoc on Nasdaq's reputation after technical glitches marred Facebook's debut. Nasdaq revealed last week that it will pay out $40 million in compensation damages to brokerages that lost money during the IPO fiasco.

    Finally, many investors claim they were misinformed on Facebook stock's first-day potential, and have initiated a class action lawsuit against the underwriters.

    Now the most recent bad news has cast even more doubts over whether or not Facebook can perform as well as investors expected.

    Has Facebook's Growth Reached a Ceiling?

    Over the weekend The Wall Street Journal ran a report on Facebook's growth slowdown, especially in the United States.

    Citing market research firm comScore Inc. (Nasdaq: SCOR), the report indicated unique visitors to the Facebook Website in the United States increased just 5% in April from a year earlier.

    That was the lowest U.S. user growth rate since comScore started tracking the data in 2008. It compared very poorly to the data from the past two years, down from 24% growth in April 2011 and 89% in April 2010.

    The amount of time Facebook users spend per month on the site increased, but also at a slower rate than before. Facebook users' time-on-site was up 16% from a year earlier, compared to a 23% increase in 2011 and 57% in 2010, according to comScore.

    "The assumption that Facebook can maintain the 100% growth it reported Q2 2011 is no more plausible than the 45% growth it reported [earlier this year," said Money Morning Chief Investment Strategist Keith Fitz-Gerald after the stock started trading in May. "Google couldn't. Apple couldn't. And both of them are real businesses."

    It may be a matter of numbers limiting Facebook's growth rather than a changed perception or heightened dislike of the company. Facebook is estimated to have already captured 71% of the 221 million U.S. Internet users, leaving little room for U.S. growth.

    That is troubling as the U.S. accounts for approximately 56% of Facebook's 2011 ad revenue of $3.1 billion, according to the company's regulatory filings.

    Morningstar analyst Rick Summer stated that Facebook cannot expect to have the same post-IPO growth as Google Inc. (Nasdaq: GOOG), due to the fact that Facebook already has a dominant market share of its industry and a very high number of Internet users.

    Summer suggested that increased ad pricing could drive future growth.

    "Facebook is already a dominant Web platform and they've got significant Internet penetration today," said Summer. "Ad pricing is clearly going to be where their growth is going to come from."

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  • The Five Questions You Need to Ask Your Financial Advisor Right Now If you have a financial advisor you need to read this-especially if you are one of the 99%.

    That's everybody who isn't a gazillionaire. You may know a few people who fit this bill.

    Being a 99-percenter just means that you want to do better.

    In that regard, you're no different than the 1%. They just have more money and by extension more freedom than you.

    That doesn't mean they are any smarter.

    I know plenty of uber-rich people who are financially inept. You probably do, too.

    What sets people apart sometimes, though, is as simple as the questions they ask. True 1-percenters have this down pat-even if they don't have a gazillion dollars.

    Here are five things you need to ask your financial advisor today if you want to join them.

    If you do, you'll profit more consistently, reduce your risk and invest with greater peace of mind.

    And I have no doubt that you will join the real 1%.

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  • Dow Jones Erases 2012 Gains – What's Next? The "sell in May and go away" approach panned out this year as the month was not merry for markets.

    U.S. equities experienced a steep drop during May, enduring the worst monthly declines in two years. The Dow Jones Industrial Average fell 6.2%.

    A good part of May's decline was blamed on the ongoing European sovereign debt crisis that has swelled of late and shattered investors' confidence. But things on the home front are far from ideal.

    The flight from stocks flowed into the first day of June. The Dow plunged 274 points Friday, erasing all of the year's gains. Fueling Friday's fall was May's dreadful U.S. jobs report, which showed employers added just a trifling 69,000 in payrolls, less than half the expected 150,000.

    The Standard & Poor's 500 Index and Nasdaq both plummeted more than 2%. The Nasdaq has given back more than 10% since its late-March peak.

    Traders consider a 10% drop to be a market correction. Meanwhile, the S&P 500 is just a mere point above correction territory.

    Just 17 of the 500 companies in the S&P index ended higher on Friday.

    "The big worry now is that this economic slowdown is widening and accelerating," Sam Stovall, chief equity strategist at market research firm S&P Capital IQ, told the Associated Press.

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