With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
Oil Surge Propels U.S. Markets; "New" GM Cans Buick Plug-In SUV; Citi's $301 Billion in Asset Guarantees to Be Audited; Credit Card Overhaul Starts Today; "Cash for Clunkers" Frustrating Unpaid Car Dealers; Buffett Sounds Off On U.S. Debt; Sony Cuts PS3 Price
U.S. stocks moved into positive territory yesterday (Wednesday) after oil prices rose on new government data that showed shrinking stockpiles lifted market sentiment, The AFP reported. The Dow Jones Industrial Average gained 0.66%, or 61.22 points to end at 9,279.16; the Standard & Poor's 500 Index was up 0.69%, or 6.79 points to close at 996.46; and the Nasdaq Composite Index was up 0.68%, or 13.32 points to close at 1,969.24 points. Crude oil for September delivery rose more than $3 a barrel to close at $72.42 a barrel after the Energy Department said stockpiles dropped 8.4 million barrels last week.
The "new" General Motors Co. (OTC: MTLQQ) has taken swift action and has canceled plans for a new plug-in SUV it announced on August 6, after potential customers said the model lacked the "premium characteristics" they expect from the brand. "In the past this would have been a several-month process involving meeting after meeting of the APB, ASB, and various other acronyms, and also many ‘offline' follow-up discussions before a decision was reached and enacted," wrote GM Vice Chairman Tom Stephens in his blog. "This happened in one day."
The government's $301 billion of asset guarantees to Citigroup Inc. (NYSE: C) will be audited to calculate losses and determine whether taxpayers got a fair deal, Bloomberg News reported. The audit was requested by Rep. Alan Grayson, D-Fla. and agreed upon by Neil Barofsky, inspector general of the U.S. Treasury's Troubled Asset Relief Program (TARP). "What kind of toxic assets did the Federal Reserve guarantee, and what off-balance-sheet liabilities have been pinned on us?" Grayson wrote Tuesday in an e- mailed response to Bloomberg's questions on the audit. "How much money have the taxpayers already lost? We need to know."
Today (Thursday) the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 goes into effect. The act protects consumers from excessive fees and last-minute contract changes such as interest rate hikes. Consumers will now have to be given at least 21 calendar days to pay monthly bills and be warned of major changes in conditions at least 45 days in advance by credit card issuers. Still, consumers face hefty fees from their checking accounts. "Fee abuse hasn't disappeared in banking with the credit- card legislation," Tony Plath, a finance professor at the University of North Carolina Charlotte told Bloomberg News. "It's just migrated to checking accounts."
Frustrated car dealers that have fronted the U.S. government money for the popular "cash for clunkers" program yesterday (Wednesday) received an assurance from Transportation Secretary Ray LaHood that they will be reimbursed for their money, The Associated Press reported. Some dealers who have lost patience with getting their reimbursements have stopped offering the program. "I know dealers are frustrated. They're going to get their money," LaHood told reporters. Cash for clunkers gives qualifying consumers $3,500 to $4,500 for their older, less fuel-efficient vehicles.
Billionaire investor Warren Buffett has finally blown the whistle on the government spending. In an op-ed column for The New York Times, Buffett pointed out how government expenditures run 185% of receipts, the U.S. deficit is at a post-World War II record 13% of the gross domestic product (GDP), the country's debt is growing by 1% a month and is borrowing $1.8 trillion a year. With such a high volume of borrowing, Buffett says, "Washington's printing presses will need to work overtime."
Sony Corporation (NYSE ADR: SNE) is giving video game fans a stimulus package of their own: The electronics giant said it has dropped the price of its PlayStation 3 console by $100 to $299. The move puts Sony's console, which not only plays games but high-definition Blu-ray DVDs, into a more comparable price range with Nintendo Co. Ltd.'s (OTC ADR: NTDOY) No. 1-selling Wii, which sells for $249 and Microsoft Corp.'s (Nasdaq: MSFT) No. 2-selling Xbox 360, which starts at $199. "The price cut may push Nintendo to lower the Wii price sooner rather than later," said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management Co. told Bloomberg News. "There seems to be an increasing number of people who aren't satisfied with the Wii, so the price cut will likely help Sony entice those users."