But sometimes, we make exceptions – especially when their over-zealous attitude causes a stock to blast higher and hand us triple-digit gains.

I remember one such occurrence in particular with a high-tech company that we own in our Xclerated Profits Report portfolio. Thanks to some giddy CNBC analysts pumping up the price, the stock surged from $6 to $20 and we took half our position off the table for a gain of more than 100%.

The small-cap stock has suffered along with the broader market, but there’s no doubt that its business is viable. It’s leading the way in the field of touch screen and force-feedback technology – otherwise known as “haptics.” In short, this simplifies and enhances human interaction with technology in a variety of ways.

Cellphones… Games… Cars… Healthcare… This Technology is Everywhere

You’ve probably used the company’s tactile feedback technology and don’t even know it.

• For example, its technology is what causes cellphones to vibrate when they ring, or you get a message. And the company has licensed the technology to major firms like Nokia (NYSE:NOK), Samsung, Motorola (NYSE:MOT), and LG.
• It’s also present in video games, which gives gamers a more interactive, realistic experience, as the action on the screen is “forced” back into the controller.
• Elsewhere, it’s used in the auto industry in dashboard instruments, the casino industry in gaming machines, and the medical industry, in helping to train surgeons and doctors by replicating the behavior of the human body.

The company holds hundreds of patents and it recently signed a deal with a major chip company, a move that an influential analyst called a “game changer.”

In short, we spotted the vast potential well before Wall Street and we’re looking for another triple-digit win on the stock. And if that happens, we’ll adopt the same practice that we always do – one that you should use in your own investing…

The Name of the Game is Profits

We have a hard and fast rule at the Xcelerated Profits Report: We don’t discriminate when it comes to profits. That means if we have a winner of 100%-plus, we take our money off the table. This is true for stocks or options.

We did this last week when we sold half our shares in the gold company Golden Star Resources (NYSE: GSS) for a cool 103% gain in just a couple of months. But what makes this trade even sweeter is that we bought the shares using the proceeds from call options that we sold on another gold stock we’ve owned for a while – Yamana Gold (NYSE: AUY).

Come options expiration in January, if Yamana is trading above $6.75 per share or thereabouts (it’s currently close to $11), we’ll have essentially bought the shares of GSS for nothing.

And speaking of gold, I’ve made another play in the upcoming October Xcelerated Profits Report issue, due out at the end of this week. But it’s a play with a twist – we’re taking a “show me” stance on gold prices, arguing that gold is either going to soar or plunge from current levels. What’s more, we’ll make it do so for about $3. If you’re looking for exposure to gold, or to hedge against a price drop, you don’t want to miss it.

The bottom line is that we don’t just make picks. We take our ideas and then figure out how to turn them into “xcelerated” profits by using straightforward investment strategies that many other investors don’t know about. We teach, then we trade.

Good investing,

Karim Rahemtulla

Source: How to Turn Ordinary Profits into ‘Xcelerated’ Profits

Motorola’s stock is up nearly 12% since the announcement, as investors are hoping the new phone will be enough to win back some of the company’s lost market share.

However, saving Motorola’s mobile division – which the company plans to spin off – is a daunting task. The company – which invented the cell phone, as well as a plethora of other communication devices used by police and military – has seen its global market share of wireless phones fall to 2% in its second quarter this year from 31% in 1995. Mobile phone sales accounted for 33% of Motorola’s second-quarter revenue, down from 41% a year ago.

Motorola had enjoyed some success in 2004 when it released its popular Razr clamshell-style phone, which was viewed as a fashionable and useful high-tech gadget. During its four-year run, more than 110 million Razrs were sold.

However, Motorola failed to respond to innovation in the mobile phone market that was pioneered by its fiercest competitors. Apple and RIMM have whittled away at Motorola’s market share over the past five years.

With the Cliq, Motorola is trying to separate from the competition by angling its device toward a younger, less professional base. The Cliq’s biggest draw will be its quick access to social networking content from Facebook Inc., Twitter Inc. and News Corp.’s (NYSE: NWS) MySpace.

“Our initial take is favorable, and it seems that Motorola is carving out a niche in the crowded smartphone market by focusing on socially minded demographics as opposed to enterprise users or pro-sumers,” RBC Capital Markets Corp. analyst Mark Sue told Reuters. Sue upped his share target for Motorola from $8 to $10 a share.

Aside from that distinction, the Cliq includes features typically found in most any smartphone: A touch screen, slide-out keyboard, and access to an application store. It runs on Google Inc.’s (Nasdaq: GOOG) Android mobile operating system, already found on two other T-Mobile Phones.

However, if Motorola’s Android-based phones are going to take off, they’ll need bigger wireless carriers. The phones currently function on Deutsche Telecom AG’s (NYSE ADR: DT) T-Mobile USA Inc. network. But with just 34 million users, T-Mobile is the fourth-largest carrier in the United States.

For that reason, a second Android phone will be offered for Verizon Communications Inc.’s (NYSE: VZ) mobile network, which is nearly three times as large. Verizon Wireless has about 88 million subscribers and is the largest carrier in the United States.

Wall Street may be underestimating the boost in profit Motorola will get from its smartphone line in 2010, UBS AG (NYSE: UBS) analyst Maynard Um said in a note to investors. Um has upgraded the communications firm’s stock to “buy” from “neutral.” Um attributed the upgrade to the expected holiday release of the Cliq, as well as additional deals with mobile carriers in the fourth quarter.

Pricing for the Cliq was not announced, but Um anticipates recession-friendly pricing.

“We do not expect new competitor handset announcements to have a materially negative sentiment impact on Motorola, as the company is not defending share, likely only has share upside, and is likely to be an aggressor on price,” he wrote.

A sizeable boost in profit could come from the Android phones’ access to the Android Market, Google’s application store. Apple’s App Store for its iPhone and iPod Touch devices have proven to be a boon for the company, with more than 1.8 billion paid and free apps downloaded since its debut in July 2008. While many of the apps, such as those from The New York Times are free, they present consumers a strong value proposition when buying a smartphone.

However, Apple’s App Store has more than 75,000 applications available, while Google’s Android Market offers just 10,000 apps.

Motorola will add more Android-based phones next year, Chief Executive Officer Sanjay Jha said at a conference last week in San Francisco, and Avian Securities LLC analyst Matt Thornton expects Android phones to represent 30% of the total handsets it sells in 2010, Bloomberg News reported.

“It’s the first step in a long journey,” said Jha, who insists the Cliq will not make or break his company.

In March 2008, Motorola to split its core business from its mobile division after pressure from billionaire investor Carl Ichan mounted. At the time, analysts said the split would put the company in a better position to sell assets or negotiate a joint venture.

A week later, Videocon Industries Ltd., the largest electronics maker in India, said it was interested in buying Motorola’s mobile business. However, neither a sale nor split of Motorola has happened.

Motorola shares closed at $8.79 in trading yesterday (Monday), up 11 cents or 1.27%.

Source: Hot Stocks: Motorola Throws Hat Into Smartphone Ring

Don’t look now, but history tends to repeat itself.

Also, consider the fundamental picture. We have rallied 48% from the March lows on the back of what? Good earnings? Good employment figures? Good spending figures? Expanding GDP? No.

We have rallied based on one of the largest and most concerted propaganda campaigns ever waged, supported by government stimulus. But no government can stimulate forever. The bottom line is this, if Americans do not return to work, THERE IS NO RECOVERY. Memorize this line. Post it on your refrigerator, your mirror, your dashboard – wherever!

So maybe now you’re asking yourself, “Aren’t the unemployment numbers getting better?”

Well, let’s see…

Verizon (NYSE:VZ) – 8,000 jobs cut
Motorola (NYSE:MOT) – 7,000
Microsoft (NASDAQ:MSFT) – 5,000
Untied Technologies (NYSE:UTX) – 8,000
HSBC (NYSE:HBC) – 6,100
Anglo American (LON:AAL) – 19,000
Avon (LON:AVON) – 2,500
Goodyear Tire (NYSE:GT) – 5,000
GM (NYSE:GRM) – 10,000
Nissan Motors – 20,000
Panasonic (NYSE:PC) – 15,000
PNC Bank (NYSE:PNC) – 5,800

Many of these will be released in the third and fourth quarters. No doubt there are plenty more we haven’t heard from yet. Frankly, I couldn’t list the thousands of companies and millions of jobs lost in this write-up. That’s just a sampling. But let’s get to some hard and fast figures.

According to Seeking Alpha, 13 million Americans will lose their benefits by years’ end. So if unemployment claims are falling, people must be getting back to work. Right?

WRONG!

They are exhausting their benefits. There are 30 million people in the United States on food stamps. There are only 200 million working-age Americans (age 15-64). Is there any wonder why the Administration is NOW saying they will have to raise taxes on the middle class to fund their programs?

Unemployment has been estimated by many good economists as being around 20%. Unfortunately for these people, their nanny-government lifeboats are slowly running out of air.

Those 3 million people who lost their jobs in the second half of last year? Once you factor in their dependants, that equals 10 million people who have no income and no savings.

And how about the other 4 million others who lost their jobs in the first half of this year? They will be next. The numbers get so depressing, I hate to even count them up.

As I have said before, unemployed people don’t spend money. They don’t buy technologies, or durables, or even pay their mortgage. Bankruptcies are up 600% in this recent downturn. And that includes the time after Congress affected new rules to make bankruptcy harder.

So who is going to pay for anything when they are struggling to buy groceries?

If the equity averages are already rallying on the back of these horrible stats, there is nowhere to go but down when the real truth sets in.

And we have seen this corollary frequently in recent months. When stocks and risk assets fall, so do the currencies, and the dollar rises. We are a long way from being out of the woods on this retracement.

So why do I cite all this doom and gloom about the United States? Believe me, there’s plenty more to go around. Because the fact of the matter is this: When these chickens do come home to roost, we will see another gut-wrenching breathtaking sell-off in equities, which will be followed by currencies. We have not seen the end of this yet.

While some are talking of a recovery, others are talking about a possible double-dip recession – and I’m reasonably sure we are in for a “multi-dip.” It is hard to be bullish on the dollar for any reason, but if the market drops again, which I believe it will, funds will rush right back to the dollar (and the yen).

So far, we have seen range-bound trading in the recent months as currencies search for direction. This week the big news was the US GDP. Risk currencies rallied on the back of it, but for 24 hours they have remained flat as there were no buyers to move it higher.

Also, the market got awfully jittery on the release of the consumer spending news yesterday. The manufacturing euphoria expended itself, and now we find out that personal income has dropped 1.4%, the biggest fall in four years. Inflation-adjusted spending fell 0.1%. The real dark spots in the economy have started showing back up. The stimulus has worked its way and done its best, but its effects are now negligible. Even though there are signs of a “recovery,” it isn’t going to be one without the consumer. If he’s exhausted his means of spending, or is just afraid to put out any money, the recovery trade will be doomed. And that means dollar strength once again.

But for now, we will have to trade with what we have. It is hard to argue with the markets, even with the most compelling of reasons. A person may as well try to stop an ocean wave from breaking onshore.

And as we look ahead, we must always be mindful of what may be. As numerous talking heads were saying on Tuesday of this week, “We have turned the corner… things are going to get better – if they don’t get worse!”

Regards,

Bill Jenkins

Source: Illogical Optimisim

When the U.S. Commerce Department on Friday said the U.S. economy contracted at a 1% annual pace in the second quarter, the report was actually seen as good news: It was a slower decline than in each of the two prior quarters, and economists had expected a contraction of 1.5%.

“This is good news,” Nariman Behravesh, an economist with IHS Global Insight Inc. (NYSE: IHS), told The San Francisco Chronicle.

But here’s the wild card: Although government spending did increase during the April-to-June quarter, only about 7.7% – $60.4 billion – of U.S. President Barack Obama’s stimulus package had actually made its way into the U.S. economy by June 30, the quarter’s official conclusion. Of that total, the largest component went to U.S. states to help defray the jump in Medicaid costs, CNNMoney.com reported.

Much of the $43 billion in stimulus tax relief – including the “Making Work Pay” tax credit for individual workers – also took effect during the second quarter, CNNMoney said.

At this point, it’s really difficult to “see how the effect of stimulus has been very large,” Edward Lazear, an economics professor at Stanford’s Graduate School of Business – who served as an advisor to former U.S. President George W. Bush – told CNN. “Very little has gone out.”
And that’s the problem.

In short, it looks like we’re already experiencing an economic rebound – without the Obama stimulus having really even kicked in … yet. In fact, the impatience over the continued U.S. malaise, the slowness of the economic turnaround and the fact that when growth does return we’re almost assured of a “jobless recovery” actually has some Washington legislators already pushing for a second stimulus.

That means the economy will be in rebound mode when nearly three-quarters of a trillion dollars in stimulus money starts to flow in. Dumping all that money into an already-growing economy won’t just serve as a simple tailwind that gives the economy a gentle push; it will be more like the head-snapping start followed by the thunderous charge down the quarter mile that we see from one of the supercharged Top Fuel Funny Cars driven by National Hot Rod Association (NHRA) star John Force. (From a standing start, Top Fuel Funny Cars cover a quarter mile in less than five seconds at speeds well in excess of 325 miles per hour).

And there’s only one outcome from that scenario – rampant inflation. In fact, U.S. consumers are probably headed for the worst bout of inflationsince the 1980s. And that makes the so-called “exit strategy” of U.S. Federal Reserve Chairman Ben S. Bernanke all the more important.
To be sure, the Obama stimulus has given the economy a bit of a boost. So far:

• The states have deployed what stimulus money they have received, which helped fuel the biggest surge in state and local spending since 2007.
• Some early pieces of the stimulus – such as the $25 increase in unemployment benefits – have allowed consumers to spend more.
• And one economist – Economic Policy Institute’s Josh Bivens – said Obama stimulus money may have boosted growth by as much as three percentage points during the second quarter.

But other economists say that – given the environment – the second-quarter GDP numbers were much too strong. After all, business spending dropped 8.9% and hours worked fell 7%. Somehow that doesn’t translate into a mere 1% drop in GDP. That latter figure will most certainly be revised downward in the future.

Unless or until that happens, look for the third quarter GDP statistics to give us a better picture of the U.S. economy’s health. Complaints that the promised stimulus money isn’t getting where it needs to be have Obama’s economic team working overtime to iron out the problems that keep cropping up.

Mark Thoma, an economics professor at the University of Oregon, toldCNNMoney that “the third quarter will be a critical time period for assessing the stimulus package.”

And for assessing the inflation threat – which Money Morning has repeatedly warned is a very real threat. Gold, commodities, and other hard assets will be key holdings. The same is true for dividend-paying stocks. And make sure to go global – the best growth prospects will continue to be overseas.

Market Matters

A report by the New York Attorney General’s Office claims the initial nine institutions that received Troubled Asset Relief Program (TARP) money paid out $33 billion in bonuses in 2008.  Of particular note, Citigroup Inc. (NYSE: C) and Bank of America (NYSE: BAC) rewarded a combined 900 employees (combined) with bonuses of at least $1 million, despite having received $45 billion each in government aid (and that doesn’t count the $3.6 billion Merrill Lynch & Co. Inc. employees received).  Imagine how much they would have made if the companies were actually doing well?

While President Obama continued his road trip across America to promote health care reform, a group of conservative Democrats (Blue Dogs) came up with their version of a bill, but offered no timetable for completion.

Meanwhile, regulators pushed forward with proposed rules aimed at reducing speculation in the marketplace and focused on so-called “naked” short selling and on lpacing strict limits on commodities contracts.

In corporate news, deals were the theme of the week.  Microsoft Corp. (Nasdaq: MSFT) made amends with Yahoo! Inc. (Nasdaq: YHOO) and forged a 10-year partnership to cut into Google Inc.’s (Nasdaq:GOOG) share of the Internet search business. And International Business Machines Inc. (NYSE: IBM) is expanding its software empire with the purchase of SPSS Inc. (Nasdaq: SPSS) for $1.2 billion.

On the earnings front, energy companies highlighted the week’s reports and the results were not pretty (though were expected).  On a positive note, Motorola Inc. (NYSE: MOT) surprised analysts by reporting an unexpected profit, while offering a promising outlook, and Deutsche Bank AG (NYSE: DB) continued the favorable trend among (previously depressed) financials by posting strong earnings on solid investment banking operations.

Investors digested the mixed earnings news and chose to focus more on the positives.  Despite a temporary setback in China (5% index decline before encouraging comments by its central bank), the Dow Jones Industrial Average moved higher late in the week after General Electric Co. (NYSE: GE) was upgraded to a “Buy” by a major analyst, a sign of an improving climate.  The Nasdaq Composite Index even flirted with 2,000 for the first time since October 2008, and theStandard & Poor’s 500 Index edged closer to 1,000, a level not seen since last November.

The Dow ended July with its best monthly performance since October 2002.  Japanese stocks moved to their highest levels in about 10 months and European equities soared to nine-month highs.  Bond investors breathed sighs of relief as a record $115 billion Treasury auctions came to a close and foreign bankers emerged as buyers on the final day.

Economically Speaking

Has Fed Chairman Bernanke suddenly become Mr. Optimist these days? Early in the week, he proclaimed that the financial debacle ultimately would produce favorable results as “not only will we will be back on track, but the economy will be stronger than it had been before this started.”  He also urged Congress to move forward with a regulatory reform package to ensure that such dire times will not be repeated.

The Fed’s Beige Book showed that the economy remained weak, though signs of stabilization and improvements in manufacturing, housing, and even labor are occurring across several regions of the country.  Some districts reported enhanced corporate hiring, particularly within the healthcare and technology sectors.

The afore-mentioned second-quarter GDP report was better than expected, giving yet another indication that the recession is drawing closer to an end.

Still, it’s a much deeper recession than most realized: For the first time since records have been kept (1947), economic activity has declined for four consecutive quarters.  New homes sales skyrocketed in June by 11%, the fourth increase in the last six months, and home prices even climbed on a month-over-month basis for the first time since July 2006 according to the S&P Case-Shiller index.

Durable good orders fell in June, though once the volatile transportation category was removed from the statistic, orders actually increased.  Consumer confidence fell in June, as ongoing pressures on the labor markets brought continued concerns and many Americans are refraining from major purchases (now and for the foreseeable future).

On the other hand, jobless claims rose in the most recent week, though analysts pointed to discrepancies from the auto industry.   Looking at the four-week moving average as a better gauge, claims for unemployment benefits actually fell to the lowest level since January and continuous claims unexpectedly declined, as well.

Weekly Economic Calendar

Source: Why the Obama Stimulus Has Us on a Collision Course with Inflation

• Both the Dow Jones Industrial Average and the Nasdaq Composite Index flirted with 9,200 and 2,000 yesterday (Thursday), respectively. Thanks to a continuing string of better-than-expected earnings reports, the Dow jumped 83.74 points, or  0.92% to close at 9,154.46. The tech-heavy Nasdaq eclipsed 2,000 in trading before finally settling in at 1,984.30, up 16.54, or 0.84%, its highest close since October 1. Meanwhile, the Standard & Poor’s 500 also posted a gain, closing at 986.75, up 11.6 or 1.19%. “Institutional and retail investors are so anxious to make up the lost returns of the last year, they are using any cue to buy aggressively,” Kevin Mahn, managing director and chief investment officer at Hennion & Walsh told MarketWatch.com. “We got to the point in the first quarter, when everyone was so risk averse they lost out. And, in just six months, they have now become overly aggressive.”

• U.S. taxpayers yesterday (Thursday) became Citigoup Inc.’s(NYSE: C) largest shareholder with a 34% stake in the company. The federal government swapped $25 billion of its $45 billion Troubled Asset Relief Program (TARP) investment into common stock. The remaining $20 billion will remain in the form of preferred shares that pay an 8% annual dividend.

• Initial claims for jobless benefits rose by 25,000 to a seasonally adjusted 584,000 last week the Labor Department said yesterday (Thursday). However, the number of people still on benefit rolls after collecting an initial week of aid fell by 54,000 to 6.20 million in the week to July 18, the lowest since early April. That fueled optimism that the economy is on the mend.

• Light, sweet crude for September delivery yesterday (Thursday) rose $3.59, or 5.6%to settle at $66.94 a barrel on the New York Mercantile Exchange (NYMEX). The surge left some analysts miffed, as there was no obvious motivation. “You need to really worry about a market that sells off on a very large build and supply one day, and then it rebounds on no headline at all,” analyst and trader Stephen Schork told The Associated Press.

• Motorola Inc. (NYSE: MOT) yesterday (Thursday) posted an unexpected profit for the second quarter after several quarters of losses. Motorola said cost cuts including 8,000 layoffs so far this year were largely responsible for the turnaround. Revenue dropped 32% to $5.5 billion for the quarter, but the company reported a profit of $26 million, or 1 cent a share. That’s up from $4 million a year ago.

• The worst recession in more than 60 years is taking its toll on theWalt Disney Co.’s (NYSE: DIS) advertising and theme park revenue. The Burbank, Calif.-based company saw its net income drop to $954 million, or 51 cents a share for the quarter ended June 27. That compares to a net income of $1.28 billion, or 66 cents a share in the same quarter last year. Operating income from its highly seasonal theme parks dropped 19% to $521 million in the quarter, compared to last year’s $641 million, which was up 3% from 2007. Advertising on its media networks which include ESPN decreased: The operating revenue was down 13% to $1.3 billion, compared to last year’s 9% increase to $1.5 billion.

• Microsoft Corp. (Nasdaq: MSFT) Chief Executive Officer Steve Ballmer weighed in on the beating his company’s new partnerYahoo Inc. (Nasdaq: YHOO) took Wednesday, when investors unloaded shares to send Yahoo’s stock down more than 12%. “People haven’t figured it out,” Ballmer said. “Yahoo gets 88% of the search revenue they have today. They have 0% cost of goods sold against 88% revenue and they have no [research and development] expense and no ongoing [capital expenditure],” Ballmer said in a Dow Jones Newswires report, which cited an event at Microsoft’s headquarters in Redmond, Wash. Yahoo’s Wall Street beating continued yesterday (Thursday), with its shares closing at $14.60, down 54 cents or 3.57%. Microsoft’s shares climbed 1 cent yesterday, closing at $23.81, up .04%.

• Southwest Airlines Co. (NYSE: LUV) made a minimum bid of $113.6 million for Frontier Airlines Holdings Inc. (OTC: FRNTQ) in a bankruptcy auction that would eliminate its low-fare rival. The bid would compete with a pending offer of $108.8 million fromRepublic Airways Holdings Inc. (Nasdaq: RJET). The winning bidder will get a bigger foothold in the Rocky Mountain region. “Taking the Denver gates and equipment from Frontier would give them a large presence there, and the cities that aren’t on Southwest’s route map now could easily be integrated,” said Dave Swierenga, president of an aviation consulting firm AeroEcon toldBloomberg News.

Source: Investment News Briefs Friday, July 31, 2009

But by the end of the month, Immelt’s resolve had collapsed under the weight of the global financial crisis and his company announced its first dividend cut since the Great Depression. GE slashed its payout by more than two-thirds, from 31 cents to 10 cents per share.

GE is not alone. Companies typically abhor dividend cuts, as they are widely viewed as a sign of desperation. But lean times – like those we’ve experienced in the past year and a half – have left even the proudest U.S. firms with little recourse.

By cutting its dividend, GE will save about $9 billion a year.

The 117-year old American icon was joined by a record number of companies that issued dividend cuts in the first quarter of 2009. Companies slashed a total $77 billion from investor payouts in the three months ended March 31. For the first time since 1955, dividend cutbacks actually outweighed dividend increases.

“While the number of dividend decreases is at a record high, the number of increases has set a new record low,” said Standard & Poor’s Chief Index Analyst Howard Silverblatt.  “The average has been for every 15 increases there is one decrease.  Now it is three increases for every four decreases.”

The long list of businesses that have cut their dividends reads like a “Who’s Who” of Corporate America.  Bank of America Corp. (NYSE: BAC), Citigroup (NYSE: C), Motorola Inc. (NYSE: MOT), CBS Corp. (NYSE: CBS), and Pfizer Inc. (NYSE: PFE) were among the victims.

Now that even America’s proudest, most-reliable labels have reduced their payouts, it’s hard to tell exactly which companies will be the next to cut their dividends. But here are some simple rules to follow when looking for a safe place to invest your money for long-term dividend growth.

Three Rules for Dividend Investing

Dividends remain a critical element of investing success, Money Morning Investment Director Keith Fitz-Gerald has repeatedly said. That’s especially true in the uncertain, whipsaw market conditions that have dominated since last fall.

According to Fitz-Gerald, one study by Ned Davis Research is particularly telling, noting that dividend-paying stocks provided returns of more than 10% a year from 1972 to 2005. Non-dividend paying stocks, in contrast, posted gains of just 4.1%.

Other experts say there are three rules to follow in order to identify companies whose dividend payouts are likely to remain in place – or even grow.

1. History Repeats Itself: Look for companies that have a history of raising their dividend.  For some organizations, dividend growth is a top priority and their track record will show that.  Although GE is clearly an exception, if a company has consistently raised its dividend for decades at a time, it will likely continue to do so.
2. Earnings vs. Payout: Research is key when investing in any stock. When looking at companies that offer a dividend, a good question to ask is: “What does the company pay per share versus its assets and earnings?”  Dividend payouts cannot grow if a company’s earnings do not grow, so check a company’s earnings history.
3. Black-and-Blue Stocks: Avoid stocks whose earnings have been hammered. While in today’s market most stocks are beaten down, stocks valued below $10 a share are generally there for a reason.

Three Companies That Are Unlikely to Cut Their Dividend

NYSE Euronext (NYSE: NYX): NYSE Euronext is a diverse exchange group that offers a 4.69% dividend yield, making it an extremely attractive investment opportunity. While the company was hit hard during the beginning of the recession (trading at over $100 a share to a meager $25.59 as of yesterday’s close), it still shows strength for long-term investment.

“The dividend is intact for 2009 and we have no plans to change it,” NYSE Euronext Chief Executive Officer Duncan Niedereaur said during a recent appearance on the 1,000th episode of CNBC’s “Mad Money.”

NYSE Euronext completed its takeover of the American Stock Exchange (AMEX) in October.  And the company has seen a tremendous improvement in its overall trading activity over the past month. Its cash equity business is up 11% on a month-over-month basis, and its U.S. consolidated equity volumes were close to record levels at 12.3 billion shares.  That’s a 48% increase from last year, and a 12% jump from February.

Additionally, the U.S. Securities and Exchange Commission (SEC) recently had a hearing and ruled unanimously in favor of reinstating five rules against short selling following the guidelines of the former “Uptick Rule.”  This ruling is important to the Big Board’s growth because short sellers helped drive down share prices.

The recession that’s plagued the markets over the past year and a half has severely diminished trading volumes, and therefore the profits of the New York Stock Exchange. The newly established rules on short selling can only make the company stronger.

“We are a three-year-old public company,” CEO Niedereaur said. “Long-term prosperity for this company is based on fairly run markets and the reinstatement of the uptick rule is a major plus for this company.”

Johnson & Johnson (NYSE: JNJ): Johnson & Johnson is a strong company with a solid dividend that yields 3.51%. Its stock remains undervalued, down 23% from its 52-week high of $72.76 a share.

Johnson and Johnson is the quintessential dividend growth stock. Its dividend has grown 14.10% on average every year since 1999.  A growth rate that high means the company’s dividend is doubling about every five years.  This has been the pattern since 1974.

Last year, JNJ’s revenue was $63.7 billion, producing a net profit of $13 billion – an increase of 22% from 2007.

JNJ’s most recent acquisition of Mentor Corp. (NYSE: MNT), a global supplier of medical products for the cosmetic-surgery market, gives JNJ the opportunity to compensate for a decline in its pharmaceutical sector (the unit has cut more than 900 sales jobs and is dealing with drug-approval  issues).

“Mentor will become the cornerstone of a broader Johnson & Johnson strategy for aesthetic medicine – serving both consumers and medical professionals,” Johnson & Johnson Chairman Gary Pruden said in a statement. “We will use our combined strengths and experience to build a market-leading aesthetic business that capitalizes on Johnson & Johnson’s broad-based commercial capabilities, worldwide surgical care footprint, and clinical scientific capabilities.”

The Proctor & Gamble Co. (NYSE: PG): Proctor & Gamble offers a healthy dividend of $1.60 a share, yielding 3.26%. At $54.02, its stock down 26.5% from its 52-week high of $73.57 share.

P&G is another example of a classic dividend growth stock:  It has been raising its dividend for the past 55 years. For 10 consecutive years, P&G has delivered its shareholders an annual average return of 3.10%.  Since 1973, dividend payments have doubled every seven years.

Proctor & Gamble offers branded consumer goods that branch off into three global markets: Beauty, household care, and health and wellness. Many common household items come from this company, such as Gillette Co. shaving products, Tide laundry detergent, Pampers baby diapers and Bounty paper towels, to name a few. During troubled times, a stock such as this is often a nice defensive play, since families are unable to do without these items.

“Today we reach a little more than half of the world’s 6.7 billion consumers,” Proctor & Gamble CEO Alan G. Lafley recently told BusinessWeek. “We want to reach another billion in the next several years, and much of that growth is going to be in the emerging markets, where most babies are being born and where most families are being formed. We see growth across our entire portfolio.”

Since 61% of P&G’s sales come from outside the United States, a weaker dollar is going to be a large factor in this company’s success.  A weaker dollar makes U.S. made exports cheaper for foreign consumers to buy. While the company is timid about its earnings and fears that business conditions may have slowed from last year, the Cincinnati-based company raised its dividend in March.  From an investment-research standpoint, increasing dividends despite expectations of a decreased consumer market is typically a good sign.

Source: Three Dividend Plays That Can Offer Stability in the Face of Uncertain Financial Markets

This dismantling of the so-called “New Federalism” will be readily apparent again this week as the federal government is once again at the forefront of the most-closely watched  crisis-fighting initiatives at hand: With Congress pushing forward on an $827 billion stimulus plan and the Treasury Department planning to unveil its new banking bailout blueprint on Tuesday, economists and other experts say the federal government is taking its biggest role in the economy in a generation.

States that once pushed away from the federal government as part of the New Federalism are now essentially begging it for financial support, banks and Big Business that once viewed near-total deregulation as Corporate America’s Holy Grail are now seeking federal financial aid and new regulatory protections (and in many cases are becoming actual business partners with the government), and individuals are asking for tax relief.

Alan Viard, a Bush administration economist now at the American Enterprise Institute, may well epitomize this reversal of thought: He’s one of the economists who initially rejected the need for a fiscal stimulus, stating that the right size for a government spending bill was “probably zero,” believing that federal interest rate cuts and existing unemployment benefits would be enough to do the trick. But he now sees the package as necessary.

“Things have gotten so bad so quickly,” Viard told The Washington Post. “We have now lost 3.6 million jobs, a stunning loss. But what’s more horrifying is that half that loss has occurred in the last three months. This is a severe recession.”

The exact shape and size of the package matters less than the timing, and any delay will be very damaging, economists say.

“Most of the things in the package, the big dollar amounts, are things that are pretty quick stimulus and need to be done,” Alice Rivlin, who was former president Bill Clinton’s budget director and a critic of aspects of the proposed stimulus, told The Post. “Is it a perfect package? Of course not. But we’re past that. Let’s just do it.”

Signs of the Stimulus

The U.S. Senate late Friday reached agreement on the estimated $827 billion stimulus bill, setting the stage for what’s expected to be some tough negotiations with the House of Representatives over tens of billions of dollars in aid to states and local governments, tax provisions, and programs focusing on education, health and renewable energy.

Congress is pushing hard to complete the legislation this week. But that figures to be a challenge. The House bill was passed without any Republican support, while the Senate version passed Friday night between Democrats and three moderate Republicans.

During a rare floor session on Saturday, Republican opponents continued to criticize the entire stimulus proposal – even though they clearly don’t have the votes to stop it. The bill is expected to be passed in the next few days.

The price tag for the Senate plan is only slightly more than the $820 billion measure adopted by the House late last month. Both plans seek to resuscitate the U.S. economy with similar one-two punch strategies:

• Fast-acting tax cuts designed to jump-start consumer and business spending.
• And longer-term – albeit slower-acting – spending on public works programs and other projects that are projected to create more than 3 million jobs.

Despite these seemingly similar philosophies, the two plans rely on approaches that are very different. The higher-priced House bill emphasizes help to states and municipalities that would otherwise be facing major cuts in services and layoffs of public employees, while the Senate slashed $40 billion of that kind of funding from its version of the bill.

The Senate plan focuses more on tax cuts, lowers a proposed increase in food stamps and provides health-care subsidies for the unemployed that are much less generous than the House version. The Senate plan also creates $30 billion in tax incentives to encourage Americans to buy homes and cars within the next year.

House Speaker Nancy Pelosi, D-Calif., said the emerging Senate cuts to the stimulus program “very damaging” and that she was “very much opposed to them.” But after the Senate reached a deal, Pelosi expressed resolve to complete the legislation in the days ahead.

U.S. President Barack Obama has made the economic recovery effort the centerpiece of his agenda since even before he officially took office. But President Obama now intends to get much more involved, and much more aggressive: He will conduct a “town-hall-style” meeting in Indiana today (Monday), followed by a formal “prime time” White House news conference – the first of his term – tonight.

The president will then pitch the plan again in Florida tomorrow (Tuesday) and again in Virginia on Wednesday.

Senate Majority Leader Harry Reid, D-Nev., said final passage of the Senate bill is expected Thursday, after which congressional leaders say they will hurry to get the House and Senate versions into conference with the hope that a passed bill can be sent to the White House by the end of week, the San Francisco Chronicle reported.

Banking Plan Overhaul Unveiling Tomorrow (Tuesday)

Busy new U.S. Treasury Secretary Timothy F. Geithner last week promised that the Obama administration would unveil its new blueprint for rescuing the U.S. banking system today. Over the weekend, however, the administration said the rollout would be delayed until Tuesday, so that the focus could remain on passage of the stimulus package, Bloomberg News reported.

But that doesn’t mean the banking bailout plan isn’t key.

According to a recent analysis, the Obama administration has a multi-pronged strategy for quelling the financial crisis, including:

• A program to insure banks against extreme losses on mortgages and other loans.
• A new round of investments in banks.
• Help for homeowners facing possible foreclosure.
• The broadening of a U.S. Federal Reserve program to ramp up lending.
• The Treasury Department could also look at purchasing toxic assets from banks – possibly with the aid of private-sector financing.

This would represent an overhaul of the $700 billion Troubled Assets Relief Program (TARP) initiated by the Bush administration. As the name implies, TARP was initially concerned with buying troubled assets – but it quickly evolved into a direct-government investment into the banks.

This new Obama plan reflects Geithner’s personally held view of how governments should respond to financial crises. Geithner believes all available financial tools should be used – and used aggressively. Any such effort would include direct efforts to deal with the financial sector’s massive losses, since that would help renew public confidence in the financial system.

Too small a government response during a crisis poses more risk than too much response, he said during his confirmation hearing.

Many of the details of what Geithner will announce remained in flux, although the broad outlines were becoming clear, published reports state. But one thing is certain: Even the ideas that are continuations of the initiatives started by former Treasury Secretary Henry M. “Hank” Paulson Jr. will have a unique Geithner twist.

One example: The government will almost certainly continue to invest in banks. But past investments consisted of a form of “preferred stock” that granted the federal government no say in how the bank was run, or how the money would be used.

As a Money Morning investigation revealed, that lack of control allowed banks to use taxpayer-provided TARP money as financing for buyouts. And then the banks refused to detail how they spent the money – and why not? They weren’t required to.

Under the new plan, there will still likely be new government investments in banks. But Geithner will likely call for those new investments to be convertible into common stock after some fixed period of time, perhaps seven years. If the banks are unable to raise private capital in that span, government control would escalate.

Banks receiving money also will probably have to report to the government and to the public, and the government is likely to insist that the new capital be used to expand lending.

Geithner has also been looking for a way to bring back the original TARP concept, which Congress passed on Oct. 3. Paulson pitched the plan to Congress as a program to buy troubled assets off of banks’ books, then shifted the plan and opted to invest directly into the banks instead.

Paulson’s chief worry – and the reason that he changed direction – was that asset purchases would involve too many technical complications, meaning it would take too long to enact. And that delay could be costly to a system where banks were teetering on the precipice of failure.

After struggling with those same issues, Geithner and his team appear to have settled on an approach that amounts to financial triage, meant to give investors confidence that banks will not encounter vast new losses so that they are willing to invest private money, The Post reported.

In addition to buying bad assets, the Fed and Treasury in the next few weeks are expected to expand a program that should jump-start lending outside the banking system. In November, the agencies launched a program – the “Term Asset-Backed Securities Loan Facility” – that would devote $200 billion for credit card, auto, student and small-business loans.

That program will be extended to include residential real-estate mortgages and into the commercial real estate sector. Geithner may also announce an initiative that would inject government money into companies known as mono-line insurers. These firms are key players for states and municipalities when it comes time for those state and local government bodies to borrow money. With the implosion of the housing bubble, and the subsequent implosion of the commercial real estate business, mortgage-related losses by the insurers have made it harder for states to issue the municipal bonds that would help them ride out the recession without aggressive tax increases or budget cuts.

Geithner is likely to roll out a plan, worth $50 billion to $100 billion, to encourage the modification of mortgages for homeowners who would otherwise likely face foreclosure. It could be based loosely on a strategy for foreclosure relief engineered by Federal Deposit Insurance Corp. (FDIC) Chairman Sheila C. Bair, when the FDIC took control of the failed bank IndyMac Bancorp Inc. (IDMCQ) last year.

Market Matters

On the corporate front, United Parcel Service Inc. (UPS) posted a profit (though revenue declined) and then announced new cost-cutting measures.  Motorola Inc. (MOT), The Walt Disney Co. (DIS), Time Warner Inc. (TWX), and Costco Wholesale Corp. (COST) reported disappointing results.  Visa Inc’s (V) earnings jumped by 35%, though management warned of tougher times ahead.

Bailout plan recipients have tried to cut back excessive spending (and the associated bad PR) as Goldman Sachs Group Inc. (GS) (Miami) and Well Fargo & Co. (WFC) (Las Vegas) canceled huge boondoggles. Bank of America Corp. (BAC) is selling off corporate jets, and Citigroup Inc. (C) may be attempting to get out of the $400 million marketing deal with the New York Mets.

C-SPAN must be enjoying stellar ratings as investors seem obsessed with the inner-workings of Congress and their debates on the stimulus and bailout.  The markets disregarded much of the dire earnings and economic data (terrible unemployment report…see below) and focused on the newfound optimism that politicos can work together to get the country moving in the right direction.

Economically Speaking

Just how long until a stimulus package starts creating jobs?  That answer can’t come soon enough for the almost 600,000 people who moved to the unemployment line in January, the most devastating month for job losses since 1974.  The unemployment rate climbed to 7.6%, forcing many economists to (upwardly) revise their projections for the rest of the year (and beyond).

Since the recession “officially” began in December 2007, the country has lost more than 3.6 million jobs, with most of the losses coming in the past three months.  The rest of the data released during the week did little to contradict the lousy unemployment picture.  Factory orders fell for the fifth straight month and the ISM index revealed that purchasing managers still look for contraction in the manufacturing sector. Though the services sector showed a slight rebound in its ISM survey, the index reported a fourth consecutive month of declining activity.  Residential construction spending experienced its worst annual decline ever recorded (since 1993), though optimists are hopeful that a stimulus package that focuses on infrastructure growth will prompt a renewal in non-residential building.

With the Fed stuck looking for creative ways to get involved (now that the benchmark Federal Fund rate stands at about 0%), its international counterparts took action (or inaction) of their own. The Bank of England (BOE) cuts its primary lending rate to a record low 1.0%, while the European Central Bank chose to leave its rate unchanged (for now) at 2.0%.

Weekly Economic Calendar

Source: As Stimulus-Package Debate Continues in Congress, New-Look Bank Bailout Plan is Set to Debut This Week

The U.S. recession may just now be entering full swing, but storm clouds have been gathering for more than a year and many companies have already trimmed payrolls. Now, the goal for many companies is to prepare for an economic rebound by finding ways to keep the their skilled productive labor intact.

“More companies are exploring alternatives to layoffs,” John A. Challenger, chief executive of consulting firm Challenger, Gray & Christmas, told BusinessWeek. “If they can keep people on until the business turns around, the company would be in much better shape to ramp up quickly.”

Dell Inc. (DELL) employees, for instance, recently received a memo from Chief Executive Officer Michael Dell asking them to take some time off without pay. The company has already met its previously stated goal of cutting employee payrolls by 10%, but the memo said there would be more layoffs unless other cost-cutting measures, like unpaid leave, weren’t effective.

Other companies throughout Silicon Valley have joined Dell in elongating the holiday.
Hewlett-Packard Co. (HPQ), Cisco Systems Inc. (CSCO), Advanced Micro Devices Inc. (AMD), Texas Instruments Inc. (TXN), Adobe Systems Inc. (ADBE) and Computer Sciences Corp. (CSC) are among the industry heavyweights to be taking a break, with some closed from today until January 5.

Maria Guidice, owner of San Francisco-based Web design firm Hot Studio Inc., told the New York Times that when the dot-com bubble burst in 2000 many companies, including hers, immediately slashed payrolls but that tactic was painful and counterproductive.

“In 2000, it was like ‘cut the heads,’” she told The Times. But things are different this time around.

“Our No. 1 priority is to keep people employed and to do that we’re going to bank the money and keep it for when we need it,” Guidice added. “I know some people are super bummed, but they understand we’re trying to keep the workforce intact.”

California’s technology giants aren’t the only ones pursuing alternative cost-saving measures to save jobs, either. Across the country, in Towanda, PA, Global Tungsten & Powders is encouraging its 1,000 employees to take leave without pay in an effort to preserve manpower, The New York Times reported.

“We have a very skilled and competent workforce and the last thing we want to do is lose them when we’re assuming this economy is going to come back,” Craig Reider, the company’s director of human resources, told The Times in an interview.

The number of U.S. workers who normally work full-time but now clock fewer than 35 hours per week has soared 72% in the past year according to the Bureau of Labor and Statistics. The agency said the number of such employees climbed from 1.49 million in November 2007 to 2.57 million in November 2008.

Pella Corp., an Iowa-based manufacturer of windows, is instituting a four-day workweek for a third of its 3,900 employees, BusinessWeek reported.

“Our contention is, consumer confidence will rebound,” said Pella Senior Vice President Chris Simpson. “If there’s a [government] stimulus package of some kind, we think people are going to respond.”

A stimulus package being drummed up by the incoming Obama administration is rumored to cost roughly $800 billion, for instance.

Other companies, like Motorola Inc. (MOT), are cutting back salaries, but so far, pay cuts do not seem to be widespread. Labor Department figures indicate the average hourly pay for about 80% of the work force grew by 3.7% last month from November 2007.

John Challenger, of Challenger Gray & Christmas, says that the effort to save jobs is not just a fad, or a case of companies living in denial, but a shift in modern corporate ethos that is not only more humane, but more economical.

“People are measured and ‘metricked’ to a much greater degree,” he told The Times, “So companies know that when they’re cutting an already taut organization, they’re leaving big gaps in the workforce.”

Company Layoffs: More Companies Trim the Fat without Trimming the Workforce

• With Morgan Stanley’s (MS) $2.2 billion loss in the third quarter, the carnage from the credit crisis passed the $1 trillion mark. About 67% of that came from U.S. financial firms, and about 30% from European firms, Bloomberg reported.

• A day after the U.S. Federal Reserve’s deepest rate cut in history, the dollar fell hit fresh lows against other currencies. It fell toward a 13-year low against the yen and a two-and-a-half-month low against the euro, Reuters reported.

• Gold and silver prices rallied yesterday (Wednesday) as the dollar declined. February gold futures climbed 4% to $872.90, while silver for March delivery climbed 7% to $11.45 an ounce on Globex, MarketWatch reported.

• A strengthening yen and plummeting car sales forced Honda Motor Co. (ADR: HMC) to slash its full-year profit forecast by 62%. Japan’s second-largest automaker may also post its first half-year loss in 11 years, Bloomberg reported.

• Trying to cut costs, troubled cell-phone maker Motorola Inc. (MOT) will suspend 401(k) contributions to worker retirement plans, freeze its pension plan, stop some raises and skim the salaries of two top executives.  “It’s a small step in the right direction, but it’s not going to save them either,” Nomura Securities technology specialist Richard Windsor told Reuters. “If you look at the degree the market has deteriorated since they last spoke to the Street, you could conclude that they will need more aggressive actions.”

• Europe auto parts supplier Valeo SA said it will cut 5,000 jobs, 9.3% of its workforce, in face of slowing demand for cars, Bloomberg reported. “For 2009, Valeo anticipates no improvement in production levels compared with the fourth quarter of 2008,” the company said in a statement.

• British retailer Woolworths will close its doors Jan. 5, leaving 27,000 people without jobs unless it finds a buyer. The 99-year-old retail company will close its 807 stores in tranches of 200 starting Dec. 27, Reuters reported.

• Online brokerage E-Trade Financial Corp. (ETFC) said it added a net of about 26,000 new accounts in November. However, total customer assets fell 42% since November 2007, and 8% from October, the Associated Press reported.

Global Investing Roundups Thursday, December 18th, 2008

While this week’s data from the manufacturing and housing sectors will be eagerly anticipated, nothing compares to Friday’s reports on unemployment and the picture of the ailing labor market.  After nine consecutive months of job contraction, few analysts hold out much hope for optimism.  In fact, some believe the jobless rate will climb to 7.5% during 2009.

Clearly the new president will have some major problems to solve, perhaps the biggest being that he’ll have to find a way to restore investor confidence.

After all that’s happened in the global economy and in the stock market in recent weeks – with the tremendous whipsaw volatility, that will be easier said than done.

Even so, watch this week as Money Morning carries several investment reports that will tell you what to expect, what to avoid, and where you may potentially profit.

Stay tuned.

Market Matters

For most investors, Halloween was a welcome treat from the haunted trickery of the markets over prior few weeks.  In fact, despite some frightful economic releases that virtually confirmed recession (as already noted), the major equity indexes received a nice reprieve this past week as investors moved beyond mass hysteria and found bargains in the carnage.  On Tuesday alone, the Dow Jones Industrial Average and Standard & Poor’s 500 Index each shot up more than 10%, and then proceeded with their remarkable (if not illogical) runs as the week continued.

Despite the positive moves, the Dow plunged by 14% in October, while the S&P 500 lost about 17%, making it among the worst performing months in over two decades.  The volatility was almost too much for investors to bear as the Dow experienced triple digits moves from open to close on all but three trading sessions.  Global markets underwent similar gyrations, with Hong Kong’s major index – the Hang Seng Index, for example, plunging 12.7% one day before soaring 14.4% the very next session.

The recent panic seemed to have subsided as some of the stimulus packages began to take effect.  The credit markets have thawed as corporations took advantage of the Fed’s decision to buy short-term commercial paper, thus, providing them much needed liquidity.  Major banks began receiving capital injections from the government as part of the bailout package and were “told” (in no uncertain terms) by their new “partner” to re-initiate lending programs.

Capital One Financial Corp. (COF) and Sun Trust Banks Inc. (STI) chose to be participate in the government’s generosity by selling preferred stock and warrants, though both were rumored to be eyeing weaker institutions as acquisition targets – a a strategy that may have differed from the Bush Administration’s goal of enhanced lending. [Editor’s Note: For an in-depth report on U.S. bank’s using government  money to mount takeover campaigns – instead of for increased lending --  please click here. The report is free of charge].

The week’s quarterly earnings releases were mixed at best though companies continued to warn about future weakness (which will hopefully lead to some positive surprises).  Exxon-Mobil Corp. (XOM) reaped another record quarter and rival Chevron Corp. (CVX) – the subject of a recent “Buy, Sell or Hold” featurue here at Money Morning just saw its profits double during the period.  Bear in mind, crude has plunged over 50% since mid-July (and suffered its worst monthly decline on record) so their future results may not be as strong.

United States Steel Corp. (X) announced favorable earnings, athough it also warned that weakness in commodities could impact its operations. The Procter & Gamble Co. (PG) experienced a better-than-expected quarter, though management reduced its sales estimates for the remainder of the year.  Motorola Inc. (MOT) announced a quarterly loss and laid off 3,000 workers to cut expenses. General Motors Corp. (GM) and Honda Motor Co. Ltd. (ADR. HMC) both reported poor quarters, as automakers struggled worldwide.

Economically Speaking

For days, weeks, months, maybe even years, analysts warned about the dreaded “R” word and, with each new report, the inevitability of such a downturn became more and more possible.

The afore-mentioned third-quarter GDP report confirmed that the economy actually contracted by 0.3% during the period, the worst results in seven years.  By definition, two straight quarters of negative growth translates into a recession, so the economy is officially halfway there (especially since the fourth quarter data is shaping up to be just as depressing).

Sluggish consumer activity highlighted the GDP report, as consumer spending plunged by 3.1% during the quarter. Such activity accounts for about 70% of the growth of the economy, so the ongoing concerns about future employment, market losses, and housing valuations (among others) have kept consumers out of the malls. And those reports now to significantly hinder the upcoming holiday season.  In fact, a recent BDO Seidman survey showed that retail-marketing execs believe their November and December sales will fall by 2.7% from the same periods last year.

On an even more pessimistic note, consumer confidence in October fell to its lowest level ever reported.

Almost lost in the negativity was the fact that new home sales actually climbed by an unexpected 2.7% in September, as bottom fishers found some bargains within the worst housing market in decades.  Still, sales remained more than 30% behind last year’s levels.

The central bankers continued their (somewhat coordinated) efforts to stem the global economic slowdown.  U.S. Federal Reserve Chairman Ben S. Bernanke and friends announced a half-percentage-point cut in the Fed Funds rate, reducing its target for that benchmark for U.S. interest rate. It was the second such move in October.

Some Fed watchers believe that policymakers could drop the rate even lower as conditions seem worse today than when that rate touched this level – in 2003.  Others feel that such moves have become more symbolic than substantive, and believe the Fed needs to halt future actions to let the lower rates work their ways through the system and begin impacting the economy over the next six to 12 months.

In other moves, central bankers in South Korea, China, and Norway each reduced their respective rates, and the European Central Bank (ECB) appears to be leaning toward a similar cut next week.

Weekly Economic Calendar

Source: Uncertainty Escalates as Tomorrow’s Presidential Election Looms