Flat incomes, weak consumer spending raise concern

By MARTIN CRUTSINGER (AP) – 4 hours ago

WASHINGTON — Flat incomes suggest more weakness ahead in consumer spending, reinforcing concerns about a ho-hum holiday shopping season and a sluggish economic recovery.

"This recovery is going to be very weak. Consumers are in no position or mood to spend. Their wages are down and they can't get credit," said Sung Won Sohn, an economics professor at California State University's Smith School of Business.

Concerns about the economy sparked by disappointing government data on spending and incomes sent stocks down Friday, erasing the previous day's big gains. The Dow Jones industrial average lost about 250 points, and broader indexes also fell.

The Commerce Department reported that personal incomes were stagnant in September while the all-important wage and salary category dropped 0.2 percent, as unemployment rose.

Consumer spending — which accounts for 70 percent of total economic activity — dropped 0.5 percent, the first decline in five months and the biggest since December.

UPDATE: US Stocks Close Sharply Lower; DJIA Ends Month Flat

By Donna Kardos Yesalavich
Of DOW JONES NEWSWIRES


NEW YORK (Dow Jones)--U.S. stocks tumbled Friday, with Bank of America, JPMorgan Chase and Alcoa leading the Dow Jones Industrial Average's components lower as investors again grew concerned about the economy after the short-lived excitement over Thursday's good report on gross domestic product.

The Dow Friday posted its biggest one-day point drop since April 20, and ended October just 0.45 point above where it began. Other major measures, including the Standard & Poor's 500 and the Nasdaq Composite, ended the month in the red, marking their first monthly declines since February.

Hillary Clinton wraps up tough mission in Pakistan

Hillary Clinton, the US secretary of state, talks to tribesmen from Pakistan's north-western areas in Islamabad. Photograph: EPA/AP of Pakistan

The US secretary of state, Hillary Clinton, wrapped up one of the toughest missions of her diplomatic career tonight after three days of bruising encounters with Pakistanis enraged by US drone attacks in the tribal areas.

The visit was never going to be easy for Clinton, who flew into Islamabad with the goal of blunting anti-Americanism in a country that seethes with hostility towards Washington.

STIMULUS WATCH: Stimulus Jobs Overstated in Report

The White House is promising that new figures being released Friday will be a more accurate showing of progress in President Barack Obama's economic recovery plan. It aggressively defended an earlier, faulty count that overstated by thousands the jobs created or saved so far.
Ed DeSeve, serving as Obama's stimulus overseer, said the administration has been working for weeks to correct mistakes in early counts that identified more than 30,000 jobs paid for with stimulus money. He said a new stimulus report Friday should correct many mistakes an Associated Press review found that showed the earlier report overstated thousands of stimulus jobs.
"I think you'll see a pretty good degree of accuracy," DeSeve said in an interview.
White House spokesman Robert Gibbs downplayed errors in job counts identified by the AP's review, telling reporters, "We're talking about 4,000, or a 5,000 error."

Celebrating Stock Market Bears Take a Major Hit

Yesterday we get some strong volume and blow through the 50-day exponential moving average on the Nasdaq. We fall only a bit below on the S&P 500 (4 points) and hold above it on the Dow. We didn't have all 3 major indexes trading below the 50-day exponential moving averages and that's what you want to see if you believe the market is ready for deeper selling than has already occurred. In addition, you don't want to clear by as little as we did on the S&P 500 as that's not a true breakdown. 4/10th's of 1% is not sufficient to say it's all clear for the bears.

Stock Markets and Other Risky Assets Tumble on Recovery Fears

I concluded a post on stock markets over the weekend saying: “After equities’ seven-month climb, stock markets certainly look vulnerable for a decline. Two downside reversal days - on Wednesday and Friday - would seem to indicate that stocks could commence a pullback to work off the overbought condition, allowing fundamentals to reassert themselves.”

Global stock markets, as well as other risky assets, closed sharply lower over the past few days as concerns mounted over the sustainability of the global economic recovery and the outlook for central bank policy.
Source: StockCharts.com

Cockpit distractions go beyond laptops

By Alan Levin, USA TODAY
The laptops that triggered two Northwest Airlines pilots to fly 91 minutes without talking to the ground may be relatively new technology, but distractions in the cockpit have led to accidents and incidents since the dawn of aviation.

As lawmakers and federal regulators called this week for banning laptops and certain other electronic devices in airline cockpits, experts who study why pilots make mistakes said the problem may be much more fundamental: People don't multitask very well.

Distractions ranging from a disgruntled passenger to a burned-out light bulb have been behind scores of crashes, according to federal accident reports and researchers.

U.S. economy stabilized but risks remain: Geithner

CHICAGO (Reuters) - The U.S. economy's return to growth during the third quarter shows stability has been regained but recovery is fragile and needs nurturing, Treasury Secretary Timothy Geithner said on Thursday.

The government estimated that gross domestic product grew at an annual rate of 3.5 percent from July through September. Still, Geithner said the government must be ready to reinforce growth if needed to avoid risks of a credit crunch.

In a one-hour question-and-answer session at the Economic Club of Chicago, Geithner said the United States can't borrow-and-spend its way to health and pledged every effort to encourage an investment-led recovery.

Boeing picks South Carolina for Dreamliner plant

WASHINGTON — US aerospace giant Boeing has chosen the state of South Carolina as the location for a second production line for the troubled 787 Dreamliner long-haul jet, a move slammed by a union leader.

The move "will expand our production capability to meet the market demand for the airplane," Jim Albaugh, president and chief executive of Boeing Commercial Airplanes, said in a statement late Wednesday.

"This decision allows us to continue building on the synergies we have established in South Carolina with Boeing Charleston and Global Aeronautica," he said, the latter being a company 50-percent owned by Boeing.

Boeing's South Carolina plant already assembles and installs parts of the 787 fuselage sections. Almost all Boeing planes are manufactured at its Everett plant outside Seattle, in the northwest state of Washington.

Delivery of the first 787 Dreamliner -- to Japanese launch customer ANA -- is now set for late 2010, more than two years behind schedule.

WORLD FOREX: Euro Breaches Key Level, Could Sink Below $1.46

NEW YORK (Dow Jones)--The dollar hit a more than two-week high against the euro in afternoon trading Wednesday, as investors reassessed their riskier holdings and shifted out of stocks, commodities and high-yielding currencies.

The euro has since bounced off its lows after having sunk to $1.4712, but is still down on the day. Recently, the euro was at $1.4728, down from $1.4802 late Tuesday, according to EBS via CQG.

The dollar was at Y90.70, from Y91.82, while the euro was at Y133.54, from Y135.88. The U.K. pound was at $1.6430, from $1.6389. The dollar was at CHF1.0262, from CHF1.0219.

The Dollar Index, a trade-weighted basket of six currencies, was at 76.344, from 76.288 late Tuesday.

Breaching a key technical level of $1.4720 signals the euro could sink further, perhaps below $1.46, said Tom Fitzpatrick, chief technical analyst at Citigroup in New York.

Euro dips under 1.48 dollars

LONDON — The euro fell below 1.48 dollars on Wednesday while the yen gained ground as fresh worries over the outlook for the global economy prompted buying of "safe-haven" units, dealers said.

Investors were also waiting for fresh US data due out later in the day, including durable goods orders and new home sales.

In London morning deals, the European single currency slipped to 1.4798 dollars, from 1.4810 dollars late on Tuesday.

Against the Japanese currency, the dollar sank to 91.06 yen from 91.77 yen late on Tuesday in New York.

A disappointing US consumer sentiment report on Tuesday sparked concerns that the world's largest economy may not be recovering as quickly as hoped, reducing demand for higher-risk but also higher-yielding currencies like the euro.

U.S. welcomes yuan rise so far, wants more

GUANGZHOU, China/BEIJING (Reuters) - The United States welcomes the rise in the yuan's exchange rate in recent years but wants the currency to climb further, visiting Commerce Secretary Gary Locke said on Tuesday.

However, a Chinese trade official said that despite pressure for the yuan to appreciate, the currency would probably not see a major adjustment until the country's exports improve noticeably.

"We think more progress needs to be made in that area," Locke told a news conference in Guangzhou, the capital of southern Guangdong province, which accounts for nearly a third of China's exports.

China has in effect re-pegged the yuan to the dollar since mid-2008 to help its exporters, who were hit hard by a slump in orders as the global financial crisis intensified.

DreamWorks' quarterly results beat low expectations

DreamWorks Animation SKG posted a 48% decline in third-quarter profit, but the results were nonetheless better than what Wall Street had been expecting.

The Glendale studio also announced that it would not be producing a sequel to its latest movie, "Monsters vs. Aliens," which received a tepid response in keyoverseas markets.

DreamWorks reported net income of $19.6 million, or 23 cents a share, on revenue of $135.4 million in the quarter ended Sept. 30. That compared with net income of $37.4 million, or 41 cents a share, on revenue of $151.5 million during the same quarter in 2008, when the studio benefited from its hit film "Kung Fu Panda."

Analysts were expecting earnings of 16 cents a share on revenue of $129.3 million, according to the average estimate compiled by Thomson Reuters.

Biden to visit GM plant amid reports of reopening

WASHINGTON (Reuters) - Vice President Joe Biden plans on Tuesday to visit a closed General Motors plant in Wilmington, Delaware, for an announcement, according to the White House.

The visit to the Boxwood plant comes amid media reports that start-up firm Fisker Automotive Inc is in talks to buy the plant to build plug-in electric hybrid cars.

The Wall Street Journal and the Detroit Free Press both reported on Friday that the talks for the purchase were at advanced stages and that an announcement was likely on Tuesday.

The White House statement announcing Biden's visit said he planned a major announcement about the assembly plant's future but gave no other details. Delaware is Biden's home state.

Brown: I will take us out of recession

Gordon Brown has vowed to lead the UK out of recession by the end of the year and announced a crackdown on sharp practice by credit card providers.

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Gordon and Sarah Brown at the Labour Party Conference, Brighton 2009
Recession busting: Gordon Brown insists he can lead the UK out of recession this year
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The Prime Minister said he would continue to act on excessive bonuses in the financial sector following the news that the UK economy was stuck in its longest ever recession.

He said: 'My pledge to you is to make reform of the financial sector a reality and to see Britain's economy return to growth by the turn of the year.'

Will the U.S. buy Reva NXR, 120 miles per charge for $25,000?

Reva Electric Car has a lot to prove.

The India-based company announced a deal with Bannon Automotive to produce 20,000 Reva NXR’s a year at a New York facility. The site could be fully optional already by fall 2010.

But check out Bannon’s Web site: http:/bannonautomotive.com. This sure doesn’t look like a technologically savvy company ready to hire 200 some employees and produce thousands of electric vehicles a year.

Although Bannon has already announced plans to start manufacturing the vehicles, the Long Island company has yet find all the financing, according to http:/syracuse.com.

Earnings reports weigh on stocks

U.S. stocks posted their first weekly decline in three weeks as several major companies forecast earnings that trailed Wall Street estimates.

Boeing slid 6.2 percent, the steepest drop among companies in the Dow Jones industrial average, as it posted a loss that was bigger than analysts forecast and reduced its full-year profit projection. Boston Scientific posted its biggest drop since February on concerns that sales of heart devices are slowing. Burlington Northern, meanwhile, fell 8.4 percent -- the most since March -- on concerns that shipments of consumer products will remain weak.

Dow finishes below 10,000

Stock markets in the United States fell yesterday, with the major indexes slipping for the first week in three, as industrial companies' weak results overshadowed robust earnings from tech and retail heavy-weights.

The blue-chip Dow average finished below 10,000 for the second time this week.

The Dow Jones industrial average lost 109.13 points, or 1.1%, to 9972.18, marking its second finish this week below the 10,000 mark. The S&P 500 fell 13.31 points, or 1.2%, to 1,079.60. The Nasdaq slipped 10.82 points, or 0.5%, to 2,154.47.

For the week, the Dow slipped 0.2% and the S&P 500 declined 0.7%, while the Nasdaq dipped 0.1%.

Read more: http://www.financialpost.com/story.html?id=2139516#ixzz0UyFBc8Uc
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