Warehouse Club Price Comparison*

Feel Good Article Of The Day: At Least The Europeans Suck Worse True, we think canned "stress tests" with negotiated findings are a joke. Still, it's something to tell the neighbors. Neighbors who, in this case, don't have one to tell back. Might we have a chance to see the effects of different approaches (the all-encompassing Geithner v. The "No Soup For You" Merkel) on financial crisis as the months roll by? Perhaps, if things remain as they are. Europe's approach has been far different (partly as a consequence of a much less developed federal system) and this makes for interesting comparisons. The U.S. government's stress tests are fueling concerns that European banks could be falling behind in their efforts to bolster their own finances. Unlike in the U.S., there has been no major policy initiative to force banks in Europe to increase capital cushions, and governments have intervened only on a piecemeal basis. Meanwhile, as U.S. banks pile in with efforts to raise capital from investors, European banks aren't taking advantage of a stock rally to do the same. "Compared to the U.S., the European banking system is rapidly being left behind," said Philip Finch, bank analyst at UBS AG. "If anything, the rally that has taken place has allowed complacency to come back at the bank level and at the policy level." They don't call it "The Old World" for nothing. European Banks Take Stress Hit [The Wall Street Journal] Related: Wall Street Journal - Bank - US Government - Federal government of the United States - Business Source: Dealbreaker | 12 May 2009 | 3:31 pm Will Stan O'Neal Be CEO Of Merrill Lynch A Second Time Around? Possibly! The Deal reports that there has been growing chatter that Bank of America will IPO Merrill in the next two or three years. Of course, this would require that Ken Lewis come up with a good story for why he'd want to do such a thing to his bright shining star (after having fired a metric asston of MER/BAC employees), but there's plenty of time to come up with something. Plus Lewis has already said he'll be out the door sometime between now and three years from now, so the problem would very well fall into someone else's lap (Mozilo). In an interview with The Deal, Getzler Henrich's Dino Mauricio claims that while the whole BAC-MER integration has been a bit of a bitch (and is also far from completed), taking Merrill public in the future could be more profitable to shareholders in the long run. "As a spinoff it allows shareholders to maximize the value to the asset. But this would at least two years from now. The market doesn't value Merrill beyond its standalone value. The merger makes sense for now. You have a set of banks whose quality of assets are under intense scrutiny. Merrill's capital markets, M&A, and the brokerage businesses are handcuffed right now due to the down economy, but as the economy improves so those businesses will flourish again." Mauricio also said that changes to the investment banking model and the commercial bank landscape could factor in. "As investment banks are forced to become more conservative in investment and trading activities, access to BofA's huge asset base becomes less of a competitive advantage for Merrill in the long run," he said. Related: Bank of America - Merrill Lynch - Investment Banks - Business - Bank Source: Dealbreaker | 12 May 2009 | 3:27 pm "We will continue to explore every opportunity to put TARP capital to work in a disciplined, transparent and responsible fashion, consistent with Citi's prudent lending standards." From: vikrampandit@citi.com Sent: Tuesday, May 12, 2009 9:29 AM Subject: Second Quarterly Progress Report on Use of TARP Capital Dear Colleagues, Today we are issuing our second quarterly progress report on how we are putting to use the $45 billion of capital the U.S. Treasury has invested in Citi as part of the federal government's Troubled Asset Relief Program, or TARP. Related: Troubled Asset Relief Program - United States - Citibank - United States Department of the Treasury - Business Source: Dealbreaker | 12 May 2009 | 2:36 pm Home prices slide 14% The steep slide in home price accelerated at a record pace during the first three months of 2009, according to an industry report issued Tuesday. Source: Business and financial news - CNNMoney.com | 12 May 2009 | 2:27 pm Microsoft sells $3.75B of bonds Read full story for latest details. Source: Business and financial news - CNNMoney.com | 12 May 2009 | 2:27 pm GM Insider Sales Put Stock Into 1930’s Levels (GM) Forget about 52-week lows.  General Motors Corp. (NYSE: GM) is trading at what looks to be the lowest levels since April or May of 1933.  There has not been fresh news from the company, but there is a key event that took place which may be a prelude to the worst case scenario.  Executives sold [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 12 May 2009 | 2:27 pm Oil touches $60 on recovery hopes Oil prices rose above $60 a barrel Tuesday, before falling back, as investors focused on signs of economic stabilization and a weaker dollar. Source: Business and financial news - CNNMoney.com | 12 May 2009 | 2:25 pm BofA asset sale fails to lift Wall St US stocks were set to edge ahead on Tuesday morning as Bank of America added to the optimistic tone set by Ben Bernanke, chairman of the Federal Reserve, on the results of the stress tests Source: Financial Times - US homepage | 12 May 2009 | 2:25 pm Economic Report: Falling exports push U.S. trade gap higher The U.S. trade gap with the rest of the world increases in March for the first time in eight months as exports decline faster than imports. Source: MarketWatch.com - Top Stories | 12 May 2009 | 2:25 pm Bond Report: Treasurys down after Bernanke's upbeat comments Treasury prices decline and yields gain, as bond traders digest remarks Fed chief Ben Bernanke that he’s encouraged by the response to “stress tests” for 19 major financial institutions recently administered by the government. Source: MarketWatch.com - Top Stories | 12 May 2009 | 2:23 pm Hendrick Construction Completes New Headquarters for Carolina Pad and Paper CHARLOTTE, N.C., May 12 /PRNewswire/ -- Hendrick Construction has completed an 18,500-square-foot office renovation for Carolina Pad and Paper. The stationary... Source: RSS feed - channel BNewsBusiness | 12 May 2009 | 2:19 pm Author Revisits 136 Year Old Double Murder MANCHESTER, Conn., May 12 /PRNewswire/ -- In his recently published book, Cold Water Crossing, author David Faxon reconstructs the murders of two women at the Isles of Shoals in... Source: RSS feed - channel BNewsBusiness | 12 May 2009 | 2:18 pm Energy Stocks: Petroleum shares flat; $60 crude delivers no lift Shares of petroleum producers trade flat, failing to draw support from the highest oil prices seen in six months as investors look for more concrete signs of an economic recovery. Anadarko and Foundation Coal grab the early spotlight. Source: MarketWatch.com - Top Stories | 12 May 2009 | 2:17 pm Stocks fluctuate in narrow range after sell-off (AP) AP - Wall Street showed little direction early Tuesday as investors searched for the next catalyst that could extend a two-month rally. Source: Yahoo! News: Stock Markets News | 12 May 2009 | 2:16 pm Median home prices fell nationwide in 1Q WASHINGTON -- Home prices fell in nearly nine out of every 10 U.S. cities in the first quarter of this year as first-time buyers looking for bargains dominated the market. Source: RSS feed - channel BNPaperBusiness | 12 May 2009 | 2:16 pm National Bankruptcy Research Center and Money Management International Financial Education Foundation Announce Results of Credit Counseling Value Study HOUSTON, May 12 /PRNewswire/ -- The National Bankruptcy Research Center in collaboration with the Money Management International Financial Education Foundation recently completed... Source: RSS feed - channel BNewsBusiness | 12 May 2009 | 2:16 pm Median home prices fell nationwide in 1Q WASHINGTON -- Home prices fell in nearly nine out of every 10 U.S. cities in the first quarter of this year as first-time buyers looking for bargains dominated the market. Source: L.A. Times - Business | 12 May 2009 | 2:16 pm Legal & General to axe 560 jobs Legal & General, Britain’s third-biggest insurer, is to cut 560 jobs, it emerged this morning. The company said it had entered a consultation period with some 300 full-time employees and another 250 to 260 part-time staff in its savings business, with most of the jobs going likely to be at Kingswood, Surrey and Hove, East Sussex. Source: Latest Business News from Times Online | 12 May 2009 | 2:15 pm Stocks fluctuate in narrow range after sell-off NEW YORK -- Wall Street showed little direction early today as investors searched for the next catalyst that could extend a two-month rally. Source: RSS feed - channel BNPaperBusiness | 12 May 2009 | 2:12 pm Stocks fluctuate in narrow range after sell-off NEW YORK -- Wall Street showed little direction early today as investors searched for the next catalyst that could extend a two-month rally. Source: L.A. Times - Business | 12 May 2009 | 2:12 pm Green Globe International, Inc. Announces Plans for Financial Reporting and Potential Future Market Listing MURRIETA, Calif., May 12 /PRNewswire-FirstCall/ -- Green Globe International, Inc. (OTC Bulletin Board: GGLBE), the worldwide owner of the Green Globe... Source: RSS feed - channel BNewsBusiness | 12 May 2009 | 2:12 pm Tech Stocks: Chips pull tech stocks down in early trading Weakness in the semiconductor sector helps pull tech stocks down into the red in early trading; negative report on shipments and sales of PC processor chips weighs on sector. Source: MarketWatch.com - Top Stories | 12 May 2009 | 2:09 pm The forgotten fiscal problem The financial crisis has cast a shadow over a perennial debate in Washington: How to ensure the long-term financial health of Social Security. Source: Business and financial news - CNNMoney.com | 12 May 2009 | 2:08 pm May National Associates Inc. Acquires License for PRC(R) Insulating Glass Sealants -High-performance insulating glass sealants are once again available for residential and commercial construction- LAKEWOOD, N.J., May 12 /PRNewswire/ -- May... Source: RSS feed - channel BNewsBusiness | 12 May 2009 | 2:05 pm Morningstar Studies Mutual Fund Investor Experiences Across 16 Countries, Gives the U.S. the Only 'A' and New Zealand a 'D-' CHICAGO, May 12 /PRNewswire-FirstCall/ -- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, today released results of a study that measures Source: RSS feed - channel BNewsBusiness | 12 May 2009 | 2:04 pm Pacific Ethanol, Another Ethanol Play Near Bankruptcy (PEIX) Pacific Ethanol, Inc. (PEIX) is still alive.  That is more than many ethanol companies can say.  The question is how long it can manage that survival.  After the open this morning, Pacific Ethanol filed a non-timely 10-Q with some basic data on the company’s first quarter results as far as what it expects.  It also [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 12 May 2009 | 2:03 pm Wall Street pulls back on financials, tech (Reuters) Reuters - Stocks pared gains on Tuesday as declines in financial and technology shares outweighed positive comments on the economy from Fed Chairman Ben Bernanke and efforts by Bank of America Corp to shore up its balance sheet. Source: Yahoo! News: Stock Markets News | 12 May 2009 | 2:03 pm Wall Street pulls back on financials, tech (Reuters) Reuters - Stocks pared gains on Tuesday as declines in financial and technology shares outweighed positive comments on the economy from Fed Chairman Ben Bernanke and efforts by Bank of America Corp to shore up its balance sheet. Source: Yahoo! News: Business | 12 May 2009 | 2:03 pm Financial Stocks: Ambac, MBIA gains help lift financial sector Shares of MBIA and Ambac Financial stage an early rally as the bond insurers both report better-than-expected financial results for the first quarter, helping contribute to broader gains in the financial sector. Source: MarketWatch.com - Top Stories | 12 May 2009 | 2:02 pm Earnings Watch: Updates, advisories and surprises A roundup of the latest corporate earnings reports and what companies are saying about future quarters. Source: MarketWatch.com - Top Stories | 12 May 2009 | 2:01 pm Americans Warm Up to Summer Travel in 2009 Americans Planning Vacations, but Half Expect to Spend Less; Hotel Brands Can Seize the Opportunity to Build Long-Term Customer Loyalty NEW YORK, May 12... Source: RSS feed - channel BNewsBusiness | 12 May 2009 | 2:00 pm Hundreds of Funeral Homes, Cemeteries Collect Recipes and Memories, Raise Donations for Feeding America NEW ORLEANS, May 12 /PRNewswire-FirstCall/ -- Hundreds of funeral homes and cemeteries have teamed with Feeding America(R), the leading hunger-relief charity in the U.S., to create... Source: RSS feed - channel BNewsBusiness | 12 May 2009 | 2:00 pm Dimon: Billion Or Beat It From a tearful mailbag: Jamie Dimon is FIRING JPM's small prime brokerage clients and administrative clients, saying, "You're just not big enough for us, we only want to handle accounts of 1 billion and up, too bad, you have a month to move your accounts." This dictate comes directly from Dan Tennant (hatchet man for Jamie) of the old Bear (Oh please Mr. Dimon, sir I will do anything, let me keep my job) signed off on by Jamie Dimon's office. Asked for a letter of the firing, "Not happening" was the answer. So if you are an RIA running 2-4 hundred million--positive performance, didn't tank in 08, hire smart people, minorities (all), do everything right--you go from a legit prime broker and administrator, which gives your investors comfort, to a bucket shop and some fat guy in a black suit, sitting on the beach holding an umbrella, in the Cook Islands. 200 firms fired. JPM reverse spin. Where is Einhorn when you need him, if he could take down Lehman - maybe he can help with JPM? Related: Jamie Dimon - JPMorgan Chase - Cook Islands - Oceania - Society and Culture Source: Dealbreaker | 12 May 2009 | 1:59 pm Alternative-energy investors stress long-term view A profit warning from German solar panel group Q-Cells on Tuesday clouded the near-term view, but the message from global money managers here was, when it comes to alternative energy, investors have to keep an eye on the longer horizon. Source: MarketWatch.com - Top Stories | 12 May 2009 | 1:59 pm UK jobless total hits 2.2 million Unemployment rises by 244,000 to 2.22 million in the first three months of 2009, or 7.1% of the workforce, figures show. Source: BBC News | Business | World Edition | 12 May 2009 | 1:58 pm IBM-SAP not in the cards At a table in Las Vegas, a town fueled by big bets, IBM software chief Steve Mills outlined one he doesn't want to make: Buying application provider SAP. Source: Business and financial news - CNNMoney.com | 12 May 2009 | 1:57 pm Bank of America said to sell $7.3 billion bank stake Bank of America Corp., under pressure from U.S. regulators to raise $33.9 billion, sold part of a stake in China Construction Bank Corp. for about $7.3 billion, said two people with knowledge of the matter. Source: L.A. Times - Business | 12 May 2009 | 1:57 pm Bank of America said to sell $7.3 billion bank stake Bank of America Corp., under pressure from U.S. regulators to raise $33.9 billion, sold part of a stake in China Construction Bank Corp. for about $7.3 billion, said two people with knowledge of the matter... Source: RSS feed - channel BNPaperBusiness | 12 May 2009 | 1:57 pm Stock Alerts on Early Morning Gainers Fueled by Recent News: CNO, DPTR, UCBH, MSFT, R, CRZO; Issued by Beacon Equity DALLAS, May 12 /PRNewswire/ -- BeaconEquity.com announces the availability of stock alerts gaining ground in premarket trading and poised to move higher on recent updates and... Source: RSS feed - channel BNewsBusiness | 12 May 2009 | 1:57 pm Conseco Announces Preliminary Results of Shareholder Vote: Nine Directors Elected; Adoption of Stockholders Rights Plan Approved; Long-Term Incentive Plan Approved; Independent Registered Public Accounting... CARMEL, Ind., May 12 /PRNewswire-FirstCall/ -- Conseco, Inc. (NYSE: CNO) announced preliminary results of voting at the company's annual meeting of... Source: RSS feed - channel BNewsBusiness | 12 May 2009 | 1:53 pm Sympathy for Wall Street...really Is something very wrong with our financial system when the nation's biggest banks are talking about seven-figure bonuses while ever more Americans are losing their jobs? Millions of people seem to think so: If we could calculate an outrage index, it would be marching toward an all-time high. But before we institute public floggings for bankers, let's take a closer look at who or what is really to blame. Source: Business and financial news - CNNMoney.com | 12 May 2009 | 1:51 pm Stocks send a mixed message Stocks were mixed Tuesday morning as investors were cautious after a two-month stock market rally and amid continued jitters about the auto sector. Source: Business and financial news - CNNMoney.com | 12 May 2009 | 1:50 pm US trade deficit widens in March The US trade deficit widened in March for the first time since July 2008, as sales of exports fell amid the recession. Source: BBC News | Business | World Edition | 12 May 2009 | 1:48 pm Greenfield Says Certain `Elite' Newspapers Can Charge Online Source: Bloomberg - All Podcasts | 12 May 2009 | 1:47 pm Geothermal Could Be on the Way Up, along with Hybrid Hummers (RZ, ORA, HTM) Raser Technologies, Inc. (NYSE:RZ) reported no revenue for the first quarter of 2009. But it also reported no cost of sales. The company’s total loss for the quarter was $6.67 million, EPS of -$0.10. That’s better than the analysts had expected, pegging EPS at -$0.12. However, analysts did expect $260,000 in revenues and got nothing. Raser [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 12 May 2009 | 1:47 pm Metals Stocks: Gold futures flirt with $920-an-ounce level Gold futures gain ground as a weaker U.S. dollar and pricier crude oil fuel demand for the precious metal among investors seeking to hedge bets against additional drops in the greenback and steeper inflation. Source: MarketWatch.com - Top Stories | 12 May 2009 | 1:47 pm Citigroup puts more TARP $ to work Citigroup said Tuesday it authorized $8.2 billion in lending to U.S. consumers and businesses so far this year backed by taxpayer funding. Source: Business and financial news - CNNMoney.com | 12 May 2009 | 1:46 pm Oil above $60 on economy hopes Oil prices rise to their highest in six months, buoyed by hopes that the worst may be over for the world economy. Source: BBC News | Business | World Edition | 12 May 2009 | 1:43 pm Broadband: how to find the best deal The war between broadband providers continues to rage but it can be difficult for consumers to know which way to turn. Source: Telegraph Finance | 12 May 2009 | 1:43 pm Unemployment rises to 2.2m as average earnings drop for first time Jobless figure jumps by almost 250000 to a 13year high. Source: Telegraph Finance | 12 May 2009 | 1:43 pm U.S. trade gap widens first time in eight months WASHINGTON (Reuters) - The U.S. trade gap widened in March for the first time in eight months as exports fell 2.4 percent and imports dropped for the eighth consecutive month, a U.S. government report showed on Tuesday. Source: Reuters: Business News | 12 May 2009 | 1:39 pm As Oil Prices Get Ugly, Trade Deficit Grows The US trade deficit rose in March, and the price of oil was a significant contributor. Since oil is up substantially since then, figures for April and May should be effected even more profoundly. The Commerce Department reported that the March trade gap was $27.6 billion compared to a revised $26.1 billion in February.  American exports dropped by 2.4% [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 12 May 2009 | 1:38 pm Wall Street opens up on BofA, Bernanke NEW YORK (Reuters) - Stocks opened higher on Tuesday after positive comments on the economy and banks from Fed Chairman Ben Bernanke and Bank of America Corp sold its stake in a Chinese bank to help shore up its balance sheet. Source: Reuters: Business News | 12 May 2009 | 1:37 pm Ace Greenberg On John Paulson Earlier this morning on the Squawk, when the issue of PPIP came up: "The people who are going to make these bids are smart people...whether it's John Paulson or whoever*...there are some smart people...but you have to have someone on the other side willing to take the hit...[Kernan interjects: and then John Paulson will write it back up]...Well, he's good...[Greenberg sees an opening to riff]...he's one of the dumb guys that used to work for us, we fired him...no, kidding, that's not true." Big G also shared that he started going by "Ace" to score chicks. Mission accomplished. *We're pretty sure Paulson will not be dipping his wick in the PPIP but Greenberg is a senior citizen so we won't correct him in public. Related: John Paulson - Hedge fund - Lifestyle Choices - Organizations - Business Source: Dealbreaker | 12 May 2009 | 1:30 pm Futures Movers: Oil tops $60 a barrel as China imports rise Crude futures bump above $60 a barrel, as energy traders play off data showing China’s crude imports for April to have jumped nearly 14% from a year ago. A weaker dollar also has the effect of lifting the benchmark crude contract. Source: MarketWatch.com - Top Stories | 12 May 2009 | 1:30 pm Icahn says Biogen should weigh splitting in two NEW YORK (Reuters) - Billionaire investor Carl Icahn wants the board of Biogen Idec Inc to consider splitting the biotechnology company into one firm focused on neurology and another focused on cancer. Source: Reuters: Business News | 12 May 2009 | 1:28 pm Israel Stocks: Israel stocks steady; Makhteshim up before report Israeli stocks were steady on Tuesday, as strength in the real estate sector was offset by weakness among some of the banks. Source: MarketWatch.com - Top Stories | 12 May 2009 | 1:28 pm Zoltek Stumbles As Prospects Remain (ZOLT) Zoltek Companies, Inc. (NASDAQ: ZOLT) posted some disappointing numbers last night and it is being reflected in the shares this morning.  So much for wind power staying up there as the next major wave, although this has been known for more than one quarter.  Zoltek’s Q2-2009 revenues were $36.0 million, down 27% from $49.6 million [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 12 May 2009 | 1:27 pm The new face of Microsoft's Zune His main claim to fame, until now, was his stint on 'The Apprentice.' Now he's the star of Redmond's latest Apple attack ad on TV. Source: Business and financial news - CNNMoney.com | 12 May 2009 | 1:21 pm US trade gap widens in March The US trade gap widened in March for the first time in eight months as exports fell faster than imports, the commerce department said Source: Financial Times - US homepage | 12 May 2009 | 1:18 pm Oil surges to six month high above $60 Oil prices hit a fresh six-month high, above $60 a barrel, as traders bet that the signs of economic 'green shoots' will boost demand Source: Financial Times - US homepage | 12 May 2009 | 1:17 pm Bernanke says early response to bank tests encouraging JEKYLL ISLAND, Ga (Reuters) - Government "stress tests" of how 19 major banks would endure a sharp downturn in the economy already appear to be helping banks gain access to private capital, a key element in economic recovery, Federal Reserve Chairman Ben Bernanke said on Monday. Source: Reuters: Business News | 12 May 2009 | 1:16 pm U.S.Bancorp raises $3.5 billion, eyes TARP repayment (Reuters) Reuters - U.S. Bancorp , the eighth-largest U.S. bank, said it sold $3.5 billion of stock and bonds as it tries to raise sufficient funds to repay a taxpayer bailout. Source: Yahoo! News: Business | 12 May 2009 | 1:13 pm U.S.Bancorp raises $3.5 billion, eyes TARP repayment NEW YORK (Reuters) - U.S. Bancorp , the eighth-largest U.S. bank, said it sold $3.5 billion of stock and bonds as it tries to raise sufficient funds to repay a taxpayer bailout. Source: Reuters: Business News | 12 May 2009 | 1:13 pm Oil hits $60 for first time since November 2008 LONDON (Reuters) - Oil prices rose more than a dollar on Tuesday to a six-month high above $59 a barrel, boosted partly by a weaker dollar and gains on equity markets. Source: Reuters: Business News | 12 May 2009 | 1:11 pm Ford to sell 300 million common shares DETROIT (Reuters) - Ford Motor Co said on Monday that it would sell 300 million common shares and use part of the proceeds to pay off its healthcare obligations to the United Auto Workers under the terms of a recently concluded deal with the union. Source: Reuters: Business News | 12 May 2009 | 1:04 pm Ackman: I Am Not GekkoIcahn We aren't totally sure that "soft sell" is how we would put it, but maybe softer sell. And this is definitely just because we can't help but root for Ackman (90% losses are nothing compared to boyish charm, you know) and Target is such a tantalizing... er... target. Plus, anyone who doubles down with such ease cannot help but attract our (sideways, nervous) glance. So, if the Post wants to give us WA the soft-seller underdog, we're game. Portraying himself as "the underdog" in the fight, Ackman referred to Target's board as a stagnating "friend of Bob," with change-resistant members handpicked long ago by retired chairman Bob Ulrich. As he introduced his own slate to Target investors at a Midtown auditorium yesterday, Ackman took pains to insist that his own nominees -- with backgrounds in groceries, credit cards and corporate governance, in addition to real estate -- weren't merely stooges assembled to further his own agenda. "I just want independent, fresh perspective on the board," Ackman said. (Michael Douglas actually thought Gekko was evil, and Carl may be the elder statesman of activists, but you are the young upstart for us every time! Call us WA! We still love you!) Ackman's Soft Sell [The New York Post] Related: Michael Douglas - Real estate - New York - Gekko - Bob Ulrich Source: Dealbreaker | 12 May 2009 | 1:04 pm CFOs predict more layoffs - survey Almost three out of five chief financial officers from throughout the world expect future workforce reductions in the recession, which they predict won't abate before next year, according to an annual survey released Tuesday. Source: Business and financial news - CNNMoney.com | 12 May 2009 | 1:02 pm Trade deficit widens in March to $27.6 billion The U.S. trade deficit rose in March for the first time since last July as the global recession cut sharply into sales of American exports. The politically sensitive deficit with China increased. Source: RSS feed - channel BNPaperBusiness | 12 May 2009 | 1:02 pm Trade deficit widens in March to $27.6 billion The U.S. trade deficit rose in March for the first time since last July as the global recession cut sharply into sales of American exports. The politically sensitive deficit with China increased. Source: L.A. Times - Business | 12 May 2009 | 1:02 pm UK recession 'less bad than 1929' The current recession in the UK is easing, and is not as bad as the one that began in 1929, an economic research body says. Source: BBC News | Business | World Edition | 12 May 2009 | 1:00 pm Max Property to float for £200m Max Property, a new property investment company backed by Nick Leslau, the entrepreneur, and Och-Ziff, the hedge fund group, is planning to float on AIM next week. Source: Latest Business News from Times Online | 12 May 2009 | 12:59 pm Unemployment reaches 2.2 million but rate slows A sharp easing in the numbers of people being thrown out of work by the economic downturn further boosted hopes today that the worst of the recession may be soon be over. Source: Latest Business News from Times Online | 12 May 2009 | 12:54 pm Hizbollah confirms broad aid for Hamas Hizbollah has been providing the Palestinians in Gaza with 'every type of support' possible for some time, the deputy leader of the powerful Lebanese Shia movement admitted in an FT interview Source: Financial Times - US homepage | 12 May 2009 | 12:50 pm Opening Bell: 05.12.09 BAC Raises $7.3B In CCB Stake (FT) BofA is well on it's way to fulfilling it's needed capital a-la stress tests as it's completed selling it's stake in CCB for $7.3B. Shares were sold at a 14.3% discount to close, and the sum leaves BAC with $26.6B to raise. AIG CEO Liddy Aims to Quell Congressional Criticism (WSJ) "Rampant, unwarranted criticism of AIG serves only to diminish the value of our businesses around the world," he will tell a U.S. House oversight committee while pleading for a better partnership with the government -- owner of 80% of the company. Full text of his statement here. Economists Obviously Out Of Touch With Market Dynamics (Bloomberg) In what could be a swift kick to the groin of the happy-go-lucky optimistic feeling spreading of recent, a poll of economists has the unemployment rate going to 9.6% next year, and exceeding 8% through 2011. As pointed out in the article, a weak recovery will probably push the Administration to do more stupid things to buoy satisfaction; one can only hope nationalization never makes its way to strip clubs. Citi Grows A Heart, Tin Man Pissed, Vows Revenge (NYT) "Citigroup said its committee overseeing the use of taxpayer money approved $44.75 billion in lending initiatives as of March 31. That is up from the $36.5 billion in lending initiatives announced in February, and now includes $5 billion in loans to municipalities. The loans being offered by Citigroup to state and local governments, municipal agencies, universities and non-profit hospitals would not likely have been made had the bank not received money from the Troubled Assets Relief Program, or TARP." Pay To Play Probe Ensnares Another (WSJ) "The New York attorney general is expected to announce soon that an associate of Hank Morris, the indicted political adviser at the center of New York's "pay to play" pension probe, has pleaded guilty to securities fraud and is cooperating with the investigation, according to people familiar with the matter. Julio Ramirez, age 48, has pleaded guilty to a criminal misdemeanor charge, according to people familiar with the matter. The Securities and Exchange Commission, conducting a parallel investigation, is expected to announce civil charges against Mr. Ramirez." Trapped Into Living With The Ex (BBC) "Couples who have split up and want to go their separate ways are increasingly being forced to live apart under the same roof by a lack of movement in the housing market." Jean-Claude Trichet Wants You To Know Shit's Getting Better (FT) "Jean-Claude Trichet signalled on Monday that the global downturn had bottomed out with some large economies already able to put the recession behind them and look forward to renewed growth. The European Central Bank president's comments on Monday in Basel, Switzerland, had added weight because he was speaking on behalf of the world's leading central bankers, not just for the eurozone." GMAC Could Be Next (WSJ) Complete with circle charts, the article proffers that we (taxpayers) may have to drop as much as $20B into GMAC. "Instead, GMAC must be saved, the argument goes, to revive the auto industry and consumer economy. The details of that approach are strikingly scarce. In fact, nearly everything about GMAC -- its mission, board, and future ties to government -- is unknown. As Winston Churchill might put it, GMAC is a financial black hole stuffed into a governance black box." Related: Troubled Asset Relief Program - Bank of America - European Central Bank - GMAC - Winston Churchill Source: Dealbreaker | 12 May 2009 | 12:50 pm Australia unveils record budget deficit Government to borrow billions as slump in tax take pushes deficit to A 57.6bn £28bn this year. Source: Telegraph Finance | 12 May 2009 | 12:49 pm Coal Fields Merger Creates Big Player (ANR, FCL, CLF, KOL) Today’s announcement of a merger between Alpha Natural Resources, Inc. (NYSE: ANR) and Foundation Coal Holdings, Inc. (NYSE: FCL) creates the third-largest coal producer in the US. The all-stock deal is worth about $2 billion including $530 million in Foundation debt, with Alpha issuing 1.084 shares for each Foundation share at a value of $32.73/share, [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 12 May 2009 | 12:46 pm Spain stimulus targets car buyers Spain's prime minister announces new economic stimulus measures, including subsidies for people who buy new cars. Source: BBC News | Business | World Edition | 12 May 2009 | 12:39 pm Buytolet: 'Robbie Fowlertype property tycoons to squeeze out amateur landlords' A study entitled "We All Live in a Robbie Fowler House: the Buy to Let Market in Retrospect and Prospect" suggests smaller landlords will be outmatched by established players. Source: Telegraph Finance | 12 May 2009 | 12:17 pm Rio leads miners down as Chinalco deal falters Rio Tinto was among the FTSE 100's biggest fallers as analysts said the deal to sell assets to Chinalco was "in the critical room." Source: Latest Business News from Times Online | 12 May 2009 | 12:15 pm The Mythology Surrounding the Corporate Tax Rate By John Tamny of RealClearMoney While there’s seemingly a bipartisan view that the U.S. corporate tax rate should be lowered, the mythology about this same levy is impressive even by Washington standards. The more it’s debated and discussed, the more in the way of untruths about it reveal themselves. First up is the notion that the U.S. [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 12 May 2009 | 12:14 pm Berlin to back toxic assets plan The German government will endorse plans to rid the country's banks of their toxic assets, its latest attempt at tackling the crisis of confidence that is crippling the financial sector and weakening Europe's largest economy Source: Financial Times - US homepage | 12 May 2009 | 12:14 pm Bottoming out? Are we seeing the green shoots of recovery? Source: BBC News | Business | World Edition | 12 May 2009 | 11:59 am IMF calls for European bank tests The International Monetary Fund (IMF) calls for European banks to be subjected to "stress tests" like those applied to US banks. Source: BBC News | Business | World Edition | 12 May 2009 | 11:53 am Nissan posts $2.4 billion loss TOKYO (Reuters) - Nissan Motor Co lost $2.4 billion in the fourth quarter amid a global slump in car sales, and forecast more losses this year as it looks to conserve cash by putting product launches and growth plans on hold. Source: Reuters: Business News | 12 May 2009 | 11:53 am Bank of America sells $7.3 billion CCB stake: source HONG KONG (Reuters) - Bank of America sold $7.3 billion worth of shares in China Construction Bank on Tuesday, according to a source, just days after a U.S. government "stress test" found the struggling U.S. bank needed to find $34 billion worth of capital. Source: Reuters: Business News | 12 May 2009 | 11:49 am Economic green shoots: what leading figures say The economic data in the UK and Britain is stabilizing prompting talk of 'green shoots'. This is what has been said by leading figures in recent days. Source: Telegraph Finance | 12 May 2009 | 11:46 am The recession index The movement of certain market prices offer a glimpse of the extent of stress in the financial system, and the health of the wider economy. We have listed these key indicators below. Source: Latest Business News from Times Online | 12 May 2009 | 11:46 am InterContinental profits drop 44 per cent InterContinental Hotels, the world's biggest hotel group, said that it was benefiting from travellers trading down to its mid-market Holiday Inn chain, although overall the group experienced a 44 per cent drop in first quarter profits, in line with analysts' expectations. Source: Latest Business News from Times Online | 12 May 2009 | 11:43 am Top Analyst Downgrades (AXP, BKE, CIEN, ENER, IP, LINTA, RBS, STO, TSM, TIN, VSAT) These are some of the top analyst downgrades and cautious research calls we have seen from Wall Street early this Tuesday morning: American Express (AXP) Started as Underperform at RBC. Buckle (BKE) Cut to Underweight at KeyBanc. Ciena (CIEN) Cut to Underperform at JMP Securities. Energy Conversion Devices (ENER) Cut to Hold at Citi; Cut to Neutral at Credit [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 12 May 2009 | 11:39 am Top Anlayst Upgrades (CAH, CENT, CHS, GPS, HELE, PFG, STEC, TJX) These are some of the top pre-market analyst comments and analyst upgrades from Wall Street early this Tuesday morning: Cardinal Health (CAH) Started as Buy at Jefferies. Central Garden (CENT) Raised to Hold at Jefferies. Chico’s FAS (CHS) Raised to Equal Weight at Barclays. Gap Inc. (GPS) Raised to Equal Weight at Barclays. Helen of Troy (HELE) Raised to Hold [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 12 May 2009 | 11:33 am Stock market optimists need to read a history of the Great Depression The stock market may not have reached its bottom. After a sharp twomonth rally that may sound like a crazy thing to say. But history suggests as much. Source: Telegraph Finance | 12 May 2009 | 11:33 am Slowdown in UK manufacturing sector almost stands still in March Official figures on manufacturing in March raise prospect that economy may not have shrunk as much as thought in the first quarter. Source: Telegraph Finance | 12 May 2009 | 11:05 am Broadband customers 'can cut bills by 40pc' Broadband customers are paying far more than they need to because they are not switching to another provider it has been claimed. Source: Telegraph Finance | 12 May 2009 | 11:01 am An Economic Map of Europe Source: Flickr/ArtWerk Source: Business Pundit | 12 May 2009 | 11:00 am BofA raises $7.3bn from CCB stake Bank of America, the stricken US lender, has sold a 6 per cent stake in China Construction Bank to a select group of predominantly mainland Chinese investors and Temasek of Singapore Source: Financial Times - US homepage | 12 May 2009 | 10:58 am Hitachi posts record annual loss Electronics maker Hitachi reports a record annual loss by a Japanese manufacturer, after a drop in demand for its products. Source: BBC News | Business | World Edition | 12 May 2009 | 10:36 am Imperial Tobacco sees sales boost as smokers switch to cheaper brands Imperial Tobacco the maker of Lambert ? Butler cigarettes expects sales to benefit in the second half as the recession forces smokers to switch to cheaper brands or roll their own. Source: Telegraph Finance | 12 May 2009 | 10:35 am EADS hit by collapse in aircraft orders EADS, Europe's leading aerospace and defence group, suffers from fall in orders and extra charges to product development programmes Source: Financial Times - US homepage | 12 May 2009 | 10:26 am Software Piracy Issues Remain Unresolved It remains true that without global IP theft laws which apply equally in all countries the piracy of software and premium entertainment content will never end. The fact was brought home by new data that shows software piracy cost the industry $50 billion worldwide last year. According to TGDaily, “The worldwide PC software piracy rate [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 12 May 2009 | 10:20 am Bank of America sells $7.3 billion CCB stake: source (Reuters) Reuters - Bank of America sold $7.3 billion worth of shares in China Construction Bank (601939.SS) on Tuesday, according to a source, just days after a U.S. government "stress test" found the struggling U.S. bank needed to find $34 billion worth of capital. Source: Yahoo! News: Business | 12 May 2009 | 10:16 am UK manufacturing continues fall UK manufacturing output continued to decline in March, but the falls were not as severe as had been expected. Source: BBC News | Business | World Edition | 12 May 2009 | 10:16 am Pound hits four-month high against dollar The pound climbed to a four-month high against the dollar as UK economic data added to recent signs that the downturn in the economy has bottomed out. Source: Financial Times - US homepage | 12 May 2009 | 10:12 am Downturn pushes Nissan into loss Japanese carmaker Nissan reports a net loss for the past year, but the results are better than expected. Source: BBC News | Business | World Edition | 12 May 2009 | 10:09 am European stocks follow Wall Street futures higher (AP) AP - European stocks made small gains Tuesday as investors remained wary of pushing markets too much higher ahead of a raft of key U.S. retail news. Source: Yahoo! News: Stock Markets News | 12 May 2009 | 9:57 am Worst of recession is past for factories Britain's factories may be over the worst of the recession, according to figures released tpday. British manufacturing output fell by less than expected in March but the scale of the crisis gripping the country was also highlighted as the overall drop in output in the first three months of the year was the sharpest since records began in 1948. Source: Latest Business News from Times Online | 12 May 2009 | 9:56 am Legal and General targets 560 redundancies Insurer Legal and General has entered into talks with unions to make up to 560 members of staff redundant as it battles against the economic downturn. Source: Telegraph Finance | 12 May 2009 | 9:55 am Citi using most of TARP capital to make loans: report (Reuters) - Citigroup Inc, the bank bailed out with $45 billion of U.S. taxpayers' money, is using almost all of that money to make new loans, the Associated Press said citing a report scheduled for release on Tuesday morning. Source: Reuters: Business News | 12 May 2009 | 9:46 am Ford to sell 300 million common shares (Reuters) Reuters - Ford Motor Co said on Monday that it would sell 300 million common shares and use part of the proceeds to pay off its healthcare obligations to the United Auto Workers under the terms of a recently concluded deal with the union. Source: Yahoo! News: Business | 12 May 2009 | 9:42 am Nissan makes its first loss for ten years Nissan racked up its first losses in a decade last year, going ¥233.7 billion ($2.4 billion) into the red. The losses compare with a profit of $¥482 billion in the previous year. Source: Latest Business News from Times Online | 12 May 2009 | 8:43 am European stocks rise, oil hits 2009 high (Reuters) Reuters - European stocks edged higher while world stocks came off an earlier low and oil hit its highest level in almost six months on Tuesday as expectations grew the worst might be over for the global economy. Source: Yahoo! News: Stock Markets News | 12 May 2009 | 8:41 am Iberia talks 'still on' with BA despite huge loss Iberia today said its planned merger with British Airways is still on despite posting a €92.6 million (£83.1 million) first quarter net loss and warning that it was unlikely to climb into profit this year. Source: Latest Business News from Times Online | 12 May 2009 | 8:06 am London stocks fall at open (AFP) AFP - Stocks in London dropped at the open on Tuesday as weak corporate figures took a toll alongwith falls in Asia. Source: Yahoo! News: Stock Markets News | 12 May 2009 | 7:58 am Enterprise Inns warns over pub jobs Enterprise Inns, Britain's second-biggest pubs chain, is supporting some of its struggling licencees to the tune of £1.4 million a month to try to keep them afloat during the recession. The company has also complained that the Government's increase in alcohol duties was endangering jobs across the industry. Source: Latest Business News from Times Online | 12 May 2009 | 7:55 am Australia stocks: Market down on light trading PERTH - The Australian share market closed in the red on very light trading volumes ahead of Tuesday night's federal budget, weighed down by losses in most major sectors. The S&P/ASX200 index was down 48.8 points, or 1.24 per cent,... Source: New Zealand Herald - Business | 12 May 2009 | 7:28 am Obama tax proposal would hit securities dealers, life insurance firms, big estates The Obama administration seeks to raise $58 billion mainly by ending some corporate tax breaks and changing the way assets in estates are valued. Republicans and business groups blast the plan. The Obama administration is digging deep into the tax code to find ways to help pay for its ambitious plans to cut taxes for middle-income families and small businesses while also overhauling the nation's healthcare system. Source: L.A. Times - Business | 12 May 2009 | 7:00 am World's carmakers racing to form alliances Woes facing General Motors and Chrysler have spurred deals among others as they work to survive the sales slump. ... Source: RSS feed - channel BNPaperBusiness | 12 May 2009 | 7:00 am Obama tax proposal would hit securities dealers, life insurance firms, big estates The Obama administration seeks to raise $58 billion mainly by ending some corporate tax breaks and changing the way assets in estates are valued. Republicans and business groups blast the plan. ... Source: RSS feed - channel BNPaperBusiness | 12 May 2009 | 7:00 am Bruckheimer to launch video game studio Halo 3 producer Jim Veevaert and former Ubisoft executive Jay Cohen will join Jerry Bruckheimer Games. Jerry Bruckheimer, the producer of action films and television shows such as "Top Gun," "Black Hawk Down" and "C.S.I," now thinks video games are where the action is. Source: L.A. Times - Business | 12 May 2009 | 7:00 am Healthcare groups join Obama at negotiating table Such a collaboration aiming to find solutions to high insurance costs is 'unprecedented,' observers say. Welcoming leaders of the hospital, drug and insurance industries to the White House on Monday, President Obama trumpeted their pledge to work together to contain the nation's skyrocketing healthcare tab. Source: L.A. Times - Business | 12 May 2009 | 7:00 am Gasoline prices jump in California and U.S. The average price per gallon of self-serve regular climbs 6.9 cents to $2.424 in the state and 16.2 cents to $2.240 nationally, the government's weekly survey of fuel stations shows. ... Source: RSS feed - channel BNPaperBusiness | 12 May 2009 | 7:00 am Bruckheimer to launch video game studio Halo 3 producer Jim Veevaert and former Ubisoft executive Jay Cohen will join Jerry Bruckheimer Games. Jerry Bruckheimer,... Source: RSS feed - channel BNPaperBusiness | 12 May 2009 | 7:00 am World's carmakers racing to form alliances Woes facing General Motors and Chrysler have spurred deals among others as they work to survive the sales slump. The breakdown of two of Detroit's Big Three is bringing urgency to the scramble among the world's automakers to forge alliances with former rivals, carve inroads into new markets and shop for well-known brands. Source: L.A. Times - Business | 12 May 2009 | 7:00 am Antitrust enforcer Christine Varney vows tough new efforts The assistant attorney general rebukes lax market policies of the past, saying that standing aside helped create the current economic woes. ... Source: RSS feed - channel BNPaperBusiness | 12 May 2009 | 7:00 am Vintage-furniture scavengers turn trash into treasure online At L.A.-based ThisIsNotIkea.com, visitors find thousands of moderately priced antique and midcentury modern furnishings they can be pretty sure won't be in their friends' or neighbors' homes. Forget that you're standing behind a giant green dumpster in a driveway cluttered with dusty relics of someone's past. Forget the musty smell, the awkward silence. Now stare down that shabby $5 metal cabinet. Do you see trash? Treasure? Source: L.A. Times - Business | 12 May 2009 | 7:00 am Antitrust enforcer Christine Varney vows tough new efforts The assistant attorney general rebukes lax market policies of the past, saying that standing aside helped create the current economic woes. The Obama administration put large companies on notice that it would be tougher on mergers and attempts to stifle competition, restoring the type of aggressive antitrust enforcement of the 1990s that led to the landmark government case against Microsoft Corp. Source: L.A. Times - Business | 12 May 2009 | 7:00 am Financial stocks lead a pullback after strong rally Dow falls 155 points in light trading. Some see the retreat as a natural, even healthy, event. After fueling a... Source: RSS feed - channel BNPaperBusiness | 12 May 2009 | 7:00 am Currency: Dollar hovering just below US60c The New Zealand dollar tracked sideways against the greenback after hitting a six-month high last night, with traders watching for a possible rise tonight. The New Zealand dollar was trading at US59.97c at 5pm today, after falling... Source: New Zealand Herald - Business | 12 May 2009 | 6:38 am NZ stocks: Market pushes lower The sharemarket closed lower for a second consecutive session, although local investors' reluctance to indulge in profit-taking provided some support for the market. The top-50 shed 0.6 per cent today, beating larger losses offshore... Source: New Zealand Herald - Business | 12 May 2009 | 6:02 am Chinese exports fall sharply Chinese exports fell steeply year-on-year in April, raising fears that the worst is not yet over for an economy that has shown signs of bottoming out in recent weeks Source: Financial Times - US homepage | 12 May 2009 | 4:31 am 28 jobs going in Ports of Auckland restructure Ports of Auckland will make 28 staff redundant as a result of the reorganisation of its container terminals, the company confirmed today. From July, the majority of visiting container ships would be berthed at the port's newly... Source: New Zealand Herald - Business | 12 May 2009 | 4:29 am Blue Chips Appear Posied to Bounce Back (Market Update) News at a Glance Tests Deliver: Stress tests boosting capital access: Fed. Gains Coming: Stock futures point to small rebound early. Citi Lending: Bank using TARP funds to expand loans to $45 bln. Energy Rising: Crude oil approaches $60 a barrel. The Lowdown The market's momentum is set to shift again. A day after a brief stint in the red, stocks looked to open higher Monday, as traders welcomed encouraging comments from the Federal Reserve. Shortly before 8:30 a.m., Dow, Nasdaq and S&P 500 futures were trading above fair value. Federal Reserve Chairman Ben Bernanke lent his support behind the government's stress tests Monday night, explaining that the tests had driven the private sector to step in and provide the nation's banks with additional funding. In autos, Ford (F) said it plans to raise $1.7 billion to $2.0 billion to pay for employee benefits through the sale of some 300 million common shares. In economic news, the trade deficit grew in March but by less than economists had expected. World markets were fairly flat. In Asia, Japan's Nikkei finished down 1.6%, while Hong Kong's Hang Seng ended up 0.4%. In Europe, the U.K.'s FTSE picked up 0.1% in afternoon trading. In energy, oil prices advanced and inched closer toward an old benchmark. By 8:23 a.m., crude traded up $1.44 at $59.94 a barrel. Corporate News Bank of America (BAC) has brought in about $7.3 billion on the sale of 13.5 billion shares of China Construction Bank, The Financial Times reported. The deal effectively reduces BofA stake in CCB to 11%, down from 16.7%. Citigroup (C) is using $45 billion in loans from the Troubled Asset Relief Program to facilitate $44.75 billion in lending, the Associated Press reported. That figure includes $5 billion in loans to state and local governments. AIG (AIG) isn't going to take it any more. Chief Executive Edward Liddy is tired of his staff being used as a punching bag in the capitol and plans to ask Congress to stop badmouthing the firm and its employees -- a politically trendy activity during the downturn -- the Wall Street Journal reported. General Motors (GM) is inching its way off the Dow. The head of the index's oversight committee said it was looking increasingly likely that GM would be replaced. "The chain of events involving GM and Citi seem to be marching in a certain direction," said John Prestbo, executive director of Dow Jones Indexes and the chairman of the DJI oversight committee. The Economy The monthly trade balance rose in March to $27.6 billion, up from a revised February balance of $26.1 billion, the Commerce Department said. Economists had expected the difference between U.S. exports and imports to have widened to $29.0 billion. REPORT SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved. Source: SmartMoney.com | 12 May 2009 | 4:00 am Warehouse Club Face-Off: The Overall Savings (Deal of the Day) Beyond the bulk food, cavernous shopping spaces and almost guaranteed savings (consumers save an average of 30% per item at warehouse clubs, according to a fall 2008 study by industry publication Warehouse Club Focus, warehouse clubs like Sam's Club), Costco (COST) and BJs (BJ), do have some distinct differences. And that could mean a big difference in savings for shoppers. While the most obvious disparity is the annual membership fee -- $50 at Costco, $45 at BJ’s (BJs is offering two months free with this coupon until July 6) and $40 at Sam’s – in-store prices and policies play an even bigger role when it comes to your bottom line at checkout. That's why it's important to compare prices on the items you need most frequently. A gallon of skim milk at Sam’s Club, for example, costs $1.88, while Costco charges $2.29. Need to stock up on Secret deodorant? At BJ’s, it's 81% cheaper than at the supermarket, while it's 67% less at Sam's Club. Another factor: coupons. BJ’s is the only warehouse club to accept manufacturers' coupons, which can give its prices an edge over the competition. (There are times, however, when combining those coupons with the sales in the weekly circular can result in even better deals at your local supermarket, says Teri Gault, founder of shopping site The Grocery Game.) Nonmembers who want to try out a warehouse club will also have to weigh the surcharge they’ll pay at checkout. Costco charges nonmembers 5%, Sam’s Club tacks on 10%, and BJ’s, 15%. Clubs usually permit nonmembers to purchase alcohol and prescription medications without having to pay a fee. (For more of the best and worst deals at warehouse clubs, see our guide here.) SmartMoney.com went shopping for household staples and other items shoppers might regularly purchase to see which stores offer the best savings. We compared prices for 17 items from three warehouse clubs in the New York City metro region against one another and those at local stores, including supermarket chain C-Town, Rite Aid (RAD), Petco and K&D Wines & Spirits for items the supermarket didn’t carry. Because warehouse clubs tend to carry bigger sizes, prices were adjusted for a unit-by-unit comparison where necessary. We also factored in manufacturers’ coupons where available, since both BJ’s and local stores accept them. The results: Even for nonmembers, warehouse clubs offer plenty of good deals, with some of the best savings on over-the-counter medications, personal-care products and pantry staples. There were exceptions to that rule, however – most notably, bell peppers at the warehouse clubs were almost twice as much as they were at the supermarket, and prescription cholesterol medication was slightly more expensive at one of the clubs than at a chain pharmacy. The winner? Sam’s Club’s prices were consistently among the best, although BJ’s coupon policy made it a serious contender in many categories. Here's our side-by-side shopping list.
Item	Supermarket	BJ’s	Costco	Sam’s Club
*Sam’s Club member prices are from the Secaucus, N.J., location. BJ’s member prices are from the East Setauket, N.Y., location. Costco member prices are from Brooklyn, N.Y., location. Nonwarehouse club prices are from New York locations of C-Town, Rite Aid, Petco and K&D Wines & Spirits. Prices have been adjusted per unit for comparison.
Skim milk, one gallon	$3.29	$2.09 Savings: 36%	$2.29 Savings: 30%	$1.88 Savings: 43%
Eggs, 1.5 dozen	$2.79	$2.99 Added cost: 7%	$1.50 Savings: 46%	$2.93 Added cost: 5%
Strawberries, 2lbs.	$5.98	$3.99 Savings: 33%	$3.50 Savings: 41%	$3.48 Savings: 42%
Bell peppers, six count	$2.97 (on sale)	$5.99 Added cost: 102%	$6.99 Added cost: 135%	$5.88 Added cost: 98%
Boneless, skinless chicken breasts, 10lbs.	$29.90	$22.29 Savings: 25%	$29.90 No savings	$19.70 Savings: 34%
Skippy Creamy peanut butter, two 40 oz. jars	$14.26	$7.39 Savings: 48%	$6.99 Savings: 51%	$6.04 Savings: 58%
Claritin allergy medication, 90-count (over-the-counter)	$69.97 (after a $5 coupon)	$29.99 (after a $5 coupon) Savings: 57%	$34.49 Savings: 51%	$31.74 Savings: 55%
Lipitor 10mg cholesterol  pills, 90-count (prescription)	$255.97	N/A	$259.79 Added cost: 2%	$250.72 Savings: 2%.
Charmin Ultra Soft toilet paper, 36 rolls	$31.22 (after a 25-cent coupon)	$18.74 (after a 25-cent coupon) Savings: 40%	N/A	$17.88 Savings: 43%
Tide Original liquid detergent, 170oz.	$31.93 (after a 35-cent coupon)	$20.14 (after a 35-cent coupon) Savings: 37%	$20.99 Savings: 34%	$20.97 Savings: 34%
Secret Invisible Solid women’s deodorant, four-pack	$20.96 (after a $1 coupon)	$3.79 (after two $1 coupons) Savings: 81%	N/A	$6.83 Savings: 67%
Huggies Step 4 diapers, 176 count	$71.11 (after a $1.50 coupon)	$37.99 (after a $1.50 coupon) Savings: 47%	$42.79 Savings: 40%	$36.43 Savings: 49%
Poland Spring water, 35 bottles	$10.19	$4.19 Savings: 59%	$4.99 Savings: 51%	N/A
Pepsi, 36 cans	$14.97	$9.49 Savings: 37%	$9.49 Savings: 37%	$9.10 Savings: 39%
Folgers Classic Roast ground coffee, 48oz.	$17.72 (after a 50-cent coupon)	$8.49 (after a 50-cent coupon) Savings: 52%	$8.99 Savings: 49%	$8.39 Savings: 53%
Grey Goose vodka, 1.75l	$68.99	N/A	$59.99 Savings: 13%	$57.82 Savings: 16%
Purina Dog Chow, 50lbs.	$31.23 (after a $1.50 coupon)	$21.49 (after a $1.50 coupon) Savings: 31%	N/A	$22.58 Savings: 27%

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Eyeing a 'Pre-Owned' Car? What You Should Know

Call it used-car chic. “Certified pre-owned” cars—the industry’s well-known euphemism for low-mileage, used vehicles that are inspected by dealers and backed by warranties—are on a roll.

Since 2000, sales have more than doubled, to 1.7 million units, says J. D. Power. In fact, it’s the lone bright spot in today’s sputtering auto market: While new-vehicle purchases plunged 37.2 percent in March, certified sales jumped 9.2 percent over a year earlier, according to CNW Marketing Research. And for luxury brands like BMW, these cars now account for more than 40 percent of total sales.

New-car smell is far less of a factor these days for buyers like David Backman of Minneapolis. For decades Backman avoided used cars, figuring he’d be “inheriting other people’s problems.” Then last year, he found a deal on a certified pre-owned 2005 Volkswagen Jetta with 47,000 miles. The car cost $10,000—about $8,000 less than a new one. It was inspected and refurbished according to VW’s 112-point checklist. And in this economy, Backman feels no shame about his secondhand car. “A lot of people I know are buying them,” he says proudly.

Indeed, more buyers are forgoing new for “gently used.” According to CNW president Art Spinella, certified buyers are virtually identical to new-car ones—in age (mid-40s), income (mid-60s) and creditworthiness (720s). But with the economy biting down, the number of new-car consumers downshifting into certified jumped nearly 60 percent from January ’08 to January ’09. “They’re stealing from that core,” says Spinella.

It doesn’t hurt that these already modestly priced vehicles were helped along last year by low-APR financing. But the bargain bonanza won’t continue, says Edmunds analyst Joe Spina, since demand is spiking and supply, dwindling. Owners are keeping vehicles longer. Production cutbacks are reducing backlogs. And lease financing has significantly dried up. The upshot: Fewer low-mileage cream puffs will be boomeranging back onto the lots, ready for gold-star status.

Which is why manufacturers (surprise!) have begun to stretch the boundaries of vehicle eligibility. Many now accept corporate-fleet cars. Others are extending the long-held five-year or 50,000-mile cap; Ford, for one, now considers cars up to six years old and with up to 80,000 miles. Glenn Burke, manager of Ford’s certified pre-owned program, says the company can certify a greater spectrum of vehicles because “quality has improved so much.” Still, such moves open the market to more grizzled trade-ins, likely to develop wear-and-tear problems not covered under warranty.

And just because a car earns a diploma doesn’t mean it won’t be a problem child. The term “certified” isn’t regulated by the government and means different things, depending on who’s holding the clipboard. While experts caution buyers to stick with cars that are manufacturer-backed, some dealers are confusing tire kickers by certifying cars independently and offering third-party warranties that won’t necessarily be honored at other authorized dealerships. Indeed, both those and the makers’ own warranties—which range from three months to three years—can be packed with pricey loopholes.

Carmakers say their certified vehicles have to pass rigorous tests, with long checklists that cover everything from engine fans to the glove-box lamp. “Even a small squeak or faint odor may disqualify a vehicle,” according to Lexus. But industry insiders say those laundry lists may give buyers a false sense of security—as New Jersey–based Scott De Lello learned firsthand when he recently bought a certified BMW. While the 2006 sedan wasn’t officially certified when he first saw it, he says the salesman promised that, after undergoing BMW’s exhaustive inspection process, it would be shiny, smooth-running—and certified. But he says that when he drove it off the lot, the sunroof didn’t work, the brakes squeaked, and it even had a bum headlight. De Lello says he took it to another BMW dealership, which fixed the problems under warranty, but he and the original dealer, JMK BMW of Springfield, N.J., say that JMK has since compensated De Lello for the inconvenience with a $400 check and a $500 gift certificate.

Even properly administered, checklists can be “very superficial,” says Bill Bates, head of BMW’s pre-owned sales. A mechanic might check the radiator coolant but not the quality and consistency of the fluid—a red flag for other problems. And manufacturers seem to be in a checklist arms race, adding dozens of minor items to the roster. In 2005, Audi hiked its inspection list from 150 points to over 300; it now includes four check-boxes for the seat belts, two for the ashtrays, even one for the cupholders. “It’s the devil that’s in the details,” says Mark Ilijanic, Audi’s head of pre-owned sales.

Okay, so the inspections aren’t infallible. But at least you can bank on a clean CarFax report, right? Most manufacturers use the service to check a vehicle’s title and accident history, but even an unblemished CarFax can’t guarantee a hassle-free car—since accident data and other problems may slip through the reporting system. The company says it offers a buyback guarantee for those “incredibly rare” occasions when it gives a clean bill of health to a vehicle that’s actually had a major accident or once been designated a “lemon” (only to make it back into the market). Still, before you buy, it pays to bring an independent mechanic to do his own inspection. Just don’t expect him to find any new-car smell.

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Toothless Watchdogs? Auditing the Audit Firms

THE BIG FOUR ACCOUNTING FIRMS ARE USED to embarrassing headlines about their purported misdeeds. After all, the past decade has seen one business catastrophe after another at companies audited by the major firms. Witness the scandals at Tyco, WorldCom and Xerox.

These days of Ponzimania have put the glare on two smaller auditing firms. BDO Seidman, the seventh-largest U.S. auditor in terms of net revenue, has been linked to disgraced financier J. Ezra Merkin and so, indirectly, to the ubiquitous Bernard Madoff. McGladrey & Pullen, the fifth-largest in the field, is under fire for its connection to a $3 billion Ponzi scheme purportedly masterminded by Minnesota entrepreneur Thomas J. Petters.

In investor lawsuits filed in recent months, BDO Seidman and McGladrey & Pullen stand accused of shoddy audits and signing off on the books of fraud-ridden businesses and investment funds. The cases, together with a string of earlier ones involving the two firms, raise unsettling questions about the level of confidence investors can put in financial audits.

The two audit firms say they stand by their work, and there is, in fact, some murkiness about auditors' responsibilities for detecting fraud. The firms are supposed to "obtain reasonable assurance about whether the financial statements are free from material misstatement, including misstatements caused by fraud," according to the Public Company Accounting Oversight Board, the federal entity that supervises auditors of public companies. The gray area centers on what is reasonable, an issue that often plays out in the courts because accounting firms can be one of the only solvent players left when a company goes down.

BEFORE MADOFF CAME ALONG, there was E.S. Bankest LLC. The Florida factoring company went bust after its executives allegedly carried out an elaborate nine-year scheme to steal roughly $170 million from the business while fabricating false financial statements; nine Bankest insiders were convicted of criminal charges in a Florida federal court. BDO Seidman had audited the company and concluded its books were free from material error.

California attorney Steven Thomas, who in 2007 won a $522 million jury award against BDO Seidman stemming from its Bankest audits, says the case reflects the kind of cozy interdependence that helped sink Enron and Arthur Andersen. "Auditors are supposed to have professional skepticism, and that is just inconsistent with the client relationships that they try to preserve to keep the money flowing," Thomas says.

BDO Seidman spokesman Jerry Walsh says the firm is appealing the Bankest verdict and remains "extremely confident that this jury's findings will be overturned."

The firm also is contesting a civil lawsuit from the collapse of Le-Nature's Inc., a Pennsylvania iced-tea producer shuttered in 2006 after allegedly faking $240 million in revenue, according to forensic accounting undertaken by a bankruptcy court. BDO Seidman auditors had certified that Le-Nature's financial statements were free from material error.

"There is a difference between being fooled and putting your head in the sand so you don't see things," says Robert Loigman, a New York lawyer representing Le-Nature's investors who sued. A tour of the company's Latrobe, Pa., warehouse would have made clear Le-Nature's wasn't selling $300 million worth of bottled drinks a year as claimed, he says.

Walsh says his firm "was one of many victims of a collusive fraud at Le-Nature's."

For McGladrey & Pullen, some tough questions have come from Frederick J. Grede, a Chicago bankruptcy trustee who claims the firm's auditors actively participated in the "looting" of Sentinel Management Group, a $1.4 billion investment fund that failed in August 2007.

A lawsuit filed by Grede accuses McGladrey & Pullen auditors of "preparing false footnotes to Sentinel's financial statements," certifying bogus financial statements to federal regulators, "consciously ignoring" serious problems "clearly shown" in the firm's work papers.

The Securities and Exchange Commission and the Commodity Futures Trading Commission are pursuing top Sentinel executives in court, saying they siphoned hundreds of millions of dollars. McGladrey & Pullen declined to comment on the case.

THE RECENT PONZI SCHEMES have touched off another round of litigation. Take the case of J. Ezra Merkin.

According to New York Attorney General Andrew Cuomo, Merkin repeatedly lied to his customers about what he was doing with the $2.4 billion they had given him. In a 54-page civil fraud complaint, Cuomo accuses Merkin, who ran a trio of investment funds, of giving his investors "false" offering documents and quarterly statements. Merkin, according to the suit, consistently deceived investors about the fact that he had entrusted Madoff with their cash, which vanished. Merkin has denied any wrongdoing.

The Merkin funds were audited by BDO Seidman, which attested that the books were free of material error. New York Law School, which lost $3 million it placed with Merkin's Ascot fund, claims BDO Seidman failed to "maintain an appropriate degree of skepticism" or collect sufficient evidence to support its conclusions.

In a lawsuit, the school blames BDO Seidman for not telling investors about Merkin's alleged sleights of hand. Exhibit A: the 2007 audit of Ascot, which lists the fund's assets on a week-to-week basis, but doesn't mention that just one broker, Madoff, held nearly all those assets.

Nancy Kaboolian, an attorney for New York Law School, declined to comment. But New Jersey lawyer Alan Wasserman, who is preparing another case against BDO Seidman on behalf of Merkin investors, says Merkin's heavy reliance on Madoff is a "red flag any accounting firm should have seen" and noted.

Says Walsh: "It is unfortunate that these investors would bring legal action before all of the facts are known and seek to blame others for their own investment decisions."

McGladrey & Pullen, meanwhile, has been targeted in the case involving Petters, who once owned Polaroid.

Before his arrest by federal agents in October 2008, Petters allegedly convinced investment funds to pump billions into a nonexistent TV-wholesaling business. McGladrey & Pullen audited three of those funds, which made a steady stream of high-interest loans to the Petters Company. All three funds were wiped out, and investors are suing McGladrey & Pullen, saying the firm should have noticed that the funds were shoveling vast sums into a business with no real customers.

Petters pleaded not guilty in December to charges of mail fraud, wire fraud, money laundering and conspiracy.

"McGladrey & Pullen stands by the quality of its audits, which are conducted with due care while conforming to professional standards," company spokeswoman Betsy Weinberger says.

In the view of Richard L. Kaplan, a law professor at the University of Illinois, a diligent auditor should go to source documents to verify the financial statements it is scrutinizing. If a fund claims it has cash in a bank account, auditors should get records directly from the bank, he said.

Kaplan has advocated tougher oversight of accounting firms. Still, he acknowledged there are limits. "A very determined crook," he said, "will deceive virtually any auditor."

The Bottom Line
Audit firms are supposed to "obtain reasonable assurance" that financial statements are free from misstatements caused by fraud. What's "reasonable" is a gray area.

A.C. Thompson and Jake Bernstein report for ProPublica, an independent, nonprofit newsroom based in New York. More of ProPublica's coverage can be found at www.propublica.org.

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.

10 Things Your Bank Won't Tell You (10 Things)

1. “We’re in survival mode.”

Banks may still be a safe place to stash your cash, with the FDIC now insuring up to $250,000 per depositor. But after years of lending money to just about anyone with a pulse, the industry is paying a steep price. Losses on bad loans issued during the credit bubble could top $1.4 trillion, according to the International Monetary Fund. With their balance sheets in tatters and stock prices in the gutter, some of America’s biggest banks have been forced to merge to survive. And even with the U.S. government infusing money into the system to get banks lending again, “the days of easy credit are gone,” says Greg McBride, senior financial analyst with Bankrate.com.

Customer service also seems to be a casualty of the credit crunch. With less money coming in, many big banks are cutting jobs, closing branches, and scaling back their call-center operations, says Mike Moebs, a bank industry consultant in Chicago. Moreover, employees left on the job now have to handle more customers and may have less flexibility to ease up on fees for overdrafts or other services. “Customer service is waning at the big banks,” says Moebs. “It’s a downward spiral.”

2. “Our fees will only go up.”

Don’t look now but punitive fees—for overdrawing your account, say, or using a competitor’s ATM—are increasing. The average ATM service charge doubled between 1998 and 2007, and overdraft fees brought in $17.5 billion in revenue in 2006, up from $10.3 billion in 2004, according to the Center for Responsible Lending. Rubecca Hegarty, a married mother of three in Woodridge, Ill., says she often pays upwards of $100 a month in overdraft fees to Chase, since, like most banks, it changes the order of purchases so that large debts get paid first— increasing the likelihood of incurring fees on smaller purchases. JPMorgan Chase says it does this because big payments like a mortgage are more important to consumers, so they get priority.

Revenue from penalties can be addictive for banks, says Harvard Business School Professor Gail McGovern, but “They’re going to face problems from angry customers, which leads to big callcenter bills, employee dissatisfaction, and turnover.”

3. “We change our interest rates all the time.”

Regardless of what your credit card agreement says, you can never be sure how much interest banks will charge you. For example, nearly all cards have a default rate—as high as 30 percent— which banks apply when you’ve done something wrong, usually after two late payments in 12 months. But some banks have cut that to one, says Curtis Arnold, founder of CardRatings.com.

Banks can also change the terms of your agreement, raising rates when they like (though you can opt out and pay off the balance at the old rate as long as you never use the card again). Bank of America did that recently, upping many cardholders’ rates from 10 or 12 percent to 27 percent or more, even though they’d done nothing wrong. “There’s no clarity on what criteria can lead a bank to raise interest rates,” says Robert Manning, director of the Center for Consumer Financial Services at the Rochester Institute of Technology. “It’s a black box.” A Bank of America spokesperson says the company periodically reviews the credit risk of its accounts and adjusts rates accordingly, adding that in the past year 94 percent have had no increase.

4. “College campuses are a gold mine for us.”

Students are the customers of the future, and banks are increasingly courting them, sometimes right on campus. More than 120 universities have cut deals with banks to issue student-ID cards that are also ATM and check cards. Schools can make millions from these deals, sometimes even taking a small cut of individual purchases.

Students are also a hot market for credit card issuers; banks will make private deals with alumni associations to get contact info for students, parents, and ticket buyers to university athletic events. Card companies cut deals to set up booths on campus, and Chase even inked a deal with Facebook to display ads and set up a Chase group on its website.

The problem? Mounting credit card debt among college kids, for one. “Universities don’t negotiate on behalf of students,” says Manning. “They’re negotiating the best deal for the university.” A spokesperson for the National Association of Independent Colleges and Universities says don’t blame schools—banks would market to students anyway, and universities at least try to get the best rates they can for students.

5. “In debt? The courts won’t help.”

Since the late 1990s, banks have been including mandatory arbitration agreements in their contracts for many of their products, including auto loans, checking accounts, home-equity loans, and credit cards. Such agreements prohibit you from suing and instead require you to use an arbitrator— someone picked by the arbitration firm named in your credit card contract to hear the dispute and decide the outcome.

While these clauses were originally designed to thwart class-action suits, the banks have also been using them for debt collection, says Paul Bland, an attorney with consumer-advocacy group Public Justice. There are even times when consumers, often victims of identity theft and unaware of the debt, aren’t present when awards are handed down against them.

A recent suit against an arbitration firm brought by the San Francisco city attorney noted that arbitrators ruled in favor of banks in 100 percent of the 18,045 California cases brought against consumers from January 2003 through March 2007. “From the consumer perspective, it’s a nightmare,” says Bland. If a bank brings arbitration against you, hire a lawyer and request a hearing—in person.

6. “We’re excited about your trip to Europe, too!”

It’s not bad enough that the dollar is hovering near historic lows against most major currencies, but when you travel overseas, every transaction comes with big fees attached. Take out cash from an ATM in London, and you’ll get hit with a foreign-transaction fee, plus a fee for using a competitor’s ATM. All told, it can cost up to $7 just to withdraw $200. Credit card purchases aren’t much better. Visa and MasterCard each charge 1 percent of the purchase for converting currency. And the issuing banks may take another cut, which can bring the total to 3 percent of your purchase price, says CardRatings.com’s Arnold. “If people don’t travel overseas very often, they just don’t think about it,” he says.

The best thing to do is see which of your cards charges the lowest overseastransaction fee. If you travel a lot, Arnold recommends a Capital One credit card, which charges no overseas-transaction fees (even refusing to pass on Visa and MasterCard’s 1 percent fee to customers). Also, ask your bank about partnerships with foreign banks. Bank of America, for example, partners with Barclays Bank, saving its customers $5 per withdrawal from the latter’s ATMs in the U.K.

7. “For all the fine print, we don’t disclose very much.”

Bank documents come loaded with small type, detailing terms and conditions. But good luck finding out exactly what you’re signing up for when you open an account. In 2007 the Government Accountability Office (GAO) sent investigators to see how well banks explained their fees and other conditions to potential customers. Though banks are required by law to make this information available, the GAO found that one third of the branches it surveyed didn’t provide the required information. Worse, more than half didn’t have any fee information on their websites.

Nessa Feddis, senior counsel at the American Bankers Association (ABA), questions the report’s methodology— banks failed the test if investigators waited more than 10 minutes for the information—and defends the lack of data online. Banks are afraid of leaving old, inaccurate information on their site if terms change, she says. But without details on fees, consumers can’t make educated choices. “Banks are not complying with the law,” says Ed Mierzwinski, consumer program director with the U.S. Public Interest Research Group. “People need more information so they can shop around for the best deal.”

8. “Your money might be better off elsewhere.”

Banks offer lots of ways to earn interest on your money—among them, simple savings, CDs, money-market accounts, and IRAs. But they don’t always yield the best return. In early 2009, the average savings account, for example, was paying about 0.5 percent interest. But even in this low-interest-rate climate, you can do better—3 percent or more—if you shop around. “It pays to be a free agent,” says Bankrate.com’s McBride. “There is tremendous disparity in the returns available.”

Banks have been expanding into other financial services for a decade or more, including comprehensive wealth management and financial planning, brokerage services, even insurance. The well-off customers who use these are a bank’s most profitable; they keep the highest balances and are less sensitive to fees, says Maryann Johnson, senior vice president of wealth market management at the ABA. That’s something to remember when you talk to a bank’s investment advisers: Many are paid a commission on investment products, says Certified Financial Planner Craig DuVarney, meaning they often go for the easy sale. “They don’t have the harder discussion about estate planning, tax bracket, and liquidity,” says DuVarney. Johnson sees it differently; she says banks take a more holistic approach and that their wealth managers serve much the same purpose as financial advisers, with bonuses for not only sales but also dollars invested, new clients, and even customer retention.

9. “When it comes to banks, smaller is sometimes better.”

Banks have been consolidating like crazy over the past decade. In 1990 the top 10 banks controlled 25 percent of the market; by 2008 they controlled half. This gives customers of large banks vast networks of free ATMs and branches across the country. But it hasn’t been entirely good for consumers, says Arthur E. Wilmarth, Jr., a professor at George Washington University Law School. Though big banks offer many conveniences, they can come at a price: high fees. In 2006 the 10 largest banks generated 54 percent of revenue from fees and service charges; by contrast, the 10 smallest banks generated just 28 percent from those sources.

Not only do big banks bring in more fee income but they also pay out less interest. According to FDIC data, smaller banks generally pay higher interest on savings accounts and other products. For example, in 2006 the 10 largest banks paid an average 1.87 percent in interest for savings accounts, while the smallest banks paid 4.37 percent. “The largest banks are no longer worried about being undercut on price,” Wilmarth says.

10. “Your online account info isn’t necessarily accurate.”

Online banking has changed the way people handle their finances. They can pay bills online, transfer funds, track payments, and get a more detailed view of their bank account than ever before. Unfortunately, it may not always show the proper balance. With electronic transactions, ATMs, check cards, and direct deposits, banking has gotten more complicated.

ATMs and online bank statements will show deposits available before the money is actually in your account. Using your debit card at a gas station or to reserve a hotel room, for example, can put a hold on funds. Some merchants may be slow to send in charges. And banks can sit on deposits—an out-of-state check may take up to five days to clear.

Add to that the constant reordering of debits, and your account balance can quickly become a moving target—hard to track accurately day to day. “Banks use different algorithms to process payments than what you see online,” says Harvard’s McGovern. “It gives you a false sense of security.”

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.

Are We Headed for a Third Bubble? (On the Street)

Laughter causes mirth, not the other way around, theorized psychologist William James (brother of novelist Henry) some 125 years ago. Today, practitioners of laughter therapy feign chuckling to induce happiness. Professor Charles Schaefer of Farleigh Dickinson University in Teaneck, N.J., made a study of the matter in 2002. Students he asked to “laugh hilariously for one minute” reported sharp improvements in mood, while those who smiled were less affected and those who howled like wolves were unmoved.

Could U.S. stocks be engaged in a version of laughter therapy at the moment? Monday’s decline notwithstanding, they’ve soared in recent weeks, erasing a 25% drop suffered earlier in the year, even while good news is scarce. The economy is shrinking and its number of unemployed is swelling, if at a slower pace than in prior months. Plenty of companies have beaten earnings forecasts but few have beaten on sales, suggesting slashed costs, not growth.

A bull would say stocks often rise before economic measures improve, since traders are quicker than government statisticians. A bear would point to the several false rallies of the Great Depression, when stocks rose more than 20% only to plunge afterward to new lows. But perhaps this rally is a fake one on its way to becoming real, if not enduring, growth. After all, an unwarranted rise in share prices, if it lasts long enough, puffs up investors’ buying power and sends them to stores. Companies cash in and the economy expands.

That’s arguably what happened during the bubbly stock market of the late 1990s. A slashing of core interest rates earlier in the decade produced a brief spurt of economic growth in 1994, but it subsided the following year. Then stocks turned remarkably generous. Over five years ended 1999, S&P 500 returns ranged from 21% to 38% a year. As share prices rose, growth in consumer spending and gross domestic product accelerated. Stock gains begat growth, not the other way around.

Share prices plunged over the next three years, but consumers kept shopping as house prices jumped 35%, aided by policy makers again slashing core interest rates. Stock returns turned positive again in 2003 and a second bubble ensued, this one shared by stocks and houses. Corporate profits rose from 5.4% of gross domestic income in 2003 to 7% by 2006. Rising shares helped make companies more profitable, not the other way around.

In both cases stock prices eventually collapsed, and if this rally grows into a third bubble it will surely end badly, too. If the first two bubbles were brought on by low core interest rates, conditions for a new one are ideal. The core rate is almost zero, a record. But one difference between bubbles No. 1 and 2 suggests economic growth this time will stop well short of past peaks. During the late 1990s, Americans maintained a respectable level of personal savings. In the latest bubble, savings rates turned negative. If the first time around consumers spent stock profits and the last time they had to go well beyond profits to spend debt, a third bubble might depend on the ability of banks to finance it. With losses in commercial property loans and credit cards still likely to worsen, that seems unlikely.

The recent rally has favored economically sensitive companies—ones whose profits rise quickly as the economy grows. Investors who expect the rally to fizzle ought to swap these for shares of companies whose products sell steadily no matter what. Favor modest valuations and big, safe dividends. Both are still abundant, fortunately. Also, keep ready a generous stash of cash.

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.

Property figures show battered market may be stabilising

Westpac cuts mortgage rates, floating unchanged

Air NZ in merger talks by end of year, says aviation think tank

Bernanke says early response to bank tests encouraging (Reuters)

Reuters - Government "stress tests" of how 19 major banks would endure a sharp downturn in the economy already appear to be helping banks gain access to private capital, a key element in economic recovery, Federal Reserve Chairman Ben Bernanke said on Monday.

Accommodation stats show 11pc slump in March

Glum times in the Grotto - Playboy revenue slumps, 100 jobs cut

Up to 200 jobs going at Ministry of Social Development

Stress tests unleash fee bonanza

Write-Offs: 05.11.09

$$$ Dreier Pleads Guilty To Fraud Charges [WSJ]

$$$ How to not learn from history [anal_yst]

$$$ Jamie Dimon Takes Down Victoria Gotti [Cityfile]

Presented By:

Hear: Follow Suit

Dreaming of a green New Deal. Steve Rhodes/Planet Money Flickr pool

 

On today's Planet Money:

-- The Planet Money crowd had a lot to say about our interview with Elizabeth Warren, most of it negative. Twitter pal Renee Rico takes the soapbox.

-- One set of not very popular folks is now suing another. It's bond insurer MBIA versus financial giant Merrill Lynch. At issue: whether the latter misled the former into selling insurance way too cheaply. Securities lawyer Zachary Rosenbaum decodes the briefs.

Bonus: Voters send Ohio school district an economic indicator.

Download the podcast; or subscribe. Intro music: MGMT's "Weekend Wars." Find us: Twitter/ Facebook/ Flickr.

Brian Goad sends this Planet Money Indicator:

Zero is the number of proms, musical concerts, theatrical performances football homecomings, basketball games and other sporting events 21,000 kids in Reynoldsburg and South-Western City Schools (near Columbus, Ohio) have to look forward to.

Goad sends news that local voters rejected a property tax that would have given the school district $21 million a year. Without the extra money, it's out with the extracurriculars.

"I can't stay here," sophomore Nick Kowaleski, a wrestler and runner, told the Columbus Dispatch. "I have to go somewhere to get a scholarship for college."

Superintendent Bill Wise had this to say:

"What's very clear is this community is trying to send us a message that we haven't heard. What we have heard is that they wanted us to tighten our belts and improve the academic performance in the district. We've done that. Yet the ballot doesn't acknowledge the fact that we have listened."

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Contest: Decipher This

PM editor Uri Berliner sends along this indecipherable business alert.

REUTERS SUMMIT-BATS EXCHANGE CEO SAYS POSSIBLE NEW OPTIONS MODEL WOULD BE MAKER-TAKER

Anyone know what this means?

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Those Were The Days

One more excerpt from Kate Kelly's Street Fighters. Maybe it's the schizophrenic weather, but this is getting us embarrassingly mistily nostalgic for last year.

Cayne was late to the board's 11:00 AM call that [Saturday] morning, and Ace Greenberg was angry. As soon as Cayne came on the line, Greenberg asked if he'd been delayed at the bridge table. Cayne said no. The two then began to argue about whether Cayne should return to New York for the next two days' deliberations, rather than where he was and deliberate telephonically. Cayne didn't want to leave. "It's very difficult," he told the directors. "Why do I have to come back? I can do it by phone."

"We can't afford to have another story that you're playing bridge this time," Greenberg snapped.

Treasurys rise sharply as stock market pulls back (AP)

Keckley Sees U.S. Health-Care Overhaul Passing This Year

Ackman says Target proxy not about him (Reuters)

Sweeney Sees U.S. Economic Growth Improving `Pretty Quickly'

China Rolled The Dice

Click to enlarge. Brad Setser/Council on Foreign Relations

 

Remember when Chinese Premier Wen Jiabao warned the U.S. to be careful with his country's investments in America?

As you can see from Brad Setser's rough chart, the U.S. is paying an increasing amount of interest to China. That's because China has loaned more than $1 trillion to the American economy in the form of Treasury bills and Fannie Mae and Freddie Mac bonds.

But, just as Wen worried, the overall rate of return is falling. The U.S. is paying less interest on the dollars it's borrowing. That's a result of the U.S. decision to lower the benchmark interest rate nearly to zero. It's supposed to get the economy going, but it also unnerves players like China with the prospect of inflation. China has been worried that its dollars won't buy as much when the U.S. pays it back; now Chinese leaders can worry about falling returns, too -- but as Setser argues, that's the risk they took.

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Merk Sees TARP Funds Being Applied Inefficiently

GM exit from the Dow looking more likely (Reuters)

Reuters - The potential for changes in the blue-chip Dow Jones industrial average remains high, according to the head of the index's oversight committee, the same day the head of General Motors said bankruptcy had become more likely.

AIG sells Japan headquarters for $1.2 billion (AP)

AP - Embattled insurer American International Group Inc. said Monday it is selling its Japanese headquarters to Nippon Life Insurance Co. for $1.2 billion in cash.

How the major stock indexes fared Monday (AP)

How the major stock indexes fared Monday (AP)

Can micro-payments mean big payoff?

Banks ahead against credit card reform

Goldman Sachs settles bad Mass. loans

DOJ wants monopolists to play nicer

Health care cutting for stake in reform

Health care should be government's job

Orenbuch Says Fed Debt Purchases Will Probably Keep Rates Low

Lithium can charge Bolivian economy

Clarida Says Too Soon to Tell If Worst Is Over for Economy

Arthur Levitt Says He Wouldn't Accept Crisis Probe Post

Britain, China announce stock market accord (AFP)

AFP - Britain and China struck an accord on Monday allowing the two countries' companies to list on each other's stock exchanges.

Massachusetts, Goldman in $60 million subprime accord (Reuters)

Reuters - Goldman Sachs Group Inc agreed to pay up to $60 million to settle a Massachusetts probe into whether its subprime mortgage securitization business had encouraged unfair loans, state officials said on Monday.

A poem of loss for the economy

Ex-Bear Stearns exec sues for $2 million bonus (AP)

Bill Ackman’s Target War Highlights Cultural Changes, Past Mistakes

Pershing Square hedge fund manager Bill Ackman is holding a Town Hall meeting today to convince investors that Target’s board needs to be replaced. His attempted shakeup highlights a shift in activist investor culture as well as a questionable moneymaking strategy.

The Backstory
Ackman launched a board shakeup fight after Target refused a real estate proposal that would convert 20% of Target’s land–the retailer owns most of its stores outright–into an inflation-protected security called a TIP REIT.

The Fight
Ackman said the real estate deal would make Target more money. Target claims that the proposal would burden the company with $1.4 billion in annual lease expenses for 75 years, a number which would increase at the rate of inflation. Now, Ackman is hitting the streets, touting his nominees for a new Target board three weeks before the company’s annual shareholder meeting.

Ackman’s nominees include:

Himself
Jim Donald, former Starbucks CEO
Michael Ashner, Chairman/CEO, Winthrop Realty Trust
Ronald Gilson, law professor
Richard Vague, former Chairman/CEO, First USA
(from DealBook)

Mr. Ackman has maintained that this slate will bolster the board’s expertise in retail, credit cards and real estate issues. In the filing, Mr. Ackman insisted that the nominees are ”entirely independent” and have ”no preconceived agenda other than to maximize shareholder value.”

Ackman’s Stake
Ackman’s Pershing Square IV fund, which invests only in Target stock, owns 26.8 million shares (3.3%) of Target. He holds another 4.5% in options, according to an excellent article by Fortune’s Jennifer Reingold.

Ackman’s fund hit a low in February, when it was down 93%. Reingold writes that he let some investors close their investments, waived fees for others, and issued a public apology. He put $25 million of his own money into the Target fund.

Ackman’s Pershing SIV fund usually moves at twice the move of Target because Ackman uses derivative contracts that give his fund two-times leverage, according to the Street Insider.

Target’s Response
Target is reacting by pouring $11 million into the proxy fight. From Fortune:

Far from treating Ackman like a mere irritant, (Target) is spending some $11 million to promote its own candidates — money, Steinhafel notes, that would be better spent improving its business. “This is a very challenging economic environment,” he says, “and it’s unfortunate that we are having to invest our time in [fighting] a proxy contest.”

A Change in Corporate Takeover Culture?

Reingold comments on the meaning of the proxy fight:

The stakes are high, and not only because Target is one of the largest companies ever to be involved in a proxy fight. Regardless of who wins the vote at the annual meeting on May 28, Ackman’s move against a widely respected company with no record of poor governance represents a new front in the world of shareholder activism, and one that any company should pay attention to.

Although directors of companies with worse records — Citigroup, anyone? — have been reelected, the fight at Target suggests that the days of the “trust me” boardroom are waning, and that costly struggles for control may become commonplace.

Meanwhile, Seeking Alpha’s TraderMark posted a quote that sums up Ackman’s motivations:

“Bottom line, PSIV has been one of the greatest disappointments of my career to date,” Mr. Ackman said in the letter. “That said, we continue to believe that we will ultimately be successful in our investment in Target.”

Bad Idea
Ackman has a reputation as a sharp investor, but I wonder about his strategy. Mervyn’s, a former Target subsidiary, experienced a similar shakeup in 2004. Target sold Mervyn’s to PE firms Sun Capital and Cerebrus, as well as real estate investor Lubert-Adler Management. The San Diego Union-Tribune explains what happened next:

The new owners changed the structure of the company, dividing it into separate real estate and retail businesses. In essence, the Mervyns real estate arm charged retailer Mervyns huge rents for its department store space.

“It didn’t make any logical business sense,” (one analyst) said. “The new owners saw it as a way to generate a lot of cash, but it was impossible for Mervyns to build a viable, long-term business facing those staggering rents.”

Mervyn’s ended up going the way of the dodo–after suing Cerebrus and Sun Capital for increasing rent to leverage the buyout.

It’s hard to imagine Target, a much stronger business than Mervyn’s, facing a similar fate. Still, if I held TGT shares, I’d steer clear of Ackman.

Cramer, Not So Mad?

Some soon-to-be-published research finds that CNBC's Jim Cramer's stock picks aren't so crazy.

Two professors at Northeastern University found that following Cramer's advice yielded a 12% annual return on average, compared with 7% for S&P 500 index over the same period.

From Paul Bolster and Emery Trahan's Investing in Mad Money.

 

You'd want to track his picks over a longer period of time to see if that's more than just luck.

The researchers, Paul Bolster and Emery Trahan, write:

"Overall, the results suggest that, while Cramer may be entertaining and mesmerizing to many of his viewers, his aggregate or average stock recommendations are neither extraordinarily good nor unusually bad."

The paper is scheduled to published in the journal Financial Services Review.

Here's an earlier paper analyzing Cramer's effect on the market.

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Senator Kyl Warns Administration Against Firing Bank CEOs

Cliggott Says U.S. Stocks Have Gone `Too Far Too Fast'

'The Story Of Stuff'

The other day at the ices stand (think snocone, Hawaiian shave ice, etc.), my seven-year-old popped a wiggly when they handed him his treat in a plastic cup instead of a paper one. Proving why you should never let a first grader do your taxes, he refused the already used plastic one on environmental grounds and walked away happy only when we poured the sugary concoction into a second (readily biodegradable) cup.

For him, plastic is a huge, huge problem.

In the New York Times today, I finally caught up with the apparent phenomenon of The Story of Stuff, a 20-minute take on the perils of consumer culture that has been making the rounds of American classrooms. Some call it an educational breakthrough, some an unfair takedown of capitalism, and I'm betting many economists will say its reasoning is flawed.

But since the next generation's watching The Story of Stuff at school, I'm thinking we might out to watch it together on the blog. I'll reach out to a couple of economists about it, to get their view. The full video's after the jump.

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A New Way Out In Michigan

Planet Money listener and self-described "Michigan exile" Chad S. sends along the story of a Michigan couple who are using an economy themed essay contest to sell their home. With an entry fee of $750, the couple hope to raise enough money to sell the farmhouse and start a new life in South Carolina. Besides the fee, entrants are required to write a 500 word essay about how the economy has affected their lives and how winning the home would change that. The Flint Journal reports:

"We want to help someone start their life over, along with ourselves," he said.

Worley, 51, and Debra, 49, have lived in the farmhouse for five years.

He said the 1,200-square-foot home, built in 1892 and possibly eligible for designation as a centennial farm, is worth about $245,000, but he'd be lucky to get half that through a sale in the present economy.

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Edmonds Sees Oil Stabilizing in Mid-$50 per Barrel Range

How 4chans /b/ board got crippled

Recently, 4chan pwnd Time Magazine’s poll to identify the World’s Most Influential Person. The online community dominated that poll and made the founder of 4chan, moot A.K.A. Christopher Poole the winner. That’s not surprising. 4chan is known for pwning everything it can get its hands on.

But this last week 4chan got a little of it’s own medicine when it’s infamous /b/ board got crippled (that’s Internet slang for “it stopped working right”). For over a week, the 4chan /b/ board was down. The question is why?

Here’s the scoop straight from our anonymous source’s mouth:

Spammers posted pics with a link saying “See nude girls here?” - The link led to a zip file that was an autoexecutable virus. Allegedly the autoexecutable was a virus based on Virtumonde. The altered virus was able to create a MASSIVE botnet capable of DDosing the board. So in essence, the people who brought down /b/ turned out to be /b/ itself. To many people got infected with the virus that is DDosing that board.

Translated:

4chan users got tricked into downloading a virus which turned around and attacked the server that the 4chan /b/ board forum runs on. The way to fix the problem is for 4chan users to clean up and get rid of the virus.