When I Propose, I'll Have Some Financial Proposals, Too

November 11, 2014, 10:00 pm

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Filed under: Life Stage Lessons

Every one of us has had "aha! moments." Epiphanies. Days when we reach a crossroads and realize that we have to make some changes. For the next two months, we're sharing moments like those in our Life Stage Lessons series: Real stories straight from the financial lives of our DailyFinance contributors about times when they realized they were due for a serious course correction. So read on, learn from our mistakes, and get inspired to improve your relationship with your money.

I am not engaged to be married, but when the day comes, I intend to be ready -- financially speaking. Marriage brings with it all kinds of money challenges. On the one hand, it's great. You've got two potential wage-earners living under one roof, tax incentives, and a better motivation to save. But it also brings whatever financial problems each partner had before they got engaged, like debt and poor spending habits. Weddings and the first year you spend together are expensive. So I have a plan.

Engagements and Weddings Are Expensive

As a young couple, you'll have to spend money on so many real needs, it's a shame to blow a fortune on a ceremony and one big party, however beautiful. Save yourself some funds to spend on a house, furnishings, everything you'll need for your new life together. I'm not saying you have to have a small, sad wedding -- but spend $3,000, rather than $200,000. Don't drop $5,000 on an engagement ring. Have a modest honeymoon and put that money toward enjoying the first months of your life together more. Get creative. You can work together as a couple to make a beautiful and fun wedding. My friends have done it. You can, too.

Andy and Kara had a small wedding: 50 people. They rented a big beautiful house for way less than a normal wedding venue. The ceremony was in a lovely central gathering room, and there was plenty of space for all. They made their own decorations and a lot of the food, with help from their friends. The whole wedding party stayed at the house (there were many bedrooms), saving thousands on hotel accommodations. The event was one long party with all their favorite people in the world, and they saved a boatload of money.

Get on the Same Page Financially

A marriage means a bringing together of your finances. You may not always agree with the spending ideas that your partner has. What do you do? People do this a lot of different ways. Some people like to throw all their money into one big pot; others like to maintain independence. I recommend opening a joint checking account to handle your joint expenses, while keeping small side spending accounts for each partner. This way, your finances feel married. You have to make decisions together and hold each other accountable. But you are still able to make your own free choices with some of your money.

My friends Nate and Bethany got married when they were at different places in their financial lives. One had no debt; the other had ... a lot. At first, they clashed because the debt-free one didn't want to have joint spending. To establish trust, they made a model like the one I described above. Rather than one pointing fingers at the debt that the other brought into the relationship, they both took up the responsibility and knocked it out together.

Be Equally Involved in Financial Health

A lot of people recommend having one partner be the "money person" while the other lives in blissful ignorance. I don't think this is a great plan. Both partners should be engaged and excited about saving, investment, debt elimination and efficient spending. You'll generate so much more wealth this way than if one partner doesn't really feel a part of things. You'll also be working together. That's an important skill for married people to have, and it's nowhere more practical than in the finances.

I know a couple, Derrick and Christopher, who totally changed their lives when they got married. They sold their cars and bought bikes. They quit wasting money in a lot of areas and began putting away more than $2,000 a month. If all goes well, they plan to semi-retire in the not-too-distant future. This kind of cooperation is not possible for couples who aren't both involved in their shared finances. Make a plan. Work together.

Marriage is a chance to do more with your money than you could as a single person. Make the most of that opportunity.

 

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There's a New Way to Tap Your Home Equity - Before It Exists

November 11, 2014, 10:00 pm

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Filed under: Real Estate, Housing Market, Alternative Investment, Home Equity Loans, Financial Education

Home equity loans and home equity lines of credit can be invaluable wealth-creation tools -- the latter can even be turned into checking and savings accounts. And odds are, you're fairly familiar with both options. Even if you've never used them, they've been heavily advertised by banks for decades.

Now, however, there's a new variation on using your home's equity: You can get an investor to buy a portion of any future equity you may acquire on the property.

Unlike with a traditional home equity product, the money you receive is not a loan but an investment. You'll pay no interest, and you're free to do with the funds whatever you see fit. EquityKey offers its home appreciation rights agreement only in selected areas, and there are other limitations.

For Example

Let's say your home is worth $500,000, and you have a mortgage balance of $200,000. This means you already have $300,000 equity, which remains yours. An investor will pay between 6 percent and 17 percent of your home's appraised value, in return for 30 percent and 75 percent of the future appreciation in the home (if any). The appreciation calculation is based on the S&P/Case-Shiller Home Price Index, which tracks 20 major U.S. markets, and not the actual value of your home.

If you make improvements in your property that cause it to be worth more money, that added value won't be part of the calculation of what you owe your investor. Any equity you obtain by paying down your debt is yours to keep. It's only the portion of any market-based gain that will be shared with the investor.

Let's assume you sell 50 percent of the future equity for $90,000 and that the starting value of your index is 100. Fifteen years later, you want to sell. The index is 200, meaning your home has now doubled in value to $1,000,000. The investor will be owed $250,000, half the $500,000 appreciation.

Let's also assume you had paid your home off during that time. You will walk away with $750,000 in cash from this transaction -- minus your costs of sale. If the market does nothing or goes down, and you decided to take the option of not having to pay back any of the investor's investment, you would have received less money at the beginning, but would owe none of it back.

'Maybe' Equity

Why might you consider this? A good play might be to put some of your "maybe" equity into "for sure" lifetime retirement income. This would be done by purchasing a solid fixed indexed annuity with a lifetime income rider. In the example, in 15 years, that income rider would have somewhere between $200,000 and $350,000 inside of the annuity. If you then took a 6 percent draw from that income rider every month, you'd get a $1,000 to $1,750 monthly lifetime income stream for both you and your spouse, no matter how long either of you lives -- all paid for with a portion of your "maybe" future equity.

Perhaps you'd rather retire debt, help with college costs, diversify your holdings, or contribute to a charity. The choice is yours.

True, if your property value went up that much during that 15 years, you might have been better off to keep 100 percent of the future equity. But nobody can know if real estate values will go up or down, or remain relatively stagnant. Real estate is no different than any other investment. It can create wealth or steal it, depending on when you buy and sell, and at what price.

Some Other Considerations

• The EquityKey program isn't yet available nationwide; It's currently available in most of California, Florida, New York, New Jersey, Connecticut, and soon Chicago.
• The property must be your personal residence or a second home that is not used for income purposes.
• The property must have no more than 65 percent of total debt load against the current value.
• If you sell within seven years of signing up, you may be subject to fees and/or the return of some of the investment made by the fund.
• There are certain minimum property values based on your local pricing.

This type of program isn't meant for people who are struggling financially but rather a sophisticated wealth-building and retirement tool.

John Jamieson is the best-selling author of "The Perpetual Wealth System" and each week promotes a free training video of the week.

 

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Holiday Shopping Nightmares: 5 Scams You Must Beware Of

November 11, 2014, 10:00 pm

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Filed under: Consumer Ally, Consumer Protection, Ripoffs & Scams

If the prospect of holiday shopping isn't enough to scare you, imagine how awful it will be if, in addition to all the familiar challenges you know you'll face, you have to cope with getting ripped off, too.

When there's money to be spent, there are crooks waiting to steal it. And they get better each year at duping consumers into making transactions that leave them with nothing, or with something quite different than they thought they were paying for.

The folks at the business review site SiteJabber.com used their complaint database to compile a list of the biggest scams consumers are likely to encounter this year. Here are the top five:

1. Counterfeit Goods

More than 14,000 SiteJabber users have lodged complaints about the ongoing counterfeit epidemic. If you find a website selling alleged designer products on the cheap, chances are, the goods were made by a counterfeiter. Be especially wary about these seven most-commonly counterfeited products. Hoping to get a refund on that cheap knockoff? Forget about it. These retail sites are run from countries far away.

2. Gift Cards

Hundreds of users have complained about buying gift cards that don't arrive or have the wrong balance. The common thread among most complaints is that they were purchased via middlemen -- sites that pay less than face value for unwanted gift cards and then resell them. While it is possible to get a deal that way, it's clear it's also a way to get ripped off. So, be careful if you buy a gift card from anyplace other than the original company -- or you could end up with an empty card in exchange for your cash.

3. Coupon Scams

When consumers get sucked into just about any scam, it almost always comes down to the fact that people want to get a great deal. And that is what holiday shopping has become -- a months-long battle to offer and receive the best deals. So the idea of getting an extra 30 percent off -- or more! -- can be seductive, and amid the retail clamor of the season, it can sound normal. It can also be a lure designed to get you to give up your personal information. What will that get you? A big target on your back for phishing scams. Be sure you're using a well-established, reputable coupon site. There are plenty.

4. Cheap Electronics

Think you can really get an iPad for $9.99? Come on. Seriously. Not going to happen. But thousands of consumers have lodged complaints about their efforts to score one on penny auction sites. What a lot of people don't understand about those sites is that they operate quite differently than traditional auctions. Your hunt for that cheap iPad could end up costing you a lot of money and yield you absolutely nothing.

5. Holiday Travel

Want to jet off to Europe for next to nothing? Or how about a free cruise to the Caribbean? The offers might look real or seem believable, but they're scams. And they ramp up around the holidays as people realize just how expensive a real trip can be, making the idea of winning one all the more enticing. Most of these scams are attempts to get your personal information or to get you to cough up cash for your "free" trip to cover taxes, government fees or some other malarkey the con artists cooked up.

 

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How Savvy Active Investors Should Handle Black Friday

November 11, 2014, 10:00 pm

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Filed under: Wall Street Watch, Securities, Stocks, Historical Stock Prices, Investing

Last year, Americans spent $57.4 billion on Black Friday weekend sales (counted as running Thanksgiving through Sunday) and all indications are that 2014's spending surge will be just as big. But consumers who have waited all year to get bargains from Apple (AAPL), Walmart (WMT) and Amazon (AMZN) might want to look at the stocks of those companies as well.

Many investors -- preoccupied with turkey, stuffing, mashed potatoes, pumpkin pie, football games and all those sales -- may overlook that the stock market is open from 9:30 a.m. to 1 p.m. Eastern on Black Friday. But what's more important is that Black Friday and the week leading up to it are historically bullish for the stock market.

Going back to 1950, the S&P 500 (^GPSC) has rising during Thanksgiving week 44 out of 64 years, or 69 percent of the time, with an average gain of 0.78 percent. Most gains came on the Wednesday before and Friday after Thanksgiving, which rose 54 of those years, or 84 percent of the time.

Boosted by Holiday Hoopla

Similar results can be seen during the lead-ups to Christmas, New Year's, the Fourth of July, Labor Day and Memorial Day -- though never Arbor Day. There are a number of theories as to why this occurs:

• Perhaps the most widely accepted, though least scientific, is that investors, like the public at large, are generally in a good mood before a holiday and more likely to be buyers.
• One theory better rooted in stock market mechanics is that short sellers don't want exposure to the extended news cycles over holidays, and as a defensive measure buy up stocks to close out their open positions.
• Perhaps the explanation that makes the most sense is that with so many market participants already on vacation around the holidays, trading volume is very thin. And since over time, the market has a bullish bias, the light volume makes it easier to drive the indexes higher with a relatively small amount of buying pressure.

But whatever the true reasons are, can you use it to your benefit?

A Strategy for the Nimble Investor

One way you could would be to overweight your portfolio toward stocks in the week prior and then take profits on the last market day before the holiday or in the case of Thanksgiving, on Black Friday itself. This is key because the data shows that the market tends to act bad immediately following a holiday -- supporting the notion that most pre-holiday bullishness is transitory, based only upon emotional factors.

A study by The Journal of Economic Research theorizes that an investment strategy that stays in all cash during the majority of the year and only invests in the stock market around the holidays, could potentially outperform major indexes over time.

Of course, nothing works perfectly every time. For example, in 2009 the Dubai sovereign debt crisis was announced on Thanksgiving, effectively killing any "good will" on Black Friday, sending the market down over 2 percent for the day.

The bottom line seems to be that if you are an active and nimble investor, you might be able to take advantage of the bullish bias during the holidays to add to your bottom line. However, for the rest of us, it is probably best just to loosen your belt, have more pie and enjoy the games.

Subscribe to my newsletter The Lund Loop a free once-weekly curated slice of what I'm writing, reading and hearing about in the stock market.

 

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Global Watchdogs Fine Big Banks Billions in Forex Probe

November 11, 2014, 10:25 pm

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Filed under: Financial Reform, European Union, U.S. Government, Banks, World Markets

By DANICA KIRKA and MARCY GORDON

LONDON -- U.S., British and Swiss regulators have fined five global banks $3.4 billion for attempting to manipulate foreign exchange markets -- the latest penalties for an industry previously criticized for rigging interest rates and for their role in triggering the global financial crisis.

The U.S. Commodity Futures Trading Commission, the U.K. Financial Conduct Authority and the Swiss Financial Market Supervisory Authority said Wednesday that Citibank (C), JPMorgan Chase Bank (JPM), Royal Bank of Scotland (RBS), HSBC Bank (HSBC) and UBS (UBS) had agreed to settlements totaling almost $3.4 billion. The FCA said it is continuing to investigate Barclays Bank.

"Today's record fines mark the gravity of the failings we found, and firms need to take responsibility for putting it right," said Martin Wheatley, chief executive of the FCA. "They must make sure their traders do not game the system to boost profits."

It is completely unacceptable ... for firms to engage in attempts at manipulation for their own benefit and to the potential detriment of certain clients and other market participants.

Some $5.3 trillion changes hands every day on the global foreign exchange market, with 40 percent of trades occurring in London. Currencies including dollars, pounds, euros and yen trade in the loosely regulated market dominated by a group of elite banks. But those trades have an even wider impact because companies around the world use market prices to value assets and manage currency risks.

The regulators found that between Jan. 1, 2008 and Oct. 15, 2013, the five banks failed to adequately train and supervise foreign currency traders. As a result, traders were able to form groups that shared information about client activity, using nicknames such as "the players, "the 3 musketeers" and "1team, 1 dream."

"Traders shared the information obtained through these groups to help them work out their trading strategies," the FCA said in a statement. "They then attempted to manipulate fix rates and trigger client 'stop loss' orders." Stop loss orders limit client losses in the face of adverse currency movements.

The traders tried to manipulate the market to ensure that their banks made a profit, the Financial Conduct Authority said.

"It is completely unacceptable ... for firms to engage in attempts at manipulation for their own benefit and to the potential detriment of certain clients and other market participants," the U.K. regulator said.

RBS Chairman Philip Hampton said the bank accepted the criticism and condemned the actions of the employees responsible.

"Today is a stark reminder of the importance of culture and integrity in banking and we will rightly be judged on the strength of our response," Hampton said in a statement.

Uncovering Improper Behavior

RBS has started disciplinary action against six employees, three of whom have been suspended.

The Bank of England conducted a separate inquiry into the role of its officials in the foreign exchange market. The investigation by outside attorneys found no evidence that the central bank was involved in unlawful or improper behavior but it said its chief foreign exchange dealer was aware that traders were sharing information.

From at least Nov. 28, 2012, the bank's chief dealer had concerns this could involve "collusive behavior," but failed to notify his superiors.

"This was an error of judgment for which he should be criticized," the investigator, Anthony Grabiner, said in his report. Grabiner stressed the dealer did not act in bad faith and was not involved in unlawful or improper behavior.

The U.S. Department of Justice and other authorities are conducting their own investigations and further penalties are possible. Barclays said in a statement that "after discussions with other regulators and authorities," it decided to seek a more general coordinated settlement."

Regulators in Britain, Switzerland, the U.S. and Asia have been investigating the banks' conduct for months, and negotiating settlements with the banks.

Heavy Fines

For their part, the banks already had factored in the prospect of heavy fines by putting money aside to cover the cost. Citigroup took a $600 million charge while JPMorgan Chase about $400 million. Barclays, HSBC and Royal Bank of Scotland similarly set aside hundreds of millions of dollars.

The foreign-exchange scandal again lifts the curtain on misconduct in the banking world and is the latest black eye for big international banks. Five big banks -- including Britain's Lloyds, Barclays and Royal Bank of Scotland -- have been sanctioned for alleged manipulation of a key global interest rate in a continuing investigation. The five banks together have paid nearly $4 billion in settlements, and several individuals have been criminally charged by U.S. authorities.

The London interbank offered rate, known as LIBOR, is used by banks to borrow from each other and affects trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans.

Major Wall Street banks including JPMorgan Chase, Bank of America and Citigroup have each paid billions of dollars in settlements with the Justice Department and other U.S. agencies over their role in selling the toxic mortgage securities that fueled the worst financial crisis since the 1930s and threw millions of homes into foreclosure.

-Gordon reported from Washington.

 

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Walmart to Make Black Friday a 5-Day Event

November 11, 2014, 10:57 pm

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Filed under: Black Friday, Retail, Holiday Shopping, Consumer Issues, Deals

By Krystina Gustafson | @KrystinaGustafs

Thanksgiving and Black Friday just weren't enough.

With a string of retailers pushing their sales ever earlier on Thanksgiving day, Walmart's shifting gears this year by extending its Black Friday discounts through the entire weekend.

Still, that's not to say the retailer will miss out on the Thanksgiving buzz. Walmart (WMT) will once again kick off its Black Friday deals at 6 p.m. Thursday, in line with competitors such as Target (TGT) and Sears (SHLD), and one hour later than Best Buy (BBY), Toys R Us and J.C. Penney (JCP).

"Black Friday is no longer about waking up at the crack of dawn to stand in long lines," said Duncan Mac Naughton, chief merchandising officer at Walmart U.S. "It's become a family shopping tradition where everyone shops at some point throughout the weekend."

On Thursday, Walmart will kick off its sales event with discounts across a number of categories, including toys, DVD and Blu-ray movies, and kitchen appliances. Sample deals from this group include an Elsa doll from "Frozen," which will sell for $28.88 and 800 DVD and Blu-ray movie titles that will sell for between $1.96 and $9.96. Two hours later, it will offer markdowns across electronics such as a Beats by Dr. Dre portable speakers, for $99.95, or a $100 savings.

Walmart will then give shoppers 30 percent off on entire categories from 6 a.m. to noon Friday through Sunday, and hold additional sales on categories such as cellphones and diamonds also on those days.

The retailer will also hold online sales throughout the weekend, kicking off at midnight Thursday, and will offer free shipping on its top 100 gifts. Target last month announced that it will offer free shipping on all online purchases through Dec. 20.

A number of retailers, including Walmart, Amazon.com (AMZN) and Target, have already kicked off Black Friday sales in some capacity. Like Walmart, Target will also extend certain Black Friday deals through Saturday.

"You've seen a number of retailers pull forward their events ... and you're seeing a lot of activity, which tells me [this holiday is] going to be very competitive," Mac Naughton said.

Walmart is trying to stabilize its U.S. business, which has posted a string of disappointing same-store sales figures. Last holiday, its same-store sales fell 0.4 percent.

For 2014, Walmart spokeswoman Deisha Barnett said the retailer has increased its Black Friday inventory in every category.

Walmart will report its third-quarter earnings Thursday.

 

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Dillard's Department Store To Girls: Don't Be Fat, Be Rich

November 11, 2014, 11:34 pm

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Filed under: Retail, Holiday Shopping, Advertising & Marketing, Scandals and Lawsuits, Consumer Issues

Many people groan when they see Christmas decorations up weeks before Thanksgiving. But in South Florida, the groan gave way to a growl over a Dear Santa sign that seemed to tell girls to be thinner and wealthier than they already are, according to WPTV-TV.

A Dillard's department store in Wellington, Florida, had a sign, which was also for sale, with what was supposed to be a humorous Christmas theme:

Dear Santa, this year please give me a big fat bank account and a slim body. Please don't mix those two up like you did last year. Thanks.

But instead of being in the home merchandise area with similar merchandise, the "whimsical" sign was in the girls' section, as a Dillard's spokesperson told USA Today.

Facebook user Julie Khanna noticed the sign and took a picture, then uploaded it, writing, "This is NOT the message we should be sending our girls!!" She said that a manager agreed to take the sign down temporarily but could not do it permanently without the store manager's approval.

In a separate post, she noted that the sign looked "intentionally placed" rather than accidentally positioned. "My intentions were for it to be shared enough times that Dillard's would get the message that there are many people that wouldn't want their children seeing things like that, and even better, maybe other retailers would think twice," Khanna wrote.

Dr. Robyn Silverman, author of "Good Girls Don't Get Fat: How Weight Obsessions is Messing Up Our Girls and How We Can Help Them Thrive Despite It," told Yahoo Parenting, "It's time for retailers to stop making a joke out of women's body image." She Silverman further said, "Retailers and advertisers use these kinds of messages to make us feel bad so we'll buy more from them to make this wish come true."

In response to the backlash, Dillard's removed the sign from its 298 stores, according to USA Today. Since the image first hit social media, Dillard's (DDS) stock price dropped by nearly 6 percent.

 

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As Rates Tick Up, Applications for New Mortgages Fall

November 11, 2014, 11:47 pm

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Filed under: Mortgages, Refinancing, Real Estate, Home Buying, Interest Rates

By Caroline Valetkevitch

NEW YORK -- Applications for U.S. home mortgages fell last week as interest rates rose, an industry group said Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, declined 0.9 percent in the week ended Nov. 7.

The MBA's seasonally adjusted index of refinancing applications fell 1.9 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, rose 1.1 percent.

Fixed 30-year mortgage rates averaged 4.19 percent in the week, up 2 basis points from 4.17 percent the week before.

The survey covers more than 75 percent of U.S. retail residential mortgage applications, according to MBA.

 

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Macy's 3Q Profit Tops Street Forecasts, Cuts 2014 Outlook

November 12, 2014, 12:22 am

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Filed under: Company News, Macy's, Earnings, Retail, Stocks

By ANNE D'INNOCENZIO

Macy's (M) reported a 23 percent increase in its fiscal third quarter earnings as some expenses fell. But the department store cut its annual profit outlook because of a sales shortfall in the period.

Macy's, a standout among its peers throughout the economic recovery, is the first of the major retailers to report third quarter results, which should provide a glimpse into shoppers' mindset as the retail industry gears up for the critical holiday shopping season.

J.C. Penney (JCP) reports late Wednesday and Walmart Stores (WMT), the world's largest retailer and Kohl's (KSS) are expected to report results Thursday.

Like many retailers catering to the middle class, Macy's is facing economic headwinds. While the job market is improving, shoppers are still grappling with stagnant wages. That environment has led several chains including Kohl's and J.C. Penney to caution that fall sales were weaker than they had expected.

Still, Macy's, which operates upscale Bloomingdale's, has benefited from its focus on tailoring merchandise to local markets. It's also trying to create a more seamless experience for shoppers who are going back and forth from stores to websites.

This fall, it's testing a same-day delivery service for products purchased at Macys.com, bloomingdales.com or on its mobile-enabled websites. Macy's is also offering same-day delivery to customers in eight major U.S. markets -- Chicago, Houston, Los Angeles, New Jersey, San Francisco, San Jose, Seattle and Washington, D.C. Bloomingdale's is testing same-day delivery to customers in four major markets-- Chicago, Los Angeles, San Francisco and San Jose.

The company has also rolled out to all Macy's and Bloomingdale's stores a service that allows shoppers to buy online and then pick up the merchandise from the stores.

For the period ended Nov. 1, Macy's earned $217 million, or 61 cents a share. That's up from $177 million, or 47 cents a share, a year earlier.

Analysts surveyed by FactSet predicted earnings of 50 cents a share.

Revenue slipped 1 percent to $6.2 billion from $6.28 billion. This fell short of Wall Street's forecast of $6.34 billion.

Revenue at stores opened at least a year, combined with comparable sales of departments licensed to third parties were down 0.7 percent in the third quarter. Exclusive of the licensed revenue, that number was down 1.4 percent.

Macy's Inc., which has corporate offices in New York and Cincinnati, said that it now foresees 2014 earnings between $4.25 and $4.35 a share. Its prior outlook was for $4.40 to $4.50 a share. Analysts expect full-year earnings of $4.41 a share.

Its shares rose $1.09, or 1.9 percent, to $59.68 in premarket trading Wednesday.

-AP business writer Michelle Chapman contributed to this report in New York.

 

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When Will 3-D Printing Firms Start Printing Cash for Investors?

November 12, 2014, 1:30 am

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Filed under: Company News, Technology, Market News, Industry News, Investing

One of the coolest industries to emerge in recent years is 3-D printing. The ability to create physical 3-D objects in a wide range of forms, colors and textures is mind-blowing. From medical equipment to aerospace parts to toys, the ability to make unique or rare objects on the fly is game-changing. Unfortunately for niche leaders 3D Systems (DDD) and Stratasys (SSYS), the game isn't changing quickly enough to satisfy Wall Street.

3D Systems reported quarterly results on Monday. The results weren't overly impressive: Revenue climbed 23 percent to $166.9 million, and adjusted earnings plunged 25 percent to $19.7 million or $0.18 a share. Delays in new consumer products and a slowdown in sales of metal printers were more than offset by gains in health care demand and other services, but growth has been decelerating sharply at 3D Systems after increasing its top line by 54 percent in 2012 and another 45 percent last year.

Shares of 3D Systems rose 5 percent on Monday following the report, but it would be myopic to call it a success. The stock fell sharply late last month after the company warned that preliminary third-quarter results were showing sales and profitability falling short of expectations. The same 3D Systems investors who were exchanging high-fives after the stock more than tripled in 2012 only to more than double in 2013 are smarting in 2014. Even with Monday's uptick, the stock has fallen by more than 60 percent this year.

It's not alone.

Putting the Die in "Die-Cast"

Last week it was Stratasys taking a hit for the 3-D printing team. The stock plunged 14 percent after the company offered up uninspiring financials of its own. Stratasys lowered its guidance for the balance of its fiscal year. It also spooked investors by revealing that capital expenditures will roughly triple next year. It apparently isn't enough to be a leader in 3-D printing; a company has to spend a lot of money to make sure that it stays there.

Stratasys investors may consider themselves the lucky ones. The stock has only surrendered 22 percent of its value this year. That's a sharp contrast relative to the market averages that have moved reasonably higher in 2014, but it's far better than its smaller rivals. ExOne (XONE) is trading 65 percent lower than it was when the year began, and if you think that's bad, Germany's voxeljet (VJET) has lost 69 percent of its value in 2014.

These are rough days for one of the market's hottest industries of 2012 and 2013. It doesn't help that the fundamentals of many of the individual players are iffy. ExOne and Voxeljet are growing their sales quickly, but they're both at least two years away from profitability. 3D Systems is expected to post lower earnings this year than it did in 2013. Stratasys is the only one that's profitable and growing, but last week's unsettling outlook is problematic.

The technology will be a game changer when it goes mainstream, but it's certainly not there yet. The printers are still too expensive (though some entry-level models are now below $1,000) and too slow (building a physical object, layer by layer).

Then there's the real possibility that the leaders of today won't be the leaders of tomorrow. Hewlett-Packard (HPQ) turned heads recently by throwing its hat into the crowded ring. It's gunning for the industrial printing market, though it hasn't revealed its approach to pricing. It will begin testing its machines with select customers next year, aiming to be officially on the market by early 2016. That seems like a long time, but given the industry's slow-moving ways, it will still give the world's leading maker of traditional inkjet printers a shot to be relevant in 3-D printing.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of 3D Systems, ExOne, and Stratasys. Try any of our Foolish newsletter services free for 30 days. Check out our free report on the Apple Watch to learn where the real money is to be made for early investors.

 

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Wholesale Inventories Rise Modestly in September

November 12, 2014, 2:15 am

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Filed under: Economic Indicators, GDP, Economic Recovery, Manufacturing, This Built America

By Jason Lange

WASHINGTON -- U.S. wholesale inventories rose more that expected in September but the government revised downward its initial estimates for growth in stocks during August, which suggests little impact on current views of economic growth in the third quarter.

The Commerce Department said Wednesday wholesale inventories increased 0.3 percent during the month after a 0.6 percent gain in August.

Economists polled by Reuters had expected a 0.2 percent increase in September.

Inventories are a key component of gross domestic product changes. The component that goes into the calculation of GDP -- wholesale stocks excluding autos -- increased 0.1 percent.

Sales at wholesalers rose 0.2 percent in September, more than the 0.1 percent increase predicted by economists. At September's sales pace it would take 1.19 months to clear shelves, unchanged from August.

Sales had fallen 0.8 percent in August.

A slowdown in the pace of restocking by businesses held back stronger economic growth in the third quarter, though gross domestic product still expanded a robust 3.5 percent during the three-month period.

 

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New Holiday Shopping Warning: Beware of Men in Parking Lots

November 12, 2014, 2:45 am

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Filed under: Holiday Shopping, Auto Insurance

All those jokes about women drivers need an overhaul. At least when it comes to parking, men are the true terrors of the lot. Chances are that if someone hits someone or something or blocks a lane, waiting for someone to eventually pull out, the culprit will be a guy.

A CarInsurance.com survey of 2,000 drivers ages 25 and older found that, contrary to many stereotypes, men are the real danger in parking lots. About 37 percent of men reported they had hit another car, vs. 33 percent of women. Nineteen percent of men said they had hit a pole, and 12 percent a shopping cart, vs. 11 percent and 5 percent respectively for women. Eight percent of men (4 percent of women) had hit a cart corral, while 8 percent of men reported hitting a pedestrian. Only 1 percent of women had.

Another big difference: Who gets hit in those incidents. 59 percent of women said they had been hit, while only 45 percent of men had.

Men generally admitted to being more aggressive in confrontations over parking in crowded lots: 27 percent had used a hand gesture while driving away; only 20 percent of women had. When it came to saying something to the other person, 20 percent of men did, but only 12 percent of women. And 8 percent of men said they had touched the other person, compared to only 2 percent of women. Similarly, 5 percent of men, but only 1 percent of women, had touched the other car. Men outnumbered women 4 percent to 2 percent in calling security or the police.

Get That Last Space

One area in which men and women didn't differ significantly was in the tactics they used to acquire a parking space:

• 38 percent circled a lot at least twice.
• 24 percent would follow people with bags and wait for them to pack their car and leave.
• 3 percent cut someone off for a spot.
• 3 percent straddled their cars on top of snow banks to fit into spaces others had passed on.

Given that Black Friday isn't the best time for discounts, maybe it would be wiser to pass on the whole parking lot sardine experience the day after Thanksgiving.

 

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Walmart Urges Improvement at U.S. Stores in 'Urgent' Memo

November 12, 2014, 2:52 am

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Filed under: Company News, Retail, Shopping, Wal-Mart, Stores

By Devika Krishna Kumar and Nayan Das

Walmart Stores (WMT) issued an "urgent agenda" memo to its store managers across the United States last month, laying out guidelines to boost sales of "chilled and fresh" food, The New York Times reported.

The memo, marked "highly sensitive," asks Walmart marketing managers to make sure they discount aging meat and baked goods to maximize chances of selling them before their expiration dates, according to the report.

Walmart, which has posted six straight quarters of flat or declining same-store sales growth, has been battling a stronger dollar and a reduction in U.S. food stamp benefits, which has eaten into the budget of the retailer's core customer base.

The Times said the memo calls for comprehensive markdowns across 32 departments, asks stores to find creative ways to sell clearance items and to keep "complete records of daily throws" of meat and poultry.

Walmart spokeswoman Deisha Barnett confirmed the memo's existence.

"Our CEO has been vocal about our need to improve in this [fresh foods] category. We know it's very important to our customer and ... to us as the largest grocer in the U.S.," she told Reuters.

The memo, which the Times said was leaked for public use by a Walmart manager unhappy about understaffing, urges managers to reduce inventory and warns them not to exceed budgets.

For meat departments, the report cited the memo as saying markdowns should start at 7 a.m. and be executed multiple times daily.

The memo also advises stores to be sure to "rotate" dairy products and eggs, which means removing expired items and adding new stock at the bottom and back of display cases, the Times said.

 

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The Little-Known Retirement Match You Can't Afford to Miss

November 12, 2014, 3:20 am

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Filed under: Retirement, Retirement Plans, 401K, IRA, Tax Credits

To give people an incentive to boost their retirement savings, many employers offer matching contributions for 401(k) plans. But the best match ever doesn't come from any employer. Instead, it comes straight from the U.S. government in the form of the Retirement Savings Contributions Credit, or more simply, the Saver's Credit. For those who qualify, the rewards from participating are simply too good to pass up.

The Saver's Credit: Matching on Steroids

Many companies offer matching contributions to persuade employees to participate in their employer-sponsored retirement plans. A typical scenario involves you receiving a matching contribution equal to half of whatever you contribute, up to 6 percent of your salary. So if you make $30,000 a year and set aside $150 each month to your 401(k) plan, your employer will add $75 in an employer match, adding $900 over the year.

Employer matching is a useful way to get a bigger retirement nest egg. But regardless of whether or not you get matching contributions in your 401(k) -- or even if you don't have access to a 401(k) plan at all -- the Internal Revenue Service offers a tax credit that can give you an even sweeter deal.

The Retirement Savings Contributions Credit allows you to have up to $2,000 in contributions to an individual retirement account, 401(k) or similar retirement plan matched with a tax credit. Low-income taxpayers with adjusted gross income of $18,000 or less for single filers or $36,000 or less for joint filers can get 50 percent of their contribution -- as much as $1,000 -- back in the form of a credit. Those who make as much as $30,000 for singles or $60,000 for joint filers can get a smaller credit of 10 percent or 20 percent. Those income thresholds will go up slightly for 2015 contributions, rising by $250 and $500 for the 50 percent credit and by $500 and $1,000 for the smaller credits.

Moreover, if you're married, each spouse can take advantage of the Saver's Credit. All told, a family can therefore get up to $2,000 in credits for making $4,000 in contributions.

Even better: You can receive the Saver's Credit on top of any employer match.

Shortcomings of the Saver's Credit

Only those who are 18 or older are eligible for the credit, and anyone who's a full-time student or who gets claimed as a dependent on someone else's tax return doesn't get to claim the credit.

The Saver's Credit is a nonrefundable tax credit. That means that if you already have zero tax liability, you can't use the credit to get a refund check from the IRS. Moreover, you can't carry the credit forward or backward to other tax years. That's particularly a problem for many low-income workers at whom the Saver's Credit is primarily targeted, because their tax rates tend to be extremely low, and they often are eligible for other tax breaks that can already reduce their total liability to zero.

Nevertheless, if you're eligible and you have a big enough tax bill to make it worthwhile, the Retirement Savings Contributions Credit is one of the most lucrative tax benefits you'll ever get. Those who are entitled to receive the Saver's Credit shouldn't miss out on the opportunity to do so, even if it takes some extra effort to put money aside for your retirement.

Motley Fool contributor Dan Caplinger loves every tax break he can get his hands on. You can follow him on Twitter @DanCaplinger or on Google+. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

 

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Student Loan Debt a Rapidly Growing Burden for Affluent Grads

November 12, 2014, 3:53 am

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Filed under: Student Loans, College, Planning, Financial Education

More than two out of three college graduates now leave school with student loan debt. And the debt they carry out of school these days -- a median of nearly $27,000 as of 2011 -- is "more than twice that of college graduates 20 years ago."

These are two conclusions cited in a recent Pew Research Center analysis of government data on student loan debt. But they're not the most startling conclusions. According to Pew, the biggest increase in student borrowing over the last 20 years has been among the wealthy.

Pity the Poor Kids

As you'd expect, Pew data shows that student loan debt in America is most often concentrated among students of limited financial means. According to Pew, the majority -- 56 percent -- of student loan debt today is borne by students from the lower and lower-middle income classes.

Indeed, 77 percent of low-income students, hailing from families making less than $44,432 per year, now leave college with at least some student loan debt. Seventy percent of lower-middle-class students (from families earning $44,432 to $83,406) are in similar straits. And even among upper-middle-class students (from families earning $83,407 to $125,772), 62 percent come out of college burdened by debt.

Pity the Rich Kids, Too

As for students from what Pew terms the high-income stratum -- families earning $125,773 and up -- 50 percent of such "rich kids" now carry student loan debt into their post-baccalaureate lives. That's a much smaller proportion of kids carrying debt than is found among students less-well-off. But it's still twice the percentage of such kids carrying student loans as we saw back in 1992.

That's the biggest jump in the proportion of students carrying loan debt found among any of the four income strata surveyed by Pew. Indeed, the prevalence of student loan debt among high-income students has grown more than twice as fast as such loans have grown among low-income students. And student loan debt among upper-middle-class students is growing nearly as fast as among the rich.

But why?

The rising cost of college (and even of college textbooks!) surely explains part of the problem. Tuition costs have nearly sextupled over the past three decades. Textbook prices are up even more -- an astounding 812 percent increase in 30 years. And with the majority of parents leaving it to their kids to buy their own textbooks -- which can cost as much as $1,200 a year for a full course load -- this alone could push some kids to take on some debt.

But Pew cites several other factors as potentially explaining the increased incidence of kids from higher-income families emerging from college laden with debt. For example:

• "The Great Recession destroyed a large amount of household wealth. From 2007 to 2010, the wealth of the typical American household fell 39 percent. ... With reduced assets to finance college, wealthier families may be resorting to borrowing."
• "In the early 1990s the [federal government's] unsubsidized Stafford loan program was introduced. Prior to this, Stafford loans were restricted to undergraduates with financial need. With the introduction of unsubsidized Stafford loans, students could access federal loan programs regardless of need." It's only logical that making low-interest (Stafford loans currently charge 4.66 percent) loans available to students regardless of need would result in a disproportionate increase in use of this funding avenue by students from higher-income families.
• "Availability of other sources of borrowing has been curtailed in the wake of the financial crisis. For example, it is more difficult for a family to borrow the equity in its home in order to finance college expenses." Higher-income families who, prior to the crisis, might have tapped home equity to finance their kids' education may well be turning to actual student loans to pay for their students' educations.

Individually or collectively, and in conjunction with the ever-rising cost of a college education, these factors could be contributing to high-income students now joining the rest of us, slogging through life under a mess of student loan debt.

Finally, Some Good News for the Rich

The difference? Despite borrowing more often, high-income students still leave college with some of the lowest levels of debt, on average, of any income class. According to Pew, your average student from a high-income family owes "only" $23,256 in student loans at graduation. That's statistically on par with students from low-income families ($23,081) -- and about $2,000 better off than the $25,000-and-change debt loads of grads from the middle class.

Statistically and financially speaking, Motley Fool contributor Rich Smith figures he's probably part of the upper middle class today. But by the time his third and final kid has gone through school, he's expecting to be somewhere toward the low end of the lower middle. He has no position in any stocks tied to the student loan industry. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

 

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Air Apparent: America Outpaces China, Germany in Wind Power

November 12, 2014, 6:24 am

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Filed under: Energy, This Built America

By Nicholas Duva

Climate-conscious Americans have long glanced enviously across the Pacific to China and its ever-growing number of often-gargantuan wind farms.

It turns out that they have less to be jealous about than previously thought: The United States has more wind energy powering its grid than any other country in the world, says a report by EDF Renewable Energy, the largest third-party provider of operations and maintenance for wind renewable-energy projects in the country.

Though China has more megawatts of wind turbines installed than the U.S -- about 90,000 to America's 60,000 -- the U.S. actually produces more electricity that is delivered to the grid, which in turn reaches more businesses and homes. And while China's wind industry delivered less than 138 billion kilowatt-hours in 2013, the U.S.'s delivered more than 167 billion.

That's 20 percent more than China. And the U.S.'s generation has been growing steadily since 2008, when it first overtook Germany to become the world's No. 1 producer.

How did we become No. 1?

America wins out due to a number of factors, says the report.

One is that the country's been blessed with outstanding natural wind resources. From the Great Plains to the coasts, the U.S. crucially has millions of acres of open space with high wind levels.

This fact alone explains why America has increased its lead in wind power over Germany, which has a total area less than that of Montana. China has plenty of open space with perfectly good wind-generation capability.

More stringent regulations on the building of wind farms in America may account for their success in generating power. Generally, projects can not be financed without an assurance of access to transmission features that deliver output to market. In addition, site choice is highly dependent on mitigation of environmental impacts.

In essence, American choices on where to build are usually safe, reliable ones-which means that U.S. wind projects installed since 2000 are of high quality. They are ready to operate more than 95 percent of the time when the wind is suitably strong.

The structure of government incentives has also encouraged production. The federal Production Tax Credit (PTC)-which expired at the end of 2013-could only be earned for kilowatt-hours produced and delivered during a 10-year period, which meant that capital investment itself was not rewarded.

The credit had been enacted in 1992 after years of developers making profits simply by completing projects, even without their wind farms operating at a high capacity.



Leading America's charge has been Texas: In 2013, it generated almost 36 million kilowatt-hours, which can power more than 3.3 million households.

But perhaps America's most vigorous supporter of wind energy has been the land of corn, early presidential primaries and pig-slaughtering Senator-elects: Iowa, which produced 15.6 million kilowatt-hours last year, provides 27.4 percent of the state's electricity.

A familiar figure has helped Iowa become one of the nation's leaders: Warren Buffett, CEO of renowned investment firm Berkshire Hathaway.

Since 2004, Berkshire Hathaway has spent over $5.8 billion on wind projects in Iowa, creating more than 64 percent of the state's considerable wind-generation capacity.



But the reason Buffett built so many wind farms may have expired in 2013.

"On wind energy, we get a tax credit if we build a lot of wind farms," said Buffett at a conference in Omaha in May. "That's the only reason to build them. They don't make sense without the tax credit."

Though the federal PTC expired in 2013, it technically remains in place for projects that began construction before January 1, 2014. But what does the future hold for the still-nascent American wind-generation industry?

An April report from the National Renewable Energy Laboratory predicted that, under a scenario in which the PTC is not extended and other policies remain unchanged, wind-capacity additions are likely to fall between 3 and 5 gigawatts per year from 2013 to 2020.

That's a stark drop from the average addition of 8.7 gigawatts per year from 2008 to 2012. Still, it seems that the tax credit (or something resembling it) won't be renewed anytime in the near future; Senator Harry Reid's attempt to extend the credit has already been thundered against by a coalition of conservative energy groups that seek to prevent a late passage in the lame-duck Congress.

 

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Disappointing View on Global Growth Outlook for 2015 (And Beyond)

November 12, 2014, 7:02 am

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Filed under: Economy

The Conference Board Global Economic Outlook released its output growth projections for the coming years. World economic growth is currently pegged at 3.2% for 2014 and is looking to accelerate to 3.4% in the 2015 year. For 2015 to 2019, growth is projected to average 3.3% compared to the period of 2020 to 2025 where it is expected to average 2.7%. Unfortunately, this would represent the fourth straight year of disappointing global growth.

According to the outlook, the long-term growth in the area of 3% is sufficient to sustain a moderate increase in global living standards. At the same time it is too low to meet all the future challenges posed by rising middle classes in emerging markets and aging populations in mature economies.

The output growth projections consist of 11 major regions and over 50 mature and emerging economies.

In advanced economies, the prediction is for 2.3% growth in 2015 compared to 1.9% in 2014. Growth in the Euro Area should improve to 1.6% from 0.9% in 2014, while Europe as a whole is projected to grow 2%. For 2015 to 2019, growth is projected to average 1.9% and for 2020 to 2025 growth is expected to slow to 1.2%.

As the global economy progresses, emerging markets will begin to lose their power and growth differential as we are entering a phase where rapid catch-up growth has come to an end. Emerging markets powered the global economy since the late 90's until recently, with an unprecedented growth differential compared to more advance economies. For example in 2014, positive growth surprises in India and Mexico were not able to offset other major shortcomings in Brazil and Russia.

Growth in developing and emerging economies is projected to edge down to 4.7% in 2015, versus 4.8% in 2014 and 6.2% from 2010 to 2013. The major driver for this slowdown is expected to be the Chinese economy, where growth is expected to decline in 2015 to 6.5% from 7.3% in 2014.

Bart van Ark, Chief Economist of The Conference Board, commented on emerging economies:

While the growth contributions from emerging economies are by no means gone, and their growth will continue to be faster than that of mature economies, the significant downshift in their growth trajectories should make us aware that success from the recent past provides no guarantees for the future. For the year ahead in particular, the confluence of multiple geopolitical fissures in Eastern Europe, the Middle East, Western Asia, and (to a less urgent extent) the South China Sea make it even less likely that an emerging-market boom will ride to the rescue of global growth, as it has in the recent past.

Looking ahead the global picture might appear to be downcast but there are opportunities available for both firms and governments that have a realistic understanding of the challenges ahead. This decade of slower growth has the potential to offer a foundation for overcoming the risk of extended stagnation.

 

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Unilever Sues Just Mayo, Claims Spread Isn't Real Mayonnaise

November 12, 2014, 8:03 am

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Filed under: Shopping, Food & Beverage

For years, the main combatants in the Great Mayo Wars have been Hellmann's, Miracle Whip and maybe Duke's. But the battlefield recently expanded to include Just Mayo, a San Francisco startup that's apparently too much of an upstart: Hellman's parent is suing it because Just Mayo isn't "mayonnaise" enough.

Unilever (UL), maker of Hellmann's and Best Foods brands of mayonnaise, recently filed a complaint in U.S. District Court in New Jersey claiming Hampton Creek, maker of Just Mayo, is guilty of false advertising for calling its spread "mayo." According to its ingredient list, Just Mayo contains canola oil, pea protein, white vinegar and other flavorings. But it doesn't contain eggs.

Unilever says you've got to have eggs to call yourself mayonnaise, and is demanding that Hampton Creek change the Just Mayo logo (an egg with a pea shoot growing up through it), recall its products, and stop claiming superior taste. The multinational food giant, which reportedly says the egg-less "Just Mayo" is taking market share from its appropriately egged products, also is seeking compensation for unspecified damages.

The Food and Drug Administration defines mayonnaise as "the emulsified semisolid food" (yum!) prepared from vegetable oil and egg yolks. Hampton Creek says it's selling "mayo" not "mayonnaise," and that the absence of eggs is not hidden from consumers, but is touted clearly as a benefit.

Josh Tetrick, Hampton Creek's chief exec, told the Wall Street Journal that the lawsuit doesn't shock him. "This is big business," Tetrick is quoted. "We're competing directly with a company that hasn't had real competition in decades. These things happen."

Close your ears, Miracle Whip (which, it must be noted, is marketed as a spread, not a mayonnaise because -- you guessed it -- its recipe uses no eggs).

The suit is shining the spotlight on the fierce competition between big, established brands and their new rivals -- natural, organic and sustainable brands that appeal to consumers' growing concerns about food additives and increasing desire to eat "clean."

Unilever reported $62 billion in revenue last year. Hampton Creek reportedly has raised $30 million from investors, including Bill Gates, who think plant-based products are better for people and the planet.

This little battle of the mayo bottles is getting a lot of attention. A recent change.org petition, which so far as over 22,000 signatures, says "even purchasing just one jar of Hampton Creek's "Just Mayo" instead of Best Foods/Hellmann's saves land and water usage, reduces CO₂ emissions, eliminates hundreds of milligrams of cholesterol." The petition goes on to call Unilever's lawsuit "corporate bullying."

 

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Happy Days for Investors with a String of Record Highs

November 12, 2014, 8:45 am

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Filed under: Market News, Wall Street Watch, Stocks, Stock Markets, Investing

It was just a month ago that stock investors, analysts and yes, reporters, were wringing our hands, worried that the big market decline many of us have been anticipating had finally arrived. Now, it's "happy days are here again" on Wall Street.

The S&P 500 (^GPSC), often considered the best gauge of the overall market, closed at record highs for five straight sessions. Had it managed a sixth in a row Wednesday, it would have represented the longest streak for the index since 1997, when the market was in the midst of its best bull run of all time.

Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, says the market is now up 10.4 percent so far this year (more than 12 percent if you include reinvested dividends). If those gains hold, it would mark the third straight year of double-digit gains. The S&P jumped 29.6 percent last year and rose 13.4 percent in 2012. The current bull market is more than 5 years old, which is a little long in the tooth, but not unprecedented. In addition, the S&P has not suffered a correction -- a drop of at least 10 percent from the recent cyclical high -- since October of 2011.

What Do These Numbers Mean?

So, when you add that up, is it a signal to buy now, or a flashing yellow light for caution? Many market pros like to ride the wave and take advantage of the strong momentum. Silverblatt says there are lots of positive underlying trends as well. "We've been seeing broad gains. It's not a top-heavy situation like the late '90s" when Internet companies with no earnings led the dot-com bubble to burst in 2000. He also notes that the recently completed third quarter is likely to produce record results for corporate earnings, dividend payments and stock buybacks -- all considered bullish signs for the market.

Others are still worried about the fairly sluggish growth of the economy and the Federal Reserve's continued manipulation of interest rates. The widespread expectation is that interest rates will start to move higher next year, but that was also the sentiment a year ago, and interest rates continued to fall to record lows this year.

The most immediate threat to the run or record highs on Wall Street could be retail earnings, which are coming out this week and next. Macy's (M) reported solid earnings on Wednesday, but warned that results for the next six months would fall short of expectations. Walmart (WMT) is due to report its quarterly results before the opening bell on Thursday.

Could the Trend Continue?

Robert Pavlik, chief market strategist at Banyan Partners, says he's not concerned about the day-to-day moves of the market, but believes the longer term trend remains positive. "Looking out to 2015 and 2016, this market still looks cheap. There are many reasons to stay in, to continue to invest." He forecasts another 12 percent to 14 percent market gain next year. Pavlik says the economic data on manufacturing, energy prices, the service sector and more continue to show expansion and are not likely to slow down any time soon.

While most signs to point towards continued gains, the S&P 500 streak itself offers a cautionary warning if it continues through the end of the week. That would mean eight straight record high. The only time that has happened was in 1929, and we all know, that did not end well.

 

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Market Wrap: Stocks Edge Slightly Lower After 5 Record Highs

November 12, 2014, 9:05 am

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Filed under: Earnings, Market News, U.S. Government, Banks, World Markets

By MATTHEW CRAFT

NEW YORK -- Big banks weighed on the stock market Wednesday, tugging major indexes back from record highs.

Regulators from the U.S., Switzerland and the U.K. fined five major banks a total of $3.4 billion for conspiring to manipulate foreign-currency trading. The news drove down bank stocks in Europe and U.S. JPMorgan Chase (JPM) fell more than 1 percent, the biggest drop in the Dow Jones industrial average.

"The fines from the watchdogs took some of the wind out of the market," said Peter Cardillo, chief market economist at Rockwell Global Capital Management. But a slight dip following five days of record highs "is actually healthy," he said. "That's the sign of a good bull market. Going straight up every day would be reckless."

The Standard & Poor's 500 index (^GPSC) slipped 1.43 point, a sliver of a percent, to end at 2,038.25.

The Dow (^DJI) lost 2.70 points to 17,612.20, while the Nasdaq composite (^IXIC) rose 14.58 points, or 0.3 percent, to 4,675.13.

On Tuesday, the S&P 500 closed at a record high for the fifth straight day.

Major markets in Europe closed with bigger losses. France's CAC 40 dropped 1.5 percent, while Germany's DAX lost 1.7 percent. Britain's FTSE 100 sank 0.2 percent.

Back in the U.S., J.M. Smucker (SJM) dropped 4 percent, the worst loss in the S&P 500. The maker of Jif peanut butter, fruit jams, and other products trimmed its full-year profit forecast, saying higher prices for Folgers coffee have hurt sales. J.M. Smucker's stock fell $3.70 to $100.38.

Susquehanna Bancshares (SUSQ) soared 33 percent on news that the commercial bank BB&T (BBT) agreed to buy Susquehanna for roughly $2.5 billion. The deal, which still needs approval from shareholders and regulators, would give BB&T a wide reach across Pennsylvania and the Mid-Atlantic states. Susquehanna Bancshares jumped $3.22 to $13.12. BB&T fell 66 cents, or 2 percent, to $37.67.

In a week light on major economic reports, investors were looking ahead to the government's monthly look on retail sales, due out Friday. Wall Street's economists expect the Commerce Department to say sales inched up 0.2 percent last month. Sales fell in September.

Sam Stovall, chief equity strategist at S&P Capital IQ, said that the upcoming report could reveal some of the benefits from lower gasoline prices. Over the past month, the national average has dropped 29 cents to $2.92 a gallon, the lowest price in four years, according to the American Automobile Association. As a result, money that would have been spent on filling up the gas tank can be used to fill up shopping bags, right in time for the holiday shopping season.

China's Shanghai Composite Index gained 1 percent after Hong Kong scrapped a daily limit on how many yuan residents can buy. Japan's benchmark Nikkei 225 touched a seven-year high and closed with a gain of 0.4 percent.

Prices for U.S. government bonds barely budged, with the yield on the 10-year Treasury note holding tight at 2.36 percent. The bond market was closed Tuesday for Veterans Day.

In the commodity markets, the price of gold lost $3.90 to settle at $1,159.10 an ounce. Silver slid 6 cents to $15.62 an ounce while copper ended unchanged at $3.03 a pound.

The price of crude oil hit a four-year low on more signs of rising supplies. Benchmark U.S. crude lost 76 cents to close at $77.18 a barrel on the New York Mercantile Exchange. Brent crude, an international benchmark used by many U.S. refineries, fell $1.29 cents to close at $80.38 a barrel, also a 4-year low, in London.

In other trading on the NYMEX:

• Wholesale gasoline rose 0.3 cent to close at $2.107 a gallon.
• Heating oil fell 2.2 cents to close at $2.447 a gallon.
• Natural gas fell 6.2 cents to close at $4.185 per 1,000 cubic feet.

What to Watch Thursday:

• The Labor Department reports weekly jobless claims at 8:30 a.m. Eastern time.
• At 10 a.m., the Labor Department releases its Job Openings and Labor Turnover Survey for September, and Freddie Mac reports weekly mortgage rates.
• The Energy Information Administration releases weekly petroleum inventories at 11 a.m.
• The Treasury Department releases its budget for October at 2 p.m.

These selected companies are scheduled to release quarterly financial results:

• Applied Material (AMAT)
• CGI Group (GIB)
• Kohl's (KSS)
• Manulife Financial (MFC)
• Nordstrom (JWN)
• Sally Beauty (SBH)
• Tyco International (TYC)
• Viacom (VIAB)
• Walmart Stores (WMT)

 

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