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Consumer Prices Tick Up; New Home Sales at 7-Year High

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A Marshalls Plc Store Ahead Of Consumer Comfort Figures
David Paul Morris/Bloomberg via Getty Images
By Lucia Mutikani

WASHINGTON -- U.S. consumer prices rebounded in February as gasoline prices rose for the first time since June, and there were also signs of an uptick in underlying inflation pressures, keeping the Federal Reserve on course to raise interest rates this year.

The economy, which has been on the back foot in recent months, received another boost from other data Tuesday showing new home sales surged to a seven-year high in February and manufacturing activity gained some momentum in March.

There is some chance economic activity is going to pick up a little bit this spring, but it's not really clear how much and that matters for the timing of the first rate hike.

The upbeat reports came despite harsh weather and a strong dollar, which have contributed to slowing economic activity early in the first quarter.

"It doesn't corroborate the further disinflation story. There is some chance economic activity is going to pick up a little bit this spring, but it's not really clear how much and that matters for the timing of the first rate hike," said Guy Berger, an economist at RBS in Stamford, Connecticut.

The Labor Department said its Consumer Price Index increased 0.2 percent last month after dropping 0.7 percent in January, ending three straight months of declines in the index.

In the 12 months through February, the CPI was unchanged after slipping 0.1 percent in January, as the impact of an earlier plunge in global crude oil prices lingers.

Fed officials have long viewed the energy-driven weakness in prices as transitory and economists said February's firmer readings were in line with policymakers' projections that inflation will move back to the central bank's 2 percent target.

While a June move remains on the cards, many economists are leaning towards a September tightening, arguing that the effects of a strong dollar and weak energy prices would continue to influence inflation data through the first half of the year.

Fed Chair Janet Yellen said last week policymakers could raise interest rates when they had "seen further improvement in the labor market" and were "reasonably confident that inflation will move back to its 2 percent objective over the medium term."

Downward Pressure

"In the near-term, the stronger dollar will continue to put downward pressure on imported goods prices," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

"As the dampening effect from the stronger dollar fades in the second half of this year, we would expect to see core inflation gradually strengthen."

The so-called core CPI, which strips out food and energy costs, increased 0.2 percent in February after a similar gain in January. In the 12 months through February, the core CPI rose 1.7 percent, the largest increase since November.

For now, the signs of inflation are welcome for an economy that has stumbled in recent months under the weight of a harsh winter, weak global demand, the strong dollar and the now-settled labor dispute at one of the country's busiest ports.

In a separate report, the Commerce Department said new home sales jumped 7.8 percent to a seasonally adjusted annual rate of 539,000 units last month, the highest level since February 2008.

Manufacturing, which has been hurt by supply chain disruptions because of the ports labor strife, showed some strength this month.

Financial information services firm Markit said its U.S. Manufacturing Purchasing Managers' Index rose to a five-month high of 55.3 in March from a reading of 55.1 in February.

Crude oil prices fell 60 percent between June and January on fears of a global oil glut and the refusal of Saudi Arabia and other OPEC members to cut output. In February, Brent stabilized at around $60 and U.S. crude at around $50.

Last month, domestic gasoline prices rose 2.4 percent, the largest increase since December 2013, after tumbling 18.7 percent in January. Food prices increased 0.2 percent.

Elsewhere, shelter costs increased 0.2 percent, accounting for about two-thirds of the increase in the core CPI.

There were gains in the prices of apparel, airfares, new motor vehicle and used cars and trucks prices. However, the cost of medical care services declined for the first time since 1975.

 

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Spruce Up Your Rental Home for Cheap -- Savings Experiment

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Spruce Up Your Rental Home for Cheap
Living in a rental home can be frustrating when it comes to home improvements. You want to dress up the place, but it's technically not yours, so you fear you'll lose your security deposit down the line if you make any big changes. Luckily, there are a few ways to spruce things up without breaking the bank, or your contract.

If you want to add some budget-friendly flair to your kitchen, try swapping out your old cabinet handles with some newer, more stylish hardware. On sites like Anthropologie, you can find tons of options on snazzy cabinet knobs and handles some for as low as $8. Switching out your doorknobs, light switches, even your kitchen faucets can help you rejuvenate your space without the pricey renovations.

Next, removable wallpaper is an easy way to give your old walls a touch-up without the permanence of paint. You can find some online for as little as $25 for 56 square feet. If you're just looking to add a little burst of color without covering your whole wall, Target also offers vinyl wall decals for as low as $10 per set. Not only are these easy to apply, you can peel them right off and use them over and over again.

Finally, if you want to add some life to your old floors, try using modular carpet tiles. These require no adhesive to assemble, and you can find them on sites like Home Depot for as little as $1 per square foot.

Just because you don't own your home doesn't mean you can't customize it. Give these quick, low-cost improvements a try and you can jazz your place up, while keeping your costs down.

View Poll

 

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High Nursing Home Bills Squeeze Insurers, Driving Rates Up

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FILE - In this Feb. 28, 2013, file photo, Tina Reese leads a word game for residents at a nursing home in Lancaster, Pa. Life insurance firms pitched long-term care policies as the prudent way for Americans to shoulder the cost of staying in nursing homes. But those same companies have found that long-term-care policies are squeezing their profits. (AP Photo/Intelligencer Journal, Dan Marschka, File)
Dan Marschka/Intelligencer Journal via APAn instructor leads a word game for residents at a nursing home in Lancaster, Pa.
By MATTHEW CRAFT

NEW YORK -- Thirty years ago, insurance companies had the answer to the soaring cost of caring for the elderly. Plan ahead and buy a policy that will cover your expenses.

Now, there's a new problem: Even insurers think it's unaffordable.

Life insurance firms pitched long-term care policies as the prudent way for Americans to shoulder the cost of staying in nursing homes. But those same companies have found that long-term-care policies are squeezing their profits. Earnings for life insurers slid 11 percent in the most recent quarter, according to Moody's Investors Service, and long-term care was the chief culprit.

Insurers that sell these products lose money on them. So they're raising prices and also trying to get out of the business right and left.

"Insurers that sell these products lose money on them," says Vincent Lui, a life-insurance analyst at Morningstar (MORN). "So they're raising prices and also trying to get out of the business right and left."

Four of the five largest providers -- including Manulife (MFC) and MetLife (MET) -- have either scaled back their business or stopped selling new policies, according to Moody's. The largest provider, Genworth Financial (GNW), continues to offer them, yet has struggled under the weight of rising costs.

The trends behind the industry's troubles sound like good news outside the world of insurance. Older Americans are healthier and living longer. But that makes it difficult for the industry to turn a profit. Stays in nursing homes tend to last longer, so insurers have to pay out more in benefits than they had planned.

For older Americans and their families, however, there are few options besides private insurance. Medicare doesn't cover nursing home visits longer than a few months. The Obama Administration had planned to make a long-term insurance program part of the Affordable Care Act but eventually abandoned it.

Sean Dargan, an analyst at Macquarie Group, an Australia-based investment bank, expects to see more people turning to Medicaid, the government's health insurance for the poor, to cover the costs of care.

"It could really blow a hole through state budgets," he says. "I think states and the federal government are going to need to think creatively to find a way out of this."

Tough Business

For insurance companies, long-term care has proven to be a tough business.

Genworth, based in Richmond, Virginia, has turned in losses for two straight quarters. On March 2, the company reported that it discovered errors in its accounting for funds set aside to cover long-term care claims, knocking its stock down 5 percent in a single day. Analysts say problems with these policies explain why Genworth has lost more than half its market value over the past year, plunging to a recent $7.79 from from $17 a share.

"Their single biggest product is long-term care, and look at their share price," Lui says. "It's one trouble after another."

In an interview with The Associated Press, Tom McInerney, Genworth's CEO, says his company has been taking steps to make long-term care insurance a viable business, raising prices on older policies, introducing new products and throwing out their previous assumptions.

"There's clearly a very high need for these policies," McInerney says. "Given high demand and the limited number of insurers offering it today, I think it can be a very good industry going forward."

When they began selling policies widely in the 1980s, the industry made a slew of assumptions about how long people would live, health care costs, and interest rates. Nearly all of them turned out wrong, analysts say.

Living Longer

Take life spans. At nearly 79 years, overall life expectancy in the U.S. has never been higher, according to the Centers for Disease Control and Prevention. That's the biggest issue, analysts say, because it means more people who took out policies stick around to make claims, moving into nursing homes and asking insurance companies to help cover the steep bills.

The rate for staying at a nursing home has gone up an average of 4 percent every year for the last five years, according to Genworth's annual survey. In 2014, the median bill for a shared room topped $6,000 a month.

"They were making their best estimates at the time. They just turned out to be wrong," says Shachar Gonen, a Moody's analyst who covers the industry. "If insurers knew full well what they were getting into, they probably would have priced their policies much higher. So who knows if the long-term insurance business would have ever started."

The industry's actuaries also made a bad call on the bond market, betting on much higher interest rates. That misstep proved critical because insurers buy bonds to cushion against future payouts, so years of historically low interest rates have thrown their accounts out of balance. It's yet another reason why insurers keep putting more money aside to cover claims, resulting in big charges and lower profits.

Spending More

All of these trends have forced companies like Genworth to spend much more than they had planned. Last year, insurers paid out a record $7.5 billion in claims on these policies, according to the American Association of Long-Term Care Insurance, which tracks insurance rates.

To cope with mounting costs and faulty assumptions, insurers have been cutting benefits and hiking their premiums year after year. Average premiums for new policies rose nearly 9 percent over the past year.

Prices range widely, depending on where you live, your age, level of benefits, and much else. In Tennessee, for instance, a 55-year old woman who is healthy enough to qualify for a policy can expect to pay $2,411 in the first year for $136,000 in benefits. That's a brand-new policy, likely the lowest premium a person will pay. The expense climbs steadily as people age, and those holding policies typically don't make a claim until they reach their 80s.

Insurers keep asking state regulators to let them raise prices on existing policies. In the last month, TIAA-CREF Life Insurance, MetLife and American General asked Connecticut's insurance department for permission to raise rates as much as 22 percent over three years. The state rejected American General's request and approved the other two.

'Impossible to Run'

McInerney, Genworth's CEO, says that when regulators refuse to allow changes -- such as signing off on single-digit rate increases or allowing other tweaks to older policies -- the business becomes "'impossible to run."

If they're not flexible enough to help make long-term care insurance viable for insurers, McInerney says he has told regulators that "Genworth isn't going to stay."

"Without it," he adds, "a lot of these baby boomers are going to wind up on Medicaid."

Analysts who follow the industry think that insurers have learned from their missteps and probably figured out the right price to charge for long-term care policies to turn a profit. The problem is, it might be too high for most people to pay.

"I'm of the opinion that it's appropriately priced today," says Macquarie Group's Dargan. "But it's also out of reach for most middle-income Americans. And that's who needs it the most."

 

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It's Official. We're All Potheads Now

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US-POLITICS-CONSERVATIVES-CPAC
Nicholas Kamm, AFP/Getty ImagesA man wears a T-shirt calling for the legalization of marijuana at last month's annual Conservative Political Action Conference in suburban Washington, D.C.
"All the cool kids are doing it" -- and now they might even vote for it.

That's the upshot of a recent poll out of Pew Research Center, which shows that the scales are now tipping decidedly in favor of nationwide legalization of marijuana. According to Pew, America passed the 50 percent mark for favoring legalization nationwide back in October, with 52 percent of voters now supporting it. And now, one of the presumably hardest-core groups opposing legalization -- Republicans -- is starting to throw its support behind legalization as well.

Broadly speaking, Pew's research finds that registered Democrats favor legalization more often than Republicans do. But among millennials (i.e., voters in their 20s and early 30s), Pew finds that 63 percent of Republican voters now support legalizing marijuana outright -- no prescriptions or medical-use-only ID cards required. That's 14 percentage points fewer than millennial Democrats who support legalization, and about on par with Democratic baby boomers and Generation Xers.

Meanwhile, support for the contrary argument -- putting marijuana users in prison -- is rapidly evaporating across party lines. Says Pew: "Most Americans (76%) think that people convicted of possessing small amounts of marijuana should not have to serve time in jail, with large majorities of both Republicans and Democrats agreeing on the issue."

What Does Your State Say?

Currently, four states -- Alaska, Colorado, Oregon and Washington, along with the District of Columbia, permit smoking marijuana recreationally. Alaska's and D.C's ballot measures, though, only went into effect in just the past few weeks.

Meanwhile, 26 jurisdictions -- including those five above -- have legalized the use of marijuana for medical purposes. In alphabetical order, these include:
  • Alaska
  • Arizona
  • California
  • Colorado
  • Connecticut
  • Delaware
  • District of Columbia
  • Hawaii
  • Illinois
  • Iowa
  • Maine
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Missouri
  • Montana
  • Nevada
  • New Hampshire
  • New Jersey
  • New Mexico
  • New York
  • Oregon
  • Rhode Island
  • Vermont
  • Washington state
And four more -- Mississippi, Nebraska, North Carolina and Ohio -- have decriminalized possession of marijuana.

California has the nation's oldest medical marijuana law (Proposition 215, passed by a majority of voters in 1996). Washington and Oregon have arguably the most lenient medical marijuana laws (both states permit the possession of up to 24 ounces of pot). But Massachusetts gives them a run for their money -- permitting licensed medical marijuana users to keep as much as a 60-day pot supply on hand. Depending on how often you smoke it, that could be a lot of pot...

Finally, a handful of states, including Alabama and Florida, have hedged on the issue, permitting the use of a prescription marijuana extract known as cannabidiol, or CBD, but not permitting smoking of marijuana per se.

What the Future Holds

With a majority of voters now supporting the legalization of marijuana, we may be approaching a legislative tipping point. According to marijuana policy website Leafly.com, as many as six more states are likely to approve full legalization in the near future:
  • Arizona
  • California
  • Maine
  • Massachusetts
  • Nevada
  • Wyoming
Voters on a Leafly-sponsored poll, however, say New Mexico has a slightly better chance of passing legalization before Wyoming does. But whichever state is next to legalize pot, one thing is certain: With younger voters of all political stripes now favoring legalization, it doesn't matter how many older voters still oppose it. The laws of demographics, and the actuarial tables, make it certain that in time, legalization will happen -- everywhere in the U.S.

Motley Fool contributor Rich Smith lives and writes in Indiana, where it's still illegal to buy beer at the grocery store on Sundays. He's pretty certain that whichever state is next to legalize pot, Indiana will be last. He owns no "marijuana stocks," nor does The Motley Fool. Check out our free report for one great stock to buy for this year and beyond.

 

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Why Are Food Companies So Eager to Diversify?

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Financial Markets Wall Street The Hershey Company
Richard Drew/APIn celebration of Halloween last fall, Hershey President and CEO J.P. Bilbrey rings the New York Stock Exchange opening bell.
If mashed together on a plate, beef jerky and chocolate would be an awful combination. But what's terrifying on the table can be a boon to the bottom line -- at least that's what Hershey (HSY) hopes by putting the two together in its asset portfolio.

This past January the firm acquired jerky specialist Krave Pure Foods for an undisclosed sum. Since the two foods aren't naturally synergistic and Hershey has never been much of an acquirer, the deal was surprising on the surface. Looking a little deeper, though, reveals that it was a sensible move following similar developments elsewhere in the food sector.

Stacking Plates

The industry has seen a host of big-ticket buyouts recently. Earlier this year J.M. Smucker (SJM) -- known for jams, jellies and coffee -- went outside of the human comestibles sphere: It bought Big Heart Pet Brands, maker of the famous Milk Bone dog biscuits and Meow Mix cat food (among others), for $3.2 billion in cash and stock.

Several months previously, conglomerate Tyson Foods (TSN) won control of packaged-food specialist (and Krave's fellow jerky purveyor) Hillshire Brands for around $8.6 billion, including debt assumption, by outbidding rival Pilgrim's Pride (PPC).

Hillshire itself was busy filling the shopping cart in the months leading up to the acquisition. It signed a $4.3 billion deal to grab Pinnacle Foods (PF), another packaged food company that holds Swanson TV dinners and Vlasic pickles among its portfolio (although Hillshire had to abandon that deal after it was hitched to Tyson). It also reached a $165 million agreement to buy breakfast-foods purveyor Van's Natural Foods.

The shopping spree could be seen as the industry incumbents roaming the aisles in search of growth. For companies that can afford it, buying a good, revenue-producing asset is a quick way to juice the top line.

Protein for Growth

And in recent times, available assets haven't necessarily been compatible with the portfolios of growth-hungry companies.

Take J.M. Smucker. Its revenues have been more or less stagnant over the past few years, and although profitability has grown nicely, this has been due to reduced expenses rather than organic sales growth.

The company's lack of diversification was a reason for its top-line sluggishness. Coffee, including the durable Folgers brand (itself an acquisition, made in 2008), accounts for nearly 50 percent of revenue.

The Big Heart buy can help put significantly bigger numbers on the top line. According to a recent report in The Wall Street Journal, the U.S. pet food business totaled around $21 billion in 2013, with Big Heart controlling about 13 percent of it. Big Heart's net sales were nearly $2.2 billion for fiscal 2014, or roughly 39 percent of Smucker's annual top line.

Hershey's troubles are more recent. The company -- maker of the eponymous chocolate bars, plus the Reese's line of treats and other iconic candy brands such as Kit Kat and Almond Joy -- posted disappointing results in its most recently reported quarter. Both revenue and net profit came in under analyst expectations, and going forward the company is projecting a fiscal 2015 bottom line that's also well below what analysts had previously forecast.

Hershey has always been associated with candy, since it's far and away the company's main product. Although the company has ventured into associated goods (Ice Breakers gum, Breath Savers mints, and Mauna Loa macadamia nuts) these brands are nowhere near as prominent as Hershey's and Reese's.

But no matter how many checkout racks and store shelves bulge with Hershey Bars, there's only so high the candy market can go -- particularly considering the dizzying number of competitors, and the increased health-consciousness of consumers.

Enter Krave. Hershey says that meat snacks (such as the treats its new asset makes) are a $2.5 billion market. According to Hershey, these products averaged 10 percent annual growth in the 2010 to 2014 period. That kind of growth is appealing for a company that has been selling a limited range of products for a very long time.

Many Mouths to Feed

Although the food business is huge, it's a tough industry to succeed in. There are a lot of players in the market, and many are competing for the same precious shelf space in supermarkets and convenience stores.

As a result, more than a few veteran companies are coming to the conclusion that it's best to bulk up in order to be competitive. Growth is the key right now, regardless of how the new items in the pantry mix with a company's mainstays.

Motley Fool contributor Eric Volkman has no position in any stocks mentioned, but wouldn't mind a chocolate bar just now. The Motley Fool has no position in any stocks mentioned. Try any of our Foolish newsletter services free for 30 days. Check out our free report for one great stock to buy for this year and beyond.

 

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Americans Want to Be No. 1 Globally, but Feel Second Rate

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Immigration Reform Rallies California
Ben Margot/AP
"We're No. 1!"

If that chant were a clue on "Jeopardy!", the correct question to match it might be: "What is: Something you never hear Americans say anymore?"

Introducing the World's Least Confident Superpower

According to a poll just out from Gallup, Americans today are less likely than at any time in at least the last two decades to agree that "the United States is No. 1 in the world economically." In fact, only 17 percent of respondents polled by Gallup think America is the world's preeminent economic power today (down from 40 percent at the turn of the millennium).

In a separate poll, Gallup showed that Americans hold a dimmer view of China's economy as well. Despite China's ranking No. 2 in the world on GDP, and nipping at our heels, only 40 percent of Americans now see the Chinese economy as a "critical threat" to America's "vital interests" today. That's down from 52 percent a year ago.

But despite Americans' modest view of our own economy currently, and our waning fears of China's, one surprising revelation drawn from Gallup's poll results is this: We may not think we are No. 1 -- but we want to be.

High Hopes

Reviewing data from over two decades of polling, Gallup notes that more Americans today think it's important for the U.S. to become the world's strongest economic power than at any time since at least 1993. And while the numbers have bobbled over time, this obsession with becoming "No. 1" has gained increasing strength in the most recent years, rising from a low point of 39 percent just before the financial crisis to 50 percent today. But why?

Chalk it up to complacency -- and a rude awakening from it. As Gallup notes, America has been the world's largest economy "since the 1870s." Actually being No. 1, therefore, Americans may have taken this fact for granted, and considered the rankings unimportant. And yet, just last year we lost that pride of place in at least one respect. Recent data shows that while lagging in absolute GDP, China has moved to No. 1 in GDP-as-modified-by-purchasing power parity (that's what absolute GDP can buy you at local prices).

So now, Americans are feeling the heat.

What It Will Take to Get There

So, how hard will it be for America to win back the No. 1 slot? Well, public opinion polls notwithstanding, it's worth pointing out that technically, we still are No. 1. According to data from website Statista.com, with a GDP of $17.4 trillion, the U.S. economy remains 68 percent larger than China's, and more than three times the size of third-place Japan. (In fact, to surpass America's GDP, you'd need to add fourth-place Germany to the mix: The U.S. economy is actually nearly as big as the next three largest economies combined.)

What's more, even in terms of purchasing power parity, China only has about a $216 billion lead over the U.S. -- a GDP/PPP lead of only 1.2 percent. That's about the size of the revenues of Microsoft (MSFT), Costco (COST), and Harley-Davidson (HOG) combined -- or the size of half a Walmart (WMT).

It's hardly an insurmountable gap. We can build that. Especially when you consider that the U.S. GDP grew 2.4 percent in 2014, accelerating from 2013's 2.2 percent rise. Meanwhile, in China, an apparently robust 7.4 percent growth rate was actually 0.3 percentage points slower than growth posted in 2013, missed the Asian nation's growth target (of 7.5 percent) -- and was the slowest rate of growth China has exhibited in the past 24 years.

Come to think of it, those two trends right there may explain both why Americans polled are less concerned with China as a competitor -- and more enthusiastic about eclipsing it than ever before.

Motley Fool contributor Rich Smith thinks government GDP growth statistics are all good and all -- but you can't pay the electric bill with them. He has no position in any stocks mentioned, but The Motley Fool recommends and also owns shares of Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. Check out our free report for one great stock to buy for this year and beyond.

 

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Market Wrap: Stocks Down for 2nd Straight Day; Energy Weak

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Financial Markets Wall Street
Richard Drew/AP
By Chuck Mikolajczak

NEW YORK -- U.S. stocks fell for a second straight session Tuesday, with equities maintaining a tight range that corresponded with currency fluctuations as traders focused on the dollar's strength and its possible effect on corporate earnings.

Data from home sales to inflation and manufacturing indicated the U.S. economy remains strong, but failed to alter expectations of a faster or steeper monetary policy tightening path at the Federal Reserve.

I don't think there is a tremendous amount of trepidation about earnings season. We will clearly see the impact of lower energy prices as well as the stronger dollar.

Traders have honed in on how the Fed will react to economic data, as a June interest rate increase remains a possibility. Stocks have been inversely correlated to the U.S. dollar and several multinational companies have given earnings forecasts that cited a negative impact from a strong greenback.

"I don't think there is a tremendous amount of trepidation about earnings season. We will clearly see the impact of lower energy prices as well as the stronger dollar," said David Lefkowitz, Senior Equity Strategist at UBS in New York.

"Those two factors are fairly well-known, so I don't expect it is going to be much in the way of a surprise for most companies when they do report earnings, but clearly those temporary factors are going to weigh on the growth for the first quarter."

The S&P energy index lost 0.8 percent as Brent crude settled down 1.5 percent at $55.11 a barrel after the dollar gained ground against the euro. The dollar index zigzagged between gains and losses against a basket of major currencies and was up 0.14 percent on the day.

The Dow Jones industrial average (^DJI) fell 104.9 points, or 0.58 percent, to 18,011.14, the Standard & Poor's 500 index (^GSPC) lost 12.92 points, or 0.61 percent, to 2,091.5 and the Nasdaq composite (^IXIC) dropped 16.25 points, or 0.32 percent, to 4,994.73.

Declines on the Nasdaq were tempered by a boost from Google (GOOGL), up 2.2 percent to $577.54. Morgan Stanley's (MS) chief financial officer is leaving the bank to join Google.

Biotechs were down for a second straight session, pulled lower by a 2.4 percent drop in Biogen (BIIB) to $452.71. The Nasdaq biotech index is down 2.9 percent in the past two sessions after snapping an eight-day winning streak.

Whiting Petroleum (WLL) plunged 19.5 percent to $30.91. North Dakota's largest oil producer announced an offering of 35 million shares and a $1.75 billion mix of notes and convertible notes to help cut its near-$6 billion debt load.

Volume was light, with about 5.29 billion shares traded on U.S. exchanges, below the 6.8 billion average so far this month, according to BATS Global Markets.

Declining issues outnumbered advancing ones on the NYSE by 1,708 to 1,317, for a 1.30-to-1 ratio; on the Nasdaq, 1,415 issues fell and 1,284 advanced, for a 1.10-to-1 ratio favoring decliners.

The S&P 500 posted 22 new 52-week highs and 1 new low; the Nasdaq composite recorded 104 new highs and 22 new lows.

What to watch Wednesday:
  • The Commerce Department releases durable goods for February at 8:30 a.m. Eastern time.
Earnings Season
These selected companies are scheduled to release quarterly financial results:
  • Apollo Education Group (APOL)
  • Five Below (FIVE)
  • H.B. Fuller Co. (FUL)
  • Paychex (PAYX)
  • PVH (PVH)
  • Red Hat (RHT)

 

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Are You Married to a Gold Digger?

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Jurgita/Shutterstock
By Kimberly Palmer

When Valerie Rind got married, her husband suggested renting out the condo he owned while they moved into another place. "He said, 'Why don't we keep this as an investment and rent it out, and then when we're ready, we'll sell the condo,'" Rind recalls. Later, when the couple needed some extra cash flow, Rind suggested they put the condo on the market. Her husband resisted.

Eventually, Rind realized her now ex-husband had been lying to her from the start. He never owned the condo but had been just renting it. "That was a traumatic realization," she says, not just financially, but because her trust was irreparably betrayed. "It destroyed the relationship. Having someone lie about something so fundamental, I felt I couldn't trust him again," she recalls. They soon divorced.

She Suffered So You Don't Have To

Rind, who works for a software company in the District of Columbia, says she wants to help other people avoid the same mistakes she made. Her new book, "Gold Diggers and Deadbeat Dads," is filled with similar stories of financial dishonesty. What's heartbreaking is it often occurs between family members, spouses and close friends.

"I wanted to show other people that they weren't the only ones who had made some sort of financial mistake and to help other people from letting it happen to him," she says. The book covers common lies about debt and estate planning and even physical abuse in relationships.

People often find themselves in trouble, she says, not necessarily because they're naïve, but because they're not educated enough about personal finance to notice the warning signs that indicate a problem. As for Rind, she didn't have much of a chance to protect herself, given the degree of deceit that was going on. Short of asking to see real estate paperwork before she got married, she's not sure how she could have uncovered the truth about the condo earlier. "I don't think it could have been prevented," she says.

Many other situations, though, come with bright red flags. Here are five:
  • Secrecy around money. "You should know how much they earn, how much they save, do they live within their means, how much debt do they have, how do they run their finances day to day," Rind says. Even details like whether your spouse tends to pay off credit cards each month and earn rewards points are important, she adds. Having a sense of how someone runs their financial life gives you insight into who they are and what being with them for the long haul might be like.
  • Hiding credit histories. A quick review of each other credit histories can make sure you're aware of each other's general financial histories, including any prior bankruptcies. In fact, a close look at her ex-husband's credit history might even have revealed that he didn't have a mortgage on the condo, which could have helped Rind uncover the fact that he didn't own it, or at least might have led to more questions.
  • Not having an estate plan. Procrastinating on setting up a will and other estate planning documents is common, but it can lead to major problems down the road, especially if you have a complicated situation such as children from prior marriages or a family business. While it's a difficult task because it "forces you to think about your priorities," Rind says, failing to draft or update your will, especially if your circumstances change, can lead to unintended consequences.
  • Resisting a prenup. Especially when it comes to second marriages and older couples, Rind says, prenups can be an important way to protect the financial futures of any young children or make the division of pre-existing assets easier in the event of divorce.
  • Asking you to co-sign a loan. People without a strong credit score might ask a boyfriend or girlfriend to co-sign a loan, which can enable them to get a better interest rate on a loan. The problem is that the boyfriend or girlfriend with good credit is then liable for the loan, even if the couple breaks up. Rind dubs this problem "sexually transmitted debt," a term she trademarked. "It's especially nasty if you didn't realize you were signing up for it," Rind says.
If you do decide to lend a family member, partner or friend money, then she suggests taking care to put the loan in writing to make sure you both understand the terms of the deal, including if and when it will be paid back.

In all relationships, whether familial or romantic, Rind says there's often emotion involved, and that can cloud your judgement when it comes to lending money or offering up your name as a co-signer on a loan. "When you loan someone money, it changes the dynamic forever," she warns.

Like Sam Smith at the Grammys, when he thanked his ex-boyfriend who broke his heart for enabling him to write his hits, Rind dedicates the book to her ex-husband. "Without you, I never would have written this book," she writes. She's already working on her follow up, based on the outpouring of emails and questions from readers she's received.

 

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10 Ways to Pay Less (Often a Lot Less) for Designer Duds

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Stylish Ways to Dress for Less
By Maryalene LaPonsie

It was probably somewhere around child No. 3 that I stopped caring. Jeans and pullover tops turned into my comfy daily uniform.

When my husband commented one day that I was dressing like an 80-year-old -- a valid point since most of my clothes at that time were gifts from my elderly mom and aunt -- I decided I had taken the casual look a little too far.

Unfortunately, I quickly discovered that clothes tend to fall into two categories: cheap in every sense of the word and shockingly expensive. Following are some strategies that will make you look like a hundred bucks without spending that much.

1. Buy Used -- Really

Before you turn up your nose at consignment stores, thrift shops and garage sales, know there are plenty of nearly new items just waiting to be snatched up for a fraction of the retail price. My local thrift store practically gives away its clothes, and there are some nice brand-name items to be found for those willing to search the racks.

If you'd rather not go on the thrift store treasure hunt, find a consignment shop catering to your clothing style, or head to garage sales in an upscale neighborhood. You can save even more by taking your unwanted clothes to the consignment shop and selling them there.

2. Hold Out for the Sale

If you don't want to go the used-clothes route, at least do yourself a favor and never buy retail. Some of the high-end designer boutiques won't run traditional sales. However, virtually all the mainstream clothing stores do and many regularly discount products by up to 50 percent off. Certain items tend to go on sale during specific months. Or, if you can hold out until the holiday shopping season, you can often find retailers that discount their entire stock by up to 50 percent.

3. Buy Out of Season

Even better than buying on sale is buying clearance items out of season. Summer clearance usually hits its peak around July as stores try to make way for fall fashions. October is when to look for the start of fall markdowns, while January can be prime time to pick up winter items. By April, many spring outfits will be moved to the clearance racks.

Clearance pricing is often progressive. Stores may start by dropping the prices 20 or 30 percent and slowly increasing the discount until it hits 70 percent or more. For the best selection, you'll want to shop the clearance sales early. But if you're not too particular or if you wear a less popular size that doesn't sell as fast, wait until the end of the sale to save the most money.

4. Search for a Coupon

You can make your own sale by finding a coupon to buy regular-priced items. Even better, combine a coupon with a sale for double savings. Find coupons in your local newspaper inserts or sign up for your favorite store's mailing list to have them sent directly to you. Many stores are increasingly offering discounts for signing up for text alerts as well. For online shopping, search for coupon codes or other promo offers before making a purchase.

5. Go to a Sample Sale

If you live in the big city and covet high-end clothes, try your hand shopping a designer sample sale. Often held in a warehouse or similar location, sample sales are how designers unload excess merchandise. Sales may be advertised locally, or you can head to websites like Racked.com or TopButton.com to find them in major U.S. cities.

While sample sales can be a good way to pick up designer duds for less, not everything will be a deal. Research the brand for its regular prices before hitting the sale. In addition, sample sales can be a different shopping experience from what you'll find in a store. There may be no dressing rooms, but you'll want to try on everything because these items may have been altered to fit models. Wear some form-fitting undergarments or a leotard you don't mind the world seeing.

6. Follow Online Flash Sale Sites

Those who don't live in the big city may never have the experience of stripping to their skivvies in a warehouse full of women during a sample sale, but they can get comparable savings at online flash sales.

Websites like Gilt.com, HauteLook.com and RueLaLa.com offer flash sales that are the online equivalent of a sample sale: limited quantities of designer items at deep discount. However, like sample sales, know your pricing because not everything is a deal. Plus most sales are final, so be sure you really want the item and have your sizing correct before ordering.

7. Shop Discount Stores

Another way to get designer clothes for less is by shopping discount retailers like T.J. Maxx and Marshalls. These stores buy excess inventory from manufacturers at a deep discount and then pass a portion of those savings on to customers.

You can find plenty of high-end brands, from Coach to Ralph Lauren. But inventory is constantly changing, so if you see something you love, better buy it now. The discounters work directly with the brands instead of liquidators, so you can feel confident you are getting the real deal.

8. Bookmark a Few Blogs

With so many sales circulating cyberspace and your local stores, it can be hard to keep tabs on all the deals. Rather than try to do it all yourself, let a blogger do the hard work. A number of blogs track fashion sales and post alerts when rock-bottom prices appear. Blogs worth bookmarking include TheBudgetFashionista.com, SheFinds, Broke & Beautiful and The Budget Babe.

9. Choose Quality Over Quantity

When I decided to update my wardrobe, I made the mistake of heading to the nearby superstore to browse the clothing section. The clothes were not the most modern fashions, but they looked OK, and the price couldn't be beat. Unfortunately, the quality of the clothes matched the price. They didn't wash well or hold up to repeated wearing, and they left me feeling as frumpy as the shirts my octogenarian aunt had gifted me.

Rather than buying on price alone, look for value. Shop for clothes that are constructed well, even if it means you pay a little more upfront. In the long run, you'll spend less on one good-quality shirt you can wear over and over again than you would if you buy a half-dozen cheap ones that don't last the season.

10. Host a Clothing Swap

Finally, paying nothing is the ultimate way to dress for less. If you have a group of friends with similar taste and sizing, organize a clothing swap. These events can be as simple as inviting two or three friends over for coffee and asking them to bring a few clothes. Or, they can be as involved as collecting clothes in advance and turning your home into a virtual store for a couple dozen friends and acquaintances to "shop." Oprah Magazine provides more details on how to set up a successful clothing swap.

How do you stay fashionable without breaking the bank? Share your tips and tricks in the comments below or on our Facebook page. Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free! We'll also email you a PDF of Stacy Johnson's "205 Ways to Save Money" as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash.

 

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Money Experts Share the 9 Best Ways to Stretch $10

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10 Dollar note, dollars, money, American banknotes
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Ten dollars doesn't buy much anymore. If you're making minimum wage, you're not even earning $10 an hour, making it vital to get creative with your spending. Even if your budget is more flexible, investing in purchases that either make your life easier or add a lot of value at a low cost will increase your return on each dollar. GOBankingRates asked today's biggest financial podcasters and radio show hosts about their best $10 purchase. Answers ranged from outlandish to indulgent, but for some money experts, a simple $10 brought them exponential value.

1. Life's Small Pleasures

Given how hard it is to stretch $10, sometimes investing your money in affordable indulgences increases each dollar's value. Andrew Horowitz -- certified financial planner, author and host of "The Disciplined Investor" podcast -- shared his favorite use of $7.50: "Tatuaje Fausto No. 114 Maduro Wrapper. A cigar a day helps keep worries away ... [at] about $7.50 per cigar."

It's often preached in personal finance that small purchases like the ritual morning latte can really add up, but for some, like Chris Hill, analyst and host of "Motley Fool Money," that cost is worth it. "Coffee," Hill said. "Starbucks, Dunkin' Donuts or anywhere else. A hot cup of coffee tops anything else I could buy for under 10 bucks."

2. Lucky Opportunities

If you're a savvy shopper, you're likely a deal seeker. Even so, finding plane tickets for under $10 is a rare feat. It might seem too good to be true -- but that doesn't mean it won't be worth it. Clark Howard, consumer expert and host of "The Clark Howard Show," shared his best $10 purchase: "An airline ticket to Washington, D.C. Once there was a sale for tickets for ... you guessed it -- $10!"

3. Streamlined Services

It's no secret we live in a quickly evolving society that propels us to do more with increased efficiency, and I'm sure no one has complained about a service that made his life easier. That's why investing in apps or services that streamline your life can offer a lot of value.

John Lee Dumas, founder and host of the podcast "Entrepreneur on Fire," shared the premium version of the app Tripit was his best $10-or-less purchase. "An app that keeps all my travel plans in one simple place. Simply a game changer​," he said.

Matt Theriault, real estate investor and host of "Epic Real Estate Investing," selected his $9 monthly ScheduleOnce.com subscription as his best stretch. "No more multiple emails, phone calls, texts back and forth trying to create appointments with people."

4. The Essentials

Sometimes it's worth investing in the basics. Luckily, this doesn't require paying $795 for a Movado watch. "A watch," was the response from Ric Edelman, chairman and CEO of Edelman Financial Services and host of "The Truth About Money with Ric Edelman." Edelman assured us that it "tells time great, looks great, lasts long. Gets the job done and didn't require me to spend money I could put to better use elsewhere - like saving for retirement."

5. Career Starters

Sometimes a small purchase can advance your career, whether it's buying a book that piques a new interest or subscribing to a service that helps you connect with a greater customer base.

Take real estate investor and cohost of "BiggerPockets Podcast" Brandon Turner's example: "I'd go with 'Rich Dad Poor Dad,' the book by Robert Kiyosaki," Turner said. "I picked it up for a couple bucks at a thrift shop, and it changed my life completely."

A similar thing happened to "Freakonomics" co-author Stephen Dubner, when a book inspired a pipe dream that became his career. "When I first moved to New York, I bought a remaindered copy of Jonathan Yardley's biography of Ring Lardner, one of my favorite writers," Dubner said. "It somehow persuaded me that I too could make it as a writer in New York. Pure delusion -- but it worked."

Financial expert, author and host of the "Rich Dad Radio Show," Kiyosaki himself can thank a classic board game for his career trajectory: "The game of Monopoly," Kiyosaki said. "When I was a kid in the 1950s, my rich dad would teach his son and me about money by playing Monopoly. As we played, he would impart his thoughts, real-life experiences and wisdom to the two of us ... I purchased my own game, a used game of Monopoly at my church flea market for 50 cents, and began a Monopoly club in the sixth grade, teaching my friends the same things my rich dad taught me. Today, I continue to be a teacher, and an entrepreneur in financial education."

6. Low-Cost Investing

Don't think $10 is too small to invest. After all, according to Warren Buffett, $40 invested in Coca-Cola in 1919 would be $10.8 million today. Most people don't have 95 years on their side to reap those returns -- nor the luck.

Laura Adams, personal finance expert and host of "Money Girl," figured out her own, virtually no-cost way to invest. "I get a lot of value out of free or low-cost mobile apps," Adams said. "My favorite one right now is Acorns, which allows me to round up each purchase I make to the next whole dollar and automatically invest the difference. It's a fun and easy way to automate investing my digital spare change."

If you want to invest with little available capital, consider $10-or-less stocks, such as deal site Groupon (GRPN), pharmaceutical retailer Rite Aid (RAD) or satellite radio company Sirius XM (SIRI).

7. Cheap Maintenance

Dough Roller recommends an oil change for your car. Every 5,000 to 7,000 miles, investing $10 in this basic service will prevent hundreds of dollars in unnecessary maintenance later. While many companies price this service between $20 and $25, coupons can bring your cost down to $15 or less, according to CarsDirect.

8. Peer-to-Peer Lending

Rather than a bank profiting off a loan, peer-to-peer lending allows you to loan money to someone and earn interest on your investment. With deposit rates at historic lows, this avenue can provide a higher rate of return than your savings account by a long shot. Consider options like Lending Club, which charges rates between 7.58 percent annual percentage rate and 25.01 percent, depending on borrower risk. Both Lending Club and another P2P site, Prosper, allow you to invest in loans in $25 increments. If you're eager for a $10 option, however, invest in the brands you love, including Apple, Starbucks, Amazon, Facebook and Walk Disney, through Loyal3 for not a penny more.

9. Increased Reach

Do you have a hobby or passion you could turn into a business? You'll first need to establish a web presence. Hosting through sites like GoDaddy.com costs as low as $1 per month. Its most secure option, Ultimate hosting, is on sale for $7.99 per month.

Journalist and personal finance expert Farnoosh Torabi thanks a free service for being able to work on the go, increasing her audience reach for her podcast "So Money." "The best thing I signed up for is Skype, which is free," Torabi said. "It's thanks to Skype I can run my podcast from anywhere and speak to guests wherever they are. The sound quality is also excellent."

If the only thing holding you back from adding to your income or completely overhauling your career is a way to connect with consumers, investing in going digital could launch your business and open up opportunities that can't be quantified.

 

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Can Disney Get Away With a $20 Cronut?

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Fantasyland Dream Lights Reflections
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It's been 13 years since "The Simpsons" poked fun of Disney's (DIS) in-park pricing. Homer Simpson scaled the Disneyland wall, only to find that a churro would set him back $14. It was all in good fun: A Disneyland churro was just $3 at the time. However, we've finally hit the point where the family entertainment giant may be trying to charge $20 for a cronut at its most popular theme park, and Homer Simpson is nowhere in sight.

Disney began serving breakfast over the weekend at Be Our Guest Restaurant, the Magic Kingdom eatery themed to "Beauty and the Beast" with three richly detailed dining rooms. The meals are all priced at $19.99 for adults, and one of the entrees just happens to be the flaky croissant doughnut confection that was created two years ago at New York City's Dominique Ansel Bakery.

To be fair, it's more than just a croissant doughnut. The fried delicacy is topped with banana caramel sauce, pastry creme and chocolate ganache. The stiff $19.99 price also includes a breakfast beverage of choice and a plate of assorted pastries shared at the table.

However, at the end of the day, you know how this is going to play out. The court of public opinion will overlook the cronut artisan toppings and included extras. It will be all about the Mickey Mouse company trying to collect a nearly $20 ransom for a cronut, adding to the lore that will seem more real than Homer Simpson's $14 churro.

Captive Audience

Disney's Magic Kingdom in Florida also made waves in pricing news last month when it boosted the price of its one-day ticket to $105, up from $99. It became Disney's first U.S. theme park to charge more than $100 for a single-day admission.

One would argue that Disney's pricing -- whether we're talking about dolled-up croissant doughnuts or just the cost to enter a park -- has gotten out of hand. However, success has a funny way of silencing the folks shaking their heads.

Disney doesn't break out attendance counts at its theme parks, but that doesn't stop third-party researchers from doing exactly that. Themed Entertainment Association's estimates find that attendance at Disney's Magic Kingdom rose 6 percent in 2013 to 18.6 million, making it the most visited theme park on the planet.

It's a safe bet that last year was even better. Disney bragged about record results at its Florida properties through 2014, and revenue at the media mogul's theme parks division posted a 9 percent year-over-year increase in its latest quarter. With the economy humming along and gas prices low, there's no reason that 2015 shouldn't be another record-breaking year for Disney World.

Try the Gray Stuff, It's Delicious

A big reason for the recent spike in attendance at the Magic Kingdom is the park's expansion. The gated attraction's New Fantasyland area opened two years ago, complete with a couple of new rides and themed experiences.

A major part of the buildout is the Be Our Guest Restaurant. It has proven immensely popular, and not just because it's the only place in the park that serves alcohol (during the dinner seating). The lines are long for lunch, and the reservations-only dinner offering typically has to be booked months in advance unless someone lucks into a cancellation. Opening the eatery earlier in the day as Disney started doing this past weekend to entertain breakfast-hungry guests is a no-brainer. More people will get to experience the unique restaurant.

The media will gravitate to the hefty prices. Folks will argue that Disney has finally gone too far and that guests won't pay $20 for a croissant-doughnut served with a beverage and a sampling of breakfast pastries. However, guests will, just as they continue to come despite the annual admission price increases. Disney usually knows what it's doing, and that's why the country's most expensive traditional theme park is also the most visited. Be our guest, indeed.

Motley Fool contributor Rick Munarriz owns shares of Walt Disney. The Motley Fool recommends and owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. Looking for a winner for your portfolio? Check out The Motley Fool's one great stock to buy for 2015 and beyond.

 

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Don't Want the Yellow Pages Dumped on Your Doorstep?

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City Board To Introduce Ban On Distribution Of Unsolicited Phone Books
Justin Sullivan/Getty Images
Be honest. When is the last time you opened the Yellow Pages and looked up a phone number?

Maybe there was that big storm last year -- the one that knocked you off the Internet, so you had to look up the electric company's number the old-fashioned way to report the outage? Or maybe you still use the reference maps in the old yellow book when you need to remind yourself -- what's the area code again for Great Aunt Maude's house in Utah?

But for most of us, the last time we touched a physical phone book was when it dropped on our front porch, unasked-for. And we only touched the Yellow Pages for the amount of time it took to carry it from the front porch directly to the recycling bin. Which seems like kind of a waste.

All Together Now: How Big of a Waste Is It?

According to website Lifehacker, Seattle alone spends $350,000 annually disposing of taxpayers' unwanted Yellow Pages. The environmentalists at Treehugger.com estimate that nationwide, recycling costs, plus landfill costs (for the 82 percent of phone books that get trashed rather than recycled) could exceed $60 million.

And speaking of the environment, Treehugger goes on to point out that the 650,000 tons of phone books shuttled from printer to front porch to recycling bin every year add about 1,474,000 metric tons of CO2-equivalents to the atmosphere -- about the same amount of pollution as is produced by 310,000 cars.

Wouldn't it be nice if we could shut that pollution down, and cut out that waste of money, all with the click of a button?

Ask and Ye Shall Receive (or Stop Receiving, If Desired)

Well, fortunately, you can. And it's "the Yellow Pages" itself (now owned by private equity firm Cerberus, according to S&P Capital IQ) that helped build the button. In cooperation with the Association of Directory Publishers, the Local Search Association (which includes both U.S. and international Yellow Pages companies), has built a service called YellowPagesOptOut.com. As the name implies, this website lets you opt out of receiving the Yellow Pages on your doorstep. It works like this:
  • First, go to YellowPagesOptOut.com, enter your ZIP code and register your name, phone number, address and email address (to ensure you're not some nefarious third party, trying to cancel your neighbor's Yellow Pages subscription).
  • Next, wait for a password to be sent to your email.
  • Finally, return to the website, enter the password and opt out of receiving the Yellow Pages forevermore.
It's really that simple. While you're at it, you might want to opt out of receiving junk mail from the post office and taking telemarketing calls during dinner as well. To accomplish these worthy goals, go to:
  • OptOutPrescreen.com, where you can instruct the various credit card firms to stop sending you "pre-approved" credit card offers -- a major source of identity theft.
  • DMAchoice.org, to opt out of other forms of junk mail -- catalogs and magazine offers, for example.
  • DoNotCall.gov, a Federal Trade Commission-operated do-not-call list where you can register to ban telemarketers from phoning you -- and register a complaint if they fail to comply.
If it's true that "time is money," just a little time spent checking the correct boxes on these websites (each of which is free to register with, by the way) could save you a lot of money. And if in the process, you keep a bit of carbon out of the air, and save a few trees from the wood chipper -- there's probably no harm in that, either.

Confession time: Motley Fool contributor Rich Smith does keep one single copy of the Yellow Pages (albeit from 2008) in the closet, just in case he needs it. But so far, he hasn't. He owns no interest in any companies mentioned, and neither does The Motley Fool.

 

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Walmart Pay Hike Not Enough to Get, Keep Right Workers

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Walmart's Black Friday Starts Strong in Bentonville
Gunnar Rathbun/Invision for Walmart/AP

By Brian Sozzi

Walmart made big news recently for increasing workers' wages above the federally mandated minimum, and Target is reportedly considering a similar move. But it may not make much of a difference in keeping and attracting higher-quality talent needed to oversee a growing list of responsibilities.

Walmart is transitioning to a $9-an-hour minimum wage in April, above the federal minimum of $7.25 an hour. Next year, employees with six months training will be paid a minimum of $10 an hour.

According to a report from Reuters, Target will soon hike its minimum wage for all its workers to $9 an hour. Target promptly denied the report, but Target CFO John Mulligan at a March 4 investment bank conference that "our goal has been and will be, we're going to be competitive on wages, whatever that means, wherever that means." At the time, he sidestepped being locked into a specific nationwide hourly wage for its retail workforce, citing differences in each state's minimum wage laws and prevalent local economic conditions.

What Employees Are Asked to Do

The maneuvers arrive at a time at which their store employees are being tasked with more by-the-minute responsibilities, such as finding items in the store to service mobile orders placed by consumers.

Another responsibility is more frequent shelf-stocking as each discount retailer tries to morph into a local grocery store by moving into fresh food and prepackaged organics. Starbucks is even trying to get its baristas to engage customers in talking about race. Nevertheless, the higher hourly wages may not do much to cure employee disenchantment. That's in large part to the allure of the new employment model for lower-wage workers championed by the likes of Chipotle, Shake Shack and Costco.

Chipotle and Shake Shack were built on the principle of paying employees more than minimum wage and teaching them leadership skills that are not being taught to workers at the low end of the pay scale at the likes of Target and Walmart.

The more these restaurant chains expand and the more that other chains pop up that copy their founding principles, other retailers will find it difficult to attract and retain talent.

It's Better at Chipotle, Shake Shack, Costco

"We provide hands on, shoulder-to-shoulder training to develop the full potential of our restaurant employees," Chipotle said in its most recent annual report. About 90 percent of salaried management at Chipotle and 98 percent of hourly management come from internal promotions.

The company's best general managers are promoted to a position called a restaurateur, a role that could pay north of $100,000 a year plus bonuses for developing team members. Restaurateurs who have shown over time that they can successfully run four restaurants by developing teams referred to as "top performers" can then be promoted to apprentice team leaders.

The opportunity to earn both skills, while also providing a clear pathway to a long-term career, continues to help Chipotle attract best-in-class talent. "I think the average quality of applicant that comes into a crew position today is vastly superior to what it was five, six, seven years ago," said Chipotle co-CEO Monty Moran in an Aug. 27 interview.

Moran added that people are migrating to Chipotle because they have "heard of us now, not just as a concept, but also as a people-oriented culture," one offering opportunities for advancement. "We have a lot more applicants than we used to, and we are able to be a lot pickier," he said.

Investing in Their Future

Shake Shack, founded by restaurateur and author Danny Meyer, is similar to Chipotle in its approach to employees in that it pays more than the hourly minimum wage and emphasizes the teaching of career-oriented skills.

"We invest in our team through extensive leadership development programs to ensure that Shake Shack remains a great place to work and an exciting career choice for team members at every level -- we have built a culture of active learning and we foster an environment of leadership development throughout the entire lifecycle of employment," Shake Shack writes in its prospectus. The company sweetens the deal with its employees by having a variety of incentive programs, including a monthly revenue-sharing program.

And if a worker would rather work the vast floors of a retail store, why not fill out an application in the hopes of getting hired at Costco? In spite of the looming wage increases at Walmart and Target, each will continue to offer hourly rates that are significantly less than Costco's.

The average employee at Costco earns a whopping $21 an hour and typically starts at $11.50 an hour. Costco's no-frills business model, where goods are shipped directly to large warehouses for sale to customers that pay annual membership dues, affords the discount retailer the luxury of paying its workers relatively high hourly wages.

 

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The Tax Surprise Few Credit Cardholders Know About

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A concept image of credit cards fanned out to pick one.
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By Matt Schulz

The day you finally pay off the last of your credit card debt is nothing short of monumental. The darkest depths of your debt struggle are over. It's as if you've just received a raise -- which, for all intents and purposes, you have.

Sure, things might not be perfect. For example, maybe you had to settle your debts, reaching an agreement with your issuer to pay off less than what you fully owe and calling it even. Maybe your credit leaves something to be desired. Still, with the debt beast slain, you can't help but feel victorious. But for many, the story isn't over -- because there's an unpleasant surprise that will be coming their way from Uncle Sam.

1099-C

The Internal Revenue Service considers forgiven or canceled debt to be income. That means if you settled your debt for at least $600 less than what you owed, you'll receive a tax bill in the form of a 1099-C cancellation of debt notice from the IRS.

Say you have $15,000 in credit card debt. You're stuck and can't pay it, so you make a deal with your credit card issuer and it agrees to let you pay just $8,000 of it. That's great, right? Well, yes, it is -- except that you'll end up paying taxes on that $7,000 that you didn't have to pay back. Now, of course, paying the tax on $7,000 is obviously preferable to paying the $7,000 itself. However, that doesn't mean receiving that tax bill is any less of a shock.

In a perfect world, creditors and debt collectors would always inform debtors about the issue, or everyone would have access to a tax attorney who helps them understand the implications of settling that debt. That's obviously not the case, though.

Also, some people simply throw the form away when they get it, thinking they don't need to worry about it since they've already settled with that creditor. It happens every year. Americans who thought their debt issues were behind them face the unfortunate reality of a tax bill that they didn't anticipate - and certainly didn't plan for.

What You Need to Do

Don't expect things to improve anytime soon either. The IRS projects that about 6 million debt cancellation forms will be filed for the 2014 tax year. That's up fivefold from 1 million in 2003 but far less than the 7 million the IRS projects for 2022. So if you receive one of these forms, what should you do? Follow these steps:
  • Don't throw it out or ignore it. That won't make the problem go away.
  • Make sure you really do have to pay. The good news is that not all debt cancellations or reductions are counted as income. Again, the amount forgiven needs to be at least $600 to spur a 1099-C form. There are other exceptions, such as debts canceled in bankruptcy, debts canceled during insolvency and debts canceled as a gift. You can learn more about these and other exceptions and exclusions on the IRS website.
  • If none of the exceptions or exclusions apply to you, report the total forgiven amount as "other income" when preparing your taxes. Or if you have someone else prepare your taxes, be sure to tell him or her and provide the 1099-C form with the rest of your tax documents. The amount should go on line 21 of your 1040 tax form.
As with any situation involving tax laws, you might want to consider consulting a tax attorney before you make any decisions. Tax attorneys aren't inexpensive, but having someone to help you navigate the ridiculously complex world of tax law can be priceless.

 

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Kraft, Heinz to Merge, Forming $28 Billion Food Company

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Kraft Heinz
Gene J. Puskar/AP
By Anjali Athavaley and Sruthi Ramakrishnan

Ketchup maker H.J. Heinz, backed by Warren Buffett's Berkshire Hathaway (BRK-A)(BRK-B) and Brazilian private equity firm 3G Capital, will combine with Kraft (KRFT) to create the third-largest North American food company, executives said on Wednesday.

Shares of Kraft, known for its namesake macaroni and cheese in a box, as well as Velveeta, Maxwell House coffee and Oscar Mayer processed meats, were up 35 percent at $82.88 in afternoon trading. The deal deepens Buffett's hold on leading U.S. food brands, as well as that of 3G founder Jorge Paulo Lemann, Brazil's richest man. The two teamed up to buy control of Heinz in 2013 and collaborated on the 2014 merger of fast-food chain Burger King and Tim Hortons, which runs coffee and doughnut shops.

Food industry experts see Kraft benefiting from Heinz's international presence, which generates more than 60 percent of its sales. Kraft brands are in 98 percent of North American households, the companies said, but would have a greater opportunity to expand overseas.

The combined company, which will be publicly traded under the name Kraft Heinz Co, expects to save about $1.5 billion in annual costs by the end of 2017. 3G has a reputation for introducing aggressive cost cuts and improving efficiencies at other companies it has invested in, including Heinz and Anheuser-Busch InBev (BUD). "Mature businesses look for cost cutting. 3G takes cost cutting to a different level," said Bob Goldin, executive vice president at food industry consultant Technomic. Goldin noted that neither Kraft nor Heinz are major players in the sector's growth segments, from organic to fresh foods.

The deal calls for the exchange of each Kraft share for one share in the combined Kraft Heinz, plus a special cash dividend of $16.50 per share to existing Kraft shareholders. The $10 billion behind the special dividend will be funded by an equity investment by Berkshire Hathaway and 3G. Heinz shareholders will own 51 percent of the combined company and Kraft shareholders the rest. Heinz did not disclose exactly how high Kraft was valued in the deal, but its executives estimate the combined company will have an enterprise value of over $100 billion.

Consumer Shift

Packaged-food makers from Kraft to General Mills (GIS) and Kellogg (K) are battling sluggish demand as consumers shift to brands that are perceived as healthier, including foods that are organic or less processed. Kraft's efforts to revamp its own products, such as combining its higher-protein snacks like meat and nuts into one container called the P3 pack, have not shifted the tide enough.

In December, Kraft named John Cahill as chief executive, who acknowledged the company has not changed enough in the face of shifting consumer tastes. Cahill overhauled his leadership team last month, announcing the exit of three senior executives. Cahill said on a call with analysts that 3G Managing Director Alex Behring approached him at the end of January about a possible deal. The discussions picked up in the second half of February.

While Kraft had been developing its own plan for change, the board saw the 3G opportunity as more compelling, said Cahill, who will be vice chairman of the combined company. Behring will serve as chairman of Kraft Heinz Co and Bernardo Hees, CEO of Heinz, will become CEO of the combined company.

Kraft Heinz Co will retain headquarters both in the Chicago area and in Pittsburgh. It will have combined revenue of about $28 billion, about half that of market leader PepsiCo (PEP) in 2014.

Berkshire Hathaway will own more than 320 million of the approximately 1.22 billion Kraft Heinz shares outstanding, Buffett told CNBC. "We will be in the stock forever. Heinz goes back to 1859. I think those tastes are pretty enduring. There will be plenty of people that want to eat other things , but there are many people who want to eat the products that Kraft/Heinz turn out"

Little Overlap

The deal is unlikely to face regulatory hurdles as there is little overlap in products, antitrust experts said. Areas that could draw regulatory scrutiny include steak sauces -- Kraft makes A1 and Heinz makes Lea & Perrins -- as well as competition between Kraft's Crystal Light drinks and Heinz's Kool-Aid. "Whatever divestitures there are will be easy, and they will be kind of minor," said Fiona Scott Morton, who teaches economics at the Yale University School of Management.

Industry watchers had speculated for months that 3G would buy another food company after the Heinz acquisition. Kraft's appeal, according to some, is that its brands occupy shelf space in the center of many stores, just like Heinz. That could lead to cost savings in merchandising and sales.

Kraft is 3G Capital's fifth major deal in the food and beverage industry since 2008, when it engineered the takeover of Anheuser-Busch by brewer InBev. 3G Capital also controls Restaurant Brands International (QSR), formed when Burger King business bought Canada's Tim Hortons. 3G Capital and Berkshire Hathaway acquired Heinz for $23.2 billion in 2013.

Kraft split into two companies in 2012, with Kraft Foods focusing on grocery products in North America and Mondelez International Inc on snack products.

 

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Durable Goods Orders Fall for 3rd Time in Last 4 Months

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Durable Goods
Charlie Riedel/APWorkers inspect a new 2015 aluminum-alloy body Ford F-150 truck at Ford's Kansas City Assembly Plant in Missouri.
By MARTIN CRUTSINGER

WASHINGTON -- Orders to U.S. factories for long-lasting manufactured goods fell in February for the third time in the past four months, while a key investment category fell for a sixth month.

Orders for durable goods dropped 1.4 percent in February following a 2 percent increase in January and declines of 3.7 percent in December and 2.2 percent in November, the Commerce Department reported Wednesday. A key category that serves as a proxy for business investment spending retreated 1.4 percent in February, the sixth consecutive monthly decline.

The weakness in February was widespread, with weaker demand for commercial aircraft, autos and machinery. The result adds to a slew of disappointing data from recent economic indicators. Economists, however, expect domestic demand to strengthen in the months ahead and hope that will be enough to offset weakness caused by a stronger dollar, which dampens export sales of U.S. companies.

Transportation orders were down 3.5 percent. Excluding transportation, durable goods orders dropped 0.4 percent. Demand for machinery and computers fell, while orders for communications equipment and appliances rose.

Paul Ashworth, chief U.S. economist at Capital Economics, blamed some of the weakness to the big plunge in energy prices, which has led to cutbacks in drilling plans by oil and gas companies. But he noted one sign of encouragement -- business surveys of investment spending plans have improved significantly in recent months.

"We would expect to see a rebound in equipment investment in the second quarter," Ashworth said.

Many economists are looking for manufacturing orders to start strengthening following a stretch of weakness in the second half of last year. They believe the end of harsh winter weather and the resolution of a labor dispute at West Coast ports, which caused supply disruptions, should help.

They expect strong consumer spending, powered by a year of healthy job gains, will boost domestic demand and help to offset global weakness and the strong dollar.

Growth in the overall economy slowed significantly in the October-December quarter, with a widening trade deficit trimming growth by more than a percentage point.

The government will release its third and final estimate of economic growth in the fourth quarter on Friday. Analysts expect growth will be revised slightly to a rate of 2.4 percent, up from the previous estimate of 2.2 percent. But that would still leave the economy expanding far below the 5 percent rate in the third quarter. And economists believe growth has remained sluggish in the current January-March period at around 2 percent.

 

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Experts Cull Financial Lessons From 'Game of Thrones'

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Emmy Nominees
Keith Bernstein/HBO/APIn "Game of Thrones," Daenerys Targaryen leveraged her assets to conquer several cities.
By Chris Taylor

If you ever find yourself at a fan convention for the popular HBO series "Game of Thrones," look at the person next to you. He or she just might control billions. Like Gavin Baker, head of Fidelity's $13 billion OTC Portfolio fund, who's looking forward to the fifth season, which debuts April 12.

Here are a few of the key takeaways, other than the ultimate lesson of the bloody series, based on the George R.R. Martin books: valar morghulis ("All men must die").

1. Listen for Weak Signals

"Be open to evidence that suggests that your view of the world is wrong," advises Baker. In the seven kingdoms of Westeros, the powers-that-be tend to dismiss the dangers gathering around them, such as the mysterious and vicious White Walkers to the north, and the fire-breathing dragons that are growing across the seas. In the next book -- which Martin is reading now -- one can only assume that these adversaries will come back to haunt those in power.

2. Make Dispassionate Decisions

As behavioral economists always tell us, mixing emotion and investing is a bad idea. So it is in Westeros. When the Stark family goes to war with the Lannisters, Robb Stark falls in love and breaks his previous engagement to the daughter of a powerful ally. "Meanwhile, his rival, Tywin Lannister, makes very few emotional decisions," says Baker. Guess who comes out ahead? Stark falls after being stabbed in the heart. "He makes an emotional decision; that is the reason he dies," Baker says.

3. Leverage What You Have

Near the beginning of the series, Daenerys Targaryen -- the so-called Mother of Dragons -- has "no money at all," says Michael Anderson, a financial planner with True North Advisors in Dallas. She is widowed and wandering foreign deserts. What she does have, though, is a fast-growing trio of dragons, the likes of which have not been seen in the kingdom for many years. She also boasts a powerful family name, being descended from a line of previous rulers.

As a result she "leverages those assets into huge gains," says Anderson. Specifically, a fierce army that takes over several cities and threatens to return and take over Westeros itself.

4. Too Much Debt Is a Killer

You might think that power in Westeros resides with the crown, and its gilded capital of King's Landing. Or perhaps with the Lannister family, thanks to their land holdings and famous taste for gold (Hence the popular saying, "rich as a Lannister.")

But according to some experts, real power lies somewhere else entirely: with the Iron Bank of Braavos, in a city across the seas. "It is absolutely the power behind the throne," says Lisa Woolfork, an associate professor at the University of Virginia who teaches a course on "Game of Thrones."

"Its bankers are not sentimental, and just want to back who is going to win. When you are in deep debt to the Iron Bank, it can weaken your hold on the throne. And when you can't get any more loans from them, that becomes a problem."

5. Hard Assets Matter

Being a favorite of the Iron Bank of Braavos is one path to wealth. Another path: real estate. To wit, the Tyrell family controls much of southern Westeros, and their land is essentially the breadbasket for the seven kingdoms. They, in turn, help prop up the Lannister regime, even funding a wedding between the two families. "Real estate is a key to real power," says Woolfork. "It's the basis for most wealth, and converts into military power."

Indeed, without land in the world of "Game of Thrones," you are of little consequence. "Everyone thinks 'Game of Thrones' is about revenge, but it's really about property," says Anderson. "You don't win anything without gaining ground, and controlling it."

 

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Justices Side With Ex-UPS Worker Who Claims Pregnancy Bias

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U.S. Supreme Court Rules in Favor of Peggy Young

By Mark Sherman

WASHINGTON -- The Supreme Court is giving a former UPS driver another chance to prove her claim of discrimination after the company failed to offer her lighter duty when she was pregnant.

The justices Wednesday sided with former driver Peggy Young in throwing out lower court rulings that rejected Young's lawsuit.

The case concerned employers' responsibilities under the 37-year-old Pregnancy Discrimination Act. Atlanta-based UPS maintained that it obeyed the law because it provided light-work duty only in limited situations and didn't single out pregnant women.

But the company changed its policy as of January and says it now tries to accommodate pregnant workers.

The vote was 6-3 in Young's favor. Justice Stephen Breyer wrote the majority opinion.

The outcome reflects a "middle ground" that Justice Elena Kagan suggested during arguments in early December. Courts must now re-examine Young's case with a more accepting view of the discrimination claim. UPS and other employers facing similar suits still are able to argue their policies were legal because they were based on seniority or some other acceptable reason.

Young's dispute with UPS arose after she gave her supervisor a doctor's note recommending that she not lift packages heavier than 20 pounds. Young, now 43, said she dealt almost exclusively with overnight letters, but UPS said its drivers must be able to lift packages weighing up to 70 pounds. Young left the company in 2009.

The Virginia woman lost two rounds in lower courts.

UPS has since changed its policy, and now says it will try to accommodate pregnant workers. Nine states also have adopted laws directing employers to do so.

In recent months, the Equal Employment Opportunity Commission has updated guidance to employers to make clear that they should accommodate people in Young's situation. Yet the U.S. Postal Service said it has made no change in policy and maintains the practice that UPS has now abandoned.

> Find a cab job
> Find a truck driver job
> Find a driver job
> Find a transportation job

 

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Netflix Enters Asia, and Why That Matters to U.S. Viewers

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Eastern Grey Kangaroos (Macropus giganteus) Wilsons Promontory National Park, Australia  Day   Eastern Gray Kangaroo   Full Leng
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Netflix (NFLX) is at it again. The world's leading premium video streaming service rolled out in Australia and New Zealand on Tuesday.

This is a big deal for investors. It's Netflix's first foray into Asia-Pacific, and the payoff can be substantial as it pushes deeper into the populous region. Netflix has made international expansion a priority, announcing earlier this year that it expects to complete its global rollouts by the end of next year. The aggressive push is expected to deliver material profitability by 2017.

However, it's not just shareholders who should be applauding the new stamps on Netflix's passport. The streaming platform's growing subscriber base -- up to 57.4 million accounts worldwide when the year began -- also makes it more likely that Netflix will retain and add compelling content.

The Dream Stream

Programming doesn't come cheap. Licensing deals for movies and shows cost money, and naturally it costs even more when the streaming service is bankrolling the production of original or exclusive content.

Netflix has an unspoken arrangement with its members: If users are loyal and growing in number, Netflix has more money to throw at new digital programming.

We don't have to guess. Netflix recently began breaking out how much it has on its books in content streaming obligations. That figure has exploded from $5.7 billion at the end of the first quarter of 2013 to a record $9.5 billion at the end of 2014. That's an impressive 67 percent increase through seven quarters of operation.

That wouldn't be possible if Netflix wasn't growing in popularity, and naturally that's exactly what is happening. Its user base has grown from 36.3 million to 57.4 million in that time, an impressive 58 percent spurt in less than two years. A major driver in that uptick has been Netflix's success in expanding overseas. Netflix's U.S. subscriber count has increased 34 percent to 39.1 million through those seven quarters, but it's been a 156 percent pop to 18.3 million outside of this country.

Thanking Netflix for Being a Globetrotter

There is a price to pay with breaking into new territories. Netflix needs to secure the homegrown content that's popular in a particular country. It also needs to broker deals to include existing shows and movies as part of the licensing arrangement, following that up with the need to offer up dubbing or subtitles of the content it makes available.

However, there's no denying that a lot more is possible when things are going well. It doesn't cost three times as much to strike a deal for content that will be accessible to an audience that is three times as large. In fact, Netflix's global girth is an advantage. Studios want their content to be experienced as widely as possible, and that makes Netflix the first if not only choice in doling out digital licensing rights.

Netflix is living up to its end of the bargain. It continues to add new and in some cases exclusive content. It announced earlier this week that it would be premiering Chris Tucker's first stand-up comedy special. Last month it revealed that it would be teaming up with Judd Apatow to bring a Pee-wee Herman sequel exclusively to Netflix's global audience.

Netflix is growing, adding more than a million members with every passing month. It obviously matters to investors, but it's also a pretty sweet deal for fans of streaming television.

Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends and owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.

 

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Comcast-Time Warner Cable Deal Stuck in the Slow Lane

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EARNS COMCAST
Douglas C. Pizac/AP
By TALI ARBEL

NEW YORK -- Comcast says its $45 billion purchase of Time Warner Cable will take longer than expected because of a long-running regulatory review.

The country's largest cable company wants to buy Time Warner Cable (TWC), the No. 2 cable provider, to create an Internet and TV giant that would serve nearly 30 percent of cable TV subscribers and more than half of high-speed Internet subscribers.

The Federal Communications Commission and Justice Department are still reviewing the deal, which was announced in February 2014.

Consumer advocates have expressed concern that Comcast would have control over too much of the country's Internet access.

Comcast said in a blog post Wednesday that it now expects the FCC's review to finish in the middle of the year. It had predicted the deal would close in early 2015. The FCC has delayed its review because of a court case that is pending.

In that case, content providers such as Walt Disney (DIS) don't want the FCC to show documents filed with the government that contain private information, such as its contracts with pay TV companies, to lawyers and other people outside the agency.

A federal court in Washington, D.C., heard arguments in the case in February but hasn't issued a decision yet.

Philadelphia-based Comcast (CMCSK) has called the case a "procedural matter" related to its Time Warner Cable deal.

 

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