Tough Economic issues are upon us !!

By Mark Felsenthal

WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke told a House of Representatives panel on Wednesday the U.S. economy is going through a "rough time" and urged lawmakers to approve Treasury Department proposals to back up mortgage markets.

"I think the housing market is really the central element of this crisis," Bernanke told the House Financial Services Committee. "And anything we can do to strengthen the housing market, to strengthen mortgage finance, would be beneficial."

On the second day of two days of congressional testimony, the Fed chairman painted a gloomier economic picture than in recent weeks, suggesting the U.S. central bank is unlikely to raise benchmark rates from the current 2 percent at its next meeting on August 5.

Underscoring the recent economic deterioration, minutes of the Fed's last meeting on June 24-25, released on Wednesday, showed officials thought at the time they might be able to begin raising benchmark interest rates from 2 percent as soon as August.

PUBLIC PAIN, PRIVATE GAIN

For the second day in a row, Bernanke sought to convince sometimes skeptical members of Congress to send a strong signal to financial markets that the U.S. government stands behind embattled mortgage finance companies Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research) by approving a backstop package proposed on Sunday.

Treasury Secretary Henry Paulson also returned to Capitol Hill in a bid to win backing for his plan to extend unlimited credit and the possibility of equity purchases to the companies.

The mortgage enterprises' share prices slid abruptly last week amid worry they may lack sufficient capital to weather crumbling housing markets. Policy-makers consider them vital to any recovery of the beleaguered housing market, and Paulson's plan had backing from the Fed, the White House, and congressional leaders.

The Fed chairman said the two companies, with small exceptions, are now the only companies securitizing mortgages.

"I would advise prompt action on housing issues, including Fannie and Freddie," he said.

But Rep. Spencer Bachus, the highest ranking Republican on the House Financial Services Committee, told Bernanke that taxpayers should not be on the hook for losses incurred by publicly traded companies.

Bachus said he was concerned about an approach "where investors reap market gains and taxpayers are stuck with the losses."

His concerns echoed those expressed by several Senators on Tuesday, raising questions about how quickly the administration can push its package of confidence-boosting measures through Congress.

Shares of the two companies jumped on Wednesday after big mortgage lender Wells Fargo reported stronger-than-expected earnings, countering a trend of bleak news in the financial sectors.

TOUGH CONDITIONS

Speaking about economic conditions, Bernanke acknowledged that rising unemployment, tight credit and higher prices are pinching many people, even though the economy continues to grow.

"This is clearly a rough time," he said in response to questions from lawmakers. "Conditions are tough on average families," he added.

But the Fed is also increasingly worried that inflation may be flaring, as the minutes of the June meeting emphasized.

Bernanke is under pressure both within and outside the Fed for not fighting inflation more aggressively with higher benchmark interest rates.

Fresh evidence of inflationary pressures surfaced in a government report on Wednesday showing consumer prices rose in June by the biggest amount since September 2005 in the aftermath of Hurricane Katrina, as gasoline prices surged.

Even when volatile food and energy costs were stripped out, consumer prices rose more than expected.

Bernanke assured lawmakers that inflation is a concern for the central bank.

"Inflation is currently too high," Bernanke said. "And it's a top priority of the Federal Reserve to run a policy that is going to bring inflation to a acceptable level consistent with price stability," he said in response to questions from the committee.

Fed to save Fannie & Freddie ?

White House, Fed will rescue Fannie, Freddie
Government-sponsored lenders are too global to go down, Paulson says
The implicit government guarantee of Fannie Mae and Freddie Mac is now explicit.
In a suprising statement released Sunday, the White House and Federal Reserve moved to give the mortgage lenders the capital they need to survive the depression in the housing market in 2008 and turmoil in financial markets that had left them dangling over a cliff and ready to fall any time.
Of most immediate importance, the Fed's board of governors voted to open up its emergency discount window to Fannie and Freddie. Will this work ???? Your thoughts ??

Will Oil hit 200 a Barrel By year End ??

Oil hit a record trading high Friday as tensions with Iran, the possibility of renewed violence in Nigeria and a planned labor strike in Brazil threatened already tight crude supplies.

Light sweet crude for August delivery was up $5.35 to $147 a barrel in electronic trading on the New York Mercantile Exchange. Earlier prices touched a new trading record of $147.27, eclipsing the mark of $145.85 set July 3.

Iran: Oil rallied more than $5 a barrel late Thursday after the oil producing nation of Iran conducted a second missile test in the Persian Gulf Thursday evening, increasing tensions with Israel and the West over its nuclear program.

The Iraqi Defense Ministry said Israeli warplanes were allegedly practicing over Iraqi airspace and at U.S. military bases in the region Friday, according to regional news reports.

Sources cited in a major Israeli newspaper said they may be training for a potential strike on nuclear sites within Iran.

If Israel does conduct a military operation over Iran during the weekend, the affect on the oil market could be devastating, said Tom Orr, head of research at Weeded & Co.

"I think you could see crude go up $10 to $15 instantaneously," added Orr.

One of the great fears facing oil investors is the possibility that Iran could blockade the nearby Strait of Hormuz, a key waterway that carries a large percentage of the world's oil traffic.

If Iran were to close the strait "even for a week, that would be disastrous," said Orr.

Nigeria: Unrest in Nigeria, Africa's largest oil producer, has also set investors on edge. The nation's main rebel group threatened to renew attacks after the British expressed support for the country's current government. Militants have commonly targeted Nigeria's oil infrastructure.

Brazil: Also adding to concerns was a potential labor strike against Brazilian oil company Petroleo Brasileiro. Brazil's Oil Workers Confederation said it was planning a 5-day strike that could affect 80% of the South American country's oil supply.

Through the beginning of the week, oil dropped more than $10 a barrel after tensions with Iran subsided over the July 4 holiday weekend and the Nigerian rebels maintained an uneasy cease-fire.

But now all those problems seem to be resurfacing at the same time, said Phil Flynn, senior market analyst with Alaron trading in Chicago.

Investors are afraid that "with all of these problems, more than likely something is bound to boil over," said Flynn. He said they don't want to get caught betting against oil if they can help it.

And still lurking at the back of everyone's mind is the value of the dollar, which lost ground against the 15-nation euro.


Gasoline prices slip again

Sizing up Iran's oil threat

Awash in oil money, and problems

Buying an IPhone today ??

Lining up for your iPhone?

BY CHERYL V. JACKSON
Retailers are planning to make the wait for Apple's much hyped iPhone 3G, which goes on sale at 8 a.m. today at Chicago Apple and AT&T store, as painless as possible.

"It's all hands on deck," said Gina Macchitelli, marketing director for AT&T, which has 11 area stores.

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Ihnatko: iPhone drops (like it's hot) today
The 160 N. State store, for example, will serve drinking water and have customers answer trivia questions to win prizes.

Employees will hand out order forms to to be filled out in line for quicker AT&T phone activation inside the stores. The purchasing and activation process should take about 15 minutes, Macchitelli said.

Also on sale today will be programs available through the online iPhone App Store that work with both the new and earlier model phones as well as the new MobileMe platform, which replaces the existing .Mac service.

Older model iPhones use the slower AT&T EDGE network, which the new phones switch to when the faster 3G network is unavailable.

The new iPhone operating system allows for use with Microsoft business applications, like Exchange-based e-mail. Older model iPhones and iPod Touches will need a software upgrade -- free for the phones and $10 for the Touch.

I would buy Apple under 176 a share and hold until it reaches 205 a share and then sell ! By: Mad Man

Sirius Pop From Cramer !?

Oil Rise , Again After Iran Missle Test

Most U.S. Stocks Retreat, Led by Financials, Technology Shares

By Eric Martin

July 9 (Bloomberg) -- Most U.S. stocks declined after Fannie Mae's borrowing costs climbed, analysts said a slowing economy may hurt sales at technology companies and oil prices rose for the first time this week.

Freddie Mac and Fannie Mae, the largest sources of financing for U.S. home loans, posted the steepest declines in the Standard & Poor's 500 Index after Fannie sold $3 billion in notes at higher yields than in past offerings. Cisco Systems Inc. tumbled as UBS AG said the world's biggest maker of computer-networking equipment faces a slowdown in the U.S. and Europe. Continental Airlines Inc. and Wal-Mart Stores Inc. fell as crude advanced. Alcoa Inc. climbed, limiting the market's retreat, after posting earnings that topped estimates.

Eight stocks fell for every seven that gained on the New York Stock Exchange. The Standard & Poor's 500 Index added 1.53 points, or 0.1 percent, to 1,275.23 at 10:31 a.m. in New York. The Dow Jones Industrial Average declined 4.95 to 11,379.24. The Nasdaq Composite Index lost 4.26 to 2,290.18.

``The bottom line is that we are in an environment where there is a high degree of uncertainty,'' said Ian Harnett, an equity strategist at Absolute Strategy Research in London. The high oil price means ``there is a lot of risk out there.''

Profits at S&P 500 companies are forecast to decline 11 percent on average in the second quarter, according to the average estimate of analysts surveyed by Bloomberg. Income is projected to slump 60 percent on average at financial companies.

Global stock markets have erased more than $11 trillion this year as record oil prices and more than $400 billion in credit- related losses threatened to push the U.S., the world's largest economy, into recession.

Fannie, Freddie Slump

Fannie Mae slipped $1.17, or 6.6 percent, to $16.45. Freddie Mac lost $1.04, or 7.7 percent, to $12.42. Fannie's 3.25 percent notes, which mature Aug. 12, 2010, priced to yield 3.27 percent, or 74 basis points more than comparable U.S. Treasuries. Fannie last month sold $4 billion of 3 percent benchmark notes maturing July 12, 2010, that priced to yield 3.036 percent, or 65 basis points more than U.S. Treasuries of similar maturity. A basis point is 0.01 percentage point.

Fannie and Freddie, which are rated Aaa by the world's largest credit-rating companies, are being treated by derivatives traders as if they are rated five levels lower. Credit-default swaps tied to $1.45 trillion of debt sold by the two are trading at levels that imply the bonds should be rated A2 by Moody's Investors Service, according to data compiled by the firm's credit strategy group.

Bank of America Corp., the second-biggest U.S. bank by market value, lost 18 cents to $23.36. Regions Financial Corp., Alabama's biggest bank, declined 29 cents to $10.66.

Dividend Concern

Credit Suisse Group AG lowered its share-price forecasts for the banks and said as many as 40 percent of the top 50 U.S. regional lenders may be forced to cut their dividends or raise ``more expensive and dilutive forms of capital over the next few quarters.''

Cisco Systems declined 62 cents, or 2.7 percent, to $22.26. The world's biggest maker of computer-networking equipment may say fourth-quarter revenue was ``flat to down'' from the third quarter, according to UBS AG.

``Enterprise spending remains challenging and there has been further slowing in the U.S., especially in the West Coast region,'' New York-based UBS analyst Nikos Theodosopoulos wrote in a report today. ``We also see Europe slowing from last quarter.''

Intel lost 45 cents, or 2.2 percent, to $20.47. The world's biggest maker of computer chips may fail to beat earnings estimates in the second half as some customers curb spending and Advanced Micro Devices Inc. introduces new products, Merrill said.

Oil Climbs

Continental dropped 60 cents, or 5.9 percent, to $9.64. Wal- Mart, the biggest retailer, tumbled 97 cents to $58.14.

Crude oil for August delivery rose $1.28, or 0.9 percent, to $137.32 a barrel in New York. Futures tumbled 6.4 percent the past two days, the biggest two-session decline since March 19 and 20. Prices are still up 90 percent from a year ago.

Alcoa, the first company in the Dow to report second-quarter results, climbed $1.26 to $33.59. The company's profit excluding certain items of 71 cents a share, topping the 65-cent average estimate of 17 analysts in a Bloomberg survey.

Mattson Technology Inc. fell 41 cents to $4.51. The provider of equipment used to make semiconductors said its second-quarter loss was wider than it predicted because of ``protracted weakness'' in the chip market.

Mohawk Industries Inc. sank 78 cents to $64.12. The U.S. carpet and tile maker said second-quarter earnings may be $1.23 to $1.26 a share, compared with a previous forecast of $1.36 to $1.45, as the housing market deteriorates.

U.S. shares rallied yesterday, sending the S&P 500 to its steepest advance in a month. Banks and transportation companies led gains after JPMorgan Chase & Co.'s chief executive officer said the credit crisis will ease and oil posted its biggest drop since March.

Oil Decline ??? WOW !!!!!!!

U.S. Stocks Push Higher On Oil's Decline, Fed Assurances




U.S. stocks on Tuesday moved solidly up after several visits to negative turf, with a broad sell-off in commodities pushing crude down for a second day and Federal Reserve Chairman Ben Bernanke offering solace to the battered financial sector.

"The market is bouncing back; yesterday there was a lot of negative news, and clearly the Fed's announcement today is helping. Of course oil coming down also helps," said Noman Ali, a portfolio manager with MFC Global Investment Management.

Down at the start, the Dow Jones Industrial Average (DJI) tossed its losses aside within the first 10 minutes of trading, and then struggled to retain its gains in volatile action.

As the final hour of trade approached, the Dow was up 82.64 points to 11, 314.6.

Of the blue-chip index's 30 components, 22 posted gains, recently led by Bank of America Corp. (BAC), up 5.3%, and Pfizer Inc. (PFE), up 4.1%.

The Dow's biggest loser was Alcoa Inc. (AA), off 3.7%, with the aluminum producer due to report on its second quarter after the close, in an unofficial kick off of the earnings season. .

The S&P 500 Index (SPX) rose 9.90 points to 1,262.21, with financials and health care leading sector gains, up 3% and 2.1%, respectively.

Of the S&P's 10 industry groups, energy declined the most, down 2.7%, followed by materials, recently off 0.4%.

Natural-gas shares led declines among energy stocks, with the sell-off continuing even after the U.S. Energy Information Administration said spot prices for crude would likely average $127 a barrel in 2008 and $133 next year. .

In an overall positive for the equities market, the price of crude futures slumped sharply for a second day, with the spot month down $4.67 to $136.50 a barrel, while Treasury prices declined were mixed, with the yield on the two- year note rising to 2.4%. The dollar firmed, with dollar index recently at 72.97, compared with 72.67 earlier on.

The technology-heavy Nasdaq Composite Index (RIXF) gained 27.67 points to 2, 270.99.

VMware Inc. (VMW) was among those dogging the tech sector, with its stock down 26.5% after the EMC Corp. (EMC) spinoff announced the departure of its chief executive and warned that sales would come in below previous estimates. .

Volume on the New York Stock Exchange surpassed 1.1 billion shares, and advancing issues ran ahead of those declining, roughly 9 to 7. On the Nasdaq, nearly 746 million shares traded and advancers topped decliners more than 3 to 2.

Active issues

Ambac Financial Inc. (ABK) soared more than 50% after the bond insurer disclosed collateral-posting requirements for its guaranteed investment contract business were smaller than some investors had feared. .

Office Depot Inc. (ODP) warned that North American same-store retail sales for the second quarter dropped 10%. Pepsi Bottling Group Inc. (PBG) edged past earnings estimates for the second quarter, but cut its revenue outlook for the year.

LCD-TV maker Syntax Brillian (BRLCD) sold some assets to TCV Group and filed for protection from creditors under Chapter 11 bankruptcy rules. It expects the common shares to have no value after the filing and reorganization.

Federal funds

"Unless and until the economic clouds part, we'll likely see the housing market continue to struggle," Mike Larson, analyst at Weiss Research, said of the National Association of Realtors' measure of pending-home sales, which fell 4.7% in May. .

Ahead of the opening bell, stock-index futures had trimmed their losses as Bernanke said that the Federal Reserve might extend the time frame for embattled brokerages to tap the central bank for emergency funds.

The Fed move offered assurances that "there is little risk of actual bankruptcy for the [financial] sector," said Ali.

Worries that Fannie Mae (FNM) and Freddie Mac (FRE) may have to raise more capital, along with a report that Lehman Brothers Holdings Inc. (LEH) was temporarily barred from trading oil contracts reignited financial-sector worries ahead of second-quarter earnings season, prompting stocks to slide on Monday.

On Tuesday, shares of Fannie and Freddie gained some ground with comments by analysts and regulators easing worries the big mortgage buyers might have to return to the capital markets due to pending accounting-rule changes.

Adding his voice to the mix, Richmond Fed President Jeffrey Lacker said the Federal Reserve shouldn't wait too long before raising interest rates.

International stocks saw heavy pressure, with the Nikkei 225 losing 2.4% in Tokyo. The FTSE 100 lost 1.3% in London.
cnn.com

NBC weathers the weather channel

NBC and its Partners Announce Deal
To Buy Weather Channel and Assets
BY MERISSA MARR and PETER LATTMAN


General Electric Co.'s NBC Universal and two financial partners announced a deal Sunday to buy the Weather Channel and its related assets. Financial terms of the deal weren't disclosed but people familiar with the situation said the price tag was just under $3.5 billion.

The deal brings to an end a lengthy auction that saw several contenders fall by the wayside. NBC Universal and its partners, Bain Capital LLC and Blackstone Group LP, entered exclusive negotiations with the Weather Channel's owner Landmark Communications Inc. last month after rival contender Time Warner Inc. pulled out of the bidding.

In a statement, the acquiring team said NBC Universal would manage the Weather Channel, but it would continue as a separate entity based in Atlanta.

The sale includes the Weather Channel cable networks, weather.com and Weather Services International, which provides weather data and services to local television stations. It also includes Enterprise Electronics Corporation, a manufacturer of meteorological radars, and Landmark's interest in Pelmorex, a Canadian weather company.