European debt troubles burden markets
The Dow fell 130 points on Monday closing at 12,381, as reported by the Associated Press. The drop was blamed primarily upon the European debt challenges. Over the weekend, Greece's bonds were classified as junk bonds and the credit rating of Italy was downgraded. The dollar has grown stronger against the euro which is not good news because it causes U.S. products to become more expensive and ultimately less desirable.
Tuesday has opened with greater stability in the markets and a rise in commodities, including oil, based on some of Goldman Sach's and Morgan Stanley's forecasts, according to Bloomberg.
Could the Middle East run out of oil?
The Wall Street Journalreported that the U.S. Energy Information Administration has predicted that world wide oil consumption will reach 88 million barrels a day this year and that oil will average $103/barrel, not leading to lower gas prices. Apparently there are 78 billion barrels of "heavy oil" in the MidEast. The challenge is that for many decades the MidEast has been fortunate and produced lighter thinner oil that is easy to extract. Saudi Arabia is currently working in conjunction with Chevron to develop methodologies to extract the heavy oil as the lighter oil begins to diminish. While the world apparently has trillions of barrels of oil, only 400 billion is extractable with existing technologies.
Actively managed ETF market grows
Many mutual fund companies, according to theWall Street Journal, are eager to join the ETF market which has just crossed $1 trillion. The difference is that these firms are creating "actively" managed ETFs, which generally have higher fees than the initial crop of ETFs. Firms initiating these funds include AllianceBernstein, Janus, Dreyfus and PIMCO.
Stimulus money given to tax dodgers
The Government Accountability Office (GAO) released a report that said 3700 government contractors and non-profit groups that received more than $24 billion in stimulus money owed the government more than $757 million in back taxes, prior to receiving the money. Overall, 6% of the 63,000 companies receiving government stimulus had dodged their taxes, according to the Associated Press.
SEC Probe on Forex trade deepens
The SEC continues to investigate the Forex (foreign exchange fees) charged by large "custodian" banks to pension plans, according to the Wall Street Journal. BNY/Mellon and State Street are the organizations with the greatest amount of assets and transactions in this arena. They custody many large pension plans. The banks, who often are trustees for these plans, claim they are not required to act in the plan's best interest when pricing trades.
Target stores facing union showdown
Unions are trying to organize in New York area Target stores. There are over 27 stores and 5,000 workers in the New York area. Currently wages average around $11.71. The unions will seek higher wages but most of all want to increase the hours available to unemployed individuals. The New York Times reports that this is the first time unions have tried to gain members in Target stores. In contrast, Walmart has repeatedly been lambasted for its refusals to allow union workers.
Amazon goes Gaga
Amazon's website is experiencing slow downs due to its release of the the Lady GaGa "Born This Way" song for 99 cents, according to the Wall Street Journal.