Bernanke delivers grim outlook
In an assessment of the economy delivered to lawmakers on Tuesday, Federal Reserve Chairman Ben Bernanke painted a gloomy picture. According to the Wall Street Journal, Bernanke indicated that the economic signs that were used to forecast growth had weakened and the outlook for the second half of the year was uncertain. He stated that he foresaw greater weakness ahead and said that if the economy weakened, the Federal Reserve would step in with appropriate measures. He did not indicate what those measures might be or when he would be ready to decide to implement those actions, causing frustration for investors. Bernanke is not scheduled to hold another news conference until September 12-13 but there is a Fed policy meeting at the end of July. The Dow closed up 78 points on Tuesday after Bernanke’s remarks ending at 12,805. Both Asian and European markets are mixed on Wednesday.
Greece to implement new round of austerity measures
Greek leaders of the three primary political parties are meeting to finalize a new round of austerity measures worth $14.1 billion in an attempt to satisfy their international creditors. The Associated Press indicates that Prime Minister Samaras met with other party leaders after 5 days of Cabinet meetings failed to generate enough cuts to cover the budget shortfall. Debt inspectors from the European Union, European Central Bank and International Money Fund are scheduled to visit Athens next week.
Olympic games bolster UK unemployment
Unemployment in the United Kingdom fell to 8.1 percent in the March-May quarter, down from 8.3 percent earlier in the year. Economists, however, indicate that the job market in the UK may be enjoying a short term boost due to the 2012 Olympic Games, which open later this month in London. The Associated Press indicates that the British economy is in recession and its central bank has voted to approve additional stimulus.
Peregrine investor money gone
The founder of Peregrine Financial Group indicated that he spent most of the money he embezzled from clients, according to previously undisclosed parts of letters left when he tried to commit suicide. The Wall Street Journal reports that $215 million of customer funds are missing from the Cedar Rapids, Iowa firm. The CFTC and the NFA have both filed actions against founder, Russell Wasendorf, Sr., and Peregrine. Peregrine is now in liquidation. Wasendorf indicated the fraud began two decades ago when he was audited by the CFTC and realized how easy it would be to cheat.
Bank of America Shares Up
Bank of America has bolstered its earnings with a second quarter profit that beat expectations, according to CNBC. Bank of America has been slower to emerge from the financial crisis than other banks due to its ownership of Countrywide Financial, which was mired in the mortgage mess. Analysts had expected the company to report earnings of 14 cents a share but earnings were reported at 19 cents per share. The improvement was due to a cut in costs and reduced loan reserve losses.
Food price spikes expected
While corn, wheat and soybean prices are still short of highs reached during the past five years, the drought conditions in the Midwest are expected to push prices even higher. According to the Wall Street Journal, corn futures prices have risen 21 percent this month and wheat is up 16 percent. Rice and cocoa remain subdued which is important to developing countries. Still, the impact of food price increases will be felt most keenly in emerging countries where food accounts for 10 to 20 percent of expenditures. The concern of experts is that changeable food prices are becoming more common than in the past. This is the fourth spike of corn prices since 2006.
New Yorkers fight beverage ban
Controversy continues to surround New York City Mayor Bloomberg’s proposal to ban larger than 16 ounce sugary fountain drinks. The Board of Health will vote in September and the ban would take effect in March 2013. A public hearing is to be held next week. According to USA Today, a coalition of citizens, beverage makers, theater owners and mom and pop stores have formed New Yorkers for Beverage Choices. The group is aggressively marketing its message through radio ads, social media, airplane banners, petitions and movie marquee ads. The Mayor’s office has also been advertising. The debate will provide an interesting outcome on the ability of the government to control calories.
Catherine S. McBreen is President of Millionaire Corner. McBreen plans and develops content for Millionaire Corner. Catherine balances editorial content to meet the informational needs of both new and seasoned investors. She designs special monthly surveys on topical issues affecting the economic environment.
McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law. She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.
Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences. She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth. Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.
McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)
Catherine is the mother of four and is involved in many school and community events.