Oil rises above $106 per barrel on Middle East tension
Oil rose above $106 per barrel today to hit a seven week high according to Reuters. The increase was caused by increasing tensions in Syria, an attack on Israeli tourists and tensions in the Strait of Hormuz. Prices climbed by 8 percent within the past week despite the fact that the US Department of Energy indicated that crude inventories fell less than expected last week.
Capital One fined by Consumer Financial Protection Bureau
Capital One will pay $210 million to settle allegations that it allowed its call center contractors to pressure customers into buying consumer credit protection products such as identify theft monitoring services. Capital One’s vendors used deceptive marketing tactic to pressure or mislead consumers seeking to activate their cards into paying for “add on” products such as payment protection. The Wall Street Journal reports that Capital One will refund $150 million to 2.5 million consumers and pay $60 million in fines, including $25 million to the CFPB in its first major enforcement action.
Spanish bond yields increase along with default fears
Spanish borrowing costs rose today above 7 percent increasing fears that the government itself may need a bailout. Reuters reports that once Greek, Irish, and Portuguese debt rose above 7 percent, each country was forced to seek a bailout. Spain has already requested a bailout of its banking system. The banking system bailout has been held up by the German parliament which should vote on the rescue program today. Once the Germans have approved the bailout, the approval by the European finance ministers should be forthcoming. European shares are up, however, on Thursday due to strong earnings reports. Asian markets were also strong and the Dow was up 103 points on Wednesday closing at 12,908.
Big banks face another round of cuts
Bank of America and Credit Suisse announced Wednesday that they will implement new cost cuts. Citigroup plans to cut an additional 2 percent of securities and banking jobs this year. Goldman Sachs plans on saving an additional $500 million on top of $1.4 billion cut since last spring. According to the Wall Street Journal, banks continue to endure weakness due to increased assets being set aside for bad loans, additional costs to meet compliance measures, reduced revenues and lessening loan availability. As of June 30, the six largest US financial firms by assets had cut over 18,000 jobs in the past year or 1.5 percent of the total. Only JP Morgan Chase has expanded its workforce in the past year.
Chinese to buy US assets via GM pension
China will soon become a sizeable investor in many of the US and Europe’s largest private equity funds by buying $1.5-2.5 billion of assets from an advisory firm that manages pension investments for GM. Performance Equity, an advisor for the GM pension funds, wants to reduce the risk of its portfolios. According to the Financial Times, China’s State Administration of Foreign Exchange will purchase the assets. The deal has been kept very secretive because there is concern about selling US assets to China during an election year.
Win $1 million by choosing the next great potato chip flavor
On Friday, Lay’s will announce plans to cook one consumer’s recipe into a potato chip and pay $1 million or 1 percent of the flavor’s net sales in 2013….the decision to be made by the winner. According to USA Today, Facebook is bending its rules and changing the “like” button into an “I’d Eat That” button. This will be the largest promotion in Lay’s history. Three finalists will be selected and the flavors sold in early 2013. Facebook consumers will then decide which flavor wins. Similar competitions have already occurred in other countries. Last year pickled cucumber won in Serbia, Caesar salad chips were popular in Australia, shrimp chips in Egypt and sausage flavored chips won in Poland.
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.