Stocks End Mixed Over Worries About Economy

Associated Press

Transcript

mainstream America has lost a tremendous amount of money after yet another massive last hour selloff Wednesday investors welcomed the relative calm Thursday I think people just trying to figure out what happened the day before as batch after batch of disappointing third quarter earnings paint a bleak picture for the days ahead investors remain wary about keeping their money in the markets although the doubt ended the day up investors know that will likely be a rarity I think that we have to retest the lows and I think the key once we retest the lows I think we will retest them and when we do I think we have to then look at the credit markets and if the credit markets are in significantly better shape than they were the last time we were at the lows I think you may people may view that as as a bottom the Dow closed up 172 points at 8,691 and the S&P 500 ended the day up 11 at 991 while the NASDAQ ended the day down 11 at 1,63 economist say unemployment numbers are key to figuring out how deep this recession will be well I think it's a continuation of the uh decline in payroll numbers increase in unemployment we've had nine months of consecutive payroll declines and I think that's one indication as to why we will likely find out that the recession started in the latter part of 2007 not in the second half of 2008 as markets continue to bounce around it's no longer a matter of if the volatility will continue it's more like given that it will but investors are still looking for that bottom in New York Bonnie Associated Press

Groceries Get Downsized

CBS

Transcript

grocery bills have been getting bigger and bigger but have you noticed that the size of many products have actually gotten smaller consumer correspondent Susan copen is here to explain good morning good morning Harry it's called downsizing and experts say in this tough economy more and more companies are going to start shrinking their products what does this mean for consumers well you're paying more and getting less after a long day of work Yolanda Medina loves a bowl of her favorite ice cream but she doesn't love what's happened to the package it comes in it's been downsized it makes me feel like I've been duped it makes me feel as if um they think we are't smart enough to notice that um we're getting less and less for our money from Ice Cream to mayonnaise to peanut butter some of our favorite products are getting smaller while their prices stay the same it's a sneaky way to pass on a price increase consumer Advocate Ed dworski has been tracking downsizing for years most people can't see the difference between the old and the new except when they're side by side and even sometimes when they're side by side you can't tell the difference the average consumer may not have noticed the slight change to Apple Jacks it went from 17 oz to 15 oz same with Froot Loops the cereal was 19.7 Oz now it's down to 17 do you think that downsizing is going to be bigger than ever oh I think so Todd Marks with Consumer Reports says Shoppers can expect more products to be downsized as the cost of raw materials increase and as our economy continues to go south I go to the supermarket all the time paying attention to these things and there's virtually no product that's off limits to downsizing take a look at this Hershey's chocolate bar this one is 8 oz but the new downsized version is 6.8 and its label now reads giant bar when they decided to shrink it they put the word Giant on the package to make you think that giant is really a giant well it is giant but it's smaller than the giant that used to exist Mark says consumers rarely notice things like the tapering of ice cream containers cereal boxes that get thinner or jars that now have concave bottoms another tactic is to make things like plastic bags thinner the Mills of plastic will be a little bit thinner so your garbage bag may not be as strong as it used to be to make the sheets of your roll of paper towels a little bit smaller in dimension or to make them a little thinner in PES Yolanda Medina says thanks to downsizing she only buys ice cream when it's on sale it's a premium on Ed's ice cream in my house now and we contact several of the companies that make the products mentioned in the story Hershey's Helman Briar and Kelloggs all said that the rise in cost of Commodities has led to a change in the way they make and package some of their products but they do point out many of their products have not changed but tough Economic Times have led to some changes Harry you look at these they look almost identical right you really can't tell if you're the average consumer you're shopping in the supermarket you are not going to be able to tell that this box of cereal is bigger than this box flying down the look at that you know look at the shot right now and how many ounces difference there's a couple of ounces it went from 19.7 down to 17 wow is there one product that this is not applied to at all milk people are going to notice if a gallon of milk is no longer a gallon yep all right thanks Susan always appreciated larger she gets getting bigger the smaller these get all right come [Music]

Is Good Credit Good Enough?

CBS

Transcript

2007 GMC Denali on America's Car lots there's a Credit crunch lenders slamming the Bricks is Tax Tag everything brs needed a loan a High Interest Rate would be a Deal Breaker so You Wanted a truck Right badly this Chevy silverado is the truck he Wants but not so badly he Blow The Family Budget Something would have to go If I couldn't make The Note Well I can't Walk to work and the family's got to have a place to live so That would have been What went These Days Good Credit Just isn't Good Enough it has to be Perfect or there's a new type of sticker Shock on Car lots not the price of the car but The Interest Rate of the loan take A6000 new car loan over 5 years a Great Credit score 700 or above Might meet an Interest Rate of 7 and Half a payment of 522 a month Same loan with a more typical Credit score of 650 and the Interest Rate and monthly payment both with even worse Credit and Banks are denying the loan alt unless customers have a down payment of At least $2000 the car Industry is definitely in a Credit freeze right now and for the automakers This is this is a disaster already this Year dropping sales have Shutter roughly 600 dealers with hundreds more expected to Close it's very difficult to have a business model or adjust to a 30 or 40% Drop particularly if it urs uh very ruply to you cost and then give you the 6500 reat On top of that brs got a Good Deal with A great Credit score more than 750 he Now owns a new Truck Everything is automatic and idiot Proof How can you Deny that smell The thrill of that new car smell the whole Car Industry wants to Experience it Mark CBS News Atlanta

Jobless claims hit 478K; Goldman to cut 3,200 jobs

CBS

Transcript

the financial crisis is forcing companies to cut jobs a new report shows 478 thousand Americans filed claims for unemployment benefits up 15 000 from the previous week the number has been above 400 000 for 14 straight weeks that's a sign of recession and more layoffs are on the way there are reports Financial giant Goldman Sachs plans to cut 3 200 employees or about 10 percent of its Workforce Chrysler is closing a factory and eliminating 1800 jobs and to save Cash General Motors is temporarily going to stop matching 401K contributions for employees despite all the negative news the markets got a boost from investors who bought up cheap stocks the Dow gained 172 points and the NASDAQ lost a little ground dropping almost 12 points a survey shows home foreclosures were up more than 70 percent last quarter today lawmakers asked a financial Guru just what caused the mortgage meltdown we are in the midst of a once in a Century Credit tsunami former Federal Reserve chairman Alan Greenspan put much of the blame on loose lending practices Greenspan told the Congressional committee he was shocked that Banks were not more careful with their money on Wall Street I'm Katherine Brown

Recession Fears Dominate Globe

CBS

Transcript

the economy financial markets around the world fell today on fears of a global recession following wall Street's dismal lead yesterday CBS News correspondent Mark Phillips is in London good morning Mark good morning Maggie well I'm afraid it's another wake up to bad news morning yesterday's big drop on Wall Street was also followed in the Far East here's low numbers Tokyo's Market was down to its lowest level in five years before regaining some ground to close down two and a half percent in Korea the drop was more than seven percent and in Hong Kong close to five percent what Traders say they're looking for is the same sort of injections of capital they've seen from governments in the U.S and Europe what Market participants want to see for and so the announcement is not enough and the European markets are down as well although a little less between one and a half and two and a half percent so far Maggie cbs's Mark Phillips in London thank you Mark so the question is no longer are we in a recession but how deep is it let's go over to Liz Clayman she's host of countdown to the closing bell on Fox Business Network and she joins us to talk about this good morning Lynn good morning Maggie this is amazing to me because we kept saying all this time if the credit Market's improved this will get better we saw Banks start to lend to each other again and the Dow still tanked why well it's funny because actually it's not funny to people who are losing a lot of money but what we saw with the credit markets was yes they started to stabilize Banks did start to lend albeit on a very very incremental basis but then investors woke up and said oh now we want to know how much money companies are making and all of a sudden we have earnings reports that come in at this time every quarter and some companies started either missing earnings numbers or outright just blowing it completely you know we had Boeing Miss estimates and that set investors a lot of other companies couldn't even give what's called guidance which means how much money will you make in the current quarter Apple computers sold millions and millions of iPods and fancy expensive gadgets but Steve Jobs specifically said we don't know how the economic problems are going to affect us going forward and investors got scared they started selling already we're seeing this lead to unemployment and I heard someone say yesterday this is 1974 all over again where we had that long nasty recession and unemployment hit double digits you think it'll be that bad I'm not sure you know I think that because people were so hesitant to say that we are in a recession last year I think the American public felt you know what it does feel like a recession so that's actually a good thing it means that we're already somewhat deeper into the recession which means hopefully it will be shorter and shallower but as far as unemployment is concerned you're really starting to see companies lay people off Merc the big pharmaceutical company said they were going to lay off 7 200 people and today the Wall Street Journal is reporting Goldman Sachs is going to lay off 10 percent of its Workforce if there's a Silver Lining is it that we saw everything else tank and at least the dollar climb a bit that's one it's actually a two-fold silver lining yes suddenly the dollar decides to perk up its head and flex a muscle here the dollar hit a two-year High against the Euro a five-year High against the British currency so that's great however we also have seen oil prices plummet Maggie down 50 percent in the past three months and that means people out there actually have more money in their pockets to spend and that may smooth out the very sharp and rough edges well let's hope let's claim and thank you anytime

Forbes outlines reforms needed

CNN

Transcript

Forbes magazine is preparing an in-depth report on the global financial crisis. And for the first time in his 18 years as chief executive of Forbes and editor-in-chief of the magazine, Steve Forbes himself will be on the cover. I spoke to him a short time ago about the U.S. government's decision to use public money to rescue the banking system. I put it to him that many in America see that as socialism. Well, I think the government helped create this debacle through easy money. That goes against my free market principles. Franny and Freddie created by the government, that going against my free market principles. This mark to market is an absurdity that came out of the government. So having created the problem, it can darn well help solve the problem and create conditions, short term, should be short term, where you get the credit system back on its feet, have proper regulations, have some tax cuts, so the economies can get moving again, and we'll pull out of this thing. Now, there will be a conference in the next month or so on the future of the world financial system. Do you think that we need a new global architecture, new global financial architecture, or do you think that the reform can start closer to home? I think it's got to be both. After all, the idea of pumping in equity came out of the U.K. Our Treasury Department was a little slow on that one. But I think ultimately I would like to see, I think it's a new financial architecture, perhaps not what some people have in mind, but I think a recreation, a modernized version of the old Bretton Woods monetary system, which grew out of World War II, was destroyed in the early 1970s, can provide a basis for getting monetary stability, instead of the kind of chaos we've had for over 30 years. You started this interview with a lot of criticism of the Fed. The U.S. Federal Reserve is seen as, if you like, the foremost central bank around the world. It has to be. It guards the world's largest bank. It's the largest economy. Do you feel that the Fed itself needs to be reformed, that perhaps its guidelines need to be rewritten, it needs perhaps to start off on a different footing? I do. I think its responsibility should be downsized to two tasks. One is maintain a strong and stable dollar, which it manifestly has not done. And number two, deal with financial panics when they come along. If they get the dollar part right, financial panic should be a once in 50 year, a once in 100 year. Instead of the every few years we've had since the 1970s. Steve, you mentioned the word panic there, and that's a reminder that emotion plays a very large part in what's going on. I'm constantly reminded when I look at what's going on, of what John F. Kennedy said, we have nothing to fear but fear itself. How do you generate the right emotion, the emotion that will wipe away this dreadful lack of confidence, which is toxic to the whole system? Well, you start with fear. Well, you start by having a stable currency, so that people can have faith that they're not going to get whipsawed by massive currency changes. That's number one. Number two, continue to do sensible things like pump equity into banks again, so they become less fearful, they start to operate like banks again. Get rid of, in my country, and I think the Europeans are already doing it, this crazy mark-to-market stuff, which is gratuitously destroyed values, so that lending institutions don't feel they're going to suddenly find themselves wrecked or destroyed, even though their cash flows are positive. You start with those three things, and then the system can start working again, especially if you have an environment, cutting tax rates, where the animal spirits, as John Maynard Keynes liked to say, can come into play again. And now, after all, confidence follows real actions. When positive actions are done, confidence then starts to revive. So do the right things first, and confidence will follow suit.

Forbes weighs in on economy woes

CNN

Transcript

I think it begins with our own central bank, the Federal Reserve, which four years ago created excess liquidity, created excess money. That created global excess liquidity, started a commodities boom, and really destructively spilled over into the housing market where everyone figured, why not let lending standards come down? Because after all, housing prices always go up, don't they? So that started it. So there's a failure there, you would be prepared to admit, on the part of lenders. They were irresponsible, clearly. They picked up a ball that had been thrown there, if you like, by the Fed. But they were partly responsible as well. Well, the Fed created the conditions for the bubble, and everyone participated in it. It wasn't just the banks and mortgage lenders, new players in the game. Wall Street got involved too. You saw the same thing happen around the world, package these things, spread them all over the place, securitization. So it became a game changer. It was a global mania, a global bubble of a kind, sort of a global version of the tulip bulb mania. A lot of critics of markets would say that the problem is that there was a lot of greed in there. Everyone wanted to put their long snouts in the trough. And this was what went wrong. And in order to get around this problem, we should not be so greedy, and we should rein in the markets. What do you think? Well, human nature has not changed for thousands of years. The real question is, what were the conditions created to allow this thing to happen? One big one was the Federal Reserve. It had not had a weak dollar policy. The Bush administration had had a strong dollar policy. This never would have reached the proportions it did. We had two entities here, Freddie and Fannie. Fannie Mae and Freddie Mac helped fuel this thing, underwrote a trillion dollars' worth of less-than-prime mortgages. And then when the bubble burst a little over a year ago, government continued to make mistakes, including this arcane accounting principle called mark-to-market, which ended up destroying banks and insurance companies that were still cash flow-possessing. So, the Fed is now a big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big, big

Experts Search For Answers to US Stock Market Volatility

VOA News

Transcript

for weeks stock brokers traders and investors have been reeling from one emotion to the next as the world's stock markets rose and fell to historic levels on september 29th the dow jones industrial average sank 777 points its biggest single day point decline ever then on october 13th the dow rebounded with a 936 point gain since then the dow has continued its erratic pattern barry wood is voice of america's economics correspondent he says the collapse of several giant american investment firms including bear stearns triggered the panic which then caused a rapid drop in the value of u.s stocks you've had a series of declines that were just precipitous people don't know if stocks which came down 45 percent from the peak of just a year ago if they've come down to the bottom or if there's still more distance down wood says anxiety is what led to market instability so uncertainty fear all of that has contributed to volatility people also need cash and if they need cash they sell stocks if they have them that all contributes to the volatility bill barker is a senior analyst with the motley fool an investment advisory news service both he and wood say nervousness about the details of the u.s government's bailout plan also triggered sell-offs the motion is adopted when the bailout first came into being as a three-page idea document it was talking about the government buying out the bad loans from the banks and when it was voted in a week week and a half later it was a several hundred page document which included one paragraph about the government injecting money into banks the form changed so fast uh that that's one of the reasons why the market liked liked it one day and didn't like it another day barker says investors want to see the american financial system stabilized so that banks feel more comfortable about offering credit the credit markets are thawing but they're not they're not flowing the way the way we would like them to once that is the case and both companies and individuals have access to the kind of um you know money that they want to borrow and that they're they're used to uh things will be better what we need more than anything is just stability a period of a few weeks where there's no great event of another bank or savings institution or company facing difficulty bill barker says many investors would be wise to follow the conservative approach of warren buffett the american billionaire investor has been advising others to stay calm he is buying good quality stocks that are now priced lower than their actual value it is a pattern that has been successful for him during the first half of 2008 buffett was ranked by forbes magazine as the richest man in the world with an estimated net worth of more than 62 billion dollars robert rafael voa news you

Asian market turbulence

CNN

Transcript

And as we've seen, it's been another volatile trading week here in Asia, especially in Japan and South Korea. To help make some sense of the turbulence we have, joining us, Mark Conan, the CEO of RCM Asia Pacific, an asset management company focused on investments and the region. And thank you so much for joining us this morning. Obviously, you've seen the depressing earnings reports that have come out. And, you know, we have seen some good reports maybe come out from Microsoft and Apple, but overall the majority has been down. How is that going to affect trading today and then into next week? Well, certainly markets, investors are very focused on the earnings outlook now. Previous weeks, it's all been about the financial crisis. Attention has pretty quickly turned to the impact that the crisis is having on the real economy, the slowdown generally. And we still think earnings are too optimistic going into next year, certainly globally, certainly in the U.S. We've seen. Revisions downwards right through this year in Asia. And probably even in Asia still for 2009, the outlook is probably still a little bit too optimistic, judging by consensus earnings. That means more disappointments, more downgrades. All right. And what about the downgrade in the price of oil? Are we going to continue to see that oil drop below $70 yesterday? OPEC is meeting today, and they're expected to cut production, oil production. And how is that going to affect the market? Well, certainly demand is now slacking off, or expectation for demand is slacking. And that's going to be a big thing. And a lot of that speculation that we saw earlier in the year in the oil market is no longer present. If you look at most expectations now out there amongst the key commentators, most are expecting for the oil price now to stay sort of around the current levels, maybe a little bit lower. There may be a cut in production, but generally demand is slowing. As for the first time in quite some time, we've got a synchronized slowdown between North America, Europe, and most major economies. And we've heard a lot about the current market. We've heard a lot about the current market.