Finance Blog number 1

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Irene is gone, and East Coast airports are reopening. But it will take at least several days to get hundreds of thousands of travelers stranded by the storm to their final destinations.

Behind the scenes, ground crews worked through the night to get planes ready, air traffic controllers prepared for a deluge of landings and takeoffs and extra pilots were called into action.

Airports in New York, Boston and Philadelphia bustled Monday after being closed for part or all of the weekend. The week before Labor Day is always a busy one for airlines, so they struggled to cram travelers stranded by Irene onto already-packed planes.

To make matters worse, more than 1,600 flight were cancelled Monday, adding to the nearly 12,000 grounded this weekend, according to flight tracking service FlightAware. The service estimates that 650,000 passengers have been stuck on the ground since Irene hit, but some experts think it’s a million or more.

Delays of mass transit are slowing airlines’ efforts to get stranded passengers back in the air.

Some passengers opted for other means of travel.

Joseph McCann, 22, of Northern Ireland, was waiting with a friend at 30th Street Station in Philadelphia to catch a bus to New York no faxing pay day loans.

The pair, who had been visiting California, flew into Philadelphia on Monday morning and were supposed to catch a connecting plane to Newark, N.J., but the flight was canceled. Friends suggested the bus.

McCann will arrive in New York about five hours later than originally scheduled, but said it could have been worse.

“I’d say we were lucky in comparison,” McCann said.

The storm is expected to cost U.S. airlines $200 million in revenue _ between lost flying and ticket-change fee waivers. Airline officials estimate it will take about two days to get every plane and crew member back in place.

“The next couple of days are going to be trying,” said Mike Flores, a US Airways flight attendant and union president. “Once we get to work we’re going to be dealing with a lot people who have been up for 24 hours, camped out in airports.”

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AP Airlines Writer Scott Mayerowitz in New York and AP Writer Kathy Matheson in Philadelphia contributed to this report.

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Like all greedy vultures, I’m looking to prey on the fear and misfortune of others. With stocks riding a yo-yo, jobs scarce and worries about a new recession, there’s a lot of fear and misfortune around.

So, I asked some fellow carrion-pickers to suggest a few investment morsels to chew on in these scary times. Their answers ranged from high-dividend stocks to master limited partnerships to certain technology stocks and, surprisingly, beaten-down banks.

This just might be the moment to swoop in on the St. Louis housing market. Some sellers are anxious, others are desperate, and mortgage rates are skimpy. More important, a local economist who specializes in housing thinks prices are about at bottom around here. More on that at the bottom of this column.

First, you have to decide if you have the stomach to do anything with your money but sit on it.

We’re in the midst of ocean-spanning angst. At home, we worry over a possible new recession. Manufacturing, a main driver of the recovery so far, has apparently stopped growing, and confidence is in a deep funk.

Then again, consumers are spending moderately after a disturbing pause in May. Slipping food and gasoline prices are giving people a little lift. Employers are still hiring, although modestly.

In all, most economists see mopey, disappointing growth for the rest of the year, but no recession.

We can still wring our hands over Europe, where the sovereign debt mess simmers on. The danger is that it could boil over into a full-blown financial panic.

Because of all that, stocks are on a roller coaster.

“It seems silly when one day a company goes up 10 percent and the next day it goes down 10 percent,” says Ken Crawford, portfolio manager at Argent Capital in Clayton. That silliness prompts Argent to sit on the sidelines until reason returns.

Others argue that the stock market has already priced in a recession. Stocks are off 13 percent from their high of July. That makes them look cheap.

“Stocks are very attractively priced these days at 12 times operating earnings. That’s something we have not seen in 20 years,” says Joe Williams, chief investment strategist at Commerce Bank.

Stocks would still be cheap even if earnings estimates for next year are lowered, as they probably will be. They’re now at only 10 times next year’s expected profits. The historical average for trailing earnings is about 16.

Williams and Joe Terril sing the same tune: a love song for dividends.

“Over the next couple of years, you’ll see more and more investors looking around for income. The time to buy is now,” says Terril, who manages $430 million at Terril & Co. in Sunset Hills.

The Fed says it expects to keep short-term interest rates stable into 2013, which eases part of the risk for investors.

Williams likes giant companies with high dividends and a tendency to raise them, such as oil company Conoco, drugmaker Pfizer and goods company Procter & Gamble. All yield 3 or 4 percent, along with AT&T, which yields nearly 6 percent.

Terril likes master limited partnerships, which own pipelines and other energy infrastructure. He likes Kinder Morgan, yielding 6.8 percent, and Sunoco Logistics yielding 5.8 percent.

Terril is buying Bank of America and Citigroup preferred stock, yielding over 7.5 percent. Terril was buying Bank of America before Warren Buffett agreed to pump $5 billion of his company’s cash into the bank on Thursday. Other investors had spent the week running away from the nation’s biggest bank, worried over its mortgage woes and the chance it will have to scrounge up more capital.

But the bank is dubbed “too big to fail,” meaning that the government can’t let it go broke for fear of sparking a panic. “I don’t think it will fail at all,” says Terril.

Terril is also picking up a couple of tech stocks: Agilent, the testing equipment firm, and Coherent, which makes laser-based components.

Consumer confidence is in the pits - the lowest in 31 years, according to the University of Michigan’s survey. That might actually be positive for stocks. Stocks have gained an average of 26 percent in the year after confidence hits bottom, according to J.P. Morgan.

At J.P. Morgan in Clayton, managing director Hans Fredrikson thinks junk bonds are a buy again. They’ve been beaten down for weeks. Intermediate-term junk will yield 6 to 8 percent.

Now on to that new feeding ground for vultures, housing. The rate on 30-year mortgages averaged 4.15 percent last week, the lowest rate since at least 1971, according to Freddie Mac.

But housing prices in St. Louis have been falling since 2008.

In June, single-family homes sold for 8.6 percent cheaper than a year earlier, according to the tracking service CoreLogic.

Now there are signs that the slump may be over, says Bill Rogers, economist at the University of Missouri-St. Louis. Rogers says his own index of St. Louis County home prices has shown a leveling off in recent months. “We’re about at the bottom,” he says, while acknowledging that he might be mistaken.

If this is the bottom, it’s a really good time to buy a house.

Remember the biggest lesson learned over the past four years: A house is a place to live, not an investment. Don’t expect rising home values anytime in the future, says Rogers. St. Louis won’t have the population growth needed to drive up prices swiftly.

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Chairman Ben Bernanke is proposing no new steps by the Federal Reserve to boost the economy while hinting that Congress may need to act to stimulate hiring and growth.

Bernanke said Friday that while record-low interest rates will promote growth over time, the weak economy requires further help in the short run. He is speaking at an annual economic conference in Jackson Hole, Wyo.

His speech follows news that the economy grew at an annual rate of just 1 percent this spring and 0.7 percent for the first six months of the year. Only slightly healthier expansion is foreseen for the second half.

Bernanke said he’s optimistic that the job market and the economy will return to full health in the long run.

Stocks fell lower after the speech was released. The Dow had been down about 78 points, about 0.7 percent, shortly before 10 a.m. The loss quickly extended to 145 points.

In his speech, Bernanke left open the possibility that the Fed will take further steps to strengthen the economy. He said its September meeting will be held over two days instead of just one.

The Fed chairman said long-term deficit reduction is necessary. But he emphasized that future economic health could be jeopardized if hiring and growth are not strengthened now cash advance to savings account.

“Fiscal policymakers should not … disregard the fragility of the current economic recovery,” he said.

Bernanke also was critical of Congress’ handling of this summer’s battle over raising the debt ceiling. He said it disrupted the economy, and another episode like that could have long-term negative consequences.

Bernanke’s speech comes at a critical moment for the economy. Some economists worry that another recession might be near.

A big reason is that consumer spending has slowed. Home prices are depressed. Workers’ pay is barely rising. Household debt loads remain high.

All that, compounded by Europe’s debt crisis, has spooked the stock markets and unnerved consumers. Congress is focused on shrinking deficits and seems unlikely to back any new spending to try to energize the economy.

That’s why many have looked with anticipation to the Fed to do more. The central bank has already kept short-term interest rates near zero for 2 1/2 years. And earlier this month, it said it would keep them there through mid-2013.

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The Suburban Journals on Wednesday announced the layoff of 20 staffers, the elimination of some print editions and a shift in emphasis to online coverage.

The Journals, along with the Post-Dispatch, are owned by Lee Enterprises, which could face bankruptcy unless it can refinance about $1 billion in debt by an April deadline.

The Journals will discontinue publication of full Sunday Journals in St. Charles County and Illinois after Aug. 28. The Wednesday editions in North St. Louis County and Monroe, St. Clair and Jefferson counties will also be discontinued after the Sept. 7 issue.

The Journals will continue to publish six Wednesday print editions in western and eastern St. Charles County, West and South St. Louis County, Collinsville and Granite City.

In addition, both news and sports stories will be updated more frequently online at stltoday.com/neighborhoods and stlhighschoolsports.com, said Publisher Dave Bundy in a written statement.

“Focusing more on digital news delivery in some areas frees us from the weekly print cycle and allows us to continue providing the best community coverage available to the Greater St. Louis area,” according to Bundy’s statement. “Our print Journals, digital coverage and niche products provide a full array of ways to serve readers and advertisers, and we can use the medium or combination that works best for the message.”

The announcement comes on the heels of a layoff of 23 workers at the Post-Dispatch in June. Those cuts included production, technology and marketing employees, but no journalists. This month, however, the company announced that it would seek to cut up to 10 newsroom employees through a voluntary severance offer. 

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Medtronic, the world’s largest medical device maker, says its fiscal first-quarter earnings slipped 1 percent as challenges in spinal products and its biggest business, implantable cardioverter defibrillators, countered other revenue gains.

The Minneapolis-based company says net income fell to $821 million, or 77 cents per share, from $830 million, or 76 cents per share.

Adjusted earnings were $845 million, or 79 cents per share, for the quarter ended July 29.

Revenue climbed 7 percent to $4.05 billion, with most of the increase attributable to favorable foreign currency rates.

Analysts forecast earnings of 79 cents per share on revenue of $3.98 billion.

Medtronic has struggled to maintain earnings growth amid sluggish sales of its two leading products: heart defibrillators and spinal implants.

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What to do?

The stock market has proved again that it’s capable of making vicious attacks on your money. But just when you think all is lost, the market also can transform into its gentler self.

The past few weeks have been enough to make you crazy, especially if you are among the great majority of people who don’t follow the stock market day in and day out and imagine, incorrectly, that someone actually knows what’s going to happen.

Let’s start there. If you have been following the news, you know that there is talk again of a possible recession, and there are worries that debt problems in Europe could cause problems in banks pay day loans.

Notable economist Martin Feldstein said there is a 2-1 chance of a recession within the next 12 months. Goldman Sachs says there’s only a 1-in-3 chance. So don’t trust anyone who claims they know. Crystal balls are foggy. But here’s what you can do to insulate yourself from trouble and still build the future you want:

Protect the money you will need soon

The stock market went back into a lull Friday as investors waited for the next signals on the economy _ and whether it’s headed for another recession.

The major indexes were fluctuating in a narrow range after Thursday’s 419-point plunge in the Dow Jones industrial average. But that doesn’t mean investors are finished selling. There was little economic news Friday to influence trading. Thursday’s plunge followed a stream of disappointing economic news that added to the belief in the market that the economy is falling into a recession.

The most notable news Friday came from JPMorgan Chase & Co. The bank joined other financial firms and cut its forecast for economic growth during the fourth quarter. It’s now predicting growth of 1 percent, down from an earlier forecast of 2.5 percent.

The Dow fell 42 points or 0.4 percent, to 10,947 at 12:20 p.m. in New York. The Standard & Poor’s 500 index fell 1, or 0.1 percent, to 1,139. The Nasdaq composite index rose 5, or 0.2 percent, to 2,386.

The Dow’s drop was largely due to Hewlett-Packard Co., which fell 21 percent. The company said Thursday that it will close its mobile business, sell or spin off its PC business and pay $10 billion for a business software company.

Investors weren’t, for the moment, seeking the safety of U.S. Treasurys. The yield on the benchmark 10-year Treasury note rose to 2.08 percent from late Thursday’s 2.06 percent. It fell below 2 percent Thursday for the first time as heavy demand sent its price sharply higher.

Overseas stock markets had larger drops than in the U.S. European banking stocks fell near two-and-a-half-year lows, dragged down by rumors about banks’ potential losses on bonds issued by heavily-indebted governments. The selling in the U.S. has come in part because of fears that U.S. banks would be hurt if European countries default on their debt. Another concern: weakening European economies will hurt growth in the U fast cash advance.S.

Earlier Friday, Asian shares fell sharply, with major indexes in China and Japan losing more than 2.5 percent. However, some of those losses reflected selling in response to the drop in the U.S. Thursday.

As the selling continued overseas, gold rose as high as $1,881 an ounce. Oil prices fell as traders feared a global slowdown that would cut demand for crude.

The word “recession” remains the focus of the markets.

JPMorgan analyst Michael Feroli said Friday that business sentiment, household wealth and global growth all look worse than just a few weeks earlier. That will keep economic growth nearly flat in the first quarter of 2012, he said.

On Thursday, economists with Morgan Stanley said that the U.S. and Europe are “dangerously close to recession,” adding, “it won’t take much in the form of additional shocks to tip the balance.”

Stocks also fell Thursday on news of another drop in home sales, weaker manufacturing in the mid-Atlantic states and a jump in inflation at the consumer level to its highest level since March. There also was bad news on the job market: an increase in the number of people who applied for unemployment benefits.

Thursday’s numbers joined a series of reports pointing to a slowing economy. The government reported on July 29 that growth in the first half was much weaker than expected _ and that the economy barely grew in the first quarter. Since then, the combination of disappointing numbers in the U.S. and worries about Europe’s debt problems have set off waves of selling.

The Dow is down 13.6 percent since stocks began falling on July 21. That has drained billions from American’s retirement savings and other investment accounts. And the stock market’s drop can itself help move the country toward recession.

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A private research group forecast that the economy will grow slowly in the second half of the year because of the support it’s gotten from the Federal Reserve.

The Conference Board said its index of leading economic indicators rose 0.5 percent in July. The index had risen 0.3 percent in June.

This summer’s readings suggest that the economy won’t pick up enough this year for the jobless rate to drop much. The small moves higher however indicate that the country likely won’t fall back into recession, as some economists fear.

“The economy is slow, with little momentum, and shows no indication of acceleration,” said Conference Board economist Ken Goldstein. He added that despite “growing risks,” the economy would likely grow at a “modest pace” this fall and winter.

Prominent economists have been cutting their growth forecasts for the second half. Moody’s Analytics on Monday said it expects real gross domestic product to grow at an annualized rate near 2 percent in the second half of this year. It had earlier predicted growth of 3.5 percent.

In the first half of 2011, the economy grew at the slowest pace since the recession officially ended in June 2009 _ 0.4 percent in the first three months and 1 instant payday loans.3 percent in the April-June quarter. The slump sparked fears that the U.S. could “double-dip” back into a downturn.

The slow upward march in the leading indicators’ index has so far suggested that won’t happen. But jobs are likely to remain scarce. Mark Zandi, Moody’s chief economist, said the economy must grow 2.5 percent to 3 percent a year to add jobs fast enough to keep the unemployment rate stable. It currently stands at 9.1 percent.

Six of the 10 measures in the Conference Board’s index show improvement _ primarily its measures of the financial sector. They have been helped by the Fed’s record-low interest rate policy. Three of the Board’s measures dropped, one held steady.

The Conference Board is a private research group based in New York. Most of the data it uses in calculating the leading indicator index _ about real estate, manufacturing, employment, consumer confidence and financial markets _ has previously been released. The Conference Board also includes its own estimates about manufacturers’ new orders and the country’s money supply.

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A marked slowdown in European economic growth is overshadowing a meeting Tuesday between the leaders of Germany and France aimed at getting the eurozone’s 17 countries to work closer together to dig Europe out of its debt crisis.

The meeting between Angela Merkel and Nicolas Sarkozy in Paris comes after a week of turmoil in financial markets, largely blamed on Europe’s sprawling government debts and worries that European leaders aren’t doing enough to address them. It also comes a day after the European Central Bank revealed that it splashed out more money than ever trying to appease the markets.

Europe’s sagging growth prospects make it even harder for governments to shrink their debts. Economic growth in the 17 countries that use the euro sagged to a lackluster quarterly rate of 0.2 percent in the second quarter, as a previously robust expansion in Germany almost ground to a halt, according to EU figures Tuesday.

“The longer the sovereign debt market remains stressed, the greater will be the damage to the wider economy,” said Lloyd Barton, senior economic advisor to Ernst & Young. “A further deterioration in financial conditions could severely damage the outlook for the whole of the eurozone.”

The downbeat growth news weighed on markets, and provided yet more evidence that the global economy is slowing down sharply, following disappointing second-quarter growth figures from the United States.

Financial markets have been hugely volatile of late, partly over fears that Italy and Spain, the eurozone’s third and fourth largest economies, may find it too expensive to service their debts. Those concerns triggered last week’s intervention in the bond markets from the ECB, which has increasingly stepped in as Europe scrambles.

France and Germany, which together account for almost half of the eurozone’s economic output, are taking the lead in pushing for reforms. But, speculation that the two leaders would consider proposals for the eurozone to issue jointly guaranteed government debt appear to have been dashed, with officials for both sides indicating that would not be on the agenda.

Germany has remained firm in its stance that other EU countries must exert more fiscal discipline.

The discussions will center on “measures for better agreement of financial policies,” Merkel’s spokesman Steffen Seibert said.

Officials for both Merkel and Sarkozy said Monday that jointly guaranteed eurobonds would not be on the agenda.

Analysts forecast that Tuesday’s meeting could set the stage for future political decisions about the euro and European integration, but no immediate breakthroughs.

“Don’t expect any game-changers from today’s meeting,” said Neil MacKinnon, global macro strategist at VTB Capital. “The eurozone debt and banking crisis has yet to be properly resolved, and the future viability of monetary union is a choice between moving towards fully fledged fiscal union or considering the possibility of a break-up in monetary union.”

European growth prospects are a growing concern too. Until now Germany’s economy, Europe’s biggest, had been growing strongly despite Europe’s government debt crisis.

The eurozone’s growth rate was well short of the 0.8 percent recorded in the first quarter, and was largely due to an abrupt slowdown in Germany. Germany’s economy has helped support the eurozone through the government debt crisis. Its world-renowned companies have tapped export markets all around the world, particularly in faster-growing emerging countries.

The chief of the International Monetary Fund urged rich-country governments not to squeeze their budgets so far that they stifle growth.

“For the advanced economies, there is an unmistakable need to restore fiscal sustainability through credible consolidation plans,” Lagarde wrote in the Financial Times. “At the same time we know that slamming on the brakes too quickly will hurt the recovery and worsen job prospects.”

France was caught in the market crossfire last week, with investors worrying about the financial health of the country’s banks in particular and whether it would be the next country after the U.S. to lose its triple-A credit rating.

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