pep

The stock market may open lower today amid growing worries about retail sales slowing following the release of figures from the U.S. Commerce Department that may heighten worries about consumer spending for the holiday season. Investors also will be keeping a close eye on earnings from two banks that have recently gobbled up smaller rivals hurt by the financial crisis JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co. (NYSE: WFC). eBay Inc. (NASDAQ: EBAY) also reports results.

Here is a look at other news that may move the market:

• Now, the bank bailouts are reaching outside the U.S. Bloomberg News reports that "The European Central Bank, Bank of England and Swiss National Bank loaned financial institutions a combined $254 billion in their first tenders of unlimited dollar funds, stepping up efforts to ease strains in markets." Meanwhile, Iceland is struggling with how to fix its collapsing banking system. Banks in the U.K. are helping because tens of thousands of British depositors have their money there.
• Intel Corp. (NASDAQ: INTC) yesterday reported earnings rose rose 12 percent in the third quarter, beating analysts' estimates though sales rose an anemic 1 percent. Chief Executive Paul Otellini is quoted by the Associated Press as saying that it's "hard to know" what impact the financial crisis will have on the fourth quarter but that he expects Intel to "outpace peer companies."
• Executive pay probably won't be hurt by the $700 billion Wall Street rescue package, according to the New York Times.
• October auto sales are likely to be as awful as September's, the Times said
• The Federal Budget Deficit hit a whopping $455 billion in the fiscal year ended September 30, Bloomberg reported.

U.S. stocks may continue their record rally from Monday as investors' confidence was buoyed by Treasury Secretary Henry Paulson's plan to invest $125 billion in the nine largest financial institutions. Japan Nikkei 225 Index had its biggest jump in its 59-year history. Benchmarks in 16 out of 17 Western European countries also advanced, according to Bloomberg News.

``The market is saluting the bailout plan,'' said Chicuong Dang, an analyst at KBL Richelieu Gestion in Paris, in an interview with Bloomberg.

Under the Bush Administration's plan, the government will buy preferred shares in nine of the largest financial firms including Goldman Sachs Group Inc. (NYSE: GS), Morgan Stanley (NYSE: MS) and Bank of America Corp. (NYSE: BAC). The money is coming from the recently enacted $700 billion rescue of Wall Street.

Here is a look at other news that may move markets:

• Big-shot hedge fund managers Paul Tudor Jones and Stephen A. Cohen have been forced to sell assets amid tightening credit markets and falling stock prices, according to Bloomberg.
• Morgan Stanley is "in a much stronger position" because of the $9 billion investment its received from Japan's Mitsubishi UFJ Financial Group Inc., Chief Executive John Mack told The Wall Street Journal.
• Google Inc. (NASDAQ: GOOG) and Yahoo Inc. (NASDAQ: YHOO) are in talks with the Justice Department to avoid an antitrust lawsuit on their advertising deal, the Journal said
• Media mogul Sumner Redstone has been forced to sell off large chunks of his holdings in CBS Corp (NYSE: CBS) and Viacom Inc. (NYSE: VIA). the Journal said.
• Commodity prices are falling, putting money into the pockets of consumers when they need it most, the New York Times reported.
• The General Motors Corp. (NYSE: GM) -- Chrysler LLC buyout talks are at a critical juncture. The company and Chrysler's owner Cerberus Capital Management are discussing how much cash the buyout firm will contribut to the joint venture and how much stock it will get in return, the Tiimes said.

U.S. stock futures were set to rise Monday morning after a Federal Reserve official pledge that the central bank would "consider every option" to restore consumer confidence, according to a report in Bloomberg News. The market was further bolstered by comments from European governments to prevent banks on the continent from failing.

On the other hand, Bloomberg News is reporting that the world's economy may be headed for its worst recession in 25 year -- if it's lucky. `The hope is that it won't become the worst unemployment business cycle since the Great Depression," economist Bradford DeLong told Bloomberg.


Here is a look at other news of interest to the markets:

• Paul Krugman -- The New York Times columnist and Princeton University professor won the Nobel Prize in economics.
• Sovreign Bancorp -- Spain's Banco Santander SA is near a deal to buy troubled Philadelphia-based Sovreign Bancorp Inc. (NYSE: SOV) according to the Wall Street Journal.
• Morgan Stanley (NYSE: MS) -- Mitsubishi UFG closed on its $9 billion investment in the Wall Street bank which gave it a 21 percent stake.
  
• Bailout -- The Treasury Department is providing some details about its $700 billion rescue, naming law firm Simpson Thatcher as an advisor.
• GM -- General Motors Corp.'s (NYSE: GM) board was cool to the idea of a merger with Chrysler LLC., according to the Journal. Meanwhile. U.S. auto sales are expected to be near a 20-year low.
• Gulf States -- Saudi Arabia and the United Arab Emerties unveiled plans to bolster their domestic banks.
• Wachovia -- Analysts expect Wells Fargo & Co. (NYSE: WFC) to sell or cut back Wachovia Corp. (NYSE: WB) investment-banking business, Bloomberg says

Maybe the economy is not quite ready to fall off a cliff quite yet, though it appears to be heading in that direction. At least, that's the message this morning coming from Dow stalwart General Electric Co. (NYSE: GE).

General Electric, whose shares have been pounded lately because of concerns about its financing unit, today reported an in-line quarter.

In a press release, GE Chief Executive Jeffrey Immelt, whose job may be in jeopardy, pointed out that the conglomerate was "on track" to meet its revised -- reduced -- guidance issued September 25. He also pointed out, "We have taken a number of steps to protect investors from the downside risk in financial services, and we have ways to mitigate potential disruptions in infrastructure and media markets, but the environment remains challenging."

GE also plans to sustain its dividend through the end of next year.

"We have big backlogs, great products, stable service revenue, strong operating discipline, an unmatched global position and multiple revenue streams. As a result, the Company is well positioned to perform in a very difficult environment, and our Board has approved our plan to sustain the GE dividend through 2009," Immelt said.

Despite the positive spin, the results were pretty dreadful. Profit from continuing operations fell 12 percent to $4.48 billion, or 45 cents a share, from $5.11 billion, or 50 cents. Many businesses including Global Finance fell by double-digit percentage points. Cash flow from operations plunged 18 percent during the first nine months of the year.

How sad is it that meeting reduced expectations is seen as great news?

One of the few things that Barack Obama and John McCain agreed on during last night's televised debate was that billionaire Warren Buffett would make a good Secretary of the Treasury.

Odds are that the universally respected Buffett won't take the job. Why does he need the headache at this point in his life? Besides, he may not be the type of government official investors would like. Much to the horror of political conservatives, the Oracle of Omaha is backing Obama. He has come out against such bedrock Republican principles as abolishing the so-called death tax on inherited wealth. The financial disclosure requirements alone probably are enough to scare Buffett away from government service.

To counter Obama's Buffett card, McCain said that former eBay Inc. (NASDAQ: EBAY) CEO Meg Whitman might be the right person for the job. I guess no one mentioned to the Arizona senator the massive layoffs planned by the online auctioneer. Interesting how another McCain supporter, ex-Hewlett Packard Co. (NASDAQ: HPQ) Chief Executive Carly Fiorina, did not merit consideration. Given her disastrous tenure, it's no wonder.

Another good potential Treasury Secretary neither brought up is Michael Bloomberg. The founder of Bloomberg LP (where I worked for seven years) clearly knows the markets. He's rich and has shown savvy in navigating New York City's political landmines that Washington should be a walk in the park. Too bad he's got his heart set on a third time as mayor.

During last night's presidential debate (which he lost badly) Republican John McCain vowed that if elected he would order the U.S. Treasury Department to purchase "bad mortgages" to help people avoid foreclosure. It's an idea that deserves consideration.

According to Bloomberg News, the McCain campaign estimates that it would cost $300 billion, some of which would be diverted from the $700 billion rescue of Wall Street. The Arizona senator did not provide specifics during the debate. Democrat Barack Obama proposed a similar idea during a press conference last month, according to Bloomberg. These proposals raise many questions.

First of all, can the government afford to purchase both mortgages and mortgage-backed securities? How will the government determine who gets help? Many people bought homes they could not afford because of criminally lax lending standards at some banks. Others were hoodwinked by unscrupulous mortgage brokers into taking adjustable-rate mortgages when they qualified for cheaper fixed-rate 30-year loans. These individuals are the most deserving of the government's help. Officials should try and help other distressed mortgagers provided that they can afford their properties. Otherwise, they should be given assistance to find affordable housing.

Republican John McCain has failed to convince the majority of Americans that Barack Obama is a tax-and-spend liberal who lacks the intestinal fortitude to face our country's enemies. In a show of desperation, the Arizona Republican and his running-mate Sarah Palin are now trying to link Obama with former Weathermen leader William Ayers, even though the New York Times and other news organizations have pointed out that the two men knew each other casually. That's why tonight's debate in Nashville is critical.

McCain, who is favored by many investors, is facing some pretty daunting odds. According to the latest NBC News/Wall Street Journal poll, 49 percent of voters said they would vote for Obama compared with 43 percent for the Arizona senator. That's up from a two-point advantage two weeks ago and mirrors other polls, according to the Journal. To be fair, the survey does have a margin of error of plus or minus 3.8 percentage points. Obama has wiped away McCain's lead with independent voters.

Investors should not underestimate the anger in the hearts of voters. The credit crisis has wiped out tens of billions of dollars in value to the retirement nest eggs of the American people. Most people don't understand why the government needed to extend a $700 billion lifeline to the financial services industry. They become even angrier when three former chief executives of American International Group Inc. (NYSE: AIG) blame one another like a bunch of two-year-olds for the firm's collapse. The Dow Jones Industrial Average dropping below 9,500 scares them even further.

It is against this backdrop we are holding this election. Obama has been able to convince voters, including this one, that he can deliver tax relief for the middle class. But Democrats should not rejoice quite yet. McCain excels at these town hall meetings. Moreover, some of Obama's support in polls comes from people who are too embarrassed to admit that they don't want to vote for an African-American candidate.

Americans crave leadership during these times of economic crisis. Since Wall Street has failed to provide, it's unfortunately up to our elected officials.

Much as I find it hard to muster sympathy for thousands of overpaid investment bankers forced to walk to the unemployment office in their designer shoes, the news that Lehman Brothers Holdings Inc. (NYSE: LEMQ) won't be paying them severance made me feel a little sorry for them.

According to Bloomberg News, the New York-based firm recently notified employees that they will not receive a payment on October 3 or after. The company reneged on a promise to the fired workers to pay them severance until August 2009. Workers who want the rest of their compensation will have to file a claim with the bankruptcy court. It will take years for the former employees to get paid through Chapter 11 and even then they might only get a fraction of what they are owed.

Bloomberg reports that it is not clear how many former Lehman employees have been affected. You can bet that members of Congress and the Department of Justice will be interested to know if Chief Executive Richard Fuld will receive a golden parachute once Barclay's PLC (NYSE: BCS) completes its takeover of the once-storied New York investment bank.

Let it be written that on the sixth day of October in the year 2008, the irrational exuberance that defined the 1990s came screeching to a halt.

The Dow Jones Industrial Average fell below 10,000 this morning for the first time since 2004. Gosh, it seems like only yesterday that investors were as giddy as school girls when the leading stock market indicator crossed that once-unthinkable benchmark. Remember the Dow 10,000 hats? I bet the people who bought them along with other keepsakes of better times plan to unload them on eBay so they can fill up their tanks with gas. In fact, some people have already started selling bull market memorabilia. A Lehman Brothers coffee mug is available on eBay for $14.99, while the book Dow 36,000 is attracting no bidders for the bargain-basement price of $1.93.

These are lousy times. The real estate market continues to suck wind. Holiday retail sales are expected to be their worst in years. Hundreds of billions of dollars worth of federal bailouts have failed to unfreeze the credit market or provide any relief for homeowners hurt by the subprime crisis. A good part of the market's downturn can be blamed on lax corporate governance, including outrageous CEO pay.

Much of the focus in tonight's vice presidential debate will be on whether Democrat Joe Biden or Republican Sarah Palin says anything stupid. Odds are fairly good that one or both of them will stick their foot in their mouths in front of millions of TV viewers.

Though I am a political junkie, I am hoping that tonight's festivities are gaffe-free. The economy is in such a horrible state that Democrats and Republicans have to raise above partisan politics. In particular, they need to do something to address the heart of the problem -- the millions of people facing foreclosure. Many of them are there because they purchased homes they could not afford. I have heard all of the talk of letting the market correct itself and of moral hazard. That's simply not good enough.

I find it difficult to believe that the U.S. government lacks the resources or the know-how to figure out which homeowners should be helped and which should be left on their own. Why is it so impossible for the U.S. Congress to include some relief in the $700 billion bailout to Wall Street for homeowners? Housing advocates and some bankruptcy judges are arguing that judges should have the power to change the terms of mortgage contracts for people who have sought protection from their creditors. That seems like a sensible idea to me.

Unfortunately, I am not expecting much substantive talk about the economy tonight. Palin, the governor of Alaska, is being kept away from the press after making a fool of herself in some recent interviews. The Tina Fey caricature of her as a loudmouth hick appears to be taking hold. Polls indicate that most Americans believe she is not qualified to be president. John McCain is the only one who seems to think otherwise.

Everywhere I go in the suburban wonderland where I live there seems to be a new housing development. When I visited my brother- and sister-in-law in a neighboring town, I must have passed seven of them. Apparently, word of the housing slowdown has not reached Burlington County, New Jersey.

This seems like madness. After all, the housing market is in the tank. Applications for mortgages fell 23% on a seasonally adjusted basis for the week ended September 26, according to data from the Mortgage Bankers Association cited by Reuters. U.S. single-family home prices fell a record 16.3 percent in July from a year earlier, according to the Standard & Poor's/Case-Shiller Home Price Indexes.

Consumer confidence is shaky -- heck, I am not feeling so confident even though I bought a car. Foreclosures are at record levels -- still. Banks are tightening their credit standards, making it difficult for borrowers without sterling credit to get loans or refinance their existing ones. That's what makes the rise in the home builder stocks even more baffling.

Shares of Hovnanian Enterprises Inc. (NYSE: HOV), Toll Brothers Inc. (NYSE: TOL) and Lennar Corp. (NYSE:LEN) all gained double-digit percentages in the third quarter. The reason? Investors are chomping at the bit to call a bottom in the housing market. But I sat that's premature. S&P points out that many metropolitan areas are showing double-digit declines in home values. "There are signs of a slowdown in the rate of decline across the metro areas but no evidence of a bottom," David Blitzer, chairman of S&P's index committee, said in a statement.

On the day the stock market was headed into the abyss, my wife and I were busy shopping for cars. I felt like Nero fiddling as Rome burned.

This was not a frivolous purchase. My wife, who like her father is nuts about cars, researched every make and model in our price range for a year. No, make that two. Impulsive, she is not. While we were waiting in our local Ford (NYSE: F) dealership, I checked the stock market on my iPhone (another recent purchase) and was stunned by the dramatic decline in the Dow Jones Industrial Average. My wife gasped when I told her about the Dow's record decline. We briefly wondered whether now was the right time to get a car. Ultimately, we decided to buy the Ford Edge thanks to the zero-percent financing available.

My wife and I are fortunate that we both work and have good credit scores. We live in a modest suburban house and pay off our bills regularly. My wife is a CPA and is fanatical about keeping our debt to a minimum. Until recently, we received at least a dozen offers a week for credit cards and home equity loans. I am glad that my wife insisted we toss them all in the trash. Otherwise, we would have held onto our old car for a while longer since the Big Three are tightening their credit standards.

In perhaps the shortest press conference on record, President George W. Bush confidently predicted that the government's $700 billion rescue of Wall Street will pass. I am not holding my breath.

Bush remarked that the legislative process sometimes is not "pretty." Talk about an understatement. Rhetoric on both sides of the aisle has been boiling over all week. People are angry, and who can blame them? It's a tough sell to taxpayers that there is a huge sense of urgency to rescue financial services companies that overextended themselves by lending money to people who could not afford to pay them back. The whole thing strikes many Americans, particularly those living paycheck to paycheck, as unfair.

Polls have overwhelmingly shown that most people are against the bailout. Most members of Congress have very little to gain right now by sticking out their necks for the Bush plan. If it passes, they have to explain to their constituents why they are helping out Wall Street fat cats. Voters will be angry and will demand explanations about why the value of their 401 (k) has plunged.

Pundits continue to plead on CNBC that the credit market is frozen, making it more difficult for people and businesses to get loans. They have warned of a financial apocalypse worse than the Great Depression. Maybe they are making valid economic arguments, but their message is not resonating with the public.

Members of Congress can ill-afford to alienate voters, many of whom are struggling to make ends meet. A bailout bill may pass but odds are that the process will be ugly and the end result may not be to Wall Street's liking.

JPMorgan Chase & Co. (NYSE: JPM) Chief Executive Jamie Dimon is the new king of Wall Street whose power rivals his company's namesake John Pierpont Morgan.

Over the past year, Dimon managed to steer JPMorgan away from the subprime credit crisis while managing to keep his company's stock from cratering like his competitors'. First, he absorbed Bear Stearns after it went out of business. Now, Dimon has managed to pick up Washington Mutual Inc. (NYSE: WM) -- the good parts of it anyway -- for $1.9 billion. The deal is accretive in 2009.

Dimon is proving to be Wall Street's shrewdest manager. He did not get to be so successful by being a teddy bear. Indeed, reports abound about his abrasive personality. But unlike other Wall Street CEOs, Dimon knows his job is to work for the shareholders. Dimon's zeal for cost-cutting knows no bounds. He got rid of expensive technology outsourcing contracts, figuring the company could do the work cheaper itself.

Let me get this straight: the Democrats are backing George Bush's $700 billion rescue plan that Republicans oppose. These are strange times.

House Republicans have many gripes with the plan. They are pushing to fund the recovery of financial services companies with private capital. Others are raising worries about the cost and the timing of the rescue. These are all valid questions.

Then there's the presidential campaign to consider. John McCain is threatening to skip tomorrow's presidential debates unless a deal on the bailout is reached. Maybe Republicans are throwing up roadblocks so McCain can swoop in and solve the impasse, looking presidential in the process. Barack Obama is also using this bailout for his political gain.

Meanwhile, Democrats are pushing for relief for cash-strapped homeowners. So far, they are not getting much sympathy from the Bush administration.

Treasury Secretary Henry Paulson recently said "the vast majority of foreclosures in this country ... are coming from people who either don't want to stay in their home, took out loans they couldn't afford as the result of irresponsible lending practices."

That's bologna, according to the Center for Responsible Lending, which says that the vast majority of people want to stay in their homes and could afford to if the courts were allowed to modify mortgages. Consumer advocates back the idea as do most Democrats. Bankruptcy judges think it's a good idea as well. The mortgage industry and some fiscal conservatives oppose this provision, arguing that it rewards people for making bad investment decisions.