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-- another week of foxbusiness.com.
Live here we go with the market sell -- finally coming it looks like Kelsey Hubbard is here.
Future digital network down -- 155 points indeed I don't know agendas that commitment to me do it.
That we -- waiting for this off right and now it's finally here started in Asia overnight that China was down a lot Japan's GDP number wasn't great it's continued here into the United States that I guess was just a matter of time someone.
-- -- we got some.
And sort of -- -- from -- every kid definitely related to retailers know showing that retailers have their consumers are still under a lot of stress and have a long way to go before coming back -- of getting a lot of that.
Absolute downward pressure for an -- check -- -- to get hammered today we'll talk to Robert about that in a moment.
I'll talk health -- that still the biggest topic of discussion in this country -- -- -- -- for the marketing a little bit of attention but a -- and yet to -- this market is up so much this is a a drop but nothing crazy today.
More talk about the -- -- and -- -- bigger picture terms with Sandra Smith.
A little bit later -- and they tell me the city of Chicago is -- off today.
If they didn't -- -- the whole city shut down except from a well hopefully for emergency workers.
Read that would be kind of bad -- stepped up their bloody cities they're really having some budget shortfalls -- You know a lot of things are not going as planned actionable that's the real point is that -- they're trying to save some dough and Steve Brown from Fox News come along to tell us.
-- -- pick up the garbage or what's going on in Chicago kind of scary but Roberts starts us off -- with the Lowe's earnings which has -- he said were.
I just kinda disappointing.
Yeah well pavement as you broke this morning every penny short time on the bottom line but.
Well that you know we heard adults all -- blaming the bad weather we've certainly had our share of it.
In this area of the country this summer and you -- they've had sounds element too hot really to get onto a lot of improvement probably.
Yeah but I also of course the recession big ticket purchases down and they did sell some not some tellers and they've been outselling in your garden column -- summer on.
They did sell some of those people are really putting off that the big purchases were -- cabinetry new flooring and things we DNC to pick up in DIY do it yourself.
Projects but the really big when you're getting pushed off and that's showing up there average sales -- down eight point 6%.
In the last quarter that was a bigger drop than in the first quarter.
That over your customer transactions was still down nine tenths of a percent that's better than the first quarter may -- less bad number we've seen a lot of that coming -- of is slight improvement but really -- again the big ticket items not selling so that's what's hurting their bottom line announcing revenue growth we've heard that story from so many people and in talking to traders investors strategists and the like.
That's what they wanna see is is revenue improvement that we knows all about the cost cutting story.
I listen and I can expand as much in the coming years they had originally planned on their tightening the belt.
Of people done layoffs now people want to see whether or not you know.
Are you selling things that he's.
The bottom line if -- business -- -- it's just sort of adding it to this story we talked about at the end of last week with the retail sales numbers disappointing from last month.
Also consumer sentiment numbers down on Friday as we head -- back to school we have this key times he -- second only pretty much to love the holidays.
-- the year -- so.
People -- -- that there is there's some trepidation and and let's keep in mind in the run up -- shares were up 11% the past month coming into today.
They're up just 6% today by the way Home Depot is far outperformed them and HD reports tomorrow.
The bigger the two home improvement to change that's going to be closely watched.
Coming -- so many of these companies have been cost cutting and were able to sort of meet expectations through cost cutting him that's cutting -- from the labor force and by the you're right the revenue growth has to come back we know consumers are still under a lot of stress did the company didn't projections in third quarter -- -- -- -- downward and it hasn't pointed out.
Coming back into.
I think right and they cut the top -- their full year forecast -- I was optimistic.
About earnings for the entire year and that's what really -- that the shares and -- -- for -- approved a little bit if you want to last Saturday -- -- earlier right.
Yep no doubt it double digits in premarket -- generator really getting hammered -- -- forecast came out that still down 8%.
Well that's a big motive for that stock Home -- is down molest 3% but as you mentioned up 18% here -- -- -- -- -- tomorrow so we'll hear it on the phone number tomorrow.
Who is comparing -- -- so we'll see how they give me a comparison -- thank you Robert appreciate it looks like Paul -- next series director of investments at Hinsdale associates and Paul joins us now.
From Chicago and -- -- get your garbage this morning call the shots city shut down from what I hear that the they did they get the essential services but the -- are still run and so we were doing fine -- we're gonna talk about a little bit later on in the program but what do you make of this market as -- mentioned at the top it's -- are talking about.
It's almost the inevitable selloff that a lot of people have been predicting some even rooting -- -- and get back in.
Is that what it'll be just that kind of a buy on the dips here or -- starting something bigger do you think.
It's possible we could be finally getting the correction that we Bellman waiting for really since the march -- something meaningful we had a little bit of a correction in June that took the markets down a little bit.
But we're really haven't corrected much at all since then.
This could be something a little bit more meaningful and trying -- a lying.
Sentiment with the overall market levels so we could see the markets.
Maybe have a downward bias now for the next couple weeks.
A lot of the got a printout and I know you have a lot of the hedge -- -- -- -- in the market is oversold at this point I'm so.
When you look at some of it data that we have seen that has been getting.
Less bad I -- that's the -- good out there do you think that will continue in the fifth inning as the market run -- we'll -- about what 50% off the lows.
An indication the fact that the economy has pulled back from falling off the precipice with so many people were worried about -- -- -- indication of where we're likely to go out.
I think -- I think it's an indication that we pull back from the precipice but I don't think that necessarily warrants a 50% rise if you look at the history.
History will tell you -- since 1950.
That we normally see credit expansion at this point we normally see jobs.
Instead of losing jobs were actually gaining jobs.
When we have a 50% rally in the marketplace from the -- so I think the market is well ahead of the economic fundamentals at this point.
Yes we're less bad but now we're -- really and more of a regular recession then now we are again -- from the best.
-- so then what do we do about all this coming up next.
I guess one of the key questions in one of our viewers Charles brings it up as -- You know whether it is as you know I care is -- and this is the unit inevitable sell -- for correction that people have been rooting for hoping for those that trade the market data day after he says while.
How about the fact there's just no improvement in the economy to speak up.
Kelsey from the fact that they're actually has been improved in a lot of the market in the economic indicators based on where we wore what's your view on the economy because maybe that'll tell something about how you.
How you look at markets which you can talk about and then in the second.
Sure let's just take a look at nonfarm payrolls is a perfect example the last three months have been very good at least in the in the view from the last six to nine months.
But if you just take the average for the last three months it's been worse than.
Any time since that's the only other times 1980 in 1977 have we lost that many jobs on average over a three month period.
So yes they're better than what they have been.
But the only reason they look that good is because they were so bad.
Over the last six to nine months the fact of the matter is the numbers are still not terrific.
Worry and probably more being normal recession at this point we're away from the Great Depression.
Analogies so earlier this year.
But by no means I don't think are we out of the woods yet.
In fact we see foreclosures still rising housing sector very much still in trouble a lot of people losing that you know their homes and -- door to bank.
Report came out saying that by 2011 about 48% of of all homes could be under foreclosure.
-- your underwater actually knew what they'll let you know it's it's really tough out there you see this turning around what are you looking forward to see -- -- signs that the consumer would be coming back.
How can be turning around I mean is this going to be.
A long drawn out recovery process -- the market respond so quickly but do you think the actual economic recovery will take much longer.
We think the economic recovery is gonna take a lot longer because the consumer right now is up to their eyeballs in debt and the only way they're gonna work that debt off is over time.
Housing is not helping.
The unemployment situation is not helping bank credit is not expanding at this point.
Those are some of the same post that we'd be looking for -- debt levels more banking credit expansion.
Those are the types of things that we're going to be looking forward to help us determine that.
Indeed the worst is truly behind us and we're now starting to embark on a new expansion.
But I think that's going to be something that may not occur really until mid to late at the earliest 2010.
The one of the things we've been watching -- to see whether that happens and how strong the economy is is the price of many commodities today commodities are getting hit pretty hard.
I think the biggest drag on the Dow last time I checked was up -- and the S&P 500 we have a number commodity related stocks that are.
That are helping to lead -- -- -- -- down below 66.
Today now I read recently that you were thinking about pulling back.
Most of not all of your exposure to commodities did you do that and what's the outlook for the future.
We have pulled back some money commodities will probably room.
Get rid of the remaining commodity exposure that we have this week or next we anticipate at least a little bit of a bounce but nothing meaningful.
We are not real constructive on the overall market the problem that we're having -- in a lot of markets is the correlations between a lot of markets.
Are very very high at this point meaning as you outlined the Dow is down soaring commodities -- the international markets.
So there's not a lot of places to hide outside of cash and bonds.
In a market that declines.
As rapidly as it does today or as we saw last fall.
What should investors be doing right now what do you what do you think that is the best move in this type of economy -- -- the marketplace.
Still playing a defensive game I -- don't -- again -- -- we're not -- the top line growth and a lot of the companies as you alluded to earlier and that's one of the things it's not gonna allow expansion of earnings.
To give us a higher multiples to allow the higher stock prices.
So as boring as it is is not exciting is bonds are at this point we've been in the treasury market the agency market.
And we do keep some money in the equity market but it's at the lower end of normal equity -- for -- I'll tell you the stock core group of stocks that is really outperforming.
Today -- the down market is that health care stocks as they have at -- right now -- Four point 6% UnitedHealth -- some more amenable to the lesson that percentage wise and most of these stocks are higher with the talk over the weekend of the government run option maybe not being included in the health care plan administration apparently at least open to battle now.
Although now we're getting kind of mixed signals on that front is that a group to look at -- is just too risky because of the the news -- -- -- I did today it's it's all over the place but what's interesting when you take a look at the health -- sector it's been moving opposite of the overall market if -- -- -- 40050.
Point rally usually the worst performing sectors in health care on days where the market sell off the best.
Performing places health care.
But we like them.
The parts of the market that we like -- the high quality issues turns alluded to it over the weekend.
Are we do agree you wanna take a look at those companies that have low debt structure.
Recurring revenues consistent revenues over time.
Those are very -- in the market today in a lot of you like these sleep.
-- something like Coke and haven't busted you know what some -- -- -- parents -- -- good these giant did Johnson & Johnson is that it is another one -- BM is is one that we own in portfolios.
So those are the types of companies that does no matter the market environment no matter the economic environment.
They tend to do well.
But parents had an article the -- and blue chips were -- still looking strongest market that.
-- asking you know we we hear so much about economic data that's been less batted lead that got a lot of people excited that we see green shoots and we've heard that maybe -- -- is over.
A lot of talk about geopolitical issues possibly now coming more into play we've got the elections in Afghanistan coming up we've got a lot of regulation possibly coming -- Washington.
Not only help get in the financial markets and no -- knows how that's really gonna play out with the recovery of a lot of these banks.
I'm do you see those bigger issues playing -- a role in certain market data they united and also in their coverage.
Not so much when we take a look at a lot of the information flow what our focus really is more on the economic data both here.
And what we're seeing from a lot of the economic data is yes you're right it's less bad but I'll make the analogy.
Defiance is that if I expected you to fail math and you've got a the fact of the matter is -- did poorly and that's kind of where the economy is right now it is better than expected but it's still in Porsche it probably better -- music.
Evelyn and then besides don't build up of the -- there.
-- the -- but anyway.
You mentioned global economic.
Outlook I mean that was really what started this today the sell off was.
Chinese market is down a lot it's down I think 11% into the first two weeks of August which is pretty bad a lot of people say -- China's going to be what's prices out of this whole mess Japan.
Don't we thought the headline would be and I guess it's still could be a Japan's out of recession positive growth but guess what the growth wasn't as strong as forecast.
What did you think of -- the numbers coming from overseas today.
The numbers are bad but again remembered to China's doubled already off of the bottom so I think there's an in built in -- -- stock prices were a lot of those expectations so it may be in very much by the rumor sell the news.
At least for those of the very short term.
But we think over the next three to five years better opportunities are going to be in the overseas markets and they will be in the US.
We seem better growth in places like China and India.
And South America -- the brick countries as well.
Better than the US better opportunities.
So we have been concentrating more money overseas.
Even though the markets may be down today it's been a very good long term -- Current didn't see Paul again thanks for coming on and hopefully Chicago opens up for -- Friend that her -- account was no way to -- -- -- I just for the garbage that they -- about Paul -- out of Chicago and sales associates.
All right just get started here foxbusiness.com live as we've been talking about big market sell off today for what it's worth -- 162 points on the Dow but remember -- -- up so much these things happen.
In one day but wolf talk about what's ahead for the future -- -- we'll have that moment and his question for you.
Do you use your credit card or your debit card more often is actually some new numbers out.
On that we're gonna have breathing -- the system come off.
Now -- remember Dave Ramsey can be watching to be careful how you answer this but creditor -- Credit in all of my debit card I usually asked to -- credit right but I put your sense of the book the put it when you do that you use your debit card.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Okay current we will tell Dave and -- sent him Brian -- with us from bank cards it.
The Tower Group -- directed their journey from Tampa -- you know.
We wanted to talk about in general about this new report showed people using debit cards -- -- -- point out more than their credit cards we're gonna talk to our audience about which one they're using.
Kind of makes a lot of -- it's a lot of people using their -- it's Al fuses credit card turns out but it's.
Number -- feel confident what does this does not help quite a bit scary to Suffolk.
-- Brian what what about.
Kelsey is question of using a debit card and -- we get the details of this but we're nice we'll get to the spurs are using a debit card and but seeing credit.
When you're given the option -- -- matter.
Did not I was -- a couple ways -- and if you.
Use your pin to -- you'll go down the check processing network and you'll get.
You'll -- your checking account immediately if you go through the credit network.
You'll be going through a MasterCard -- visa authorization system which has a delayed affect someone adventure camp.
But a lot of that -- -- if you use your debit card you're not getting any extra fees like you get cash back or something like you would if you went to a bank outside it ATM outside your own bank.
Now but you won't be able to get the cash back if you go if you select credit market cash back -- get that back if you do the data.
OK so good to -- and actually stick with what you're doing there but I think that outfit and -- -- coming up that idea too by the way and I always the same music would have occurred.
Anyway art let's talk about the survey grind that is out -- -- -- this result these results in the new report from Tower Group that says.
Essentially and and you can go into details but if you -- -- People -- using debit more than credit these -- -- talk so much about this nation of debt and credit what have you but people are using a debit cards more when did this shift start to happen and and how -- how strong is that shift.
We'll call the debit card was introduced in 1999 the depth of the credit card and already been about.
Two decades old and the growth of the debit card has been pretty significant over the years but some of the economic factors are really fueling the growth of debit cards today.
An example is.
Credit card portfolios and credit card lines are.
Tightening up significantly and you see them.
In the industry indicators are good example is what the Federal Reserve does on a survey of lenders and they show that 70% of all credit card portfolio lenders have tightened their criterion today.
That coupled with that tightening of credit -- of new frugality with consumers right now savings rates are at a ten year high.
So people are pulling back some of their purchases.
And doing -- more consumable purchases on the debit card as opposed to the credit card.
And I actually act that rather -- -- users because.
The banks -- the same live feeds from the merchants that they do with credit purchase credit card purchases and debit purchases.
Yet we see would -- they get slightly less.
That at the same in income at live up and one thing I read it and maybe that's not -- the case.
-- actually this.
Actually the interchange -- that comes with debit cards is significantly less than what comes on -- credit -- -- -- kind of -- -- there but they do the one probably written in -- consumers have no academic part of the overdraft fees -- -- sometimes you know they're not sure exactly how much they have an account at the time -- you know.
Get -- that they don't judge it correctly they'll get and walked with an overdraft fee if they use their debit card.
Where the credit card to speak the -- -- right.
Yeah all the credit card has -- its own array of fees of as interest rates and it also has over credit limit rates of delinquency rates.
One of the challenges of what you just mentioned a minute ago that Kelsey is when people.
Don't really calibrate what they have in the account properly and they might get an authorization -- the point of sale when they use their debit card and they could have an outstanding check that would collide with that.
But it could cause either one of either that to overdraft or.
We've talked about this issue credit -- -- a couple times on the show in the pass I'm still waiting for a reason someone would use.
What Kelsey notwithstanding but she doesn't really use someone she's a debit card just -- credit which is different -- -- -- why would some.
Is there an argument for using -- credit card over a debit -- Sullivan heard one.
-- that the biggest discriminate here's what type of purchase she's doing if you have a durable expense.
Such as buying a brand new plasma TV Murphy have a consumable expense like buying milk and eggs and that's been.
One of the driving factors in building the -- the debit card volumes over time up until now.
We're people of kind of sorted out if I go to a gas station and I'm putting eighty dollars -- the gas -- my -- might as well take the hit on it with what I have in the count today right but the point as far as.
You would never use my main camera but you seem to be you would never use logic clearly side never would use a credit card -- had to another words in my site.
I felt like that month I wasn't gonna have enough money like it.
It is any other time if I'm given a choice that I actually feel like I have a choice I'd always pick Devin is that with the right -- me not them except try to now.
Yeah that's the best way to sorted out -- practically speaking but you also the occasions where.
People don't have the funds available and I need to live off of the credit card and that's one of the challenges in today's economy.
You have unemployment going into the 10% range and you have bankruptcies of the 35% growth rate.
There's a lot of stress out there with people's.
Personal finances financial situation.
What's also colliding with that situation though is that that credit card debt is getting harder to get.
Lines have been tightened across the board.
And there have been tightened in reaction to issuers who are not making profits is not one major card issuer this year.
That will post a profit because loss rates have almost tripled from two years ago.
And the credit card business model is built on the card business operates really well when you have about a three and a half percent loss -- What issuers are faced with today is about a 10% loss right.
So consumers still need to react you can't do much Internet shopping without a car.
It's very hard to travel without -- card so that the solution is that people now live have to live with what's available -- their accounts.
One of the challenges that the retail industry we'll see later this year actually went to holidays come into play.
Is that the people tend to accumulate debt in the fourth quarter of the year if they do their holiday shopping.
And a lot of that credit will not be available.
And protection for consumers.
Is it true that you get more protection using a credit card than you do on a debit card for big purchases.
Or be someone -- -- your identity or something like that yeah.
Yeah that's true they're the protections are much better on the credit -- side that the debit card has come a long way over the years.
Keeping in mind that what he -- the credit card using other people's money.
As opposed to the credit card we're using your.
The transactions -- that generally go through the branded card network so.
Back to you what you said before -- about you might use your debit card but -- a select the credit option.
Then you'll get similar credit protections that he would under the credit card terms.
Most major banks have zero loss.
Programs if you follow the rules that report -- that required almost very short term reporting of lost guards.
Right -- -- -- -- that's a good point and Tom.
Seek an upstate New Yorkers watching brought that up about.
Never using a debit -- he says specially for Internet purchase didn't feel comfortable with a debit card I -- Because security reasons and the you know so that's -- one of the events I guess of the critical you know.
I've actually gone through it seemed like five cards last couple years because of security breaches and what have you never lost anything out of the there was call often and just pain in the neck of the gonna change everything you have.
If you have anything automatically deducted from it but so that debit cards then -- doing -- Grind to keep up with this they're they're we're at at some -- -- -- -- you -- an -- -- the level playing field in terms security between credit and debit or.
Is that not just is that just not possible.
We have relatively short term basis film -- emerge as some of the things that people do today it might be to have a shadow accounts either have a secondary debit card.
That's not the normal account that you might be using.
It might be with a different bank -- the same bank.
-- to go through something like PayPal which really insulates you from.
A lot of the exposure you get with typical card fraud on the Internet.
I'm running out what the new credit card rules that are coming down the pike for -- credit card companies that are you know come out of Washington and fight they can't raise interest rates.
Unless you know but at -- -- customers sixty days overdue or they can't you know written people under 21 I think -- take -- credit card that apparent signature those kinds of things that are happening.
Is that -- change with -- credit for companies do and if so what should consumers be looking at now in anticipation of those changes to be sure they're on top of things in terms of this whole debate is whether it's better excuse predator to have it.
Played -- -- that's -- -- timely question because double really bring further change of the credit card model as we know it today if you keep in mind.
Under today's world issuers are under a lot of stress to make money in fact they're -- 1 February rolls around they're going to be dealing with not being able to use -- risk adjusted -- Risk adjusted -- says that I could look at how you use your card at modified my.
Credit card interest that -- charging along the way.
Instead of being able do that -- real time basis.
It will require that I have to freeze your rate for the first year I can increase.
And in order to make a further change if -- if you're.
So you lose your job and your performance deteriorates and you become much more risky I can only -- price another portion of the portfolio.
So that's another example by issuers will be very conservative and now they're lending their money that you could see that reflected in.
A report that stunned by the Federal Reserve Bank every month called -- nineteen and that shows -- revolving debt in the United States and revolving debt in the United States.
Has been trapped for about forty years going back in 1968 when it was three billion dollars has now -- all the way up to 974.
In the last four months that number has been driven down to 915 billion dollars and -- -- group expects we can see that as close -- 822 billion.
By the first quarter of next year so you have that tightening of credit and consumers need to be aware of that.
You need to bring a lot more practical purchasing and and even if this holiday season might not be as robust as the last two have been.
You know to be realistic and living within the means.
When you're an environment that unemployment is rising in your net -- has gone away you might not be able to be is frivolous and yet as you have been in the in the past.
So governance expenses is very important.
Then also being aware that those parts of the use today might be undergoing changes and not to rely on those as a safety valve for the family anymore.
Our Brian good to see existing discussion I think a lot of fuel weighing in on what they do you personally which is so helpful Brian Riley Tucker thank you Brian thank you.
Thanks very much we're gonna move on here talk more about these markets again let's put it up -- down 160 plus right now 9160.
Good I'm Nicole at the stock exchange there's the big board for an update on -- interest -- still ahead as well with some of the roadblocks and may be ahead for US stocks in the longer term basis.
This is fox this is dot com life.
Kind of interesting down the creditor vs debit it is side because people brought up some good reasons on -- security that maybe -- -- -- credit -- I was wondered about that and and a half an independent.
And I never I don't have this is not a lot right now so hopefully this island New York -- not a mug on the way as studio oddly enough -- -- -- -- -- -- I don't either answer I think cars that.
They -- person that there's nothing and none of them is nothing in the -- None of them on the single dollar right now so -- -- tomorrow and money on some of the got to go to I never have money with you about what.
Made a lot of people like that where yet Adam Adam Levin does neither he's coming up from my credit dot com he'll be Tucker credits and I was about -- credit -- so we'll keep on that story but we gotta get these markets again were down up.
A lot on the markets and somebody's front loaded up with cash Nicole -- them on the floor of these days.
A lot of money around -- -- -- I -- that I haven't chilly in the back and just can't get all the I want my sister and don't mind you know that you carry a lot of money on your pockets and out.
-- and one guy is seriously at the end of the day whether or not I hit BACM I remember one time we were six girls and we could win ten dollars together one time.
Yeah dad yeah.
That's how did that I have a few hundred bucks.
Think I'm happy to take credit cards now I know I'm now I'm -- or even got hailing cabs nowadays -- kind of kind of feel though it has fat or debit cards admitted -- -- right -- and get nothing article about the market's pretty ugly today and I nearly out well.
The Dow Jones Industrial Average down -- -- sixteen points but.
It's really give you the picture of what's really going on to go to the S&P 500 of those 500 Sox about 450.
Parts of the downsides of really shows -- the -- in this market.
It's obviously clearly the down volume outpacing up volume and we've had selling in basically every sector from energy.
Two the semiconductors the banking stocks -- retailers the drug index if you catch me picking up at that point.
See just how much selling was seeing in each one of those groups.
-- watching the -- yelled as well the ten year.
Yield right now at 3.4 8% to something interesting to keep -- well this is oil is -- back below.
66 dollars and certainly today isn't going back today give back day -- day to take profits whatever you want to call at -- One of the many reasons setting the tone we also came off an Asian and European trading we -- some -- -- there until as a result today -- -- -- that we see the -- back -- on Friday where the -- It was -- -- -- declined to lay back so we were thinking that maybe you might keep five straight weeks in a row of gains though last week we did.
Have by the end of the week managed to finish the end does the downside about fifty pointed -- that this week.
We've been getting a lot of housing data today -- an -- the number at 1 o'clock.
Throughout the week we're going to be getting all kinds of how -- that'll be something to watch as well but for today certainly we're seeing a -- and the question is whether or not tomorrow.
Good buyers will step back in or even later today because every time was so excited -- market -- take their profits or do whatever and certainly -- seemed.
-- -- in -- and -- on the debt so we have been seeing that we'll see if that trend continues and there are folks who think that about 101000 someone like Jason Weisberg.
What -- that is to keep quiet them until we hit 101000 whether you're at 9100 or any other level for that matter -- -- -- on the way up -- -- other folks were telling me they're selling.
And they're gonna keep selling until we have -- 7000 together people are certainly betting on land another event.
They don't seem to agree on one thing and that is it a little bit of a -- I'll let down after run out -- happening.
Here announcer call ends of the spectrum well done -- talked a little while thank you to call penalties giving it's up to -- on the market.
Selloff today which we're gonna talk more about as we continue here throughout the hour foxbusiness.com.
-- OK let's get back this conversation we've been having about credit.
Credit -- -- essentially -- and Adam Levin joins us now credit dot com are you good to see again thanks we were talking you know over the last 1015 minutes about this whole idea debit cards.
Over taking credit -- some growth Morton.
Better and stronger growth among debit cards which I guess is that surprising.
But what about from the bank's point of view they're turning this into profit has a thousand working out for them I still think.
Get better change change things on debit cards smashing when you use the one with the logos and so as a result they always find a way to do it then and with a debit cards they still have -- -- ATM fees and all sorts of other -- -- they have.
And so it's a continuing controversy debit cards are now in the lead.
The did that you have a good news about a debit card -- it's kind of a self executing control mechanism for consumers can only spend what's in your account.
The bad news is that if you lose or have your debit cards stolen the protections that are there for your credit card.
Are much better than the ones that are there for your debit card that's the downside.
We're talking about that in fact a lot of like I don't think realize that you have to notice the the problem within a certain amount of days if you don't think you're liable for certain yet the longer it goes the less they're gonna cover -- with your credit card.
Here we -- protected a lot more.
It's either zero or fifty and the other problem the debit card is let's say the institutions has they'll give you the money back the question then doesn't become if but when.
And if that's your grocery money red money here gas money -- school money could have a big problem while you waiting for the -- be restored your cap.
And with the Democrats you mentioned that it's it's easier for consumers to keep track of their -- perhaps they can't overspend their account.
So what does it mean for the banks because we need to please credit cards they get to charge interest.
On that money that was borrowed and you people may pay the minimum but it may not pay it off shore banks losing that interest payments that they were getting as debit card usage creeps up and -- what are they doing account.
Because they have different fees say they have a debit cards and SOS resolve that they always find new ways to make it -- -- overdraft -- when people do already -- they have a lot of wherever overspending fees and things like that that'll become controversial by the -- in the net you know and -- back and forth in Washington goes -- -- -- -- what's your take on these overdraft -- well what what's really happening now with the with the over limit -- in particular is the fact that.
You know now under the new law you can only charge an over limit fee if the consumer consents in advance.
To be allowed to go over the limit and then be charged to see right others that it should be allowed do in the first place right and you don't know today we know in the old days they would just.
Declined that the charge if you were to close to the limit.
Then they decided not to they wanted to make is it if it -- they were good guys but the truth is similar -- limit they chose the -- So you know and -- its business.
We may not agree with it but it but -- business and recently -- -- a number of credit for companies announced that they were eliminating.
Over limit fees.
But while they were doing that people have to remember all fees are fungible so they were eliminated over limit -- But raise.
The interest rate 4% -- a group of people like American Express did.
Or race late fees and another group of people.
And chase announced they were there's going they were eliminating arbitration clause is coming it's very interesting moves that are being made right now by the credit card.
Was get him one on one end to the other -- It is so it commune -- Tell us a little bit about what might be best for the consumers looking I mean it's just a personal choice really feel -- debit or credit Carter is there one that's maybe more advantageous.
I think -- cars are good if you were simply want -- card that you can go and get cash with.
You certainly wouldn't want to get a cash advance off credit card because the rates and cash advances are terrifying relative to the rates on purchases.
Debit cards are good because again it's a -- -- securing control mechanism for consumers.
The bad news is that day.
Had the debit card is the gateway to your bank account and an identity theft situations your bank account could go be the gateway to your life.
And the liability issue.
I also recommending consumers regardless whatever you use -- specially if using credit cards.
You need to look at your bank accounts in your credit card accounts every day for five minutes on line.
Just make sure every transaction that you see as your transaction so it's not an early warning for an identity theft.
And more importantly it's a reality check it forces you to look at -- -- spending to think about what you're spending and where you're spending your money.
It gives you an idea how close you are coming to that magic credit limit -- because a lot of the lenders now the credit card companies controlling their lists of borrowers.
Looking to see who is having -- usually high activity and looking to see who's coming close to the line.
And then you have a -- of account closings and credit limit reductions which is going on as well as part of his.
-- and right into the part that -- didn't think about as much that's happening before that you go out and headline today from from Capital One and I'm sure a lot of people in the same boat here that delinquencies are going up they went up they have their July numbers up for.
Four point eight.
Percent was that I was the rate I should say -- four point seven the month -- forces higher -- was right is that going to be continue to issue.
For the rest of the year I think it is delinquencies -- bigger problem you think yeah I think it is I think part of it's because of the job loss job situation and and the other part of it is that I'm still not convinced.
That a great deal -- problems we're seeing in the credit card area.
With people going off the tracks has to do with the credit card companies themselves and that is especially as they jockey to -- -- -- the regulations.
You have a consumer -- -- making minimum payments more than minimum payments that are on a budget they're on a plan -- on track and all of a sudden they find out their minimum payment has been doubled.
Not so bad because anything we do to help people reduce balance is as good.
But then they find out that their interest -- -- jumped by ten full percentage points.
That become suffocating.
That's part of the continuing problem consumers are going to be facing issue here for -- and stuff OK Adam good to see you again thanks for coming back thanks for having Adam Levin credit dot com has been on our show and I'm retired -- -- that on the credit.
Vs debit -- the issues in the credit card industry Santa triple come up in a moment to talk about the markets again and again it's -- It's a rough day and we're gonna see what happens next for these markets speaking of next Richardson is next from DC on the whole health care debate very very good.
Films over the weekend friends aren't we continue foxbusiness.com line.
Look at Kelsey -- handed Internet.
Bob McCarthy Chelsea have -- Milwaukee journal digital network and filling in for general all -- long as our guest host which is great markets are down central come along with more.
Detail on that.
In just -- second but let's get Richardson and hear from DC to talk health care because that's still.
To me the biggest topic in this country right now rich and now we're wondering whether the public option is on or off the table and you really have -- -- it.
Have one of these key levers that we can readers or something like that the figured out over the weekend right.
Yeah and it's still on the table -- has been on the table for quite some time will probably remain there for a little bit longer if if it's not even in the end product but what you're looking at now you have.
You know HHS secretary Kathleen civilians saying over the weekend that the public option is not the essential part of this planet and it seemed as though.
That -- the Obama administration is stepping back a bit from the it's rhetoric and its language when it comes to the health care debate saying that he wanted her prefers a public plan.
-- the White House even last week wasn't really saying whether a public plan had to be in there whether it was a -- even this morning.
The White House isn't mentioning and they're saying that we want choices we wanna health care exchange.
-- -- when it comes that public option they say they supported but they won't necessarily say.
They'll sign something or won't sign something.
If congress passes a bill without that public option so over in the senate you've got to the Senate Finance Committee.
They're writing a bill right now without that public option it's very appealing to moderate Democrats it's appealing to some Republicans.
But the Liberal Democrats are just incensed -- as they want a public plan that's really where it stands right now.
This is a blow to Obama and the administration that this is not believe this could perhaps could be taken out of the -- -- pretty I think him.
Out of it in the beginning that they wanted -- public option so is this being seen as sort of a big blow here.
It it is and it might be what gets health care through and I think.
The bottom line is for the Obama administration is they want Health Care Reform if it doesn't have a public option -- it.
They don't prefer that but they certainly prefer.
Passing a health care bill over passing absolutely nothing and -- no public letter co op is what it takes.
To get this through I think at this point the Obama administration would take -- let's talk politics and a lot of it is such an emotional issue I'm for good reason affects everybody so everybody gets very very emotional about it but you look at just the pure politics which is what you just brought up rich.
They -- -- get something passed how do you get a pass all right will you make some sort of a compromise to get Republican votes and the question becomes in making a compromise you anger your own base of -- so much that they're not gonna vote for it so it is kind of a rough balance.
The Obama administration to kind of strike here to -- It's -- -- be tough if you have this cooperative plan come into the finance committee I think he could pass the senate the problem is you have liberals in the house to have been complaining over the stimulus who complained about.
The cap and trade bill that passed the house they're saying we should not be listening to the senator moderates on this for the Democratic Party we should vote that way.
But that doesn't necessarily mean that they're going to get their work done.
I think the only test case she could probably use for this is that cap and trade bill.
The liberals weren't all that thrilled with that they gave most of the carbon credits -- to businesses to try to blunt the impact it would cap and trade would do.
You only had one or two Democrats on liberal on a liberal base is a vote against cap and trade so to pretty much.
The objections that they had on the liberal side of the party they were willing to take cap and trade as long as they got it through.
Out right now they're not.
That they're their rhetoric doesn't sound as though they would just -- with a health care bill that.
Did not have a public option but I think maybe you put a gun to their head eventually it may come down to that and the presidents cup.
Clearly more willing to bend and some of the more liberal members of his own party are for all this back and for that the president is.
It you know these are socialist policies only kind of things we hear -- much more willing to sacrifice it sounds like that's what we learned this weekend from.
Look -- from hearing from Kathleen Sebelius and others.
Then somebody like just just for example Barney Frank would do you think about those comments from Barney Frank was a week or two ago where he basically said -- was explicit in saying that the whole point.
Of this public option is so -- -- so that we can get to a single Payer system.
Eventually in this country which would be you know much more out there than any anything anybody's talking about right now.
Yet -- of the parties pretty strong right now Howard Dean and former democratic committee chairman was saying this weekend that you cannot reform health care without a public option.
For some it is the essential way to bring health care costs down for others have -- frank was saying.
It opens the door to it and eventual singer -- pails Payer system.
At which level Democrats are certainly looking for what the president's -- here is and has been with with and we looked a cap and trade -- look at the stimulus.
The president has an idea he sends his principles to congress and then he kind of sits back and just.
Prods congress to do its work and say get me a bill get -- bill -- and then when you -- to the white house on specifics.
They don't really get too specific they stay vegan above so far that's pretty much we've seats.
A far argued that this is really the books about this this is the point and the viewers started -- -- -- get -- right.
So Bruce writes and -- Obama -- to the center question mark doubted Stephen response Obama will never moved to the center if it.
That's it -- does it make any sense at all this is you think about the timing of where we are right now right.
We are in 2009.
There's not an election on the run for president until 2011.
From the president's point of view is a practical person.
You know if you wanted to say this but does he care that a few members of the house represented you can lose their seat over this probably not even in his own party -- the end of the day he cares whether he gets reelected so if he moves -- center.
He can say.
I pass this health care plan yet co ops instead of a public option but I'm reelected because I went out and said I did what nobody else could -- -- health care overhaul.
Did some members of my party lose their seats over.
Yeah I guess so but you know he can't come out and say that but it you know -- it -- pushed him to move through the center politically rich right now.
Politically he needs to get a health care bill pass it if it passes and -- it exactly and if it's if it has to be be asked to move to the center on that to get this past.
He'll do that and I don't think that that's an issue with the president.
You know he wants that public option this is also somebody you can add on to.
Later in your administration that something you want if you look at -- a lesson the last time that Health Care Reform was tried by the congress during the Clinton administration -- democratic counts.
I democratic congress he failed to get that through the president loses congress to the Republicans he moves more toward the center in the Clinton presidency in the benefits of it.
Are more known towards.
What -- accomplished after Health Care Reform.
And after after that that.
-- thank you rich thank you -- Good to talk to you we'll talk to see in this is they have people again people get fired up about it I think -- -- just think.
Time will tell whether this is churned up the most presidents cared about how I care about how to remember they care about history -- members.
And for good reason you're president you probably would too that's the only thing people remember that the end of the day is not how used you -- the specific issues of bills were and what have you but.
I'm a big issues for the network yeah that were accomplished and that I don't know an office and -- out -- that.
Proves that President Obama any different so we'll see how this complacent.
Anyway the job market is down we've been all -- that today it's been down all day started in Asia overnight down 165 now on the Dow.
Japan was down about 3% from -- over Asia with some of the economic data center Smith is here to tell us about some of the road -- -- may be ahead for the US market.
Now we're all that last week -- so we're talking you know.
Last couple weeks about how -- the green shoots the economy is recovering the market's taking off we've come 50% off the lows and in my continue and now.
One to mark down.
I had thought about -- Roadblocks -- Wal-Mart -- -- one down day 200 points that out everybody wants to know is this is this the end.
But you have to -- have -- given America some credit you know looking at it it looking at Dow Jones Industrial Average -- is a very telling story that down route 42%.
Since March ninth that's a huge run up.
OK but it's still off about 18%.
Since a very big day back in September September 12 this was the last trading day.
Before -- Lehman Brothers fell into bankruptcy so.
The question here among a lot of investors and analysts looking at this of course today as well.
Big question is why is the stock market not showing the same sort of recovery.
That we're seeing in other areas of the economy.
Some of those risky high yield bond markets they've made a full recovery -- comes to manufacturing ISM manufacturing index.
Making a full recovery actually back to levels we haven't seen since.
-- dissidents finds out -- saying that the market is not making it as strong or quick of -- recovery as some other areas of the market.
Now whether it's still a lot of momentum a lot of -- out there.
What may be a major roadblock going forward.
How often and we -- over the past six months or so.
I'll well the company still reported -- but 35%.
Drop in profits but it beat Wall Street estimates.
So a lot of the rally that we've seen in the stock market has been attributed.
To corporate earnings coming out better than expected so we had this -- big legs up in the market.
A lot of that coincided with -- better than expected quarterly reports coming out.
Question is can we keep that up.
Because what was happening -- big trend that we saw there was that revenues were actually down.
Profits were up as companies cut costs laid off workers.
He unit that's not a long term good seeing.
For these companies a lot of analysts out there saying hold on wait a second and one in particular in the Wall Street Journal this morning -- it -- Rich -- that portfolio management consultants sentences.
Part of a Chicago based Furman at about seven billion dollars in assets he said.
If corporate profits take years to return to pre crisis levels.
Said the stock market will probably take just as long to return to those pre crisis levels.
Not that means we might not see the market -- recover to where was in 2007.
For several years ago -- about that come.
-- -- well I think 2011 -- one needed profits and S&P 500 companies are expected to reach the 07 peak I think I'm right about that is what new if you look at how little lax imitation yet to -- back.
So that would mean so that would that would be the point is that would there would be essentially you're to have two years before we get back to that point -- the numbers.
Are alarming and I'm here I'm there for -- folks are watching this at -- -- our network companies in the S&P 500.
On track this year to report combined earnings per share -- sixty bucks about -- give or take a few cents.
Companies on average and S&P 500 reporting earnings per share but Condit about 83 dollars and -- were down.
43 all the different -- -- -- -- war layoffs as far as corporate earnings per share from where we were a few years ago so we have.
Not seen that part of the market recover.
The candidates are talking to our Indians who lives we discussed earlier this market is oversold we may see this pullback happening and you could get me to take -- account we're in August.
Very -- ball high volatility and low volume we happening right now so is this something that could we could see continued deterioration of what your talking to or we might just sort of waited no real reason -- period for -- and and that's a great point we don't know what happens when you have light summer volume in the light of the volume the bigger -- that you have -- -- mark.
It -- today got very a lot of volume and you've got this big swing in the market.
-- don't want to take away completely from the bulls up his -- like a lot of analysts are saying hey we might be looking at some of these bearish indicators right now.
The how many people at home think.
-- the market's been incredibly resilient to still a lot of bad news in the economy as we continue get those jobs reports out showing.
I continued job losses in the United States we still managed to rally -- can also a lot of analysts saying hey negativity.
At this point in the game.
It is not such a bad thing when everybody ball positioning also -- your tax senior taxi driver says well what's fox that I be buying that's kind of like the contrarian -- -- And I mean really talked about that as traders but you know right now to have a little -- activities probably -- that.
You know you're trading days are back in Chicago -- that -- -- the city shut down today you know Chicago.
It's close -- -- -- this is a true story that they the city Chicago or to talk about this the second but they've -- I'd pick of the garbage out there to try to save money oh yeah.
They -- shut down -- I -- She was in Chicago this morning.
-- filed last regularly what.
Horrible thunderstorms and came in first fight in the morning as the violence and it didn't didn't.
So anyway they have that and did you hear that the in Illinois they're they're raising taxes on candy bottled tea and coffee and medicated -- -- right.
Incredible because guess what Chicago has the highest sales tax.
On everything in the country there at 10% from him than that apparently gone out for some property -- New -- was expensive that it useful knowledge.
All right Dan thank you so we're we're gonna talk about -- hometown of Chicago -- -- terrible things that are happening there next.
-- hot -- this is done online.
Carter Jimmy stories out of Illinois today we'll get to Steve Brown Fox News of the moment on this set shut down and we're talking about trying to say it's bill.
But first Adam are precious and David Wright joins -- Illinois retail merchants association's president.
CEO David good to see you as -- said the center before we took quick break there.
Taxes going up September 1 right.
Candy bottled tea coffee all these kinds things so.
What's this what's this all about.
Well equipment taxes are the definition of the categories you've just described are changing -- it's a modernization of the system.
Under current law that is until September 1.
Iced -- bottled iced tea Lipton brisk Arizona iced -- the snapple products etc.
Have been tax -- at a rate of about six a quarter percent less than their counterparts in Pepsi or Coke or 7UP.
And no this isn't a commercial for any of those products but breaks no sense.
To have one type of soft drink being taxed at.
About 2% and then or 3% in the city of Chicago.
And six and a quarter percent down most everywhere else why it was that way to begin with -- -- -- ask what is on the do with the you know well so did not being as healthy as I see yours and is that nothing to do with it at all.
Now there's nothing to do -- that back when that when soft drinks were defined as a nonfood items in them in the mid eighties.
There weren't iced tea products out there.
As soon as the market has changed as new Protestants -- onto the market.
It's time to change the the statute so that you've -- there.
By public policy that there isn't one product to is who -- advantaged or another who -- disadvantage based on the tax policy of the state.
And stick it to hear you got -- -- from consumers.
In this sound that you could be a little bit of PR.
Problem with taxes going up on certain products in such a hard economic time that you were a lot of consumers are very very hard hit in the -- pocketbook right now and are they.
Rebelling against the then ailing wondering why this is happening now.
Well we haven't seen anyone rebelling.
Remember that through the reason that that these tax definitions are changing.
He has to fund a thirty billion dollar public works program.
Throughout the state of Illinois -- roads bridges.
Mass transportation and and and schools so those dollars were approved by the general assembly.
Approved by governor Quinn.
-- to get back to the place where maybe put some people back to work.
And frankly I'm not sure that citizens in Illinois.
Realize that when they get a twelve pack of Pepsi.
And a twelve pack of -- didn't brisk iced tea that there are taxed differently today and I don't think that don't notice the difference -- September 1 comes around -- leveling the playing field on the similar products all right David.
That's -- that's exactly right right it's leveling the playing field good enough.
-- invite Illinois retail merchants association the CEO there with us today from Chicago which is also -- fine.
Which is which is also where we find Steve Brown -- Fox News who joins us now to talk about this story we were.
Halfway kind of joking around about earlier with the whole city being shut down but is no joke they're trying to save money because it is a it's a rough situation there fiscally.
And what does this mean -- shut down -- city Chicago.
Up for all practical purposes it needs no garbage it means a city offices are closed City Hall is shut down city run health clinics are shut down.
It means that the senior senators that are operated by the city government they're all closed today essential services are still up and operating we're talking about fire police.
Ambulances that sort of thing.
But essentially the city believes between today and she -- more furlough days scheduled.
For the remainder of this year which will be Christmas Eve and the day after Thanksgiving that's all they'll save about eight million dollars.
It's not even close to what it is the city anticipates being shortened terms of revenue this year he estimates from the city or 300 million.
Estimates outside of the city taking a look at it from the outside in suggests that could be as high as half a billion dollars so they will save some money today but -- got a long ways ago.
According to -- camps right now.
Before just talk we'll talk a second about the fiscal situation never let me ask you the most obvious and practical question -- standing right down the middle.
Of the city and how -- things today what effect does it happen.
I mean you still hear the ambulances and the police if you don't carriages going down the streets on me I'm meeting them for those that are reliant.
City run services senior -- we've you know had a camera out and people were walking to go -- I mean it's part of their social networking.
These are places that when the city gets extraordinarily high they set up Cooper -- extraordinarily hot -- -- of cooling centers are seniors have a place to -- -- keep them from you know threatening their help so I mean they're -- an awful lot of things going on playing into their hands of the fact that schools are open today which helps a great deal.
The letter is good which helps a great deal but I -- otherwise have been I don't know that folks walking down the street that don't use those services visitors here in town.
Would necessarily notice because the police are still on patrol fire roads are still answering call and ambulances are still being -- where their medical Americans.
Season -- they're planning three days at this point if this goes off -- without a hitch is that people don't really notice that in their data they have reason to think that more days could possibly be added that the city is enough let's and a budget shortfall.
This -- -- unions pretty hard immediately and they understand what's what's at stake here it's either accept these holidays and a couple of days without pay or accept the fact that -- -- your membership may be hearing into the pink slip and headed out in the street.
So I think there's a certain understanding about it we'll show you something that probably.
Is bothering some -- Sunday newspaper yesterday Chicago Tribune did an excellent job.
What's in the all the -- expense accounts just last year there expense accounts were doubled to the amount of 73000.
And change and the -- in middle of this.
Downturn in the middle of this economic crisis -- workers are being furloughed.
While -- themselves suvs and luxury automobiles and higher than one -- -- Alderman hired his mom.
You know there's been all sorts -- kind of fishy things going on.
-- city -- not exactly tightening their belts to reflect what is happening with some city workers.
-- an awful lot of union folks that are Al you know not working today got a day off they're not gonna -- today's -- Report meanwhile they got city all the men who -- you know finding more money to be able to spend and including hiring you know one -- and only hiring his mom.
In justifying it by saying you did you'd put around for mayor Daley's job -- thought he could get it but I mean there's a certain mentality here in the city of Chicago it I swear that's the quote.
There's a certain mentality here in the city of Chicago that you know get get.
You can justify it to your you know your media desperate to your constituents.
It must be good economics it's not good economics -- -- good government it's good government equals good economics which sometimes is -- this time around -- -- little.
What what -- -- The mom doing problems that we'll.
-- -- -- -- -- -- -- -- She was working she was working in and all the -- office you know has a liaison and and and and this is not uncommon it happens at all levels of government that doesn't make it right -- it happens by.
Particularly when you have a situation where.
The state is several billion dollars a bit short in the red.
Build -- city which could have by year's end I have to billion dollars in shortfall and facing some really difficult decisions.
Coming up quality how close of this year.
Palm isn't really the time even if you -- allocated the money and are doing things legally right in and spending it it properly.
You know isn't the time to start spending more money out of the city all the results what message is that -- to only people live in the city but the people work in this city.
What how serious is the city government.
Taking you know -- its financial crisis and how serious is it going to be tackling it it this is the kind of shenanigans that goes on in the old Lawrence offices.
If you aren't Steve Brown thanks a lot for joining us here -- fox business for a few minutes Steve Brown Fox News Channel joining us from the streets of Chicago and city shut down but there's no other running into.
You know I'm happier with my mom might be sitting and I didn't say that why it's taking a lot of.
We can't bring my mom that we can have -- his next job the stage manager Harry Hamlin and we're in the knowledge of my mom could chemists and stuff for us she's involved.
My mom this weekend that can take an early vacation that's fine if he was -- Anyway.
All right so -- its existing I guess we'll talk tomorrow you're here all week post in which he said.
We'll see as the week goes on -- OK I think -- be -- yet these markets acts as the week goes on we'll be.
Are we gonna see kind of an aggressive self through the week that we really -- see this the start of something or some of those portfolio managers -- fell behind it and -- relic has pneumonia and it until it was too -- back -- they jump in Atlanta.
And it isn't using it again on top of that with Sandra thank you about the fact that we're in this -- -- period the marketplace traditionally that's very you know quiet end of August -- from vacations.
Right volume high volatility when we're seeing now we'll see how that plays out in the up and swings.
That's when my thing so we don't know.
You know when we don't -- also -- -- And that's right you can always watch -- -- -- -- kickass show live noon eastern time foxbusiness.com live or download the podcast on iTunes we'll see vacuum at noon tomorrow again.
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