High earners will see the amount of money they can save into a pension drastically reduced next year, after the Treasury confirmed on Thursday a package of cuts to pension tax relief.
From next April, people will be able to save only £50,000 a year into a pension with tax relief, down from a current annual limit of £255,000.
Higher-rate taxpayers will also be allowed to keep tax relief at their marginal rate on pension contributions up to the £50,000 limit. There had been fears the government would restrict tax relief to 20 per cent for everyone.
The lighter-than-expected measures attracted relief from the pensions industry, who had lobbied for a higher contribution limit.
“The allowance of £50,000 allows the vast majority of people to save as much as they want, when they want,” said Andrew Tully, senior pensions policy manager at Standard Life.
However, consultants warned that the annual limit could hit people in final salary schemes with unexpected tax bills if they receive a pay rise, due to the way their pension benefits are calculated. People on earnings as low as £60,000 could be affected, depending on how long they have been in their final salary scheme.
The lifetime allowance for how much each person can pay into a pension will also be reduced from £1.8m to £1.5m, though this is not expected to come into effect until April 2012.
The coalition government’s proposals on pension reform replace those of the previous government, which had proposed limiting tax relief on contributions for people earning over £150,000.
The new measures were drawn up in response to complaints from the pensions industry that the previous proposals were too complicated.
“These new proposals are a significant improvement on the approach proposed by the previous government, which was simply unworkable,” said John Cridland, deputy director-general of the CBI.
“Today’s announcement is not as bad as feared.”
Thursday, October 14, 2010
Monday, July 19, 2010
US vice president says reform of Wall St ends uncertainty
THE passage of Wall Street reforms by Congress helps the US economic recovery now under way by easing uncertainty that had been holding back investment, Vice President Joe Biden said yesterday.
Biden said financial regulation legislation passed on Thursday would encourage businesses that were hesitant about expanding to move ahead.
“The very uncertainty they had (has) now been settled by the passage of the reforms. They didn’t know which way they were going to go. They didn’t know how much was going to happen,” he said in an interview.
The Senate gave final congressional approval to the sweeping shake-up of rules designed to tighten financial industry oversight, limit risky lending practices at the root of the 2007-2009 financial crisis, and create a consumer watchdog agency.
“It’s passed. And they’re going to know how to deal with it,” Biden said.
The bill, a year in the making, is set to be signed into law by President Barack Obama on Wednesday. It joins healthcare reform as another key legislative achievement by Obama this year as the Democrats try to maintain political control in congressional elections on 2 November.
Biden said financial regulation legislation passed on Thursday would encourage businesses that were hesitant about expanding to move ahead.
“The very uncertainty they had (has) now been settled by the passage of the reforms. They didn’t know which way they were going to go. They didn’t know how much was going to happen,” he said in an interview.
The Senate gave final congressional approval to the sweeping shake-up of rules designed to tighten financial industry oversight, limit risky lending practices at the root of the 2007-2009 financial crisis, and create a consumer watchdog agency.
“It’s passed. And they’re going to know how to deal with it,” Biden said.
The bill, a year in the making, is set to be signed into law by President Barack Obama on Wednesday. It joins healthcare reform as another key legislative achievement by Obama this year as the Democrats try to maintain political control in congressional elections on 2 November.
Wednesday, June 23, 2010
British Airways merger 'back on track'
BRITISH Airways has said it has agreed a recovery plan for its underfunded pension schemes in a move which paves the way for its merger with Spanish rival Iberia.
The embattled airline said its agreement with pension trustees would avoid closure of the two final salary company pension schemes – which together have nearly 100,000 members.
It aims to pay £330m a year, rising in line with inflation, until 2023 and 2026 for the two schemes to plug a gaping £3.7bn deficit.
But members will have to either pay more to maintain the same benefits, or see their pension pots reduce.
BA, which has around 700 staff in the North East, will submit the plans to the Pensions Regulator by the end of June and Iberia now has three months to consider the pensions deal.
The pension recovery programme had been a major sticking point in the Iberia merger and Iberia still has the option to call off the tie-up if it does not agree with the arrangement.
BA struck an agreement in March with trade unions on the pension changes, which will see members accept a reduction in benefits.
However, those in the larger of the two schemes – the 68,800-strong New Airways Pension Scheme (Naps) – can pay 4.5% more in contributions to maintain existing benefits.
BA chief financial officer Keith Williams said: “The trustees understand that the airline is unable to increase its contributions in the current financial climate but we have agreed a recovery plan that avoids closing the pension schemes, gives Naps members choice over their future pension accruals, and increases the prudence of the assumptions employed in managing the scheme.”
The Naps scheme has a deficit of around £2.7bn, while the Airways Pension Scheme (Aps) – with around 31,000 members – is some £1bn in the red. They both closed to new members years ago – Naps shut in 2003 and Aps in 1984. But they have been under threat amid mounting funding pressure from falling stock markets and increasing liabilities as members live longer.
An Iberia spokesman said BA’s pension agreement was “a positive step forward in the merger process. The next step will be Iberia’s decision on the pension recovery plan.”
The embattled airline said its agreement with pension trustees would avoid closure of the two final salary company pension schemes – which together have nearly 100,000 members.
It aims to pay £330m a year, rising in line with inflation, until 2023 and 2026 for the two schemes to plug a gaping £3.7bn deficit.
But members will have to either pay more to maintain the same benefits, or see their pension pots reduce.
BA, which has around 700 staff in the North East, will submit the plans to the Pensions Regulator by the end of June and Iberia now has three months to consider the pensions deal.
The pension recovery programme had been a major sticking point in the Iberia merger and Iberia still has the option to call off the tie-up if it does not agree with the arrangement.
BA struck an agreement in March with trade unions on the pension changes, which will see members accept a reduction in benefits.
However, those in the larger of the two schemes – the 68,800-strong New Airways Pension Scheme (Naps) – can pay 4.5% more in contributions to maintain existing benefits.
BA chief financial officer Keith Williams said: “The trustees understand that the airline is unable to increase its contributions in the current financial climate but we have agreed a recovery plan that avoids closing the pension schemes, gives Naps members choice over their future pension accruals, and increases the prudence of the assumptions employed in managing the scheme.”
The Naps scheme has a deficit of around £2.7bn, while the Airways Pension Scheme (Aps) – with around 31,000 members – is some £1bn in the red. They both closed to new members years ago – Naps shut in 2003 and Aps in 1984. But they have been under threat amid mounting funding pressure from falling stock markets and increasing liabilities as members live longer.
An Iberia spokesman said BA’s pension agreement was “a positive step forward in the merger process. The next step will be Iberia’s decision on the pension recovery plan.”
Thursday, June 3, 2010
US dollar gains as the Euro wanes
The past two days the markets have been looking to today’s US employment report for clues as to the next direction these markets will likely take. With that we have seen the return of a certain amount of risk appetite with respect to equity markets, with both the Dow and S&P500 just failing to break above their respective 200 day moving averages yesterday.
Positive US retail sales data, (up 2.5%) and the solid ADP report helped boost this positive mood amongst investors yesterday.
This appetite for risk however has been less resilient with respect to currencies, with the US dollar continuing to remain fairly buoyant.
US non farm payrolls are expected to come in at around 525k for May, which would be the biggest increase since 1983, so any disappointment here, could well provoke a sharp reaction, considering the ambient bullishness of some investors about these numbers.
The reason the forecast is expected to be so high is due to census hiring boosting the numbers.
The US dollar continues to attract safe-haven buying on the back of continued concern in the euro zone about sovereign debt and credit market liquidity with European banks remaining extremely nervous with respect to their lending between each other. European Central Bank data suggests that these European banks have parked just over €320bn in the overnight deposit facility in preference to lending to other banks at higher rates.
This continued reliance on the ECB coupled with the news that Hungary was at risk of a Greek like crisis, has continued to dampen sentiment and increase the likelihood that the European Central Bank will need to hasten further liquidity measures ahead of, or at its rate meeting, next week.
Economic data hasn’t been of any help either as Euro zone retail sales released yesterday showed a slump by 1.2% in April, against an expectation of a small rise of 0.1%.
With the market focus on the US employment report it should also be noted that Euro zone Q1 GDP is due out today as well with an expectation of a 0.2% rise.
The dollar has also been helped by various comments by Kansas City Fed hawk Thomas Hoenig who suggested that the Fed Funds rate may have to rise to 1% by the end of the summer and by Dallas Fed President Richard Fisher, who suggested that the time for tightening monetary policy was getting closer.
The election of monetary dove Naoto Kan as Japanese Prime Minister has also served to further weaken the yen as he is reputed to be an advocate of further monetary easing measures in order to stimulate the Japanese economy.
EURUSD – the single currency continues to find each rally off its recent lows shallower with each passing attempt. Yesterday we stalled at 1.2330, the day before 1.2350 and last Friday the rally stalled at 1.2455.
As said before the 1.2135 level remains the proverbial line in the sand, and we need a daily close below here to set off a move towards the 1.1700 level, and 2005 lows.
There is minor resistance around the 1.2350 area but to break higher significantly we would need to see a break above the 1.2450/60 level for a move towards 1.2700 to unfold.
GBPUSD – the pound has so far been unable to re-test the 1.4780 level of earlier this week. While we stay above trend line support which is now at 1.4570, the odds continue to favour another test of the 1.4780 level, and possibly even 1.4850. A break below 1.4535/45 would re-target the lows around the 1.4430/40 area.
Key support level remains around the 1.4230/50 level and remains the key barrier to any further sterling declines in the short term. The 1.4000 level remains a key support on a monthly close.
EURGBP - the Euro continues to find rallies difficult to sustain failing just short of the breakout level that was the previous 18 month lows. The next target remains the 0.8250 level on the way towards the 0.8170 level.
The 0.8170 level is a 50% retracement of the up move from the 2007 lows at 0.6537 to the 2008 highs at 0.9801.
USDJPY – the election of Naoto Kan as Japanese Prime Minister this morning continues to weigh on the yen, falling back yesterday from the 92.80 level, which remains the next obstacle for a move above 93.00 towards the 93.30 area. With short term indicators looking a little overbought we could see a slip back towards the 91.45 area on a break below the support at the 92.20/30 area.
Recent range support remains around the 90.70/80 area.
Positive US retail sales data, (up 2.5%) and the solid ADP report helped boost this positive mood amongst investors yesterday.
This appetite for risk however has been less resilient with respect to currencies, with the US dollar continuing to remain fairly buoyant.
US non farm payrolls are expected to come in at around 525k for May, which would be the biggest increase since 1983, so any disappointment here, could well provoke a sharp reaction, considering the ambient bullishness of some investors about these numbers.
The reason the forecast is expected to be so high is due to census hiring boosting the numbers.
The US dollar continues to attract safe-haven buying on the back of continued concern in the euro zone about sovereign debt and credit market liquidity with European banks remaining extremely nervous with respect to their lending between each other. European Central Bank data suggests that these European banks have parked just over €320bn in the overnight deposit facility in preference to lending to other banks at higher rates.
This continued reliance on the ECB coupled with the news that Hungary was at risk of a Greek like crisis, has continued to dampen sentiment and increase the likelihood that the European Central Bank will need to hasten further liquidity measures ahead of, or at its rate meeting, next week.
Economic data hasn’t been of any help either as Euro zone retail sales released yesterday showed a slump by 1.2% in April, against an expectation of a small rise of 0.1%.
With the market focus on the US employment report it should also be noted that Euro zone Q1 GDP is due out today as well with an expectation of a 0.2% rise.
The dollar has also been helped by various comments by Kansas City Fed hawk Thomas Hoenig who suggested that the Fed Funds rate may have to rise to 1% by the end of the summer and by Dallas Fed President Richard Fisher, who suggested that the time for tightening monetary policy was getting closer.
The election of monetary dove Naoto Kan as Japanese Prime Minister has also served to further weaken the yen as he is reputed to be an advocate of further monetary easing measures in order to stimulate the Japanese economy.
EURUSD – the single currency continues to find each rally off its recent lows shallower with each passing attempt. Yesterday we stalled at 1.2330, the day before 1.2350 and last Friday the rally stalled at 1.2455.
As said before the 1.2135 level remains the proverbial line in the sand, and we need a daily close below here to set off a move towards the 1.1700 level, and 2005 lows.
There is minor resistance around the 1.2350 area but to break higher significantly we would need to see a break above the 1.2450/60 level for a move towards 1.2700 to unfold.
GBPUSD – the pound has so far been unable to re-test the 1.4780 level of earlier this week. While we stay above trend line support which is now at 1.4570, the odds continue to favour another test of the 1.4780 level, and possibly even 1.4850. A break below 1.4535/45 would re-target the lows around the 1.4430/40 area.
Key support level remains around the 1.4230/50 level and remains the key barrier to any further sterling declines in the short term. The 1.4000 level remains a key support on a monthly close.
EURGBP - the Euro continues to find rallies difficult to sustain failing just short of the breakout level that was the previous 18 month lows. The next target remains the 0.8250 level on the way towards the 0.8170 level.
The 0.8170 level is a 50% retracement of the up move from the 2007 lows at 0.6537 to the 2008 highs at 0.9801.
USDJPY – the election of Naoto Kan as Japanese Prime Minister this morning continues to weigh on the yen, falling back yesterday from the 92.80 level, which remains the next obstacle for a move above 93.00 towards the 93.30 area. With short term indicators looking a little overbought we could see a slip back towards the 91.45 area on a break below the support at the 92.20/30 area.
Recent range support remains around the 90.70/80 area.
Tuesday, May 25, 2010
'Unfair' bank charges to be banned, government proposes
Last year, the Office of Fair Trading suffered a high profile legal defeat in its attempts to regulate bank charges.
The government's plans also include powers to ban "excessive" interest rates on credit and store cards.
Among the other measures are a promise to give homeowners more protection against "aggressive" bailiffs.
Courts will also be told that repossessions must always be a last resort.
Continue reading the main story I expect pressure, especially on the state-owned banks, to sharply reduce their charges
Martin Lewis
Moneysavingexpert.com
'Historic' deal
The plans policy-by-policy
Under another proposal, people taking out a store card for the first time will be given a seven-day cooling off period, which is aimed at stopping some people getting into debt in the first place.
Reaction
Marc Gander of the Consumer Action Group, a leading campaigner on bank charges, welcomed the government's commitment, but said it would be important to see the detail.
"It [the government] does not define 'unfair' or say what protections will be granted overall," he said.
Martin Lewis of Moneysavingexpert.com also welcomed the new policy.
"I expect pressure, especially on the state-owned banks, to sharply reduce their charges," he said.
"If they don't play ball, the government needs to legislate to make this happen."
The British Bankers' Association played down the implications of the government's threat.
"The OFT has already looked into bank charges and in March this year reported that 'real progress' is being made by the industry in making current accounts work well for customers," said a spokesman.
"Competition is driving down the cost of other accounts that provide a whole range of different features as part of the package," he added.
Advice and debts
The expanded policy programme of the new government adopts two policies that had already been set in train by the previous Labour administration.
Firstly, there will be a free national financial advice service. A similar policy was announced in March after three years of planning and pilots.
The version being suggested by the coalition will be funded by a new levy on the financial services industry, rather than by the government and the Financial Services Authority as planned by Labour.
Secondly, the coalition will also halt the ability of creditors to get a court order allowing them to seize and sell the homes of borrowers who have unsecured debts.
In February, the Ministry of Justice said it was looking at setting a minimum level of debt before a court order could be obtained.
Now, the coalition government says it will ban court orders for the sale of properties where the unsecured debt is below £25,000.
Pensions
The coalition programme adds some extra pension policies to those first announced by the new government on 11 May.
It says it will look at giving people "flexibility" to get their hands on part of their personal pension pots early - in other words drawing lump sums to spend before retirement.
And in response to pressure from the pension industry, the government says it will "simplify" the rules and regulations that surround pensions to "reinvigorate" company pension schemes.
This is usually taken to mean relaxing the current requirements to offer spouses pensions and some form of index-linking, to make final-salary schemes less expensive for companies to fund.
Joanne Segars, of the National Association of Pension Funds, said the government should be very cautious about letting people have early access to pension savings.
But she welcomed the idea of genuine simplification.
"There have been 800 changes to pension regulations since 1995 - flexibility will slow the exodus from defined benefit schemes in the private sector we are seeing at the moment," she said.
The government's plans also include powers to ban "excessive" interest rates on credit and store cards.
Among the other measures are a promise to give homeowners more protection against "aggressive" bailiffs.
Courts will also be told that repossessions must always be a last resort.
Continue reading the main story I expect pressure, especially on the state-owned banks, to sharply reduce their charges
Martin Lewis
Moneysavingexpert.com
'Historic' deal
The plans policy-by-policy
Under another proposal, people taking out a store card for the first time will be given a seven-day cooling off period, which is aimed at stopping some people getting into debt in the first place.
Reaction
Marc Gander of the Consumer Action Group, a leading campaigner on bank charges, welcomed the government's commitment, but said it would be important to see the detail.
"It [the government] does not define 'unfair' or say what protections will be granted overall," he said.
Martin Lewis of Moneysavingexpert.com also welcomed the new policy.
"I expect pressure, especially on the state-owned banks, to sharply reduce their charges," he said.
"If they don't play ball, the government needs to legislate to make this happen."
The British Bankers' Association played down the implications of the government's threat.
"The OFT has already looked into bank charges and in March this year reported that 'real progress' is being made by the industry in making current accounts work well for customers," said a spokesman.
"Competition is driving down the cost of other accounts that provide a whole range of different features as part of the package," he added.
Advice and debts
The expanded policy programme of the new government adopts two policies that had already been set in train by the previous Labour administration.
Firstly, there will be a free national financial advice service. A similar policy was announced in March after three years of planning and pilots.
The version being suggested by the coalition will be funded by a new levy on the financial services industry, rather than by the government and the Financial Services Authority as planned by Labour.
Secondly, the coalition will also halt the ability of creditors to get a court order allowing them to seize and sell the homes of borrowers who have unsecured debts.
In February, the Ministry of Justice said it was looking at setting a minimum level of debt before a court order could be obtained.
Now, the coalition government says it will ban court orders for the sale of properties where the unsecured debt is below £25,000.
Pensions
The coalition programme adds some extra pension policies to those first announced by the new government on 11 May.
It says it will look at giving people "flexibility" to get their hands on part of their personal pension pots early - in other words drawing lump sums to spend before retirement.
And in response to pressure from the pension industry, the government says it will "simplify" the rules and regulations that surround pensions to "reinvigorate" company pension schemes.
This is usually taken to mean relaxing the current requirements to offer spouses pensions and some form of index-linking, to make final-salary schemes less expensive for companies to fund.
Joanne Segars, of the National Association of Pension Funds, said the government should be very cautious about letting people have early access to pension savings.
But she welcomed the idea of genuine simplification.
"There have been 800 changes to pension regulations since 1995 - flexibility will slow the exodus from defined benefit schemes in the private sector we are seeing at the moment," she said.
Monday, April 26, 2010
Split mortgage offers borrowers some flexibility
WITH experts divided on when and how quickly interest rates may eventually start to rise, HSBC has thrown a new option into the ring for borrowers to consider.
The new two-year split mortgage offers three options in the way you divide up your mortgage borrowing. You can opt for half at tracker rate and half at fixed rate, 75% tracker and 25% fixed or 25% tracker and 75% fixed.
The rates on offer are very competitive, but the higher the fixed portion the higher the overall rate becomes.
This is not surprising because it mirrors current pricing patterns in the mortgage market as a whole.
A 75% fixed/25% tracker deal is priced at 2.99% for a 70% loan to value ratio (LTV) and 3.89% to 80% LTV, with rates as low as 2.49% for the 25% fixed/75% tracker 70% option. All deals come with a £999 booking fee and the split loan mortgage is available to a maximum of £500,000.
This product also gives borrowers the option to pay their booking fee now and delay drawing down the mortgage for up to six months, therefore customers with deals due to end before October 31 this year have the option to lock in now.
The flexibility of this product may also manage to tempt some of those consumers still sitting on the standard variable rate (SVR) fence who have not been sure which way to jump.
The beauty of this combined mortgage product is that you have the ability to fix the bulk of your borrowing but at the same time can overpay without limitation on the variable rate element of your loan, and this flexibility will certainly appeal to those who receive regular bonus payments or are looking to pay down their mortgage quickly.
Mortgage lending remains subdued and with the current levels of economic and political uncertainty things are unlikely to pick up markedly in the short term. However, this innovative move from HSBC which gives borrowers more choices is a positive step and should be applauded.
The new two-year split mortgage offers three options in the way you divide up your mortgage borrowing. You can opt for half at tracker rate and half at fixed rate, 75% tracker and 25% fixed or 25% tracker and 75% fixed.
The rates on offer are very competitive, but the higher the fixed portion the higher the overall rate becomes.
This is not surprising because it mirrors current pricing patterns in the mortgage market as a whole.
A 75% fixed/25% tracker deal is priced at 2.99% for a 70% loan to value ratio (LTV) and 3.89% to 80% LTV, with rates as low as 2.49% for the 25% fixed/75% tracker 70% option. All deals come with a £999 booking fee and the split loan mortgage is available to a maximum of £500,000.
This product also gives borrowers the option to pay their booking fee now and delay drawing down the mortgage for up to six months, therefore customers with deals due to end before October 31 this year have the option to lock in now.
The flexibility of this product may also manage to tempt some of those consumers still sitting on the standard variable rate (SVR) fence who have not been sure which way to jump.
The beauty of this combined mortgage product is that you have the ability to fix the bulk of your borrowing but at the same time can overpay without limitation on the variable rate element of your loan, and this flexibility will certainly appeal to those who receive regular bonus payments or are looking to pay down their mortgage quickly.
Mortgage lending remains subdued and with the current levels of economic and political uncertainty things are unlikely to pick up markedly in the short term. However, this innovative move from HSBC which gives borrowers more choices is a positive step and should be applauded.
Tuesday, March 30, 2010
Friday, March 19, 2010
Stocks end mixed after price, jobs reports
Major stock indexes ended mixed Thursday on more evidence that the economy is regaining strength at a slow pace.
The Dow Jones industrial average rose for an eighth straight day, its longest unbroken climb since August. The Dow gained 46 points while broader indexes were little changed.
Reports indicated that inflation remains in check and manufacturing is growing. The government said, however, that first-time claims for unemployment benefits only inched lower.
The Labor Department said its Consumer Price Index was unchanged in February and that initial jobless claims fell last week. Meanwhile, the Philadelphia Federal Reserve said manufacturing in its region increased this month. The Conference Board, a private research group, said its index of leading indicators rose at a slow pace last month.
"The market has been grinding higher on what has been benignly positive news," said Alan Gayle, senior investment strategist for RidgeWorth Investments. "There is a growing sense the economy is plodding along in the right direction."
Renewed concern about economic troubles in Greece kept the gains in check. The country said it might turn to the International Monetary Fund for support if European leaders can't agree to a bailout plan next week.
Stocks have been in a steady climb for about five weeks as economic reports signal the economy is seeing modest improvement.
The Dow rose 45.50, or 0.4 percent, to 10,779.17. That marks the highest close since Oct. 1, 2008. The Dow last rose for eight straight days in the period ended Aug. 27.
The broader Standard & Poor's 500 index slipped 0.38, or less than 0.1 percent, to 1,165.83, while the Nasdaq composite index rose 2.19, or 0.1 percent, to 2,391.28.
Bond prices fell and yields rose following the economic reports. The yield on the benchmark 10-year Treasury note rose to 3.68 percent from 3.64 percent late Wednesday.
The dollar rose against other major currencies. Gold rose.
Crude oil fell 73 cents to settle at $82.20 per barrel on the New York Mercantile Exchange.
The Labor Department's Consumer Price Index was flat. Excluding volatile energy and food prices, it rose 0.1 percent. Economists polled by Thomson Reuters forecast an increase of 0.1 percent in both measures of inflation. On Wednesday, the government said that wholesale prices barely rose in February.
The Federal Reserve repeated this week that it expects inflation to remain low. That would allow the central bank to keep interest rates low to help revive lending and boost the economy.
The Labor Department said that initial jobless claims fell by 5,000 to a seasonally adjusted 457,000 last week. Although the drop was short of expectations, it was the third straight weekly slide. A four-week average of claims is up by 30,000 since the beginning of the year.
Initial claims have hovered around 450,000 in recent weeks, which Gayle called a "tipping point" between employers adding or cutting jobs.
Companies like 3M Co. got a boost from the Philadelphia Fed's report that manufacturing expanded in the Mid-Atlantic region for the seventh straight month in March. However, a drop in new orders signaled growth could slow.
The Conference Board's index of leading indicators rose 0.1 percent in February. That matched expectations but the increase in the gauge of future economic activity was the smallest in 11 months.
The concerns about Greece brought a reminder that the calm can be interrupted.
"That's why you're seeing a little bit of resistance," said Greg Merlino, president of Ameriway Financial Services. "Whenever we hear Greece, we get this knee-jerk reaction, is this the first domino to fall?"
Improved earnings reports gave the market some support.
FedEx Corp. said its fiscal third-quarter profit more than doubled. It also raised its full-year earnings forecast, which is now in line with analysts' expectations.
FedEx is considered a measure for the health of the overall economy because of the variety of products it ships. The stock rose $2.87, or 3.2 percent, to $92.67.
3M rose $1.49, or 1.8 percent, to $83.67.
Three stocks fell for every two that rose on the New York Stock Exchange, where consolidated volume fell to 4.3 billion shares from 5 billion Wednesday.
The Russell 2000 index of smaller companies fell 2.37, or 0.4 percent, to 681.61.
Overseas, Britain's FTSE 100 fell less than 0.1 percent, Germany's DAX index dropped 0.2 percent, and France's CAC-40 fell 0.5 percent. Japan's Nikkei stock average fell 1 percent.
The Dow Jones industrial average rose for an eighth straight day, its longest unbroken climb since August. The Dow gained 46 points while broader indexes were little changed.
Reports indicated that inflation remains in check and manufacturing is growing. The government said, however, that first-time claims for unemployment benefits only inched lower.
The Labor Department said its Consumer Price Index was unchanged in February and that initial jobless claims fell last week. Meanwhile, the Philadelphia Federal Reserve said manufacturing in its region increased this month. The Conference Board, a private research group, said its index of leading indicators rose at a slow pace last month.
"The market has been grinding higher on what has been benignly positive news," said Alan Gayle, senior investment strategist for RidgeWorth Investments. "There is a growing sense the economy is plodding along in the right direction."
Renewed concern about economic troubles in Greece kept the gains in check. The country said it might turn to the International Monetary Fund for support if European leaders can't agree to a bailout plan next week.
Stocks have been in a steady climb for about five weeks as economic reports signal the economy is seeing modest improvement.
The Dow rose 45.50, or 0.4 percent, to 10,779.17. That marks the highest close since Oct. 1, 2008. The Dow last rose for eight straight days in the period ended Aug. 27.
The broader Standard & Poor's 500 index slipped 0.38, or less than 0.1 percent, to 1,165.83, while the Nasdaq composite index rose 2.19, or 0.1 percent, to 2,391.28.
Bond prices fell and yields rose following the economic reports. The yield on the benchmark 10-year Treasury note rose to 3.68 percent from 3.64 percent late Wednesday.
The dollar rose against other major currencies. Gold rose.
Crude oil fell 73 cents to settle at $82.20 per barrel on the New York Mercantile Exchange.
The Labor Department's Consumer Price Index was flat. Excluding volatile energy and food prices, it rose 0.1 percent. Economists polled by Thomson Reuters forecast an increase of 0.1 percent in both measures of inflation. On Wednesday, the government said that wholesale prices barely rose in February.
The Federal Reserve repeated this week that it expects inflation to remain low. That would allow the central bank to keep interest rates low to help revive lending and boost the economy.
The Labor Department said that initial jobless claims fell by 5,000 to a seasonally adjusted 457,000 last week. Although the drop was short of expectations, it was the third straight weekly slide. A four-week average of claims is up by 30,000 since the beginning of the year.
Initial claims have hovered around 450,000 in recent weeks, which Gayle called a "tipping point" between employers adding or cutting jobs.
Companies like 3M Co. got a boost from the Philadelphia Fed's report that manufacturing expanded in the Mid-Atlantic region for the seventh straight month in March. However, a drop in new orders signaled growth could slow.
The Conference Board's index of leading indicators rose 0.1 percent in February. That matched expectations but the increase in the gauge of future economic activity was the smallest in 11 months.
The concerns about Greece brought a reminder that the calm can be interrupted.
"That's why you're seeing a little bit of resistance," said Greg Merlino, president of Ameriway Financial Services. "Whenever we hear Greece, we get this knee-jerk reaction, is this the first domino to fall?"
Improved earnings reports gave the market some support.
FedEx Corp. said its fiscal third-quarter profit more than doubled. It also raised its full-year earnings forecast, which is now in line with analysts' expectations.
FedEx is considered a measure for the health of the overall economy because of the variety of products it ships. The stock rose $2.87, or 3.2 percent, to $92.67.
3M rose $1.49, or 1.8 percent, to $83.67.
Three stocks fell for every two that rose on the New York Stock Exchange, where consolidated volume fell to 4.3 billion shares from 5 billion Wednesday.
The Russell 2000 index of smaller companies fell 2.37, or 0.4 percent, to 681.61.
Overseas, Britain's FTSE 100 fell less than 0.1 percent, Germany's DAX index dropped 0.2 percent, and France's CAC-40 fell 0.5 percent. Japan's Nikkei stock average fell 1 percent.
Thursday, March 11, 2010
Ten Ways to Land More Financial Aid
When most high school students start looking at colleges, they think about what the college offers in terms of academics and extracurriculars. But when the financial aid packages from schools come in the mail this spring, the final decision will likely be made with dollars and cents in mind.
"A good financial aid package is as important as the major, course of study and geographic location," says Bob Friedman, the university director of student finance at Yeshiva University in New York. "It comes at the end of the search, and it's absolutely a top concern."
Though financial aid officers have some latitude in how much they can offer students, don't expect that securing a better aid package will be as easy as snaring a deal on a vacation or flat-screen TV, says Marty Carney, DeLand, Fla.-based Stetson University's director of financial aid.
"Don't come in with the expectation that financial aid offices are in the business of negotiating like used-car salesmen," he says. "In many cases, schools don't negotiate financial aid awards."
That said, it never hurts to ask. To get the best possible aid package from your dream school, follow these tips.
1. Make colleges compete. If you're a fantastic student and have plenty of offers, you may have a better shot of getting an improved financial aid package at your top school, Carney says.
"Some schools have a policy to match other school's financial aid award offers," he says.
In a letter, explain why you consider this school to be your first choice, and that you'd come "if the school could make it financially feasible for you," Carney says. Include the competing institution's financial aid offer.
_____________________________________
Need Help Investing? More Stories from Bankrate.com:
How to Plan for Retirement
Asset Allocation Explainer
How to Tell if Your Retirement Plans are on Track
_____________________________________
2. Ask for a reassessment. FAFSA, the Free Application for Federal Student Aid, is the document that determines a student's eligibility for federal financial aid, and in many cases, the additional awards offered by schools themselves. Financial aid for students is calculated from "base year" data. For example, for the 2009-2010 academic year, the base year is the 2008 calendar year.
Financial aid is calculated with the assumption that the income and assets will remain stable, but in this economy, that's often not the case. If your family's financial circumstances have changed, it's wise to ask for a reassessment, Yeshiva's Friedman says.
"If somebody lost a job, or if your assets are worth 75 percent what they were worth before, (financial aid officers) need to know that," he says. "If you can document it, these are things that a school can take into consideration."
Other changes that may have an effect on financial aid include the death of a parent, divorce and high medical expenses.
3. Explain money issues outside of FAFSA. FAFSA puts students and parents under the financial aid microscope to determine how much they can truly pay for college. Still, the endless forms don't capture every detail or always represent the true picture of a family's finances, says Marc Hill, a financial planner and founder of ReduceMyCollegeCosts.com.
"Maybe the parents have a grandparent that they're supporting in some fashion, such as a nursing home," he says. "That's not captured on the FAFSA. But if you can document that to the financial aid officer, (she) may be able to change the numbers to better reflect your ability to pay."
Because financial aid officers have some latitude to account for special circumstances, you may net additional aid based on the nuances of your situation.
"A good financial aid package is as important as the major, course of study and geographic location," says Bob Friedman, the university director of student finance at Yeshiva University in New York. "It comes at the end of the search, and it's absolutely a top concern."
Though financial aid officers have some latitude in how much they can offer students, don't expect that securing a better aid package will be as easy as snaring a deal on a vacation or flat-screen TV, says Marty Carney, DeLand, Fla.-based Stetson University's director of financial aid.
"Don't come in with the expectation that financial aid offices are in the business of negotiating like used-car salesmen," he says. "In many cases, schools don't negotiate financial aid awards."
That said, it never hurts to ask. To get the best possible aid package from your dream school, follow these tips.
1. Make colleges compete. If you're a fantastic student and have plenty of offers, you may have a better shot of getting an improved financial aid package at your top school, Carney says.
"Some schools have a policy to match other school's financial aid award offers," he says.
In a letter, explain why you consider this school to be your first choice, and that you'd come "if the school could make it financially feasible for you," Carney says. Include the competing institution's financial aid offer.
_____________________________________
Need Help Investing? More Stories from Bankrate.com:
How to Plan for Retirement
Asset Allocation Explainer
How to Tell if Your Retirement Plans are on Track
_____________________________________
2. Ask for a reassessment. FAFSA, the Free Application for Federal Student Aid, is the document that determines a student's eligibility for federal financial aid, and in many cases, the additional awards offered by schools themselves. Financial aid for students is calculated from "base year" data. For example, for the 2009-2010 academic year, the base year is the 2008 calendar year.
Financial aid is calculated with the assumption that the income and assets will remain stable, but in this economy, that's often not the case. If your family's financial circumstances have changed, it's wise to ask for a reassessment, Yeshiva's Friedman says.
"If somebody lost a job, or if your assets are worth 75 percent what they were worth before, (financial aid officers) need to know that," he says. "If you can document it, these are things that a school can take into consideration."
Other changes that may have an effect on financial aid include the death of a parent, divorce and high medical expenses.
3. Explain money issues outside of FAFSA. FAFSA puts students and parents under the financial aid microscope to determine how much they can truly pay for college. Still, the endless forms don't capture every detail or always represent the true picture of a family's finances, says Marc Hill, a financial planner and founder of ReduceMyCollegeCosts.com.
"Maybe the parents have a grandparent that they're supporting in some fashion, such as a nursing home," he says. "That's not captured on the FAFSA. But if you can document that to the financial aid officer, (she) may be able to change the numbers to better reflect your ability to pay."
Because financial aid officers have some latitude to account for special circumstances, you may net additional aid based on the nuances of your situation.
Wednesday, January 13, 2010
Nikkei falls after China move, profit-taking weighs
China surprised world markets by raising banks' reserve requirements, with an eye toward reining in surging asset prices.
Volume on the Tokyo exchange's first section hit its highest in seven months, boosted by active trade in Japan Airlines, which crumbled on growing expectations the airline is headed for bankruptcy and a delisting from the bourse.
"The Japanese stock market had become overheated following a big rally since December. On top of that, we now have China's decision to raise banks' reserve requirements," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.
"It's hard to think the move would hinder China's economic recovery, but the news likely led some risk money to close positions for now."
The benchmark Nikkei shed 144.11 points to 10,735.03 after closing at a 15-month high on Tuesday. The broader Topix retreated 1.1 percent to 944.02.
JAL tumbled to a record low of 7 yen, the second consecutive day it has fallen by its daily trading limit of 30 yen, and trade in the stock accounted for about 26 percent of the overall volume at 823 million shares.
Analysts noted that the Nikkei, which is hovering around 15-month highs, had been overbought and was poised for profit-taking even before the China news broke after Tokyo market hours on Tuesday.
The Nikkei's relative strength index (RSI) fell to 64 on Wednesday after rising to 72 the previous day.
Over 70 is considered overbought territory, so market players said some downward adjustment -- particularly in resource shares, which have gained recently -- was only natural.
CHINA-LINKED STOCKS DOWN
The China move spurred selling in shares of metal stocks as commodities prices fell on concern that the country's purchases of natural resources might slow, while construction machinery firms, which have a big presence in China, also came under pressure.
Ferronickel producer Pacific Metals lost 4.7 percent to 685 yen, smelter Toho Zinc declined 3.8 percent to 460 yen and fellow smelter Dowa Holdings shed 3.3 percent to 525 yen.
Komatsu Ltd, the world's second-biggest maker of earth-moving machinery, slid 2.9 percent to 2,036 yen and Hitachi Construction fell 2.3 percent to 2,506 yen.
Both gained sharply just a day earlier following strong Chinese data that boosted expectations of strong demand.
Toyota Motor Corp and other exporters slipped after the dollar fell more than 1 percent against the yen on Tuesday. It was roughly flat at 91.05 yen on Wednesday.
Toyota retreated 1.5 percent to 4,055 yen, while electronics parts maker Kyocera Corp slid 2.2 percent to 8,320 yen.
Steel companies slid after Credit Suisse downgraded its stance on the steel sector to "market weight," citing demand concerns at home and abroad.
Nippon Steel lost 3.3 percent to 382 yen and JFE Holdings dropped 5 percent to 3,580 yen.
Best Denki Co Ltd tumbled 18.6 percent to 281 yen after the consumer electronics retailer said its full-year net loss is likely to be more than 20 times bigger than previously forecast, as it plans to book charges from closing up to 30 percent of its stores and from folding its struggling subsidiary.
Volume on the Tokyo exchange's first section hit its highest in seven months, boosted by active trade in Japan Airlines, which crumbled on growing expectations the airline is headed for bankruptcy and a delisting from the bourse.
"The Japanese stock market had become overheated following a big rally since December. On top of that, we now have China's decision to raise banks' reserve requirements," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.
"It's hard to think the move would hinder China's economic recovery, but the news likely led some risk money to close positions for now."
The benchmark Nikkei shed 144.11 points to 10,735.03 after closing at a 15-month high on Tuesday. The broader Topix retreated 1.1 percent to 944.02.
JAL tumbled to a record low of 7 yen, the second consecutive day it has fallen by its daily trading limit of 30 yen, and trade in the stock accounted for about 26 percent of the overall volume at 823 million shares.
Analysts noted that the Nikkei, which is hovering around 15-month highs, had been overbought and was poised for profit-taking even before the China news broke after Tokyo market hours on Tuesday.
The Nikkei's relative strength index (RSI) fell to 64 on Wednesday after rising to 72 the previous day.
Over 70 is considered overbought territory, so market players said some downward adjustment -- particularly in resource shares, which have gained recently -- was only natural.
CHINA-LINKED STOCKS DOWN
The China move spurred selling in shares of metal stocks as commodities prices fell on concern that the country's purchases of natural resources might slow, while construction machinery firms, which have a big presence in China, also came under pressure.
Ferronickel producer Pacific Metals lost 4.7 percent to 685 yen, smelter Toho Zinc declined 3.8 percent to 460 yen and fellow smelter Dowa Holdings shed 3.3 percent to 525 yen.
Komatsu Ltd, the world's second-biggest maker of earth-moving machinery, slid 2.9 percent to 2,036 yen and Hitachi Construction fell 2.3 percent to 2,506 yen.
Both gained sharply just a day earlier following strong Chinese data that boosted expectations of strong demand.
Toyota Motor Corp and other exporters slipped after the dollar fell more than 1 percent against the yen on Tuesday. It was roughly flat at 91.05 yen on Wednesday.
Toyota retreated 1.5 percent to 4,055 yen, while electronics parts maker Kyocera Corp slid 2.2 percent to 8,320 yen.
Steel companies slid after Credit Suisse downgraded its stance on the steel sector to "market weight," citing demand concerns at home and abroad.
Nippon Steel lost 3.3 percent to 382 yen and JFE Holdings dropped 5 percent to 3,580 yen.
Best Denki Co Ltd tumbled 18.6 percent to 281 yen after the consumer electronics retailer said its full-year net loss is likely to be more than 20 times bigger than previously forecast, as it plans to book charges from closing up to 30 percent of its stores and from folding its struggling subsidiary.
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