| Stock market ends week with mixed finish after Federal Reserve adds third dose of liquidity
NEW YORK -- Wall Street closed out a difficult week with a mixed finish Friday after the Federal Reserve injected billions of dollars into the banking system to calm markets torn by worries about evaporating credit. The Dow Jones industrials, down more than 200 points during the session, ended with just a 31-point deficit and managed to post a gain for the week. .
Investors may look far from home
IF YOU CAN'T DEPEND on your home equity increasing during a U.S. housing downturn, where do you turn for growth? U.S. bonds offer cold comfort. With ultra-safe six-month Treasury bills yielding as much as 5 percent, your real return is paltry after inflation and taxes. What about U.S. stocks? The specter of a housing recession, consumer slowdown and more ugly surprises in the subprime mortgage market weighs heavily on Wall Street now. That leaves a compelling investment typically neglected by most investors: non-U.S. stocks with high dividends. Since the U.S. home market may get blistered further by a general economic decline, more houses coming on the market or bond yields surging, you will need to find growth elsewhere. If you haven't considered how the global economy is propelling emerging markets, it's time to take a hard look.
Reserve paves way for another rate rise
THE Reserve Bank has revealed a significant deterioration in its outlook for inflation, suggesting the Federal Government might have to defend itself over another interest rate rise before the election. The bank expects underlying inflation to hit 3 per cent - the upper limit of its comfort zone - by the end of the year. It is expected to hover in the top end of the 2 to 3 per cent target band until well into 2009. The bank shrugged off fears that the crisis in the US subprime market would slow global growth, a factor that would argue against further interest rate rises. "At this stage … the evidence continues to point to strong growth in the global economy overall," it said. Economists were surprised by the strength of the bank's outlook and said another interest rate rise - the sixth since the Government promised to keep interest rates low - looked all but certain.
Dinged for being overdrawn
A recent report by the non-profit Center for Responsible Lending contends that U.S. banks and credit unions are using "abusive" overdraft loans to generate $17.5 billion in fees every year - well up from the consumer group's 2005 estimate of $10.3 billion. The issue of bank overdraft fees, in fact, has spurred ongoing congressional hearings on potential banking reforms. And Riverside resident Laura Foster recently received a maddening lesson on the subject. Perusing her checking account balance online after a day of shopping with her daughter, Foster discovered that her credit union, without warning, had charged her a $30 "courtesy fee" for processing a $9 transaction at Ralphs with her debit card, which went beyond her existing balance. In fact, that happened three times on the same day, for a total of $90 in fees.
John F. Wasik: Where to invest if your home equity evaporates
If you can't depend on your home equity increasing during a U.S. housing downturn, where do you turn for growth? U.S. bonds offer cold comfort. With ultra-safe six-month Treasury Bills yielding as much as 5 percent, your real return is paltry after inflation and taxes. What about U.S. stocks? The specter of a housing recession, consumer slowdown and more ugly surprises in the subprime mortgage market weighs heavily on Wall Street now. That leaves a compelling investment typically neglected by most investors: non-U.S. stocks with high dividends. Since the U.S. home market may get blistered further by a general economic decline, more houses coming on the market or bond yields surging, you will need to find growth elsewhere. If you haven't considered how the global economy is propelling emerging markets, it's time to take a hard look.
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