Looking Ahead to the Obama Stimulus Deal

First a quick Why You Care publishing note: We will not publish New Year's Eve or New Year's Day, but Next Week's News Today will return on Friday, January 2, 2009.

After the first of the year all eyes will turn to how the Obama administration will stimulate the economy. Why does it matter what it looks like?

Here's why you care: CNNMoney.com's Jeanne Sahadi does a terrific job of sketching out the different ways a plan could take shape. You are going to hear a lot of different numbers thrown around come January, and she does a good job of sorting through how they can be divided and redivided and who stands to get what. We are highlighting her story on this because it is an excellent base coat of paint to understand what will undoubtedly become a political football on Capitol Hill. Do yourself a favor, read her piece, and come next year you'll be ready.

The Private Equity Story You Need to Read

We'll guess you took a look at the headline "Private Equity" and "IndyMac" and thought it to be a snooze. You'd be wrong.

Here's why you care: Ask yourself why would private equity want IndyMac? The answer of course is they think they can make some money. The New York Times' Zachery Kouwe points out, "the proposed deal is unusual because it is one of the first transactions involving unregulated private equity firms acquiring a majority stake in a bank holding company." You might say, ah-ha!, this is about regulation and the impact of private equity making such a move. Maybe in the long term. But, in the short term, this is a story about money sitting on the sidelines deciding it is time to take advantage of fire sales. Read this story, then keep your eye out for more like it. We suspect when you see a number of them it will be a sign that the gears of the market are slowly moving again.

30-Year Mortgage Rates Fall a Full Point From October

The LA Times' Tom Petruno reports that 30-year mortgage rates are now at 5.47%, down from 6.46% at the end of October.

Here's why you care: The rest of his report notes that the government regulator which oversees the housing entities Fannie/Freddie thinks rates will go below 4%. You care because this is a sign of actual movement - and a positive sign - amidst much of the bad news in the business pages today. At some point the rate goes low enough that people start buying. What's that number? Tough to say, but dropping rates puts it closer.

You also care because as we've noted there is a split of view points between Treasury and the FDIC on how to help mortgage holders in default. FDIC wants the government to help them directly, while the Treasury wants to drive the lending rate lower to stimulate the market in the hopes that will revive housing prices and thus help those behind in mortgages by lifting their home values. You can bet this article will be cited by Treasury folks as progress - and thus the article will help you understand the forth coming stories regarding the Treasury/FDIC debate.

2Million Jobs Gone in 2009!!???? + Next Week's News Today

Before we get to Next Week's News Today there are two stories that you need to give three minutes to: 1) The LA Times' David Pierson reports that UCLA economists are predicting TWO MILLION jobs will be lost in 2009, and 2) the LA Times' Peter Hong reports that the National Association of Home Builders has pivoted and is "now open" to bankruptcy judges modifying delinquent mortgages.

Here's why you care: First, UCLA has been right in predicting the economy's twists and turns. Second, bankruptcy court has been a controversial proposal. Some see it as a solution, others say it has a downside: Modifying the mortgages means a loss for banks, who will then pass along that loss to the next mortgage applicant by raising lending rates. However, there tide may be turning. You'll see more on this in the coming weeks (note the LA Times story says it would not get voted on until January).

So, if it's Thursday, then it's time for Next Week's News Today where we publish our own futures calendar of earnings, reports, hearings and political events which will either drive the news, or deserve more attention. Last week we were right when we said this week would "see press coverage of, and the market driven by, both Capitol Hill oversight moves, and economic reports..." whether it was TARP reports or hearings.

Next week you'll see press coverage of, and the market driven by, the Fed meeting, unemployment claims, and housing starts/building permits. You'll also see retail examined due to Best Buy reporting earnings and financial institutions who have received Treasury cash injects examined anew due to Goldman Sachs reporting.

Another story thread likely to continue is whether the FDIC's proposal to help homeowners underwater with their mortgages refinance should be green lighted. You saw a number of stories this week, and the debate will continue next week.

Here's why you care about next week's trends in earnings and reports:

Big Names/Retail: Best Buy earnings 12/16.

Interesting self explanatory news peg: Goldman Sachs earnings 12/16.

Reports: Building Permits and Housing Starts (12/16) and Unemployment Claims (12/18).

As always notable earnings, events, and reports are below are below:

MONDAY 12/15
Earnings: ABM Industries; Smith & Wesson Holding Corp.

Reports: Industrial Production


TUESDAY 12/16
Earnings: Best Buy, Goldman Sachs, Verifone Holdings Inc.

Reports: Building Permits (for Nov.), Consumer Price Index (CPI - for Nov.), FOMC Statement, Housing Starts (for Nov.)

Meetings: Federal Open Market Committee Meeting; FDIC Board of Directors meets in open session at 10:00a ET.


WEDNESDAY 12/17
Earnings: ConAgra Foods, General Mills, Micron, Nike, Paychex


THURSDAY 12/18
Economic Reports: Initial Unemployment Claims


FRIDAY 12/19
Events: Nobel Prize winner Paul Krugman, National Press Club, 12:30p ET

Did Treasury Get As Good a Deal as Warren Buffet? Could Downtown Real Estate Prices Torpedo Your Town - Or Be the Next Big Opportunity?

Two stories that will take only a couple of minutes, but you must read today:

1) Last week in our futures calendar - Next Week New's Today - we flagged that the Congressional Oversight Panel for Economic Stabilization's report to Congress was due today. There are a number of great writes today but we like the New York Times' Diana Henriques' report because it lays out the Panel's concern that Treasury's stock purchases in financial institutions at times didn't land the same excellent terms as private investors.

Here's why you care: The story shows that your tax dollars will not get as good of a return as say Warren Buffet or investors from the Persian Gulf buying shares in the same institutions. Also, the report challenges Treasury to explain why they are not embracing the FDIC's proposal to refinance homeowner mortgages currently underwater. We say, call on us, we think we have the answer - in fact explaining that debate is what we posted this past Friday 12/5 - check it out right here.

2) Commercial real estate impacts you in ways you may not think... The New York Times (again) has a must read story by Terry Pristin who reports how vacancies are looming large for downtown commercial space. The reason being is because like homeowners with adjustable mortgages, many of these investors have loans due and were only paying interest on them.

Here's why you care: If you own an apartment or townhouse in an urban area you don't want commercial vacancies, not just because you moved to the city for convenience, but because ultimately it could take down your home value. That said, you care if you are a company doing okay because it means you may be able to negotiate a terrific new lease where you are, or elsewhere. You need to be reading this story. We can tell you, this is what we've been discussing as real estate and finance lawyers. You should be thinking about this as well. One note, Pristin's article uses the term "Special Receiver" - don't worry, it is pretty much what you think. A Special Receiver is essentially a neutral third party that a court can look to for unbiased guidance as to whether the borrower that is behind in payments is keeping to the workout promise. The Special Receiver is a neutral intermediary for the borrower to send the money to, allowing the lender to get a report and payments from the Special Receiver instead of spending time constantly asking the borrower for an update.

Half of Modified Mortgages Back in Default

The Capitol Hill/auto makers story will be in the A section of the papers, so we say the one piece you might miss buried in the business section today is from the Associated Press in the LA Times which reports that, "More than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again." You need to give this story a quick read.

Here's why you care: The question is why? Are they now behind on their credit cards too? Is it simply untenable? Is it due to job loss? Those are the questions. You should read this story, because the Federal Reserve can lower rates again, but eventually that gets to zero and then what? The "what" has to be a multi-front approach, but the exact mix will be the source of the debate. Helping homeowners has been a top agenda item for many on Capitol Hill and elsewhere, and this report will give them pause to consider how to get it right. They'll be reading this piece and you should be too.

Two Big Stories: Financial Rescue Gridlock? & Big Newspapers Cry for Help

1) Financial Rescue Gridlock? Obama vs.Bush
The eye opening business article today is actually a political article in the Wall Street Journal by Jonathan Weisman and Deborah Solomon who report the current administration and incoming administration are at something of a stalemate on the financial rescue/recovery. Here's the operable sentence from their report which you need to read, "Treasury officials believe Obama aides are being short-sighted in their refusal to offer more policy and lobbying assistance, while the transition team sees an administration looking to be rescued from its own miscues."

Here's why you care: What they are talking about is not just a stimulus package, but also whether to green light the FDIC proposal to help mortgage holders underwater refinance. Why You Care doesn't take political sides, instead would like to make an objective observation. The longer it takes to implement all of the recovery tools, the longer the recovery itself gets postponed. In real terms that means anything that can be done to shorten the durations means less jobs lost, less businesses folding/shrinking, and fewer homes in foreclosure.

Meanwhile, speaking of the Obama economic team, the LA Times' Ralph Vartabedian has a well written piece looking at former Federal Reserve head Paul Volcker's rescue suggestions.

Here's why you care: You care because he's advising Obama. Give this story a quick read when you have a moment because it points the way the Obama team may take in the months ahead. Remember, President-elect Obama noted this weekend there would be more pain ahead, this report on Volcker tracks that sentiment.

2) Big Newspapers Cry for Help in the Business Pages
The LA Times' James Rainey reports that the paper's parent, the Tribune Co. which also own the Chicago Tribune, has filed for bankruptcy. And if that were not enough to catch your eye, the NY Times' Richard Perez-Pena reports that the NY Times Co. is going to borrow $225 million against its NYC headquarters. In other words, the NY Times is taking out a mortgage to make ends meet.

Here's why you care: As many Why You Care readers know we are convinced that if you could just read the business pages with a better base knowledge then you'd see the coming economic waves on the horizon and be able to adjust accordingly. Much of what is happening today was warned some time ago in the business pages. The problem is that you didn't know you cared about credit default swaps way back when. Thus, if newspapers continue to shrink staffs - or in the case of community newspapers go under - then the crucial economic reporting will disappear. Blogs are helpful to gather links, and some have interesting opinions, but real reporting on a daily basis comes from full time journalists. Loose that then what have you got?

Why You Care continues to suggest alternative business models to those who will listen. You know where to find us.

Here's why you care one more time: We can understand why the NY Times is turning to its real estate. It is popular for most businesses to say that their employees are their greatest asset. If that's true, then a business' real estate is its greatest resource. You might say, well our business doesn't own but rather leases. We'd then say, well that still might be a resource.

Unemployment Numbers in Context and Understanding the Competing Mortgage Plans/Debate

There are two must read stories out there today in addition to the enormity of November's job loss numbers - the greatest single month decline since 1974. The first story puts the job loss numbers in better context than other stories, and the second will help you understand the competing visions for mortgage rates in order to stabilize housing prices.

Here's why you care: The New York Times' David Leonhardt's blog "Economix" makes an excellent point. He notes that as bad as the unemployment numbers are today, they are actually worse. Why? The Labor Department doesn't count those that are not looking for work. You care because it means the number is much higher. Take a moment and read his posting, he does a great job of adding context.

Here's why you care about the mortgage plans: Yesterday we highlighted solid reporting on the Treasury's trial balloon which essentially pushes banks to lend to prospective homebuyers at 4.5%, and in return purchasing the mortgages from the banks. The idea being that this would create new buyers, thus stabilize and even eventually raising home prices - and THAT the theory goes - would help existing homeowners who are underwater with their mortgages due to the drop in their home values. Rising tide lifts all boats. If you look closely this has the same goal, but much different execution than the FDIC model which aims to refinance EXISTING homeowners with mortgages underwater.

Lost in much of the coverage is this debate. CNNMoney.com's Tami Luhby has a great breakdown of what Treasury is up to, and the concerns that the plan doesn't do enough - ala not targeting existing homeowners. Read her piece, it will help. However, we'd like to take this one further step based on folks we are talking to up and down K Street, Capitol Hill, and real estate developers - they are concerned there's not a coherent plan. We've made the point often that the market seeks stability, but as long as the debate is going on, there will not be an implemented plan. Meanwhile the clock is ticking and things are not getting better... BUT, the good news is, understanding what's going on will help you understand the story as it develops next week.

Next Week's News Today (Capitol Hill Gears Up on Rescue Oversight, Treasury Mortgage Plan Trial Balloons, and Holiday Shopping Numbers)

Before we get to Next Week's News Today, we want to make sure that the one piece you are reading this morning is on the trial balloon being floated by the Treasury Department. The Washington Post's David Cho, Zachary A. Goldfarb and Dina ElBoghdady have the best write we've seen. Yes it is on page 1, and yes our mission assumes you see the front page and not the business section, but for our non-Washington readers, in particular our West Coast readers - you need to be reading this piece.

Here's why you care: The Treasury's plan appears to say this, "Hey mortgage lenders! Yes you. We are considering putting together a program where if you lend to borrowers at say a really low 4.5%, then bundle those mortgages we'll buy then (actually Fannie/Freddie will buy them). Thus, you'll get cash back for the bundled mortgages just like the old days, and we'll unclog the market. What say?" What's going on here is that the Paulson Treasury has a view point that driving down lending rates will stabilize the market. The FDIC's competing plan also wants to stabilize the markets but thinks it should target existing mortgages under water. We bet you'll see more coverage of this in the coming days. Which means we're looking ahead and it is time for our weekly futures calendar...

If it's Thursday, then it's time for Next Week's News Today where we publish our own futures calendar of earnings, reports, hearings and political events which will either drive the news, or deserve more attention. Next week stands to see press coverage of, and the market driven by, both Capitol Hill oversight moves, and economic reports - specifically the first look at official retail sales numbers for the start of the holiday season.

Here's why you care - Congressional oversight Round I: This week we spotlighted coverage of a Congressional study calling safeguards for the government's financial rescue program lacking. Next week the five member supervisory panel overseeing that rescue program (aka - TARP) will report to Congress. The kicker is that the Senate hasn't confirmed the inspector general for the program. An anonymous Senator is holding up Neil Barofsky's nomination. We suspect that by the time the new report gets to Congress on Wednesday (12/10), that either that hold will be lifted - or there will be lots more press coverage as to why not. You care because after all, these are your tax dollars.

Here's why you care- Congressional oversight Round II: House Oversight and Government Reform Cmte. Chmn. Waxman exams Fannie Mae/Freddie Mac on Tuesday (12/9) - his witnesses? The most recent two CEOs for each of them. We suspect this will garner a fair amount of press attention.

Here's why you care about next week's trends in earnings and reports:

Big Names/Retail: Kroger earnings on 12/9, and Costco earnings on 12/11 stand to be metaphoric news pegs for stories examining the middle class during tough financial times.

Interesting self explanatory news peg: H&R Block earnings 12/8.

Reports: Pending Homes Sales (12/10); Unemployment Claims (12/11); and Retail Sales (12/12) are all strong candidates for market drivers and press coverage. In particular, retail sales because it will be the official number for the first month of holiday shopping.

As always notable earnings, events, and reports are below are below:

MONDAY 12/8
Earnings: H&R Block; Learning Tree International Inc.; National Semicondcutor Corp.; Pep Boys;

Events: Office of Thrift Supervision holds its National Housing Forum at the National Press Club, 9a ET

Hearings: House Ag. Cmte. Chmn. Peterson holds credit derivatives hearing impact on the economy at 1p ET.

TUESDAY 12/9
Earnings: AutoZone; Kroger; Vail Resorts

Reports: Pending Home Sales (for Oct.)

Hearings: House Oversight and Government Reform Cmte. Chmn. Waxman holds Fannie Mae/Freddie Mac government take over hearing. Witnesses: Fmr. Freddie Mac CEO's Leland Brendsel and Richard Syron, and Fmr. Fannie Mae CEO's Daniel Mudd and Franklin Raines.


WEDNESDAY 12/10
Earnings: Multimedia Games, NCI Building Systems Inc.

Congressional Reports: Five Member TARP Supervisory Panel's First Oversight Report to Congress is due.


THURSDAY 12/11
Earnings: Ciena; Costco

Economic Reports: Export Prices (minus agriculture) and Import Prices (minus oil) (for Nov.); Initial Unemployment Claims (for 12/6);


FRIDAY 12/12
Economic Reports: Producer Price Index (PPI) (for Nov.); Retail Sales (for Nov.); Univ. of Michigan Consumer Sentiment (for Dec.)

Economic Rescue Program Lacks Oversight, Says Congress' Accountability Office

The Washington Post's Amit Paley has the must read article today reporting that the Government Accountability Office (GAO) - aka Congress' way to run numbers and scrutinize projects - says the economic rescue package doesn't have enough safeguards.

Here's why you care: It is your money. The GAO filed both a full report, and a straightforward easy to read two page summary listing off the concerns. Give Paley's story a read and print and keep the two page GAO summary. You'll want this because it contains an excellent timeline of the rescue program that will help you follow the bouncing ball of the Treasury's moves to stabilize the market. Why You Care also thinks that the GAO's concerns will be echoed by a number of members of Congress each time a Treasury or Federal Reserve official testifies on Capitol Hill. Especially when the Senate finally approves the inspector general for the program. It is like a cheat cheat for the coming debate. Hang on to it, you'll be glad you did.

The Recession in Context: How Long Will It Last?

Lots of headlines today that the recession has not only arrived, but has been here for a year. Why You Care says let's focus on the context.

Here's why you care: You need to know two things... First, what's the length of other recessions? Second, how long will this last? Fortunately the New York Times' David Leonhardt has put together a list of the longest recessions in the last century for a little context - it is worth checking out. Second, the LA Times' Maura Reynolds has a story reporting that this recession could last into 2010.

If you take three minutes and look at both of these stories you come to realize, that even if we go half way into 2010 we're no where near the Armageddon of 1929-33. Small comfort, yes.

However, what we do know is that once Wall Street declares a bottom, that is when things will start gradually picking up. Again, small comfort. But, this data is the same information that all of Capitol Hill, K Street and Wall Street are considering and talking about today. In other words, they are looking forward, not backward. That's why given the policy debates going on right now, you should be thinking about it too.

How Much the Rescue is Costing You, and What a Stimulus Plan Might Look Like

Two terrific stories out there today that are both utilitarian, and will help you understand the debate as to what the government should (or shouldn't) do next in the financial meltdown. First, the New York Times' Louis Uchitelle has a forward looking piece analyzing the effectiveness of a stimulus package and what it must look like. Second, CNNMoney.com's David Goldman breaks down how much money the federal government has doled out thus far.

Here's why you care: The new administration has worked quickly to roll out its proposed members for the financial and security teams. A stimulus package is the next logical step toward recovery. You can bet those who have a say, have their own list of what the government has spent thus far, and their own analysis as to what a stimulus package should look like. Reading these two pieces gives you the tools the decision makers have, and it will allow you to understand the news stories come down the pike.

Read these two and be smart.

Understanding Today's Treasury/Federal Reserve Moves in the Lending and Mortgage Markets

Lots of fancy names out there today in press releases: credit facility, asset backed securities, etc.... The New York Times' Jeff Zeleny and Jack Healy have a good write that will keep you on the straight and narrow as to what the government did today.

Here's why you care: For a change we'd like to say ignore the fancy terms because here is the essence of what is going on...

1) The Treasury gave the Federal Reserve some money today so that the Fed could basically lend money to companies that lend to small businesses, provide credit cards and do auto and student loans. Those companies need access to more cash so they can turn around and lend to others - that's the theory behind the move.

2) The Federal Reserve separately said, hey, we know that banks need to sell mortgages to Freddie Mac and Fannie Mae in order to have cash to lend to others. In other words, the system has ground to halt. So, we - the Fed - will buy those bundled mortgages from Freddie Mac and Fannie Mae so they can more easily get back to doing business.

Both moves work on the theory that this will lubricate the gears of lending. That's the take away.

Why You Care wanted to make that really straightforward because with the press conferences, releases, etc. we saw a new acronym - TALF ("Term Asset-Backed Securities Loan Facility"). We thought that you probably just got used to TARP, and now you have TALF. Not easy. (FYI - TALF is item #1 above - keep it simple).

Got questions? Emailwhyyoucare.com.

The Citi Deal in Context of Broader Rescue Efforts

The details of the Citi deal are interesting, but of course the most important part of this is inside the business pages.

Here's why you care: Here's what most folks are wondering, is the third time the charm for the government's effort to stabilize Wall Street? The New York Times' Louise Story has that story today. What's particularly good about this piece is that it is forward thinking. Her report notes that market is looking for signals from the next administration (something we've pointed out in Next Week's News Today) - and getting them. Read this story and stay ahead of the curve.

Next Week's News Today (Cabinet News, Christmas Shopping - Retail Woes, New Homes Sales and Unemployment Numbers)

If it's Thursday (so it is Friday, and we're really late), then it's time for Next Week's News Today where we publish our own futures calendar of earnings, reports, hearings and political events which will either drive the news, or deserve more attention. Last week, once again, we were right on earnings (retail in particular) and ink spent on the next cabinet.

Last week we suggested someone would break the name for Treasury Secretary. Voila - as we type that name has surfaced: Timothy Geithner, president of the New York Federal Reserve Bank.

Here's why you care: Our suggestion that the administration go farther and name the team that will make the key decisions on financial recovery (the assistant secretaries) did not happen. We still think THAT STORY remains a big deal. Who breaks it will drive the markets. You can see how the markets responded at the end of today to Geithner's name. We think journalists will be looking to nail down the team itself. Will the administration help them? We'll guess yes... At least floated names.

We note that the FDIC this week really did something remarkable - they posted the entire model for their IndyMac loan modification plan. What's that mean? When the FDIC took over IndyMac it created a model for how it would deal with people up the creek on their mortgage payments. They think they've got a good working model, and now they are sharing it with everyone. Why You Care spoke with the FDIC, and we can report they are incredibly user friendly - check out their model, it deserves more attention.

Here's why you care: What's really going on here is the FDIC model showcased this week is voluntary. But, the FDIC has a different plan, that's currently a proposal where it helps homeowners the same way it basically does in the IndyMac model - PLUS - an enticement for those institutions who service the mortgages. What that means is money, and the FDIC would like some to get mortgage servicers in a better position to work out loans. Congress is watching - and this will get more attention next week.

Meanwhile, here's why you care about next week's trends in coverage:

Christmas Shopping Begins: Look for lots of stories through out the week on retail woes. American Eagle also reports (11/25).

Other Big Name to watch: Hewlett-Packard (11/24).

Interesting self explanatory news pegs: Zale (11/25) and Tiffany & Co. (11/26).

Reports: Existing Home Sales (11/24); New Home Sales and Unemployment Claims (11/26).

As always earnings, events, reports by day are below:

MONDAY 11/24
Earnings: Allied Healthcare; Campbell Soup; Hewlett-Packard

Reports: Existing Homes Sales (for October)


TUESDAY 11/25
Earnings: American Eagle; Daktronics; Dollar Tree; Genesco; Hormel Foods; Talbots, TiVo; Warner Music Group; Zale

Reports: Consumer Confidence (for November); Third Quarter GDP


WEDNESDAY 11/26
Earnings: Deere; Fred's; Tiffany & Co.

Economic Reports: Durable Orders (for October); Initial Unemployment Claims (for 11/22); New Home Sales; Personal Income (for October); Personal Spending (for October)

THURSDAY 11/27 - Holiday

FRIDAY 11/28 - Look for TV news stories on retail shopping numbers

The Next Mortgage Tsunami Is Not What You Think

There's another wave about to hit the financial institutions that are already hit hard enough to go to the Treasury for taxpayer dollars. The Wall Street Journal's Lingling Wei and Prabha Natarajan have a story today about a thing called the CMBS market (commercial mortgage backed securities). Remember how you've read about mortgaged backed securities where banks bundle mortgages and sell them off (ie - securitization)? The same thing happens with commercial loans - and these are the loans for shopping centers, office building, malls - place you work in or count on in some way. That market is having a tough time. And the tough time will impact the same financial institutions that you're already keeping an eye on. You need to understand how this piece relates to the rest of the economy.

Here's why you care: Last week in our installment of Next Week's News Today we pointed out that there will be a growing pressure for a stimulus package. Today you see that piece from CNNMoney.com's Jeanne Sahadi. Her reporting points out delaying a stimulus package could mean drawing out the pain. Then on Friday we pointed out that a plan to help residential mortgages from FDIC head, Sheila Bair, was about to get a lot more attention from Congress because Capitol Hill wants something done for homeowners. That's what happened yesterday, and the Wall Street Journal's Michael Crittenden has a great report on the Congressional hearing in today's paper. You'll note that Fed Chairman Ben Bernanke voiced encouragement for Ms. Bair's suggested game plan.

If you take all these stories together you care greatly because at the exact moment that the commercial mortgage market is having problems, you see both the possibility of a stimulus package being delayed and and direct help for homeowners still debated. We've given you a great deal of information here - but the idea that's important is to see how all of these events will play in concert with each other. Understanding that will help you understand what's going to not just happen next week, but for at least the first part of 2009.

Understanding Bank Lending and the Financial Crisis

Here's why you care: One of the premises we often here is that everything will be fine if banks start lending again. But, what if they really have been, and can only do so much. What then? That's the topic of the Wall Street Journal's Jon Hilsenrath's story today. He reports that two Harvard B-School economists (David Scharstein and Victoria Ivashina) took a close look at what banks are up to and concluded that in fact they are lending. Just not in the way you'd expect.

The upshot is this - back when times were REALLY GOOD money was flowing and companies were able to negotiate deals for essentially what are rainy day loans. Now it is a rainy day and the banks are contractually obligated to lend. The problem? Some of the companies would not be able to get loans today because they are not healthy, but because of the contracts were done a couple years ago the banks have to lend to them instead of the healthy companies looking for a loan now.

Read this story, it is well written and reported and Mr. Hilsenrath even gives layman explanations for the financial lingo not easily accessible to the non-MBA set. You can bet Capitol Hill, Wall Street and K Street are reading this piece today.

Why You Need to Understand the Latest Mortgage Solution Plan.

The Federal Deposit Insurance Corporation (the FDIC) came out with a plan to modify mortgages that deserves your attention because you'll be hearing more about it. As we've pointed out here and here, FDIC head Sheila Bair has been consistent in raising red flags over bank failures and the need to raise the amount the federal government backs your bank account (which was pumped up from $100K to $250K).

Here's why you care: The FDIC's new plan is going to get a lot more attention. If you watched Interim Asst. Treasury Secy. Neel Kashkari get grilled today by Congress, then you know Capitol Hill is frustrated. In fact you should read the Wall Street Journal's Michael Crittenden to understand the depth of Mr. Kashkari's grilling. But, what's important in this is that Capitol Hill is looking for a solution. Enter the FDIC. You can go to the FDIC's website and read the details for yourself, or read the Washington Post's Binyamin Appelbaum's report explaining what the proposal does. Most importantly, the FDIC is willing to share some of the loss if the loan defaults again after being modified - BUT, only if mortgage managers (ie the "servicer") come into their program.

Will that be enough to attract those that manage mortgages? Time will tell. But, you're going to be hearing lots more about the program, so better to understand it now.

Here's a thumbnail sketch that will help you get through the FDIC's proposal:

Who can apply? Home owners in trouble with a mortgage for a property that they live in (ie - owner-occupied).

What type of modification are we talking about? For the home owner, a modification as low as 31% of their monthly income.

What's in it for the mortgage manager/servicer? If they take part in the FDIC program, they'd get $1,000 per modified mortgage. Plus, the FDIC could share up to 50% of the loss should the loan default after being modified.

You can bet the details (and there are more details on both the FDIC website, and the Post report) are getting lots of looks tonight on Wall Street and Capitol Hill.

Next Week's News Today (Paulson Talks Recovery, Capitol Hill Calls the Big 3 Auto Makers, and the Big Financial Guns to Testify)

If it's Thursday, then it's time for Next Week's News Today where we publish our own futures calendar of earnings, reports, hearings and political events which will either drive the news, or deserve more attention. Last week we were right on earnings, reports, and ink spent on the next cabinet.

However, our suggestion that because the markets crave stability means the next administration should detail not just who will take up Treasury, but the deputies as well who are implementing the myriad recovery programs did not come to fruition. THAT STORY remains a big deal. Who breaks it will drive the markets.

Here's why you care: Congress is back next week for a lame duck session. We know an auto maker rescue package will be debated. We know the rescue package for the economy will be scrutinized. These are going to drive the market for not only what gets done, but what doesn't. There's a lot of talk about another stimulus package. Passing it before the holidays certainly doesn't mean more money in consumers pockets for the holidays, but it might mean a psychological boost - perhaps at least for the market. Alternatively, letting it languish might mean just the opposite.

Proof in concept? Watch the Big 3 Auto Makers on Capitol Hill for scrutiny of the their needs, and the rescue bill over all. And watch Secy. Paulson on Monday, and then if reports are right, along with Fed Chairman Ben Bernanke and FDIC Chair Sheila Bair testify later in the week on the recovery.

As journalists and news consumers worried about your 401(k)s and home prices, be on the look out for how the stimulus gets defined. Why You Care thinks the stimulus will included infrastructure rebuilding, and not just a check for tax payers. That will be an interesting story - and labor intensive for journalists. Really labor intensive to detail - but well worth it.

Keep in mind that next week's retail earnings are likely to be bad, and so too unemployment reports. Hard for a new administration, and a lame duck Congress that wants to set a tone for 2009 to not be busy working on stimulus and other financial issues. We're not saying you'll see a bill pass next week. We're saying maybe some trial balloons in solid reporting.

Here's why you care about next week's trends:

Big Names/Retail: Retail woes heading into the holidays will be a big theme. Here are some of the selected names noted below you'll see - Lowe's and Target (11/17); HomeDepot and Saks (11/18); Ross Stores (11/19); and Barnes & Noble, Cost Plus, Foot Looker, Gap, and J.Crew (11/20).

Other Big Name to watch: Dell (11/20).

Interesting self explanatory news pegs: Jack in the Box (11/19); Freddie Mac (11/20)

Reports: Housing Starts and Building Permits (11/19), Unemployment (11/20)

As always earnings, events, reports by day are below:

MONDAY 11/17
Earnings: Imclone; Lowe's; Target

Paulson event: Treasury Secy. Henry Paulson discusses the economy and financial markets at a meeting of the Wall Street Journal CEO Council - Four Seasons Hotel, Washington, DC.

Events: American Banker's Association Annual Convention (in San Francisco) - Speakers: Edward Yingling, Pres. ABA; Weekly Standard's William Kristol & Fmr. WH Press Secy., Mike McCurry; FDIC Chairperson Sheila Bair; Fmr. Hewlett-Packard/McCain Advisor Carly Fiorina


TUESDAY 11/18
Earnings: Home Depot;La-Z-Boy; Pacific Sunwear; Phillips-Van Heusen; Saks

Reports: Producer Price Index and Core PPI (for Oct.)

Events-Political: House Maj. Leader, Rep. Steny Hoyer on Congressional Agenda, at National Press Club, 10a ET.

Events-Financial: SEC's Director of the Division of Corporation Finance attends Current Financial Reporting Issues Conference (New York City).

Hearings: House Financial Services Committee hearing on oversight and implementation of the Emergency Economic Stabilization Act. The Wall Street Journal reported that Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson, and Federal Deposit Insurance Corp. Chairman Sheila Bair are all testifying this week - this looks like the most plausible day.


WEDNESDAY 11/19
Earnings: BJ's Wholesale; Dress Barn; Jack in the Box; Limited Brands; Men's Wearhouse; PETSmart; Ross Stores

Economic Reports: Building Permits (for Oct.); Consumer Price Index and Core CPI (for Oct.); FOMC Minutes (10/29); Housing Starts (for Oct.)

Events: Steve Preston, Secretary U.S. Department of Housing and Urban Development, National Press Club, 12:30p ET.

Hearings: House Financial Services Committee has posted it will hold a hearing on extending the Troubled Asset Relief Program (TARP) to auto makers. The Wall Street Journal reports that Chairman Frank plans to have the CEO of the Big Three auto makers along with the United Auto Workers union head.


THURSDAY 11/20
Earnings: Barnes & Noble; Cost Plus; Dell; Dick's Sporting Goods; Ditech; Foot Locker; Freddie Mac; Gap; J.Crew; Pilgrim's Pride; Wet Seal

Economic Reports: Initial Unemployment Claims (for 11/15); Leading Indicators (for Oct.)


FRIDAY 11/21 - TBD

Understanding Treasury's Shift in Focus for the $700 Billion Economic Rescue Package

The Treasury Department says it is going to focus on injecting taxpayer funds into financial institutions (which is called the Capital Purchase Program in the business pages) instead of buying and selling "troubled assets" (which means mortgages and other related securities).

Here's why you care: The Wall Street Journal's Deborah Solomon had the first write on this from what we could tell, and you should read her updates. You care because originally the economic rescue package (aka - TARP) was going to mean the government buying and selling stuff that the financial institutions had a hard time unloading. Today's statement in some ways is Treasury Secretary Paulson saying what most of K Street, Wall Street and Capitol Hill concluded that Treasury was thinking: Problems in the market place necessitated swift action. Swiftest of the swift is a cash injection (that's what the business pages mean by liquidity. Liquidity means cash.). So, as a taxpayer you want to understand the direction Treasury is taking because the $700 billion is quickly drying up.

So what's going to happen next? Treasury says it may expand the Capital Purchase Program (remember that's for those that can get the cash injection) to more than banks or bank holding companies (recall yesterday American Express qualified as a bank holding company, and today the Wall Street Journal's Robin Sidel reports that it would like $3.5 billion from the Capital Purchase Program). But, in expanding the applicant field it may say to the newcomers - you have to raise matching funds. In other words, you have to privately go raise the same amount of taxpayer dollars we inject into you.

Significant. Significant if you are a smaller firm wanting to play. Significant if you are a consumer needing a loan, or just wanting your 401(k) to stabilize.

And guess what? Deborah Solomon also has interesting reporting in her piece indicating Capitol Hill is asking questions about the original intent.

All you have to do is read her piece, one piece, and you'll understand what the financial world is focused on right now.

The Front Page Story You Likely Ignored - Treasury, Congress and Bank Mergers

It was on the front page of the Washington Post print addition, and we bet you ignored it. Alternatively, if you went on WashingtonPost.com you likely didn't realize the editors thought it was front page material - you have to hunt for it a bit online.

Here's why you care: Amit R. Paley's Washington Post article would be everywhere from the Drudge Report to TV if the story was about political intrigue. Instead it is about money. That means K Street is talking about, Congress is talking about and Wall Street is talking about it. But, you are not. You should. The story in its essence is whether Treasury needed to tell Congress it was making a move with tax implications for financial institutions. And, whether that move helped hasten some mergers during the stock market's shock and awe of the past few months.

Paley does a good job of explaining it for the non-MBA set without overburdening the reader with tax law jargon. Take a few minutes and see what the government and financial institutions that impact your life are reading and thinking about today.

Next Week's News Today (Politics and Economics Collide to Drive the Markets - Who Drives Treasury's Rescue Engine for Obama?)

If it's Thursday, then it's time for Next Week's News Today where we publish our own futures calendar of earnings, reports, hearings and political events which will either drive the news, or deserve more attention. Last week we were correct to point out that economic reports would drive the market along with selected earnings (in addition to the election, but we all knew that). We were also right to point out there would be a rush to cover the next administration's cabinet.

This coming week it is a no-brainer to say that naming of President-elect Obama's Treasury Secretary will drive the markets. However, what may be less obvious to non-financial reporters is the importance of what happens to the five assistant Treasury Secretaries which the New York Times' Mark Lander profiled this week as being the folks making the call between winners and losers of the $700 billion rescue package.

Here's why you care: The market craves stability and forward thinking. There's a lot of institutional money sitting on the sidelines waiting to see how things shake out. So, along with a new financial team, we are hoping the Obama transition team makes a point of explaining whether they keep the gang of five in place, or who replaces them, and if they are replaced does that mean the new folks will start shadowing the gang of five immediately?

Today we read Anne Kornblut's and David Cho's Washington Post transition team piece with great interest along with the rest of America. But, the folks that have the ability to REALLY move the markets are looking for the story about who is going to be quarterbacking the rescue package in a hands on way (meaning assistants/deputies), and if they are not the same folks presently making the calls, then what's the plan to not reinvent the wheel. The news outlet that nails that story will likely drive the market in a more profound way than any other story next week.

Here's why you care about next week's trends:

Big Names: Wal-Mart (11/13) is not just retail but an easy metaphor for "Main Street" America during good times and bad. You've already seen a few stories in the papers this week, but expect more this Sunday and next week as the earnings report nears.

Retail: The October numbers for Retail Sales are out 11/14, meanwhile American Apparel (11/10); Liz Claiborne (11/11); Macy's (11/12); Kohl's, Nordstrom, Urban Outfitters and Wal-Mart (11/13); Abercrombie and JC Penny (11/15) provide a good snapshot for retail woes going into the the holiday season.

Media: DISH Network and Sirius XM Radio (11/10)

Money: Fortress Investment (11/11) has already recently gotten press coverage for their efforts to pool investors and try to make lemonade out of the market's bottomless lemon barrel. They are likely to get more attention.

Press: Thomson Reuters (11/12) offers a look at the health of this journalistic business model.

Interesting self explanatory news pegs: Starbucks (11/10); Las Vegas Sands (11/12);

MONDAY 11/10
Earnings: Allied Capital; American Apparel; American Capital; American Casinos; American International Group; Clear Channel Outdoor Holdings; DISH Network; Focus Media; GLG Partners; Integra; Integra Bank; Nortel; Orbitz; Oriental Financial Group; Pike Electric; Regency Centers; Sempra Energy; Sirius XM Radio; Starbucks; Sterling Construction; Tyson Foods; Virgin Mobile USA; Warner Chilcott

Events: Booking Alert - The Kennedy Center will posthumously awards the Mark Twain Prize to George Carlin. Those performing: Richard Belzer, Lewis Black, Margaret Cho, Ben E. King, Denis Leary, Bill Maher, Joan Rivers, Garry Shandling, Jon Stewart, Lily Tomlin, Ben Stiller. Hard to envision comedians moving markets - however, we included this because we thought it might offer a creative way to book a regular news cast and get into political and economic issues in a way that might broaden an audience.


TUESDAY 11/11
Earnings: Bob Evans; Fortress Investment; Liz Claiborne; NGP Capital Resources; TJX Cos; Tyco;


WEDNESDAY 11/12
Earnings: Computer Sciences; Dr. Pepper Snapple; Green Mountain Coffee; Las Vegas Sands; Macy's; Meridian Bioscience; Network Appliance; Thomson Reuters; Targa Resources


THURSDAY 11/13
Earnings: Kohl's; Microsemi Corp; NG Resources; Nordstrom; Siemens AG; Urban Outfitters; Wal-Mart

Economic Reports: Initial Unemployment Claims; Trade Balance (for Sept.)

Events: Treasury's Director of the Division of Corporation Finance, John White, attends the Institute on Securities Regulation Conference in New York.


FRIDAY 11/14
Earnings: Abercrombie; General Steel; Hewitt Associates; JC Penny

Economic Reports: Business Inventories (for Sept.); Export Prices (for Oct.); Import Prices (for Oct.); Retail Sales (for Oct.)

SATURDAY 11/15
Events: President Bush convenes a 20 nation global economic summit in Washington, DC

Understanding How Wall Street Tried to Calculate Risk - And Missed the Human Factor. Will a New Congress and an Obama Administration?

The day after the election means a new playing field for Capitol Hill and Wall Street. While most of the country is contemplating what the new administration means for them, there are a number of folks from Capitol Hill to K Street contemplating what the new administration means for congressional races in 2010. Normally the party in the White House loses seats in an off year election, and 2010 promises to be an interesting economic time in the country.

Here's why you care: The Wall Street Journal's Maura Webber Sadovi reports that the worst is yet to come in the Los Angeles real estate market. It matters to you because this isn't just about housing, it is about commercial real estate prices that are impacted by - yes, that's right - the softening economy. As Americans tighten their purse strings, so too does corporate America. The interconnectivity in this article is the important part, because Los Angeles is not going through this as an island. If the worst is yet to come in some areas, that means 2010 is not likely to be rosey.

So, if you are Congress and need to find a way out of economic peril, but you also know that what you do is about to be graded in two years (really less because the campaign cycle will be full throated in one year) what's the balance between helping Main Street and Wall Street? What's the balance in enabling risk taking and guarding against it? If your brain hurts with these questions, especially the day after election day, it is supposed to - these are not easy things.

That's why you really need to read Steve Lohr's article in the New York Times today. It walks you through how Wall Street tries to mathematically calculate risk. He will show you that those credit default swaps were really conceived as a hedge against risk. And the punch line is that no matter how much fancy math or fancy laws are used often times human behavior becomes the x factor. This is thoughtful reporting that everyone should read - you can bet those with offices on Wall Street, K Street and Capitol Hill will be digesting it. You should too, it is the crux over the debate about "regulation".

Two BIG DEAL Stories: Who is Making Treasury's Financial Rescue Calls and Expanding the Rescue Beyond Banks

It is election day and most of the country is rightly focused on voting. However, there are two stories out there that have a major impact on how long a recovery will take and what it would look like.

Here's why you care: First the New York Time's Mark Lander profiles the key players at the Treasury Department quarterbacking the $700 billion economic rescue package. You care because they are making the calls as to which financial institutions the Treasury Department will injected your money into. And, they are making the rules by which Wall Street is going to play as it claws out of the downturn. The key part to this story is that until now we haven't really known who these folks are, but the Times even has a bio breakdown for you.

That brings us to the second must read story by the Wall Street Journal's Deborah Solomon who reports that the very same $700 billion rescue package run by the folks profiled in the Times may be broadening beyond financial institutions (like Bank of America, etc. - the Journal has a list of those that have already received tax payer dollars) to now include specialty finance firms and bond insurers. What's that mean?

Here's why you care: That means a unit of GE may get the same type of cash infusion in exchange for the Treasury receiving the right to some of the company's stock. Don't shrug. This matters - you are already an investor in a bunch of banks. You now may be an investor in things like GE's finance unit.

We're not saying that's good or bad, rather enlightening because it is a significant change. That's why you need to read these two stories. Yes, read the polls on election day, but remember whoever is the next president (regardless of party affiliation) has to deal with the economic issues in order deal with every issue from war to healthcare. Understanding these two pieces will put you ahead of the curve for the coverage over the next few months.

Understanding the Limits of Your 401(k)

Perched on this election eve it is easy to think about what the next President will have to deal with: How to lift the economy, try to find balance between policing Wall Street and encouraging creativity, baby boomer retirement costs, entitlement costs, Iraq, Afghanistan, decaying roads and bridges, pollution, and healthcare. That's a lot to take stock in. We also know that everyone who reads this space has looked at their 401(k) and said, "oh man". That's why right now is a good time to closely examine the ins and outs of your 401(k).

Here's why you care: The Wall Street Journal's Eleanor Laise has a great write on some of the pitfalls of your 401(k). Namely, things like too much company stock, not taking into account if retirement is around the corner or decades off, things like that... Notably, she also points out the issue of how much are you saving? That's why we think you should read her piece and consider your own plan for your next administration. Her piece is very utilitarian, and when you consider that your 401(k) is chalk full of companies we spotlight in pieces everyday we think you'll come to realize you care even more about the business pages.

Understanding the Why the Market Went Up Mid-Week and the Coming Congressional Debate/Hearings Over Bank Lending and Bonuses

Why You Care has gotten numerous questions about two things: 1) How can the market go up amidst bad news?, and 2) Now that taxpayers own a piece of big time financial institutions, what's Congress going to do?

First to the market's behavior...

Here's why you care: The New York Times Michael Grynbaum deftly explains today that sometimes if the market is simply not surprised by more bad news, that in itself is reassuring. In other words, much like we've pointed out in earnings coverage, it is a game of expectations. For instance, our Thursday futures calendar for the following week lists off key earnings, well, often times you find stories on Friday and Sunday preceding the week on those companies. Why? To frame the earnings report for the purposes of managing expectations. Read Mr. Grynbaum and feel smarter.

As to Banks and Congress...

Here's why you care: This week House Oversight and Government Reform Committee chairman Henry Waxman sent letters to the financial institutions receiving tax payer funds seeking an explanation for their end of the year bonus plans. Today, House Financial Services Committee chairman Barney Frank announced a second hearing on November 12 (he previously announced one for November 18) to examine if banks receiving tax payer funds are in fact using the money to lend. In other words, Congress is REALLY interested. Fortunately, there are two pieces out there that frame both sides of the debate. The Washington Post's Steven Pearlstein lays out the problems of tinkering with financial institutions in "Hank Paulson's $125 Billion Mistake." And, the New York Time's Clyde Haberman frames the questions that we often hear from readers in "We're All Bankers Now. So Why's the A.T.M. Still Charging Us $2?"

Both pieces are well written and combined they will take three minutes of your day. We know most of you are looking at presidential polling numbers, but believe us when we say you want to get ahead of understanding this debate.

Next Week's News Today (Election Day, Media Companies, Casinos, Liquor, Steak Houses, and of course Real Estate)

If it's Thursday, then it's time for Next Week's News Today where we publish our own futures calendar of earnings, reports, hearings and political events which will either drive the news, or deserve more attention. Last week we were correct to point out that earnings would be a driver, and that oil companies would get serious play. We were right that regional banks would get play, but we were disappointed to not see an overarching story on the health of the regional banks sparked by the litany of earnings reports last week. We also thought the number of real estate companies reporting last week would have been a terrific piece - but sometimes the market itself overshadows the sidebars.

Before diving into trends for next week, we have an update for tomorrow's calendar: Federal Reserve chairman Ben Bernanke speaks (via satellite) at 2p ET to the "Symposium on the Mortgage Meltdown, the Economy and Public Policy." Sounds exactly like the type of thing for a live webcast.

Here's why you care about next week's trends:

Politics - First, we all know Tuesday is the big day. Barring hanging chads, look for a quick turnaround in the news on what the next administration's cabinet will look like (we wouldn't be surprised to see articles on Sunday looking at both candidates in this light), specifically in the business pages what the financial team for the next administration will look like.

Broadcasting - Last week Comcast reported, next week Cox Radio, Iowa Telecom, Sinclair Broadcast Group, Time Warner, Time Warner Cable, and Time Warner Telecom all report earnings on 11/5 and are among the media companies reporting next week. Advertising dollars, distribution, and what people are willing to live with, and without in a strained economy are interesting if part of a broader look at the industry.

Gaming/Casinos - Ameristar Casino and Churchill Downs (11/5), and Trump Entertainment Resorts (11/7) provide a platform of an examination of how the gaming industry fairs when times get tough.

Liquor - AmBev and Anheuser-Busch report 11/6 and stories on alcohol consumption during a volatile market are always interesting.

Steak Houses - Yes, steak houses. McCormick & Schmick's and Ruth's Chris Steak House (11/5) are both reporting next week, and the question in our minds is - are business lunches on the decline? We'll guess yes, but we could be wrong.

Real Estate - Next week (like last week) offers a deep bench of real estate companies reporting. What interests us is what these companies are thinking for the long term. We'd love to see an article on their 1, 2 and 5 year plans. If anything that would show what each company is betting is the bottom of the market, and how they plan to keep fighting in the years to come.

Utilities - There are again a broader number of utilities reporting next week. This is an opportunity to look at utility costs for homeowners in the same way basic goods have been analyzed.

Reports - Car and Truck sales are out on 11/4 and unemployment 11/7 - both likely to get at least a paragraph on the business pages.

As always, all items are broken down by day below.

MONDAY 11/3
Earnings: Allegheny Energy; Atlas Energy Resources; Automatic Data Processing; Bronco Drilling Co.; Comstock Res Inc.; Cross Country Healthcare Inc; Dynamics Research; Forest Oil Corp.; Herbalife; Goodyear tire; Grubb & Ellis; Hawaiian Electric Industries; Houston Wire & Cable; Health Care REIT; MasterCard; Mercury General; Mohawk Industries Inc.; NICOR Inc; Parkway Properties; PMI Group; Post Properties; Orient-Express Hotels; Oshkosh Corp; Pennsylvania REIT; Principal Financial Group; Rockwell Collins; St. Mary Land and Exploration; Sysco; UDR Inc.; United States Cellular Corp;

Economic Reports: Construction Spending (for September); Federal Reserve posts its statistical release on Foreign Exchange Rates.

Events: Washington Post reporter Liz Mundy signs her Michelle Obama biography "Michelle" at Politics and Prose


TUESDAY 11/4 - ELECTION DAY
Earnings: AMICAS; Archer-Daniels; Ameren; Boston Beer Co; BRE Properties; Cambrex; Emerson; FirstEnergy; Healthsouth; HRPT Properties; Kenneth Cole; Gasco Energy; LoJack; Marvel Enterprises; National Retail Properties; Nautilus Group; Papa John's; Perot Systems; Providence Service Group; Tenet Healthcare; Tenneco; Titanium Metals; TXCO Resources; Ultra Petroleum; Virgin Mobile USA; Vornado Realty Trust; Weight Watchers

Economic Reports: Car and Truck Sales (for October); Factory Order (for September)


WEDNESDAY 11/5
Earnings: Activision Blizzard; Advisory Board; AMBAC Financial; Ameristar Casinos; AvalonBay; Blackstone; Brandywine Realty; CapitalSource; CenterPoint Energy; Checkpoint Systems; Churchill Downs; Cisco; Conseco; Cox Radio; Devon Energy; Digital Realty Trust; General Motors; Hertz Global; K-Swiss; Inland Real Estate; Iowa Telecom; LandAmerica Financial; Marsh & McLennan Co.; McCormick & Schmick's; New Frontier Media; Newstar Financial; Parker Drilling; Plains All American; Polo Ralph Lauren; Quicksilver Gas; Quicksilver Resources; Radian Group; Revlon; Ruth's Chris Steak House; Sara Lee; Sinclair Broadcast Group; Speedway Motorsports; Sunoco; Time Warner; Time Warner Cable; Time Warner Telecom; Whole Foods; Ziprealty

Economic Reports: ADP Employment (for October [this is a private company's research on unemployment figures]); Crude Inventories

Events: National Press Club hosts the RNC and DNC Chairmen (12:30p ET)


THURSDAY 11/6
Earnings: AES Corp.; Allied Capital; AmBev; Anheuser-Busch; Assured Guaranty; AthenaHealth; Barr Pharmaceuticals; bebe stores; Biovail; Blockbuster; Borland; Bristow Group; Building Materials; Cablevision; California Pizza Kitchen; Caribou Coffee; CastlePoint Holdings; Citadel Broadcasting; Continental Energy; Delta Petroleum; Discovery Labs; Dolby Laboratories; Dynergy Inc; Echelon; Elizabeth Arden; Fannie Mae; Frontier Oil; Genesis Energy, LP; GTX Inc.; Hansen Natural Corp; Hospitality Properties; HRPT Properties; IMAX Corp; JMP Group; King Pharmaceuticals; Lexington Realty Trust; Linn Energy; MBIA Inc; Medical Properties Trust; NASDAQ; Natural Gas Services; Nortel; Northstar Realty; Patriot Capital Funding; PG&E; Pioneer Drilling; priceline.com; Public Storage; OM Group; Orleans Homebuilders; Petrohawk Energy; Playboy; Qualcomm; Quanta Services; Sapient; Senior Housing Properties; Spectra Energy; Spectrum Brands; Steven Madden; Tower Group; Stone Energy; Toyota; Tyco Electronics; U.S. Concrete; Vonage; Walt Disney; Williams Companies

Economic Reports: Initial (Unemployment) Claims


FRIDAY 11/7
Earnings: Aircastle; Con Edison; Cooper Tire; Crosstex Energy; Discovery; Edison; Ford Motor Co.; Life Point Hospitals; Metalico; Nordic American Tanker; Reliant Energy; Sotheby's; Sprint Nextel; Sun Communities; Tetra Technologies; Trump Entertainment Resorts; Westar Energy

Economic Reports: Hourly Earnings (for October); Unemployment Rate (for October); Wholesale Inventories (for September); Consumer Credit (for September); Federal Reserve posts its statistical release on Consumer Credit 3p.

Understanding How Low the Federal Reserve Can Go and a Quick Guide to Your Salary and Tax Cuts.

Why You Care loves two types of journalism stories: The type that reports the news and flags how it impacts you down the road, and/or pieces that clearly lay out in an easy accessible way why you care about them. Today you need to take 3 minutes and read two pieces. One by the Wall Street Journal's Jon Hilsenrath on the Federal Reserve and interest rates and the other by CNN/Money.com's Jeanne Sahadi on what type of tax cut (or not) you would get under an Obama administration versus a McCain administration.

Here's why you care: The Journal's Hilsenrath points out there are really two main questions going forward regardless of the Fed's actions today with interest rates - 1) Does a cut mean another lending bubble?, and 2) How low can the Fed really go? Hilsenrath points out that the real action is the second question. Read his report and understand where the Federal Reserve may end up and why. You need to know because the market down the road is going to care a lot.

Meanwhile, Sahadi's article is particularly utilitarian. Everyone wants to look up their salary and figure out what type of tax cut or tax hike they'd get under the next administration. She not only does the math to make it easy, you'll be able to recite the candidates' positions with the type of clarity that would put a professional pundit to shame.

Reading these two articles will leave you better equipped to understand the business pages in the coming days and months.

Jaws Drop as Home Prices Plummet and BusinessWeek's Chief Economist Outlines the Argument that will Dominate Congress

Eye popping, yet not surprising. That's what you are likely to think about about the new report showing home prices falling 17.7% from last year in a number of major cities. The Wall Street Journal's Donna Kardos has a terrific write on the report, and the Journal has an excellent second web page breaking down each metro area. If you want to focus on Los Angeles then you should check out the zen master of LA real estate - aka - the LA Times' Peter Viles who runs the paper's real estate blog: LA Land.

You should take a moment with the report, and as we say, eye popping but not surprising. Not surprising because the economy hasn't stabilized yet. How do we get to stability? Well, that's why today's must read is BusinessWeek's chief economist Michael Mandel who argues that the economy's problem isn't a confidence crisis but rather a breakdown in the economic system itself.

Here's why you care: Mr. Mandel's argument essentially says this - We are in a global economy where a number of countries depend on American consumers to do just that consume, but how can Americans continue to do that if their personal debt is rising while their wages are falling? Yes, we are doing a slight disservice in over simplifying his argument. But, that's why we are highlighting this for you. His arguments will be important as Capitol Hill will return post election and will undoubtedly tackle a stimulus package (i.e. - a cash injection for the tax payer, as we've previously noted deserves to be on your radar screen).

Mr. Mandel's argument is both thought provoking, and well laid out. Whether we agree or disagree with him is beside the point, we think you'll walk away from it better able to understand the policy arguments over the next month between Capitol Hill and Wall Street. You'll be glad you read it.

Banks Claim It's Killing the Economy - Here's "It" is, and How You Can Understand "It".

Decoding the business pages sometimes involves a two step process. Step one: Getting past industry lingo. Step two: Understanding often obtuse business concepts. We try to help you decode the business pages and put you ahead of the curve. Today, Allan Sloan, senior editor at large for FORTUNE Magazine has done the two steps for everyone in his FORTUNE article posted on CNN/Money.com. It is about industry lingo called "mark-to-market" - aka - Financial Accounting Standard 157 (sometimes called FAS 157). Sounds terrible, huh? Well, it might have a big impact on your 401k.

Here's why you care: Mr. Sloan frankly does a service for you by explaining this term because all the banks REALLY, REALLY, REALLY care about it. In fact, why they care is why you care. The concept basically requires banks to account for all their assets at the price they can sell them today. Banks say, hey, wait a second, I wasn't intending to sell those bundled mortgages for years so don't make me say they are only worth what I'd get for them on today's market that is in the gutter, because if you do that I'll need even more money to stay afloat.

And if banks need more money, and can't get it from other banks, guess where they turn? Under the Emergency Economic Stabilization Act they can go to the U.S. Treasury. This is about to get a lot of attention because the Stabilization Act says the concept has to be studied - thus the reason for the banks' concern, they don't want to have to readjust their balance sheets in a negative way. You can bet Wall Street is watching. You need to as well.

There is, of course, a counter argument which essentially says the concept works because what if a bank suddenly ends up having to sell the asset? Shouldn't we have a fair read of the value of all the assets? And of course, now that taxpayers have stock in many of the banks that makes things even more interesting.

Read Mr. Sloan's article and never let "mark-to-market" send you to Wikipedia again.

Understanding How Greenspan and California's Foreclosure Law Will Play in the Financial Crisis Debate

Two must reads for you today. While Why You Care was posting our futures calendar (Next Week's News Today) yesterday, former Federal Reserve Chairman Alan Greenspan was making news on Capitol Hill, we've narrowed down the mountain of coverage to one story on it that you'll need to read in order to understand the debate in the weeks and months (likely years) to come.

Plus, we have a forward looking article on how California has slowed the foreclosure process... at least temporarily. This will also be part of the public debate over solutions, so you'll want to understand it now.

First to Mr. Greenspan -

Here's why you care: The Wall Street Journal's Kara Scannell and Sudeep Reddy have a terrific write deciphering what Mr. Greenspan had to say and how the lawmakers questioned him. You need to read this piece because his testimony will be used in much of the public debate over how much regulation is needed, and where to find a balance between regulating and over regulating. You're going to see it again and again, so it is well worth your time.

Now to California's foreclosure process -

Here's why you care: The must read LA Times story by William Heisel, Marc Lifsher and Maura Reynolds shows that California has done something inventive - put a law in place this past September requiring lenders to wait 30 days after contacting the defaulting borrower (or making reasonable efforts to) before initiating the foreclosure process. Why this article is a must read is because the result is still a jump ball. Yes, the reporters note the process has slowed, but their reporting also illustrates it is unclear whether the desired result is achieved: More lenders and borrowers working out loans instead of turning to foreclosure. Time will tell, but you can bet other state lawmakers are watching this. And they are reading this story - so should you.

Next Week's News Today: (Economic Crisis Metaphor Alert as Earnings, Hearings, and Political Polls Collide)

If it's Thursday, then it's time for Next Week's News Today where we publish our own futures calendar of earnings, reports, hearings and political events which will either drive the news, or deserve more attention. Last week we were correct to point out that earnings would be the main action.

Here's why you care: This coming week expect earnings to also take center stage. The list below is not exhaustive, but selective (although exhaustive for us to have gone through). Are there narratives here in the deluge of company earning reports? Sure. First, the well known names like Verizon (10/27) or Comcast, Kraft Foods, Procter & Gamble, and Prudential (all 10/29) will likely get there own stories on the wires, and on the web.

Looking at all the companies there are many related to oil, like Chevron (10/31), but there are also a number of companies reporting that are associated with oil drilling that make for interesting copy as to the industry which did so well this past summer, only to have prices go down of late.

There are once again a number of regional banks below that collectively deserve more attention. It would be nice to have stories on the status of the Treasury's watch list for regional banks that might fail.

We were interested to see the surprising number of real estate related companies reporting next week. Since expectations are low, let's see who beats them.

Economic reports like New Home Sales (for September out on 10/27) and Personal Spending and Income (10/31) will make good news pegs to examine the economy.

Capitol Hill will get into the action with a number of economic hearings listed below, notably the Joint Economic Cmte (10/30) could prove interesting once their witness list is complete.

And if you are inclined to look at earnings as truly being put on metaphor alert for the economy you might see a piece on Moody's earnings (10/29) in the business section and a story on Mortons Restaurant Group (10/29) in the style section on the same day.

Lastly, politics can't be ignored as the economy is the number one issue on the campaign trail and next week is the last week of the campaign. Notably Quinnipiac University unveils a poll at the Press Club (10/30) taken simultaneously in the battleground states of Florida, Ohio and Pennsylvania - all states feeling the pinch of declining real estate values.

As always, events are broken down by days below.

MONDAY 10/27
Earnings: American Financial Group; Americredit Corp; Applied Industrial Technologies; Arch Coal; Axis Capital Holdings; Bank of Hawaii; BE Aerospace Inc.; Boardwalk Pipeline; CNA Financial; Corus Bankshares; Ducommun Inc.; Eagle Materials; Education Realty Trust Inc.; Fidelity National Information Services; First Advantage Corp; First State Banc; Franklin Electric; Gehl Co; Heartland Financial USA; Hercules; Kilroy Realty; Lorillard; Old National Bancorp; Parexel International Corp; Penn National Gaming; Plum Creek; PrivateBancorp; SL Green Realty Corp; Tidewater; Universal Health Services; Verizon; Vertex Pharmaceuticals Inc.

Economic Reports: New Homes Sales (for September)


TUESDAY 10/28
Earnings: ACE Ltd; Actel Corp; Align Technology Inc.; American Capital Agency Corp; Apollo Group; Bemis; BP; Boston Properties; Canadian Pacific Railway; Centex; Check Point Software; CTS Corp; Denny's; Dreamworks Animation; EarthLink; Entergy Corp; Estee Lauder; FirstMerit Corp; FMC Corp; Fresh Del Monte Produce Inc.; Health Management Associates Inc.; Holly Energy Partners; Kansas City Southern; Lan Airlines SA; LandAmerica Financial Group; Martha Stewart; Martin Marietta Materials; McGraw-Hill Companies Inc.; MicroStrategy; NetLogic; Occidental Petroleum; Odyssey Healthcare; Pacer International; Peet's Coffee; Pzena Management Inc; RenaissanceRE Holdings Ltd.; Royal Caribbean Cruises; SAP AG; Sierra Wireless; Smith International Inc.; Taser; U.S. Steel; Under Armor; USG Corp; Valero Energy; Whirlpool

Economic Reports: Consumer Confidence (for October)

Hearings: House Education and Labor Cmte.: Impact of Economy on Health Coverage


WEDNESDAY 10/29
Earnings: Advanced Auto Parts; Aetna; Ameriprise Financial; Annaly Mortgage; Comcast; Constellation Energy; Corning; Drugstore.com; Equity Residential; Federal Realty Investment Trust; FirstService Corp; Hartford Financial; Invesco; Kellogg; Kraft Foods; Lazard; Legg Mason; MetLife; Moody's; Mortons Restaurant Group; New York Community Bancorp; Nexen; Noble Energy; Office Depot; Owens Corning; Procter & Gampble; Prudential; Qwest; RealNetworks; Sony; SPX Corp; Standard Pacific; Suncor Energy; Visa

Economic Reports: Durable Orders (for September); Crude Inventories (for 10/25); Federal Open Market Cmte Policy Statement released

Hearings: 1) House Transportation and Infrastructure Cmte.: Economic Recovery and Infrastructure Investing; 2) House Ways and Means Cmte.: Economic Security and Recovery


THURSDAY 10/30
Earnings: Advisory Board; Alcatel-Lucent; Alexandria Real Estate Equities Inc.; American Capital; AmerisourceBergen Corp; Apache Corp; Avon Products; Ball Corp; BJ Services; Blockbuster; Brinks; Bronco Drilling; Callaway Golf; Cameron; CBS Corp; Chiquita Brands; CIGNA Corp; CMS Energy; Colgate-Palmolive; Conseco; CVS Caremark; Dominion; Dril Quip Inc; Eastman Kodak; Energizer Holdings; Expedia Inc.; Exxon Mobil; Flagstar Bancorp; First American Corp; France Telecom; Human Genome Sciences Inc.; Integra Bank; International Paper; Mack Cali Realty Corp.; Marathon Oil; Midas; Midway Games; MFA Mortgage Investments Inc.; Micros Systems; Nationwide; NRG Energy; Newell Rubermaid Inc.; Omega Healthcare Investments; Penske Auto; Pride International Inc.; Public Service Enterprise Group; Radian Group; Realty Income Corp; SBA Communications Corp; Signature Bank; Sirius XM Radio; Steven Madden; Sun Microsystems; Timberland; Union Drilling; Waste Management; WebMD Health; Weingarten Realty; Westwood One Inc; Wyndham Worldwide; Wynn Resorts

Economic Reports: Initial Unemployment Claims (for 10/25);

Hearings: Joint Economic Cmte.: Economic Recovery - Need for Growth and Stimulus examines Gross Domestic Product (GDP) numbers (early signs growth stalling and spending declining).

Polls: Quinnipiac University Poll press conference, 10a National Press Club on polls conducted simultaneously in Florida, Ohio and Pennsylvania.


FRIDAY 10/31
Earnings: Alliant Energy; American Electric; Burger King; Chevron; MB Financial; NYSE Euronext;

Economic Reports: Employment Cost Index (for the third quarter); Personal Income (for September); Personal Spending (for September);

Understanding How... As the California Recovery Goes, So Goes the Nation (Plus a Note on Today's Market Flux)

There's an important article today that you are likely to overlook, and guess what? It lays out in detail what the recovery is likely to look like... under a microscope... just for you. Remember, if you buy into the thesis that a recovery can't happen without home prices stabilizing then you shouldn't ignore today's Wall Street Journal article on California. Most Why You Care readers are familiar with the political maxim: As California goes, so goes the nation. It turns out, so does the economy.

Here's why you care: The Journal article today is important for two reasons. First, it gives you a detailed understanding of how the market will unfold by providing evidence of properties in certain California communities starting to sell for bargain basement prices. The result is a domino effect into the next community driving prices down further, but with the promise that they will start to be bought on the market.

Second, it cites a study claiming that while "California represents about 12% of the nation's population, its homes account for 34% of the loans in a typical mortgage-backed security." Wow - 34%. That means even if you don't really care about the California market, you actually have to because it impacts the economy, and the banks where you keep your money, and your 401K which likely includes investments impacted by the mortgage/credit crisis.

(Quick primer on a mortgage back security: That's where an entity buys up a bunch of mortgages, stuffs them into a salami casing, and essentially cuts pieces off and sells them to investors. Each piece contains different percentages of a variety of mortgages - some more safe than others.)

Bonus why you care about today's market flux: Notably the New York Times and others are pointing to earnings reports today as the reason for the market roller coaster. However, we note that this past Thursday when we published Next Week's News Today on our site we highlighted that this week's action would be due to earnings reports. Just another reason to never miss each Thursday's Next Week's News Today.

As always, our goal: Put you ahead of the curve and decode the business pages.

The Answer to the Financial/Credit Crisis - More Banking Mergers?

Why You Care is not surprised by the New York Times story today reporting that the Treasury is seeking more mergers in the banking industry. The plan at its most basic level is this: Make all moves necessary to shore up banks.

Here's why you care: The story notes that it isn't just about the uber national banks, but the name brand regional banks. You need to read this story, because the unintended consequences of mergers have not yet been explored. However, we trust they will in the days to come. For those ahead of the curve, this means a number of things. First it may mean investment opportunities now. Second, it may (or may not) mean that banks start lending capital (on the national level). Third, it might mean a face lift for you small town bank. Fourth, if your small town bank does in fact get a face lift, it might mean a new person behind the loan desk that doesn't know you or your business - or conversely it might actually mean a familiar face behind the loan desk has money again.

Read this story and be ahead of the curve.