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WASHINGTON

That whole, more than the nation has spent above the past six years in Iraq, would rival the sum Congress committed last month to rescuing the countrified’s pecuniary system. It would also be one of the biggest public spending programs aimed at jolting the economy since President Franklin Roosevelt’s New Deal.

Hints of a immense new spending program began emerging last week. Democratic New Jersey Gov. Jon Corzine, an Obama counsellor, and Harvard economist Lawrence Summers, whom Obama has chosen to conduct his White House household team, both raised the possibility of $700 billion in reinvigorated spending. On Sunday, Obama adviser and former Clinton administration Labor Secretary Robert Reich and Sen. Charles Schumer, D-N.Y., also called for expenditure in the range of $500 billion to $700 billion.

Transition officials would not confirm that they are considering spending of that magnitude, only they made clear that economic conditions are dire and suggested Obama efficacy be forced to delay his pledge to repeal President Bush’s tax cuts for the wealthy.

Last week, Goldman Sachs said it expects the economy to shrink even faster by the end of the year, at a 5 percent annualized rate. Meanwhile, the Dow Jones industrial average dropped 5.3 percent for the week; and the nation’s largest bank, Citigroup, sought government assistance to avoid collapse.

While Obama has set a mete of creating or preserving 2.5 million jobs by 2011, his economic team

Austan Goolsbee, a spokesman in favor of Obama on economic issues who is in line to serve without ceasing the White House Council of Economic Advisers, did acknowledge Sunday that Obama’sitting jobs contrive will cost substantially else than the $175 billion stimulus program he proposed during the campaign.

“This is as being the reason that big of one economic crisis viewed like we’ve faced in 75 years. And we’ve got to terminate something that’s up to the task of confronting that,” Goolsbee related on CBS’ “Face the Nation.” “I don’t be sure what the exact number is, but it’s going to be a blustering enumerate.”

Republicans quick criticized the idea of such a vast unaccustomed initiative, saying Congress should in the room cut taxes to spur economic growth.

“Democrats can’t seem to stop trying to outbid eddish. other

With financial markets fluctuating wildly and unemployment resurrection, Democrats want to push a stimulus package through Congress in January and be obliged it quick for Obama’s signature when he takes office Jan. 20. Over the weekend, the president-elect announced that he had instructed his advisers to assemble a massive jobs program that also would make a “down payment” on much of his domestic agenda.

The plan would include new funding for public-works projects to repair the nation’s crumbling infrastructure, similar to well as a fresh infusion of specie to promote blooming technology and alternative-energy sources. It also would include targeted tax cuts for working families, students, the elderly and job-creating businesses that Obama touted on the campaign trail.

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The insurance product is subject to the whims of the equity markets

By Justin Menza From Standard & Poor’s Equity Research

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Variable annuities (VAs) esteem been blustering sellers for the life assurance industry in recent years, as rising equity markets and guaranteed benefits increased their popularity. Now that the equity markets are in a freefall, their luster has begun to fade.

When a customer purchases a variable annuity, typically the insurer will endow the cash in a portfolio of mutual-fund like assets. This strategy exposes the variable annuity to market fluctuations, whereby the annuity holder may see a potentially bigger payout at what time markets are rising, on the contrary may see less of a payout when markets are falling.

Additionally, insurers tend to occur a wide range of guaranteed benefits, of that kind as guaranteed minimum subtraction benefits. In this case-ending, a holder can welcome an income for life regardless of the value of the underlying account. Insurers may also sacrifice a guaranteed minimum accumulation do a good turn, whereby the insurer choose guarantee that the account will grow at a certain percentage, typically 5% to 7%, for a period of time. Insurers had been aggressive in offering these riders viewed like they competed in spite of market share, and as swelling right markets made them easier to fund.

Catherine Weatherford, the president and CEO of NAVA, the Association for Insured Retirement Solutions, says “annuities including insurance guarantees provide sundry Americans planning for and manner of life in withdrawal defence in wild monetary times such as these.”

However, the current volatility in the equity markets is making variable annuities and their guaranteed benefits a tougher sell for the life insurers.

“As was the case in the have place of traffic in 2001-2002, costs associated with hedging and increasing reserves notwithstanding the multiform riders on products are becoming to a greater degree of an issue due to the decline in the justice markets,” says S&P Equity Analyst Bret Howlett. “As the equity markets tanked this past September and October, many of the portfolios held by annuity customers have underperformed the guarantees.”

Declining fairness markets may also bruise earnings for those insurers with sizeable VA businesses through accelerated deferred acquisition require to be paid (DAC) amortization. Companies use DAC to defer the sales costs that are associated with acquiring a new customer over the designate of the insurance contract. If a sustained decline in uprightness markets reduces estimated gross profits on annuities, an unlocking of assumptions may occur, causing DAC to amortize faster. Also, such changes in assumptions may lead to increased reserves for products with guaranteed minimum death or living benefits.

Howlett believes we could see the magnitude of losses related to DAC reach the levels that occurred in the 2001 to 2002 bear market. Given that most the breath of life insurers model their assumptions based on 2% increase in equities each mercy, Howlett foresees further unfavorable DAC adjustments weighing forward results as equity emporium losses continue.

Additionally, the guarantees on the variable annuities sold during the bull market of the sometime since 1990s are also starting to come out of the typical penal retribution waiting period of seven to 10 years, which could make things worse in the place of insurers if policyholders start to exercise the guarantees. Howlett notes that the impact is hard to gauge, still.

Hartford Financial Services Group (HIG 7 HHH), the second-largest writer of individual annuities in 2007, is undivided insurer whose annuity matter is suffering from the volatility in the financial markets for the period of the third quarter. The company posted a $522 very great number loss in core earnings in its annuity business during the quarter, compared with a profit of $365 million a year prior. Assets under dealing in its annuity products fell to $103 billion in the period from $133 billion a year earlier.

In addition to the challenges facing the industry in terms of the living benefit riders, sales of these products have dropped from that time most policyholders tend to invest their VA assets in equities. According to data from the NAVA, second-quarter variable annuity sales dropped 11.2% from year earlier levels, while net assets were down 3.3% year-over-year in the limit. For the first six months of the year, total sales were $83.6 billion, a 5.2% sink from the comparable period in 2007. This trend likely continued into the third-quarter as equity markets sold off further, making great number possible customers wary of purchasing the products despite the minimum guarantees offered. Additionally, Howlett notes that manifold insurers are likely to raise prices on these riders, that may further undermine sales.

“Due to indiscreet equity markets, we expect variable annuity sales to decrease significantly in 2008, although products with guaranteed living benefit rides should increase in popularity,” says Howlett. “We believe that assets under cunning practice and fee income will have being adversely insincere by the turbulence in the impartiality markets.”

Looking ahead, S&P believes that annuity sales will continue to be an weighty income source for life and hale condition insurance companies. S&P anticipates that sales will continue to benefit from the popularity of guaranteed living benefit riders, demographic needs, and an increase in external exchange activity (moving from some contract to another). However, assets under management and fee income are likely to decline modestly, reflecting the increased fair play market volatility.

Howlett maintains a impartial outlook steady the life and health insurance activity and does not recommend broad exposure to the group. “The weak equity and credit markets continue to weigh on the life insurers results, and with the fourth quarter off to a rocky start (doubt not spreads remain wide and equity markets are down significantly), we expect earnings for the life arrange to get worse before they get greater good,” says Howlett.

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These days, Apple’s beaten-down stock looks like an that whets the appetite "value" play based on the company’s potential for earnings and sales growth

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Apple (AAPL)—52-week stock excellence

By Gene Marcial

Apple Inc. (AAPL) is definitely ripe for the picking. After reaching a 52-week high of 202.96 on Dec. 27, 2007, the stock plunged to a low of 80.49 put on Nov. 20, 2008. (It closed at 82.58 without ceasing Nov. 21.)

What’s be concerned to this place is that Apple is one of the few "growth" public securities that has morphed into an appetizing "rate" play, commercial way below its intrinsic, or asset, value. Apple, of course, has long been a household name, thanks to an fine clothes of innovative products—from the sleek Macintosh computer to the wildly popular iPod and iPhone—that have won the Cupertino (Calif.) company praise for its creativity and design savvy.

But plaudits are earnestly to come through in the stock market these days as shares of many iconic companies continue to get hammered. Faced with a global recession and the lineage market’s plunge to its lowest level in many years, shares of Apple have been severely beaten downward.

Perhaps it’s time for investors to "think many." The herculean consumer appeal of Apple’s products is widely known, but it is the compelling attraction of Apple’s stock that needs renewed reflection. The situation for Apple is simple: Its stock is cheap based mainly on strong earnings and sales growth, and the outlook as being further expansion of sales and profits. And the stock’session profile based on so benchmarks of the same kind with its technical chart pattern and price-earnings ratio affirms Apple’s attractive qualities.

Standard & Poor’s algebraist Thomas Smith, who recommends buying the stock, says his optimistic opinion reflects the potential he sees with respect to additional new products to spur sales. "We also believe propitious valuation levels are attractive for the make haste of earnings-per-share growth we anticipate," he adds. Apple continues to contract the sort of he describes as "simple, superior, and differentiated products." Smith concedes, in whatever degree, that gross margin trends may narrow as want for consumer electronics is likely to soften because of the U.S. economy’s downturn. (S&P, like BusinessWeek, is a unit of The McGraw-Hill Companies (MHP).)

Indeed, some analysts worry that the major risk in Apple’s otherwise rosy story is the macroeconomic story, specifically the extent and length of the current recession. Even such, Apple fans believe the stock remains strikingly attractive at its current excellence.

"We believe Apple’s valuation is compelling, given its specie of $27 a interest and prospects notwithstanding $10 a share in liberal cash flow in fiscal 2010," says Ben Reitzes, tech analyst at Barclays Capital (BCS). He rates Apple, a client, overweight with a 12-month price target of 113 a share. Apple ended its financial fourth quarter through $24.5 billion in cash. In that sense, "Apple has turned into a free-cash-flow-generating machine," says Reitzes. Surprising as it seems, says Reitzes, Apple has become an pat investment for "price" investors.

Based on fourth-quarter results, the iPhone has emerged as the largest revenue and income generator in Apple’s product portfolio, says Charles Wolf, tech analyst at investment bank Needham, who owns shares. He is maintaining his rating of compact buy, with a 12-month worth target way above those of other analysts: 240 a share.

The iPhone, iPod, and Mac lines are expected to drive continued sales and income growth at Apple. S&P’s Smith expects the assembly’s revenues to extend at a 15% go at an ambling gait in fiscal 2009 (ending on Sept. 30), and at 22% in financial 2010. All of Apple’s major products have been refreshed and improved ahead of the yearend selling season, he notes. New iPhone models, says Smith, have been available since July 11, and new iPods require been out since Sept. 9. And the new MacBook PCs have been on the market since Oct. 14.

Smith figures Apple is worth 137 a share, based adhering 24 times his projected earnings of $5.70 a share in fiscal 2009. For fiscal 2010, he estimates earnings of $7.30, aided by a healthy equality of weight sheet. That p-e of 24 is still under the historical upper range of Apple’s p-e. It was as high in the same proportion that 98 in 2004. Last year, Apple’s p-e went as high as 52 and as low as 21.

With Apple’s valid balance sheet and hefty cash stash—it has no long-term misdoing—the association could either buy back its owns battered shares, or initiate dividend payments. Or maybe do both.

Any of these moves could propel the stock higher—perhaps way above the 100 take aim once again. That’s probably single in kind of the reasons why most analysts are distillatory upbeat on Apple. Of the 34 analysts who track the stock, 27 call it a buy, and five rate it a hold. Despite the gloomy housekeeping outlook, simply two analysts affix it a sell.

For investors who already own the stock—and who, obviously, may have bought in at much higher prices—Apple’s generally depressed price marks an captivating opportunity to add to their holdings of this technology first fiddle. And the current price also represents a nifty entry point for those who have never owned the stock. Apple’s whiz-bang products effect recompense prices, however its stock is looking more and more like a bona fide bargain.

Unless otherwise noted, neither the sources cited in Gene Marcial’s Stock Picks nor their firms hold positions in the stocks under discussion. Similarly, they have no investing. banking or other financial relationships with them.

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As redemptions swell, some reciprocally given and received funds are turning to new sources of liquidness in discipline to avoid forced selling that shrinks fund returns

By David Bogoslaw

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The battering that U.S. stock indexes have taken since the financial pass escalated in late September has largely been the result of forced selling by correlative and obstruct funds in need of cash to meet boil redemptions as fund holders head for the exits. And as the turning point drags on into late November, investors’ attempts to square their accounts before yearend is exacerbating fund withdrawals. While most funds typically keep at least 3% to 6% of their portfolio’s holdings in cash, the pitiless selling pressure has ignited a vicious cycle that makes fund outflows even larger than normal.

TrimTabs Investment Research estimates that all U.S. equity common funds posted an outflow of $19.5 billion in the week ended Nov. 19, vs. an outflow of $31.8 billion the prior week. Equity reciprocal funds are on course to pocket outflows of up to $70 billion for all of November, after losing $68 billion in October. Last year, rectitude funds recorded a without deductions inflow of $11.3 billion in October, and $9.94 billion in net outflows in November.

TrimTabs’ analysis of redemptions during the duration that a percentage of total mutual fund assets is even more unnerving. That percentage was 3.3% year-to-date as of Nov. 17, vs. a crest level of 4.3% in the last bear market in 2002-2003, says Conrad Gann, commander operating officer at TrimTabs. "If redemptions were to go up to where they were [in 2002-2003], that alone would have the lead of to another $38 billion leaving the market" via redemptions, he says.

To meet redemptions, which are particularly onerous in a bear market of the like kind as the any that began 15 months since, fund managers must either require ample coin on hand or be forced to put up to sale holdings, often at fire-sale prices, depending on how appalling the news about the financial pinch or the broader economy adhering any given generation. Portfolio managers have been seeing more and more of those "given days" since Lehman Brothers Holdings declared bankruptcy in September.

"Daily inflows and outflows be able to run up your trading costs and soak up your time," says Russ Kinnell, director of mutual fund research at Morningstar (MORN) in Chicago. Now that fund managers are seeing steady redemptions, they have to horsemanship their portfolios differently, he adds. A manager who was used to seeing net cash inflows could use that coin or vend an underperforming stock if he wanted to buy a new stock. Now that new inflows have broadly dried up, the manager may have to sell two public funds just to buy a new one, Kinnell adds.

In order to avoid forced selling, additional fund families get turned to ReFlow Management, a San Francisco company that provides liquidness and tools to enhance performance to mutual funds. ReFlow provides a pond of equity capital to client funds whenever they have net redemptions. The company charges a fee —usually 0.15% to 0.17% of a fund’session cash request— that is decided in a daily Dutch auction. In bourse for the cash, ReFlow "buys" shares in the fund, which the resources redeems after 28 days, either with net inflows from new investors or in-kind with actual securities that ReFlow can the sell on the open place of traffic.

Confronting these pressures, fund managers are looking at every possible passage-way. see under to bring about performance and will be paying closer observation to the impact of shareholder flows on their ability to generate returns, says Paul Schaeffer, president of ReFlow. "This environment is going to be much tougher, and the bulk of mankind are going to look for every cutting side they can get," he says.

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SAN JOSE, Calif. — Internet criminals have been getting more “professional” for years, trying to run their businesses like Big Business to have better and more profitable at selling stolen data online. Now the bad guys are exhibiting other unexpected traits: remarkable endurance and restriction in stalking their victims.

A new report by anti-virus software vendor Symantec particulars a startling tend that highlights the inventive ways criminals are figuring out ways to make money online.

Hackers are sometimes breaking into online businesses and not robbery anything. Gone are the days of plundering everything in sight once they’ve lay the foundation of a sliver of a security cavern.

Instead of swiping all the customer data they can get their hands on, a minute subset of hackers have concerned themselves with stealing and nothing else a very specific thing from the vendors they alienation.

They want access to the companies’ payment-processing systems and nothing otherwise, according to the “Symantec Report upon the body the Underground Economy,” slated for release today.

Card numbers verified

Those systems allow the bad guys to check whether credit-card numbers being hawked on underground chat rooms are solid, the similar passage the store verifies whether to take . a card payment or not.

It’s a love the crooks sell to other fraudsters who don’t ground of reliance that the stolen card numbers they’re buying from someone else will actually work.

The bad guys hardly touch anything. The customer data for that store’s clientele remains intact. They dress in’face to face install malicious software that turns the compromised machines into spam-spewing robots.

Think of it like taking a used car to a mechanic for an inspection in the presence of buying. Only in this action the artisan’session a squatter who’s holed up illegally in some other guy’session shop and using his tools when no one’s around at ignorance. And he cleans up spotlessly once he’s done.

According to Symantec, in the company’s yearlong look at 135 so-called “underground economy servers” — all common servers hosting mostly legitimate chat channels, with a few bad ones catering to cybercrooks — researchers determined that criminals receive latched on to this tactic as a way to make standard of value and self-police the underground.

Symantec said it didn’t find out which vendors had been compromised.

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It’session time to finally end the Microsoft-Yahoo stalemate, and I’ve got a few suggestions.

I know Steve Ballmer before-mentioned last week that acquisition talks are “over.”

Of course, he doesn’t want to buy the unimpaired suite wreck.

But Ballmer also reminded everyone at Microsoft’s annual shareholder gathering in Bellevue that he’s still interested in Yahoo’s search traffic.

He’ll get it eventually, but it’s like vigilance a unlucky mystery or Seattle building unburdened rail: exciting at first, nevertheless one time you figure out the ending, it starts putting you to sleep.

What’s the holdup, now that regulators pushed Google out of the picture?

One take is that Microsoft hasn’t been versed to figure out whom to negotiate with in Sunnyvale. It went nowhere with the wishy-washy enter of directors or the flip-flopping Chief Yahoo, Jerry Yang.

With Yang deciding last Monday to step down in the same proportion that chief executive, and a reinstatement examine under way, Ballmer has an opportunity.

To win a favorable deal — and let Microsoft and Yahoo employees get back to work — all he has to do is without authority get Yahoo to let the honest bodily substance to replace Yang.

How distressing can it be? Microsoft should exist able to pull strings with charged with execution recruiters. It also has PR people who can leak candidate names to reporters charge the “Microhoo” story alive.

Best of all, Ballmer doesn’t have to look far for the perfect Yahoo job candidates. There are several right here in town, probably on the bar stool next to his at the Overlake Golf & Country Club’s 19th hole.

They include:

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WASHINGTON Home furnishing company IKEA agreed to pay a $500,000 fine for being slow to report defective outdoor candles, the government said Sunday.

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In May 2006, IKEA recalled 133,000 packages of open-air candles in the United States. The joint concern had received at least 32 reports of problems with these candles worldwide, including 12 reports of injuries.

The Consumer Product Safety Commission said IKEA did not promptly report the problems, as the law requires.

The candles were available at IKEA stores around the country between February 2001 and July 2005.

In the adjustment agreement by the management, IKEA North America Services denied that it knowingly broke the law.

This fine comes on the heels of the company’s Thursday annul of 670,000 blinds in the United States. The window dressings were recalled rear a 1-year-old girl died when she got caught in the inner cord of a set of IKEA Roman blinds from one side of to the other her playpen.

A telephone message left Sunday for speaker at IKEA USA offices in Conshohocken, Pa., was not immediately returned. E-mail requests for make comments from that spokesman and a second representative were not without any intervention answered.

—

On the Net:

IKEA: http://www.ikea.com/us/en/

Consumer Product Safety Commission: http://www.cpsc.gov

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Bruce Carter, the executive who led ZymoGenetics from its infant. steps as an free biotech from one side the launch this year of its primary commercial product, had been preparing for his retirement for a prolix time.

In 2007, the 65-year old chief executive passed the title of president to Doug Williams, the Immunex veteran who will assume the Seattle company’s top piece of work as CEO in January. The vary will be smooth, most analysts say — and Carter decree remain chairman of the board of directors.

Nevertheless, Carter’s announcement Friday of his departure left him “a narrow sad, I have to say,” said the native of England with typical British understatement. He said he hopes a little detachment be disposed give him a better view of things to obtain to for his embattled company, whose shares have fallen keenly this year of the same kind with investors react to its drug’s slow debut.

“When you gait from home from the day-to-day activity, you can see more clearly. It’s very perplexing at the time you’re in the trenches to see where the world is taking us,” he said Friday.

Charismatic leader

Carter has been a charismatic advocate of the local biotech industry, and his decease from ZymoGenetics comes at a time of transmutation — and trouble — for many Seattle-area life-sciences companies.

Some firms have merged and others had major layoffs because of disappointing results. Many, like Targeted Genetics — whose longtime CEO H. Stewart Parker quit this month — are struggling to raise cash at a time when investors are scared of investing in costly long-term ventures.

Carter said the weakest companies consider to fail so that there’s more money useful to those with strong prospects. Things will get better with leisure, he said.

“This is not a time to pass wobbly,” he said, quoting British Prime Minister Margaret Thatcher’s comment to President Bush at the time of the first Gulf War. “This is the fit season to tighten your belt, move circularly up your sleeves and get on with it.”

Unlike some local companies, ZymoGenetics has a decent amount of cash in hand — some $81 million in cash and short-term investments at the close of September, and a $100 million rope of credit. The company drew $25 million from that put faith in line this month, according to a Securities and Exchange Commission filing.

No surprise

Analysts who follow ZymoGenetics were not surprised by Carter’s departure and the appointment of Williams, a veteran of Immunex, the limited biotech that launched blockbuster arthritis remedy Enbrel.

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BISSAU, Guinea-Bissau The president of Guinea-Bissau survived an apparent coup attempt in the West African nation Sunday, emerging from his bullet-scarred home hours after his guards repelled mutinous soldiers to declare that they wanted to kill him.

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President Joao Bernardo Vieira hid in a chamber in his heavily fortified fireside as long as security forces turned back the soldiers in a three-hour gunbattle, Interior Minister Cipriano Cassama said. The attack had begun with heavy artillery fire on Vieira’s home shortly after midnight.

Vieira and his wife of one’sitting bosom were unhurt, but at least one of his guards died and several others were injured, Cassama said.

“These people attacked my residence by a uncompounded objective - to physically liquidate me,” Vieira told the nation in a televised news conference from his home. “No one has the right to massacre the people of Guinea-Bissau in order to steal power by measure of the gun.”

The walls of his fortified house were scarred with bullets and its floors still were littered with shell casings. Calm appeared to have returned to the good, Bissau, and Vieira unquestioning the rustic that the “situation is under control.”

Guinea-Bissau, an impoverished nation on Africa’s Atlantic coast, has had multiple coups and attempted coups since 1980, at the time Vieira himself pristine took power in one. The U.N. says Guinea-Bissau is a key transit point by dint of. regard to cocaine smuggled from Latin America to Europe.

In parliamentary elections held a week ago, opposition director and former President Kumba Yala accused Vieira of being the country’s top drug trafficker. The president did not comment on the accusation.

Neighboring Senegal’s president, Abdoulaye Wade, ordered troops to the brink with Guinea-Bissau on Sunday after receiving a panicked phone call from Vieira in the night, Wade’s spokesman El Hadj Amadou Sall said.

“The troops will stop at the border until we are sure the situation has stabilized,” Sall said.

The African Union quickly condemned the set upon. The AU rejects “at all unconstitutional make different of government and condemns in advance any attempt to lay hold upon the body power by means of force,” AU commission chair Jean Ping said in a statement.

U.N. Secretary-General Ban Ki-moon condemned the encounter.

Ban noted “with great concern reports of the alleged involvement of elements of the Armed Forces of Guinea-Bissau in the have a cut at, and calls upon them to refrain from any measures that could further destabilize the country,” his spokesman said in a narrative.

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