Howdy folks-here's what's happening this evening……
THE ECONOMY-Another up day for Mr. Market. The Dow Jones rose 67.79, or 0.8 percent, to 8,915.94, its highest level since January. Seven straight advances have pushed the blue chips up 9.4 percent. The S&P 500 index rose 3.45, or 0.4 percent, to 954.58, its highest close since November. The Nasdaq rose 6.91, or 0.4 percent, to 1,916.20, its 10th straight gain. The last time the index rose 10 straight days was in July 1997. What’s going on? Bianna Golodryga notes that “strong profits from a slew of corporate heavyweights and tech darlings like Apple led traders on a buying spree. Optimistic that an economic recovery is underway.” Optimistic enough that a seemingly mixed-report from Federal Reserve Chairman Ben Bernanke to the House Financial Committee today didn’t upset the rally cart. Bernanke restated the Fed's view that the economy is still on track to recover this year, but slowly. He also predicted rising unemployment and continued high levels of foreclosures. Sounds less than reassuring-why didn’t the market react more negatively? Charlie Herman: “While Main Street may not be doing well…Wall Street is looking to where the economy will be say in six months. They’re seeing some good news and that’s pushing the market right now.” One big question Congress had for Bernanke, Golodryga noted, was “when households and small businesses will be able to get easy access to lending?” Bernanke’s answer was another indication that a “new normal” lies ahead for us. Bernanke: “In terms of having the exact same terms and conditions they had before the crisis, maybe that will never come back, because credit has sort of permanently tightened up in that respect.” Bernanke was also asked about whether a second stimulus plan would be needed. Golodryga notes “the Fed Chairman said it was too early to consider, citing that only a quarter of the initial stimulus has been put into effect so far.”
HEALTH CARE-President Obama was talking health care today and if it seems like the subject has come up a lot recently, you are absolutely correct. Jake Tapper notes that “In the last nine days, the President has spoken publicly about health care 9 times.” With tomorrow night’s prime-time press conference also health-care centric, how are the President and his allies faring in the battle to win the hearts and minds (well at least the votes) of House and Senate members? Not so well-Tapper notes that “despite (the White House) push, it seemed less likely today that Democrats would be able to come together to agree on an actual bill.” Case in point-at a time when you’d expect the Administration to be focusing on winning Republican votes, the President still appears to be shoring up his own party’s support. He met at the White House during the day with so-called Blue Dogs, moderate and conservative Democrats whose call for additional cost savings has slowed work in the House Energy and Commerce Committee. The panel is the only one of three that has yet to approve its portion of the legislation. And while serious differences between the House and Senate versions of the bill exist, Tapper tells us that “President Obama came to the Rose Garden today to accentuate the areas of consensus.” Tapper ticks off the positives-“Both the Democrats’ bills in the House and Senate would:
-reform insurance rules to, for example, prohibit denying coverage for those with pre-existing medical conditions.
-offer a government-run plan to compete with private insurance to lower costs
-and emphasize prevention and wellness programs.”
President Obama had this to say about opponents of his health care reform effort. Obama: “These opponents of reform would rather score political points than offer relief to Americans who’ve seen premiums double and costs grow three times faster than wages.”
But out in the nation’s heartland, a reminder that the political debate in Washington may not be taking Main Street’s needs (or at least its’ Chamber of Commerce members) into consideration. Chris Bury visited the town of Woodstock, Illinois, a “community that depends on its small businesses”. Bury says “we heard from a lot of different employers today and a lot of different opinions. One thing is clear, the businesses here feel that reform is moving too fast, and many of them worry about bearing the brunt of crushing new costs.”
DAIRY WOES/RECESSION-The recession has slammed many industries but Mike Von Fremd on WORLD NEWS noted that “dairy farmers across the country have been hit by the global recession as hard as any single segment of the economy.” Case in point-milk.Von Fremd notes that “it costs dairy farmers a dollar fifty to produce a gallon of milk but since the beginning of the year, they’ve only been getting a dollar back…a staggering loss of fifty cents on every gallon they produce.” And that’s not all-Von Fremd reports that “although milk sales are up slightly, sales of other dairy products at the supermarket are down: cheese, ice cream, butter, even yogurt.” That has led to many dairy farmers getting out of the business. Von Fremd: “The National Milk Producers Federation runs a farmer-financed program that bought…over 100 thousand dairy cows so far this year. All were slaughtered to reduce the number of cows producing milk. But even a drop in the amount of milk has not managed to increase its price.”
DRIVING WITH CELLPHONE: An old study by the National Highway Traffic Safety Administration indicates driving and talking on a cell phone at the same time is not a good thing under any circumstances. No, that’s not a typo. We’re talking about a 2003 study and Lisa Stark explains: “Six years ago government researchers scrutinized more than one hundred studies and found a troubling picture – evidence that cell phone use in cars was growing, and that even talking on a hands-free device was dangerously distracting… Studies found drivers using hands-free devices, are still so focused on the conversation, they don't pay attention to the road.” Lisa says the NHTSA had a plan to sound the alarm: “That plan – to inform "the public, government and industry… (that) both hand-held and hands-free cell phones contribute to driver distractions…Drivers are advised not to use any wireless communication devices while driving, except in emergencies." But this effort by the National Highway Traffic Safety Administration .. never happened — it was buried.” So why did this happen? One theory is that the NHTSA didn’t want to antagonize members of Congress who warned against lobbying states. Again, Lisa Stark: “It's unclear why the agency didn't act - whether it was worried about Congress or the cell phone industry or had other safety priorities.. But in the years since, cell phone use in cars has doubled.” And according to one study, cell phone distractions cause 2,600 deaths and 330,000 injuries in the United States each year. (thanks to Ed Bailey for this entry)
NO MORE F-22s-Score one for the Obama Administration. The Senate voted 58-40 to terminate further production of the Air Force's topline F-22 fighter jets today. The Senate’s vote negates a possible run-in with the President, who had threatened to veto defense-spending legislation if it included monies for more F-22s. The Pentagon wants to shift its monies towards programs geared to fighting more unconventional wars. The F-22, designed for mid-air combat, has not been used in the Iraq/Afghanistan wars. Defense Secretary Robert Gates and other Pentagon officials want to put more emphasis on the next-generation F-35 Lightning, a single-engine jet that would be used primarily to attack targets on the ground. The defense bill has money to build 30 F-35s.
While the Senate has deleted the F-22 from its defense bill, Jake Tapper points out that “the House version of the Defense Department Authorization Act contained $369 million in funding for the F-22.” That fact had White House press secretary Robert Gibbs reiterating the President’s veto threat “for the final passage of the bill as well.”
CALIFORNIA BUDGET DEAL-Governor Arnold Schwarzenegger and legislative leaders reached a deal late last night to close the state’s $26 billion dollar shortfall. The Republican and Democratic leaders of the Assembly and Senate began briefing their caucuses Tuesday on a plan that makes $15 billion in cuts. Taking money from local governments, speeding up tax collections and other gimmicks will make up the rest of the shortfall. Unfortunately, with the threat of a persistent economic recession, some see another multi-billion dollar deficit for the next fiscal year. Schwarzenegger and lawmakers said it was the best they could do under the circumstances, with tax revenue evaporating and Republicans refusing to raise taxes. The state’s pain has a trickle-down effect. Today, for example, The California State University system raised student fees by 20 percent as part of a budget plan that would also shrink enrollment and furlough nearly all employees for two days a month. The Board of Trustees voted 17-1 to raise undergraduate fees by $672 a year to $4,827 in the nation's largest four-year university system. The fee increase, which follows a 10 percent hike approved in May, is part of the 23-campus system's plan to close a $584 million budget shortfall caused by an unprecedented drop in state funding to CSU, which has 450,000 students.
CHARGES DROPPED AGAINST GATES-Prosecutors have dropped a disorderly conduct charge against prominent black Harvard University scholar Henry Louis Gates Jr., who was arrested at his home last week after a reported break-in. In a joint press release, the City of Cambridge and the Cambridge Police Department “acknowledge that the incident of July 16, 2009 was regrettable and unfortunate. This incident should not be viewed as one that demeans the character and reputation of Professor Gates or the character of the Cambridge Police Department. All parties agree that this is a just resolution to an unfortunate set of circumstances.” “A just resolution” maybe, but Gates made it clear he’s far from placated. "I'm outraged," he said in extensive comments made to TheRoot.com, a Web site he oversees. "I can't believe that an individual policeman on the Cambridge police force would treat any African-American male this way, and I am astonished that this happened to me; and more importantly I'm astonished that it could happen to any citizen of the United States, no matter what their race. "There are 1 million black men in the prison system, and on Thursday I became one of them," he said. "I would sooner have believed the sky was going to fall from the heavens than I would have believed this could happen to me. It shouldn't have happened to me, and it shouldn't happen to anyone." Gates said that he planned to talk to his legal team about the next step and that he planned to work on a documentary about racial profiling.
ASIA/ECLIPSE-(Associated Press)Scientists, students and nature enthusiasts prepared Tuesday for the longest total solar eclipse of the 21st century, while millions planned to shutter themselves indoors, giving in to superstitious myths about the phenomenon. The eclipse will first be sighted at dawn Wednesday in India's Gulf of Khambhat, just north of the metropolis of Mumbai, before being seen in a broad swath moving north and east to Nepal, Myanmar, Bangladesh, Bhutan and China. The eclipse – visible only in Asia – reached its peak in India a short while ago (8:50pm ET) and will last 6 minutes and 39 seconds at its maximum point. It is the longest such eclipse since July 11, 1991, when a total eclipse lasting 6 minutes, 53 seconds was visible from Hawaii to South America. There will not be a longer eclipse than Wednesday's until 2132.
CREDIT RATING AGENCY REFORM-From Charles Herman: “Today, the Treasury Department sent to Congress credit rating agency reform legislation. ‘In recent years, investors were overly reliant on credit rating agencies that often failed to accurately describe the risk of rated products,’ the Treasury said in the fact sheet explaining the bill. ‘This lack of transparency prevented investors from understanding the full nature of the risks they were taking. The Administration’s legislation would tighten oversight of credit rating agencies, protect investors from inappropriate rating agency practices, and bring increased transparency to the credit rating process.’
The rating agencies – in particular S&P, Moody’s and Fitch – have been criticized as a major culprit in the collapse of the financial sector. It was these agencies that gave stellar ratings to the investments consisting of mortgages packaged together as securities. The problem was that the very banks that bundled the home loans together also paid the rating agencies to rate the securities.”
AIRLINES RELEASE EARNINGS-We heard from three more of the big airlines today who released 2nd quarter earnings reports. Southwest Airlines and the parent of United made money in the second quarter, but Continental Airlines reported a big loss($213 million) and said it would cut 1,700 more jobs. Southwest’s return to profitability after three losing quarters may be short-lived. Chairman and CEO Gary C. Kelly said that he couldn't predict another profit in the third quarter because of weak travel demand and higher fuel prices. United Airlines parent UAL Corp. posted a surprising profit, thanks to fuel-hedging gains. Then it announced it will cut capacity on international flights another 7 percent this fall, reducing flights to match the lighter demand.
– SOTOMAYOR-The Senate Judiciary committee meet for all of three minutes today to vote on the nominations of Judge Sotomayor to the Supreme Court. Chairmen Leahy noted that the republicans had asked that the vote be delayed until next week and noted that they had the right to ask for the delay. Leahy asked that they meet next Tuesday so that they can move quickly on the vote. Leahy said that the judge was all but assured to win the nomination and that she had a lot to do in the coming weeks to move to DC, hire law clerks and get read in on a Campaign Finance Reform case that will be heard on September 9th. (Dennis Powell)
–ROBERT BYRD RETURN TO SENATE- Robert Byrd made his first appearance on Capitol Hill since he was hospitalized for an “infection” on May 15. In a wheelchair, the 91-year-old Byrd came to the Senate floor just long enough to vote against a McCain/Levin amendment to strip $1.75 billion out of the Defense Authorization bill for the F-22 fighter jet. Byrd’s return is good news for the White House. If he made back for this vote, he may be around for a vote on health care, when he would be expected to support the President and his vote will be needed. (Jon Karl)
–FASHION MAGS/WHEN IS THIN NOT IN?-Say goodbye to those phone book-sized September issues of fashion mags. Ad pages in the September issue of W fell 53% from last September, according to the company's report Tuesday morning. Allure saw pages fall 52%, Self gave up 51%, Glamour lost 42%, Vogue arrived down 37%, Details lost 35%, and GQ and Teen Vogue each lost 32%. Publishers believe the declines stem from the recession primarily and don’t suggest any long-term shift in consumer or advertiser demand. (Brian Hartman/Advertising Age)