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Features - 9 September 2010

Markets Respond to Tax Concessions, Job Creation Proposals

Many consider the $350 billion job creation/recovery proposal offered by President Barack Obama as being 'too little, too late', nonetheless stocks were boosted by his speech outlining the plan as investors grabbed onto some hope for an increase in the pace of economic recovery - despite the Federal Reserve's observation that the economy is once again slowing down. The Dow Jones Industrial Average rose to 10,387 (46 points/.045 percent), with the Standard & Poor's 500 closing at 1,099 (7 points/0.6 percent) and the Nasdaq Composite ending Wednesday at 2,229 (20 points/0.9 percent).

The Federal Reserve's warning has led to speculation as to whether the US is heading for another recession, or a double-dip recovery. But although the economy grew at a reduced rate, it is still growing – at least in seven of the twelve districts detailed in the Fed's Beige Book. Although manufacturing activity expanded and consumer spending increased slightly, the job market remains a cause for concern in most regions, and the job market and job creation are areas that the president focused on in his speech on Wednesday. Other proposed economy boosting measures, which are closely linked with job creation, include tax concessions for businesses that invest in new manufacturing plants and equipment, as well as in R&D. Moreover, the proposal calls for improvement to infrastructure, such as roads and rail, to the tune of $50 billion over the next decade. These new proposals are in addition to previous proposals by the Obama administration to extend tax breaks to US households with an income below $250,000 a year.

Some are rather skeptical about job creation resulting from the establishment of new manufacturing plants and upgraded equipment, pointing out that new technology is moving toward automation rather than relying on manpower. There may be initial job creation in setting up the plants, but then automated technology may very well push people out of their jobs, so it is not likely to be a long-term solution. There seems to be general consensus that more should be done to help Americans deal with loss of income, loss of livelihood and even the loss of a roof over their heads. As increased consumer spending remains the key to economic recovery. It must also be borne in mind that these are still only proposals, which need to find their way through all the legal channels before becoming a reality.

Features

Stock Market Simulators - 6 September 2010

Few would disagree that being a stock market player must be one of the most stressful, but also the most exciting, career paths to follow – especially in light of the global financial turmoil over the past two years or so. Have you ever wondered what it must feel like to win, or lose, a fortune as a result of a single decision? Or if slow and steady is your way, how would you best go about building up a comfy nest-egg by investing in the stock market? Before you leap into the world of high finance, you can test your aptitude for stock market trading, without any of the financial risk, by means of a stock market simulator.

Features

GM Drop in Sales May Deter IPO Investors - 2 September 2010

In mid-August General Motors filed the necessary documentation with US regulatory authorities for an IPO reportedly to the value of around $50 billion. GM took this step to extricate the company from the US and Canadian authorities that are currently major shareholders, holding 72 percent of GM's equity. The success of the IPO would depend largely on whether investors are prepared to give General Motors another chance, after it had to be bailed out of potential bankruptcy more than a year ago. So, with a lot riding on the success of the IPO should it be approved, it was disconcerting news that GM's US market sales for August 2010 were around 25 percent lower than August 2009. It's true that the Obama administration’s "cash for clunkers" program did much to boost sales at that time, but even taking that into account, GM's August sales are a cause for concern and may deter investors from supporting the upcoming IPO.

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