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DailyFinance.com

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    FILE - In this March 13, 2015 file photo, workers inspect the new aluminum-alloy body Ford F-150 trucks before they get painted at the company's Kansas City Assembly Plant in Claycomo, Mo. The Commerce Department releases its September report on durable goods on Tuesday, Oct. 27, 2015. (AP Photo/Charlie Riedel, File)
    Charlie Riedel/AP
    By Lucia Mutikani

    WASHINGTON -- A gauge of U.S. business investment plans fell for a second straight month in September, pointing to a sharp slowdown in economic growth and casting more doubts on whether the Federal Reserve will raise interest rates this year.

    Other data released Tuesday showed consumer confidence slipped this month amid worries over a recent moderation in job growth and its potential impact on income. Housing, however, remains the bright spot, with home prices accelerating in August.

    That should boost household wealth, supporting consumer spending and the broader economy, which has been buffeted by a strong dollar, weak global demand, spending cuts in the energy sector and efforts by businesses to reduce an inventory glut.

    The drift of data suggests that the first time the Fed will raise rates will be in the spring.

    The continued weakness in business spending, together with the slowdown in hiring, could make it difficult for the Fed to lift its short-term interest rate from near zero in December, as most economists expect. The U.S. central bank's policy-setting committee started a two-day meeting Tuesday.

    "The drift of data suggests that the first time the Fed will raise rates will be in the spring," said Steve Blitz, chief economist at ITG Investment Research in New York.

    Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, slipped 0.3 percent last month after a downwardly revised 1.6 percent decline in August, the Commerce Department said.

    These so-called core capital goods were previously reported to have dropped 0.8 percent in August. The data was the latest dour news for manufacturing, which has borne the brunt of dollar strength, energy sector investment cuts and the inventory correction.

    Manufacturing accounts for 12 percent of the economy.

    In a separate report, the Conference Board said its consumer sentiment index fell to 97.6 this month from a reading of 102.6 in September. Consumers were less optimistic about the labor market, with the share of those anticipating more jobs in the months ahead slipping.

    There was a drop in the proportion of consumers expecting their incomes to increase and more expected a drop in their income. The downbeat assessment of the labor market follows a step down in job growth in August and September.

    Softer Growth

    Data ranging from trade to retail sales and industrial production have all suggested a significant loss of momentum in the third quarter.

    Housing continues to outperform the economy. A third report Tuesday showed the S&P/Case Shiller composite index of home prices in 20 metropolitan areas increased 5.1 percent in August from a year ago after rising 4.9 percent in July.

    U.S. stocks were trading lower, while the dollar was little changed. Prices for U.S. government debt rose.

    According to a Reuters survey of economists, gross domestic product likely expanded at a 1.6 percent annual rate in the third quarter, slowing from a brisk 3.9 percent pace in the second quarter. The government will publish its advance third-quarter GDP estimate Thursday.

    The dollar has gained 15.4 percent against the currencies of the United States' main trading partners since June 2014, undermining the profits of multinational companies such as Procter & Gamble (PG) and 3M (MMM).

    At the same time, a plunge in oil prices has squeezed revenues for oil field companies such as Schlumberger (SLM) and diversified manufacturer Caterpillar (CAT).

    Schlumberger, the world's No.1 oilfield services provider, said this month it didn't expect a recovery in demand before 2017 and anticipated that exploration and production spending would fall for a second consecutive year in 2016.

    "It is hard for firms to commit to expanding plants and upgrading equipment in a global economy that continues to deliver so many speed bumps," said Diane Swonk, chief economist at Mesirow in Chicago.

    Shipments of core capital goods, which are used to calculate equipment spending in the government's GDP measurement, rose 0.5 percent last month after a downwardly revised 0.8 percent drop in August. Core capital goods shipments were previously reported to have dropped 0.4 percent in August.

    A 2.9 percent decline in transportation equipment spending helped to weigh down overall orders for durable goods -- items ranging from toasters to aircraft that are meant to last three years or more -- which fell 1.2 percent last month.

    Durable goods inventories fell 0.3 percent, the largest drop since May 2013, while unfilled orders declined 0.6 percent.

     

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    2000 05 Chevrolet Impala LS
    Alamy2000-04 Chevrolet Impala
    By TOM KRISHER

    DETROIT -- For the third time in seven years, General Motors (GM) is recalling cars that can leak oil and catch fire, in some instances damaging garages and homes.

    The recall, which covers 1.4 million vehicles dating to the 1997 model year, is needed because repairs from the first two recalls didn't work. More than 1,300 cars caught fire after they were fixed by dealers, the company said.

    In the previous recalls, in 2008 and 2009, GM told owners to park the cars outside until repairs can be made since most of the fires happened shortly after drivers turned off the engines. A spokesman was checking to see if the same recommendation applies this time.

    In addition, GM will notify owners of 500,000 more cars that weren't repaired in the previous recalls, spokesman Alan Adler said.

    The latest recall, mainly in North America, includes: the 1997-2004 Pontiac Grand Prix and Buick Regal; the 2000-2004 Chevrolet Impala; the 1998 and 1999 Chevrolet Lumina and Oldsmobile Intrigue; and the 1998-2004 Chevrolet Monte Carlo. All have 3.8-liter V6 engines.

    Over time, a valve cover gasket can degrade, allowing oil to seep out. Under hard braking, oil drops can fall onto the exhaust manifold and catch fire. Flames can spread to a plastic spark plug wire channel and the rest of the engine.

    GM says it has reports of 19 minor injuries in fires caused by the cars. In 2008, a GM spokeswoman said the cars were responsible for 267 fires, including at least 17 that burned structures.

    The problem first surfaced in 2007, when 21 consumer complaints about engine fires in some of the cars prompted the National Highway Traffic Safety Administration to investigate. That probe found three injuries. Most of the blazes happened five to 15 minutes after the engines were turned off, according to agency documents.

    The investigation led to the recall in March 2008 of more than 200,000 U.S. cars with supercharged engines. A year later GM recalled almost 1.5 million more cars that weren't supercharged. Dealers replaced the spark plug wire channels but documents filed with the government don't mention any repair of the oil leaks.

    GM is finalizing a fix in the most recent recall. The company will use state registration databases in an effort to track down the owners and notify them by mail, he said.

    The 1,300 fires were discovered when GM began investigating whether to recall some 2004 models that weren't part of the earlier recalls, Adler said. He said he didn't know why the recall wasn't done sooner given the large number of fires.

    Company investigators ultimately found 1,345 fires in previously recalled cars and decided "that the recall would be to come up with a better fix for the vehicles that were out there," Adler said.

    The recall is so large that it could have an impact on GM's fourth-quarter earnings, although Adler said that hasn't been determined.

    "Since we have not decided on the remedy, we do not know whether the cost will result in a material charge to earnings," he said.

     

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    business cycle income profit...
    Getty Images
    By Steve Leisman

    The chance of recession in the next 12 months jumped to a two-year high in the latest CNBC Fed Survey as Wall Street continues to downgrade the outlook for U.S. growth and push out the date for the first Fed rate hike.

    Respondents to the survey, including economists, fund managers and analysts, see a 22 percent chance of a recession in the next year, up from 19 percent last month and the highest level since the fiscal cliff debate seized Washington and the nation in January 2013. The chance of recession, however, remains well below its all-time high of 36 percent in 2011, but higher than the 13 percent all-time low at the beginning of this year.

    The economy is losing momentum in a way that in the past has been consistent with the Fed cutting interest rates, certainly not raising them.

    "The economy is losing momentum in a way that in the past has been consistent with the Fed cutting interest rates, certainly not raising them," Mark Vitner, a senior economist at Wells Fargo, wrote in response to the survey.

    The median of the 41 respondents sees the first rate in December, compared with September in the prior survey. While about half of the respondents forecast the first rate hike this year, the other half sees it into 2016 and even, for some, as late as 2017. As recently as the September survey, 80 percent were certain of a 2015 hike.

    "The earliest possible liftoff date for the FOMC is now January," wrote John Donaldson, vice president of Haverford Trust. "That would likely require a good to very good holiday season for consumer spending combined with a winter without a polar vortex."

    Not everyone is so sure. Many expressed concerned about the dangers of the Fed waiting too long to raise rates. Nearly half worry that not hiking rates will give the central bank less defense against a future downturn. A third are concerned about the risk to the credibility of the Fed, which has forecast a rate rise this year for some time.

    "There is an increasing risk that the Federal Reserve will be too slow in beginning to normalize interest rates and will need to raise rates much more aggressively in the future," said Mark Zandi, chief economist of Moody's Analytics.

    The overwhelming economic concern among respondents is weak overseas growth, chosen by 41 percent as the biggest threat to the U.S. economy. The next biggest threat, chosen by 13 percent, is geopolitical risks. Slow wage growth is the main concern with the domestic economy, but it only ranked in third place, a sign that many believe the underlying domestic economy is at least stable.

    Still, the outlook for U.S. growth continues to creep lower, with average growth for 2016 being lowered for the fifth straight survey. Growth next year, which had been estimated as high as 2.9 percent, is now seen at 2.6 percent. Growth in 2015, once estimated to be at 3 percent, is now seen at just 2.3 percent. And the outlook for inflation in the U.S. continues to fall. Respondents believed for most of this year that the consumer price index would hit 2 percent. Now, the outlook is for just 1.75 percent.

    "In an environment with weak oil prices and falling commodity prices how could so many members be 'reasonably' sure that inflation would get back to 2 percent over the 'intermediate term' by end-2015?" asked Robert Brusca, chief economist of Fact and Opinion Economics

    The outlook for the S&P brightened just a bit or, at least, the forecast didn't fall for the first time since the summer. The average respondent sees the S&P 500 at 2,079 by year-end, up 8 points from Monday's close, and at 2,166 for the end of 2016, or about a 4.5 percent gain.

    Only a third of respondents judge that stocks are already discounting a rate rise, suggesting some downside risk for equities if the Fed were to hike this year. The outlook for the 10-year yield continues to decline, with rates seen hitting just 2.7 percent at the end of 2016, down from 2.9 percent in the prior survey.

    The survey was conducted from Oct. 22 through Oct. 25.


    Fed Rates 'Too Low for Too Long'

     

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    A Rite Aid pharmacy is pictured in Maine
    Alamy
    By Ramkumar Iyer

    Drugstore operator Walgreens Boots Alliance is in advanced talks to buy rival Rite Aid, a source familiar with the matter said.

    The Wall Street Journal reported the news earlier Tuesday and said a deal was expected to be announced by Wednesday.

    Shares of Rite Aid (RAD), which had a market value of $6.36 billion as of Monday's close, rose as much as 44 percent to $8.74.

    Walgreens (WBA) shares rose as much as 5.8 percent to $94.69.

    Rumors of a combination between the two companies have circulated for years. The rumors have gained ground recently after a spate of mergers in the health care industry.

    Rite Aid spokeswoman Susan Henderson said the company didn't comment on market rumors or speculation.

     

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    In door heating thermostat set at a room temperature and money
    Alamy
    By Richard Valdmanis

    BOSTON -- After shelling out about $1,000 a month to heat his 190-year-old Massachusetts bed and breakfast during a harsh winter last year, Brian Weinrich is hoping for some relief this season. By all accounts, he should get it.

    Americans are likely to see their lowest heating bills in years thanks to a glut in the domestic fuel supply and predictions of milder winter weather, forecasters and regional fuel dealers say, a welcome outlook after record snowfalls and repeated price spikes over the past two seasons.

    "I'm hopeful for a bit of a break," said Weinrich, 67, whose 1824 brick and wood-frame building in the Berkshire mountains is a seasonal draw for snowshoers and skiers.

    The U.S. Energy Information Administration predicted this month that households using natural gas as a heating fuel are likely to spend an average 10 percent less this winter than last, while those using heating oil could see bills down 25 percent to their lowest since 2009.

    Since then, energy futures have dropped even further. Natural gas touched a three-year low below $2 per mmBtu this week, while heating oil dipped to around $1.43 a gallon, near their lowest level since the aftermath of the 2008 financial crisis.

    "The pass-through from wholesale to household is not quick, but over the long-term these further declines will reach people," said EIA spokesman John Cogan, referring to this week's drop in futures prices.

    About half of U.S. households use natural gas as a heating fuel, while less than a quarter -- mainly concentrated in New England -- use heating oil.

    One of the main reasons for the reprieve is America's years-long drilling boom, which has topped up domestic supplies and helped tip energy markets into a price nose-dive.

    The rise of fracking technology, which involves pumping water, sand and chemicals into a well to extract oil or gas, has helped lift U.S. production of natural gas by 35 percent since 2005 and oil by 45 percent since 2010.

    The OPEC producer group led by Saudi Arabia, meanwhile, has kept price pressures low by leaving oil spigots open in an effort to retain global market share even as Chinese demand growth has slowed.

    Another key is weather. An El Nino weather event, characterized by unusually warm water off South America's Pacific coast, promises higher temperatures for much of the U.S. North and Midwest, the biggest heating fuel markets, according to the National Oceanic and Atmospheric Administration.

    That should reduce demand for heating fuel.

    "This is going to be helpful," said John Drew, director of the Action for Boston Community Development, which helps poor households cover their energy costs.

    It will be great if people get a few more gallons out of their money, but it doesn't mean life will be easy.

    "It will be great if people get a few more gallons out of their money, but it doesn't mean life will be easy," he said, adding that winter heating bills are among the biggest challenges facing the region's poor.

    The steep decline in heating oil prices that began in the middle of 2014 has slowed a gradual years-long shift among New England households from fuel oil to natural gas. But pipeline construction has lagged, which experts said could still lead to localized price hikes for gas and electricity in the region during cold snaps.

    Pipeline capacity has been added to deliver natural gas to the New York market since last year, but "constraints still exist in the Northeast," the EIA said.

    In Maine, where a larger share of households heat with fuel oil than in any other state, heating oil companies said customers were celebrating sharply reduced costs.

    "In this area, and a lot of New England, we have big old historic homes that burn a couple thousand gallons of oil a year," said Gary Nash, owner of Main Street Fuel in Richmond, in south coastal Maine. "So when you cut costs in half like we've seen this year, that's a tremendous savings."

    More than seven in 10 Maine households continue to use fuel oil as their primary energy source for home heating.

    -Dave Sherwood contributed reporting.

     

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    Financial Markets Wall Street
    Richard Drew/AP
    By Caroline Valetkevitch

    NEW YORK -- U.S. stocks slipped Tuesday on uncertainty over the U.S. rate outlook and disappointing results from Ford and other companies.

    Upbeat results from Apple after hours, however, could give the market a boost Wednesday.

    Shares of Apple (AAPL), the biggest company by market capitalization, rose 2.8 percent to $116.89 after it reported higher-than-expected earnings and revenue. Apple's stock ended the regular session down 0.6 percent at $114.55.

    Nasdaq 100 e-mini futures also edged up after Apple's results.

    "Both earnings and revenues were above expectations, which I think was well embraced based on the fact that a lot of companies have been struggling on the top line," said Daniel Morgan, senior portfolio manager at Synovus Trust Co., which owns Apple shares.

    Also after the bell, shares of Twitter (TWTR) dropped 11 percent to $27.89 after it reported results. Twitter's stock ended the regular session up 1.5 percent at $31.34.

    During the regular session, Ford (F) dropped 5 percent to $14.89 after quarterly results missed expectations, while JetBlue Airways (JBLU) fell 3.2 percent to $25.36 after it said it will make less money per mile in October than it did a year ago.

    Shares of other airlines also fell, and the Dow Jones transportation average dropped 2.6 percent.

    The Federal Reserve began its two-day policy meeting Tuesday. While expectations for a rate hike this week are slim, investors are looking for clues in its policy statement Wednesday as to when the Fed will begin to raise interest rates.

    That's going to be parsed every way possible," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

    Casting more doubts on whether the Fed will raise rates this year, data showed U.S. non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, slipped last month after a downwardly revised decline in August.

    The Dow Jones industrial average (^DJI) fell 41.62 points, or 0.2 percent, to 17,581.43, the Standard & Poor's 500 index (^GSPC) lost 5.29 points, or 0.3 percent, to 2,065.89 and the Nasdaq composite (^IXIC) dropped 4.56 points, or 0.1 percent, to 5,030.15.

    Movers and Shakers

    Alibaba (BABA) rose 4 percent to $79.44 after the e-commerce giant reported better-than-expected revenue. After the bell, shares of Twitter dropped after it reported results. Twitter (TWTR) stock ended the regular session up 1.5 percent.

    Declines in crude oil weighed further on energy shares, and the S&P energy index, down 1.2 percent, led sector declines for the S&P 500.

    Health care was only one of two S&P 500 sectors to end in positive territory for the day. The index was up 1.7 percent after better-than-expected earnings from top drugmakers Pfizer and Merck. Pfizer (PFE) was up 2.4 percent at $34.99 and Merck (MRK) was up 1.1 percent at $53.47.

    Rite Aid (RAD) shares jumped 42.6 percent to $8.67. Sources said Walgreens Boots Alliance (WBA) is nearing a deal to buy the rival drugstore chain.

    Among other gainers, shares of hotel operators rose after The Wall Street Journal reported at least three Chinese firms were looking to bid for Starwood Hotels & Resorts Worldwide. Starwood (HOT) shares were up 9.1 percent at $74.81 while shares of Marriott International (MAR) were up 1.8 percent at $77.99.

    NYSE declining issues outnumbered advancing ones 2,293 to 797, for a 2.88-to-1 ratio; on the Nasdaq, 2,003 issues fell and 820 advanced, for a 2.44-to-1 ratio favoring decliners.

    The S&P 500 posted 14 new 52-week highs and 13 new lows; the Nasdaq recorded 56 new highs and 122 new lows.

    Federal Reserve policymakers meet to set interest rates and release a statement at 2 p.m. Eastern time.

    Earnings Season:
    These selected companies are scheduled to report quarterly financial results:
    • Anthem (ANTM)
    • Amgen (AMGN)
    • General Dynamics (GD)
    • GlaxoSmithKline (GSK)
    • Mondelez International (MDLZ)
    • Northrup Grumman (NOC)
    • Occidental Petroleum (OXY)
    • PayPal (PYPL)
    • Walgreens Boots Alliance (WBA)
    • Williams Cos. (WMB)

     

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    Are You Overusing Household Products?
    There are many ways you can save by cutting back on your household products. For instance, instead of using paper towels you can use old newspapers to clean windows and mirrors. Newspaper can easily soak up dust and dirt, and, best of all, it won't leave any streaks. Here are a few more tips you can try.

    First, when it comes to spray cleaners don't spray directly onto the surface -- it always leads to using too much product. Contrary to what you might think, over-spraying can actually lead to more streaks, too. Instead, give your cleaning rag a quick spritz, then wipe down the surface.

    Next, toothpaste can be costly, and while advertisers would like you to think more is better, that's not really true. In fact, a small, pea-sized amount is what most dentists recommend to adequately brush your teeth.

    Finally, using too much carpet cleaner can stain the area and leave a soapy residue, attracting more dirt over time. Instead, start out with less potent options like soap, water or white vinegar. And be sure to properly dry the area after cleaning to extend your carpet's lifespan.

    There are several ways to avoid overusing and overspending on household products. Give these tips a try and you'll see the savings for yourself.

    View Poll

     

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    U.S. CVS Caremark Flu Shots
    M. Spencer Green/AP
    By Raechel Conover

    With flu season about to rear its ugly head, now is the time to line up for your annual flu shot. Peak time for flu in the United States generally falls in January or February, but activity can erupt as early as October and it takes two weeks after vaccination for the body to develop the necessary antibodies. The Centers for Disease Control and Prevention recommends that everyone over the age of 6 months get a dose of the vaccine. This can be costly for an entire family, especially without health insurance coverage.

    To find the cheapest source for flu shots, Cheapism checked prices at six of the largest pharmacy chains (based in 2014 revenue from prescriptions); warehouse clubs Costco and Sam's Club, which are known for low prices and allow non-members to use their pharmacies; and a doctor's office in Columbus, Ohio. As of the third week of September, all the chains had a supply of the vaccine in stock, as did the doctor's office. Some employers organize a flu-shot day for employees and spouses, with the cost dependent on your insurance and employer.

    Price Breakdown. For self-pay, Costco is cheapest: $14.99 for members and non-members alike, compared with $20 at Sam's Club. Target and Walmart price the injection about the same, at $24.99 and $25, respectively. Kroger is charging $30 this year, while Rite Aid, CVS and Walgreens cluster on the high end, at $31.99. Prices at doctors' offices vary widely. Last year a local physician quoted $82.70 for the flu vaccine. This year the going rate is $30.
    Provider Price
    Costco
    $14.99
    Sam's Club
    $20
    Target
    $24.99
    Walmart
    $25
    Kroger
    $30
    Doctor's Office
    $30
    CVS
    $31.99
    Rite Aid
    $31.99
    Walgreens
    $31.99

    Insurance Coverage for Flu Shots. Many insurance companies consider the influenza vaccine a preventive measure and cover some or part of the cost. Every pharmacy and the doctor's office we contacted can run insurance information through their systems and quickly let patients know whether all, part, or none of the cost is covered. (Other doctors may not provide this convenience. The safest bet is to check with your insurance company before heading to an appointment.)

    In-Store Rewards. To entice consumers to the pharmacy for a flu shot, many retailers offer in-store perks to soften the sting. At CVS, customers receive a 20 percent-off shopping pass up to $100, good for any non-sale and non-pharmacy item. The Pharmacy Rewards program at Target offers 5 percent savings on a full day of shopping with every five prescriptions filled, and a flu shot counts toward that. Each flu shot at Walgreens translates into a donated vaccine for a child in need.

    Appointments/Walk-Ins. Every place we called, aside from the doctor's office, adheres to the same policy: no appointment necessary. Just walk in and wait your turn. Most pharmacies estimate a 10- to 15-minute wait, more or less, depending on traffic. If you go on a weekend, patience may be in order. Check your doctor's office for procedures -- some require appointments and others have designated walk-in times.

     

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    mourning woman on funeral with...
    ShutterstockExperts say there are several major money missteps widowers and widows tend to make after a partner's death.
    By Geoff Williams

    In the wake of a spouse's death, it may seem too soon to think about how to manage your money from here on out. And you would be right.

    But at some point, it's one of those topics you need to examine carefully. If this was the love of your life, and you're in deep grief, then you're in a state of mind that's prone to making financial mistakes. According to a number of financial experts, there are at least four major money missteps widowers and widows tend to make once a spouse passes on.

    Shaking up your life too soon. Whatever your situation, you probably have some major decisions to make with your partner's passing, but what seems like a logical decision today may not seem so smart tomorrow.

    Give yourself some time to really think about what you're doing, financial experts say

    "Some people want to immediately pay off a mortgage and make other large changes too quickly. That can create a situation where there [are] little liquid funds available, which may be more important for the survivor," says Rochelle Odesser, vice president of Madison Planning Group, a financial planning firm headquartered in White Plains, New York.

    Myra Salzer, who owns The Wealth Conservancy, a Boulder, Colorado, wealth management and financial planning firm, agrees. "Before one has experienced a new equilibrium, decisions that are made tend to be poor ones," she says, reeling off some of the things surviving partners may get wrong: "Widows might sell the family house for less than it's worth, just to get rid of it, or invest IRA assets in annuities to guarantee an income, even though the IRA is already tax-advantaged and the annuity might not pay out enough for the minimum-required distributions."

    And for good measure, Roger Bell, president of Roger R. Bell & Co., a planning and investment consultancy in Pulaski, Virginia, concurs.

    In that first year, he says, "too often, the surviving spouse expends large sums of money to purchase vehicles, improve their house or take extended and numerous trips."

    It's understandable. You're recovering from a huge loss. A positive change, like making home improvements or taking a trip abroad, is going to clear your head. But if you aren't careful, it will also clear out your bank account.

    This is a time, Bell says, when your "capacity to reason and think clearly is impaired." But he adds: "In time, the surviving spouse will regain their capacity to address matters in a rational and timely manner."

    Spending too much. If your husband or wife was the one who paid the bills and made the financial decisions, you may find it empowering to be in control of the purse strings. But be careful. You may not have as much money as you think.

    William Matthews, a financial counselor in Houston, says he often sees widows and widowers doling out loans and monetary gifts to family and friends.

    "Stop," he says. "You're emotional and shouldn't rush in to help others without thinking about it. You're down to one income, and you need it."

    It doesn't mean you can't help your kids with small purchases, Matthews says, but he was struck by what he saw with the daughter of a friend. After losing her husband, the widow gave the couple's daughter $2,000 toward a car down payment and gifted her $5,000 to go toward moving into an apartment. But she shouldn't have parted with so much money, according to Matthews.

    "She struggled to pay her bills ... and almost lost her home," he says.

    Being too trusting. "The biggest mistake I have seen is being too quick to trust someone, especially in places you may typically have your guard down," says Jeff Weeks, a certified financial planner with ATX Portfolio Advisors in Austin, Texas. "Be wary of the salesperson you know only through places like church and social clubs."

    Twice, Weeks says, he has tried to help widows who lost large portions of their nest eggs, over $100,000, "in what turned out to be Ponzi schemes. In both cases, their spouse had been the primary decision maker in financial matters and died prematurely from sudden illness."

    In each case, the widow found her financial adviser through referrals at church.

    But those are extreme situations, Weeks says. "What's much more common are predatory insurance salespeople or stockbrokers that sell expensive commission-based investments that may qualify as suitable, but that benefit the salesperson more than the client. The salespeople count on unsophisticated clients that are unlikely to read or understand the language in an insurance contract or prospectus."

    Weeks makes the observation that "con people rely on a certain level of trust."

    It's tough, though. Wouldn't everyone like to think that if they're getting a referral through church, it's as solid a referral as they come? But no -- at least, you can't make that assumption.

    Switching financial advisers. Maybe this falls under the category of not being trusting enough. Quite a few financial advisers have mentioned that after a spouse dies, the surviving partner will often change financial advisers.

    "A recent study by Fidelity Investments found that 70 percent of widows dismiss their adviser within a year after their spouse dies," says Robert Johnson, president and CEO of the American College of Financial Services in Bryn Mawr, Pennsylvania. "There can be significant costs to changing advisers both in terms of time and money. Surviving spouses should give the adviser the benefit of some time to establish a trusting relationship with them."

    Switching a financial adviser can fall into the category of making a big decision too quickly. If you haven't been running the financial show for a while, and your financial adviser has been assisting with your finances for some time, there is a pretty good argument that switching advisers for someone who doesn't know you and your finances well is the last thing you'd want to do in haste.

    If anything, that is the money lesson to grab hold of when you're grieving: Take your time making any decision. The status quo may not be sustainable, but it probably is for a little while longer, at least until you can think clearly. You probably feel like there's a gaping hole in your life. Creating a gaping financial hole to go along with that is the last thing you need.

    Geoff Williams is a regular contributor to U.S. News. He is also the author of several books, including "Washed Away," about the great flood of 1913, "C.C. Pyle's Amazing Foot Race," about the infamous Bunion Derby of 1928 and "Living Well with Bad Credit." You can follow him on Twitter @geoffw.

     

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    Young woman holding shopping bags in arms
    Getty Images
    By Stacy Johnson

    From eating too much to drug addiction, sometimes we engage in self-destructive behavior. Why would we deliberately do things we know to be against our self-interest? Often we're doing it because of an unaddressed emotional issue.

    Here's this week's question:

    How can I curb emotional shopping? When I'm in a bad mood, one of my go-to things to feel better is to buy something online. It's always small stuff, but crap I don't need really hurts the wallet. Any tips? -Whitney

    I sat down with a psychiatrist a few years ago to discuss this issue.

    The upshot? It's one thing to surrender to the occasional impulse buy -- that watch gleaming from behind the display case, or a pair of black shoes that will add the perfect dash of sophistication to your favorite business suit. But when your purchases shift from impulsive to compulsive, you might be a shopping addict.

    Researchers estimate that up to 6 percent of Americans are so-called shopaholics. In our society, the phrase "shop till you drop" translates as frivolous and fun, but when spending becomes a problem, the glamour fades.

    Psychologists call it compulsive buying disorder, which is characterized as an impulse-control issue, just like gambling or binge eating, and has the potential to create emotional and financial distress.

    Here are seven signs of a potential problem. For a more complete analysis, check out the Compulsive Buying Scale, developed by psychologist Gilles Valence and his associates.
    • You have many unopened or tagged items in your closet. This isn't the sweater your aunt gave you last Christmas; it's about items you bought. Maybe you forgot about some of this stuff -- boxes of shoes lining the bottom of your closet or jackets that have never seen the light of day.
    • You often purchase things you don't need or didn't plan to buy. You're easily tempted by items you can do without. A fifth candle for your bedroom dresser, a new iPod case, even though yours is fine ... you get the idea.
    • An argument or frustration sparks an urge to shop. Compulsive shopping is an attempt to fill an emotional void. Do you find yourself shopping to deal with a feeling of anxiety?
    • You experience a rush of excitement when you buy. Shopaholics experience a "high" or a rush, not from owning something, but from the act of purchasing it. Experts say dopamine, a brain chemical associated with pleasure, is often released in waves as shoppers see a desirable item and consider buying it. This burst of excitement can become addictive.
    • Purchases are followed by feelings of remorse. This guilt doesn't have to be limited to big purchases. Compulsive shoppers are just as often attracted to deals and bargain hunting.
    • You try to conceal your shopping habits. If you're hiding shopping bags in your daughter's closet or constantly looking over your shoulder for passing co-workers as you shop online, this is a possible sign you're spending money at the expense of your loved ones or even your job.
    • You feel anxious on the days you don't shop. Shopaholics have reported feeling out of sorts if they haven't had their shopping fix, and have even admitted to shopping online if they can't physically pull away from their day's responsibilities.
    If the characteristics above sound a lot like you or someone you know, here are some ways to help kick a shopping habit:

    Find a new activity. Jogging, exercising, listening to music, watching TV -- any activity could potentially substitute for shopping and would be a much lighter burden on your wallet.

    Identify triggers. Take note of what's likely to send you off to the nearest department store, whether it's an argument with your significant other or frustration after a business meeting. When these feelings overcome you, resist shopping at all costs and find a healthier way to work it out.

    Remove temptation. It's no secret that you shouldn't walk through your favorite boutique if you're trying to curb your spending. Try to limit your shopping trips and go only when absolutely necessary. If online shopping is your weakness, resist the urge to surf your favorite stores' sites and even consider keeping your laptop out of reach, especially when you're feeling vulnerable.

    Leave home without it. Leave your debit and credit cards at home. Create a shopping list with estimated costs, and stick to it when you're at the store.

    Get help. If you're still struggling with compulsive spending, don't be afraid to ask for help. You can start with self-help books or by asking a friend or family member to help keep you in check, but it might also be wise to enlist professional help. Consider therapy, resources like Stopping Overshopping or support groups such as Debtors Anonymous.

    Got any words of wisdom you can offer for this week's question? Share your knowledge and experiences below or on our Facebook page.

    Got a question you'd like answered? A great way to get answers to just about any money-related question is to head to our Forums. It's the place where you can speak your mind, explore topics in-depth and, most important, post questions and get answers. It's also where I often look for questions to answer in this weekly column. You can also ask questions by replying to our daily emails. If you're not getting them, fix that right now by subscribing here.

    About me I founded Money Talks News in 1991. I've earned a CPA (currently inactive), and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate. Got some time to kill? You can learn more about me here.

    Sign up for our free newsletter Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free!

    Are You a Shopaholic?

     

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    Democratic Presidential Candidates Attend Iowa Jefferson-Jackson Dinner
    Scott Olson/Getty ImagesDemocratic presidential candidate Hillary Clinton speaks at the Jefferson-Jackson Dinner in Des Moines, Iowa.
    By Beth Braverman

    About seven months after Hillary Clinton announced that she'd run for president in the 2016 election -- and years after the press began predicting that she'd win the Democratic nomination -- the former secretary of state has begun to formally lay out her proposed economic policy for the country.

    As her lead in the Democratic polls diminished in the past few months while rival Bernie Sanders gained steam, she recently announced a plan that focuses on jobs, the middle class and small business. Here's a look at where Clinton stands on the key issues and how those positions could affect the U.S. economy and your wallet if she is elected president.

    1. Tax cuts for the middle class. While she hasn't released too many details on how she'll do it, Clinton has promised to cut taxes for the middle class so people can increase their take-home pay. She also advocates closing tax loopholes and enacting the "Buffett Rule," which would require millionaires and billionaires to pay at least 30 percent of their income in taxes. Additionally, she wants to incentivize businesses to share their profits with workers by providing a 15 percent tax credit to companies that do so.

    Where she has gotten more specific is her plan to raise the capital gains tax, which is paid on the profits made by individuals when they sell property, stocks, businesses or other assets after holding them for a short period of time. Under Clinton's plan, investors would be taxed 39.6 percent on their gain on assets held for less than two years, with that rate phasing out to the current 20 percent after the six-year mark, according to CNBC. This change, which is meant to encourage longer-term investing and economic growth, would apply to those in the highest tax bracket, which is nearly $465,000 for married joint filers and $411,500 for single filers. "For most Americans, an increase in the capital gains tax won't affect them at all," said Tom Wheelwright, certified public accountant and author of "Tax-Free Wealth." "For the average investor who has their money in an IRA or a 401(k), there is no impact by all of this."

    2. Protection for the CFPB. Clinton has publicly urged Democrats in Congress to fight a Republican proposal that would limit the Consumer Financial Protection Bureau, a federal agency created in the wake of the financial crisis to supervise financial institutions' dealings with the public. The agency is responsible for supervising and enforcing the laws that cover consumer financial products and services, and it aims to provide better transparency for the consumers who use them.

    "The [CFPB] has only one mission: protecting Americans from unfair and deceptive financial practices -- and it's succeeding," she wrote in an open letter to Congress.

    3. Increased wages for the 99 percent. Reducing income inequality is one of the central tenets of Clinton's campaign. The gap between the richest and poorest Americans is wider than the gap in any other democracy in the developed world, according to U.S. News & World Report.

    "Corporate profits are at near record highs, and Americans are working as hard as ever, but paychecks have barely budged in real terms," Clinton said in a July 2015 speech. "Families today are stretched in so many directions, and so are their budgets."

    Clinton supports raising the federal minimum wage to $12 an hour. Despite minimum wage hikes by many state and local governments, and by high-profile employers like Walmart and Target, the federal minimum wage remains stuck at $7.25 an hour, the same rate it has been at since 2009. Many advocates of a higher minimum wage, including Clinton competitor Bernie Sanders, want a federal minimum wage of $15 an hour nationwide.

    Even moving the minimum wage to $12 would raise wages for one in four U.S. workers, according to Amy Traub, a senior policy analyst with public policy organization Demos. "That's a big segment of the workforce, and it would make a big difference for a lot of people," she said. "It would be really good for consumers' wallets." Clinton has also backed President Obama's expansion of overtime rules to more workers. Starting in 2016, that plan extends overtime protection to nearly 5 million workers, covering salaried workers who make up to $50,400.

    4. Options to avoid or refinance student debt. Student loan borrowers carry a mean balance of $26,700, and nearly 17 percent of all borrowers are late or in default on their loans, according to a 2015 report published by the Federal Reserve Bank of New York. Furthermore, a study by the Federal Reserve Bank of Boston shows that student loan borrowers appear to be less likely to own a home and have more difficulty accumulating wealth. Clinton addresses the student debt crisis with her "New College Compact."

    Advocating for "debt-free" college, her proposal would allow students to go to in-state public colleges without borrowing any money for education. She also supports a plan to allow Americans with existing student loans to refinance at more favorable rates, which her campaign claims would save the typical borrower about $2,000 over the life of the loan.

    5. No cuts to Social Security. The 2015 annual report on Social Security projected that retirement and disability trust funds would be depleted in 2034 and then would "pay about three-fourths of scheduled benefits for 50 years," according to The New York Times. The future of Social Security, however, has long been a big point of contention between the parties. Republicans, in particular, have been calling for cuts and privatization to address the situation.

    In April 2015, Clinton called Republicans who want to cut back Social Security "just wrong" and said she'd preserve the retirement benefit. "We do not mess with it, and we do not pretend that it is a luxury -- because it is not a luxury," she said at a New Hampshire campaign event. "It is a necessity for the majority of people who draw from Social Security."

    Clinton also has stated that she believes women especially need better access to Social Security and has promised to work to "enhance" the program.

    6. Paid family leave and affordable child care policies. It's been more than 20 years since Bill Clinton signed the Family and Medical Leave Act, which allows families to take up to 12 weeks of unpaid leave to care for a new child and deal with their own or a family member's health needs. That provision puts America behind most other developed countries which offer paid leave for women -- and often men.

    I believe that what's good for women is good for America.

    As part of her goal of getting more women in the workforce at higher wages, Hillary Clinton supports family-friendly policies such as paid family leave and affordable child-care policies.

    "I believe that what's good for women is good for America," she wrote in a 2015 op-ed for women's lifestyle media platform SheKnows. "Take child care. It's a women's issue. It's also an economic issue. You can't go to work every day if you can't afford a safe place to leave your kids."

    This issue has gained more visibility in recent months as several Silicon Valley companies have announced changes to their parental leave policies that extend more generous benefits to both men and women, according to Wired. Currently, California, New Jersey, Rhode Island, Washington and the District of Columbia offer paid family leave.

    7. Pursuit of a new foreign trade agreement. Clinton broke with President Obama and with previous statements recently in opposing the Trans-Pacific Partnership deal, which would put in place one of the largest free trade areas in the world.

    "I still believe in the goal of a strong and fair trade agreement in the Pacific as part of a broader strategy both at home and abroad, just as I did when I was secretary of state," Clinton said in a statement in October. "I appreciate the hard work that President Obama and his team put into this process and recognize the strides they have made. But the bar here is very high and, based on what I have seen, I don't believe this agreement has met it."

    8. Help for small businesses. Clinton wants to "jump-start small businesses" by reducing the time it takes to start a business, expanding access to capital, simplifying and cutting the taxes paid by small businesses, and using technology to allow small businesses to access new markets both domestically and globally.

    "Despite generations of progress on so many other fronts, it's still too hard to get a business started today," Clinton wrote on LinkedIn in May. "Credit is too tough to come by. Too many regulatory and licensing requirements are uneven and uncertain."

    9. Repeal of the Obamacare 'Cadillac tax.' While she has supported the Affordable Care Act and its goal of reducing the number of uninsured Americans, Clinton announced in September that she is opposed to the so-called "Cadillac tax," which imposes a tax on employers with the most expensive health plans. The goal of the tax is to reduce overall health care costs, but critics say it's encouraging employers to simply reduce the quality of their insurance and push costs onto consumers.

    If she were to succeed in repealing the tax, the Congressional Budget Office has said that, without such a tax, the Affordable Care Act might not actually reduce health care costs.

    This story, How Hillary Clinton's Financial Plan Will Affect Your Wallet, originally appeared on GOBankingRates.com.

     

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    Labrador puppy
    Getty Images
    By Beth Pinsker

    NEW YORK -- When some 120 million employees start filling out their open enrollment choices this fall, they will be presented with the usual health, dental and vision options. But a slew of other voluntary benefits are now popping up, ranging from critical-illness coverage to pet insurance.

    Some group deals your employer will offer are true group discounts. Others merely make it easier for employees to sign up for coverage but provide no real cost savings.

    Spotting the difference between a good deal and merely a convenient one requires shopping around to know the market value of the policies you are considering, according to benefit consultants.

    "Some of those policies are going to be a perfect fit and valuable, and other things are not going to be useful," says Jennifer Benz, who runs her own benefits firm based in San Francisco.

    Here is what you need to know before you sign up:

    Supplements Matter

    For employees with a high-deductible health plan, which now accounts for about 25 percent of the workforce, a supplemental policy like critical illness insurance (for cancer and other major illnesses) can be helpful as a hedge, said Karen Frost, senior vice president of health strategies and solutions for Aon Hewitt, a benefits consultant.

    "It's a really inexpensive way to fill a gap with high-deductible plans," said Frost, adding that supplemental premiums can run as low as $5 a month and typically don't require medical underwriting.

    Many employers who offer high-deductible plans will provide some level of critical illness coverage and also hospital indemnity policies, which cover a flat dollar fee for hospital stays that would defray a person's out-of-pocket costs, Frost added. Then employees can pay extra for higher levels of coverage.

    The same applies to personal accident insurance as well as short- and long-term disability policies.

    "We recommend accident more than life insurance, especially if you don't have a family," said Frost.

    When plans like these are bundled together during open enrollment, workers with high-deductible plans choose them much more than when they are offered other times, with enrollment jumping from around 4 percent to 15 to 20 percent, Frost said.

    Brokers Needed

    With supplemental life insurance, long-term care insurance or any other complicated product that is typically sold by a licensed broker, employees should definitely talk to a professional before taking the leap.

    Rates can vary by company and a person's age, but adding four times your pay to basic coverage could cost in the range of $40 a month. An individual $250,000 "term" policy for a healthy 40-year-old man could cost $36 a month, according to ValuePenguin.com.

    Many employers provide individual discussions with a financial professional over the phone as part of their educational outreach. Half of workers offered supplemental insurance at work buy into it, according to LIMRA, the life insurance trade association. "Although it's not the sit-down with a broker, they do get insights," said Frost. For instance, a young single person will need less life, but more accident coverage.

    Group life insurance rates may be competitive in the open market. Rates for specialty products like long-term care insurance may not be.

    For these, what is called a "group" is sometimes just individual policies packaged together, said Jesse Slome, president of the American Association for Long-Term Care Insurance.

    "If you are healthy or married, you might get a better price as an individual," said Slome.

    A typical individual long-term care policy for a 55-year-old healthy woman could be $250 a month, according to Genworth (GNW), one of the leading providers.

    Club Discounts

    Your workplace may also be able to help you insure your car, your house and your pet, but don't count on getting the greatest deal. An average pet policy, for instance, averaged $36 a month in 2014, and a group employer discount typically knocked off 5 percent, said Randy Valpy, president of the North American Pet Health Insurance Association.

    "The convenience of payroll deduction is where those begin and end. Potentially you're getting a discount, but it's not really something I'd consider a generous benefit," said Hall Kesmodel, consultant at Sequoia, an employee benefits firm headquartered in San Mateo, California.

     

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    Earns Walgreen
    Charles Krupa/AP
    By Brian Sozzi

    To better serve aging U.S. baby boomers and the growing number of Americans with health insurance under Obamacare, becoming bigger may be better for Walgreens Boots Alliance (WBA).

    On Tuesday evening, Walgreens Boots Alliance announced that it will acquire smaller rival Rite Aid for $9 a share in cash, for a total enterprise value of approximately $17.2 billion, including acquired net debt. The purchase price represents a premium of 48 percent to Rite Aid's closing price on Oct. 26, the day before the agreement was signed.

    Shares of Rite Aid (RAD) spiked about 43 percent Tuesday, but fell roughly 6.9 percent in after-hours trading. Walgreens shares rose roughly 6.8 percent Tuesday, and tacked on another 0.8 percent in after-hours trading.

    "This combination will further strengthen our commitment to making quality healthcare accessible to more customers and patients -- our complementary retail pharmacy footprints in the U.S. will create an even better network, with more health and wellness solutions available in stores and online," said Walgreens Boots Alliance Executive Vice Chairman and CEO Stefano Pessina in a statement.

    The combined company would be a drugstore retailing monster, operating over 12,000 locations in the U.S. and filling more than 1 billion prescription drugs each year. A merged Walgreens and Rite Aid would have an especially commanding presence in California and New York, operating more than 1,000 stores. Walgreens would also be able to beef up in Rite Aid's second-largest market in Pennsylvania, where it operates over 500 sites compared to Walgreens' 130 stores.

    A tie-up between the two companies would pose a serious threat to CVS Health (CVS), which operates roughly 8,300 locations across the U.S. It would also bring New York City's drugstore icons in the Rite Aid and Duane Reade brands under the ownership of Walgreens. Walgreens acquired Duane Reade for about $1.1 billion in 2010.

    There are several reasons why Walgreens sought out a blockbuster deal like this, which will require a debt issuance to fund and will warrant close scrutiny by regulators who are also deliberating Staples' (SPLS) proposed buyout of Office Depot (ODP).

    First, the smaller Duane Reade and Rite-Aid brands would likely be rebranded as Walgreens over time as the retailer strives to develop a bigger national presence. Becoming more top-of-mind among consumers would be important as Walmart continues to focus on improving its prescription drug and basic preventative care services inside of its super centers. Furthermore, 1,660 Target (TGT) stores across the country are about to be retrofitted with CVS Health shops, giving the drugstore chain a more significant national presence than is the case today.

    Walgreens hinted at this on Tuesday's press release. According to the company, Rite Aid will "initially operate under its existing brand name." But, says Walgreens, "decisions will be made over time regarding the integration of the two companies, ultimately creating a fully harmonized portfolio of stores and infrastructure." Walgreens will likely have to close hundreds of stores to satisfy regulators, as well as more profitably operate a store network where Walgreens and Rite Aid stores are often right next to one another.

    [E]ven though you will be left with two large traditional pharmacies, this is a very competitive market.

    Second, the combination would likely bring cost synergies in the form of sharper prices from branded and generic drug manufacturers. Saving money on the medications they sell is vital given the likely long-term upward trajectory in healthcare costs due to Obamacare and more boomers moving onto Medicare/Medicaid. Walgreens outlined that it expects to realize synergies in excess of $1 billion.

    If a combined Walgreens/Rite Aid is able to negotiate lower costs for their prescriptions, it could be reinvested in making retail prices more competitive for consumers and help wrestle market share away from Walmart, Target and CVS Health.

    Portfolio manager Chris Pultz at Kellner Capital, which specializes in merger arbitrage, said that "even though you will be left with two large traditional pharmacies, this is a very competitive market. You still have the specialty pharmacies, pharmacy benefit managers like Express Scripts(ESRX) and mail order firms like Unh's, Optimum RX and even Walmart (WMT) -- in the end, divestitures should be able to solve any problems the Federal Trade Commission may have."

    Added Pultz, "Rite-Aid has been closing stores over the last few years in order to stabilize its business, and I would expect there to be additional store closures as the two companies are integrated."

    Walgreens Boots Alliance declined to comment for this article, while CVS Health didn't respond to requests for comment.

     

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    This product image provided by Ford Motor Co. shows the 2010 Lincoln MKX. Ford on Wedensday, Oct. 28, 2015 announced it is recalling approximately 129,000 2009 and 2010 Ford Edge and Lincoln MKX midsize SUVs in parts of the U.S. and Canada to fix potential fuel leaks. (Ford Motor Co. via AP)
    Ford Motor Co. via AP2010 Lincoln MKX
    DETROIT -- Ford is recalling 129,000 midsize SUVs in parts of the U.S. and Canada to fix potential fuel leaks.

    The company says the recall covers the 2009 and 2010 Ford Edge and Lincoln MKX.

    In places where salt is used to clear the roads of snow, the fuel tanks can rust under the reinforcement brackets that hold them to the SUVs. This can cause a fuel leak or activate the check engine light. A leak could cause a fire.

    Ford (F) says it doesn't know of any fires caused by the problem.

    Dealers will inspect the fuel tanks and repair or replace them at no cost to customers.

    The recall affects SUVS that are registered or were sold in Connecticut, Delaware, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, West Virginia, Wisconsin and Washington, D.C. In Canada, it covers New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island and Quebec.

     

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    Caucasian businessman working on patio
    Alamy
    By JOYCE M. ROSENBERG

    NEW YORK -- Don't look for a small business boom anytime soon.

    Many company owners aren't interested in expanding, and many have no plans to hire.

    They don't trust the economy. In a survey released in September by Bank of the West, 80 percent of nearly 500 small business owners called the economy a barrier to growth.

    There are indeed signs the U.S. economy may be slowing because of weakness in trading partners like China and Canada. Earnings are down at many big U.S. companies, and manufacturers are exporting fewer goods. These developments have an impact on small businesses and contribute to a vicious cycle -- when small companies aren't trying to grow or hire, it helps slow the economy further.

    They're saying, '2015 hasn't been as great as we thought it was going to be. I'm not ready to invest or hire.'

    Owners' caution was clear in September hiring reports, including one from payroll company ADP (ADP) that counted 37,000 new jobs at its small business customers, down 63 percent from a monthly average of nearly 100,000 the first eight months of the year.

    Owners were more optimistic in the spring when the economy was recovering from a tough winter, according to the National Federation of Independent Business, whose Small Business Optimism index was at a high for the year of 98.3 in May; in September it was at 96.1.

    Gene Marks, owner of The Marks Group, a consulting firm based in Bala Cynwyd, Pennsylvania, says the owners he's spoken too aren't as confident as they were earlier this year.

    "They're saying, '2015 hasn't been as great as we thought it was going to be. I'm not ready to invest or hire,' " Marks says.

    Uncertainty about the economy piles onto concerns individual owners have about their businesses:

    Once Burned, Twice Shy

    Brent Ridge and Josh Kilmer-Purcell have always known a weak economy could threaten their business selling products like food, clothes and bedding made on farms.

    They started the company, Beekman 1802, in 2009 after both lost jobs to the recession. They've built the business by reinvesting money they've made back into it, never taking on debt.

    "We believed the reason the economy faltered was because people were playing around with money that wasn't theirs," says Ridge, whose company is located in Sharon Springs, New York.

    They've added two or three people a year the past few years, bringing their staff to 11, after getting a deal to sell pasta sauce to 250 Target stores. Now, the discount store chain wants their products in all its nearly 1,800 stores.

    Still, while Ridge says the company has been thriving, he and Kilmer-Purcell plan to hire only when they really need to.

    "I don't think there's ever going to be a time when we throw caution to the wind," Ridge says.

    Learning From the Past

    Orit and Robert Pennington learned taking on too many employees can jeopardize a company.

    TPGTEX Label Solutions was successful after its 2002 start, and grew to a staff of about 15. But the Houston-based company, which makes software to print barcode and other labels, didn't have the income to justify its expansion.

    The Penningtons had to downsize, and by 2013 they and a freelancer were the only employees.

    "We were doing things too fast and the business model was not perfect," Orit Pennington says.

    The company is growing again, adding four employees in the last year. But the Penningtons have turned down opportunities to significantly expand the business.

    Uneasy Clients

    Annie Pace Scranton has the money to pay another employee for her company, Pace Public Relations, but she's hesitant to hire.

    She can't be sure her clients, many of them medical practices or other small businesses, won't cut their marketing budgets and in turn, her revenue.

    Scranton already has some saying they don't have the money for marketing. Others hire her five-year-old New York-based firm for several months rather than a year or more.

    She's using more freelancers when there's more work than her staff of three full-timers can handle.

    "I don't think it's smart or fair to a prospective employee to hire them when I can't commit to supporting another salary," she says.

     

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    Views Of The Federal Reserve As Markets Watch For Interest Rate Liftoff
    Andrew Harrer/Bloomberg via Getty Images
    By MARTIN CRUTSINGER

    WASHINGTON -- The Federal Reserve is keeping its key short-term interest rate at a record low in the face of a weak global economy, slower U.S. job growth and subpar inflation. But it suggested the possibility of a rate hike in December.

    A statement the Fed issued Wednesday said it would monitor the pace of hiring and inflation to try to determine "whether it will be appropriate to raise the target range" for its benchmark rate at its next meeting.

    It marked the first time in seven years of record-low rates that the central bank has raised the possibility that it could raise its key rate from near zero at its next meeting.

    It has to be immensely frustrating ... The global economy is still decelerating, and we're seeing a softening of growth domestically.

    In a further sign that a hike could occur in December, the Fed's policymakers sounded less gloomy about global economic pressures. They removed a sentence from their September statement that had warned of global pressures stemming from a sharper-than-expected slowdown in China.

    "They implied they'd do it this year," Patrick O'Keefe, director of economic research at the accounting firm CohnReznick, said after the Fed issued its statement after its latest policy meeting. "It has to be immensely frustrating ... The global economy is still decelerating, and we're seeing a softening of growth domestically."

    Stocks gave up some of their gains after the Fed's mid-afternoon announcement, and the yield on the 10-year Treasury note rose slightly.

    Ian Shepherdson, chief economist at Pantheon Macroeconomics, said he expects a December rate increase if the jobs reports for October and November improve over September, when hiring slowed.

    "Some combination of payrolls, unemployment and wages signaling continued improvement will be enough," Shepherdson wrote in a note to clients.

    Still, the Fed noted that the economy is expanding only modestly. And in a nod to recent weaker data, the policymakers signaled some concern about the pace of hiring.

    While many Fed officials have signaled a desire to raise rates before year's end, tepid economic reports in recent weeks had led some analysts to predict no hike until 2016.

    The Fed's statement Wednesday was approved on a 9-1 vote, with Jeffrey Lacker, president of the Fed's Richmond regional bank, dissenting. As he had in September, Lacker favored a quarter-point rate increase.

    The Fed has kept the target for its benchmark funds rate at a record low in a range of zero to 0.25 percent since December 2008. After the September meeting, Yellen noted that 13 of 17 Fed officials expected the first rate hike to occur this year. But some economic reports since then have been lackluster, including the slowdown in job growth last month.

    Some of the U.S. weakness has occurred because of a global slump, led by China, that's inflicted wide-ranging consequences. U.S. job growth has flagged. Wages and inflation are subpar. Consumer spending is sluggish. Investors are nervous. And manufacturing is being hurt by a stronger dollar, which has made U.S. goods pricier overseas.

    The Fed cut its benchmark rate to near zero during the Great Recession to encourage borrowing and spending to boost a weak economy. Since then, hiring has significantly strengthened, and unemployment has fallen to a seven-year low of 5.1 percent.

    But the Fed is still missing its target of achieving annual price increases of 2 percent, a level it views as optimal for a healthy economy.

    At the start of the year, a rate hike was expected by June. A harsh winter, though, slowed growth. And then in August, China announced a surprise devaluation of its currency. Its action rocked markets and escalated fears that the world's second-largest economy was weaker than thought and could derail growth in the United States.

    Uncertainty was too high, Fed officials decided, for a rate hike in September.

    Since then, the outlook has dimmed further, with lower job gains and weak retail sales and factory output. Also, inflation has fallen further from the 2 percent target because of falling energy prices and a stronger dollar, which lowers the cost of imports.

    This week's Fed meeting followed decisions by other major central banks -- from Europe to China and Japan -- to pursue their own low-rate policies. Against that backdrop, a Fed rate hike would boost the dollar's value and could squeeze U.S. exporters of farm products and factory goods by making them costlier overseas.

    Congress may help if a budget deal announced this week wins congressional approval. That could avert a government shutdown and raise the government's borrowing limit -- two threats that concern Fed policymakers.

     

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    Financial Markets Wall Street
    Richard Drew/AP
    By Caroline Valetkevitch

    NEW YORK -- U.S. stocks ended sharply higher Wednesday after a volatile session as the Federal Reserve gave a vote of confidence in the U.S. economy by signaling a December interest rate hike was still on the table.

    S&P financials, which benefit from higher borrowing rates, shot up following the Fed statement and led sector gains. The financial index ended up 2.4 percent, its biggest percentage gain in seven weeks. The KBW Nasdaq regional bank index jumped 4.1 percent.

    S&P utilities, which tend to do worse when interest rates are rising, fell 1.1 percent and led S&P sector declines.

    The Fed left rates unchanged, as expected, and, in a direct reference to its next meeting, put a December rate hike firmly in play. It also downplayed global economic headwinds in its statement.

    Stocks initially sold off following the statement, with the S&P 500 erasing close to a 1 percent gain, but quickly rebounded to end at the day's highs as investors saw the statement as a sign the Fed has confidence the U.S. economy can sustain a rate hike.

    "Obviously the first move [in stocks] is down, which is conventional wisdom. However, I do like the idea of the Fed having more confidence in the economy, less concerned about the global backdrop and willing to ring the bell on the long-term health of the U.S. economy with a rate hike," said Michael Marrale, head of research, sales and trading at ITG in New York.

    The Fed hasn't raised rates in nearly a decade.

    The Dow Jones industrial average (^DJI) rose 198.09 points, or 1.1 percent, to 17,779.52, the Standard & Poor's 500 index (^GSPC) gained 24.46 points, or 1.2 percent, to 2,090.35, its highest in more than two months.

    The Nasdaq composite (^IXIC) added 65.55 points, or 1.3 percent, to 5,095.69, while the Nasdaq 100 index of biggest non-financial names rose 0.9 percent to 4,678.57, just shy of a 15-year high.

    Movers and Shakers

    A 4.1 percent gain in Apple (AAPL) shares to $119.27 also helped support indexes a day after stronger-than-expected results.

    The company sold 48 million iPhones in the latest quarter and posted a near doubling of revenue from China, allaying concerns about its business in the world's second-largest economy.

    On the flip side, Twitter (TWTR) shares fell 1.5 percent to $30.87 while Akamai Technologies (AKAM) dropped 16.7 percent to $62.91, Both reported disappointing results late Tuesday.

    The S&P energy sector snapped a three-day losing streak, ending up 2.2 percent, after a sharp rally in crude oil prices .

    After the bell, shares of GoPro (GPRO) dropped 15.2 percent to $25.62 following its results.

    Advancing issues outnumbered declining ones on the NYSE by 2,428 to 645, for a 3.76-to-1 ratio on the upside; on the Nasdaq, 2,252 issues rose and 605 fell for a 3.72-to-1 ratio favoring advancers.

    The S&P 500 posted 35 new 52-week highs and six new lows; the Nasdaq recorded 155 new highs and 82 new lows.

    About 8.5 billion shares changed hands on U.S. exchanges, well above the 7.1 billion daily average for the past 20 trading days, according to Thomson Reuters (TRI) data.

    -Chuck Mikolajczak contributed reporting.

    What to watch Thursday:
    • At 8:30 a.m. Eastern time, the Labor Department releases weekly jobless claims, and the Commerce Department releases third-quarter gross domestic product.
    • At 10 a.m., Freddie Mac releases weekly mortgage rates, and the National Association of Realtors releases pending home sales index for September.
    Earnings Season
    These selected companies are scheduled to report quarterly financial results:
    • Aetna (AET)
    • Altria Group (MO)
    • ConocoPhillips (COP)
    • Goodyear Tire & Rubber Co. (GT)
    • Johnson Controls (JCI)
    • LinkedIn (LNKD)
    • MasterCard (MA)
    • Starbucks (SBUX)
    • Teva Pharmaceutical (TEVA)
    • Time Warner Cable (TWC)

     

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    Getty ImagesFinancial advisers say it helps to keep long-term goals in mind when evaluating any particular asset class.
    By Kate Stalter

    Large U.S. stocks have notched a mostly stellar performance since their post-financial-crisis rebound, beginning in March 2009. However, the same can't be said for emerging market stocks.

    The Financial Times Stock Exchange emerging index has declined about 15 percent over the past five years. The index tracks large- and mid-capitalization stocks based in 21 emerging markets.

    The largest emerging-market country weightings in the FTSE index include China, India, Taiwan, Brazil, Mexico and South Africa. The index also tracks countries in Eastern Europe and the Middle East.

    A number of factors determine whether a market is considered developed or emerging. For example, emerging nations often have fewer financial-market checks and balances, relative to those in developed countries. Banking and regulatory systems often lag, and these nations may be politically and economically unstable, at least to some degree. That adds up to investors demanding a higher return for taking more risk than with Apple (AAPL), Exxon Mobil Corp. (XOM), Microsoft Corp. (MSFT), Johnson & Johnson (JNJ) or General Electric Co. (GE).

    Most investors understand intellectually that risk and return are related. But should they continue holding an asset class, such as emerging-market equity, that is suffering a prolonged slump?

    "I believe that long-term, growth-oriented investors should have emerging market exposure," says Ryan Wibberley, CEO of CIC Wealth in Gaithersburg, Maryland. "As the more developed economies continue to mature, the growth rates from these places are most likely going to be lower than the rates found in some emerging economies."

    In a diversified portfolio, all asset classes generally don't move in the same direction at the same time. That lack of correlation tends to smooth returns, but it also worries investors who don't like seeing any of their holdings heading south, especially over several years.

    However, financial advisers say it helps to keep long-term goals in mind when evaluating any particular asset class. From there, an investor can determine what is appropriate for his or her situation.

    "An investor with a long horizon and high risk tolerance can hold a diversified group of emerging market ETFs that filters companies for attractive attributes, such as low volatility," says Chuck Self, chief investment officer of iSectors, an exchange-traded fund strategist in Appleton, Wisconsin.

    Self says retirees, who frequently opt for income-paying investments, may find that some emerging-market funds fit the bill. For example, he cites the WisdomTree Emerging Markets High Dividend Fund (DEM) as an ETF containing high-quality companies that pay high dividend yields.

    Scott Kubie, chief investment strategist at CLS Investments in Omaha, Nebraska, says investors who turn their back on emerging markets may forego gains over time.

    "Emerging markets represent a large and important part of the investment universe. A portfolio without any emerging-markets exposure would not have investments in China, Mexico or much of Eastern Europe. Investors who pass up potential opportunities in emerging markets will miss out on the opportunities in these markets," he says.

    Kubie says that even with the recent outperformance of U.S. stocks, emerging-market equities have a 15-year track record of outperforming the Standard & Poor's 500 index (^GSPC).

    While the S&P 500 experienced the so-called "lost decade" between 2000 and 2009, emerging-market stocks outperformed. For the past five years, that situation has essentially been reversed. Proponents of globally diversified portfolios say that's exactly why investors should hold different types of assets at the same time.

    Patience, however, is always key when trying to stick with a portfolio tailored to one's objective and risk tolerance. Investors often tinker with allocations that don't perform as well as they'd hoped or expected. However, attempts to stem losses often result in missed opportunity as an asset class begins rising again.

    Owning emerging markets equities can provide high returns to investors who exercise patience.

    "Owning emerging markets equities can provide high returns to investors who exercise patience," Wibberley says. "These asset classes tend to move quickly, and timing them is very difficult. The advantage of holding these stocks during a downturn is that you no longer need to be a market timing expert -- which I have yet to actually meet one of these people. You capture all of the downside and all of the upside, which can be great."

    Advisers suggest keeping a long-term perspective on the current emerging-market underperformance.

    "Unfortunately, the recent downturn was prolonged by strong decreases in the Chinese growth rate. This has happened to various countries as they attempt to emerge," Self says. He says similar issues occurred with other fast-growing Asian nations in the early 1990s, and with Russia in 1998.

    "Eventually, these stock markets have come back and hit new highs," he says. "Trying to the time the move in and out of emerging markets is tricky, because you have to be correct when you sell, and you have to get back in before the market runs up. Unless they are guided by a rigorous quantitative model, very few investors can make both calls correctly and consistently."

    Even professional investors with a tactical approach say emerging-market exposure is often worth the risk. It comes back to a basic buy-low-and-sell-high philosophy. While investors always like that idea in theory, it's not necessarily easy, in practice, to buy a beaten-down asset class.

    "Holding an asset through a downturn is never fun. The real challenge is knowing when to exit and when to re-enter asset classes. Most investors, we find, are slow to take advantage of opportunities and slow to exit them when they turn. CLS's approach is adjust the allocation to emerging-market stocks up or down based on market condition," Kubie says.

    "Right now, our approach is to emphasize emerging-market stocks in the portfolio because of their attractive valuations," he says. "Emerging markets are cheap compared to most markets, especially the expensive U.S. market."

    Kate Stalter is founder of asset-management firm Better Money Decisions. You can reach her at www.bettermoneydecisions.com or on Twitter @katestalter.

     

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    Shutterstock
    By Lisa Gerstner

    1. A cashless society? Not so fast. From PayPal to Bitcoin to Samsung Pay (the newest contender among mobile wallets), advances in payment technology make pocket change look as if it's headed for the history books. But according to a 2012 study from the Federal Reserve Bank of San Francisco, 40 percent of an average consumer's transactions were in cash -- more than for debit cards (25 percent), credit cards (17 percent), electronic payments (7 percent) and checks (7 percent). The number of notes in circulation has grown by about 5 percent per year since then, says Doug Conover, an author of the study.

    2. Currency comes in handy. Most vending machines don't take plastic, and cash works best for all small purchases. In the Federal Reserve study, consumers used cash for two-thirds of transactions smaller than $10 and for half of all payments of less than $50. Merchants are legally permitted to refuse plastic for transactions of less than $10, and they may provide a discount to customers who pay with cash. For most people, $50 or so is an adequate amount of cash to keep on hand, says Matt Schulz, senior industry analyst for CreditCards.com.

    3. Hamiltons can't get hacked. With data breaches of major retailers becoming common, some consumers have turned to cash payments to prevent hackers from obtaining their credit card information. But plastic carries one big benefit that cash doesn't: If a thief racks up charges on your credit card, you're protected by the card networks' zero-liability policies. And banks will most often reimburse you for fraudulent debit card charges.

    4. A cash fix can cost you. Use an ATM outside your bank's network and you'll pay more than $4, on average, in combined fees to the bank and the ATM's owner, according to a MoneyRates.com survey. Check your bank's app or Web site to locate in-network ATMs. Or use a checking account that reimburses ATM surcharges (Ally Bank pays back up to $10 a month). A few banks have introduced ATMs from which customers can get cash by arranging a withdrawal on a smartphone app, then using the app to scan a QR code that the ATM displays -- no card required.

    5. It's a great budgeting tool. If you have trouble controlling your spending when you pay with credit cards, then favoring cash or a debit card is best for your finances. With cash, you can spend only what you have, so you may treat your money more carefully if you see real dollars leaving your hands. Divide the cash into envelopes labeled for each category of your monthly budget -- or at least for discretionary purchases such as eating out and shopping. Unfortunately, doing that means you won't be able to use online tools that automatically track each dollar you spend. But with mobile apps such as GoodBudget and Mvelopes (both are available for Apple and Android devices), you can create virtual envelopes and connect to your bank account to see where the money goes.

    6. But it won't help build your credit history. Consider using a credit card now and then -- perhaps for routine purchases, such as gas, that won't tempt you to overspend. A history of responsible card usage on your credit record can help you get the best terms on a mortgage or other loan. It may even improve your prospects for getting a job or an apartment rental.

     

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    Americans have amassed more than $1.3 trillion of student loan debt. 11 percent of borrowers are already in default. Many more borrowers are delaying homeownership and children to deal with their debt burden. Fortunately, there are an increasing number of options out there for both graduates and parents to manage their student loan debt. Two of the most effective methods are federal income-based repayment programs and refinancing options made available by private lenders. While these can be great tools, they aren't for everyone.

    Income-Based Repayment

    According to the Department of Education, "if your outstanding federal student loan debt is higher than your annual income or if it represents a significant portion of your annual income, you may want to repay your federal student loans under an income-driven repayment plan." With the three available plans, your monthly payment would generally be capped to no more than 20 percent of your discretionary income. For people who are struggling to make student loan payments, the savings can be dramatic. You can estimate your monthly payment under the plan by using a payment tool created by the government.

    Once you are enrolled in the program, your monthly payment reduces. However, your situation will be re-assessed every year and you will need to re-enroll. If your salary increases your monthly payment would likely increase. Depending upon the program, any remaining balance would be forgiven after 20 to 25 years. That debt forgiveness would be taxable. The people who benefit the most from this program are individuals with big federal student loan balances and low lifetime earnings.

    It is possible to have your monthly payment reduced to nothing, if you don't earn enough income to make the payment on time. Enrolling in an income-driven plan doesn't harm your credit report or your credit score.

    Unfortunately, income-driven plans are only available for people with federal student loans. Private loans aren't eligible for the program. You can apply for the program at StudentLoans.Gov.

    If you are a parent with a PLUS loan, you are eligible for ICR (income-contingent repayment), so long as your loans are consolidated. Even if you only have one PLUS loan, you can still "consolidate" it and then apply for ICR.

    Refinance

    If you don't have problems making your monthly payment, but you are tired of the high interest rate on your student loan debt, you should consider refinancing with one of the new marketplace lenders. Today there are more than 20 providers (and growing) that offer student loan refinancing at very low interest rates. Fixed interest rates start as low as 3.25 percent, and variable rates start as low as 1.9 percent. You can comparison shop for the best rate at MagnifyMoney. One of the leading providers has disclosed that its average borrower saves $14,000 when refinancing.

    In order to qualify, you need to have an excellent credit score, a good job and strong cash flow. Student loan refinancing companies are offering excellent interest rates to people with the best credit scores. If you have missed payments or have too much credit card debt, you might find getting approved difficult.

    Refinancing student loan debt makes perfect sense for people with private student loans. However, people with federal student loan debt should be cautious. When you refinance a federal loan, you will be giving up income-driven repayment options described earlier. If you are highly confident that you can pay off your student loan debt in the next few years, it may be a risk worth taking. However, if you think it might take 20 years to pay off your debt, you should carefully weigh the risks before proceeding.

    What if I Have Private Loans and Can't Afford My Payments?

    People with federal loans facing difficulty making payments have great options. Unfortunately, people with private loans are at the whim of their servicing companies. If you are having difficulties making payments, your best bet is to call your servicing company and explain your situation. Private lenders are under increasing scrutiny from regulators to help people in hardship.

    Nick Clements is co-founder of MagnifyMoney.com, a financial education and price comparison company.

     

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