First Ever Fed Press Conference

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Today marks the first time the Federal Reserve will hold a press conference to go along with it’s decision on whether to change interest rates. Most observers expect the Fed to leave interest rates unchanged (basically at zero percent), so the real action will be in the details that emerge from the press conference where questions about how the economy is doing, what the Fed is doing, and how long they think those things will last, will take center stage. In another change, the Federal Open Market Committee will also release the quarterly growth and inflation estimates that is uses to make its rate decisions today. Usually, the Fed releases those numbers weeks later. Today’s changes could make for a very volatile day in the markets because no one has ever done things this way before, so no one really knows how they are supposed to react. Will the markets over-react to something Fed Chairman Ben Bernanke says? Will the markets react less than they would otherwise given how fresh all the data is? Or is this all just a bunch of sound and fury signifying nothing? We’ll all find out later today.

Exempt vs Nonexempt Employees

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One topic that generates a lot of confusion in people’s personal finances is what is the difference between exempt and nonexempt employees? There are actually a lot of nuances and pages of labor law that deal with the difference between nonexempt and exempt employees. However, the practical implications of what it means to be an exempt employee or non exempt employee are pretty straight forward. Basically, it comes down to whether you have to be paid for overtime or whether you have to be paid the minimum wage. What Is An Exempt Employee The definition of exempt employee is one who is not subject to the minimum wage or overtime rules of the Fair Labor Standards Act, or FLSA. An FLSA exempt employee must fall into one of several categories to qualify as exempt. What determines exempt employee by labor law standards is what role the employee has in their job. A job title is not enough to make an employee exempt. There are several types of exempt employees including certain employees under age 20, employees of a motor carrier (drivers), and certain types of seasonal and farm workers. In addition, a broad category of salaried exempt employee allows certain …

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Banks to Buy Back Shares, Raise Dividends After Passing Fed’s “Stress Test”

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Several major banks, including most of those deemed “too big to fail,” are set to raise their dividends and announce large stock repurchases after passing the latest Federal Reserve “stress test.” Banks and financial institutions that have repaid their government bailout TARP funds and passed the stress test have been given the go-ahead by the Federal Reserve to make new capital-based decisions such as increasing their dividend payouts or doing share buybacks. Shortly after the Fed’s announcement, the financial sector came alive with press releases about how the banking stocks would take advantage of the new allowances. J.P. Morgan announced both a higher dividend and a share buyback, for example. Banks Raising Dividends After Drastic Cuts During the height of the banking crisis, most banks and financial stocks were forced to cut their dividends to minimal levels, or even to zero. Eliminating their dividends took away one of the major reasons to invest in financial stocks, which historically have provided solid dividend income to investors. Even the the financial sector’s best preferred stocks were forced to slash their dividends. The quick moves by the big banks and Wall Street firms to reverse their dividend cuts offer a glimpse at how …

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Citibank Rewards Credit Card Offers: Premier Card

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Citibank updates its credit card rewards programs from time to time and when it discontinues an old rewards program like the Citibank PremierPass rewards card, it moves those customers to one of its current Citibank rewards credit cards. One of the many cards that offer the company’s branded rewards program called Thank You Rewards, is the Citi ThankYou Premier card. (Note: Citibank is the official name, although some people look for City Bank MasterCard or City Bank rewards when trying to find out more information.) Is the Citibank Premier Card a good rewards card? Let’s take a look. First, the Citi ThankYou Premier Card comes with a $125 annual fee PLUS ANOTHER $50 fee for each authorized user. That means a husband and wife credit card account with Citibank for this card will run an eye-popping $175 per year just for the annual fee. It’s waived for the first year, but otherwise, that is a pretty solid strike against any credit card offer unless it has a lot of benefits to back it up. Don’t look for a great interest rate to offset that big annual fee. The terms and conditions list the rates as 13.99% , 17.99% , or …

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Trading Basics from the SEC

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The SEC released an interesting item today.  It’s a two and a half page "bulletin" entitled Investor Bulletin: Trading Basics. Ironically, anyone who knows enough about the stock market to know about the investor education materials offered by the SEC probably already knows everything included in the PDF file. Be that as it may, if you want an official government agency explanation of terms like Market Orders, Limit Orders, Stop Orders, and Stop-Limit Orders, here is a nice, short, easy to read one for you. By the way, there are numerous investor education pieces available at the SEC website. Just search your topic and add site:sec.gov to the end of your search to limit results to those that are on the official U.S. Securities and Exchange Commission website.

Spousal IRA Contribution Limit 2011

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Contributions to IRA accounts for 2010 and 2011 are subject to an annual limit of $5,000 for all taxpayers under age 50. (The IRA contribution limits for 2011 are the same as the IRA contribution limits for 2010.) IRA owners over age 50 can contribute an additional $1,000 catch-up contribution to their IRA account for a total contribution of $6,000 per year. Contributions must come from taxable income. In other words, a parent cannot contribute to an IRA on behalf of a child with no earned income. For couples who file jointly, there is an exception called a spousal IRA.  A spousal IRA allows one spouse to contribute to the other spouse’s IRA up to the yearly IRA contribution limits for 2010 or 2011. If Bob makes $100,000 and Betty makes $2,000, typically, Bob could contribute $5,000 to an IRA and Betty could contribute just $2,000.  However, if the couple is married filing jointly, a full $5,000 contribution can be made to Betty’s IRA by the couple. If Betty is over age 50, a catch-up contribution is allowed to spousal IRA as well, so $6,000 can be contributed to the spousal IRA for 2010 and also contributed for 2011. If …

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PIMCO Total Return Bond Fund Cuts U.S. Government Holdings

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Pimco Total Return is the biggest bond mutual fund in the world. It has a long-term track record that any bond fund would be jealous of. As a result, its fund manager, Bill Gross, has become something of an oracle of investing in bonds. Recently, the mutual fund reported its holdings. Like all mutual fund reporting, the data provides only a snapshot of one day of holdings within the fund. The Wall Street Journal reports that the allocation of assets in the Total Return fund in U.S. Government bonds and securities dropped again to just 12 percent of the overall portfolio, down from 22 percent at the end of 2010. Gross has become increasingly critical of the government’s intervention in the bond market and in particular of the Fed’s action to hold down interest rates by buying U.S. treasuries.  One can understand his frustration as these manipulations make it difficult for a money manager to do his job, regardless of their overall value (or lack thereof) to economic stability and growth. The real irony is that with U.S. treasury yields depressed, and Gross having sold out almost anything he can at the Fed’s inflated pricing, there are few places to …

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Groupon IPO Better Hurry UP

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Not long ago, news that Groupon had spurned Google’s $6 billion takeover bid was released and I couldn’t help but thinking that maybe Groupon had succumbed to pop-star diva mentality, where everyone except you and the flatterers you surround yourself with know that your future at the top is shaky at best. Later reports suggested that Groupon was worried that the deal might eventually be blocked by regulators and that the company would be left holding the bag after spending over a year in waiting mode. That makes more sense, but I still thought the clock was ticking. After that, reports suggested that Groupon raised more money to buy out early investors who wanted to cash out. Looks like I’m not the only one worried about the future. The main issue with Groupon is that the barrier to entry, or the so-called economic moat, around its business model is virtually non-existent. Sure, other small VC-funded startups might have trouble taking on the deal of the day website, but a well funded competitor would have no problem replicating what the company does quickly. Yesterday slammed home just how urgent the Groupon IPO is. Living Social, one of the Groupon competitors that …

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Apple Earnings Way Up for Quarter

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Most analysts had expected a big quarter for Apple, propelled by big holiday sales numbers. They were right; they just didn’t go high enough with their estimates. Apple reported revenue of $26.7 billion for its first-quarter which ended on December 25th. (The company uses a fiscal year for its earnings and reporting.) That’s earnings of $6 billion, or 6.43 cents per share, which is up 78 percent from a year ago. FactSet Research said analysts were predicting earnings of around $5.42 per share and revenue of $24.4 billion. Not coincidentally, all of this good news comes the day after the company announced that CEO Steve Jobs was taking a medical leave of absence. Apple stock traded ended the day down 2.25 percent at $340.65. Trading in the stock was halted after hours. When it resumed, shares were up in after-hours trading.