Mid-Afternoon Market Update: Markets on the Rise as Intel Falls

Toward the end of trading Friday, the Dow traded up 0.29 percent to 16,056.02 while the NASDAQ surged 0.52 percent to 3,989.78. The S&P also rose, gaining 0.46 percent to 1,804.22.

Top Headline

Foot Locker (NYSE: FL) reported a better-than-expected third-quarter profit.

Foot Locker's quarterly profit surged to $0.70 per share, versus $0.69 per share, in the year-ago period. However, its profit declined to $104 million versus $106 million. Excluding one-time items, it earned $0.68 per share.

Its revenue climbed to $1.62 billion from $1.52 billion. However, analysts were projecting earnings of $0.66 per share on revenue of $1.57 billion.

Equities Trading UP
Ariad Pharmaceuticals (NASDAQ: ARIA) shot up 34.05 percent to $3.72 after the company announced positive opinion by EMA on continued availability of Iclusig.

Shares of Splunk (NASDAQ: SPLK) got a boost, shooting up 22.70 percent to $73.50 after the company reported upbeat results for the third quarter and issued a strong forecast.

Aruba Networks (NASDAQ: ARUN) was also up, gaining 6.63 percent to $18.34 after the company reported upbeat Q1 results. Needham upgraded the stock from Hold to Buy.

Equities Trading DOWN
Shares of Nordic American Tankers (NYSE: NAT) were down 10.08 percent to $7.98 after the company announced the pricing of follow-on offering.

The Fresh Market (NASDAQ: TFM) shares tumbled 18.41 percent to $41.12 after the company reported downbeat Q3 results and issued a weak profit outlook. Sterne Agee downgraded the stock from Buy to Neutral and lowered the price target from $59.00 to $44.00.

Intel (NASDAQ: INTC) was also down, falling 5.31 percent to $23.90 after Nomura maintained its reduce rating on the company this morning following comments from the company's CFO at its analyst day Thursday that they expect PC sales down in the mid single digits range for 2014.

Commodities
In commodity news, oil traded down 0.58 percent to $94.89, while gold traded down 0.06 percent to $1,242.00.

Silver traded down 0.55 percent Friday to $19.86, while copper rose 0.77 percent to $3.22.

Eurozone
European shares were mostly higher today. The Spanish Ibex Index rose 0.75 percent, while Italy's FTSE MIB Index declined 0.11 percent. Meanwhile, the German DAX gained 0.20 percent and the French CAC 40 surged 0.58 percent while U.K. shares fell 0.11 percent.

Economics
US job openings climbed to 3.91 million in September, versus 3.84 million in August. However, job openings increased 8.6% y/y in September.

The Kansas City Fed manufacturing index rose to 7.00 in November, from a prior reading of 6.00. However, economists were expecting a reading of 6.00.

Posted-In: Earnings News Guidance Futures Forex Global Econ #s Economics Hot Intraday Update Markets Movers Tech

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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The Week Ahead: Where in the World to Invest?

It was another week where the stock market surprised the majority by continuing higher despite the already lofty levels of the major averages. The S&P 500 broke through short-term resistance on Wednesday and closed the week just below the 1800 level.

Oftentimes, there is selling when a market average reaches a round number like 1800 but it is also possible this time that a strong close above this level will move more money off the sidelines. Mutual fund managers have a relatively high level of cash on hand and many are not keeping pace with their benchmarks. A failure to match or exceed the benchmarks could jeopardize their year-end bonuses.

Many continue to voice concern over the high level of bullish sentiment, which implies that the smaller investors have joined the party. But Charles Schwab CEO Walter Bettinger commented on CNBC that only about half of their clients think it is a good time to be investing in equities. Furthermore he said "Our clients are engaged, but they're very cautious about the markets overall."

In last week's column, I shared the reasons why I did not think a bubble was forming even though the market is overextended. This is especially true when you look at the investing public as most are now scared to death of the stock market, unlike 2000.

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Just a year ago the stock market was bottoming after the post election correction as the S&P hit a low of 1343.65 on November 16. This date it labeled on the chart and shows that one of the star performers since that low has been Japan's NK225, which is up over 63%.

The chart of the NK225 shows that resistance at line a has just been overcome even though some are having doubts about their economic plan. From a technical standpoint, it was clear in early 2013 that both the NK225 and Japanese yen had undergone long-term trend changes that should last many years. This is still my view.

The Spyder Trust (SPY) and German DAX show very similar patters as both are up over 31%, just half of Japan's gain. The emerging markets as measured by Vanguard FTSE Emerging Market (VWO) is now up 2.3% since the November 2012 lows. Since I do feel a more meaningful correction is likely in the next few months (see What to Watch), it should present a buying opportunity.

But should you just concentrate on stocks in the US or should you also look elsewhere?

The Vanguard FTSE Emerging Market (VWO) was discussed in more detail in last August's A Contrary Bet for 2014? as I though it might be a star performer in 2014 and advised a dollar cost averaging strategy to get invested. As it turned out, VWO bottomed the following week and had a nice rally into the late October high, but then dropped as many turned became skeptical of the group.

Click to Enlarge

The weekly chart of VWO shows that it may finally be ready to move significantly higher as last week it dropped below its quarterly pivot at $40.32 before closing higher. The OBV had broken its major downtrend in early October and has turned up this week.

Part of my rationale for looking at the emerging markets was that I thought that the US and Eurozone economies were actually doing much better This growth, I felt, should spread to the emerging market economies in the coming year.

Argentina and Dubai have been the two top performers in 2013, up 86.4% and 72.6% respectively, with the US just below Greece on the list. This would have been tough to predict at the start of the year as the wide range of data gives you the ability to predict the US market's direction. Though a sharp correction is possible before the end of the year, we should finish the year with the double-digit gains I was looking for last December.

Though there has been some softness in the recent economic data for the Eurozone lately, which their rate cut may offset, their economies seem to be in an improving trend. The JP Morgan Global Manufacturing PMIT rose to 52.1 in October, which was a 2?-year high.

 

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In an early November press release they stated "The data signaled expansions  in the US, the euro area, China , Japan, the UK, South Korea, Taiwan, Canada, Russia, and Brazil." Of course Russia and Brazil have two of the worst-performing stock markets this year, down 5.8% and 15% respectively.

The Global PMI Output Index from Markit points to 1.9% global year-to-year GDP in the 3rd quarter, up from 1.1%. Their chart shows the sharp upturn in their Global PMI Index, which is now very close to its downtrend, line a. It does show a pattern of higher highs but the global GDP does not.

Click to Enlarge

The data on the US economy last week was generally weak as the Empire State Manufacturing Survey dropped into negative territory. Imports also were down sharply due in part to a contraction in petroleum-based products. The Industrial Production also slipped to -0.1% but the manufacturing sector component did show nice growth.

On Monday, we get the monthly Housing Market Index, followed by more housing data on Wednesday with Existing Home Sales. The homebuilders bounced late last week and finally show some signs of bottoming.

The Employment Cost Index is out on Tuesday with the Consumer Price Index, Retail Sales, and FOMC minutes on Wednesday. In addition to the jobless claims on Thursday, we get the Producer Price Index, the PMI Manufacturing Survey, and the Philadelphia Fed Survey.

It may take some disappointing numbers to start a market correction as the public again question the economy's health. Monthly readings are usually not important to the big picture as it is the trends that are important.

August home prices up 1.3% from July

U.S. home prices were up 1.3% in August from July , but the peak rate of gain in home prices occurred in April, a widely watched index shows.

Data through August shows that prices were up 12.8% year over year, shows the Standard & Poor's Case-Shiller 20-city index.

Both the 10 and 20-city indices showed their highest annual increases since February 2006, and all 20 cities reported positive year-over-year returns.

But while home prices continue to rise, it's at a slower pace each month since April, the data shows. In August, 16 cities reported smaller gains compared to July.

Other home price tracking services have shown slowing rates of appreciation amid higher interest rates, more homes for sale and slowing investor purchases.

U.S. home values were up 1.2% in the third quarter from the second, Zillow data show. That's down from a 2.5% jump in the second quarter from the first.

Half of 30 major metropolitan areas covered by Zillow saw values fall in September from August, seasonally adjusted numbers show. Earlier this summer, all the same metros were seeing month-to-month gains.

Pending home sales, too, declined in September for the fourth month in a row, a signal to expect lower home sales this quarter and a flat trend going into next year, the National Association of Realtors said Monday. NAR said price gains will continue, however, given still tight inventories of homes for sale in many markets.

After spiking in May, mortgage interest rates have come back down. Freddie Mac data shows them slipping last week to a four-month low at an average of 4.13% for the 30-year fixed rate loan. That's still up from 3.41% a year ago.

Brean Capital Upgrades WGL Holdings to “Buy” (WGL)

Brean Capital reported on Friday that it has upgraded natural gas utility company WGL Holdings Inc (WGL).

The firm has raised its rating on WGL from “Hold” to “Buy,” and has given the company a $46 price target. This price target suggests a 12% increase from the stock’s current price of $40.62. The upgrade was primarily based on valuation and future investment opportunities.

“Like many utilities in the gas LDC space, the shares of WGL Holdings have come off recent highs and are now trading at a level we consider attractive,” analyst Michael Gaugler comments. “Beyond valuation, we consider the recent announcement of conditional approval of Dominion’s Cove Point facility for LNG export as a positive development in terms of future investment opportunities, given the company’s one-third interest in the Commonwealth Pipeline project, which we believe will be revisited due to future increased demand.”

WGL Holdings shares were mostly flat during pre-market trading Friday. The stock has been mostly flat YTD.

Unemployment Above 25% in Spain and Greece

If the European economy has improved at all, it has not shown up in unemployment numbers among the region’s weakest nations.

According to Eurostat, within the region:

Among the Member States, the lowest unemployment rates were recorded in Austria (4.8%), Germany (5.3%) and Luxembourg (5.7%), and the highest in Greece (27.6% in May 2013) and Spain (26.3%).

Compared with a year ago, the unemployment rate increased in seventeen Member States and fell in eleven. The highest increases were registered in Cyprus (12.2% to 17.3%), Greece (23.8% to 27.6% between May 2012 and May 2013), Slovenia (9.3% to 11.2%) and the Netherlands (5.3% to 7.0%). The largest decreases were observed in Latvia (15.7% to 11.5% between the second quarters of 2012 and 2013) and Estonia (10.1% to 7.9% between June 2012 and June 2013).

The figures for young people were absolutely brutal:

In July 2013, 5.560 million young persons (under 25) were unemployed in the EU28, of whom 3.500 million were in the euro area. Compared with July 2012, youth unemployment decreased by 53 000 in the EU28 and by 16 000 in the euro area. In July 2013, the youth unemployment rate was 23.4% in the EU28 and 24.0% in the euro area, compared with 22.9% and 23.3% respectively in July 2012. In July 2013, the lowest rates were observed in Germany (7.7%), Austria (9.2%) and Malta (10.6%), and the highest in Greece (62.9% in May 2013), Spain (56.1%) and Croatia (55.4% in the second quarter of 2013).

Overall, the region’s jobs situation was stagnant:

The euro area (EA17) seasonally-adjusted unemployment rate was 12.1% in July 2013, stable compared with June.The EU28 unemployment rate was 11.0%, also stable compared with June. In both zones, rates have risen compared with July 2012, when they were 11.5% and 10.5% respectively.

5 of Last Week's Biggest Winners

What's better than momentum? Mo' momentum. Let's take a closer look at five of this past week's biggest scorchers.

Company

July 12

Weekly Gain

Organovo Holdings (NYSEMKT: ONVO  )	$6.01	55%
Anacor Pharmaceuticals (NASDAQ: ANAC  )	$6.75	20%
Breitburn Energy Partners (NASDAQ: BBEP  )	$17.97	18%
Ebix (NASDAQ: EBIX  )	$10.98	14%
Sirius XM Radio (NASDAQ: SIRI  )	$3.72	10%

Source: Barron's.

Let's start with Organovo Holdings, one of this week's biggest winners. All it had to do was hop from the obscure Pink Sheets and onto the New York Stock Exchange to get noticed. It's all about visibility for Organovo, and it couldn't have timed its leap to a more prolific exchange any better.

Organovo provides functional, three-dimensional human tissues for medical research and therapeutic applications. When you apply the investing craze over red-hot 3-D printing and combine it with medical applications, it makes Organovo a compelling story stock.

The downside is that this is a development-stage company. We're talking about just $0.2 million in revenue in its most recent quarter, and half of that amount came in the form of grant revenue. Expect this one to take wild swings in both directions in the coming weeks.

Anacor Pharmaceuticals moved higher after a well-received presentation by CEO David Perry at the JMP Securities Healthcare Conference. Anacor is a biotech upstart toiling away on novel small-molecule therapeutics stemming from its boron chemistry platform.

Anacor isn't making a lot of money -- and the quarterly deficits will continue for a few years -- but biotech investors are willing to be patient if they believe medical breakthroughs will eventually happen.

Breitburn Energy Partners rose in each of the week's five trading days. Things got off to an encouraging start after the high-yielding upstream master limited partnership received an analyst upgrade on Monday. Baird moved the units from "neutral" to "outperform," less than three months after a downgrade. Then again, the price target of $24 at the time of the downgrade addressed valuation concerns that don't necessarily apply now that the stock has fallen to the teens.

Ebix finally bounced back into the double digits. The provider of enterprise software solutions for the insurance industry cratered last month after Goldman Sachs walked away from its plan to help take the company private amid accounting concerns. Ebix appears to have entered oversold territory, and it helped make its own luck by announcing a new partnership earlier in the week that will expand its offerings in Brazil.

Finally, we have Sirius XM pushing through to close out the week at a five-year high. The satellite-radio provider pumped up the volume after announcing that it closed out the second quarter with 715,000 net new subscribers. Despite all of the fears that streaming apps will kill satellite radio, Sirius XM keeps growing. It's now serving more than 25 million subscribers and boosting its subscriber guidance for all of 2013.

Keep the good vibes coming
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8 Fascinating Reads

Happy Friday! There are more good news articles, commentaries, and analyst reports on the Web every week than anyone could read in a month. Here are eight fascinating ones I read this week.

Centuries old, still relevant 
Eddy Elfenbein finds a set of market rules from a book written by Jose de la Vega in 1688:

The first rule in speculation is: Never advise anyone to buy or sell shares. Where guessing correctly is a form of witchcraft, counsel cannot be put on airs.

The second rule: Accept both your profits and regrets. It is best to seize what comes to hand when it comes, and not expect that your good fortune and the favorable circumstances will last.

The third rule: Profit in the share market is goblin treasure: at one moment, it is carbuncles, the next it is coal; one moment diamonds, and the next pebbles. Sometimes, they are the tears that Aurora leaves on the sweet morning's grass, at other times, they are just tears.

The fourth rule: He who wishes to become rich from this game must have both money and patience.

Advice from a con man
MarketWatch has a talk with Bernie Madoff from prison: 

MarketWatch: You have worked with some of the most elite financial firms on Wall Street. How has it changed since before you started the Ponzi scheme?

Bernard Madoff: The individual investor is the last person that has any information. The average investor is coming up against professional financial firms, hedge funds and the professional trader, and it's easy to be scared out of the market.

MW: You say the individual investor is facing an unfair market environment, what can be done to level the playing field?

B.M.: The SEC needs more resources to protect investors. It's grossly undercapitalized and it doesn't have money to hire the right people. Basically it's a training ground, by the time people are qualified they leave and work for private firms. They didn't catch me because the whistleblower, Harry Markopolos, was leading them down the wrong alley. He was an idiot.

The key to success
Robert Frank of CNBC discusses a survey of successful people:

Among people worth $5 million or more, more than 98 percent cited hard work as a "wealth creation factor." More than 90 percent cited education, followed by "smart investing," "frugality" and then "taking risk."   Slightly more than half of those surveyed cited "being at the right place at the right time" as a factor in their success -- ranking it far below hard work and education.   Among business owners, however, the number of self-described "lucky wealthy" is much higher: 79 percent of them cited "being at the right place at the right time" as a factor in their success. Fully 68 percent of business owners cited "luck" as a factor. Career risk Noah Smith asks if we should trust economists: No matter how much we might wish they were, economists are not go-to experts who know just how the world works or how to fine tune it. They are not car mechanics. And if they act like they are car mechanics, you should instantly be suspicious. But they do have a lot of interesting things to say. They might help you clarify or reevaluate your own beliefs about how the economy functions. They can also help you spot the flaws in each other's arguments. Investment attention deficit disorder Carl Richards writes about the logic of checking your portfolio all day: Since many of us use the Standard & Poor's 500-stock index as a proxy for the market, let's take a look at the period from 1950 to 2012 to see how often we're likely to feel positive, based on how often we check our investments:   If you checked daily, it would be positive 52.8 percent of the time. If you checked monthly, it would be positive 63.1 percent of the time. If you checked quarterly, it would be positive 68.7 percent of the time. If you checked annually, it would be positive 77.8 percent of the time. Risk and reward Star investor Joel Greenblatt talks about Apple (NASDAQ: AAPL  ) : Right now something that is very cheap would be Apple. I always ask my students, what do you do of a company where the technology is always changing and it is not clear what the competition will look like in a few years. The answer to that would be: always skip that one and try to find out the ones that you can figure out. I don't know what is going to happen with Apple, but if I own a bucket of Apples then, on average, that is a really good bet. You are buying good businesses with a great franchise at six times cashflow, have great market share and good management, strong balance sheets and so forth. So, if I own a bucket of Apples rather than just Apple, I am pretty sure it is going to work out very well. The new king John Gapper in The Financial Times praises Google (NASDAQ: GOOG  ) : Indeed, the best comparison for Google seems to me not Microsoft in the 1980s but General Electric in the late 19th century -- the age of electrification. Like GE, Google is a multifaceted industrial enterprise riding a wave of technology with an uncanny ability not only to invent far-reaching products but also to produce them commercially. Don't act like you're not jealous  The Wall Street Journal profiles what has to be the best job of all time: Warren Buffett's financial assistant at Berkshire Hathaway (NYSE: BRK-B  ) :  When Tracy Britt arrived in Omaha, Neb., in 2009 to meet with Warren Buffett, she brought a Harvard M.B.A., a glittering resume and a boatload of ambition. But she also brought the famed investor a gift to highlight their shared Midwestern roots: a bushel of corn and a batch of tomatoes.   The seed Ms. Britt planted that day yielded quick results: a job for Ms. Britt as Mr. Buffett's financial assistant at Berkshire Hathaway Inc. Enjoy your weekend. 

Have the Bond Vigilantes Finally Arrived?

I used to think if there was reincarnation, I wanted to come back as the President or Pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everyone
 – James Carville, Clinton campaign strategist

Like clockwork, financial commentators are emerging to declare the return of the so-called "bond vigilantes" -- an amorphous network of speculators that, in certain instances, wreak havoc on sovereign debt yields as they did on the other side of the Atlantic until the European Central Bank forcefully stepped in. A recent CNBC headline asked: Are bond vigilantes taking on the fed? And a blogger at Seeking Alpha wondered whether bond vigilantes will drive the 10-year above 2.06%?

What's gotten these commentators in a tizzy? At about this time last year, the interest rate on the 10-year Treasury bond bottomed out below 1.5%. Today, and particularly after a recent run-up, it's at 2.16%. In terms of basis points, that equates to a 44% increase in rates, and a concomitant decline in bond prices. That's a massive move for one of, if not, the largest and most liquid markets in the world.

But is there anything to the provocative headlines, or are they, as has been the case so often over the last few years, simply using the incendiary phrase to generate page views from readers like you? I'm sad to say, but it's probably the latter.

To provide some context, take a look at the chart below. It compares the frequency of Google searches for the term "bond vigilante" with the interest rate on the 10-year Treasury bond. While the correlation is far from perfect, this shows that the two biggest spikes in Google searches corresponded at least anecdotally to the two biggest increases in long-term interest rates.

Take April to June of 2009 as an example. Over these three months, the yield on the 10-year shot up from a monthly average of 2.93%, to 3.72%. Meanwhile, the incidence of Internet searches for "bond vigilantes" went from an index value of zero, all the way up to 86.

But what happened to interest rates after each of these instances? They went down, bottoming out, as I noted above, at less than 1.5% in the middle of last year. If the bond vigilantes were indeed on the prowl, in other words, they appear to have sauntered into the wrong town (cue Clint Eastwood, playing the role of sheriff, calmly awaiting their arrival).

I'll be the first to admit that it's exciting to attribute the market's volatility to the behind-the-scenes machinations of a loose confederation of international speculators. Saying that bond prices went down (and thus interest rates up) because investors are generally more confident in the state of the economy simply doesn't have the same pizzazz. Yet, at least when it comes to the recent fluctuations in long-term interest rates, the latter appears to be more closely aligned with reality.

To refer back to the chart above, it's no coincidence that the two times in which interest rates spiked most dramatically overlapped with an increasing sense of confidence in the economic recovery. In March of 2009, Ben Bernanke infamously told 60 Minutes that "green shoots" were starting to appear in different markets, and that "as some confidence begins to come back that will begin the positive dynamic that brings our economy back." And a second wave of confidence hit at the end of 2010, only to watch as riskier asset prices swooned six months later; for the latter, all you need to do is look at what happened to the Dow Jones Industrial Average (DJINDICES: ^DJI  ) or the S&P 500 (SNPINDEX: ^GSPC  ) in the middle of 2011.

Paul Krugman discussed this in a recent post on his blog, The Conscience of a Liberal.

[W]hen long-term interest rates rise, there are three main stories you hear. One is that the bond vigilantes have arrived, and are selling U.S. debt because they now believe in the horror stories. Another is that the Fed has changed, that it may be ready to snatch away the punch bowl sooner than previously believed. And the third is that the economy is looking stronger than expected, which means that the Fed, although just as soft-hearted as before, will nonetheless start raising rates sooner than previously believed.

All three of these stories would imply falling bond prices, that is, rising interest rates. But they have different implications for other markets, in particular for stocks and the dollar. Debt fears -- basically, a run on America -- should send stocks and the dollar down along with bonds. A perceived tougher Fed should send stocks down but the dollar up. And a better recovery should send both stocks up (because of higher expected profits) and drive the dollar higher. ...

And while day by day there are variations, basically what you see over the last month or so is [the third option]: falling bond prices accompanied by rising stocks and a rising dollar. So this looks like a story about macroeconomic optimism.

So, what's the point in all of this? The point is that there is neither now nor likely soon-to-be any type of legitimate threat to the government's borrowing costs from a wild posse of bond vigilantes. While these ostensibly rogue speculators may be able to muster a sufficient amount of capital to short the debt of Greece, Spain, or Portugal, for reasons beyond the scope of the current article, the United States simply isn't vulnerable to the same concerted actions.

As a result, the uptick in long-term interest rates should be interpreted to mean just what your standard macroeconomic textbook would suggest: that in the face of growing economic confidence, investors' risk aversion decreases, and they demand a higher yield from government bonds. Does this mean that the recovery is nearly complete? No. Not even close. But it does mean that the economy, at least for the time being, is headed in the right direction.

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

How to Become Financially Independent in Seven Years or Less

You are middle-aged. Your net worth is meager. Your income is barely sufficient to meet expenses... And those expenses are going up. The Great Recession is looming. Economists are predicting things will get worse. What can you do?   Should you give up your dream of retiring comfortably one day? Should you accept a future of increasingly meager existence? Should you grow bitter and curse the powers that be for putting you in this situation?   Or should you take responsibility for your situation and make changes?   That last question was rhetorical, of course. But sometimes, I wonder if people really do understand their options. There are things that happen in life that we can't control. But we can control the way we respond to them.   I understand that when you are halfway through your life and are barely making ends meet, it seems like the only chance to become financially successful is to win the lottery (either an actual lottery or the stock market equivalent of one). So it may be frustrating to hear some rich guy from Palm Beach telling you that you can't quickly turn $25,000 into $1 million by investing in stocks.   But I believe – no, I am certain – that anyone who has modest intelligence and a positive attitude can become financially independent in seven years or less if he or she is willing to work enormously hard.   You do not have to give up on your dream of being wealthy. You always have the ability to change your financial life. It will take a bit of time and patience. And it will require that you change some of the thoughts and feelings you have about wealth and your relationship to wealth.   The first thing you must do is accept the fact that you are solely and completely responsible for your current financial situation. Before you react defensively, read that sentence again... I didn't say you are the cause of your situation. I said you are responsible for it.   By taking responsibility for your current condition, you also assume responsibility for your future. Nobody can change your fortune but you. And nobody else will. The sooner you accept that reality, the sooner you will shed the anger and blame and begin to feel financially powerful.   I'm not giving you a pep talk. I'm telling you the truth. I've done it myself, and I've coached dozens of people to do it, too. It is a simple adjustment of your thinking, but it is extremely powerful. It works instantaneously. Without it, you cannot move forward, even by a single inch.   The next thing you must do is set realistic expectations. I've had people tell me that they don't want to make 10% or 15% per year on their money. They think returns like that are "ho-hum." They want some incredible stock tip or some secret get-rich-quick technique. But when I hear people say that, I think, "This person will never become wealthy."   Realize that 10%-15% is a high rate of return. Warren Buffett – the most successful investor of all time and the third-richest person on the planet – has averaged 19% on his investments over his entire career.   And realize that the journey to millions of dollars is earned $100 at a time. You must be willing to accept this fact to move your financial life forward. Your financial life is like a train that has stalled. And right now, you want to be driving it at 100 miles an hour. But it can't go from zero to 100 miles an hour in no time flat. Inertia is against you. Be happy with 10 miles an hour now... and then 20... and then 30. This is how wealth accumulates: gradually at first, but eventually at lightning speed.   The third thing you must do is thoroughly understand the difference between spending, saving, and investing. With every paycheck you get, cover your necessary expenses first (bills, mortgage, etc.). Then put some money toward saving. And then put some money toward investing. Then and only then – after you have "paid yourself" – should you add to your "spending" account.   The fourth thing you must do is recognize that your net investible income (the amount of cash you have after spending and saving) is the single most important factor in determining how quickly you will become wealthy.   Commit to adding to your income with a second income. Make an honest count of the number of hours each month you devote to television and other non-productive activities. Devote them to wealth-building instead. Cast aside the comfortable shoes of victimization. Put on the working boots of a financial hero.   It's not fun to realize, in the midst of your life, that you haven't acquired the wealth you want. But the good news is your past doesn't have to be a prologue... unless you allow it to. You can change your fortunes today by doing the four things I've just told you to do.   You are only 47, not 87. You have plenty of time to increase your income and grow your net worth. Why do you assume all is lost when – as any 87-year-old will tell you – you have a whole wonderful life ahead of you... a life that can be rich in 100 ways?   Regards,   Mark Ford

Millionaire tax: Illinois voters say 'Yes,' but it's a long shot

  This is where 70% of tax dollars go NEW YORK (CNNMoney) The citizens of Illinois voted for a millionaire tax on Tuesday, but that doesn't mean it's going to become law.

They approved by a wide margin a proposal that would impose an additional 3% tax on income over $1 million to help fund schools, according to unofficial results counted by The Associated Press.

The nonbinding vote was essentially a measure of public opinion -- a way to send a message to state lawmakers.

Voters also ousted the Democratic incumbent governor, Pat Quinn, a proponent of the measure, and voted for his Republican opponent.

The House speaker, a Democrat, may bring similar legislation up again, his spokesman said, but "it's even less likely to go anywhere with a Republican governor," said David Merriman, a professor of public policy at the University of Illinois at Chicago.

Meanwhile, Illinois' finances are in bad shape.

The state's fiscal woes could worsen in January, when its single 5% individual income tax rate is set to drop to 3.75% and the corporate income tax rate is set to fall as well.

Other states, of course, have considered higher taxes on millionaires in the past decade, and a few have even enacted them.

California in 2012 approved a 3% additional tax on income over $1 million that will be in effect through 2018. Revenue raised is going largely to schools.

In the wake of the 2008 financial crisis, Connecticut, New Jersey and Maryland temporarily imposed a higher rate on high-income households -- both above the $1 million threshold and below.

In 2010, Bill Gates Sr. backed a ballot measure that would have required Washington state, which has no individual income tax, to tax adjusted gross income over $400,000 for couples ($200,000 for singles) at 5% and income over $1 million at 9%.

Revenue from the Washington measure would have paid for middle class tax relief as well as education and health services. But it was defeated at the polls.

Some New Jersey Democrats, meanwhile, have also tried and failed to raise the tax rate on those making millions in an effort to offer property tax relief and help the state make its pension payments. This year they proposed a 10.75% rate on income over $1 million, which is what the rate was in 2009. The top rate currently is 8.97% on income! over $500,000.

At the federal level, Democrats have repeatedly floated different types of millionaire taxes.

One that's gotten the most attention is President Obama's proposed "Buffett Rule" or "Fair Share Tax." That proposal called for those making more than $1 million to pay at least 30% of their income, after charitable contributions, in federal taxes.

The most recent incarnation of that idea came from Senator Elizabeth Warren, who proposed that the 30% minimum be imposed and used to pay for a program to help student loan borrowers buried in debt.

- CNNMoney's Gregory Wallace contributed to this report

Tax Inversion Deals: DC Blames Wall Street for Its Mess

Democrats and Republicans alike in Washington are unhappy about the increasing number of so-called tax inversion deals, but instead of blaming Wall Street they need to look at the real cause of the problem - themselves.

A tax inversion deal is a merger between a U.S and a foreign company specifically designed to allow the U.S. company to move its headquarters out of the United States to escape America's high corporate tax rate.

Several recent high-profile tax inversions, such as AbbVie Inc.'s (NYSE: ABBV) merger with Ireland-based Shire Plc. (Nasdaq ADR: SHPG) and Medtronic Inc.'s (NYSE: MDT) deal to buy Ireland-based Covidien Plc. (NYSE: COV), have resulted in much wailing and gnashing of teeth in our nation's capital.

Walgreen Co. (NYSE: WAG) is thought to be considering a deal, while Pfizer Inc.'s (NYSE: PFE) attempt via a deal with Britain's AstraZeneca Plc. (NYSE ADR: AZN) fell apart.

Over the past 10 years about 50 U.S. companies have reincorporated overseas via tax inversion to tax-friendly countries like Ireland, about half of which are in the Standard & Poor's 500, but the practice has accelerated in recent years.

And it's not surprising that the federal government doesn't like it; the Joint Commission on Taxation has said corporate tax inversion could cost the Treasury as much as $20 billion in tax revenue over the next decade.

President Barack Obama has returned to the topic several times over the past week or so, but urged "closing this unpatriotic loophole for good" in his budget proposal earlier this year.

"Even as corporate profits are as high as ever, a small but growing group of big corporations are fleeing the country to get out of paying taxes," President Obama said in his weekly radio address on Saturday. "They're keeping most of their business inside the United States, but they're basically renouncing their citizenship and declaring that they're based somewhere else, just to avoid paying their fair share."

Democratic leaders like Sen. Chuck Schumer, D-N.Y., have gone a step further, calling for legislation that would not only prevent future tax inversions, but include retroactive language to deprive the sought-after tax breaks to any company that executed such a deal after May 8.

That would affect the AbbVie and Medtronic deals, and create uncertainty among other U.S. companies that might be considering a tax inversion themselves.

But for all the political hot air, the law now being discussed in Washington treats the symptom, not the disease. What the politicians seem to forget is that their own failure to reform the corporate tax laws is the root cause of this problem...

Why Tax Inversion Deals Are Washington's Fault

The fact is the U.S. has the highest corporate tax rate in the world - 35%. Worse still, the U.S. taxes all profits a company makes, no matter where they are earned. Other major economies only tax profits earned domestically.

This punitive combination strongly incentivizes the use of loopholes like tax inversion deals.

It's also the reason that so many U.S. multinational corporations refuse to repatriate some $2 trillion worth of profits made overseas.

And companies have gotten very good at using these loopholes to the point that many pay an average of only about 12% of profits in taxes, and some pay zero or near zero. Overall, corporate tax loopholes cost the U.S. about $150 billion annually.

So the rules that were intended to maximize revenue instead have had the opposite effect.

But while this is easy for politicians to spin this as "unpatriotic" corporate behavior, the truth is every company has a fiduciary responsibility to their shareholders to minimize all taxes.

It's a silly accusation, and one that the politicians know is silly.

You see, when they're not insinuating that U.S. corporations are tax cheats, both Democrats and Republicans acknowledge that what's really needed is a major overhaul of the corporate tax code.

Both parties also agree that something needs to be done as soon as possible about the tax inversion loophole to stop the bleeding.

And yet, despite the urgency, it's unlikely Congress will do anything, as partisan bickering over how to fix any part of the problem - tax inversions specifically or the corporate tax code in general - quickly bog down on the details.

That leaves a status quo that's not good for anybody - U.S. companies will continue to be forced to find increasingly creative ways to get relief from a burdensome tax code, while the Treasury watches tax revenue from corporations dry up.

"My concern is that tax reform is moving slowly, inversions are moving rapidly and that is a prescription for chaos," Finance Committee Chairman Ron Wyden, D-Ore., told The Wall Street Journal.

How do you feel about tax inversion deals? Do you blame corporations for trying to minimize their tax burden, or Washington for not reforming the corporate tax code? Let us know on Twitter @moneymorning or Facebook.

UP NEXT: At least the worst thing you can say about Congress and the corporate tax code is that they've failed to fix it. When it comes to their own stock trading habits, however, things get a good bit uglier. After promising to behave as recently as 2012, some members of Congress, well, haven't...

Related Articles:

The Wall Street Journal: Congress Is Split on Taxing of Corporate Inversions The Economist: How to Stop the Inversion Perversion MarketWatch: Slim Chances Seen for Tax 'Inversion' Clampdown, Analysts Say Associated Press: Obama: Offshore 'Tax Inversions' Are Unpatriotic

CVS Caremark Corporation to Acquire Navarro Discount Pharmacy (CVS)

After the closing bell on Monday, CVS Caremark Corporation (CVS) announced that it will acquire the assets of Navarro Discount Pharmacy. 

Navarro Discount Pharmacy is based in Miami and is the largest Hispanic-owned drugstore chain in the U.S, with 33 retail locations in the country. Though the financial terms of the agreement were not disclosed, CVS announced that the acquired stores will remain under the Navarro brand.

Commenting on the acquisition, CVS President Helena Foulkes noted, “The acquisition of Navarro will strengthen CVS/pharmacy’s position in the Hispanic marketplace, the fastest growing demographic in the U.S., and we are excited to be adding the Navarro Discount Pharmacy brand to the CVS/pharmacy family”

CVS’s Dividend

CVS will pay its next quarterly dividend on August 1 to shareholders of record on July 27. The stock goes ex-dividend on July 17.

Stock Performance

DD stock ended Monday’s trading session 0.51% higher. YTD, the company’s stock is up 9.23%.

CVS Dividend Snapshot

As of Market Close on July 14, 2014

Click here to see the complete history of CVS dividends.

Week's Winners and Losers: Fresh Coffee, Plus a Chinese Data Breach

Diane Bondareff/Invision for Subway/AP There were plenty of winners and losers this week on Wall Street, with one restaurant chain improving its coffee and and another one suffering a data breach. Here's a rundown of the week's smartest moves and biggest blunders. Keurig Green Mountain (GMCR) -- Winner If you're craving a really fresh cup of coffee with your next $5 footlong, Subway has an answer. It's teaming up with Keurig Green Mountain to outfit all of its nearly 30,000 sandwich shops in the U.S. and Canada with Keurig brewers to serve coffee in single-serve doses. Roughly half of Subway eateries already use Keurig brewers to make coffee to order, instead of brewing entire pots that may go unused. That Subway is adopting it chain-wide is a win for both companies, but Keurig Green Mountain will benefit more from the spike in coffee makers and K-Cup sales. P.F. Chang's -- Loser P.F. Chang's is under the heat lamp after thousands of stolen credit and debit cards appeared on an underground marketplace for swiped plastic. Reports indicate that the one thing tying the cards together is that they had all been used at the casual Chinese chain between early March through mid-May. A new company webpage offers updates. Whether or not P.F. Chang's is vindicated, the headlines are likely to keep some customers away from the growing restaurant chain that offers American tweaks to Chinese cuisine. I guess those diners wound up with a misfortune cookie at the end of their meals. Too soon? Then adding an Orange "You Glad You Didn't Eat Here This Spring" Chicken entree to the menu is probably also out of the question. Amazon (AMZN) -- Winner Amazon Prime -- the popular loyalty shopping program with more than 20 million customers paying $99 a year -- has added another free perk. Amazon is adding a digital catalog of 1.2 million music tracks for streaming. Prime Music has its limitations. Not all of the major labels aren't on board, and those that are participating aren't allowing their newest and more marketable releases into the smorgasbord. Still, it makes Prime even prime-ier, which is always a win for the e-tail giant. McDonald's (MCD) -- Loser Grimace is doing a bit more grimacing these days. McDonald's reported on Monday that comparable restaurant sales slipped 1 percent at its domestic eateries in May. Stateside weakness isn't really much of a surprise. McDonald's is coming off of three consecutive quarters of negative comps, and store-level sales had been negative every month since last October before clocking in flat in April. Stability in April may have led some to believe that the chain was back, but now we see that McDonald's continues to fail at wooing hungry bargain hunters with its expanding menu. There's no Happy Meal here. Yum! Brands (YUM) -- Winner Yum! Brands' Taco Bell has become one of the most innovative players in fast food, having introduced Doritos Locos Tacos in 2012, Waffle Tacos three months ago and Quesaritos on Monday. And unlike other fast food giants, Taco Bell has been rewarded with a spike in sales whenever it rolls out something new. . More from Rick Aristotle Munarriz
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Subway founder back in saddle after cancer scare

NEW YORK CITY — Subway co-founder and CEO Fred DeLuca was staring death in the face less than a year ago.

But the leukemia diagnosis that turned his life — and the future of his $19 billion, privately held sandwich chain — upside down last summer, has blinked.

His deep hazel eyes reflect the stress he's endured in the past 11 months, but in an interview on Tuesday afternoon with USA TODAY at a bustling Subway store in Midtown Manhattan, DeLuca says he's now 90% back on the job after many months away.

"I was really out of commission," he says, in his signature soft voice, referring to the bone marrow transplant he underwent last October, followed by chemotherapy, for what was then a fast-spreading cancer in his blood. In the early stages of his illness, DeLuca says, he had an emotional moment of clarity when he recognized, "This is something people can die from."

For the first several months of his illness, DeLuca says he was "zero percent" involved with the Subway business, but in the past several months, he's back to "ninety percent." Even then, he says, "like anyone with any kind of cancer, they have to keep checking up on you for the rest of your life."

But he has no plans to retire. No plans to publicly discuss specifics on an eventual successor. No plans to sell the chain or go public. No plans to do anything other than grow the 41,783-store behemoth to 50,000 by 2017.

And by some quick calculations he did on the spot, he says the chain could reach 100,000 locations worldwide within about 20 years.

"Getting to 100,000 is something a chain will do," says the 66-year old billionaire. "I don't know if we will be the first."

The chain is a rip-roaring industry success by any standards with its $5 sub deals, its glow of better-for-you offerings and more locations domestically and globally than McDonald's. But beneath that luster is a chain now facing serious issues of leadership succession, an increasingly difficult growth environment and killer co! mpetition from a bunch of smaller chains that all want to be the next Subway.

Both DeLuca and Subway find themselves at a tricky crossroads, widely watched by a highly competitive industry and a curious public.

For DeLuca, who lives in Fort Lauderdale, but typically spends most of the year on the road visiting franchisees, the question is whether he can fully resume his former pace. For Subway, which celebrates its 50th anniversary next year, the question is whether the chain can successfully take the growth formula that's worked so well domestically and extend it globally.

While Subway already is in more than 100 countries, the ongoing pace of international expansion will be three, four, even five times that of domestic growth, says DeLuca.

But growing internationally is far more complex, he says, because it can mean trying to change cultural habits. Most of Subway's international expansion potential will be in Brazil, Mexico, the U.K., India, China and Japan. But rice-based cultures such as China and Japan, he says, are far less accustomed to bread.

DeLuca could hardly have imagined any of this in 1965, when, as a 17-year-old freshman at University of Bridgeport in Connecticut, he got a $1,000 loan to open Pete's Super Submarine Sandwiches. The shop was named for Dr. Peter Buck, a physicist and family friend who loaned DeLuca the money. Buck remains a 50% owner of Subway. DeLuca says that he owns the other 50%.

Subway has been secretive about its management structure and, as a private company, doesn't have to divulge the details. DeLuca declines to specifically discuss a succession plan, other than to say, "We have a succession plan in place that's always evolving."

That plan, DeLuca says, does not include his 41-year-old son, Jonathan, who runs an investment business in Boca Raton, Fla., and is not involved with Subway.

Nor does it include Jared Fogle, the familiar Subway spokesman, who 16 years ago, lost 245 pounds on a diet of Subway subs and has! starred ! in Subway commercials. Fogle still recalls meetings with DeLuca in 1998, when Fogle was just beginning to evolve into the face of Subway. DeLuca took Fogle to dinner and advised the then-college student to save some of the money he was making.

Then, out of the blue, Fogle says, DeLuca told him, "You've done a lot for us. I want to buy you a car." Which he did — a $25,000 Mitsubishi Galant.

"That was amazing," says Fogle. "I'd never had a car."

Like its founders, Subway has always been a "secretive company," says Malcolm Knapp, an industry consultant. The key to Subway's success is DeLuca, he says. "He is the brand. He runs it."

But in the past year, DeLuca has been "mostly invisible," notes Ron Paul, president of research firm Technomic, and the company hardly missed a beat. Says Paul, "I suspect their secret sauce is strong organization."

The organization was seriously tested last June, shortly after DeLuca visited stores in Montreal and Toronto. One moment he was at a breakfast meeting with franchisees, and the next, DeLuca recalls, he was overcome with chills and shivers. He saw a doctor in Toronto, and tests soon confirmed that he had leukemia.

DeLuca says his reaction to the diagnosis wasn't dramatic. "I said, 'Tell me what that means, and tell me what I have to do.' "

He was taken by air ambulance, back to New Haven, Conn., where treatment soon began. He was ordered by doctors, he says, "to stay away from germs," while under treatment, so he mostly stayed home.

For DeLuca, who visits up to 400 to 500 locations annually, this wasn't easy. When he visits Subway restaurants, he says, he prefers to go alone and unannounced. "I don't have people coming in advance saying, 'Fred is coming.' " He often goes unrecognized, he says.

For a guy in remission from leukemia, DeLuca has quite an appetite. For lunch on Tuesday, he polished off a foot-long with turkey, cheese and veggies that he personally made while having his photo taken. Store em! ployees s! warmed DeLuca and waited in line to pose for selfies with him.

And why not? He's an American success story. Raised in a Bronx public housing project, Forbes estimates his net worth at $3 billion. DeLuca says he doesn't know how much he's worth. But when asked what else he hopes to accomplish in his lifetime, DeLuca thinks hard, then smiles before answering. "I don't have much of a bucket list," he says. "I don't have a lot of needs and desires."

Except one. And that's been taken care of. While recuperating at home, his wife of 45 years and high school sweetheart, Elisabeth, relented on something that she's fended off for years: a big-screen TV in the middle of the house.

"I guess that's one of the benefits of being sick," jokes DeLuca. "Your wife lets you have a big-screen TV in the living room."

U.S. Consumer Confidence Slips on Jobs, Economy

Joe Raedle/Getty Images WASHINGTON -- U.S. consumer confidence fell in April over concerns about hiring and business conditions, even though many people foresee a strengthening economy in the months ahead. The Conference Board said Tuesday that its confidence index dropped to 82.3 from a March reading of 83.9. Despite the decline, consumer sentiment for the past two months has been at its strongest levels since January 2008, when the Great Recession was just beginning. Concerns about the state of the economy fell for the first time since the federal government partially shut down in October. Jennifer Lee, senior economist at BMO Capital Markets, said consumer sentiment tailed off in April because the pace of hiring, while strengthening, "is still slow, and the tougher environment is hurting American confidence." Even though consumers are a bit more downbeat about existing economic conditions, their outlook for future growth held steady, noted Conference Board economist Lynn Franco. The expectations component of the index rose to an eight-month high in April. Consumer confidence is closely watched because consumer spending accounts for about 70 percent of the U.S. economy. The number of people who thought jobs were hard to get rose slightly to 32.5 percent from 31.4 percent in March. Economists expect sentiment about the job market to brighten if the pace of hiring quickens. Employers added 192,000 jobs in March and 197,000 jobs in February, after cold winter weather had caused hiring to stall in the prior months. The unemployment rate held steady at 6.7 percent last month despite the hiring because more Americans are seeking work. People without jobs are counted as unemployed only when they start looking for one. The Labor Department will release its April employment report Friday. Economists have forecast that 210,000 jobs will have been added this month, according to a survey by FactSet. The April consumer sentiment report showed that households with incomes of more than $125,000 continue to have the most confidence in the economy, as do people younger than 35. Plans to buy autos and appliances fell in April, while slightly more Americans are considering whether to buy a home, according to the report. Those purchases could be influenced by interest rates. The Federal Reserve has held rates near historic lows, though mortgage rates have increased over the past year. At its December, January and March meetings, the Fed trimmed its monthly bond purchases. The purchases have been intended to keep long-term rates low. The Fed has cut back on its bond buying because it deems the recovery to have strengthened.

SEC’s New Investor Advocate Says He Has Broad Authority

Rick Fleming, the Securities and Exchange Commission’s new investor advocate, said Thursday that the Dodd-Frank Act gave his office “broad authority” in overseeing issues that impact investors.

A "big part" of the Office of Investor Advocate’s job, Fleming said during a meeting of the Investor Advisory Committee at SEC headquarters in Washington, will be in the policy area. “Dodd-Frank gave me pretty broad authority to look at issues that affect investors,” and that includes rulemakings, legislation on Capitol Hill or specific products, he said.

Fleming, who’s also a member of the Investor Advisory Committee, was appointed the SEC’s first Investor Advocate on Feb. 12 and assumed his role on Feb. 24. He noted that he’s one to “work long hours” when he believes “injustice is being done. I bring that approach to this job.” Added Fleming: “I will investigate before I advocate, to work on behalf of investors.”

One injustice that Fleming said he handled while serving in his former role as the deputy general counsel for the North American Securities Administrators Association was bringing criminal charges in a churning case. Fleming said that he saw the broker’s churning to generate commissions as more than an ethical violation because the customer was at a mental institution. “That [case of churning] was more than an ethical violation, it was a fancy way of stealing money.”

Fleming said his office will have six employees, including himself, and that he’s currently hiring an ombudsman, two senior attorneys, a junior attorney and an economist. The ombudsman, he said, will be the point person for investors to go to if they have a problem with the SEC, not with their broker or advisor.

The committee also appointed Kurt Schacht, managing director of the CFA Institute, as its new chairman. He replaces Joseph Dear, the former chief investment officer of the California Public Employees’ Retirement System, who died of prostate cancer in late February. Dear was 62.

The committee’s Investor as Purchaser subcommittee also proposed a set of recommendations for the SEC to consider as it writes rules for crowdfunding.

The subcommittee recommended that the SEC:

Adopt tighter restrictions on the amounts that investors can invest in crowdfunding; 

Strengthen the mechanisms for the enforcement of the investment limits in order to better prevent errors and evasion;

Clarify and strengthen the obligations of crowdfunding intermediaries to ensure compliance by issuers with the crowdfunding title and relevant regulations;

Take further steps to ensure that educational materials clearly convey the required information and are reviewed and, to the degree possible, understood by investors; and

Withdraw its proposed definition of electronic delivery, which fails to ensure that investors actually receive the required disclosures and educational materials, and continue to rely instead on the strong and effective policy for electronic delivery adopted by the Commission in the mid-1990s.

Barbara Roper, director of investor protection for the Consumer Federation of America, who heads the subcommittee, noted during the meeting that the SEC has a “daunting task” in writing crowdfunding rules as there are “20 some rulemaking areas” for the commission to consider.

“It’s a very daunting task to create this new marketplace and write the rules in a way to maximize the benefit for investors and minimize the risk,” Roper said.

She noted that companies’ failure rates worry her more than the fraud that could come with crowdfunding, noting “there will be fraud.”

Said Roper: “I’m far more concerned [that] many of these companies will fail, for a variety of reasons. So unsophisticated investors will participate in a market with a high failure rate.”

Another concern is that the “madness and the potential for people to get carried away” through crowdfunding could cause people “to pay way too much for the stocks.”

Indeed, SEC Commissioner Kara Stein noted during her Tuesday speech at NASAA's public policy conference that the Commission "has another great opportunity in its rulemaking for crowdfunding," as crowdfunding "holds the promise of harnessing the power of the internet to provide capital for start-ups and small businesses that otherwise lack access to such capital."

But, she continued, "with that opportunity also comes risk. Ordinary people, like a teacher in Iowa, or a retiree in Tampa, may not be equipped to assess the risks of an investment offer coming via the internet. We all need to make sure that crowdfunding isn’t turned into a new, cyber-version of boiler rooms."

Investing in startups "is a risky business," Stein added. "And potential crowdfunding investors should know that the risks include not just whether the company is successful, but also whether the company will dilute or otherwise devalue their investment as the company moves forward."

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Check out SEC Seeks Comments on Target-Date Fund Marketing on ThinkAdvisor.

Yellen: Harsh winter slowing economy

Federal Reserve Chair Janet Yellen told Congress on Thursday that the economy has shown signs of weakness in recent weeks, suggesting that a hard winter may only partially explain the slowdown.

In her semi-annual report before the Senate banking committee, Yellen said that economic data, particularly on consumer spending, had "softened" since she testified before a House committee two weeks ago.

Some of the weakening, she said, "may be related to adverse weather" but the Fed "will be attentive" to other economic signposts to see if the economy "is progressing in line with our expectations."

STOCKS THURSDAY: How markets are doing

In the House hearing, Yellen said the Fed remained on course to continue tapering its economic stimulus program despite weak job growth in December and January. She suggested much of the slowing appeared to be due to severe winter weather.

Since her testimony on Feb. 11, reports indicated that retail sales slowed significantly in January and measures of the housing recovery have dipped. Economists say that while weather is a factor, other forces, such as rising mortgage rates, are likely also at work.

In an effort to hold down interest rates and spur growth, the Fed is now buying $65 billion monthly in Treasury bonds and mortgage-backed securities after reducing the purchases from $85 billion a month last year. Citing an acceleration in the economy and job gains since the Fed began the purchases in September 2012, Yellen reiterated Thursday that the Fed plans to continue to trim the purchases in "measured steps" through the year.

"If there is a significant change in the outlook, certainly we would be open to reconsidering" that plan, she said. Yellen added that it will take "some years" before the economy returns to normal.

At the same time, some Fed policymakers worry that the Fed's bond purchases are raising the risks of asset bubbles by driving money to riskier, higher-yielding investments.

Yellen on Thursday voiced some c! oncerns that such market froth may be forming. "At this stage, broadly I don't see" asset bubbles "but there are pockets, a few things" that Fed policymakers are monitoring. She cited deteriorating underwriting standards for some loans and rising farmland prices.

Previously, Yellen had downplayed worries about overvalued assets and markets.

Yellen also drew questions about last week's release of 2008 Fed meeting transcripts that showed policymakers failed to immediately grasp the magnitude of the financial crisis even after Lehman Bros. failed and the stock market plunged in September that year. The transcripts indicated that many Fed policymakers thought the economy would continue to grow, and some were more worried about high inflation than recession.

Yellen acknowledged that in September 2008 Fed officials did not foresee the brutal economic downturn that would be triggered by the financial crisis. But she said that by December the Fed had moved aggressively to lower interest rates to near zero and pump money into frozen credit markets.

"I was one urging more, faster, we need to get on this," Yellen said.

Early, this month Yellen succeeded Ben Bernanke as Fed chair, becoming the first woman to lead the central bank.