US STOCKS-Wall St scores weekly gains, but sags for the day - Reuters UK US STOCKS-Wall St scores weekly gains, but sags for the day - Reuters UK

Friday, May 25, 2012

US STOCKS-Wall St scores weekly gains, but sags for the day - Reuters UK

US STOCKS-Wall St scores weekly gains, but sags for the day - Reuters UK

Fri May 25, 2012 9:35pm BST

* Industrials lag as investors turn to defensive stocks

* U.S. consumer sentiment in May at highest since Oct. 2007

* Dow off 0.6 pct, S&P down 0.2 pct, Nasdaq off 0.1 pct (Updates to close)

By Ryan Vlastelica

NEW YORK, May 25 (Reuters) - U.S. stocks ended their first positive week in four with a down day on Friday as investors were reluctant to buy going into a long weekend, with uncertainty still swirling around Europe.

An S&P index of industrial shares ranked among the session's biggest losers while weakness in large-cap tech stocks like Google Inc kept the Nasdaq in negative territory.

Warnings about Greece kept investors cautious, as did Spain after Standard & Poor's downgraded five banks and a source told Reuters that Bankia asked for $24 billion in state aid. However, a bullish read on U.S. consumer sentiment kept pessimism in check.

Boeing Co and Chevron Corp were the Dow's biggest decliners, followed by Caterpillar Inc, with each falling more than 1 percent in the thinly traded session.

Google fell 2 percent to $591.53, pressuring the Nasdaq.

Utilities and telecom were the only S&P sectors in positive territory. Both are deemed defensive plays.

"The market is drifting and cautious ahead of the (Memorial Day) holiday. There's no consistency, though we do seem to be digging in after some bad weeks," said Donald Selkin, chief market strategist at National Securities in New York, which has about $3 billion in assets under management.

"Still we have the overhang of Europe, and just have to hope things don't get worse over there."

Belgium's Deputy Prime Minister Didier Reynders issued a warning over Greece, saying it would be a "grave professional error" if central banks and companies were not preparing for a Greek exit from the euro zone.

French banks, which are among the lenders most exposed to Greece, have stepped up their efforts on contingency plans for the debt-laden country leaving the euro zone, sources familiar with the situation said.

The Dow Jones industrial average fell 74.92 points, or 0.60 percent, to 12,454.83 at the close. The Standard & Poor's 500 Index dipped 2.86 points, or 0.22 percent, to 1,317.82. The Nasdaq Composite Index was down 1.85 points, or 0.07 percent, at 2,837.53.

The U.S. stock market will be closed on Monday for the Memorial Day holiday.

For the week, the S&P 500 rose 1.7 percent. That advance broke the benchmark index's a three-week string of losses with its best weekly performance since mid-March. The Dow added 0.7 percent for the week, while the Nasdaq climbed 2.1 percent. Trading was choppy all week, with volatility often spiking around the close.

Even with the S&P 500's 5.7 percent drop since the end of April, stocks have held up relatively well as bear markets rage in Brazil, Russia, peripheral Europe, and many core European equity markets have given up all their gains for the year.

For the year to date, the S&P 500 is still up 4.8 percent.

The S&P 500's top gainer in Friday's session was telecom services - a sign that investors were looking for safety in defensive U.S. sectors, possibly as money returns from riskier emerging markets and Europe. The S&P telecoms index rose 0.3 percent.

At the end of last week, the S&P 500 tested support at the 1,290 mark and has inched away from that level during the week. Some analysts are expecting the benchmark index to test its 200-day moving average at 1,281 and possibly fall below that.

Weighing heavily on the Dow in Friday's session, Boeing shares lost 1.9 percent to end at $70. Chevron's stock dropped 1.2 percent to $98.86. Caterpillar shares shed 1.6 percent to close at $89.94.

Chesapeake Energy Corp gained 1.5 percent to $15.81, rising for the second day after the company announced it has put a half-million acres in Wyoming and Colorado up for sale.

Data showed Thomson Reuters/University of Michigan Surveys of Consumers' final May consumer sentiment index jumped to 79.3 from 77.8 in the preliminary May report. It was the highest level since October 2007. Market reaction was muted.

In the aftermath of last Friday's botched initial public offering of Facebook, lead underwriter Morgan Stanley will adjust thousands of trades to ensure outstanding limit orders to sell will be filled at no more than $42.99 a share, the firm told its brokers on Thursday, according to several who listened to the call.

Facebook's stock lost 3.4 percent to $31.91, close to its all-time intraday low of $30.94 that it hit on Tuesday.

Volume was light, with about 4.78 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year's daily average of 7.84 billion.

About half of the stocks listed on both the New York Stock Exchange and Nasdaq closed in positive territory. (Editing by Jan Paschal)

Stocks slip on eurozone fears - CBS News

(CBS/AP) Another flare-up in Europe's debt crisis has knocked U.S. markets lower.

Stock indexes waffled between small gains and losses until news broke in the afternoon that Bankia, a hobbled Spanish bank, asked that country's government for nearly $24 billion in support. The head of Germany's central bank also suggested the country wouldn't support region-wide bonds to prop up Spain and other troubled countries.

Signs of a cool-down in Asia also weighed on investors after Taiwan lowered its growth forecast for the year.

The Dow Jones industrial average dropped 75 points to 12,455 Friday. The Standard & Poor's 500 fell three to 1,318. The Nasdaq fell two to 2,838.

Analysts: Europe bank run is under way
ECB official calls for urgent financial overhaul
The death of equities: Here we go again

Rising and falling stocks were evenly matched on the New York Stock Exchange. Volume was thin ahead of the Memorial Day holiday.

Facebook (FB), marking its one week anniversary as a public company, fell 3.4 percent to close at $31.91, still roughly 16 percent below its initial pricing of $38.

Investors have worried about what will happen if Greece leaves the euro, and major markets were down in France, Britain, Germany, Greece and Spain. It's impossible to gauge the exact fallout, but it's likely that traders would dump the bonds of other struggling European countries, such as Spain and Italy, and residents could start to pull money out of banks there.

European leaders are arguing over how to cut the profligate spending of struggling countries without throwing the region further into recession. The messages emanating from Europe were mixed.

The head of Germany's central bank said it was an "illusion" to think allowing euro zone countries to borrow money jointly -- a proposal pushed by other countries -- would solve the crisis.

A top official from the European Central Bank said that the 17 countries that use the euro need an "urgent overhaul" to their structure, including a banking regulator and deposit insurance program that could cover the entire Eurozone.

The parliament of Portugal, which has been pushed close to bankruptcy, endorsed a budget plan that would set legal limits on government spending. Spain's market regulator suspended trading of shares in Bankia, a bailed-out bank that is preparing to ask for even more rescue money from the government.

Markets were rattled in Asia as well. Taiwan lowered its economic growth forecast for the year. Media reports suggested that some of China's biggest banks will miss their annual lending targets for the first time in seven years. China, the world's second-largest economy, has propped up global financial markets in recent years as other countries have slowed.

Stocks End Lower, but Log Best Week in May - CNBC

Stocks closed lower in thin trading Friday as investors hesitated to stay long over the three-day Memorial Day holiday weekend amid ongoing worries over the euro zone.

Still, all three major indexes posted their best weekly gains for the month, snapping a three-week losing streak.

The Dow Jones Industrial Average fell 74.92 points or 0.60 percent, to close at 12,454.83. The blue-chip index has yet to see a two-day win streak this month.

The S&P 500 slipped 2.86 points, or 0.22 percent, to finish at 1,317.82. The Nasdaq erased 1.85 points, or 0.07 percent, to end at 2,837.53. The Dow and Nasdaq are on pace for their worst month since 2010.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, ended near 22.

For the week, the Dow gained 0.69 percent, the S&P 500 rallied 1.74 percent, and the Nasdaq soared 2.11 percent. Home Depot [HD  Loading...      ()   ] was the biggest weekly gainer on the Dow, while Pfizer [PFE  Loading...      ()   ] lagged.

All 10 S&P sectors finished in positive territory for the week, led by materials and consumer discretionary.

“It’s been a brutal month…and a lot of guys are still hiding today,” said Gordon Charlop, managing director at Rosenblatt Securities. “Everyone’s looking at Europe—the June 17Greek elections—and until we get some clarity there, it’s buyer beware. This chart is looking exactly like last year.” (What Happened to Stocks? Most Unloved in 50 Years)

European shares closed flat, as some traders looked to book profits on the back of a two-day rally with fears over Greece still lurking in the background. The euro briefly dipped below $1.25, nearing a 23-month low.

Adding to jitters, Spain's Bankia asked the state for a bailout of 19 billion euros, more than double what the government had expected earlier this week. Shares of the Spanish bank were halted earlier during European trading. And S&P downgraded the bank to 'double-B-plus' from 'triple-B-minus.' The agency also cut its ratings on another four Spanish banks.

Meanwhile, concerns continued to brew over ongoing flight of capital from European banks.

"We estimate a further 200 billion euros in flight from each of Spain and Italy is quite likely without further policy action," according to a note from Citi. "Economic deterioration, ratings downgrades and especially a Greek exit would almost certainly significantly accelerate the timescale and increase the amounts of these outflows."

In the latest over Facebook's [FB  Loading...      ()   ] IPO debacle, Citigroup [C  Loading...      ()   ] said its Automated Trading Desk saw trading losses of around $20 million, according to sources. Facebook shares have plunged almost 17 percent for the week. (Read More: Still Like Facebook? There’s an ETF for That.)

This comes after Knight Capital Group and Citadel Securities also reported losses earlier this week. UBS, the other large market maker involved in Facebook's IPO, has not disclosed any losses.

Not even a better-than-expected consumer sentiment report could help lift equities. Consumer sentiment climbed in May to its best level since October 2007, with the index hitting 79.3, according to the Thomson Reuters/University of Michigan's final reading.

VeriFone Systems [PAY  Loading...      ()   ] plunged after the electronic payment technology provider handed in a disappointing third-quarter and full-year guidance.

BlackRock's [BLK  Loading...      ()   ]increased its stake in Chesapeake Energy [CHK  Loading...      ()   ] to almost 4 million shares from fewer than 1 million shares, sources told CNBC.

Green Mountain Coffee Roasters [GMCR  Loading...      ()   ] independent director Douglas Daft resigned from the board this week.

U.S. generic drug maker Mylan [MYL  Loading...      ()   ] settled a patent infringement suit with Sunovion Pharmaceuticals, a unit of Dainippon Sumitomo Pharma, related to the Japanese drugmaker's bronchitis medicine Brovana.

U.S. markets will be closed Monday for the Memorial Day holiday.

—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

On Tap Next Week:

MONDAY: Memorial Day—equity, bond markets closed
TUESDAY: S&P Case-Shiller home price index, consumer confidence, Dallas Fed mfg survey
WEDNESDAY: Mortgage apps, pending home sales; Earnings from TiVo
THURSDAY: Challenger job-cut report, ADP employment report, GDP, jobless claims, Fed's Pianalto speaks, corporate profits, Chicago PMI, oil inventories, chain-store sales, Zipcar shareholders mtg; Earnings from Joy Global
FRIDAY: Non-farm payrolls, personal income & outlays, ISM mfg index, construction spending, auto sales, Wal-Mart shareholders mtg

More From

Bank stocks tumble on JPMorgan's trading loss - Yahoo Finance

NEW YORK (AP) -- Shares of the major U.S. banks tumbled Friday on news that JPMorgan Chase, the country's largest bank, lost $2 billion in the past six weeks in a trading portfolio that was intended to reduce its financial risks.

Shortly after Friday's opening bell, JPMorgan Chase & Co. shares dropped more than 9 percent, making it the biggest loser among the 30 stocks in the Dow Jones industrial average.

While the losses were particular to JPMorgan, the news boosted fears of increased bank regulation and was enough to spook investors.

Shares of Citigroup Inc. and Goldman Sachs Group Inc. both fell about 4 percent in early trading, while Bank of America Corp. initially dropped about 3 percent before rebounding. Earlier in the day, shares of British banks fell when European markets opened.

But gains in technology, energy and other stocks offset the losses on the broader U.S. market. In midday trading, the Dow was up 34 points at 12,888.

Wall Street analysts said the hefty losses provide fodder for proponents of increased bank regulation including the so-called Volcker rule, which is still being written and is expected to ban certain types of trading by banks with their own money.

The Federal Reserve said last month that it would begin enforcing that rule in July 2014. Bank executives, including JPMorgan's CEO, have argued for weaker rules and broader exemptions.

Baird analyst David George said in a Friday note to investors that it's now less likely that the government will heed those requests. And once the political season gets going, the country's largest banks could also face calls from their critics for them to break up, he said.

But Citi analyst Keith Horowitz said that while JPMorgan's timing couldn't have been worse for the industry, he's still not convinced that the losses will result in stricter Volcker rule than previously expected, since that would severely affect the amount of money in the markets.

The trading loss was an embarrassment for JPMorgan, which came through the 2008 financial crisis in much better health than its peers. It kept clear of risky investments that hurt many other banks.

The loss came in a portfolio of complex financial instruments known as derivatives and in a division of JPMorgan designed to help control its exposure to risk in the financial markets and invest excess money in its corporate treasury.

Partly because of the $2 billion trading loss, JPMorgan said it expects a loss of $800 million this quarter for a segment of its business known as corporate and private equity. It had planned on a profit for the segment of $200 million. The loss is expected to hurt JPMorgan's overall earnings for the second quarter, which ends June 30.

In midday trading, JPMorgan shares dropped $3.01, or 7.4 percent, to $37.73; Citigroup lost $1.03, or 3.4 percent, to $29.62; and Goldman Sachs fell $3.08, or 2.9 percent, to $103.24. Bank of America shares initially fell 29 cents, or 3.8 percent, to $7.41, before climbing back to $7.72, up 3 cents per share.

Accusations that climate science is controlled by money are mistaken -

Ars Technica

One of the unfortunate memes that has made repeated appearances in the climate debate is that money isn't just influencing the public debate about science, but it's also influencing the science itself. The government, the argument goes, is paying scientists specifically to demonstrate that carbon dioxide is the major culprit in recent climate change, and the money available to do so is exploding.

Although the argument displays a profound misunderstanding of how science and science funding work, it's just not going away. Just this week, one of the sites where people congregate to criticise mainstream climate science once again repeated it, with the graph accompanying this story. That graph originated in a 2009 report from a think tank called the Science & Public Policy Institute (notable for using the serially confused Christopher Monckton as a policy advisor).

The report, called " Climate Money: The climate industry: $79 billion (£50.4 billion) so far -- trillions to come" (PDF) and prepared by Australian journalist Joanne Nova for the Science & Public Policy Institute, claims to show how money has distorted climate science. There are several aspects to this argument, but we'll start with the money itself.

Who's got the money?
Many discussions have focused on the fact that businesses with a large carbon output (like fossil fuels extractors) have funded PR and lobbying efforts that, in part, have attempted to undercut the scientific case for human-driven climate change. It notes that there is now significant money being made by companies that build carbon-neutral energy sources and energy efficient technology, some coming from tax incentives and subsidies. In addition, carbon-trading markets are predicted to grow rapidly over the coming decades. Combined, the report asserts, this money provides an incentive to keep the spotlight focused on carbon.

In short, some of the green industries are now in the same position as their fossil fuel counterparts, in that they have an incentive to shape policy and the public support for it. There's a definite element of truth to this, although there are clearly reasons other than climate change -- ocean acidification, energy security, extending the lifetime of finite resources -- for promoting efficiency and green energy.

But the key thing here is that, at best, these companies can influence things like public perception and policy responses. They don't influence the underlying science because almost none of them are paying any scientists to gather data. So, although a focus on the income of various companies might tell us something about public opinion, it doesn't really say much about the science.

The false assertion that money is distorting the science comes, in part, from a spectacular misreading of the graph that accompanies this article.

The graph ostensibly shows how the US has gone from essentially funding nothing in the way of climate research to spending over $7 billion (£4.47 billion) a year. But the vast majority of that money is in the form of "Climate Technology," and a careful reading of the report indicates that this goes to things like wind and solar power, biofuel production, and things of that nature. None of that money goes to the researchers who are actually generating the results that point to anthropogenic warming, so it can't possibly provide an incentive to them.

The money that is actually going to climate science is on the bottom of the graph, in purple. And, as that shows, funding has been essentially flat since the early 1990s. (Funding has gone up slightly in recent years, but is still in the neighbourhood of $2 billion (£1.2billion) annually.) A lot of that money doesn't actually go to scientists, either, as it pays to support everything from some of NASA's Earth-monitoring satellites to land and ocean temperature monitoring.

The other issue with this graph is that it gives the false impression that funding shot up from nowhere around 1990. The truth of the matter is that the US has been funding climate science for decades. It's why we have things like a record of CO2 levels that goes back to the 1950s, temperature records that span over a century, and a detailed history of periods like the ice ages. People didn't just suddenly start studying this stuff in 1990 -- and much of the work from before that date was funded by the government. What changed was the accounting. There are over a dozen different branches of the government that fund some sort of science, but it wasn't until 1990 that the government formed the Climate Change Science Program, which started aggregating the expenditures across agencies.

There has never been any sudden boom in government funding for climate research that is luring people onto the research track, much less inducing them to support the consensus view. If anything, many years of flat funding would provide an incentive for people to look to getting out of the field. The graph, held up as evidence that climate scientists are being led around by money, actually shows the exact opposite.

Where's that money going?
But maybe that money is somehow being directed in a biased manner, distributed in a way that ensures the current consensus is supported. "Where is the Department of Solar Influence or the Institute of Natural Climate Change?" Nova asks, elsewhere claiming, "Thousands of scientists have been funded to find a connection between human carbon emissions and the climate. Hardly any have been funded to find the opposite."

This displays an almost incomprehensible misunderstanding of how science research works. Thereare institutes that are dedicated to studying the Sun -- the Naval Research Laboratory has one, as does NASA. But those institutes are focused on learning about what the Sun actually does, not squeezing what we learn into some preconceived agenda. For decades, solar activity has been trending downwards, even as temperatures have continued to rise. It's not that the researchers are being induced or compelled to some sort of biased interpretation of the data. Reality just happens to have a bias.

The same thing works in other areas as well. A number of countries have spent large sums of research dollars to put Earth-monitoring satellites in orbit, not with the intent of finding anything in particular, but because monitoring the Earth can tell us important things. This hardware has imaged the Greenland ice sheet -- again, not because of some sort of bias, but because the sheet is very big and very significant. Most of these studies have suggested that ice loss is accelerating, but a recent one concluded, "sea level rise from Greenland may fall well below proposed upper bounds."

The researchers weren't from some sort of "Institute to discover a stable sea level." They were from departments focused on polar research and Earth sciences. What Nova doesn't seem to get is that the people who study the planet actually pay attention to what the planet tells them, not to what their institute may be titled.

(Incidentally, this paper is also a clear indication that research that indicates things aren't as bad as they could be not only gets published, but makes it into very prestigious journals.)

Like many other self-proclaimed skeptics, Nova also has the bizarre idea that research normally proceeds by "auditing" existing studies. "Auditing AGW research," she writes "is so underfunded that for the most part it is left to unpaid bloggers who collect donations from concerned citizens online." But nobody audits the JPL to see if it's handling the Cassini probe properly; geneticists aren't being asked to open their books so that other scientists can see if they're fudging the numbers.

Science simply doesn't proceed through audits. The Greenland paper linked above provides a much more typical picture of how things work. The researchers behind it didn't simply reanalyse what others had done; they got new (and, in many ways, better) data that addressed the same issue and provided a more comprehensive picture of what was going on at the ice sheet's glaciers.

In short, you generally don't make an impression on science by auditing past data; you do it by coming up with better data.

It's pretty strange that people find in the graph (which shows research stuck in neutral for decades) evidence of a flood of money into climate science that distorts its conclusions. But it's unfortunately typical that an argument focused on climate science leaves the facts behind from the start.

Source: Ars Technica

Stocks open higher on Wall Street; Facebook falls - Yahoo Finance

NEW YORK (AP) -- Stocks rose Monday morning as investors latched onto a survey suggesting that economists are more optimistic about housing and unemployment.

It's the first gain for the Dow Jones industrial average after six straight days of losses. However a tense undercurrent created by continued tension in Europe, and a steep slide in Facebook's stock, reminded investors that the market is far from healed.

The Dow rose 80 points to 12,449 at midmorning Monday. The Standard & Poor's 500 index rose 11 to 1,306. The Nasdaq composite rose 28 to 2,807.

The most recent report from the National Association for Business Economists showed that its forecasters expect modest growth for the remainder of the year, with the pace picking up in 2013.

That mildly cheerful news seemed to be just a small oasis in a grim desert. The 54 economists who took part in the survey also said they expect consumer spending, business investment and gross domestic product will remain below historic norms. Oil prices rose after Iraq's central government told its Kurdish residents that they must get approval for their oil deals with Turkey.

Lowe's Cos., the world's second largest home improvement chain, posted a 14 percent jump profit for its first quarter, but the stock slumped 9 percent because the company lowered its full-year earnings forecast. That raised concerns that some of the hiring and retail sales of the first quarter weren't signs of the economy actually recovering, but an anomaly caused by an unusually mild winter that encouraged people to do home renovations a few months earlier than they otherwise would.

The Group of Eight summit over the weekend at Camp David produced a joint statement from German Chancellor Angela Merkel, new French President Francois Hollande and U.S. President Barack Obama calling for growth-promoting solutions to the European debt crisis, not just cost cutting.

But tension and uncertainty lingered. Germany's deputy finance minister told a radio station that "eurobonds," debt that Germany and other strong countries would back to prop up weaker countries like Greece and Portugal, were "a prescription at the wrong time with the wrong side effects." Bankia, a bank nationalized by the Spanish government, was ordered to come up with more money to set aside for bad loans in order to meet the government's requirements.

Facebook slid 11 percent to $33.92, below its initial public offering price of $38. Its market debut on Friday was marred by technical problems.

Stocks Continue To Turn In A Lackluster Performance - U.S. Commentary - RTT News

5/25/2012 1:59 PM ET
(RTTNews) - Stocks continue to show a lack of direction in mid-afternoon trading on Friday, as traders seem reluctant to make any significant moves going into the long weekend. The major averages have spent the session bouncing back and forth across the unchanged line.

The lackluster performance by stocks comes amid a relatively quiet day on Wall Street, with many traders getting a head start on the Memorial Day weekend.

Traders have largely shrugged off the release of a report from Reuters and the University of Michigan showing that U.S. consumer sentiment in the month of May improved by more than previously estimated.

While most of the major sectors are showing only modest moves, considerable strength is visible among semiconductor stocks. The Philadelphia Semiconductor Index is up by 1.7 percent amid strong gains by SanDisk (SNDK) and Micron Technology (MU).

Health insurance and healthcare provider stocks are also seeing notable strength on the day, while railroad and tobacco stocks are seeing modest weakness.

The major averages currently continue to turn in a mixed performance, with the Nasdaq posting a modest gain. While the Nasdaq is up 2.27 points or 0.1 percent at 2,841.65, the Dow is down 46.92 points or 0.4 percent at 12,482.83 and the S&P 500 is down 0.57 points or less than 0.1 percent at 1,320.11.

by RTT Staff Writer

For comments and feedback:

Can financial education help a person to make better decisions? -

“WELL-INFORMED, well-educated consumers can create economic ripples” according to Jeanne M. Hogarth of the US Federal Reserve Board in her paper, Financial Education and Economic Development presented at the 2006 Financial Literacy International Conference. They make better financial decisions for themselves and their families, increasing their economic security and well being. And these economic ripple effects can be significant.

Over the last several years, the issue of financial literacy and financial education has risen on the agenda of financial institutions, government agencies, organisations and policy makers. Increasingly over the last few years there has been a steady stream of media advertisements, events and conferences, articles and news reports highlighting recent efforts to provide financial education to consumers.

Drop a rock into a lake or pond the ripples extend outward with wider and wider effects. So it is also with financial education. Perhaps the greatest challenge in financial education is measuring the efficacy of the programme.

Getting one's financial house in order can take time, and longitudinal studies to prove that a particular programme is effective are costly to conduct. However, there have been some longer-term impact and evaluation studies that show financial education can make a difference.

Financial education of different types

According to Jeanne, personal financial education means different things to different people. For some, it can be quite broad encompassing an understanding of economics and how household decisions are affected by economic conditions and circumstances.

She adds that for others, it focuses quite narrowly on basic money management budgeting, saving, investing, and insuring. Still others include a set of consumer behaviours and money skills within a financial education framework. In reality, a comprehensive financial education approach probably should include the following themes:

(1) Being knowledgeable, educated, and informed on the issues of managing money and assets, banking, investments, credit, insurance, and taxes;

(2) Understanding the basic concepts underlying the management of money and assets (e.g. time value of money in investments and pooling of risks in insurance); and

(3) Using that knowledge and understanding to plan, implement, and evaluate financial decisions.

This implies that the outcome of financial education that is, what a “financially educated” person does includes behaviours such as paying bills on time, having manageable levels of credit, setting financial goals and having a way of achieving those goals through saving and investing, spending wisely, and so on. The specific implementation of these behaviours may vary with income, personal family circumstance, and asset level, however.

Individual behaviours can and should have ripple effects beyond the realm of an individual household. Less visible, but nonetheless important, are how these themes can be expanded to include community development. Having one's financial house in order can lead to stability of housing and family life, which can contribute to stable educational situations for children, and more involvement of families in their community.

In most cases, we assume these farther-reaching benefits of financial literacy will be translated into the country's real economic growth and financial stability.

Linking Financial Knowledge with Financial Behaviors

In research done by Hogarth, Hilgert, and Schuchardt, “Money managers: The good, the bad, and the lost” demonstrates that the higher a consumer's financial knowledge (based on a quiz score), the higher the probability that the consumer undertakes more positive financial management behaviours and uses more financial products and services.

For example, consumers scoring 80% on the quiz had a 0.37 probability of being “active and engaged” in financial management (that is, they undertook more positive financial behaviours and used more financial products and services), while consumers scoring 50% had only a 0.14 probability.

Persons who are more knowledgeable in specific financial behaviours will be more likely to engage in positive cash-flow management, saving and investment behaviours. Again in a study by Hogarth, Beverly, and Hilgert, “Patterns of financial behaviours: Implications for community educators and policymakers”, financial knowledge and learning experiences are the only variables that are consistently associated with more positive financial management behaviours in particular, learning from family, friends and personal experiences.

Difficulties in measuring the effectiveness of financial education

Although it is clear that financial education is beneficial and has a positive impact on the lives of consumers, it is often difficult to identify what kind of an impact it has and to what degree of success.

Researchers and practitioners continue to debate the rigour of various evaluation techniques and the measures to use. While knowledge, attitudes, behaviours and outcomes (dollars saved or debt reduced) are often the metrics, researchers and programme evaluators are beginning to coalesce around the desirability of outcome measures.

But in many cases, increased knowledge does not necessarily change behaviour or overcome our behavioural weaknesses. Many educated and mature adults still struggle with unpaid study loans, overdue credit card debts, defaults of car or housing loan payments, investment losses, bankruptcies, financial scams and insufficient retirement funds.

Workplace financial education

Beyond teaching kids in primary and secondary schools and young adults in tertiary institutions, financial education at the workplace is an important channel to deliver financial literacy programmes to the adults.

Financial education can be used to inform staff of the financial implications of specific pay-slip options from new private retirement schemes, insurances, bank products, retail loan packages and employees' benefit packages or effect of rising healthcare costs and inflation on their income and bonus. Financially-informed staff will be able to set priorities and decide; appreciating better the effects of these options on their present cash flow and their retirement future.

It is recommended that employers conduct needs analysis in order to tailor an education syllabus according to staff salaries and job positions. Employers can even conduct an employee finance health-check survey to understand their staff's financial well-being. The results can help to optimise the delivery of customised financial literacy programmes, thereby improving corporate human capital development investments.

Online courses can be offered to the staff and seminars can be captured on video for those who can't attend. Employers can encourage staff to provide feedback on what they have learnt and open the discussion of programme weaknesses and benefits to in-house discussion forums.

Knowing and doing are two different things

Individuals need to apply what they learn to their lives, families and situations. In the end, personal finance is, after all, personal.

But when individuals learn to cultivate a responsible saving, spending and investment attitude, and do the right thing, the positive ripple effects extend to and can strengthen a country's economy. Add a business community that is working cohesively towards a healthy and sustainable financial infrastructure, good things can happen.

And with readily available and appropriately designed financial education, there is less chance of negative ripples of debt affecting individuals, their families and the countries that they live in.

> Carol Yip, founder of Abacus For Money, believes that if people understand their money mindset, behaviours and money psychology, they can be financially happy and successful. She actively promotes financial literacy and intelligence within families and for women, youths and retirees. Email her at

Investments: make money from water - Daily Telegraph

The fund has a 14pc weighting in China alone, as well as exposure to Brazil, India and Singapore.

“There is a huge opportunity in emerging markets where populations are growing immensely. There often is not enough water to go around and where there is water it is polluted,” he said.

Impax is dedicated solely to environmental services investing, with holdings in alternative energy, water and waste, with both global and geographically focused funds.

The investment philosophy revolves around the four key themes of resource scarcity, pollution, energy security and climate change.

Balancing this ethical approach with investors’ need to make a profit is part of what drives Mr Jenkyn-Jones.

“You need to invest to deliver clean water. There are many people in emerging markets who are suffering because of dirty drinking water. It is only through investment in clean-up technologies that the situation will change,” he said.

“The rise in the price of water is mitigated for poorer people – but that rise is what delivers the technology that benefit.”

European stocks close firmer after nervous session - Economic Times
LONDON: The euro briefly dipped below $1.25 on Friday but European stocks firmed despite dark clouds lingering over the eurozone with concerns that problems at Spanish banks could turn into a full-blown crisis.

Trade was choppy throughout the session but took a final turn higher on news Italian Prime Minister Mario Monti had invited French, Spanish and German leaders to a four-way summit after key Greek elections in June.

At close London's benchmark FTSE 100 index inched up 0.03 per cent to 5,351.53 points, while Frankfurt's DAX 30 gained 0.38 per cent to 6,339.94 points and in Paris the CAC 40 rose 0.32 per cent to 3,047.94 points.

Madrid gained 0.13 per cent to 6,543 points even though lender Bankia earlier asked to be suspended from trading on reports saying the bank may seek up to 20 billion euros from the state to stay afloat.

On Wall Street, the major US indices were mixed amid thin pre-weekend trade with the Dow Jones down 0.23 per cent, the Nasdaq dipping 0.15 per cent and the S&P index modestly in the black, rising 0.05 per cent.

"The market globally lacked volume and will be sorely short of catalysts over the next few days," said Renaud Murail of Barclays Bourse in Paris.

In foreign exchange deals, the European single currency, hit $1.2496 during the session touching a low point last seen in July 2010. It later recovered to $1.2514, still lower than $1.2532 late in New York on Thursday.

The dollar firmed to 79.64 Japanese yen from 79.59 yen.

This week, the single currency has tumbled to a series of multi-month low points on the back of concern over the plight of debt-plagued Greece.

"The euro remains firmly in a downtrend, investors continue to pile into German bunds (bonds) that are returning them next to nothing and Spain's economy is continuing to be crippled by rising borrowing costs and more bank bailouts," said Simon Denham, head of Capital Spreads trading group.

"The recipe is a toxic one that shows just how serious the European crisis is becoming and now that we've had the big shake out in equities, it would seem that for now at least the selling has been exhausted."

Across Europe, prices of bonds issued by countries considered to be at less risk from the debt crisis have tended to rise in recent weeks, pushing down their rate of return, as investors seek to put money in safer instruments.

The rate of return earned by holders of French 10-year government bonds touched a record low 2.414 per cent on Friday from 2.531 per cent at the close the previous day.

The yield on French two-year government bonds also fell to a historic low of 0.399 per cent, with five-year bonds at 1.259 per cent.

In Spain, lender Bankia requested the suspension of its shares ahead of a board meeting to decide on a recapitalisation plan, "in view of the lack of precision on the figures," the bank said in a statement

The announcement came as a poll Friday found that consumer confidence in Germany, which has taken a knock from high oil prices in recent months, is currently holding up in face of the eurozone debt crisis.

Market research company GfK said its household confidence index was steady at 5.7 points for June, unchanged from May, a statement said.

On Thursday, the key Ifo business climate index unexpectedly dropped sharply in May, bringing to an end a six-month rally and casting a cloud over the hitherto strong performance of Europe's biggest economy.

French consumer confidence continued its slow improvement in May but remains below the long-term trend, the INSEE national statistics office said on Friday.

The household sentiment index compiled by INSEE edged up one point to 90, it said, putting it back at levels last seen in late 2010.

In December, the index was at 80, its lowest level since December 2008.

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