Daily Briefing


August 01, 2009

Positive economic signs give market best July in 20 years

Investors placed big bets over the last month that the profit machine at U.S. companies will continue to rev higher, and that the longest recession since World War II is finally easing its grip. If that turns out to be wrong, the huge gains of July means there will be an even bigger price to pay if companies don't deliver. The Dow surged 725 points, or 8.6 percent, for the month, with most of the gains arriving in bursts in the final 15 days. The extraordinary run shaped July into the best month for the blue chips since October 2002 and the best July since 1989. The broader Standard & Poor's 500 index, a benchmark for many mutual funds, also ran at a strong pace and July was its best performance since 1997. Even with the gains, the S&P is still down 37 percent from its peak in October 2007. Earnings reports that fueled the rally often contained a few dark spots, and many companies have been increasing their bottom line by taking a knife to costs. Eventually they will have to bring in more revenue because trimming costs can't increase profits forever. Stu Schweitzer, global markets strategist at J.P. Morgan's Private Bank in New York, said the lower expenses means companies will be better positioned to reap big earnings when the economy does grow and revenue starts to tick higher.

- Associated Press

Sinclair partner gets extension on debt payments

Cunningham Broadcasting Corp., whose debt obligation could trigger Hunt Valley-based Sinclair Broadcast Group to file for bankruptcy, has received an extension until Oct. 30 to pay off $33.5 million. Sinclair said Friday that the extension allows Cunningham, whose six television stations are operated by Sinclair under an agreement, more time to work with its lenders on a solution. Sinclair has said if Cunningham can't reach an agreement with its lenders, it could trigger a credit default at Sinclair.

- Hanah Cho

AmeriDebt employee jailed for contempt of court

A former AmeriDebt Inc. employee who offered debt settlement services has been jailed for contempt of court for failing to comply with a settlement reached two years ago with Maryland regulators, the Maryland attorney general's office announced Friday. Richard A. Brennan was sentenced to serve six months in jail at the Frederick County Adult Detention Center or until the court determines he is no longer in contempt. Maryland's Consumer Protection Division reached a settlement with Brennan and his law firm in October 2007. State officials accused Brennan of using money consumers gave him to settle their debts to finance his lavish lifestyle. Under the settlement, Brennan was to return the money to consumers, pay $200,000 in penalties and costs and stop selling debt settlement services unless he posted a bond with the state. Regulators said Brennan failed to meet the terms. In an article in The Baltimore Sun a year ago, Brennan maintained he had honored his settlement with the state.

- Eileen Ambrose

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