By relaxing the US financial system’s mark-to-market accounting standards, the government is effectively deactivating the financial “early warning system” that let investors know that a global credit crisis was brewing, says Jennifer Yousfi in Money Morning.

By Jennifer Yousfi Managing Editor ConocoPhillips (COP) is selling its remaining company-owned gas stations in the latest example of the changing face of the retail gas station business. According to unnamed sources, ConocoPhillips, the third-largest U.S. oil company and second largest U.S. refiner, plans to sell 600 company-owned gas stations to PetroSun West LLC for $800 million. The deal is expected to close today (Wednesday). "This transaction is designed to strengthen our branded wholesale business model and grow market share," said Clayton Reasor, President, U.S. Marketing of ConocoPhillips, MarketWatch reported. "We have worked with PetroSun before and believe that they will continue to enhance our brands and provide excellent service to our retail customers." ConocoPhillips operates domestic gas stations under the Phillips 66, Conoco, and 76 brands in the United States and JET brand in Europe. PetroSun plans to boost gas ...

By Jennifer Yousfi Managing Editor The next move from the U.S. Federal Reserve will be to increase the Federal Funds rate, although the timing of that hike remains to be decided. “A number of participants worried about the possibility that core inflation might fail to moderate next year unless the stance of monetary policy was tightened sooner than currently anticipated by financial markets,” according to the minutes of the Federal Open Market Committee’s Aug. 5 meeting released yesterday (Tuesday). The FOMC voted to slash interest rates seven times from 5.25% last September, before voting to hold steady at the current 2.0% rate at the last two consecutive meetings. While it seems clear the Fed is anticipating a change in course to a tighter monetary policy in order to battle inflation, the majority of FOMC members still feel weak economic growth remains the larger ...

By Jennifer Yousfi Managing Editor U.S. markets rallied as soothing comments from two of the most influential minds in finance combined to assuage investor fear and push indices higher. The blue-chip Dow Jones Industrial Average Index gained 195.90 points (1.71%), to close at 11,626.11. The tech-laden Nasdaq Composite Index rose 34.33 points (1.44%), to reach 2,414.71. And the broader Standard & Poor’s 500 Index increased 14.43 points (1.13%), to hit 1,292.15. Speaking in Jackson Hole, Wyo., U.S. Federal Reserve Chairman Ben S. Bernanke said the effects of the ongoing domestic credit crisis "are becoming apparent in the form of softening economic activity and rising unemployment," The New York Times reported. But Bernanke anticipates inflation to ease by year-end, stating he found the recent decline in oil prices and other commodities "encouraging." Mirroring the Federal Open Market Committee’s policy statement from Aug. 8, ...

By Jennifer Yousfi Managing Editor U.S. private-equity firm Lone Star Funds announced yesterday (Thursday) that it would buy a majority stake in Germany’s IKB Deutsche Industriebank AG for one-fifth of the original asking price. Lone Star will pay $223 million (150 million euros) for a 90.8% stake in IKB, considerably lower than the asking price by state-controlled bank KfW Bankengruppe. However, KfW was anxious to close the deal and get IKB’s distressed assets off of its balance sheet. “This will finally bring clarity and calm,” Green party lawmaker and KfW administrative board member Christine Scheel said in a telephone interview with Bloomberg News. “It was the right decision to sell the bank as quickly as possible.” IKB has been savaged by the subprime mortgage crisis. The German bank has had to take $15.1 billion in writedowns since the credit ...

By Jennifer Yousfi Managing Editor U.S. companies were hit with the largest annual jump in wholesale prices in 27 years during July, while housing starts dropped to their lowest level in 17 years, the latest indicators that ruinous stagflation is tightening its grip on the U.S. economy for the first time in decades. "Inflation is way too hot and with housing way too cold, we have the opposite of a Goldilocks economy," Joel Naroff, president and chief economist of Naroff Economic Advisors, said in a note to clients after two separate U.S. government reports were released. The Labor Department announced that the producer price index (PPI) increased 1.2% in July on a seasonally adjusted basis, after an increase of 1.8% the month prior. Even more troubling, the year-over-year increase for PPI was 9.8%, the highest level in 27 years. "It’s not ...

By Jennifer Yousfi Managing Editor Brazil is no longer just a tourist hot spot, but a solid profit play for savvy investors, too. And one of the best ways to profit from Brazil’s expected... Money Morning is here to help investors profit handsomely on this seismic shift in the global economy. Money moves markets. But Money Morning lets you move first.

By Jennifer Yousfi Managing Editor Gold prices tumbled below $800 per ounce for the first time since late 2007 Friday, as the continuing U.S. dollar rally sparked an across-the-board retreat in commodity prices. Gold closed Friday at $792 an ounce, a decline of $22.40, or 2.75%. Gold prices have plummeted 23% since the "yellow metal" hit an all-time record of $1,032 an ounce on St. Patrick’s Day. “The dollar’s continuing uptrend is a key factor depressing commodities in general and triggering heavy sales in gold,” Shuji Sugata, manager at Mitsubishi Corp. Futures and Securities Ltd. in Tokyo told Reuters. Investors who had been using precious-metals investments as a hedge against a weak greenback dumped their holdings, causing the dollar to gain more than 8% against the euro and more than 5% against the yen in the past month.  The greenback hit a ...

By Jennifer Yousfi Managing Editor Consumer sentiment improved for the second consecutive month, as lower commodities prices picked the index of consumer confidence up from a 28-year low. The Reuters/University of Michigan Surveys of Consumers announced its index of consumer confidence inched up a half-point to 61.7 in early August from 61.2 in late July. However, the index fell just shy of economists’ median forecast of 62.0, according to a recent poll conducted by Reuters. “Consumers still remain pretty pessimistic,” Arun Raha, a senior economist at Swiss Re (OTC ADR: SWCEY) in New York, said in an interview with Bloomberg Television. “This little-higher number is probably the result of lower gas prices. The economy remains pretty weak and consumer sentiment reflects that.” The index has climbed back from 56.4 in June, its lowest level since May 1980. Any improvement ...

By Jennifer Yousfi Managing Editor The Eurozone economy recorded its first decline in more than a decade as slowdowns in the European Union’s largest economies dragged on gross domestic product (GDP). The Eurozone economy, which covers the 15 nations that share the euro currency, contracted 0.2% in the second quarter, as a 0.5% decline in Germany and a 0.3% decline in France offset gains in the smaller economies of Austria, Portugal and Spain, Eurostat, the European Union’s official statistics office, announced yesterday (Thursday). The decline marks the Eurozone’s first contraction since 1996, when the euro was introduced and Eurostat began tracking the data. While declining to speculate on the potential for a recession, “the signs are not really very good for the future,” Amelia Torres, spokeswoman for EU Economic and Monetary Affairs Commissioner Joaquin Almunia, told Bloomberg News in Brussels yesterday. “It’s ...