The Social Security mistake that costs retirees thousands

While many retirees claim their benefits at the age of 62, holding off can often result in an additional hundreds of thousands of dollars over a lifetime.

NEW YORK (CNNMoney)

While you're allowed to start claiming Social Security benefits at age 62, holding off for several years can add thousands of dollars to your payments over a lifetime. That's because you don't qualify for all of your earned benefits until you reach "full retirement age," which is 66 for most Baby Boomers and 67 for those born in 1960 or later.

So checks claimed at age 62 are about 25% smaller than if you wait until your full retirement age. And if you wait even longer, your annual benefits will grow by another 8% for each year you wait up to age 70.

For example, let's say 61-year-old Mary, who currently earns $55,000, is deciding when to retire. If she were to file for Social Security benefits next year at 62, she would receive around $15,400 a year, according to T. Rowe Price's Social Security benefits evaluator. If she waits until 66, however, her annual benefits would grow to around $20,500 per year. And if she is able to hold off for several more years, until age 70, her annual benefits would climb to roughly $27,100 per year.

Related: Do I really need 100% of my pre-retirement income?

The difference can really add up. If Mary lives to be 95 years old, claiming her benefits at age 70 would result in roughly $677,000 in cumulative Social Security benefits (in today's dollars), compared to the $500,000 or so in benefits that she would receive if she'd filed eight years earlier.

"We think for most people that's really startling because they've never really thought about it," said Christine Fahlund, a senior financial planner at T. Rowe Price. "They don't appreciate that waiting would make such a difference."

Still, waiting until 70, or even 66, is not for everyone. For example, you may be concerned that you won't live long enough to reap the benefits of waiting for the larger checks. Or, due to health issues or unemployment, you may not be able to work any longer and don't have adequate savings to tide you over.

"Just because it's better doesn't mean it's necessarily going to be the best option for you," said David Richmond, president and founder of Richmond Brothers, a Michigan-based financial advising firm. "You may not be able to afford to maximize Social Security."

Living off credit cards to ensure a larger check is never going to be a good idea, for example.

Related: 3 basic steps to creating a retirement plan

While singles are only able to control the age at which they file for benefits, married couples (and divorced couples who were married for at least 10 years) have a variety of strategies to consider. Each married partner is typically eligible for three kinds of benefits, depending on circumstances:

• A retired worker benefit, which are the benefits you accrue over your own working years.
• A spousal benefit, which entitles you to half of your spouse's benefits while he or she is still alive. If you have not hit full retirement age, you are only eligible to receive a portion of those benefits.
• A survivor benefit, which entitles you, once you reach full retirement age, to a deceased spouse's full benefit. If you have not hit full retirement age, you are only eligible to receive a portion of those benefits.

Couples can increase their annual benefits by coordinating when and how they file for Social Security. In many cases, for example, it makes sense for the lower-earning spouse to file first, while the higher-income earner waits as long as possible.

Not only does this strategy result in larger annual benefit checks, it also locks in a higher "survivor benefit" for the lower-earning spouse. According to Fahlund, the survivor benefit is so important that sometimes it makes sense for even a spouse with health problems to hold off on claiming benefits if he or she is the higher earner.

Related: Pretirement: Keep the paycheck, live the lifestyle

Couples can also consider other strategies, such as the ability to "file and suspend," which allows one partner to receive spousal benefits while the other partner delays their annual benefits to receive a larger check.

To learn more about the Social Security strategy that makes the most sense for you and your retirement goals, online tools are available, including the Social Security Administration's Retirement Planner, T. Rowe Price's Social Security Benefits Evaluator tool and AARP's Social Security calculator.

First Published: July 31, 2013: 5:57 AM ET

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Google Chromecast offers more questions than answers

Google's Chromecast is a cheap way to let you watch online video on TV. But it's far from the best option.

NEW YORK (CNNMoney)

So that may seem liked a great bargain when compared to the $50 you would shell out for Roku or $100 for an Apple TV box.

But a closer look at Chromecast reveals that its capabilities are much more limited than its competitors.

Chromecast currently only works with four streaming services-- Netflix (NFLX), Pandora (P), Google-owned YouTube and Google Play. It also lets you stream whatever is open in a Chrome browser.

While you can stream certain types of locally-stored media files on your laptop by dropping it in a Chrome tab and broadcasting that tab, the device isn't otherwise designed for the easy playback of local media. Nor can it push content from other apps on your phone or tablet unless they have already built in support for Chromecast.

Related: YouTube's boost from a cable TV boss

That means whatever device you're using with Chromecast essentially becomes a remote control. You use the app for one of these services to find what you want to watch, and then Chromecast pulls the media directly from that service's cloud. The only thing you need the device for is playback control.

Having Chromecast pull directly from a service's cloud is a smarter, more efficient way of streaming in theory, but its success is contingent upon every content service going out of their way to support the feature. It's a risky strategy for Google (GOOG, Fortune 500).

And while we stream more content than ever and upload more of our own files to the cloud, most people still store a lot of photos and videos locally on their own devices. Failing to create a simple-to-use interface for streaming these files isn't just shortsighted. It's perplexing.

Related: Google's Chromecast vs. Apple's AirPlay

There are other issues too. Only a small number of TVs are capable of powering the Chromecast stick through their HDMI port alone. That means you still need an extra USB port or power outlet to deliver juice to the Chromecast.

Using Chromecast with an Android or Apple (AAPL, Fortune 500) iOS based phone or tablet is a must. There's no standalone remote or user interface for Chromecast. You could break out a laptop every time you want to watch something on Chromecast. But that's clunky.

Simply put, Google Chromecast is just too limited to appeal to the general population.

The device's biggest selling point is the Chrome streaming feature. In theory, any media your browser can handle, Chromecast (and by proxy, your TV) will be able to handle as well. The goal is to not have to worry about compatible file formats and app availability.

Still, it feels more like a temporary solution in the face of fickle restrictions by content owners. In practice, video quality is noticeably choppier than streaming directly from a service like Netflix. And there is a lag between the video and its accompanying audio.

Yes, it's nice that you can access the free version Hulu or login to HBO Go without much fuss. (HBO is owned by Time Warner (TWX, Fortune 500), the parent company of CNNMoney.) But why like this?

It's true that the existing crop of media streamers-- including ones powered by Google's existing software-- haven't proven to be the saviors of TV in the internet age. But Chromecast seems more like an apology for the previous shortcomings of the entire product category as opposed to an innovative way to seamlessly watch online content on a big screen.

It's hard to be too disappointed with a gadget that costs $35, but unless you really want a way to watch what's on your browser window on a TV, there are better options for a few extra dollars.

Furthermore, what this means for the future of Google's struggling, Android-based Google TV platform is anyone's guess. Chromecast essentially runs a stripped-down version of the Google TV software, but does not provide the support or on-screen programming guides that its more robust sibling does.

Google's official line is that they're excited about both devices and that they even want to integrate Chromecast into Google TV products

But if Chromecast does attract tons of third-party support from streaming services and proves commercially successful, there's almost no incentive for those services to develop a Google TV-specific app. They'll just tweak their existing mobile app to work with Chromecast.

Google also risks further alienating the hardware companies that manufacture its Google TV products, which includes the likes of Asus, LG, Sony (SNE) and Vizio. The introduction of Chromecast could eat into sales of Google TV products.

It's no secret that Google has ambitious plans for its own hardware business. So if Chromecast winds up being more than just a niche device for early adopters, it could make Google's partners even more hesitant to keep working with it.

First Published: July 31, 2013: 5:59 AM ET

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Parents, get ready for some tax-free shopping

NEW YORK (CNNMoney)

The tax savings could amount to anywhere from 4% to 7% on everything from crayons to computers.

That savings could come in handy. Economic uncertainty, unemployment and a recent surge in gas prices are forcing parents to focus on necessities this school year, says Matthew Shay, chief executive of the National Retail Federation. Still, families with school-aged children are expected to spend an average of $635 on apparel, shoes, supplies and electronics during this year's back-to-school shopping season, down from $688 last year, the industry trade group found.

Related: Watch out bullies, you're about to get fined

Before heading to the stores, shoppers in the states where these temporary breaks are being offered should research which items are tax exempt and the restrictions that apply, said Carol Kokinis-Graves, senior state tax analyst at CCH, a global provider of accounting and audit information.

In Florida, for example, clothing that costs less than $75 qualifies. But any item that costs more than that amount does not. Want a personal computer? You can get a tax break in Florida, but only if you opt for something that costs less than $750 -- not that MacBook Air you may have been eying.

If you gotta' have that top-end Mac, try Missouri or North Carolina; those two states are offering breaks on computers worth up to $3,500.

Every single one of the 17 states offering tax breaks include exemptions on clothing, but most of the states limit the exemption to items that cost less than $100. However, in Connecticut, clothes horses can spend up to $300 an item. In Louisiana and South Carolina, there is no limit.

Another big difference: In most states, the tax holiday lasts only for a couple of days, while in others it lasts a full week.

While these tax holidays sound like a shopper's dream, some groups don't think they are very effective.

Related: Are you paying the iTunes tax?

In a report released in July, the Tax Foundation found that the price limit imposed on items during sales tax holidays encourages consumers to purchase cheaper goods -- even if they would prefer a better quality item.

"If you raise a poster advertising 5% off, that's not going to get people through the doors," said Joseph Henchman, vice president for state projects at the Tax Foundation. "But if you raise a poster saying 'tax-free' that will get people through the doors."

States offering summertime sales-tax breaks

Alabama

August 2 - 4

Clothing worth $100 or less; computers and software worth less than $750; school supplies of $50 or less; and books priced at $30 or less.

Arkansas

August 3 - 4

Clothing worth $100 or less, school supplies.

Connecticut

August 18 - 24

Clothing and footwear worth $300 or less. Items that aren't exempt include athletic clothing or footwear, jewelry, handbags, luggage, umbrellas, wallets, watches or similar items.

Florida

August 2 - 4

Clothing worth $75 or less; school supplies of $15 or less per item; computers and accessories worth $750 or less. Exemption does not apply to sales made within theme parks, entertainment complexes or airports.

Georgia

August 9 - 10

Clothing and footwear worth $100 or less; personal computers worth less than $1,000; school supplies of $20 or less.

Iowa

August 2 - 3

Clothing and footwear worth $100 or less. Exemption does not include athletic clothing or footwear.

Louisiana

August 2 - 3

All items worth $2,500 or less are tax free, with the exemption of vehicles and meals. Does not apply to local taxes.

Maryland

August 11 - 17

Clothing and footwear worth $100 or less. Accessories not tax-exempt.

Mississippi

July 26 - 27

Clothing and footwear worth $100 or less.

Missouri

August 2 - 4

Clothing worth $100 or less, computers worth $3,500 or less, software worth $350 or less, and school supplies worth $50 or less per item.

New Mexico

August 2 - 4

Clothing and footwear worth $100 or less, personal computers worth less than $1,000, computer accessories worth $500 or less, book bags, backpacks, maps and globes worth $100 or less and calculators worth $200 or less.

North Carolina

August 2 - 4

Clothing worth $100 or less, computers worth $3,500 or less, computer supplies worth $250 or less, school supplies worth $100 or less. Does not apply to accessories, furniture luggage, DVD players, stereos, educational software and luggage.

Oklahoma

August 2 - 4

Clothing and footwear worth $100 or less. Does not apply to athletic clothing or footwear or accessories.

South Carolina

August 2 - 4

Clothing, accessories, footwear, school supplies, computers, printers, software, linens, towels and rugs.

Tennessee

August 2 - 4

Clothing and school supplies worth $100 or less; computers worth less than $1,500.

Texas

August 9 - 11

Clothing and footwear worth $100 or less, backpacks worth $100 or less.

Virginia

August 2 - 4

Clothing and footwear worth $100 or less, school supplies of $20 or less.

Source: Federation of Tax Administrators; CCH, a Wolters Kluwer business

First Published: August 1, 2013

First Published: July 31, 2013: 6:03 AM ET

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California city's drastic foreclosure remedy: Seizure

Richmond Mayor Gayle McLaughlin said the city is "stepping into the void with a local principal reduction program" after other attempts to stem foreclosures failed.

NEW YORK (CNNMoney)

As a first step, the San Francisco Bay city said it will work with an investment firm to try to purchase mortgages of underwater homeowners at a price well below their current balances. It would then try to get those loans restructured to make them affordable.

But if the holders of the loans, who are mostly investors, refuse to sell by Aug. 14, the city said it will invoke eminent domain to seize the mortgages so it has more control over the process of making them affordable.

Eminent domain is the legal principle that lets government entities purchase land or structures, usually from reluctant owners who don't want to sell. It is typically invoked for public uses such as parks, roads or utilities -- not mortgages.

In the case of Richmond, the city argues that eminent domain is in the public interest because it could let people stay in their homes and help keep neighborhoods, especially minority communities and low-income neighborhoods, from fraying.

"After years of waiting for a comprehensive fix, we're stepping into the void with a local principal reduction program," said Gayle McLaughlin, mayor of Richmond.

The idea is controversial and reflects the frustration, seven years after the housing market started to collapse, of homeowners and officials in areas that are still reeling.

The Richmond plan was proposed by a private backer, Mortgage Resolution Partners, which will find the money the city needs to buy the mortgages. It stands to profit by taking a cut when the loans are refinanced.

Related: Borrowers in Obama's housing program re-defaulting, watchdog says

There's no question the housing meltdown has thwacked Richmond.

The median home price peaked at about $460,000 in early 2006, according to real estate website Zillow. Today, it is $206,000.

That means a family that purchased at the top of the market could still owe twice the current value of its home.

The idea of invoking eminent domain has been considered but rejected by other localities, including Chicago and San Bernardino, another California city hit hard by the real estate collapse.

Related: 10 great foreclosure deals

Richmond's efforts are likely to draw court challenges from investors and others who hold the current mortgages and stand to lose financially, experts said.

And banks could be scared off lending to homeowners in Richmond in the future.

"Eminent domain refinancing may offer temporary benefits to underwater borrowers in specific markets, but there will be longer-term harm as lenders are likely to pull out of those markets and mortgage financing costs across the board are likely to rise," said Jaret Seiberg, a banking analyst at Guggenheim Partners.

Richmond homeowner Morris LeGrande, however, said the city is already paying a big price for the severely underwater mortgages.

Borrowers paying off bloated loans have less money to spend at businesses in town. And the homes lost to foreclosure can blight entire neighborhoods, lower property values for every homeowner and contribute to crime.

"We want the city to purchase the loans at fair market value so we can manage our lives more effectively and economically," he said.

First Published: July 30, 2013: 2:28 PM ET

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More ho-hum economic growth ahead

NEW YORK (CNNMoney)

Economists surveyed by CNNMoney are forecasting that growth slowed to 1.2% in the second quarter. That would be even worse than the already modest 1.8% gain in the first three months of the year.

Four of the 18 economists who responded expect growth to fall below 1%, while only two expect it to be faster than the first quarter's anemic gain.

That would make three straight quarters of what most would consider an economy performing below potential, despite a rebounding housing market. Worries about cutbacks in federal spending, known as the sequester, and higher taxes that went into effect at the start of the year are the biggest headwinds for the struggling economy, the survey showed.

"The economy has shown some animal spirits in housing and new car demand, but still faces headwinds, not the least of which is mandated spending cuts," said David Nice of Mesirow Financial.

But the news isn't all bad. The economists think better growth is ahead. For the full year, they expect growth of 2%, despite the sluggish first half, and 3% in 2014.

The report on second quarter growth, which will be released Wednesday, will also be the first to implement a new measure of the U.S. economy. The Commerce Department will now factor in additional services -- such as research and development and the production of artistic properties -- which should increase the size of the entire economy. The expanded methodology will apply to previous quarters, and is not likely to have a major effect on the rate of growth.

Related: Why the housing market could grow even if economy slows

The recovery in the long suffering housing market will be a major driver of better growth ahead. Fueled by record low mortgage rates and a drop in foreclosures, major housing indicators like home prices, home building and home sales have all been rebounding throughout 2013. The recent rise in mortgage rates might slow the pace of recovery, but not enough to kill off the rebound entirely, the economists said. And despite a 12.2% jump in home prices over the last 12 months, few of the respondents are worried about the threat of a new housing bubble.

"Home prices are recovering at a 'Goldilocks' pace that should enable the sector to extend its recovery out over many years," said Russell Price of Ameriprise Financial. "There is a very healthy dynamic in our view as it should enable the sector to avoid too rapid a rebound and thus the risk of another boom and bust."

The economists are a bit more bullish about Friday's report on job growth. They predict employers added 180,000 jobs in July, down only slightly from the 195,000 gain in June. They expect that to trim the unemployment rate to 7.5% from 7.6% in June.

First Published: July 30, 2013: 3:12 PM ET

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Government shutdown won't shut Obamacare: Report

A federal shutdown wouldn't stop Obamacare, report says.

WASHINGTON (CNNMoney)

The new health care law draws funding from sources that are not subject to the congressional budget process, according to the nonpartisan Congressional Research Service. Also, the revenue collected under Obamacare is considered to be part of a category that ensures the "safety of human life or the protection of property," which makes it immune to government shutdowns, the report said.

Related: Who loses out under Obamacare

The report is significant because Republican lawmakers have been talking about opposing any measure to keep government running, if it means also funding Obamacare.

The current bill funding the government runs out on Sept. 30.

The expectation is that Congress will do what it has done in recent years: pass a temporary funding bill by Sept. 30 to prevent a government shutdown on Oct. 1, the first day of fiscal 2014.

Some Republicans are demanding that the 2014 budget withhold funding for Obamacare. The Senate and President Obama would not agree to such a budget, which could lead to a government shutdown.

"We have the potential to show real leadership -- and stand together and actually defund (Obamacare)," said Texas Republican Sen. Ted Cruz. "Republicans will be blamed for a government shutdown. . . but I think (the House) should fund the entirety of the federal government -- except Obamacare."

However, the congressional report underscores that shutting down the government will do little to stop Obamacare.

The Affordable Care Act was passed in 2010, with the goal of expanding health care coverage and affordability to millions by various mechanisms, including subsidies, mandates and setting up health care exchanges for the uninsured.

Obama economy speeches come ahead of budget battle

Obamacare has lately been in the spotlight, as it gets closer to taking full effect. States are setting up health exchanges for people to buy insurance. The individual mandate, which requires taxpayers to buy insurance or pay a government fine, takes effect Jan. 1. The mandate forcing employers was delayed by a year to 2015, allowing businesses more time to provide their workers with health insurance.

Not all Republicans want to shut down the federal government over Obamacare.

Sen. Tom Coburn, an Oklahoma Republican said on Tuesday that while he wants to defund Obamacare, threatening a government shutdown isn't the best way to end Obamacare, citing the new congressional report.

"I praise my colleagues in what they're trying to do," Coburn said. "What we need to do is delay (Obamacare) and get it to a point where we can kill it."

President Obama on Tuesday criticized Republicans in Congress who would "hurt a fragile recovery by suggesting they wouldn't pay the very bills Congress rang up, and threaten to shut down the people's government if they can't shut down Obamacare."

--CNN's Ted Barrett and Deirdre Walsh contributed to this report.

First Published: July 30, 2013: 5:31 PM ET

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Loeb blasts Sony's 'bloated' entertainment division

Sony CEO Kazuo Hirai has said the company's entertainment division is off limits.

HONG KONG (CNNMoney)

Since May, the hedge fund investor has pressed Sony to spin off its entertainment division. The Japanese electronics giant has responded by indicating its movie and music business isn't going anywhere near an auction block at the moment.

Now, Loeb is increasing pressure on the company -- and he's not dancing around the key issues.

"Keeping entertainment underexposed, undervalued and underperforming is not a strategy for success," Loeb wrote in a July 29 letter to investors with his Third Point fund.

The letter says that profits from the division lag behind its competitors, a trend exacerbated by recent summer blockbuster films like After Earth and White House Down that "bombed spectacularly at the box office."

Loeb also issued a sharp critique of management in the entertainment division, saying the operation has a "famously bloated corporate structure, generous perk packages, high salaries for underperforming senior executives, and marketing budgets that do not seem to be in line with any sense of return on capital invested."

Sony won't realize its full potential unless it stops treating its entertainment division as a "red-headed stepchild," he said.

Related story: Nintendo's big problem

Third Point, as one of Sony's largest shareholders, has continued to raise its stake. In June, the fund boosted its holdings to about $1.4 billion.

Sony's earnings could benefit directly from a separation, as it "stands at the crossroads of compelling corporate opportunity and massive Japanese economic reform," Loeb wrote previously in a letter to the company. "Under Prime Minister Abe's leadership, Japan can regain its position as one of the world's preeminent economic powerhouses and manufacturing engines."

Related story: Why Dan Loeb loves Japan

Loeb has been vocal about his interest in Japan, telling investors that his firm is "extremely focused" on the country. At a hedge fund conference in May, Loeb said Japanese stocks were cheap despite recent strong gains.

Sony was noncommittal when asked for comment on Tuesday. The company said in a statement that it was "focused on creating shareholder value" while the board reviews Loeb's proposal, and "looks forward to a constructive dialogue with our shareholders."

Sony shares gained 3% in Tokyo trading and have surged 121% so far this year. The company will release its latest quarterly earnings report on Aug. 1.

-- CNN's Yoko Wakatsuki contributed reporting.

First Published: July 30, 2013: 4:52 AM ET

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Regulators accuse JPMorgan of manipulating electricity markets

In an official notice, the Federal Energy Regulatory Commission alleged that the bank had engaged in "eight manipulative bidding strategies" in California and Midwestern markets.

NEW YORK (CNNMoney)

In an official notice, the Federal Energy Regulatory Commission alleged that the bank had engaged in "eight manipulative bidding strategies" in California and Midwestern markets.

The strategies led to payments to JPMorgan "of tens of millions of dollars at rates far above market prices," according to the notice. JPMorgan is expected to pay a massive fine related to the allegations.

Related: Are big banks driving up commodity prices?

The strategies allegedly worked like this. In California, for example, the bank would bid to deliver electricity to a utility the next day at a low price of $30 per megawatt hour. When the next day came, JPMorgan would change its offer to a much higher price of $999 per megawatt hour, assuring the power did not get bought, according to the notice.

California ISO, the state's power-grid operator, would then have to compensate the bank for the cost of making the bid, under California's "make whole provision," which requires ratepayers to cover certain costs incurred by energy sellers.

JPMorgan employed a similar strategy in the Midwest, according to the notice.

JPMorgan and FERC both declined to comment.

FERC also recently fined British bank Barclays and Deutsche Bank for other improprieties involving the sale of power.

First Published: July 29, 2013: 6:40 PM ET

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Stocks: Looking to rebound after Monday's losses

Click chart for more premarket data.

NEW YORK (CNNMoney)

U.S. stock futures were edging slightly higher Tuesday, with both the S&P 500 and the Dow Jones industrial average in positive territory. The Nasdaq was up by roughly 0.2%.

U.S. investors will receive a variety of economic and corporate news Tuesday as they await this week's statement from the U.S. Federal Reserve and Friday's jobs report.

The S&P Case-Shiller index, which measures home prices in 20 major markets, will be released at 9 a.m. ET. And at 10 a.m., the Conference Board will release its monthly reading on consumer confidence.

Related: Fear & Greed Index

With earnings season in full swing, several companies will release quarterly results Tuesday, with Goodyear Tire (GT, Fortune 500) and Aetna (AET, Fortune 500) reporting ahead of the opening bell.

Sprint (S, Fortune 500) reported a loss for the quarter as it shut down its Nextel network and moved millions of subscribers to its Sprint platform. The loss comes even as the company boosted sales.

Shares in BP (BP) are slipping in London trading after its quarterly results missed market expectations. The company reported a drop in earnings due, in part, to lower oil prices and higher taxes. The oil company is also expecting to pay more in U.S. settlements related to the massive Gulf of Mexico oil spill in 2010.

Barclays (BCS) shares were down by roughly 5% in London after the bank revealed it will be raising $8.9 billion in a rights issue to meet capital requirements set out by regulators.

Related: BP fighting 'inflated' Gulf spill payouts

On Monday, all three indexes fell as investors reduced exposure to stocks ahead of this week's Fed meeting.

European markets were trading higher on Tuesday morning, even as banking shares were under pressure. Meanwhile, Asian markets bounced back from Monday's losses, with all major indexes closing with gains.

First Published: July 30, 2013: 5:29 AM ET

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Tax reform secrecy plan blasted

A 50-year cloak of confidentiality is "far longer than presidential records are sealed," 30 groups wrote, urging the Senate Finance Committee to make proposals public in real time.

NEW YORK (CNNMoney)

Thirty organizations urged the Senate Finance Committee in a letter to make all tax reform correspondence public in real time.

The committee has said that senators can propose which tax breaks they think should be retained without fear their views will be made public until Dec. 31, 2064.

A 50-year cloak of confidentiality is "far longer than presidential records are sealed," the groups said in their July 26 letter.

"[T]ransparency is essential for your final product to have credibility with the public rather than feed cynicism. Taxpayers across the United States have a right to know what their elected officials are advocating and what their justification," the letter said.

The letter was signed by Taxpayers for Common Sense, the Center for Effective Government, the American Sustainable Business Council and the Fund for Constitutional Government, among others.

Quiz: What do you really know about the tax code?

Christopher Bergin, president and publisher of Tax Analysts, which also signed the letter, put it more bluntly.

"[W]hile it may not be secret law, it gets a little close to making law in secret. I realize it may be a novel idea to argue that the people have the right to know what groups their lawmakers think should get favors from their tax laws, but it's a good idea," Bergin wrote in a blog post.

Some CNNMoney readers, reacting to news coverage last week, were not pleased.

"If a politician believes in a tax break they should have to stand for it publicly. If they can't do that, then they clearly shouldn't be supporting it to begin with," one reader wrote.

Others were more sympathetic to the idea that lawmakers might need some protection to discuss unpopular proposals, just not 50 years' worth.

"We are likely to get a better tax code out of something like this, but 50 years? Come on, it should be more like 12. You get two more terms without losing your job if you did something your [constituents] would've found distasteful ... not a life pardon," another wrote.

And not everyone is necessarily going to take advantage of the committee's offer for a half century of confidentiality.

Some lawmakers -- including retiring senator Jay D. Rockefeller, a Democrat from West Virginia, and Sen. Mike Enzi, a Republican from Wyoming -- have posted their recommendations on their own Web sites.

First Published: July 29, 2013: 1:23 PM ET

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Regulators accuse JPMorgan of manipulating electricity markets

In an official notice, the Federal Energy Regulatory Commission alleged that the bank had engaged in "eight manipulative bidding strategies" in California and Midwestern markets.

NEW YORK (CNNMoney)

In an official notice, the Federal Energy Regulatory Commission alleged that the bank had engaged in "eight manipulative bidding strategies" in California and Midwestern markets.

The strategies led to payments to JPMorgan "of tens of millions of dollars at rates far above market prices," according to the notice. JPMorgan is expected to pay a massive fine related to the allegations.

Related: Are big banks driving up commodity prices?

The strategies allegedly worked like this. In California, for example, the bank would bid to deliver electricity to a utility the next day at a low price of $30 per megawatt hour. When the next day came, JPMorgan would change its offer to a much higher price of $999 per megawatt hour, assuring the power did not get bought, according to the notice.

California ISO, the state's power-grid operator, would then have to compensate the bank for the cost of making the bid, under California's "make whole provision," which requires ratepayers to cover certain costs incurred by energy sellers.

JPMorgan employed a similar strategy in the Midwest, according to the notice.

JPMorgan and FERC both declined to comment.

FERC also recently fined British bank Barclays and Deutsche Bank for other improprieties involving the sale of power.

First Published: July 29, 2013: 6:40 PM ET

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CBS/Time Warner Cable talks turn bizarre

Summer hit "Under the Dome" is one of many shows some Time Warner Cable customers would lose access to if a deal isn't reached.

NEW YORK (CNNMoney)

Contract negotiations between CBS and Time Warner Cable continued into the early morning Tuesday, even as both companies issued threats and accused the other of being unreasonable.

The companies have been battling in recent weeks over the transmission fee that Time Warner Cable pays to run CBS-owned stations, including network affiliates in major cities.

Negotiations appeared to reach an impasse at midnight, when Time Warner Cable said it was pulling CBS (CBS, Fortune 500) off the air in New York City, Dallas, Los Angeles and other cities.

Both companies issued sharply-worded statements confirming the breakdown in negotiations, only to reverse course a few minutes later and say that negotiations were back on. Bemused Twitter users reported that CBS channels were indeed blacked out in certain markets, while others then reported that service had resumed.

"At the request of CBS, we have halted going dark on their channels," Time Warner Cable spokeswoman Maureen Huff said in a statement.

The deadline to complete negotiations has now been extended at least nine times since the former contract expired on June 30.

Should the channels go dark again, Time Warner Cable (TWC, Fortune 500) customers won't be able to view CBS programs, including hit shows like "NCIS," "The Big Bang Theory" and this summer's "Under the Dome."

The 3 million customers affected by these talks are mostly in New York, Los Angeles and Dallas, but subscribers in Chicago, Boston, Pittsburgh, Detroit and Denver are also at risk.

Time Warner Cable has claimed that CBS is demanding too high a rate -- 600% more than what the cable provider has to pay for the network's programming in other parts of the country. In those areas, Time Warner Cable negotiates with local CBS affiliates that are not owned outright by the network.

Related: The 6 longest TV blackout wars

Although TV networks tend to attract fewer viewers in the summer season, "Under the Dome" has topped the ratings list, attracting more viewers than any other show last Monday night.

CBS had been running TV commercials warning customers in the affected cities that "Time Warner Cable is threatening to hold your favorite shows hostage."

Time Warner Cable and CBS are very likely to reach a deal -- especially if the dispute threatens NFL broadcasts scheduled to air on CBS later this year. The question is whether consumers will be forced to endure a blackout.

"In the end, of course, an agreement will be reached," CBS acknowledged in a statement issued Tuesday.

-- CNNMoney's Katie Lobosco contributed to this report.

First Published: July 29, 2013: 5:38 PM ET

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Hottest trade on Wall Street: Detroit bonds

Detroit has roughly $8.3 billion in tradeable bonds.

NEW YORK (CNNMoney)

Detroit's bonds have become the hottest trade on Wall Street, since the Motor City filed for the largest municipal bankruptcy two week ago.

Prior to the bankruptcy filing, Detroit's emergency manager, Kevin Orr, offered to pay bondholders roughly 10 cents on the dollar to help keep the city going.

That would results in huge losses for the city's original creditors. But hedge funds, particularly those that invest in troubled or bankrupt companies, think these bonds will turn out to be lucrative in the long run.

The problem is there aren't that many available. Few have traded, and the waiting lists are long.

Related: Detroit: After bankruptcy, then what?

"The biggest problem we have is how to allocate bonds," said a trader on a major bank's municipal desk. "Only major customers are getting the opportunity to buy."

Detroit has $18 billion of liabilities, but only about $8.2 billion in bonds you can trade. The rest of the city's liabilities are tied to unfunded pensions and retirees' healthcare costs.

Of the bonds, there are $1.4 billion that have funded some of Detroit's pension costs, and those are among the most coveted by hedge funds.

These taxable bonds, known as pension obligation certificates, were issued and sold to European banks in 2005 to help fund the city's pensions. It was an unusual move by Detroit, because cities typically use local revenue to fund these obligations.

Now, hedge funds are just waiting for the banks to sell. Given Detroit's financial mess, that could happen in the next month or so as banks get skittish about keeping that debt on their books, several market experts say.

Many funds are willing to buy small amounts just to get their foot in the door.

Shortly after Detroit filed for bankruptcy, several hedge funds managed to buy $5 million of pension bonds for 41 cents on the dollar. Those were some of the only pension obligation bonds available.

Related: Michigan court clears way for Detroit bankruptcy to proceed

Hedge funds are also eyeing about $1 billion in general obligation bonds backed by Detroit. More of these have changed hands, but also in small increments. One hedge fund manager said he was able to procure $30,000 of general obligation bonds at 75 cents on the dollar from a dentist in Milwaukee. The fund was hoping to buy several millions of dollars' worth, but so far, that's all they can get their hands on.

Most of Detroit's general obligation bonds are owned by retail investors. Since the bankruptcy, these bonds have been selling at between 69 cents and 92 cents on the dollar.

While Detroit's full faith and credit seems questionable right now, the city's bonds are backed by insurance firms, including Ambac (AMBC), Assured Guaranty (AGO) and the national finance arm of MBIA (MBI). Some investors are betting that these insurers will continue to pay Detroit's bondholders for now.

Other bondholders think Orr's initial projection for what they could recover was overly pessimistic. There's some speculation that he overstated the unfunded pension liabilities. Some hedge fund managers also think a portion of healthcare costs for Detroit's city workers will be able to be deferred under Obamacare.

Betting on Detroit's bonds is still a big gamble. There have been few municipal bankruptcies in the United States, and most have been small.

Still, Jim Spiotto, a partner at law firm Chapman and Cutler and a veteran of several municipal bankruptcies, said that overall, bondholders have recovered more in municipal bankruptcies than corporate ones.

But he cautioned investors should be wary of Detroit, because it might not follow suit. "Detroit has a long history of disappointing people. Detroit could very well be an aberration from other municipal bankruptcies."

First Published: July 29, 2013: 6:24 AM ET

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Why we're working less than our parents did

NEW YORK (CNNMoney)

But as a whole, Americans are working far less now than they did a generation ago, and have more leisure time than ever.

The average work week has gone from over 38 hours in 1964 to under 34 hours in 2013 -- a drop of nearly 12%, according to the Bureau of Labor Statistics.

A big reason for the decline is the growth in part-time jobs, which have surged as more woman entered the workforce and the number of restaurants, shopping malls, and other establishments that employ part-time workers have exploded.

Another explanation is that people tend to stay in school longer and retire earlier, clocking fewer hours over their lifetime. Men in their 50s, for example, have been retiring or entering semi-retirement earlier and in greater numbers than those in previous generations, according to John Robinson, a sociology professor at the University of Maryland, and are partly responsible for driving down overall work hours per week.

And we're working a lot less than our grandparents, great grandparents and earlier generations. The average work week for a manufacturing employee in the 1860s was 62 hours, according to a paper from Robert Whaples, an economist at Wake Forest University.

In the 1600s, there were actually laws requiring a minimum work day, wrote Whaples. In parts of the country, most people had to work sun up to sundown -- part of the Puritanical "idle-hands-are-the-devil's-workshop" ethos.

Related: 10 hardest working countries

It wasn't easy to change that culture. Political battles that led to less religious influence over the nation's laws almost sparked a civil war. A century later, labor activists fought for decades to get the 40 hour work week.

Coinciding with the shorter work week is a rise in leisure time. Americans reported having just under 35 hours a week of "free time" in 1965 -- that's time not spent at work, doing housework, eating, sleeping or doing other activities necessary for day-to-day survival, according to research by Robinson, who directs the American's Use of Time Project at the University of Maryland.

By 2012, it had reached 42, according to the Bureau of Labor Statistics.

"People feel less rushed than they did even a decade ago," said Robinson.

And thanks to modern technology, the time we spend on housework and cooking is declining.

Just what are we doing with all these extra hours? Watching more TV, mostly.

Related: World's shortest work weeks

But technology certainly hasn't made all our lives easier.

Some people, especially those at the higher end of the earnings spectrum, report working more hours than they want to. This is particularly true for professionals who are now tied to their work by smartphones and email.

Also, many Americans are working part time not because they want to, but because their jobs have been replaced by automation, outsourced, or otherwise eliminated.

"The promise of technology is that we'd all get to work less," said Linda Barrington, head of the Institute for Compensation Studies at Cornell University's school of Industrial and Labor Relations. "But it's playing out differently for different people at different income levels."

Barrington believes the Affordable Care Act - a.k.a. Obamacare -- is the first real law intended to deal with some of the disruption of a changing workplace, as more Americans enter freelance or part-time positions that don't provide health insurance.

As happened during the industrial revolution, she feels other measures will need to take shape to make the technological revolution more beneficial to all workers.

"How are we going to change the rules again?" she asked.

First Published: July 29, 2013: 6:28 AM ET

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The secret to taking a real vacation

NEW YORK (CNNMoney)

According to a survey from American Express OPEN, just 49% of entrepreneurs planned to take vacations this summer, down from 54% last summer and 67% in 2006.

But it doesn't have to be that hard. Josh Golden, founder and CEO of Table XI Partners, found the secret to going off the grid: Delegation.

"Delegating takes practice," says Golden. "But every time I delegate something new to someone else in the firm, I wish I had done it sooner."

Letting go of the day-to-day details -- and trusting that employees can handle whatever pops up -- is one of those things business owners know they ought to do, but find incredibly difficult in practice.

Golden launched his Chicago web-development firm in 2002 with just a part-time assistant. Like many entrepreneurs, at first he did everything from strategic planning to emptying the wastebaskets -- but he quickly learned that wouldn't work for long.

"As you grow, you just can't do everything anymore," said Golden, whose firm now has more than 30 employees.

Related: 10 hardest working countries

The first step is analyzing your own strengths and weaknesses.

"It takes some honest introspection to identify the one or two things you truly are the best at," Golden said. "The goal is to spend 90% of your time on those things, while you hand over to others the tasks where you aren't really adding value."

Learning to delegate also means shushing your inner perfectionist.

"It took me a while to come to terms with the fact that other people can do perfectly acceptable work without being as passionate about the business as I am," Golden said. "And there are plenty of tasks in any company where 'good enough' really is just fine."

Related: How startups can get cheap office space

Carving out time for a vacation also means more than just delegating while you're gone -- you've also got to make it part of your business plan. Golden, whose strongest skill is marketing, was still running Table XI's accounting and finance until last fall, when he finally handed over the number-crunching to a newly-hired finance director.

To get her up to speed, he used a collaborative method, common in software development, called pairing. "It's like an apprenticeship. You train someone over time, sharing knowledge until that person is independent in that role," he said. "The main thing is to resist the impulse to helicopter in and do everything yourself."

Golden's work paid off. In June, he and his wife spent nine days in Waikiki, Kauai and Honolulu. Was he worried about the company? Not quite. "I could have stayed away for another week or even two," he said.

First Published: July 29, 2013: 6:32 AM ET

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Omnicom, Publicis to form world's largest ad agency

NEW YORK (CNNMoney)

The newly combined agency, Publicis Omnicom Group, would have a stock market value of $35.1 billion and 130,000 employees worldwide.

Publicis, based in Paris, and Omnicom (OMC, Fortune 500), based in New York, together brought in revenue totaling $22.7 billion last year.

Chief executives Maurice Lévy of Publicis and John Wren of Omnicom will act as co-CEOs for the next 30 months, after which Lévy will become non-executive chairman and Wren the CEO.

Related: JPMorgan to exit commodities business.

Shareholders will each hold about 50% of the equity of the agency, which is expected to be listed on the NYSE and Euronext Paris under the symbol OMC. It will be traded on the S&P 500 and CAC 40.

Publicis Groupe shareholders will receive one newly-issued ordinary share of the agency for each Pubicis share they already own, with a special dividend of €1.00 per share.

Omnicom shareholders will get .813 newly-issued shares, with a special dividend of $2 per share.

The transaction is subject to approval by shareholders of both companies as well as government regulators. It is expected to close in the fourth quarter of 2013 or the first quarter of 2014.

First Published: July 28, 2013: 10:44 AM ET

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Stocks: All eyes on jobs

Click the chart for more stock market data.

NEW YORK (CNNMoney)

A look at labor: Several key reports on the nation's employment picture are due out throughout the week, including ADP's snapshot on employee payrolls and Challenger's job cuts.

The main event comes Friday, when the labor department releases its monthly jobs report and unemployment rate.

Economists surveyed by Briefing.com are expecting the number of nonfarm payrolls to have decreased to 175,000 in July from 195,000 a month earlier, and the unemployment rate to fall to 7.5% from 7.6%.

Related: The government wants SAC Capital's billions

The numbers are likely to be scrutinized by investors even more closely than usual, coming close on the heels of signals from the Federal Reserve that it will start pulling back on stimulus measures if the economy improves. Recently, Federal Reserve chairman Ben Bernanke has said the central bank could start tapering its bond purchases by the end of the year.

Other economic news: Beyond the jobs report, investors will digest an advance estimate on second quarter gross domestic product, which is due out Wednesday, as is the Federal Open Market Committee's decision on interest rates.

Auto sales, consumer confidence, the Case-Shiller 20 city index, pending home sales, and personal income and spending are also on tap.

More earnings: A few major companies are also set to report earnings this week, including Herbalife (HLF), Sprint (JZK) and Exxon Mobil. (XOM, Fortune 500)

Last week, the Dow Jones Industrial Average and the Nasdaq ended higher, while the S&P 500 was little changed.

First Published: July 28, 2013: 11:57 AM ET

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China and European Union strike deal on solar panels

China and the EU have reached a deal over solar panels.

HONG KONG (CNNMoney)

The deal, reached after weeks of negotiations, will allow Chinese solar panel producers to export their goods to Europe, provided they offer the products above a minimum price. Chinese companies that agree to the terms will avoid the severe tariffs that had been implemented by the EU.

EU Trade Commissioner Karel De Gucht praised the agreement as the solution that "both the EU and China were looking for."

"We have found an amicable solution that will result in a new equilibrium on the European solar panel market at a sustainable price level," he said.

The deal is not likely to please all parties. While the European Commission has not announced the full terms, media reports indicate that the minimum price for Chinese panels has been set at 74 U.S. cents per watt -- a much lower price than had been sought by European manufacturers.

De Gucht, the EU trade chief, is bound to face questions from producers over the price minimum. He must also move to patch up fissures between EU member countries -- some of which had publicly questioned the wisdom of taking China to task over solar panels.

The agreement still needs approval from the European Commission.

The deal should cool tensions between China and the EU, which had been engaged in tit-for-tat retaliatory actions that raised the specter of a trade war.

Related story: China and Europe risk trade war

In recent months, China had launched investigations into European wine and chemical producers. The EU, meanwhile, said in May that it had enough evidence to begin an investigation into Chinese telecoms.

A full-blown trade spat would have resulted in profound consequences for both economies. China is the EU's second biggest trading partner behind the United States, and the EU is China's biggest market. Trade in goods and services between the two totaled nearly 480 billion euros ($638 billion) last year.

The solar panel issue had been by far the most contentious dispute, covering Chinese exports worth about 21 billion euros ($28 billion).

Analysts will now looking for concrete signs that the relationship is on the mend. It's possible, for example, that China will halt its investigation into European wine prices.

Related story: China, OPEC and the future of energy

The trade spat between China and the EU was playing out against an evolving trade landscape, with China, the United States and other countries jockeying for power in Asia.

A slew of trade agreements are currently being negotiated, with the United States working toward the Trans-Pacific Partnership, a pact that many analysts in China view as a hedge against growing Chinese influence.

At the same time, China is pursuing its own objectives and increasing its engagement with international trade arbiters.

First Published: July 29, 2013: 12:35 AM ET

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Starbucks sees big growth in China

Starbucks is opening more stores in inland Chinese cities, such as this one in Chengdu, Sichuan Province in Southwest China.

NEW YORK (CNNMoney)

According to its latest quarterly report, Starbucks (SBUX, Fortune 500) saw a 30% year-over-year jump in revenues from its Asia-Pacific region, lifted by outstanding sales in China.

"The very strong sales volumes prove that the coffee concept can succeed in traditional tea-drinking countries," said R J Hottovy, director of consumer equity research at Morningstar, Inc. "It's resonating very well with [inland] cities."

Starbucks' solid sales growth in the region was driven by the 500 new stores it opened in China last year, and its Chinese expansion plans aren't slowing down.

The Seattle-based coffee giant said it plans to open its thousandth store in China by the end the year. In addition to already being in major cities like Beijing and Shanghai, the company says its stores will have penetrated lesser-known cities. By 2014, Starbucks said China will surpass Canada to become the second largest market, after the United States.

Related: Starbucks' caffeine-fueled expansion

In the last five years, overall retail coffee sales in China climbed by 10%, beating growth in Hong Kong, Japan and the 3% global average, according to data from research company Euromonitor International.

Starbucks said its marketing strategy in China is similar to that of its Western markets. It continues to focus on its core food and beverage products while also offering other locally oriented choices.

"The demographics they are targeting are younger and more affluent groups," Hottovy said.

Starbucks opened its first store in Taipei in 1998, followed by its first mainland China store in Beijing in 1999. But the coffee shop market is beginning to heat up. "Increasing competition will be the most pressing issue as more Western coffee brands enter the Chinese market," he said.

In 2012, an average Chinese person consumed about two cups of coffee per year. That's a far cry from the global average of 134 cups a year, according to Euromonitor. Coffee has less than 1% of the Chinese hot-drink market share. By contrast, tea makes up 54% of the market.

"It's still too early to say that coffee is going to replace tea, or that the Chinese flavor profile is changing," said Dana LaMendola, analyst of hot drinks at Euromonitor.

First Published: July 26, 2013: 6:24 PM ET

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The government wants SAC Capital's billions

Steven Cohen's hedge fund SAC Capital was indicted for criminal insider trading.

NEW YORK (CNNMoney)

The U.S. Attorney for Southern District of New York's filing Thursday of civil and criminal charges against Cohen's hedge fund opens the door for the government to seek significant penalties.

"A criminal conviction would forever taint SAC and Steven Cohen, but ultimately the big financial penalties could come from the civil case," said John Coffee, a professor of securities law at Columbia University.

So far Cohen has escaped criminal charges and, as of now, faces no possibility of jail time.

The real penalty now could be a financial blow to the hedge fund manager, whose personal fortune is estimated at roughly $9 billion.

SAC Capital at its height had $15 billion in assets under management. This year, as the government's investigation expanded, up to $5 billion has been withdrawn from the firm, according to published reports. The majority of the firm's money comes from Cohen.

Several securities lawyers said the scope of the government's civil indictment indicate that prosecutors might try to go after all of the firm's assets.

Related: SAC indictment depicts culture of law-breaking

The government gets to that demand by painting a picture of rampant insider trading at a fund where "hundreds of millions of illegal profits" from insider trading were "commingled" with legitimate profits. The government is seeking not just the illegal profits but even legal profits that may have been generated from that money.

The 40-page civil indictment outlines how these profits infiltrate every level of the firm.

"I don't know how easy it will be to prove, but it may be frightening enough to get SAC to seek a settlement," said Coffee.

On Friday, SAC Capital's lawyers pleaded not guilty to the federal criminal charges against the hedge fund. SAC Capital said Thursday that it plans to continue to operate as it works through these matters.

Both SAC and Cohen face fines from several different lawsuits, but the civil penalties sought by the U.S. Attorney's Office are expected to be steepest. The government said the actual figure will be determined at trial, and U.S. Attorney Preet Bharara declined to comment on possible penalties during a news conference Thursday.

Related: Not guilty plea entered by SAC Capital

The government can also seek penalties from its criminal case, but the maximum penalty for each count of securities fraud is $25 million. SAC has been indicted on four counts of securities fraud.

The hedge fund was also indicted on a charge of wire fraud. In that case, the government can seek twice the gains or losses generated from illegal trades.

The indictment only specifies profits from one set of trades in the pharmaceutical companies Elan (ELN) and Wyeth in 2008 and 2009. The profit from those trades was approximately $275 million.

In a separate case against Cohen, the SEC is seeking financial penalties for what it says is a failure to supervise employees engaged in insider trading. Coffee estimates that any penalties from the SEC case would be smaller than those possible in the U.S. Attorney's case.

The SEC has already extracted one penalty from SAC. In March, the firm paid $615 million to the agency to settle insider trading charges.

Bharara has said that the government wants to extract meaningful penalties so this case and other insider trading cases can have a deterrent effect.

First Published: July 26, 2013: 4:27 PM ET

17.42 | 0 komentar | Read More

JPMorgan to exit commodities businesses

NEW YORK (CNNMoney)

The announcement comes as the bank reportedly nears a settlement with the U.S. government over the manipulation of electricity markets in California.

JPMorgan (JPM, Fortune 500)said it "is pursuing strategic alternatives for its physical commodities business...including, but not limited to: a sale, spin off or strategic partnership."

The move will not affect the bank's trading activities, such as the buying or selling of futures contracts.

Earlier this week, the Senate held a hearing on bank ownership of physical commodities, during which several witnesses said involvement from the big banks is dangerous for the financial system and may be driving up prices for consumers.

The hearing followed a story in the New York Times on Sunday alleging Goldman Sachs (GS, Fortune 500) was stockpiling aluminum in Detroit, leading to higher prices for aluminum products like soda cans and cars.

People familiar with JPMorgan's involvement in California's electricity markets say the bank would bid to deliver electricity to a utility on a future day, and then raise the price, ensuring the power would not get bought.

Consumers would then have to compensate the bank for the cost of making the bid, under California's "make whole provision," which requires ratepayers to cover certain costs incurred by energy sellers.

It's not clear how JPMorgan made money on this arrangement, or if it was technically legal.

The government agency charged with policing electricity markets -- the Federal Energy Regulatory Commission -- and JPMorgan have declined to comment on the case.

Barclays and Deutsche Bank (DB) have also been recently fined by the government for improper electricity trading.

First Published: July 26, 2013: 5:51 PM ET

17.42 | 0 komentar | Read More

The government wants SAC Capital's billions

Steven Cohen's hedge fund SAC Capital was indicted for criminal insider trading.

NEW YORK (CNNMoney)

The U.S. Attorney for Southern District of New York's filing Thursday of civil and criminal charges against Cohen's hedge fund opens the door for the government to seek significant penalties.

"A criminal conviction would forever taint SAC and Steven Cohen, but ultimately the big financial penalties could come from the civil case," said John Coffee, a professor of securities law at Columbia University.

So far Cohen has escaped criminal charges and, as of now, faces no possibility of jail time.

The real penalty now could be a financial blow to the hedge fund manager, whose personal fortune is estimated at roughly $9 billion.

SAC Capital at its height had $15 billion in assets under management. This year, as the government's investigation expanded, up to $5 billion has been withdrawn from the firm, according to published reports. The majority of the firm's money comes from Cohen.

Several securities lawyers said the scope of the government's civil indictment indicate that prosecutors might try to go after all of the firm's assets.

Related: SAC indictment depicts culture of law-breaking

The government gets to that demand by painting a picture of rampant insider trading at a fund where "hundreds of millions of illegal profits" from insider trading were "commingled" with legitimate profits. The government is seeking not just the illegal profits but even legal profits that may have been generated from that money.

The 40-page civil indictment outlines how these profits infiltrate every level of the firm.

"I don't know how easy it will be to prove, but it may be frightening enough to get SAC to seek a settlement," said Coffee.

On Friday, SAC Capital's lawyers pleaded not guilty to the federal criminal charges against the hedge fund. SAC Capital said Thursday that it plans to continue to operate as it works through these matters.

Both SAC and Cohen face fines from several different lawsuits, but the civil penalties sought by the U.S. Attorney's Office are expected to be steepest. The government said the actual figure will be determined at trial, and U.S. Attorney Preet Bharara declined to comment on possible penalties during a news conference Thursday.

Related: Not guilty plea entered by SAC Capital

The government can also seek penalties from its criminal case, but the maximum penalty for each count of securities fraud is $25 million. SAC has been indicted on four counts of securities fraud.

The hedge fund was also indicted on a charge of wire fraud. In that case, the government can seek twice the gains or losses generated from illegal trades.

The indictment only specifies profits from one set of trades in the pharmaceutical companies Elan (ELN) and Wyeth in 2008 and 2009. The profit from those trades was approximately $275 million.

In a separate case against Cohen, the SEC is seeking financial penalties for what it says is a failure to supervise employees engaged in insider trading. Coffee estimates that any penalties from the SEC case would be smaller than those possible in the U.S. Attorney's case.

The SEC has already extracted one penalty from SAC. In March, the firm paid $615 million to the agency to settle insider trading charges.

Bharara has said that the government wants to extract meaningful penalties so this case and other insider trading cases can have a deterrent effect.

First Published: July 26, 2013: 4:27 PM ET

15.31 | 0 komentar | Read More

JPMorgan to exit commodities businesses

NEW YORK (CNNMoney)

The announcement comes as the bank reportedly nears a settlement with the U.S. government over the manipulation of electricity markets in California.

JPMorgan (JPM, Fortune 500)said it "is pursuing strategic alternatives for its physical commodities business...including, but not limited to: a sale, spin off or strategic partnership."

The move will not affect the bank's trading activities, such as the buying or selling of futures contracts.

Earlier this week, the Senate held a hearing on bank ownership of physical commodities, during which several witnesses said involvement from the big banks is dangerous for the financial system and may be driving up prices for consumers.

The hearing followed a story in the New York Times on Sunday alleging Goldman Sachs (GS, Fortune 500) was stockpiling aluminum in Detroit, leading to higher prices for aluminum products like soda cans and cars.

People familiar with JPMorgan's involvement in California's electricity markets say the bank would bid to deliver electricity to a utility on a future day, and then raise the price, ensuring the power would not get bought.

Consumers would then have to compensate the bank for the cost of making the bid, under California's "make whole provision," which requires ratepayers to cover certain costs incurred by energy sellers.

It's not clear how JPMorgan made money on this arrangement, or if it was technically legal.

The government agency charged with policing electricity markets -- the Federal Energy Regulatory Commission -- and JPMorgan have declined to comment on the case.

Barclays and Deutsche Bank (DB) have also been recently fined by the government for improper electricity trading.

First Published: July 26, 2013: 5:51 PM ET

15.31 | 0 komentar | Read More

Starbucks sees big growth in China

Starbucks is opening more stores in inland Chinese cities, such as this one in Chengdu, Sichuan Province in Southwest China.

NEW YORK (CNNMoney)

According to its latest quarterly report, Starbucks (SBUX, Fortune 500) saw a 30% year-over-year jump in revenues from its Asia-Pacific region, lifted by outstanding sales in China.

"The very strong sales volumes prove that the coffee concept can succeed in traditional tea-drinking countries," said R J Hottovy, director of consumer equity research at Morningstar, Inc. "It's resonating very well with [inland] cities."

Starbucks' solid sales growth in the region was driven by the 500 new stores it opened in China last year, and its Chinese expansion plans aren't slowing down.

The Seattle-based coffee giant said it plans to open its thousandth store in China by the end the year. In addition to already being in major cities like Beijing and Shanghai, the company says its stores will have penetrated lesser-known cities. By 2014, Starbucks said China will surpass Canada to become the second largest market, after the United States.

Related: Starbucks' caffeine-fueled expansion

In the last five years, overall retail coffee sales in China climbed by 10%, beating growth in Hong Kong, Japan and the 3% global average, according to data from research company Euromonitor International.

Starbucks said its marketing strategy in China is similar to that of its Western markets. It continues to focus on its core food and beverage products while also offering other locally oriented choices.

"The demographics they are targeting are younger and more affluent groups," Hottovy said.

Starbucks opened its first store in Taipei in 1998, followed by its first mainland China store in Beijing in 1999. But the coffee shop market is beginning to heat up. "Increasing competition will be the most pressing issue as more Western coffee brands enter the Chinese market," he said.

In 2012, an average Chinese person consumed about two cups of coffee per year. That's a far cry from the global average of 134 cups a year, according to Euromonitor. Coffee has less than 1% of the Chinese hot-drink market share. By contrast, tea makes up 54% of the market.

"It's still too early to say that coffee is going to replace tea, or that the Chinese flavor profile is changing," said Dana LaMendola, analyst of hot drinks at Euromonitor.

First Published: July 26, 2013: 6:24 PM ET

15.31 | 0 komentar | Read More

The government wants SAC Capital's billions

Steven Cohen's hedge fund SAC Capital was indicted for criminal insider trading.

NEW YORK (CNNMoney)

The U.S. Attorney for Southern District of New York's filing Thursday of civil and criminal charges against Cohen's hedge fund opens the door for the government to seek significant penalties.

"A criminal conviction would forever taint SAC and Steven Cohen, but ultimately the big financial penalties could come from the civil case," said John Coffee, a professor of securities law at Columbia University.

So far Cohen has escaped criminal charges and, as of now, faces no possibility of jail time.

The real penalty now could be a financial blow to the hedge fund manager, whose personal fortune is estimated at roughly $9 billion.

SAC Capital at its height had $15 billion in assets under management. This year, as the government's investigation expanded, up to $5 billion has been withdrawn from the firm, according to published reports. The majority of the firm's money comes from Cohen.

Several securities lawyers said the scope of the government's civil indictment indicate that prosecutors might try to go after all of the firm's assets.

Related: SAC indictment depicts culture of law-breaking

The government gets to that demand by painting a picture of rampant insider trading at a fund where "hundreds of millions of illegal profits" from insider trading were "commingled" with legitimate profits. The government is seeking not just the illegal profits but even legal profits that may have been generated from that money.

The 40-page civil indictment outlines how these profits infiltrate every level of the firm.

"I don't know how easy it will be to prove, but it may be frightening enough to get SAC to seek a settlement," said Coffee.

On Friday, SAC Capital's lawyers pleaded not guilty to the federal criminal charges against the hedge fund. SAC Capital said Thursday that it plans to continue to operate as it works through these matters.

Both SAC and Cohen face fines from several different lawsuits, but the civil penalties sought by the U.S. Attorney's Office are expected to be steepest. The government said the actual figure will be determined at trial, and U.S. Attorney Preet Bharara declined to comment on possible penalties during a news conference Thursday.

Related: Not guilty plea entered by SAC Capital

The government can also seek penalties from its criminal case, but the maximum penalty for each count of securities fraud is $25 million. SAC has been indicted on four counts of securities fraud.

The hedge fund was also indicted on a charge of wire fraud. In that case, the government can seek twice the gains or losses generated from illegal trades.

The indictment only specifies profits from one set of trades in the pharmaceutical companies Elan (ELN) and Wyeth in 2008 and 2009. The profit from those trades was approximately $275 million.

In a separate case against Cohen, the SEC is seeking financial penalties for what it says is a failure to supervise employees engaged in insider trading. Coffee estimates that any penalties from the SEC case would be smaller than those possible in the U.S. Attorney's case.

The SEC has already extracted one penalty from SAC. In March, the firm paid $615 million to the agency to settle insider trading charges.

Bharara has said that the government wants to extract meaningful penalties so this case and other insider trading cases can have a deterrent effect.

First Published: July 26, 2013: 4:27 PM ET

17.42 | 0 komentar | Read More

JPMorgan to exit commodities businesses

NEW YORK (CNNMoney)

The announcement comes as the bank reportedly nears a settlement with the U.S. government over the manipulation of electricity markets in California.

JPMorgan (JPM, Fortune 500)said it "is pursuing strategic alternatives for its physical commodities business...including, but not limited to: a sale, spin off or strategic partnership."

The move will not affect the bank's trading activities, such as the buying or selling of futures contracts.

Earlier this week, the Senate held a hearing on bank ownership of physical commodities, during which several witnesses said involvement from the big banks is dangerous for the financial system and may be driving up prices for consumers.

The hearing followed a story in the New York Times on Sunday alleging Goldman Sachs (GS, Fortune 500) was stockpiling aluminum in Detroit, leading to higher prices for aluminum products like soda cans and cars.

People familiar with JPMorgan's involvement in California's electricity markets say the bank would bid to deliver electricity to a utility on a future day, and then raise the price, ensuring the power would not get bought.

Consumers would then have to compensate the bank for the cost of making the bid, under California's "make whole provision," which requires ratepayers to cover certain costs incurred by energy sellers.

It's not clear how JPMorgan made money on this arrangement, or if it was technically legal.

The government agency charged with policing electricity markets -- the Federal Energy Regulatory Commission -- and JPMorgan have declined to comment on the case.

Barclays and Deutsche Bank (DB) have also been recently fined by the government for improper electricity trading.

First Published: July 26, 2013: 5:51 PM ET

17.42 | 0 komentar | Read More

Starbucks sees big growth in China

Starbucks is opening more stores in inland Chinese cities, such as this one in Chengdu, Sichuan Province in Southwest China.

NEW YORK (CNNMoney)

According to its latest quarterly report, Starbucks (SBUX, Fortune 500) saw a 30% year-over-year jump in revenues from its Asia-Pacific region, lifted by outstanding sales in China.

"The very strong sales volumes prove that the coffee concept can succeed in traditional tea-drinking countries," said R J Hottovy, director of consumer equity research at Morningstar, Inc. "It's resonating very well with [inland] cities."

Starbucks' solid sales growth in the region was driven by the 500 new stores it opened in China last year, and its Chinese expansion plans aren't slowing down.

The Seattle-based coffee giant said it plans to open its thousandth store in China by the end the year. In addition to already being in major cities like Beijing and Shanghai, the company says its stores will have penetrated lesser-known cities. By 2014, Starbucks said China will surpass Canada to become the second largest market, after the United States.

Related: Starbucks' caffeine-fueled expansion

In the last five years, overall retail coffee sales in China climbed by 10%, beating growth in Hong Kong, Japan and the 3% global average, according to data from research company Euromonitor International.

Starbucks said its marketing strategy in China is similar to that of its Western markets. It continues to focus on its core food and beverage products while also offering other locally oriented choices.

"The demographics they are targeting are younger and more affluent groups," Hottovy said.

Starbucks opened its first store in Taipei in 1998, followed by its first mainland China store in Beijing in 1999. But the coffee shop market is beginning to heat up. "Increasing competition will be the most pressing issue as more Western coffee brands enter the Chinese market," he said.

In 2012, an average Chinese person consumed about two cups of coffee per year. That's a far cry from the global average of 134 cups a year, according to Euromonitor. Coffee has less than 1% of the Chinese hot-drink market share. By contrast, tea makes up 54% of the market.

"It's still too early to say that coffee is going to replace tea, or that the Chinese flavor profile is changing," said Dana LaMendola, analyst of hot drinks at Euromonitor.

First Published: July 26, 2013: 6:24 PM ET

17.42 | 0 komentar | Read More

The government wants SAC Capital's billions

Steven Cohen's hedge fund SAC Capital was indicted for criminal insider trading.

NEW YORK (CNNMoney)

The U.S. Attorney for Southern District of New York's filing Thursday of civil and criminal charges against Cohen's hedge fund opens the door for the government to seek significant penalties.

"A criminal conviction would forever taint SAC and Steven Cohen, but ultimately the big financial penalties could come from the civil case," said John Coffee, a professor of securities law at Columbia University.

So far Cohen has escaped criminal charges and, as of now, faces no possibility of jail time.

The real penalty now could be a financial blow to the hedge fund manager, whose personal fortune is estimated at roughly $9 billion.

SAC Capital at its height had $15 billion in assets under management. This year, as the government's investigation expanded, up to $5 billion has been withdrawn from the firm, according to published reports. The majority of the firm's money comes from Cohen.

Several securities lawyers said the scope of the government's civil indictment indicate that prosecutors might try to go after all of the firm's assets.

Related: SAC indictment depicts culture of law-breaking

The government gets to that demand by painting a picture of rampant insider trading at a fund where "hundreds of millions of illegal profits" from insider trading were "commingled" with legitimate profits. The government is seeking not just the illegal profits but even legal profits that may have been generated from that money.

The 40-page civil indictment outlines how these profits infiltrate every level of the firm.

"I don't know how easy it will be to prove, but it may be frightening enough to get SAC to seek a settlement," said Coffee.

On Friday, SAC Capital's lawyers pleaded not guilty to the federal criminal charges against the hedge fund. SAC Capital said Thursday that it plans to continue to operate as it works through these matters.

Both SAC and Cohen face fines from several different lawsuits, but the civil penalties sought by the U.S. Attorney's Office are expected to be steepest. The government said the actual figure will be determined at trial, and U.S. Attorney Preet Bharara declined to comment on possible penalties during a news conference Thursday.

Related: Not guilty plea entered by SAC Capital

The government can also seek penalties from its criminal case, but the maximum penalty for each count of securities fraud is $25 million. SAC has been indicted on four counts of securities fraud.

The hedge fund was also indicted on a charge of wire fraud. In that case, the government can seek twice the gains or losses generated from illegal trades.

The indictment only specifies profits from one set of trades in the pharmaceutical companies Elan (ELN) and Wyeth in 2008 and 2009. The profit from those trades was approximately $275 million.

In a separate case against Cohen, the SEC is seeking financial penalties for what it says is a failure to supervise employees engaged in insider trading. Coffee estimates that any penalties from the SEC case would be smaller than those possible in the U.S. Attorney's case.

The SEC has already extracted one penalty from SAC. In March, the firm paid $615 million to the agency to settle insider trading charges.

Bharara has said that the government wants to extract meaningful penalties so this case and other insider trading cases can have a deterrent effect.

First Published: July 26, 2013: 4:27 PM ET

15.30 | 0 komentar | Read More

JPMorgan to exit commodities businesses

NEW YORK (CNNMoney)

The announcement comes as the bank reportedly nears a settlement with the U.S. government over the manipulation of electricity markets in California.

JPMorgan (JPM, Fortune 500)said it "is pursuing strategic alternatives for its physical commodities business...including, but not limited to: a sale, spin off or strategic partnership."

The move will not affect the bank's trading activities, such as the buying or selling of futures contracts.

Earlier this week, the Senate held a hearing on bank ownership of physical commodities, during which several witnesses said involvement from the big banks is dangerous for the financial system and may be driving up prices for consumers.

The hearing followed a story in the New York Times on Sunday alleging Goldman Sachs (GS, Fortune 500) was stockpiling aluminum in Detroit, leading to higher prices for aluminum products like soda cans and cars.

People familiar with JPMorgan's involvement in California's electricity markets say the bank would bid to deliver electricity to a utility on a future day, and then raise the price, ensuring the power would not get bought.

Consumers would then have to compensate the bank for the cost of making the bid, under California's "make whole provision," which requires ratepayers to cover certain costs incurred by energy sellers.

It's not clear how JPMorgan made money on this arrangement, or if it was technically legal.

The government agency charged with policing electricity markets -- the Federal Energy Regulatory Commission -- and JPMorgan have declined to comment on the case.

Barclays and Deutsche Bank (DB) have also been recently fined by the government for improper electricity trading.

First Published: July 26, 2013: 5:51 PM ET

15.30 | 0 komentar | Read More

Starbucks sees big growth in China

Starbucks is opening more stores in inland Chinese cities, such as this one in Chengdu, Sichuan Province in Southwest China.

NEW YORK (CNNMoney)

According to its latest quarterly report, Starbucks (SBUX, Fortune 500) saw a 30% year-over-year jump in revenues from its Asia-Pacific region, lifted by outstanding sales in China.

"The very strong sales volumes prove that the coffee concept can succeed in traditional tea-drinking countries," said R J Hottovy, director of consumer equity research at Morningstar, Inc. "It's resonating very well with [inland] cities."

Starbucks' solid sales growth in the region was driven by the 500 new stores it opened in China last year, and its Chinese expansion plans aren't slowing down.

The Seattle-based coffee giant said it plans to open its thousandth store in China by the end the year. In addition to already being in major cities like Beijing and Shanghai, the company says its stores will have penetrated lesser-known cities. By 2014, Starbucks said China will surpass Canada to become the second largest market, after the United States.

Related: Starbucks' caffeine-fueled expansion

In the last five years, overall retail coffee sales in China climbed by 10%, beating growth in Hong Kong, Japan and the 3% global average, according to data from research company Euromonitor International.

Starbucks said its marketing strategy in China is similar to that of its Western markets. It continues to focus on its core food and beverage products while also offering other locally oriented choices.

"The demographics they are targeting are younger and more affluent groups," Hottovy said.

Starbucks opened its first store in Taipei in 1998, followed by its first mainland China store in Beijing in 1999. But the coffee shop market is beginning to heat up. "Increasing competition will be the most pressing issue as more Western coffee brands enter the Chinese market," he said.

In 2012, an average Chinese person consumed about two cups of coffee per year. That's a far cry from the global average of 134 cups a year, according to Euromonitor. Coffee has less than 1% of the Chinese hot-drink market share. By contrast, tea makes up 54% of the market.

"It's still too early to say that coffee is going to replace tea, or that the Chinese flavor profile is changing," said Dana LaMendola, analyst of hot drinks at Euromonitor.

First Published: July 26, 2013: 6:24 PM ET

15.30 | 0 komentar | Read More