Bernanke: Recent jobs reports are 'disappointing'

NEW YORK (CNNMoney)

The latest data show the economy added an average of 200,000 jobs each of the last three months -- marking a sudden breakout for the labor market after months of weaker reports.

Immediately after the October report was released, Fed watchers started speculating that it may just be the good news the Fed has been waiting for: Would the Fed start winding down its stimulus program at its next meeting in December?

Now, it doesn't sound like it.

In a speech Tuesday evening, Bernanke characterized that data as "somewhat disappointing."

The Fed stands by its stimulus program, he said, repeating comments that Vice Chair Janet Yellen delivered to the Senate Banking Committee last week.

"The FOMC remains committed to maintaining highly accommodative policies for as long as they are needed," Bernanke said in prepared remarks.

The Fed is currently engaged in its third bond-buying spree in the last five years, purchasing $85 billion in Treasuries and mortgage-backed securities each month. It's a controversial policy with unknown risks, but the aim is to stimulate the economy by keeping long-term interest rates low.

The central bank is looking for substantial improvement in the job market before it starts gradually reducing that bond-buying program.

Bernanke repeated Tuesday that the bond purchases are "not on a preset course, and the committee's decisions about their pace will remain contingent on the committee's economic outlook."

Related: Smooth sailing for Yellen in front of Senate

Yellen is currently under consideration to succeed Bernanke as Fed Chair, when his second term ends in January. Like Bernanke, she has recently spoken out in favor of continued stimulus.

"I consider it imperative that we do what we can to promote a very strong recovery," she told lawmakers last week.

First Published: November 19, 2013: 7:04 PM ET

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JPMorgan can deduct big chunk of $13 billion deal

NEW YORK (CNNMoney)

Here's why: Many of the costs associated with corporate legal cases are treated as deductible under the tax code, in much the same way that a company's wages or equipment expenses are.

That means JPMorgan will be able to reduce its tax bill because of many of the settlement payments that it must make.

"From 1913, our tax laws have permitted companies to deduct their 'ordinary and necessary' expenses, which include compensation and restitution payments," said Steve Rosenthal, a lawyer specializing in financial institution taxation and a visiting fellow at the Tax Policy Center.

But not all types of settlement payments are deductible. For instance, companies are prohibited from deducting fines and penalties payable to the federal government.

"In 1969, Congress decided that allowing companies to deduct fines and similar penalties frustrated public policy, so it disallowed deductions for these payments -- and, separately, disallowed deductions for antitrust damages, illegal bribes, and kickbacks," Rosenthal said.

Related: JPMorgan agrees to $13 billion settlement

The U.S. Department of Justice, which negotiated the deal with JPMorgan, said the bank will pay $2 billion as a "civil penalty" to settle certain legal claims.

And it's JPMorgan's understanding that the $2 billion is not deductible, the bank's chief financial officer said on an analyst call Tuesday.

It wasn't immediately clear how much of the rest of the $13 billion settlement, if any, may be considered non-deductible as well.

But here's the general bottom line: The compensation or restitution portions of a settlement like the one struck by JPMorgan (JPM, Fortune 500) may be deducted, but the penalties can't.

While that may seem like a bright line, settlements are often written in a way that can leave a lot open to interpretation.

In some deals, for instance, a penalty may be characterized in such a way that the company could argue that it should be deductible.

That's why some are pushing for much greater transparency in the drafting of government settlements.

Phineas Baxandall, a senior analyst at the U.S. Public Interest Research Group, wants agencies like Justice to expressly label what is "a penalty for tax purposes."

Senators Charles Grassley and Jack Reed recently introduced a bill that would narrow the scope of what can be considered deductible in such a deal.

Under their bill, all settlement payments over potential violations of the law would be considered non-deductible -- unless they meet the criteria of restitution or a payment needed to bring a company into compliance with the law.

The legislation would further require agencies to spell out what is deductible and what is not.

"If a company is paying thousands, millions or even billions in fines, it shouldn't save money for those same misdeeds. It should be held accountable," Reed said in a statement.

First Published: November 19, 2013: 6:55 PM ET

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House panel to investigate unemployment data

NEW YORK (CNNMoney)

Reps. Blake Farenthold, Darrell Issa and Kevin Brady submitted a letter to Census Bureau Director John Thompson on Tuesday, demanding the agency investigate allegations that an employee in its Philadelphia office fabricated data under instructions from his supervisor.

The accusations came from a New York Post report, which claims the shady behavior reaches beyond just that one employee and go back at least as far as 2010.

"The implications of an unreliable unemployment figure are serious and far-reaching," reads the congressmen's letter. "The national unemployment rate affects everything from legislation on Capitol Hill, to Federal Reserve policy, to stock prices on Wall Street."

The Census Bureau responded, issuing a statement that said it takes the accusations "very seriously," but it doesn't believe there's a widespread problem.

"We have no reason to believe that there was a systematic manipulation of the data described in media reports," a Census Bureau spokesperson said.

Every month, the Census Bureau conducts a nationwide survey of 60,000 households known as the Current Population Survey. It's a gargantuan task involving 2,200 Census employees. Even if one rogue employee decided to submit fake information, it would be difficult to alter the overall results dramatically -- the problem would have to be wider spread.

The agency also said it does random checks, often re-interviewing survey participants and double checking data that its employees have submitted.

The Labor Department then uses this data to calculate the national unemployment rate and other employment statistics. It uses a separate survey of businesses to calculate the number of jobs created in the economy each month.

Related: Jack Welch: I was right about jobs report

The latest reports have shown the unemployment rate has fallen slowly from as high as 10% in 2010, to 7.3% as of October. The news has not been entirely encouraging though, because the data also show much of the decline is due to workers dropping out of the labor force.

Allegations that the data are manipulated are nothing new. Last year, Jack Welch -- the former CEO of General Electric -- accused the Obama Administration of fudging the numbers ahead of the election. Hilda Solis, who served as Labor Secretary at the time, called those accusations "insulting."

The New York Post article also alleges the Census manipulations continued in the months leading up to the 2012 election, but fails to point out the named source in the story -- Julius Buckmon -- hasn't worked for the Census Bureau since August 2011. According to the Post, Buckmon filed as many as 100 fake reports a month in 2010.

A Census Bureau spokesperson confirmed to CNNMoney that Buckmon no longer works at the agency.

First Published: November 19, 2013: 9:50 PM ET

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U.S., JPMorgan near $13 billion settlement

JPMorgan and Justice Department could announce settlement as soon as Tuesday.

WASHINGTON (CNNMoney)

Elements of the proposed pact are now being signed by states that are parties to the agreement, the person said. Only a few details remain to be completed.

The outlines of the deal were first tentatively agreed to in October in negotiations led by Attorney General Eric Holder and JPMorgan (JPM, Fortune 500) Chief Executive Jamie Dimon.

A spokesman for the bank declined to comment on Monday evening.

In recent days, the parties finalized one of the last major pieces of the deal calling for $4 billion in money to help consumers.

Of that amount, at least $1.5 billion will go to reduce loan payments for homeowners mortgages are underwater, meaning the money owed on the loan exceeds the value of the home. Another $300 million to $500 million will pay for partial loan forgiveness and other aid for homeowners, with the goal of keeping them in their homes.

The remaining $2 billion could be used in a variety of ways, including funding new loans for low-income home buyers that the bank would be required to keep on its books instead of selling to investors. The bank could also use some of the money to pay for knocking down foreclosed homes in areas hard hit by the mortgage crisis.

An independent monitor will keep an eye on the bank to ensure compliance.

At issue in the deal are mortgage-backed securities and related derivatives that were blamed as a key cause of the financial crisis.

Related: Where are key players from the financial crisis now?

The $13 billion settlement includes an already-completed $4 billion deal with the Federal Housing Finance Agency to compensate Fannie Mae and Freddie Mac for allegedly misleading practices in loans sold to those agencies.

A federal criminal investigation based in Sacramento, California, would continue against the bank and several employees, and JPMorgan Chase has agreed to cooperate with that probe.

First Published: November 18, 2013: 6:57 PM ET

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Maria Bartiromo leaving CNBC

Bartiromo joined CNBC in 1993.

NEW YORK (CNNMoney)

CNBC anchor Maria Bartiromo is leaving the financial news channel, CNBC spokesman Brian Steel confirmed Monday. She is set to join rival Fox Business Network, according to various reports Monday evening.

"After 20 years of groundbreaking work at CNBC, Maria Bartiromo will be leaving the company as her contract expires on November 24th," Steel said in a statement. "Her contributions to CNBC are too numerous to list but we thank her for all of her hard work over the years and wish her the best."

A Fox spokeswoman said the network "[does] not have anything to announce at this time"

Related: Forbes explores sale

Bartiromo currently hosts the daytime program "Closing Bell" as well as a weekend show, "On the Money with Maria Bartiromo." She joined CNBC in 1993 and later became the first journalist to report live from the floor of the New York Stock Exchange on a daily basis.

She worked for five years at CNN Business News prior to joining CNBC.

Nicknamed the "money honey," Bartiromo was famously the subject of a tribute song by punk rocker Joey Ramone.

"I watch her at the big board every single day," Ramone sang. "While she's reporting you best stay out of her way."

First Published: November 18, 2013: 7:08 PM ET

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Protesting Wal-Mart workers win round in labor fight

Last year, hundreds of workers and thousands of supporters took part in Black Friday demonstrations in front of Wal-Mart stores across the country.

NEW YORK (CNNMoney)

The National Labor Relations Board, which protects the rights of workers who organize for better working conditions, said in a statement Monday that its general counsel had found merit in several allegations against Wal-Mart.

The agency said it would file a complaint if Wal-Mart and the parties could not reach a settlement.

Wal-Mart, in statements on national TV and to employees at Wal-Mart (WMT, Fortune 500) stores in California and Texas, illegally threatened "reprisal" for workers who protested on November 22, 2012, the labor board said.

The NLRB also said Wal-Mart stores in more than a dozen states "unlawfully threatened, disciplined, and/or terminated employees" who participated in legal strikes and protests.

Related: Amid criticism, Wal-Mart touts promotions for workers

At the same time, the NLRB said it did not find merit in allegations that Wal-Mart had retaliated by changing work schedules, or that it interfered with workers' right to strike by telling non-employee protesters to move from Wal-Mart property.

Wal-Mart spokesperson Brooke Buchanan said the company will pursue its "options to defend" itself, noting that it takes labor laws very seriously.

"We believe our actions were legal and justified," Buchanan said.

The finding stems from claims filed a year ago related to Black Friday strikes and protests by hundreds of workers across the country.

An advocate for Wal-Mart workers applauded the NLRB's finding.

"The board's decision confirms what Walmart workers have long known -- the company is illegally trying to silence employees who speak out for better jobs," said Sarita Gupta, executive director of Jobs With Justice and American Rights at Work.

Worker protests continue at Wal-Mart. Earlier this month, five workers seeking higher wages were arrested while demonstrating in Los Angeles.

First Published: November 18, 2013: 7:54 PM ET

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Can the Fed and consumers keep rally going?

NEW YORK (CNNMoney)

The Dow Jones Industrial Average is closing in on 16,000, while the S&P 500 is inching toward 1,800. The tech-heavy Nasdaq is nearing 4,000, a level not seen since September 2000, just months after the tech market collapsed.

Ongoing stimulus measures from the Federal Reserve have fueled the bull market for the past several years, and investors were encouraged last week by comments from Janet Yellen, President Obama's nominee to be the next Fed chair. Yellen, who may be confirmed by the Senate as soon as this week, told the Senate Banking Committee the Fed will continue to support the economic recovery.

She added that the Fed's $85-billion-per-month bond-buying program still has the power to help reduce unemployment.

The Fed will remain in the spotlight this week, as investors parse through minutes from the central bank's last meeting in late October.

Related: The strangest bull market ever

The Dow is up more than 20% this year while the S&P 500 and Nasdaq have gained more than 25% and 30% respectively. That has raised questions about whether stocks are overvalued. But Yellen assured lawmakers that she's not seeing any major bubbles forming.

Data seems to support that. The S&P 500 is trading at 17 times earnings from last year, just slightly above the historical average of 16, according to Bank of America (BAC, Fortune 500) Merrill Lynch.

In the bubble days of 2000, the index was trading at nearly 30 times trailing earnings. And analysts expect earnings will continue to grow next year, which should justify further increases in the broader stock market.

Consumers in focus: Investors will be paying particularly close attention to a slew of earnings reports from some of the nation's largest retailers to get a fresh pulse on how consumers are feeling with the holiday shopping season just around the corner.

Last week, investors received a mixed bag of results from three top retailers. Macy's (M, Fortune 500) blew away forecasts but Wal-Mart (WMT, Fortune 500) and Kohl's (KSS, Fortune 500) both issued disappointing guidance.

Best Buy (BBY, Fortune 500) and J.C. Penney (JCP, Fortune 500), both of which are in the middle of turnaround plans, are among the first to report next week.

Investors are encouraged by the signs of life from Best Buy. They've sent shares of the once ailing electronics retailer up nearly 270% so far this year, making it the second best-performing stock in the S&P 500, just after Netflix (NFLX). It is scheduled to report earnings on Tuesday.

And even though J.C. Penney is expected on Wednesday to report a wider loss than a year ago and another drop in sales, the stock has rallied lately on hopes the worst is over. Several hedge funds have also bought stakes in J.C. Penney lately, another sign that the stock may have bottomed.

Related: CNNMoney's Fear & Greed Index

Struggling teen retailer Abercrombie & Fitch (ANF), which is among the worst-performing stocks of the year, is also on tap to report earnings. The company already warned of a big sales decline.

Target (TGT, Fortune 500), Gap (GPS, Fortune 500) and Victoria's Secret and Bath & Body Works parent L Brands (LTD, Fortune 500) are reporting their latest results this week as well.

Earnings from off-price leaders Ross (ROST, Fortune 500) and TJX (TJX, Fortune 500), owner of T.J. Maxx and Marshalls, as well as discount chain Dollar Tree (DLTR, Fortune 500), could show that consumers are continuing to gravitate to retailers that offer the biggest bargains.

Home Depot (HD, Fortune 500) and Lowe's (LOW, Fortune 500) are also scheduled to report earnings. Results from these two home improvement retailers are a key gauge of the housing recovery, which has helped boost the economy this year.

The Census Bureau will release October figures for retail sales on Wednesday.

First Published: November 17, 2013: 10:03 AM ET

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