Recall Alert

FOR IMMEDIATE RELEASE October 1, 2009 Release # 10-002

Firm's Recall Hotline: (800) 425-2966
CPSC Recall Hotline: (800) 638-2772

Diving Equipment Recalled by Halcyon Manufacturing Due to Drowning Hazard

The U.S. Consumer Product Safety Commission, in cooperation with Halcyon Manufacturing Inc., on Friday announced a voluntary recall of diving equipment. Consumers should stop using recalled products immediately unless otherwise instructed.

View the equipment here


Name of Product: Halcyon Diving Equipment
Units: About 20,300
Manufacturer: Halcyon Manufacturing Inc., of High Springs, Fla.

Hazard: The over pressure valves (OPVs) in the diving equipment could fail allowing the buoyancy compensator devices (BCDs) and the diver lift inflatable devices to leak, posing a drowning hazard to divers.

Incidents/Injuries: None reported.

Description: This recall involves Halcyon diving equipment including the Halcyon Explorer, Eclipse, CCR35, Evolve and Pioneer Buoyancy Compensator Devices (BCDs) and Halcyon Surface Marker Buoys (SMBs), Lift Bags, Diver Alert Markers (DAMs) Surf Shuttle and Diver Lift Raft Inflatable Devices. "Halcyon" is printed on the diving equipment.

Sold at: Diving equipment retailers and distributors from January 2006 through December 2008 for between $350 and $450 for the buoyancy compensator devices (BCDs) and between $50 and $275 for the inflatable devices.

Manufactured in: United States

Remedy: Consumers should immediately stop using recalled diving equipment and return it to an authorized Halcyon distributor or dealer for a free inspection and, if necessary, free replacement of the overpressure valve spring.

Consumer Contact: Halcyon at (800) 425-2966 between 8 a.m. and 5 p.m. ET, Monday through Friday.

Visit the firm's Web site or email the firm at techservices@halcyon.net

Storms Brewing for the Stock Market

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

With the month of September and third quarter of 2009 just ending, it’s a good time to reflect on the financial markets and take stock of where we are and where we may be headed. As individual investors, it’s important to stay on top of your portfolios and I usually recommend doing this quarterly with more emphasis placed on the annual review. The vast majority of investors do not want or enjoy valuing their holdings daily, weekly or monthly, and frankly, that’s why you hire advisors. It’s our job to get you from day to day, week to week and month to month.

Since the March 6 bottom in the stock market, we’ve seen a truly historic rally across the board. It’s certainly been “the rising tide lifting all ships”. Unlike previous attempts to rally during the bear market, selling into strength has not been rewarded as the pullbacks have been very brief and shallow. That in itself was an indication that the character of the stock market was changing in April and May.

By the time June came, a very important hurdle was overcome. In most bear markets, rallies do not last more than 11 weeks. Once we got past that point, it was further confirmation that the overall tone of the market had changed from down to at least neutral, if not up. And similar to 2003 when we last emerged from a bear market, the early June peak led to some much needed digestion or consolidation over the next month or so.

Since the last decent low in July, we’ve seen the stock market embark on another nearly vertical run to its mid September high. Similar to what we saw coming out of the March bottom, anyone who sold into the rally was not rewarded and forced to either chase the rally higher or sit uncomfortably with cash during a rising market. As someone who made what I felt were good sales at the time and held some cash, I would much rather wish I had more skin in the game than get stuck during a collapse with too much on the line!

Fast forward to today and for the first time since the rally began in earnest, there are some storm clouds brewing on the horizon. To begin with, several sentiment surveys have come full circle, now showing far too many bulls versus the bottom in March when we saw almost all bears. Similarly, small-time option traders, the ones I commonly refer to as mom and pop, have been exhibiting very bullish tendencies of late.

None of the behavior above can be construed as positive for the market since it usually occurs near market peaks, not valleys. Think of it this way, when everyone is sure of a particular outcome, how often do we see the opposite happen. It’s worse in the financial markets. If the masses are very positive, wouldn’t that mean they already invested and have little cash left to propel things higher? If everyone bought a blue Toyota this year because it got 1000 miles to the gallon and all service was free, who would be left to buy next year?

Besides sentiment not being favorable right now, the stock market has lost “the rising tide lifting all ships”. Typically, as rallies get long in the tooth, we see fewer and fewer sectors keeping pace and leading the charge higher. And those that turned early, say in January or February, will likely turn early before the rest of the market begins to correct. That’s certainly the case now with the Chinese market underperforming. Here in the U.S., the housing stocks, transportation, materials, energy, agriculture, metals and mining have all begun to lag the indices, signaling a “tired’ stock market in need of rest. Should the various technology groups begin to follow suit, it won’t be long before a widespread correction sets in.

Finally, the catalyst for the summer rally was based on earnings that were better than expectations and much “less worse”. With earnings season officially starting on the 7th at 4:00 pm with Alcoa, the likelihood of a repeat performance is remote. At best, history says we can expect a neutral period, but most of the time, following such strength, the next period is weak.

Add it all together and I come up with the best opportunity for a correction since the bull market began in March. If I had a crystal ball, it would say that stocks are in the topping process and should be completed by the 16th. If the correction appears, it should be the most significant since March, taking 8-15% off the major indices. In Dow Jones Industrial numbers, that’s a decline of 800-1500 points that should wrap up sometime in late October to mid November.

For those curious as to why I have such a big range in the numbers, it’s because it’s tough to pinpoint the downside target until we begin to see some weakness and how investors behave. If people use the 8% decline to buy and become even more positive, that opens the window for another 8% lower to clean out the weak-handed holders and get folks to worry more that their recent purchases will be losers. If, on the other hand, after an 8% correction, the media is talking about the end of the bull market and much lower prices to come, chances are the correction is over already.

The good news is that if we see a correction in stocks, it should only serve as a much needed and healthy pause to refresh, with higher prices to come later this year and in early 2010. If by some chance, we get to Halloween without any weakness, the window of opportunity for a significant correction will likely close until the New Year.

Help for Delinquent Consumers

Consumer delinquency rates in the third quarter hit record highs across the three key categories of home equity loans, home equity lines of credit and bank cards, the American Bankers Association said Thursday.

The ABA’s Consumer Credit Delinquency Bulletin defines delinquency as a late payment that is 30 days or more overdue.

Bank card delinquencies rose 26 basis points to a record 5.01 percent of all accounts. Record delinquency rates occurred in home equity loans - up 49 basis points to 4.01 percent of all accounts – and in home equity lines of credit – up three basis points to 1.92 percent of all accounts.

The association’s composite ratio, which tracks eight closed-end, installment loan categories, also hit a record high at 3.35 percent of all accounts (seasonally adjusted), compared to 3.23 percent of all accounts in the second quarter.

A closed-end loan provides a fixed amount of money with a fixed repayment period and regularly scheduled payments.

ABA Chief Economist James Chessen said in a statement that the high consumer credit delinquency rates represent the cumulative effect of the longest recession since the Great Depression.

“Six consecutive quarters of job losses have taken their toll,” Chessen said. “With jobs lost and work hours cut, it doesn’t take long for the financial pressure to become overwhelming. Falling behind on debt payments is an unfortunate side effect of high unemployment and a frozen job market. The picture won’t change until the labor market improves and the economy picks up steam. This is going to take time.”

Auto loans also saw payment declines, however, there was some improvement in the third quarter.

Direct auto loan delinquencies fell 55 basis points to 2.46 percent of all accounts and indirect auto loan delinquencies – which are on loans arranged through auto dealers - dropped to 3.26 percent of all accounts from 3.42 percent in the previous quarter.

“The good news is that consumers are clearly being more cautious by saving more, spending less and making great efforts to repair their balance sheets,” Chessen said.

A new survey of public views on the economy, released this week, showed that 57 percent of Americans are close to someone who has been laid off, 61 percent report that someone close to them has had their hours or pay cut and 44 percent of all households have experienced one or the other during the past year.

The "Tracking the Recovery" survey was conducted among 802 registered voters nationwide from Sept. 21 to 23 by Hart Research Associates for the Economic Policy Institute, a think tank in Washington, D.C. that researches the impact of economic trends and policies on working people in the U.S. and worldwide.

Donald Klepper-Smith, chief economist and director of research at DataCore Partners LLC in New Haven, said that in the current economic environment, every dollar counts and every job counts.

“As unemployment rates rise and incomes remain stagnant, I think we’re going to continue to see increases in non-performing loans,” Klepper-Smith said.

Here are some tips from the ABA on managing debt:

For homeowners having trouble paying their mortgage, the American Bankers Association "strongly recommends" you consult HOPE NOW, an initiative coordinated between counselors, investors and lenders to help homeowners in distress. Call 1-888-995-HOPE.

For others who are having trouble paying down debts, ABA advises taking action -- sooner rather than later -- to solve debt problems:

· Talk with creditors – the sooner you talk to them, the more options you have;
· Don’t charge more purchases until your problems are solved;
· Avoid bankruptcy – it’s a short-term solution with long-term consequences; and
· Contact Consumer Credit Counseling Service at 1-800-388-2227.

For more information on budgeting, saving and managing credit, visit the ABA Education Foundation’s consumer web page.

Navigating Life, Navigating Insurance

Be it going off the college, getting married, starting a family, buying or junking a car or settling into retirement, insurance needs can change with life's milestones.

Lisa Lobo (pictured at left) , vice president of personal lines underwriting, for The Hartford Financial Services Group in Southington, Conn., has several helpful tips to offer you on savings options and policy provisions to consider with certain life events.

One big influence on insurance costs is when you tend to pay your bills. If, for example, rent or mortgage or utility payments are late, then that will affect your credit score and have a bearing on the cost of insurance policies. Credit scores are factored in when insurance companies determine rates.

So, let's examine some of the changes that can affect your insurance needs.

• Getting Married. This is an important time for you and your new spouse to take an inventory of individual, joint and new possessions - such as engagement and wedding rings - to make sure these items, and any other high-value possessions or gifts, are protected. "Know what each spouse is bringing into the household," Lobo said. One option is a personal articles floater policy. This is a separate policy from your homeowners or renters insurance that raises the coverage limit for personal items and protects from other potential problems, such as when an expensive item is lost or stolen. "They should consider multi-car discounts on car insurance. There are credits to adding the home to the (auto)policy," Lobo said. "I would suggest that they bring their assets together." Having insurance policies in both names means that in the event of a death, they automatically transfer to the surviving spouse. When it comes to health coverage, Lobo recommended assessing the benefits each spouse receives and whether you want to seek additional coverage beyond those plans.


• Having a baby. At this point, it's especially important to make sure you have a valid will and expand your life insurance coverage so your child may be provided for if something happens to you, and to ensure that your spouse has the resources to continue to care for your child. "Take stock in everything that you have, and think: If I'm out of the picture, if my spouse is out of the picture, what will the need be?" Lobo said.


• Sending a Child to College. Once your children head out on their own and prepare for their future careers, there are considerations for automobile, health and renters insurance. Will your children have health insurance through a collegiate plan if attending an out-of-state school or can they remain on a parent's policy during their school years? Will they need renter's insurance for an off-campus apartment? As an example of a savings opportunity, if your son or daughter won't be driving a vehicle while in school, then your premium could go down significantly. "There will be some benefit if your child will have no access to your vehicle or won't be the primary driver," Lobo said. Also, most insurance companies offer discounts for students with good grades.


• Retiring. The decision to retire affects almost every aspect of life from income and spending to investments and saving to insurance. Driving less could cut costs and some home insurance companies provide automatic discounts for retirees or perks for living in a gated or retirement community. The chance of theft could be viewed as diminished due to greater presence around the home or spending more time at home, Lobo said.
  
• Losing A Spouse. This can be one of life's most difficult changes. This grief is intensified when the surviving spouse is forced to take on a new role in managing the family finances. While life insurance is the primary consideration in this situation, it is also important to speak with a financial advisor on any changes that need to be made to your investments. In addition, this is a time to remove your spouse from insurance policies and change beneficiaries if a secondary beneficiary has not previously been named. "You will continue to pay for that spouse until we know they're no longer on the policy," Lobo said.

For auto and homeowners insurance, The Hartford offers trained customer service representatives and resource guide books to assist older adults with managing the financial decisions and changes that result from becoming a widow or widower.

Coming Sunday: Lisa Lobo offers "3 Steps, 10 Minutes to Auto Insurance Savings"

FDIC Seeks Buffer for Deposit Insurance

The Federal Deposit Insurance Corp. will require banks to prepay premiums that support insurance on depositors’ funds, due to staff projections that bank failure provisions have forced the insurance fund’s reserve ratio into a deficit as of today.

FDIC Chairman Sheila Bair is pictured at right.

But consumer deposits are still protected by cash and marketable securities that can be sold off and those assets "remain positive," FDIC staff reported Tuesday in a Board of Directors meeting.

No banks have failed in Connecticut at this point in the calendar year, according to FDIC records, but slightly under half of the 95 failures that have occurred were spread across California, Illinois and Georgia.

The FDIC insures up to $250,000 per account, but Tuesday was the first time in the organization’s 75-year history that it decided to collect fees early from banks. As of December 30, institutions would have to pay the assessments for the fourth quarter of 2009 and for all of 2010, 2011 and 2012.

That is the time banks normally would pay insurance premiums only for the third quarter of 2009.

The FDIC projected that the fund will need $100 billion through 2013, an increase from the staff’s May 2009 estimate of $70 billion over the same period. "Projected failures have increased due to further deterioration in the condition of insured institutions, as reflected in the increasing number of problem institutions. Asset quality problems among insured institutions are not expected to abate in the near-term," Arthur Murton, director of the FDIC’s Division of Insurance and Research reported, to the board.

Approximately $25 billion of the $100 billion in projected failure costs already has been incurred this year and the FDIC anticipates that the majority of costs are likely to occur in 2009 and 2010.

The prepaid assessments are expected to bring in about $45 billion from affected institutions.

"We haven’t analyzed it fully yet, and at this point, it is still a proposal. But we understand it is in our interest and the industry’s interest to support the FDIC, and this looks like the best option," said Ed Steadham, vice president of public affairs for Webster Bank in Waterbury.

The FDIC imposed an emergency insurance fee on banks earlier this year which brought in about $5.6 billion. The industry opposed any additional assessments, saying that would likely do more harm than good. Such a move would directly reduce bank income, hinder capital growth, and make lending much more difficult, the American Bankers Association said in a statement.

"The pre-paid assessments represent money that the FDIC expects to receive from banks anyway over the next several years, but having the cash on hand sooner rather than later provides more flexibility for dealing with any contingencies over the foreseeable future. The bottom line is that customer deposits remain safe in banks and the FDIC has the resources needed to meet its responsibilities," ABA Chief Economist James Chessen said.

Matthew Breese, a research associate with the firm Sterne, Agee & Leach, Inc., said that from a liquidity standpoint, institutions will lose a lot of cash and cash equivalents, but on the upside, they will know what to expect, rather than the uncertainty of repeated special assessments going forward.

"We believe it was the FDIC’s best option," Breese said. "During a time when profitability is important to banks and to the economy, you can’t have this big question mark hanging over the industry."

John Carusone, president of the Bank Analysis Center, said banks will have to set up prepaid asset accounts and put capital against them for the next three years. A pay-as-you-go system would be more prudent, he said.

"There’s no assurance for the banks that paying the money upfront is going to relieve them a later burden," Carusone said. "There’s no consensus from Congress on what the new regulatory landscape will look like and we still don’t know the magnitude of future bank losses."

FDIC Chairman Sheila Bair did not rule out another option of tapping into the agency’s $500 billion line of credit with the Treasury Department, if circumstances worsen. "But today is not that day," Bair said.

There will be a 30-day comment period before the policy goes into effect.

We’re in a recession… so why hasn’t the stock market listened?

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)





It’s no secret that the U.S. and most of the world has been in a recession since late 2007, although so many people have felt the pain long before it “officially” began. The National Bureau of Economic Research (NBER), a non profit group from Cambridge MA, is the official scorekeeper of recessions and expansions and use various objective and subjective methods to declare the start and finish.

Most analysts keep it simple and use two consecutive quarters of negative gross domestic product (GDP) growth as the line in the sand for recession. The problem here has been that by the time a recession has been triggered, it’s usually close to being over. That was until the tsunami of 2008, which will go down as one of longest economic downturns in history!

So enough with the textbook info, most people want to know why the stock market has rallied so hard in the face of horrific employment numbers and an economy that keeps shrinking. I can give you the easy one line answer and then offer some details.

The simplest reason is that the stock market is one of the greatest discounting mechanisms in the entire financial system. By discounting, I am not talking about something in a retail store that’s offered at 20% off. Rather, the behavior of the stock market today is signaling economic activity three to nine months down the road. In this case, although the reports remained dire in March and April, the stock market rallied because it was snuffing out that things were about to become a lot less worse than they have been. And that would eventually lead to some kind of recovery.

Let me give you some more examples.

In October 2007, the market made its all-time high above 14,000 and then promptly collapsed 16.50% to 11,700 by mid January 2008. During that three month stretch, corporate earnings and economic numbers continued to show good growth, coming in as or better than expected. A significant rally began again in March 2008, following the Bear Stearns rescue and the economic effects of that rally showed up in the June/July period.

Following Lehman’s vaporization in September 2008, the stock market fell off the cliff, losing more than 20% in one week, yet the economic numbers did not severely worsen for three to four months.

My all time favorite example of why you should watch the stock market’s behavior over what news is actually being reported takes us all the way back to 1990 when Iraq invaded Kuwait.

The economy was already showing very early signs of weakening with inflation ticking up and the S&L Crisis becoming front and center. Saddam Hussein was the catalyst that actually pushed it over the edge. Oil spiked to over $40, which at that time was viewed as deeply recessionary. Another $20, it was thought, would throw us into another depression! I guess those analysts wouldn’t still be employed today with that mentality.

Anyway, stocks sold off very hard, losing more than 20%, from July to October 1990, while the economic reports just began to weaken. From that historic bottom in October 1990 with the recession deepening, banks going out of business on a weekly basis and the U.S. about to begin its first war since Vietnam, the stock market took off like a rocket ship, soaring more than 30% by the time the recession was officially declared over in April 1991.

The stock market almost always looks ahead at economic activity three to nine months down the road. If you are basing your investing decisions on the economic or earnings news of the day, you will usually find yourself chasing your tail. Remember, what’s being reported today is already in our rear view mirror. It’s where we’ve been. Imagine driving your car to the supermarket and only looking in that rear view mirror. Not a pretty outcome, right?

The stock market hammered out that historic bottom this past March, not because the landscape was getting better at that time, but because it saw a light at the end of the tunnel three to nine months down the road. Stocks typically begin to rally around the time where the recession is at its worst and the fewest people expect it. It does its best to confound the masses, so as investors, we should always expect the unexpected and look ahead.

If your philosophy has been to wait until the economic reports signal a recession or expansion, you may be making investment decisions at precisely the wrong time. The reasons for the beginning of a bull or bear market are irrelevant. If you must have rational explanations for things, the stock market is a tough place to make money unless you have the unique ability to invest with hindsight.

To quote John Maynard Keyes, “The stock market can stay irrational longer than you can stay solvent”.

Recall Alert

The U.S. Consumer Product Safety Commission Tuesday issued these two recalls due to safety hazards:

• Wal-Mart recalled expansion of Durabrand DVD Players due to fire hazard


• OfficeMax recalls office chairs due to fall hazard