Business and economy news for kids of all ages primary, middle, and high school.
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“Today Shapes Tomorrow

 Published Every Monday Volume  15                         August 27, 2007
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Markets rally!

Stocks had a good week, following a rough period on Wall Street. Investors have calmed down after the panic that we talked about in our previous newsletters (click here for Volume 13).  As a result, this week, S&P500, the Dow Jones Index and NASDAQ went up.  For now, bears are taking a time out and bulls are mulling over what to do next.  S&P500 gained 33 points, Dow gained 300 points and NASDAQ was up by 66 points, for the week ending August 24th, 2007. 

So far, experts believe that the central bank of the US (Federal Reserve Bank) has done a good job in managing the bad loan crisis.  The Federal Reserve Bank is watching the situation closely.  It continues to show its confidence in the economy and the financial markets’ ability to deal with the bad loan crisis.  Such commitment by the Federal Reserve Bank seems to be paying off, at least in the near term.   Whether the Federal Reserve Bank is successful in averting the crisis completely, we will have to just wait and see what happens in coming weeks. 

 

Durable goods orders up  

The US Census Bureau, which serves as the source of quality data about the nation's people and economy, said that new orders for manufactured durable goods in July increased $13 billion or 5.9 percent to $231 billion. This was the fifth increase in the last six months and it is at the highest level since 1992.   

”Consumer durables,” (also called “durables”) are everyday use items purchased by people that have more than three years of life, such as cars, appliances, computers, stereos, furniture, and clothes etc.  

Why the durable goods orders important?  Durable goods orders indicate the level of goods manufacturing in the factories.  Rise in the durable goods orders is considered good news because it helps to grow the economy.  Durable goods orders can also be an indicator of employment trends.  As orders of manufactured goods increases, chances are that more jobs will be created.  

   

Who runs the Federal Reserve Bank that we have been talking about?

Dr. Ben Bernanke is the Chairman of Federal Reserve Bank.  The Federal Reserve Bank (also known as the “Fed”) system consists of twelve US government banks covering important economic regions throughout the , and their 25 smaller branches.  We briefly discussed the role of Federal Reserve in economy in our earlier newsletters (click here for Volume 11 and Volume 13).  A few of its functions include stabilizing the economy, providing loans and money to other banks, establishing and enforcing good banking practices, and determining interest rates.  On October 24, 2005, President George W. Bush appointed Dr. Bernanke as the Chairman of the Federal Reserve.  He replaced Mr. Alan Greenspan, who was the chairman of Federal Reserve for the previous eighteen years.  

Dr. Bernanke, 53, is one of the most respected financial and business professionals. His expertise on economics, public policy making, and financial market is world renowned.  He received his B. A. in economics in 1975 from Harvard University (summa cum laude) and a doctorate in economics in 1979 from M.I.T.(Massachusetts Institute of Technology).  In 1985, Dr. Bernanke joined Princeton University as a Professor of Economics and Public Affairs, and later became the chairman of the Economics Department.  Dr. Bernanke is a respected published author of many articles, books and texts on finance and economics.  He has been honored with several famous fellowships and awards. 

Your Favorite Stocks (For details click Volume 5)

Company

Company known for?

If you bought one stock in Jan-07

This week stock is?

Your gain or loss?

Mickey Mouse, Toys, Entertainment, and more.

$34.20

$33.87

-$0.33

Frosted Flakes, Rice-Krispies, and more.

$49.89

$54.60

$4.71

Fast food hamburgers, restaurants and more.

$43.87

$50.12

$6.25

 

Weekly Foreign Exchange Rates

What is Currency and Foreign Currency Exchange Rate? (Click Volume 14)

$1 is equal to

0.73

  Euro (€)

$1 is equal to

116.46

  Yen (¥)

$1 is equal to

0.50

  Pound (£)

$1 is equal to

7.57

  Yuan ()

$1 is equal to

40.91

  Rupee (Rs.)

 

Weekly Stock Market Summary

Bulls Market-Stocks up! 

Aug 20-24, 2007

Index

Change

Last

DOW  

Up 300

13,379

S&P500 

Up 33

1,479

NASDAQ

Up 66

2,577

What is Economy?  The word economy means everything related to the production and use of goods and services in an area. On a daily basis we buy many things (products) that come from many businesses, such as, food, drinks, toys, cars, etc.  When we buy or not buy such products it affects businesses, economy and all of us.

What is a Stock? A stock is a share of a business.  So when you buy a stock of a company, say, McDonald's, you become a McDonald's shareholder or part owner of the business.

What is DOW? The Dow (also known as DJIA or Dow Jones Industrial Average) tracks 30 large US companies stocks and it is 100 years old. DOW going up is good news as it indicates that the companies are expected to do well in the future.

What is S&P500? Standard & Poor's 500, is also called S&P500. It tracks 500 companies and how they are doing.  It is over 50 years old and most widely used because it is a better way to track the stock market.  It represents over 7 out of 10 US public companies.

What is NASDAQ? NASDAQ stands for National Association of Securities Dealers Automated Quotations system.  It sounds complicated but it is a highly computerized stock market.   It was started in 1971.  It has over 3,200 companies that are leaders in technology, communication, media etc.

What is a Business? Business offers goods and services to customers for money.  Businesses create jobs for people who work to make goods and or provide services for other who need them.  

 

Who are the Workers? The people who work at the businesses are also called workers.  Workers are paid money which they use to take care of their loved ones.  When these workers are paid money they pay some money to the governments, called taxes, so that the government can provide the services to the communities where we live such as schools, police, fire station, parks, roads, and many more. 

 

What are Goods? Goods are things that you can see, such as toys, balls, dolls, candies, cereals, etc.

 

What are Services? Services are things that are done for others for money, such as, barber gives you service of hair cutting, waiter serves you food at the restaurant, etc. 

 

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