My finance view

Verizon just can’t seem to stay out of hot water.

As of May 6, new, upgrading and moving Verizon DSL Internet users are being required to also purchase a landline telephone service package. That decision is causing a stir on Capitol Hill and with partner DirecTV (, Fortune 500).

Sen. Herb Kohl, chairman of the Senate’s antitrust subcommittee, wrote to Verizon (, Fortune 500) on Thursday, slamming the telecom giant for its new DSL rules.

"The bundling that Verizon now plans could potentially lessen competition, increase rates and lead to less innovation," Kohl said in his letter. "Consumers benefit when one service is competing with another, not when they must buy a package of services."

Kohl’s primary complaint was about the timing of the company’s move. Verizon’s decision comes soon after it struck a deal with rival cable companies Comcast () and Time Warner Cable (, Fortune 500) to sell wireless service to their customers.

Verizon’s move to reduce its competition with its new partners seems a little suspicious.

As Kohl put it: "It appears inconsistent for Verizon to argue, on the one hand, that the joint marketing arrangements and bundling wireless services with cable offerings increases customer choice, while on the other hand the company is tying voice and DSL services, compelling consumers to purchase bundled offerings."

Verizon’s residential DSL and landline telephone businesses is on the decline. In the first quarter, the company shed 89,000 DSL customers and 205,000 landline phone users.

"Our decision to adjust the way we offer DSL service after May 6 more accurately represents the broadband customer base at Verizon," Verizon spokesman William Kula said.

Ending standalone DSL sales lets Verizon "control our cost structure more effectively," he said.

Verizon said it is reviewing Kohl’s letter and "will respond appropriately."

Verizon is still waiting for regulatory approval of its arrangement with Comcast and Time Warner Cable. It agreed to purchase $3.6 billion of wireless spectrum from the cable companies. In return, the cable consortium will be able to bundle wireless service with their triple-play TV, broadband and phone packages.

"We have made a strong case that the spectrum purchase is in the public interest," said Verizon spokesman Ed McFadden.

Verizon’s plan is to take currently unused spectrum and use it to expand its 4G LTE wireless broadband services.

But the deal has raised eyebrows among consumer advocates and other competitors, since Verizon has its own FiOS triple-play package as well as its DSL service. Those both compete directly with the cable companies’ plans.

Related story: Are landlines doomed?

DirecTV, which bundles Verizon’s DSL service with its satellite TV offering, also opposes Verizon’s spectrum purchase. It said in a complaint filed to the FCC on Wednesday that Verizon’s DSL-landline bundling decision is a prime example of why the telecom’s spectrum deal with the cable companies is anticompetitive.

"Even in the short amount of time since the commercial agreements were finalized, Verizon’s behavior offers direct evidence of ways in which the proposed transaction will alter the market to the detriment of competition and consumers," the company said.

The DSL wrangle is just the latest in a recent slew of negative headlines about Verizon.

The company on Wednesday said it was planning this summer to begin forcing smartphone customers with unlimited data plans to switch to tiered plans when they upgrade.

Last month, Verizon said it would begin instituting a $30 upgrade fee when current customers purchase a new phone.

And just before New Year’s Eve, Verizon tried to sneak through a $2 "convenience charge" for customers who make one-time bill payments using a debit or credit card. Met with incredible consumer ire, Verizon abandoned that plan the next day. 

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The price of oil plunged to its lowest level in nearly six months Friday, falling below $100 per barrel for the first time since February. A drop in gasoline prices can’t be far behind.

It’s a welcome trend for motorists, with the summer driving season just around the corner. And it eases some pressure on the U.S. economy, which has shown only agonizingly slow growth in the nearly three years since the Great Recession ended.

Oil fell $4.05, or 4 percent, to $98.49, after a weak U.S. jobs report offered the latest evidence that the global economy is weakening, possibly reducing demand for oil. At the same time, there is mounting evidence that world oil supplies are growing.

For the week, oil fell more than $6 and is now about $12 below its February high. U.S. gasoline prices have fallen to $3.80 per gallon from a peak of $3.94 in early April.

Now they could go as low as $3.50 per gallon by July 4, according to Tom Kloza, chief oil analyst at the Oil Price Information Service.

The picture of the oil market is the reverse of just a few months ago. Then, world oil demand looked to be rising quickly at the same time that world supplies were threatened by a host of small production outages and the potential for drastically reduced production from Iran, the world’s third-biggest exporter.

Those developments raised the prospect that world supplies would be at their most tenuous just as the summer driving season arrived in the developed world. The price of U.S. benchmark oil rose to about $110. The price for international oil used to make most of the gasoline in the U.S. spiked even higher, to $128 per barrel.

Gasoline prices in the U.S. appeared to be on track to soar past $4 per gallon nationwide, another burden for U.S. consumers already suffering from high unemployment and pitiful wage growth.

Now the worst of those price fears have melted away for a number of reasons:

• Falling demand: A spreading recession in Europe and slow growth in the U.S. suggests energy consumption, which fell 0.4 percent worldwide in the first quarter, will remain weak.

• Growing supplies: Saudi Arabia and other OPEC members are pumping more oil. Energy companies are employing cutting-edge drilling technology to ramp up production across the globe. World oil supplies grew on average by 1.35 million barrels per day in the first quarter, and producers should easily meet demand in the coming months.

• Easing political tensions: The West’s nuclear standoff with Iran appears to be cooling off. The threat of conflict — and less Iranian crude on the market — helped push oil prices past $100. But now Iran and the West are planning talks.

The price of oil hasn’t dropped this much since Dec. 14, 2011, when it fell by $5.19, or 5.2 percent, to $94.95 per barrel.

Oil prices may drift even lower in coming weeks.

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Learn what faxless payday loans are and how online payday loans can be used as a quick fix to pay off your bills.

Technology consulting firm Perficient Inc. reported a 67 percent jump in profits in the first quarter. The company, based in Town and Country, reported a profit of $3 million, or 10 cents per share, compared with $1.8 million, or 6 cents per share, in the corresponding period of 2011 totally free credit score. The company reported quarterly revenue of $74.7 million, compared with $56.2 million last year.

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China

SXC Health Solutions Corp. agreed to buy Catalyst Health Solutions Inc. in a cash and stock transaction valued at $4.4 billion to stay competitive as larger pharmacy benefit managers join forces.

Catalyst investors will receive $28 in cash and 0.6606 shares of SXC stock for each Catalyst share under the terms of the agreement, the companies said. That implies a purchase price of $81.02 per Catalyst share, 28 percent above Tuesday’s closing prices.

Pharmacy benefit managers are combining after Express Scripts Inc., the largest in the U.S., agreed to pay $29.1 billion for Medco Health Solutions Inc. SXC, one of the biggest providers of technology for processing prescription claims, was the target of speculation last month.

The company is now in position to be one of the nation’s largest pharmacy benefit companies, said Brian Tanquilut, an analyst with Jefferies & Co. in Nashville, Tenn.

“SXC will be the next big player in the PBM space,” Tanquilut said. “The opportunity to win new business from the larger guys, meaning Express-Medco, CVS, is there.”

SXC Chairman and Chief Executive Mark Thierer will continue in those roles in the combined company. “We will be the second-largest independent PBM in the country, in terms of prescription volume,” Thierer said. “The transaction will expand our reach to larger clients.”

The companies have little overlap among clients, with Catalyst having many state employers while SXC has state Medicaid clients, Thierer said.

“This catapults SXC and Catalyst into a much better negotiating stance,” said Anthony Vendetti, a Maxim Group LLC analyst in New York who follows both companies. “It gives them more leverage with drug manufacturers and drug distributors and because of their increased size, it gives them more leverage with clients.”

Founded as Systems Xcellence in 1993, SXC negotiates with drugmakers for lower prescription medicine prices on behalf of health insurers, Medicare and Medicaid plans, workers’ compensation programs and long-term care facilities.

SXC also makes software that processed one out of every five drug claims in the U.S., according to the company’s 2010 annual report.

Tanquilut said the company may take a year to complete the integration, then move on to more deals to keep growing and compete with Express Scripts and CVS. The company needs to add smaller assets in specialty pharmaceuticals, most of which are likely to be closely held regional companies, he said.

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Dole Food Co.’s fresh vegetables division is recalling 756 cases of bagged salad, because they could be contaminated with salmonella.

The bags of Seven Lettuces salads were distributed in Alabama, Florida, Illinois, Indiana, Maryland, Massachusetts, Michigan, Mississippi, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and Wisconsin.

The company said the bags are being recalled, because a random sample tested by the State of New York came back positive for Salmonella. No other Dole salads are included in the recall.

The recalled salads are stamped with a use-by date of April 11, 2012, UPC code 71430 01057 and product codes 0577N089112A and 0577N089112B, the company said.

The product code and use-by date are located in the upper right-hand corner of the package, while the UPC code is on the back of the package, below the barcode fast payday loans.

Dole said that it’s coordinating with regulatory officials and that no illnesses have been reported.

Consumers should throw out the recalled salads. Dole said it’s also contacting retailers to make sure the bags in question are not available for sale.

The most common symptoms of salmonella are diarrhea, abdominal cramps and fever within eight to 72 hours of eating the contaminated food. The illness can be severe or even life-threatening for infants, older people, pregnant women and people with weakened immune systems.

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1994 was great for movie fans. "Pulp Fiction." "The Shawshank Redemption." "Forrest Gump." But bond investors definitely would rather forget that year.

The yield on the 30-year Treasury (then the benchmark, as opposed to the 10-year that’s the benchmark now) began 1994 at about 5.8%. At the time, the economy was starting to show some signs of life after a big housing bust wreaked havoc on consumers and big banks. (Sound familiar?)

By the end of the year, long-term yields had popped to around 8%, one of the biggest bond market bloodbaths ever. Remember that prices fall when rates rise.

Flash forward to 2012. The 10-year started the year at a rate of just 1.87%. It spiked as high as 2.4% and has since settled back to about 2.25%. With the economy slowly improving, do bond investors have to fear that it’s 1994 all over again?

Some experts are, to paraphrase the Ace of Base song that topped the charts in 1994, seeing the sign. (1994 was not nearly as good a year for music as it was for film.)

But rates may only go so high. The big difference between now and two decades ago is that, in 1994, the Federal Reserve under Alan Greenspan was raising rates.

Current Fed chairman Ben Bernanke has gone out of his way numerous times, including in a speech Monday morning, to point out that the central bank needs to stick with "accommodative" monetary policy to keep the job market and economy humming.

How the Fed hurts retirees

The Fed has already pledged to keep short-term rates near zero through the end of 2014. And investors strongly believe that if there’s any evidence that economic growth is starting to stall, Bernanke will likely agree to the Fed’s third big bond buying program since the 2008 financial crisis.

This so-called quantitative easing, or QE3, could put a lid on how high bond rates can go, experts said. That’s because the Fed would be viewed as a buyer of last resort for long-term Treasuries.

"This is completely different from 1994," said Michael Mata, manager of the ING Global Bond Fund () in Atlanta. "As long as Bernanke is Fed Chairman, the Fed will buy more Treasuries as it deems necessary."

Still, many bond investors are bracing for higher rates — albeit not at 1994 levels. If the economy continues to pick up steam, the Fed will probably let its current stimulus effort, which sells short-term bonds and uses the proceeds to buy long-term Treasuries, expire in June as currently scheduled.

The end of this program, dubbed "Operation Twist," should lead to more selling of long-term bonds and higher rates.

Wilmer Stith, portfolio manager of the Wilmington Trust Broad Market Bond Fund () in Baltimore, said that yields on the 10-year could climb as high as 3% after the Fed ceases with Twist. For this reason, he said his fund is betting more on high-quality, investment-grade corporate bonds over Treasuries.

But Stith points out that higher rates are not necessarily a significant problem for the economy — as long as they don’t climb too quickly. And he believes a move from 1.8% to 3% for the 10-year would lead some bond investors to flock back to Treasuries, since they might think the bonds are now a good value.

"At the end of the day, a slow but recovering economy should augur higher yields," Stith said. "But a yield near 3% would be up nicely from the lows, and the net result could be some more buyers."

Another key difference between 1994 and now was that 1994 was also a bad year for stocks. The S&P 500 and Nasdaq fell while the Dow finished the year up just 2%. Investors back then were nervous about the impact of the Fed’s rate hikes on both corporate profits and the broader economy payday loan lenders.

This year, investors seem to be fleeing bonds to rush back into stocks. But this newfound love for riskier assets could itself make life more difficult for bond investors.

Ben Bernanke is just doing his job, folks

Tommy Huie, president and CIO of BMO Asset Management US in Chicago, points out that, until Treasury yields spike significantly higher, investors who want to take part in the market rally but still receive steady income streams might be better off with dividend-paying companies. Heck, even Apple (, Fortune 500) has finally agreed to pay a dividend.

"There are many more attractive opportunities than Treasuries," Huie said. "Concerns about another sell-off like 1994 are legitimate. But it will probably be gradual. Rates may creep up as opposed to spiking up."

Politics could affect bond yields too. Doug Peebles, head of fixed income for AllianceBernstein in New York, said he’s being asked the 1994 question more often lately — especially from people in Europe.

With the U.S. facing yet another crucial deadline for the debt ceiling sometime after the presidential election, it’s possible that bond rates could move much higher (like they did in Italy, Spain and yes, Greece) if investors feel that Republicans and Democrats can’t come to a meaningful agreement on deficit reduction.

Peebles said he does think Treasury rates should be higher than what they are now, but that it’s highly unlikely yields will approach the levels well north of 5% that plague Spain and Italy.

Of course, how high rates head all depends on the economy. And at least one investing expert is worried that if the Fed continues to stick with its pledge to leave short-term rates low for another two years, even if the recovery proves to be sustainable, inflation fears could resurface with a vengeance.

"The slump in economic activity won’t last forever. Interest rates near their lows won’t last forever," said Keith Skeoch, CEO of Standard Life Investments in Edinburgh, Scotland. "Something strange is afoot. The bond sell-off is going to happen. It’s just a matter of when."

Best of StockTwits: Some traders are starting to wonder if Bernanke has "I heart QE" tattooed on his bicep.

mohannadaama: Next best thing to actually doing #QE is threatening to do so when the market least expects it. #Bernanke $SPY $GLD #Stocks #Bonds

etfdigest: Pending home sales down -0.5%, consensus 1.0%, down from 2.0%: That’s gonna leave a mark. Oh wait…more QE? $SPY

DavidSchawel: We live in a QE world; more & more RF assets being sucked out of the system - a form of financial repression as some call it. $SPY $TLT

This is what worries most about the rally this year. It’s hard to tell whether investors really think the economy is getting better, or if they are willing to keep buying stocks because they think Bernanke will drop another quarter in the QE pinball machine every time the market flashes Tilt.

EddyElfenbein: Always amazed at the disconnect between what Ben Bernanke says and what some people think he says.

A fair point. Bernanke isn’t completely tipping his hand. While he’s not as opaque as his predecessor Mr. Greenspan, he’s not as blunt as his European contemporary Mario Draghi at the ECB.

Investors may be grasping for QE3 straws in every Bernanke utterance. But after QE1, QE2 and Operation Twist, can you blame them?

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks. 

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While record-low interest rates have cut income for savers, they will ultimately nurse the U.S. economy back to health, increasing returns for savers and investors alike, a top Federal Reserve official said on Thursday.

“Critics of the Federal Reserve’s accommodative monetary policy are correct that the low level of interest rates represents a strain on households who rely on income from interest-bearing assets,” Federal Reserve Governor Sarah Bloom Raskin said in a speech to the Y’s Men of Wesport/Weston.

But she said the Fed’s goal was “to strengthen the economic expansion and, over time, return the economy to sustainable rates of output growth, unemployment, and inflation.”

Ultimately, Raskin said that would lead to higher returns for stocks, real estate, businesses and retirement accounts, where the bulk of household wealth is held.

“For these other types of assets, rates of return depend primarily on the strength of the economy and how fast the economy is growing,” Raskin said.

The Fed has cut interest rates to near zero and said it will likely hold them there through 2014.

ECONOMY STILL FACING SLOW RECOVERY

Raskin said such an unprecedented period of low rates is necessary to support an economy that, while improving, is only likely to expand at a gradual pace over the coming months.

The Fed expects the U.S. economy to grow between 2.2 and 2.7 percent this year, not much different from the pace seen in the second half of 2011.

Higher gas prices may reduce household purchasing power in coming months, she said, but probably would not raise inflation expectations or inflation, which Raskin said is expected to run at or below the Fed’s long-term goal of 2 percent.

With housing still depressed and credit still hard to come by for small businesses, “the headwinds that have been restraining the expansion for some time have been easing, at best, only gradually,” Raskin said.

Raskin said low rates are also helping households, as evidenced by increased purchases of motor vehicles and other big-ticket durable goods that can be financed cheaply.

“And in many cases, households have been able to refinance their mortgages into lower-rate loans, freeing up income for other uses,” she said.

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