Alan Greenspan continued his semiannual testimony before Congress today.

The Fed chief told the Senate Banking Committee that the threat of deflation has his full attention. "If it occurs, it is a very major event and even though its probability is very small, the size of the problem should it occur is sufficiently large to have engaged our attention."

For an idea of what the markets are reading into Mr. Greenspan's remarks, check out The Fed's New Stance by our own Matt Richey.

In today's Motley Fool Take:

Kiss Intel

The cyclical semiconductor lull may be over. Bellwether Intel(Nasdaq: INTC) rang strong and loud last night, announcing its second-quarter earnings. Profits more than doubled to $0.14 a share as revenue grew to $6.8 billion from a $6.3 billion showing the year before.

The new quarter holds even more promise as the company is looking for sequential improvement in everything from gross margins to the top line. Sweetness all around, but nervous trend watchers may have noticed that while Intel did inch up its R&D budget for 2003, it kept its capital spending forecast in check.

Holding the line on its $3.5 billion to $3.9 billion capital spending target sent a ripple through its otherwise favorable earnings report. If demand was in fact starting to pick up, shouldn't Intel be following suit? Is the company worried about long-term weakness? To the fiscal worrywarts out there, maybe four words of advice are in order: Open a history book!

Three years ago, Intel had the investing world buzzing. After devoting $3.4 billion to capital spending in 1999, it earmarked a hefty $5 billion for the following year. By that logic, 2000 should have been an amazing year for the industry and Intel. Well, it may have started out well, but that was the year the bottom fell out of the chip market -- and the tech stock market as a whole.

In other words, don't read too much into the company's capital spending projections. Tech companies that spend their time correcting three months' worth of profit guidance aren't going to be giving Nostradamus a run for his visionary money anytime soon.

Take Intel's report for its positives. The company is making so much money that it's been able to spend $1 billion on share repurchases every quarter while growing its cash investments to a whopping $13.4 billion.

Yes, the company's hesitancy to load up on capital spending is a cautious move, but look where the Y2K exuberance landed it. We'll take the sleeker, somber, penny-pinching Intel of today anytime.

Discussion Board of the Day: Intel

Is Intel holding true to its 2003 capital spending budget despite its healthy outlook for the rest of the year a contradiction? Are the semis finally back for keeps this time? What does this report say of the health of the computer industry? All this and more -- in the Intel discussion board. Only on

Sears Gambles on Credit

Sears, Roebuck (NYSE: S) yesterday unloaded its $29 billion credit card portfolio on Citigroup(NYSE: C) for $32 billion. Sears, which will be paid a roughly $3 billion premium for its outstanding receivables, actually comes out more like $6 billion ahead (pre-tax), as the deal frees up another $3 billion in capital formerly tied to receivables. The market's cheering the news so far, with Sears gaining nearly 10% to $38 and change.

Given its desire to whittle $32 billion in debt down to $1.5 billion (net of cash reserves), Sears could certainly use the cash. Still, while the company can now focus exclusively on retail, credit cards had lately buttered its bread, making up 60% of operating income in fiscal 2002. Rising delinquencies and uncollectible accounts notwithstanding, the unit has helped Sears smooth out retail's inherent seasonality.

From here, all eyes are on Sears' flagging retail operations. Management says it wants it that way, despite 22 months of declining same-store sales and trends that favor discount competitors like Target(NYSE: TGT) and Kohl's(NYSE: KSS).

Sears, which is still working to integrate Lands' End merchandise into its stores, insists that a turnaround is under way. With investors now paying for a pure-play retailer, it better be.

Tom Gardner's Motley Fool Hidden Gems

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Card-Carrying Fools

Given that it's Cash In On Credit month here at The Motley Fool, we don't know whether to tsk-tsk or give you a high five. Last week's poll on credit card debt revealed that nearly 6,000 of 9,358 respondents pay off their entire credit card balances every month. (Cue polite golf clap.) Of course, that leaves the remaining 36% rolling over anywhere from $1 to more than $10,000 -- from month to month to month.

In other words, one out of every three Fools has revolving credit card debt!

Compare this to America at large, where 40% of consumers carry a credit card balance month-to-month. Thank you to the 37 Fools who pay off their balances every month -- you inched us up 4% above the average. As for the rest of you: You decide whether or not you should put yourself in a Time Out.

Now, there may be a good reason for keeping a balance on your credit cards. Perhaps you've hit a bumpy patch and need your cash to keep a roof over your head and the room at a pleasant 74 degrees. (At the very least, pay the minimum due on your cards -- and pay it on time. Late fees are killers and have reached an all-time high of $39 at some major lending institutions.)

Or maybe you're taking advantage of an interest-free loan, like the low balance transfer rate currently offered on The Motley Fool Visa, biding your time while paying down your debts. (By the way, you should know that we do not make money based on your level of spending or how much debt you carry. But thanks for caring anyways.)

Perhaps you're even trying to game the system, thinking that your investments can beat out the interest you're paying on borrowed cash. No matter your stock-picking prowess, that's a bad idea. Market returns are not guaranteed -- unlike the interest you pay on your credit card, which is about as sure as death and taxes.

They exist, but the times it makes sense to carry debt are few and far between. And the 7% of you carrying outstanding balances between $5,000 and $9,999, consider this: By paying the minimum -- say, for instance, $120 a month -- on a card charging around 14% interest, you end up shelling out anywhere from $1,900 to $2,700 in interest alone.

(We're not math whizzes. You can find out how much interest you're paying on your debts by using the cute little calculator in our Get Out of Debt area.)

Quote of Note

"As a child, a library card takes you to exotic, faraway places. When you're grown up, a credit card does it." -- Sam Ewing, 1920-2001, American writer and humorist

Quick Takes

Gap (NYSE: GPS) is trying to up its cool quotient with the ultimate cultural icon, Madonna. For its fall marketing campaign, which launches July 28, Gap will feature the Material Girl herself. No word yet on whether its fall line will include black latex and spiked dog collars to reflect the naughty Madonna of old or soft pretty designs to better suit today's children's book-writing diva.

Investment and banking powerhouse J.P. Morgan(NYSE: JPM) reported a 78% boost in earnings this morning. Analysts had been expecting J.P. Morgan to earn $0.62 a share, and it returned $0.89 a share. Net revenues increased 27% to $8.6 billion.

Not content to make news by buying Sears'(NYSE: S) credit card business, Citigroup(NYSE: C) also garnered attention today when it announced that CEO Sanford Weill will relinquish his title to Charles Prince by January 2004. Prince has been running Citigroup's investment banking and global corporate businesses since last summer. Weill will stick around as chairman until 2006.

Lots of people are straddling hogs, and that's making Harley-Davidson(NYSE: HDI) happy. The Milwaukee-based motorcycle legend earned $202.2 million ($0.66 a share) in its second quarter, 40% higher than the net of $144.3 million ($0.47 a share) from the prior period. Revenues charged ahead 21.8% to $1.2 billion. Harley shipped 76,000 Fat Boys, Sportsters, and other models in the second quarter, 16% ahead of last year's Q2.

And Finally...

Today on

Bob Bobala, Robert Brokamp, Paul Elliott, Mathew Emmert, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Reggie Santiago, Kate Southerland, Dayana Yochim