Informing you with the latest Economy, Finance, and Mortgage related news with a slice of humor.
Stocks are mixed on fed rate cut after an entail increase the market is falling sharply. If the behavior will continue like it has in the last couple day it will just titter between the positive and the negative.
I wouldn’t be surprised to see the rest of the world match the Feds move to slash rights. China has already cut rates be for the Fed had made their decision. Bernanke has already said that he will use all available tools to battle this crisis.
U.S. home builders took a big step in September toward reducing the gigantic oversupply of homes, boosting sales slightly, slashing prices and reducing the number of unsold homes at a record pace.
Sales of new homes rose an estimated 2.7% in September to a seasonally adjusted annual rate of 464,000 in September, the Commerce Department reported Monday, close to the 460,000 pace expected by economists surveyed by MarketWatch. See Economic Calendar.
Sales surged 23% in the West, bouncing back from a similar decline in August. Meanwhile, sales in the Northeast fell to lowest level recorded in the past 35 years, and sales in the Midwest fell to a 17-year low.
Nationally, sales in September were down 33% compared with September 2007.
The inventory of unsold homes fell a record 7.3% in September to 394,000, the lowest level in four years. In the past year, inventories have fallen 25.4%, the biggest percentage drop since the government began tracking the data in 1963.
At 394,000, the inventory represents 10.4 months’ worth of sales, about double the normal inventory. It’s taking more than 9 months after completion for the typical new home to sell, a sign that builders have much more work to do to bring supply down to match demand.
In the past year, the number of homes for sale that were under construction has plunged by 35%.
The median sales price fell to $218,400, down 9.1% in the past year. It’s the lowest median sales price in four years.
Tags: Commerce Department, Home Sales
Former Federal Reserve Chairman Alan Greenspan said a “once-in-a-century credit tsunami” has engulfed financial markets and conceded his free-market ideology shunning regulation was flawed.
“Yes, I found a flaw,” Greenspan said in response to grilling from the House Committee on Oversight and Government Reform. “I was shocked because I’d been going for 40 years or more with very considerable evidence that it was working exceptionally well.” Greenspan added he was “partially” wrong for opposing the regulation of derivatives.
Greenspan’s contrition came after lawmakers and Fed watchers increasingly blamed the former Fed chairman for helping cause the crisis with lax oversight of the housing boom and derivatives markets. Normally afforded deference by Congress, he endured almost four hours of questions from lawmakers less than two weeks before a national election.
“Greenspan is finally taking some responsibility for his actions,” said Paul Kasriel, director of economic research at Northern Trust Co. in Chicago and a former Fed official. “The damage has been done. His reputation has definitely been tarnished.”
Greenspan, responding to questions, said only “onerous” regulation would have prevented the financial crisis. Stifling rules would have suppressed growth and hurt Americans’ standards of living, he said.
Tags: Alan Greenspan
Stocks fell around the world, the euro sank to an almost two-year low against the dollar and commodities retreated as the economic slump deepened and corporate profits declined.
Exxon Mobil Corp., BHP Billiton Ltd. and Petroleo Brasileiro SA slid more than 3 percent. Emerging-market stocks lost 8.2 percent and Argentina’s Merval index headed for its worst drop since 1990 after the government’s plan to seize private pension funds undermined investor confidence in developing countries. The pound tumbled to a five-year low after Bank of England Governor Mervyn King said the country probably is in a recession.
“You see the slowdown in companies and economies and this is only the beginning,” Philippe Gijsels, a Brussels-based senior equity strategist at Fortis Global Markets, which has $62 billion under management, said in a Bloomberg Television interview. “You will see a very nasty shakeout.”
The Standard & Poor’s 500 Index fell for a second day, losing 3.1 percent to 925.48 as of 12:58 p.m. in New York. Europe’s Dow Jones Stoxx 600 Index declined 5.1 percent. The MSCI World Index slid 4.9 percent.
The slump in oil, gold and copper prices dragged Brazilian stocks lower, sending the Bovespa Index to a 6.8 percent retreat. The MSCI Emerging Markets Index reached the lowest level since May 2005.
The MSCI Asia Pacific Index decreased 5.4 percent. Mitsubishi UFJ Financial Group Inc. lost 8.8 percent after a newspaper said earnings probably dropped by half.
As business cycles come and go from time to time, they are a much needed element in the free market. Only this time the storm has been bigger and longer than anyone could have imagined. Business cycles are a natural way of sorting through the good companies from bad ones and it is, only the strong and vibrant companies that make it through the peaks and troughs. The American Banks have been an excellent example of what happens when companies cannot survive. They are bought, sold, merged and allowed to die off, if unable to maintain a profitable organization. As the banks have taken the spotlight on this topic, there has been a wave of this activity that is rippling through every business sector in the market. Darwin knew it all along, only the strong survive!
There has been an enormous flight to quality, in the last 6 months in every field from banking to consumer goods to home loans and auto sales. Lendability.com has staked its claim as a beacon of quality in this economic downturn with its clear cut mission statement and its ABLITY to evolve, flex, and shift to meet the rapidly changing demands of our customers. It is for this reason that Lendablity.com along with so many other companies in various sectors from banking to the Auto Sales will come out of the downturn with enormous strength and resilience. As the flight to quality continues it will be a great indicator as to who the quality institutions in any market will be. The companies founded on the “Quick Buck” business model will be all but extinct leaving only quality companies to help bring the US out of this economic decline.
Brett Nelson
Tags: Lendability.com
Federal Reserve Chairman Ben S. Bernanke endorsed consideration of a fiscal stimulus package, citing the chance of a “protracted slowdown” and a “weak” outlook for the U.S. economy into next year
Lawmakers “should consider including measures to help improve access to credit by consumers, homebuyers, businesses and other borrowers,” Bernanke said in testimony to the House Budget Committee. “Such actions might be particularly effective at promoting economic growth and job creation,” he said, calling consideration of a stimulus “appropriate.”
Bernanke’s remarks differ with the Bush administration’s position and may give momentum to legislation being proposed by House Democrats; in January Bernanke told the same panel a stimulus “could be helpful” and urged lawmakers to act “quickly.” The impact of that $168 billion measure faded by July, and economists anticipate the economy will contract in the current quarter.
The Bush administration has been cool to the prospect of another stimulus. Press Secretary Dana Perino, responding to reporters’ questions Oct. 16, said that “a lot of conversations about a second stimulus took place just last month” with Congress, but “we didn’t think” the proposals put forward “would help bring money into the economy.”
Tags: Ben Bernanke, Congress, Dana Perino, Economy, Stimulus Package
Demand Destruction has hit everyone from the oil market to the retail sector and it has finally hit the niche head-kicking market. With consumer confidence at an all-time low people are watching what they spend their money on! It seems like only yesterday that it was at least 1.00 USD to have someone kick themselves in the head.
Brett Nelson
As I am a frequent camper, one of the funnier activities while camping by a canyon or cliff is throwing rocks off of the edge and listening for the rock to hit bottom. I cannot help to notice how the Dow Jones has taken a similar path to a rock thrown off a cliff. The only problem is that we have not heard the rock hit the bottom yet. The market over the last week has been testing a bottom and forming support levels. The market has almost given back its entire rally that shocked everyone, except this trader on Monday. They always say the bottom is never easy or pretty! I can tell you that the saying hold true to our situation. Bottoms form when everyone talks about giving up and just decide to buy and hold because they see the value in beat up stocks or they refuse to panic sell and hold their positions.
If we have not hit bottom, we are close the market seemed to find a support level after hitting the 8000 mark. The true test will be seeing what the Dow does through third quarter earnings season especially in the retail sector. The banks will soon be clear of their bad debt through the government’s full support. This should bring a great deal of confidence back into the market. When the confidence comes back be prepared for several large up swings, similar to the one on Monday.
Brett Nelson
The eroding U.S. economy drove retail sales into their longest slump in at least 16 years, even before this month’s market collapse signaled a deepening recession.
Consumer purchases fell 1.2 percent in September, extending the decline to three straight months, the first time that’s happened since comparable records began in 1992, Commerce Department figures showed today. In another sign of weakening demand, prices paid to U.S. producers fell last month on lower fuel costs.
Sales are slowing just as merchants prepare for the holiday selling season, on which they depend for the largest share of their revenue. San Francisco Federal Reserve President Janet Yellen said yesterday the U.S. may already be in a recession, and stocks dropped amid concern that the government’s plans to inject capital into banks won’t halt the economy’s decline.
Brent Kirk
Tags: Federal Reserve
Global efforts to rescue the international banking system gathered force late Monday, as details began leaking out about the U.S. Treasury Department’s effort to distribute funds to top banks in exchange for ownership stakes.
Industry officials confirmed that Treasury outlined a plan to inject $250 billion of the government’s $700 billion rescue plan into U.S. banks.
Banks set to receive money from the government, according to a report in the online edition of The Wall Street Journal, include J.P. Morgan Chase & Co., Bank of America Corp., Citigroup Inc., Wells Fargo & Co., Bank of New York Mellon Corp.
U.S. officials announced they would unveil their version of a rescue package before the U.S. markets opened Tuesday.
Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke met with top chief executives of the largest banks and Wall Street firms Monday, and after the meeting details of the package began to leak out.
Brent Kirk
Tags: Bank of America, Ben Bernanke, Citigroup Inc., Federal Reserve, Henry Paulson, JPMorgan Chase & Co., New York Mellon Corp., US Treasury, Wall Street, Wells Fargo & Co.
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