27 Jul 2007

Posted at 13:10h in The Friday Brief by
Banks and other credit issuers took it on the chin this week with growing uncertainty in the credit markets. Citibank is down over 4% for the week while the S&P Global Financials Sector Index is down 4% over the past two weeks. The news of continuing declines in housing fueled worries that the broader credit markets would be damaged by a growing rate of sub-prime mortgage defaults and foreclosures. Wednesday, the National Association of Realtors reported that existing home sales fell more than expected by 3.8% in June to a seasonally adjusted annual rate of 5.75 million units, the lowest level since November 2002. Yesterday the Commerce Department reported that new-home purchases in June fell by 6.6%, the most since January.

29 Jun 2007

Posted at 13:18h in The Friday Brief by
With one day remaining, it’s safe to say that the second quarter was a good one for equity investors. The S&P 500 is up just a smidge under 6% and the NASDAQ increased by 7.7%. Much of the increases in both indices came in April as mega-corporate buyouts and mergers out did the former on a daily basis. Corporate earnings were surprisingly good as they climbed 11.6% on average during the second quarter, more than three times analysts' estimates in March. And the economy showed signs of improving growth without significant inflation pressures.

22 Jun 2007

Posted at 13:26h in The Friday Brief by
Once again the big unregulated hedge funds are roiling the markets. Stocks and bonds have been down over the last couple of days on concern that hedge fund losses at Bear Stearns may signal wider problems in credit markets, particularly the sub-prime mortgage markets. The two hedge funds’ speculation in sub-prime collateralized debt obligations has threatened collapse as creditors including Merrill Lynch, Bank of America, and Citigroup moved to sell some of their collateral at fire sale prices.

15 Jun 2007

Posted at 13:35h in The Friday Brief by
Today’s buying strength brings stock indices close to their all-time highs. The S&P and Dow are pennies away while the NASDAQ has blow considerably past its seven year high. In all the indices dropped between 3 ½% and 4% starting on June 5th. On that day inflation fears rocketed long term interest rates to three-year highs. The good news today is that an important measure of consumer price inflation increased less than predicted. The index which excludes food and fuel rose only 0.1% last month following a 0.2% rise in April. The measure which includes gasoline was up .7% for the month. The good news so far is that rising energy prices have not been passed along by producers to consumers.