"The consumer is an overloaded camel and the air is full of straws."
Consumer confidence: third-lowest reading in the 56-year history of the survey
Don't need to tell you how the markets reacted this week. A 4-digit Dow isn't as far away as you might think.
But we are overdue for a bounce - although the VIX shows no "fear" in the markets. Regardless, it looks like a multi-week bounce may start at some point this week.
GM stock at a 53-year low.
Want the head's up on Tuesday's announcement on June auto sales? Not good.
According to J.D. Power's forecast, generally accepted as among the most accurate in the auto industry, General Motors Corp. will see a 26.2% decline, Ford Motor Co. a 31.4% drop and Chrysler LLC a 30.1% fall.
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Uh-oh - the world is catching on:
Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero".
"We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."
Barclays Capital said in its closely-watched Global Outlook that US headline inflation would hit 5.5pc by August and the Fed will have to raise interest rates six times by the end of next year to prevent a wage-spiral. If it hesitates, the bond markets will take matters into their own hands. "This is the first test for central banks in 30 years and they have fluffed it. They have zero credibility, and the Fed is negative if that's possible. It has lost all credibility," said Mr Bond.
http://tinyurl.com/3tjerw
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For the large former Fortis contingent in the house:
"American 'meltdown' reason for money injection Fortis. 28th of June, 9:10
BRUSSELS/AMSTERDAM - Fortis expects a complete collapse of the US financial markets within a few days to weeks. That explains, according to Fortis, the series of interventions of last Thursday to retrieve € 8 billion. "We have been saved just in time. The situation in the US is much worse than we thought", says Fortis chairman Maurice Lippens. Fortis expects bankruptcies amongst 6000 American banks which have a small coverage currently. But also Citigroup, General Motors, there is starting a complete meltdown in the US"
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I didn't mention it last month, but Dow Chemical raised prices 20% across the board. They make “thousands of products ranging from plastic wraps to car parts and insecticides.” Now a month later, they do another 25%! 50% price increase in a little over a month!! This affects pretty much everything in Target - why is nobody concerned about this...yet? This surely won’t help the CPI...
http://tinyurl.com/5mnmwk
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Mike Morgan - read him while he still posts publicly...
http://tinyurl.com/64ply3
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$300 Billion Housing bailout bill passes 83-9.
“The resounding vote reflected a keen interest in both parties in claiming election-year credit for helping homeowners amid tough economic times.”
Welcome to paying for irresponsible people/lenders to continue their ways. People’d probably care more if a line-item showed up on their taxes showing you the charge, instead it will be hidden in there with all the other increases for years to come. Be ready.
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We aren’t thinking about winter yet, but it’s definitely not too early for people to prepare for this – maybe some of our Maine-ites can comment...
Apparently, the sky IS falling!
That’s the word not from Chicken Little, but from former Maine Governor Angus King, who says he doesn’t use the term “catastrophe” lightly.
“This is a human catastrophe coming at us in the state of Maine in terms of energy supply and costs,” King said last week at a daylong seminar on harnessing tidal energy and offshore wind to confront runaway energy costs, costs he sees as a direct threat to Maine being habitable.
“This winter, the cost of fuel oil is going to more than double,” he said. “What’s being quoted now is $4.96 — $5 a gallon. That’s $1,000 to fill up your tank in the basement one time, and most people are going to have to fill up their tank six times.
“How is somebody who is making $350 or $400 a week going to pay to fill up the tank to keep warm? How are they going to pay to fill up the truck to get to work? This is, I think, the most serious crisis to ever face the state of Maine.”
“Eighty percent of homes in Maine are heated with oil,” he said. “The national average is 9 percent. If you do the math, 87 percent of the total energy bill of the average Maine person is dependent on oil or natural gas, and that is a particularly serious problem.”
King notes that oil prices have more than tripled in the last 10 years. Only six months ago, he said, the price of oil was $75 a barrel. Last week it was $114.
It’s not $114 any more...
http://tinyurl.com/4uu5cr
Just as bad expected in Montana:
Natural gas is used to heat more than 250,000 Montana homes. During winter months, a household with natural gas heat may use 15 to 20 dekatherms. At current prices, that means a $300 monthly bill.
http://tinyurl.com/6qfovm
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In case you haven't seen the pictures of Iowa - unreal
http://tinyurl.com/3oy5qh
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Here we go – Fannie and Freddie already abusing the power we just gave them – taxpayers beware!!!
Three months after Fannie Mae and Freddie Mac won the freedom to step up home-loan purchases, the government-chartered mortgage-finance companies are doing what critics in the Federal Reserve and Congress had predicted.
Instead of using powers granted by Congress to buy jumbo loans for the first time, Freddie Mac and Fannie Mae are purchasing their own mortgage-backed securities, helping reduce losses, company filings show. The large loans, above $417,000, made up almost a third of the U.S. market last year, according to the Mortgage Bankers Association.
Since the rule change took effect in March, Fannie Mae has packaged $24 million of jumbo loans into securities, while Freddie Mac added $220 million, according to the Inside Mortgage Finance newsletter. In April, the companies spent more than $32.4 billion to buy their own instruments, regulatory filings show.
``They were granted expanded opportunity to help recovery in a troubled housing market and yet have appeared to focus on their own recovery,'' said former U.S. Representative Richard Baker, a critic of the companies who left office earlier this year to run the Managed Funds Association in Washington.
Congress had kept Fannie Mae and Freddie Mac out of the jumbo market to force them to concentrate on low- and moderate- income borrowers.
The change places taxpayers at greater risk ``without facilitating the policy goals I believe the Congress had in mind when they eased these portfolio limits,'' said Baker, 60, a Louisiana Republican.
http://tinyurl.com/6jtd8h
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“It’s never been this bad” – bad omen.
http://tinyurl.com/584v2a
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I'll sum this one up for you if you've made it this far - it's from the monolines to the banks. "Remember that $125 BILLION of insurance we have you covered for? How about we round that down to the nearest zero?" Ridiculous. Oh, by the way, I moved this up from the "less important" section because of the exposure that Merrill Lynch and Citigroup have to the monolines. Monolines go down and those two are boarderline toast.
http://tinyurl.com/6bvne7
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"Less" important, but still worth a scan:
Bank of America is doing just fine - which is exactly why they leave messages on peoples answering machines "offering to settle all 3 accounts (credit card) with me for 70 to 80 percent OFF existing balances.... I'm delinquent on all 3 and getting ready to file. YIKES and they left that on my voicemail!!!"
When the banks go, credit goes, and it all goes...
http://tinyurl.com/3p7k8t
It does seem like everything is happening at once on this planet..
http://tinyurl.com/54rkwk
Lest we forget the upcoming ARM resets - the numbers in here are scary. Oh, and don't forget how BADLY the banks need this money from people.
http://tinyurl.com/6pxwwt
And don't forget the unemployment situation. For the record, I think his unemployment estimates are way low.
http://tinyurl.com/654g6n
If the Fed doesn't have to play by the rules....
http://tinyurl.com/5jqyer
More on how the banks are the ones who actually wrote the bailout bill. Sad how this country is now run.
http://tinyurl.com/6sbdq8
Yep, these are our leaders.
http://tinyurl.com/56w9w8
Multiple states suing Countrywide, some asking their boards to remove Countrywide’s license to sell in their state. Bank of America says the deal is going through (duh, it came out this week that the taxpayers will be paying for up to $5 Billion of it!). This blemish could bring them down. Remember when I said it was a mistake to make Bank of America a Dow stock a few months back??? Have fun taking over Mozillo’s rapidly SINKING ship – and tying your anchor to the Dow Jones...
5 comments:
As far as the Maine perspective goes, I agree with Mr. King. This year for the first time ever, people are starting to go with alternate energy. We purchased a pellet burning stove ang just got it installed this week. If oil prices are indeed 5.00 per gallon this winter, we would not be able to comfortably fill the tank 3-4 times during the course of winter. At the stove shop we purchased our stove from, last May the owner sold 3 soves. This May he sold 36 stoves! He says the stove companies cannot keep up and people that order now will not get one until November.....Crazy. At this point, we now need to buy pellets, last month they were 250.00 per ton, now they are heading to 300.00 per ton a month later! I guess it really is all about supply and demand!
I don't think the hardships that King predicts for Mainers are going to be greatly different from the hardships others in cold-climate states will face. Sure, the midwest is primarily natural gas heated, while the east coast uses heating oil, but the increases in natural gas have rivaled the increase in oil prices. Maine's political views have always been as liberal and environmental as such places as Berkley, so I'm not taking too much credence to King's left-wing suggestion of seeking alternative energy in wind / tidal power. King governed as an independent, but spent like a liberal. Not much changing there.
Thanks for the info Mr. Anon - good to hear you are ahead of the crowd on that one, hopefully it nets you some cheaper prices.
Todd - looks like nat gas up 60% in the past year as well, which isn't good - but with oil pushing 90% itself, and 87% of Maine residents using oil per the article (vs national avg of 9%), that's gonna hurt some people.
Especially those who have to now wait it out 'til Nov. to get the burning stoves mentioned by E.
In the bailout bill article that you say, "it is sad to see how this country is run", I'm wondering what the alternative to a bailout bill is? Granted the banks have self interest in lobbying for their own benefits in the bill, but the article does state that the committee did consult many sources, not just the banks, to arrive at a bill. I know I don't want to be on the hook for all those scammers that are now in trouble, but nor do I want all my banking options to fold along with a huge increase in uninhabited houses. So, what is the alternative to the have a s s e d attempt to help both in trouble homeowners and overstretched banks?
You bring up a valid point that many are using, but...
The part I considered "sad" was that Bank of America/Credit Suisse etc. have a such a large hand in the creation of the bill. Being voted on by people who got improper "gift's" from them.
Foxes guarding the hen-house got us here - continuing doesn't seem like the best course of action. What else can be done? Not showing future banks/lenders that this is how business is done. Let them take the loss/raise money/lower people's mortgage amounts.
I liken it to building a Twins stadium. Pohlad could afford it, why do taxpayers need to help pay for something that will increase his net worth??? Same with the banks/lenders - put your own money in the game - you f'd it up.
Just my thoughts.
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