Daily Updates

Fannie Mae & Freddie Mac Will be put into Conservatorship - so says WSJ

September 5, 2008 @ 11:55 pm

The Wall Street Journal broke a story after the market closed today that the US Treasury Department was “close” to a plan to provide aid to Fannie Mae and Freddie Mac. (Link to Article) The Wall Street Journal said that an announcement may come as early as this weekend. My guess is that if there is going to be any announcement it will be on Sunday before the Asian markets open. So far, Fannie and Freddie are declining to comment and so is the US Treasury Department. There are more questions than answers right now. I can assure you that Lisa and I will be monitoring this situation very closely and will report on it as soon as we obtain any additional information. Because this news came out after the futures market had closed up for the weekend we can’t gauge the initial reaction of this news. However, the common shares of Freddie and Fannie did tumble after hours as it is thought that whatever the plan is it will wipe out the common shares. Also, there was a reaction in... [Read more...]

Bank Failure - Silver State Bank of Henderson, NV

September 5, 2008 @ 9:45 pm

Nevada State Bank Acquires the Insured Deposits of Silver State Bank, Henderson, Nevada FOR IMMEDIATE RELEASE September 5, 2008 Media Contact: David Barr Office – 202-898-6992 Cell – 202-622-4790 dbarr@fdic.gov En Español Silver State Bank, Henderson, Nevada, was closed today by the Nevada Financial Institutions Division, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. To protect the depositors, the FDIC entered into a Purchase and Assumption Agreement with Nevada State Bank, Las Vegas, Nevada, to assume the Insured Deposits of Silver State Bank. The branches of Silver State Bank will open on Monday as Nevada State Bank in Nevada and National Bank of Arizona in Arizona. Depositors of the failed bank will automatically become depositors of Nevada State Bank or National Bank of Arizona. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Over the... [Read more...]

Market Update - Indices Struggle with Opening Gap Resistance Levels

September 5, 2008 @ 2:48 pm

The major indices have been struggling with the opening gap resistance levels. Lehman (LEH) rumors are circulating once again of someone may buy them and that gave the market a bit of a boost. But at the moment the broad market is still struggling to make any headway, and when it does it quickly falls back again. The rest of the trading day remains ‘confused’ at best. Reminder that it is Friday so I will be watching my inbox for announcements from the FDIC about any new bank failures tonight. Shelia Bair of the FDIC kind of tipper her hand earlier in the week when she spoke that the FDIC has enough money (for now) to deal with the upcoming bank failures.  Read More →

Prime Mortgage Delinquencies on the Rise

September 5, 2008 @ 10:17 am

That’s right, I said ‘Prime’ mortgages. Sub prime implosion has continued to spread. The cancer that is the credit implosion has metastized and spread. US Q2 MORTGAGE DELINQUENCIES:  6.41% V 6.35% PRIOR - Highest level on record (29 years is the total data collection period) - Prime mortgage delinquency rate 3.93% v 3.71% prior -  Mortgages in foreclosure at record 2.75% v 2.47% q/q 1.40% y/y  Read More →

Futures Drop on Unemployment Data

September 5, 2008 @ 9:09 am

Our predictions of rising unemployment have been on target since the end of 2007. Our earlier prediction for 6.4% unemployment rate by the end of this year remains on track to being met. Additionally, the rate of rise is increasing which may require us to revise our estimates for unemployment upwards for 2009. We will be watching the reaction in the markets for an eventual retest of the July lows on the S&P 500 index. Will those lows be retested today? Or will the market float downwards over the next few days and weeks? Can’t say at this moment, but one thing we have remained very clear about for over a year now is that the markets will continue to go lower over time. We remain solidly within a bear market and shall be for a considerable time to come in our estimation. Bear market rallies will come and go, but the S&P 500 target price of 1040 to 1100 remains very real. Can the markets go even lower than that? Yes, and the possibility of that is becoming more and more a potential... [Read more...]

AUGUST UNEMPLOYMENT RISES TO 6.1%

September 5, 2008 @ 8:33 am

AUGUST CHANGE IN NONFARM PAYROLLS: -84K  V -75KE; CHANGE IN MANUFACTURING PAYROLLS: -61K V -35K - Prior June Non-farm Payrolls revised Higher from - 51K to  -60K - Prior Manufacturing Payrolls revised Lower from -35K to  -38K  Read More →

Charts - Path of Least Resistance

September 4, 2008 @ 11:22 pm

After today’s significant sell off on higher volume, the path of least resistance is to the down side. Even an attempt to rally the market upwards will be met with resistance levels that may very well just act as a brick wall and we head right back down to the July lows. The action today has clearly opened a new door to further declines in the broad market over the weeks and months ahead. It was a significant event that needs to be respected. Bear market rules STILL apply.                              Read More →

Market Wrap - World Economies Continue to Weaken

September 4, 2008 @ 10:38 pm

Yea, that would about sum up the sentiment in the market today. It did not help matters when this mornings jobless claims showed no let up in US employment declines. Another catalyst was the poor retail sales data (same store sales) that came in during the pre market hours. The mood going into the opening was fairly negative. Sales at retailers continue to show a building trend of consumers spending less and buying only the essentials (i.e. Wal-Mart sales increase). The back to school shopping season appears to have been a disaster. Throughout the day there were rumors of hedge funds blowing up (liquidating their holdings) and  Fed President Janet Yellen’s comments on the future were very pessimistic. She said today that there are “substantial” risks of slower US economic growth. She went on to say that the U.S. economy’s acceleration to a 3.3 percent growth rate in the second quarter “is likely to prove ephemeral”.  “My forecast is for sluggish... [Read more...]