October 29, 2008
October 29, 2008 by admin
Following one of the largest rallies in recorded history, today the Fed lowered the fed funds rate down to one percent. The stock market which has dropped over thirty percent in the past six months appears to be closing in on a bottom. Most traders believe the market is now in a trading range between 8000 & 9000 and that the bottom and top of this market is 7800 and 9500, if the top or bottom of this market is breached then the markets could move agressively.
The change in the Fed Funds rate was expected by most economists and a good sign that the Fed is working to help to restore confidence into the market and help to slow down the recessionary fears. Mortgage rates have been trending up and are still above six percent on most fixed rate loan programs. The stock market is likely to continue to be volatile and could have a large move next week following the election.
Credit card rates could move lower with another fed rate cut
October 26, 2008 by admin
The FOMC meeting this week could add some needed relief for the average consumer. The negative news that has been flowing from news papers and media outlets have pushed the idea of a recession from a possibilty into a full blown reality.
Consumers who have credit cards that are directly tied into the prime rate should are likely to see an additional decline of 1/2 pt to their interest rates. The prime rate has dropped sharply in 2008 as the fed has moved to drop the fed funds rate to help unfreeze the credit markets, as the fed funds rate has declined lenders typically follow suit and lower the prime rate.
Not all consumers will benefit from the rate cut as card issuers often have floors tied into the rates they offer to consumers. This essentially means they reserve the right to have a limit to how low interest rates can move on their cards.
Lenders have pulled back sharply on the amount of offers they are now sending to consumers. The fallout in the credit markets has effected consumer loans, auto loans and credit cards as banks look to mitigate the risk in their credit portfolios.
Fear and panic result in huge declines in the world equity markets
October 25, 2008 by admin
The amount of fear in the market appears to grow on a daily basis as investors try to find a bottom to the stock market. Accross the world equity markets continue to falter as the growing concerns about growth grab the headlines. The amount of money removed from the stock market is almost hard to quantiy as it surpasses trillions of dollars in wealth.
What many economist believe started in the U.S. with the fallout in the housing market is now being felt in countries from Australia to Iran as the world tries to stop the economic slowdown from gaining speed. Oil prices have dropped sharply, despite a recent change by OPEC to slow down production. The decrease in oil prices are likely to be one of the factors that help to restore the economy faster. In addition, the U.S. housing market may finally be closing in on a true bottom as home sales are begining to trend higher.
Mortgage rates finished the week lower for the second week in a row. Combining this with another expected cut in the fed funds rate, the amount of liquidity added to the markets will certainly help assist with a recovery. There is growing speculation that the government will look for an additional stimulus package to help jumpstart the economy. The sooner the U.S. economy turns around, the world markets are likely to follow suit.
Stocks continue to decline in October
October 16, 2008 by admin
The stock market continued marching lower as news out of the most recent factory order survey, following up a grim report out of the retail sales market has pushed investors confidence lower. The market which is down over 22% for the month of October continues to deal with a number of critical issues.
There are some reasons to be optimistic. The credit markets have shown three straight days of slight improvements to the LIBOR rate. This is a good sign that the credit markets and interbank lending is starting to improve. There is also growing speculation that the U.S. will soon roll out another government back stimulus package aimed at spurring growth.
There are a number of companies that have reported earnings that have topped analysts forecasts, including sunpower & united technologies, and most importantly have stood behind their growth forecast for the next year, a clear indication that the markets may be soft in areas but their is still future growth ahead.
October 8, 2008
October 8, 2008 by admin
The stock market dropped for the sixth day in a row despite the FOMC working with international banks on a collective move to lower interest rates. The market is selling off as concerns grow that the U.S. will be heading into a long recessionary period. The government and Federal Reserve have been working around the clock to help bring relief to the credit markets which continue to feel the strain of the global credit crunch.
The fed lowered both the fed funds rate and the fed discount rate. Banks often change the prime rate following a fed rate cut and the prime rate now stands at 4.5%. Mortgage rates trended up with the news today.
October 5, 2008
October 5, 2008 by admin
The market digested major news on Friday with the final approval of the long anticipated government bailout package for the banking industry. Earlier in the day the economy was dealt another blow as the labor market reported that the economy had lost over 160,000 jobs for the month of September. Every month in 2008, the economy has lost jobs and the unemployment rate remains above six percent.
The news out of the labor markets did not surprise most economists who recognize that the U.S. is now in a full born recession. The immediate reaction of the passing of the seven hundred billion dollar bank bailout was a sell off in the stock market. Mortgage rates remained relatively unchanged with the news and fixed rate loans are hovering in the mid six percent range.