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4/1/03 - Mortgage Applications down
17% Week over Week: As the war continues to be prolonged
(it is only the 14th day I believe) applications
for mortgages in the United States plummeted 17 percent last week, a
report said on Wednesday, as the Iraq war news preoccupied Americans who
might have otherwise bought homes or refinanced their home loans.
However, I believe we need to put this within the proper
context. The number of mortgage applications fell last week
from the previous week but was still over 50 percent higher than the
average for last year and double the average for 2001.
4/1/03 - Interesting Stock Chart
While the market is rocking and
rolling in recent weeks this chart is a nice illustration of how
bear markets continually give bullish investors hope, before taking
it away quickly.
Source: Chartoftheday.com
The below data is how the stock
market reacted today on hopes that the Gulf War II will end
quickly. Today the U.S. forces moved within 20 miles of
Baghdad and pretty much drove straight thru Saddam's
"Republican Guard" units. This has led to massive
amounts of emotion and positive sentiment. Sentiment swings
tend to lead to volatility. I still believe that the economic
fundamentals are not good and are only getting worse each
day.
3/31/03 - Manufacturing Data is
CRUMBLING!
Manufacturing was a lead indicator of
this recession in 2001. It started dropping months before the
other data started falling. Well, here is what I read
today....If this doesn't concern people I don't know what does.
| The
National Association of Purchasing Management-Chicago said
its factory index fell to 48.4 this month from 54.9 in
February. Readings below 50 mean business is contracting.
A
measure of production fell by the most in 23 years and
companies placed fewer orders with the region's factories.
Weakening manufacturing and expectations of a second
straight decline in employment this month suggest the
economy is stalling.
``It
seems to me as if the economy contracted in February and
March,'' said David Rosenberg, chief North American
economist at Merrill Lynch & Co. in New York.
Federal
Reserve policy makers on March 18 promised ``heightened
surveillance'' of economic data to assess the war's effect
on the economy. Some economists have said the central bank
may consider an interest-rate cut before its next scheduled
meeting in May. The Fed's benchmark rate is at a 41-year-low
of 1.25 percent.
The
purchasing managers' index was expected to fall to 50.5,
according to the median of 53 economists in a Bloomberg News
survey. Manufacturing in the entire country this month
probably contracted, economists say they expect the
Institute for Supply Management's factory index to show
tomorrow.
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3/30/03 - Interesting Economic
Facts
Here are a few interesting tidbits I
read in the last week, summarized for folks:
Consumer
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Consumer
confidence sank this month to the lowest level in nearly a
decade. People are scared. It's only a matter of time before the
gloom translates into a major drop in spending.
-
The
Conference Board, a private business research group, said
confidence fell for the third month in a row as Americans worry
about holding onto their jobs, wealth-destroying financial
markets, rising energy prices and the threat of war with
oil-rich
Iraq
.
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Consumers are
staggering under a record debt load. The surge in oil prices
this week to just shy of $40 a barrel, a post-Gulf War high,
will reduce the amount of money that's available for spending on
non-energy stuff.
-
Job cuts by
U.S.
corporations leaped 42 percent in December. Firings and
layoffs continue to be announced every week. The jobless
claims, which have risen to the recession level of more than
400,000, don't have the footprints of an economic upturn by a
long shot.
-
One of the
best clues that American consumers are not feeling as good about
their finances as they once were can be found in the steady
increase in the personal savings rate. In the last quarter of
2002, consumers socked away 4.3 percent of their income, the
largest amount since 1998. A year earlier, when confidence
readings were higher, people saved less than 1 percent of their
paychecks.
Housing
-
New residual
construction edged up just 0.2 percent in January after jumping
by 4.9 percent in December.
-
What was
troubling is housing starts fell in major regions of the
country, crashing by 16.7 percent in the Northeast and
plummeting by 11.9 percent in the
Midwest
.
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Sales of new
homes plunged by 12.6 percent in January to the lowest level in
a year. They then fell again by 8.1 percent in February to
a seasonally adjusted annual rate of 854,000, the lowest level
since August 2000.
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The number of
homes in foreclosure leaped by 23 percent in
San Francisco
last year. Nationwide, home loans in foreclosure were at a
record high last year. And more people will be forced out of
their homes as unemployment rises.
-
Many
Americans have also turned their homes into virtual checkbooks,
writing a trillion dollars in home-equity loans to pay off
high-interest-rate credit cards. This caused household debt to
soar to a record $8.5 trillion late last year. Borrowers
will be in hot water if interest rates on equity loans, which
are tied to the Fed's prime rate, start to climb. It
happened in 1994 and 1995 when the prime rate went through the
roof -- jumping to 9 percent from 6 percent. I don't think this
will happen but it could.
Stock Market
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The more
money people squirrel away, the less likely they will make new
investments in the stock market. It's also bad for the economy
because the more they save, the less they'll spend on stuff that
will stimulate growth. So don't look for the bad market to end
until the uncertainty is removed.
-
While we have
seen a short term pop in the stock market the trend remains
down. I think this is just a set-up for the next leg down
because the economic fundamentals remain horrible and are
actually weakening in recent months.
Taxes
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