Home Sale Recovery On The Cards?
August 1, 2007
Home sales within the stagnant US housing market could be set to gather momentum, a new industry indicator published today said.
The down and out US housing market has been plagued with scandal over the last few weeks, and its effects on the US economy have been felt around every major stock exchange in the world.
Lax lending practices uncovered within the controversial sub-prime lending market, which some analysts value to the extent of $10billion, have led to increasing defaults on mortgages loaned too far above the borrower’s household income, specifically targeted towards those with poorer credit history.
As a result, mortgage lenders have performed poorly suffering the brunt of bad debts, as have American home buyers with below average economic growth and a growing trade deficit only adding to the US economic problems.
The index of the National Association of Realtors showed a 5% increase through June, well above analysts negative 0.6 forecast.
The rise that has seen the biggest increase in the index in several years has been taken to indicate the start of a potential upturn in the fortunes of the flailing housing market, which has bogged down much of the US economy in recent times.
The news will surely have a positive effect on the stock markets, and indeed within the government, as a sign that the US economy could be on the verge of a turnaround sometime soon.
The Dow Jones jumped after the announcement came today, after a morning of sluggish trading, suggesting investors perceive the figures as positive news for the future of the economy.
Whilst industry experts have been quick to come short of pronouncing a turnaround, many have suggested that the unexpected jump in the index is good news for the future of American housing, and the economy at large.
Share Prices Trade Down Again After New Mortgage Fears
August 1, 2007
Trading indexed across the world have again fallen sharply today, after news of additional mortgage troubles in the rocky US housing market were announced today.
The news came alongside rapidly increasing mortgage defaults with one of America’s largest mortgage lenders, and substantial losses experienced by private equity funds in Australia.
Stock markets have seen very inconsistent trading over recent weeks, with threats from tightening global economies and problems with the US market affecting share sales on all major markets.
European stock markets have fallen dramatically, with the FTSE in London losing in excess of 100 points.
Meanwhile, Asian markets directly reflected the problems in the US and Australia by shedding a substantial portion of their value over the course of trading.
Trading on Wall Street has today shown some brief spells of recovery, but overall movements look to be in keeping with the overall trend of a lack of confidence and prudence in investment.
Analysts have suggested that until the US sub-prime lending crisis is fully uncovered and dealt with, volatility in markets will continue as present, given the widespread impact of the current situation on mortgage lenders and banks.
Additionally, the impact of closing economies worldwide and rising interest rates could be having an effect on traders’ propensity to buy, with growing uncertainty as to the health of economies in Europe and Asia.
Both the Cac and the Dax in central Europe fell substantially, as did the Nikkei in Japan, the Hang Seng in Hong Kong and the Kopsi in Korea, reflecting the worldwide impact of the American crisis.
Additionally, with the growing threat in Eastern Asia from inflation and overheating, markets there have begun to exercise caution in trading, which is only further aggravated by the ongoing US housing crisis in the sub-prime lending market.
US Stock Markets Bouncing Back
July 31, 2007
Stock markets in the US have today showed strong performance thus far, signifying an apparent recovery from the losses throughout the course of last week.
The strong performance over trading this morning and yesterday has been echoed around the world, with most of the world’s major stock exchanges posting positive trading results.
US stocks closed up on yesterday, after recovering from the results of last week. After plummeting as a result of the stagnant housing market and perceived poor economic performance, the figures last week reflected the worst stock performance for over four years in the US.
Analysts feared that almost universal interest rate rises could begin to take their toll on businesses, hence market confidence hit rock bottom with widespread share sales driving prices and indexation figures down.
However, many companies have posted positive results since then, and the impact of tightening global economies seems not to have impacted upon company profits and performance too greatly.
The Dow Jones closed 92.8 points up, whilst the Dax and Cac in Germany and France were also up at the close. The Nikkei grew by 5.5 points, whilst the Hang Seng in Hong Kong also enjoyed a growth of in excess of 169 points.
The FTSE 100 in London closed down 9.1 points over the course of yesterday, although recovered through the morning today, up by over 124.2 points by midday.
With strong trading over the course of today, stock markets look set to continue their positive growth worldwide, as the takeover trend in recent years continues to remain strong in spite of higher interest rates.
Both the Bank of England and the European Central Bank are expected to make decisions on interest rates this Thursday, which could have a further knock-on effect on the performance of stock markets across Europe.
SEC’s “Operation Spamalot” targets e-mail scams
March 9, 2007
The US Securities and Exchange Commission has temporarily suspended trading in 35 companies who were advertising their shares via e-mail spam. Between them, someone had been sending out as many as 100 million e-mails a week that carried subject lines intended to entice people to invest in the companies. Their aim, according to the SEC, was to pump up the share prices of the stocks by encouraging people to invest and then quickly dumping their own shares while the price was artificially inflated.
The SEC did not say whether the companies in question themselves were behind the spam campaigns, and while they said they know who sent the e-mails, their identities were not made public. The shares are not traded on stock exchanges, but appear on “Pink Sheets”, an electronic service that does not investigate the backgrounds of brokers listing the stocks.
The investigation, called “Operation Spamalot” after the Broadway musical based on material by the Monty Python comedy troupe, is ongoing and the SEC said that they will continue to track down and punish those who send the e-mails, which it called “illegal and destructive”.
Trading in the 35 companies whose stock was advertised in this way have been suspended from trading for 10 days, through March 21.
SEC in insider trading investigation with a twist
February 6, 2007
The US Securities and Exchange Commission is looking into whether big banks have leaked trade information to favorite clients in a bid for favor with those clients. The investigation is said to have as its object discovering just how common insider trading is in the New York markets.
Brokerages that act ahead of client orders for their own benefit has long been an issue on Wall Street, but the current investigation is more focused on whether banks are tipping off their best customers, including hedge funds, with inside information that allows them to make trades with other banks with the purpose of hiding the source of the information that allowed them to make advantageous trades.
The SEC sent out letters last month to major banks asking for a wide variety of information, including all stock and option trading data for the banks and their customers for the final two weeks in September, the end of the third quarter. Recipients of the letters included Deutsche Bank, Merrill Lynch, Morgan Stanley, and UBS.
The SEC will use the information to determine whether it looks like banks are tipping off customers in ways that allow the customers to make trades that they would not have made without the information. If any evidence of such inside trading is turned up, a formal investigation that could lead to civil charges against the institutions and/or individuals involved.
The SEC has confirmed that the investigation is being conducted but would not offer any details, while none of the banks included would comment.
SEC in insider trading investigation with a twist
February 6, 2007
The US Securities and Exchange Commission is looking into whether big banks have leaked trade information to favorite clients in a bid for favor with those clients. The investigation is said to have as its object discovering just how common insider trading is in the New York markets.
Brokerages that act ahead of client orders for their own benefit has long been an issue on Wall Street, but the current investigation is more focused on whether banks are tipping off their best customers, including hedge funds, with inside information that allows them to make trades with other banks with the purpose of hiding the source of the information that allowed them to make advantageous trades.
The SEC sent out letters last month to major banks asking for a wide variety of information, including all stock and option trading data for the banks and their customers for the final two weeks in September, the end of the third quarter. Recipients of the letters included Deutsche Bank, Merrill Lynch, Morgan Stanley, and UBS.
The SEC will use the information to determine whether it looks like banks are tipping off customers in ways that allow the customers to make trades that they would not have made without the information. If any evidence of such inside trading is turned up, a formal investigation that could lead to civil charges against the institutions and/or individuals involved.
The SEC has confirmed that the investigation is being conducted but would not offer any details, while none of the banks included would comment.
The world of financial products
December 14, 2006
The recent boom in third-party financial brokerages has led to a much larger - and potentially more confusing - outlook for consumers looking for insurance, mortgages, and loans.
The reason for the boom is simple - some percentage of the commissions paid for financial products are being increasingly passed over to consumers. This leads to real savings on purchase.
However, there are also now a much wider choice of financial products available. This is not least due to the much more varied financial status of UK society, which see bad credit scoring and self-certification and lesser evils than not lending at all.
An example is where someone can compare car insurance from providers such as Prudential, Direct Line, Admiral and the AA.
Consumers also have a whole range of building and home insurance available - and this market was recently aggressively attacked to promote Barclays Home Insurance after they offered a £50 rebate to new customers.
It doesn’t end there - high street lenders have became much less conservative and and now offer increasingly flexible mortgage products, offering everything from bad credit, 100%, and self-certified mortgages to buyers.
The loans industry has naturally followed suit - the normal staple product of loans companies, the Personal Loan has now grown into a much wider field of loan products, aimed at all financial circumstances.
US Treasury announces new debt sale
August 3, 2005
The US Treasury announced on Wednesday that it would resume auctions of 30-year government bonds early next year. It had stopped issuing the 30-year paper in 2001, a time of budget surpluses.
Treasury said it was resuming issuance of the longer-dated bonds in order to give the government more options in its borrowing, made necessary by the government’s current deficit.
Dealers have asked for the return of 30-year bonds. The Chicago Board of Trade reacted to the announcement by saying that the bonds would be a benefit to investors by providing a secure long-term investment alternative.
In announcing the upcoming issuance of the new bonds, Treasury Secretary John Snow said from Brazil that they would be auctioned twice a year and that the auctions would be of modest size. Assistant Secretary Timothy Bitsberger said that $20 billion to $30 billion of the bonds would be sold each year, and that the first auction would come some time in the first three months of 2006.
The first of the new bonds to be sold will mature in February 2036. In another announcement related to government bonds, the Treasury Department said that it would sell only $44 billion in 3-year, 5-year, and 10-year bonds next week, below the $46 billion it had expected to sell due to a better short-term deficit outlook.
Fitzpatrick proposes SEC control of competitive ratings
June 28, 2005
Legislation to open up the credit rating industry to more competition has been introduced to Congress in a bill by Representative Michael Fitzpatrick.
The legislation would let any rating agency that meets certain standards register with the Securities and Exchange Commission. It would also allow the SEC to inspect rating agencies and regulate how they handle conflict of interest situations and non-public information.
Passage of the bill through Congress would not only open up the industry for competition, but it would also greatly reduce the power of such agencies as S&P and Moody’s.
Those two agencies currently hold 80 percent of the market between them. In introducing the legislation, Mr. Fitzpatrick criticized these two agencies for failing to give adequate warning of the disasters at Enron and WorldCom.
Under the current system, the SEC designates select agencies as “nationally recognized statistical rating organizations,” and only credit ratings generated by those agencies are legally valid in the US.
Dollar rises against foreign currencies
June 9, 2005
The dollar was up on Thursday in relation to the euro, the yen, sterling, and the Canadian dollar on Thursday.
The dollar was up 0.4 percent against the euro to $1.2177. It was rose by 0.5 percent against the yen to ¥107.76, gained 0.3 percent to $1.8176 against sterling, and advanced by 0.5 percent to C$1.2579 in relation to the Canadian dollar.
Predictions from JP Morgan that interest rates would stand at 4.25 percent by the end of the year and that the dollar would strengthen to $1.18 in relation to the euro and to ¥110 against the yen by March 2006 helped the dollar higher.
So did comments by Federal Reserve chairman Alan Greenspan to a Congressional committee on Thursday. He gave a fairly optimistic assessment of the US economy, including his belief that the US economy is on “a reasonably firm footing” and that inflation is at an acceptable level.
Dollar enjoys strength on retail figures
May 12, 2005
The US dollar was up in relation to the euro, the yen, sterling, and the Australian dollar in Thursday’s mid-day trading in New York as strong retail sales figures added to previous good news on employment and trade.
The dollar reached a six-month high against the euro as it rose 0.8 percent to $1.2706; it was also up 0.9 percent in relation to the yen, to ¥106.68, a three-week high.
US currency was also up in relation to sterling, rising 0.3 percent to $1.8658, a six-week high, and it advanced 0.9 percent in relation to the Australian dollar, to $0.7664.
Mortgage lender recovers value as sheds false revenues
April 1, 2005
Things haven’t been so good at Freddie Mac since the new millennium began. An investigation found that the second-largest mortgage-finance provider in the United States had understated its earnings by 5 billion dollars in the years 2000 to 2002.
Among the repercussions of that investigation was a major scandal that led to the dismissal of top executives, major changes in accounting procedures and oversight of their operations, and issuance of restatements of earnings for those years.
The investigation and it’s fallout also resulted in a delay of the reporting of Freddie Mac’s earnings for 2004. The report, when it was finally released on Thursday, showed that its net income had dropped by 42 percent, although the fair value of its assets had actually increased by 13 percent.
The report didn’t seem to worry Wall Street; by the middle of the day Thursday, Freddie Mac’s stocks had gained 1.2 percent.
Corporate giants report good on Q4 earnings.
February 2, 2005
US markets warmed to strong profit results from billion dollar companies today.
Boeing reported net profits of $186m - down 84% on last year - namely due to closure of its 717 programme. However, this was still above narket expectations. Strong defence contracts helped buoy performance, and the coming Boeing 7E7 Dreamliner gives 2005 a very positive outlook for the company.
News Corp, Rupert Murdoch’s media company, reported an 80% increase in Q4 profits to $386m (£205m). Film and DVD sales suprised analysts by prociing an engine to above-expectation profits - and are expected to provide further growth in 2005.
Google reported Q4 profits of over $204.1m , which again exceeded market expectations, resulting in a stock price’s rise that at one point peaked over 7% in value at $216.80 per share.
Amazon was the only large trader to disappoint. Although a tax credit swelled their Q4 earnings to $346.7m, the site of overall revenues climbing but with little return on net profits left shareholders feeling shunned in lieu of consumers, and devalued the company by over 13%.
Advertisement
