Crazy Market Woes (8-24-10)

[Ben]

What's up with the market (NYSE NASDAQ) lately!? My stocks have been taking hits the last four days! Thankfully I bought when the market was about as low as it got, so I'm still quite up, but it sucks to see the downward movement. What's going on lately?

[Rexx]

Housing market and unemployment #s -- worries that the "recovery" isn't working. Actually, I wouldn't be surprised if the fact that consumer debt is dropping and consumer savings is rising are also hurting the market. But personally, I love hearing that -- in the long run, more consumer fiscal responsibility is going to get the market back to more steady, consistent gains. Now, if the government would do the same thing...

[bwdial]

Housing market and unemployment #s -- worries that the "recovery" isn't working. Actually, I wouldn't be surprised if the fact that consumer debt is dropping and consumer savings is rising are also hurting the market. But personally, I love hearing that -- in the long run, more consumer fiscal responsibility is going to get the market back to more steady, consistent gains. Now, if the government would do the same thing...

What he said.

The housing market is the major factor. News came out that sales of existing homes fell 27%. Sales of new homes plummetted as well. One would think that interest rates staying so low would help, but I think that having such a narrow margin (along with regulations requiring increased cash reserves) is keeping banks from actually loaning any money.

[JWL1957]

That is why a housing based economy like we had through the 90's is bad. There are only so many people to buy houses. It was a matter of time before some of the lending companies handed mortgages to anyone with a heartbeat.

[bwdial]

That is why a housing based economy like we had through the 90's is bad. There are only so many people to buy houses. It was a matter of time before some of the lending companies handed mortgages to anyone with a heartbeat.

Wait... you mean my house isn't an ATM? ;)

[JWL1957]

The wife recently (and secretly) killed off her IRA and paid off every single bill we have other than the mortgage and utilities. She said that it was worth 89 thousand 3 years ago, and before she cashed it in it was worth 29. Our house and property was worth 240 before the crash..... 150 now :(

Many banks are sitting on too many bad mortgages right now. They need to unload these before they can start moving the money. I am not sure if this is 100 percent correct, but I think it is part of the problem. I have also been reading lately that alot of investors have just given up playing the markets altogether?

[Blades4me]

Until employment gets better with jobs that actually pay enough to be able to afford a house I really wouldn't expect much to change. Also, all of the shadow RE the banks are holding back so as not to flood the market have an effect also. Since we have out sourced a lot of our industry the housing market is the only thing really left to help out the economy; and that won't happen--refer to the first sentence. I expect things to get worse before getting better and I don't see the economy of the 60's & 70's ever retuning. Kind of reminds me of Rown & Martin's Laugh In back in the late 60's with their military skit with the always true, "War is good business".

[Leftygolfer]

The market seems to be doing nothing recently. Trading volume is low and any movement produces bigger volatility. We are getting ready for our second serving of recession in the first quarter of 2011. If the tax cuts expire which is what is expected that is going to kill job creation and any recovery we have.

Companies are sitting on lots of cash and unwilling to invest right now. There is so much uncertainty with taxes, spending in Washington (how are we going to pay it), energy, and regulation. Is the EPA really going to use the clean air act to regulate green house gases? What is going to happen in the lame duck session after they lose the house? Those are very big concerns for wall street and main street.

[JWL1957]

Every time Obama opens his mouth................. business cringes.

[kpaulhus]

You should watch the CNBC special called "House of Cards" it explains how the housing market is a significant cause of our current global economic issues.

[Spencer]

Every time Obama opens his mouth................. business cringes.

i wish this was on facebook so i could "like" it haha

[TN94z]

Every time Obama opens his mouth................. business cringes.

Wasn't that his plan????

[bwdial]

The wife recently (and secretly) killed off her IRA and paid off every single bill we have other than the mortgage and utilities. She said that it was worth 89 thousand 3 years ago, and before she cashed it in it was worth 29. Our house and property was worth 240 before the crash..... 150 now :(

Yeah, this is pretty much the situation.

Between the banks having to sit on large cash reserves to cover the toxic mortgages they have on the books and the new stricter policies set forth by Fannie and Freddie, their loan officers' hands are pretty much tied. I'm a realtor, and I've seen so many instances where people with pretty good credit are ready and willing to buy a house, but they can't get a loan. One mortgage broker I talked to said that he'd been in the business for 30 years in June, and that he'd never before seen banks look for reasons not to make a loan. They used to look at the paperwork and disregard little dings. Now, they look specifically for those little dings so they can turn down the application. We had a mortgage guy in from a bank that didn't accept TARP money the other day. They've been out of the mortgage market for a while, and now have an excess amount of cash in reserve that they are looking to lend. Furthermore, he said that they are going to keep the loans in house and service them throughout the life of the loan, which means they don't have to underwrite them based on Fannie or Freddie, and therefore will be able to make a decision based on their own criteria. It's going to be banks like this, along with the small, local community banks that hadn't gotten involved in the Wall Street mess that are going to be our way forward. Oh, and House of Cards was pretty much right on the money.

[alf174]

Housing market and unemployment #s -- worries that the "recovery" isn't working. Actually, I wouldn't be surprised if the fact that consumer debt is dropping and consumer savings is rising are also hurting the market. But personally, I love hearing that -- in the long run, more consumer fiscal responsibility is going to get the market back to more steady, consistent gains. Now, if the government would do the same thing...

I agree. Consumer debt is dropping and it needs to. Many consumers are afraid of getting stung like so many did a couple of years ago when their house values crashed following the burst bubble and their homes were no longer a reserve that could be tapped.

My take on what is yet to come? The commercial & industrial real estate markets are due to crash now that the manufacturing sector has contracted and demand has disappeared.

[JWL1957]

In some ways, the crash was a good thing. Alot of people woke up and realized that they were living way beyond thier means. Hopefully the younger generation will see this and save for the bad times when they have the chance.

It is going to be a while before we come out of this hole.