Commercial Real Estate Loans
Stocks continued their recent climb.
Bonds, oil and gasoline all went sideways.
The Dollar lost over one cent – a major move downward.
Gold gained $11, and has broken out of its recent trading range to the upside.
In the news today….
Economic Indicators – were up in June. Ergo the increase in the stock market recently. What indicators?? Well, home starts, lower jobless claims and higher stock market – those are the economic indicators used to predict the economy for the next 3 to 6 months.
Do you believe these indicators? Well, they are grounded in history. BUT, we are in virgin economic territory right now, so it is very dangerous to hang your hat on past history. Home starts are flaky because house prices are continuing to go down, but home starts are a local phenomenon, so it is possible to have pockets of new homes. Lower jobless claims happened, but the auto industry has interfered with the real measure. The stock market has gone up, but will it continue? These are the thoughts for you to ponder.
CIT is saved – from within. Its bondholders ponied up $3B in additional funds. Why?? If CIT had declared bankruptcy, the bondholders would have been worse off. So, this is self-interest at work; and it represents capitalism at work. In other words, the bondholders assessed the risk of various options, and this was the least risky for them. They have $10B in security, and a high interest rate on the new money. More self interest. It doesn’t solve the CIT problem, but it buys time for CIT to attempt to work their way out of their mess. I usually don’t comment on individual companies unless they have a major impact on the overall economy. CIT is one of these companies, as its demise would be a major blow to small businesses across the USA.
Commercial Real Estate Loans – U.S. banks are charging off failed commercial mortgages at the fastest rate in 20 years. If the pace continues, commercial loan losses could reach $30B by the end of 2009, with regional banks likely to be especially hard hit.
57 Banks have Failed – so far this year. And, we’re only half way through the year. It is predicted that even more banks will fail next year. So, far no individual has lost one cent – provided they stayed within the FDIC limits of $250,000 per unique account. People who went over that limit lost money – let that NOT be you.
Here are the last numbers for today:
Dow Jones 30 Industrial – 8848 (up 108 points)
10 Year Treasury Bond – 3.59% (down 0.07%)
Euro – $1.4229
Gold – $949 (up $11)
Oil – $63.98 (up $0.42)
Gasoline $1.79 (up $0.02)
