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American Credit Scores Plunge

Now here's a real worry for the Federal Reserve. According to the Associated Press,25% of Americans have a credit score below 600.

A score below 600 automatically puts you in an unwanted category. If you happen to fall below 600, forget about buying a house. Lenders and landlords will look at your FICO score before renting and really don't care what the reason is for the low score.

Continue reading American Credit Scores Plunge

U.S. Home Buying Applications Plunge to a 13-Year Low

If you were a potential home buyer and heard talk of a double dip recession, what would you think? You might think that the next drop will be worse than the first and that you probably shouldn't buy now. You might wait a bit to see what happens. That's exactly what most Americans are doing and that's exactly why demand for home loans is at a 13-year low.

This is happening despite record low mortgage rates of 4.69%. The record low rates attracted refinancing, which accounted for 78.7% of all applications last week. But even refinancing fell 2.9%

Continue reading U.S. Home Buying Applications Plunge to a 13-Year Low

The New World of ETFs

Twenty years ago, Nathan Most invented the exchange-traded fund (ETF) as a simple mutual fund that trades on exchanges like a stock. Then other creators like Blackrock Inc. (BLK) joined in, creating ETFs for commodities as well as exotic ones that double and triple returns. They are called 2x and 3x shares.

When first introduced, ETFs were shunned, mainly because investors knew little about the way they worked. Slowly, they gained momentum, and now there are some 260 such funds trading $40 billion globally. On some days, more than four out of ten trades on U.S. stock exchanges involve ETFs.

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Falling Bond Yields Highlight Investor Fears

Bond yields around the globe are painting a grim picture for anyone who is still bullish on the stock market.

Yields on the U.S. Treasury's 10-Year note dropped to a 52-week low of 3.09% on Wednesday, at the same time the yield on Japan's 10-year bond is hitting seven-year lows of 1.145%.

Investors also pushed yields on Germany's 10-year Bund to 21-year lows of 2.5%.

Sinking bond yields indicate demand for bonds is increasing, and we typically only see demand for bonds rise to these levels when investors are jumping out of the stock market.

Continue reading Falling Bond Yields Highlight Investor Fears

Number of World's Millionaires on the Rise

Well, millionaires of the world, your club has become a bit less elite. The number of millionaires across the globe rose by an astounding 17% in 2009, according to the 14th annual "World Wealth Report" published by Merrill Lynch and Capgemini SA. That's a lot of wealth in a time of global economic crisis.

But first, what defines a millionaire? No, having a baseball-card collection that might fetch that kind of a price tag doesn't count (unfortunately). The way the Merrill study defines it is those households with at least $1 million in investable assets, not including primary residences. There are now 10 million of these households in the world, up from 8.6 million in 2008.

Continue reading Number of World's Millionaires on the Rise

Do High Gold Prices Mean Future Trouble?

The price of gold has recently set a new high, which may indicate a lot of fear about the future by investors. Could high gold prices be telling us the financial storm is far from over? Might record gold prices be indicative of more fiscal trouble in the years to come?

It has been 15 months since the March 2009 lows in the stock market and we have seen significant improvements since. Yet, Europe is full of fiscal problems; governments are spending too much money; and there is still a lot of uncertainty in the market.

Continue reading Do High Gold Prices Mean Future Trouble?

George Soros Says Financial Crisis Entering Act Two

George Soros plays the bear much more often than the bull. In a dramatic statement at a conference in Vienna, he said: "We have just entered Act II" of the crisis Again in dramatic fashion he states: ""The collapse of the financial system as we know it is real and the crisis is far from over." "Indeed we've just entered Act II of the drama."

What does Soros see that makes him so bearish? For one thing he believes that the financial crisis in Europe will worsen and attempts to cut budget deficits will push the global economy back into a recession.

Continue reading George Soros Says Financial Crisis Entering Act Two

Nassim Taleb, Author of Black Swan, Predicts Trouble Ahead for World Economies

Nassim Taleb, author of The Black Swan, predicts trouble ahead for world economies. The Black Swan is a metaphor for unexpected events because people view the world as something structured, ordinary and comprehensible.

Some of his statements are factual, and some are conjecture. Here is list of quotes from his interview on CNBC:

Continue reading Nassim Taleb, Author of Black Swan, Predicts Trouble Ahead for World Economies

Home Purchase Loan Demand Slumps to 13-Year Low

The $8,000 tax credit for first time home buyers has ended. That created a vacuum. Home loans fell off 5.7% in the week ending June 4, the lowest level since 1997. Purchase applications dropped 35% below their level four weeks ago. Let's keep in mind that applications are a good predictor of future sales.

The refinance market is also suffering. The MBA refinance index fell 14.3%, after rising for four straight weeks. This is taking place even when mortgage rates are below 5%. 30 year loans are down to 4.81%.

Continue reading Home Purchase Loan Demand Slumps to 13-Year Low

Gold Futures Jump to $1,240.30 per Ounce, Up $22.60

Gold is on the move today. August gold futures are trading at $1,240.30 per ounce, up $22.60 (12:30 EDT.) One of the triggers that set the rally off was a breach of the $1.19 level in the euro. The June euro traded at $1.18740 earlier this morning.

Leonard Kaplan of Prospector Asset Management commented: "People are still buying gold for currency protection." "People should remember that the euro was once at 85 cents and I see no reason why it shouldn't go there again."

Continue reading Gold Futures Jump to $1,240.30 per Ounce, Up $22.60

Another BP Attempt to Solve Gulf Oil Leak Fails

Using a diamond studded wire saw operated by an underwater robot, British Petroleum (BP) tried to saw the pipe that runs from the wellhead up to the drilling rig. That pipe now lays on the ocean floor. The plan was to saw the pipe off and cap the well. However, the saw that was doing the cutting got stuck in the pipe and the attempt had to abandoned. Now BP has to try a second cut. Admiral Thad Allen of the Coast Guard said: "I don't think the issue is whether or not we can make the second cut." It's about how fine we can make it, how smooth we can make it."

Continue reading Another BP Attempt to Solve Gulf Oil Leak Fails

Do Dark Pools Benefit or Harm U.S. Equity Trading?

The Securities and Exchange Commission (SEC) is conducting a discussion in Washington on dark pools.

What are dark pools and how do they function? Dark pools are private U.S. stock venues, like a hidden stock exchange. Big players use these venues to trade large blocks of stock off the exchange floor. The identity of traders using dark pools is kept secret. This is a big departure from trading on the NYSE floor where trades are made via the open outcry system. The size of trades is made public on the ticker tape. In dark pools none of this information is public.

Continue reading Do Dark Pools Benefit or Harm U.S. Equity Trading?

Germany Wants Wider Ban on Naked Short Selling

In yet another surprise move, Germany wants to widen its ban on naked short selling. According to the Wall Street Journal, Germany's Finance Ministry proposed extending its ban on "naked short selling" to cover all stocks and euro currency derivatives not intended for hedging.

Naked short sales covers sales not owned by the seller and isn't borrowed to cover the position while it is held. Many politicians in Germany see naked short selling as a way to manipulate the markets. What happens is that naked short sales can dwarf the underlying assets.

Continue reading Germany Wants Wider Ban on Naked Short Selling

AIG Managers to Receive $380 Million

American International Group, Inc. (AIG) earned $1.45 billion in the first quarter. AIG owes the government $182.3 billion. AIG plans to pay its managers $380 million in bonuses. Do you see anything wrong with this picture?

Up to 3,000 managers will receive an average of $125,000. AIG has maintained that it has to pay these huge bonuses to retain their employees. This is hogwash. You can bet that there are thousands of unemployed persons on Wall Street who can do the job.

Continue reading AIG Managers to Receive $380 Million

Will Goldman Sachs Face Criminal Charges Soon?

Goldman Sachs Group, Inc. (GS) has been under investigation by the SEC for alleged securities fraud. The alleged violations against Goldman Sachs are civil charges. Now the Goldman Sachs saga is taking a more deadly turn. The US Attorney's Office in New York is looking into the case to determine if criminal charges are warranted.

This changes the whole dynamic of the case. Civil charges usually involve a fine and bar from trading. However, if you remember Enron, criminal charges can include not only fines but also jail time.

Continue reading Will Goldman Sachs Face Criminal Charges Soon?

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Symbol Lookup
IndexesChangePrice
DJIA-1.2210,465.94
NASDAQ+3.012,254.70
S&P 500+0.071,101.60

Last updated: August 01, 2010: 01:46 AM

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