There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:
- On Monday, the Dow Jones Industrial Average jumped up by 275 points.
- On Tuesday, the Dow Jones Industrial Average fell 232 points.
- On Wednesday, the Dow Jones Industrial Average plunged 514 points.
- On Thursday, the Dow Jones Industrial Average rose 172 points.
- On Friday, the Dow Jones Industrial Average dropped another 312 points and closed the week at 8378.
- Investors in CDO’s that invested in credit default swaps or other structured finance vehicles tied to corporate debt are facing losses of up to 90% of their investments.
- The Fed announced that it is providing up to $540 billion in financing to money market funds under its Money Market Investor Funding Facility.
- Well-known economist Nouriel Roubini of New York University predicts that the United States is entering a recession which he expects to last two years and to be deeper than previously expected; however, Roubini does not expect a depression.
- Moody’s Economy.com reports that approximately 12 million homeowners currently owe more on their homes than their homes are worth; the number of homeowners “under water” is expected to rise to almost 15 million next year.
- Wachovia, which is in the process of being acquired by Wells Fargo, reported a loss of almost $24 billion in its most recent quarter.
- The Fed recently reduced the value of assets that it acquired in the Bear Stearns’ bailout by $2.7 billion ? so much for suggestions that the American taxpayer wouldn’t be significantly impacted by the government’s action.
- In August, home prices experienced the largest drop in at least 17 years.
- Credit Suisse wrote-down $2.06 billion on mortgage securities and buyout loans in the third quarter.
- Merck announced that it was cutting 7,200 jobs as profits declined.
- Yahoo reported that it was cutting 1,500 jobs ? approximately 10% of its workforce.
- Goldman Sachs announced it was laying-off approximately 10% of its workforce or 3,260 employees.
- As many as 10,000 Merrill Lynch employees may lose their jobs when Bank of America consummates its $50 billion acquisition of Merrill.
- Xerox plans to eliminate 3,000 positions thereby reducing its workforce by approximately 5%.
- Chrysler announced that it would cut 25% of its salaried workers.
- CNBC reported that “Wall Street Layoffs Could Surge Past 200,000.”
- Unemployment rates rose in 47 of the 50 states from one year earlier according to the Labor Department.
- Microsoft reported higher than expected earnings.
- McDonald’s profits jumped 11% in the third quarter while Phillip Morris profits rose 20.6%.
- Lower prices are adversely affecting farmers.
- Oil prices dropped to $63 per barrel.
- Gas prices reportedly fell below $3 per gallon in some areas of the country.
- The U.S. Treasury is now considering buying stakes in U.S. insurance companies; meanwhile others including automakers, transit companies and local governments seek federal support. The Treasury Department’s promotion of socialistic policies continues.
- On Monday, the Fed will open its Commercial Paper Funding Facility that will provide loans on commercial paper.
Page Perry’s Market Monitor is published periodically to give investors an overview of certain recent developments impacting the economy and/or the investment markets.