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:
- The Dow Jones Industrial Average opened the week at 8500 and, on Monday, soared 221 points.
- On Tuesday, the Dow Jones Industrial Average rose 19 points.
- On Wednesday, the Dow Jones Industrial Average fell 66 points.
- On Thursday, the Dow Jones Industrial Average soared 75 points.
- On Friday, the Dow Jones Industrial Average rose another 13 points and closed the week at 8763.
- General Motors filed for bankruptcy on Monday and immediately announced that it was closing 14 plants displacing 18,000 to 20,000 workers.
- The national unemployment rate has grown to 9.4%. In May employers cut 345,000 jobs, the lowest monthly total since last September.
- Walmart expects to open approximately 150 new or renovated stores in 2009 and anticipates hiring 22,000 people to fill new positions.
- As job losses have increased, consumer and commercial bankruptcies have dramatically increased. Bankruptcy filings are on pace to reach 1.5 million filings this year compared with 1.1 million filings last year.
- Most forecasters expect employers to eliminate more jobs than they are adding through the remainder of 2009.
- Consumer borrowing dropped by $15.7 billion in April on the heels of March’s $16.6 billion drop. American households appear to be spending less and saving more. While this is a positive long-term development for Americans, it suggests that economic recovery will be slower than hoped.
- The SEC filed civil fraud charges against Angelo Mozilo, former chief executive officer of Countrywide Financial.
- Mortgage rates on a 30-year fixed rate home loan have risen to 5.29%, the highest level in six months, and some experts fear that these rates could climb above 6%. A continued rise in mortgage rates could slow the recovery of the housing market.
- Many seniors aged fifty and older are being hit particularly hard by the mortgage crisis. According to the American Association of Retired Persons, approximately 684,000 seniors are delinquent on home loans, have their homes in foreclosure, or have already had their homes foreclosed upon.
- Paul Krugman, the Nobel Prize-winning economist from Princeton University, says he doesn’t see “a hint” of a “V-shaped” recovery (a swift recovery following a steep decline). He believes that the economy is beginning to stabilize but not recover.
- Are the Securities and Exchange Commission and the Financial Industry Regulatory Authority ever going to take actions against any of the big Wall Street banks and their management personnel for their roles in the sale of toxic products to retail investors? The longer they delay, the more that it looks like they share incestuous relationships with the very people they are suppose to regulate. They profess to open investigation after investigation but never seem to take any meaningful action.
- Mortgage delinquency and foreclosure rates continue to increase. One of every eight homeowners is either late on his or her payment obligations or already experiencing foreclosure.
- Pending home sales increased 6.7% in April. This is the largest percentage increase in seven years.
- The Wall Street Journal reports that brokerage firms are again touting high-commission structured finance securities (such as so-called principal protected notes and return-enhanced notes) as safe investments for investors. Investors are urged to be leery of these products and to carefully investigate before investing in them. Many similar products have been responsible for billions of dollars of losses in the past several years.
- Congress has extended the $250,000 FDIC deposit guarantee on individual accounts through December 31, 2013. The insurance guarantee was originally scheduled to revert to $100,000 at the end of this year.
- Television broadcasters across the country are scheduled to turn off their analog signals on June 12 and switch exclusively to digital programming. Millions of Americans are expected to completely lose television reception when the switch occurs because they do not have digital television sets, converter boxes or special antennas.
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.