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 8277 and, on Monday, the markets were closed for Memorial Day.
- On Tuesday, the Dow Jones Industrial Average rose 196 points.
- On Wednesday, the Dow Jones Industrial Average fell 173 points.
- On Thursday, the Dow Jones Industrial Average soared 104 points.
- On Friday, the Dow Jones Industrial Average jumped another 97 points and closed the week at 8500.
- The economy experienced a 5.7% annualized drop on the first quarter of 2009.
- The current recession which economist peg as beginning in December, 2007 is now the longest recession since World War II.
- A survey by Bloomberg estimates that unemployment reached 9.2% in May. The Labor Department will release official results on June 5.
- Next week, a bankruptcy judge is expected to decide whether Chrysler can emerge from bankruptcy or faces liquidation.
- Rumors abound that General Motors will file for bankruptcy early next week.
- Visteon, a major automobile parts supplier, has filed for bankruptcy as sales plunge.
- Automobile dealerships and parts suppliers across the country will be significantly impacted by the events of the coming week. The ripple effects of what happens will be felt far and wide.
- Across the country, the values of skyscrapers are plummeting. Many could lose as much as one-half their value.
- During the first quarter of 2009, almost one of every eight homeowners with mortgages was behind in their payments. This does not include homes that have already been foreclosed upon or repossessed by lenders.
- The National Association of Realtors reports that there is some evidence that the single-family home market is stabilizing: however, the condominium market is “substantially weaker.” Some experts project that condominium prices could fall as much as 60% from their peak.
- Toys R Us has acquired troubled retailer FAO Schwartz.
- Almost one million small businesses are being adversely impacted by a loss of credit facilities.
- According to the Federal Deposit Insurance Corp. (FDIC), there are 305 banks on the government’s “problem list.” This is a fifteen year high.
- The FDIC also reported that banks wrote off $38 billion in problem loans in the first quarter of 2009.
- Finally, the FDIC noted that the overall quality of loans at U.S. banks is worse than it has been in at least 25 years and is deteriorating at a fast pace.
- USA Today reported that increased government spending over the past year has subjected each U.S. household to $55,000 of additional debt.
- California is on the verge of running out of cash again.
- The news continues to be mixed on the economy as a whole. The good news is that a recent survey of economists revealed that most expect the recession to end later this year. The bad news is that most economists also believe that the recovery will be slow and long. Unemployment is anticipated to remain a significant problem for the foreseeable future.
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.