IS THE END OF THE FINANCIAL CRISIS NEAR??

Wells Fargo is rocking Wall Street today, see article below. Are these the first signs of the recovery? No, the first signs were the recovery in the housing market. We began to bottom out when sales hit their low levels of only 700 per week in mid 2007. That was followed by price declines throughout 2008. In the beginning of 2009, sales regained their normal rate at about 1,500 per week. But as the market started to shift positively sales have soared! For the last 8 weeks, enough to make more than a trend, home sales have jumped to averages of over 2,000 sales per week. Over the past 2 weeks we have experienced 2,400 per week. At the same time, inventory levels have crashed, well relatively speaking. Inventories of single family homes are down 10% over the past 3 weeks and are down 17.6% YTD. These are the signs of a recovery in housing.
So, how did Wells Fargo turn around and make a profit???? I believe one of the biggest reasons is that they are paying, I don't even know, 1.5% on savings for a blended cost. Then lending that money at 5%. That is a huge spread! It seemed logical that if the Fed kept rates artificially low, it was only a matter of time where banks would start to profit from that. Also, since they have written down most of the "toxic" assets to zero, now when they sell them there is a profit there too.
Let's keep it rolling, this shift we experienced over the past 4 years was very difficult on me and I am ready to be a happy survivor!

Every major U.S. bank is rallying like mad on the heels of Wells Fmade a profit in the first quarter. WFC shares have spiked up 23 percent to $18.50 in early trading.

The financial firm said it expects to report record net income of approximately $3 billion for first quarter 2009, or approximately 55 cents per common share after preferred dividends, including $372 million in dividends paid to U.S. taxpayers on the U.S. Treasury's Capital Purchase argo (WFC) reporting that it Program investment.

The word "record" must floor investors based on the perception that American banks still face substantial write-offs from toxic assets, consumer loans, and commercial real estate.

Wells Fargo predicted that it would post total revenue of $20 billion, up an estimated 16 percent, driven by the core businesses it owned before buying Wachovia. Results at Wachovia were better than expected.

If one or two other large money center banks post strong results, there will be a temptation to think that the worst of the financial crisis is over.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Don't forget, see foreclosure homes before most agents even know they are there: www.ArizonaBankDeals.com

FEDERAL RESERVE TO PUMP $600 BILLION INTO HOUSING

It is about time they deal with the issue: Supply and Demand of Housing. That is it. To stop the bleeding, the supply of homes coming to the market must be slowed. Demand is back as buyers purchase homes at values not seen in nearly 5 years. Value is back. But the problem is there are still too many homes coming to the market and they are fighting for the buyers with their price. Here in Phoenix, one big problem is Short Sales. The government must stream line short sales now. Due to the long waiting period to get any type of answer, I am talking 3 to 8 months, buyers and Realtors are avoiding Short Sales. What does that do, the Short Sales must drop to outrageously low prices to attract a buyer. This drives the whole market lower! This is the $6 million dollar question; how to stabilize the Short Sales before the drive all values to ZERO! For example, single family home at Tatum and Bell, selling in the DAY for $400K, last sale $240K, NEW SHORT SALE LISTED at $175K. That is tomorrow's comp.
Just My Opinion...Jeff Cameron


Fed Unveils Plan to Support Mortgages, Consumer Credit
Topics:Interest Rates Consumers Federal Reserve Economy (Global) Economy (U.S.)
Reuters and CNBC.com 25 Nov 2008 08:27 AM ET
The U.S. Federal Reserve, in another massive life-support intervention for the U.S. financial system, Tuesday announced a $600 billion program to buy mortgage-related debt and securities and a $200 billion facility to buy consumer debt securities.
The U.S. central bank said it would buy up to $100 billion in debt issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, the government-sponsored mortgage finance
enterprises.
The Fed also said it would buy up to $500 billion in mortgage-backed securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae.
The move is intended to strike at the heart of U.S. economic woes, the collapsed housing market.
"This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved financial conditions more generally," the Fed said in a statement.
Read the rest of the story: http://www.cnbc.com/id/27906891

FED CUTS RATES .5%

The federal reserve went to work for the consumer, or should I say the borrower. They say this won't make that much of a difference in the Economy, I disagree. Lower interest rates increase buyer's purchase power with homes. They also feed the consumer, now credit cards, Lines of Credit payments and car payments are lower. This will give the consumer more discretionary spending to help revive the economy.

Fed Cuts Rates Half Point To Lowest Level in 4 Years
AP 29 Oct 2008 04:28 PM ET
The Federal Reserve slashed a key interest rate by half a percentage point as it seeks to revive an economy hit by a long list of maladies stemming from the most severe financial crisis in decades. AP
The central bank on Wednesday reduced its target for the federal funds rate, the interest banks charge on overnight loans, to 1 percent, a low last seen in 2003-2004.
read the rest of the story: http://www.cnbc.com/id/27436237

RATE CUTS ACROSS THE WORLD

This saves everyone with an adjustable rate mortgage, credit cards and line of credit on a monthly basis. This is better than a tax rebate. Between these types of actions and lower gas prices, the consumer can step up and help us through this mess...Jeff Cameron


Fed Orders Emergency Interest Rate Cut
posted: 13 MINUTES AGOcomments: 493
filed under: Financial Crisis
Acting in concert with central banks around the globe, the Federal Reserve says it is slashing its key interest rate by a half-point to 1.50 percent. The move continues a string of aggressive actions by Ben Bernanke and the Fed to cope with the worst financial crisis since the 1929 stock market crash. On Tuesday, the Fed said that it would buy massive amounts of "commercial paper" -- a short-term financing option many firms rely on to fund day-to-day operations.

Read the full article here: http://money.aol.com/news/articles/_a/bbdp/fed-orders-emergency-interest-rate-cut/204500

MARCH JOB LOSSES TOTAL 80,000

The nation's jobs report is out and it is a negative number. But let's face it. We know we are in a recession. Therefore, losses of 80,000 jobs is not huge. Plus they restated the numbers for the first 2 months of this year and there were 33,000 less jobs lost earlier this year. Therefore, the net loss is 47,000 jobs. Don't get me wrong, if those jobs are your job, this is serious. But overall, the number was less than expected. Maybe this recession will be milder than expected. Only time will tell.

Economy Loses 80,000 Jobs, Worse Than Expected

By Reuters 04 Apr 2008 08:32 AM ET

US employers cut payrolls for a third month in a row in March, slashing 80,000 jobs for the biggest monthly job decline in five years as the economy headed into a downturn, government data on Friday showed.
CNBC.com
The Labor Department revised the first two months of the year's job losses to a total of 52,000 from a previous estimate of 85,000. The March unemployment rate jumped to 5.1 percent from 4.8 percent, the highest since a matching rate in September 2005.
The March job report was more bleak than expected.
Economists polled ahead of the report forecast a decline of 60,000 in non-farm payrolls and a rise in the unemployment rate to 5 percent.
Read the rest of the story: http://www.cnbc.com/id/23952640

4TH QUARTER GDP GROWS AT .6% ANNUAL GROWTH RATE

The US Economy stayed out of recession in the 4th quarter of 2007. Mostly due to a 6.5% growth rate of exports. The consumer was out in fashion, with a 2.3% growth rate on consumer purchases. Business cut back and lowered inventories by 1.7%, which is what really hurt GDP.

Economy Grows at 0.6 Percent Pace
By JEANNINE AVERSA,
AP
Posted: 2008-03-27 12:28:32
WASHINGTON (March 27) - The economy nearly sputtered out at the end of the year and is probably faring even worse now amid continuing housing, credit and financial crises. The Commerce Department reported Thursday that gross domestic product increased at a feeble 0.6 percent annual rate in the October-to-December quarter. The reading - unchanged from a previous estimate a month ago - provided stark evidence of just how much the economy has weakened. In the prior quarter, the economy clocked in at a sizzling 4.9 percent growth rate. The gross domestic product (GDP) measures the value of all goods and services produced in the United States and is the best barometer of the country's economic health. Many economists say they believe growth in the current January-to-March quarter will be even weaker than the 0.6 percent figure of the previous quarter. A growing number also say the economy may actually be shrinking now. Under one rough rule, the economy needs to contract for six straight months to be considered in a recession. The government will release its estimate for first-quarter GDP in late April.
real the full report: http://money.aol.com/news/articles/_a/economy-grows-at-06-percent-pace/20080327090809990001

FED SLASHES FED FUNDS RATE BY 3/4%

We didn't get the full point, but I will take 3/4%. Lowers my payments! Let's hope this starts to stimulate the real estate market and brings liquidity to the financial markets!


Fed Lowers Rates 3/4 Point, Fueling Huge Stock Rally
By Reuters 18 Mar 2008 02:19 PM ET

The Federal Reserve slashed a key U.S. interest rate by three-quarters of a percentage point, but Wall Street didn't seem to care that the cut was smaller than many had expected.
After initially pulling back from a morning rally, stocks resumed climbing and ended sharply higher.
CNBC.com
The Fed's action, taken on an 8-2 vote of its policy committee, took the bellwether federal funds rate down to 2.25 percent, the lowest since February 2005. Financial markets had largely priced in a full point reduction.
"Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth overthe next few quarters," the central bank said in a statement outlining its decision. (Click here to read the full statement.)
The Fed also said downside risks to economic growth remained even in the wake of the rate cut, suggesting an openness to a further lowering of borrowing costs if needed. http://www.cnbc.com/id/23691022

JP MORGAN BUYS BEAR STEARNS FOR $2 PER SHARE

As the central bank looks for answers for today's credit crisis, one sharp move is for JP Morgan to buy Bear Stearns. This investment bank could not go under, "It would be apocalyptic," says Marino Marin and investment banker.
This is a serious situation and the Fed had to make something happen. You have to wonder how much JP Morgan wanted Bear Sterns, or were they told to take or watch it fall?????

From CNBC on line:
JP Morgan Agrees to Buy Bear Stearns for $2 a Share
By Reuters 16 Mar 2008 07:33 PM ET
JPMorgan Chase set a deal to buy stricken rival Bear Stearns for a rock-bottom price, while the U.S.Federal Reserve expanded lending to securities firms for the first time since the Great Depression to prop up the financial system.
CNBC.com
The shock news, the biggest sign yet of how devastating the credit crisis is for Wall Street, slammed the U.S. dollar to a record low against the euro, pummeled Asia stock markets and boosted gold and low-risk bonds.

http://www.cnbc.com/id/23663919

FEDRERAL RESERVE BAILS OUT BEAR STEARNS

Yes, the Fed to the rescue. I am not an expert on this issue, but here is what I understand. A European bank refused to extend credit to Bear Stearns, which effectively declared Bear Stearns as insolvent. This caused a run on the bank.
The Federal Reserve met last night and allowed an emergency EXCEPTION:
1. JP Morgan, the clearing house for Bear Stearns, was to be allowed to bring Bear Stearns collateral to the Fed's discount window. This would allow Bear Stearns to raise CASH.
2. JP Morgan would not be liable should Bear Stearns default to the Fed.
Bear Stearns reportedly has about $400 Billion of the not so good real estate loans in their portfolio. No one knows what their value is due to the changing real estate market.
Read More: http://money.aol.com/news/articles/_a/fed-pledges-to-supply-cash/20080314104309990001
and More : http://www.bloggingstocks.com/2008/03/14/why-does-bear-stearns-need-a-government-bailout/

FEDERAL RESERVE REACTS TO CREDIT CRISIS, PUMPS $200 BILLION INTO SYSTEM

The reaction to the Margin Calls last week had put tremendous pressure on the financial markets and the Federal Reserve just stepped up to ease the pressure. So far, the stock market is happy. Stocks are up over 2%. Is this a knee jerk reaction or will the market continue up?? It is always interesting to see how the markets react over time.

Hopefully this will bring interest rates back down. However, the bond market it getting killed today. Which typically brings rates up, however, interest rates are not fully linked to the bond market. Where the 10 note was you would expect mortgage rates as low as 5%.

This often bothers me. Mortgage rates don't always follow the bond rates down, but they seem to always follow bond rates up. Let's see what happens today???

Here is the AP report:
Fed Offers More Help to Banks
By JEANNINE AVERSA,
AP
Posted: 2008-03-11 09:31:41
Filed Under: Banking
WASHINGTON (March 11) - The Federal Reserve on Tuesday announced it is ramping up efforts to provide more relief to cash-strapped financial institutions, a coordinated action with other central banks aimed at easing a global credit crises that threatens to push the U.S. economy into its first recession since 2001. The Fed said it will make up to $200 billion in cash available to cash-strapped financial institutions. "Pressures in some of these markets have recently increased again," the Fed said in a statement. "We all continue to work together and will take appropriate steps to address those liquidity pressures." The other banks involved are the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank. In addition, the Fed has authorized increases in existing programs called "swap lines" with the European Central Bank and the Swiss National Bank "These arrangements will now provide dollars in amounts of up to $30 billion and $6 billion to the ECB and the SNB respectively," the Fed said, extending the term of these swap lines through Sept. 30.
Read the full report at this link: http://money.aol.com/news/articles/_a/fed-offers-more-help-to-banks/20080311093009990001

JOBS REPORT IS OUT, DOWN 63,000 FOR FEBRUARY

Not the news I wanted to start the day with, but it is what is. The jobs report was released by the labor department and not only did we loose 63,000 jobs in February but there were downward revisions for the last couple of months. Losses in January were increased from 17,000 to 22,000 and December job gains were cut in half from 82,000 to 41,000. As you can see, the report is very inconsistent. However, this report states there are 109,000 less jobs than we thought were there yesterday.

One of the strengths to our economy is the low unemployment. We are still in a good position, the question is "where are we headed?"

The sinking dollar is also helping our economy. It is making our goods more competitive with the rest of the world. Not the way I prefer to increase our competitiveness, but it still helps the economy.

Read the full report: http://www.cnbc.com/id/23518353

FED CUTS 1/2 POINT

Wow, after taking the back seat and letting this economy shift gears, good ol Ben is getting pretty aggressive. I did not expect to see the Fed lower another 1/2 point after giving up 3/4 of a point last week. The market got what the market wanted, the Fed doesn't usually do that. I am impressed. I hope that is not a sign of more difficulties ahead. This should really help in the mortgage market to free up liquidity and bring more products for buyers to purchase.

Read the Fed's Statement
http://www.cnbc.com/id/22917035

Fed Cuts Rates Half Point, to 3%, to Fight Recession
Topics:Interest Rates Inflation Ben Bernanke Employment Consumers Federal Reserve Federal Budget (U.S.) Economy (Global) Economy (U.S.)
By Reuters 30 Jan 2008 02:15 PM ET
The Federal Reserve cut a key U.S. interest rate by a half-percentage point Wednesday as part of an aggressive effort to halt a sharp slowdown in an economy hit by a housing slump and a credit crunch.
The Fed's action takes the bellwether federal funds rate target to 3 percent, the lowest since June 2005, and comes just eight days after it slashed rates by a bold three-quarters of a point. Wednesday's follow-up reduction was in line with the expectations of many financial market participants.
The cumulative 1.25 point reduction in the benchmark overnight rate in less than two weeks ranks among the most abrupt rate-cutting sprees in the modern history of the U.S. central bank.
http://www.cnbc.com/id/22916491

4th QUARTER GDP AT 0.6% GROWTH RATE

Preliminary number are showing the 4th quarter GDP grew at 0.6%. That is slower growth than the 1% forecast, however not negative. One thing to keep in mind is this is a preliminary number and they always revise the number as time goes on.

FED WATCH TODAY! The Fed is meeting as I write this. What will they do, time will tell!
Here is an article about the GDP news.

Economy Nearly Stalled in 4th Quarter
By JEANNINE AVERSA,
Associated Press
Posted: 2008-01-30 11:06:59
WASHINGTON (AP) - The economy nearly stalled in the fourth quarter with a growth rate of just 0.6 percent, capping its worst year since 2002. The Commerce Department's report on the gross domestic product, released Wednesday, showed an economy that had deteriorated considerably during the October-to-December quarter as worsening problems in the housing market and harder-to-get credit made individuals and businesses more cautious in their spending. Fears of a recession have grown, even as inflation remained elevated. For all of 2007, the economy grew by just 2.2 percent, the weakest performance in five years, when the country was struggling to recover from the 2001 recession. The housing collapse dealt the economy its biggest blow last year. Builders slashed spending on housing projects by 16.9 percent on an annualized basis, the most in 25 years. The report came as the Democratic-run Congress and the Bush administration continue to work on a program of tax rebates and business incentives aimed at stimulating the economy. http://money.aol.com/news/articles/_a/economy-nearly-stalled-in-4th-quarter/n20080130110609990021

Federal Reserve Cuts Fed Funds Rate by 3/4%

Ask and you shall receive! What ever. I was just blogging for a full 1% and found they dropped 3/4%. WOW! I was shocked. Shocked they dropped the interest rate, but even more shocked they dropped right at the same time I was blogging for the drop! You go Big BEN! Hopefully this will calm the markets.


Federal Reserve Cuts Key Interest Rate
By MARTIN CRUTSINGER,
AP
Posted: 2008-01-22 08:28:15
WASHINGTON (Jan. 22) - The Federal Reserve, confronted with a global stock sell-off fanned by increased fears of a recession, cut a key interest rate by three-quarters of a percentage point on Tuesday. The Fed said it was cutting the federal funds rate, the interest that banks charge each other on overnight loans, to 3.5 percent, down by three-fourths of a percentage point from 4.25 percent. The Fed action was the most dramatic signal it can send that it is concerned about a potential recession in the United States. It marked the biggest one-day move by the central bank in recent memory.

I THINK THE "DON" IS RIGHT!

Well I heard a news report last week that Donald Trump was urging the FED to lower a full 1%. I think he is RIGHT! Also, they can't wait until next week, they need to act NOW! TODAY! We need to calm the markets right now before this gets tooooooooo far out of hand.