3 Steps To Lift Your Credit Score
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
Your erstwhile Editor-at-Large continues to confront unsuspecting people on the streets of NYC to dole out financial advice. In the episode, I tackle the thorny issue of credit scores.Continue »
Financial Reform: Consumer Protections
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
Sick of the Volcker Rule or endless talk on derivatives? I talked to CBS3 about what the Dodd-Frank Act means for YOU!
(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
Wednesday Market Note: How Will the Quarter End?
Yesterday was a pretty rough one for investors, as news out of China and from U.S. consumers renewed fears of a global slowdown. The Dow fell 268 points to 9,870; the Nasdaq Composite dropped 3.8 percent to 2,135; and the S&P 500 declined 3.1 percent to 1,041, its lowest close this year. The S&P 500 is now down over 14 percent from its April high. Stocks head into the last trading session of the quarter facing their first quarterly loss since Q1 2009.
Yesterday's selling started early, after a report showed slowing growth in China. The Conference Board said its leading economic index for China rose 0.3 percent in April, far less than the 1.7 percent reported recently. Chinese stocks fell 4.3 percent before the U.S. markets opened.
After rising for three consecutive months US Consumer Confidence plunged to 52.9 from 62.7 in May. Consumers continue to worry about the weak job market.
Completing the trifecta of bad news, European banks need to repay about $540 billion in loans to the ECB this week, shining a light on which institutions are still weak.
Today is looking a little brighter, at least early on. Asian shares closed lower, but after those markets closed, there was positive news from across the pond. European banks borrowed less than anticipated this morning, providing some relief to investors. US stock futures are pointing higher.
There was news out of the housing sector: RealtyTrac said that foreclosure sales accounted for nearly 1/3 of all home sales in the first quarter. The report noted that "total foreclosure sales in 2009 were up more than 1,100 percent from 2006 and up more than 2,500 percent from 2005."
Separately, by a vote of 409-5, the House voted to extend the closing deadline of the first time homebuyer credit. The vote doesn't allow for new entrants into the program--to qualify, the purchase and sale agreement had to be signed by April 30. However, the program had said that the transaction must close by June 30 to receive the credit. Lawmakers voted to extend the closing deadline to Sept. 30. The Senate must now approve the measure.
Finally, the horse trading continues on financial reform. Congressional Democrats gave up on the $18 billion bank tax, which would have covered the costs of reform efforts. The concession is expected to clear the path for the bill's passage.
MarketWatch: Chinese Stocks Hammered
Specialists on the floor of the New York Stock Exchange Monday.
/ AP Photo/Richard DrewThe slowing economic recovery continues to spook investors, sparking a flight to so-called safe havens, like U.S. Treasuries and gold. Yesterday, the yield on the 10-year Treasury note fell to 3.032%, the lowest level since late-April 2009, keeping mortgage rates at 40-year lows.
Chinese stocks dropped to a 14-month low — the Shanghai Composite index tumbled 4.3%, and is now down approximately 26% for the year.
Japanese stocks fell to a 4-month low. European stocks fell over 2% on renewed fears of Euro zone debt, and U.S. stock futures are pointing to a lower opening this morning.
On today's economic calendar, the Case-Shiller Home Price Index is expected to show little progress on the real estate front, while consumer confidence is expected to rise.
Yesterday, the Commerce Department said personal income grew faster than spending last month. Personal income increased 0.4% in May from April, while spending rose 0.2%. The personal saving rate — the amount of after-tax income that isn't spent — rose to 4% in May from 3.8% the month prior. The savings rate is now at its highest level since September.
While that's good news for households, it's not so good for the economy, which relies on consumer spending to propel it forward.
Monday Market Note: G-20 Nations Eye Deficits
After digesting the Congressional agreement on financial reform over the weekend, news of Sen. Robert Byrd's death cast doubt as to whether there were enough votes to overcome a potential filibuster. Based on prior voting, Democrats have 56 votes, so 4 Republicans must vote for the bill to ensure its passage. Keep an eye on Massachusetts Sen. Scott Brown; as in the health care debate, he could once again be the key.
Asian markets closed mixed, while European shares are trading higher, ahead of a busy week on the U.S. economic calendar, which will culminate with the June employment report on Friday. The May report was a big disappointment, with only 41,000 private sector jobs created. In June, it's expected that the unemployment rate will remain at 9.7 percent, but due to Census worker lay-offs, economists expect that a total of 100,000 jobs were lost last month. Not counting the Census workers, the consensus is for the addition of 150,000 jobs.
(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
Jill Schlesinger on Financial Reform Winners & Losers
CBS/AP
Winners:
Wall Street Banks: The reform will hurt, but it wasn't as bad as it could have been. To wit:
1. The Volcker Rule was substantially watered down. Banks can still own private equity and hedge funds so long as they do not exceed 3% of core capital. Sure, banks may have to reduce their stakes, but there seems to be plenty of wiggle room on the definition of proprietary trading.
2. Although the derivatives business will change, the legislation omitted hard capital requirements, which really would have put bankers into a tizzy, and turned a deaf ear to leverage limits.
Financial Reform: What's In It For Consumers?
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
It's been nearly two years since the financial system melted down and brought with it The Great Recession. Congressional leaders promised to pass laws that would prevent another financial crisis, but I have my doubts.
While the bill probably won't prevent the next crisis, it will help consumers by establishing the Consumer Financial Protection Bureau, which will be housed inside the Federal Reserve. The new regulator will have the authority to oversee the mortgage market and the credit card industry. It will also clamp down on "pay-day lenders," companies that charge a hefty fee to advance money to cash-strapped consumers, in anticipation of their next pay checks.
Continue »Financial Reform Bill: What Made the Cut
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
Let's start with the basics here: there hasn't been meaningful regulatory reform since the aftermath of the Great Depression. So perhaps it makes sense that after the Great Recession, lawmakers finally got on the stick and passed sweeping financial reform.
After hours of negotiations, the House and Senate conference committee managed to lock down the details early Friday morning. Both houses of Congress are expected to vote to approve the bill next week, so that President Obama can sign it before July 4.
Before we get into the details, however, let me state that this bill, while sweeping, historic and dense, doesn't do the one thing it set to accomplish: prevent the next financial melt-down. The reason is that it doesn't address the interconnectedness and size of financial institutions in a meaningful way. Continue »
Record Low Mortgage Rates
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
Stock market got you down? There's one bit of cheer on the financial landscape-record low mortgage rates! I talked about the market, mortgage rates and the plight of our country's poor-suffering savers with CBS3 this morning.
(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
Thursday Market Note: Jobless Claims, Durable Goods Fall
AP Photo
On the heels of horrible existing and new home sales, Fannie Mae announced that it would penalize homeowners who walk away from their mortgage obligations. The trend of "strategic defaults," where a homeowner can afford to repay his obligation, but chooses not to do so, will now come with a penalty: no shot at a Fannie Mae-backed mortgage for seven years from the date of foreclosure. Separately, many critics contend that Fannie Mae and Freddie Mac contributed to the nation's housing and credit crisis.
Weekly jobless claims fell by 19,000 to 457,000 last week from a revised 476,000. The 4-week moving average, inched lower to 462,750 from 464,250 the prior week. The number of people continuing to receive jobless benefits decreased by 45,000 in the week ended June 12 to 4.55 million.
Separately, durable goods (goods meant to last at least three years) for May fell 1.1 percent. Excluding transportation, orders rose 0.9 percent, the third increase in four months, indicating continued improvement in manufacturing.
Regulatory reform negotiations are bumping up against today's self-imposed deadline. Yesterday, lawmakers carved out an exemption for auto dealers from oversight by the soon-to-be created Consumer Financial Protection Agency. Additionally, Washington was happy to prevent financial professionals from putting their clients' interest first (the fiduciary duty)--a big loss for ordinary investors.
Today's topic: the thorny issue of derivatives.
(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
Landon Donovan Goal: Market Timing or Tactical Allocation
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
I walked outside after the awesome Landon Donovan World Cup goal and heard the following comment: "He was lucky-just happened to be in the right place at the right time!" Um, no...he was exactly where a striker should be, that is, attacking the opposing team's goal and following up on his teammate's attempt.
Elise Amendola, AP
The killjoy who uttered the "lucky" comment surely knows nothing about soccer (for the record, I know a little something, since I played soccer in in my youth and in college), but he reminded me of a refrain that I've often heard about individual investors: they should stick to "buy and hold" because reallocating portfolios relies on market timing, or luck.
Continue »
Cheap Mortgage Rates Fail To Spur Housing
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
You know that there's something wrong with housing when sub-5% 30-year fixed rate mortgages can't inspire buyers to budge. The MBA said mortgage applications dropped last week, despite hovering at 4.75%, yet existing home sales fell unexpectedly by 2.2% to an annual rate of 5.66 million units in May-new home sales are expected to drop nearly 5% when they are released later this morning.
An optimist might point out that existing sales were up 17.7% from a year ago, while a pessimist would say that we are piling up inventory, bringing the current supply of homes to 8.3 months (the peak level of supply was 11.2 months in 2008). Prices usually fall when inventory levels are above six months. Uh-oh.
Housing experts blame the expiration of the tax credit, which is not a good reason to extend it yet another time. In fact, the housing and mortgage markets are functioning in a rational manner: with lots of houses on the market, buyers are taking their time. Additionally, amid tight lending conditions and plenty of underwater borrowers, it's hard to qualify for a re-fi. Taken together, mortgage demand has dropped.
I don't think that we're about to see another massive collapse in the market, but with the supply of homes outstripping demand, prices could fall another 5-10%. The bottom line: we're going to have to wait for the housing market recovery to unfold the old fashioned way: allow market forces to burn up supply and find the proper level for prices.
(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
Fed Unlikely to Raise Interest Rates
AP Photo
With only a fragile recovery in place, there's virtually no chance that the Fed will raise interest rates from the current level of 0-0.25 percent at the conclusion of the two-day FOMC meeting this afternoon. It's also doubtful that the key language about "exceptionally low levels of the federal funds rate for an extended period" will remain in the statement. The Fed last raised rates four years ago, on June 29, 2006.
(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
Tuesday Market Note: Focus on Housing
People walk past a stock price indicator in Tokyo on Monday.
/ AP Photo/Koji SasaharaAfter U.S. stocks closed lower on the day, Asian shares dropped today on fears that a stronger yuan would slow China's growth, and European stocks have dropped after a 9-session bull run on renewed concerns of the debt crisis spillover.
Today, the focus will be on housing. The National Association of Realtors will release May existing home sales, which are expected to rise 5 percent, to an annual rate of just over 6 million units (from April's 5.77 million annual rate). The data comes as concerns over the administration's mortgage plan ("HAMP") are escalating after the release of the Monthly Housing Scorecard.
The box score on housing looks something like this:
• A bunch of trial modifications were canceled, which portends more foreclosures;
• There are still many who are in loan modification hell; and
• Many of the borrowers in the plan could re-default rate in the coming years.
There's no way around this basic fact: Housing is going to be messy for the foreseeable future.
Pre-Market Notes: China Currency Announcement
AP Photo
Over the weekend, China's central bank said it would allow the Chinese yuan to float against the U.S. dollar. For years, the Chinese currency (known as the yuan or the renminbi) has been pegged to the value of the dollar, which has kept the cost of Chinese exports low.
While China had allowed its currency to rise against the dollar from mid-2005 to mid-2008, it returned to a peg in the aftermath of the financial crisis.
The artificially-low yuan skewed the ability of U.S. manufacturers to compete effectively with their Chinese counterparts, and American exporters have said that an undervalued yuan gave Chinese exporters an unfair advantage on the global stage. If the Chinese currency were to reflect the strength of the world's third-largest economy, the yuan would be trading at higher levels — and the cost of Chinese exports would rise.
Some analysts say that the Chinese currency announcement is bunk because China's move will be "gradual." The skeptics note that for years, China has talked about currency revaluation, but done little to get there.
If the Chinese do get serious about easing the currency peg, the quick look at winners and losers:
Winners would include: U.S. exporters (whose goods will be valued more fairly); U.S. trade deficit (which could narrow on a more equitable exchange rate); U.S. employment (which could rise); the Chinese economy (which can't rely solely on exports to fuel its growth); Chinese consumers (who will have an opportunity to buy global goods); and potentially, Chinese citizens (who could benefit from more government spending at home, because China no longer would have to spend as much money maintaining the artificial currency level).
Losers would include: U.S. consumers (who could pay more for China-made goods); U.S. importers (who purchase Chinese goods and sell them in the U.S.); and in the short-term, bears who bet against a stock market rally today after two consecutive weeks of gains.
