9/19/07

Forbes Notes:

Covering Home Base:

• China now has reputation for poor quality control.
• Chinese manufacturers usually elect to cut costs rather than obey rules.
• China is second largest vehicle manufacturer.
• Imported designs are usually a bust for U.S. carmakers.
• GM should let Koreans design small cars, Europeans design medium-size ones, leaving US engineers to trucks and SUV's.
• Rule Number One for any business is to hold onto home market.

CNN Money:

• The Fed cut its federal funds rate, an overnight lending rate banks charge each other and that helps to determine the rates for many types of consumer loans, to 4.75 percent.
• The market's interpretation: more rate cuts could follow later this year.
• "I wouldn't say a big rate cut was the wrong thing to do. And I don't think they did this to bail out borrowers and banks. The Fed was able to do cut rates because inflation pressures are coming down," Stine said.
• Wallstreet responded well, but could be missing the point: The economy is worse than thought.
  

9/18/07

Administration officials have said the full impact on the economy of the worst housing slump in 16 years and wildly gyrating financial markets has yet to play out. Wall Street has been betting on an interest-rate cut by the Federal Reserve - the first in more than four years - at its meeting Tuesday, to prod millions of borrowers to spend and invest more and thereby revitalize the economy.

9/17/07

The end of hurricane season should bring oil prices down, and with the end of summer driving season, the demand just isn't there to push gasoline processing much higher.

The numbers fueled worries that American consumers are feeling the pressure of an ongoing slump in the housing market, mortgage turmoil and also higher energy costs.

Mortgage rates dropped in the latest week, which could help home buyers who are looking to refinance, Freddie Mac reported Thursday.

The discount window is the way the central bank provides direct loans to banks. The Fed on Aug. 17 announced it was cutting the interest it charges banks to make direct loans by a half-percentage point. It has been the most dramatic move the central bank has made to signal that it was prepared to do what was necessary to contain the fallout from the credit crisis that began with rising delinquencies in subprime mortgages but has now spread to other types of loans. Jones said he expected the Fed to go further and begin cutting the more economically important federal funds rate next Tuesday at the Fed's regularly scheduled meeting. A cut in the funds rate, which has been at 5.25 percent for a year, would immediately trigger declines in banks' prime lending rate, the benchmark for millions of consumer and business loans.

Learning Notes -- 9/16/07

The New York Times had a fantastic article on a young entrepreneur named Gabriel Hammond, a founding partner of Alerian Capital Management.

• Hammond started on Wall Street and three years onto the job, decided to fore-go his MBA and start a hedge fund; raising 5 million dollars to do so.
• Successful traders said in interviews that they relished the challenge of their jobs, in addition to the lofty paychecks
• At funds that manage $1 billion to $3 billion, people with just a few years of finance experience will make $337,000 this year, and those with five to nine years experience will average $830,000.
• Key Words: Hedge funds, private equity banking, investment banks, certified financial adviser.

Apple: Missed opportunity to gain market share with lack of retail presence due to bad retailer relationships.

Credit market puts pressure on large-cap stocks. However, the feds response to lower interest rates could put downward pressure on the dollar. This will favor large corporations with global reach, i.e.blue-chip stocks.

Housing market will continue to be unstable in the near future. Foreclosure rates are rising. Lenders pulling back are lowering housing prices. Climbing mortgage rates could continue to push down housing prices.

10 year Treasury notes tend to be a barometer for longer-term mortgage rates. Brokers don't find you the best deal all the time.

Key words: Mortgage Bankers Association, S & P/ Case-Shiller Housing indices