Financial Market Update!

With Veteran's Day last week making it a shortened week in the Bond Market, the financial market was still lively as they reacted to several pieces of bad economic news brought throughout the week. Bad News #1 The week started with Circuit City filing for Chapter 11 Bankruptcy, and stating that they will be closing 150 stores - all this news before the holiday season, when most retailers make a larger portion of their profits for the year. Nordstrom reported its growth rate is down 16%, where they were expecting an increase of 10%. Best Buy and Macy's, Wal-Mart and Intel also reported lower earnings. As if the headlines of the week weren't enough, Friday's Retail Sales report showed that overall retail sales fell for the fourth straight month and plunged to their worst level since record keeping began in 1992. It is looking like this may be the worst holiday season "shopping/money" wise that retailers will have seen in a long, long time. In addition, there was bad news for the automobile industry as Deutsche Bank downgraded shares of General Motors from hold to sell, giving a price target of $0. As a result, General Motors stock fell below $3 for the first time since April 13, 1943. Interestingly enough, the automaker was not even making cars at that time but producing only military equipment for WWII. Nationally, the job market reported bad news as well as Continuing Jobless Claims reached their highest level in 25 years.
Now, remember that poor economic news and a weak labor market usually cause Bonds and home loan rates to improve. This is because fewer jobs and lower confidence about keeping or finding work causes people to spend less. In turn, businesses and retailers lose pricing power, and this is a cycle that keeps inflation - the arch enemy of Bonds and home loan rates - at low levels, especially if oil remains near present reasonable prices. Bonds and Home Loan Interest Rates are stable right now, which is great at this time when the rates are really low! Now is a great time in real estate to be a buyer!
*Source MMG Weekly