News for credit cards companies is terrible. They expect this will be their worst year as measured by defaults. The previous record rate for defaults was about 7½%, this year that rate is expected to shoot up to 10-11%. The effects of this massive recession bleed into every area of the economy.
•Bank of America, American Express May Suffer as Card Defaults Set Record
Last week, 627K workers filed unemployment claims, the 4 week average, less volatile, was 619K, another staggering number. Both figures were worse than expected. A record number, almost 5M, are receiving unemployment checks. An additional 1½M are receiving benefits under an extended unemployment compensation program approved by Congress last year. This brings the total number receiving unemployment benefits to 6½M last week. The Federal Reserve expects unemployment to keep rising for the rest of 2009.
Adding to this grief, wholesale prices jumped 0.8% last month, above the 0.2% increase that was expected. Without food & energy, wholesale prices rose 0.4%, again bigger than expected.
The Gates Foundation, run by Bill & Melissa Gates, is taking the advice of friend Warren Buffet & investing in quality stocks during these troubled times. Some of their blue chip holdings are: Caterpillar (CAT), McDonald's (MCD), Costco (COST), Canadian National Railway (CNI), Waste Management (WMI), Coca Cola (KO) & Exxon Mobil (XOM).
- Gates Foundation loads up on blue chips- Indie Research
Speaking of Warren Buffet, Berkshire Hathaway (BRK.A) has taken a nasty tumble after the financial crisis began last year:
Berkshire Hathaway --- 10 years
With one whopper bailout package after another, markets are not taking this news well. Make it up as we go along, now involving $Ts, is alarming many potential buyers. Averages continue to hover near recent lows, a very bearish sign.
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