Thursday, August 7, 2014

Markets decline on Ukraine - Russia dispute

Dow dropped 75 finishing near the lows, decliners over advancers 5-4 & NAZ sank 20.  The MLP index added 1 to the 495s & the REIT index was off fractionally in the 501.  Junk bond funds inched higher & Treasuries rallied.  Oil & gold gained.

AMJ (Alerian MLP Index tracking fund)

CLU14.NYM....Crude Oil Sep 14....97.34 Up ...0.42 (0.4%)

Live 24 hours gold chart [Kitco Inc.]

Consumer borrowing rose in Jun as households took out auto & student loans.  The $17.3B increase in consumer credit followed a $19.6B May advance, according to the Federal Reserve.  Non-revolving loans, including borrowing for cars & college tuition, climbed $16.3B.  Stronger employment & gains in home values are giving households the confidence to borrow & make big-ticket purchases such as cars & appliances.  Banks also are showing greater willingness to lend, which could boost consumer demand, the biggest part of the economy.  The increase in credit compared with an $18.7B forecast.  The report doesn’t track mortgages, home-equity lines of credit & other debt secured by real estate.  Credit probably continued to expand in Jul.  Motor vehicle sales last month cooled to a 16.4M annualized rate from an 8-year high of 16.9M in Jun.  Federal gov lending to consumers, comprising mainly educational loans, increased $5.4B from the prior month before adjusting for seasonal variations.  Revolving credit, which includes credit-card balances, rose $941M, the smallest advance since Feb, after a $1.74B gain in May.

Consumer Credit in U.S. Rises on Demand for Car, Student Loans

The share of US mortgages that are seriously delinquent fell to the lowest in 6 years as the job market improved, allowing borrowers to stay current on payments while higher home prices made it easier for others to sell.  Mortgages that were more than 90 days behind or in the foreclosure process dropped to 4.8% of loans in Q2 from 5.9% a year earlier, the Mortgage Bankers Association said.  That was the lowest rate since 2008, when it was 4.5%.  About 75% of seriously delinquent loans were originated in 2007 & earlier, while mortgages from 2011 & later made up only about 6%.  The share of loans on which foreclosure actions were started during Q2 fell to 0.4%, the lowest since 2006.  Home prices nationwide have been rising as lower-cost distressed listings vanish from the market.  Prices climbed 7.5% in Jun, the 28th straight year-over-year increase.

U.S. Serious Mortgage Delinquencies Fall as Job Market Improves

Bank of America is nearing a $16-$17B record settlement with the Justice Dept to end probes into sales of mortgage-backed bonds that fueled the financial crisis.  Under the proposed terms, the bank would pay about $9B in cash & the rest in consumer relief to settle federal & state claims.  Details are still being negotiated.  Bank officials met with justice officials yesterday to work on the settlement.  The agreement, if finalized, would cement BAC’s status as the firm punished hardest for faulty mortgage practices.  BAC & firms it acquired issued about $965B in mortgage backed securities in 2004-2008, almost 75% of those came from Countrywide.  About $245B in securities have defaulted or become delinquent, though BAC only accounted for 4% of those.  BAC was off pennies.  If you would like to learn more about BAC, click on this link:pennies

Bank of America Said to Near Mortgage Deal With U.S. for Up to $17 Billion

Bank of America (BAC)

Stocks continue to meander lower.  There is little reason to buy with growing uncertainty in Ukraine & the unknown in the entire MidEast.  The rate on  the 10 year Treasury plunged 6 basis points & gold is back on the rise, although modestly today, well above the 1300 support level.  The VIX, volatility index was up fractionally in the 16s, which compares with low of 11 last month.  Fear is on the rise.  Dow is down 200 YTD & 800 below the record high reached last month.  These are scary times for the stock market.

Dow Jones Industrials

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