Dec 10- What happens when credit conditions are far too loose, the banking system is fragile and interest rates start to rise? The Bank for International Settlement's quarterly review of financial conditions is an exercise in nightmarish deja vu: familiar to those who watched the last crisis but just different enough to be plausible.» Read More
Jason Schenker, an economist at Wachovia, told CNBC’s “Morning Call” that he believes 2007 will mark the bottom of the housing market, in starts and sales of new and existing homes. But he expects housing prices to remain flat for the next two or three years -- despite solid economic and demographic growth.
"Risk appetite has started to abate expressed by lower equity markets, rising credit spreads and continued steepness of bond curves."
I got some interesting email replies to my previous post on housing numbers. Take a look: I've returned to California after a six year corporate move to find my Southern California tract house selling for $1 million more than I sold it for in 2001? I am not in the market. The house was barely worth what I sold it for in 2001. I have an excellent credit rating, equity in the bank and am leasing for now. We are Leasing a new 3,100 square foot home in a new development for the price of an apartment. Why buy?
Leon Cooperman, founder of Omega Advisors and former Chair of Goldman Sachs Investment Policy Committee, said he expects stocks to do well the rest of this year and into next year.
With the second half beginning next week, two market analysts joined "Morning Call" to give their outlook for stocks for the remainder of 2007. Charles Bobrinskoy, vice chairman and director of research at Ariel Capital Management, is "somewhere between cautious and bearish," while Patricia Chadwick, president of Ravengate Partners, "is not as worried."
Investors will soon have earnings to add to their watch list, but unlike interest rates and energy prices they may yield a positive surprise. Though interest rates and subprime worries have rattled stocks lately, corporate profits will also be closely watched in the coming weeks. And many market pros think that--like the first quarter--the results will come in above unrealistically low forecasts.
Ken Fisher, CEO of Fisher Investments, told CNBC’s “Morning Call” that private equity is in the middle of a “perfect storm” and there will be more IPOs like Blackstone Group in the future.He said P/E ratios are lower in relation to interest rates than they’ve been in about 25 years. This allows a company to borrow money to buy back its shares or to take over a competitor, boosting earnings per share
European equity markets looked set to extend losses next week as stocks teetered at inflated price levels with little on the corporate and economic calendar to act as a positive catalyst.
The dollar gained on the Swiss franc on Thursday and approached a 4-1/2-year high against the yen as investors continued to punish low-yielding currencies in a quest for higher returns.
U.S. Federal Reserve policy makers want to shift their emphasis away from current benign inflation to uncertainty about future price pressures, and are debating whether to stop calling inflation "elevated" in their policy statements, the Wall Street Journal reported on Thursday.
Sterling rose on Wednesday after minutes from a Bank of England policy meeting were perceived by the market as pointing to a UK rate rise as early as next month, while the dollar gained for the fifth day in six against the low-yielding yen.
Larry Smith, chief investment officer at Third Wave Global Investors, told CNBC’s “Street Signs” that interest rates in Switzerland are significantly lower than in the United Kingdom, creating an opportunity for investors.
Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors, told CNBC’s “Power Lunch” that the market may face a short-term valuation problem. ... But Craig Hodges, portfolio manager at the Hodges Fund, remained optimistic despite the risks.
Bank of England Governor Mervyn King and three other policymakers opposed this month's decision to hold interest rates at 5.5% and called for a hike, boosting expectations that borrowing costs will rise next month.
Sweden's central bank raised its key repo interest rate by 25 basis points on Wednesday as expected, taking interest rates to 3.50%, their highest level since March 2003.
Soft business sentiment data on Wednesday reinforced expectations that the Bank of Japan will be in no rush to raise interest rates, pushing down bond yields, while comments from BOJ Deputy Governor Toshiro Muto did little to alter the market's direction.
The dollar slipped against the major currencies on Tuesday as U.S. bond yields continued to retreat from five-year highs hit last week, eroding their appeal to foreign investors.
Art Hogan, managing director at Jefferies, told CNBC’s “Power Lunch” that the slumping housing market has shaved about 1% off GDP growth and this may be good news for interest rates.
Robert Mellman, senior U.S. economist for JP Morgan, told CNBC’s “Morning Call” that strong employment and a sound economy have offset the housing slump.
Initial public offerings may be hurt by higher interest rates, but one analyst said the IPO market is still robust."We've had nearly 100 IPOs priced raising over $20 billion in the U.S. marketplace," Richard Peterson, Thomson Financial Senior Research Analyst, said on "Morning Call."