The Economic Week In Review….

9. November 2007 by Burbank Real Estate.

Very volatile week with lots of interesting news.

• The Dow plunged 224 points after a volatile session, the S&P was down 21.07 or 1.4% and Nasdaq was down 68.06 or 2.5%. Financial stocks are under pressure again, and they are bringing down most stocks.

• Today both Wachovia and Fannie Mae released a dismal earnings report and rumors abound about Barclay’s bank potential losses due to their Collateralized Debt Obligations(CDO’s).

• The University of Michigan Consumer Sentiment Survey fell to 75 vs. the expected 80. Except for the 74.2 hurricane-related reading in October of 2005, this is the lowest consumer sentiment reading from this survey since 1993!

• Fed Chairman Bernanke’s appearance before the Joint Economic Committee on Thursday yielded some very interesting comments. He expects economic growth to slow considerably in the 4th quarter and that the slowdown would last through the first two quarters of 2008. He also said that he sees “important upside risk” to inflation. He also emphasized the need to “modernize” the FHA so more borrowers can get help with their adjustable rate loans.

• The market spent the week in wait of the Goldman Sachs announcement on losses that never came.

A wave of negative news hit on Wednesday…….

• Washington Mutual was hit by continued allegations of fraudulent appraisals. Additionally, analyst reports came out that questioned the viability of Citibank and others and indicated that banks would write down $100B in portfolio losses this year. Needless to say stocks got hammered with a 360 point loss on the Dow and the S&P suffered a 3% loss on the day.

• Non-Farm Productivity rose to 3.9$ in the 3rd quarter. Given that the Fed is concerned with inflation this is important data for the Fed to consider because when productivity rises, labor costs go down which in turn is less inflationary for the economy.

• GM reported losses of $39B, $38B was due to an accounting charge, the remaining $1B was larger than expected.CEO of Washington Mutual is predicting lower home prices, lower loan volumes and tighter lending standards for 2008.

• An analyst report on Morgan Stanley cited a potential for a $6B loss on their loan portfolio, but on Thursday they announced that their losses were only $3.7B, better than the $6B, but seriously!

• Oil closed the week at $96.32 per barrel this week.

• Gold hit $842 per ounce, but closed the week at $834.70.

Well, I think the saying goes something like, it’s darkest before the dawn or this too shall pass. I think we’ll have a great buying opportunity at some point in the not too distant future as everything is going on sale!

Have a great weekend everyone!

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