[1]

• Stocks finished a tough week! The Dow finished 1.1% lower this week at 11,371. The decline was led by financial institutions, which posted their worst drop in 8 years and home builders. The amount of writedowns due to the mortgage mess continues and based on what analysts are saying, we’re not out of the woods yet.

• [2] Washington Mutual shares declined a staggering 31% in the last two days, just to an example of the carnage out there. One positive note on all this is that those home buyers looking to purchase a foreclosure may have more to choose from soon in addition to the current supply.

• Existing home sales for June were down 2.6% . What’s troubling is that although the median price of a home fell 6.1%, inventories were up to an 11.1 month supply signaling that the housing market is still struggling. Tight lending standards and slightly higher mortgage rates are making things a bit challenging for home buyers.

• Jobless claims were up, in line with recessionary scenarios, even though overall the consensus is that we are not in a recession.

• The Federal Reserve’s Beige Book report for the latest six-week period came out and it signaled that the economy is increasingly weak across most of the U.S. All 12 districts reported slower home sales, continuing big inventories and falling home prices.

New York and Chicago also reported that buyers had increasing difficulty getting mortgage financing. The survey said tighter credit standards are hurting commercial real-estate activity.

• The House and Senate approved a sweeping housing bill Wednesday that would provide tax credits of up to $7,500 for first-time home buyers and help an estimated 400,000 strapped homeowners avoid foreclosure. President Bush is expected to sign the bill, which he had previously threatened to veto due to the $3.9B in block grant monies to help local communities. The Treasury Department would have the ability to extend Fannie Mae and Freddie Mac an unlimited line of credit and buy their stock.

The Congressional Budget Office estimates the program would cover about 400,000 homeowners with mortgages totaling $68B.The bill includes:

–A $7,500 tax credit for first-time home buyers.
–A $500 to $1,000 deduction for 2008 property taxes for people who don’t itemize deductions on their tax returns.
–Higher limits, up to $625,000, on mortgages insured through Fannie and Freddie. A temporary limit of $729,750 until Dec. 31 would remain in place.

• U.S. foreclosure filings more than doubled in the second quarter from last year. RealtyTrac reported that one in every 171 households was foreclosed on, received a default notice or was warned of a pending auction. That represents an increase of 121 percent from a year earlier and 14 percent from the first quarter. Almost 740,000 properties were in some stage of foreclosure, the most since the Irvine, California-based data company began reporting in January 2005.

• [3] Sales of new homes fell 0.6 percent to a 530,000 pace from 533,000 in May, a revised higher reading than originally reported.

• 1:16 a.m. in New York Stock Exchange composite trading. The shares have lost 43 percent of their value in the past 12 months.

• Bonds…2 year 2.70%, 5 yr. 3.44% and the 10 yr. 4.10%.

• Crude oil closed at $123.26 per barrel as it continued it’s correction.

• 30-Year Fixed Jumbo average came in at 6.39%.

Here in Burbank and the San Fernando Valley we are experiencing pockets of good news, but overall it’s not an optimal situation. Foreclosures are up and continue to challenge current inventories. Expect things to continue this path until next year.

The Economic Week Ahead:

• [4] Consumer Confidence,[5] (Tuesday)

• [6] [7] MBA Purchase Applications[5] (Wednesday)

• [9] Jobless Claims , [10] GDP, [11] NAPM Chicago Index [12] Employment Cost Index (Thursday)

• [13] ISM Manufacturing Index, Employment Situation (Friday)

Have a great weekend!