Housing, The Best Is Yet To Come? II
Toll Brothers (TOL) -3%, a 33% drop in Q1 orders, the homebuilder says full year write downs to "significantly exceed" forecasts. Other homebuilders Lennar (LEN), Pulte (PHM) and KB Home (KBH), all dropped 2.7%.
New Century Financial (NEW) -36%, the sub prime lender warned that its total loan production for 2007 will fall 20% short of expectations.
HSBC (HBC) -2.6%, the worlds 3rd largest bank, warned bad debt charges will be 20% higher; exceeding forecasts by about $1.76 billion.
Higher interest rates and a lack of refinancing options in the slowing U.S. housing market leave customers unable to pay their mortgages.
Washington Mutual (WM) -2.6% on the sub prime news, 8% of their loans are sub prime.
In todays markets, an increase in sub prime mortgage defaults sparked heavy selling of some types of mortgage linked securities and home equity collateralized debt obligations.
These are structured finance products, similar to a mutual fund, in which owners buy a stake in a pool of mortgages or home-equity loan products.
Deteriorating conditions in the housing market are spilling over into the financial services industry and the broader economy.
New York University economist Nouriel Roubini in his blog here and here and here said the rate of subprime defaults and foreclosures is rapidly increasing.
"The number of sub prime lenders going belly up increases every week and even those big ones that have not closed shop are showing increasing signs of losses, retrenchment and/or willingness to sell their operations".
Declining wealth from home values threatens to hit consumption. And "the quality of job creation is poor, replacing manufacturing jobs with service jobs, which is not creating a big enhancement to consumer demand," said Robert Smith, director of portfolio strategy at Smith Affiliated Capital.
"With little job and wage growth, the consumer is extended debtwise, and declining activity is coming to the fore. The subprime lending story lays bare this issue," Smith said.
Coincidence? Costco (COST), posted its slowest comps growth since November 2002.
New Century Financial (NEW) -36%, the sub prime lender warned that its total loan production for 2007 will fall 20% short of expectations.
HSBC (HBC) -2.6%, the worlds 3rd largest bank, warned bad debt charges will be 20% higher; exceeding forecasts by about $1.76 billion.
Higher interest rates and a lack of refinancing options in the slowing U.S. housing market leave customers unable to pay their mortgages.
Washington Mutual (WM) -2.6% on the sub prime news, 8% of their loans are sub prime.
In todays markets, an increase in sub prime mortgage defaults sparked heavy selling of some types of mortgage linked securities and home equity collateralized debt obligations.
These are structured finance products, similar to a mutual fund, in which owners buy a stake in a pool of mortgages or home-equity loan products.
Deteriorating conditions in the housing market are spilling over into the financial services industry and the broader economy.
New York University economist Nouriel Roubini in his blog here and here and here said the rate of subprime defaults and foreclosures is rapidly increasing.
"The number of sub prime lenders going belly up increases every week and even those big ones that have not closed shop are showing increasing signs of losses, retrenchment and/or willingness to sell their operations".
Declining wealth from home values threatens to hit consumption. And "the quality of job creation is poor, replacing manufacturing jobs with service jobs, which is not creating a big enhancement to consumer demand," said Robert Smith, director of portfolio strategy at Smith Affiliated Capital.
"With little job and wage growth, the consumer is extended debtwise, and declining activity is coming to the fore. The subprime lending story lays bare this issue," Smith said.
Coincidence? Costco (COST), posted its slowest comps growth since November 2002.
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