Tuesday, October 18, 2011

Oops, the world's broken again...

Last week when the market was racing upward every day on little news and less volume it seemed like we'd turned a corner.  Well, a new week has brought new concerns and the list of reasons for a dip, at least at the open, is long.

* Well, Goldman has reported just their second quarterly loss since going public in 1999.  The results were pretty weak across the board, but banking and trading had a pretty negative impact on results.  However, before you cry too hard for the Goldmanites consider that the bank has $10 billion set aside for compensation and benefits to be paid out this year.  With just over 30,000 employees the average employee will still get a comp package north of $300k this year.

* Both Citibank and Bank of America posted HUGE profits but the bulk of the profits were due to accounting shifts and I don't believe they reflect a core improvement in their businesses. 

* From the FT an article on the early bank results: "Wells "Fargo) said delinquencies of more than 90 days in its main portfolio of consumer loans – including mortgages and credit cards – rose 4 per cent to $1.5bn, the first increase since 2009. The bank increased its provision for consumer-banking losses for the first time in two years…

Citi said the percentage of mortgages that were 90 days delinquent rose for the first time in almost two years – from 3.87 per cent in the second quarter to 3.88 per cent in the third.

John Gerspach, chief financial officer, said the bank was seeing “re-defaults” on mortgages that had been modified to make them more affordable.

“The residential mortgage problems are unprecedented,” said Gerard Cassidy, analyst at RBC Capital…He said the problems were no longer in “subprime” but “prime” mortgages.

Capital One, among the top six US card issuers, reported rising 30-day delinquencies in June and July.

Coupled with efforts by some European leaders to talk down expectations of a new grand bailout plan, the markets may have a difficult week (however, Apple's earnings could easily change the mood because millions of people are lining up to buy basically the same phone they already have ;).

I shared this stat yesterday with a friend and I have to be honest that this is the scariest stat I've ever seen when it comes to the future of our great nation.

86% of American workers are overweight, obese and/or have a chronic health issue (high blood pressure, cholesterol, diabetes, etc).  This was the result of a study using self-reported data which means that the results might even be worse in reality because people tend to overestimate their height and underestimate their weight.  Admittedly, this focuses on the flawed BMI chart but it's still a staggering piece of data.  How can we expect to compete as a nation in a global economy when we have this incredible health issue hanging around our neck?


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