Tuesday, July 29, 2008
When bad news goes good... bonds took a slight nosedive today after investment bank Merrill Lynch said late Monday it would take a $5.7 billion write-down and sell off $30 billion in mortgage backed securities (MBS) this quarter.... At 1/5th their face value. They are doing this, along $8.5 billion through the issuance of new stock, just to bring the write-down to only $5.7 Billion. If I were an investor I would dump all I had in MBS and get in line for this fire sale. Also in the bad, good, and ugly, S&P/Case-Shiller Home Price Index dropped again for the 22ND consecutive month. The silver lining here is that it didn't drop as much as last time, therefore we must be nearing the end of this slump. With oil prices down, consumer confidence rose nearly a point in July, when it was expected to once again drop. More of that its darkest before the dawn mentality. Let's hope so, but not at the expense of a solid interest rate. I suggest locking today even though most of the losses were before pricing came out. We have a lot of financial information out this week, so expect volatility in the market.
As always, if you have any questions, please don't hesitate to contact me.
Karl Menzer
435-849-0212
