To nobody’s surprise, the $700 billion bailout is on paper and ready to save the nation. To celebrate, global stock markets…sold off hard. Overnight:
- -1.3% Japan
- -4.3% Korea
- -2.8% Germany (9:15 a.m. Eastern)
- -2.9% London (9:15 a.m. Eastern)
Why?
This excerpt from yesterday’s Kelly Letter points out a little something called the economy that got lost among the bailout drama:
General Electric issued an earnings warning on Thursday, and durable goods orders, home sales, and weekly initial claims all came in worse than expected. GE is so widely diversified that its report is considered to be a harbinger of the state of the economy. Hint: bad.
Durable goods orders fell 4.5% in August on the heels of a slight 0.8% gain in July, which is part of what helped our summer rally along. Business investment is drying up.
Bottom-seekers in the housing market are still seeking. Existing home sales fell 2.2% in August, and new home sales plunged 11.5%. From a year ago, the latter is off 34.5%. The median price of existing homes fell 3.4% last month, and is down 9.5% from a year ago. Supply of unsold homes rose from July’s 10.3 months to 10.9 months.
That’s what it’s looked like for a while now, and some signatures from Congress that enable the government to buy junk assets don’t do much for short-term durable goods orders.
