Stocks continued to decline today. The last big surprise was Citigroup reporting a loss of 57% of its income for the quarter. Today Merril Lynch reported a much larger than expected loss Merril Lynch increased the amount of its write-down by $2.9 billion for a total of $7.9 billion. Merrill said it lost $2.24 billion, or $2.82 a share, compared with a profit of $3.05 billion, or $3.17 a share, in the period a year earlier. Earnings from continuing operations were $2.85 a share. Revenue fell 94 percent, to $577 million from $9.83 billion a year earlier.
These losses are much greater than any of the experts were expecting and all is due to the subprime mess and the financial engineering of very complex products that exaggerated the move .
Whats it Mean for Us
Of course, if the lenders dont know how deep this is, no one else does .My guess is that the Fed will have to lower interest rates....
Freddie Mac reports that:
15-year Fixed Rate Mortgage: this week averaged 6.08 percent with an average 0.6 point, up from last week when it averaged 6.06 percent. A year ago, the 15-year FRM averaged 6.06 percent.
30-year Fixed-rate Mortgage:averaged 6.40 percent with an average 0.5 point for the week ending October 18, 2007, unchanged from last week when it averaged 6.40 percent. Last year at this time, the 30-year FRM averaged 6.36 percent.
Im surprised that rates havent really dropped at all from last year. The Fed better get on it or we face a looming recession is my guess... Sorry for the gloom
Thanks for Reading