U.S. stocks followed other markets today, dropping substantially on weak earnings reports coming out of financial companies. An unfortunate start to the Obama presidency, but one clearly out of his control.
A number of statistics were reported on Bloomberg today that clearly point to the underlying problem of this financial mess we are in....it's all about residential real estate. Until the residential real estate market finds stability, these problems will remain. Shoring up the banks with capital from the TARP has proven fruitless. Neil Cavuto reported on FOX that the big banks that have received money from the TARP are worth less now than the money they have received!
And, the fact is, the big banks are not willing to lend on any residential real estate projects. I spoke with a banker today that said his bank wants nothing to do with any residential subdivisions, anywhere. That is probably a sure sign of a bottom in that market. This is the point in time when someone needs to step up and take a risk. As such, I can see that anyone with money to spend at this point in time is looking for opportunities in these markets. Unfortunately, they won't get much financing from the banks.
The mess we are in started with real estate, and will not end until those issues are resolved. Hopefully, the Obama administration will realize that, and some courageous entrepreneurs will begin taking the risks necessary to step into this market.
More to come later.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
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