Bedside Observations

Funny thing about being out of circulation for a few days.
Nothing’s changed.

Oh, we’ve had variations in the closing prices of the markets, but really, other than the date on the calendar, nothing’s any different: We’re still at war in the Middle East, gasoline prices are still higher than we’d prefer, and a bunch of grown adults are behaving like Junior High Band Students going to Six Flags—shirking their responsibilities, and promising the moon as they campaign for their party’s presidential nomination.

Exxon disappointed its analysts by turning in a less-than-perfect report card. Exxon blamed its earnings miss on lower natural gas prices and higher costs of doing business. Exxon’s the company everyone loves to hate. If Exxon had met expectations, they would still have been pilloried for something else—like making money selling the oil they pump out of the ground.

Wall Street blamed the past few days’ losses on credit nervousness. That’s code-speak for the fact that because a few mortgage lenders got greedy in the real estate bubble, and a few more investment bankers got greedy in buying up all their skanky loans that subsequently soured, now the whole lot is tainted, and it’s going to be tougher to borrow money—whether it's for a home, a loan portfolio, or a shipment of steel. There’s nothing more pathetic than a snake-bit financier, especially when he’s been injected with his own poison.

Coincidentally, new home sales in June were reported as tapering off again, despite home builder incentives up to, and including, a new car in the garage. Because the numbers the government reports do not reflect contract cancellations, the figure may actually be overstating sales---or understating the problem. Sales are off over 20% from this time last year, and only in the South have home sales shown an increase.

Go figure: There are over a half-million homes on the market right now. The inventory in June slipped only every so slightly, so builders are not making much headway in working through what they’ve built to sell. It is a buyer’s market…if you can find the funding. On Wall Street, it’s the same—only there seem to be more sellers than buyers these days.