So many things in the economy are intertwined. In this article we can see the results of the deteriorating mortgage sector is having on other companies earnings. As discussed yesterday, banks are seeing incredible decreases in the demand for mortgage applications, which is driving down their profits. Banks are not the only ones invested in mortgages. All of the brokerage houses morphed into banks as well and they are suffering loses from them as well. Many people’s personal wealth and financial well-being is tied to their home, and I wonder if these numbers reflect on this to some extent. Best Buy, Bed Bath & Beyond, Family Dollar and Target all posted disappointing numbers and cut back their outlook for the year after a disappointing holiday season. Now we know Target suffered losses due to the massive data breach more than anything else. That is a very scary story, and one that could be any company out there. If we don’t get a handle on cyber security it is going to be a nightmare. I see Best Buy and Bed Bath & Beyond as victims of lack of discretionary income. People just don’t need that stuff, it is a luxury, so they will do without now. Family Dollar is just getting hurt by their competitors right now, who are really outfoxing them at every turn it seems. Goldman Sachs and Citigroup were dragged down by mortgage losses, and the railroad operator CSX dropped almost 7%.
The bond market saw yields fall on the 10 year treasury and the price went up slightly. But the good news is that over 70 members of the S & P 500 report still have not reported earning, including some big boys like Microsoft, IBM and McDonald’s. The stock market reflects economic reports and local and global currents events but you cannot react to ever shift and bump. Let’s hope that last month really was a blip and that we can keep pushing forward with economic progress in 2014. But I think this article is important to bring people back to reality. Many people are talking like all of our problems will be solved this year. It is not going to be a miracle speedy economic recovery for the U.S. unfortunately. It is going to be a slow and steady climb up, and there will be stumbles along the way as we see here. As long as we keep heading in the right direction it is to be expected. Nothing is perfect in life as we all know. I would love to know what you think. As always thanks for reading and have a safe and wonderful weekend.
Gloom Descends as Earnings Fall Short
Orin Rosenfeld
President
Rosenfeld Realty Advisors
9858 Glades Rd. Suite 209
Boca Raton, FL 33434
Phone: 561-756-1665
Fax: 561-470-0707
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