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Martin here, working from home today, with some breaking news:
The Dow sank 143 points today in response to an ugly plunge in the Philadelphia Fed’s manufacturing index — to its lowest level since February of 2001.
Meanwhile, with the U.S. sliding into recession, the housing market bust we’ve been writing you about is now spreading to commercial real estate.
The primary catalyst:
Just within the last few weeks, the market for securities backed by commercial mortgages has all but vanished.
There is no new financing. There are no buyers. And the market value of these securities has tanked.
But we’re just beginning to see the fall-out …
- Keycorp (the big Ohio bank Mike warned about in our recent teleconference) has just told the SEC it will suffer another huge loss in March. In the fourth quarter, its earnings had already plunged 83%. Now, it could be sinking deep into the red.
- Many other banks are in the same soup: The U.S. Comptroller of the Currency has warned that over a third of the nation’s community banks have commercial real estate concentrations exceeding 300 percent of their capital.
- Lehman Brothers just announced the likelihood of a $1.3 billion write-down. It’s stuck with a staggering $34 billion in commercial real estate assets.
- According to the New York Times, Wall Street is now admitting that the big mortgage losses you’ve seen so far are just the tip of the iceberg. Why? Because most of the losses so far have stemmed from the bust in residential mortgages. The losses from commercial mortgages and other loans are just now beginning to come to light.
How will the Federal Reserve respond?
What will be the impact on the U.S. dollar and natural resources?
Will foreign stock markets continue to outperform ours by a huge margin?
How can you turn each of these consequences — in the dollar, natural resources and foreign stocks — into major profit opportunities?
I answer all of these questions — and more — in my just-released report entitled …
I’ve just posted the report to the Web. Click here to read it now. Then be ready to take prompt action.
Good luck and God bless!
Martin
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Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Sean Brodrick, Larry Edelson, Michael Larson, Nilus Mattive, Tony Sagami, and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include John Burke, Amber Dakar, Adam Shafer, Andrea Baumwald, Kristen Adams, Maryellen Murphy, Red Morgan, Jennifer Newman-Amos, Julie Trudeau, and Dinesh Kalera.
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