Stocks are sinking this afternoon as indices are sliding below their 2003 levels as stocks are down about 3.5 to 5.0%. Growing concern over the fate of the car industry and economic data signaling the recession is deepening or getting worse is pushing stocks down. Sustained deflation (lower prices) is a concern as consumers “hold off purchases now hoping to get lower prices later.” The mindset that you could buy a car for $1,000 less if you wait a month or so is not helping since stocks are pretty short-term focused.
U.S. home builders in October “broke ground” on the fewest amount of new U.S. homes (current environment) and obtained the fewest amount of building permits for future construction (future environment) at the lowest levels on record. This is a signal that the housing slump may extend into a 4th year. Construction starts on new housing fell 4.5% in October, at an annual rate of 791,000, that was the lowest level since records began in 1959, the U.S. Commerce Department said.
This, over the long-term, is good news as supply is reduced which helps prices find a floor and stabilize, but for today investors will sell.
More in my regular update in the a.m.
Regards,
Wilfred
