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No Rush to Raise Interest Rates

Written By Brian Hicks

Posted April 11, 2010

Welcome to the Wealth Daily Weekend Edition — our insights from the week in investing and links to our most-read Wealth Daily and sister publication articles.

Retailers are on the up and up, as many reported double-digit growth in same store sales and others raised earnings guidance, thanks to stronger results.

Target’s same store sales were up 10.3%, bettering forecasts for 7.8%. They even said Q1 EPS would exceed consensus estimates of 74 cents by 10 cents or more.

Kohl’s same store sales shot up nicely, coming in at 22.5% — well ahead of 12.4% estimates. They, too, boosted Q1 EPS guidance from a 48 to 52-cent range to a 55 to 57-cent range.

Even TJX Companies had great news, raising Q1 EPS guidance from a 60 to 65-cent range to a 76 to 79-cent range; the retailer posted a 12% jump in March same store sales.

And while there are many more retail success stories, will the trend continue? And will it extend to other markets, including real estate?

We’ll just have to wait and see…

Because, as Bernanke pointed out, "We are far from being out of the woods… We have yet to see evidence of a sustained recovery in the housing market. Mortgage delinquencies for both subprime and prime loans continue to rise as do foreclosures. The commercial real estate sector remains troubled, which is a concern for communities and for banks holding commercial real estate loans."

Consumers must still contend with:

  • Mortgage rates jumping from about 5% to 5.3%, which could price would-be homeowners out of the market — a possible threat to this recovery. With some believing rates could go as high as 6%, it could slow our economic rebound.

  • Bernanke warning that we may have to accept higher taxes or changes in programs — such as Medicare and Social Security — if we are to deal with budget deficits that could choke economic growth.

  • Reports from the Irvine Housing blog: "Bank of America, which currently forecloses on 7,500 homes a month nationally, will increase that number to 45,000 per month by December of 2010." That’s a 600% increase. While the numbers haven’t been confirmed by us, if true, this is wishful thinking. (Even if they foreclose 45,000 homes a month, that’s only 540,000 foreclosures. What about the other 660,000 people in default?)

  • CNBC saying that foreclosures are coming. "We won’t get the [foreclosure] numbers until next week, but sources tell me they will likely be a new monthly record. Tens of thousands of loans have been hitting the ‘notice of trustee sale’ bin, and that means they are coming to foreclosure." The actual foreclosure numbers have been down recently because of all the modification efforts, but as we see more loans not qualifying for modifications and more loans defaulting on modifications, the foreclosure numbers rise.

But I won’t leave you heading into the warm spring weekend with all bad news. There is some good news, and opportunity to profit from the silver lining of the next coming bubble, foreclosures, and emerging growth markets in other countries around the globe can be found in the stories from the pages of Wealth Daily and our sister publications, below.

Stay Ahead of the Curve,

Ian L. Cooper
Wealth Daily


How I Learned to Stop Worrying and Love the Bubble: Don’t Fight the Fed
Wealth Daily Editor Christian DeHaemer details the history of recent bubbles and tells you to make the easy money from its inflation.

Foreclosure Fortunes: Simple Ways to Profit from the Coming Crisis
A real estate mogul explains why 20 million properties will be foreclosed by 2012… and how three stocks could make you filthy rich.

Latin America’s Top-Performing Stocks: The Top Plays on Emerging Latin America in 2010
International Editor Sam Hopkins shares his top plays on this week’s World Economic Forum for Latin America.

How Market-Makers Impact Stocks: Is the Energy Investment Game Rigged?
Energy & Capital Editor Nick Hodge discusses various ways market-makers can impact the value of stocks, and how you can follow them to easy profits.

Oil Headed to $100-$110 Near Term: My Updated Predictions for Crude Oil Prices
Editor Ian Cooper explores the reality of a return to $100 oil and offers three trades from which to profit as the days of cheap oil leave us in their wake.

Oil Rises above $84: Profit from it Domestically
Time reports there’s a real-live boom happening here in the state where there’s three times more cattle than people. Not only does it boast the country’s lowest unemployment rate; home values are actually up and companies are actively recruiting workers from all over the country. Check out the latest report from Wealth Daily to read about profit opportunity in domestic oil.

Offshore Marine Energy: Scotland Bets Millions on Marine Energy Innovation
International Editor Sam Hopkins looks at where the real and lasting power of offshore energy is being invested in today.

Washington’s Other Undeclared War: Congress’ Secret Offensive
Right now — whether you know it or not — every one of us is danger of losing our hard-earned savings as the war for American retirement rages on… don’t miss this report from Wealth Daily to prepare for and protect against Congress’ plans to increase spending via your 401(k).