Tuesday, May 19, 2009

American Express Will Slash 4,000 Jobs

By Hugh Son and Ari Levy
May 18 (Bloomberg) -- American Express Co., the largest U.S. credit-card company by purchases, will cut about 6 percent of its workforce as cardholders squeezed by rising unemployment fail to pay debts.

American Express will take a charge of $180 million to $250 million in the second quarter, mostly tied to severance and other costs from eliminating 4,000 positions, the New York-based company said today in a statement. Additional reductions will be made in marketing and travel costs and consulting services.

The cuts, in addition to 7,000 job eliminations announced in October, may save about $2 billion in expenses this year, the company said. American Express has had to set aside more reserves for failed loans as surging U.S. unemployment makes it harder for customers to pay debt. The jobless rate reached 8.9 percent in April, a 25-year high.

“Credit is a big issue and the spending volume on the cards is a concern as well,” said Jason Arnold, an analyst at RBC Capital Markets in San Francisco, who recommends selling American Express shares. “They’re taking the right steps in this environment.”

American Express rose $1.90, or 7.8 percent, to $26.13 at 4 p.m. on the New York Stock Exchange today, trimming its loss for the past year to 46 percent. The stock dropped 13 cents to $26 in extended trading after the announcement.
Read entire article:

Housing Bubble Sparks Buyer's Advantage

Housing Bubble Sparks Buyer's Advantage

In the early 2000's acquiring a home was a simple as buying a pair of shoes. A less than perfect credit score with no money down and no closing costs was just enough to secure a loan for a brand new home with up-to-date amenities. At the time, it seemed like the newest trend in home buying was a success, however, fluctuating interest rates and a plummeting economy tanked the housing market faster than the speed of light.

As the saying goes, one man's junk is another man's treasure, and in the case of today's housing market, it's true. If you're looking to purchase your first home, or have the liquid cash to buy up a few foreclosed properties, it can all be done.

Because home values and interest rates have fallen to a record low and inventory has spiked to an all time high, the potential buyer has the advantage. In many cases, home owners are desperately needing to sell their properties knowing they can't compete with today's low values, and as result, buyers can name their price. The only disadvantage is the difficulties of securing a loan. If you have stellar credit, it is still problematic to get that loan without proof of savings, a steady job that you've maintained for at least 18 months, and a down payment of at least 3.5 percent for a Federal Housing Loan (F.H.A.) and 5 percent through a major bank. If you have switched jobs and/or ran into some financial troubles that have been reported to the credit bureaus, don't even try. Spare yourself the time and rejection to secure a job get your credit fixed. Don't worry about time running out, as the current market is predicted to last for at least another 6 years.

If you are a first-time homebuyer, you are in luck because there is an $8,000 tax credit that was extended in February 2009 to all those who qualify for a loan. Another perk is a very low, fixed interest rate in addition to the banks footing the expense of closing costs and accepting down payments as low as 3.5 percent.

Foreclosures are a tricky business because of the hit or miss element. While you might score and find a home for half or less than what's it worth, three possibilities exist. First, you could very well find yourself a foreclosed property for a good price that's been destroyed by the previous owners so badly that the cost to repair the damages trumps what it's worth. Second, you could find a diamond in the rough and acquire a foreclosure with ease, but risk the chance of seeing no return because surrounding property values have fallen too low. Third, if you're trying to flip the foreclosure, the resale of the home could take longer than you have saved to maintain it. The best thing to do is plan to rent out the property or occupy it until it appraises to the desired return and sell.

If you're in the market to buy a home, it can be easily be done at the right time. If possible, start saving a little bit at time and continue to fix or build your credit so you "look good on paper" within the next few years.

Source

Southern California Home Prices Fall on Foreclosures

By Daniel Taub

May 19 (Bloomberg) -- Southern California house and condominium prices fell 36 percent in April from a year earlier as foreclosures accounted for more than half of all sales, MDA DataQuick said.

The median price dropped to $247,000 from $385,000 a year earlier and is now 51 percent below the peak reached two years ago, the San Diego-based research company said today in a statement. Sales rose 31 percent last month from a year ago.

“Whatever price stability is out there is tenuous at best,” said Andrew LePage, an analyst with MDA DataQuick. “It’s going to come down to how much worse job losses and foreclosures are going to get for the balance of the year.”

Sales of foreclosed homes accounted for 54 percent of all transactions involving previously owned properties in April. That marks the seventh consecutive month such properties were more than half of resales, MDA DataQuick said. The median price was down 1.2 percent from March, the research company said.

A total of 20,514 new and existing homes sold last month in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties, up from 15,615 a year earlier, the company said.

Absentee buyers, including investors requesting that their property-tax bills be sent to a different address, bought almost 19 percent of Southern California homes purchased in April. That’s up from 17 percent a year ago and compares with a 15 percent monthly average since 2000, MDA DataQuick said.

Read entire article

Silver more rare than gold, the price will explode

GATA board member Adrian Douglas, publisher of the Market Force Analysis financial letter (http://www.MarketForceAnalysis.com), was interviewed for a half hour yesterday by TheFinancialTube.com about the gold and silver markets, and you can listen to it here:
DAILY NEWS ON BOOZE