Despite wins on Monday, Dow futures looking ominous for Tuesday.
On Monday the Dow closed up 68 points after a drop of 167 points early in the day. The rally was caused by a report that the Chinese were set to purchase Italian debt, thus interceding in the European sovereign debt crisis. Asian markets were also up following the U.S. lead. But what a difference twelve hours can make....
Markets falling in Europe on recurring fears of Greek debt and downgrade of French banks
European stocks are falling and Dow futures are down. Despite the fact that the Chinese Investment Corporation met with the Italian Strategic Fund, the hopes are relatively low because China's investments in Greece and Portugal were somewhat limited, according to the Financial Times.
The greater challenge for today is Moody's potential downgrade of the French banks, BNP Paribas, Societe Generale, and Credit Agricole. According to the New York Times, the French have flooded their airwaves with reassurance from the government that these banks are "too big to fail" and that the government would step in and support the banks. The government has emphasized as well that their credit rating is AAA unlike the U.S.'s credit rating. Despite a report by the Wall Street Journal that BNP Paribas was struggling to get lending in U.S. dollars from U.S. money market funds, the bank is adamantly denying that rumor, according to CNBC. The French banks reportedly hold $60 billion of Greek debt.
Obama's jobs plan to raise taxes on wealthy
Despite all of the hoopla in presenting his $447 billion jobs plan, President Obama forgot to mention in his speech to the joint session of Congress, that the plan includes an increase in taxes for families that make over $250,000 annually. Additionally, according to Bloomberg, the plan also cuts tax breaks for muni-bonds, allowing those in the highest tax brackets to report only a portion of the gains, rather than continuing the exemption. This will be a blow to state and local governments.
Reverse mortgages challenging to seniors
Approximately 30,000 of the 600,000 outstanding reverse mortgages are in default, according to the National Reverse Mortgage Lenders Association and as reported by USA Today. Default on a reverse mortgage is when the taxes and insurance are not paid on a property, since the loan is not technically repaid until the property is sold. Because of falling home values, some lenders , like Wells Fargo, have exited the market. MetLife is the largest provider of reverse mortgages. Reverse mortgage lenders, in conjunction with HUD, have recently set up a counseling program . Additionally, HUD has introduced a new reverse mortgage, the HECM Saver, which is less expensive but also provides up to 20% less in proceeds to the homeowner. Reverse mortgages are only available to those over age 62.
Berkshire Hathaway hires new manager
As Warren Buffett increases in age, his hiring of a new manager has become big news. Buffett, who is currently 81, has been able to beat the markets for most of the last 40 years. Recently he has hired a new manager, Ted Weschler of Peninsula Capital Advisors LLC. Weschler, according to the Wall Street Journal, is similar to Buffett in that he eschews a big staff and has a small unpretentious office. He also tends to invest similarly and to hold investments for a long time. How did they meet? Weschler, for two years in a row, won a lunch with Buffett through a charity auction. The cost of each luncheon? Over $2 million to the charity. But the investment ultimately paid off.
Ready to purchase a super car?
USA Today has highlighted the available super cars for those with a few hundred thousand or million dollars lying around. The Lexus LFA is available for $375,000. The Mercedes Benz SLS AMG, which is a gull wing coupe similar to those seen in the 1950's, is available for $189,600. The 700 horsepower Lamborghini will cost you $387,000. But the Brigadi Grand Sport, the granddaddy of them all , will set you back $2.1 million. Yet there are many still set to come. The Jaguar C-X75 will soon be available for a mere $1.1 million. The SSC Tuatara, with the 1,350 horsepower engine needed to sail down the roads, is only $1.1 million followed by its rival the Pagani Huayra at $1.3 million. Looking for something more modest? Audi is set to release its R8 GT for only $196,000.