S&P500: The 'Buy the Dip' Crowd is Now Trapped

Yesterday: Blogpost: (S&P500: Critical Support and Rising Volatility)
Today:

ISM Services Index Falls to 55.8 from 60.7

" Growth in U.S. service industries slowed more than forecast in July, a sign businesses that make up most of the economy may be contributing less to the expansion in the second half.

The Institute for Supply Management's index of non- manufacturing businesses, including banks, builders and retailers fell to 55.8 last month, from 60.7 in June, the biggest drop in almost two years, the Tempe, Arizona-based group said today. Readings above 50 point to growth.

Weakening consumer demand, the prospect of increased limits on borrowing and evidence of slower economic growth are leading companies to hold off on their own spending and expansion. Payrolls grew less than expected last month, and the unemployment rate rose, the Labor Department said in an earlier report today. "

Source: U.S. ISM Services Index Falls More Than Forecast (Update2) (http://www.bloomberg.com/apps/news?pid=20601068&sid=asw3e3pfTRVA&refer=economy)

U.S. Payrolls Rose 92,000 in July; Jobless Rate at 4.6%

" Employers in the U.S. added a fewer-than-forecast 92,000 workers to payrolls last month and the jobless rate unexpectedly rose, a sign the labor market is cooling.

The increase in jobs followed a 126,000 gain in June that was smaller than previously reported, the Labor Department said today in Washington. The jobless rate rose to 4.6 percent, the first increase since April, from 4.5 percent. Wages gained 3.9 percent from a year earlier. "

Source: U.S. Payrolls Rose 92,000 in July; Jobless Rate at 4.6% (http://www.bloomberg.com/apps/news?pid=20601087&sid=aUggn1TBqQfU&refer=home)

Make Your Mortgage Payments with Your Credit Card

This is so unbelievably ridiculous and significant that it must be emphasized: You can now charge your monthly mortgage payments DIRECTLY to your credit card.

Oh sweet sweet credit bubble!

" American Express Co. will allow consumers to charge monthly mortgage payments, making them eligible for perks including rewards points on airline travel and hotels. "

That sure sounds good. Put it on the card, collect points and miles, and then pay it off that billing cycle thereby avoiding punishing credit card interest rates. However, in reality the individuals charging to their cards will be exactly the kind of individual you wish did not even have a credit card. They will be the ones already in a financial death spiral and will be using their cards as one final sad little postponement of inevitable foreclosure.

Now for the fun stuff:

May 23rd 2007: " The American Express Rewards Mortgage program with American Home Mortgage Corp. starts today, Christine Elliott, a spokeswoman for American Express said."

August 2nd 2007: " American Home Mortgage Investment Corp. plans to halt operations, becoming the second-biggest residential lender to fail this year as bad loans spread to people with good credit records. "

That was quick.

If I can't pay my monthly mortgage payment @ 6.5% and therefore charge it to my card, what happens when I get THAT monthly bill @ 19.9%?

Brilliant. Just brilliant. All of it.

Source: American Home Will Close as Loan Demand Collapses (Update4) (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=abEuBa_evwH4)
Source: American Express Allows Mortgage Payments on Cards (Update3)(http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aGpnCcRNmcis)
Source: Credit Brothel Raided, Even Piano Player Not Safe: Mark Gilbert (http://www.bloomberg.com/apps/news?pid=20601039&sid=a31pp7slShC8&refer=home)

Germany Rescues German Subprime Lender

US subprime problems have far reaching consequences in this global economy of ours...

" Shares of IKB Deutsche Industriebank AG plunged as German banking associations and state-owned KfW Group agreed to provide 3.5 billion euros ($4.8 billion) to cover potential losses from the U.S. subprime mortgage rout.

The shares fell 6.83 euros, or 40 percent, to 10.35 euros at 4:28 p.m. in Frankfurt today. The stock tumbled as much as 43 percent before the BdB banking association head Manfred Weber, who represents private banks such as Deutsche Bank AG and Commerzbank AG, said in a statement that the BdB will contribute as much as 500 million euros to ``stabilize the bank and prevent market disruption.''

Dusseldorf-based IKB on July 30 replaced its chief executive officer and said it'll miss its full-year profit target because of losses on U.S. subprime holdings. The rescue package covered as much as one-fifth of IKB's roughly 17.5 billion-euro exposure to the U.S. subprime mortgage market, Reuters reported, citing an unidentified person close to the plan. "

Subprime problems are contained. Don't even worry about it. Have another drink. This party is just getting started. >grin<

Source: IKB Shares Fall as German Banks Agree on Bailout (Update1) (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a62xBsSllhLg)