Tuesday's session was another roller coaster as the bottom fell out of the market halfway through the day while many analysts pointed their fingers at reports of Russian troops massing on the Ukraine border; the fact is that anxiety is the boogeyman these days. I liked the pockets of buying, especially into the close, but the bias is to the downside, and we are nearing a pivotal test of support; an exponential 50-day moving average. As observed in the chart below, this marks the third time that the Dow has fallen below the 200-day moving average, however it has continued to keep climbing.
For the Dow Jones Industrial Average that magic number is 16,294.
After the close, there was a slew of earnings announced including results from Disney (DIS), which blew everyone away. However, even names that beat struggled a bit, reflecting a fading appetite to buy, rather than take profits into good news.
Stop Whining Main Street, Regulations Are Hurting You, Too
We must get the government out of the nanny state business and as the middleman in all areas of commerce. That's what's making life more expensive. The government is bailing out banks with taxpayer dollars, but you still can't buy a house.
President Obama took corporate America to task for not liking regulations and told them to stop whining. Instead, he says Main Street should be excited about getting benefits out of this powerhouse economy. Unfortunately, those regulations amount close to $15,000 per household in compliance costs that obviously are passed through, as much as possible, in the chain of doing business in America.
Moreover, what does President Obama say to people who want to own homes and cannot because new regulations have effectively put up a roadblock?
Most recently, the Senior Loan Officer Opinion Survey on Bank Lending Practices survey, taken by the Federal Reserve, show a picture of a nation where more people want to own a home, and more banks want to lend the money, but new rules are making it impossible. On January 10, 2013, the Consumer Financial Protection Bureau issued final regulations based on the Dodd-Frank Act, which requires all creditors to determine a consumer’s “ability to repay” (ATR) a mortgage before making a loan. Also, approved was the “qualified mortgage” (QM) standards. Consequently, homeownership is currently at a 19-year low.
Loans approved by FHA, VA, and the USDA are eligible for purchase by Fannie Mae and Freddie Mac, but are exempt from the 43% debt-to-income rule. In addition to meeting the following additional requirements: