I don't know about you, but while the market found its sea legs somewhat last week, the economic news in just the past couple of days has me wearing a neck brace to deal with my newfound whiplash. By the end of Friday I was sitting in a corner, rocking back and forth, and lapsing into all sorts of unintelligible babbling.
Let's start with Thursday. We awoke to the news that Bank of America
Amid this newfound euphoria and before we could even think about lunch, Countrywide CEO Angelo Mozilo responded in the affirmative when asked in a CNBC interview whether he thought the current housing crisis could push the U.S. economy into a recession. And to add a little fuel to the negative fire, before the end of the day rating agencies Moody's and Standard & Poor's said they might still downgrade Countrywide's debt ratings despite the help from Bank of America.
On Friday, the Commerce Department told us that new home sales for July rose 2.8%, after falling 4.0% in June. At about the same time, and to end the week on a high note, it was announced that durable goods orders for July had jumped by 5.9%, the biggest hike in nearly a year. That last bit of news was good -- or maybe not -- because it just might keep the Fed from cutting the federal fund rate when it meets next month.
But perhaps the most noteworthy aspect of the two-day news barrage was the effect it apparently didn't have on the homebuilders. At a time when some investors obviously are champing at the bit to turn even the slightest morsel of good news into a justification to build positions in the builders, the likes of Centex
I have my fingers crossed that investors, particularly Foolish ones, are not just manifesting news confusion, but are exercising forbearance in their approach to the builders. The effects of a ton of irresponsible mortgages likely will require a very long time to abate, meaning that the all-clear bell for the group isn't close to being wrung.
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Fool contributor David Lee Smith, having recently escaped the nation's most severely depressed housing market, doesn't own any part of the companies mentioned. He does welcome your emails. The Motley Fool has a brick-and-mortar disclosure policy.
