And bank lending last year posted the steepest drop since World War II.

The snapshot for October-December 2009 issued Tuesday by the Federal Deposit Insurance Corp. offered a tale of two banking sectors. On the one hand, big banks have been gradually recovering, many of them with help from federal bailout money. On the other, small and mid-sized institutions continue to suffer distress that will likely persist in the coming years.

Loan losses and bank failures are likely to continue to haunt the industry as regional banks succumb to soured commercial real estate loans.

Banks have tightened their lending standards. The volume of bank loans dropped by $587.3 billion, or 7.5 percent, last year from 2008 — the biggest full-year decline since 1942, according to the FDIC.

Big banks were responsible for 90 percent of the fourth-quarter decline in loan balances, which totaled $128.8 billion. That was up from 74 percent in the third quarter of 2009. Banks Report Profit

A flood of bad news, including rising debt levels in European nations and an unexpected jump in the number of Americans filing for unemployment benefits, had investors pulling money out of assets like stocks and commodities that look increasingly risky. Fears of more disappointing news Friday, when the government issues its January employment report, added to the sell off.

Demand for safer investments sent the dollar and Treasury’s higher and the euro falling. Major indexes skidded as much as 3.1 percent to their lowest levels in three months. The Dow fell 268 points and briefly traded below 10,000 for the first time since Nov. 6. The Dow’s 2.6 percent drop was its biggest in seven months. It was the ninth time in 14 days that the Dow has moved by more than 100 points.

Personal incomes rose more than expected in December and consumer spending increased for the third straight month, helping the economy slowly recover from the worst recession in decades.

The Commerce Department said Monday that incomes rose by 0.4 percent, the sixth increase in a row. That’s slightly better than analysts’ expectations of 0.3 percent growth.

Income growth was spurred by a large, one-time social security payment. Wages and salaries rose by only 0.1 percent, or $9.1 billion, after increasing 0.4 percent, or $27 billion, in November.

Consumer spending, meanwhile, increased by 0.2 percent, less than analysts’ forecasts of 0.3 percent. The department also revised November’s figure to show a 0.7 percent increase in spending, higher than the initial estimate of 0.5 percent.

Consumer spending is closely watched because it accounts for about 70 percent of total economic activity. In last year’s fourth quarter, consumer spending rose by 2 percent, down from a 2.8 percent increase in the July-September period.

That helped boost the nation’s gross domestic product, the broadest measure of the economy’s output, by 5.7 percent in the fourth quarter, the fastest growth in six years. The economy grew at a 2.2 percent rate in the third quarter after a record four straight quarters of decline.

While the worst may be over I expect we will hear more news in the near future about company layoffs and downsizing. I continue to believe that we will see another surprise when credit card companies start releasing delinquency reports.

The market bulls are in charge right now but don’t expect this to last or at least I don’t. Look for value, price and companies that may benefit if this correction is not over.

2oversold.com is a blog for the individual consumer and private investor. We are not experts in the markets nor do we make any recommendations of any company. The companies we blog about are discussed for the purposes of this blog only and this should not be considered as investment advice.

Do we think the Real Estate market is back? Not at all. In fact this is the reason we like MOVE here. NASDAQ:MOVE closed trading on Jan 15th at $1.87 and in our opinion this price is not reflecting a large portion of their business model which is the rental side of the company homes for rent. As the economy forces more homeowners into foreclosure the rental markets will continue to remain strong and could possibly see some pricing power.

The markets continue to rise despite all the economic news indicating that the average consumer continues to struggle in the jobs market and we continue to believe there is a credit card crisis looming. And while layoffs seems to have peaked there is no indication that companies are anywhere close to putting America back to work so many in the jobs market are needing to relocate in order to secure a job and this suggest to me that companies like MOVE.COM will stand to benefit from the rental side of the business.

At 2oversold.com we are always on the lookout for companies we believe might be undervalued in today’s market and economy. At $1.87 we think MOVE.COM is well worth a look for the longer term investor wanting to get some exposure to the Real Estate market and especially the homes for rent side of the equation.

About MOVE.COM:

Corporate Profile

Move, Inc. is the leader in online real estate, capturing an average of more than nine million visitors each month in 2009 to the Move Network of real estate Web sites.

Move’s sites provide the resources and decision support tools for consumers and real estate professionals looking for home and real estate-related information. Visitors to the Move network of Web sites, including REALTOR.com®, Move.com®, Moving.com™ and SeniorHousingNet.com™ have access to the most comprehensive selection of existing homes for sale, new homes, apartments and homes for rent, senior housing and moving resources.

Move has deep local and national advertising relationships with more than 400,000 real estate professionals as well as consumer advertisers. On the Move Network, advertisers can choose a variety of ad solutions including subscription, lead generation, text-link and rich media, directory products, price quote tools and sponsorships.

You can visit MOVE.COM and find out more about the rental side of their Real Estate Business here: homes for rent

Stocks Mentioned In This Article
Stock	More Info
MOVE	| |

The big question is whether Chairman Ben Bernanke and his colleagues will give hints about when they will reverse course and start boosting rates.

A decision to raise rates is still months away. But plans for reeling in the unprecedented amount of money the Fed has plowed into the economy is likely to dominate its private discussions Tuesday and Wednesday. The Fed is expected to announce its policy decisions on Wednesday afternoon.

The central bank faces a high-stakes challenge: If it removes the stimulus too soon, it could short-circuit the recovery. But if it moves too late, it could unleash inflation or new speculative asset bubbles. Each scenario could feed a fresh economic crisis.

Bernanke, who’s seeking a second term as Fed chief, has made clear his No. 1 task is sustaining the fragile recovery. Last week, he and other Fed officials signaled they are in no rush to start raising rates.

At the same time, Bernanke has sought to assure skeptical lawmakers and investors that when the time is right, he’s prepared to sop up all the money.

Some encouraging signs for the economy have emerged lately. The nation’s unemployment rate dipped to 10 percent in November, from 10.2 percent in October. And layoffs have slowed. Employers cut just 11,000 jobs last month, the best showing since the recession started two years ago.

Still, the Fed predicts unemployment will remain high because companies won’t ramp up hiring until they feel confident the recovery will last.

The DOW currently stands 10,471 and shows no signs of retreating. Yet in some of our favorites stocks that we picked one year ago this month continue to due great too which still indicates to me that the markets have more downside ahead.

Example:

Northgate Minerals (NYSE: NXG) We first profiled this company at .77 on Dec 28, 2008. Read that blog here . Northgate Minerals closed trading on Friday at $3.22 or +300% in the last 12 months.

Yamana Gold Corp (NYSE: AUY) was our second favorite play in the gold mining sector. We first blogged about Yamana on Nov 6, 2008 at a price of $4.67. Yamana Gold Corp closed Friday’s trading session at $12.05 another 300% gainer in the last 12 months. Read the original Yamana Gold blog here

Both companies appear to continue to be strong as does the price of gold itself. This brings me to the query, “are we now trading in a different world” than the one we knew pre-bailout period?

Maybe, maybe not but as I continue to watch the DOW I am amazed at it’s ability to hold the 10,000 level and will not be surprised to see a lot of turbulence in the next 17 days.

Stocks Mentioned In This Article
Stock	More Info
NXG	| |
AUY	| |

U.S. stock index futures pointed to a sharp drop when Wall Street reopens on Friday for half a session following Thanksgiving, as fears over Dubai’s debt woes knocked stock markets around the world.

At 1019 GMT, futures for the S&P 500 were down 1.9 percent, Dow Jones futures down 2.5 percent and Nasdaq 100 futures down 2.6 percent.

Dubai, part of the oil-exporting United Arab Emirates, said on Wednesday it would ask creditors of state-owned Dubai World and Nakheel to agree to a standstill on billions of dollars of debt as a first step toward restructuring.

Dubai World, the conglomerate that led the emirate’s expansion, had $59 billion of liabilities as of August, most of Dubai’s total debt of $80 billion. Nakheel was the builder of three palm-shaped islands off Dubai.

Investors continued to dump risky assets on Friday, spooked by the risk that a Dubai debt default could revive the financial turmoil of the credit crisis.

“The Dubai concerns are an issue but not a real shock. It’s more a question of timing with the lack of market participants due to Thanksgiving holiday yesterday and the Muslim Eid holiday today exaggerating the moves,” Mic Mills, senior trader at ETX Capital, in London.

Stock futures pointed to a lower opening Wednesday on Wall Street as third-quarter earnings reports once again set the tone for the market.

Wells Fargo & Co., US Bancorp and Morgan Stanley all reported better results for the July-September period from a year earlier. However, the three financial firms provided fresh reminders that the broader economy is struggling even as Wall Street rebounds.

All said loan losses remain elevated.

Last week, Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. all reported higher credit losses as consumers struggle to pay off their bills.

Dow Jones industrial average futures fell 38, or 0.4 percent, to 9,962. Standard & Poor’s 500 index futures fell 3.80, or 0.4 percent, to 1,085.60, while Nasdaq 100 index futures fell 6.25, or 0.4 percent, to 1,752.00.

The Labor Department figures prompted President Barack Obama to say he’s working to “explore any and all additional measures” to spur growth, and underscored forecasts for the Federal Reserve to keep its benchmark interest rate near zero through next year.

“This has the potential to put a big stop sign on the road to economic recovery,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “The harder jobs are to get, the harder and longer this road to recovery is going to be.”

Payrolls dropped by 263,000 in September, exceeding the median forecast in Bloomberg’s survey, with losses extending from cash-strapped state and local governments to retailers to builders, yesterday’s report showed. The jobless rate rose to 9.8 percent from 9.7 percent in August, while working hours matched a record low.