Stocks fell hard to close the week in the red on disappointing news. Since Monday the DOW has lost about 60 points or some ½% while the NASDAQ is about even.
The May Treasury International Capital flows or TIC Report fell to 35.4 billion, a little less than the trade deficit but keeping us in the ballpark relative to our external deficits. Foreign buying interest in all asset classes fell sharply with the exception of Agency Issues that nearly doubled and marked a 4th consecutive gain. As an aside the Fed transferred Fannie Mae and Freddie Mac’s mortgage portfolio’s to its balance sheet recently turning what was an implied guarantee into an actual guarantee backed by us taxpayers.
The ECRI Weekly Leading Index continues to slip, the smoothed annualized growth rate fell to –9.8%, -10% is usually good for a recession. The top line number was unchanged at 120.6. The CPI fell .1% in June pushing the annualized rate down to just 1.1%, the latest indicator to show price pressures falling rapidly. DataQuick reports that the median home price in California fell 2.9% in June despite increasing sales to $270,000. On a year ago basis prices are 9.8% higher, an eighth consecutive monthly gain. Foreclosure sales as a percentage of total sales fell to 34.7% of the market in June. A month that will probably represent the highpoint for stimulus induced real estate recovery.
Goldman Sachs agreed to pay a record 550 million dollar fine to settle its SEC civil fraud lawsuit over its sale of structured mortgage securities. In the process Goldman was forced to admit that its marketing deals “contained incomplete information.” A seemingly trivial detail it leaves the bank open to substantial claims from other investors who lost money on similar deals. The same applies to other banks that engaged in similar securities deals. Other than that the fine is fairly trivial, at least in Goldman’s eyes as it represents about 2-weeks profit, will see how the expected parade of related lawsuits turns out.
The case also serves to illustrate that the mainstream media is essentially the PR department for big corporations and more than willing to discard facts and substitute opinion. Initially they dismissed the suit as “weak” and downplayed it as a trivial matter that would have little bearing on either Goldman Sachs or Wall Street in general. A record fine later and forced admission of misleading marketing deals and this suit is anything but trivial for either Goldman or the Street as the resultant investor lawsuits over the losses from these products will illustrate.
Hi and welcome to The Profit Motive, I’m your host Caleb Lawrence. Once upon a time in America the media acted as the watchdog of the corporations and the state. In the modern era it’s all about ratings and profits, opinion has been substituted for news and frequently is presented as fact. 
