Credit Loan Deals

As we head into the last half of april, company earnings will start to roll out.  This is commonly known as 1st Quarter earnings season.  The beginnings of what has been rolling out is been a mixed bag of earnings.  Google pushed the markets quite a bit higher as many people thought they would have weak earnings from the recession, but the suprised the market.  Yahoo slightly beat estimates, but didn’t move the stock much, and many other companies are very mixed in their earnings picture.

The leader in Internet Search earned $1.31 billion in the 1st quarter of 2008. Earnings were $4.12 per share up from $3.18 per share in the 1st quarter of 2007. 1st quarter revenue was $5.19 billion up from $3.66 billion a year earlier.

Google is the dominate internet search engine. More than 50% of all online searches are done through Google. It’s a great investment due to it’s complete dominance of the AdWords paid/sponsored links. So far Google is showing a resistance to the US recession, but we will see if it can hold up in the latter stages of the recession if online advertising dollars dwendle.

Aloha Airlines filed on March 31st, ATA filed on April 3rd, Skybus filed on April 5th, and now Frontier Airlines has filed for bankruptcy protection.  At least for passengers, Frontier is still flying, while the other 3 shut down completely leaving passengers who had bought tickets stuck without a flight.  The rumor behind the bankruptcy protection is thought to be because of an unexpected increase in the amount it’s principle credit card processor plans to withhold from the sale of it’s flight tickets.

General Electric Co. (aka GE) stock is currently down more than 11% as they missed their anticipated 51 cents per share earnings forcast by analysts and missed GE’s own forcast of between 50 - 53 cents per share.  GE posted 43 cents per share in earnings in the 1st Quarter, down 8 cents for their estimates and down a penny from year ago earnings.  GE stated that disappointments were spread across all of their businesses both in financial and industrial segments.  GE has lowered 2008 full year earnings expectations from $2.42 per share down to between $2.20 and $2.30 per share.

Fed meeting minutes show that their slashing of the key interest rates last month was due to their worries about a severe recession.  With the economic downturn, crash of the housing bubble, and credit markets being the tightest they have been in a long time, the Fed is looking at a perfect storm of issues that could make this a prolonged recession.  On the other hand with the high oil prices and food prices, it is making it difficult to lower the interest rates any further to fight the recession as a continued drop will only be more inflationary.

Microsoft has given Yahoo a 3 week ultimatum to accept it’s $41 billion buyout offer, or Microsoft would launch a hostile takeover through Yahoo’s shareholders at a lower price.  “If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo board,” wrote Microsoft Chief Executive Steve Ballmer.  Yahoo’s board officially rejected the deal a month earlier looking for a higher price.  Yahoo is a dangerous stock to play at the moment, the stock price (which is highly expensive at the moment) has some definite downside if Microsoft goes hostile on Yahoo, but could lose very little if Yahoo’s board agree’s to the offer on the table.

Prosper.com is a person to person money lending website.  Allowing people to bypass the banks to get a 3-Year loan.  People who need money request how much they need, and their maximum interest rate they will pay.  Prosper has a pool of lenders who then bid on the loan and many times the bidding will decrease the the interest the borrower has to pay.  A person requesting a $3,000 loan could have 1 person bid $3,000, or 30 people bidding $100 each.  Once the loan is 100% bid on, the next bidder has to bid at a lower interest rate, decreasing the interest rate the borrower has to pay once the loan is finalized. 

Many people have found Prosper an easier way to pay back debt on high interest credit cards as many of the borrowers will bid the interest rate lower than that of the many bank run high interest rate credit cards.

The Dow continues to rise as it has for the past couple weeks.  Posting a huge 3.19% gain yesterday.  While 30 Year Mortgage rates have started increasing again.  Average 30 Year rates are currently 5.75% up from 5.72% last week and 15 Year rates are currently 5.29% up from 5.22% last week.  Mortgage rates while up lately are still around historic lows. 

With the fed continuing to cut short term rates to try and fight the pressures of recession.  People needing fixed income are finding CD rates dropping like a rock.  E-Loan’s current rates for a 3 month CD are running 2.75% APY.  But keep your eyes on the long term CD’s as they usually show you how people feel the economy will be in the future.  Currently with the 2 year at 3.25% and the 4 year at 3.72%, the rates are starting to show that the downturn is expecting to end within the next 12 to 18 months.