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Real Estate Short Sale - Home Owner Hardship Letter - RealEstateMarketingThisweek.com

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Excelsia's Cliff Draughn Goes In Search Of Your Sleeping Point

Turkey is among a handful of emerging nations on the cusp of joining the economic big league. How painful economic reform measures and banking controls can work. Foreign multinationals are pouring in. Suddenly, being shut out of the EC doesn’t look half bad. Does its flexing of new diplomatic muscle have a pronounced Islamic, anti American bent? (TUR), (TKC). ”

Expectations – one’s beliefs central to forming a view of the future that creates the elements of surprise or disappointment. Great Expectations – Charles Dickens story of Pip and his quest to become a man in the midst of cruelty, intimidation, and hard times. Unrealistic Expectations – the current disconnect between stock analysts’ projected earnings growth of the S&P 500 and consensus economic outlook for GDP growth.

In my April newsletter, I spent considerable time building the case that investors’ belief in the Bernanke Put, combined with increasing risk appetites due to Zero Interest for savings, had propelled stock prices past reasonable valuations. Well, the S&P 500 experienced an -11.43% decline in Q2 but that did nothing to temper analyst enthusiasm for further earnings expansion.

According to Bloomberg, Wall Street analysts are “raising earnings estimates for U.S. companies at the fastest rate since 2004 just as stocks post the biggest losses in 16 months. ” The analysts’ expectations for S&P 500 EPS  project a 34% growth in profits for 2010, which is up from the first-quarter consensus projections of 27% growth in 2010 profits. These upward earnings projections are coming in the face of higher unemployment, lower home sales, continued deleveraging of balance sheets by consumers, increasing government regulations, and higher taxes. 

As I stated in January and April letters, the next shoe to drop on the economy is a second wave of delinquencies related to the Alt-A and ARM mortgage resets that will last through 2011. The US economic bubble/decline began with real estate, it will end with real estate, and I fear we are in the sixth inning of real estate foreclosures. I am in agreement with Meredith Whitney that we are headed for a “double dip” in US housing. Therefore, if the average American’s biggest asset is his home, then is it unreasonable to project continued spending limitations and increasing savings as opposed to the return of consumer consumption at the 2004-08 pace?

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