Filed under: Other issues, Bad news, Products and services, Consumer experience, Economic data, Federal Reserve, Recession

Credit cards … the little plastic cards in your wallet that are so convenient to rely on when you are strapped for cash. While the convenience of having cards definitely makes it easier to buy items when you are running low on cash, the flip side is that credit card debt can drown the typical household, and statistics are showing that Americans are pulling out their cards more than before.

One of the reasons why credit card usage has been on the rise is the fact that homeowners are having a harder time using home equity to get a cash infusion into their accounts. As a result, they are looking to borrow money from somewhere, and more times than not, they are turning to credit cards.

The evil with credit cards is that once you start to use them to pay for your basic necessities like food and gas, you find that in the months to come you still can’t afford your basic needs but in addition, your monthly bills are racking up like crazy due to your credit card expenses. It’s a scary cycle that many families find themselves trapped in.

Continue reading Americans relying more heavily on their credit cards

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Filed under: Before the bell, Google (GOOG), Yahoo! (YHOO), Time Warner (TWX), Sprint Nextel Corp (S)

Sprint (NYSE:S) is up almost 7% on a rumore buy-out by Deutsche Telekom.

Yahoo! (NASDAQ:YHOO) is off 23% after rejecting a buy-out from Microsoft.

Time Warner (NYSE:TWX) shares are up 2% on news Yahoo! may buy AOL.

Google (NASDAQ:GOOG) is up 3% on the chance it may provide Yahoo! some of its search services.

Douglas A. McIntyre is and editor at 247wallst.com.

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Orange County, an area with over 3,098,121 people sometimes has a reputation at least nationwide as being an exclusively prime area. What most people that don’t live or work here realize is that the media perception of the “OC” is guided by a few prime cities such as Laguna Hills and Newport Beach. […]
Related Posts:
■Real Homes of Genius: Today we Salute you Santa Ana. 498 Square Feet for $440,000, What a Deal!
■Real Homes of Genius: Lifetime Achievement Award. Nearly 80 Percent Loss in Oakland California.
■Home Sales: Worst Drop in 18 Years. Enjoy your Day!
■C.A.R. says 2007 will see a -2% Drop in California. Does This Feel like a 2% Yearly Drop?
■Real Homes of Genius: Today we Salute you Maywood. 853 Square feet for $385,000.

Orange County, an area with over 3,098,121 people sometimes has a reputation at least nationwide as being an exclusively prime area. What most people that don’t live or work here realize is that the media perception of the “OC” is guided by a few prime cities such as Laguna Hills and Newport Beach. These tiny cities hold a very small percentage of the overall county population. The largest city Santa Ana, has 353,428 people making up for over 11 percent of the entire county. Let us take a look at the county and run some quick numbers:

Source: Wikipedia

Let us look a few of the most populace cities in terms of population:

With these 5 cities, 1.26 million people make up these areas or more specifically, they make up over 42 percent of the entire county’s population. As you can see from the average household income, we aren’t in incredibly affluent areas although certain enclaves such as Anaheim Hills, Huntington Harbor, or certain areas in Irvine have very expensive niches but this isn’t the majority as you can see from the average. So let us now take a look at a few of the more expensive mainstream ideas of what Orange County is:

Now with these 5 cities, we have a total population of 143,993 or 4.7+ percent of the entire county population. The point again here is that incomes never justified the absurd prices reached in certain cities. Will the wealthier areas stay high? Of course! But look at how much of the entire population they impact. We haven’t even talked about Westminster, Stanton, Fullerton, Tustin, and Orange which also have similar income profiles like Santa Ana and Anaheim.

The overall halo effect took a major hold of prices during the past decade. Just because you were a few miles away from a prime area doesn’t mean you are prime. We saw this in Los Angeles County and I have talked about this extensively for a county with 10,000,000 people and 88 cities. That is why Orange County as a whole has seen the following:

-Orange County Median Home Price: $506,000 (down 19.6% from a year ago)

-Sales are down by 46.9% from a year ago.

Now with that background, let us now look at the largest percentage drop ever in Orange County (hat tip to reader J). Before we begin, you must brace yourself and take your motion sickness meds because we are jumping onto a crazy rollercoaster! Today we salute you Santa Ana with our Real Home of Genius Award.

Real Homes of Genius - 68 Percent Drop in Santa Ana

There are few homes that encompass the mania of the housing bubble. Multiple sales, quick price movements, and an ultimate fall from grace. This home is located in the largest city in Orange County and as we have stated above, the average household income for the city is slightly over $44,000. This majestic 825 square foot home with 2 bedrooms and 1 bath has it all. It was built in 1918 and has been on the market for almost one full year. For all you folks out of town who want to own a piece of the OC here you go.
This home has a current selling price of get this, $177,495! Before you go running to your agent let us look at the background story of this place. It is always important to look at previous sales history and once again, here is the reason we discussed why housing will continue to go down because technology has leveled the playing field:

Sales History:

With this home, you can see the amazing appreciation that occurred during this decade long boom. In fact, we get a perfect view of what happens in a financial mania. Don’t forget this is a 825 square foot home that is nearly 100 years old! What you see above is 4 sales transactions which each subsequent buyer got a taste of the “real estate never goes down” Kool-Aid. It was manic! The most significant jump of course occurred during the 2006 sale price where it almost sold for twice the price in 3 years! Or what about the person that sold it for a 124.8% profit in 6 months back in 2002? This went over and over like a broken record here in California. This seemed all orderly but what wasn’t orderly is the correction. Let us now dive into the listing price action. Get your scroll button finger ready:

Listing Price:

Now that has to be the worldwide record for most price changes in less than one year! I’m actually at a loss for words here. How do you go from an initial listing price of $569,000 in July of 2007 to the current price of $177,495? What is certain is that lender who financed that sale in 2006 for $505,000 is going to be in a world of hurt. Aren’t you ecstatic that your tax money is going to bailout places and lenders like this? I have placed a link on the right hand sidebar that’ll take you directly to your Congressional Representative so make sure you write a polite letter letting them know you will not stand for having your money squandered on speculative banana republic mortgages. I plotted this listing movement on a graph so you can see bubblicious prices in a graphical format:

Today we salute you Santa Ana with our Real Home of Genius Award.

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Related Posts:
■Real Homes of Genius: Today we Salute you Santa Ana. 498 Square Feet for $440,000, What a Deal!
■Real Homes of Genius: Lifetime Achievement Award. Nearly 80 Percent Loss in Oakland California.
■Home Sales: Worst Drop in 18 Years. Enjoy your Day!
■C.A.R. says 2007 will see a -2% Drop in California. Does This Feel like a 2% Yearly Drop?
■Real Homes of Genius: Today we Salute you Maywood. 853 Square feet for $385,000.

Via [DrHousingBubble]

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There is a lot of great stuff out there on the Web that interests me that if not for the lack of time I’d blog about here. If you’re looking for more mortgage news from the world around us simply click on the Google Reader icon to get my shared items feed from my Google Reader.

I track more than 150+ RSS feeds from news and opinion sites and blogs and share a great deal of information that I just can’t get to on Blown Mortgage. So add my shared items to your RSS reader and get a full-dose of mortgage news from Blown Mortgage each and every day!

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Filed under: Deals, Best Buy (BBY)

Best Buy, Inc. (NYSE: BBY) has gone shopping across the pond, and will be spending about $2.1 billion in cash to purchase 50% of the UK’s Carphone Warehouse mobile telephone retailer. Best Buy is signaling to the retailer world that it thinks mobile is the place to be, after it committed to expanding mobile market share here in the U.S. just recently in a large way.

This multi-billion commitment to Carphone Warehouse will allow the European retailer to pay down debt and gets Best Buy a foothold in the European retail business in a pretty large and immediate way. Along with Wal-Mart Stores, Inc. (NYSE: WMT), U.S. retailers are seeking out ways to expand their footprints globally. Carphone Warehouse isn’t just a small step in that direction, as it’s one of Europe’s largest mobile phone retailers.

Best Buy’s revenues continue to soar on an annual basis, and this partnership should add to that amount significantly. While U.S. competitor Circuit City Stores, Inc. (NYSE: CC) has had nothing but troubles recently and is just hanging out in la-la land while delivering substandard results every quarter, Best Buy is going for the jugular — still growing sales and taking market share in the U.S. and now in Europe. Can it be stopped? For now, there’s no equal — so, no.

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He may be “Vindicated” but Jose Canseco is letting his Encino, California mansion go in to foreclosure as the housing market has tanked. He doesn’t see any point in making the payments any more. The $7.7 million house makes for some expensive jingle mail. What happens when the wealthy start walking away? When does preserving your credit score not matter? Where is that line? When is that decision made? Will it become easier for people as we get in to this mess? Will this generation be defined by subprime, bad credit and the shirking of all financial responsibility?

Housing Wire has the amusing/scary tale via the AP:

Canseco told the syndicated TV show “Inside Edition” that he walked away from his $2.5 million, 7,300-square foot home in suburban Encino because it didn’t make sense to continue making payments …

“What about other families that we’re hearing on TV, that they’re saying, `We have nowhere else to go,’” he said. “I mean, that is amazing. I’ve got books (he’s put out two expose-type books on drug use in baseball), we’re now trying to produce the movie to both.

“Like I said, my situation was a little more different than most. I decided to just let it (the house) go, but in most cases and most families, they have nowhere else to go.”

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Source [blownmortgage]

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Filed under: Newspapers, Magazines, Google (GOOG), Yahoo! (YHOO), Citigroup Inc. (C), Sprint Nextel Corp (S), News Corp’B’ (NWS)

MAJOR PAPERS:

• Three years into its $35B takeover of Nextel, the Wall Street Journal reported that Sprint Nextel Corporation (NYSE: S) is considering selling or spinning off the troubled unit. Few details were available and a deal is not imminent.
• The Wall Street Journal also reported that pressure is mounting on Citigroup Incorporated’s (NYSE: C) CEO Vikram Pandit to show that he can turn around the troubled bank. Executives believe Pandit, who has been praised for his cautious and deliberate approach, has been taking “too long” to make crucial decisions.

WEB SITES:

• According to a person close to Google Inc (NASDAQ: GOOG), Reuters reported that Google and Yahoo! Inc (NASDAQ: YHOO) are still “hammering out the intricacies” of a potential advertising and search deal. The source said no final agreement has been reached yet.
• ABC News learned that if Rupert Murdoch does not testify in a lawsuit accusing one of his companies of “corporate espionage,” it may cost News Corporation (NYSE: NWS) hundreds of millions of dollars, a federal judge overseeing the trial said. News Corp has denied any wrongdoing, and lawyers maintain Murdoch had no direct knowledge of the unit’s alleged hacking into EchoStar Corporation’s (NASDAQ: SATS)/DISH Network Corporation’s (NASDAQ: DISH) security code and posting it on the Internet.

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Filed under: Competitive strategy, Marketing and advertising, Abercrombie and Fitch (ANF)

Who can forget the advertising campaign a number of years back that threw social watch dogs into fits over Abercrombie & Fitch (NYSE: ANF). That particular advertising foray employed the lithe bodies of teen and preteen boys and girls in a way which, while certainly drawing attention, underscored today’s excessive use of underage sexuality in advertising. Parent groups and child protective agencies were enraged, as well they might be. However, a recent ad campaign launched by Beyonce and her House of Dereon, clothes for girls, makes Abercrombie’s misadventures look about as harmless as a day at the zoo.

A blog post presented by our sister blog Styledash, reveals the shocking truth about the clothing ad campaign, which is the brainchild of Beyonce and her mother, Tina Knowles. Blogger Kristen Seymour espouses the danger in this type of advertising by describing the presentation in the terms of “Go on, baby, and earn your lunch money the old-fashioned way.”

The gallery provided by Styledash is self-explanatory and might serve to turn the stomachs of little girl’s parents everywhere. Certainly, Beyonce and her advertising agency have accomplished what they wanted to. We can also believe that Abercrombie & Fitch shall benefit slightly with a parallel focus to its own questionable advertising strategy. However, we need only to remember the enigmatic fate of JonBenet Ramsey to realize down which road this type of advertising strategy may lead.

(Thanks to Styledash for the tip, Additional thanks to Gawker)

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Filed under: Bad news, Options, Technical Analysis

InterContinental Exchange (NYSE: ICE) shares are falling today after the company released a statement in response to Congressional proposals to modify the operation of regulated global energy exchanges. The company called the proposals arbitrary controls that would adversely affect consumers, market prices, and the competitiveness of the U.S. markets. If you think this stock won’t be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on ICE.

After hitting a one-year high of $194.92 in December, the stock hit a one-year low of $110.25 in March. This morning, ICE opened at $159.37. So far today the stock has hit a low of $156.07 and a high of $159.90. As of 12:00, ICE is trading at $156.57, down $3.15 (-2.0%). The chart for ICE looks bullish and steady, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.

For a bearish hedged play on this stock, I would consider a September bear-call credit spread above the $200 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in four and a half months as long as ICE is below $200 at September expiration. ICE would have to rise by more than 24% before we would start to lose money. Learn more about this type of trade here.

ICE hasn’t been above $195 at all in the past year and has shown resistance around $167 recently. This trade could be risky if the company’s earnings (due out in late July) are a positive surprise, but even if that happens, this position could be protected by resistance ICE might find around $195, where it topped out back in January.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in ICE.

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