It seems the only thing good in Germany these days is the beer...this morning, the country reduced its GDP (Gross Domestic Product) forecast for the remainder of the year as well as for next year. This basically means that the government isn't as optimistic on how well their economy perform as they previously were. They did so because of all the headwinds that are facing Europe, mainly the uncertainty surrounding the struggling financial system over there. Because of this, the European stock markets got pounded over night.
Etrade released dissapointing earnings earlier this morning, but there were some positives. Trading revenues came in slightly below Wall Street estimates, but this was due to the volatile and confusing action that we've seen over the past quarter. When the markets act as they have been moving up and down with little reason, this serves to frustrate the average investor and therefore they lose the desire to participate in such, which in return hurt Etrades trading revenues.
One of the positives that came out of the earnings release was that mortgage loan delinquences had fallen sharply which harbors well for the mortgage side of their business (back in 2008, Etrade made the foolish decision to start offering mortgages which subsequently blew up in their face as the housing market crashed). Nonetheless, Etrade still remains undervalued and I continue to believe the company is an acquistion candidate over the coming months.
While the U.S. markets are down approximately .75% as of 12:00 today, Yahoo, which is the object of my affection is up on the day. I still expect the company to be acquired by someone over the coming month, which might help to explain the continue move up in the stock price.
