Another difficult week in the financial and mortgage markets and the housing sector. The credit markets remain in a bad way as illustrated by KKR's losing $40 million in mortgage-backed securities, the complete lack of new issues in the high yield market, the Federal Reserve injecting $38 billion into the banking system and Goldman Sachs announcing significant losses in its Global Alpha investment fund. The most recent news today is that Countrywide Financial, the country's largest mortgage lender, is facing financial distress. While home prices were flat, unit sales continue to show weakness according to the latest NAR release. The index of homebuilder confidence plummetted again in August and is now near it all-time low.

But all is not doom and gloom. Inflation news seemed good as did industrial production for July. Unemployment remains low, Second quarter GDP is likely to be adjusted upwards from the initial reports and may have exceeded 4%, with exports leading the way. The big question remains will the turmoil in the financial markets carry over into the overall economy. Unfortunately, it is just too soon to know, but the next 30 days is likely to bring some clarification.