Markets battered, housing stays weak

Yesterday's market action is described by Reuters:

U.S. stocks tumbled on Monday, falling in sync with their counterparts around the world as credit market jitters intensified, driving investors into less volatile government bonds and safer-haven currencies such as the Japanese yen.

Worsening sentiment in the banking sector and escalating stress in short-term lending markets were at the center of the turbulence...

The Dow Jones industrial average was down 206.23 points, or 1.57 percent, at 12,970.56. The Standard & Poor's 500 Index was down 23.37 points, or 1.60 percent, at 1,435.37. The Nasdaq Composite Index was down 34.95 points, or 1.33 percent, at 2,602.29...

Three-month London interbank offered rates rose for the fourth session, hitting 4.98188 percent, their highest since before the Federal Reserve delivered its latest interest-rate cut at the end of October...

Japan's Nikkei average slid 0.7 percent to end at 15,042.56, giving up earlier gains and extending its losing streak to the third straight session on Monday as the yen's strength cooled investors' enthusiasm for stocks.

The pan-European FTSEurofirst 300 index lost 2.1 percent to close at 1,462.76, its lowest close since Aug. 16.

Meanwhile, the US housing market, the trigger for all the turbulence, remains in the doldrums. From MarketWatch:

The seasonally adjusted housing market index held steady at a record low of 19 in November from the previous month, the National Association of Home Builders reported Monday. It matches the lowest reading in the index since it was started in 1985.

Little wonder that more economists are forecasting a recession for the US economy. Bloomberg reports the findings of a survey by the National Association for Business Economics.

Nine of 50 economists pegged the odds of a contraction over the next 12 months at 50 percent or higher, according to a poll taken from Oct. 22 to Nov. 6. Just five of 46 held a similar view in September.

And the UK economy could follow in the US footsteps if its housing market is any indication. From Reuters:

House price inflation in England and Wales dropped to 7.9 percent year-on-year in the month to November 10 from 10.4 percent the previous month, a survey by property website Rightmove shows.

The survey showed house prices fell on the month in all regions bar London where demand continues to outstrip supply, pushing prices up 2.3 percent on the month.