Atlanta Federal Reserve President Dennis Lockhart commented this morning that he feels the housing market may not reach the bottom of its slump until the second half of 2008 or later, but that hasn't stopped Luminent Mortgage from posting a healthy gain after receiving an upgrade from Deutsche Bank this morning.
Lockhart noted that the housing market's malaise will likely drag down consumer spending, despite healthier-than-expected data released earlier today. In the Atlanta Fed President's view, the risk of slower growth now outweighs the risk of higher inflation. I believed, and still do, that the factor weighing most heavily on this change in the outlook has been the potential negative ramifications of the financial turmoil, Lockhart said.
Meanwhile, the shares of LUM are up more than 9% after Deutsche Bank boosted the beleaguered lender from sell to hold, asserting its belief that the firm's portfolio has begun to stabilize and its liquidity position has improved. Positive factors include a repurchase agreement, a credit line from ARCO Capital, and new capital generated by issuing warrants. LUM has jumped as high as $1.65 on the news, though the stock has not successfully challenged the 2 level since plunging to its current lows in early August.