Even as investors get more and more bullish about the outlook for the U.S. economy, the economy’s underlying foundation continues to erode.

In a report to be released this week, the Obama administration will boost its 10-year projection for the federal budget deficit to about $9 trillion – an increase of roughly $2 trillion, or 29%, from its prior projection, Fox News reported over the weekend, citing a source from the Office of Management and Budget (OMB).

The new cumulative deficit projection – for 2010-2019 – replaces the administration’s previous estimate of $7.108 trillion. Changes in budget projections – whether they result in a surplus or a deficit – are often refined as economic conditions change. This new projection was necessary because the recession has gone on for so long, causing federal tax receipts to plunge – and because the economic rebound will be prolonged and weak, resulting

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First time home buyers are in luck, construction of new U.S. homes rose in June to the highest level in seven months as builders rushed to pour foundations for homes that must be completed by the end of November in order to be eligible for a special tax break. Buyers can take advantage of a tax credit worth 10 percent of the purchase price, with a cap of $8,000, included in the federal stimulus package.

On Friday, the Commerce Department said that construction of new homes and apartments jumped 3.6 percent last month to a seasonally adjusted annual rate of 582,000 units, from an upwardly revised rate of 562,000 in May. The figured surpassed the 530,000-unit pace estimate that economists predicted, and was the second straight monthly increase after April’s record low of 479,000 units, prompting one economist to write that, “[it is] the most positive housing report in ages.” Meanwhile,

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Asian markets extended losses Tuesday as commodities took a beating and worried investors looked for fresh signs of an economic recovery.  Japan's Nikkei 225 stock average declined 2.9%, its worst one-day percentage loss in more than two months, even as Bank of Japan noted that "Japan's economic conditions, after deteriorating significantly, have begun to stop worsening."  The bank left its overnight lending rate unchanged at 0.1%.  Hong Kong's Hang Seng dropped 1.8% and South Korea's Kospi fell 1%.  China's Shanghai Composite Index however outperformed regional markets and declined 0.5%.

Dollar prices were under pressure after Russian President Dmitry Medvedev, speaking at a summit of the Shanghai Cooperation Organization, said the world needs new reserve currencies.  Wall Street futures point to a flat opening.  

On Monday, US stocks registered their worst slide in a month with the Dow Jones Industrial Average, which ended last week in a positive territory

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In the currency market, the dollar declined against the euro. Late Monday, the euro was trading at $1.3535 vs. $1.3471 on Friday. “The driver continues to be the risk backdrop, as Wall Street adds to gains,” said analysts at Action Economics.

There was little effect from the National Association of Home Builders’ index on the mood of the industry rising to 16 in May, in-line with economists’ predictions, from 14 in April. While any advance is welcome news, that reading still has a long way to go before reaching 50, the dividing line between expansion and contraction in the sector.

Nevertheless, it is the highest level since September, which suggests to some that stabilization may have arrived in the housing market.

Meanwhile, Treasury Secretary Geithner attributed the current financial mess to failures on the part of both government and the private-sector, and said it will take reforms of both to get us

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Asian markets jumped to their seven-month high Tuesday, fueling confidence the global financial crisis is easing.  Investors also took heart from U.S. Treasury Secretary Timothy Geithner's comments that financial markets have stabilized.  However, Geithner noted recovery is going to take some time and unemployment picture is likely to remain grim.  Markets in Asia, nevertheless, showed increased appetite for risk with major indexes gaining 2% or more.  Japan's Nikkei 225 Stock Average gained 2.8% and South Korea's benchmark Kospi jumped 3%.  The Hang Seng Index in Hong Kong climbed 3.1%.  India's Sensitive Index managed to end the day with a meager 0.1% gain, after an unprecedented rally in stocks triggered a trading halt yesterday.

Pre-market futures suggest a higher opening on the Wall Street, following better-than-expected earnings from Home Depot (NYSE:HD), which reiterated full-year guidance and reported a 44% jump in profit despite lower sales.

On Monday, U.S. stocks rallied

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China Ramps Up Oil Refining; Lowe’s Tops Forecasts; Toshiba Raising $3 Billion in Stock Sale; AIG Fast-Tracking Asian Subsidiary IPO; Obama Sets First Pollution Limits on Cars; Homebuilder Confidence Highest in 8 Months; State Street Sells $1.5 Billion in Stock to Repay TARP Funds; Oil Spikes on Africa Violence, U.S. Refinery Fire

China will increase its annual oil refining volume by 18% over the next two years to meet expected long-term demand. China’s State Council also said that it would boost stockpiles and encourage petro companies to merge operations, Bloomberg reported. Lowe’s Cos. Inc. (NYSE: LOW) reported an analyst-beating quarterly profit and raised its full-year forecast. The No. 2 home improvement retailer cited improving ...

The week started off on a strong note as the major indexes were all up significantly, as the Dow closed up 2.85%.  The NASDAQ and the S&P also had strong days, finishing up 3.11% and 3.04% respectively.  Gold and oil headed in different directions today, as oil was up settling at $59.03, while oil declined to $921.70.  The 10-year treasury saw prices rise finishing with a yield of 3.237%. 

State Street Corp. [STT: 41.79, +3.28 (+8.52%)] announced today that it has already started selling $1.5 billion worth of common stock and in an additional offering it will sell senior notes, not backed by the FDIC’s Temporary Liquidity Guarantee Program.  Both of these actions were taken as the company plans to use the proceeds to buy back preferred stock and warrants from the Treasury Department.  The buyback has not been approved by the government, but many feel that given the fact that

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Asian markets declined Monday but Indian stocks witnessed an unprecedented surge on hopes the ruling coalition's victory in national elections would result in wide-ranging economic reforms.  All other major indexes in the region declined after losses at two of Japan's leading companies fueled concern the recent rally in stocks was overdone.  The Nikkei Stock Average declined 2.4% after Japan's Panasonic and Mizuho Financial reported wide losses for the last fiscal year; South Korea's Kospi was off 0.4%.  The Shanghai Composite Index in Mainland China edged up 0.3% and Hong Kong's Hang Seng added 1.4%.  

India's Sensex jumped 2,099.21 points, or 17%, to 14,272.63, before trading was halted for the day.     

Stock futures showed a higher opening on the Wall Street.        

On Friday, U.S. stocks declined as lack of a clear economic data suggesting economic recovery and General Motors' (NYSE:GM) announcement that it will drop 1,100 dealers

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Best Buy Names New CEO; IBM to Post Strong 2008 Earnings; BHP Cuts 6,000 Jobs; GM Loses Sales Crown to Toyota; Investors Retreat From Hedge Funds; Housing Market Index Hits New Low; Satyam Seeks Funding; Crude Futures Climb

Best Buy Co. (BBY) crowned chief operating officer Brian Dunn as the electronics retailer’s new chief executive. Dunn, 48, started his career at Best Buy as a store associate in 1985 and will succeed retiring Bradbury Anderson, MarketWatch reported. IBM Corp. (IBM) will beat analysts’ estimates for its 2008 earnings. The company said yesterday (Wednesday) that its income will rise to at least $9.20 a share in 2009, ahead of the $8.75 average estimated by Bloomberg. “They’re using ...

Feel like getting angry? Treasury publishes latest debt/deficit details… But Fed now encouraged to intervene more… latest data show historic inflation drop… How to invest accordingly? Burritt on near-term trading, Grantham on the long haul… Byron King explains why $40 oil is “worst of both worlds”… Bill Jenkins explains the dollar’s recent downturn… Plus, the Dububble expands… refrigerated beaches on UAE shores…

However dire you think U.S. government’s fiscal condition has become… today we learn it’s even worse. For starters, would you invest in this business?

2008 fiscal year net operating cost: $1 trillion. Triple that of 2007. And those aren’t funky alternative accounting methods… today’s charts and numbers come directly from the 2008 Financial Report of the U.S. Government, issued yesterday.

What is “net cost”? It is “computed by subtracting earned revenue

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