Since the stat is based on claims to get unemployment benefits, what is the impact of all of the "job" losses in the RE and finance market where (I believe) there is a large number of independent agents (brokers, RE agents)?
If someone is a waitress and a real-estate agent and they lose the waitress job, are they still considered employed because they have a RE agent license? (In terms of getting unemployment benefits.)
Maybe one of the "key gauges" the Fed's watching is borrowing at the discount window. If nobody really belly'd up to the bar, so to speak, how bad can things really be.
Holding rates steady is definately a minority viewpoint. I'm holding out hope that they will hold steady or the cut will only be a quarter basis point. It would do wonders to wean the addict off easy money.
It would be interesting after trotting out Paulson, Bernanke, Poole and Bush about how strong the economy is that the Fed would then have the balls to make a cut before or at the next meeting. I know with some PR spin they could easily explain it away, and most in the markets are expecting/wanting it, but it would be ironic non the less.
I doubt a rate cut, too. Partly that is not objective thinking, I know. I think the Fed has got to start making the distiction that it will keep the financial system liquid but it will quit being an enabler for spec-heads.
147.67 was hit twice during the feb-june rally... now resistance
IMO, stat-arb guys,vol-variance player's STILL have the market in there palms(Dialed) to be exact..
Well, weaker retail sales numbers are already there, so a weakish employment number in two weeks will give them cover to cut rates at their regular September meeting. An inter-meeting cut is unlikely unless the wheels really start to come off, but maybe some really bad home sales numbers tomorrow and Monday will get that ball rolling again. The economy is weakening, and rates are midly restrictive, so a mild round of reductions is currently appropriate, and not just to bail out specs.
Retired Military/FDIC employee with 800 FICO buying new TH in Evanston, IL. 20% down. Quoted 8% by WAMU. Closes late Oct or early Nov. Merry Christmas.
In the past, how long has the Federal Reserve kept the overnight rate lower than the target rate. We are going on almost 2 weeks now below the target rate.
Maria interviews Mozillo in Calabasas Ca and says "How long will it take for the mortgage market to stabilize" Mozillo says "If I knew the answer to that question we would be conducting this interview in the South of France"
LMFAO
Mozillo said "this will lead us into recession"
Dog the Tan Man if you will but he shoots straight.
OK I took few hours away from the market. Much easier to do when you are 80% cash (used to be like 50% cash but 30% PUTs)
as for "i feel for u Yal. u are a great contributor to this blog and i personally would be sorry to not see u regularly. cheer up, you're in the midst of one of the greatest shorting opportunities of a lifetime. how often do we get to witness firsthand a sea change in the economy?"
I am doing OK. It was just a crazy 6 month and I need some break from this craziness. While if I would cover last thursady I would have been a real king being out now was good enough for me. I regard it as a miracle that I did made money in this manipulated environment.
as for the sea change in the economy, the great shorting opportunity etc:
Look, I need to re-think all that. I think as of last Thursady things have changed and they will not be played out as I thought before. It may be much slower. It may delayed until US election or Olympics in china or who knows.
In Feb 07 I had an insight to what goes on (thansk in part for this blog). In March I was up over 100% on my PUTs and in April I was down by 70% (30% left) but held due to conviction. These 30% ended up 300% and maybe now they are up by 250% or 220% so the insight was correct but what is next - I really can not tell. I sense something is changed but can't say what it is and how best to play it.
FED(the stock) looks totaly fucked up bank to me (but it is now up from $40 to over $50) so I no longer sure how to play it. WM looks in trouble but I am not sure how to play it (maybe they are the best short since CFC was saved) . Still hold very small short position on both of them and a larger one on DSL.
If you have an insight into where this market will be two months from now - plase share your reasons and please give me reasons that are different from the one we had up until two weeks ago because there IS a change......
Mama,
I think the TH has a mini-stock trading floor in the basement. Yes, the friend is going to check around. I suggested Patti Hawkins at Wells Fargo Dallas for starters. But, who the hell knows what rates will be in Oct.Nov. I told him he should have stayed in the great state of Texas but noooooooooo.
Two factors are influencing the unemployment figures. First is the large number of people in real estate who have a job, but in name only; real estate agents and loan brokers who list themselves as employed, but who haven't seen a commission in weeks, even months.
The second, and very often overlooked, is the number of under-the-table workers, especially illegals, in construction. They don't get counted in the employment figures and don't get counted in the unemployment figures, because statistically they don't exist. Anecdotal evidence is that many of them are effectively out of work.
Unemployment will stay steady until self-employed real estate professionals capitulate and start looking for real jobs, and when construction is hurting so badly that they let "official" employees go. I don't think we're there yet.
Yal,
I would get out of the fed, they have been doing option arms for a long time and are known to have pretty conservative underwriting. They did not do any 100% loans(what I perceive to be the main problem in mortgage) and anything over 80% LTV has mortgage insurance. They are an S & L and having been structured that way for a while they can "porfolio" their loans and not have to access the capital markets. My 2c.
If the undocumented construction workers really need work they can easily come back to farming. A hard working harvester can make $1000 a week in some crops. EVERYONE I talk to needs more labor.
geez, you do sound sick. if i were u i'd get out too. but here's my take.
no one, even ac, knows where this mkt is going this next yr. its about having enough capital to play with and having a conviction based on an overview of the facts. for me it has been an up and down gut wrenching ride for me the last year being short on the majority of my portfolio. but it has worked out great so far. its about getting a feel for whats happening in the overall global economy. yeah, it amounts to educated gambling. although i agree with you the Fed's latest moves indicate a willingness to moral hazard, i don't think they're in control of the outcome any longer and we're headed for hard times. i believe that the real economy will trump the financial economy. i know that isn't very specific or data driven but those are my thoughts.
don't meant to sound sick. I am fine. really. But I had enough for a while. made 30 trades since I open my account in 1995-2007 and 350 since Feb 2007 to now.
will read and respond about the economy later but just want you to know I am fine. There were times btw (April May June) that I was not so fine....
Could you please explain your thoughts on the letter? Seems to me the Fed letter is saying that as long as a liability meets certain qualifications, the bank need not fully count it as a liability.
I'm a total amature, but is this basically Basle II in reverse??? So instead of weighting assets, they are weighting liabilities???
No I am nobody. Seriously. If I were important I guess I'd believe that reserve capital wasn't necessary for boat loans or all those fancy investment-rated MBS thangs.
Down here in Nobodyville, we were thinking we could buy those with our leftover Confederate dollars, but now it seems they're good as gold. The fat lady just sang from my POV.
Bill Gross says in his September investment outlook that Bernanke can not save the housing market and Bush must create RMC-Reconstruction Mortgage Corporation.If Gross is right,and I think he is,we are in trouble.Bush is thinking ONLY about Iraq war right now ,he has no time for anything else.
RCRyan: Risk weighting determines what amount of reserve capital is necessary. Reserve capital regulations are what keeps banks from being as overleveraged as hedge funds.
FRB seems to have just tossed out the rules. I'm incoherent with shock.
Slowmo: Thanks. I am mostly out of FED. Over all it was not a good short for me. I think there is some unresposible behaviour there which manifested itself in tons of buyback which hold the stock hi. We will need to look deeper into FED - NPA will be key to watch.
idoc: This is the key: "real economy will trump the financial economy" - this is what I thought and this is what I am no longer convinced off. We need to analyze this better.
here is what I learned over the last 6 month:
Banks can make all sorts of magic on their balance sheets until they become total fiction. (example: mark to model, mark to make belief, neg-arm booked as profits and more)
Excessive shorts make a wonderfull play for hedgies with almost unlimited resorces, MM, option writers and the insiders. Some of them want the stock up, some want it down at some points and up later and with media they are able to get the shorts to cover all in the same time. Too many newbe shorts (I am one) some of them are dum and weak hands (on CFC I was one) so bottom line this "finacial" game can trumpet over real economy for a while.
Fed, IB, goverment, congress: They have profits as well as political skin in this game and a lot of it. I accepect some more from the FED, some type of partial GSE bailout (raisng the 417,000 iMHO is a given)
How all that infulance the real economy and how the real economy affect all that ?
3 ways:
A. The real way the one that can not be ignored. (forclosures, home prices, recession)
B. the measured way - which I think they manipulate.
C. credit crunch issues (fear of defaults)
OK enough for now need to re-evaluate all this the term slowwwmotion is indeed correct - it is all taking very long and many steps back and forth.
Agreed, mostly. Fed guys and gals know they need to project their thinking quarters ahead. Jobless claims don't let them do that. They are stuck doing a sort of Rubinesque risk assessment that attaches likelihoods to various real economic outcomes in the medium term that result from credit market and real economic events now. That is hard at the best of times. Right now, not likely to be satisfying at all.
So, here's Bernanke, tagged as "Helicopter Ben" and loaded up the the "Bernanke Put" even though he has not formally eased monetary one single time in his tenure as chairman. "Ah," he says, "what a great time to knock down the 'Bernanke put' notion. Can't get the economic consquences of this mess sorted out in my head anyway, so why not accomplish something useful?"
We got a huge rate cut today. BoJ left their rates steady. Carry trade fired right back up until the next BoJ meeting, in Oct, when the global market will be on its knees...
FWIW, I admire your ability to trade your conviction and understand your need to get out. This market is totally nerve wracking, I got burned last week trying to play a fade on Friday's "helicopter drop".
Unfortunately, as I am learning, if youre gonna go short you have to factor in the risk of Central Bank interventions and manipulations in addition to the usual takeover/buyout factors on a stock that looks doomed.
RCRyan: Risk weighting determines what amount of reserve capital is necessary. Reserve capital regulations are what keeps banks from being as overleveraged as hedge funds.
FRB seems to have just tossed out the rules. I'm incoherent with shock.
MaxedOutMama
This was the thing that I was suspecting/wondering about and now have confirmation: Banks were using "AAA" CDOs & MBSs to satisfy reserve requirements.
When they started re-rating the "AAA" paper as "CCC" paper the manure hit the turbine. The letter now tells them it's OK, just don't have too much. The part that disturbs me was that the fed says it was OK to play this game at all. Basel II was supposed to reward those with better risk mangagment skills, when it's apparent that almost nobody had them.
The Fed discount window and ECB injections were meant to give time to the banks to get their reserves in order, because it obviously hasn't helped commrcial paper at all.
The letter isn't about reserve requirements, it's about risk-based capital requirements. Banks can't include CDOs and MBSs in capital. The letter is about the risk-weighting of the capital required for specific assets. Basically, you start with a requirement that a bank has to hold 8% capital against an asset, then you risk-weight the capital requirement. If the risk-weighting is 100%, you have to hold 8%; if it's 20%, then you hold 20% of the 8%, or 1.6%. Since capital is expensive, this makes a difference in the pricing of the assets and the bank's willingness to hold them at all.
I'm not sure this letter means the sky is falling. The conditions and the footnotes seem to me to put some pretty strict limits on the letter. Really, only the fourth alternative provides much leeway and, as I said on CR, for the pledged security to be deemed "liquid and marketable," you have to show that it has "a robust historical record of an active market characterized by daily market prices." The word "historical" is the key; it probably means that temporary disruptions don't automatically make a security illiquid, which would only add to the instability.
But the "historical record" of an "active market characterized by daily market prices" has to be "robust." Like prime mortgages, is my guess. Not boats. My second guess is that this is designed to keep daily mark-to-markets in place, but allow for short-term disruptions in a normally liquid market without also disrupting capital requirements.
Don't think a bank could rely on this letter for any assets that didn't have daily market prices and liquidity over a period of several years. Unless it got its own letter from the Fed.
first to troll
Since the stat is based on claims to get unemployment benefits, what is the impact of all of the "job" losses in the RE and finance market where (I believe) there is a large number of independent agents (brokers, RE agents)?
If someone is a waitress and a real-estate agent and they lose the waitress job, are they still considered employed because they have a RE agent license? (In terms of getting unemployment benefits.)
this isn't good
CREDIT WRAPUP 4-BOJ says turmoil to linger, ECB cash snapped up
| Reuters
Maybe one of the "key gauges" the Fed's watching is borrowing at the discount window. If nobody really belly'd up to the bar, so to speak, how bad can things really be.
Holding rates steady is definately a minority viewpoint. I'm holding out hope that they will hold steady or the cut will only be a quarter basis point. It would do wonders to wean the addict off easy money.
commercial paper outstanding shrinking fast..
Commercial Paper Has Biggest Weekly Drop Since 2000 (Update3) - Bloomberg.com
It would be interesting after trotting out Paulson, Bernanke, Poole and Bush about how strong the economy is that the Fed would then have the balls to make a cut before or at the next meeting. I know with some PR spin they could easily explain it away, and most in the markets are expecting/wanting it, but it would be ironic non the less.
I doubt a rate cut, too. Partly that is not objective thinking, I know. I think the Fed has got to start making the distiction that it will keep the financial system liquid but it will quit being an enabler for spec-heads.
Delta Financial Lays Off Staff, Too; Will Close Satellite Wholesale Offices : HousingWire || financial news for the mortgage market
146.49 - 147.65
days range on spy...
147.67 was hit twice during the feb-june rally... now resistance
IMO, stat-arb guys,vol-variance player's STILL have the market in there palms(Dialed) to be exact..
Well, weaker retail sales numbers are already there, so a weakish employment number in two weeks will give them cover to cut rates at their regular September meeting. An inter-meeting cut is unlikely unless the wheels really start to come off, but maybe some really bad home sales numbers tomorrow and Monday will get that ball rolling again. The economy is weakening, and rates are midly restrictive, so a mild round of reductions is currently appropriate, and not just to bail out specs.
Why would anyone believe a word they say!
OT Tan Man on CNBC right now; says the mortgage lending crunch is "not real" and driven by "panic".
He is TAAAAN, maaaaaan.
Retired Military/FDIC employee with 800 FICO buying new TH in Evanston, IL. 20% down. Quoted 8% by WAMU. Closes late Oct or early Nov. Merry Christmas.
Will Maria moan her Countrywide book on teevee? I wanna watch!
In the past, how long has the Federal Reserve kept the overnight rate lower than the target rate. We are going on almost 2 weeks now below the target rate.
08/22 4.77
08/21 4.89
08/20 5.03
08/17 4.91
08/16 4.97
08/15* 4.71
08/14 4.54
08/13 4.81
08/10 4.68
08/09 5.41
To big to fail, bitches!!!
Maria interviews Mozillo in Calabasas Ca and says "How long will it take for the mortgage market to stabilize" Mozillo says "If I knew the answer to that question we would be conducting this interview in the South of France"
LMFAO
Mozillo said "this will lead us into recession"
Dog the Tan Man if you will but he shoots straight.
FFDIC - geeze, you can't get a better rate than that? What about conforming? Is it a second home?
I'd say WaMu has its own problems, but you ought to be able to do better than 8% - unless that is one heck of a TH!
FDIC,
But, did you get your price - that's the MAIN thing.
OK I took few hours away from the market. Much easier to do when you are 80% cash (used to be like 50% cash but 30% PUTs)
as for "i feel for u Yal. u are a great contributor to this blog and i personally would be sorry to not see u regularly. cheer up, you're in the midst of one of the greatest shorting opportunities of a lifetime. how often do we get to witness firsthand a sea change in the economy?"
I am doing OK. It was just a crazy 6 month and I need some break from this craziness. While if I would cover last thursady I would have been a real king being out now was good enough for me. I regard it as a miracle that I did made money in this manipulated environment.
as for the sea change in the economy, the great shorting opportunity etc:
Look, I need to re-think all that. I think as of last Thursady things have changed and they will not be played out as I thought before. It may be much slower. It may delayed until US election or Olympics in china or who knows.
In Feb 07 I had an insight to what goes on (thansk in part for this blog). In March I was up over 100% on my PUTs and in April I was down by 70% (30% left) but held due to conviction. These 30% ended up 300% and maybe now they are up by 250% or 220% so the insight was correct but what is next - I really can not tell. I sense something is changed but can't say what it is and how best to play it.
I think August sales will be good. I see more people shopping this month now that gas prices have come down.
Once they go back up, it will get ugly.
hmmm vistor count right at 200... I'm just sayi
As an example of what I went through in 6 months:
I bought WMMG.X: Summary for WM Jan 2010 35.0000 put- Yahoo! Finance at $0.5 and sold for $4.20 .It cont to go up to $6.20 few days later but now down to $2.70 (was $2.25 yesterday)
or this FEDMI.X: Summary for FFED Jan 2010 45.0000 put- Yahoo! Finance in at $3.60 went up to $8 down to $1.20 back up to $10 and on the way down I am out at $7 (it is now back around $4.00)
FED(the stock) looks totaly fucked up bank to me (but it is now up from $40 to over $50) so I no longer sure how to play it. WM looks in trouble but I am not sure how to play it (maybe they are the best short since CFC was saved) . Still hold very small short position on both of them and a larger one on DSL.
If you have an insight into where this market will be two months from now - plase share your reasons and please give me reasons that are different from the one we had up until two weeks ago because there IS a change......
Mama,
I think the TH has a mini-stock trading floor in the basement. Yes, the friend is going to check around. I suggested Patti Hawkins at Wells Fargo Dallas for starters. But, who the hell knows what rates will be in Oct.Nov. I told him he should have stayed in the great state of Texas but noooooooooo.
Ironically, the bulls were probably hoping for a figure over 350k.
Two factors are influencing the unemployment figures. First is the large number of people in real estate who have a job, but in name only; real estate agents and loan brokers who list themselves as employed, but who haven't seen a commission in weeks, even months.
The second, and very often overlooked, is the number of under-the-table workers, especially illegals, in construction. They don't get counted in the employment figures and don't get counted in the unemployment figures, because statistically they don't exist. Anecdotal evidence is that many of them are effectively out of work.
Unemployment will stay steady until self-employed real estate professionals capitulate and start looking for real jobs, and when construction is hurting so badly that they let "official" employees go. I don't think we're there yet.
Yal,
I would get out of the fed, they have been doing option arms for a long time and are known to have pretty conservative underwriting. They did not do any 100% loans(what I perceive to be the main problem in mortgage) and anything over 80% LTV has mortgage insurance. They are an S & L and having been structured that way for a while they can "porfolio" their loans and not have to access the capital markets. My 2c.
FFDIC!!! TANTA!!! Have you seen the FRB's why bother with reserve capital letter?
This is some major freaky stuff here.
If the undocumented construction workers really need work they can easily come back to farming. A hard working harvester can make $1000 a week in some crops. EVERYONE I talk to needs more labor.
Yal
geez, you do sound sick. if i were u i'd get out too. but here's my take.
no one, even ac, knows where this mkt is going this next yr. its about having enough capital to play with and having a conviction based on an overview of the facts. for me it has been an up and down gut wrenching ride for me the last year being short on the majority of my portfolio. but it has worked out great so far. its about getting a feel for whats happening in the overall global economy. yeah, it amounts to educated gambling. although i agree with you the Fed's latest moves indicate a willingness to moral hazard, i don't think they're in control of the outcome any longer and we're headed for hard times. i believe that the real economy will trump the financial economy. i know that isn't very specific or data driven but those are my thoughts.
idoc,
don't meant to sound sick. I am fine. really. But I had enough for a while. made 30 trades since I open my account in 1995-2007 and 350 since Feb 2007 to now.
will read and respond about the economy later but just want you to know I am fine. There were times btw (April May June) that I was not so fine....
Mama,
I guess we need to call the Fed's Sandra Braunstein for an interpretation unless you are her! I hope not! Talk about lipstick on a pig.
MOM-
Could you please explain your thoughts on the letter? Seems to me the Fed letter is saying that as long as a liability meets certain qualifications, the bank need not fully count it as a liability.
I'm a total amature, but is this basically Basle II in reverse??? So instead of weighting assets, they are weighting liabilities???
Sorry if I totally misunderstood.
No I am nobody. Seriously. If I were important I guess I'd believe that reserve capital wasn't necessary for boat loans or all those fancy investment-rated MBS thangs.
Down here in Nobodyville, we were thinking we could buy those with our leftover Confederate dollars, but now it seems they're good as gold. The fat lady just sang from my POV.
Bill Gross says in his September investment outlook that Bernanke can not save the housing market and Bush must create RMC-Reconstruction Mortgage Corporation.If Gross is right,and I think he is,we are in trouble.Bush is thinking ONLY about Iraq war right now ,he has no time for anything else.
RCRyan: Risk weighting determines what amount of reserve capital is necessary. Reserve capital regulations are what keeps banks from being as overleveraged as hedge funds.
FRB seems to have just tossed out the rules. I'm incoherent with shock.
Slowmo: Thanks. I am mostly out of FED. Over all it was not a good short for me. I think there is some unresposible behaviour there which manifested itself in tons of buyback which hold the stock hi. We will need to look deeper into FED - NPA will be key to watch.
idoc: This is the key: "real economy will trump the financial economy" - this is what I thought and this is what I am no longer convinced off. We need to analyze this better.
here is what I learned over the last 6 month:
How all that infulance the real economy and how the real economy affect all that ?
3 ways:
A. The real way the one that can not be ignored. (forclosures, home prices, recession)
B. the measured way - which I think they manipulate.
C. credit crunch issues (fear of defaults)
OK enough for now need to re-evaluate all this the term slowwwmotion is indeed correct - it is all taking very long and many steps back and forth.
CR,
Agreed, mostly. Fed guys and gals know they need to project their thinking quarters ahead. Jobless claims don't let them do that. They are stuck doing a sort of Rubinesque risk assessment that attaches likelihoods to various real economic outcomes in the medium term that result from credit market and real economic events now. That is hard at the best of times. Right now, not likely to be satisfying at all.
So, here's Bernanke, tagged as "Helicopter Ben" and loaded up the the "Bernanke Put" even though he has not formally eased monetary one single time in his tenure as chairman. "Ah," he says, "what a great time to knock down the 'Bernanke put' notion. Can't get the economic consquences of this mess sorted out in my head anyway, so why not accomplish something useful?"
We got a huge rate cut today. BoJ left their rates steady. Carry trade fired right back up until the next BoJ meeting, in Oct, when the global market will be on its knees...
YouTube
- Broadcast Yourself.
Mama waving the Confederate Flag.
Yal,
Get out if you have to. It has been a pleasure talking with you. Hope you choose to come back soon!
Yal,
FWIW, I admire your ability to trade your conviction and understand your need to get out. This market is totally nerve wracking, I got burned last week trying to play a fade on Friday's "helicopter drop".
Unfortunately, as I am learning, if youre gonna go short you have to factor in the risk of Central Bank interventions and manipulations in addition to the usual takeover/buyout factors on a stock that looks doomed.
RCRyan: Risk weighting determines what amount of reserve capital is necessary. Reserve capital regulations are what keeps banks from being as overleveraged as hedge funds.
FRB seems to have just tossed out the rules. I'm incoherent with shock.
MaxedOutMama
This was the thing that I was suspecting/wondering about and now have confirmation: Banks were using "AAA" CDOs & MBSs to satisfy reserve requirements.
When they started re-rating the "AAA" paper as "CCC" paper the manure hit the turbine. The letter now tells them it's OK, just don't have too much. The part that disturbs me was that the fed says it was OK to play this game at all. Basel II was supposed to reward those with better risk mangagment skills, when it's apparent that almost nobody had them.
The Fed discount window and ECB injections were meant to give time to the banks to get their reserves in order, because it obviously hasn't helped commrcial paper at all.
CR,
A FED cut is in the making and will hit much sooner than you think or the unemployment gauge suggests.
Alec,
The letter isn't about reserve requirements, it's about risk-based capital requirements. Banks can't include CDOs and MBSs in capital. The letter is about the risk-weighting of the capital required for specific assets. Basically, you start with a requirement that a bank has to hold 8% capital against an asset, then you risk-weight the capital requirement. If the risk-weighting is 100%, you have to hold 8%; if it's 20%, then you hold 20% of the 8%, or 1.6%. Since capital is expensive, this makes a difference in the pricing of the assets and the bank's willingness to hold them at all.
I'm not sure this letter means the sky is falling. The conditions and the footnotes seem to me to put some pretty strict limits on the letter. Really, only the fourth alternative provides much leeway and, as I said on CR, for the pledged security to be deemed "liquid and marketable," you have to show that it has "a robust historical record of an active market characterized by daily market prices." The word "historical" is the key; it probably means that temporary disruptions don't automatically make a security illiquid, which would only add to the instability.
But the "historical record" of an "active market characterized by daily market prices" has to be "robust." Like prime mortgages, is my guess. Not boats. My second guess is that this is designed to keep daily mark-to-markets in place, but allow for short-term disruptions in a normally liquid market without also disrupting capital requirements.
Don't think a bank could rely on this letter for any assets that didn't have daily market prices and liquidity over a period of several years. Unless it got its own letter from the Fed.
I actually think the letter is a good thing.