Wow, just imagine how many subprime people actually were listed as "Alt-A" since the mortgage bankers threw caution to the wind. I'm sure glad this subprime thing is contained. I'd be really nervous otherwise.
The indices start skyrocketing at the end JUST LIKE YESTERDAY and the schmuck faction jumps on board like lemmings...
There are double short Dow ETFs out there. I wouldn't be surprised if there's a lot of positions leveraged into these things for a quadruple short, or better if you know how to swing it.
Inverse ETFs make it a lot easier for people to take short positions.
Things like this coupled with so much bearishness, IMO, are just a recipie for huge volatility including unprecedented short squeezes on major indicies.
Didn't I say this would keep happening last night?
AHM American Home Mortgage: American Home Mortage closing tomorrow -- Newsday (1.79 +0.30) -Update-
American Home Mortgage Investment Corp. will be closing its doors Friday, after several attempts to sell of all or some of its divisions to rival lenders went up in smoke this week, numerous employees said. Employees said they were contacted by senior management through the course of the day and told that none of their strategic options for remaining open had panned out. Just after 3 p.m., company founder Michael Strauss sent an email to employees saying, "American Home Mortgage has been forced to close." It said tomorrow would be their final day of employment. Employees expressed frustration with the secrecy of this week's process, and with upper management's decision not to disclose any information about the company's status until the bankruptcy was announced earlier today.
Don't know if this was discussed in previous threads but, didn't CR do a post about how more ALT-A's were being originated this year, so far, than compared with 2006? Insinuating that ALT-A was picking up some of the subprime slack?
There are double short Dow ETFs out there. I wouldn't be surprised if there's a lot of positions leveraged into these things for a quadruple short
ac,
Most of these inverse double-short ETFs enter into swap contracts (I feel like I'm turning into the swap nerd) and just hold cash in their account.
So, they aren't shorting the underlying in anyway. Maybe the counterparty to their swap is shorting it.. to hedge.. but.. I doubt it.
This is one reason why I don't know if I trust the ETFs completely.. they are attempting to enter into contracts that simulate a double inverse return.. but these are swap contracts they're using. So, who knows what would happen to the swaps if the market really moved violently. (Maybe it would be fine.. I tend to be a little paranoid about these things behaving in the way others say they should.)
Don't get me wrong, I think it's great Clyde linked the whole enchilada. I rather tentatively put up one of the Credit Suisse charts this morning to see if anyone twigged. Never mind.
M-F,
The 2006 buyers?
A family member who was working for a national builder in CA described some of them to me in a way that made me think of the shirtless people who get arrested on the TV show "Cops".
I'm a bit shocked at the high number of No-doc originations in 2006... in San Diego, it was 58%!
Since the customer has to pay extra for the "service" of no providing documentation, I see three possible reasons:
1) laziness
2) opportunity to lie about income or assets
3) issuer gets an extra cut from these loans and steers customers there
Anyone in the real world care to hazard a guess as to the proportions of these? If there is a large percentage of 1) and 3), at least these people are swimming in the debt pool with some shorts on...
Here in the Silent Bubble of Maryland ("It's different here because everyone is rich because of DC"), last year some low-brows in the apartment next door moved out to "buy a house." They met the description of the people mentioned above in that they were very much the type of people that one would see on COPS. Their "job" was in remodeling bathrooms, but their truck sat in the parking lot with a flat tire for months. Considering the drug trade in Baltimore, I think we know what their real job was... Anyway, one can imagine how happy I was that these two clowns who put together make half the money I do and who have the financial skills of lumps of sod would be able to "buy" a house on some funny money loan while honest people like myself can't afford them.
What happen to the COPS rejects? Well, their move out was delayed when one of them died of a drug overdose, and when their apartment was emptied, the place was totally trashed and covered in trash. So, that's an example of the people who have been "buying" houses in the past year in the land of the Silent Bubble - Maryland.
If we get enough shorts in this market we can squeeze our way to Dow 20,000 with a little help from the hedgies.
You have got to love, absolutely love what is happening right now in the market.
The indices start skyrocketing at the end JUST LIKE YESTERDAY and the schmuck faction jumps on board like lemmings...
Only...the envelope please, the big guys start selling into it.
Another thunderous fart through silk.
Meanwhile, the housing area sinks slowly under the quicksand and all Tarzan can do is watch. Jane is going to have to really comfort him tonight.
Wow, just imagine how many subprime people actually were listed as "Alt-A" since the mortgage bankers threw caution to the wind. I'm sure glad this subprime thing is contained. I'd be really nervous otherwise.
The indices start skyrocketing at the end JUST LIKE YESTERDAY and the schmuck faction jumps on board like lemmings...
There are double short Dow ETFs out there. I wouldn't be surprised if there's a lot of positions leveraged into these things for a quadruple short, or better if you know how to swing it.
Inverse ETFs make it a lot easier for people to take short positions.
Things like this coupled with so much bearishness, IMO, are just a recipie for huge volatility including unprecedented short squeezes on major indicies.
Didn't I say this would keep happening last night?
Any estimates for 2007, thus far?
Napolean, all estimates for 2007 just become "inoperative."
AHM American Home Mortgage: American Home Mortage closing tomorrow -- Newsday (1.79 +0.30) -Update-
American Home Mortgage Investment Corp. will be closing its doors Friday, after several attempts to sell of all or some of its divisions to rival lenders went up in smoke this week, numerous employees said. Employees said they were contacted by senior management through the course of the day and told that none of their strategic options for remaining open had panned out. Just after 3 p.m., company founder Michael Strauss sent an email to employees saying, "American Home Mortgage has been forced to close." It said tomorrow would be their final day of employment. Employees expressed frustration with the secrecy of this week's process, and with upper management's decision not to disclose any information about the company's status until the bankruptcy was announced earlier today.
The information contained in those charts is amazing, very well presented!! The information itself is depressing...
Don't know if this was discussed in previous threads but, didn't CR do a post about how more ALT-A's were being originated this year, so far, than compared with 2006? Insinuating that ALT-A was picking up some of the subprime slack?
Exhibit 29 is quite stunning. IO and Neg Ams went from 6% of all originations in 2003 to 25% in 2004!
No, that was his reckless and dangerous co-blogger.
Napolean, I think you mean this one.
Calculated Risk: Alt-A: The New Home of Subprime?
Sorry for being a little spastic at the moment, but it's brown-out in my neighborhood today.
Sorry Tanta. It must have been a relatively short post, leading to my confusion as to who was the author.
There are double short Dow ETFs out there. I wouldn't be surprised if there's a lot of positions leveraged into these things for a quadruple short
ac,
Most of these inverse double-short ETFs enter into swap contracts (I feel like I'm turning into the swap nerd) and just hold cash in their account.
So, they aren't shorting the underlying in anyway. Maybe the counterparty to their swap is shorting it.. to hedge.. but.. I doubt it.
This is one reason why I don't know if I trust the ETFs completely.. they are attempting to enter into contracts that simulate a double inverse return.. but these are swap contracts they're using. So, who knows what would happen to the swaps if the market really moved violently. (Maybe it would be fine.. I tend to be a little paranoid about these things behaving in the way others say they should.)
Nevermind. I stand corrected, again.
Thanks for the link, btw.
Don't get me wrong, I think it's great Clyde linked the whole enchilada. I rather tentatively put up one of the Credit Suisse charts this morning to see if anyone twigged. Never mind.
It must have been a relatively short post, leading to my confusion as to who was the author.
If my electricity keeps going off all posts will be very, very short.
burnside, Clyde just sent me the link. I had the impression that Patrick posted all the charts.
Maybe Ivy gave everybody permission before she quit. And is that looking like a smart move now, or what?
If my electricity keeps going off all posts will be very, very short.
Yet more evidence of the PPT?
Exhibit 41 is scary. 2006 vintage subprime foreclosure & REO is going off the charts. Who are these people?
For 2006Q1 3.5% of them are getting foreclosed on 8 months after closing -means they stopped paying after a few months or never made a single payment!
Tanta, Ivy's brilliant, really. Paul K. too for that matter.
I'm fine. Sorehead for three minutes and then poof
OT, did everyone see CHina got it's thumb caught in the Blackstone door?
China faces backlash at home over Blackstone investment
Seems they're deleting on line comment.
Um. That's 'China' and 'its'. Apologies to E.B. White.
M-F,
The 2006 buyers?
A family member who was working for a national builder in CA described some of them to me in a way that made me think of the shirtless people who get arrested on the TV show "Cops".
M-F,
That graph was scary at that time. Now the current performance of 2006-Q4 vintages is worse by a few points.
Arrrrgggggghhhhhh - give me a gun to shoot myself - and maybe them first!
If I were in the market for a house in NV or CA the next few years would be looking good.
Yup, its definitely contained. Nothing to worry about!
Calculated Risk + Clyde
Thanks for the great charts.
Thanks Clyde, Now we can jump off a bridge.
I'm a bit shocked at the high number of No-doc originations in 2006... in San Diego, it was 58%!
Since the customer has to pay extra for the "service" of no providing documentation, I see three possible reasons:
1) laziness
2) opportunity to lie about income or assets
3) issuer gets an extra cut from these loans and steers customers there
Anyone in the real world care to hazard a guess as to the proportions of these? If there is a large percentage of 1) and 3), at least these people are swimming in the debt pool with some shorts on...
Chart 32: 1/3 of all prime originations in 2006 were low/no doc. Should we assume that prime borrowers are less likely to lie on their stated income?
DH,
You'll thank me after you dry off...nothing like air going up your nose at 120 m.p.h. to clear the mind & focus the resolve...
Here in the Silent Bubble of Maryland ("It's different here because everyone is rich because of DC"), last year some low-brows in the apartment next door moved out to "buy a house." They met the description of the people mentioned above in that they were very much the type of people that one would see on COPS. Their "job" was in remodeling bathrooms, but their truck sat in the parking lot with a flat tire for months. Considering the drug trade in Baltimore, I think we know what their real job was... Anyway, one can imagine how happy I was that these two clowns who put together make half the money I do and who have the financial skills of lumps of sod would be able to "buy" a house on some funny money loan while honest people like myself can't afford them.
What happen to the COPS rejects? Well, their move out was delayed when one of them died of a drug overdose, and when their apartment was emptied, the place was totally trashed and covered in trash. So, that's an example of the people who have been "buying" houses in the past year in the land of the Silent Bubble - Maryland.
Better yet, look at the PDF link at the very bottom of the page, titled Mortgage Liquidity du jour:
http://www.recharts.com/reports/CSHB031207/CSHB031207.pdf