I'm getting mighty tired of all confessional and no penance. Societie General at least said a few "Hail Marys" were in there someplace. Trust me, the tangential references to Catholicism are about to become the new talking points.
CR, a suggestion. If and when there are ever any consequences to all this you should label them "Woodshed."
This nationwide snowstorm is a significant event. It happened right before the Chinese New Year, the busiest shopping season. I heard many highways were blocked and the factories did not fare much better.
R Dawg,
Here you go man. You want popcorn and a diet Pepsi with that?
Former Bayou CFO gets 20 years: 'I'm truly sorry,' says Daniel Mariono, who defrauded hedge fund investors out of more than $400 million... Business, financial, personal finance news - CNNMoney.com
FFDIC, from the link: Marino and Samuel Israel III, ex-chief executive of the Stamford, Conn., hedge-fund firm, pleaded guilty in September 2005 to conspiracy,
September 2005! Sentenced yesterday. What he couldn't reschedule his yacht reservations to visit his offshore accounts?
I wonder when/what we'll hear from Bear Sterns again. They kind of kicked this whole thing off last May (not including the HSBC last Feb. or so) but I don't recall hearing any further confessions from them.
And people wonder why others can morally/ethically walk away from mortgages that are underwater? Is anything involving business done on an ethical basis anymore? I think not. It seems like it's all based on "screw someone."
The "contained to the planet" was originally said by a poster on The Housing Bubble Blog about a minute (literally) after Bernanke's first "The problem is contained" speech, last spring or late winter.
Almost a year ago now....time flies...
It was funny to hear it being said on primetime Sunday.
The only reason why any of this stuff is happening is because everyone got greedy. You can't tell me that everyone outside the "Housing Bubble Blog" didn't see this coming. People can't be that blind.
lets hope their CHF 13 billion capital injection from Temasek (11)and one unnamed Middle Eastern investor (2) is still enough after the next "forecast" is hitting the tape......
Seems to me sentencing for jack Abramoff (and Moussaoui?) was held up until he finished co-operating with the prosecution, so the value of his testimony could be figured in. Maybe Mr. Bayou has flipped? (If so, then all those years suggests he didn't give them much!)
Oppenheimer & Co.'s Meredith Whitney lowered her recommendation for the bank to underperform'' fromperform,'' saying Merrill has the ``highest probability of further writedowns throughout 2008.''
``Merrill could have an additional writedown of roughly $10 billion if the monolines were to be downgraded,'' New York-based Whitney wrote in a note to clients dated yesterday.
I am remembering the days when BS hedge funds imploded and we were arguing when, if ever, this paper would be downgraded to cause MTM losses and what the consequences would be. seven months later... wow
Man what I could do with a couple bill. I'll put it in some account that yeilds 6% & viola they'd have a profitable quarter. Heck ANY quarter. I'll insure even them! Also, I WILL NOT lose one cent of their investment. Just gimee,gimme, gimmmmmme two Billion. Pleeeeeease:)
I like this part: Value declines have extended beyond just subprime-related exposures, to new areas, for which we do not yet have disclosure on exposure size,'' Jeremy Sigee, an analyst at Citigroup, said in a note to clients.The recently bolstered capital base remains vulnerable to further erosion.
Meridith says MER could lose another $10B upon downgrades
Why is it that others have to point out how much you are going to write off? Like Merril the other day was saying Citi was going to write off more. Can't they sit and figure out how much THEY themselves have to write off??
On a related note, home builder Centex reported losses of nearly $1B last evening. They have racked up almost $1.7B in losses already their fiscal year (and they have 1 more quarter to go).
In the meantime, they have under $100M in available cash and short-term liabilities of over $2B.
It's obvious, then, that this stock should be up over 30% from its recent lows. Keeping with the Catholic theme today, could one say this is the result of immaculate deception?
"WASHINGTON (MarketWatch) -- Companies in the U.S. private sector added 130,000 jobs in January, according to the ADP employment report released Wednesday. The report two days before the Labor Department reports on nonfarm payroll growth for January. Adding in some 25,000 jobs created by government, the ADP report suggests nonfarm payrolls grew by about 155,000, well above the 70,000 jobs now expected by Wall Street economists."
Durable goods - check
Jobs - check
Oil up, gold up - check
The Big Picture did a thread on what most people expect the cut to be this afternoon and it seemed 25 bps was the winner although I didn't count them up. But I think a lot of people on Wall Street are expecting more and may be disappointed. Surely Ben will want to save some ammo for later?
You can't tell me that everyone outside the "Housing Bubble Blog" didn't see this coming. People can't be that blind.
"Blind" isn't the half of it. The dot-com craze of the late '90s and its ugly aftermath taught me that people can, in fact, be that blind.
The fact that, less than a half-decade after the denouement of that asset bubble, everyone and their brother engaged in another prolonged test of the Greater Fool Theory - in the process blowing an asset bubble that was an order of magnitude larger - has taught me that people aren't just blind.
They're willfully ignorant as well.
Too early in the day / week for me to be that cynical, I suppose, but 'tis what it is.
Man talk about cross currents, ADP up 130k, yet 4Q GDP up only 0.6% (although final sales up 1.4%). Housing investment off 24%. Add in better than expected durable goods, but then the news on declining new home sales and CS home prices. Looks like most economists have to be incarnations of Shiva. Its the only way to have enough hands for "on the other hand"
Yes, yes, agree that the ADP numbers are rubbish. But if Ben wants an excuse to not slash, won't this do? Economy slowing a bit but still positive he can say, and look at all the people with new jobs. Just saying it's a possibility.
Mook, I wonder if some enterprising independent film maker is making a human level documentary about the bubble and demise. That is, tracking the same people from 2003-2009.
In hindsight, it might be an interesting look at the psychology of the masses...sad, but interesting.
But if Ben wants an excuse to not slash, won't this do?
No, because he already knows what the BLS number is that gets reported on Friday. And it may, as it often does, run counter to the ADP estimate.
But I also agree with others that think there's a good chance he holds at 25 to save powder for another day. In any case, if you are risking money in this looney stock market, you need to plan for either contingency.
And not only did GDP fall all the way to 0.6%, the PCE "inflator" number jumped from 1.0% in the 3rd quarter to 2.6% in the 4th.
About all that's missing at this point is the Cranberries coming out at the Super Bowl halftime show with Dolores O'Riordan jumping around singing, "Stagflation! Stagflation! Stagflation is here! ..."
"The refinance share of mortgage activity climbed to 73.0% of total applications, down from 66.0% the week before and 62.7% in the week ending Jan. 11. The ARM share fell to 8.6% from 9.3% of total applications the previous week.
The refinance index increased 22.1% to 5103.6 from 4178.2 the week before, while the purchase index fell 17.7% on a seasonally adjusted basis to 362.0 from 439.9 in the prior week. The conventional purchase index decreased 18.9% while the government index, which is largely comprised of FHA loans, fell 10.0%."
Looks like good news for the finance industry, not so good news for the home building industry.
At this point in time, how much the fed cuts has nothing to do with the economy. The most important thing right now is saving banks. The FED needs to slash borrowing costs for banks so the banks can build up their reserves.
US banks are in serious danger of running out of money. No money, means no loans. No loans means banks can only make money off fees. Fees don't come close to covering expenses. Bottom line is banks make money by borrowing at X% and loaning at X+Y%. The lower X is, the more Y can be.
With banks holding a lot of bad loans, they have to set aside money as reserves to cover expected losses. This is money they can't loan out and hence can't collect interest on. If the true value of their losses was actually used to determine loan loss reserves, most banks wouldn't be able to make a profit. So, what's happening is debts are being classified as Non-Performing until they absolutely have to be and hopefully banks will be able to generate enough profit to ride out the storm until things turn around.
The bottom line is I would be susprised if the FED didn't cut by at least 50%.
The bottom line is I would be susprised if the FED didn't cut by at least 50%.
Well, oil seems to share your perspective. It's already heading up again this morning. I think because it's winter (when gas prices are depressed) people don't realize gas is up over 80 cents per gallon from a year ago.
If the rise in oil prices continues to benefit from rate cuts we could be looking at over $4/gal come this summer.
If employment is a lagging indicator isn't it possible that we could be in a recession but we're just not seeing it show up in the employment numbers yet?
not much banter here about the ADP numbers.
have we ever had a jobfull recession?
There's a lot of statistical evidence that suggests the payroll and employment numbers tend to lag the economy at inflection points, often by as much as 2-3 quarters - because small business hiring, which accounts for more than 50% of all new jobs, involves a lot of "historical estimates" and "trend forecasting" (read: pure guesswork) on the part of the BLS and ADP.
So yes, just because the numbers seem better than expected at this inflection point doesn't mean a recession isn't happening / imminent.
Looks like most economists have to be incarnations of Shiva. Its the only way to have enough hands for "on the other hand"
Dirk
He's only got 4 hands - good for bridge I suppose - Parvati, his consort, is a better fit. (I often wondered as a kid how they'd hold hands in a Bollywood song 'n' dance sequence).
Back to figuring out the export contribution - why the net export/import figure in current $ was worse in Q4 compared to Q3( as I expected) yet its contribution to QonQ GDP is still positive.
I hope that's not a trend.
ac | 01.30.08 - 9:29 am |
I guess this is actual home loans ??
By the end of next week I will have some final numbers for the hardest hit SW Fl counties. After looking at the sales numbers yesterday I frankly got a chill. Thru the 28th most counties were off about 90% !!!
Is it really bad when you reside in a county of 150k and you can count actual sales on your fingers and toes ??
I thought my county had been slow posting because sales jumped by 350 on the counties website. Nope,it was the developer of Kings Gate retirement community handing approx 350 lots back to the lender...
"If employment is a lagging indicator isn't it possible that we could be in a recession but we're just not seeing it show up in the employment numbers yet?"
sure, but i would also posit that it is possible that we aren't in a recession and we aren't heading into one.
i haven't looked at the gdp report but the talking heads said that there was a pretty good hit in residential construction. if that is the case, then the absolute levels are getting to the point where it is going to be really difficult to get that to contribute to the downside in any appreciable manner going forward.
i don't doubt that there are a lot of people who got whacked by the housing debacle but there are plenty that did not. to the extent that the employment hit in residential is already baked in the pie, all this fiscal and monetary stimulus might have a pretty salutary effect on the rest of the economy. the refi boom is being dissed here, but if 10 trillion dollars of mortgage debt has its interest rate lowered 200 basis points thats 200 billion dollars a year in consumer adrenaline. throw in another 150 of fiscal from the feds and you ar talking 2+ percent of gdp. that is a big number. sometimes the manure doesn't get your flowers to grow better but something else always seems to pop up.
OK As far as the Fed i am going to start doing "anti George" a la Seifeld. I think what should be done and do the opposite. I say hold, no cut wait and see outcome of last weeks rather large emergency cut. That would be logical. So I will do the opposite and say he wants 75 but rest of Board will talk him down to 25 and he will do 50 BPS.
the refi boom is being dissed here, but if 10 trillion dollars of mortgage debt has its interest rate lowered 200 basis points thats 200 billion dollars a year in consumer adrenaline.
I went into some detail on why this assumption of yours is wildly optimistic in the comments of an earlier post - not sure if you caught it.
Basically, I'd be shocked if the refi "boom" generates more than $20-30B in freed-up cash, never mind $200B. Better than nothing, but a far, far cry from what it's going to take to keep the economy out of recession by itself.
"I went into some detail on why this assumption of yours is wildly optimistic in the comments of an earlier post - not sure if you caught it.
Basically, I'd be shocked if the refi "boom" generates more than $20-30B in freed-up cash, never mind $200B"
I think that 200b is probably an upper bound but 20-30 seems way low. the variable rate stuff is somewhere around 1/3, so these people (me included) don't have to do anything to get the benefit, so that's more than 2x your number right off the bat.
sorry i missed your prior post. perhaps you could just give me a quick recalc.
thanks
d
King Peasant - if you look at FUT (Federal Unemployment Tax) receipts compiled from the Daily Treasury Statements, you get a totally different picture. FUT is a pretty sensitive indicator and it is far more timely than BLS, because it doesn't have the backward reflecting B/D adjustments. FUT leads WIET receipts, which are now just beginning to show YoY weakness. Corporate income tax receipts are in the middle of the two.
You can get the Daily Treasury Statements back to 1999 at this link. I warn you they are a bitch to use. You really have to adjust for days of operation and timing regarding tax filings of various sorts, although there is a lot of useful information contained in those very fluctuations. You can often get an early take over whether small businesses are hiring vs large businesses from looking at relative trends.
However, regarding ADP's number and Cobradriver's statement, I have to agree that I see relative strength in January. The fundamental stats continue to decline (and most of them have been declining for TWO YEARS), but not apparently at a much faster rate than before. There appears to have been a diffusion of employment weakness in late third/early fourth quarter, but it isn't clear that it is extending at this point. What is clear is that in the last half of 2007 suddenly employment changes stopped being concentrated in short brown undocumented people who don't pay income tax (they all fill out W2s showing like 8 dependents, which they probably do have) and shifted to, you know, "real" people.
YoY FUT changes since 2005 clearly show the continued decline one would expect from construction jobs.
BLS establishment and survey are probably broken over the recent years because of the huge influx of illegals. Anyway, that's my take on it. BLS is always slow (but catches up with reality after a couple of years) but I think in this case it just doesn't have an ability to measure. There is no way that corporations would start sending in FUT on mythical employees. They were there, then they weren't. We're talking over a million people, it looks like.
The early indicators from retail employment CR was looking at last year plus decline in construction jobs probably accounted for most of the the first 19 months of YoY FUT declines. Now, as Brian23 comments, employment losses are walking up the social visibility chain.
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Rogue traders are NOT contained, apparently.
This will be helpful for the Fed tomorrow. Pass the bongwater hon.
wow 12 billion.....that must mean UBS only has 2 rogue traders
I'm getting mighty tired of all confessional and no penance. Societie General at least said a few "Hail Marys" were in there someplace. Trust me, the tangential references to Catholicism are about to become the new talking points.
CR, a suggestion. If and when there are ever any consequences to all this you should label them "Woodshed."
Unfortunately for China and for the world economy:
China Snowstorms Kill 24, Cause Loss of $3 Billion (Update3) - Bloomberg.com
This nationwide snowstorm is a significant event. It happened right before the Chinese New Year, the busiest shopping season. I heard many highways were blocked and the factories did not fare much better.
R Dawg,
Here you go man. You want popcorn and a diet Pepsi with that?
Former Bayou CFO gets 20 years: 'I'm truly sorry,' says Daniel Mariono, who defrauded hedge fund investors out of more than $400 million...
Business, financial, personal finance news - CNNMoney.com
Is our Black Swan white as snow?
F. Frederson writes:
Rogue traders are NOT contained, apparently.
Per Jim Grant in the "60 Minutes" piece:
"Contained to planet earth."
FFDIC, from the link: Marino and Samuel Israel III, ex-chief executive of the Stamford, Conn., hedge-fund firm, pleaded guilty in September 2005 to conspiracy,
September 2005! Sentenced yesterday. What he couldn't reschedule his yacht reservations to visit his offshore accounts?
The quip "contained to planet earth" was lifted from the blogs.
Either The Big Picture, Calculated Risk or even Krugman's blog had the quip.
"It is contained to my diaper, I am so glad that I started wearing them."
I wonder when/what we'll hear from Bear Sterns again. They kind of kicked this whole thing off last May (not including the HSBC last Feb. or so) but I don't recall hearing any further confessions from them.
UBS to Robin Hood
And people wonder why others can morally/ethically walk away from mortgages that are underwater? Is anything involving business done on an ethical basis anymore? I think not. It seems like it's all based on "screw someone."
Mortgages are like "Enron Ethics" for the masses.
R Dawg,
Good point. Obviously you have never worked for the federal government and its six layers of management.
waitinginPNW - catchy name but fuck Bear Sterns. I want to hear the truth from Goldman.
This is the one time (in China at least) where one can say that weather was indeed a significant factor in buyer decisions at shopping malls...
The "contained to the planet" was originally said by a poster on The Housing Bubble Blog about a minute (literally) after Bernanke's first "The problem is contained" speech, last spring or late winter.
Almost a year ago now....time flies...
It was funny to hear it being said on primetime Sunday.
Wow. Will this adversely affect their wealth management business? If so, who stands to benefit?
FFDIC-
Goldman's high on my list too. Really really high.
thanks for all the great links you provide all the time BTW.
The only reason why any of this stuff is happening is because everyone got greedy. You can't tell me that everyone outside the "Housing Bubble Blog" didn't see this coming. People can't be that blind.
Moin from Germany,
lets hope their CHF 13 billion capital injection from Temasek (11)and one unnamed Middle Eastern investor (2) is still enough after the next "forecast" is hitting the tape......
September 2005! Sentenced yesterday.
Seems to me sentencing for jack Abramoff (and Moussaoui?) was held up until he finished co-operating with the prosecution, so the value of his testimony could be figured in. Maybe Mr. Bayou has flipped? (If so, then all those years suggests he didn't give them much!)
It is an write down everyday tha why I must keep my mind on my goal here is list of things i go by
Lively Money: 7 things to do to achieve the unachieveable!
Heh, big headline on marketwatch, too; but Euro markets are a-OK (don't worry, u kan haz cheap $, too).
Meridith says MER could lose another $10B upon downgrades
Stocks Fall in Europe, Asia, U.S. Futures Drop; BNP Declines - Bloomberg.com
Oppenheimer & Co.'s Meredith Whitney lowered her recommendation for the bank to underperform'' fromperform,'' saying Merrill has the ``highest probability of further writedowns throughout 2008.''
``Merrill could have an additional writedown of roughly $10 billion if the monolines were to be downgraded,'' New York-based Whitney wrote in a note to clients dated yesterday.
I am remembering the days when BS hedge funds imploded and we were arguing when, if ever, this paper would be downgraded to cause MTM losses and what the consequences would be. seven months later... wow
Man what I could do with a couple bill. I'll put it in some account that yeilds 6% & viola they'd have a profitable quarter. Heck ANY quarter. I'll insure even them! Also, I WILL NOT lose one cent of their investment. Just gimee,gimme, gimmmmmme two Billion. Pleeeeeease:)
An all-out assault on ruthless puts and other ills of our time?
Central Bankers: Securitization is Dead, Long Live Banking.
is this a bird? is this superman? no! it's transformers. i guarantee this term will stick!
The Bond 'Transformers' - WSJ.com
subprime toxic waste decline in real value? you want to talk about toxic waste? lets talk about dollar, it is becomming as toxic as subprime mortgage
MBA Purchase applications in a 362
Rob Dawg,
You can't use the Woodshed, it's full of taxpayers awaiting their beating. No room for CEO's.
Guillermo Calvo sees stagflation in the future if expansionary policies are adopted.
I still think we need to start our own bank.
"Bank of Tanta" or "CR Bank"
Mortgage pig could be the logo.
Come on folks, I need to put my cash somewhere safer so the banksters can't get it!
I like this part: Value declines have extended beyond just subprime-related exposures, to new areas, for which we do not yet have disclosure on exposure size,'' Jeremy Sigee, an analyst at Citigroup, said in a note to clients.The recently bolstered capital base remains vulnerable to further erosion.
Meridith says MER could lose another $10B upon downgrades
Why is it that others have to point out how much you are going to write off? Like Merril the other day was saying Citi was going to write off more. Can't they sit and figure out how much THEY themselves have to write off??
kerviel transcript-
Kerviel: "I wanted to make money for my bank" - MarketWatch
Make sure you're sitting down before you fire these charts up.
Really Scary Fed Charts, Why Bernanke Will Cut Furiously
At least the loss is in dollars.
On a related note, home builder Centex reported losses of nearly $1B last evening. They have racked up almost $1.7B in losses already their fiscal year (and they have 1 more quarter to go).
In the meantime, they have under $100M in available cash and short-term liabilities of over $2B.
It's obvious, then, that this stock should be up over 30% from its recent lows. Keeping with the Catholic theme today, could one say this is the result of immaculate deception?
REBear, I guess it's not always easy to look in the mirror.
"WASHINGTON (MarketWatch) -- Companies in the U.S. private sector added 130,000 jobs in January, according to the ADP employment report released Wednesday. The report two days before the Labor Department reports on nonfarm payroll growth for January. Adding in some 25,000 jobs created by government, the ADP report suggests nonfarm payrolls grew by about 155,000, well above the 70,000 jobs now expected by Wall Street economists."
Durable goods - check
Jobs - check
Oil up, gold up - check
The Big Picture did a thread on what most people expect the cut to be this afternoon and it seemed 25 bps was the winner although I didn't count them up. But I think a lot of people on Wall Street are expecting more and may be disappointed. Surely Ben will want to save some ammo for later?
Another OT - it's not just China with weather problems. Oil up because of cold snap in Canada which has shut down Syncrude.
Crude Oil Rises to Two-Week High on Canadian Oil-Sands Shutdown - Bloomberg.com
You can't tell me that everyone outside the "Housing Bubble Blog" didn't see this coming. People can't be that blind.
"Blind" isn't the half of it. The dot-com craze of the late '90s and its ugly aftermath taught me that people can, in fact, be that blind.
The fact that, less than a half-decade after the denouement of that asset bubble, everyone and their brother engaged in another prolonged test of the Greater Fool Theory - in the process blowing an asset bubble that was an order of magnitude larger - has taught me that people aren't just blind.
They're willfully ignorant as well.
Too early in the day / week for me to be that cynical, I suppose, but 'tis what it is.
"CR, a suggestion. If and when there are ever any consequences to all this you should label them "Woodshed."
Perhaps that label should be reserved for SEC and State AG investigations.
in case this has'nt already been posted, advance gdp is in at 0.6%.
The mortgage pig wears pink lipstick. This started a long time ago.
gdp in at half the predicted number. It basically hit a wall and must be zero or negative for the latter part of the quarter.
Those ADP figures are screwed up, just like last month.
Man talk about cross currents, ADP up 130k, yet 4Q GDP up only 0.6% (although final sales up 1.4%). Housing investment off 24%. Add in better than expected durable goods, but then the news on declining new home sales and CS home prices. Looks like most economists have to be incarnations of Shiva. Its the only way to have enough hands for "on the other hand"
Yes, yes, agree that the ADP numbers are rubbish. But if Ben wants an excuse to not slash, won't this do? Economy slowing a bit but still positive he can say, and look at all the people with new jobs. Just saying it's a possibility.
Mook, I wonder if some enterprising independent film maker is making a human level documentary about the bubble and demise. That is, tracking the same people from 2003-2009.
In hindsight, it might be an interesting look at the psychology of the masses...sad, but interesting.
If the Fed only raises 25bps, the market will quite likely $hit a brick.
I wouldn't bet on it.
Man talk about cross currents, ADP up 130k, yet 4Q GDP up only 0.6% (although final sales up 1.4%).
I'm seeing final sales up 1.9%.
Yes, yes, agree that the ADP numbers are rubbish.
Actually, they tend to be more acurate than the initial BLS numbers. I think they have a graph illustrating the point.
But if Ben wants an excuse to not slash, won't this do?
No, because he already knows what the BLS number is that gets reported on Friday. And it may, as it often does, run counter to the ADP estimate.
But I also agree with others that think there's a good chance he holds at 25 to save powder for another day. In any case, if you are risking money in this looney stock market, you need to plan for either contingency.
And not only did GDP fall all the way to 0.6%, the PCE "inflator" number jumped from 1.0% in the 3rd quarter to 2.6% in the 4th.
About all that's missing at this point is the Cranberries coming out at the Super Bowl halftime show with Dolores O'Riordan jumping around singing, "Stagflation! Stagflation! Stagflation is here! ..."
The job numbers from ADP/BLS, as usual, don't properly gauge the health of the job market.
The statistics don't take into account off-the-books laborers, self-employed people, etc;
In addition, I suspect that everyone bailing from the mortgage, bank, and homebuilder businesses are now seeking employment -any employment!
This can cause a temporary increase in the number of "counted" people as they go into "normal" jobs, but there is no net gain.
Man talk about cross currents, ADP up 130k, yet 4Q GDP up only 0.6%
Remember, ADP isn't about measuring jobs, it's about predicting the outcome of the BLS report, birth-death flaws and all.
From CEP News:
"The refinance share of mortgage activity climbed to 73.0% of total applications, down from 66.0% the week before and 62.7% in the week ending Jan. 11. The ARM share fell to 8.6% from 9.3% of total applications the previous week.
The refinance index increased 22.1% to 5103.6 from 4178.2 the week before, while the purchase index fell 17.7% on a seasonally adjusted basis to 362.0 from 439.9 in the prior week. The conventional purchase index decreased 18.9% while the government index, which is largely comprised of FHA loans, fell 10.0%."
Looks like good news for the finance industry, not so good news for the home building industry.
Looks like good news for the finance industry, not so good news for the home building industry.
Actually I'm not sure millions of people desperately trying to refinance is good for anyone.
Missed an important detail in previous post:
"On an unadjusted basis, the index increased 10.5% compared to the prior week and was 70.7% over the same week in 2007."
70% more refi applications is a material number - even after discounting a higher percentage of rejections, I suspect.
At this point in time, how much the fed cuts has nothing to do with the economy. The most important thing right now is saving banks. The FED needs to slash borrowing costs for banks so the banks can build up their reserves.
US banks are in serious danger of running out of money. No money, means no loans. No loans means banks can only make money off fees. Fees don't come close to covering expenses. Bottom line is banks make money by borrowing at X% and loaning at X+Y%. The lower X is, the more Y can be.
With banks holding a lot of bad loans, they have to set aside money as reserves to cover expected losses. This is money they can't loan out and hence can't collect interest on. If the true value of their losses was actually used to determine loan loss reserves, most banks wouldn't be able to make a profit. So, what's happening is debts are being classified as Non-Performing until they absolutely have to be and hopefully banks will be able to generate enough profit to ride out the storm until things turn around.
The bottom line is I would be susprised if the FED didn't cut by at least 50%.
Actually I'm not sure millions of people desperately trying to refinance is good for anyone.
Bob_in_MA
How do you figure?
it's not good or bad. most of the people that want refi don't have the equity anyway, or won't have in the nearest future.
The bottom line is I would be susprised if the FED didn't cut by at least 50%.
Well, oil seems to share your perspective. It's already heading up again this morning. I think because it's winter (when gas prices are depressed) people don't realize gas is up over 80 cents per gallon from a year ago.
If the rise in oil prices continues to benefit from rate cuts we could be looking at over $4/gal come this summer.
Just what an ailing economy needs.
The conventional purchase index decreased 18.9% while the government index, which is largely comprised of FHA loans, fell 10.0%
I hope that's not a trend.
ot much banter here about the ADP numbers.
have we ever had a jobfull recession?
have we ever had a jobfull recession?
If employment is a lagging indicator isn't it possible that we could be in a recession but we're just not seeing it show up in the employment numbers yet?
not much banter here about the ADP numbers.
have we ever had a jobfull recession?
There's a lot of statistical evidence that suggests the payroll and employment numbers tend to lag the economy at inflection points, often by as much as 2-3 quarters - because small business hiring, which accounts for more than 50% of all new jobs, involves a lot of "historical estimates" and "trend forecasting" (read: pure guesswork) on the part of the BLS and ADP.
So yes, just because the numbers seem better than expected at this inflection point doesn't mean a recession isn't happening / imminent.
Looks like most economists have to be incarnations of Shiva. Its the only way to have enough hands for "on the other hand"
Dirk
He's only got 4 hands - good for bridge I suppose - Parvati, his consort, is a better fit. (I often wondered as a kid how they'd hold hands in a Bollywood song 'n' dance sequence).
Hindu Gods
Back to figuring out the export contribution - why the net export/import figure in current $ was worse in Q4 compared to Q3( as I expected) yet its contribution to QonQ GDP is still positive.
-K
I hope that's not a trend.
ac | 01.30.08 - 9:29 am |
I guess this is actual home loans ??
By the end of next week I will have some final numbers for the hardest hit SW Fl counties. After looking at the sales numbers yesterday I frankly got a chill. Thru the 28th most counties were off about 90% !!!
Is it really bad when you reside in a county of 150k and you can count actual sales on your fingers and toes ??
I thought my county had been slow posting because sales jumped by 350 on the counties website. Nope,it was the developer of Kings Gate retirement community handing approx 350 lots back to the lender...
Chris
Considering last Q GDP, I would predict 75 bsp cut today.
What is your predition?
Considering last Q GDP, I would predict 75 bsp cut today.
I thought we already got the 75bsp when the Fed cut at the request of a "rouge" trader in France.
"If employment is a lagging indicator isn't it possible that we could be in a recession but we're just not seeing it show up in the employment numbers yet?"
sure, but i would also posit that it is possible that we aren't in a recession and we aren't heading into one.
i haven't looked at the gdp report but the talking heads said that there was a pretty good hit in residential construction. if that is the case, then the absolute levels are getting to the point where it is going to be really difficult to get that to contribute to the downside in any appreciable manner going forward.
i don't doubt that there are a lot of people who got whacked by the housing debacle but there are plenty that did not. to the extent that the employment hit in residential is already baked in the pie, all this fiscal and monetary stimulus might have a pretty salutary effect on the rest of the economy. the refi boom is being dissed here, but if 10 trillion dollars of mortgage debt has its interest rate lowered 200 basis points thats 200 billion dollars a year in consumer adrenaline. throw in another 150 of fiscal from the feds and you ar talking 2+ percent of gdp. that is a big number. sometimes the manure doesn't get your flowers to grow better but something else always seems to pop up.
OK As far as the Fed i am going to start doing "anti George" a la Seifeld. I think what should be done and do the opposite. I say hold, no cut wait and see outcome of last weeks rather large emergency cut. That would be logical. So I will do the opposite and say he wants 75 but rest of Board will talk him down to 25 and he will do 50 BPS.
See this all makes sense now.
You and Us are apparently f'ed.
Question on ADP. If I have 3 part time jobs, and that is counted as 3 separate new jobs, how does it accurately reflect employment?
the refi boom is being dissed here, but if 10 trillion dollars of mortgage debt has its interest rate lowered 200 basis points thats 200 billion dollars a year in consumer adrenaline.
I went into some detail on why this assumption of yours is wildly optimistic in the comments of an earlier post - not sure if you caught it.
Basically, I'd be shocked if the refi "boom" generates more than $20-30B in freed-up cash, never mind $200B. Better than nothing, but a far, far cry from what it's going to take to keep the economy out of recession by itself.
Hey RobDawg,
You could say that the suddenly penitent brokers/bankers etc are in mortgatory.
NR
"I went into some detail on why this assumption of yours is wildly optimistic in the comments of an earlier post - not sure if you caught it.
Basically, I'd be shocked if the refi "boom" generates more than $20-30B in freed-up cash, never mind $200B"
I think that 200b is probably an upper bound but 20-30 seems way low. the variable rate stuff is somewhere around 1/3, so these people (me included) don't have to do anything to get the benefit, so that's more than 2x your number right off the bat.
sorry i missed your prior post. perhaps you could just give me a quick recalc.
thanks
d
"I went into some detail on why this assumption of yours is wildly optimistic in the comments of an earlier post - not sure if you caught it"
He is saying that if interest rates lower by 2% on 10,000,000,000,000 of mortgage debt that equals a saving available to the economy of 200,000,000,00
Ie a stimulous of 200 billion dollars.
King Peasant - if you look at FUT (Federal Unemployment Tax) receipts compiled from the Daily Treasury Statements, you get a totally different picture. FUT is a pretty sensitive indicator and it is far more timely than BLS, because it doesn't have the backward reflecting B/D adjustments. FUT leads WIET receipts, which are now just beginning to show YoY weakness. Corporate income tax receipts are in the middle of the two.
You can get the Daily Treasury Statements back to 1999 at this link. I warn you they are a bitch to use. You really have to adjust for days of operation and timing regarding tax filings of various sorts, although there is a lot of useful information contained in those very fluctuations. You can often get an early take over whether small businesses are hiring vs large businesses from looking at relative trends.
However, regarding ADP's number and Cobradriver's statement, I have to agree that I see relative strength in January. The fundamental stats continue to decline (and most of them have been declining for TWO YEARS), but not apparently at a much faster rate than before. There appears to have been a diffusion of employment weakness in late third/early fourth quarter, but it isn't clear that it is extending at this point. What is clear is that in the last half of 2007 suddenly employment changes stopped being concentrated in short brown undocumented people who don't pay income tax (they all fill out W2s showing like 8 dependents, which they probably do have) and shifted to, you know, "real" people.
YoY FUT changes since 2005 clearly show the continued decline one would expect from construction jobs.
BLS establishment and survey are probably broken over the recent years because of the huge influx of illegals. Anyway, that's my take on it. BLS is always slow (but catches up with reality after a couple of years) but I think in this case it just doesn't have an ability to measure. There is no way that corporations would start sending in FUT on mythical employees. They were there, then they weren't. We're talking over a million people, it looks like.
The early indicators from retail employment CR was looking at last year plus decline in construction jobs probably accounted for most of the the first 19 months of YoY FUT declines. Now, as Brian23 comments, employment losses are walking up the social visibility chain.
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Banks May Write Down $70 Billion on Insurers, Oppenheimer Says (expect more than $100)
Banks May Write Down $70 Billion on Insurers, Oppenheimer Says - Bloomberg.com
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