What is going on? The headlines on Bloomberg.com are sea of bad news, the real economy is taking a big hit, inflation is up and apparnently staying up, banks are losing money head over heel...... BUT the stock markets are up and seem to see nothing but optimism . Something here is wrong! Or I am just not getting it?
The credit ratings of the complex bonds that pool together slices of mortgage backed securities so-called structured finance CDOs, or CDOs of ABS face further pressure after changes introduced by S&P. The ratings agency has cut its assumptions about the amount of money likely to be recovered by investors in US subprime mortgage backed bonds when the individual mortgagees default on their loans.
In detailing its new recovery assumptions for structured finance CDOs Monday, S&P revealed that for any deals rated A or lower, recoveries were likely to be zero, while recoveries for AA-rated slices of such deals would be at best 5%.
As of yesterday, data compiled by Bloomberg showed the worlds biggest banks and securities firms have so far reported credit losses and writedowns of about $310 billion linked to the U.S. subprime meltdown.
on a short term basis, asset pricing (especially the stock market) is irrational.
Look at the longer term picture. The S&P 500 has returned less than 4% annually over the past decade and is still over-valued by many historical measures. How many times have you heard THAT on bubble vision?
Looking ahead to tomorrow, I see the bloomberg consensus expectation for Q1 gdp is +0.5% (annualized), and +0.7% for real personal consumption. I'm not expecting a large contraction, say -0.5%, but I'm very surprised the consensus forecast is for the US to not be in recession for in Q1. Then again, my faith in the accuracy of government statistics is falling faster than consumer confidence.
This gloom and doom is unwarranted. The Law of News Neutrality requires that the sum of negative and positive news over a non-negligible time span is zero. Thus, all the negative news of late will have to be balanced by positive news in the (near?) future. Things will get better, markets will skyrocket, bubbles will form...
Credit markets in general are doing a little better this morning. There seems to be a short-term correlation between the US dollar doing a little better, and the funding/credit situation improving a bit.
Stock market discounts the future, not past. Hint?
The stock market never discounted the past.
Basically starting in late 2006 every negative economic data point was systematically "pumped" out of the market.
It was really amusing to watch - market would go down 150 points on some surprisingly bad economy news and then the market would get geared higher until it was back where it started by the end of the day.
Over and over again.
Relatively little bad news has been discounted in the broad markets.
Look at the longer term picture. The S&P 500 has returned less than 4% annually over the past decade and is still over-valued by many historical measures. How many times have you heard THAT on bubble vision?
As Barbara Kingsolver said when she was asked how many dates she went on in high school -- "Approximately zero."
Help - I'm wrestling with this particular use of the word "discount". Does Seb mean the Stock Market is selling our future for cheap (but the past is full price)?
"Business conditions remain difficult in a number of the Company's markets. The Company continues to estimate that 2008 housing starts will decline an additional 25 to 33 percent, to a range of 900,000 to one million units, compared to 1.3 million units in 2007. (In the first quarter of 2008, housing starts declined 30 percent).
While the Company's view on housing starts for 2008 has not changed since it developed its earnings guidance earlier this year, the Company currently believes that consumer spending for home improvement products and demand for certain of the Company's International products will be weaker than originally anticipated. As a result, the Company currently estimates that its 2008 percentage sales decline will be low-double digits to mid-teens compared to 2007. The Company's previous guidance estimated that its 2008 percentage sales decline would be high-single to low- double digits.
In detailing its new recovery assumptions for structured finance CDOs Monday, S&P revealed that for any deals rated A or lower, recoveries were likely to be zero, while recoveries for AA-rated slices of such deals would be at best 5%.
There are many U.S. life insurance companies, large and small, that have 25-30% of their assets in CMOs. The industry average is probably around 20%.
The leverage of U.S. life insurance company capital to general account portfolio assets is probably around 8-10 to 1. You do the math. We could be looking at a significant portion of life insurance industry capital wiped out.
Life insurance companies can't replenish capital as easily as banks. Mutual companies don't even have any stock to sell. It could be the disaster under the iceberg.
I'm actually serious - my other definition seems to be that it's ignoring the future, which also makes sense in my world but I don't think that's what Seb's Whatever-B is aiming for.
OK, seems to have something to do with the weightings, although now I have to go sit in a corner and wrestle my brain into accepting models that seem to be weighting what they at the same time seem to be predicting. I'm getting glimmers here but it will take me a little head-banging.
1.5% of 10% is one thing, but 1.5% of 4.5% is brutal. Don't get me started on 2/20.
This is why people like Bill Gross love the high inflation -- it hides the killer fees behind nominal gains even if the real gains are the same.
Much easier to gouge people for 1.5% of their savings a year with high inflation, even if it's still 1.5% of their wealth a year.
Wall Street makes so much money off of peoples' inability to see inflation and inflation makes average joe poor because he doesn't know how to counteract it. The side effect is Wall Street gets rich and then exports their wealth to other countries for safe keeping.
Might as well join in on the looting. My only regret is not getting in on the racket sooner.
"Stock market discounts the future, not past. Hint?"
How many times did the market get it right in the dot com bust before they finally discounted it to the correct level? This time will be no different. Until the DOW can break 13k on volume and the S&P 1440 this nothing more then a short covering a sucker rally.
"Wall Street makes so much money off of peoples' inability to see inflation and inflation makes average joe poor because he doesn't know how to counteract it."
I've done some mutual fund accounting. They make alot more money off people's inability to see portfolio losses and exorbitant fees by convincing avg joe that the have a crystal ball.
I've done some mutual fund accounting. They make alot more money off people's inability to see portfolio losses and exorbitant fees by convincing avg joe that the have a crystal ball.
The whole premise of the mutual fund industry (except maybe index funds) is absurd:
"I'll go out and find 10 dollar bills for you if you give me a dollar of each one."
AC: here's something posted on another blog about Pimco & Bill Gross:
I looked at Pimco's Total Return Fund a while back. The fund is enormous and has various classes (mainly of fees). I believe the fund is the worlds largest. Per Finra, one class of the fund (PTTAX) has about 13B in assets, a 3.75% load and a .90% annual expense ratio.
Now Gross is a good manager, but those fees are tough to overcome. Worse still, the fund has a dismal tax efficiency so I won't go near it.
The annual returns for PTTAX (after load, expenses & yearly federal taxes):
1yr: 3.94% (that 1st year load is a killer)
3yr: 2.97%
5yr: 2.71%
10yr: 3.78%
For comparison, Vanguard's Intermediate Term Treasury Fund's annual returns (after taxes & fees):
1yr: 12.4%
3yr: 5.59%
5yr: 3.34%
10yr: 4.46%
Both funds have durations of about 5 years. On an after tax & fee basis, I'm not sure sure the worlds biggest bond fund can outpace inflation let alone a safe investment like treasuries.
U.S. President George W. Bush said on Tuesday the U.S. economy was facing a "tough time" because of rising food and energy prices and a weak housing market, and faulted Congress for inaction.
I'm teling you, these 'folks' who follow this jesus guy around, htey'll buy anything....seriously.
Let's sell them something, I know they'll buy it.
And the sons conversed on this thought from there father....
Father, they said, let's sell them hope! And we'll create a story, and write a book , and call it a Bible, and we'll make SOOO much money.
Rich - is that really an apples to apples comparison (CDOs and CMOs are different things)? Many CMOs are fairly vanilla.
ajw,
Good point. I guess the question is how well the IB underwriters were able to convince conservative institutional investors that the riskiest mortgage derivatives weren't so risky because of high ratings.
I don't think we yet know the answer. I think it will be very mixed, with some life insurance companies and pensions being heavily exposed and others not very.
I always am amused by Americans bitching about the "toxic toys" that the Chinese have exported to us, forgetting of course the vastly incredibly larger amount of toxic financial material we have exported around the world. For toxic exports, the US just can't be beat.
lama: no children but some Deutsche Bank stock. I know where you are coming from, and it's still no excuse. The US is #1 exporter of toxic material. And it does vast damage. Face it. Americans always want to think they are better than anybody else. They aren't.
...will locate the combined national consumer mortgage headquarters in Calabasas, California, once it completes the purchase of Countrywide Financial Corp.
The combined company expects to modify or workout at least $40 billion in troubled mortgage loans in the next two years and estimates these efforts will keep at least 265,000 customers in their homes.
..combined company will continue...policy of permitting tenants to continue living in properties subject to foreclosure for 60 days after the completion of foreclosure proceedings. If the tenant voluntarily leaves the property within 30 days of the completion of foreclosure proceedings, they will receive a $2,000 cash-for-keys payment to help defray moving expenses.
".combined company will continue...policy of permitting tenants to continue living in properties subject to foreclosure for 60 days after the completion of foreclosure proceedings. If the tenant voluntarily leaves the property within 30 days of the completion of foreclosure proceedings, they will receive a $2,000 cash-for-keys payment to help defray moving expenses."
I'll say it again;
I don't know why people don't just lease their house to the neighbor across the street for $500 a month and rent their neighbor's house for $500, and everyone just stop paying the banks.
It would be a pain in the ass to move across the street but whole developments could live for a long time like this before the system worked through.
Chris,
You're applying a sweeping (and correct, IMO) judgement against the most personal matter that exists. It doesn't work that way.
I think US corporations should be sued by anyone they damage, domestic and foreign persons. On the other hand, don't screw with my kid.
I don't mean to sound like a smart ass, but you can't know exactly what I mean until you have your own booger nosed crapping machine to love.
rich-I am interested in your life insurance company research. Can you give me any possible carriers that you think are exposed? Most of the CIO's I've talked to at the big boys (stock companies only) have indicated that their exposure is less than 5% of general account assets.
My brother-in-law is deeply involved in Deutsche Bank's real estate business. Things could get worse for them.
There is more to the BAC press release worth noting. For example, written confirmation of mortgage policy underwriting changes including:
Non-conforming loans with terms expected to produce no greater risk of default than conforming loans.
Interest-only, fixed-rate and adjustable-rate mortgage products, subject to a 10-year minimum interest-only period that removes the possibility of short-term payment shock.
Discontinue certain nontraditional mortgages -- including so-called "option-ARM loans" -- in which payments may not cover accrued interest and cause negative amortization.
Significantly curtail some other nontraditional mortgages, such as certain "low documentation" loans.
i believe your suspicions about life insurers is correct. my IB friend turned me on to that trade last Fall when PRU was at 99. part of his work was in dealing with these guys. i scalped it down to 90 and covered. wish i hadn't as its now down to 76. i think there's more downside as well.
scav said: "Help - I'm wrestling with this particular use of the word "discount"..."
Although I didn't initiate or participate in this discussion before, I'll chime-in now.
Myself, I think that collectively investors decided that the bad news they knew of and the bad news that was likely to develop subsequently was only worth an -18% decline in the SP500.
So, the current bad news is causing stocks to trade at a discount to what their future value will ultimately be.
FDIC Enforcement Decisions and Orders (March 2008)
The Federal Deposit Insurance Corporation (FDIC) today released a list of orders of administrative enforcement actions taken against banks and individuals in March. No administrative hearings are scheduled.
The FDIC processed a total of 28 orders in March. These included eight cease-and-desist orders; seven removal and prohibition orders; eight civil money penalties; one prompt corrective action, three terminations of cease-and-desist orders; and one termination of a an 8(b) proceeding and 8(c) order.
Copies of the orders referred to above can be obtained from or inspected at the FDIC's Public Information Center, 3501 Fairfax Drive, Room E-1002, Arlington, VA (telephone 703-562-2200 or 1-877-275-3342). To view all orders online, visit the FDIC's Web page at FDIC: FDIC: Enforcement Decisions and Orders. A list of orders made public today follows.
It beats me. Must be the slick marketing stuff they have. I don't have a brochure with smiling people at a graduation ceremony. I just have these boring numbers. The fund companies also close out the worst funds so they don't have them cluttering up the performance averages.
BTW, if you really want to piss off an analyst, talk about The Statement of Cash Flows. That's the one that tells you what's really going on.
scav said: "...So this whole discounting thing does apparently does involve anchoring to pre-conceptions about what the future will be."
Exactly. Everything looks terrible now, so we (irrationally, short-sightedly) assume it's going to stay that way. The inverse of "irrational exuberance, which also involved "anchoring," but on the bullish side.
Not me, but my experiences (esp. my mistakes) in the market are certainly worth something.
I was so completely suckered into the perma-bear way of thinking back in 2002 that I couldn't see how stocks could go up.
It's been one of the biggest regrets of my trading life that I didn't have a purely objective way of measuring the markets and the economy, but I do now.
No recession now or at any time in 2008, or in 2009, either. I don't care what Warren Buffett says.
the sad thing is that when i go to the pension i have to buy an anuity from this insurance guys. ou great i will take the necessary minimum annuity and takeout the rest in cash and put it to CD in bank. these fee sucking vampires
The cancer is spreading. I wonder how much deeper this going to get. Pretty interesting stuff!
How much is the stock up?
Aren't we seeing the term "swings to loss" a lot? Maybe a phrase of the year for 2008?
CR, don't forget those ugly foreclosure stats. Up 112% YoY - even worse than Sebastian's margin calls.
Once again, I think they'd be happier if their loss was in dollars.
The good thing is that i'm no longer receiving emails advertising 0% down low APR ARM loans.
Does anyone know which banks haven't visited the confessional yet?
I don't recall Wells Fargo announcing anything bad. Any others?
Maybe that nice Mr. Bernanke can help those poor folks by taking his ice cream cone truck down the street by the bank and give them some goodies.
How do you say "pony ranch" in German?
Has ANYONE looked at the Stansberry Research Ad at the top of CR's site this morning? Amazing!
What is going on? The headlines on Bloomberg.com are sea of bad news, the real economy is taking a big hit, inflation is up and apparnently staying up, banks are losing money head over heel...... BUT the stock markets are up and seem to see nothing but optimism . Something here is wrong! Or I am just not getting it?
We'll probably start to hear more nonsense about what inning we're in.
In little league, they usually have a ten run mercy rule. No such rule in investing though.
S&P delivers blow to CDOs
Apr 29 05:32
by Gwen Robinson
The credit ratings of the complex bonds that pool together slices of mortgage backed securities so-called structured finance CDOs, or CDOs of ABS face further pressure after changes introduced by S&P. The ratings agency has cut its assumptions about the amount of money likely to be recovered by investors in US subprime mortgage backed bonds when the individual mortgagees default on their loans.
In detailing its new recovery assumptions for structured finance CDOs Monday, S&P revealed that for any deals rated A or lower, recoveries were likely to be zero, while recoveries for AA-rated slices of such deals would be at best 5%.
As of yesterday, data compiled by Bloomberg showed the worlds biggest banks and securities firms have so far reported credit losses and writedowns of about $310 billion linked to the U.S. subprime meltdown.
Add this to the heap, boys and girls...
"BUT the stock markets are up and seem to see nothing but optimism"
Stock market discounts the future, not past. Hint?
S.
Markets are back to moderately-overbought.
Couple of more up days and you'd have a good defined-risk entry for some short positions on the indices.
The H&S in the June gold contract jumps out at me.
COUNTRYWIDE FINANCIAL CORPORATION
LOAN SERVICING SECTOR
SERVICING PORTFOLIO DELINQUENCIES
March qtr vs. December
conventional 1st liens
6.48% vs. 5.76%
prime home equity
8.29% vs. 7.32%
subprime 35.8% vs. 33.6%
total servicing portfolio
9.27% vs. 8.64%
total servicing portfolio 90 day +
4.81& vs. 3.48%
Zack:
Pls enlighten as to what is meant by H&S in the June gold contract? Not familiar with that term.
Thanks
Anthony,
on a short term basis, asset pricing (especially the stock market) is irrational.
Look at the longer term picture. The S&P 500 has returned less than 4% annually over the past decade and is still over-valued by many historical measures. How many times have you heard THAT on bubble vision?
Looking ahead to tomorrow, I see the bloomberg consensus expectation for Q1 gdp is +0.5% (annualized), and +0.7% for real personal consumption. I'm not expecting a large contraction, say -0.5%, but I'm very surprised the consensus forecast is for the US to not be in recession for in Q1. Then again, my faith in the accuracy of government statistics is falling faster than consumer confidence.
Consumer confidence worst in five years too.
homedad "How do you say "pony ranch" in German?"
Pferdehaus?
I hope that BB brings them all a bucketful of Pferdeapfeln.
http://de.wikipedia.org/wiki/Pferdeapfel
This gloom and doom is unwarranted. The Law of News Neutrality requires that the sum of negative and positive news over a non-negligible time span is zero. Thus, all the negative news of late will have to be balanced by positive news in the (near?) future. Things will get better, markets will skyrocket, bubbles will form...
Turbo
how are your mkts doing?
BZB,I can haz pony pictures in my paper?Pink ones?
bzb? you're bzbrilliant.
Credit markets in general are doing a little better this morning. There seems to be a short-term correlation between the US dollar doing a little better, and the funding/credit situation improving a bit.
bzb,
Bubbles are forming. Just look at commodities & CPI inflation - D'oh!
"Stock market discounts the future, not past."
Sebastian, then why was the Dow over 14000 last summer?
Answer: Because the stock market's discounts are ignorant.
Conclusion: Sebastian is an idiot!
Stock market discounts the future, not past. Hint?
The stock market never discounted the past.
Basically starting in late 2006 every negative economic data point was systematically "pumped" out of the market.
It was really amusing to watch - market would go down 150 points on some surprisingly bad economy news and then the market would get geared higher until it was back where it started by the end of the day.
Over and over again.
Relatively little bad news has been discounted in the broad markets.
Look at the longer term picture. The S&P 500 has returned less than 4% annually over the past decade and is still over-valued by many historical measures. How many times have you heard THAT on bubble vision?
As Barbara Kingsolver said when she was asked how many dates she went on in high school -- "Approximately zero."
Help - I'm wrestling with this particular use of the word "discount". Does Seb mean the Stock Market is selling our future for cheap (but the past is full price)?
MAS this morning, things are worse...
They are home Depot's biggest supplier
"Business conditions remain difficult in a number of the Company's markets. The Company continues to estimate that 2008 housing starts will decline an additional 25 to 33 percent, to a range of 900,000 to one million units, compared to 1.3 million units in 2007. (In the first quarter of 2008, housing starts declined 30 percent).
While the Company's view on housing starts for 2008 has not changed since it developed its earnings guidance earlier this year, the Company currently believes that consumer spending for home improvement products and demand for certain of the Company's International products will be weaker than originally anticipated. As a result, the Company currently estimates that its 2008 percentage sales decline will be low-double digits to mid-teens compared to 2007. The Company's previous guidance estimated that its 2008 percentage sales decline would be high-single to low- double digits.
There are many U.S. life insurance companies, large and small, that have 25-30% of their assets in CMOs. The industry average is probably around 20%.
The leverage of U.S. life insurance company capital to general account portfolio assets is probably around 8-10 to 1. You do the math. We could be looking at a significant portion of life insurance industry capital wiped out.
Life insurance companies can't replenish capital as easily as banks. Mutual companies don't even have any stock to sell. It could be the disaster under the iceberg.
I think the stock market is over-valued, but crashes are rare. My best guess is low/disappointing stock market returns (3-7%) over the next decade.
One more thing, if you agree that low returns are indeed likely, fees, trading costs, loads, taxes, etc. will be a killer.
1.5% of 10% is one thing, but 1.5% of 4.5% is brutal. Don't get me started on 2/20.
I'm actually serious - my other definition seems to be that it's ignoring the future, which also makes sense in my world but I don't think that's what Seb's Whatever-B is aiming for.
According to some of the things seb has spilt:
he's a 30-50 year old former broker, sings the song of WS, and is most likely a mutual fund/annuity wholesaler , probably for american century.
OK, seems to have something to do with the weightings, although now I have to go sit in a corner and wrestle my brain into accepting models that seem to be weighting what they at the same time seem to be predicting. I'm getting glimmers here but it will take me a little head-banging.
Rich - is that really an apples to apples comparison (CDOs and CMOs are different things)? Many CMOs are fairly vanilla.
1.5% of 10% is one thing, but 1.5% of 4.5% is brutal. Don't get me started on 2/20.
This is why people like Bill Gross love the high inflation -- it hides the killer fees behind nominal gains even if the real gains are the same.
Much easier to gouge people for 1.5% of their savings a year with high inflation, even if it's still 1.5% of their wealth a year.
Wall Street makes so much money off of peoples' inability to see inflation and inflation makes average joe poor because he doesn't know how to counteract it. The side effect is Wall Street gets rich and then exports their wealth to other countries for safe keeping.
Might as well join in on the looting. My only regret is not getting in on the racket sooner.
"Stock market discounts the future, not past. Hint?"
How many times did the market get it right in the dot com bust before they finally discounted it to the correct level? This time will be no different. Until the DOW can break 13k on volume and the S&P 1440 this nothing more then a short covering a sucker rally.
"Stock market discounts the future, not past. Hint? "
Yeah that worked for those in the Naz at 5,035...
@homedad43:
H&S = head & shoulders = dandruff.
Prototypically, a break of the neckline implies a move equal to the distance between the head and the neckline.
Barchart.com - Equities and Mutual Funds Symbol Lookup
A break of that neckline would imply a price target for gold around 750.
I think the stock market is over-valued, but crashes are rare. My best guess is low/disappointing stock market returns (3-7%) over the next decade.
Angry Saver, I didn't know you were such an optimist.
Looks like we won't prop up the market today so as to justify tomorrow's rate cut.
works every time.
"Wall Street makes so much money off of peoples' inability to see inflation and inflation makes average joe poor because he doesn't know how to counteract it."
I've done some mutual fund accounting. They make alot more money off people's inability to see portfolio losses and exorbitant fees by convincing avg joe that the have a crystal ball.
I've done some mutual fund accounting. They make alot more money off people's inability to see portfolio losses and exorbitant fees by convincing avg joe that the have a crystal ball.
The whole premise of the mutual fund industry (except maybe index funds) is absurd:
"I'll go out and find 10 dollar bills for you if you give me a dollar of each one."
How do people fall for this stuff?
AC: here's something posted on another blog about Pimco & Bill Gross:
I looked at Pimco's Total Return Fund a while back. The fund is enormous and has various classes (mainly of fees). I believe the fund is the worlds largest. Per Finra, one class of the fund (PTTAX) has about 13B in assets, a 3.75% load and a .90% annual expense ratio.
Now Gross is a good manager, but those fees are tough to overcome. Worse still, the fund has a dismal tax efficiency so I won't go near it.
The annual returns for PTTAX (after load, expenses & yearly federal taxes):
1yr: 3.94% (that 1st year load is a killer)
3yr: 2.97%
5yr: 2.71%
10yr: 3.78%
For comparison, Vanguard's Intermediate Term Treasury Fund's annual returns (after taxes & fees):
1yr: 12.4%
3yr: 5.59%
5yr: 3.34%
10yr: 4.46%
Both funds have durations of about 5 years. On an after tax & fee basis, I'm not sure sure the worlds biggest bond fund can outpace inflation let alone a safe investment like treasuries.
you forgot the best part ac:
give us $100 and we'll go find $10
Economy might be in bas shape. But people already prepared for a bull stock market before the recession happened. It is a little bit scary.
i think there are some people here who have yet to read this wonderful article on Yahoo Finance.
Dont lose faith in your planner just because he keeps you invested in a down market. Ask yourself these questions first.
You people need more faith. In a faith based economy, it is better than gold.
U.S. President George W. Bush said on Tuesday the U.S. economy was facing a "tough time" because of rising food and energy prices and a weak housing market, and faulted Congress for inaction.
Bush faults Congress for inaction on economic woes
| Reuters
What a hoot.
"You people need more faith."
More people have died from faith then from all diseases known to man usually because of some middle man.
Turbo-
Bush says he expects GDP data will show 'very slow economy'
I believe this means we will have negative gdp..Good trading to ya
And Abraham said to his sons:
I'm teling you, these 'folks' who follow this jesus guy around, htey'll buy anything....seriously.
Let's sell them something, I know they'll buy it.
And the sons conversed on this thought from there father....
Father, they said, let's sell them hope! And we'll create a story, and write a book , and call it a Bible, and we'll make SOOO much money.
And so it was.
Rich - is that really an apples to apples comparison (CDOs and CMOs are different things)? Many CMOs are fairly vanilla.
ajw,
Good point. I guess the question is how well the IB underwriters were able to convince conservative institutional investors that the riskiest mortgage derivatives weren't so risky because of high ratings.
I don't think we yet know the answer. I think it will be very mixed, with some life insurance companies and pensions being heavily exposed and others not very.
S&P financial sector has has twelve 5% rallies since the onset of the credit crisis. Nice chart:
The Big Picture
I always am amused by Americans bitching about the "toxic toys" that the Chinese have exported to us, forgetting of course the vastly incredibly larger amount of toxic financial material we have exported around the world. For toxic exports, the US just can't be beat.
Chris,
Do you have any children?
GMAC Posts $589 Million Loss on Home Lending Woes (Update3) - Bloomberg.com
GMAC lost money...go figure!
EXtended?? nooneculdanode
lama: no children but some Deutsche Bank stock. I know where you are coming from, and it's still no excuse. The US is #1 exporter of toxic material. And it does vast damage. Face it. Americans always want to think they are better than anybody else. They aren't.
BAC press release:
Bank of America Details Community Development, Foreclosure Relief Goals
Bank of America | Newsroom - Press Releases
Some choice quotes:
...will locate the combined national consumer mortgage headquarters in Calabasas, California, once it completes the purchase of Countrywide Financial Corp.
The combined company expects to modify or workout at least $40 billion in troubled mortgage loans in the next two years and estimates these efforts will keep at least 265,000 customers in their homes.
..combined company will continue...policy of permitting tenants to continue living in properties subject to foreclosure for 60 days after the completion of foreclosure proceedings. If the tenant voluntarily leaves the property within 30 days of the completion of foreclosure proceedings, they will receive a $2,000 cash-for-keys payment to help defray moving expenses.
Best,
".combined company will continue...policy of permitting tenants to continue living in properties subject to foreclosure for 60 days after the completion of foreclosure proceedings. If the tenant voluntarily leaves the property within 30 days of the completion of foreclosure proceedings, they will receive a $2,000 cash-for-keys payment to help defray moving expenses."
I'll say it again;
I don't know why people don't just lease their house to the neighbor across the street for $500 a month and rent their neighbor's house for $500, and everyone just stop paying the banks.
It would be a pain in the ass to move across the street but whole developments could live for a long time like this before the system worked through.
Chris,
You're applying a sweeping (and correct, IMO) judgement against the most personal matter that exists. It doesn't work that way.
I think US corporations should be sued by anyone they damage, domestic and foreign persons. On the other hand, don't screw with my kid.
I don't mean to sound like a smart ass, but you can't know exactly what I mean until you have your own booger nosed crapping machine to love.
rich-I am interested in your life insurance company research. Can you give me any possible carriers that you think are exposed? Most of the CIO's I've talked to at the big boys (stock companies only) have indicated that their exposure is less than 5% of general account assets.
My brother-in-law is deeply involved in Deutsche Bank's real estate business. Things could get worse for them.
Our "Sebastian" imitator (or a new one) is back. The post from 04.29.08 - 10:14 am wasn't me.
Sebastia
There is more to the BAC press release worth noting. For example, written confirmation of mortgage policy underwriting changes including:
Non-conforming loans with terms expected to produce no greater risk of default than conforming loans.
Interest-only, fixed-rate and adjustable-rate mortgage products, subject to a 10-year minimum interest-only period that removes the possibility of short-term payment shock.
Discontinue certain nontraditional mortgages -- including so-called "option-ARM loans" -- in which payments may not cover accrued interest and cause negative amortization.
Significantly curtail some other nontraditional mortgages, such as certain "low documentation" loans.
Best,
Hard to argue that US toxic financial instruments don't have a net negative health affect on millions of kids...albeit indirectly.
More deceptive than lead, too.
"...booger nosed crapping machine to love."
LOL
lama:
you are such a sentimentalist. What do you call your wife?
rich
i believe your suspicions about life insurers is correct. my IB friend turned me on to that trade last Fall when PRU was at 99. part of his work was in dealing with these guys. i scalped it down to 90 and covered. wish i hadn't as its now down to 76. i think there's more downside as well.
scav said: "Help - I'm wrestling with this particular use of the word "discount"..."
Although I didn't initiate or participate in this discussion before, I'll chime-in now.
Myself, I think that collectively investors decided that the bad news they knew of and the bad news that was likely to develop subsequently was only worth an -18% decline in the SP500.
So, the current bad news is causing stocks to trade at a discount to what their future value will ultimately be.
Sebastia
clearly not possible , because in the end, were all dead.... and so are stocks, over the long term.
i thought lama was talking about a st.bernard
FDIC Enforcement Decisions and Orders (March 2008)
The Federal Deposit Insurance Corporation (FDIC) today released a list of orders of administrative enforcement actions taken against banks and individuals in March. No administrative hearings are scheduled.
The FDIC processed a total of 28 orders in March. These included eight cease-and-desist orders; seven removal and prohibition orders; eight civil money penalties; one prompt corrective action, three terminations of cease-and-desist orders; and one termination of a an 8(b) proceeding and 8(c) order.
Copies of the orders referred to above can be obtained from or inspected at the FDIC's Public Information Center, 3501 Fairfax Drive, Room E-1002, Arlington, VA (telephone 703-562-2200 or 1-877-275-3342). To view all orders online, visit the FDIC's Web page at FDIC: FDIC: Enforcement Decisions and Orders
. A list of orders made public today follows.
Thanks Seb. So this whole discounting thing does apparently does involve anchoring to pre-conceptions about what the future will be.
How do people fall for this stuff?
ac | 04.29.08 - 11:05 am |
It beats me. Must be the slick marketing stuff they have. I don't have a brochure with smiling people at a graduation ceremony. I just have these boring numbers. The fund companies also close out the worst funds so they don't have them cluttering up the performance averages.
BTW, if you really want to piss off an analyst, talk about The Statement of Cash Flows. That's the one that tells you what's really going on.
scav said: "...So this whole discounting thing does apparently does involve anchoring to pre-conceptions about what the future will be."
Exactly. Everything looks terrible now, so we (irrationally, short-sightedly) assume it's going to stay that way. The inverse of "irrational exuberance, which also involved "anchoring," but on the bullish side.
S.
in response to: "How do people fall for this stuff?"
lama said: "It beats me. Must be the slick marketing stuff they have."
Bingo. There were no-load and low-load funds available back when I was a broker, but the majority of mutual funds sold had sales loads of 4%+.
Why? Because there was a nationwide salesforce out there actively selling them, along with nationwide mailing, print, and TV advertising campaigns.
Right or wrong, logical or not, that's America for you.
Sebastia
It's a Lake Wobegon Market, where all future losses are priced in, yet all gains are not.
Seb - you are priceless.
KnotRP said: "Seb - you are priceless."
Not me, but my experiences (esp. my mistakes) in the market are certainly worth something.
I was so completely suckered into the perma-bear way of thinking back in 2002 that I couldn't see how stocks could go up.
It's been one of the biggest regrets of my trading life that I didn't have a purely objective way of measuring the markets and the economy, but I do now.
No recession now or at any time in 2008, or in 2009, either. I don't care what Warren Buffett says.
S.
LOL
lama:
you are such a sentimentalist. What do you call your wife?
homedad43 | 04.29.08 - 12:16 pm | #
He probably refers to her as a kitchen cleaning clothes washer or something of that sort...........
Seb - that may still be your anchor. But yeah.
the sad thing is that when i go to the pension i have to buy an anuity from this insurance guys. ou great i will take the necessary minimum annuity and takeout the rest in cash and put it to CD in bank. these fee sucking vampires
ok sry, i am just again in my depressed state
my pension is anyway 37 years away, at least for now xD