don't miss this:On Aug. 10, 2005, when Greenspan was chairman, 94 percent of the Fed's $24 billion in outstanding repurchase agreements with Wall Street were in U.S. Treasury notes. On Aug. 10, 2008, only 14 percent were in Treasuries, with the rest in mortgage bonds and agency securities, according to Wrightson ICAP LLC in Jersey City, New Jersey.
Jus me, there is a point at which all the "toxic waste" the Fed has on it's books rolls over, but they have already said the window will remain open. So the question becomes, how much more room for "accommodation" do they have left ?
Dear Wells Fargo,
I was sorrowed to learn of your recent troubles. We here at the Dawg Pound understand you are wholesaling some of your assets (loans) for quick cash. No doubt our MBS 26 years remaining below 5% fixed 25% LTV is among the more marketable. Suggestion; how much do you think it's worth? We can pay cash for the right deal. If you prefer we can agree to change the terms to reflect a substantially lower NPV carrying a much higher (deductible of course) interest rate. Get back to us soon, free up all that dead equity in your loan vault and get the bonuses you deserve. Time to make your portfolio work for you! Hurry, limited time offer, terms and conditions may change. Subject to lender proving their financial ability to participate.
JimPortlandOR writes:
Reworked 1960's: 'Where has all the money gone?
Longtime passing'
Jim,
I pro'lly should appologize for posting this for the 3rd time, but I'm rather fond of it:
One score and seven years ago [ that's 27 years ago for the math challenged ] our fathers brought forth on this continent, a new means of financing, conceived in profitability, and dedicated to the proposition that everyone will make money and the only question was how much.
Now we are engaged in a great civil war, testing whether that means of financing, or any bubble so conceived and so dedicated, can long endure. We are met on a great battle-field of that war.
{hint: that's when Reagan was elected and shortly therafter our dollar was moved off the gold standard}
how much more room for "accommodation" do they have left ?
The federal governments total liabilities, Walker explained, translates into a de facto mortgage of about $455,000 for every American household and theres no house to back that mortgage.
It's almost game over already, what do they have to loose.
OK, as nonfinancial type who has served on the board of a small community bank, if memory serves, aren't banks constantly rolling over laddered maturities? I don't think "refinancing" is the appropriate term is it? Without context comparing previous bank "borrowings", other than restating the obvious (recapitalization needs) I can't see that this is exactly newsworthy. What am I missing.
sparks: Ronnie did LOTS of bad stuff, but Tricky Dick is the culprit on the gold standard:
"The Bretton Woods system ended on August 15, 1971, when President Richard Nixon ended trading of gold at the fixed price of $35/ounce. At that point for the first time in history, formal links between the major world currencies and real commodities were severed". The gold standard has not been used in any major economy since that time. link
I'm not SURE fiat money is really THE problem - as opposed to the lieing, cheating, money-grubbing financial institutions and the GOP government that they own.
OK, as nonfinancial type who has served on the board of a small community bank,
No offense to you personally, but that is a great example of the problem. A board member does not understand the business well enough to see that rising financing costs might be a problem?
Ho boy. There needs to be a BIG shakeout.
i have a realy stupid question for you
What is the differnece between higher costs for borrowing money and or having your credit rating been lowered?
in the end you pay more for less right?
Jim Portland wrote: "I'm not SURE fiat money is really THE problem - as opposed to the lieing, cheating, money-grubbing financial institutions and the GOP government that they own."
All of which was engendered by the fiat money system. Whenever a system is inherently corrupt, corruption will be the most likely outcome. Fruit of the poison vine and all that.
"Rising financing costs" in the article is attributed to "increased borrowings" of maturing investments and then to recapitalization costs, which aren't necessarily the same thing, unless I'm mistaken.
ok more blunt
are this the first sign's that the USA could loose its AAA rating or are financials and banks seperated from that issue (AAA).
i mean when the taxpayer gets this bill there wont be much left for consumtion right.
"The real question is: what is the likely increase in borrowing costs? 50 bp? 100 bp? 200 bp?!"
That's the obvious implication of determining what point the author of the article is attempting to make. What's new about banks needing to recapitalize. That story has been and will continue to be written for the foreseeable future.
To quantify the "increased cost of borrowing" would then require an understanding how maturing present treasuries and commercial paper would be more expensive in the absence of appreciable changes in the overall environment of interest rates, unless the institution's credit risk has signficantly declined.
The Federal Reserve needs to act quickly and aggressively to bring this move toward more rational pricing of credit to an end.
People might stop throwing away their money on frivolous and unproductive investments and those engaged in pointless or outright destructive enterprises might actually lose their jobs!
I've posted negative comments long enough, and, while I think they are well justified, I want to make two points.
First, it is my hope that only very very smart professional traders are betting on where the market is now and how to profit from it. Or, put another way, it is my hope that if you are not one of "them" you are holding only some form of cash.
Second, it is the purpose of this exercise, not to bash - or demean. The purpose is to assess the damage that has been done with a view toward identifying reasonable investment opportunities.
The banks WILL roll over the debt, and it will cost them more. This will continue until certain banks become insolvent at which point they will be absorbed by others. This will happen many times as it did in Japan.
More media hype around the finanical crisis. Goldman is the latest target, along with the perennial GSEs. Put on your seat belts again and enjoy the roller coaster ride in the next chapter of the thriller/horror story that is the Financial Crisis. For your safety another government bailout maybe on the way, thanks once again to the ever suffering American tax payer. Of course the investment banks and wall street vultures (i.e. hedge funds) will continue to make money shorting the shares of these financial companies as they go down, and also when they have their obligatory spike in a couple of days.
"We have a subprime financial system, not a subprime mortgage market."
And the danger is that US treasuries will ultimately be perceived as subprime debt.
This is a very real danger if the US govt starts taking on the credit risk of deadbeat homeowners and deadbeat Wall Street firms with influential lobbyists.
If US public debt gets painted with the subprime brush all hell is going to break loose.
Borrowing to pay for a war, or two, might downgrade treasuries eventually. We've been living on borrowed time/money since Bush took over. Eventually, the house of cards falls down--we're screwed.
The reason the rates for rolling over these loans matters is many banks borrowed short and then lent long. The recent strong slope to the yield curve has helped those banks.
When banks borrow short and lend short, their primary concern is less business, rather than having profitable accounts turn unprofitable.
Banks who have lots of fixed rate mortgages which they didn't sell off, borrowed short to lend long, have a high default rate on the portfolio, and are located in CA, FL, NV, MI, or OH could have some big drops in profit.
AC,
Your point is well taken, but needs context. There is a reasonably well balanced assessment from an economist I admire. Unfortunately, their site does not post easily. I suggest it is worth your time.
it is hard to make sense out of those $xbn per month numbers without seeing a graph or something (or at least knowing total outstanding residential debt?)
From Aug to Dec, the big banks need to roll over a total of $188B. The other alternative, not discussed, is to allow their loans to run off and contract their balance sheets. This option will further contract credit, and drive borrowing rates higher still.
"The other alternative, not discussed, is to allow their loans to run off and contract their balance sheets. This option will further contract credit, and drive borrowing rates higher still."
Thanks for this. My naivete is based in my past experience learning the basics of banking business in a different time. I still can't quite fully comprehend that the banking business model I came to know is obsolete. We made (what was then considered) a lot of money back in the day. Hard to believe that banks are faced with the Hobbesian choice of run off mode or losing money.
Ben S. Bernanke is still trying to define which financial institutions it's safe to let fail. The longer it takes him to decide, the tougher the decision becomes.
In the year since credit markets seized up, the 54-year- old Federal Reserve chairman has repeatedly expanded the central bank's protective role, turning its balance sheet into a parking lot for Wall Street's hard-to-finance bonds and offering loans through its discount window to investment banks and mortgage firms Fannie Mae and Freddie Mac.
The lack of clearly defined limits may put the Fed's independence at risk as Congress discovers that its $900 billion portfolio can be used for emergency bailouts that might otherwise require politically sensitive appropriations and taxes.
There is some hard thinking that needs to be done,'' Philadelphia Federal Reserve Bank President Charles Plosser said in an interview last week.The Fed has a terrific reputation as a credible institution. We have to be cautious not to undertake things that put that credibility at risk.''
"People might stop throwing away their money on frivolous and unproductive investments and those engaged in pointless or outright destructive enterprises might actually lose their jobs!"
The return of the eight percent CD would be a revolutionary act that would change radically where people put their money -- and a lot of other things. Interesting to note that it might not happen because the kingpins of finance decree it, but just because it has to. In the end, no one's in control.
"Maybe a naive question, but why are the borrowing costs going up for the banks if they can borrow from the Fed at ~2%?"
That's a good question. I wonder if all the sludge they can pledge at the fed is already there and what remains is so nasty even the fed won't accept it.
Home Depot Inc., whose shares have risen 27 percent in New York trading since July 15, may disappoint investors tomorrow by saying profit this year will fall more than it forecast three months ago.
The world's largest home-improvement retailer is facing the deepest housing slump since the Great Depression, which is taking its toll on sales of power saws and drywall. Home Depot may issue the new forecast when it reports second-quarter profit tomorrow, according to four analysts surveyed by Bloomberg News.
American Banker (no link)
A Darwinian Tale in California: Strong Prey on Faltering
"Downey's report Friday that depositors pulled funds this summer amplified an industry shift: Customers are fleeing weakened banks in favor of those viewed as safe havens..."
I dunno, both methods of accessing the article work on my system. Point is, AC's argument is addressed in the second paragraph. The balance of the piece provides context.
Repackaging synthetic crap into crap that is re-marketed as crap that has value, is crap! Cash is king, because investors do not trust the future value of crap, and rightfully so, because obviously the last crap that was sold, is worth crap.
You know what else pisses me off, do yah, huh ... punk, the crap related to this story, i.e, when Hershey decided to move to mexico, I thought that was crap, and now that they wanna raise the cost of a mexican pinata sugar to offset losses in Bushland, well, that seems like more crap! They cut out American jobs, move to mexico and now raise the price? Do you think people will support that crap?
Re: After the market closed on Friday, the Hershey, Pa.-based company said it will raise prices by an average of 11 percent, due to rising commodity costs. Hershey also lowered its earnings expectations for 2008 and 2009.
Citigroup analyst David Driscoll on Friday downgraded the company to "Hold" from "Buy" in a note to investors.
He said the price increases are a "good sign" that Hershey is protecting its margin structure. However, he lowered his earnings estimates and said the company still has issues it needs to work on.
"Last week, financial groups including Citigroup, JPMorgan Chase and American International Group borrowed almost $20bn in new long-term debt, paying some of the highest interest rates ever..."
On its face, this comment doesn't make sense to me. Market interest rates were much, much higher in the 80's - short rates were in the high-teens. Even with tighter spreads then (and I'm not sure they were) banks borrowing costs had to be much higher than they are now.
Secondly, the money banks borrow thru the debt markets doesn't flow directly through to the borrower. It's the cost of deposits that mostly drives lending rates.
The trouble with Lehman, the anticipated issues with Goldman, JPM, Citi etc, will likely have lessened sting as the potential stories are giving a long lead on rumors as well as the means of trickle-out-news desensitizing things when actual headlines hit. (Oh, yeah, Fannie and Freddie, too.) Analysts are seeing trouble as "many of them believe that Goldman could suffer from a global slump in equity markets which has taken many key indexes around the globe down by 20% or more." (WSJ) The word "bailout" is getting an uptick in play, with a Bear style rescue chattered about.
The reversal in stocks is helping fuel the move better, but event free, thin trade and lofty price levels will crimp any rallies. The curve has been slanted steeper with the 2-10-yr yield spread running 146.5 after having sent most of the session knocking around 145.5. Bond Ticker - Bonds Center - Yahoo! Finance
The cost to insure the subordinated debt of Fannie Mae and Freddie Mac hit new highs on Monday, a day after Barron's reported an increasing likelihood the U.S. Treasury may essentially take over the mortgage finance companies.
Is GS in danger. I remember they were long CRE debt. I wonder if they will be able to excape this mess altogether or if they day or reckoning is coming....
"The momentum behind the move came from the financials index," fixed-income research service CreditSights said in a report on Saturday. Yields on financial companies' bonds rose by 9 basis points last week to 370 basis points over Treasuries, even higher than after Bear Stearns' collapse.
Persistently high borrowing costs for banks could further curb their ability to lend, worsen a cash crunch at the sickest companies and extend an economic slump.
"We're still waiting to see some numbers that show these banks are stabilizing and recovering," said Dan Sheppard, director at Deutsche Bank Private Wealth Management.
Adding to concerns, banks have been charged with misleading investors about the risk of auction-rate securities and are having to buy back billions of dollars of the debt and pay fines to settle the charges.
"That takes up room on the balance sheet," said Deutsche Bank's Sheppard. "So far, it's only been for retail (small investor) accounts, but can the others be far behind?"
One year into the credit crisis, the turmoil may be only half over at best and banks may face more write-downs from soured mortgage debt and problems at bond insurers, Standard & Poor's said last week. Debt sales push U.S. corporate bond risk to new highs
| Reuters
"Monday morning, a spokeswoman cited Treasury Secretary Henry Paulson as saying the Treasury has no plans to use the authority it's been given. The spokeswoman also said the Treasury wouldn't comment on speculation."
Paulson is sounding more and more like that CEO of Bears that was full of crap (the week before bear crashed):
Citing an insider in the Bush administration, newsweekly Barron's reported Aug. 16 that the Treasury and the companies' new regulator are urging both Fannie and Freddie to raise more capital.
Government officials don't expect the agencies to succeed, however, and only a capital raise of $10 billion or more by each would have any credibility, Barron's reported. Read Barron's article.
I'm listening. I'm listening and learning. The market is a funny place, and sometimes, it's hard to get your bearings. Listen to your own comments. Are you addressing the position current counter trend rally, or undercutting the most recent lows?
Methinks it would be very very very interesting to know who holds what position... as I read their comments.
the link squeezed posted should be a posting IMNSHO opinion - that is a tectonic ruh-roh in the making - fish flopping the beach where did the water go...?
Is GS in danger. I remember they were long CRE debt. I wonder if they will be able to excape this mess altogether or if they day or reckoning is coming....
There is no way to know. Personally, I don't want to invest in a black box. Also, consider that if Goldman's level 2 & 3 assets fall in value by < 7%, Goldman's equity is wiped out.
Absent the fed and accounting forebearance, all the IB's would be insolvent now.
High leverage is a killer. Except when you have a central bank put.
Weve seen year-over-year consumer prices (CPI) and producer prices (PPI) -- including food and energy -- soar of late. But Treasury yields have remained stubbornly low. I may not agree with the markets assessment of where Treasury yields sit, but as they say, The reaction to the news is more important than the news itself.
Year-over-year CPI sits at 5.6% while the 10-year Treasury sits at 3.84%, for a real return of minus1.76%, the lowest its been since the late 1970s. Year-over-PPI sits at 9.2%, producing a real return of minus 5.36% - also a multi-decade low.
This author is on crack ... the 10 year has not been this low in almost 40 years!
A bit of context is helpful, I think. JPM published a research note asserting that $660 bln in corporate debt is due for refinancing in the next 12 months. So the big refinancing of bank debt comes with a background of big corporate financing. And weak performance, let's not forget. And those figures don't include roll-overs of ABS and other financial exotica. A big chunk of the US economy is going to be hunting extraordinary amounts of financing in the next year or so, with lenders showing some reluctance.
Fired our guns and the British kept a'comin'
There wasn't nigh as many as there was a while ago
We fired once more and they began to runnin'
On down the Mississippi to the Gulf of Mexico
"Monday morning, a spokeswoman cited Treasury Secretary Henry Paulson as saying the Treasury has no plans to use the authority it's been given. The spokeswoman also said the Treasury wouldn't comment on speculation."
Note to spokesman: If your second sentence contradicts your first, you will achieve an effect opposite to the one you intend.
That idea from, "No Credit for Financials, Part 1" is not bad:
ut there certainly must be a reason why Treasury yields remain stubbornly low. In the graph above, note that the red line (10-year minus CPI) tends to act inversely to the level of CPI itself. Perhaps the markets telling us that CPI has peaked and is about to reverse course - and even turn negative.
Perhaps the aversion to credit is forcing more and more money into Treasuries. Even more likely, as foreigners recycle our deficit in our Treasury bills and notes (they now own nearly 58% or all marketable Treasuries), one can make the case that supply is shrinking.
Considering that foreigners are slowing their purchasing of corporate bonds after getting killed by them in the last year or so, one can see why Treasury yields remain stubbornly low. Im not the type to argue with the market and short Treasuries just because they appear expensive. Rather, I respect the price action.
Context is great so I will post this for a second time:
There is a reasonably well balanced assessment from an economist I admire. Unfortunately, their site does not post easily. I suggest it is worth your time.
crispy&cole,
Yeah, and she has never mentioned former FDIC Chairman Donald Powell's role and never will. Powell has also been silent not that anything he said would be worthy of printing.
She was at the Treasury and stated it was out of their jurisdiction...what a joke. So they can get involved now, but they could do nothing then? Maybe she was too busy setting up her AOL email account
Consider the Government National Mortgage Association, Ginnie Mae, born in 1968, carrying the full faith and credit of the U.S. Treasury, guarantor of MBS holding FHA and VA loans. Outstanding Ginnie MBS are just short of a half-trillion dollars, growing $27 billion per month now, triple last year's rate as the FHA is one of the last games in town. Ginnie owns no loans and does not borrow..
Finance stocks getting it in the solar plexus again: DB, C, AIG, etc. dropping like rocks. These momentary upticks in such stocks are only opportunities to get out. Per Roubini they still have a long way to go DOWNward.
But what about the outlook for U.S. bonds, especially as yields have edged up since the recent lows of 3.314% (March 17) and 4.165% (March 20) for the 10-year and 30-year Treasury Note, respectively?
The graph below shows the long-term movement of the yield on the US 10-year Treasury Note, indicating that long-dated US bonds have experienced a multi-year bull market and are trading at levels last seen more than 40 years ago as far as nominal yields are concerned and 28 years ago in real terms. Thinking of which, the only investors who first-hand experienced the last major bear market in bonds (from 1971 to 1980) are now all on the wrong side of 50!
OT for our Kim Novak elderly fans:
New York Times
Giving Kim Novak Her Due
"Novak was the top box office star three years running in the 50s. Still, she is not usually mentioned in the same breath with the other major actresses of the period Taylor, Marilyn Monroe, Grace Kelly, Ava Gardner. She was not earthy like Gardner or icy like Kelly or Rubensesque like Monroe or raunchy like Jane Russell or perky like Doris Day. She was something that has gone out of fashion and even become suspect in an era of feminist strictures: she was the object of a voyeuristic male gaze." Giving Kim Novak Her Due - Opinionator Blog - NYTimes.com
Sheila Bair was on Bloomberg this weekend and she implied the fed was asleep during the run up and is to blame for this mess
Well I guess I'd have to agree with that, except I don't think they were asleep. I think they were actively ignoring what was going on for political expediency.
Re: yields have edged up since the recent lows of 3.314% (March 17) and 4.165% (March 20) for the 10-year and 30-year Treasury Note, respectively?
Re: Mr Bernanke said: "... on March 13, Bear Stearns advised the Federal Reserve and other government agencies that its liquidity position had significantly deteriorated and that it would have to file for bankruptcy the next day unless alternative sources of funds became available."
The Fed chairman said that the central bank was forced to step in because the US financial system is "extremely complex and interconnected", and the collapse of Bear Stearns would have led to a "chaotic unwinding of positions in those markets are could have severely shaken confidence".
Anyone see yields going down, just as they did before Bear antitrust collusion?
The U.S. Treasury repeated on Monday that it has no plans to use its new authority to backstop mortgage finance giants Fannie Mae and Freddie Mac by providing them with equity capital or new loans.
The Treasury might as well kiss the stockholders of Fanny and Freddy goodbye and be done with it. Keep the money for the bondholders who are foreign and could really do us damage if they got mad.
FFDIC,
Given your market views, I'm very impressed by your sense of humor. I've listened to your post: YouTube
- Broadcast Yourself.? v=x...feature=related
Misean,
I've was hoping to see you again. "Pacifist" was the wrong term yesterday... and we don't need to get into it. I should have used the term "isolationist" in re: pre WWII. Totally different connotation. My apologies.
We aren't going to comment on speculation,'' said a Treasury spokeswoman, Jennifer Zuccarelli.As the Secretary has said, we have no plans to use these authorities.''
Until they need to use them. Then they'll plan for it. Literalism can be so fun. That's like the kid who pushes his brother over the edge of the stairs, and when his furious mother says, "did you push your brother down the stairs?!", replies, "I only pushed him down the first one; he fell the rest all on his own."
No Limit to Greenspan's Once-In-A-Century Events: Caroline Baum
Greenspan's ability to identify asset bubbles -- by his own admission, impossible when he was at the Fed -- improved markedly in the last two years. Everywhere you turned he was identifying a housing bubble, handicapping recession odds, spouting the wisdom gleaned from half a century of following the U.S. economy.
He's like the forensic pathologist brought in as an expert on how to fix things when in fact he played a large role in causing the problems,'' said Bill Fleckenstein, president of Fleckenstein Capital in Seattle, and author ofGreenspan's Bubbles.''
Conflict of Interest
Last month, Greenspan showed up on CNBC with Maria Bartiromo and Paul McCulley, managing director at Pacific Investment Management Co. in Newport Beach, California. Pimco happens to be one of Greenspan's three main consulting clients, a relationship that was never disclosed to the audience.
It was positively quaint to see Greenspan and McCulley talking shop -- discussing the likelihood of U.S. recession, slowing global growth and concerns about solvency -- for the benefit of bond investors, er, the viewing audience. All that was missing was a phone number on the bottom of the screen: Call 1- 800-4PIMCO.
And yes, the solvency crisis is a ``once-in-a-century phenomenon,'' according to Greenspan.
Last week, Greenspan showed up on the front page of the Wall Street Journal -- just like old times -- with a forecast for a bottom in housing.
``Home prices in the U.S. are likely to start to stabilize or touch bottom sometime in the first half of 2009,'' Greenspan told the Journal.
He's like the forensic pathologist brought in as an expert on how to fix things when in fact he played a large role in causing the problems,'' said Bill Fleckenstein, president of Fleckenstein Capital in Seattle, and author ofGreenspan's Bubbles.''
Sorry that light fixture I installed burned down your house.
I'll do all the wiring for your new house free of charge to make it up to you.
sparks, that is good commentary. the money quote is in the august link:
"Not surprisingly, the manifestation of this tightening in lending terms is a slowdown in the amount of credit being created by the banking system. To wit, in the three months ended June, total bank credit loans granted by and securities held by commercial banks contracted at an annual rate of 3.72% -- the largest contraction since the 3 months ended November 1948 (see Chart 11).
There are a lot of terrific charts in their analysis, but it's hard to see how their projections are so mild when you look at their analysis.
Maybe they don't want to be brandished with the 'dr. doom' label?
He's like the forensic pathologist brought in as an expert on how to fix things when in fact he played a large role in causing the problems,'' said Bill Fleckenstein, president of Fleckenstein Capital in Seattle, and author ofGreenspan's Bubbles.''
Sorry that light fixture I installed burned down your house.
I'll do all the wiring for your new house free of charge to make it up to you.
.... of course, you will have o pay for the parts.... and incidentally, I'll be long gone.
Mel writes:
Borrowing to pay for a war, or two, might downgrade treasuries eventually. We've been living on borrowed time/money since Bush took over. Eventually, the house of cards falls down--we're screwed.
This would be a good time to go back and read or reread Paul Kennedy's "Rise and Fall of the Great Powers." This book was published just before the fall of the Soviet Union, which happened a lot faster than Kennedy had predicted. At the time, I can recall that the Soviet Union's collapse led some pundits to dismiss Kennedy's book as disproved, since it seemed obvious (to those ignorant of history) that the game of history was over and the United States was the winner.
Last month, Greenspan showed up on CNBC with Maria Bartiromo and Paul McCulley, managing director at Pacific Investment Management Co. in Newport Beach, California. Pimco happens to be one of Greenspan's three main consulting clients, a relationship that was never disclosed to the audience.
I guess almost single handedly destroying the US economy isn't enough. Now he has to provide consulting services to Wall Street in order to help them more effectively game the system and rob the consumers and the tax system in the most efficient way possible.
STRIPS components can be reassembled into a fully constituted security in the commercial book-entry system. To reconstitute a security, a financial institution or government securities broker or dealer must obtain the appropriate principal component and all unmatured interest components. The principal and interest components must be in the appropriate minimum or multiple amounts for a security to be reconstituted.
If you have questions about buying, redeeming, or selling STRIPS, contact your financial institution, broker, dealer, or investment advisor. See also 31 CFR 356.31 for rules relating to stripping and reconstituting Treasury securities. If you are from a financial institution, broker, or dealer and have specific questions on the process for stripping or reconstituting Treasury securities, call the Federal Reserve Bank of New York at 201-531-3894.
Example: A customer of broker M sells a security to a customer of financial institution J.
Broker M delivers the securities to Depository institution A by sending a message wire instructing Depository A's computer to deliver the securities to Financial Institution J.
In turn, Depository A's computer sends the message to the Federal Reserve's book-entry computer, which debits Depository A for the security and credits Depository B's account for the security.
Depository B's computer sends a message wire to Financial Institution J's computer to inform it of the electronic receipt of the security.
Financial Institution J applies the security to the buyer's account.
In turn, the Federal Reserve Bank will debit Depository B's reserve (money) account at the Fed and credit Depository Bank A's reserve account for the same amount to complete the transaction.
The money debits and credits will follow a similar transaction path as the securities until they reach the buyer's and seller's accounts.
Southland home sales post annual gain as prices drop again [31.1%!]
August 18, 2008
La Jolla, CA---The number of Southern California homes sold last month edged up to its highest level in more than a year as bargain hunters swept up foreclosure properties in affordable neighborhoods, a real estate information service reported.
A total of 20,329 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 16.7 percent from 17,424 the previous month and up 13.8 percent from 17,867 for July a year ago, according to San Diego-based MDA DataQuick.
Last month's sales count was the highest since 21,856 homes were sold in March 2007, though it still fell 23 percent short of the average July sales total since 1988, when MDA DataQuick's statistics begin. From last September through June, sales for each month were at an all-time low for that particular calendar month, with the exception of April which was the next lowest. Last month's sales total was the first since September 2005 to rise above the year-ago level.
"What we're looking at is a fire sale of properties in newer affordable neighborhoods that were bought or refinanced near the price peak with lousy mortgages. What we're still not seeing is this level of distress spreading to more expensive or established neighborhoods," said John Walsh, MDA DataQuick president.
The median price paid for a Southland home was $348,000 last month, down 2.0 percent from $355,000 in June and down 31.1 percent from $505,000 for July 2007. That peak of $505,000 was reached in March, April, May and July of last year.
WTF about : MORGAN STANLEY INSTITUTIONAL FUND TRUST
August 12, 2008
Derivatives are financial instruments whose value and performance are based on the value and performance of another security or financial instrument. Derivatives sometimes offer the most economical way of pursuing an investment strategy, limiting risks or enhancing returns, although there is no guarantee of success. Hedging strategies or instruments may not be available or practical in all circumstances. Derivative instruments may be publicly traded or privately negotiated. Derivatives used by the Adviser include futures contracts, options contracts, forward contracts, swaps, CMOs, stripped mortgage-backed securities (SMBS) and structured notes.
If you're out there....NO Ferrari California (that I saw).
As a spectator (and sometimes participant) it was painfully obvious that the credit "issues" are affecting even the high-end spenders at Monterey. Plenty of vacancies at most hotels (they have inflated rates and 4 night minimums so that speaks to that instead of the "walk-up" visitor's).
Hit rates (actual sold cars) on Friday evening's auctions in downtown Monterey were pathetic. At one point in an hour's time only two cars sold-this was at prime time about 8pm.
And one of them was a side deal that didn't get the gavel. Sometimes the wrong cars and the wrong place can apply to explain it however I don't think that was the case here. The mix was pretty good and it wasn't the "parade of muscle cars" found at the overdone BJ auction in Phoenix (january)
I also can report that the yen-carry trade is alive and well based on the numerous Japanese tourist's hanging around their usual haunts in Pebble and Carmel.
No problem with dinner reservations at any place that we went. That's not occurred in over 20 years (I've been going to this for 30 of it's 35 year's of existence).
Can't speak for Sunday's action as I'd left by then. The money is made on Saturday's in any case
The featured marque (at Laguna Seca) was Alfa Romeo.....usually the factory will bring out older cars to run on the track or display (cant say I saw one or any factory participation on Alfa's behalf) This is not the case at all in year's past. I hope Alfa builds the 8c but it's not coming here.
As always a fun event not to missed if you are a car person. Leave the wife at home if you go though....
I appreciate that the majority of folks here are heavily into banking and real estate; and I agree that there is great drama in those areas.
I recognized we were in real trouble a long time ago. To my mind, we have two problems. The first is what you are all seemingly focused on which is ... to borrow a word "deflation". There is a second part, at least as I see it.
That second issue is tied to the 70% {forgive the rounding up} of our GNP that is tied to retail sales. I have been watching them closely, and there is a really great drama playing out there as well.
Look at TGT. Here is a company who's shareholders cannot complain unless they bought within the last couple of years. But take a moment and look at their long term chart - it's very nice.
Now, you need to know that TGT is in the midst of buying back 20% of their stock - by my read they are about 1/4 done with that. TGT sold 1/2 of their receivables position back in March... and, no matter how you count it... they are in a very good cash position.
Nevertheless, they are obviously a retailer and they are staring a cash-strapped-being foreclosed upon consumer ... straight in the face [or at least as many faces as WMT can spare]. They report earnings tomorrow.
In the spirit of being straight up front and honest myself.... I just went short.
Mortgaged-Backed Securities also include stripped Mortgage-Backed Securities (SMBS), which are derivative multiple class Mortgage-Backed Securities. SMBS are usually structured with two different classes: one that receives substantially all of the interest payments and the other that receives substantially all of the principal payments from a pool of mortgage loans. The market value of SMBS consisting entirely of principal payments generally is unusually volatile in response to changes in interest rates. The yields on SMBS that receive all or most of the interest from mortgage loans are generally higher than prevailing market yields on other Mortgage-Backed Securities because their cash flow patterns are more volatile and there is a greater risk that the initial investment will not be fully recouped.
I'm still looking.. I need time.. please, please, this crap is killing me...
Pursuant to a claim for exemption filed with the Commodity Futures Trading Commission (CFTC) on behalf of the Portfolios, neither the Trust nor any of the individual Portfolios is deemed to be a commodity pool or commodity pool operator under the Commodity Exchange Act (CEA), and they are not subject to registration or regulation as such under the CEA. PIMCO is not deemed to be a commodity pool operator with respect to its service as investment adviser to the Portfolios.
Yes, and I'm glad you brought that up because I forgot Conjure's attribution.
With all of this refinancing talk, Conjure and I are beginning to think the financials may really be headed for half of book.
Does everyone have their helmets on?
Meanwhile, Conjure is absorbed by trivia. He is amused by the fact that Louise Brooks, the 'it-girl,' was the only person on the planet who could honestly claim she had both Charlie Chaplin and Greta Garbo.
Make no mistake about it, there is something going on that I can't account for. Forget the fact that TGT recently saw 41. It is the move up from 45 that holds my interest. There is a "force" out there that is buying this company big time. In going short, I'm betting they or it will lay off and let the numbers speak for themselves. But I could very well be wrong, and have a stop in place.
JPMorgan has launched Highbridge Statistical Market Neutral Sterling fund, which will compete directly against BlackRock's hugely successful Absolute Alpha vehicle.
The new fund is a hedged version of the existing Highbridge fund; domiciled in Luxembourg, the fund will aim to give investors a return of Libor +4 to 6pc per annum. It is designed to allow investors to protect against the effect of foreign exchange rates. http://professionaladviser.co.uk/showPage.html?page=padv_display_news&tempPageId=806681
The advisers collateral investment guidelines limit the quality and duration of collateral investment to minimize losses
The Fund also may fail to recover additional amounts (i.e., premiums) paid for securities with higher interest rates, resulting in an unexpected capital loss. Furthermore, some asset-backed securities may have additional risk because they may receive little or no collateral protection from the underlying assets, and are also subject to the risk of default described under Credit Risk. The risk of such defaults is generally higher in the case of mortgage-backed investments that include so-called sub-prime mortgages.
Re: With all of this refinancing talk, Conjure and I are beginning to think the financials may really be headed for half of book.
Repackaging crap into newly redesigned boxes for XMAS will increase the future value of this crap, right? I mean green paper is better than red and if you can put a covered bond bow on this, then WTF?
mp,
did you want me to say market force ? Did you want me to suggest that oil money has been moving the market ? Did you want me to opine, that the folks who hold oil money might be acquiring US assets as they extract our cash.
Please mp... let me in on your views.
Now don't ya'll forget about blackrock in the background trying to come up with new synthetic "solutions", i.e, looking for ways to clone fingers for the increasing holes in the dike, as they add more sandbags and look for liquidity pumps -- in this awful tsunami of corruption...
Re: BlackRock continues to explore alternative forms of leverage for
its fixed income closed-end funds. One approach includes the
development of a put feature for the ARPS, which would make them
eligible for purchase by money market funds. This objective may be
accomplished by adding the feature to the existing structure of the
ARPS or through the issuance of a new form of preferred stock that
includes a put feature. The existing ARPS issued by BlackRock
closed-end funds or other issuers as currently structured are not
eligible for purchase by money market funds. This potential solution
is dependent on identifying third parties to provide liquidity
commitments, demand for these instruments in the broader marketplace
and obtaining necessary regulatory relief to make the ARPS eligible
for purchase by money market funds.
We estimate long-term prepayment speeds using third party services, market
data and internal models. The third party services estimate prepayment speeds using models that incorporate the current yield curve, current mortgage rates, current mortgage rates of the outstanding loans, loan age, volatility and other factors.
Management reviews the prepayment speeds estimated by the third-party services and compares the results to market consensus prepayment speeds, if available, and internal prepayments models. Management also considers historical prepayment speeds and
current market conditions to validate reasonableness. Actual and anticipated prepayment experience is reviewed quarterly and effective yields are recalculated when differences arise between the previously estimated future prepayment and the amounts
actually received plus current anticipated future prepayments. If the actual and anticipated future prepayment experience differs from our prior estimate of prepayments, we are required to make an adjustment to the amortization or accretion of premiums and discounts that would have an impact on future income
Conjure is a stone-cold son of a bitch. He doesn't believe in a damned thing aside from his own precision. He cranks numbers endlessly, listens to everybody, then makes a decision. He does not day trade. He has investments and special situations.
The special situations, more often than not, take months to develop because it takes time to spring the trap.
Sometimes he's wrong but, more often than not, he's right.
Plus, he likes good-looking women, good scotch and good cigars. In my book that makes him OK, so I'm willing to tolerate his bulls&*t.
Re: When you spot a flag pattern in a downtrend it is a bearish sign as the market consolidation which forms the pattern is seen as a pause before a continuation of the original downtrend.
In that vein, I will confess a few sins. I am still a sucker for pleasant female company, don't care for scotch - beefeaters only - but I enjoy good cigars. I don't daytrade. In fact, I'm mostly cash. But mistake me not, I will take a profit from the market whenever I can.
hey, we can all agree on the cigars and let each name their own poison...oh and the first best thing!
To quote a classic of American cinematography, Paint Your Wagon: "Until you've had a good cigar and a shot of whiskey, you're missing out on the second- and third-best things in life."
Conjure is a stone-cold son of a bitch. He doesn't believe in a damned thing aside from his own precision. He cranks numbers endlessly, listens to everybody, then makes a decision. He does not day trade. He has investments and special situations.
We used to call these individual investors. Good to see one survived the 90s.
The special situations, more often than not, take months to develop because it takes time to spring the trap.
Sometimes he's wrong but, more often than not, he's right.
We used to call "months" "short term." These days what qualifies as short term? Propagation delays between Bloomberg terminal refreshes?
Plus, he likes good-looking women, good scotch and good cigars. In my book that makes him OK, so I'm willing to tolerate his bulls&*t.
If his cardiologist could get him on a dietary Dawg Bawl restriction I'd be okay with him as well. Maybe you can sneak him into the McCain/Romney Presidential Ball so we can meet?
Just as an aside, I did crunch the numbers on TGT in detail long before I entered this trade. I spent a significant amount of time studying their position amongst the box retailers. This is obviously a short term play for me.
I'm new to this site and don't know your positions or market views. We will come to know each other.
Conjure,
HEY back. If I can manage to keep my mouth shut. It would do me well to say nothing and listen - - at least until I get a much better feel for who is speaking from what market position and what they are saying. Nuf said.
There is no industry standard for market data formats. Each exchange has their proprietary format. Financial content providers such as Reuters and Bloomberg aggregate different sources of market data, normalize it, and add news or analytics. Examples of consolidated feeds are RDF (Reuters Data Feed), RWF (Reuters Wire Format), and Bloomberg Professional Services Data.
To deliver lower latency market data, both vendors have released real-time market data feeds which are less processed and have less analytics:
RDF-D (Reuters Data Feed-Direct) (The page cannot be found
Bloomberg B-PipeWith B-Pipe, Bloomberg de-couples their market data feed from their distribution platform because a Bloomberg terminal is not required for get B-Pipe. Wombat and Reuters Feed Handlers have announced support for B-Pipe.
A firm may decide to receive feeds directly from an exchange to reduce latency. The gains in transmission speed can be between 150 milliseconds to 500 milliseconds. These feeds are more complex and more expensive and the firm has to build and maintain their own ticker plant (http://www.financetech.com/featured/showArticle.jhtml?articleID=60404306).
Bloomberg's Secunda says the B-Pipe data is different from the Bloomberg Professional Service data in that the Professional Service data delivered to the terminal is highly processed. The B-Pipe data, on the other hand, is closer to what the exchange or source sends out. "We had to back out all the specialty stuff; we wanted to make sure we had the best latency in the business," Secunda says of the B-Pipe data. He explains that the purpose of B-Pipe is "to help Bloomberg terminal customers increase the value of the product to the enterprise." Low Latency: Wall Street & Technology Resource Center
Banks needing to roll over their capital - That's a feedback I hadn't considered
If banks keep borrowing at these levels, you will get a repricing of credit for the whole economy.
That should be good for a 200 point pop in the dow.
Whos addicted to credit now? Banks have turned in to the new little people. Let shake out begin.
jo6pac
The race to the bottom continues.
Jus me
don't miss this:On Aug. 10, 2005, when Greenspan was chairman, 94 percent of the Fed's $24 billion in outstanding repurchase agreements with Wall Street were in U.S. Treasury notes. On Aug. 10, 2008, only 14 percent were in Treasuries, with the rest in mortgage bonds and agency securities, according to Wrightson ICAP LLC in Jersey City, New Jersey.
Bernanke Tries to Define What Institutions Fed Could Let Fail - Bloomberg.com
Jus me, there is a point at which all the "toxic waste" the Fed has on it's books rolls over, but they have already said the window will remain open. So the question becomes, how much more room for "accommodation" do they have left ?
Reworked 1960's: 'Where has all the money gone?
Longtime passing'
Destruction of assets, you say? Deflation, could be?
Dear Wells Fargo,
I was sorrowed to learn of your recent troubles. We here at the Dawg Pound understand you are wholesaling some of your assets (loans) for quick cash. No doubt our MBS 26 years remaining below 5% fixed 25% LTV is among the more marketable. Suggestion; how much do you think it's worth? We can pay cash for the right deal. If you prefer we can agree to change the terms to reflect a substantially lower NPV carrying a much higher (deductible of course) interest rate. Get back to us soon, free up all that dead equity in your loan vault and get the bonuses you deserve. Time to make your portfolio work for you! Hurry, limited time offer, terms and conditions may change. Subject to lender proving their financial ability to participate.
Dear Mr Dawg -
We sold your loan a long time ago.
Best,
WF
JimPortlandOR writes:
Reworked 1960's: 'Where has all the money gone?
Longtime passing'
Jim,
I pro'lly should appologize for posting this for the 3rd time, but I'm rather fond of it:
One score and seven years ago [ that's 27 years ago for the math challenged ] our fathers brought forth on this continent, a new means of financing, conceived in profitability, and dedicated to the proposition that everyone will make money and the only question was how much.
Now we are engaged in a great civil war, testing whether that means of financing, or any bubble so conceived and so dedicated, can long endure. We are met on a great battle-field of that war.
{hint: that's when Reagan was elected and shortly therafter our dollar was moved off the gold standard}
how much more room for "accommodation" do they have left ?
The federal governments total liabilities, Walker explained, translates into a de facto mortgage of about $455,000 for every American household and theres no house to back that mortgage.
It's almost game over already, what do they have to loose.
I thought payment in kind was all the rage. Why all this worry?
Dear Mr Dawg -
You seem like a nice chap.
Can you loan us 20 Bil?
Best,
WF
This reminds me of my favorite Roubini quote from that "Dr.Doom" article:
"We have a subprime financial system, not a subprime mortgage market."
OK, as nonfinancial type who has served on the board of a small community bank, if memory serves, aren't banks constantly rolling over laddered maturities? I don't think "refinancing" is the appropriate term is it? Without context comparing previous bank "borrowings", other than restating the obvious (recapitalization needs) I can't see that this is exactly newsworthy. What am I missing.
outlier wrote: "What am I missing."
the increased cost and reduced availability of credit
Volker:
Yeah, I don't think this is a big deal--even now. It just means that consumer and business rates will be going up incrementally.
sparks: Ronnie did LOTS of bad stuff, but Tricky Dick is the culprit on the gold standard:
"The Bretton Woods system ended on August 15, 1971, when President Richard Nixon ended trading of gold at the fixed price of $35/ounce. At that point for the first time in history, formal links between the major world currencies and real commodities were severed". The gold standard has not been used in any major economy since that time.
link
I'm not SURE fiat money is really THE problem - as opposed to the lieing, cheating, money-grubbing financial institutions and the GOP government that they own.
Dear "nonfinancial" type who served as a board member on a small community bank:
to what are you referring as not newsworthy ? I suspect, I missed your point.
OK, as nonfinancial type who has served on the board of a small community bank,
No offense to you personally, but that is a great example of the problem. A board member does not understand the business well enough to see that rising financing costs might be a problem?
Ho boy. There needs to be a BIG shakeout.
Jim
Thanks for the correction.
i have a realy stupid question for you
What is the differnece between higher costs for borrowing money and or having your credit rating been lowered?
in the end you pay more for less right?
germansausages,
In the end you paid a price to hold a "currency" that can buy the goods available today. What you are asking about is the price you paid.
Jim Portland wrote: "I'm not SURE fiat money is really THE problem - as opposed to the lieing, cheating, money-grubbing financial institutions and the GOP government that they own."
All of which was engendered by the fiat money system. Whenever a system is inherently corrupt, corruption will be the most likely outcome. Fruit of the poison vine and all that.
"Rising financing costs" in the article is attributed to "increased borrowings" of maturing investments and then to recapitalization costs, which aren't necessarily the same thing, unless I'm mistaken.
The real question is: what is the likely increase in borrowing costs? 50 bp? 100 bp? 200 bp?!
JimPortland,
Fortunately, enough that still works out, but now it reads:
One point five and seven years ago......
kinda fitting, don't you think ?
Maybe I'll be able to get better than 2.25% on my money market account?
ok more blunt
are this the first sign's that the USA could loose its AAA rating or are financials and banks seperated from that issue (AAA).
i mean when the taxpayer gets this bill there wont be much left for consumtion right.
"The real question is: what is the likely increase in borrowing costs? 50 bp? 100 bp? 200 bp?!"
That's the obvious implication of determining what point the author of the article is attempting to make. What's new about banks needing to recapitalize. That story has been and will continue to be written for the foreseeable future.
To quantify the "increased cost of borrowing" would then require an understanding how maturing present treasuries and commercial paper would be more expensive in the absence of appreciable changes in the overall environment of interest rates, unless the institution's credit risk has signficantly declined.
The Federal Reserve needs to act quickly and aggressively to bring this move toward more rational pricing of credit to an end.
People might stop throwing away their money on frivolous and unproductive investments and those engaged in pointless or outright destructive enterprises might actually lose their jobs!
I've posted negative comments long enough, and, while I think they are well justified, I want to make two points.
First, it is my hope that only very very smart professional traders are betting on where the market is now and how to profit from it. Or, put another way, it is my hope that if you are not one of "them" you are holding only some form of cash.
Second, it is the purpose of this exercise, not to bash - or demean. The purpose is to assess the damage that has been done with a view toward identifying reasonable investment opportunities.
Currently, I don't see any.
The banks WILL roll over the debt, and it will cost them more. This will continue until certain banks become insolvent at which point they will be absorbed by others. This will happen many times as it did in Japan.
More media hype around the finanical crisis. Goldman is the latest target, along with the perennial GSEs. Put on your seat belts again and enjoy the roller coaster ride in the next chapter of the thriller/horror story that is the Financial Crisis. For your safety another government bailout maybe on the way, thanks once again to the ever suffering American tax payer. Of course the investment banks and wall street vultures (i.e. hedge funds) will continue to make money shorting the shares of these financial companies as they go down, and also when they have their obligatory spike in a couple of days.
"We have a subprime financial system, not a subprime mortgage market."
And the danger is that US treasuries will ultimately be perceived as subprime debt.
This is a very real danger if the US govt starts taking on the credit risk of deadbeat homeowners and deadbeat Wall Street firms with influential lobbyists.
If US public debt gets painted with the subprime brush all hell is going to break loose.
Borrowing to pay for a war, or two, might downgrade treasuries eventually. We've been living on borrowed time/money since Bush took over. Eventually, the house of cards falls down--we're screwed.
They need to roll over debt and the dollar is getting stronger. Good luck wit' dat. Looks like another rate cut is in the offing.
Healthy banks will absorb failing banks? There are no healthy banks.
.5% here we come.
The reason the rates for rolling over these loans matters is many banks borrowed short and then lent long. The recent strong slope to the yield curve has helped those banks.
When banks borrow short and lend short, their primary concern is less business, rather than having profitable accounts turn unprofitable.
Banks who have lots of fixed rate mortgages which they didn't sell off, borrowed short to lend long, have a high default rate on the portfolio, and are located in CA, FL, NV, MI, or OH could have some big drops in profit.
AC,
Your point is well taken, but needs context. There is a reasonably well balanced assessment from an economist I admire. Unfortunately, their site does not post easily. I suggest it is worth your time.
[1] Economic Research - Northern Trust
[2] On the left light grey box choose "Economic"
[3] On the main screen {orange print} choose "July, 2008"
IMHO, this is a highly recommended source of reason.
it is hard to make sense out of those $xbn per month numbers without seeing a graph or something (or at least knowing total outstanding residential debt?)
Is $86bn in a single month high?
From Aug to Dec, the big banks need to roll over a total of $188B. The other alternative, not discussed, is to allow their loans to run off and contract their balance sheets. This option will further contract credit, and drive borrowing rates higher still.
["We have a subprime financial system, not a subprime mortgage market."]
We have a subprime financial system partly because we have been cultivating a subprime economy.
Sparks, I think you left out a step:
[2.5] On the left light-grey box choose "U.S. Economic Outlook"
"The other alternative, not discussed, is to allow their loans to run off and contract their balance sheets. This option will further contract credit, and drive borrowing rates higher still."
Thanks for this. My naivete is based in my past experience learning the basics of banking business in a different time. I still can't quite fully comprehend that the banking business model I came to know is obsolete. We made (what was then considered) a lot of money back in the day. Hard to believe that banks are faced with the Hobbesian choice of run off mode or losing money.
Ben S. Bernanke is still trying to define which financial institutions it's safe to let fail. The longer it takes him to decide, the tougher the decision becomes.
In the year since credit markets seized up, the 54-year- old Federal Reserve chairman has repeatedly expanded the central bank's protective role, turning its balance sheet into a parking lot for Wall Street's hard-to-finance bonds and offering loans through its discount window to investment banks and mortgage firms Fannie Mae and Freddie Mac.
The lack of clearly defined limits may put the Fed's independence at risk as Congress discovers that its $900 billion portfolio can be used for emergency bailouts that might otherwise require politically sensitive appropriations and taxes.
There is some hard thinking that needs to be done,'' Philadelphia Federal Reserve Bank President Charles Plosser said in an interview last week.The Fed has a terrific reputation as a credible institution. We have to be cautious not to undertake things that put that credibility at risk.''
Bernanke Tries to Define What Institutions Fed Could Let Fail - Bloomberg.com
Hate to tell you Chuckie but that decision has already been made, you have no credibility or independence.
Is thias really news or is this PIMCOs method of asking for Yet another bailout....
I must admit that following up on this crisis for nearly two years I am now more puzzeled than ever:
On Feb 2007 it was simple - I knew we are in trouble and the market did not
On Aug 2007 still simple: I knew we are in big problem but the market knew it was bottom.
....
By now I can not tell any more: I don't know where we are, were we are going and what the market "thinks".
"People might stop throwing away their money on frivolous and unproductive investments and those engaged in pointless or outright destructive enterprises might actually lose their jobs!"
The return of the eight percent CD would be a revolutionary act that would change radically where people put their money -- and a lot of other things. Interesting to note that it might not happen because the kingpins of finance decree it, but just because it has to. In the end, no one's in control.
Maybe a naive question, but why are the borrowing costs going up for the banks if they can borrow from the Fed at ~2%?
Re buyouts of failing banks, did folks here notice that Union BanCal
has been bought by Mitsubishi Finance Japan?
"Maybe a naive question, but why are the borrowing costs going up for the banks if they can borrow from the Fed at ~2%?"
That's a good question. I wonder if all the sludge they can pledge at the fed is already there and what remains is so nasty even the fed won't accept it.
Lowes and now HD
Home Depot May Say Profit to Fall More Than Forecast (Update2) - Bloomberg.com
Home Depot Inc., whose shares have risen 27 percent in New York trading since July 15, may disappoint investors tomorrow by saying profit this year will fall more than it forecast three months ago.
The world's largest home-improvement retailer is facing the deepest housing slump since the Great Depression, which is taking its toll on sales of power saws and drywall. Home Depot may issue the new forecast when it reports second-quarter profit tomorrow, according to four analysts surveyed by Bloomberg News.
...............
"If US public debt gets painted with the subprime brush all hell is going to break loose."
Expired
Ruh roh.
American Banker (no link)
A Darwinian Tale in California: Strong Prey on Faltering
"Downey's report Friday that depositors pulled funds this summer amplified an industry shift: Customers are fleeing weakened banks in favor of those viewed as safe havens..."
Dallas Morning News
Weak rules hinder home appraisal oversight
"The system is completely broken," Marc Weinberg, the former acting director at the federal agency charged with monitoring the appraisal industry, told the AP before he retired this year. "It's amazing that the system ever worked at all."
Weak rules hinder home appraisal oversight |
News for Dallas, Texas | Dallas Morning News
| Dallas Business News
But Cramer called the bottom for Fre and Fnm....
Zero,
I dunno, both methods of accessing the article work on my system. Point is, AC's argument is addressed in the second paragraph. The balance of the piece provides context.
Bond Rally??? Low volume but the spread btwn mortgages and treasuries is something to watch
Uhh what just happened??
No love for junk bonds which are proxy for treasuries.
Expired
Repackaging synthetic crap into crap that is re-marketed as crap that has value, is crap! Cash is king, because investors do not trust the future value of crap, and rightfully so, because obviously the last crap that was sold, is worth crap.
You know what else pisses me off, do yah, huh ... punk, the crap related to this story, i.e, when Hershey decided to move to mexico, I thought that was crap, and now that they wanna raise the cost of a mexican pinata sugar to offset losses in Bushland, well, that seems like more crap! They cut out American jobs, move to mexico and now raise the price? Do you think people will support that crap?
Re: After the market closed on Friday, the Hershey, Pa.-based company said it will raise prices by an average of 11 percent, due to rising commodity costs. Hershey also lowered its earnings expectations for 2008 and 2009.
Citigroup analyst David Driscoll on Friday downgraded the company to "Hold" from "Buy" in a note to investors.
He said the price increases are a "good sign" that Hershey is protecting its margin structure. However, he lowered his earnings estimates and said the company still has issues it needs to work on.
Paulson just came out of his cave again to say there is no plans to backstop Fannie and Freddie. Can this guy ever tell the truth?
Uhh what just happened??
crispy&cole |
dont know but it looks like something
maybe S&P downgraded America....
..........
MoT link?
TIA
............
"Last week, financial groups including Citigroup, JPMorgan Chase and American International Group borrowed almost $20bn in new long-term debt, paying some of the highest interest rates ever..."
On its face, this comment doesn't make sense to me. Market interest rates were much, much higher in the 80's - short rates were in the high-teens. Even with tighter spreads then (and I'm not sure they were) banks borrowing costs had to be much higher than they are now.
Secondly, the money banks borrow thru the debt markets doesn't flow directly through to the borrower. It's the cost of deposits that mostly drives lending rates.
The trouble with Lehman, the anticipated issues with Goldman, JPM, Citi etc, will likely have lessened sting as the potential stories are giving a long lead on rumors as well as the means of trickle-out-news desensitizing things when actual headlines hit. (Oh, yeah, Fannie and Freddie, too.) Analysts are seeing trouble as "many of them believe that Goldman could suffer from a global slump in equity markets which has taken many key indexes around the globe down by 20% or more." (WSJ) The word "bailout" is getting an uptick in play, with a Bear style rescue chattered about.
The reversal in stocks is helping fuel the move better, but event free, thin trade and lofty price levels will crimp any rallies. The curve has been slanted steeper with the 2-10-yr yield spread running 146.5 after having sent most of the session knocking around 145.5.
Bond Ticker - Bonds Center - Yahoo! Finance
The cost to insure the subordinated debt of Fannie Mae and Freddie Mac hit new highs on Monday, a day after Barron's reported an increasing likelihood the U.S. Treasury may essentially take over the mortgage finance companies.
UPDATE 1-Fannie, Freddie subordinated debt CDS hit record
| Reuters
Freddie and his fat sister Fanny getting the beat down the so desperately deserve. Next up American taxpayers.
Voted BEST Greespan article by jaded CR blogger...
Bloomberg
No Limit to Greenspan's Once-In-A-Century Events: Caroline Baum
No Limit to Greenspan's Once-In-A-Century Events: Caroline Baum - Bloomberg.com
I have a question.
Is GS in danger. I remember they were long CRE debt. I wonder if they will be able to excape this mess altogether or if they day or reckoning is coming....
...............
"The momentum behind the move came from the financials index," fixed-income research service CreditSights said in a report on Saturday. Yields on financial companies' bonds rose by 9 basis points last week to 370 basis points over Treasuries, even higher than after Bear Stearns' collapse.
Persistently high borrowing costs for banks could further curb their ability to lend, worsen a cash crunch at the sickest companies and extend an economic slump.
"We're still waiting to see some numbers that show these banks are stabilizing and recovering," said Dan Sheppard, director at Deutsche Bank Private Wealth Management.
Adding to concerns, banks have been charged with misleading investors about the risk of auction-rate securities and are having to buy back billions of dollars of the debt and pay fines to settle the charges.
"That takes up room on the balance sheet," said Deutsche Bank's Sheppard. "So far, it's only been for retail (small investor) accounts, but can the others be far behind?"
One year into the credit crisis, the turmoil may be only half over at best and banks may face more write-downs from soured mortgage debt and problems at bond insurers, Standard & Poor's said last week.
Debt sales push U.S. corporate bond risk to new highs
| Reuters
"Monday morning, a spokeswoman cited Treasury Secretary Henry Paulson as saying the Treasury has no plans to use the authority it's been given. The spokeswoman also said the Treasury wouldn't comment on speculation."
Fannie, Freddie drop after report says bailout likely - MarketWatch
Paulson is sounding more and more like that CEO of Bears that was full of crap (the week before bear crashed):
Citing an insider in the Bush administration, newsweekly Barron's reported Aug. 16 that the Treasury and the companies' new regulator are urging both Fannie and Freddie to raise more capital.
Government officials don't expect the agencies to succeed, however, and only a capital raise of $10 billion or more by each would have any credibility, Barron's reported. Read Barron's article.
Ministry of Truth,
WTF, are we like twins here dressed in the same crap?
Paulson is a scammer! He lets his GS buddies get out of their longs and go short then dumps the news on the market via some unnamed source...SCAM!
I'm listening. I'm listening and learning. The market is a funny place, and sometimes, it's hard to get your bearings. Listen to your own comments. Are you addressing the position current counter trend rally, or undercutting the most recent lows?
Methinks it would be very very very interesting to know who holds what position... as I read their comments.
Looks like Paulson is playing Pocket Pool with his bazooka.
CR,
the link squeezed posted should be a posting IMNSHO opinion - that is a tectonic ruh-roh in the making - fish flopping the beach where did the water go...?
Is GS in danger. I remember they were long CRE debt. I wonder if they will be able to excape this mess altogether or if they day or reckoning is coming....
There is no way to know. Personally, I don't want to invest in a black box. Also, consider that if Goldman's level 2 & 3 assets fall in value by < 7%, Goldman's equity is wiped out.
Absent the fed and accounting forebearance, all the IB's would be insolvent now.
High leverage is a killer. Except when you have a central bank put.
Jaded thread music:
How can I miss you if you won't go away...
YouTube - How can I miss you if you won't go away. Eldon Hunt
FFDIC:
WELL SUNG
I just wonder how the recent crash in oil prices has affected Granma.
No Credit for Financials, Part 1
No Credit for Financials, Part 1-Minyanville
Inflation and Interest Rates: Why the Disconnect?
Weve seen year-over-year consumer prices (CPI) and producer prices (PPI) -- including food and energy -- soar of late. But Treasury yields have remained stubbornly low. I may not agree with the markets assessment of where Treasury yields sit, but as they say, The reaction to the news is more important than the news itself.
Year-over-year CPI sits at 5.6% while the 10-year Treasury sits at 3.84%, for a real return of minus1.76%, the lowest its been since the late 1970s. Year-over-PPI sits at 9.2%, producing a real return of minus 5.36% - also a multi-decade low.
FFDIC,
I love the "you're using my toothbrush" line the best.
Oh, never mind, that ratio between CPI/treasury at 30 year low, but obviously related to treasuries being at 40 year lows...
A bit of context is helpful, I think. JPM published a research note asserting that $660 bln in corporate debt is due for refinancing in the next 12 months. So the big refinancing of bank debt comes with a background of big corporate financing. And weak performance, let's not forget. And those figures don't include roll-overs of ABS and other financial exotica. A big chunk of the US economy is going to be hunting extraordinary amounts of financing in the next year or so, with lenders showing some reluctance.
Fired our guns and the British kept a'comin'
There wasn't nigh as many as there was a while ago
We fired once more and they began to runnin'
On down the Mississippi to the Gulf of Mexico
High leverage is a killer. Except when you have a central bank put.
I know aint capitalism grand....
............
RWT going down... going to zero IMO
"Monday morning, a spokeswoman cited Treasury Secretary Henry Paulson as saying the Treasury has no plans to use the authority it's been given. The spokeswoman also said the Treasury wouldn't comment on speculation."
Note to spokesman: If your second sentence contradicts your first, you will achieve an effect opposite to the one you intend.
That idea from, "No Credit for Financials, Part 1" is not bad:
ut there certainly must be a reason why Treasury yields remain stubbornly low. In the graph above, note that the red line (10-year minus CPI) tends to act inversely to the level of CPI itself. Perhaps the markets telling us that CPI has peaked and is about to reverse course - and even turn negative.
Perhaps the aversion to credit is forcing more and more money into Treasuries. Even more likely, as foreigners recycle our deficit in our Treasury bills and notes (they now own nearly 58% or all marketable Treasuries), one can make the case that supply is shrinking.
Considering that foreigners are slowing their purchasing of corporate bonds after getting killed by them in the last year or so, one can see why Treasury yields remain stubbornly low. Im not the type to argue with the market and short Treasuries just because they appear expensive. Rather, I respect the price action.
Context is great so I will post this for a second time:
There is a reasonably well balanced assessment from an economist I admire. Unfortunately, their site does not post easily. I suggest it is worth your time.
[1] Error 404--Not Found
TYPE=interior
[2] On the left light grey box choose "Economic"
[3] On the main screen {orange print} choose "July, 2008"
IMHO, this is a highly recommended source of reason.
Or, as modified by Zero:
Sparks, I think you left out a step:
[2.5] On the left light-grey box choose "U.S. Economic Outlook"
Either way works on my system. But the point, my friends, is...... keep it in context.
Are you arguing against the current counter trend rally, or are you suggesting that we are going to pierce the last lows?
Bank debt rollover.
Come on, be a good debt, rollover.
Rollover debt, rollover!
Aw, come on, rollover!
I don't think the banks are rolling over debt. I think debts are rolling over banks, in tanks.
Cheers,
Japanese Bank Buys Rest of UnionBanCal (one bank Sheila will not be getting greasy gray hairs over for for a while)
Japanese Bank Buys Rest of UnionBanCal - NY Times
its gonna get ugly when paulson whips out that bazzoka
Sheila Bair was on Bloomberg this weekend and she implied the fed was asleep during the run up and is to blame for this mess
she implied the fed was asleep during the run up and is to blame for this mess
What?! Someone implying that they are partly responsible for the mess?
Are you sure you weren't drinking heavily when you heard that?
crispy&cole,
Yeah, and she has never mentioned former FDIC Chairman Donald Powell's role and never will. Powell has also been silent not that anything he said would be worthy of printing.
LOL
There was blood on the saddle
and blood all around
and a great big puddle
of blood on the ground
She was at the Treasury and stated it was out of their jurisdiction...what a joke. So they can get involved now, but they could do nothing then? Maybe she was too busy setting up her AOL email account
Consider the Government National Mortgage Association, Ginnie Mae, born in 1968, carrying the full faith and credit of the U.S. Treasury, guarantor of MBS holding FHA and VA loans. Outstanding Ginnie MBS are just short of a half-trillion dollars, growing $27 billion per month now, triple last year's rate as the FHA is one of the last games in town. Ginnie owns no loans and does not borrow..
Feds, don't forget Ginnie, the other GSE | Real Estate and Technology News for Agents, Brokers and Investors | Inman News
Wall Street Pulls Back as Financials Fall (wait until heating bills hit NY and NE this winter)
- NY Times
CR:
that 'rollover debt, c'mon boy, rollover
would make a great visual for your cartoon guy
crispy&cole,
I'll be glad when the FDIC is out of her jurisdiction...
Finance stocks getting it in the solar plexus again: DB, C, AIG, etc. dropping like rocks. These momentary upticks in such stocks are only opportunities to get out. Per Roubini they still have a long way to go DOWNward.
Ben S. Bernanke is still trying to define which financial institutions it's safe to let fail.
Why the hell would Bernanke be allowed to make such decisions?
When has he ever demonstrated the kind of insight and ability that would justify giving him oversight of these kind of matters?
The New New Deal will save us.
Only problem is that there is one more step to play out.
What?! Someone implying that they are partly responsible for the mess?
Are you sure you weren't drinking heavily when you heard that?
Or maybe Sheila had been drinking heavily before she confessed that. LOL
From March 28, 2008
U.S. Long Bonds: Be Careful, We're in Injury Time
U.S. Long Bonds: Be Careful, We're in Injury Time -- Seeking Alpha
But what about the outlook for U.S. bonds, especially as yields have edged up since the recent lows of 3.314% (March 17) and 4.165% (March 20) for the 10-year and 30-year Treasury Note, respectively?
The graph below shows the long-term movement of the yield on the US 10-year Treasury Note, indicating that long-dated US bonds have experienced a multi-year bull market and are trading at levels last seen more than 40 years ago as far as nominal yields are concerned and 28 years ago in real terms. Thinking of which, the only investors who first-hand experienced the last major bear market in bonds (from 1971 to 1980) are now all on the wrong side of 50!
OT for our Kim Novak elderly fans:
New York Times
Giving Kim Novak Her Due
"Novak was the top box office star three years running in the 50s. Still, she is not usually mentioned in the same breath with the other major actresses of the period Taylor, Marilyn Monroe, Grace Kelly, Ava Gardner. She was not earthy like Gardner or icy like Kelly or Rubensesque like Monroe or raunchy like Jane Russell or perky like Doris Day. She was something that has gone out of fashion and even become suspect in an era of feminist strictures: she was the object of a voyeuristic male gaze."
Giving Kim Novak Her Due - Opinionator Blog - NYTimes.com
Sheila Bair was on Bloomberg this weekend and she implied the fed was asleep during the run up and is to blame for this mess
Well I guess I'd have to agree with that, except I don't think they were asleep. I think they were actively ignoring what was going on for political expediency.
Hello, is anyone home out there?
Re: yields have edged up since the recent lows of 3.314% (March 17) and 4.165% (March 20) for the 10-year and 30-year Treasury Note, respectively?
Re: Mr Bernanke said: "... on March 13, Bear Stearns advised the Federal Reserve and other government agencies that its liquidity position had significantly deteriorated and that it would have to file for bankruptcy the next day unless alternative sources of funds became available."
The Fed chairman said that the central bank was forced to step in because the US financial system is "extremely complex and interconnected", and the collapse of Bear Stearns would have led to a "chaotic unwinding of positions in those markets are could have severely shaken confidence".
Anyone see yields going down, just as they did before Bear antitrust collusion?
The U.S. Treasury repeated on Monday that it has no plans to use its new authority to backstop mortgage finance giants Fannie Mae and Freddie Mac by providing them with equity capital or new loans.
US Treasury: no plans to backstop Fannie, Freddie
| Reuters
Watch what they do, not what they say.
ac
Right on and the same thing occured at the FDIC & OCC. Ask any examiner off the record of course.
The New New Deal will save us.
Seems like we can't even pay for the Old New Deal.
But I don't suppose that will stop politicians from making even more promises they have no hope of keeping.
Geez. I just reread the C&C post.
I thought he'd written that FDIC was asleep, not the Fed. So Sheila was pointing fingers.
Seems to indicate that I need to drink less, rather than C&C.
The Treasury might as well kiss the stockholders of Fanny and Freddy goodbye and be done with it. Keep the money for the bondholders who are foreign and could really do us damage if they got mad.
--
And housing will be no help for years...
Housing Market Index and Traffic of Prospective Buyers Stays at an All-Time Low
From the survey of homebuilders:
NAHB: The NAHB/Wells Fargo Housing Market Index (2007 - Current)
A reading below 20 means that the conditions are horrible.
Jas
FFDIC,
Given your market views, I'm very impressed by your sense of humor. I've listened to your post:
YouTube
- Broadcast Yourself.? v=x...feature=related
...five times, and I'm still laughing.
Are DSL or Wachovia rolling over (debt I mean) during this time frame?
I gotta get myself some of THAT action!
MMMMMM...good.
Cheers,
Hank and Co. now going to drop the market back to 11k and then "implement" his "no plans" to bail them out....
Lather, rinse, repeat...
Ciao
MS
Misean,
I've was hoping to see you again. "Pacifist" was the wrong term yesterday... and we don't need to get into it. I should have used the term "isolationist" in re: pre WWII. Totally different connotation. My apologies.
We aren't going to comment on speculation,'' said a Treasury spokeswoman, Jennifer Zuccarelli.As the Secretary has said, we have no plans to use these authorities.''
Until they need to use them. Then they'll plan for it. Literalism can be so fun. That's like the kid who pushes his brother over the edge of the stairs, and when his furious mother says, "did you push your brother down the stairs?!", replies, "I only pushed him down the first one; he fell the rest all on his own."
No Limit to Greenspan's Once-In-A-Century Events: Caroline Baum - Bloomberg.com
No Limit to Greenspan's Once-In-A-Century Events: Caroline Baum
Greenspan's ability to identify asset bubbles -- by his own admission, impossible when he was at the Fed -- improved markedly in the last two years. Everywhere you turned he was identifying a housing bubble, handicapping recession odds, spouting the wisdom gleaned from half a century of following the U.S. economy.
He's like the forensic pathologist brought in as an expert on how to fix things when in fact he played a large role in causing the problems,'' said Bill Fleckenstein, president of Fleckenstein Capital in Seattle, and author ofGreenspan's Bubbles.''
Conflict of Interest
Last month, Greenspan showed up on CNBC with Maria Bartiromo and Paul McCulley, managing director at Pacific Investment Management Co. in Newport Beach, California. Pimco happens to be one of Greenspan's three main consulting clients, a relationship that was never disclosed to the audience.
It was positively quaint to see Greenspan and McCulley talking shop -- discussing the likelihood of U.S. recession, slowing global growth and concerns about solvency -- for the benefit of bond investors, er, the viewing audience. All that was missing was a phone number on the bottom of the screen: Call 1- 800-4PIMCO.
And yes, the solvency crisis is a ``once-in-a-century phenomenon,'' according to Greenspan.
Last week, Greenspan showed up on the front page of the Wall Street Journal -- just like old times -- with a forecast for a bottom in housing.
``Home prices in the U.S. are likely to start to stabilize or touch bottom sometime in the first half of 2009,'' Greenspan told the Journal.
1- 800-4PIMCO
Is Gross buying or selling?
He's like the forensic pathologist brought in as an expert on how to fix things when in fact he played a large role in causing the problems,'' said Bill Fleckenstein, president of Fleckenstein Capital in Seattle, and author ofGreenspan's Bubbles.''
Sorry that light fixture I installed burned down your house.
I'll do all the wiring for your new house free of charge to make it up to you.
Is Gross buying or selling?
More & More Crap
Gross is long on foreheads.
sparks, that is good commentary. the money quote is in the august link:
"Not surprisingly, the manifestation of this tightening in lending terms is a slowdown in the amount of credit being created by the banking system. To wit, in the three months ended June, total bank credit loans granted by and securities held by commercial banks contracted at an annual rate of 3.72% -- the largest contraction since the 3 months ended November 1948 (see Chart 11).
There are a lot of terrific charts in their analysis, but it's hard to see how their projections are so mild when you look at their analysis.
Maybe they don't want to be brandished with the 'dr. doom' label?
m
ac writes:
He's like the forensic pathologist brought in as an expert on how to fix things when in fact he played a large role in causing the problems,'' said Bill Fleckenstein, president of Fleckenstein Capital in Seattle, and author ofGreenspan's Bubbles.''
Sorry that light fixture I installed burned down your house.
I'll do all the wiring for your new house free of charge to make it up to you.
.... of course, you will have o pay for the parts.... and incidentally, I'll be long gone.
jm writes:
its gonna get ugly when paulson whips out that bazooka
hope thats a bazooka in his pocket and hes not just happy to see us
What is Gross holding is the better question: Bond
Funds Top Performers : Mutual Funds Center - Yahoo! Finance
I see Brazil making him a few pennies in front of the steamroller... but this is worth checking info maybe...
Mel writes:
Borrowing to pay for a war, or two, might downgrade treasuries eventually. We've been living on borrowed time/money since Bush took over. Eventually, the house of cards falls down--we're screwed.
This would be a good time to go back and read or reread Paul Kennedy's "Rise and Fall of the Great Powers." This book was published just before the fall of the Soviet Union, which happened a lot faster than Kennedy had predicted. At the time, I can recall that the Soviet Union's collapse led some pundits to dismiss Kennedy's book as disproved, since it seemed obvious (to those ignorant of history) that the game of history was over and the United States was the winner.
The Rise and Fall of the Great Powers - Wikipedia, the free encyclopedia
Where is conjure bag?
Last month, Greenspan showed up on CNBC with Maria Bartiromo and Paul McCulley, managing director at Pacific Investment Management Co. in Newport Beach, California. Pimco happens to be one of Greenspan's three main consulting clients, a relationship that was never disclosed to the audience.
I guess almost single handedly destroying the US economy isn't enough. Now he has to provide consulting services to Wall Street in order to help them more effectively game the system and rob the consumers and the tax system in the most efficient way possible.
mock,
ROTFL
Ok , what about this crap?
STRIPS components can be reassembled into a fully constituted security in the commercial book-entry system. To reconstitute a security, a financial institution or government securities broker or dealer must obtain the appropriate principal component and all unmatured interest components. The principal and interest components must be in the appropriate minimum or multiple amounts for a security to be reconstituted.
If you have questions about buying, redeeming, or selling STRIPS, contact your financial institution, broker, dealer, or investment advisor. See also 31 CFR 356.31 for rules relating to stripping and reconstituting Treasury securities. If you are from a financial institution, broker, or dealer and have specific questions on the process for stripping or reconstituting Treasury securities, call the Federal Reserve Bank of New York at 201-531-3894.
Corn up 4%.
Soybeans up 5%.
So far today!
Another food fight coming.
Go DBA!
Bernanke Tries to Define What Institutions Fed Could Let Fail
(free dinner for two at Sonny Bryan's Smokehouse to first blogger that post good financial news)
Bernanke Tries to Define What Institutions Fed Could Let Fail - Bloomberg.com
Sonny Bryan's Smokehouse BarBQue
SonnyBryans.com - Home
We've been living on borrowed time/money since Bush took over.
It started long before that.
It's fun to beat up on GWB and all, and he certainly deserves it. But to suggest it started when he took office just doesn't properly reflect reality.
More and more crap- wtf?
Do you not understand strips, a basic component of the treasury market for over 3 decades?
Go to class young man.
Someday this war's gonna end...
Here is how you play this crap:
Commercial Book-Entry System
Institutional - Commercial Book-Entry System
Example: A customer of broker M sells a security to a customer of financial institution J.
Broker M delivers the securities to Depository institution A by sending a message wire instructing Depository A's computer to deliver the securities to Financial Institution J.
In turn, Depository A's computer sends the message to the Federal Reserve's book-entry computer, which debits Depository A for the security and credits Depository B's account for the security.
Depository B's computer sends a message wire to Financial Institution J's computer to inform it of the electronic receipt of the security.
Financial Institution J applies the security to the buyer's account.
In turn, the Federal Reserve Bank will debit Depository B's reserve (money) account at the Fed and credit Depository Bank A's reserve account for the same amount to complete the transaction.
The money debits and credits will follow a similar transaction path as the securities until they reach the buyer's and seller's accounts.
AllenM aka Joliet Jake ,
WTF, I'm just offering a few examples... WTF do you want me to do?
--
Southland home sales still ultra-low; median price slips again
Southland home sales post annual gain as prices drop again [31.1%!]
August 18, 2008
La Jolla, CA---The number of Southern California homes sold last month edged up to its highest level in more than a year as bargain hunters swept up foreclosure properties in affordable neighborhoods, a real estate information service reported.
A total of 20,329 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 16.7 percent from 17,424 the previous month and up 13.8 percent from 17,867 for July a year ago, according to San Diego-based MDA DataQuick.
Last month's sales count was the highest since 21,856 homes were sold in March 2007, though it still fell 23 percent short of the average July sales total since 1988, when MDA DataQuick's statistics begin. From last September through June, sales for each month were at an all-time low for that particular calendar month, with the exception of April which was the next lowest. Last month's sales total was the first since September 2005 to rise above the year-ago level.
"What we're looking at is a fire sale of properties in newer affordable neighborhoods that were bought or refinanced near the price peak with lousy mortgages. What we're still not seeing is this level of distress spreading to more expensive or established neighborhoods," said John Walsh, MDA DataQuick president.
The median price paid for a Southland home was $348,000 last month, down 2.0 percent from $355,000 in June and down 31.1 percent from $505,000 for July 2007. That peak of $505,000 was reached in March, April, May and July of last year.
...
Jas
Anyone else notice the SIPC ad on todays CR?
My toes are beginning to curl.
Welcome Home jas, WTF are you doing here?
WTF about : MORGAN STANLEY INSTITUTIONAL FUND TRUST
August 12, 2008
Derivatives are financial instruments whose value and performance are based on the value and performance of another security or financial instrument. Derivatives sometimes offer the most economical way of pursuing an investment strategy, limiting risks or enhancing returns, although there is no guarantee of success. Hedging strategies or instruments may not be available or practical in all circumstances. Derivative instruments may be publicly traded or privately negotiated. Derivatives used by the Adviser include futures contracts, options contracts, forward contracts, swaps, CMOs, stripped mortgage-backed securities (SMBS) and structured notes.
I smell smoke in The SMBS Market ....
Jas,
Hurry! Buy now before prices fall further.
ac
i agree Bush 2 is not solely responsible
however it is a fact only one administration in the last 28 years has put the brakes on spending
guess which one?
Unknown Domain
bush2 and Reagan accumulated more debt than all other president put together since the American revolution
this is not an accident
both of these presidents "hate" government and decided upon the strategy of feeding the pig till it bursts rather than putting the pig on a diet.
yea AC...it's more like when Bush became V.P.
That's when this mess really started.
Tim-
If you're out there....NO Ferrari California (that I saw).
As a spectator (and sometimes participant) it was painfully obvious that the credit "issues" are affecting even the high-end spenders at Monterey. Plenty of vacancies at most hotels (they have inflated rates and 4 night minimums so that speaks to that instead of the "walk-up" visitor's).
Hit rates (actual sold cars) on Friday evening's auctions in downtown Monterey were pathetic. At one point in an hour's time only two cars sold-this was at prime time about 8pm.
And one of them was a side deal that didn't get the gavel. Sometimes the wrong cars and the wrong place can apply to explain it however I don't think that was the case here. The mix was pretty good and it wasn't the "parade of muscle cars" found at the overdone BJ auction in Phoenix (january)
I also can report that the yen-carry trade is alive and well based on the numerous Japanese tourist's hanging around their usual haunts in Pebble and Carmel.
No problem with dinner reservations at any place that we went. That's not occurred in over 20 years (I've been going to this for 30 of it's 35 year's of existence).
Can't speak for Sunday's action as I'd left by then. The money is made on Saturday's in any case
The featured marque (at Laguna Seca) was Alfa Romeo.....usually the factory will bring out older cars to run on the track or display (cant say I saw one or any factory participation on Alfa's behalf) This is not the case at all in year's past. I hope Alfa builds the 8c but it's not coming here.
As always a fun event not to missed if you are a car person. Leave the wife at home if you go though....
Ciao
MS
Washington Post
In Rural Missouri, The Place to Bring Your Cents of Humor
Banker Heard Name, and It Added Up
"Tightwad Bank may be quirky and unproven, but it is a genuine bank with a real charter and a real vault and a pair of real bankers in charge. For good measure, the business cards say: "Tightwad Bank. Member FDIC."
In Rural Missouri, The Place to Bring Your Cents of Humor - washingtonpost.com
New Porsche 2 turbo go fast like splickedly lick.
Regards
ross
Fannie and Freddie continue to stonewall in true Bear Stearns fashion.
So, Mr. Market is now going to eat them.
I appreciate that the majority of folks here are heavily into banking and real estate; and I agree that there is great drama in those areas.
I recognized we were in real trouble a long time ago. To my mind, we have two problems. The first is what you are all seemingly focused on which is ... to borrow a word "deflation". There is a second part, at least as I see it.
That second issue is tied to the 70% {forgive the rounding up} of our GNP that is tied to retail sales. I have been watching them closely, and there is a really great drama playing out there as well.
Look at TGT. Here is a company who's shareholders cannot complain unless they bought within the last couple of years. But take a moment and look at their long term chart - it's very nice.
Now, you need to know that TGT is in the midst of buying back 20% of their stock - by my read they are about 1/4 done with that. TGT sold 1/2 of their receivables position back in March... and, no matter how you count it... they are in a very good cash position.
Nevertheless, they are obviously a retailer and they are staring a cash-strapped-being foreclosed upon consumer ... straight in the face [or at least as many faces as WMT can spare]. They report earnings tomorrow.
In the spirit of being straight up front and honest myself.... I just went short.
mp writes:
Fannie and Freddie continue to stonewall in true Bear Stearns fashion.
So, Mr. Market is now going to eat them.
mp | 08.18.08 - 1:56 pm
Was that the Conjure Bag communique?
FNMA down 20%, FRE down 17%. The mareket wants to see Paulson's bazooka.
Goldman Sachs Trust, et al. · 485BPOS · On 7/29/0
http://www.secinfo.com/dsvr4.t887.htm
Mortgaged-Backed Securities also include stripped Mortgage-Backed Securities (SMBS), which are derivative multiple class Mortgage-Backed Securities. SMBS are usually structured with two different classes: one that receives substantially all of the interest payments and the other that receives substantially all of the principal payments from a pool of mortgage loans. The market value of SMBS consisting entirely of principal payments generally is unusually volatile in response to changes in interest rates. The yields on SMBS that receive all or most of the interest from mortgage loans are generally higher than prevailing market yields on other Mortgage-Backed Securities because their cash flow patterns are more volatile and there is a greater risk that the initial investment will not be fully recouped.
I'm still looking.. I need time.. please, please, this crap is killing me...
WTF?
Pursuant to a claim for exemption filed with the Commodity Futures Trading Commission (CFTC) on behalf of the Portfolios, neither the Trust nor any of the individual Portfolios is deemed to be a commodity pool or commodity pool operator under the Commodity Exchange Act (CEA), and they are not subject to registration or regulation as such under the CEA. PIMCO is not deemed to be a commodity pool operator with respect to its service as investment adviser to the Portfolios.
jus me- "Was that the Conjure Bag communique?"
Yes, and I'm glad you brought that up because I forgot Conjure's attribution.
With all of this refinancing talk, Conjure and I are beginning to think the financials may really be headed for half of book.
Does everyone have their helmets on?
Meanwhile, Conjure is absorbed by trivia. He is amused by the fact that Louise Brooks, the 'it-girl,' was the only person on the planet who could honestly claim she had both Charlie Chaplin and Greta Garbo.
TGT follow up
Make no mistake about it, there is something going on that I can't account for. Forget the fact that TGT recently saw 41. It is the move up from 45 that holds my interest. There is a "force" out there that is buying this company big time. In going short, I'm betting they or it will lay off and let the numbers speak for themselves. But I could very well be wrong, and have a stop in place.
JPMorgan has launched Highbridge Statistical Market Neutral Sterling fund, which will compete directly against BlackRock's hugely successful Absolute Alpha vehicle.
The new fund is a hedged version of the existing Highbridge fund; domiciled in Luxembourg, the fund will aim to give investors a return of Libor +4 to 6pc per annum. It is designed to allow investors to protect against the effect of foreign exchange rates.
http://professionaladviser.co.uk/showPage.html?page=padv_display_news&tempPageId=806681
JPMorgan Total Return Fund
http://www.secinfo.com/d12uJc.t23z.htm
The advisers collateral investment guidelines limit the quality and duration of collateral investment to minimize losses
The Fund also may fail to recover additional amounts (i.e., premiums) paid for securities with higher interest rates, resulting in an unexpected capital loss. Furthermore, some asset-backed securities may have additional risk because they may receive little or no collateral protection from the underlying assets, and are also subject to the risk of default described under Credit Risk. The risk of such defaults is generally higher in the case of mortgage-backed investments that include so-called sub-prime mortgages.
Re: With all of this refinancing talk, Conjure and I are beginning to think the financials may really be headed for half of book.
Repackaging crap into newly redesigned boxes for XMAS will increase the future value of this crap, right? I mean green paper is better than red and if you can put a covered bond bow on this, then WTF?
sparks- "There is a "force" out there..."
Get this man some Valium. Stat!
More & More Crap, if their borrowing costs go up, yours go up, and their quarterly reports will be even more and more crap.
mp,
did you want me to say market force ? Did you want me to suggest that oil money has been moving the market ? Did you want me to opine, that the folks who hold oil money might be acquiring US assets as they extract our cash.
Please mp... let me in on your views.
Now don't ya'll forget about blackrock in the background trying to come up with new synthetic "solutions", i.e, looking for ways to clone fingers for the increasing holes in the dike, as they add more sandbags and look for liquidity pumps -- in this awful tsunami of corruption...
Re: BlackRock continues to explore alternative forms of leverage for
its fixed income closed-end funds. One approach includes the
development of a put feature for the ARPS, which would make them
eligible for purchase by money market funds. This objective may be
accomplished by adding the feature to the existing structure of the
ARPS or through the issuance of a new form of preferred stock that
includes a put feature. The existing ARPS issued by BlackRock
closed-end funds or other issuers as currently structured are not
eligible for purchase by money market funds. This potential solution
is dependent on identifying third parties to provide liquidity
commitments, demand for these instruments in the broader marketplace
and obtaining necessary regulatory relief to make the ARPS eligible
for purchase by money market funds.
Amen and may the best hedge wi
Sparks, sorry, I didn't mean to offend your feelings. If your feelings work for you, that's great.
My feelings don't work too good for me. I use other methods.
You know what started this crap? Mrs Fields!
mp,
I wasn't offended.
"You know what started this crap? Mrs Fields!"
It's certainly possible. When a warm and fuzzy company like Mrs. Fields gets the old shaft-ola, it gets folks to thinking, no?
mp,
I may still need the valium, but I wasn't offended.
This is total crap:
We estimate long-term prepayment speeds using third party services, market
data and internal models. The third party services estimate prepayment speeds using models that incorporate the current yield curve, current mortgage rates, current mortgage rates of the outstanding loans, loan age, volatility and other factors.
Management reviews the prepayment speeds estimated by the third-party services and compares the results to market consensus prepayment speeds, if available, and internal prepayments models. Management also considers historical prepayment speeds and
current market conditions to validate reasonableness. Actual and anticipated prepayment experience is reviewed quarterly and effective yields are recalculated when differences arise between the previously estimated future prepayment and the amounts
actually received plus current anticipated future prepayments. If the actual and anticipated future prepayment experience differs from our prior estimate of prepayments, we are required to make an adjustment to the amortization or accretion of premiums and discounts that would have an impact on future income
Now, take Conjure as an example.
Conjure is a stone-cold son of a bitch. He doesn't believe in a damned thing aside from his own precision. He cranks numbers endlessly, listens to everybody, then makes a decision. He does not day trade. He has investments and special situations.
The special situations, more often than not, take months to develop because it takes time to spring the trap.
Sometimes he's wrong but, more often than not, he's right.
Plus, he likes good-looking women, good scotch and good cigars. In my book that makes him OK, so I'm willing to tolerate his bulls&*t.
Re: When you spot a flag pattern in a downtrend it is a bearish sign as the market consolidation which forms the pattern is seen as a pause before a continuation of the original downtrend.
I'm just saying, 10K is closer every day...
mp,
In that vein, I will confess a few sins. I am still a sucker for pleasant female company, don't care for scotch - beefeaters only - but I enjoy good cigars. I don't daytrade. In fact, I'm mostly cash. But mistake me not, I will take a profit from the market whenever I can.
Oh, my God! A gin drinker!
A two foot tall, razor toothed, number crunching, attentive listener. Interesting.
OMG, CB is Dick Cheney !!!
hey, we can all agree on the cigars and let each name their own poison...oh and the first best thing!
To quote a classic of American cinematography, Paint Your Wagon: "Until you've had a good cigar and a shot of whiskey, you're missing out on the second- and third-best things in life."
"Until you've had a good cigar and a shot of whiskey, you're missing out on the second- and third-best things in life."
Conjure says, "BWAHAHA! How true."
OK, Sparks, you can come back now.
We won't rib you any more today, and that's a promise.
Conjure is a stone-cold son of a bitch. He doesn't believe in a damned thing aside from his own precision. He cranks numbers endlessly, listens to everybody, then makes a decision. He does not day trade. He has investments and special situations.
We used to call these individual investors. Good to see one survived the 90s.
The special situations, more often than not, take months to develop because it takes time to spring the trap.
Sometimes he's wrong but, more often than not, he's right.
We used to call "months" "short term." These days what qualifies as short term? Propagation delays between Bloomberg terminal refreshes?
Plus, he likes good-looking women, good scotch and good cigars. In my book that makes him OK, so I'm willing to tolerate his bulls&*t.
If his cardiologist could get him on a dietary Dawg Bawl restriction I'd be okay with him as well. Maybe you can sneak him into the McCain/Romney Presidential Ball so we can meet?
Just as an aside, I did crunch the numbers on TGT in detail long before I entered this trade. I spent a significant amount of time studying their position amongst the box retailers. This is obviously a short term play for me.
I'm new to this site and don't know your positions or market views. We will come to know each other.
"Propagation delays between Bloomberg terminal refreshes? "
Aw, hell, Rob Dawg. What was the propagation delay on subprime and "containment?" A year, two?
Christ, Sebastian still hasn't gotten the memo. What's his prop delay? Forever?
There's still a lot of "information asymmetry" out there.
Mixed in with a wicked dose of confimation bias...
"I'm new to this site and don't know your positions or market views. We will come to know each other."
Sparks, welcome.
Conjure Bag says, "Hi!"
Energyecon, don't take my word for it.
Conjure says, "Gravity works."
Conjure,
HEY back. If I can manage to keep my mouth shut. It would do me well to say nothing and listen - - at least until I get a much better feel for who is speaking from what market position and what they are saying. Nuf said.
Trade well..... think..... and trade well
Up up and away!
I was thinking of Seb's confirmation bias, but that one can sneak up on all of us (well, excepting Conjure perhaps).
A personal supposition:
One of tomorrow's headlines will be TGT disappoints. Or - at least that is my bet.
Ok, where are we?
There is no industry standard for market data formats. Each exchange has their proprietary format. Financial content providers such as Reuters and Bloomberg aggregate different sources of market data, normalize it, and add news or analytics. Examples of consolidated feeds are RDF (Reuters Data Feed), RWF (Reuters Wire Format), and Bloomberg Professional Services Data.
To deliver lower latency market data, both vendors have released real-time market data feeds which are less processed and have less analytics:
RDF-D (Reuters Data Feed-Direct) (The page cannot be found
Bloomberg B-PipeWith B-Pipe, Bloomberg de-couples their market data feed from their distribution platform because a Bloomberg terminal is not required for get B-Pipe. Wombat and Reuters Feed Handlers have announced support for B-Pipe.
A firm may decide to receive feeds directly from an exchange to reduce latency. The gains in transmission speed can be between 150 milliseconds to 500 milliseconds. These feeds are more complex and more expensive and the firm has to build and maintain their own ticker plant (http://www.financetech.com/featured/showArticle.jhtml?articleID=60404306).
Huh,
Bloomberg's Secunda says the B-Pipe data is different from the Bloomberg Professional Service data in that the Professional Service data delivered to the terminal is highly processed. The B-Pipe data, on the other hand, is closer to what the exchange or source sends out. "We had to back out all the specialty stuff; we wanted to make sure we had the best latency in the business," Secunda says of the B-Pipe data. He explains that the purpose of B-Pipe is "to help Bloomberg terminal customers increase the value of the product to the enterprise."
Low Latency: Wall Street & Technology Resource Center
TRADERVIEW.COM
You folks will have fun with this. Be nice
"...billionaire investor Wilbur Ross told "Squawk Box" that a thousand banks could fail before the financial crisis is over..." (I agree and make it 1,500.)
Financial Crisis May Get Much Worse, Experts Say - CNBC