Wow - real estate really is the best investment - look at that rate of growth for opportunities to get in the market. And the numbers! 3/4 million will likely become a million in just a few months - those are the sorts of growth rates that real estate didn't offer in the past, like 2004 or 2005.
Well, truly, this is the time to buy - or get foreclosed out of the market forever.
Umm - on second thought, that slogan needs a bit of tweaking.
Morgan Creek Capital Management, a $16bn (10.3bn) fund of hedge funds, has launched a $200m opportunistic fund focused on dislocation in the credit market, and targeting the municipal bond market for the first time.
The Morgan Creek Dislocation Fund is designed in part to capitalise on assets discounted by institutions to improve liquidity, and is different from distressed vehicles set up by other fund managers. Mike Hennessey, the chief operating officer for Morgan Creek, said the dislocation fund is designed to exploit new pricing opportunities that arise from managers selling off assets at a discount in a hurry to improve their liquidity and financial footing. Classic distressed situations tend to short companies in financial trouble.
Last month, Swiss fund of hedge funds Unigestion unveiled a Distressed Hybrid Fund of Funds with a fundraising target of up to $750m to invest in 10 to 15 funds investing in distressed consumer and commercial credit, corporate loans, mortgages, high yield debt, distressed private equity, mezzanine debt and distressed real estate.
bloomberg reports that the market value of the 10 com[anies protected by the prohibition against naked short sales surged 26% since the July 15th implementation date
Brian Hunter, the trader who was blamed for the collapse of $9bn hedge fund Amaranth Advisors two years ago, has taken advantage of last month's plunge in commodity prices to help propel the year-to-date return at the fund he now advises to 230 per cent.
The Peak Ridge Capital Commodities Volatility fund, which Mr Hunter advises, returned 24 per cent in July as commodities prices fell 10 per cent for the month.
About $70 billion is invested in commodity hedge funds, more than double the amount three years ago, according to estimates by Chicago-based Cole Partners Asset Management, which invests in such funds.
BlueGold, Ospraie
Traders that lost money last month included BlueGold Capital Management LLP, an $800 million fund co-founded in February by 31-year-old Pierre Andurand in London. The fund declined about 19 percent in July, paring its return this year to 109 percent, according to investors.
The flagship fund of New York-based Ospraie Management LLC, the $9 billion hedge-fund firm run by Dwight Anderson, 41, fell 13 percent, extending its loss this year to 15 percent, clients said. - Bloomberg.com
The saga continues... even I wake up now asking when's all this going to end... Need to see 40-60% national declines IMO the people who are leaving the game now are the smart ones...
To speed up the disposition of the 54,000 foreclosed properties it owns, Fannie Mae is opening offices in California and Florida and is considering selling those properties in bulk to investors.
Huge anchoring bias still at work -- people still just can't conceive prices dropping anywhere near as far as they have to. I'm still surprised at how optimistic CR is, frankly. He promised to expand on his thinking, but instead he's running off to the Sierras to scout new hideouts.
Problem is, any such deals would have to happen before FAS 141R takes effect in December. The new rule, she says, will make it almost impossible to do bank mergers. The rule demands that an acquirer not only immediately mark to market the portfolio of the company being bought - and remember, bids for mortgage assets are now few and far between - but also mark to market its own portfolio as well. Nobodys going to want to do that, Whitney says.
Another regulatory change that may wreak havoc: Starting next year, the Office of Thrift Supervision will bar credit card issuers from using outside credit information to reset interest rates. For instance, Wells Fargo (WFC) couldnt increase the rate on your Visa just because you were late on an electric bill. While Whitney thinks the OTS proposal is well intentioned, shes convinced that it will force banks to reduce the amount of credit they extend to consumers,
mp, tj, MT- I believe you're right, but are we talking days, weeks, or months? Talk about perfect storm,...got the Summer Olympics and Presidential election to throw a wrench into the normal wackiness. I've been waiting for a year for the pot to boil.
No timetables for me, just a steady turning up of the temperature. I've learned my lessons. TPTB can't prevent what's happening, only delay (and exacerbate) it.
From Kona link above: Regardless of whether hedge funds and short-sellers exploited the firms weakness, it was Cayne and his colleagues who made the firm financially vulnerable. They sealed the firms fate by choosing to finance the vast majority of the firms daily needs - about $50 billion a day - in the overnight repurchase agreement (or repo) market, using some 71% of its mortgage book as the collateral. (By contrast, Goldman Sachs (GS) finances less than 10% of its mortgage book in the overnight market, according to [Goldman Sachs co-president Gary] Cohn.)
It was a properly difficult month," said BlackRock (BLK.N: Quote, Profile, Research, Stock Buzz) fund manager Mark Lyttleton. "If you're highly leveraged, you're going to be losing a lot of money very quickly.
"There's one or two hedge funds that I look at (that) I would imagine at certain points of the month were down 10 to 15 percent, and one of them, which is a good one, was down 7 (percent) in a month, which is the worst month they've ever had," Lyttleton said,
Funds which owned soaring commodities and shorted battered financials in the expectation of further price falls have profited in recent years. John Paulson for instance, the top-earning manager in 2007 with $3.7 billion, has been short financials.
However, the suddenness of the drop in commodities and recovery in financials in July resulted in heavy losses for many funds who were betting against such moves.
The next shoe has already dropped and the clock is ticking IMHO!
One fact remains. This market has become way too volatile for anyone not willing to tolerate the extremely wide swings being generated by the hedge funds.
So, if you're in for the long term, fine. If not, you're going to end up not toasted, but incinerated.
LOL, how can it not be? This is like a game of chicken and more cash is burned every day, so I'm still wondering what the driver for a turn-around is; where is future value and job creation going to come from with this mess?
Keep in mind that the guys in charge, in their infinite wisdom, have decided to put up a smoke screen.
Nothing has changed from last October. The SIVs, which were supposed to have come on the books in June, didn't because the FASB and SEC didn't want to stress the system.
As Goldman points out, if everything was marked to market right now, a large share of the financial sector would be insolvent.
They can only hope that the financials earn their way out of this mess because they're having trouble raising capital the old fashioned way.
With more losses from credit cards and consumer debt coming, it's going to be problematic, as JP Morgan warned earlier this week.
In other words, we haven't seen the REAL crunch yet. The ball busting is yet to come.
The Wife and I are making choices. Footloose to a fault over the past ten years with dry powder. We could attempt to emigrate to anywhere in the world, hoping for a better place to raise two school age children. But the paradises are unknown to us, so we have narrowed it to two countries where we have network, family, etc. One is in Asia. The other is the USA. Timing, as mentioned above, becomes an interesting question . . .
Blood running in the streets as a favorable investment environment is undeniable, so long as you don't slip in the gutters!
I do agree with Greenspan concerning the idea that it's necessary to clean up household balance sheets before the financials can begin to think about returning to health.
As far as I'm concerned, both McCain and Obama are fools. No sane person would want the job one of them will have.
This is going to turn out to be the biggest government bailout in human history and one of them will preside over it.
At some point the masses are going to get the message that this thing is just completely blowing up and start pulling money out of their 401K plans.
If this happens at the same time as the high end housing falls apart, it might not be a surprise. By the time the over-leveraged discover "we are all subprime now" they will be desperate for cash or just be forced to declare BK. At that point we will already be seeing a pile of corporate BKs...
The prospect of a Japan-style 80% haircut is not at all far-fetched. We are talking numbers that no amount of Fed injections can stabilize, whent he big deflation waves hit the shore everything will be overwhelmed, and any concerns about a small number of short sellers will be rendered irrelevant by a tsunami of forced redemptions...
Looking at certain counties like Clark County, NV (Vegas), and San Bernardino, CA, I see more than 1% of homes getting foreclosure notices in a month. If that continued for just a year, one in eight homes would be in foreclosure.
With dropping cure rates, that means something like 8-10% of existing homes will be foreclosed within a year in some counties. By the time the housing crisis is over, there might be counties where over 25% of homes going to foreclosure sale between late 2007 and the end of 2011.
Recent foreclosure rates have already exceeded those occuring during the Texas oil bust of the 1980s, and the CA bust of the 1990s. Both of those busts were aggravated major problems in the real economy. This time it's different. The foreclosure rates were already really high before the likely recession started in late 2007.
From what I am seeing - and it's conjecture, I admit - a lot of people are not getting good information and don't realize just how firmly they're pinned. I don't fault them for it. They're busy, and their usual sources for gaining an understanding of what's happening have not been very helpful.
It will be a surprise to many how much the lending environment has changed since they last needed to take a look. And many more will find every 'usual' avenue for coping cut off or made impossible.
It may get anxious, not to say panic-stricken, out there as the credit crunch moves into the real economy.
Not getting good information'...it's all about the bond market and jobs. Equities are at the mercy of hedge fund black boxes, just look at the P/E of the Dow and Russell 2000...nil. What's the NPV of nil?
There's different kind of boxes. A true black box is totally automated and algorithm-driven. No humans, other than programmers.
A gray box uses the signals generated by black boxes but filters them through human traders.
A quant box generates data that human traders interpret to arbitrage trades and keep portfolios aligned with parameters.
Hedge funds and prop desks use all kinds of boxes. Probably on any given day, up to 90% of trading volume is generated by various high-volume, leveraged trading systems. It's a recipe for manipulation, volatility and disaster.
Months ago, it left the planet of reality-based fundamentals.
Aug. 14 (Bloomberg) -- U.S. consumer prices rose more than forecast in July, indicating Federal Reserve policy makers have reason to be concerned over a pickup in inflation.
The consumer price index climbed 0.8 percent, twice as much as anticipated, the Labor Department said today in Washington. The cost of living was up 5.6 percent in the year ended in July, the biggest jump in 17 years. So-called core prices, which exclude food and energy, also rose more than projected.
in 1930's deflation, money was scarce...there was plenty of supply of goods, in fact too much supply...but the money was scarce. why? because the us dollar was tied to a gold standard...now, we are seeing the beginnings of a simialr deflation but will our money be scarce? without a gold standard for any currency on the planet, i find it impossible for paper money to suddenly become scarce...
Ok so the 'official' YOY is 5.6%....and the bond mkt is what? 10yr. 3.9%, 30yr., 4.5%.. somebody hit me.
The twin pillars of respectability, P&B, have got to steepen the curve if they want to save the banks....right? Sure.
Brother can you spare a dime?
Goose:
The Fed can fire the presses up when ever it wants. It's not the money supply that's shrinking right now (although IMO it's not growing at this time), it's credit...which in this context is considered the same thing. Look how much credit has been destroyed already in the write downs by IB's. Look how hard it is already to get a loan from a bank. Limits are already being rolled back on credit cards, and things are just going to get tighter in that arena. Yes our borrower society is suddenly find that there is no where left to get credit from.
In other news today the government released a new Universal Government Statistics Deflator of 2.9, the highest so far.
NervousRex | 08.14.08 - 9:09 am | #
The Bloomberg write-up puts big emphasis on the headline CPI figure, mentions core CPI off-handedly. To the extend that there was a bigger measured rise in energy prices in July than was expected, the decline in August (or September) is likely to be magnified. We already know what is happening with energy prices. Core ran at 0.3% two months in a row, despite all the reasons it shouldn't (Wal-Mart winning the retail war, real weekly incomes down 3.5% from a year ago, declining credit availability to households, employment falling). Even some Fed hawks have recently said they thought core inflation might come down. They aren't gonna like this.
There's different kind of boxes. A true black box is totally automated and algorithm-driven. No humans, other than programmers.
A gray box uses the signals generated by black boxes but filters them through human traders.
A quant box generates data that human traders interpret to arbitrage trades and keep portfolios aligned with parameters.
Hedge funds and prop desks use all kinds of boxes.
Rich's point redefines the notion of "trading against the box". And maybe that's all that is left the market as a price discovery mechanism. If Rich is right, perhaps we should breed a flock of black swans instead of feeding the pigs who created this mess.
The boxes of all descriptions leveraged games will continue until their access to credit is withdrawn...however that occurs. We will not see a fundamental value driven equity market until that happens IMNSHO.
When do we get to the "them idiot Californians and slimy Florida guys"? Plus "sunshine house scammers" and "Michigan forelorn"? After that, we're just name calling, but really, we do have to see this for what it really is. Which is, a non-uniform distribution of koolaid drinkers.
First?
16.7% That's a disturbing, mind-boggling number.
Wow - real estate really is the best investment - look at that rate of growth for opportunities to get in the market. And the numbers! 3/4 million will likely become a million in just a few months - those are the sorts of growth rates that real estate didn't offer in the past, like 2004 or 2005.
Well, truly, this is the time to buy - or get foreclosed out of the market forever.
Umm - on second thought, that slogan needs a bit of tweaking.
Guess after all, people will end up living in Hondas since Hummer will be out of reach. It is a upper scale appartment.
Morgan Creek Capital Management, a $16bn (10.3bn) fund of hedge funds, has launched a $200m opportunistic fund focused on dislocation in the credit market, and targeting the municipal bond market for the first time.
The Morgan Creek Dislocation Fund is designed in part to capitalise on assets discounted by institutions to improve liquidity, and is different from distressed vehicles set up by other fund managers. Mike Hennessey, the chief operating officer for Morgan Creek, said the dislocation fund is designed to exploit new pricing opportunities that arise from managers selling off assets at a discount in a hurry to improve their liquidity and financial footing. Classic distressed situations tend to short companies in financial trouble.
Last month, Swiss fund of hedge funds Unigestion unveiled a Distressed Hybrid Fund of Funds with a fundraising target of up to $750m to invest in 10 to 15 funds investing in distressed consumer and commercial credit, corporate loans, mortgages, high yield debt, distressed private equity, mezzanine debt and distressed real estate.
sorry
OT but worth it i hope
bloomberg reports that the market value of the 10 com[anies protected by the prohibition against naked short sales surged 26% since the July 15th implementation date
Naked Short Ban Returns SEC 19 to Bear Monday: Chart of Day - Bloomberg.com
ouch bad typing
... 19 companies protected by naked short sales prohibition...
mock turtle, this relates directly to what was being discussed on the previous thread re the hedge funds.
Its just plain easy!
Brian Hunter, the trader who was blamed for the collapse of $9bn hedge fund Amaranth Advisors two years ago, has taken advantage of last month's plunge in commodity prices to help propel the year-to-date return at the fund he now advises to 230 per cent.
The Peak Ridge Capital Commodities Volatility fund, which Mr Hunter advises, returned 24 per cent in July as commodities prices fell 10 per cent for the month.
Since hedge funds play both ways -and- are heavily computerized, volatility should be breathtaking.
About $70 billion is invested in commodity hedge funds, more than double the amount three years ago, according to estimates by Chicago-based Cole Partners Asset Management, which invests in such funds.
BlueGold, Ospraie
Traders that lost money last month included BlueGold Capital Management LLP, an $800 million fund co-founded in February by 31-year-old Pierre Andurand in London. The fund declined about 19 percent in July, paring its return this year to 109 percent, according to investors.
The flagship fund of New York-based Ospraie Management LLC, the $9 billion hedge-fund firm run by Dwight Anderson, 41, fell 13 percent, extending its loss this year to 15 percent, clients said.
- Bloomberg.com
IT'S CONTAINED!
Nothing to see here, move along, move alone. Thank You.
The saga continues... even I wake up now asking when's all this going to end... Need to see 40-60% national declines IMO the people who are leaving the game now are the smart ones...
To speed up the disposition of the 54,000 foreclosed properties it owns, Fannie Mae is opening offices in California and Florida and is considering selling those properties in bulk to investors.
What happens when the "investors" go bankrupt?
Huge anchoring bias still at work -- people still just can't conceive prices dropping anywhere near as far as they have to. I'm still surprised at how optimistic CR is, frankly. He promised to expand on his thinking, but instead he's running off to the Sierras to scout new hideouts.
Things that make you go hmmmm...
Go West
Go West - FORTUNE Features
Problem is, any such deals would have to happen before FAS 141R takes effect in December. The new rule, she says, will make it almost impossible to do bank mergers. The rule demands that an acquirer not only immediately mark to market the portfolio of the company being bought - and remember, bids for mortgage assets are now few and far between - but also mark to market its own portfolio as well. Nobodys going to want to do that, Whitney says.
Another regulatory change that may wreak havoc: Starting next year, the Office of Thrift Supervision will bar credit card issuers from using outside credit information to reset interest rates. For instance, Wells Fargo (WFC) couldnt increase the rate on your Visa just because you were late on an electric bill. While Whitney thinks the OTS proposal is well intentioned, shes convinced that it will force banks to reduce the amount of credit they extend to consumers,
mp, tj, MT- I believe you're right, but are we talking days, weeks, or months? Talk about perfect storm,...got the Summer Olympics and Presidential election to throw a wrench into the normal wackiness. I've been waiting for a year for the pot to boil.
"What happens when the "investors" go bankrupt?"
This is one of the issues that Goldman talks about in the Keene interview. Sort of.
As he puts it, the credit hedge model is kaput.
sdtfs,
No timetables for me, just a steady turning up of the temperature. I've learned my lessons. TPTB can't prevent what's happening, only delay (and exacerbate) it.
I think it's going to boil over this year.
Genevieve, for example, says she's making money in this market, and I believe her, but I think it's picking up nickles in front of a steamroller.
From Kona link above: Regardless of whether hedge funds and short-sellers exploited the firms weakness, it was Cayne and his colleagues who made the firm financially vulnerable. They sealed the firms fate by choosing to finance the vast majority of the firms daily needs - about $50 billion a day - in the overnight repurchase agreement (or repo) market, using some 71% of its mortgage book as the collateral. (By contrast, Goldman Sachs (GS) finances less than 10% of its mortgage book in the overnight market, according to [Goldman Sachs co-president Gary] Cohn.)
Define "boil over", please.
I know what I expect to happen, but if I knew the when I'd be a zillionaire already.
The credit funds should hit a brick wall within a few more months.
The equity funds that don't have access to long term money will probably hit the wall shortly thereafter.
I think it's picking up nickles on a burning runway filled with crashing jets
"Define "boil over", please."
Become illiquid or insolvent.
Actually, I'm personally hoping it takes a little longer; I'll be much more prepared. I'm good now, but I'll be great then!
Times Online
April 16, 2008
Money men: the 50 best paid hedge fund managers
50 best paid hedge fund managers - WEST HAWK DEVELOPMENT CP - WHD
WTF is John Paulson?
Hedge funds braced for poor data after tough July
Hedge funds braced for poor data after tough July
| Reuters
It was a properly difficult month," said BlackRock (BLK.N: Quote, Profile, Research, Stock Buzz) fund manager Mark Lyttleton. "If you're highly leveraged, you're going to be losing a lot of money very quickly.
"There's one or two hedge funds that I look at (that) I would imagine at certain points of the month were down 10 to 15 percent, and one of them, which is a good one, was down 7 (percent) in a month, which is the worst month they've ever had," Lyttleton said,
Funds which owned soaring commodities and shorted battered financials in the expectation of further price falls have profited in recent years. John Paulson for instance, the top-earning manager in 2007 with $3.7 billion, has been short financials.
However, the suddenness of the drop in commodities and recovery in financials in July resulted in heavy losses for many funds who were betting against such moves.
The next shoe has already dropped and the clock is ticking IMHO!
One fact remains. This market has become way too volatile for anyone not willing to tolerate the extremely wide swings being generated by the hedge funds.
So, if you're in for the long term, fine. If not, you're going to end up not toasted, but incinerated.
"John Paulson for instance, the top-earning manager in 2007 with $3.7 billion, has been short financials."
Please. They've ALL been short financials.
Illiquid or insolvent? That's half the players already, they just don't show it (with the Fed's help).
It still surprises me that we haven't had more failures (homebuilders, banks, etc.) by now, which is why I won't fall into the timing trap.
With one caveat... it'll feel like a nationwide depression in 2009.
2009 is probably going to be a genuine mess.
Goldman is saying he expects the financials to be .4 of book. Right now they're about 1.5.
Re: 2009 is probably going to be a genuine mess.
LOL, how can it not be? This is like a game of chicken and more cash is burned every day, so I'm still wondering what the driver for a turn-around is; where is future value and job creation going to come from with this mess?
ationwide depression in 2009? What about a global meltdown?
"What about a global meltdown?"
It is melting as we speak, write, whatever.
Keep in mind that the guys in charge, in their infinite wisdom, have decided to put up a smoke screen.
Nothing has changed from last October. The SIVs, which were supposed to have come on the books in June, didn't because the FASB and SEC didn't want to stress the system.
As Goldman points out, if everything was marked to market right now, a large share of the financial sector would be insolvent.
They can only hope that the financials earn their way out of this mess because they're having trouble raising capital the old fashioned way.
With more losses from credit cards and consumer debt coming, it's going to be problematic, as JP Morgan warned earlier this week.
In other words, we haven't seen the REAL crunch yet. The ball busting is yet to come.
Good now, better later....
The Wife and I are making choices. Footloose to a fault over the past ten years with dry powder. We could attempt to emigrate to anywhere in the world, hoping for a better place to raise two school age children. But the paradises are unknown to us, so we have narrowed it to two countries where we have network, family, etc. One is in Asia. The other is the USA. Timing, as mentioned above, becomes an interesting question . . .
Blood running in the streets as a favorable investment environment is undeniable, so long as you don't slip in the gutters!
Anak
This is a great photo of greenspan (if you missed it):
"You never know whether he is speaking on behalf of John Paulson now."
Greenspan Excerpts: Housing Stabilization Key to Crisis End - Real Time Economics - WSJ
I do agree with Greenspan concerning the idea that it's necessary to clean up household balance sheets before the financials can begin to think about returning to health.
As far as I'm concerned, both McCain and Obama are fools. No sane person would want the job one of them will have.
This is going to turn out to be the biggest government bailout in human history and one of them will preside over it.
No sane person would want the job one of them will have.
Political blindness. Politicians just aren't very good at economics, and they believe politics can trump other issues.
Mmmmm, and politically bailout isn't something to be avoided, but a brilliant solution to the problem.
At some point the masses are going to get the message that this thing is just completely blowing up and start pulling money out of their 401K plans.
If this happens at the same time as the high end housing falls apart, it might not be a surprise. By the time the over-leveraged discover "we are all subprime now" they will be desperate for cash or just be forced to declare BK. At that point we will already be seeing a pile of corporate BKs...
The prospect of a Japan-style 80% haircut is not at all far-fetched. We are talking numbers that no amount of Fed injections can stabilize, whent he big deflation waves hit the shore everything will be overwhelmed, and any concerns about a small number of short sellers will be rendered irrelevant by a tsunami of forced redemptions...
That 16.75% is only those forced into the situation, how many of the rest are having problems and looking to bail out before they get foreclosed.
There is more detail at FORECLOSURE ACTIVITY INCREASES 8 PERCENT IN JULY
Looking at certain counties like Clark County, NV (Vegas), and San Bernardino, CA, I see more than 1% of homes getting foreclosure notices in a month. If that continued for just a year, one in eight homes would be in foreclosure.
With dropping cure rates, that means something like 8-10% of existing homes will be foreclosed within a year in some counties. By the time the housing crisis is over, there might be counties where over 25% of homes going to foreclosure sale between late 2007 and the end of 2011.
Recent foreclosure rates have already exceeded those occuring during the Texas oil bust of the 1980s, and the CA bust of the 1990s. Both of those busts were aggravated major problems in the real economy. This time it's different. The foreclosure rates were already really high before the likely recession started in late 2007.
Jamie, that's a good question.
From what I am seeing - and it's conjecture, I admit - a lot of people are not getting good information and don't realize just how firmly they're pinned. I don't fault them for it. They're busy, and their usual sources for gaining an understanding of what's happening have not been very helpful.
It will be a surprise to many how much the lending environment has changed since they last needed to take a look. And many more will find every 'usual' avenue for coping cut off or made impossible.
It may get anxious, not to say panic-stricken, out there as the credit crunch moves into the real economy.
So Greenspan is out with yet another missive on the housing bubble:
<a href="http://online.wsj.com/article/SB121865515167837815.html?mod=mktw>Bubble architect, heal thyself
Somewhat surprisingly he criticizes the bailout Paulson rammed through Congress.
Also he is banking on increased (illegal?) immigration to help spur new household formation and absorb all those foreclosures.
Somebody pass this senile old goat a shuffleboard stick and a coupon for Denny's!
How reliable are RealtyTrac's statistics? Wasn't there a problem with double counting, etc. at one point? Has that been resolved?
Was Lincoln talking of Reaganomics:
"Whether any nation so conceived and so dedicated can long endure"
There's different kind of boxes. A true black box is totally automated and algorithm-driven. No humans, other than programmers.
A gray box uses the signals generated by black boxes but filters them through human traders.
A quant box generates data that human traders interpret to arbitrage trades and keep portfolios aligned with parameters.
Hedge funds and prop desks use all kinds of boxes. Probably on any given day, up to 90% of trading volume is generated by various high-volume, leveraged trading systems. It's a recipe for manipulation, volatility and disaster.
Months ago, it left the planet of reality-based fundamentals.
U.S. July Consumer Prices Rise More Than Forecast on Fuel, Food
By Shobhana Chandra
Aug. 14 (Bloomberg) -- U.S. consumer prices rose more than forecast in July, indicating Federal Reserve policy makers have reason to be concerned over a pickup in inflation.
The consumer price index climbed 0.8 percent, twice as much as anticipated, the Labor Department said today in Washington. The cost of living was up 5.6 percent in the year ended in July, the biggest jump in 17 years. So-called core prices, which exclude food and energy, also rose more than projected.
{snip}
in 1930's deflation, money was scarce...there was plenty of supply of goods, in fact too much supply...but the money was scarce. why? because the us dollar was tied to a gold standard...now, we are seeing the beginnings of a simialr deflation but will our money be scarce? without a gold standard for any currency on the planet, i find it impossible for paper money to suddenly become scarce...
Only 5.6%?
futures dont like claims and cpi
Only 440,500?
The cost of living was up 5.6 percent in the year ended in July, the biggest jump in 17 years.
In other news today the government released a new Universal Government Statistics Deflator of 2.9, the highest so far.
Ok so the 'official' YOY is 5.6%....and the bond mkt is what? 10yr. 3.9%, 30yr., 4.5%.. somebody hit me.
The twin pillars of respectability, P&B, have got to steepen the curve if they want to save the banks....right? Sure.
Brother can you spare a dime?
Unemployment is 5.7%
Inflation is 5.6%
The Misery Index is thus 11.3. the highest in 17 years.
Goose:
The Fed can fire the presses up when ever it wants. It's not the money supply that's shrinking right now (although IMO it's not growing at this time), it's credit...which in this context is considered the same thing. Look how much credit has been destroyed already in the write downs by IB's. Look how hard it is already to get a loan from a bank. Limits are already being rolled back on credit cards, and things are just going to get tighter in that arena. Yes our borrower society is suddenly find that there is no where left to get credit from.
No credit? Call 1-800-DEFLATION.
In other news today the government released a new Universal Government Statistics Deflator of 2.9, the highest so far.
NervousRex | 08.14.08 - 9:09 am | #
We need a deflator inflator index.
The Bloomberg write-up puts big emphasis on the headline CPI figure, mentions core CPI off-handedly. To the extend that there was a bigger measured rise in energy prices in July than was expected, the decline in August (or September) is likely to be magnified. We already know what is happening with energy prices. Core ran at 0.3% two months in a row, despite all the reasons it shouldn't (Wal-Mart winning the retail war, real weekly incomes down 3.5% from a year ago, declining credit availability to households, employment falling). Even some Fed hawks have recently said they thought core inflation might come down. They aren't gonna like this.
Direct link to official figures here (pdf, 108.3kb)
El Cliffo writes:
No credit? Call 1-800-DEFLATION.
Exactly.
rich writes:
There's different kind of boxes. A true black box is totally automated and algorithm-driven. No humans, other than programmers.
A gray box uses the signals generated by black boxes but filters them through human traders.
A quant box generates data that human traders interpret to arbitrage trades and keep portfolios aligned with parameters.
Hedge funds and prop desks use all kinds of boxes.
Rich's point redefines the notion of "trading against the box". And maybe that's all that is left the market as a price discovery mechanism. If Rich is right, perhaps we should breed a flock of black swans instead of feeding the pigs who created this mess.
The boxes of all descriptions leveraged games will continue until their access to credit is withdrawn...however that occurs. We will not see a fundamental value driven equity market until that happens IMNSHO.
Up only 55% YOY! Is that all?
my monthly "RealtyTrash" comment.
When do we get to the "them idiot Californians and slimy Florida guys"? Plus "sunshine house scammers" and "Michigan forelorn"? After that, we're just name calling, but really, we do have to see this for what it really is. Which is, a non-uniform distribution of koolaid drinkers.
This post says that SKF options are pricing in an 85% chance that there won't be another financials selloff. Does that make sense to anyone?
The Dean of Penny Stocks | CollegeStock