I have a confusion - is this a suckers rally going on?? due to the changes like "mark to market accounting", do u anticipate banks will still fail? (or fail later than usual)
I have a confusion - is this a suckers rally going on?? due to the changes like "mark to market accounting", do u anticipate banks will still fail? (or fail later than usual)
KC | 10.20.08 - 3:57 pm
It's a bear rally, I would give it a week tops.
The underlying banks are still basically insolvent, being kept alive on life support so that their demise doesn't take the whole system down from CDS's.
When do retailers give final guidance on holiday sales?
That's the next big speedbump I see on the road (beyond the end of Oct stats data, which I expect to be followed by the FOMC cut which leaves outlook hazy)
One way or another, a lot of money managers are looking to grind out a gain by next quarter's report given how many must be in the red right now.
With the VIX calming down and LIBOR as noted improving. The problem arises in FNMA and its compulsion to screw everyone trying to increase its earnings
Question: Are the coming option ARM resets going to present a problem to borrowers if their index interest rates remain low?
I realize that the LIBOR rate indexed loans are likely a separate issue as there is unknown volatility there, (Conjure article), and that recast loans (neg am recast when loan hits 110%) are going to fail regardless.
You're right. Likely to be volatile, but I just don't see anything getting worse in finance world.
What is of more interest to me is how the U.S. (and much of the developed world) makes the secular shift from consumer-based society to something less consumer-based. Until we get some clarity, I don't think that this period in our economic history will have concluded. Personally, I wouldn't buy equities unless they were much, much cheaper.
Correct me if I'm wrong, but that is about 25% and 50% of recent 'regular' volume. Furthermore it was focussed in basic materials and commodities which is not an endorsement of the greater stock market or economy.
We're in a holding pattern for FOMC, OPEC, end of Oct stats (crude inventory, home sales, durable orders, initial claims, personal income/spending, PMI), earnings, and maybe some CDS settlement. Nov 4 brings truck+auto sales which will remind everyone that Chrysler+GM either did or did not get a deal in before the election (which they hopefully could use to secure election-time promises)
You're right. Likely to be volatile, but I just don't see anything getting worse in finance world.
Well I think things could possibly get worse somewhere down the line if the markets get concerned about some kind of sovereign default or currency blow up. I would rule that out, though I don't think that's "just around the corner".
I think concerns about a near-term inflationary blow up are unfounded. Longer-term though I think attempting to fix the system by flooding it with cash could have serious consequences... like a secondary financial crisis just when we think we've gotten past the primary economic crisis.
Bond Girl,
It's ok, just caught the reply. I would say that everything is really in a holding pattern then. Although it is worth keeping in mind that we're circling close to the ground with things like Pennsylvania's 30yr turnpike debt selling for 6.5% yield -- but at least it sold without being pulled
Off topic, but not much seems to be on... Isn't there supposed to be some cataclysm related to settlement of credit-default things on Lehman? When (if ever) does the Great Unwashed get to find out if it happened?
I think concerns about a near-term inflationary blow up are unfounded. Longer-term though I think attempting to fix the system by flooding it with cash could have serious consequences... like a secondary financial crisis just when we think we've gotten past the primary economic crisis.
I agree, and I personally don't think that what has been done has fixed the underlying economic problem.
The financial problem was simply the market realising that we are not as wealthy as we thought we were. It saw the magnitude of the problem and siezed up. The Central Banks, through some sleight-of-hand, have convinced the markets that the costs of mal-investment will not be paid for all at once. Future generations will pay, or we will pay in a few years.
But there is little chance that we will be able to build castles in the sky of this magnitude in the future. Instead, we need an engine of growth. That is the economic crisis in the U.S., as our entire economic system of the past decade or longer has been built on this premise.
Dope Brontide writes:
I have a confusion - is this a suckers rally going on?? due to the changes like "mark to market accounting", do u anticipate banks will still fail? (or fail later than usual)
KC | 10.20.08 - 3:57 pm
It's a bear rally, I would give it a week tops.
The underlying banks are still basically insolvent, being kept alive on life support so that their demise doesn't take the whole system down from CDS's.
So, the banks are still going to fail sooner or later?? with this mark to market accounting changes, i dont see them failing. they can manipulate books to show any value....isnt it? correct me where am i going wrong.
Thanks
BillyHill,
Final Lehman cash settlement on Oct 21. With FOMC (repos + TOMO) + Treasury (TIO + TAF), the sloshwill be at a short term peak of $403bn to help make a smooth transition. I guess that the government didn't get DDTC's press release speculating that only $6bn of net exposure to Lehman was out there. Physical settlment has happened so the $150bn of actual Lehman debt should be have been used up, so it's just the ~$300bn in naked CDS left to be settled
I definitely think that the $250bn of free/forced cash for banks was related to the Lehman settlement as the Treasury couldn't afford the overtime to deal with a second Lehman, and they couldn't specifically out any serious net exposure publicly
US Card Services income down 59%, loss provisions up ~50%, write down rate increased 100% YoY (3% to 6%)
International Card services income down 2%, loss provisions increased 60% YoY
Global Commercial Services income flat, loss provisions up 43% YoY
Global Network & Merchant Services income flat, loss provisions up 87% YoY
Corporate and Other reported a third-quarter net gain of $158 million, compared with a net loss of $11 million from a year ago. The net gain reflects the recognition of $220 million ($136 million after-tax) for the previously announced MasterCard and Visa settlements and tax benefits due to the revision of the Companys estimated annual effective tax rate.
American Express Company (NYSE: AXP) today reported third-quarter income from continuing operations of $861 million, down 23 percent from $1.1 billion a year ago. Diluted earnings per share from continuing operations were $0.74, down 21 percent from $0.94 a year ago.
Headline doesn't match the results as the stock rises after hours...
Same thing happened in Tokyo about two years after the marke crash. Real estate stabilized and rose for perhaps a year and off a cliff for fifteen years.
So, the banks are still going to fail sooner or later?? with this mark to market accounting changes, i dont see them failing. they can manipulate books to show any value....isnt it? correct me where am i going wrong.
Thanks
KC | 10.20.08 - 4:24 pm
Short of central banks defaulting they have made it crystal clear that they will not allow any large financial institution to fail at this point.
So give it 3 months and see if they have "contained" the issue.
With the huge move in short term treasuries today, do people expect the longer term yields to rise? Or is the Fed going to actively work to keep longer term yields down?
The Press Democrat. Lenders have been foreclosing on about 62 homes a week in Sonoma County. From real estate agents to police officers to neighbors, those reporting on the status of foreclosed homes say vandalism and vacant properties go hand in hand. Its getting toward winter, and people may be making fires to stay warm or using candles for light, said Santa Rosa Fire Division Chief Mike Jones.
Foreclosed homes sitting vacant are becoming heavy burdens for some neighborhoods as vandals break windows, dump trash, deal drugs, spray-paint graffiti and commit arson, said Georgia Pedgrift, graffiti-abatement officer with the Santa Rosa Police Department and one of the primary observer of vacant properties.
A little farther north, near Coffey Park, broken and boarded-up windows and the remnants of spray paint greet potential buyers at a home on Skyview Drive, listed at $248,900.
The few neighbors remaining on Shawnee Street said they cope by keeping to themselves. That means not confronting the people they see trespassing or squatting in the empty homes and not calling police about crime. It has nothing to do with me, said a Shawnee Street resident who, with his own financial difficulties, is worried about losing his home.
With one house already gutted by fire suspicious because gas and electricity to the vacant house had been turned off neighbors anticipate more flames. That ones empty, that ones empty, that ones empty, but you can tell people are there, said one woman who feared retaliation if her name was used. Im just waiting for this one next door to catch on fire.
Real estate agents said neighbors can help protect vacant properties by being observant and active before fire danger begins. First, said agent James Madison, appliances are typically taken from vacant houses. Next, trash is dumped in the yard. Then windows are broken and graffiti starts appearing, and squatters, from overnight partiers to longer-term occupants, move in. It goes in stages, Madison said.
When neighbors cope by ignoring problems you get the serious downward spiral.
Maybe I am nutz but....If we are ina 70% consumption based economic model...and consumers are bank-o, Fed, State, and local gov't is banko, credit is scarce...How do previous P&E ratios factor into this new stock market pricing model? You can totally scrap all historical earnings data because this is a brave new market.
What you are seeing today is the first stirrings of the next big up leg in commodities. Commodities will be choppy, not straight up, but I'll bet the bull commodities market runs for a year or more and creates some nice profits.
My strategy now is to hold some vulnerable shorts in the stock market like small-caps and real estate and range trade them opportunistically while gradually beefing up on commodities, especially energy, food and silver.
Over time, you might see commodities do very well while these weak stock market sectors keep tanking. At least that's what I'm hoping.
The only really big news from this press release is that banks have finally started to move REO inventory. REO sales were half of the total sales, which means that in fact, the "organic", or person-to-person sales were actually LOWER than September of 2007!
Of course, the REO sales were priced aggressively lower, which is why we have the 30% drop from the year before - that's the only reason these home sales were happening.
Add to the mix the fact that Fannie Mae's new fees for high risk areas, and the elimination of Down Payment Assistance at the end of September, and you have the real reason sales "spiked" in September.
So, no bottom. And this is only good news for those of you renters out there who are waiting to buy a home - home prices are really going to start moving downward now that banks have staffed up their REO departments and are finally moving inventory with aggressive price discounts!
If they're cost of capital was 6% (an overestimate, they have cheaper credit out there) + their write-offs were 6% + their operating costs were 3% (didn't look) What's the average interest paid on outstanding credit card debt? I have to estimate 50% of people pay on time and incur no interest, for the other 50% maybe their dollar weighted interest rate is 30% (no usury rate right?)... Well that would be break even with back of the envelope numbers. Might end up being a good strategic buy for a foreign bank
It's a housing led recession so we'll probably even see such desperation as Mastercard or Visa lowering their transaction fees
Uffish tought writes:
Q: Are the coming option ARM resets going to present a problem to borrowers if their index interest rates remain low?
A: Yes. The interest rate has little to do with the payment shock, it's almonst entirely a matter of how many times the borrower chose the "option" of making a negatively amortizing (a/k/a "minimum") payment. Also, they don't have to hit 110% to recast; at month 60 they are recast no matter what.
Sun's First-Quarter Sales Miss Analysts' Estimates (Update1)
By Vivek Shankar
Oct. 20 (Bloomberg) -- Sun Microsystems Inc., the world's fourth-largest maker of server computers, said first-quarter sales fell short of analysts' estimates as customers held back purchases amid an economic slump.
Revenue dropped to $2.95 billion to $3.05 billion in the period ended Sept. 28, Sun said today in a preliminary earnings statement. Analysts projected $3.15 billion, according to the average of estimates in a Bloomberg survey. The company expects a loss of as much 35 cents a share. Sun Posts Loss on Writedown; Revenue Misses Estimates (Update3) - Bloomberg.com
So Nouriel goes off for a "series of talks" in Hungary, and then the first thing he does is sit down with a Hungarian to talk to us about our fate. Tokaj!
Cramer is idiot writes:
AMEX beats. Cramer suggest to sell...When are they going to yank his chain
Not a fan of Cramer, but Amex beat crazy low numbers, and peeling the onion, the results are I think quite ugly.
US card services - net $244M down from $592 last year. Loss provisions up to $941M from 638M. Similar disaster unfolding on the international side ($67M down from $140M).
If you take away the FX gains, average card spend is up about 1% - so on an inflation adjusted basis, customer spend is down.
Meanwhile, deliquency rates are predictably up.
From a global recession standpoint, there is nothing to like here. For Amex in particular, the bright spot on the earnings is a Visa/MC settlement number of $220M.
One of the slides shows sources of credit for continuing operations as possibly being the Fed discount window...
"Wally Bollocks writes:
MJK writes:
Kung fu panda, I live in Santa Rosa, it has a long,long way to go before it reaches Detroit status.
You hope."
It's kind of weird to live in a coastal Cal area where this all hasn't hit home yet.
Little or nothing is moving, but the asking prices stay high and empty houses don't seem common. I know we have them, but we didn't build a lot of new developments so they're not all bunched together. With a couple of exceptions like a large, doomed, condo complex downtown.
Kind of like sitting in a rowboat in the eye of a hurricane in the bright sunshine, watching the eye wall get closer.
Led By SF and SJ Prices in CA and the US Continue to Decline At, or Near, the Fastest Rate Ever
Decline In PPSF For Transaction That Originated in July-Aug and Closed Over the Past 2 months (Annual Rate):
San Fran, CA\t-47.5%
San Jose, CA\t-44.9%
San Diego, CA\t-35.5%
Sacramento, CA\t-33.5%
Denver, CO\t-33.0%
Las Vegas, NV\t-32.3%
Miami, FL\t-30.1%
Phoenix, AZ\t-28.2%
Los Angeles, CA\t-25.4%
Washington, DC\t-20.6%
\t
25 MSA Composite\t-21.0%
\t
Data Source: Radar Logic
All These Areas Have more than 20% drops in PPSF from the Peak Prices. Please note that the metro areas include rural counties nearby .The YoY decline in most of these areas is also at the fastest rate ever, so it is not just the seasonality. The above pace has been fairly consistent.
Bob , Santa Rosa has been hit pretty hard as I stated in my 2nd post above. And I don't think it's over yet, but it will not be comparable to Detroit. Ever.
safe_as_apartments writes:
"The economic crisis is just beginning. Equities are rallying because the financial crisis has ended."
Agree. a lot of the current rally likely from relief that the whole financial system isn't going to seize up. However...the market will soon focus on the depth and scope of the general economic downturn and we may not see the ultimate low of this bear market cycle for some time yet.
typically we need to see 2 quarters of terrible earnings and down revises before ultimate lows are reached. We haven't seen that yet.
That said, bottoms are very tough to call and usually only clear in the rear view mirror.
citizen energyecon, Texas Instruments also missed earnings
Jas Jain,
Those silly Californians. They should install some granite counter tops and soaker tubs -- that'll boost their values by 20%, they can make another 10% by installing all stainless steel appliances
"CA did a foreclosure rule change, requiring banks to wait 30 days to FC and make efforts to contact FB.
Kicked in a couple of months ago, so this is just a catch up."
Nostrovia,
Comrade Misean is Dope | 10.20.08 - 4:55 pm | #
Oh,but it gets better. The latest blurb on the boob tube. "Lee County is going to solve the foreclosure crisis". The dumbfucks are talking about millions and millions of dollars to direct purchase homes...
Bear rally - I agree.
Commercial RE has yet to blow up - and it will.
Credit cards are now showing their stress.
Car loans are bringing down GMAC and thus GM.
CDS are STILL not regulated and thus people are still making 'side bets' against most insurers and banks.
Heck, if GM or Ford pop the CDS there alone are scary.
So, umm, very much not a good time to jump back in.
--
"DataQuick shows median house prices have fallen significantly in SoCal, but these median prices are distorted by the mix of houses sold."
I agree. I track PPSF for Resale SFH by zip codes and that is showing a median (median for all zip codes) decline of close to 40% from the peak PPSF for these zip codes. In this case we are confronted with the fact that prices peaked at different times. Also, some zip codes don't have enough sales and there is some distortion. All in all, 35% decline from the peak is a reality for all of SoCal and 30% for L.A. County. The median numbers in DataQuick are probably higher by 3-5%.
"Bob , Santa Rosa has been hit pretty hard as I stated in my 2nd post above. And I don't think it's over yet, but it will not be comparable to Detroit. Ever."
I don't know about Detroit. I do know if there are more houses than people with an economic basis to live in that area, there will be major problems.
Where I am, we didn't overbuild, because we couldn't -- not enough land, and a town full of well-financed NIMBYs. But we did overprice. And that will lead to its own brand of trouble.
Shnaps writes:
A: Yes. The interest rate has little to do with the payment shock, it's almost entirely a matter of how many times the borrower chose the "option" of making a negatively amortizing (a/k/a "minimum") payment. Also, they don't have to hit 110% to recast; at month 60 they are recast no matter what.
Q: So if someone made the P&I each month, their "payment shock" should be negligible at 60 months in a 5/1 ARM.
In trying to get at the magnitude of the OA reset problem, as I've reread a post from Tanta: "10.22.07 - 1:36 pm": "I have been keeping my eye on the reports of the big OA thrifts (DSL, FED, BKUNA), and they seem to be experiencing a neg am rate of 2.5-4.5% annually"
I'm curious if that neg am rate has changed or if it will have any affect on the OA reset damage that is coming?
Thanks for the response.
"Kind of like sitting in a rowboat in the eye of a hurricane in the bright sunshine, watching the eye wall get closer.
Bob Dobbs | Homepage | 10.20.08 - 4:58 pm | # "
Damn it man! PADDLE HARDER!! We can OUTRUN the beast!
Up here in Fremont I've been following Zillow to see he our old home that we sold in 2004 has been doing. Zestimate price has been holding steady for the last few months but in the last 30 days it's dropped by over 20k.
It's below where we sold it at back in 2004 and in the meantime we're up big time just parking the money in CDs.
I agree, and I personally don't think that what has been done has fixed the underlying economic problem.
Yep. I stand by my basic criticism of policy in the US that I've been making for some time now:
I think the idea of trying to make the real economy better by manipulating the financial system is like trying to make a person with pneumonia or malnutrition better by manipulating their nervous system.
I believe that kind of thinking is the primary cause of the problems we currently have and I still haven't seen any sign that we're moving away from that mode of thinking.
Of course I may be wrong about that not being a viable strategy, but so far I haven't heard any compelling arguments or seen any compelling evidence that leads me to come to a different conclusion.
Correct me if I'm wrong, but that is about 25% and 50% of recent 'regular' volume. Furthermore it was focussed in basic materials and commodities which is not an endorsement of the greater stock market or economy.
Volume was unimpressive to say the least. However, my method of benchmarking volume relies on testing swing points (highest highs, lowest lows of moves). So we need to wait for how the SPX gets into that high of last Tuesday, 1044.31, to indicate how fast this market wants to move up to the 1265 area.
Oh - thank Glod you guys are talking about something other than this fauxlection.
Pissed off-
Hey fremont neighbor...nice day here..Fremont has really become little India..And it has plenty of room to fall...only thing supporting it is the east asian community buying these over priced assets
EvilHenryPaulson writes:
Anonymouse,
How did you make out after diving in on ?Friday?
Two Friday's ago I doubled down to a leveraged position of about 160% of my account, long SPY average $91, QQQQ average $31. I sold the leveraged portion last Tuesday during the decline for nothing - virtually no profit/loss. Then I took an ugly drawdown last Thursday but didn't sell becuase I noticed the volume was significantly lighter. I certainly won't allow that to happen again. If the markets move just above my current average prices I'll stop myself out - period. Thanks for asking.
Now that India/China is falling apart I think a lot of the buying in Fremont, San Ramon is going to dry up. They're still about 6 months behind in the koolaid.
Though I hear anecdotaly from my father-in-law in China that things are getting SERIOUSLY bad there now.
We are renting now and every house in our neighborhood that was for sale has been pulled off the market. Seems that everyone wants to get what the house is "worth" and not a cent less.
I'm expecting the layoffs to start soon in high-tech and the forced selling of houses to start. That's when the wheels should really come off Bay Area housing.
Uffish Thought writes Q: So if someone made the P&I each month, their "payment shock" should be negligible at 60 months in a 5/1 ARM.
That's true, but you original question wasn't about 5/1 ARMs, it was about Option ARMs - which are vastly different.
Granted - if an OA elects to remit the full P&I every month, there won't be much payshock to be had come recast.
Unfortuntely, most do not.
I would guess the neg-am rate has come down a bit; but that's like observing that Hurricane Optionarmius has slowed its sustained windspeed from 175mph to 160mph as it approaches the California coast.
I forgot about Nixon as Eisenhower's veep. That's truly creepy.
You could, if you wished, see the Nixon era as a strange 55-year-long executive reign, sometimes in the shadows and sometimes not. Bush 1's instincts, and certainly not Eisenhower's, were not With the Program. But Eisenhower had to take Nixon to satisfy Nixon's wing of the party, and Bush 1 had to toe the line to it.
Condo community where I live currently has a couple 2/2's and 2/1's listed at 400K avg., it needs to get to 225k to be anywhere close to reality....
Question for all- is it time to buy into emerging market shorts..I mean everything seems to be going against them without the g-7 backstop...
thoughts?
cd writes:
Question for all- is it time to buy into emerging market shorts..I mean everything seems to be going against them without the g-7 backstop...
thoughts?
Everything still seems to indicate - to me at least - that all the world's markets want to do a fairly large counter-trend Intermediate Term bounce, perhaps much higher than most expect. Come next March or May - SPX above 1265 - everyone's a bull again and . . . POW! The next bear leg down begins. At least that's my take.
In my opinion, the biggest story that is not getting the press it should is what stimulus plan China will take.
I forget the company name already, but this morning I read about a toy manufacturer (contracts for Mattel, and other big names) went bankrupt in Guangdong and that in that province alone 2,220 toy factories had shut this year.
The reserves China built up over the past decade were for just such an occasion, they are worth their most value in ~5 years thanks to dollar appreciation, they have infrastructure/entitlement investments that have previously been delayed.
Right now they've been sitting back and using the opportunity to negotiate better contracts as with commodity imports, or better political deals as with Pakistan. However they cannot ignore their domestic economy indefinitely and many exporters are just beginning to realize that they have no orders for the busiest weeks of the entire year.
A large public intervention by China is one thing that would induce a solid bear market rally in my opinion. It would even lower the USD to boost the US economy, and lower USD credit costs. The unwinding of the treasury bubble if done in the right context would further lower credit costs.
Of course their intervention could be 100% basic materials and commodities, which would just start a rally there and beat down the US dollar (by nature of those items being priced in USD)
Question for my elders:
Currently some media outlets are thumping alternative energy as the potential next growth sector (bubble). Given that we are entering and not exiting an economic downturn, these prognostications seem to be very early.
Have these types of predictions ever panned out?
What were they looking to in the 1970s, I'm fairly certain they didn't expect it to be financial deregulation, consumer credit, and securitization. I'm also pretty sure most of them did not know about the internet until there was a web-ipo bubble
"That's true, but you original question wasn't about 5/1 ARMs, it was about Option ARMs - which are vastly different."
Sorry, I got my ARM's mixed up again, good thing I'm not a surgeon.
Anak, that question is above my paygrade. If they are looking to do an orderly unwind of government debt (doubtful), they are probably negotiating government to government and wouldn't tell the public about it
bearly writes:
WFC now probably owns the bulk of CA's mortages & HELOCs since the acquisition of WB (Golden West Shower). 40% DOWN from peak. How do they survive ?
San Francisco Business Times 12/07: Wachovia (NYSE: WB) recently entered the California market through its purchases of Westcorp and Golden West Financial, the parent of World Savings.
WaMu, BofA, Countrywide were the big primary lender in CA over the past 10 years.
Chris, they gonna sell some bonds to finance that little boondoggle?
Comrade Terry | 10.20.08 - 5:42 pm |
It was just on...Something about a stimulus package??? I guess this some of the "free" cash from the feds. They were all over the board with what they want to do with it.
The house in the news piece was sold for 340k at the peak. Listed for 91k.
Talking about northerners kicking the tires...
It doesn't take many more months of 6%/mo. median home price declines to turn the current 40% drop into a home price collapse.
Owners, buyers and several investors I talk to repeatedly reassure themselves that each new low "must be near the bottom", but the graph of median price declines doesn't say that at all.
My interpretation is that barring some miraculous reversal, prices are going over a cliff. Just my idea from seeing that graph.
bearly; I agree with you about WFC HELOCs, they will continue to take a big hit as FCs wipe these loans out. Was there something in the deal with WB that allowed them to feel "safe" about the mortages?
This was my thinking on those markets..they were gamed hard than us markets last 12 months, last 30 days not withstanding. Where are they going to get earnings from?
Persecuted, thanks for reply...
your correct regarding eev following other shorts down...last summer this was a typical pattern...
"bearly; I agree with you about WFC HELOCs, they will continue to take a big hit as FCs wipe these loans out. Was there something in the deal with WB that allowed them to feel "safe" about the mortages?"
IMO With the WB purchase Wells Fargo can now rework a huge number of loans on the tax-payers dime. Less FCs means less of their HELOCs going bad.
The typical monthly mortgage payment that Southern California buyers committed themselves to paying was $1,458 last month, down from $1,566 the previous month, and down from $2,198 a year ago. Adjusted for inflation, current payments are 31.9 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 44.4 percent below the current cycle's peak in June 2006.
I'd like to see how close current payments are above the TROUGH in payments in the mid nineties.
Please people, don't be fooled by these numbers. Actual sales minus foreclosures are down. Inventory is not clearing faster than new foreclosures. Sure there are sales taking place, but foreclosures are up and prices are falling. You'll see a bottom when foreclosure sales aren't the majority of sales and prices remain stable for multiple months. Until then, these numbers will all be skewed because of the foreclosure tsunami.
It is obvious now, people are getting used to buying in foreclosure. Soon, it will spread to all levels of the market and not just the lower end, which is experiencing 50%+ declines. As more toxic loans reset, foreclosures will become the norm and prices in all neighborhoods will drop.
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first?
he he...first after a long time.
emo
Taking another hit in OC, when will it end
second
I have a confusion - is this a suckers rally going on?? due to the changes like "mark to market accounting", do u anticipate banks will still fail? (or fail later than usual)
IOW sales not at gun point are 30% lower than ever previously recorded.
Inventory is at least coming off the market!
New.....Bull.....Market!
boooyaaahahahahahaha
Buy now or get priced out forever.
Huh. Maybe there was some pent-up demand after all.
I have a confusion - is this a suckers rally going on?? due to the changes like "mark to market accounting", do u anticipate banks will still fail? (or fail later than usual)
KC | 10.20.08 - 3:57 pm
It's a bear rally, I would give it a week tops.
The underlying banks are still basically insolvent, being kept alive on life support so that their demise doesn't take the whole system down from CDS's.
When do retailers give final guidance on holiday sales?
That's the next big speedbump I see on the road (beyond the end of Oct stats data, which I expect to be followed by the FOMC cut which leaves outlook hazy)
One way or another, a lot of money managers are looking to grind out a gain by next quarter's report given how many must be in the red right now.
With the VIX calming down and LIBOR as noted improving. The problem arises in FNMA and its compulsion to screw everyone trying to increase its earnings
The economic crisis is just beginning. Equities are rallying because the financial crisis has ended.
Just goes to show the magic that falling prices can work in restoring liquidity to markets.
The economic crisis is just beginning. Equities are rallying because the financial crisis has ended.
We don't really know that yet. This thing has come in waves so far. It's at least possible we'll have more waves even if they aren't as severe.
Question: Are the coming option ARM resets going to present a problem to borrowers if their index interest rates remain low?
I realize that the LIBOR rate indexed loans are likely a separate issue as there is unknown volatility there, (Conjure article), and that recast loans (neg am recast when loan hits 110%) are going to fail regardless.
ac,
You're right. Likely to be volatile, but I just don't see anything getting worse in finance world.
What is of more interest to me is how the U.S. (and much of the developed world) makes the secular shift from consumer-based society to something less consumer-based. Until we get some clarity, I don't think that this period in our economic history will have concluded. Personally, I wouldn't buy equities unless they were much, much cheaper.
This is not a bear market rally.
NYSE volume ~ 1bn, NASDAQ volume ~ 2bn
Correct me if I'm wrong, but that is about 25% and 50% of recent 'regular' volume. Furthermore it was focussed in basic materials and commodities which is not an endorsement of the greater stock market or economy.
We're in a holding pattern for FOMC, OPEC, end of Oct stats (crude inventory, home sales, durable orders, initial claims, personal income/spending, PMI), earnings, and maybe some CDS settlement. Nov 4 brings truck+auto sales which will remind everyone that Chrysler+GM either did or did not get a deal in before the election (which they hopefully could use to secure election-time promises)
Heh. France entering into the partial nationalization game now.
France Will Invest 10.5 Billion Euros in Major Banks (Update2) - Bloomberg.com
The question is probably what OECD country hasn't bought preferred yet...
EHP - Sorry, I responded to your question on the last thread as a new post went up.
Basel Too,
I'd say about 25-50% of the OECD have not bought preferred shares yet just eye-ballin it
Dow unofficially closes up 406.60 points, or 4.59 percent; S&P 500 rises 4.72 percent; Nasdaq climbs 3.43 percent
if suckers' rally hits 10000, I'm selling it all!!!
Now I'm hearing from a few friends and family that now is a great time to buy stocks.
They're all moving everything they can into the stock market.
Oh man.
ac,
You're right. Likely to be volatile, but I just don't see anything getting worse in finance world.
Well I think things could possibly get worse somewhere down the line if the markets get concerned about some kind of sovereign default or currency blow up. I would rule that out, though I don't think that's "just around the corner".
I think concerns about a near-term inflationary blow up are unfounded. Longer-term though I think attempting to fix the system by flooding it with cash could have serious consequences... like a secondary financial crisis just when we think we've gotten past the primary economic crisis.
AMEX beats. Cramer suggest to sell...When are they going to yank his chai
Bond Girl,
It's ok, just caught the reply. I would say that everything is really in a holding pattern then. Although it is worth keeping in mind that we're circling close to the ground with things like Pennsylvania's 30yr turnpike debt selling for 6.5% yield -- but at least it sold without being pulled
FNMA 30yr MBS finish up 94bps. Rates are coming down....
Off topic, but not much seems to be on... Isn't there supposed to be some cataclysm related to settlement of credit-default things on Lehman? When (if ever) does the Great Unwashed get to find out if it happened?
FNMA 30yr MBS finish up 94bps. Rates are coming down....
The game continues... sigh...
amex reports net income 70c vs 90c..I don't see how that is beating although it's up 8% now a/h
"I don't see how that is beating although it's up 8% now a/h"
It's "a beating."
I think concerns about a near-term inflationary blow up are unfounded. Longer-term though I think attempting to fix the system by flooding it with cash could have serious consequences... like a secondary financial crisis just when we think we've gotten past the primary economic crisis.
I agree, and I personally don't think that what has been done has fixed the underlying economic problem.
The financial problem was simply the market realising that we are not as wealthy as we thought we were. It saw the magnitude of the problem and siezed up. The Central Banks, through some sleight-of-hand, have convinced the markets that the costs of mal-investment will not be paid for all at once. Future generations will pay, or we will pay in a few years.
But there is little chance that we will be able to build castles in the sky of this magnitude in the future. Instead, we need an engine of growth. That is the economic crisis in the U.S., as our entire economic system of the past decade or longer has been built on this premise.
Dope Brontide writes:
I have a confusion - is this a suckers rally going on?? due to the changes like "mark to market accounting", do u anticipate banks will still fail? (or fail later than usual)
KC | 10.20.08 - 3:57 pm
It's a bear rally, I would give it a week tops.
The underlying banks are still basically insolvent, being kept alive on life support so that their demise doesn't take the whole system down from CDS's.
So, the banks are still going to fail sooner or later?? with this mark to market accounting changes, i dont see them failing. they can manipulate books to show any value....isnt it? correct me where am i going wrong.
Thanks
BillyHill,
Final Lehman cash settlement on Oct 21. With FOMC (repos + TOMO) + Treasury (TIO + TAF), the sloshwill be at a short term peak of $403bn to help make a smooth transition. I guess that the government didn't get DDTC's press release speculating that only $6bn of net exposure to Lehman was out there. Physical settlment has happened so the $150bn of actual Lehman debt should be have been used up, so it's just the ~$300bn in naked CDS left to be settled
I definitely think that the $250bn of free/forced cash for banks was related to the Lehman settlement as the Treasury couldn't afford the overtime to deal with a second Lehman, and they couldn't specifically out any serious net exposure publicly
Its the low expectations game...
US Card Services income down 59%, loss provisions up ~50%, write down rate increased 100% YoY (3% to 6%)
International Card services income down 2%, loss provisions increased 60% YoY
Global Commercial Services income flat, loss provisions up 43% YoY
Global Network & Merchant Services income flat, loss provisions up 87% YoY
Corporate and Other reported a third-quarter net gain of $158 million, compared with a net loss of $11 million from a year ago. The net gain reflects the recognition of $220 million ($136 million after-tax) for the previously announced MasterCard and Visa settlements and tax benefits due to the revision of the Companys estimated annual effective tax rate.
Expired
American Express Third Quarter Revenues Rise
American Express Company (NYSE: AXP) today reported third-quarter income from continuing operations of $861 million, down 23 percent from $1.1 billion a year ago. Diluted earnings per share from continuing operations were $0.74, down 21 percent from $0.94 a year ago.
Headline doesn't match the results as the stock rises after hours...
This looks like a dead-cat bounce.
Same thing happened in Tokyo about two years after the marke crash. Real estate stabilized and rose for perhaps a year and off a cliff for fifteen years.
So, the banks are still going to fail sooner or later?? with this mark to market accounting changes, i dont see them failing. they can manipulate books to show any value....isnt it? correct me where am i going wrong.
Thanks
KC | 10.20.08 - 4:24 pm
Short of central banks defaulting they have made it crystal clear that they will not allow any large financial institution to fail at this point.
So give it 3 months and see if they have "contained" the issue.
With the huge move in short term treasuries today, do people expect the longer term yields to rise? Or is the Fed going to actively work to keep longer term yields down?
Detroitification of California:
The Press Democrat. Lenders have been foreclosing on about 62 homes a week in Sonoma County. From real estate agents to police officers to neighbors, those reporting on the status of foreclosed homes say vandalism and vacant properties go hand in hand. Its getting toward winter, and people may be making fires to stay warm or using candles for light, said Santa Rosa Fire Division Chief Mike Jones.
Foreclosed homes sitting vacant are becoming heavy burdens for some neighborhoods as vandals break windows, dump trash, deal drugs, spray-paint graffiti and commit arson, said Georgia Pedgrift, graffiti-abatement officer with the Santa Rosa Police Department and one of the primary observer of vacant properties.
A little farther north, near Coffey Park, broken and boarded-up windows and the remnants of spray paint greet potential buyers at a home on Skyview Drive, listed at $248,900.
The few neighbors remaining on Shawnee Street said they cope by keeping to themselves. That means not confronting the people they see trespassing or squatting in the empty homes and not calling police about crime. It has nothing to do with me, said a Shawnee Street resident who, with his own financial difficulties, is worried about losing his home.
With one house already gutted by fire suspicious because gas and electricity to the vacant house had been turned off neighbors anticipate more flames. That ones empty, that ones empty, that ones empty, but you can tell people are there, said one woman who feared retaliation if her name was used. Im just waiting for this one next door to catch on fire.
Real estate agents said neighbors can help protect vacant properties by being observant and active before fire danger begins. First, said agent James Madison, appliances are typically taken from vacant houses. Next, trash is dumped in the yard. Then windows are broken and graffiti starts appearing, and squatters, from overnight partiers to longer-term occupants, move in. It goes in stages, Madison said.
When neighbors cope by ignoring problems you get the serious downward spiral.
REPORT TO CENTRAL COMMAND
FROM: GENERAL FULDA
Life in Paris is wonderful.
Taking up an interest in old cathedrals
Invasion of UK delayed indefinitely.
FULDA.
September Housing Price Elasticity in SoCal:
-1.95
Very elastic
August Elasticity: -0.27...inelastic
Maybe I am nutz but....If we are ina 70% consumption based economic model...and consumers are bank-o, Fed, State, and local gov't is banko, credit is scarce...How do previous P&E ratios factor into this new stock market pricing model? You can totally scrap all historical earnings data because this is a brave new market.
What you are seeing today is the first stirrings of the next big up leg in commodities. Commodities will be choppy, not straight up, but I'll bet the bull commodities market runs for a year or more and creates some nice profits.
My strategy now is to hold some vulnerable shorts in the stock market like small-caps and real estate and range trade them opportunistically while gradually beefing up on commodities, especially energy, food and silver.
Over time, you might see commodities do very well while these weak stock market sectors keep tanking. At least that's what I'm hoping.
I made 14+% today in my SLW.
buy now or get priced out for...uh, weeks?
Tech earnings (or for some companies, revenues) not gonna appreciate this dollar rally.
The only really big news from this press release is that banks have finally started to move REO inventory. REO sales were half of the total sales, which means that in fact, the "organic", or person-to-person sales were actually LOWER than September of 2007!
Of course, the REO sales were priced aggressively lower, which is why we have the 30% drop from the year before - that's the only reason these home sales were happening.
Add to the mix the fact that Fannie Mae's new fees for high risk areas, and the elimination of Down Payment Assistance at the end of September, and you have the real reason sales "spiked" in September.
So, no bottom. And this is only good news for those of you renters out there who are waiting to buy a home - home prices are really going to start moving downward now that banks have staffed up their REO departments and are finally moving inventory with aggressive price discounts!
Back on track.
Foreclosure sales UP
Catchers (of Falling Knives) UP
Jeffrey Sachs (Currently speaking) is really handsome. And what a speaking voice.
re: American Express
$100mn+ issued with a 6.05% coupon was issued this Sept to mature in 3 years.
If they're cost of capital was 6% (an overestimate, they have cheaper credit out there) + their write-offs were 6% + their operating costs were 3% (didn't look) What's the average interest paid on outstanding credit card debt? I have to estimate 50% of people pay on time and incur no interest, for the other 50% maybe their dollar weighted interest rate is 30% (no usury rate right?)... Well that would be break even with back of the envelope numbers. Might end up being a good strategic buy for a foreign bank
It's a housing led recession so we'll probably even see such desperation as Mastercard or Visa lowering their transaction fees
Kung fu panda, I live in Santa Rosa, it has a long,long way to go before it reaches Detroit status.
I like what he says about skepticism though. It sounds good though.
Photo of the protesters at the MBA convention in San Fran:
http://www.housingwire.com/wp-content/uploads/2008/10/photo-1.jpg
Who wants to meet me there?
LOL
MJK writes:
Kung fu panda, I live in Santa Rosa, it has a long,long way to go before it reaches Detroit status.
You hope.
Uffish tought writes:
Q: Are the coming option ARM resets going to present a problem to borrowers if their index interest rates remain low?
A: Yes. The interest rate has little to do with the payment shock, it's almonst entirely a matter of how many times the borrower chose the "option" of making a negatively amortizing (a/k/a "minimum") payment. Also, they don't have to hit 110% to recast; at month 60 they are recast no matter what.
Yes indeed, I do hope. The median here is down 40-45%, the median is now around 300k. Sales are up, just like SOCAL.
re: American Express
$100mn+ issued with a 6.05% coupon was issued this Sept to mature in 3 years.
...
That's what I meant to post. I don't have a fancy bloomberg/reuters terminal to look up their current bond trading
Sun's First-Quarter Sales Miss Analysts' Estimates (Update1)
By Vivek Shankar
Oct. 20 (Bloomberg) -- Sun Microsystems Inc., the world's fourth-largest maker of server computers, said first-quarter sales fell short of analysts' estimates as customers held back purchases amid an economic slump.
Revenue dropped to $2.95 billion to $3.05 billion in the period ended Sept. 28, Sun said today in a preliminary earnings statement. Analysts projected $3.15 billion, according to the average of estimates in a Bloomberg survey. The company expects a loss of as much 35 cents a share.
Sun Posts Loss on Writedown; Revenue Misses Estimates (Update3) - Bloomberg.com
So Nouriel goes off for a "series of talks" in Hungary, and then the first thing he does is sit down with a Hungarian to talk to us about our fate. Tokaj!
CA did a foreclosure rule change, requiring banks to wait 30 days to FC and make efforts to contact FB.
Kicked in a couple of months ago, so this is just a catch up.
Nostrovia,
Cramer is idiot writes:
AMEX beats. Cramer suggest to sell...When are they going to yank his chain
Not a fan of Cramer, but Amex beat crazy low numbers, and peeling the onion, the results are I think quite ugly.
US card services - net $244M down from $592 last year. Loss provisions up to $941M from 638M. Similar disaster unfolding on the international side ($67M down from $140M).
If you take away the FX gains, average card spend is up about 1% - so on an inflation adjusted basis, customer spend is down.
Meanwhile, deliquency rates are predictably up.
From a global recession standpoint, there is nothing to like here. For Amex in particular, the bright spot on the earnings is a Visa/MC settlement number of $220M.
One of the slides shows sources of credit for continuing operations as possibly being the Fed discount window...
"Wally Bollocks writes:
MJK writes:
Kung fu panda, I live in Santa Rosa, it has a long,long way to go before it reaches Detroit status.
You hope."
It's kind of weird to live in a coastal Cal area where this all hasn't hit home yet.
Little or nothing is moving, but the asking prices stay high and empty houses don't seem common. I know we have them, but we didn't build a lot of new developments so they're not all bunched together. With a couple of exceptions like a large, doomed, condo complex downtown.
Kind of like sitting in a rowboat in the eye of a hurricane in the bright sunshine, watching the eye wall get closer.
"Kicked in a couple of months ago, so this is just a catch up."
...And a little bit of extra mustard on the sales.
--
CA severe recession goes North from South...
Led By SF and SJ Prices in CA and the US Continue to Decline At, or Near, the Fastest Rate Ever
Decline In PPSF For Transaction That Originated in July-Aug and Closed Over the Past 2 months (Annual Rate):
San Fran, CA\t-47.5%
San Jose, CA\t-44.9%
San Diego, CA\t-35.5%
Sacramento, CA\t-33.5%
Denver, CO\t-33.0%
Las Vegas, NV\t-32.3%
Miami, FL\t-30.1%
Phoenix, AZ\t-28.2%
Los Angeles, CA\t-25.4%
Washington, DC\t-20.6%
\t
25 MSA Composite\t-21.0%
\t
Data Source: Radar Logic
All These Areas Have more than 20% drops in PPSF from the Peak Prices. Please note that the metro areas include rural counties nearby .The YoY decline in most of these areas is also at the fastest rate ever, so it is not just the seasonality. The above pace has been fairly consistent.
Yeah, yeah, the Bay Area is special!
Jas
Bob , Santa Rosa has been hit pretty hard as I stated in my 2nd post above. And I don't think it's over yet, but it will not be comparable to Detroit. Ever.
And I don't think it's over yet, but it will not be comparable to Detroit. Ever.
You hope.
safe_as_apartments writes:
"The economic crisis is just beginning. Equities are rallying because the financial crisis has ended."
Agree. a lot of the current rally likely from relief that the whole financial system isn't going to seize up. However...the market will soon focus on the depth and scope of the general economic downturn and we may not see the ultimate low of this bear market cycle for some time yet.
typically we need to see 2 quarters of terrible earnings and down revises before ultimate lows are reached. We haven't seen that yet.
That said, bottoms are very tough to call and usually only clear in the rear view mirror.
citizen energyecon, Texas Instruments also missed earnings
Jas Jain,
Those silly Californians. They should install some granite counter tops and soaker tubs -- that'll boost their values by 20%, they can make another 10% by installing all stainless steel appliances
Soros just used the term: "Tranche Warfare"
antucket,
And given that analysts are still forecasting near record earnings in 2009, there is still a lot of selling that's got to go on.
Before there was Detroit, there was Kolmanskop in Namibia
Last I heard they were hoping for a tourism boom
"CA did a foreclosure rule change, requiring banks to wait 30 days to FC and make efforts to contact FB.
Kicked in a couple of months ago, so this is just a catch up."
Nostrovia,
Comrade Misean is Dope | 10.20.08 - 4:55 pm | #
Oh,but it gets better. The latest blurb on the boob tube. "Lee County is going to solve the foreclosure crisis". The dumbfucks are talking about millions and millions of dollars to direct purchase homes...
Chris
GAAAAAAAAAAAAAAAAAAAA....I fucking quit!!!
BTW...Lee County=Ft Myers/Cape Coral
Bear rally - I agree.
Commercial RE has yet to blow up - and it will.
Credit cards are now showing their stress.
Car loans are bringing down GMAC and thus GM.
CDS are STILL not regulated and thus people are still making 'side bets' against most insurers and banks.
Heck, if GM or Ford pop the CDS there alone are scary.
So, umm, very much not a good time to jump back in.
so... how long before i'm eating my own shoes?
Soros just used the term: "Tranche Warfare"
Uncle Billy, Adenoid
lol
wth is "the MBA convention" ?
Mr Mortgage on youtube explains this anomaly very well. This is an illusion.
Don't believe the hype.
--
"DataQuick shows median house prices have fallen significantly in SoCal, but these median prices are distorted by the mix of houses sold."
I agree. I track PPSF for Resale SFH by zip codes and that is showing a median (median for all zip codes) decline of close to 40% from the peak PPSF for these zip codes. In this case we are confronted with the fact that prices peaked at different times. Also, some zip codes don't have enough sales and there is some distortion. All in all, 35% decline from the peak is a reality for all of SoCal and 30% for L.A. County. The median numbers in DataQuick are probably higher by 3-5%.
Jas
"Bob , Santa Rosa has been hit pretty hard as I stated in my 2nd post above. And I don't think it's over yet, but it will not be comparable to Detroit. Ever."
I don't know about Detroit. I do know if there are more houses than people with an economic basis to live in that area, there will be major problems.
Where I am, we didn't overbuild, because we couldn't -- not enough land, and a town full of well-financed NIMBYs. But we did overprice. And that will lead to its own brand of trouble.
Shoe Pavillion throws in the towel:
Bakersfield Bubble
Shnaps writes:
A: Yes. The interest rate has little to do with the payment shock, it's almost entirely a matter of how many times the borrower chose the "option" of making a negatively amortizing (a/k/a "minimum") payment. Also, they don't have to hit 110% to recast; at month 60 they are recast no matter what.
Q: So if someone made the P&I each month, their "payment shock" should be negligible at 60 months in a 5/1 ARM.
In trying to get at the magnitude of the OA reset problem, as I've reread a post from Tanta: "10.22.07 - 1:36 pm": "I have been keeping my eye on the reports of the big OA thrifts (DSL, FED, BKUNA), and they seem to be experiencing a neg am rate of 2.5-4.5% annually"
I'm curious if that neg am rate has changed or if it will have any affect on the OA reset damage that is coming?
Thanks for the response.
"Kind of like sitting in a rowboat in the eye of a hurricane in the bright sunshine, watching the eye wall get closer.
Bob Dobbs | Homepage | 10.20.08 - 4:58 pm | # "
Damn it man! PADDLE HARDER!! We can OUTRUN the beast!
MJK,
SoCal's high desert doesn't have the charm of Santa Rosa, but relative prices and trends are similar here.
According to DQ numbers:
San Bernardino County had an 87% increase in sales volume, but 63% of the sales had been foreclosed within the past year; and
Median price fell to $205K, down 37% YOY and 46% from the peak.
FWIW, my opinion as to this area is that the total drop from peak price (November 2006) will be in the 55% range to around $85/sf by 1Q09.
Naturally, neighborhood medians do vary.
Up here in Fremont I've been following Zillow to see he our old home that we sold in 2004 has been doing. Zestimate price has been holding steady for the last few months but in the last 30 days it's dropped by over 20k.
It's below where we sold it at back in 2004 and in the meantime we're up big time just parking the money in CDs.
I guess it isn't different up here.
When was the last U.S. presidential election the Republican Party won without a Nixon or a Bush on the ticket?
Is that a trick question?
I agree, and I personally don't think that what has been done has fixed the underlying economic problem.
Yep. I stand by my basic criticism of policy in the US that I've been making for some time now:
I think the idea of trying to make the real economy better by manipulating the financial system is like trying to make a person with pneumonia or malnutrition better by manipulating their nervous system.
I believe that kind of thinking is the primary cause of the problems we currently have and I still haven't seen any sign that we're moving away from that mode of thinking.
Of course I may be wrong about that not being a viable strategy, but so far I haven't heard any compelling arguments or seen any compelling evidence that leads me to come to a different conclusion.
Maybe I'm just hard headed.
EvilHenryPaulson writes:
NYSE volume ~ 1bn, NASDAQ volume ~ 2bn
Correct me if I'm wrong, but that is about 25% and 50% of recent 'regular' volume. Furthermore it was focussed in basic materials and commodities which is not an endorsement of the greater stock market or economy.
Volume was unimpressive to say the least. However, my method of benchmarking volume relies on testing swing points (highest highs, lowest lows of moves). So we need to wait for how the SPX gets into that high of last Tuesday, 1044.31, to indicate how fast this market wants to move up to the 1265 area.
Oh - thank Glod you guys are talking about something other than this fauxlection.
Bull Trap ?
Bob Dobbs,
The high desert area definitely did overbuild (though not as bad as Riverside County). Land was not and is not an issue (though water is).
Mostly, though, the supply has been absorbed. Something about 'affordable' gets housing occupied.
Meanwhile, there are a good 40,000 or so paper lots on tentative tract maps that will never get finished or built.
Pissed off-
Hey fremont neighbor...nice day here..Fremont has really become little India..And it has plenty of room to fall...only thing supporting it is the east asian community buying these over priced assets
Anonymouse,
How did you make out after diving in on ?Friday?
MLM writes:
Is that a trick question?
Better yet, is that a serious question?
Meltdown Man writes:
MLM writes:
Is that a trick question?
Better yet, is that a serious question?
No trick, yes serious.
Anon - You clearly aren't a middle aged guy living in his parents' basement.
Hoover?
EvilHenryPaulson writes:
Anonymouse,
How did you make out after diving in on ?Friday?
Two Friday's ago I doubled down to a leveraged position of about 160% of my account, long SPY average $91, QQQQ average $31. I sold the leveraged portion last Tuesday during the decline for nothing - virtually no profit/loss. Then I took an ugly drawdown last Thursday but didn't sell becuase I noticed the volume was significantly lighter. I certainly won't allow that to happen again. If the markets move just above my current average prices I'll stop myself out - period. Thanks for asking.
No trick, yes serious.
Anonymous | 10.20.08 - 5:27 pm | #
1928 (Hoover)
EHP,
Thanks! I was thinking about that last night but got sidetracked this afternoon and missed their report.
MLM writes:
Anon - You clearly aren't a middle aged guy living in his parents' basement.
Oh yeah. How do you know?
cd,
Now that India/China is falling apart I think a lot of the buying in Fremont, San Ramon is going to dry up. They're still about 6 months behind in the koolaid.
Though I hear anecdotaly from my father-in-law in China that things are getting SERIOUSLY bad there now.
We are renting now and every house in our neighborhood that was for sale has been pulled off the market. Seems that everyone wants to get what the house is "worth" and not a cent less.
I'm expecting the layoffs to start soon in high-tech and the forced selling of houses to start. That's when the wheels should really come off Bay Area housing.
Because middle aged guys living in their parents basement have all day to do Google searches on questions like that.
Only 1 Nixon...no family. Reagan was before both Bushes.
Nixon 1 1/2 term
Ford remaining
Carter 1 term
Reagan 2
Bush 1
Clinton 2
Bush 2
Ron Paul/Bob Barr wish it could be
sportsfan writes:
No trick, yes serious.
Anonymous | 10.20.08 - 5:27 pm | #
1928 (Hoover)
Very good Sportsfan! The similarities between today and the late 1920's keep coming.
[You can totally scrap all historical earnings data because this is a brave new market]
Yeah... but, Obama's gonna win and we'll be holding 100000000 people rallies on Wall St cheering on the new bull market.
MLM writes:
Because middle aged guys living in their parents basement have all day to do Google searches on questions like that.
45 single, own my home. Want to exchange numbers? No google searches, I just love information:http://thepage.time.com/
Uffish Thought writes Q: So if someone made the P&I each month, their "payment shock" should be negligible at 60 months in a 5/1 ARM.
That's true, but you original question wasn't about 5/1 ARMs, it was about Option ARMs - which are vastly different.
Granted - if an OA elects to remit the full P&I every month, there won't be much payshock to be had come recast.
Unfortuntely, most do not.
I would guess the neg-am rate has come down a bit; but that's like observing that Hurricane Optionarmius has slowed its sustained windspeed from 175mph to 160mph as it approaches the California coast.
"abrador writes:
Hoover?"
I forgot about Nixon as Eisenhower's veep. That's truly creepy.
You could, if you wished, see the Nixon era as a strange 55-year-long executive reign, sometimes in the shadows and sometimes not. Bush 1's instincts, and certainly not Eisenhower's, were not With the Program. But Eisenhower had to take Nixon to satisfy Nixon's wing of the party, and Bush 1 had to toe the line to it.
Or you might see something else.
89th!
Thanks for the hat tip, CR.
Is there an increase in employment to go with this trend?
My dog has fleas. That's information too. But is it information that is pertinent to anything?
Pissed,
Condo community where I live currently has a couple 2/2's and 2/1's listed at 400K avg., it needs to get to 225k to be anywhere close to reality....
Question for all- is it time to buy into emerging market shorts..I mean everything seems to be going against them without the g-7 backstop...
thoughts?
MLM writes:
My dog has fleas. That's information too. But is it information that is pertinent to anything?
Obviously my information is pertinent, timely. Yours isn't.
If Jeb hadn't fleas, he could have made a great candidate!
Neel's got your $700B and he's going to get himself a 120 inch flat screen.
These gawker guys are starting to scare me.
Neel 'Ferrari' Kashkari: The US Bailout Chief's Epic High School Yearbook - Exclusive - Gawker
Question for all- is it time to buy into emerging market shorts..I mean everything seems to be going against them without the g-7 backstop...
thoughts
I'm with you.Those poor motherf#ckers are like prisoners "they got nothing coming"
cd writes:
Question for all- is it time to buy into emerging market shorts..I mean everything seems to be going against them without the g-7 backstop...
thoughts?
Everything still seems to indicate - to me at least - that all the world's markets want to do a fairly large counter-trend Intermediate Term bounce, perhaps much higher than most expect. Come next March or May - SPX above 1265 - everyone's a bull again and . . . POW! The next bear leg down begins. At least that's my take.
[Confounded Seinfeld voice] Viles!
Cobradriver groused: "The dumbfucks are talking about millions and millions of dollars to direct purchase homes..."
Chris, they gonna sell some bonds to finance that little boondoggle?
Anak writes:
If Jeb hadn't fleas, he could have made a great candidate!
Tery Schiavo fiasco doomed him in the interim, now his big brother has doomed his national political aspirations for the rest of his life
Persecuted Comrade Anonymouse
Is the EEV hammer inverted or upright?
Anonymous | 10.20.08 - 5:45 pm,
EEV looks just like SDS or DXD or so many other ultrashorts - it's heading down.
re: emerging markets, China
In my opinion, the biggest story that is not getting the press it should is what stimulus plan China will take.
I forget the company name already, but this morning I read about a toy manufacturer (contracts for Mattel, and other big names) went bankrupt in Guangdong and that in that province alone 2,220 toy factories had shut this year.
The reserves China built up over the past decade were for just such an occasion, they are worth their most value in ~5 years thanks to dollar appreciation, they have infrastructure/entitlement investments that have previously been delayed.
Right now they've been sitting back and using the opportunity to negotiate better contracts as with commodity imports, or better political deals as with Pakistan. However they cannot ignore their domestic economy indefinitely and many exporters are just beginning to realize that they have no orders for the busiest weeks of the entire year.
A large public intervention by China is one thing that would induce a solid bear market rally in my opinion. It would even lower the USD to boost the US economy, and lower USD credit costs. The unwinding of the treasury bubble if done in the right context would further lower credit costs.
Of course their intervention could be 100% basic materials and commodities, which would just start a rally there and beat down the US dollar (by nature of those items being priced in USD)
Anonymouse, you place far too much faith in the quackery of technical trading.
Good luck with that.
EHP, how do they dislodge the agencies and treasuries w/o crashing the system? Slowing the pace of take up itself is a problem, no?
Question for my elders:
Currently some media outlets are thumping alternative energy as the potential next growth sector (bubble). Given that we are entering and not exiting an economic downturn, these prognostications seem to be very early.
Have these types of predictions ever panned out?
What were they looking to in the 1970s, I'm fairly certain they didn't expect it to be financial deregulation, consumer credit, and securitization. I'm also pretty sure most of them did not know about the internet until there was a web-ipo bubble
"That's true, but you original question wasn't about 5/1 ARMs, it was about Option ARMs - which are vastly different."
Sorry, I got my ARM's mixed up again, good thing I'm not a surgeon.
Anak, that question is above my paygrade. If they are looking to do an orderly unwind of government debt (doubtful), they are probably negotiating government to government and wouldn't tell the public about it
WFC now probably owns the bulk of CA's mortages & HELOCs since the acquisition of WB (Golden West Shower). 40% DOWN from peak. How do they survive ?
China hopes rest and fall on their RE market
Has anyone seen our Fun Bob (Currently Smoking Cannabis) since Lahde sang his swan song?
My thinking is that China could better deploy it's new flow of forex into commodities, portfolio investments, FDI, etc. But that's new flow.
Selling overseas gov't debt, bringing dollars back to China, and investing it at home is not an option.
And yes, RE is very important to China's local governments. Local satraps have bearly any other means of support!
unintentional: "bearly"
Re: "Has anyone seen our Fun Bob ("
Like dude, chill out, it's like harvest time man!
Any nude pixs of yves yet?
aNonna: Dude, with all the hydroponics equipment I see them selling in strip malls I think all the time is harvest time.
Stop it with the nudity. It's bad enough we have the violence of the markets.
bearly writes:
WFC now probably owns the bulk of CA's mortages & HELOCs since the acquisition of WB (Golden West Shower). 40% DOWN from peak. How do they survive ?
San Francisco Business Times 12/07: Wachovia (NYSE: WB) recently entered the California market through its purchases of Westcorp and Golden West Financial, the parent of World Savings.
WaMu, BofA, Countrywide were the big primary lender in CA over the past 10 years.
Chris, they gonna sell some bonds to finance that little boondoggle?
Comrade Terry | 10.20.08 - 5:42 pm |
It was just on...Something about a stimulus package??? I guess this some of the "free" cash from the feds. They were all over the board with what they want to do with it.
The house in the news piece was sold for 340k at the peak. Listed for 91k.
Talking about northerners kicking the tires...
Chris
It doesn't take many more months of 6%/mo. median home price declines to turn the current 40% drop into a home price collapse.
Owners, buyers and several investors I talk to repeatedly reassure themselves that each new low "must be near the bottom", but the graph of median price declines doesn't say that at all.
My interpretation is that barring some miraculous reversal, prices are going over a cliff. Just my idea from seeing that graph.
bearly; I agree with you about WFC HELOCs, they will continue to take a big hit as FCs wipe these loans out. Was there something in the deal with WB that allowed them to feel "safe" about the mortages?
Thanks for feedback on emerging markets..
Millennium Global Closes Emerging-Markets Hedge
Millennium Global Closes Emerging-Markets Hedge Fund (Update2) - Bloomberg.com
This was my thinking on those markets..they were gamed hard than us markets last 12 months, last 30 days not withstanding. Where are they going to get earnings from?
Persecuted, thanks for reply...
your correct regarding eev following other shorts down...last summer this was a typical pattern...
"bearly; I agree with you about WFC HELOCs, they will continue to take a big hit as FCs wipe these loans out. Was there something in the deal with WB that allowed them to feel "safe" about the mortages?"
IMO With the WB purchase Wells Fargo can now rework a huge number of loans on the tax-payers dime. Less FCs means less of their HELOCs going bad.
The typical monthly mortgage payment that Southern California buyers committed themselves to paying was $1,458 last month, down from $1,566 the previous month, and down from $2,198 a year ago. Adjusted for inflation, current payments are 31.9 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 44.4 percent below the current cycle's peak in June 2006.
I'd like to see how close current payments are above the TROUGH in payments in the mid nineties.
Please people, don't be fooled by these numbers. Actual sales minus foreclosures are down. Inventory is not clearing faster than new foreclosures. Sure there are sales taking place, but foreclosures are up and prices are falling. You'll see a bottom when foreclosure sales aren't the majority of sales and prices remain stable for multiple months. Until then, these numbers will all be skewed because of the foreclosure tsunami.
It is obvious now, people are getting used to buying in foreclosure. Soon, it will spread to all levels of the market and not just the lower end, which is experiencing 50%+ declines. As more toxic loans reset, foreclosures will become the norm and prices in all neighborhoods will drop.
That includes the high-end, I'm afraid.
WestsideREmeltdown
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