" In this note, we examine the deleveraging process for leveraged lenders under various circumstances, ensuring consistency between loss estimates and economic scenarios. We believe that our baseline forecast of a deep recession with a peak-to trough decline in real output of 4.3% is consistent with cumulative US financial system losses of about $2.7 trillion, or 9% of total assets. Taking securities and loans together, that estimate implies that investors and lenders have realized roughly one-third of the likely cumulative total loss through the end of 2008; in other words, of our 9% cum loss total, lenders have taken 3%, and 6% remains."
Credit Losses, Deleveraging and Risks to the Outlook
May 7, 2009
55.7% occupancy average? Fifty-five point seven percent? Did I read that right?
Sweet Jesus. I've heard varying accounts as to what the required occupancy for break-even is, but for mainline hotels I think it's in the 75-80% range. And I'm sure that number came from a more innocent, less overleveraged age.
I can't imagine too many hotels being able to pay the bills for long if every other room is empty night in and night out ... their fixed costs are simply too high.
LMAO, I just glanced at the "who is online" list and saw the funniest screen name in awhile... "Cooking ramen in my percolators"...Thanks for the morning giggle...
"...the [stress test] loss estimates expected (tonight) are entirely forward looking, not ‘lifetime’ losses. Specifically, those estimates will exclude losses realized in 2007-08, amounting to some $400 billion for the 19 BHCs participating and, according to Bloomberg data, $867.5 billion for the entire financial system."
Can you elaborate on the mechanics of that? Seems if that were so, you would just buy puts and collect your money.
One, all the ultra funds are long term losers. Only for short term trading. The daily resets are a killer. Don't trust me though. Pencil out a few up/down scenarios and see what your return will be over time.
Two, you can't buy those puts, I know people that have tried. Even if you could, the cost would be prohibitive.
Of course, one way to fill up those rooms is simply slash prices.
I did an overnight in NYC last week, and it was the first time in at least 10 years I saw an upper-end Midtown hotel go for under $200. (Of course, $199 plus state tax, city tax, occupancy tax, and the "Jacob Javits Center Fee" - gotta love that - netted out to $240 or so. But that's another topic.)
Our corporate travel agency had one of the Radissons in midtown listed at $107. One-oh-seven!
"Can you elaborate on the mechanics of that? Seems if that were so, you would just buy puts and collect your money."
The leveraged ETFs get chewed up by volatility. With a 3x ETF, If the market goes up 10% today, and down 9.09% tomorrow (net zero) then they get -30% today and +27.27% and they're net down 5%.
Huh, people don't stay in hotels when they're broke? I guess they must be vacationing in their cars. And along comes swine flu to wreck the Q2 numbers.
ETFs serve the purpose of converting real selling pressure in the market into a circle jerk.
they are part of the script of the trick market.
don't be fooled.
without all these ultra ETFs people might just choose a donkey retail stock and short it on margin using a trailing stop, causing real problems for the PPT &PTB.
Bank Stocks and ETFs Encompass 41% Of Today's NYSE Volume
It will be interesting to see the debt dance for all these over leveraged hotels. Surely the lenders don't want to own a hotel and acknowledge the loses. So I expect a flurry of new loan packages rather than bankruptcies.
Just anecdotally: I live in a California seaside town that specializes in low-end weekend tourism, mainly from within 150 miles. Our many rundown motels are largely vacant from November through mid-April. Then they start to pick up noticeably, and book out solid for the summer starting just before Memorial Day. Prices rise about mid-May.
This year: the pickup in bookings is about 3 weeks late. I drive through the motel district every morning around 7:30, and I'm seeing nothing but vacancy signs and empty parking stalls, even on weekends. Special rates are being offered through May.
That is for January of 2011, and there are 157 people wanting to take the other side of that contract. So if you expect FAS to go from 5.3886 to 1 or less, why would you not do so?
Just anecdotal, but I work in Danbury, CT, and when I moved here 14 years ago, there were really only 3 hotels/motels in the area where I work. Now, there are over a dozen. I just don't see how they stay in business.
Who's Hilton's financial adviser? Wow! Almost prescient and sold almost at the absolute top. Unless it's a completely lucky shot, this calls for skill!
This isn't bad news for consumers. I'm booked for a hotel in DC in a weekend for $77/night at a highly rated hotel. Last year, this place would have charged about $200/night.
Santa Barbara: One of the most dramatic numbers in the report showed transient occupancy tax revenue of $759,867 last month, which was down 24 percent, or $240,706, from a year ago, due in large part to the global recession.
Read the entire article to understand just how California municipalities are screwed. Check out the budgeting assumptions.
the test was fairly easy. Kind of upset because AIG skyyed to 2.19 during the exam
Of the 15B, 14B came from spending at "Department of Health and Human Services"
Most of this spending was via Medicaid rebates that didn't actually stimulate but instead allowed states to delay cutting expenses elsewhere.
The hotels just need to offer more 'accessories': sex toys, lounges with M/F bed warmers to select from, pre-coitus partner massages, post-coitus energy drinks, and special wake-up visits.
"In year-over-year measurements, the industry’s occupancy fell 11.6 percent to end the week at 55.7 percent."
It would seem that with occupancy that low one would want lower rates? Of course if you can't cover your interest or lease at that rate, you might have a problem. Well at least YOY should turn positive when measured against 4$ gal gas?
Hi all. Just figured I'd throw in my anecdotal 2 cents.
I work in a Super 8. Yup hotels in the area are hurting and so are we however we have just had our strongest winter-season ever and have had many nights this spring full or almost full.
The 'down-sizing' of the customer I think. The ones who would have thought nothing of a 100 dollar room (we are in a more rural area) are now 'bargain shopping'. basically they are holding their noses at the idea of needing to use such a lower class abode, hahaha, and sucking it up and booking.
We cut our prices over the winter to the absolute minimum the owner would accept and now we are back to the regular rates. I prefer that since it gives me a little more room to play the negotiation game, leaves a little bit of room between the regular rates + discount and the 'winter rate'. Makes my life more pleasant. Some absolutely would not believe me when I said I was not allowed to go lower and would get huffy and then be surprised when I let them drive off with a good-luck-to- you smile and a wave. We truly were and are the cheapest chain hotel in the area, with a very nice new property and competent staff, ha, good luck beating the rates we had and have.
Hint to any new person reading CR ( since I know the regulars here are smart enough to know this already)
If you are asking a desk/service person of any type whatsoever to cut you a deal, make an exception, go lower on price---obscenities, yelling, tantrums and threatening my job with a future complaint WILL NOT make me bend. Snort. As if.
[I can't imagine too many hotels being able to pay the bills for long if every other room is empty night in and night out ... their fixed costs are simply too high.]
That's where Ben & TALF comes in and the taxpayer gets to help out a little with fixexd costs, buying back the current debt 100c/d, bailing out debtholders. And then, once everyone' that counts is happy, the BK wipes out the taxpayer and fixed costs go down after reorg...
Dawg,I read some of the assumptions and started laughing uncontrollably.I may buy a lottery ticket today and have assumed that i will win $12MM which I will take as a lump sum of about $7mm.Anyone want to loan me a conservative $2.5MM secured by the ticket?
rsj, we traveled back to St. Louis for a visit in October and stayed at a Super 8, We paid 500 bucks for a 7 night stay and it was VERY clean and comfortable. The staff was excellent and the only complaint I had was they wouldn't STOP cleaning up after us, even when we wanted to sleep in...Their free breakfast and coffee was also good.
There is a simple bailout for this: gov't prints hotel room vouchers, which the hotels can redeem at 150% of their room rate. A bailout of the restaurants could be done in the same way. Bernanke's helicopters could be used to deliver the vouchers to the people.
That's a big price change for < 2 years. It's hard to price/forecast volatility over time let alone on a daily basis AND over time. Especially with all the hedge funds and day traders out there.
Longer term, I still think they are headed towards zero. Unless Bernake can deliver the mythical and elusive financial stability.
Just thoughts. Keep in mind I haven't bought stocks in > a decade, although I get tempted from time to time.
--
We get weekly proof of the uncomfortable fact that in January of 2008 CR was totally clueless about the coming cliff diving in demand for CRE when he vehemently defended his claim, based on fantasy, that CRE was not as over built as RRE. Of course, being an economist how was he supposed to know about the future demand. He was looking backwards as is required of an economist in good standing.
Please don't depend on CR for any kind of forecasting. He is only good at reporting.
for states, this april was a wildcard in terms of revenue, since that's when all the capital gains for individuals typically get reported. Well, the results have been absolutely disastrous. hoocoodanode?
mt and Byz, Comrade Point over on Nates blog made an interesting point yesterday about UE. If you look at the non seasonaly adjusted numbers for employment to population ratio, we are sitting at 40%. I had to check the numbers myself to believe it, but that is what it is.
Now for something completely different....just in time since it seems that swine flu fear has been pushed back until it comes a knocking in the fall, enter SUPER RABIES for your summer enjoyment:
for states, this april was a wildcard in terms of revenue, since that's when all the capital gains for individuals typically get reported. Well, the results have been absolutely disastrous. hoocoodanode?
Yeah, but look at all the unexpected consumer spending due to tax rebates. One off green shoots rule!
hyperinflation would be the only rational explanation for nominal prices to rise in the face of the absolute worst fundamental situation that anyone (not in the market for 80 years) can remember.
hyperinflation goes hand in hand with corruption and monetization.
For any stays longer than a couple of days when traveling with company, I always arrange my lodging using VBRO or other similar systems. Big savings, no taxes/fees/surcharges, more space and full kitchens.
for states, this april was a wildcard in terms of revenue, since that's when all the capital gains for individuals typically get reported. Well, the results have been absolutely disastrous. hoocoodanode?
Gee ... you mean with the broad market down 40% for the year, people weren't sitting on a ton of capital gains?
Of course, every state legislature convened a special session in early January to evaluate the scope of the potential revenue hit and discuss their contingency plans, since they already knew where the market ended up and thus knew they were going to get crushed. Right?
No, of course not! The budgets for the '09 fiscal year were already set - which assuredly had already assumed the cap gains from '07 were going to continue on into infinity ... and everyone was shocked, shocked, when April rolled around and the revenue side somehow didn't pan out!
Everyone sees the chain of dominoes falling, but no one seems to be smart enough to try to reach out a foot or two ahead of the current point of impact and pull a couple of dominoes up from there. No ... it's much more convenient to wait for the entire chain to come down and just charge the taxpayer for whatever it'll cost to rebuild the whole damn thing. Unbelievable.
Metals and forest products continue to accelerate their weekly deterioration. Coal particularly has deteriorated significantly in the last week.
Auto haulage is up this week notably, and intermodal books an uptick.
Looking at the 4 week plots, you can see some moderation, but, keeping in mind the seasonal character of the previous year plots, the 4 week total rail traffic is still in decline vis a vis previous time periods. The crushed stone is a particularly good example of this -- it's "flat" term-on-term, but YoY, but it should be spiralling upwards for construction season demand.
Again, the credit panic is decisively over, and has been for months. The damaged American economic context does not appear to have materially improved over the last 7 days.
--
Aahha, we got lots of "Printing Money" inflation dopes here. Being a born-and-bred American dope is a big handicap to overcome. BBAD have been rendered incapable of understanding economics and political systems.
We have a bad econo-political system for a reason. A system of the Crooks...
re: Weekly Unemployment Claims
Less than 2 weeks ago, I saw included in a government press release that more than 40% of unemployed were on unemployment benefits until they ran out. I thought it was the BLS but I didn't quickly find it in their employment situation release. If someone knows what I'm talking about, please clear it up.
Until then, Among the unemployed, the number of job losers and persons who completed tem-
porary jobs increased by 547,000 to 8.2 million in March. This group has nearly
doubled in size over the past 12 months. (See table A-8.)
The number of long-term unemployed (those jobless for 27 weeks or more) rose
to 3.2 million over the month and has increased by about 1.9 million since the
start of the recession in December 2007.
This recession has been unlike others, and I would not be surprised in the least if the 2 months of unemployment decline rule failed this time. Furloughs, voluntary pay cuts, layoffs, professionals taking retail or manual labor work, ... unemployment is saturated and has spilled over into less measured areas in an economically significant way. Then there is looming auto sector reorganization, perhaps followed by the airlines again.
Oil looks over-priced too me. The re-flation trade crowd is way too early imo. Especially against a back drop of rising unemployment, over-capacity and a debt saturated CONsumer.
I still see a sick eCONomy and deflation in the cards.
"hyperinflation would be the only rational explanation for nominal prices to rise in the face of the absolute worst fundamental situation that anyone (not in the market for 80 years) can remember."
That is where I am betting.
I am not a big follower of the oil markets, but it is a big game of chicken in some ways - tons of oil being stored, but the price keeps rising. The price isn't demand driven, any more than it was last summer, it is a side effect of Zimbabwe Ben pumping billions of dollars into the financial system with no discretion: a lot of it is going to leak into places where it will be used for pure speculation.
This is the problem with the government's whole approach to the crisis IMHO. Rather than target specific targets like taking down Citi, etc., they pump money into everyone, and all that money sloshing around the system is going to go to unproductive means, because there is so much less productive work going on.
I am amazed at people (including Krugman) who still think we are going to get deflation. Clearly he does not see the money creation that is going on in the MBS market everyday, it is astronomical.
Ka-boom. When is Mr. Market gonna figure out that it is not the Fed that is raising rates, but the bond market. I mean what usually happens when the fed raises a 1/4 pt? Any venture that is running on debt is in for a hurting. You know like housing...
Clearly he does not see the money creation that is going on in the MBS market everyday, it is astronomical.
Ghost,
Home sales are way down. Too me that means the fed is sponsoring a massive round of refinancing - lower interest loans exchanged for higher interest loans. It seems to me that lower aggregate interest is deflationary.
The wife and I are running up to Chicago to catch a play and do our part to boost consumption. We usually stay at this Hotel that has been ranked as the best hotel in C-town for business travellers. Up until last year, if you could get a room, it was in the mid 200's. My wife snagged a room for late May at about 150 per night.....Makes me feel good about dropping a few dollars on Rush street.
in fairness, a lot of states did convene emergency legislative meetings. My home state did at least two meetings mid-term and reduced the budget at least three times with across the board tax cuts. Granted they weren't being too realistic with 10-15% spending cuts. Additionally, the Medicaid rebates that came out immediately after the ARRP helped a lot. But when you're getting 35% reduction in projections, things are FUBAR.
For 2009-2010, many states are secretly waiting for a federal bailout, either directly or via a Federal Reserve Lending Facility, at the eleventh hour; they're really in a state of denial.
"Home sales are way down. Too me that means the fed is sponsoring a massive round of refinancing - lower interest loans exchanged for higher interest loans. It seems to me that lower aggregate interest is deflationary."
Same mistake a lot of people make - assuming that the purpose of the low MBS rates are to help homeowners. It is not.
The purpose is to help the banks. Those low rates enable them to refinance all those Alt A and Option ARMs on their books into govt insured fannie/freddie/fha paper.
The capital that gets freed up at banks like JPM, who turn around and pour it into commodities.
"Home sales are way down. Too me that means the fed is sponsoring a massive round of refinancing - lower interest loans exchanged for higher interest loans. It seems to me that lower aggregate interest is deflationary."
Same mistake a lot of people make - assuming that the purpose of the low MBS rates are to help homeowners. It is not.
The purpose is to help the banks. Those low rates enable them to refinance all those Alt A and Option ARMs on their books into govt insured fannie/freddie/fha paper.
The capital that gets freed up at banks like JPM, who turn around and pour it into commodities.
May 7 (Bloomberg) -- The current global crisis is “vastly worse” than the 1930s because financial systems and economies worldwide have become more interdependent, “Black Swan” author Nassim Nicholas Taleb said."
snip
"Nouriel Roubini, 51, the New York University professor who predicted the crisis, told Bloomberg News yesterday that analysts expecting the U.S. economy to rebound in the third and fourth quarter were “too optimistic.” "
snip
"The global economy is facing “big deflation,” though the risks of inflation are also increasing as governments print more money, Taleb told the conference organized by Bank of America- Merrill Lynch. Gold and copper may “rally massively” as a result, he added."
snip
“Certainly the rate of economic contraction is slowing down from the freefall of the last two quarters,” Roubini said. “We are going to have negative growth to the end of the year and next year the recovery is going to be weak.”"
The purpose is to help the banks. Those low rates enable them to refinance all those Alt A and Option ARMs on their books into govt insured fannie/freddie/fha paper.
One of the cuts:
1. LORAN C Long Range Radio Navigation System
The White House says this technology has been made obsolete by GPS.
Savings: $35 million/year
Tell me that its obsolete when those sats go up in smoke in a solar storm.
We'll try to keep the hotel open for you, but just remember, if the office is locked and boarded in the morning, there's no cofay or continental breakfast.
The capital that gets freed up at banks like JPM, who turn around and pour it into commodities.
Ghost,
I recognize that, in general, the fed is helping banks not home owers. Many home owers would be best served via jingle mail. That said, banks or speculators dumping money into overpriced commodities against a back drop of falling end demand argues for future losses and lower future commodity prices.
We saw this with housing as prices soared (for a while) against declining demand.
Yes, but not because they're cheap, but because they can cause accidental midnight fires, thus pushing the cost of the leveraged asset onto the balnce sheet of the fire insurance company.
"Welcome to a new kind of tension.
All across the alien nation.
Where everything isn't meant to be okay.
Television dreams of tomorrow.
We're not the ones who're meant to follow.
For that's enough to argue."
"The number of long term unemployed rose to 3.2 million"
And the rate of long term employment increase has yet to plateau, in fact, long term unemployment is accelerating at the greatest rate since the onset of the recession. No green shoots here.
in the eyes of congress and the courts corporations are individuals with rights but can you do this...bet not
Coca-Cola, Oracle, Intel Use Caymans to Avoid Taxes (Update1) By David Evans May 5 (Bloomberg) --
Seagate Technology, the world’s largest maker of hard disk drives, is headquartered in Scotts Valley, California. Yet the documents it files with the Securities and Exchange Commission list its address on South Church Street in George Town, the capital of the Cayman Islands.
snip While the U.S. corporate tax rate is 35 percent, Seagate paid an effective tax rate of 5 percent in the year ended June 2008, according to data compiled by Bloomberg. The Caymans have no corporate income tax for companies incorporated there. The Caribbean island has helped scores of U.S. companies, including Coca-Cola Co. and Oracle Corp., to legally avoid billions in tax payments to the U.S. government, says U.S. Senator Byron Dorgan. “
snip Largest Companies One quarter of the 100 largest contractors with the U.S. federal government, including Altria Group Inc. and Tyco International Ltd have had subsidiaries in the Caymans, according to a study by the Government Accountability Office. At least 10 of the 30 companies listed in the Dow Jones Industrial Average have had units with addresses in the Caymans.
these companies wave the flag im sure and many profited from contracts in iraq
CNBC is really pushing that whole building confidence thing with it's "green shoots" asking for replies to are you seeing any in your area.
My reply; I'm seeing a lot of "poop shoots", they're called the little people. Tax payers and common folks taking it up the ass.
"Are the Green Shoots for real? Watch Part-Time Workers"
".......see a close correlation between the start of a recession and a sharp shift to using part-time workers. And, conversely, that when an economy recovers, the use of part-time workers falls off quickly."
Anyone understand why there appears to be an unlimited amount of Cash willing to buy REIT Secondary offerings. At least 5 REITS have announced secondaries amounting to Billions of Dollars for commercial real estate.
What am I missing. i have been short the reits (SPG, ESS, VNO, etc) and getting killed.
Dow Jones reported that Bank of America Corporation plans to sell part of its stake in China Construction Bank Corporation, and China's $200 billion sovereign wealth fund, China Investment Corp.,
mock turtle,
FRBSF Economic Letter 2009-12; March 27, 2009
"The Risk of Deflation"
"The SPF forecast is for the unemployment rate to rise to 9% early next year and then edge down during the remainder of 2010. According to this model, the high degree of slack in labor markets pushes the core personal consumption expenditures price index (PCEPI) inflation rate down from 1.9% in 2008 to 0.3% in 2009, and down further to a deflation rate of 0.8% in 2010. Based on this forecast and the historical average of core PCE inflation forecast errors reported in Reifschneider and Tulip (2007), the estimated probability of deflation is about 30% for 2009 and 85% for 2010."
"Based on this forecast and the historical average of core PCE inflation forecast errors reported in Reifschneider and Tulip (2007), the estimated probability of deflation is about 30% for 2009 and 85% for 2010"
Consider the source, is all I can say. If you were the Fed and wanted to push your agenda, what would you say?
They can talk all they want about PCEPI, do their numbers matter when you are paying $5 a gallon at the pump? Does saving $300 a month on your mortgage make you richer or poorer if you pay $200 more a month in energy costs and $150 more a month in food costs?
ghostfaceinvestah
I've been expecting both deflation and high inflation in that order. Just like the changing of the seasons, it does not all happen in one day
"The White House says this technology has been made obsolete by GPS."
Vonbeck, I can't believe they're letting Loran C go. You're right. Now there's no backup to GPS, unless it's a sextant. Not too many folks know how to operate one of those nowadays.
But for the fed's massive debt pushing, we would have been living in a world of mild deflation for well over a decade. The fed robbed the majority of the fruits of their labor and gave the spoils to wall street.
Anyway, I think inflating from here is going to be more difficult than Bernanke thinks. Consider: if prices rise, I'll buy less.
I must down to the seas again, to the lonely sea and the sky,
And all I ask is a tall ship and a star to steer her by,
And the wheel's kick and the wind's song and the white sail's shaking,
And a grey mist on the sea's face, and a grey dawn breaking.
I must down to the seas again, for the call of the running tide
Is a wild call and a clear call that may not be denied;
And all I ask is a windy day with the white clouds flying,
And the flung spray and the blown spume, and the sea-gulls crying.
I must down to the seas again, to the vagrant gypsy life,
To the gull's way and the whale's way where the wind's like a whetted knife;
And all I ask is a merry yarn from a laughing fellow-rover
And quiet sleep and a sweet dream when the long trick's over.
John Masefield
Sextant indeed. Wonder if sliderules will come back in fashion too.
nobusiness:
Anyone understand why there appears to be an unlimited amount of Cash willing to buy REIT Secondary offerings. At least 5 REITS have announced secondaries amounting to Billions of Dollars for commercial real estate.
What am I missing. i have been short the reits (SPG, ESS, VNO, etc) and getting killed.
Lets see:
1. No risk of default (Previous prices are at levels assuming some default) now that Govt is stepping in.
2. New mark to magic means banks can refi CRE at lower, and longer terms; which helps a lot of REIT stay afloat.
3. Retailers have to crash before REITs. Despite very bad numbers, I still don't see enough retailers crash; the stabilization of consumer expenditures is also new being observed.
4. REITS is also one of the best hedge against inflation -- if there're funds out there hedging aganist hyperinflation, they'll be buying this en-mass.
In aggregate, because CRE rents are paid a long time in advance, they usually don't change price in a shortable fashion.
There's simply no trigger in a "shortable" sense to cause any REIT to BK; hence, in a Bernake helocopter environment, short positions are being closed by hedge funds. Retail shorts are being sacrificed in the meantime.
If this increase in commondities and foreign markets we're seeing now continues and becomes the forefront of hyperinflation, be careful of your shorts, it could be very expensive. Shorts have unlimited losses should hyperinflation happen.
According to local TV news, quite a few hotels/motels are being foreclosed on in the Atlanta area.
Bernake's new word "Macroprudential" could become a lttle embarassing if mispronounced.--given the amount of lisping & stuttering that goes on among our financial regulatory leaders, I expect to hear someone give a speech soon that sounds like the topic has something to do with large female genitalia. (Edit --for those who are a bit slow today, the mispronounciation would be macropudendal).
Anyone who thinks buying pairs of leveraged ETFs and shorting both is a no-brainer needs to check out DTO's performance over the past year (somewhat excluding the past month)...
Looks like Jas won't be buying rounds at the truck stop tonight...
For people looking to flight to safety from both hyperinflation and hyperdeflation, I suggest healthcare, esp pharmaceuticals. Not the edge-of-your-seat startups or biotechs; but giant, old, boring plain old pharceuticals with a steady product mix that doesn't consist of "optional" drugs.
In hyperinflation, people still need meds, and drug companies can increase prices equal to or faster than inflation.
In deflation, if the drugs are not optional, loss is sales is going to be limited, until of course, we end up with Armageddon.
On the other hand, if Armageddon is here, buy guns and bullets. But that kind of mad max thinking is beyond me.
Seems to me that examples of past plutocracies, from Rome to South America to Africa, where the elites openly stole from the rest of the population, economic collapse into hyperinflation was the end result. Jas claims that the US is a kleptocracy (which I agree with), but rails against anyone who talks about the potential for high inflation, which historically contradicts his core belief. How high will the 10 year treasury yield have to back up before you admit you're wrong Jas? At least Sebastian, for all his flawed economics, had the ability to eventually admit he was wrong.
"I live in a California seaside town that specializes in low-end weekend tourism"
Why is it that there isn't a single decent hotel in Santa Cruz? Is development there that much of a pain? Pretty amazing, considering that half of the Nas's market cap is over the hill.
I was in Moab, UT last weekend and had a devil of a time trying to book an inexpensive hotel room. I started looking during the week, using the usual websites - Kayak etc.. - best we managed was $119/day - while there, for sure for the Fri. night it seemed the NO vacancy signs were lit everywhere - FWIW.. guess Moab is pretty popular this time of the year I suppose.
I think today is Ben and Timmay's worst nightmare - Bonds and equities both heading south at the same time. If this persists it's a pretty dark storm ahead.
I'm in the retail sector so I'm kinda on the front lines with j6p and use him as a prism to view things. He ain't buying unless it is a DEAL. Which doesn't do much for margins.
No way No how do I see inflation taking root (outside of commidity manipulation) in the near term (<1yr) unless one of 3 things happen to get $$'s in people's hands.
1) wages/hours go up
2) monthly stimulus checks from gov
3) return of (broad based) easy credit
until one or more of the above happens any price increase will be met with a drop in demand. Not very inflationary.
Usually when interest rates start to turn up, that increases homebuying as people sitting on the fence decide to jump in... It will be interesting to see if we get that effect this time... Are there any fence sitters, other than refi's?
bearly:
I think today is Ben and Timmay's worst nightmare - Bonds and equities both heading south at the same time. If this persists it's a pretty dark storm ahead.
Hmm... I think money running to emerging / asian / offshore market from the so called "safety" of UST and US stock market is gaining strength. I wonder if this is just a speculative trend or the start of the run of "bank of USA"...
Pray it ain't so... There can't be a USA run right, can it?? It's huge and so unbelievable but then huge and unbelievable things have happened recently.
mp (profile) wrote on Thu, 5/7/2009 - 10:32 am reply Ignore user
mp and Conjure are seeing green shoots.
(mp and Conjure duck back into foxhole to await incoming)
That green you see? That's an afterflash from your staring so long at the long bonds waiting for the detonation and now being blinded because it was so much bigger than anyone expected.
"Usually when interest rates start to turn up, that increases homebuying as people sitting on the fence decide to jump in.."
Yeah, but, MBS prices are barely changed, down 7-8 ticks today, not that much given the action in the 10 year. Zimbabwe Ben is still exercising his 70s-style price controls in that market.
I remember when the old A&P went under.... I think it was sometime around 1973.... At the time us young punks had never seen any big corp go under... we were astonished...
skk,
Moab is pretty much booked solid from May to Labor Day. It's a global summer destination; between mountain bikers, 4WD people, and Europeans on holiday, it's been a jamfest for years. The signs at Arches NP campgrounds have "No Vacancy" carved into the wood...seriously. That area is like the United Nations of tourism...you can hear four or five different languages in one day. It's a great place...
Terry,
My dad has a motor yacht. Up and down the east cost. He is actually thinking about trading in and going for the big sail. He hates gps, only uses it for verification. The man honestly can't get lost. Has Patton's gift for seeing terrain in 3 dimensions all the time, like he is in the clouds looking down. Likes the ocean because it challenges his sense of direction. I wish I had that gift. I think when my boys are older, we are going to head out for a six month cruise. Astronomy 101 here we come! Another reason to home school. NO DAMN ATTENDANCE POLICES!!!
"Anyway, I think inflating from here is going to be more difficult than Bernanke thinks. Consider: if prices rise, I'll buy less."
You will buy less bread? Milk? Maybe a bit less gasoline, but how much, 20% less? Doesn't matter if prices rise 100% (and up 40% YTD btw).
Bernanke is proving what every good economist should know - price controls never work.
Instead of fixing our economy we are printing money and giving it to the banksters to play with. Recipe for a disaster - stagflation to the nth degree.
Absolutely. y-o-y mileage #s keep on dropping, don't they?
Same with beef vs ramen. True, to some degree, with home heating. Blankets are a sunk cost, and if you don't like seeing your breath in the morning, AZ has tons of cheap new housing!
mp, didn't the conjure clock prescribe a depression just a few short months ago? I hope you're being sarcastic, else conjure's watchmaker has some 'splainin to do...
"Absolutely. y-o-y mileage #s keep on dropping, don't they?"
How much? What percentage? $2 a gal gas - $5 = 250% increase. Hard to make the math work, unless you ditch your car and start walking/biking everywhere (taking the bus helps a bit, but of course bus prices will go up to pay for the gas).
"I think when my boys are older, we are going to head out for a six month cruise. Astronomy 101 here we come! Another reason to home school. NO DAMN ATTENDANCE POLICES!"
Your boys would learn more in those six months than six years in a government school.
You just listed three things that j6p NEEDS so, of course, he will buy but what makes you think he will not change his habits to reduce his demand (and cause prices to drop)?
Don't worry, Zimbabwe Ben will step in to buy more, which will drive commodities prices up, which will drive up the 10 year, which will cause him to buy more...
There is no magic bullet in the world folks, the underlying problem is the structure of the economy, not the money supply, not the availability of credit, those are symptoms. Pouring more money into a broken economy only makes it more broken.
But we sure had a nice feel-good couple of months, didn't we?
"HollywoodHack (homepage, profile) wrote (in reply to...) on Thu, 5/7/2009 - 10:30 am
"I live in a California seaside town that specializes in low-end weekend tourism"
Why is it that there isn't a single decent hotel in Santa Cruz? Is development there that much of a pain? Pretty amazing, considering that half of the Nas's market cap is over the hill.
That is a very good question. I would say a combination of several things:
For those with big cash, a nice selection of really high-end vacation homes along the coast, easily bookable on the Internet. A lot of these are "second homes" for wealthy valley types, rented out when they don't need them.
Much of our tourism is on the lower-end; lower-middle class families, surfers, etc. A lot are daytrippers.
But I really don't know. We've had some new motels go up in recent years, and they turn to crap quickly. I don't know why. There are a couple of new projects building on Ocean, and part of the Patel clan is tearing down three yucky motels they own by the boardwalk and building one big new one in its place; no opposition from the city.
The only big controversy with new hotels is a new project down on Beach Street by the Boardwalk that would replace an older structure. And most of the problem came about because they wanted to exceed the height limit; they were eventually allowed to do so.
obviously, factoring in gasoline retail makes this an incredibly fast moving target.
but, starting with the obvious - observed by quite a few anectpointal datadotes very close to one of the top 5 freeway intersections by traffic in the lower 48 - people tend to commute a lot less when they aren't working. and they certainly don't load up the kids for a trip to legoland with hotel and $40 tix included when they aren't working (unless, perhaps they have a little saved from their previous professional job and would normally be taking them on a Caribbean cruise).
of course americans are almost totally wedded to their cars, but there are many ways to skimp. i'm sure many less are insured, many oil changes go out to 10K instead of 5K miles, many tires run until popping, etc, as well.
"You just listed three things that j6p NEEDS so, of course, he will buy but what makes you think he will not change his habits to reduce his demand (and cause prices to drop)?"
Higher prices in the things he needs, lower prices in the things he wants.
Is that good or bad for the lifestyle of J6P? His standard of living goes down.
Printing money does not improve the standard of living, it is very regressive.
Vonbek777 writes:
One of the cuts
1. LORAN C Long Range Radio Navigation System
The White House says this technology has been made obsolete by GPS.
I'll miss my Northstar M-1. I rely on it because of the nice, large display. The GPS is harder for an old guy to read so I set it to provide visual track info with no charactors displayed. The pentagon will miss being able to navigate period. Satellites will be the first casualties in a war.
mp (profile) wrote on Thu, 5/7/2009 - 10:49 am reply Ignore user
We still see the possibility of a 10% output gap coming.
That would mean major deflation.
Bernanke's is unable to print enough money to backfill the slowdown in the velocity of money. There's our deflation. Slower money chasing the same goods is more deflationary than demand destruction. Both together and Ben is swamped.
"And most of the problem came about because they wanted to exceed the height limit; they were eventually allowed to do so. "
Santa Cruz is indeed a parallel universe. So much money so close, so much natural beauty, yet it still stubbornly refuses to look like something besides a lower-middle-class suburb stuck in 1955. I'd still love to own rental property for UCSC kids one day - they happily pay a grand a month to split a closet...
"of course americans are almost totally wedded to their cars, but there are many ways to skimp. i'm sure many less are insured, many oil changes go out to 10K instead of 5K miles, many tires run until popping, etc, as well."
Sounds like an economy in decline. Unfortunately other countries (e.g. China) have plenty of money to snatch up commodities.
"Iron-ore imports at major Chinese ports rose 24 percent from a year earlier to a record 53.5 million metric tons last month, the country’s Ministry of Transport said yesterday. "
Who initially propagated this phrase "green shoots", I would love to whomp them on the head but then I realize they could not have spread it alone and so I must weep for the complete and utter stupidity of so many people.
not unfortunate at all. commodities, tourism and money laundering are the core pillars of our present and future economy. that's why they call it a 'banana republic'. Hank and Ben just accelerated the inevitable.
"bearly:
I think today is Ben and Timmay's worst nightmare - Bonds and equities both heading south at the same time. If this persists it's a pretty dark storm ahead."
wait till the day currencies complete the trifecta
"Santa Cruz is indeed a parallel universe. So much money so close, so much natural beauty, yet it still stubbornly refuses to look like something besides a lower-middle-class suburb stuck in 1955. I'd still love to own rental property for UCSC kids one day - they happily pay a grand a month to split a closet..."
More like $400-500 each to split a bedroom. If you load up too many kids in one house, the neighbors can file a public nuisance claim in small claims. Granted it takes a lot -- there was some dentist from Monterey who was stuffing 15 students in his investment rental on the West Side -- but the option is there.
Basically, everybody who moved here a long time ago "got theirs" in the form of cheap housing, and is resolute that Santa Cruz will not change one iota from when they got here. These are the political movers and shakers, by the way. Chamber of Commerce -- not so much.
By the way, if you have to stay in Santa Cruz -- Babbling Brook Inn. In the middle of town, very secluded. Not that much more expensive than a decent hotel; they just lowered prices.
All Fall Down,
China is already shooting down sats, this just doesn't make sense to me at all. Maybe I am just a chicken little but everyone seems to be using overly optimistic 'models' for the future no matter the field. Dad used to get amused when pilots would lose their gps and couldn't tell anyone where they were. Scared them to death. Just what are we teaching these days besides over-reliance on technology and blind faith in crumbling paradigms.
It's all about confidence. Ben & Timmay have been working hard on confidence in the banks & markets, taking their eye off the rock-solid confidence in Treasuries. Once that gets shaken vigorously, it will be tough to restore.
We were reading the story of Noah's ark in preparation for Gilgamesh later and he asked me why god killed all the animals if it was the people who were bad.
Because man created God in man's image. How could it be any other way?
Re: Hotels in SC:
My guess is that it's easier to build hotels in Monterey and surrounding small cities, and Monterey is a nicer town. Even in this recession/depression, the hotels in Monterey are doing quite well, based on the difficulty that I have had getting a room there lately.
bobn,
Wasn't that rational at the time, I just said god had a bad hair day like mommy does sometimes and wished the world dead. Works for gods, not mortal men.
Let's see, for the chartists the 10 year looks to be breaking out above the 200 day SMA, looking back it was around Thanksgiving that it was last at this level...
IMO the next decline will be slow (relatively) over 2 months it will be unrelenting and mostly permanent. FED/Treasury used a tremendous amount of political capital over the last 2 months. When we don't get that recovery watch out.
mp (profile) wrote on Thu, 5/7/2009 - 10:55 am reply Ignore user
...-the macro side no longer appears to be plunging.
The pause that refreshes. No concerns over the long bonds? Supply chain echoes over GM/Chrysler? The summer energy glut? The REITs and Homebuilders seem poised to all simultaneously implode.
IMO when you factor in the inevitable the macro picture is still plunging.
"the underlying problem is the structure of the economy, not the money supply, not the availability of credit, those are symptoms."
In theory, the Feds could split the debt into two camps - one camp is refinanced at below-true-growth rates and the second camp is defaulted. That's really what's happening right now, but we'd need greater extremes. Probably.
I suspect that 20 million homes underwater will become a big issue soon. Right now, most defaults are from lack of cash flow, not lack of conviction in future gains or moral conviction.
A bump-along see-saw economy that barely stays afloat for years is my best guess.
Monterey is a much wealthier town than SC with a much better class of tourist and more business/gov't travelers (Defense language Institute, etc.). Pebble Beach, for one, is going to draw the well-off no matter how bad things are. The attitude toward building may well be easier than Santa Cruz.
"Don't worry, Zimbabwe Ben will step in to buy more, which will drive commodities prices up, which will drive up the 10 year, which will cause him to buy more..."
'Trust me, I'll pull out just in time...'
I believe some call it a death spiral.
Verizon is coming out with a device called "MiFi" - called a personal wifi hotspot, it's a small card you can carry in your pocket - gives a 30 foot radius of signal and 5 devices can connect at once... $100 with rebate and data plan from Verizon... This could be a big problem for Comcast since you can use this baby at home as well as wherever you travel... 4 hours battery life online, 40 hours standby time... could be a big winner...
Turbo said: "...How high will the 10 year treasury yield have to back up before you admit you're wrong Jas?..."
Now you've said something that forces me to be an apologist for Jas Jain, and I can't tell you how I hate that.
Your argument is like asking a bear "How high will the stock market have to rise before you admit you're wrong?"
JMO, but I think the rise in the 10-year Treasury yield and the recent stock market rally are both transient events, only corrections in a larger downtrend. The recession is dealing with the inflation potential.
mp (profile) wrote on Thu, 5/7/2009 - 11:14 am reply Ignore user
"IMO when you factor in the inevitable the macro picture is still plunging. "
This may be a pause. I'm not denying that possibility, but I'm also unwilling to deny the possibility that there may be a turning point coming.
I'd be a fool to deny the possibility of this being a long term muddle along period. That said, I look at energyecon's debt rollover timeline chart and then today's long bond blow up and conclude there can be no further "stimulus" forthcoming from the Federal government.
I'm also the same idiot that thought the DJIA couldn't stay above 8000 for more than a few days/weeks so don't think I'm trying to sound smart or anything.
My TZA is starting to look good. I was drawn to it just because the russell 2K seems least receptive to direct Fed support monkeying. Though I actually bought it because it reminded me of the RZA. Just saying "Tizzah" to myself is fun.
The congress is going to really be feeling the heat about a year from now, when the markets will be telling them that they cant be running these huge deficits, but the election is looming over the hill and they want to step on the gas one more time...
PRU must be issuing equity after the close today. Why else would they be pimped so hard after shitty earnings? Or was anyone here actually impressed with their results?
black dog (profile) wrote on Thu, 5/7/2009 - 11:16 am reply Ignore user
@ Rob
you forgot one of your favorites - state/muni hitting the wall (or is that ground?) as the new fiscal year begins.
My county (in va) is facing a 10% budget cut unless they raise the prop tax.
THANK YOU! I had that in my first post that got eaten (at my end, Ken is a god). I had meant to mention the necessity of Federal intervention in the State of California's "business." I already see the spoor indicating the discussions are going on right now. The "other 49" are going to be pissed at the terms.
"conclude there can be no further "stimulus" forthcoming from the Federal government."
I learned my lesson in 93-94 when Greenspan managed to bailout an insolvent Citibank, refill the banking system and then burned the debt off in the Big Bond Kill of '94.
It's a mistake to assume Feds are incompetent or simplistically evil.
Seb "JMO, but I think the rise in the 10-year Treasury yield ... transient event"
Seb, Is the Fed balance sheet and staggering shitpile of USG obligation also transient ? Seems to me that stuff is accumulating and Obama has some pretty grand plans to ramp.
The only transient was the JUMP in treasuries contrary to the mounting case against them.
IMO - The only thing that saves UST is a massive international conflict, where capital flow into the USA for safety. Does Obama get it ?
Thanks mp, I was just curious. I admittedly don't understand the bond market all that well but I'm trying to learn and I know you and Conjure both seem to be pretty astute about it, that is why I asked. It would seem impossible that something wouldn't improve considering all the artificial stimulus the markets have recieved, agreed on that front. I just can't see what might lift us out of this mess into a recovery minus jobs. I too am hopeful, but my freezers are still stocked to the max and my garden is coming along nicely
Well, Kalifornia has always been 'special', didn't expect any less. Let's face it, the moral hazard arguments are increasing everyday at an exponential rate:
Love the two song combo of a Month of Sundays/Sunset Grill by Don Henely, sums up my feelings.
"JMO, but I think the rise in the 10-year Treasury yield and the recent stock market rally are both transient events,"
I don't know about the stock market, that is more a casino than a real market, but the bond market, which better reflects real macro events, may rally a bit once Ben comes back in with more QE (which is he sure to do, you can guarantee Bill Gross is ringing him up like crazy), but he is pushing on a string.
There is one way out of this mess IMHO - if Congress did the right thing and fixed the Fannie/Freddie mess, and gave them full faith and credit, some of our bankers (the country's bankers, the Chinese et al) would start buying those securities again, which, when added to the QE, could bring rates back down across the board.
But our bankers see our economy as a sham, and rightfully so. 2 years in and we still haven't fixed the housing finance system in our country? Not even lifted a finger to fix it? It is a joke.
"There is one way out of this mess IMHO - if Congress did the right thing and fixed the Fannie/Freddie mess, and gave them full faith and credit, some of our bankers (the country's bankers, the Chinese et al) would start buying those securities again, which, when added to the QE, could bring rates back down across the board."
Just out of curiosity, where do you see the money coming from to backstop those losers?
Earlier today I was talking with a consultant friend in NYC who was recently the victim of some bad spinach from a vegetarian entree at a trendy bar and grill (the name escapes me at the moment), and from the awkward tone of the conversation I would assume it probably had "green shoots" as a concomitant result. Using the term like this may be the best way to dislodge its association to economic recovery.
Ha, I am in Moab right now, and it's the first place I've seen in a long time where there are many guests...booked out right now too, as is Bryce and Zion! It's the foreigners, maybe.
you go first
let's have a nationwide open ended camping trip.
call the next five years a holiday
Buy signal? ask cramer...
Orange County hotel taxes plunge 28 percent in March
Topic Galleries -- OrlandoSentinel.com
42nd?
Hmm, 4th, I suppose I actually will read the post now.
@Angry Saver
"FAS & FAZ are both going to zero. Only for the nimble."
Can you elaborate on the mechanics of that? Seems if that were so, you would just buy puts and collect your money.
" In this note, we examine the deleveraging process for leveraged lenders under various circumstances, ensuring consistency between loss estimates and economic scenarios. We believe that our baseline forecast of a deep recession with a peak-to trough decline in real output of 4.3% is consistent with cumulative US financial system losses of about $2.7 trillion, or 9% of total assets. Taking securities and loans together, that estimate implies that investors and lenders have realized roughly one-third of the likely cumulative total loss through the end of 2008; in other words, of our 9% cum loss total, lenders have taken 3%, and 6% remains."
Credit Losses, Deleveraging and Risks to the Outlook
May 7, 2009
Morgan Stanley - Global Economic Forum
Worst year over year? Year ain't over yet.
The municipalities are about to get a rude surprise over their vicious "welcome stranger" hotel room occupancy taxation policies.
The graph clearly indicates that we have seen the bottom.
55.7% occupancy average? Fifty-five point seven percent? Did I read that right?
Sweet Jesus. I've heard varying accounts as to what the required occupancy for break-even is, but for mainline hotels I think it's in the 75-80% range. And I'm sure that number came from a more innocent, less overleveraged age.
I can't imagine too many hotels being able to pay the bills for long if every other room is empty night in and night out ... their fixed costs are simply too high.
LMAO, I just glanced at the "who is online" list and saw the funniest screen name in awhile... "Cooking ramen in my percolators"...Thanks for the morning giggle...
How's North Carolina doing, token bull or Sebastian?
It's for my daily sodium rush, Kristina.
What do you think are the intentions of the Fed?
it appears their intention is to save themselves by owning all of us.
After it all comes tumbling down the Fed will still have it's instantly giganto, freshly diversified, balance sheet (that they got for free).
didn't the original bankster JP himself crash the market in the GD1 to buy on the cheap?
anyone notice the rhyming?
Rob Dawg, OK, I expanded the title to mention quarterly.
I'll fire the headline writer.
best wishes.
Another benefit to that CRMP is that the sodium residue will take any bitterness away from your coffee when you make it as well...
who's clapping?
stop that!
.
.
.
otishertz, you can bet GS JP and the gang are in on this one as well...
Mook, yeah, that is right.
This is going to crush some hotels. I expect we will see a number of hotel defaults in the coming months.
best to all.
"...the [stress test] loss estimates expected (tonight) are entirely forward looking, not ‘lifetime’ losses. Specifically, those estimates will exclude losses realized in 2007-08, amounting to some $400 billion for the 19 BHCs participating and, according to Bloomberg data, $867.5 billion for the entire financial system."
Morgan Stanley - Global Economic Forum
Can you elaborate on the mechanics of that? Seems if that were so, you would just buy puts and collect your money.
One, all the ultra funds are long term losers. Only for short term trading. The daily resets are a killer. Don't trust me though. Pencil out a few up/down scenarios and see what your return will be over time.
Two, you can't buy those puts, I know people that have tried. Even if you could, the cost would be prohibitive.
Of course, one way to fill up those rooms is simply slash prices.
I did an overnight in NYC last week, and it was the first time in at least 10 years I saw an upper-end Midtown hotel go for under $200. (Of course, $199 plus state tax, city tax, occupancy tax, and the "Jacob Javits Center Fee" - gotta love that - netted out to $240 or so. But that's another topic.)
Our corporate travel agency had one of the Radissons in midtown listed at $107. One-oh-seven!
"How's North Carolina doing, token bull or Sebastian?"
Now that's just mean. That is just like calling today's bond market FanJastic!
"Can you elaborate on the mechanics of that? Seems if that were so, you would just buy puts and collect your money."
The leveraged ETFs get chewed up by volatility. With a 3x ETF, If the market goes up 10% today, and down 9.09% tomorrow (net zero) then they get -30% today and +27.27% and they're net down 5%.
Huh, people don't stay in hotels when they're broke? I guess they must be vacationing in their cars. And along comes swine flu to wreck the Q2 numbers.
I've already seen one (more) motel fail in this area. I'm sure they're all screwed. Priceline is making out like a bandit though.
Didn't the Hilton family sold their entire Hilton stake somewhere in 2007/2008? I thought that was an extremely smart move when they announced that.
Assuming they didn't plow right back into hotels, that would've set them up for quite a while.
Will they leave the light on for me anyways?
hc sold it to blackstone.
ETFs serve the purpose of converting real selling pressure in the market into a circle jerk.
they are part of the script of the trick market.
don't be fooled.
without all these ultra ETFs people might just choose a donkey retail stock and short it on margin using a trailing stop, causing real problems for the PPT &PTB.
Bank Stocks and ETFs Encompass 41% Of Today's NYSE Volume
StreetInsider.com - Bank Stocks and ETFs Encompass 41% Of Today's NYSE Volume
It will be interesting to see the debt dance for all these over leveraged hotels. Surely the lenders don't want to own a hotel and acknowledge the loses. So I expect a flurry of new loan packages rather than bankruptcies.
Yes, IIRC, Hilton sold out to the British (?) Hilton Hotels company (whoever ran the Hilton Hotels everywhere else).
July 3, 2007
Biggest Hotel Deal in History - Blackstone
Buys Hilton for $26 billion
Biggest Hotel Deal in History - Blackstone Buys Hilton for $26 billion / Jim Butler / July 2007
Just anecdotally: I live in a California seaside town that specializes in low-end weekend tourism, mainly from within 150 miles. Our many rundown motels are largely vacant from November through mid-April. Then they start to pick up noticeably, and book out solid for the summer starting just before Memorial Day. Prices rise about mid-May.
This year: the pickup in bookings is about 3 weeks late. I drive through the motel district every morning around 7:30, and I'm seeing nothing but vacancy signs and empty parking stalls, even on weekends. Special rates are being offered through May.
@Angry Saver
Last Price Today's Change Bid (Size) Ask (Size) Day's Range Volume
2.10 -0.15 (-6.67%) 2.05 x20 2.35 x21 2.10 - 2.10 100
DIREXION SHS ETF TR DLY FINL BEAR 3X JAN-11 $4.00 PUT (ZFFMD)
That is for January of 2011, and there are 157 people wanting to take the other side of that contract. So if you expect FAS to go from 5.3886 to 1 or less, why would you not do so?
hilton, busch, and ABN Amro have to the luckiest SOB around, selling for CASH at peak debt.
All of the TARP banks should be wards of the state.
Instead, under Geithner/Summers/Obama, the State is a ward of the banks.
Just anecdotal, but I work in Danbury, CT, and when I moved here 14 years ago, there were really only 3 hotels/motels in the area where I work. Now, there are over a dozen. I just don't see how they stay in business.
So far 15B (2%) has been spent from the stimulus plan.
Of the 15B, 14B came from spending at "Department of Health and Human Services"
Recovery.gov
Dam luk:
Biggest Hotel Deal in History - Blackstone
Buys Hilton for $26 billion
Biggest Hotel Deal in History - Blackstone Buys Hilton for $26 billion / Jim Butler / July 2007
Thanks for the link Dam!
Who's Hilton's financial adviser? Wow! Almost prescient and sold almost at the absolute top. Unless it's a completely lucky shot, this calls for skill!
Basel
how'd that test go?
This isn't bad news for consumers. I'm booked for a hotel in DC in a weekend for $77/night at a highly rated hotel. Last year, this place would have charged about $200/night.
Santa Barbara:
One of the most dramatic numbers in the report showed transient occupancy tax revenue of $759,867 last month, which was down 24 percent, or $240,706, from a year ago, due in large part to the global recession.
Read the entire article to understand just how California municipalities are screwed. Check out the budgeting assumptions.
ROB DAWG thanks for the link
the test was fairly easy.
Kind of upset because AIG skyyed to 2.19 during the exam
Of the 15B, 14B came from spending at "Department of Health and Human Services"
Most of this spending was via Medicaid rebates that didn't actually stimulate but instead allowed states to delay cutting expenses elsewhere.
The hotels just need to offer more 'accessories': sex toys, lounges with M/F bed warmers to select from, pre-coitus partner massages, post-coitus energy drinks, and special wake-up visits.
Where's that good old American innovation?
"In year-over-year measurements, the industry’s occupancy fell 11.6 percent to end the week at 55.7 percent."
It would seem that with occupancy that low one would want lower rates? Of course if you can't cover your interest or lease at that rate, you might have a problem. Well at least YOY should turn positive when measured against 4$ gal gas?
Hi all. Just figured I'd throw in my anecdotal 2 cents.
I work in a Super 8. Yup hotels in the area are hurting and so are we however we have just had our strongest winter-season ever and have had many nights this spring full or almost full.
The 'down-sizing' of the customer I think. The ones who would have thought nothing of a 100 dollar room (we are in a more rural area) are now 'bargain shopping'. basically they are holding their noses at the idea of needing to use such a lower class abode, hahaha, and sucking it up and booking.
We cut our prices over the winter to the absolute minimum the owner would accept and now we are back to the regular rates. I prefer that since it gives me a little more room to play the negotiation game, leaves a little bit of room between the regular rates + discount and the 'winter rate'. Makes my life more pleasant. Some absolutely would not believe me when I said I was not allowed to go lower and would get huffy and then be surprised when I let them drive off with a good-luck-to- you smile and a wave. We truly were and are the cheapest chain hotel in the area, with a very nice new property and competent staff, ha, good luck beating the rates we had and have.
Hint to any new person reading CR ( since I know the regulars here are smart enough to know this already)
If you are asking a desk/service person of any type whatsoever to cut you a deal, make an exception, go lower on price---obscenities, yelling, tantrums and threatening my job with a future complaint WILL NOT make me bend. Snort. As if.
thanks and have a nice day
[I can't imagine too many hotels being able to pay the bills for long if every other room is empty night in and night out ... their fixed costs are simply too high.]
That's where Ben & TALF comes in and the taxpayer gets to help out a little with fixexd costs, buying back the current debt 100c/d, bailing out debtholders. And then, once everyone' that counts is happy, the BK wipes out the taxpayer and fixed costs go down after reorg...
Dawg,I read some of the assumptions and started laughing uncontrollably.I may buy a lottery ticket today and have assumed that i will win $12MM which I will take as a lump sum of about $7mm.Anyone want to loan me a conservative $2.5MM secured by the ticket?
ah. manny being manny
rsj, we traveled back to St. Louis for a visit in October and stayed at a Super 8, We paid 500 bucks for a 7 night stay and it was VERY clean and comfortable. The staff was excellent and the only complaint I had was they wouldn't STOP cleaning up after us, even when we wanted to sleep in...Their free breakfast and coffee was also good.
OT
cinco-x
your link couple threads down to article in atlantic june 6 by stewart
The Atlantic Online | June 2006 | The Management Myth | Matthew Stewart
the management myth
..outstanding thanks
Convert them into condos. That'll solve the problem.
/s
There is a simple bailout for this: gov't prints hotel room vouchers, which the hotels can redeem at 150% of their room rate. A bailout of the restaurants could be done in the same way. Bernanke's helicopters could be used to deliver the vouchers to the people.
Black Halo,
That's a big price change for < 2 years. It's hard to price/forecast volatility over time let alone on a daily basis AND over time. Especially with all the hedge funds and day traders out there.
Longer term, I still think they are headed towards zero. Unless Bernake can deliver the mythical and elusive financial stability.
Just thoughts. Keep in mind I haven't bought stocks in > a decade, although I get tempted from time to time.
--
We get weekly proof of the uncomfortable fact that in January of 2008 CR was totally clueless about the coming cliff diving in demand for CRE when he vehemently defended his claim, based on fantasy, that CRE was not as over built as RRE. Of course, being an economist how was he supposed to know about the future demand. He was looking backwards as is required of an economist in good standing.
Please don't depend on CR for any kind of forecasting. He is only good at reporting.
Jas
OT: check out a) the price of oil today, b) the 10 year rate.
And Zimbabwe Ben continues to buy MBS like crazy, the mortgage basis is down to 72bps, 4bps off the all-time record.
This is money that is being pumped in the system that can never be fully extracted.
Byzantine_Ruins
your comment at 6:52 am two or three threads down
re U3 U6 spread and how can we trust current UE numbers when these cronies cook so much other data
right on
The municipalities are about to get a rude surprise over their vicious "welcome stranger" hotel room occupancy taxation policies.
elasticity, ee-las-ticity.
Good day to be a dope. Lookit that long end go, and with the market down, no less.
for states, this april was a wildcard in terms of revenue, since that's when all the capital gains for individuals typically get reported. Well, the results have been absolutely disastrous. hoocoodanode?
State budget gaps widen as tax revenue falls - May. 7, 2009
mt and Byz, Comrade Point over on Nates blog made an interesting point yesterday about UE. If you look at the non seasonaly adjusted numbers for employment to population ratio, we are sitting at 40%. I had to check the numbers myself to believe it, but that is what it is.
wow, oil $57.60
this rally has no fundamentals.
has hyperinflation finally arrived?
Now for something completely different....just in time since it seems that swine flu fear has been pushed back until it comes a knocking in the fall, enter SUPER RABIES for your summer enjoyment:
"New, Fast-Evolving Rabies Virus Found -- And Spreading"
ghostfaceinvestah (profile) wrote on Thu, 5/7/2009 - 12:09 pm reply Ignore user OT: check out a) the price of oil today, b) the 10 year rate.
Yeah, don't remind me. I'm still freaked from when you pointed this out yesterday. I watch oil go up and know it's my tax dollars funding it.
for states, this april was a wildcard in terms of revenue, since that's when all the capital gains for individuals typically get reported. Well, the results have been absolutely disastrous. hoocoodanode?
Yeah, but look at all the unexpected consumer spending due to tax rebates. One off green shoots rule!
hyperinflation would be the only rational explanation for nominal prices to rise in the face of the absolute worst fundamental situation that anyone (not in the market for 80 years) can remember.
hyperinflation goes hand in hand with corruption and monetization.
hmmm.
For any stays longer than a couple of days when traveling with company, I always arrange my lodging using VBRO or other similar systems. Big savings, no taxes/fees/surcharges, more space and full kitchens.
"Will they leave the light on for me anyways?"
....even Tom Bodett went on to better things (Wait, Wait, Don' Tell Me, on NPR)
hyperinflation is a good thing, yes?
for states, this april was a wildcard in terms of revenue, since that's when all the capital gains for individuals typically get reported. Well, the results have been absolutely disastrous. hoocoodanode?
Gee ... you mean with the broad market down 40% for the year, people weren't sitting on a ton of capital gains?
Of course, every state legislature convened a special session in early January to evaluate the scope of the potential revenue hit and discuss their contingency plans, since they already knew where the market ended up and thus knew they were going to get crushed. Right?
No, of course not! The budgets for the '09 fiscal year were already set - which assuredly had already assumed the cap gains from '07 were going to continue on into infinity ... and everyone was shocked, shocked, when April rolled around and the revenue side somehow didn't pan out!
Everyone sees the chain of dominoes falling, but no one seems to be smart enough to try to reach out a foot or two ahead of the current point of impact and pull a couple of dominoes up from there. No ... it's much more convenient to wait for the entire chain to come down and just charge the taxpayer for whatever it'll cost to rebuild the whole damn thing. Unbelievable.
New Transmatch Railfax up!
Railfax Report - North American Rail Freight Traffic Carloading Report
Metals and forest products continue to accelerate their weekly deterioration. Coal particularly has deteriorated significantly in the last week.
Auto haulage is up this week notably, and intermodal books an uptick.
Looking at the 4 week plots, you can see some moderation, but, keeping in mind the seasonal character of the previous year plots, the 4 week total rail traffic is still in decline vis a vis previous time periods. The crushed stone is a particularly good example of this -- it's "flat" term-on-term, but YoY, but it should be spiralling upwards for construction season demand.
Again, the credit panic is decisively over, and has been for months. The damaged American economic context does not appear to have materially improved over the last 7 days.
--
Aahha, we got lots of "Printing Money" inflation dopes here. Being a born-and-bred American dope is a big handicap to overcome. BBAD have been rendered incapable of understanding economics and political systems.
We have a bad econo-political system for a reason. A system of the Crooks...
Jas
re: Weekly Unemployment Claims
Less than 2 weeks ago, I saw included in a government press release that more than 40% of unemployed were on unemployment benefits until they ran out. I thought it was the BLS but I didn't quickly find it in their employment situation release. If someone knows what I'm talking about, please clear it up.
Until then, Among the unemployed, the number of job losers and persons who completed tem-
porary jobs increased by 547,000 to 8.2 million in March. This group has nearly
doubled in size over the past 12 months. (See table A-8.)
The number of long-term unemployed (those jobless for 27 weeks or more) rose
to 3.2 million over the month and has increased by about 1.9 million since the
start of the recession in December 2007.
This recession has been unlike others, and I would not be surprised in the least if the 2 months of unemployment decline rule failed this time. Furloughs, voluntary pay cuts, layoffs, professionals taking retail or manual labor work, ... unemployment is saturated and has spilled over into less measured areas in an economically significant way. Then there is looming auto sector reorganization, perhaps followed by the airlines again.
My financial advisor told me that the money printing would make stocks go up and me rich. He was right!
Jas - What happened to the 10yr?
What happend to the depression?
You keep talking about CR's "bad" forecast...you might want to look in the mirror, because you are the real DOPE! BAHAHHAHA
Jas - you said the 10yr @ 2% was only going lower? DOPE!
Oil looks over-priced too me. The re-flation trade crowd is way too early imo. Especially against a back drop of rising unemployment, over-capacity and a debt saturated CONsumer.
I still see a sick eCONomy and deflation in the cards.
"hyperinflation would be the only rational explanation for nominal prices to rise in the face of the absolute worst fundamental situation that anyone (not in the market for 80 years) can remember."
That is where I am betting.
I am not a big follower of the oil markets, but it is a big game of chicken in some ways - tons of oil being stored, but the price keeps rising. The price isn't demand driven, any more than it was last summer, it is a side effect of Zimbabwe Ben pumping billions of dollars into the financial system with no discretion: a lot of it is going to leak into places where it will be used for pure speculation.
This is the problem with the government's whole approach to the crisis IMHO. Rather than target specific targets like taking down Citi, etc., they pump money into everyone, and all that money sloshing around the system is going to go to unproductive means, because there is so much less productive work going on.
I am amazed at people (including Krugman) who still think we are going to get deflation. Clearly he does not see the money creation that is going on in the MBS market everyday, it is astronomical.
"10y bond 3.26% +0.03 (0.93%)"
Ka-boom. When is Mr. Market gonna figure out that it is not the Fed that is raising rates, but the bond market. I mean what usually happens when the fed raises a 1/4 pt? Any venture that is running on debt is in for a hurting. You know like housing...
jas is chopper ben's illegitimate love child
Moreover, the more money that the Fed prints to buy bonds, the more the risk of long-term inflation. Its a Catch-22.
So any virus experts here...what are the chances of a fox with super rabies giving it to a pig with a sniffle... Can these two join up?
higher interest rates gooob for duh sock markit, no?
Clearly he does not see the money creation that is going on in the MBS market everyday, it is astronomical.
Ghost,
Home sales are way down. Too me that means the fed is sponsoring a massive round of refinancing - lower interest loans exchanged for higher interest loans. It seems to me that lower aggregate interest is deflationary.
I could be wrong though.
The wife and I are running up to Chicago to catch a play and do our part to boost consumption. We usually stay at this Hotel that has been ranked as the best hotel in C-town for business travellers. Up until last year, if you could get a room, it was in the mid 200's. My wife snagged a room for late May at about 150 per night.....Makes me feel good about dropping a few dollars on Rush street.
Lotta REIT trendline breaks. I don't know how these things are staying up.
Reversal and trendline break in some retailers. JWN looks tasty here, trying for a little.
mook:
in fairness, a lot of states did convene emergency legislative meetings. My home state did at least two meetings mid-term and reduced the budget at least three times with across the board tax cuts. Granted they weren't being too realistic with 10-15% spending cuts. Additionally, the Medicaid rebates that came out immediately after the ARRP helped a lot. But when you're getting 35% reduction in projections, things are FUBAR.
For 2009-2010, many states are secretly waiting for a federal bailout, either directly or via a Federal Reserve Lending Facility, at the eleventh hour; they're really in a state of denial.
[I still see a sick eCONomy and deflation in the cards]
Impossible. Ben/Timmay will fight deflation with every shred of their energy, citizens be damned.
"GM 1Q Loss $6B; Spent $10.2B More Than It Brought In"
WSJ Error Page - WSJ.com
Again why is this not a 16 billion dollar loss
"Home sales are way down. Too me that means the fed is sponsoring a massive round of refinancing - lower interest loans exchanged for higher interest loans. It seems to me that lower aggregate interest is deflationary."
Same mistake a lot of people make - assuming that the purpose of the low MBS rates are to help homeowners. It is not.
The purpose is to help the banks. Those low rates enable them to refinance all those Alt A and Option ARMs on their books into govt insured fannie/freddie/fha paper.
The capital that gets freed up at banks like JPM, who turn around and pour it into commodities.
Vonbek777
believe it or not there are many genetic similarities between men and pigs (especially on wall street , ok just kinda kidding, but maybe not so much)
but the genetic differences between man and dog are greater
so re assortment and mutual infection between men and dogs is very low to impossible compared with high transmissability between humans and pigs
"Home sales are way down. Too me that means the fed is sponsoring a massive round of refinancing - lower interest loans exchanged for higher interest loans. It seems to me that lower aggregate interest is deflationary."
Same mistake a lot of people make - assuming that the purpose of the low MBS rates are to help homeowners. It is not.
The purpose is to help the banks. Those low rates enable them to refinance all those Alt A and Option ARMs on their books into govt insured fannie/freddie/fha paper.
The capital that gets freed up at banks like JPM, who turn around and pour it into commodities.
Crispy wait it will be a 6/10 Depression. Bad enough
the on books paper economy will see inflation.
new production and necessities will see inflation.
the the off books real economy will see deflation.
real economy is the craigslist economy.
......this is one area of retail that we have never over-indulged - excess lodging/rooms..........now 60-miles away? Whoa Nellie! (Vegas)
deflation in the near term
then...stagflation and hyperstagflation
"Obama Unveils New Budget Cuts"
Country laughs in frustration and disappointment...
ghostfaceinvestah (profile) wrote on Thu, 5/7/2009 - 12:41 pm
The capital that gets freed up at banks like JPM, who turn around and pour it into commodities.
Which suppresses aggregate demand. Who's going to buy the inflated goods that come out of the inflated commodities?
"the on books paper economy will see inflation.
new production and necessities will see inflation.
the the off books real economy will see deflation.
real economy is the craigslist economy."
someone else here put it very well - inflation in the things you need (food, energy), deflation in the things you want (cars, furniture, etc).
terribly regressive.
Global Crisis ‘Vastly Worse’ Than 1930s, Taleb Says
Global Crisis ‘Vastly Worse’ Than 1930s, Taleb Says (Update1) - Bloomberg.com
May 7 (Bloomberg) -- The current global crisis is “vastly worse” than the 1930s because financial systems and economies worldwide have become more interdependent, “Black Swan” author Nassim Nicholas Taleb said."
snip
"Nouriel Roubini, 51, the New York University professor who predicted the crisis, told Bloomberg News yesterday that analysts expecting the U.S. economy to rebound in the third and fourth quarter were “too optimistic.” "
snip
"The global economy is facing “big deflation,” though the risks of inflation are also increasing as governments print more money, Taleb told the conference organized by Bank of America- Merrill Lynch. Gold and copper may “rally massively” as a result, he added."
snip
“Certainly the rate of economic contraction is slowing down from the freefall of the last two quarters,” Roubini said. “We are going to have negative growth to the end of the year and next year the recovery is going to be weak.”"
The purpose is to help the banks. Those low rates enable them to refinance all those Alt A and Option ARMs on their books into govt insured fannie/freddie/fha paper.
Oh great. Thanks again.
One of the cuts:
1. LORAN C Long Range Radio Navigation System
The White House says this technology has been made obsolete by GPS.
Savings: $35 million/year
Tell me that its obsolete when those sats go up in smoke in a solar storm.
Never mind the Morons Jas, I here you loud and clear.
Oh and Hyper-Inflation is miserable I was in Argentina during that uprising, laugh all you want it is miserable.
--
Dopes react to daily, weekly, monthly, quarterly, etc., movements in prices and economic data. All my forecasts are 3-5 years and beyond.
Americans have been bred to be dopes for a reason. They react to serve their criminal rulers' interests. Amazing dooooopppes...
Jas
We'll try to keep the hotel open for you, but just remember, if the office is locked and boarded in the morning, there's no cofay or continental breakfast.
ghostfaceinvestah (profile) wrote on Thu, 5/7/2009 - 12:46 pm
someone else here put it very well - inflation in the things you need (food, energy), deflation in the things you want (cars, furniture, etc).
Rob Dawg, IIRC.
We'll keep the oil lamp lit for you?
re: Unemployment, the 2 consecutive month rule
Enough said
The capital that gets freed up at banks like JPM, who turn around and pour it into commodities.
Ghost,
I recognize that, in general, the fed is helping banks not home owers. Many home owers would be best served via jingle mail. That said, banks or speculators dumping money into overpriced commodities against a back drop of falling end demand argues for future losses and lower future commodity prices.
We saw this with housing as prices soared (for a while) against declining demand.
All shams end - in tears.
O,
"We'll keep the oil lamp lit for you? "
Yes, but not because they're cheap, but because they can cause accidental midnight fires, thus pushing the cost of the leveraged asset onto the balnce sheet of the fire insurance company.
Just don't tell anyone we told you.
Misean - welcome back.
"Welcome to a new kind of tension.
All across the alien nation.
Where everything isn't meant to be okay.
Television dreams of tomorrow.
We're not the ones who're meant to follow.
For that's enough to argue."
"The number of long term unemployed rose to 3.2 million"
And the rate of long term employment increase has yet to plateau, in fact, long term unemployment is accelerating at the greatest rate since the onset of the recession. No green shoots here.
in the eyes of congress and the courts corporations are individuals with rights but can you do this...bet not
Coca-Cola, Oracle, Intel Use Caymans to Avoid Taxes (Update1) By David Evans May 5 (Bloomberg) --
Seagate Technology, the world’s largest maker of hard disk drives, is headquartered in Scotts Valley, California. Yet the documents it files with the Securities and Exchange Commission list its address on South Church Street in George Town, the capital of the Cayman Islands.
snip While the U.S. corporate tax rate is 35 percent, Seagate paid an effective tax rate of 5 percent in the year ended June 2008, according to data compiled by Bloomberg. The Caymans have no corporate income tax for companies incorporated there. The Caribbean island has helped scores of U.S. companies, including Coca-Cola Co. and Oracle Corp., to legally avoid billions in tax payments to the U.S. government, says U.S. Senator Byron Dorgan. “
snip Largest Companies One quarter of the 100 largest contractors with the U.S. federal government, including Altria Group Inc. and Tyco International Ltd have had subsidiaries in the Caymans, according to a study by the Government Accountability Office. At least 10 of the 30 companies listed in the Dow Jones Industrial Average have had units with addresses in the Caymans.
these companies wave the flag im sure and many profited from contracts in iraq
but then they f^(& america in the A$$
Coca-Cola, Oracle, Intel Use Caymans to Avoid Taxes (Update1) - Bloomberg.com
China Investment Corp Likely To Buy Bank of America Corporation Shares From Bank of America Corporation-DJ
I wonder what Ben had to promise to make that happen? Cooling down the presses?
CNBC is really pushing that whole building confidence thing with it's "green shoots" asking for replies to are you seeing any in your area.
My reply; I'm seeing a lot of "poop shoots", they're called the little people. Tax payers and common folks taking it up the ass.
Thank goodness those low paying tempt jobs are keeping the # of employed up... not
Red Rover, Red Rover, We call on the national debt to roll over
Ouch, that was NOT a good 30 year auction.
"Are the Green Shoots for real? Watch Part-Time Workers"
".......see a close correlation between the start of a recession and a sharp shift to using part-time workers. And, conversely, that when an economy recovers, the use of part-time workers falls off quickly."
Casey's Charts - Delay and Pray
Anyone understand why there appears to be an unlimited amount of Cash willing to buy REIT Secondary offerings. At least 5 REITS have announced secondaries amounting to Billions of Dollars for commercial real estate.
What am I missing. i have been short the reits (SPG, ESS, VNO, etc) and getting killed.
and congress held amerika down while they did her up the back door
make no mistake about it, the tax liabilities they avoid are on you...us
"take a load off fanny
take a load for free
take a load off fanny
and and and
they put the load, put the load, put the load
right on me"
bob dylan and the band
Dow Jones reported that Bank of America Corporation plans to sell part of its stake in China Construction Bank Corporation, and China's $200 billion sovereign wealth fund, China Investment Corp.,
Chinese buying BAC's Chinese shares. That's all
10-year yield just broke 3.3%.
mock turtle,
FRBSF Economic Letter 2009-12; March 27, 2009
"The Risk of Deflation"
"The SPF forecast is for the unemployment rate to rise to 9% early next year and then edge down during the remainder of 2010. According to this model, the high degree of slack in labor markets pushes the core personal consumption expenditures price index (PCEPI) inflation rate down from 1.9% in 2008 to 0.3% in 2009, and down further to a deflation rate of 0.8% in 2010. Based on this forecast and the historical average of core PCE inflation forecast errors reported in Reifschneider and Tulip (2007), the estimated probability of deflation is about 30% for 2009 and 85% for 2010."
FRBSF Economic Letter: The Risk of Deflation (2009-12, 3/27/2009)
"All my forecasts are 3-5 years and beyond."
And where will the 10 year be 36 months out?
maybe the Fed now would like a steeper or rising yield curve?
Ghostface how's that 30 yr go. Link?
Captain Elmo, take her down.....
http://www.treasurydirect.gov/instit/annceresult/press/preanre/2009/R_20090507_1.pdf
30yr results
"Based on this forecast and the historical average of core PCE inflation forecast errors reported in Reifschneider and Tulip (2007), the estimated probability of deflation is about 30% for 2009 and 85% for 2010"
Consider the source, is all I can say. If you were the Fed and wanted to push your agenda, what would you say?
They can talk all they want about PCEPI, do their numbers matter when you are paying $5 a gallon at the pump? Does saving $300 a month on your mortgage make you richer or poorer if you pay $200 more a month in energy costs and $150 more a month in food costs?
Vobeck LOL
EHP gracias
Thanks, Ben, for balancing the sins of the few on the backs of the many. Appreciate it.
ghostfaceinvestah
I've been expecting both deflation and high inflation in that order. Just like the changing of the seasons, it does not all happen in one day
"The White House says this technology has been made obsolete by GPS."
Vonbeck, I can't believe they're letting Loran C go. You're right. Now there's no backup to GPS, unless it's a sextant. Not too many folks know how to operate one of those nowadays.
30 year mortg rate above 5%
so bond yields are rising and emerging markets are rebounding....
I remember on this very blog there were predictions of mortgage rates falling not just to 4.5, but in the 3's.
I fought the tape from the low $50s to ther high $30s in TBT, until it hit 20% of my trading acct.
Paying off now.
The Chinese are not pleased today with their Trillion dollar Treasury holdings.
Or should trade wars turn into shooting wars and we discover the anti-satellite capabilities of our adversaries...
Ghost,
But for the fed's massive debt pushing, we would have been living in a world of mild deflation for well over a decade. The fed robbed the majority of the fruits of their labor and gave the spoils to wall street.
Anyway, I think inflating from here is going to be more difficult than Bernanke thinks. Consider: if prices rise, I'll buy less.
caramba!
http://finance.yahoo.com/echarts?s=^TNX#symbol=^TNX;range=1d
3.31 Up 0.1560 (4.95%)
10-YEAR TREASURY NOTE (^TNX)
Oh my! Houston, we have lift-off.
I must down to the seas again, to the lonely sea and the sky,
And all I ask is a tall ship and a star to steer her by,
And the wheel's kick and the wind's song and the white sail's shaking,
And a grey mist on the sea's face, and a grey dawn breaking.
I must down to the seas again, for the call of the running tide
Is a wild call and a clear call that may not be denied;
And all I ask is a windy day with the white clouds flying,
And the flung spray and the blown spume, and the sea-gulls crying.
I must down to the seas again, to the vagrant gypsy life,
To the gull's way and the whale's way where the wind's like a whetted knife;
And all I ask is a merry yarn from a laughing fellow-rover
And quiet sleep and a sweet dream when the long trick's over.
John Masefield
Sextant indeed. Wonder if sliderules will come back in fashion too.
Interesting action today! Check out COF and PRU. Time to add to my puts? Anyone watching volumes here?
Watch those 10 years -- as a sidenote, as treasuries sell off isn't that typically bullish for equities? But apparently not today...
BH is there any chart resistance?
nobusiness:
Anyone understand why there appears to be an unlimited amount of Cash willing to buy REIT Secondary offerings. At least 5 REITS have announced secondaries amounting to Billions of Dollars for commercial real estate.
What am I missing. i have been short the reits (SPG, ESS, VNO, etc) and getting killed.
Lets see:
1. No risk of default (Previous prices are at levels assuming some default) now that Govt is stepping in.
2. New mark to magic means banks can refi CRE at lower, and longer terms; which helps a lot of REIT stay afloat.
3. Retailers have to crash before REITs. Despite very bad numbers, I still don't see enough retailers crash; the stabilization of consumer expenditures is also new being observed.
4. REITS is also one of the best hedge against inflation -- if there're funds out there hedging aganist hyperinflation, they'll be buying this en-mass.
In aggregate, because CRE rents are paid a long time in advance, they usually don't change price in a shortable fashion.
There's simply no trigger in a "shortable" sense to cause any REIT to BK; hence, in a Bernake helocopter environment, short positions are being closed by hedge funds. Retail shorts are being sacrificed in the meantime.
If this increase in commondities and foreign markets we're seeing now continues and becomes the forefront of hyperinflation, be careful of your shorts, it could be very expensive. Shorts have unlimited losses should hyperinflation happen.
Bond Result: Debacle
http://acrossthecurve.com/?p=5179
[30 year mortg rate above 5%]
Ammo stockpile running low and the enemy is closing in.
......I thought the "grand design" was to keep interest rates down on Treasuries?
According to local TV news, quite a few hotels/motels are being foreclosed on in the Atlanta area.
Bernake's new word "Macroprudential" could become a lttle embarassing if mispronounced.--given the amount of lisping & stuttering that goes on among our financial regulatory leaders, I expect to hear someone give a speech soon that sounds like the topic has something to do with large female genitalia. (Edit --for those who are a bit slow today, the mispronounciation would be macropudendal).
Looks like possible resistance at around 3.5% on the TNX.... I wonder what BB's target for it is now???
Outsider
Lower mortgage rates would not have affected the housing market. Not until inventory was so low that prices were thought to be stable.
as a sidenote, as treasuries sell off isn't that typically bullish for equities?
yeah, assuming that America is the only game in town; lotsa money going abroad or into commodities...
didn't notice that COF and PRU hadn't blow-off like the other financials.
Anyone who thinks buying pairs of leveraged ETFs and shorting both is a no-brainer needs to check out DTO's performance over the past year (somewhat excluding the past month)...
Looks like Jas won't be buying rounds at the truck stop tonight...
Race for the exits in LT Treasuries. I fail to see how the dollah can hold its ground as treasuries tank.
Why do I get the sense that the bears might have been lurking, and are a bit....pissed? Hope Heliben has a couple hundred billion laying around...
Memo to Bernanke: Printing dollars to keep interest rates down might not work.
Fairly massive selling off in C today
Money flows - Selling on Strength
Money Flows: Selling on Strength - Markets Data Center - WSJ.com
Note the volume from Yahoo is already well in excess of the 90 day average:
C: Summary for CITIGROUP INC- Yahoo! Finance
Side note - massive purchases of SPY in Buying on Weakness:
Money Flows: Buying on Weakness - Markets Data Center - WSJ.com
time for the dentist - trade well.
Outsider
Lower mortgage rates would not have affected the housing market. Not until inventory was so low that prices were thought to be stable.
Actually my focus is much more microeconomic: waiting for best of the best refinancing rates. May lose that game now.
Ben the mad economtric scientist's experimental machine seems to be wandering out of the control zone. "WHERE'S THAT DROP THE TNX DIAL I ORDERED?"
For people looking to flight to safety from both hyperinflation and hyperdeflation, I suggest healthcare, esp pharmaceuticals. Not the edge-of-your-seat startups or biotechs; but giant, old, boring plain old pharceuticals with a steady product mix that doesn't consist of "optional" drugs.
In hyperinflation, people still need meds, and drug companies can increase prices equal to or faster than inflation.
In deflation, if the drugs are not optional, loss is sales is going to be limited, until of course, we end up with Armageddon.
On the other hand, if Armageddon is here, buy guns and bullets. But that kind of mad max thinking is beyond me.
Just food for thought.
Seems to me that examples of past plutocracies, from Rome to South America to Africa, where the elites openly stole from the rest of the population, economic collapse into hyperinflation was the end result. Jas claims that the US is a kleptocracy (which I agree with), but rails against anyone who talks about the potential for high inflation, which historically contradicts his core belief. How high will the 10 year treasury yield have to back up before you admit you're wrong Jas? At least Sebastian, for all his flawed economics, had the ability to eventually admit he was wrong.
"I live in a California seaside town that specializes in low-end weekend tourism"
Why is it that there isn't a single decent hotel in Santa Cruz? Is development there that much of a pain? Pretty amazing, considering that half of the Nas's market cap is over the hill.
I was in Moab, UT last weekend and had a devil of a time trying to book an inexpensive hotel room. I started looking during the week, using the usual websites - Kayak etc.. - best we managed was $119/day - while there, for sure for the Fri. night it seemed the NO vacancy signs were lit everywhere - FWIW.. guess Moab is pretty popular this time of the year I suppose.
-K
Moving averages
834 20 day
800 50 day
Very little Resistance down IMO.
mp and Conjure are seeing green shoots.
(mp and Conjure duck back into foxhole to await incoming)
skk - its the dune buggy crowd out there tearing up the sand...
C&C How's business?
Seriously though duck and cover.
I think today is Ben and Timmay's worst nightmare - Bonds and equities both heading south at the same time. If this persists it's a pretty dark storm ahead.
"Sextant indeed."
I still have Loran on the boat for back up and redundancy. Plus, you never know when the GPS might break.
I'll bet I could still use a slipstick. I'm not sure where I'd find one, though.
"Memo to Bernanke: Printing dollars to keep interest rates down might not work."
Yeah the math on that one left something to be desired.
Back up the truck Jas! Just think what they will be worth 3 years from now!
re inflation v. deflation
I'm in the retail sector so I'm kinda on the front lines with j6p and use him as a prism to view things. He ain't buying unless it is a DEAL. Which doesn't do much for margins.
No way No how do I see inflation taking root (outside of commidity manipulation) in the near term (<1yr) unless one of 3 things happen to get $$'s in people's hands.
1) wages/hours go up
2) monthly stimulus checks from gov
3) return of (broad based) easy credit
until one or more of the above happens any price increase will be met with a drop in demand. Not very inflationary.
Usually when interest rates start to turn up, that increases homebuying as people sitting on the fence decide to jump in... It will be interesting to see if we get that effect this time... Are there any fence sitters, other than refi's?
bearly:
I think today is Ben and Timmay's worst nightmare - Bonds and equities both heading south at the same time. If this persists it's a pretty dark storm ahead.
Hmm... I think money running to emerging / asian / offshore market from the so called "safety" of UST and US stock market is gaining strength. I wonder if this is just a speculative trend or the start of the run of "bank of USA"...
Pray it ain't so... There can't be a USA run right, can it?? It's huge and so unbelievable but then huge and unbelievable things have happened recently.
"I'm in the retail sector so I'm kinda on the front lines with j6p and use him as a prism to view things. He ain't buying unless it is a DEAL."
You think the same applies to gasoline? Or food? Or heating fuel?
He is buying, bargain or not.
10 yr yield explosion, yet euro is stronger.
That's a good sign, isn't it? (ducking)
mp (profile) wrote on Thu, 5/7/2009 - 10:32 am reply Ignore user
mp and Conjure are seeing green shoots.
(mp and Conjure duck back into foxhole to await incoming)
That green you see? That's an afterflash from your staring so long at the long bonds waiting for the detonation and now being blinded because it was so much bigger than anyone expected.
"Usually when interest rates start to turn up, that increases homebuying as people sitting on the fence decide to jump in.."
Yeah, but, MBS prices are barely changed, down 7-8 ticks today, not that much given the action in the 10 year. Zimbabwe Ben is still exercising his 70s-style price controls in that market.
mp and Conjure are seeing green shoots.
Real? Please expound.
I remember when the old A&P went under.... I think it was sometime around 1973.... At the time us young punks had never seen any big corp go under... we were astonished...
skk,
Moab is pretty much booked solid from May to Labor Day. It's a global summer destination; between mountain bikers, 4WD people, and Europeans on holiday, it's been a jamfest for years. The signs at Arches NP campgrounds have "No Vacancy" carved into the wood...seriously. That area is like the United Nations of tourism...you can hear four or five different languages in one day. It's a great place...
Terry,
My dad has a motor yacht. Up and down the east cost. He is actually thinking about trading in and going for the big sail. He hates gps, only uses it for verification. The man honestly can't get lost. Has Patton's gift for seeing terrain in 3 dimensions all the time, like he is in the clouds looking down. Likes the ocean because it challenges his sense of direction. I wish I had that gift. I think when my boys are older, we are going to head out for a six month cruise. Astronomy 101 here we come! Another reason to home school. NO DAMN ATTENDANCE POLICES!!!
If mortgage rates rise by any significant amount, that's going to leave a mark on the bailout recovery...
mp and Conjure are seeing green shoots. (mp and Conjure duck back into foxhole to await incoming)
Glutton for punishment! Well, over time we shall see.
I have one friend in manufacturing, and he reports an increase in orders -- but he's having to bid at cost to get the business.
Could just be phosphenes
"Anyway, I think inflating from here is going to be more difficult than Bernanke thinks. Consider: if prices rise, I'll buy less."
You will buy less bread? Milk? Maybe a bit less gasoline, but how much, 20% less? Doesn't matter if prices rise 100% (and up 40% YTD btw).
Bernanke is proving what every good economist should know - price controls never work.
Instead of fixing our economy we are printing money and giving it to the banksters to play with. Recipe for a disaster - stagflation to the nth degree.
"You think the same applies to gasoline? "
Absolutely. y-o-y mileage #s keep on dropping, don't they?
Same with beef vs ramen. True, to some degree, with home heating. Blankets are a sunk cost, and if you don't like seeing your breath in the morning, AZ has tons of cheap new housing!
mp, didn't the conjure clock prescribe a depression just a few short months ago? I hope you're being sarcastic, else conjure's watchmaker has some 'splainin to do...
Are you still bunkering up?
Gold should be going nuts right about now... the lag is a bit odd.
10 yr 318.28%
Bernanke has been talking so much out of his ass, I'm afraid his head is suffering from obdormition
"Absolutely. y-o-y mileage #s keep on dropping, don't they?"
How much? What percentage? $2 a gal gas - $5 = 250% increase. Hard to make the math work, unless you ditch your car and start walking/biking everywhere (taking the bus helps a bit, but of course bus prices will go up to pay for the gas).
"Real? Please expound."
Definitely a jobless recovery.
No V-shaped recovery, more and more looking L-shaped.
"mp and Conjure are seeing green shoots"
Just to clarify - a "green shoot" is not when Earth Firsters pull out a machine gun and try to reduce global warming through lead attrition.
"I think when my boys are older, we are going to head out for a six month cruise. Astronomy 101 here we come! Another reason to home school. NO DAMN ATTENDANCE POLICES!"
Your boys would learn more in those six months than six years in a government school.
Hell, teach 'em to use a slide rule, too!
"Are you still bunkering up?"
Absolutely. The situation is too unstable.
mp and Conjure's garden must be sprouting...
@ghost.
You just listed three things that j6p NEEDS so, of course, he will buy but what makes you think he will not change his habits to reduce his demand (and cause prices to drop)?
We still see the possibility of a 10% output gap coming.
That would mean major deflation.
"10 yr 3.28% "
Don't worry, Zimbabwe Ben will step in to buy more, which will drive commodities prices up, which will drive up the 10 year, which will cause him to buy more...
There is no magic bullet in the world folks, the underlying problem is the structure of the economy, not the money supply, not the availability of credit, those are symptoms. Pouring more money into a broken economy only makes it more broken.
But we sure had a nice feel-good couple of months, didn't we?
"HollywoodHack (homepage, profile) wrote (in reply to...) on Thu, 5/7/2009 - 10:30 am
"I live in a California seaside town that specializes in low-end weekend tourism"
Why is it that there isn't a single decent hotel in Santa Cruz? Is development there that much of a pain? Pretty amazing, considering that half of the Nas's market cap is over the hill.
That is a very good question. I would say a combination of several things:
But I really don't know. We've had some new motels go up in recent years, and they turn to crap quickly. I don't know why. There are a couple of new projects building on Ocean, and part of the Patel clan is tearing down three yucky motels they own by the boardwalk and building one big new one in its place; no opposition from the city.
The only big controversy with new hotels is a new project down on Beach Street by the Boardwalk that would replace an older structure. And most of the problem came about because they wanted to exceed the height limit; they were eventually allowed to do so.
"How much? What percentage?"
obviously, factoring in gasoline retail makes this an incredibly fast moving target.
but, starting with the obvious - observed by quite a few anectpointal datadotes very close to one of the top 5 freeway intersections by traffic in the lower 48 - people tend to commute a lot less when they aren't working. and they certainly don't load up the kids for a trip to legoland with hotel and $40 tix included when they aren't working (unless, perhaps they have a little saved from their previous professional job and would normally be taking them on a Caribbean cruise).
of course americans are almost totally wedded to their cars, but there are many ways to skimp. i'm sure many less are insured, many oil changes go out to 10K instead of 5K miles, many tires run until popping, etc, as well.
"You just listed three things that j6p NEEDS so, of course, he will buy but what makes you think he will not change his habits to reduce his demand (and cause prices to drop)?"
Higher prices in the things he needs, lower prices in the things he wants.
Is that good or bad for the lifestyle of J6P? His standard of living goes down.
Printing money does not improve the standard of living, it is very regressive.
Vonbek777 writes:
One of the cuts
1. LORAN C Long Range Radio Navigation System
The White House says this technology has been made obsolete by GPS.
I'll miss my Northstar M-1. I rely on it because of the nice, large display. The GPS is harder for an old guy to read so I set it to provide visual track info with no charactors displayed. The pentagon will miss being able to navigate period. Satellites will be the first casualties in a war.
mp (profile) wrote on Thu, 5/7/2009 - 10:49 am reply Ignore user
We still see the possibility of a 10% output gap coming.
That would mean major deflation.
Bernanke's is unable to print enough money to backfill the slowdown in the velocity of money. There's our deflation. Slower money chasing the same goods is more deflationary than demand destruction. Both together and Ben is swamped.
"And most of the problem came about because they wanted to exceed the height limit; they were eventually allowed to do so. "
Santa Cruz is indeed a parallel universe. So much money so close, so much natural beauty, yet it still stubbornly refuses to look like something besides a lower-middle-class suburb stuck in 1955. I'd still love to own rental property for UCSC kids one day - they happily pay a grand a month to split a closet...
We find it hopeful that--at least for now--the macro side no longer appears to be plunging.
OT (or is it?)
10y bond 3.31% +0.08 (2.48%)
"It's huge and so unbelievable but then huge and unbelievable things have happened recently."
First they mispriced risk, then they mispriced trust. "This plan will work!" Did not instill confidence for me.
"of course americans are almost totally wedded to their cars, but there are many ways to skimp. i'm sure many less are insured, many oil changes go out to 10K instead of 5K miles, many tires run until popping, etc, as well."
Sounds like an economy in decline. Unfortunately other countries (e.g. China) have plenty of money to snatch up commodities.
Nippon Yusen Leads Shipping Lines Higher on Baltic (Update1) - Bloomberg.com
"Iron-ore imports at major Chinese ports rose 24 percent from a year earlier to a record 53.5 million metric tons last month, the country’s Ministry of Transport said yesterday. "
Who initially propagated this phrase "green shoots", I would love to whomp them on the head but then I realize they could not have spread it alone and so I must weep for the complete and utter stupidity of so many people.
"the macro side no longer appears to be plunging."
mp, conjure is just messing with you. did you forget to feed him his weekly rabbit at one point a month ago? is he still bitter?
Here's a fuel saver...
ArvinMeritor Shows Off Diesel-Electric Hybrid Class 8 Tractor Prototype - Auto News - Truck Trend
but don't worry, the result of the stress tests are coming out today.
gotta go sell some MBS to Zimbabwe Ben...
Instead of fixing our economy we are printing money and giving it to the banksters to play with. Recipe for a disaster - stagflation to the nth degree
Yes! Stagflation could be worse than letting the deflationary debt bomb unwind on its own. No one gets out alive.
ghostfaceinvestah
Not so much money, as national make work projects without demand
"Unfortunately other countries "
not unfortunate at all. commodities, tourism and money laundering are the core pillars of our present and future economy. that's why they call it a 'banana republic'. Hank and Ben just accelerated the inevitable.
"bearly:
I think today is Ben and Timmay's worst nightmare - Bonds and equities both heading south at the same time. If this persists it's a pretty dark storm ahead."
wait till the day currencies complete the trifecta
"Santa Cruz is indeed a parallel universe. So much money so close, so much natural beauty, yet it still stubbornly refuses to look like something besides a lower-middle-class suburb stuck in 1955. I'd still love to own rental property for UCSC kids one day - they happily pay a grand a month to split a closet..."
More like $400-500 each to split a bedroom. If you load up too many kids in one house, the neighbors can file a public nuisance claim in small claims. Granted it takes a lot -- there was some dentist from Monterey who was stuffing 15 students in his investment rental on the West Side -- but the option is there.
Basically, everybody who moved here a long time ago "got theirs" in the form of cheap housing, and is resolute that Santa Cruz will not change one iota from when they got here. These are the political movers and shakers, by the way. Chamber of Commerce -- not so much.
By the way, if you have to stay in Santa Cruz -- Babbling Brook Inn. In the middle of town, very secluded. Not that much more expensive than a decent hotel; they just lowered prices.
All Fall Down,
China is already shooting down sats, this just doesn't make sense to me at all. Maybe I am just a chicken little but everyone seems to be using overly optimistic 'models' for the future no matter the field. Dad used to get amused when pilots would lose their gps and couldn't tell anyone where they were. Scared them to death. Just what are we teaching these days besides over-reliance on technology and blind faith in crumbling paradigms.
Manny Ramirez just got a 50 game suspension for a positive drug test, good luck with that MLB
It's all about confidence. Ben & Timmay have been working hard on confidence in the banks & markets, taking their eye off the rock-solid confidence in Treasuries. Once that gets shaken vigorously, it will be tough to restore.
Run on the US Central Bank ?
From previous thread:
We were reading the story of Noah's ark in preparation for Gilgamesh later and he asked me why god killed all the animals if it was the people who were bad.
Because man created God in man's image. How could it be any other way?
Re: Hotels in SC:
My guess is that it's easier to build hotels in Monterey and surrounding small cities, and Monterey is a nicer town. Even in this recession/depression, the hotels in Monterey are doing quite well, based on the difficulty that I have had getting a room there lately.
Who's feeling confident today! LOL
All American bailout coming soon...
bobn,
Wasn't that rational at the time, I just said god had a bad hair day like mommy does sometimes and wished the world dead. Works for gods, not mortal men.
Let's see, for the chartists the 10 year looks to be breaking out above the 200 day SMA, looking back it was around Thanksgiving that it was last at this level...
IMO the next decline will be slow (relatively) over 2 months it will be unrelenting and mostly permanent. FED/Treasury used a tremendous amount of political capital over the last 2 months. When we don't get that recovery watch out.
mp (profile) wrote on Thu, 5/7/2009 - 10:55 am reply Ignore user
...-the macro side no longer appears to be plunging.
The pause that refreshes. No concerns over the long bonds? Supply chain echoes over GM/Chrysler? The summer energy glut? The REITs and Homebuilders seem poised to all simultaneously implode.
IMO when you factor in the inevitable the macro picture is still plunging.
"the underlying problem is the structure of the economy, not the money supply, not the availability of credit, those are symptoms."
In theory, the Feds could split the debt into two camps - one camp is refinanced at below-true-growth rates and the second camp is defaulted. That's really what's happening right now, but we'd need greater extremes. Probably.
I suspect that 20 million homes underwater will become a big issue soon. Right now, most defaults are from lack of cash flow, not lack of conviction in future gains or moral conviction.
A bump-along see-saw economy that barely stays afloat for years is my best guess.
sm_landlord:
Monterey is a much wealthier town than SC with a much better class of tourist and more business/gov't travelers (Defense language Institute, etc.). Pebble Beach, for one, is going to draw the well-off no matter how bad things are. The attitude toward building may well be easier than Santa Cruz.
There's an old saying in Texas Ben. "Fool me once shame on you. Fool me twice... uh you can't fool me again!"
obdormition
That's it, EHP. I want to know your IQ. Fess up.
" I used to believe in America now I only hope for Miracles..." American taxpayer
Let's forget any world events that might not be positive developments for the "macroprudential" environement or something...
"IMO when you factor in the inevitable the macro picture is still plunging. "
This may be a pause. I'm not denying that possibility, but I'm also unwilling to deny the possibility that there may be a turning point coming.
energy +1
Jas is getting totally CRUSHED today. Has been for a few weeks but now it's getting serious. No wonder he's grouchy.
"Don't worry, Zimbabwe Ben will step in to buy more, which will drive commodities prices up, which will drive up the 10 year, which will cause him to buy more..."
'Trust me, I'll pull out just in time...'
I believe some call it a death spiral.
@ Rob
you forgot one of your favorites - state/muni hitting the wall (or is that ground?) as the new fiscal year begins.
My county (in va) is facing a 10% budget cut unless they raise the prop tax.
mp, what are Conjure's thoughts on the bond market activity?
No V-shaped recovery, more and more looking L-shaped.
An L-shape describes a decline/bottom. If it's L-shaped, it's not a recovery, is it?
I was hoping the S&P would close under 9 today, the suspense is killing me...
"Jas is getting totally CRUSHED today"
Paper is not your friend when the gov't owes more than the citizens.
Death spiral=Negative feedback loop
"Toematoes"="Toomottos"
Verizon is coming out with a device called "MiFi" - called a personal wifi hotspot, it's a small card you can carry in your pocket - gives a 30 foot radius of signal and 5 devices can connect at once... $100 with rebate and data plan from Verizon... This could be a big problem for Comcast since you can use this baby at home as well as wherever you travel... 4 hours battery life online, 40 hours standby time... could be a big winner...
Turbo said: "...How high will the 10 year treasury yield have to back up before you admit you're wrong Jas?..."
Now you've said something that forces me to be an apologist for Jas Jain, and I can't tell you how I hate that.
Your argument is like asking a bear "How high will the stock market have to rise before you admit you're wrong?"
JMO, but I think the rise in the 10-year Treasury yield and the recent stock market rally are both transient events, only corrections in a larger downtrend. The recession is dealing with the inflation potential.
Sebastian
mp (profile) wrote on Thu, 5/7/2009 - 11:14 am reply Ignore user
"IMO when you factor in the inevitable the macro picture is still plunging. "
This may be a pause. I'm not denying that possibility, but I'm also unwilling to deny the possibility that there may be a turning point coming.
I'd be a fool to deny the possibility of this being a long term muddle along period. That said, I look at energyecon's debt rollover timeline chart and then today's long bond blow up and conclude there can be no further "stimulus" forthcoming from the Federal government.
I'm also the same idiot that thought the DJIA couldn't stay above 8000 for more than a few days/weeks so don't think I'm trying to sound smart or anything.
My TZA is starting to look good. I was drawn to it just because the russell 2K seems least receptive to direct Fed support monkeying. Though I actually bought it because it reminded me of the RZA. Just saying "Tizzah" to myself is fun.
dear retail investor:
RUN
love,
reality
The congress is going to really be feeling the heat about a year from now, when the markets will be telling them that they cant be running these huge deficits, but the election is looming over the hill and they want to step on the gas one more time...
PRU must be issuing equity after the close today. Why else would they be pimped so hard after shitty earnings? Or was anyone here actually impressed with their results?
black dog (profile) wrote on Thu, 5/7/2009 - 11:16 am reply Ignore user
@ Rob
you forgot one of your favorites - state/muni hitting the wall (or is that ground?) as the new fiscal year begins.
My county (in va) is facing a 10% budget cut unless they raise the prop tax.
THANK YOU! I had that in my first post that got eaten (at my end, Ken is a god). I had meant to mention the necessity of Federal intervention in the State of California's "business." I already see the spoor indicating the discussions are going on right now. The "other 49" are going to be pissed at the terms.
"conclude there can be no further "stimulus" forthcoming from the Federal government."
I learned my lesson in 93-94 when Greenspan managed to bailout an insolvent Citibank, refill the banking system and then burned the debt off in the Big Bond Kill of '94.
It's a mistake to assume Feds are incompetent or simplistically evil.
Why would you conclude "no further stimulus"?
Kristina, Dawg, I remain pessimistic on the bond market. Same goes for equities. I think this rally is a trading market, not an investing market.
I'm not looking for a fight and don't have the time in this twitter-type environment to lay out all of my views or to understand all of yours.
I'm simply saying that I see some of the green shoots Ben is talking about. I'm hopeful.
Maybe all of the trillions of dollars they've helicoptered will accomplish something.
Seb "JMO, but I think the rise in the 10-year Treasury yield ... transient event"
Seb, Is the Fed balance sheet and staggering shitpile of USG obligation also transient ? Seems to me that stuff is accumulating and Obama has some pretty grand plans to ramp.
The only transient was the JUMP in treasuries contrary to the mounting case against them.
IMO - The only thing that saves UST is a massive international conflict, where capital flow into the USA for safety. Does Obama get it ?
Just yesterday, I bought back into SRS for the first time in awhile. Not much.
Today, the combination of SRS and TBT is just awesome.
Who woulda thought they could work so well together?
Gold is still a little weak because somebody big is selling. But silver is strong.
Silver tells you where gold is going.
Fed doing an agency coupon pass tomorrow.
Turbo, what are you hearing about the recent action in the bond market ?
Healthy ?
Expected ?
Panic ?
Wow. CNBC guest compared Bank CEO's to welfare recipients. "Welfare comes with restrictions".
Thanks mp, I was just curious. I admittedly don't understand the bond market all that well but I'm trying to learn and I know you and Conjure both seem to be pretty astute about it, that is why I asked. It would seem impossible that something wouldn't improve considering all the artificial stimulus the markets have recieved, agreed on that front. I just can't see what might lift us out of this mess into a recovery minus jobs. I too am hopeful, but my freezers are still stocked to the max and my garden is coming along nicely
Well, Kalifornia has always been 'special', didn't expect any less. Let's face it, the moral hazard arguments are increasing everyday at an exponential rate:
Love the two song combo of a Month of Sundays/Sunset Grill by Don Henely, sums up my feelings.
BWAHAHAHAHA yogi, for once I wish I had CNBC on...
"JMO, but I think the rise in the 10-year Treasury yield and the recent stock market rally are both transient events,"
I don't know about the stock market, that is more a casino than a real market, but the bond market, which better reflects real macro events, may rally a bit once Ben comes back in with more QE (which is he sure to do, you can guarantee Bill Gross is ringing him up like crazy), but he is pushing on a string.
There is one way out of this mess IMHO - if Congress did the right thing and fixed the Fannie/Freddie mess, and gave them full faith and credit, some of our bankers (the country's bankers, the Chinese et al) would start buying those securities again, which, when added to the QE, could bring rates back down across the board.
But our bankers see our economy as a sham, and rightfully so. 2 years in and we still haven't fixed the housing finance system in our country? Not even lifted a finger to fix it? It is a joke.
they got to MP
holding conjure hostage?
"There is one way out of this mess IMHO - if Congress did the right thing and fixed the Fannie/Freddie mess, and gave them full faith and credit, some of our bankers (the country's bankers, the Chinese et al) would start buying those securities again, which, when added to the QE, could bring rates back down across the board."
Just out of curiosity, where do you see the money coming from to backstop those losers?
Earlier today I was talking with a consultant friend in NYC who was recently the victim of some bad spinach from a vegetarian entree at a trendy bar and grill (the name escapes me at the moment), and from the awkward tone of the conversation I would assume it probably had "green shoots" as a concomitant result. Using the term like this may be the best way to dislodge its association to economic recovery.
Ha, I am in Moab right now, and it's the first place I've seen in a long time where there are many guests...booked out right now too, as is Bryce and Zion! It's the foreigners, maybe.
Slower money chasing the same goods is more deflationary than demand destruction.
Slower/lower velocity is a consequence/symptom of less demand.