I remember when $35 dollar oil was a great thing for our country and consumers. Now $63 oil is a good sign too. Methinks $3 gas will put a dent in consumer confidence, which is apparently the most important indicator.
I have heard 80k homes being held by BAC/CFC crap pile.
Within the next two weeks, they will start listing these. Ya, rumor, but I heard it from an employee who works in this area at BAC.
Too many of the current transactions counted as sales are merely transitional events such that comparisons to previous years are not applicable.
Let's just admit it. "inventory 2009" is not "inventory 2006".
There's a new paradigm as well. I was in Zip 92397 this Memorial Day weekend and while redfin shows 70 and realtor dot com shows 120 the truth is nearer 300 out of less than 2500 du.
IMO the reportage of supply is no longer reliable.
How do you extrapolate into the future when both ends (supply and demand) are actively managed?
Having all those mortgages under the government control through GSE's is a wonderful thing. It provides huge leverage to those who control the instrument. Reminds me of the customary pre-election increase in government sponsored salaries and pensions.
BTW, to an earlier post that CR made about the MBA numbers, re: purchase apps. Word is a lot of purchases these days are cash buyers, thus, no application, so there is a disconnect there.
But also troubling - a lot of money is being generated for banks and various other mortgage lenders via refi activity. But, as things get better and/or the Fed prints more money, driving up rates, refi activity slows. Expect maybe one more good week of refi apps, as the fence sitters move as rates increase, then it should drop like a rock, absent a turnaround in rates. In the past two days along rates have increased nearly .375%, almost entirely due to the move in the curve (spreads are still at greatly depressed levels).
2-3 months out the pipeline gets bled out.
Then all those mortgage processing jobs are over, and those people are back on the street. Expect that in 3-4 months.
I heard it from a Realtor who works in N CA a few weeks ago. Funny thing is I also heard it on those late night talk radio shows so it could be just a rumor flying around.
"Inventory in April 2009 was below the levels in April 2007 and 2008"
Bank -owned foreclosure backlog + accidental landlords + "waiting til the market improves" + shadow inventory withheld by Realturds to game inventory numbers = real inventory levels far higher than either 2007 or 2008.
Posted a few threads back after I got "pigged" (h/t to whomever suggested that phrasing)
AnonyMiss (profile) wrote (in reply to...) on Wed, 5/27/2009 - 9:04 am edit reply Anyone posting a "first" goes on my ignore list, because they're too stupid to be posting here.
It's either a real response to CR's thoughtful and insightful commentary, a Nemo reference or a Tanta Vive!.
Pick your poison, rickrolled and others. Going back a few posts, Mr/Mrs/Ms Hysterical Laughter? If you don't know who Marc Faber is, you have no business posting anything on this blog. Google is your friend, I am not.
For the record, AnonyMiss is not PMSing or hormonal, she's just irritated by ignorant comments that degrade the quality and value of this blog that CR and Tanta worked so hard to create.
I am not asking you ignoramouses (ignoramii?) to go away, I'm asking you to read and learn quietly until you can add value to the commentary.
This isn't dealbreaker, Gawker, dailykos, or the freerepublic, OK?
You might be saying to yourselves "WTF is AnonyMiss?" And you'd be right, I'm a long time reader who rarely makes any comments because I have nothing to add, you see? I am just like you. Shut up and start reading and learning, mkay?
Tim, like I said, this was from someone at BAC and this person would have to know if this sort of thing was going to happen. I also really trust this individual. Guess we will see.
I wonder, how helpful would it be for the USG to to post on the web those CDO and MBS addresses it holds an interest in, would it help those borrowers make their payments to know that the USG owned their mortgages? My mind reels at the prospect...
And that is the crazy part about all this. That is a big number. The employees that work in this area at BAC are tired of being jerked around by gov policy changes just like all of us. They just want to do their jobs and they are getting the red light, green light treatment. Frustrating stuff.
BTW, even if the plan was to start unwinding the inventory last week, that could have already changed. I havent heard any new news yet though.
CR, u've been a great bogger. CR, can you envision blogging at this pace for (11-4=7) 7 more years?
I know ur style is not to speculate much....and u likely wouldnt say what I postulate: that the global debt crisis spells the demise of a GDP model that's 70% driven by debt-fueled consumer spending....or say my postulate (not theory) which is that the unsustainability of our GDP model beyond its 25th year has forced the USA into an involuntary structural economic transformation that rules out any 'recovery' returning us to a comfortably familiar place like 2003 or 1999's economy.
This could easily take 11 years. That's how long the last structural change took before employment growth across sectors resumed in 1984. And we were a smaller nation 25 years ago. It could take shorter or longer.
But we need data to monitor this.
CR, can you envision blogging at this pace for (11-4=7) 7 more years?
W/o CR, Mish, TBP and a few other blogsites, I'd have to live on database sites.
EHP, thanks for the reply, I concur with your views, I think in the short term, even though I am very long commodities, the whole commodities rally is overdone, and largely due to China stockpiling on the margin, plus a lot of momo. But still, I could see that coming, as this QE has everyone scrambling to get away from the dollar. That helped CAD. But eventually that will peter out and take down the commodity-linked currencies in the short term.
Longer term, though, I like the CAD for a lot of the reasons you mentioned, plus in general I think Canada is going to benefit greatly from a lot of the trends in the global economy.
Look, this is not a regular environment. Investments are down, savings are down, credit is down.
Any vacant house, should be considered house waiting to be sold.
I haven't checked recently, but the vacancy rate never declined post S&L crisis which means that we are working off more than one real estate bubble. The numbers I remember are 12mn vacant year round, 7mn seasonally vacant, 128mn total units, 108mn households. I also remember asking the question how many fewer households would there be if people couldn't afford to buy, say a move from the national average from current up to Califrornia's level. It adds another 10mn vacant units, or a 25% vacancy nationally.
Ergo, there is enough guaranteed inventory for this year and the next. Prices don't stabilize until you have at least less than 6 months of inventory in the relevant market. Ergo, prices will keep falling. Probably to significantly below material cost. We've already seen some of that in Phoenix.
We haven't even processed local and State responses to their drop in revenue. Vegas is empty today, so what if they boost taxes? Basel Too is the one to ask about State revenues, but my sense is that -10 to -20% is common. Personal income tax makes up about half of revenues in the states that have it. So closing the gap with income tax increases alone would be an effective rate increase of 20 to 40% as one thought experiment.
glad you discovered the filter, anonymiss, now use it.
i for one welcome anyone who has an honest opinion, related anecdote, or repressed outrage. this is a free forum and a conversation that frequently only approximates the topic that started the dialouge. conversations work like that.
it is not a meritocracy, aristocracy, or popularity contest. who are you to say what is of value and what isn't? some people do not know everything. i'm one of them. just because someone isn't yet up on some investor named marc faber is no reason to shout them down or say go away.
ghostfaceinvestah,
The way I think of Canada is "perpetually on the edge of greatness" It is poised to adapt well, but don't expect it to lead. There is a strong negative sentiment to run up debt and inflate our way out, which I like, but Mark Carney our quiet new-ish Central Bank head is likely more disposed to the "give the banks any money they want and then give them an extra 10%" course of action. So far we haven't had to do much. Economy slows down, loonie goes down even faster, no one notices. Commodities go up, loonie goes up, no one notices. Sometimes it pays to be overlooked
"Longer term, though, I like the CAD for a lot of the reasons you mentioned, plus in general I think Canada is going to benefit greatly from a lot of the trends in the global economy."
Hey don't mention anything positive about Canada on this blog. Someone who shall remain nameless will blow a gasket. But here's a hint, their name starts with an L, ends with an R and contains UCIFE in the middle.
"There will be no structure that would allow banks to bid on their own assets," Federal Deposit Insurance Corp. Chairman Sheila Bair said during a briefing with reporters on the banking industry's first-quarter results.
Gracias. At first read, I was afraid you thought that I thought your posts were worthless.
I greatly enjoy both you and Yogi (while I never 100% agree with either of you, I do enjoy both of your thoughtful posts), I urge you to unban yogi, he's not somebody I generally agree with, but he does put a great deal of thought into his posts.
Banning/ignore mode should be saved for idiots and yogi is no idiot. As I said, I rarely, if ever, agree with yogi, but he is a thoughtful poster and he/she deserves to be heard, if in the end, disregarded if you choose.
"I wonder, how helpful would it be for the USG to to post on the web those CDO and MBS addresses it holds an interest in, would it help those borrowers make their payments to know that the USG owned their mortgages? My mind reels at the prospect..."
One of my ideas for this crisis, to get cash off the sidelines and aid in the deleveraging of the economy, is to post somewhere on a website the mark on everyone's mortgage, first and second liens. Every mortgage, whether in an MBS, CDO, Fannie/Freddie balance sheet, bank balance sheet, is marked at least quarterly, if not monthly or weekly.
If, say, you saw your mortgage was marked at 80cent on the dollar, and were offered a chance to buy it at the mark, I'd bet a lot of people would do that. Even at the ridiculous levels some banks have them marked.
Companies can buy back debt at below face, why not consumers?
EvilHP, how's the RE and CRE markets holding up in Toronto, Vancouver (still horrifically overbuilt relative to Olympic dreams?) and ....whichever flyover province capital is the Energy King City?
In the 80's I spens an ungodly amount of time in Torontoo and on the QEW (there oughta be a law about semi-routine 11pm traffic jams) and heard earfuls from the plant employees about nightmarish commutes from Bramalea and further places from the Dom valley.
US Treasury Secretary Timothy Geithner will meet with President Hu Jintao to discuss expansion of ties and current economic turmoil during his trip to Beijing on June 1-2, officials said Wednesday.
The meetings would involve "a range of issues of importance to both countries, including strengthening US-China economic ties to promote stable, balanced and sustained economic growth in the two nations and further global economic recovery," a Treasury statement said.
Abbott: Well Costello, I'm going to Beijing
Costello: Look Abbott, you must know all the players.
Abbott: I certainly do.
Costello: Well you know I've never met the Hu et al. So you'll have to tell me their names, and then I'll know who's playing on the team.
Abbott: Oh, I'll tell you their names, but you know it seems to me they give these ball players now-a-days very peculiar names.
Costello: You mean funny names?
Abbott: Strange names like Hu Tse Ling
Costello: His brother Bruce lee.
snip
Abbott: I say Who's on first, What's on second, I Don't Know's on third.
Costello: Are you the manager?
Abbott: Yes.
Costello: You gonna be the coach too?
Abbott: Yes.
Costello: And you don't know the fellows' names?
Abbott: Well I should.
Costello: Well then who's on first?
Abbott: Yes.
Costello: I mean the fellow's name.
Abbott: Who.
Costello: The guy on first.
Abbott: Who.
Costello: The first baseman.
Abbott: Who.
Costello: The guy playing...
Abbott: Who is on first!
Costello: I'm asking YOU who's on first.
Abbott: That's the man's name.
Costello: That's who's name?
Abbott: Yes.
Costello: Well go ahead and tell me.
Abbott: That's it.
Costello: That's who?
Abbott: Yes.
PAUSE
Costello: Look, you gotta first baseman?
Abbott: Certainly.
Costello: Who's playing first?
Abbott: That's right.
Costello: When you pay off the first baseman every month, who gets the money?
Abbott: Every dollar of it.
Costello: All I'm trying to find out is the fellow's name on first base.
Abbott: Who.
Costello: The guy that gets...
Abbott: That's it.
Costello: Who gets the money...
Abbott: He does, every dollar. Sometimes his wife comes down and collects it.
Costello: Whose wife?
Abbott: Yes.
PAUSE
Abbott: What's wrong with that?
Costello: Look, all I wanna know is when you sign up the first baseman, how does he sign his name?
Abbott: Who.
Costello: The guy.
Abbott: Who.
Costello: How does he sign...
Abbott: That's how he signs it.
Costello: Who?
Abbott: Yes.
PAUSE
Costello: All I'm trying to find out is what's the guy's name on first base.
Abbott: No. What is on second base.
Costello: I'm not asking you who's on second.
Abbott: Who's on first.
Costello: One base at a time!
Abbott: Well, don't change the players around.
Costello: I'm not changing nobody!
Abbott: Take it easy, buddy.
Costello: I'm only asking you, who's the guy on first base?
my take on EHS cross posted from Zacks, charts are from CR's first post on the subject this morning:
Blog: Existing Home sales up, but so are Inventories
The existing home sales report for April showed mixed news, but was largely in line with expectations. Starting with the good news first, sales rose 2.8% to an annualized rate of 4.68 million, and were up in three out of the four regions. The Northeast fared the best by far on a month to month basis with a 11.6% rise, followed by the West, up 3.5% and the South up 1.8%. Sales in the Midwest declined by 1.8%. On a year over year basis sales were down 3.5%. The real stand out on a year over year basis was the West where sales soared 19.4%, while the other three regions were down significantly. The Northeast is still off the most on a year over year basis, off 10.5%, followed by the Midwest, down 9.9% and the South which is off 8.9%. The graphs below are from Calculated Risk and shows that existing home sales were largely stabilized for most of last year, before the turmoil of the fall, and have since seemed to have stabilized again at a lower level. Both single family houses and condos saw more sales in April than in march, although the condo gain of 6.4% in March far outpaced the 2.5% increase in single family houses. On the other hand on a year over year basis, condos are still down 9.4% vs. single family houses down just 2.8%.
The bad news was that inventories jumped by 8.8% to 3.97 million. This brings the months of supply up to 10.2 months from 9.6 months in March. While this is off the highs of a year ago, it is far above a more normal level of about six months (was usually between 4 and 5 months during the bubble), and an increasing months of supply is not the sign of a healthy market. Some rise in inventories in the spring is normal, but this seems to be larger than one could expect from seasonal factors alone. Also, distressed sales (bank repossessions or short sales) made up 45% of all sales nationwide. The low end of the market is very active due to these distressed sales, but unfortunately a distressed sale does not start the chain reaction that a “normal” sale does. The family that got evicted is not a family that is moving up to a bigger house, in turn leading the selling family to move to a still larger house. These sales are one and done. The increase in activity at the low end was partially responsible for the 15.4% year over year decline in the median price of an existing home, which now stands at $170,200. The effect of these distressed sales has been particularly pronounced in the West, the only region where sales are up year over year, but also the region that has posted by far the biggest drop in median price, off 21.8% on a year over year basis. The next worst region is the South, off 12.8%. The Northeast, where sales are off the most on a year over year basis, has also had the smallest decline in median prices at 9.6%.
I do not see this report as particularly good news, nor particularly horrific news. Those expecting housing to come roaring back and lead this economy back to health are likely to be sorely disappointed. On the other hand, the signs of stabilization mean that housing is not going to drive the country into oblivion either. The very high level of supply (including lots of shadow inventory of people who would like to sell, but want to wait for a stronger market, and the still very full foreclosure pipeline) means that housing prices will continue to be under pressure for a while. While prices relative to rents and incomes have returned to more rational levels, there is nothing to stop prices from going past “fair value” on the downside. Certainly there is no reason to expect that the trillions of dollars in housing equity that has been lost over the past few years will come back anytime soon (perhaps not for a decade or more). Even though consumer confidence is up, I would still be cautious about investing in the Consumer Discretionary area. With the need to replenish their savings (housing equity was a huge part of most peoples “savings”) for retirement and college funds, people will not be spending freely for a long time. The likely beneficiaries of this would be sellers of “inferior goods”. In retail that means that stores like Wal-Mart (WMT),
Big Lots (BIG) and Family Dollar (FDO) will out perform stores like Saks (SKS) and Nordstrom’s (JWN)
TREASURY AUCTION RESULTS
Term and Type of Security 5-Year Note
CUSIP Number 912828KV1
Series M-2014
Interest Rate 2-1/4%
2.310%
High Yield1
Allotted at High 44.97%
Price 99.718283
Accrued Interest per $1,000 $0.06148
2.249%
Median Yield2
Low Yield3 2.000%
Issue Date June 01, 2009
Maturity Date May 31, 2014
Original Issue Date June 01, 2009
Dated Date May 31, 2009
Tendered Accepted
Byzantine_Ruins (homepage, profile) wrote on Wed, 5/27/2009 - 9:40 am
Posted a few threads back after I got "pigged" (h/t to whomever suggested that phrasing)
Me, I think.
I think Byzantine_Ruins coined "mortgage pigged" and I suggested the more colloquial "pigged".
HARM (profile) wrote on Wed, 5/27/2009 - 9:36 am
"IMO the reportage of supply is no longer reliable. "
Understatement of the week. We will continue to torture the data until it confesses what we want to hear.
Man, we need another BBQ and this time I won't burn the chicken. Mmmmm, Patrõn, Nom nom nom.
It seems like Ben or his primary dealer friends could juice the bid-to-cover by submitting extra bids away from the market just to juice the stats. It is one of those things we will never know. Say an auction went horribly and the Gov didn't want to report it. They could juice the stats, but would they ever tell anybody? Market didn't react much to the results.
Avl Dao
Toronto didn't have a boom in prices as much as it did construction and/or sprawl. Don't know much about where its CRE is headed without looking through it.
Vancouver's boom was in RRE, prices will probably decline 60% from peak where the bubble was strongest. The Olympics were coincidental, the city has lived its entire life going through RE booms and busts. Averages to 5 years up, 3 years down. Biggest losers this time are condo landlords. Boom started later, and ended later, now the declines are among the fastest of NA cities to catch up. Probably take 2-3 years to clear the excess inventory. I think 3/4 of new jobs in BC post 2001 were in construction, so there is an economic shift. Restaurants will close, real estate agents find other work, developers will focus on a single project at a time, construction workers will move/get employed by one of the backlogged infrastructure projects/find other work. Keep in mind there is downtown Vancouver which is on a peninsula, Vancouver the city, and Greater Vancouver/Metro Vancouver/Lower Mainland. Geography is very significant to the area. Vancouver suffers a deficit of CRE, RRE boom displaced all interest in it. Projects that are being announced now are a lot more CRE. A bunch of condo projects were cancelled at the drop of a hat because the lenders are back East in Toronto and have home-side biases. A ridiculous amount of projects are on the slate in Toronto, still unsure if that will change.
Rob Dawg & Harm, I had forgotten that phrase, "torturing the data" until it confesses only what we want to hear...
it use to be a fav phrase of mine.
Thanks.
So as of right now, there is $740.43M betting that GM common wont go to $0. Thats a lot of cash and there are a lot of shares trading hands above $1.20. I dont get it. It I did, would I get rich?
Term and Type of Security 5-Year Note
CUSIP Number 912828KV1
Series M-2014
Interest Rate 2-1/4%
High Yield
2.310%
Allotted at High 44.97%
Price 99.718283
Accrued Interest per $1,000 $0.06148
Median Yield
2.249%
Low Yield
2.000%
Avl Dao (profile) wrote on Wed, 5/27/2009 - 10:11 am
reply ignore user
Rob Dawg & Harm, I had forgotten that phrase, "torturing the data" until it confesses only what we want to hear...
it use to be a fav phrase of mine.
Thanks.
"Torturing the data" was a joke at the Santa Barbara patrick.net BBQ a few years back. Maybe HARM will share the t-shirt slogans. I still have mine.
It will be interesting to see what the default rate on new fannie and freddie loans is in about 6 months from now... if home prices continue to fall, it could well be that these new loans being issued today are more of a rent subsidy to people who have seen the method of buy and default work for others... Merle Hazard could explain this well in song, I'm sure...
You know what, swamp otis/dotdotdashotis/whatever else you post here as otis?
I am really not up for reading Michael/Hysterical Laughter/Juvenal Delinquent type posts, in fact, I barely tolerate yours.
I have little free time and I refuse to devote attention to those whom have not spent a bit of time themselves towards learning a bit about the financial crisis and who are the big players in it, Marc Faber is a big player.
You are an uninformed alarmist, and I question your bias. As I said, I read your commentary, but I generally discount anything you say. Sorry. You have no credibility.
the storng bid to covers are suspect. The indirect bids coming from offshore are coming from where? China doesn;t have a surprlus and neither does japan? Saudi is in deficit too? Also doesn;t the fed have an incentive for its PDs to place bids to pad the bid/cover ratio for window dressing? the whole auction thing is such a joke - bought and controlled by the primary dealers which re wards of the respective states. What woyuld stop the fed buying threough cayman consuits to add to their confidcnec blowing operation?
Hey Tim - you didnt ask me, but my bet is gold stays under $1k absent external events... If it was to break through $1k, and then successfully retest $1k as support, that would get my attention... I dont think it's going to run away on the upside unless we get some serious additional deterioration in the global financial system... Or other events - wars, whatever...
energyecon
Are you around? I've got my idea for a sweet animated plot. I need to find the Maturities of outstanding US marketable debt that you used to make the beautiful charts 401 Authorization Required
Interesting Times (profile) wrote on Wed, 5/27/2009 - 10:28 am
reply ignore user
soooo is the auction today a prime example of a ponzi unit sale where the marks are told to bid so their current units retain higher value?
No Shadow Appreciate it. I feel the same way Gold prices aren't going to run away this week or next.
However the first big mover will be rewarded with cheap (relative) gold today. When either the Saudi's, Chinese or Indians make a move All other will have to follow.
Sometimes the Data Tortures Back...as in when the data has a margin of error of say 10%, yet the analyst produces findings with lotsa decimal points as if that makes the findings more accurate than the limitations of the original data.
Via such common mistakes is how I separate the Grown-ups from the Pre-Teens.
A lot of housing data has huge margin of errors...thanks to the poor quality of initial reporting and the heavy usage of "surveys".
But the 25-year cycle in securities, and the over-lapping bubbles in debt (credit) and assorted markets, yielded so many self-reinforcing trendlines in the 1990s and 2000s that many analystst would counter-argue that the adherence to a trend justified claiming the accuracy exceeding the margin of errors (which were actually compounding, mathematically).
Well those days are over...the underlying new Natural Laws of Physics for economics have changed...thanks to Debt Unwind.
We are now on Planet DeLeveraging and we ignore the "New Physics" in economic data and formulas, at our own peril.
(hat tip to blogger John Mauldin)
As with the entire market I'm not even going to guess. It's a complete and total fraud (this market) and trying to guess which way any of it is going will just make you sick. Not what you want to hear however it's just that simple, for me.
If someone said, last year when all this really got going (the socialistic aspect of it) and gold would stay below $1000 I would have laughed at them...I did. The real key is that most of this "money" is hidden digitally.....doesn't mean it's not real because it most certainly is. the counter to that argument has always been akin to the repo. process (you know how it's put back at the end of it's "cycle") but no one really addresses what it was used for in the first place and how it basically is an infinite "service" for the very few who got it.
I have no tolerance for those who would deny others their Constitutional rights and I will attack them at every opportunity, no matter how sophisticated their vocabulary and no matter whether they ignore me.
Would anyone believe me if I said that from Q3Y07 to Q1Y09, State and Local governments redeemed Treasuries worth $61.5bn as opposed to the 7 quarters prior when they accumulated $76.4bn or a swing of -$137.9bn
So as of right now, there is $740.43M betting that GM common wont go to $0.
I wish there was a true swashbuckling robber baron out there. Lever up 10:1 with his $37.25m to buy 51% of the common. For a credit trade, short the index triple longs and buy OOM puts on your GM with the proceeds.
Waving your Chapter 7 paperwork on the stairs of Wayne County Municipal Courthouse just before the open tomorrow, hold a press conference that goes something like: "Every American is tired of these endless bailouts. I've bought this company and we're going Chapter 7 this morning. Sell off the assets, pay the bondholders what we can, common holders are screwed. Unions and pensions get what's left. Banks get nothing. For the next 10 minutes, however, I will entertain offers to buy my share of the common, starting at $5 billion."
MS - since Moody's (and all others) are effectively government/wallstreet controlled and owned, why would it ever bite the hand that feeds it.
No other country in the world would have gotten this far down the rabbit hole. Some examples:
- Argentina
- Russia
- Brazil
- Hungary
... care to add more ?
I can tell you that the MBS market is getting CRUSHED today, the (formerly) par coupon is down 27/32s as I write., looks like the 4.5s will be the new par coupon going forward, so roughly speaking, 30 year rates are about 50bps higher than last week.
Originators can take some of the pain out, temporarily, but cutting into their margins, but most are so backed up that is is unlikely it will happen anytime soon.
crispyandcole (homepage, profile) wrote on Wed, 5/27/2009 - 10:44 am
"TNX 3.61% drip drip drip "
Anyone seen Jas "Indian Dope" Jain? His call at 2% was the worst call in the history of this site!
"Anyone seen Jas "Indian Dope" Jain? His call at 2% was the worst call in the history of this site! "
Yeah, he was pretty stubborn, wasn't he? Once again, ignore the mortgage market at your own peril. You can't buy a market like BB has tried to do, and not expect consequences. Ask the Hunt brothers.
As much as the bond market collapse was an easy call, seeing it in action is kind of scary.
drip drip drip
The room is filling up, don't know if Mr. Bond will escape this one. Then again, he could always sacrifice his very last gadget (codename: DOLLAR)
This bond stuff still makes my head hurt, but I'm pretty sure I understand enough to know that it's a) unusual and b) a bit scary for both my equity index puts and my TLT puts to be gaining value simultaneously as they have at a rapid rate since about 1:30.
Did someone's quant box get food poisoning at lunch?
The MBS market has to shed some value (well at least it's implied value) so that Timmay's Pee Pee in the Potty can look like it's actually doing something.
Don't panic guys, if the treasury can't finance the debt we can just reduce our spending. Maybe Obama can find another $100 million or so out of the white house budget. I mean, the hole isn't THAT big? We can grow our way out. Right? Who's with me?!
CR, First I would like to thank you again for being able to quickly take a jumbled mess of data and presenting it in a manner that even I can understand.
OK, I did my howling at the moon a few days ago, but I got a question today that really surprised me.
Today a co-worker asked me (No, it is really not me) if he should buy the lease on his apartment, so I asked him how much the lease was and when it came up for re-negotiation, and how long he had to decide.
He said he has 30 more days, someone else wants to buy the lease, its $150,000 and its re-negotiated next year.
After I picked my jar up from the floor, I asked him when he bought the place and he said 2004. Now I'm biased against buying anything lease held, ever.
Now I'm not not in the real estate area at all, but this man wants to retire next year, and does not want to stay here.
So Sheila Bair says banks can't bid on their own assets. She should have had the sense to dismiss the notion outright when it was suggested at the March conference call, but better late than never.
HARM (profile) wrote on Wed, 5/27/2009 - 10:57 am
Hey, Rob Dawg, I sure miss the old Surfer-X BBQs. I'll definitely give you a ring the next time I visit SCAL --perhaps around Christmas time.
You are always welcome. I still think the Ventura County CRs need to get together soon.
Looks like the bbad bond vigilantes (bbad bv's?) are running riot over the bond market again. $150 bio in new issuance, $50 bio+ in rollovers every month as far as the eye can see - whocoodanode this would cause problems?
KK I dont understand the 'buy lease' thing... You buy the lease but you dont own the property or shares in an association? Who owns the land and building? If you could explain that I'd be learning something.... In any event if the guy wants to leave within a year and has a buyer now, sounds like a no brainer to sell now.... Could he sell and rent back so he doesnt have to move?
It's the other way around, homedad--the amount tendered is total amount of bids received from bidders, the amount accepted is the amount actually sold (and is the same, more or less, as the amount announced as available), so the difference is the amount of unfilled bids.
Note to all. Financials made 8% of SP500 in July 08. Today make up over 13% of SP500. Lots of gamblers in the financials. This tells me that the the stock market must move lower as conditions have worsened since last summer and it is full of speculators not investors.
Somewhat OT, but 4 KS banks are going from federal charters to state charters, saying that state regulators "understand" how rural banks function better than the feds do. I don't know if: (1) this could be the start of a trend; (2) if that's just code words for saying, "we believe we can get around capital reqm'ts for bad loans-or something else? --more easily when dealing with state than federal regulators these days." Thought some of the people posting here would have a better idea of significance (if any) of this. http://www.oregonlive.com/newsflash/index.ssf?/base/business-11/1243444089284210.xml&storylist=business
To be honest I think it is the craziest thing also, basically when you buy a lease-hold house or condo, you buy the building only and someone else still owns the land. You then pay a set "rent" or lease fee to the lease holder. The lease is set to be renegotiated at a set time, and it is a complex contract that helps keep lawyers and RA's well employed.
Part of the catch all, is that lease can be sold to a third party, that third party can then utilize and all gotchas within the original contract to improve their profits, etc.
I dont even like HOA's - no way I would go into a deal like that... Owning a chunk of a building without the land - there is no way to project what your future costs would be, and you will never wind up owning it free and clear... I still vote for the immediate sale...
azurite,
It looked to me like the motivator for the switch to state charter is they pay less in "assessments", whatever that is. They avoid subsidizing the larger banks, it would seem.
Outsider -
I did not see EHP's call on that, but last Thursday I sold what little stocks I had in my personal account, most of them energy stocks. Then I started howling at the moon and am very surprised no one banned me. Though I may be some peoples ignore list.
Man am I glad I loaded up on Gold and especially glad I loaded up on Silver.....reading a lot of articles about potential big profit in silver....I am a smiley one today.
So hows those stocks doing today?............( crickets chirping )
From Bloomberg, 30Y Treasury is up to almost 4.6%, and yet the 30Y Mortgage rate is holding steady at 5% exactly.
The spread continues to shrink. Is the US Government going to be considered an equal credit risk to Average Joe? Remember that Average Joe is under fire from declining wages, rising unemployment, and declining house prices! Amazing!
Nova -
I don't try to be an A..H..., it just come naturally at times.
The last week my BS sensors have been going full blast, usually its just the consent buzz of cognitive dissonance, now its a fog horn.
I think that uncle Ben has stated he is committed to a 5% 30Y Mortgage right, personally when someone has a bazooka, I don't stand in front of them and dare them to shoot it again, until I am absolutely certain he is out of ammo.
My bank mortgage rates went from 5 to 5.125 today. Maybe some are sticking to 5, but I doubt for long.
Edit: It just went to 5.25! Did I read it wrong an hour ago, or did it just change?
I was sitting in a AA meeting years ago and heard someone say "I figure everyone gets a free pass on the first 50,000 times they are an asshole before God smacks them down."
A women, who probably had a recent experience with him said "You better duck eveytime you go outside cause your odometer turned over Friday night."
It's likely nothing to worry about, but in the back of my feeble mind, I find it very disCONcerting that the British pound is on negative credit watch yet is rallying mightily against the U.S. dollar.
The oil call is not bold. Pretend you've never seen any charts in your life. Notice how the rally in oil is linked to the rally in equities more than it is the USD. Notice how equities have run out of rocket fuel. Notice how oil in dryland storage has climbed along with the rally. Notice how storage is full. Storage creates bills that need to be paid somehow. Notice how we just passed Memorial day weekend and miles driven is set to disappoint judging by assorted hotel/campground data. Notice how airlines have not begun to make the cuts necessary to get their load factors back up into the 90s from the 70s and 60s.
I completely agree that the amount of USD needed to fulfill spending commitments will cause it to go bust one way or another. However that much has been certain for some time now, and it hasn't gone bust yet. The market is not efficient, it is capable of taking the Family Circus route from Point A to Point B. Because the market trades more than just the items in the exchange, it is more the forum for negotiation.
Most of my recent conviction was from where money would not go next. Then I saw the signs of a flight to safety beginning. Then I saw economic data offering the chance to disappoint, which would snowball the existing flight to safety. One way or another.
asterisk, yes, that is a decent blog, directed towards originators mostly, but it tells the story, a good read for anyone looking for insight into the MBS market.
the govt now controls 95% of the mortgage financing market in this country, and the Fed is monetizing all of that 95%. Fabozzi should be required reading in high school IMHO.
Nova, I got to remember that comeback, I'm sure I'll be able to use it.
I try to work hard at being a nice guy to make up for the times I fail, just in case karma is real.
I think that uncle Ben has stated he is committed to a 5% 30Y Mortgage right, personally when someone has a bazooka, I don't stand in front of them and dare them to shoot it again, until I am absolutely certain he is out of ammo.
What's astounding about all this is that the Fed is attempting to provide credit to the system. But providing credit just means lending real goods and services.
What kind of real goods and services does the Fed actually have to lend? None!
The whole thing is a fiction. At best they can try and trick people into lending more by playing with fiat money, or panic them into lending by making alternatives too risky. But none of this leads to an intelligent decision making process.
It's like holding a gun to someone's head during a final exam to "help" them do better.
What kind of real goods and services does the Fed actually have to lend? None!
ac,
The fed is set up as a bank and has ~$45 billion of capital. The fed also contributes $20-30 billion yearly to the treasury (out of profits). Those profits are now projected to decline by ~ $90 billion over the next decade. Actually, decline is not the proper wording as said profits will be diverted to the banking system at large.
"IRS tax revenue falls along with taxpayers' income
By John Waggoner, USA TODAY
Federal tax revenue plunged $138 billion, or 34%, in April vs. a year ago — the biggest April drop since 1981, a study released Tuesday by the American Institute for Economic Research says.
When the economy slumps, so does tax revenue, and this recession has been no different, says Kerry Lynch, senior fellow at the AIER and author of the study. "It illustrates how severe the recession has been."
For example, 6 million people lost jobs in the 12 months ended in April — and that means far fewer dollars from income taxes. Income tax revenue dropped 44% from a year ago.
"These are staggering numbers," Lynch says.
Big revenue losses mean that the U.S. budget deficit may be larger than predicted this year and in future years. "
Some of the PM proponents are fond of their early 80s charts and have the data without considering the history - evidently they've forgotten or never knew about the Hunt brothers. That's not to say there aren't other factors at work, or even that someone else won't make a Hunt-like attempt now, but at least a part of the claims regarding silver's volatility is overstated.
I've got some - I'm just not anticipating a repeat of that 80s spike.
So there was announcement on the PPIP by Bair, the treasuries sales sucked, and the GM BK is baked in the cake...
So with all the good news, what tidbit of insider info was leaked around lunch time to make the bulls finally take notice?
/snark off
Oil, I just think psychologically, people are going to flip out when Mexico and the North Sea production fall off the edge of the earth in a couple of years.
All the prior examples of deflation - Great Depression, Lost Decade - occurred against a backdrop of cheap, abundant energy and other commodities. This time, I think energy prices play whack-a-mole with any nascent recovery.
I've got some - I'm just not anticipating a repeat of that 80s spike.
What would be a good trading vessel for silver, I'm not really trusting of the ETF's, but they are quick to get out of. While shipping, storage, and mark ups of real possession is also a problem.
Maybe I am too locked into my overall deflationary mindset, where all assets are destined to go down, it's just a matter of when the reaper decides to do the cutting.
Depends on whom you are talking about really.....not trying to be evasive however it's not really something I can answer without a very large reply...and even then I don't really claim to have a great understanding of it. Not many do....
"Wednesday, the Saudi Oil Minister, Ali al-Naimi, said that the global economy was capable of managing with oil as high as $75 to $80 a barrel, according to reports from Reuters."
I'd agree with that... $80 isn't a back breaker anymore.
BTW, I don't know if it's ethical to mention Denninger over here, but he quoted 30 yr. rates at 6.5% today. I don't know where he saw that - my bank is offering them at 5.25. Sometimes I have to scratch my head on all this conflicting info.
Paul and Asha's latest reports argue that the worst is over and that we'll see a weak recovery by the end of the year. The stimulus is kicking in and the housing, manufacturing, employment, and consumer-spending trends are beginning to improve (which in some cases means "decline less").
I too felt that the storage and con tango for oil was just too much to support oil at it's current price. Maybe China will be able to turn some large valley into an oil lake and continue to build their surplus, but not right away.
Of course I may be wrong, I often am but I just could not see any support other than speculation, and from last year you can see how crazy and how long that can be.
Actually MS I have to say, and the 5.25 APR on my bank's site does read 5.3158, that in the I believe 4 loans I've had with the bank, I think they're pretty up and up.
KK - the big reason why I doubt anyone can actually say what anything is going to do with certainty is the outside manipulation variable. I don't know whose hands are in what til, but if sanity reigned, everything would be easier to call.
Silver, I have numismatic and bullion coins. I was a hobbyist in the 70s and recall numismatic outperformed bullion.
Equities, silver stocks look pretty extended to me. The only real entry since last fall/winter was trendline bounces, except for microcaps like HL that double-bottomed in the spring.
Most levered (upside and downside) business model is SLW. They stream production from other mines, do not own or dig so much as a hole in the ground, which is good for profits when energy gets expensive in tandem with precious metals.
My own positions... I am down to tag ends of SLW that I got last fall. Been selling all along - too early, as always. Mainly gold now - a little DGP from when gold did a pretty little double-bottom in mid-April at 850. A tiny, speculative basket of microcaps (microcaps vastly outperformed in the final parabolic run in 1980) including NXG, GBG, AGT.
Massive green shoots.
Any indication what the shadow inventory might be? I seem to recall reading 600K units nationwide?
""What do you think are the odds of the CAD hitting parity within, say, the end of the year?"
When was the last time that happened?"
July 21, 2008.
I talk to many people who are renting out their houses, waiting for "prices to come back".
Yeah, couple of those cashflow-negative patient rentiers in my neighborhood.
"I talk to many people who are renting out their houses, waiting for "prices to come back"."
Seeing that a lot in my market. And was in LaLaLand in Feb, tons of signs up For Sale/For Lease. Take your pick.
"There are also reports of REOs being held off the market, so inventory is probably under reported."
I have heard 80k homes being held by BAC/CFC crap pile.
I remember when $35 dollar oil was a great thing for our country and consumers. Now $63 oil is a good sign too. Methinks $3 gas will put a dent in consumer confidence, which is apparently the most important indicator.
I have heard 80k homes being held by BAC/CFC crap pile.
Within the next two weeks, they will start listing these. Ya, rumor, but I heard it from an employee who works in this area at BAC.
Too many of the current transactions counted as sales are merely transitional events such that comparisons to previous years are not applicable.
Let's just admit it. "inventory 2009" is not "inventory 2006".
There's a new paradigm as well. I was in Zip 92397 this Memorial Day weekend and while redfin shows 70 and realtor dot com shows 120 the truth is nearer 300 out of less than 2500 du.
IMO the reportage of supply is no longer reliable.
How do you extrapolate into the future when both ends (supply and demand) are actively managed?
Having all those mortgages under the government control through GSE's is a wonderful thing. It provides huge leverage to those who control the instrument. Reminds me of the customary pre-election increase in government sponsored salaries and pensions.
Cr,
I tell you, all this evidence based stuff that you put out is just too much! You da man in my book!!!
BTW, to an earlier post that CR made about the MBA numbers, re: purchase apps. Word is a lot of purchases these days are cash buyers, thus, no application, so there is a disconnect there.
But also troubling - a lot of money is being generated for banks and various other mortgage lenders via refi activity. But, as things get better and/or the Fed prints more money, driving up rates, refi activity slows. Expect maybe one more good week of refi apps, as the fence sitters move as rates increase, then it should drop like a rock, absent a turnaround in rates. In the past two days along rates have increased nearly .375%, almost entirely due to the move in the curve (spreads are still at greatly depressed levels).
2-3 months out the pipeline gets bled out.
Then all those mortgage processing jobs are over, and those people are back on the street. Expect that in 3-4 months.
I heard it from a Realtor who works in N CA a few weeks ago. Funny thing is I also heard it on those late night talk radio shows so it could be just a rumor flying around.
"Inventory in April 2009 was below the levels in April 2007 and 2008"
Bank -owned foreclosure backlog + accidental landlords + "waiting til the market improves" + shadow inventory withheld by Realturds to game inventory numbers = real inventory levels far higher than either 2007 or 2008.
Garbage in, garbage out.
ghostfaceinvestah, reply in last thread
Posted a few threads back after I got "pigged" (h/t to whomever suggested that phrasing)
AnonyMiss (profile) wrote (in reply to...) on Wed, 5/27/2009 - 9:04 am edit reply Anyone posting a "first" goes on my ignore list, because they're too stupid to be posting here.
It's either a real response to CR's thoughtful and insightful commentary, a Nemo reference or a Tanta Vive!.
Pick your poison, rickrolled and others. Going back a few posts, Mr/Mrs/Ms Hysterical Laughter? If you don't know who Marc Faber is, you have no business posting anything on this blog. Google is your friend, I am not.
For the record, AnonyMiss is not PMSing or hormonal, she's just irritated by ignorant comments that degrade the quality and value of this blog that CR and Tanta worked so hard to create.
I am not asking you ignoramouses (ignoramii?) to go away, I'm asking you to read and learn quietly until you can add value to the commentary.
For your penance, you can go contribute to one of the charities set up in Tanta's name.
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This isn't dealbreaker, Gawker, dailykos, or the freerepublic, OK?
You might be saying to yourselves "WTF is AnonyMiss?" And you'd be right, I'm a long time reader who rarely makes any comments because I have nothing to add, you see? I am just like you. Shut up and start reading and learning, mkay?
"IMO the reportage of supply is no longer reliable. "
Understatement of the week. We will continue to torture the data until it confesses what we want to hear.
Is the 5 year auction at 1 today?
Tim, like I said, this was from someone at BAC and this person would have to know if this sort of thing was going to happen. I also really trust this individual. Guess we will see.
5 year auction at 1PM, correct, don't leave that terminal...
Going forward that big hump on the last graph needs to be reflected across the x-axis one would think.
I believe you. The number itself isn't so hard to believe.
AnonyMiss (profile) wrote on Wed, 5/27/2009 - 12:35 pm
Posted a few threads back after I got "pigged" (h/t to whomever suggested that phrasing)
Me, I think.
I wonder, how helpful would it be for the USG to to post on the web those CDO and MBS addresses it holds an interest in, would it help those borrowers make their payments to know that the USG owned their mortgages? My mind reels at the prospect...
The number itself isn't so hard to believe.
And that is the crazy part about all this. That is a big number. The employees that work in this area at BAC are tired of being jerked around by gov policy changes just like all of us. They just want to do their jobs and they are getting the red light, green light treatment. Frustrating stuff.
BTW, even if the plan was to start unwinding the inventory last week, that could have already changed. I havent heard any new news yet though.
CR, u've been a great bogger. CR, can you envision blogging at this pace for (11-4=7) 7 more years?
I know ur style is not to speculate much....and u likely wouldnt say what I postulate: that the global debt crisis spells the demise of a GDP model that's 70% driven by debt-fueled consumer spending....or say my postulate (not theory) which is that the unsustainability of our GDP model beyond its 25th year has forced the USA into an involuntary structural economic transformation that rules out any 'recovery' returning us to a comfortably familiar place like 2003 or 1999's economy.
This could easily take 11 years. That's how long the last structural change took before employment growth across sectors resumed in 1984. And we were a smaller nation 25 years ago. It could take shorter or longer.
But we need data to monitor this.
CR, can you envision blogging at this pace for (11-4=7) 7 more years?
W/o CR, Mish, TBP and a few other blogsites, I'd have to live on database sites.
ghostfaceinvestah (profile) wrote on Wed, 5/27/2009 - 12:39 pm
5 year auction at 1PM, correct, don't leave that terminal...
No bloomie here, I'll have to sit here, listen to theta wave entrainment and wait the 90 seconds or so it takes someone to post it over.
EHP, thanks for the reply, I concur with your views, I think in the short term, even though I am very long commodities, the whole commodities rally is overdone, and largely due to China stockpiling on the margin, plus a lot of momo. But still, I could see that coming, as this QE has everyone scrambling to get away from the dollar. That helped CAD. But eventually that will peter out and take down the commodity-linked currencies in the short term.
Longer term, though, I like the CAD for a lot of the reasons you mentioned, plus in general I think Canada is going to benefit greatly from a lot of the trends in the global economy.
Look, this is not a regular environment. Investments are down, savings are down, credit is down.
Any vacant house, should be considered house waiting to be sold.
I haven't checked recently, but the vacancy rate never declined post S&L crisis which means that we are working off more than one real estate bubble. The numbers I remember are 12mn vacant year round, 7mn seasonally vacant, 128mn total units, 108mn households. I also remember asking the question how many fewer households would there be if people couldn't afford to buy, say a move from the national average from current up to Califrornia's level. It adds another 10mn vacant units, or a 25% vacancy nationally.
Ergo, there is enough guaranteed inventory for this year and the next. Prices don't stabilize until you have at least less than 6 months of inventory in the relevant market. Ergo, prices will keep falling. Probably to significantly below material cost. We've already seen some of that in Phoenix.
We haven't even processed local and State responses to their drop in revenue. Vegas is empty today, so what if they boost taxes? Basel Too is the one to ask about State revenues, but my sense is that -10 to -20% is common. Personal income tax makes up about half of revenues in the states that have it. So closing the gap with income tax increases alone would be an effective rate increase of 20 to 40% as one thought experiment.
@Byz et al,
Results will be posted at
Today's Auction Results
"Shut up and start reading and learning, mkay?"
glad you discovered the filter, anonymiss, now use it.
i for one welcome anyone who has an honest opinion, related anecdote, or repressed outrage. this is a free forum and a conversation that frequently only approximates the topic that started the dialouge. conversations work like that.
it is not a meritocracy, aristocracy, or popularity contest. who are you to say what is of value and what isn't? some people do not know everything. i'm one of them. just because someone isn't yet up on some investor named marc faber is no reason to shout them down or say go away.
tolerance
tranquilo...
Thanks RATM!
ghostfaceinvestah,
The way I think of Canada is "perpetually on the edge of greatness" It is poised to adapt well, but don't expect it to lead. There is a strong negative sentiment to run up debt and inflate our way out, which I like, but Mark Carney our quiet new-ish Central Bank head is likely more disposed to the "give the banks any money they want and then give them an extra 10%" course of action. So far we haven't had to do much. Economy slows down, loonie goes down even faster, no one notices. Commodities go up, loonie goes up, no one notices. Sometimes it pays to be overlooked
"Longer term, though, I like the CAD for a lot of the reasons you mentioned, plus in general I think Canada is going to benefit greatly from a lot of the trends in the global economy."
Hey don't mention anything positive about Canada on this blog. Someone who shall remain nameless will blow a gasket. But here's a hint, their name starts with an L, ends with an R and contains UCIFE in the middle.
OT: Banks can't bid on their own assets
"There will be no structure that would allow banks to bid on their own assets," Federal Deposit Insurance Corp. Chairman Sheila Bair said during a briefing with reporters on the banking industry's first-quarter results.
WSJ Error Page - WSJ.com
Gracias. At first read, I was afraid you thought that I thought your posts were worthless.
I greatly enjoy both you and Yogi (while I never 100% agree with either of you, I do enjoy both of your thoughtful posts), I urge you to unban yogi, he's not somebody I generally agree with, but he does put a great deal of thought into his posts.
Banning/ignore mode should be saved for idiots and yogi is no idiot. As I said, I rarely, if ever, agree with yogi, but he is a thoughtful poster and he/she deserves to be heard, if in the end, disregarded if you choose.
"I wonder, how helpful would it be for the USG to to post on the web those CDO and MBS addresses it holds an interest in, would it help those borrowers make their payments to know that the USG owned their mortgages? My mind reels at the prospect..."
One of my ideas for this crisis, to get cash off the sidelines and aid in the deleveraging of the economy, is to post somewhere on a website the mark on everyone's mortgage, first and second liens. Every mortgage, whether in an MBS, CDO, Fannie/Freddie balance sheet, bank balance sheet, is marked at least quarterly, if not monthly or weekly.
If, say, you saw your mortgage was marked at 80cent on the dollar, and were offered a chance to buy it at the mark, I'd bet a lot of people would do that. Even at the ridiculous levels some banks have them marked.
Companies can buy back debt at below face, why not consumers?
Whoever has a terminal post the 5 year results please.
"The way I think of Canada is "perpetually on the edge of greatness" "
LOL! True, but as you say, not a bad place to be in this environment. Slow and steady is not a bad strategy.
i will xpost when I see 'em. RATM gave a direct url to the results gateway.
EvilHP, how's the RE and CRE markets holding up in Toronto, Vancouver (still horrifically overbuilt relative to Olympic dreams?) and ....whichever flyover province capital is the Energy King City?
In the 80's I spens an ungodly amount of time in Torontoo and on the QEW (there oughta be a law about semi-routine 11pm traffic jams) and heard earfuls from the plant employees about nightmarish commutes from Bramalea and further places from the Dom valley.
"The way I think of Canada is "perpetually on the edge of greatness""
I think about it via The McKenzie brothers, ya hoser ay.
US Treasury Secretary Timothy Geithner will meet with President Hu Jintao to discuss expansion of ties and current economic turmoil during his trip to Beijing on June 1-2, officials said Wednesday.
The meetings would involve "a range of issues of importance to both countries, including strengthening US-China economic ties to promote stable, balanced and sustained economic growth in the two nations and further global economic recovery," a Treasury statement said.
Abbott: Well Costello, I'm going to Beijing
Costello: Look Abbott, you must know all the players.
Abbott: I certainly do.
Costello: Well you know I've never met the Hu et al. So you'll have to tell me their names, and then I'll know who's playing on the team.
Abbott: Oh, I'll tell you their names, but you know it seems to me they give these ball players now-a-days very peculiar names.
Costello: You mean funny names?
Abbott: Strange names like Hu Tse Ling
Costello: His brother Bruce lee.
snip
Abbott: I say Who's on first, What's on second, I Don't Know's on third.
Costello: Are you the manager?
Abbott: Yes.
Costello: You gonna be the coach too?
Abbott: Yes.
Costello: And you don't know the fellows' names?
Abbott: Well I should.
Costello: Well then who's on first?
Abbott: Yes.
Costello: I mean the fellow's name.
Abbott: Who.
Costello: The guy on first.
Abbott: Who.
Costello: The first baseman.
Abbott: Who.
Costello: The guy playing...
Abbott: Who is on first!
Costello: I'm asking YOU who's on first.
Abbott: That's the man's name.
Costello: That's who's name?
Abbott: Yes.
Costello: Well go ahead and tell me.
Abbott: That's it.
Costello: That's who?
Abbott: Yes.
PAUSE
Costello: Look, you gotta first baseman?
Abbott: Certainly.
Costello: Who's playing first?
Abbott: That's right.
Costello: When you pay off the first baseman every month, who gets the money?
Abbott: Every dollar of it.
Costello: All I'm trying to find out is the fellow's name on first base.
Abbott: Who.
Costello: The guy that gets...
Abbott: That's it.
Costello: Who gets the money...
Abbott: He does, every dollar. Sometimes his wife comes down and collects it.
Costello: Whose wife?
Abbott: Yes.
PAUSE
Abbott: What's wrong with that?
Costello: Look, all I wanna know is when you sign up the first baseman, how does he sign his name?
Abbott: Who.
Costello: The guy.
Abbott: Who.
Costello: How does he sign...
Abbott: That's how he signs it.
Costello: Who?
Abbott: Yes.
PAUSE
Costello: All I'm trying to find out is what's the guy's name on first base.
Abbott: No. What is on second base.
Costello: I'm not asking you who's on second.
Abbott: Who's on first.
Costello: One base at a time!
Abbott: Well, don't change the players around.
Costello: I'm not changing nobody!
Abbott: Take it easy, buddy.
Costello: I'm only asking you, who's the guy on first base?
Abbott: That's right.
Costello: Ok.
Abbott: All right.
PAUSE
Costello: What's the guy's name on first base?
Abbott: No. What is on second.
Costello: I'm not asking you who's on second.
Abbott: Who's on first.
Costello: I don't know.
etc etc etc
"IMO the reportage of supply is no longer reliable."
The Fog Of War.
I know of whole neighborhoods where folks are months behind in payments. The banks are telling them to pay what they can.
In a more normal market they would have been foreclosed on but they don't seem to have the staff to do it. Plus it is a declining market.
+1
my take on EHS cross posted from Zacks, charts are from CR's first post on the subject this morning:
Blog: Existing Home sales up, but so are Inventories
The existing home sales report for April showed mixed news, but was largely in line with expectations. Starting with the good news first, sales rose 2.8% to an annualized rate of 4.68 million, and were up in three out of the four regions. The Northeast fared the best by far on a month to month basis with a 11.6% rise, followed by the West, up 3.5% and the South up 1.8%. Sales in the Midwest declined by 1.8%. On a year over year basis sales were down 3.5%. The real stand out on a year over year basis was the West where sales soared 19.4%, while the other three regions were down significantly. The Northeast is still off the most on a year over year basis, off 10.5%, followed by the Midwest, down 9.9% and the South which is off 8.9%. The graphs below are from Calculated Risk and shows that existing home sales were largely stabilized for most of last year, before the turmoil of the fall, and have since seemed to have stabilized again at a lower level. Both single family houses and condos saw more sales in April than in march, although the condo gain of 6.4% in March far outpaced the 2.5% increase in single family houses. On the other hand on a year over year basis, condos are still down 9.4% vs. single family houses down just 2.8%.
The bad news was that inventories jumped by 8.8% to 3.97 million. This brings the months of supply up to 10.2 months from 9.6 months in March. While this is off the highs of a year ago, it is far above a more normal level of about six months (was usually between 4 and 5 months during the bubble), and an increasing months of supply is not the sign of a healthy market. Some rise in inventories in the spring is normal, but this seems to be larger than one could expect from seasonal factors alone. Also, distressed sales (bank repossessions or short sales) made up 45% of all sales nationwide. The low end of the market is very active due to these distressed sales, but unfortunately a distressed sale does not start the chain reaction that a “normal” sale does. The family that got evicted is not a family that is moving up to a bigger house, in turn leading the selling family to move to a still larger house. These sales are one and done. The increase in activity at the low end was partially responsible for the 15.4% year over year decline in the median price of an existing home, which now stands at $170,200. The effect of these distressed sales has been particularly pronounced in the West, the only region where sales are up year over year, but also the region that has posted by far the biggest drop in median price, off 21.8% on a year over year basis. The next worst region is the South, off 12.8%. The Northeast, where sales are off the most on a year over year basis, has also had the smallest decline in median prices at 9.6%.
I do not see this report as particularly good news, nor particularly horrific news. Those expecting housing to come roaring back and lead this economy back to health are likely to be sorely disappointed. On the other hand, the signs of stabilization mean that housing is not going to drive the country into oblivion either. The very high level of supply (including lots of shadow inventory of people who would like to sell, but want to wait for a stronger market, and the still very full foreclosure pipeline) means that housing prices will continue to be under pressure for a while. While prices relative to rents and incomes have returned to more rational levels, there is nothing to stop prices from going past “fair value” on the downside. Certainly there is no reason to expect that the trillions of dollars in housing equity that has been lost over the past few years will come back anytime soon (perhaps not for a decade or more). Even though consumer confidence is up, I would still be cautious about investing in the Consumer Discretionary area. With the need to replenish their savings (housing equity was a huge part of most peoples “savings”) for retirement and college funds, people will not be spending freely for a long time. The likely beneficiaries of this would be sellers of “inferior goods”. In retail that means that stores like Wal-Mart (WMT),
Big Lots (BIG) and Family Dollar (FDO) will out perform stores like Saks (SKS) and Nordstrom’s (JWN)
TREASURY AUCTION RESULTS
Term and Type of Security 5-Year Note
CUSIP Number 912828KV1
Series M-2014
Interest Rate 2-1/4%
2.310%
High Yield1
Allotted at High 44.97%
Price 99.718283
Accrued Interest per $1,000 $0.06148
2.249%
Median Yield2
Low Yield3 2.000%
Issue Date June 01, 2009
Maturity Date May 31, 2014
Original Issue Date June 01, 2009
Dated Date May 31, 2009
Tendered Accepted
Competitive $81,182,250,000 $34,889,037,200
Noncompetitive $111,003,400 $111,003,400
FIMA (Noncompetitive) $0 $0
Subtotal4 $81,293,253,400 $35,000,040,6005
"stores like Wal-Mart (WMT), Big Lots (BIG) and Family Dollar (FDO) will out perform stores like Saks (SKS) and Nordstrom’s (JWN)"
Stay away from all of them IMO. Who will win in this race to the bottom? No One.
5 yr:
tendered 81 billion - accepted 35 billion
BR
Thanks
Byzantine_Ruins (homepage, profile) wrote on Wed, 5/27/2009 - 9:40 am
Posted a few threads back after I got "pigged" (h/t to whomever suggested that phrasing)
Me, I think.
I think Byzantine_Ruins coined "mortgage pigged" and I suggested the more colloquial "pigged".
Bid to cover ~2.31
2% low yield
2.31% high yield
2.249% median
HARM (profile) wrote on Wed, 5/27/2009 - 9:36 am
"IMO the reportage of supply is no longer reliable. "
Understatement of the week. We will continue to torture the data until it confesses what we want to hear.
Man, we need another BBQ and this time I won't burn the chicken. Mmmmm, Patrõn, Nom nom nom.
Mortgage-Bond Yields Soar, Jeopardizing Fed’s Housing Effort
Mortgage-Bond Yields Jump, Jeopardizing Fed’s Housing Effort - Bloomberg.com
It seems like Ben or his primary dealer friends could juice the bid-to-cover by submitting extra bids away from the market just to juice the stats. It is one of those things we will never know. Say an auction went horribly and the Gov didn't want to report it. They could juice the stats, but would they ever tell anybody? Market didn't react much to the results.
5YR 2.310%? I won't believe it until it starts trading on the secondary market.
Only 10 of us are logged in?
Kinda low traffic today.
Avl Dao
Toronto didn't have a boom in prices as much as it did construction and/or sprawl. Don't know much about where its CRE is headed without looking through it.
Vancouver's boom was in RRE, prices will probably decline 60% from peak where the bubble was strongest. The Olympics were coincidental, the city has lived its entire life going through RE booms and busts. Averages to 5 years up, 3 years down. Biggest losers this time are condo landlords. Boom started later, and ended later, now the declines are among the fastest of NA cities to catch up. Probably take 2-3 years to clear the excess inventory. I think 3/4 of new jobs in BC post 2001 were in construction, so there is an economic shift. Restaurants will close, real estate agents find other work, developers will focus on a single project at a time, construction workers will move/get employed by one of the backlogged infrastructure projects/find other work. Keep in mind there is downtown Vancouver which is on a peninsula, Vancouver the city, and Greater Vancouver/Metro Vancouver/Lower Mainland. Geography is very significant to the area. Vancouver suffers a deficit of CRE, RRE boom displaced all interest in it. Projects that are being announced now are a lot more CRE. A bunch of condo projects were cancelled at the drop of a hat because the lenders are back East in Toronto and have home-side biases. A ridiculous amount of projects are on the slate in Toronto, still unsure if that will change.
eh?
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Rob Dawg & Harm, I had forgotten that phrase, "torturing the data" until it confesses only what we want to hear...
it use to be a fav phrase of mine.
Thanks.
"Mortgage-Bond Yields Soar, Jeopardizing Fed’s Housing Effort "
Yup, all those 4s the Fed bought have lost about $1.50 in value (per $100) in the past few days.
But these are risk-free investments, right? That money can all be taken back out of the system, right?
"Whoever has a terminal post the 5 year results please."
Today's Auction Results
RATM +1000
That's exactly what they've done...and will continue to do until they can't.
It's out and out gaming in plain sight and no one is doing a thing about it.
Ciao
MS
So as of right now, there is $740.43M betting that GM common wont go to $0. Thats a lot of cash and there are a lot of shares trading hands above $1.20. I dont get it. It I did, would I get rich?
Condos are where the bubble was in Toronto too I hear. The new construction RE units
Term and Type of Security 5-Year Note
CUSIP Number 912828KV1
Series M-2014
Interest Rate 2-1/4%
High Yield
2.310%
Allotted at High 44.97%
Price 99.718283
Accrued Interest per $1,000 $0.06148
Median Yield
2.249%
Low Yield
2.000%
Avl Dao (profile) wrote on Wed, 5/27/2009 - 10:11 am
reply ignore user
Rob Dawg & Harm, I had forgotten that phrase, "torturing the data" until it confesses only what we want to hear...
it use to be a fav phrase of mine.
Thanks.
"Torturing the data" was a joke at the Santa Barbara patrick.net BBQ a few years back. Maybe HARM will share the t-shirt slogans. I still have mine.
It will be interesting to see what the default rate on new fannie and freddie loans is in about 6 months from now... if home prices continue to fall, it could well be that these new loans being issued today are more of a rent subsidy to people who have seen the method of buy and default work for others... Merle Hazard could explain this well in song, I'm sure...
28 day bill
112 billion tendered - 34 billion accepted
not too long ago people couldn't get enough of these.
5y - high yield went up from 1.94% to 2.31% in a month.
Topped 2% for the first time this year.
how long should it take for the bump in Treasury rates to show up in bank CD rates?
You know what, swamp otis/dotdotdashotis/whatever else you post here as otis?
I am really not up for reading Michael/Hysterical Laughter/Juvenal Delinquent type posts, in fact, I barely tolerate yours.
I have little free time and I refuse to devote attention to those whom have not spent a bit of time themselves towards learning a bit about the financial crisis and who are the big players in it, Marc Faber is a big player.
You are an uninformed alarmist, and I question your bias. As I said, I read your commentary, but I generally discount anything you say. Sorry. You have no credibility.
Scratch that, you're filtered. Congrats.
IMO the best bet these days are the tax free munis with short dated call prices well above the sale prices.
State Maturity Quantity Issuer Moody's S&P Insurance Coupon Yield Price Call Date Call Price Cusip
CA 12/15/2038 115 TEMECULA CALIF REDEV AGY TAX A N.A. N.A. 5.500 7.000 81.38 12/15/2009 103.00 87970FDV8
$81.38 in Jun and $103 in December while earning 7%? Wow.
124 billion not accepted today
"You are an uninformed alarmist."
better than a uniformed alarmist.
i question my bias too.
i think you just barely tolerate.
thanks for ignoring me.
MS
What is your best guess of gold prices this week?
Gracias.
swamp otis (homepage, profile) wrote on Wed, 5/27/2009 - 10:19 am
$124 billion not accepted today
$400 per person for every person in the USA. For those of us used to carrying many times our per capita load....
the storng bid to covers are suspect. The indirect bids coming from offshore are coming from where? China doesn;t have a surprlus and neither does japan? Saudi is in deficit too? Also doesn;t the fed have an incentive for its PDs to place bids to pad the bid/cover ratio for window dressing? the whole auction thing is such a joke - bought and controlled by the primary dealers which re wards of the respective states. What woyuld stop the fed buying threough cayman consuits to add to their confidcnec blowing operation?
Hey Tim - you didnt ask me, but my bet is gold stays under $1k absent external events... If it was to break through $1k, and then successfully retest $1k as support, that would get my attention... I dont think it's going to run away on the upside unless we get some serious additional deterioration in the global financial system... Or other events - wars, whatever...
energyecon
Are you around? I've got my idea for a sweet animated plot. I need to find the Maturities of outstanding US marketable debt that you used to make the beautiful charts
401 Authorization Required
http://energyecon.blogspot.com/2009/04/treasury-marketable-debt-maturity-redux.html
update: Found it here, but the data is in messy pdfs unlike what I remember U.S. Treasury - Office of Domestic Finance
TNX yield just shot up to 3.58%
Oil quantitatively eased its way up to almost $64 earlier. Now sitting at about $63.50.
Thanks Ben!
"It will be interesting to see what the default rate on new fannie and freddie loans is in about 6 months from now..."
Those loans should be OK, since the min down payment is 10% these days.
The FHA loans, however, where the 8K credit is used as the downpayment, are going to be a disaster, IMHO.
soooo is the auction today a prime example of a ponzi unit sale where the marks are told to bid so their current units retain higher value?
Interesting Times (profile) wrote on Wed, 5/27/2009 - 10:28 am
reply ignore user
soooo is the auction today a prime example of a ponzi unit sale where the marks are told to bid so their current units retain higher value?
AKA the "pump" part before the "dump" part.
No Shadow Appreciate it. I feel the same way Gold prices aren't going to run away this week or next.
However the first big mover will be rewarded with cheap (relative) gold today. When either the Saudi's, Chinese or Indians make a move All other will have to follow.
Rob, et al:
Sometimes the Data Tortures Back...as in when the data has a margin of error of say 10%, yet the analyst produces findings with lotsa decimal points as if that makes the findings more accurate than the limitations of the original data.
Via such common mistakes is how I separate the Grown-ups from the Pre-Teens.
A lot of housing data has huge margin of errors...thanks to the poor quality of initial reporting and the heavy usage of "surveys".
But the 25-year cycle in securities, and the over-lapping bubbles in debt (credit) and assorted markets, yielded so many self-reinforcing trendlines in the 1990s and 2000s that many analystst would counter-argue that the adherence to a trend justified claiming the accuracy exceeding the margin of errors (which were actually compounding, mathematically).
Well those days are over...the underlying new Natural Laws of Physics for economics have changed...thanks to Debt Unwind.
We are now on Planet DeLeveraging and we ignore the "New Physics" in economic data and formulas, at our own peril.
(hat tip to blogger John Mauldin)
Man, the MBS market has been getting crushed these past few days. Maybe BB is getting worried about the potential for a real audit and is backing off?
HR 1207
Tim-
As with the entire market I'm not even going to guess. It's a complete and total fraud (this market) and trying to guess which way any of it is going will just make you sick. Not what you want to hear however it's just that simple, for me.
If someone said, last year when all this really got going (the socialistic aspect of it) and gold would stay below $1000 I would have laughed at them...I did. The real key is that most of this "money" is hidden digitally.....doesn't mean it's not real because it most certainly is. the counter to that argument has always been akin to the repo. process (you know how it's put back at the end of it's "cycle") but no one really addresses what it was used for in the first place and how it basically is an infinite "service" for the very few who got it.
Ciao
MS
Moody's: US government's 'Aaa' rating is stable
NEW YORK (AP) -- Moody's Investors Service said Wednesday the U.S. government's "Aaa" rating is stable despite the country's swelling debt.
Yahoo! 404 - Page Not Found
by the way, as to my credibility, i am completely crazy.
sue me.
BTW for those who are waiting for the US to be downgraded (credit-wise) it's not going to happen.....ever.
Ciao
MS
Ya, OK, belated congrats to you both.
I do tend to get distracted by real llfe. Congrats to both of you.
So, my congrats come many hours late, but Jesus I am a busy woman!
Look, a green shoot popping up.
Bloomberg.com:
Personal Finance
Auction must of been bad. TBT took off like a rocket.
Thanks anonymiss.
I have no tolerance for those who would deny others their Constitutional rights and I will attack them at every opportunity, no matter how sophisticated their vocabulary and no matter whether they ignore me.
MS
Thanks for the reply. I would have expected over 1000 easy during this last March stock lows. Oh well I guess I'll have to wait
TNX 3.61%
drip drip drip
Whoa... TNX yield just Bernanke-blasted over the 3.6% mark.
EDIT: Over 3.63% now
EDIT: Over 3.64% now
EDIT: Over 3.66% now
Bizarre Job Ad Of The Day -
"design of the MDM program data/information architecture"
" 3+ years of experience with Delphi programming"
"$42/hr max"
WTF?!
This guy's gonna be looking for a long time, even in this economy.
You never know if the currency looses 20% and they want to make their business legitimate they could make call after the play so to speak =)
Would anyone believe me if I said that from Q3Y07 to Q1Y09, State and Local governments redeemed Treasuries worth $61.5bn as opposed to the 7 quarters prior when they accumulated $76.4bn or a swing of -$137.9bn
I grabbed a green shot once. It turned out to be a cactus, OUCH!
Moody's: US government's 'Aaa' rating is stable
NEW YORK (AP) -- Moody's Investors Service said Wednesday the U.S. government's "Aaa" rating is stable despite the country's swelling debt.
Just like all those CDOs right?
Someone remind me the rule of thumb for 30-year mortgage rates vs. the 10-year Treasury?
So as of right now, there is $740.43M betting that GM common wont go to $0.
I wish there was a true swashbuckling robber baron out there. Lever up 10:1 with his $37.25m to buy 51% of the common. For a credit trade, short the index triple longs and buy OOM puts on your GM with the proceeds.
Waving your Chapter 7 paperwork on the stairs of Wayne County Municipal Courthouse just before the open tomorrow, hold a press conference that goes something like: "Every American is tired of these endless bailouts. I've bought this company and we're going Chapter 7 this morning. Sell off the assets, pay the bondholders what we can, common holders are screwed. Unions and pensions get what's left. Banks get nothing. For the next 10 minutes, however, I will entertain offers to buy my share of the common, starting at $5 billion."
Just a fantasy, of course.
MS - since Moody's (and all others) are effectively government/wallstreet controlled and owned, why would it ever bite the hand that feeds it.
No other country in the world would have gotten this far down the rabbit hole. Some examples:
- Argentina
- Russia
- Brazil
- Hungary
... care to add more ?
"TNX 3.61%
drip drip drip "
Anyone seen Jas "Indian Dope" Jain? His call at 2% was the worst call in the history of this site!
Bradford & Bingley to Skip Subordinated Bond Interest
Bradford & Bingley to Skip Subordinated Bond Interest (Update3) - Bloomberg.com
Exploding debt threatens America
FT.com / Comment / Opinion - Exploding debt threatens America
IT-
I said exactly that last week.
"it will never bit the hand that feeds the system"
Just add in most of Europe excepting Germany and France....
Ciao
MS
"Someone remind me the rule of thumb for 30-year mortgage rates vs. the 10-year Treasury? "
No need to look at the 10 year anymore, when you can look at this (thanks, Bloomberg). Bookmark it.
Bloomberg.com:
Personal Finance
That is the MBS price, just add 75-100bps or so (note that Freddie usually quotes a 0.7points price, who the heck pays points these days)?
here
I can tell you that the MBS market is getting CRUSHED today, the (formerly) par coupon is down 27/32s as I write., looks like the 4.5s will be the new par coupon going forward, so roughly speaking, 30 year rates are about 50bps higher than last week.
Originators can take some of the pain out, temporarily, but cutting into their margins, but most are so backed up that is is unlikely it will happen anytime soon.
crispyandcole (homepage, profile) wrote on Wed, 5/27/2009 - 10:44 am
"TNX 3.61% drip drip drip "
Anyone seen Jas "Indian Dope" Jain? His call at 2% was the worst call in the history of this site!
Banker owns that title of worst call.
3.635%
(I know most of you don't care, but ac does so we will just talk to each other)
I care!
"I can tell you that the MBS market is getting CRUSHED today"
can't keep it all "spinning" each and every day can they?......
Ciao
MS
"Anyone seen Jas "Indian Dope" Jain? His call at 2% was the worst call in the history of this site! "
Yeah, he was pretty stubborn, wasn't he? Once again, ignore the mortgage market at your own peril. You can't buy a market like BB has tried to do, and not expect consequences. Ask the Hunt brothers.
As much as the bond market collapse was an easy call, seeing it in action is kind of scary.
drip drip drip
The room is filling up, don't know if Mr. Bond will escape this one. Then again, he could always sacrifice his very last gadget (codename: DOLLAR)
"You wanna play with Elmo?!" - Elmo
3.660
We may be witnessing an Event.
An iconic home featured in the 1986 film "Ferris Bueller's Day Off" goes on the market. » Ferrari not included
Anyone Anyone ?....Bueller
This bond stuff still makes my head hurt, but I'm pretty sure I understand enough to know that it's a) unusual and b) a bit scary for both my equity index puts and my TLT puts to be gaining value simultaneously as they have at a rapid rate since about 1:30.
Did someone's quant box get food poisoning at lunch?
The MBS market has to shed some value (well at least it's implied value) so that Timmay's Pee Pee in the Potty can look like it's actually doing something.
Ciao
MS
MS
Pee pee in the potty --- peepee into the tornado
Grab hold to your guns and bibles folks this is going to be a rough day!
tnx 3.678, wait 3.7
Let me get this straight.
So the unsold amount means that price has to drop to sell it, resulting in a yield increase.
Is that correct?
Thanks.
BTW, I think that AnonyMiss = Scone.
Mkay?
Don't panic guys, if the treasury can't finance the debt we can just reduce our spending. Maybe Obama can find another $100 million or so out of the white house budget. I mean, the hole isn't THAT big? We can grow our way out. Right? Who's with me?!
3.7%
EDIT: Calming down a bit now. Back to around 3.65%
3.701
But only for a moment.
"We may be witnessing an event"
Oh good. Will the market finally respond to this if so?
And the "Oh good" was meant to be snark.
to nemo et al
did the auction results come in or is this move in response to the insider info?
Didn't Bendover Ben say his next line of defense was when 10y gets to 4.5?
Getting there rather quickly wouldn't you say.....
All this with Oil steadily rising too...gotta love that one.
Ciao
MS
What about the "deflationists"...what say you? Mish?
Where are you following the TNX at?
GH
+1 HOPE Now or never folks!
nevermind - saw the bloomberg article
Treasuries Fall on Concern Record Sales Will Overwhelm Demand - Bloomberg.com
Jansen thinks this round is just about over, though.
If you have been shorting Treasuries, congratulations. Take profits.
Hey, Rob Dawg,
I sure miss the old Surfer-X BBQs. I'll definitely give you a ring the next time I visit SCAL --perhaps around Christmas time.
"id the auction results come in or is this move in response to the insider info? "
My best guess? Shot across the bow from someone.
Give him time he can be less wrong we haven't hit asset price bottom yet.
CR, First I would like to thank you again for being able to quickly take a jumbled mess of data and presenting it in a manner that even I can understand.
OK, I did my howling at the moon a few days ago, but I got a question today that really surprised me.
Today a co-worker asked me (No, it is really not me) if he should buy the lease on his apartment, so I asked him how much the lease was and when it came up for re-negotiation, and how long he had to decide.
He said he has 30 more days, someone else wants to buy the lease, its $150,000 and its re-negotiated next year.
After I picked my jar up from the floor, I asked him when he bought the place and he said 2004. Now I'm biased against buying anything lease held, ever.
Now I'm not not in the real estate area at all, but this man wants to retire next year, and does not want to stay here.
All I could think of was to sell now, and rent.
Was I way off on my gut reaction?
So Sheila Bair says banks can't bid on their own assets. She should have had the sense to dismiss the notion outright when it was suggested at the March conference call, but better late than never.
Y'know, Nova asked for some bad news the other night. When are things finally going to break?
EHP responded May 28 - 29 and I wrote off as SWAG/humorous response.
I might rethink that.
Also have to force EHP to take new moniker: Nostradoomus
homedad43 --
Where are you following the TNX at?
Real-time quotes from my brokerage. Yahoo has delayed numbers.
I am not an expert; just an interested observer.
Remember Werner? I think he was extradited to Germany not so long ago.
HARM (profile) wrote on Wed, 5/27/2009 - 10:57 am
Hey, Rob Dawg, I sure miss the old Surfer-X BBQs. I'll definitely give you a ring the next time I visit SCAL --perhaps around Christmas time.
You are always welcome. I still think the Ventura County CRs need to get together soon.
HomeDad, I didn't. I took it as gospel.
I actually have skin in this bond yield discussion.
90-ish should be monster support on TLT. Good place to declare victory and cover a little something in another point or so.
Assume Crash Positions -
Great handle by the way, bonds tend to give me headaches also.
Rick on CNBC is stating that the auction is going well, but people are starting to get worried about.... blah, blah.
Looks like the bbad bond vigilantes (bbad bv's?) are running riot over the bond market again. $150 bio in new issuance, $50 bio+ in rollovers every month as far as the eye can see - whocoodanode this would cause problems?
KK I dont understand the 'buy lease' thing... You buy the lease but you dont own the property or shares in an association? Who owns the land and building? If you could explain that I'd be learning something.... In any event if the guy wants to leave within a year and has a buyer now, sounds like a no brainer to sell now.... Could he sell and rent back so he doesnt have to move?
It's the other way around, homedad--the amount tendered is total amount of bids received from bidders, the amount accepted is the amount actually sold (and is the same, more or less, as the amount announced as available), so the difference is the amount of unfilled bids.
Hmmm, maybe deficits DO matter.
"I can tell you that the MBS market is getting CRUSHED today"
I usually follow it from Mortgage Rates Blog
, but apparently he's swamped at the moment. Can't imagine why...
homedad43 -
EHP to take new moniker: Nostradoomus
That or he really is one of TPTB and he is here taking a reading of the uber bears.
EHP,
I pull it out of MS Excel downloads (using OpenOffice to work the data) from here:
Government - Monthly Statement of the Public Debt (MSPD) and Downloadable Files
Click into the month you want then take the Excel download under 'Entire MSPD'
Note to all. Financials made 8% of SP500 in July 08. Today make up over 13% of SP500. Lots of gamblers in the financials. This tells me that the the stock market must move lower as conditions have worsened since last summer and it is full of speculators not investors.
For those of you who are "footies" (nee soccer)......Champions League Final starts in about 45 minutes or so....
Final score: Barcelona 3 Man. U. 2
But what do I know....
Ciao
MS
i vote someone telling big ben that he doesn't make the decisions
Remember when I said I was buying those June $48 TBT calls?? Man, good times...
Edit: (I wish I still had them....weeeping...)
You are always welcome. I still think the Ventura County CRs need to get together soon.
yeah, we NH CRs need to get together soon too. Anyone? Anyone? Bueller?
(edit: km4 I didn't even read your post before I wrote that. weird)
Somewhat OT, but 4 KS banks are going from federal charters to state charters, saying that state regulators "understand" how rural banks function better than the feds do. I don't know if: (1) this could be the start of a trend; (2) if that's just code words for saying, "we believe we can get around capital reqm'ts for bad loans-or something else? --more easily when dealing with state than federal regulators these days." Thought some of the people posting here would have a better idea of significance (if any) of this. http://www.oregonlive.com/newsflash/index.ssf?/base/business-11/1243444089284210.xml&storylist=business
tho Banker pretty much owned up to it IIRC...
Nemo and Yalt, thanks.
I'm gonna have to see if Rosetta Stone has a package for BondSpeak.
Later, folks.
watching the economic death match on Bloomie
That or he really is one of TPTB and he is here taking a reading of the uber bears.
Yikes, that's scary. I'm counting on his prediction of oil to fall any minute now. I'm driving around on E, waiting.
-
ShadowInventory -
KK I dont understand the 'buy lease' thing..
To be honest I think it is the craziest thing also, basically when you buy a lease-hold house or condo, you buy the building only and someone else still owns the land. You then pay a set "rent" or lease fee to the lease holder. The lease is set to be renegotiated at a set time, and it is a complex contract that helps keep lawyers and RA's well employed.
Part of the catch all, is that lease can be sold to a third party, that third party can then utilize and all gotchas within the original contract to improve their profits, etc.
oh well so much for Q3 bank earnings..
Is it weird that the 10-year yield had a percentage gain higher than FAZ ?
I dont even like HOA's - no way I would go into a deal like that... Owning a chunk of a building without the land - there is no way to project what your future costs would be, and you will never wind up owning it free and clear... I still vote for the immediate sale...
Outsider
I am too. Just fill up half a time.
azurite,
It looked to me like the motivator for the switch to state charter is they pay less in "assessments", whatever that is. They avoid subsidizing the larger banks, it would seem.
Outsider -
Though I may be some peoples ignore list.
I did not see EHP's call on that, but last Thursday I sold what little stocks I had in my personal account, most of them energy stocks. Then I started howling at the moon and am very surprised no one banned me.
Man am I glad I loaded up on Gold and especially glad I loaded up on Silver.....reading a lot of articles about potential big profit in silver....I am a smiley one today.
So hows those stocks doing today?............( crickets chirping )
If your not on Missyanon's igonore list - you aren't anyone in this town
KK - don't worry, your howling at the moon just gets drowned out by everyone else here howling at the moon.
EHP has made a lot of bold calls lately. I'm rooting for him/her. We'll see.
asterisk -
"I can tell you that the MBS market is getting CRUSHED today"
That is a great link, thank you. Ton's of great information buried here, thanks to everyone here yet again.
energyecon,
Thanks buddy, I'm adding a bookmark this time
As thanks, I offer a polar plot of coupons vs blls
When all the shorts are watching something it is usually the bottom. I wonder if TLT is now a good buy.
From Bloomberg, 30Y Treasury is up to almost 4.6%, and yet the 30Y Mortgage rate is holding steady at 5% exactly.
The spread continues to shrink. Is the US Government going to be considered an equal credit risk to Average Joe? Remember that Average Joe is under fire from declining wages, rising unemployment, and declining house prices! Amazing!
Yeah, just about time to cover some TLT here. You don't have to be a hero to make some money.
Nova -
I don't try to be an A..H..., it just come naturally at times.
The last week my BS sensors have been going full blast, usually its just the consent buzz of cognitive dissonance, now its a fog horn.
I'm starting to think that Free Lunch we're all being promised isn't going to be so free.
I think that uncle Ben has stated he is committed to a 5% 30Y Mortgage right, personally when someone has a bazooka, I don't stand in front of them and dare them to shoot it again, until I am absolutely certain he is out of ammo.
I just saw 3.71 on the ten year flash by again..
My bank mortgage rates went from 5 to 5.125 today. Maybe some are sticking to 5, but I doubt for long.
Edit: It just went to 5.25! Did I read it wrong an hour ago, or did it just change?
i'd be interested if anyone observes savings / CD rates increasing
Kahuna,
I was sitting in a AA meeting years ago and heard someone say "I figure everyone gets a free pass on the first 50,000 times they are an asshole before God smacks them down."
A women, who probably had a recent experience with him said "You better duck eveytime you go outside cause your odometer turned over Friday night."
It's likely nothing to worry about, but in the back of my feeble mind, I find it very disCONcerting that the British pound is on negative credit watch yet is rallying mightily against the U.S. dollar.
Again, it's probably nothing.
The oil call is not bold. Pretend you've never seen any charts in your life. Notice how the rally in oil is linked to the rally in equities more than it is the USD. Notice how equities have run out of rocket fuel. Notice how oil in dryland storage has climbed along with the rally. Notice how storage is full. Storage creates bills that need to be paid somehow. Notice how we just passed Memorial day weekend and miles driven is set to disappoint judging by assorted hotel/campground data. Notice how airlines have not begun to make the cuts necessary to get their load factors back up into the 90s from the 70s and 60s.
I completely agree that the amount of USD needed to fulfill spending commitments will cause it to go bust one way or another. However that much has been certain for some time now, and it hasn't gone bust yet. The market is not efficient, it is capable of taking the Family Circus route from Point A to Point B. Because the market trades more than just the items in the exchange, it is more the forum for negotiation.
Most of my recent conviction was from where money would not go next. Then I saw the signs of a flight to safety beginning. Then I saw economic data offering the chance to disappoint, which would snowball the existing flight to safety. One way or another.
asterisk, yes, that is a decent blog, directed towards originators mostly, but it tells the story, a good read for anyone looking for insight into the MBS market.
the govt now controls 95% of the mortgage financing market in this country, and the Fed is monetizing all of that 95%. Fabozzi should be required reading in high school IMHO.
Nova, I got to remember that comeback, I'm sure I'll be able to use it.
I try to work hard at being a nice guy to make up for the times I fail, just in case karma is real.
EHP - You're talking as if the whole market thing is rational. But I still hope you're right.
"Market drops on GM bankruptcy concerns"...says the Yahoo headline...
HAHAHAHAHAHAHAHAHAHAHAHAHA!
Not one mention of the auction results.....not that most would even begin to understand them the way they get published.
Ciao
MS
"Edit: It just went to 5.25! Did I read it wrong an hour ago, or did it just change? "
you read it right.
the market seems to have settled, at a much lower level (off 1-12/32 or so).
I think that uncle Ben has stated he is committed to a 5% 30Y Mortgage right, personally when someone has a bazooka, I don't stand in front of them and dare them to shoot it again, until I am absolutely certain he is out of ammo.
What's astounding about all this is that the Fed is attempting to provide credit to the system. But providing credit just means lending real goods and services.
What kind of real goods and services does the Fed actually have to lend? None!
The whole thing is a fiction. At best they can try and trick people into lending more by playing with fiat money, or panic them into lending by making alternatives too risky. But none of this leads to an intelligent decision making process.
It's like holding a gun to someone's head during a final exam to "help" them do better.
MS
What does a 2.42% 5 year Treasury mean
5 year yield right now is 2.40 - instant losses for those auction buyers...
What kind of real goods and services does the Fed actually have to lend? None!
ac,
The fed is set up as a bank and has ~$45 billion of capital. The fed also contributes $20-30 billion yearly to the treasury (out of profits). Those profits are now projected to decline by ~ $90 billion over the next decade. Actually, decline is not the proper wording as said profits will be diverted to the banking system at large.
by the way EHP, the saudi oil minister begs to disagree with you.
Oil hovers around $63 Wednesday - May. 27, 2009
I'll shut up about oil now.
GREEN SHOOT ALERT, GREEN SHOOT ALERT!!!
"IRS tax revenue falls along with taxpayers' income
By John Waggoner, USA TODAY
Federal tax revenue plunged $138 billion, or 34%, in April vs. a year ago — the biggest April drop since 1981, a study released Tuesday by the American Institute for Economic Research says.
When the economy slumps, so does tax revenue, and this recession has been no different, says Kerry Lynch, senior fellow at the AIER and author of the study. "It illustrates how severe the recession has been."
For example, 6 million people lost jobs in the 12 months ended in April — and that means far fewer dollars from income taxes. Income tax revenue dropped 44% from a year ago.
"These are staggering numbers," Lynch says.
Big revenue losses mean that the U.S. budget deficit may be larger than predicted this year and in future years. "
Ouch! That's going to leave a green stain.
Isn't that like a realtor saying now is a great time to buy?
shill, about the silver:
Some of the PM proponents are fond of their early 80s charts and have the data without considering the history - evidently they've forgotten or never knew about the Hunt brothers. That's not to say there aren't other factors at work, or even that someone else won't make a Hunt-like attempt now, but at least a part of the claims regarding silver's volatility is overstated.
I've got some - I'm just not anticipating a repeat of that 80s spike.
Hey, even trader mark has said enough is enough on the TLT short.
Fund My Mutual Fund: Bookkeeping: Covering Majority of iShares Barclays 20+ Year Treasury Bond (TLT)
So there was announcement on the PPIP by Bair, the treasuries sales sucked, and the GM BK is baked in the cake...
So with all the good news, what tidbit of insider info was leaked around lunch time to make the bulls finally take notice?
/snark off
Oil, I just think psychologically, people are going to flip out when Mexico and the North Sea production fall off the edge of the earth in a couple of years.
All the prior examples of deflation - Great Depression, Lost Decade - occurred against a backdrop of cheap, abundant energy and other commodities. This time, I think energy prices play whack-a-mole with any nascent recovery.
jane - you forgot federal taxes receipts down 34% year-over-year for April
"IRS tax revenue falls along with taxpayers' income"
This is inflationary right? (sorry CC, I just had to >; )
Outsider
I'm not talking about a long term trend. Just a few months
EHP - Oh. Just a few months? Ugh. Well, it's better than nothing.
burnside
shill,
I've got some - I'm just not anticipating a repeat of that 80s spike.
What would be a good trading vessel for silver, I'm not really trusting of the ETF's, but they are quick to get out of. While shipping, storage, and mark ups of real possession is also a problem.
Maybe I am too locked into my overall deflationary mindset, where all assets are destined to go down, it's just a matter of when the reaper decides to do the cutting.
EHP-
Depends on whom you are talking about really.....not trying to be evasive however it's not really something I can answer without a very large reply...and even then I don't really claim to have a great understanding of it. Not many do....
Ciao
MS
Finally a headline that isn't pure filth and lies:
BULLETIN: Dow industrials slide 100 points as Treasurys sell off
burnside
I agree but I also think we have to at least move forward to $50 especially if gold moves up to $1200/$1500
We shall see, in the mean time I hold both...and on days like this I put on my black eye patch grab a handful and go " Arrrrrr "
@Kauai_Kahuna,
If you want silver without taking possession, take a look at the Kitco pool account or goldmoney.com.
by the way EHP, the saudi oil minister begs to disagree with you.
Oil hovers around $63 Wednesday - May. 27, 2009...
I'll shut up about oil now.
From Outsider's money link:
"Wednesday, the Saudi Oil Minister, Ali al-Naimi, said that the global economy was capable of managing with oil as high as $75 to $80 a barrel, according to reports from Reuters."
I'd agree with that... $80 isn't a back breaker anymore.
BTW, I don't know if it's ethical to mention Denninger over here, but he quoted 30 yr. rates at 6.5% today. I don't know where he saw that - my bank is offering them at 5.25. Sometimes I have to scratch my head on all this conflicting info.
You guys worry too much. Don't you know that The Worst Is Over for the Economy?
Paul and Asha's latest reports argue that the worst is over and that we'll see a weak recovery by the end of the year. The stimulus is kicking in and the housing, manufacturing, employment, and consumer-spending trends are beginning to improve (which in some cases means "decline less").
Outsider & EHP
I too felt that the storage and con tango for oil was just too much to support oil at it's current price. Maybe China will be able to turn some large valley into an oil lake and continue to build their surplus, but not right away.
Of course I may be wrong, I often am but I just could not see any support other than speculation, and from last year you can see how crazy and how long that can be.
Outsider-
That's just the starter rate. Once you factor in all the variables you are looking at something much closer to Karl's quote. That's the big lie IMO.
Ciao
MS
Comrade Coinz -
Thank you, I'll check it out.
shill wrote:
I agree but I also think we have to at least move forward to $50 especially if gold moves up to $1200/$1500
We shall see, in the mean time I hold both...and on days like this I put on my black eye patch grab a handful and go " Arrrrrr "
Funny
I don't have a black eye patch, but I do carry some physical around with me wherever I go. What's in your wallet?
Actually MS I have to say, and the 5.25 APR on my bank's site does read 5.3158, that in the I believe 4 loans I've had with the bank, I think they're pretty up and up.
There are also reports of REOs being held off the market, so inventory is probably under reported.
CR, can you provide a link to any credible report of any servicer who is doing this to any significant degree?
pigged! drat.
KK - the big reason why I doubt anyone can actually say what anything is going to do with certainty is the outside manipulation variable. I don't know whose hands are in what til, but if sanity reigned, everything would be easier to call.
Silver, I have numismatic and bullion coins. I was a hobbyist in the 70s and recall numismatic outperformed bullion.
Equities, silver stocks look pretty extended to me. The only real entry since last fall/winter was trendline bounces, except for microcaps like HL that double-bottomed in the spring.
Most levered (upside and downside) business model is SLW. They stream production from other mines, do not own or dig so much as a hole in the ground, which is good for profits when energy gets expensive in tandem with precious metals.
My own positions... I am down to tag ends of SLW that I got last fall. Been selling all along - too early, as always. Mainly gold now - a little DGP from when gold did a pretty little double-bottom in mid-April at 850. A tiny, speculative basket of microcaps (microcaps vastly outperformed in the final parabolic run in 1980) including NXG, GBG, AGT.
BTW, I don't know if it's ethical to mention Denninger over here, but he quoted 30 yr. rates at 6.5% today.
Maybe Denninger's FICO isn't what it used to be....
So Did anyone look at the numbers for the Western U.S.
Western U.S. YOY 2008 and 2009 existing home sales are about the same April 2008 and April 2009 .
Location Location Location
Thats all I have to say.
Stock market is surging this morning on good consumer confidence numbers. Ned is long MA POT
and GOOG stocks (which keep going up day after day after day)
Breaking News: interesting Finance & Economics Articles
submissions for economics, fi1:03 PM Small-cap value stocks - to date this year's worst segment - have led the charge in
each of the last five economic recoveries. ETF vehicles include DSV, VBR, PWY, IWN, RZV, JKL
and UVT.
Stock market is surging this morning on good consumer confidence numbers. Ned is long MA POT
and GOOG stocks (which keep going up day after day after day)
Breaking News: interesting Finance & Economics Articles
submissions for economics, fi1:03 PM Small-cap value stocks - to date this year's worst segment - have led the charge in
each of the last five economic recoveries. ETF vehicles include DSV, VBR, PWY, IWN, RZV, JKL
and UVT.