Too Early To Say If Sales Have Passed Bottom
Some housing bubble news from Wall Street and Washington. “The Pending Home Sales Index based on contracts signed in June…is 8.6 percent below June 2006 when it stood at 112.0. The PHSI in the West was 5.5 percent below a year ago. In the Northeast, the index is 2.4 percent lower than June 2006. The index in the South was 12.7 percent below a year ago. In the Midwest, the index was 8.2 percent lower than June 2006.”
“The PHSI was 5.0 percent higher from the downwardly revised May index of 97.5. ‘It is too early to say if home sales have already passed bottom,’ said Lawrence Yun, National Association of Realtors senior economist.”
From Bloomberg. “Bear Stearns Cos., the manager of two hedge funds that collapsed last month, blocked investors from pulling money out of a third fund as losses in the credit markets expand beyond securities related to subprime mortgages.”
“The latest developments signal that the slump in the subprime mortgage market may not be ‘contained,’ as officials including Treasury Secretary Henry Paulson have said.”
“‘You don’t necessarily have to be a subprime fund now to be having problems,’ said Bryan Whalen, a money manager in Los Angeles at Metropolitan West Asset Management, which oversees more than $21 billion in fixed-income assets.”
“‘It’s uncertain when we will see the full impact’ from the subprime fallout, Craig Overlander, co-head of global fixed-income at Bear Stearns, said in an interview today. ‘We can stress test, we can come up with possible scenarios but really we won’t know until we see what’s coming in the mortgage pipeline, the forms they are coming and the environment in which they will reset.’”
“Bear Stearns yesterday froze its $900 million Asset-Backed Securities Fund. Less than 0.5 percent was invested in debt linked to subprime mortgages.”
“‘Markets are still very, very shaky, and it doesn’t look like there will be any quick recovery from these levels,’ said Jochen Felsenheimer, head of credit strategy at Unicredit SpA in Munich. ‘The next negative headline appearing is just a matter of time.’”
The Associated Press. “Two Bear Stearns Cos. hedge funds heavily exposed to the flagging mortgage industry filed for bankruptcy protection late Tuesday, two weeks after the company told investors one was essentially worthless and the other had lost more than 90 percent of its value.”
“The funds were squeezed after Bear Stearns made wrong-way bets on the home mortgage market and was caught as loans to risky investors began to default. Bear Stearns is the nation’s fifth-largest investment bank and specializes in mortgage-backed securities.’
“American Home Mortgage Investment Corp. edged closer to bankruptcy Tuesday, as its solvency woes killed a rally on Wall Street and renewed fears of worsening credit quality in the troubled mortgage market.”
“The struggling mortgage lender said its financial backers have essentially pulled the plug. The Wall Street banks that lend American Home Mortgage money for home loans, which include firms like UBS AG, Bear Stearns Cos., and JPMorgan Chase & Co., will not extend the company any more money, and some have demanded back they money they have lent.”
“American Home Mortgage said it has over the last three weeks paid ‘very significant’ margin calls, which occur when a lender demands compensation after a borrower’s collateral loses value. The company still faces ’substantial’ unpaid margin calls.”
“The reason American Home Mortgage’s lenders are balking is the mortgage loans that act as collateral for the company’s credit lines have sunk in value. Almost none of American Home Mortgage’s $58.9 billion in loans last year were classified as subprime.”
“Separately, the ratings agency Moody’s Investors Service said it is increasing its assumptions for losses on pools of Alt-A loans. As delinquencies in Alt-A debt mount, Moody’s said it sees signs that Alt-A loans were underwritten using similar standards to subprime loans.”
“Moody’s Investors Service described some so-called Alt A mortgages as no better than subprime home loans, and said it will change how it rates related securities after failing to predict how far delinquencies would rise.”
“The ratings company said today its expectations for losses on Alt A mortgages will increase by 10 percent to 100 percent, depending in part on how many mortgages in a loan pool were extended to borrowers with low credit scores and little money for down payments.”
“It’s also raising loss expectations on loans in which borrowers don’t fully document incomes or have ‘limited homeownership experience.’”
“‘Actual performance of weaker Alt-A loans has in many cases been comparable to stronger subprime performance, signaling that underwriting standards were likely closer to subprime guidelines,’ Marjan Riggi, Moody’s senior credit officer, said in a statement. ‘Absent strong compensating factors, we will model these loans as subprime loans.’”
“About $400 billion in Alt A mortgages were packaged into bonds in 2006 with about $40 billion of those mortgages sharing subprime characteristics, Moody’s said.”
“‘What is triggering this is the weakness of the housing market and the weakness of the mortgage market,’ said Warren Kornfeld, a managing director in Moody’s structured finance group.”
“The worst Alt A loans account for 25 percent to 50 percent of the increased loss projections, Kornfeld said, even though they make up only 10 percent of the principal.”
“More than $800 billion of subprime mortgage bonds and $700 billion of Alt A bonds are outstanding, according to a March report by Zurich-based Credit Suisse Group. Of the Alt A bonds, more than $200 billion are backed by option ARM bonds.”
The Journal News. “The parent company of Columbia Home Loans LLC in Valhalla, which lost $12.6 million in the first half of 2007 amid problems with its subprime mortgage portfolio, said it plans to close the operation by Sept. 30.”"Michael J. Fitzpatrick, chief financial officer of the parent, OceanFirst Financial Corp…said earlier this year it would close its subsidiary. Columbia’s president, Robert M. Pardes, resigned and a number of staffers who concealed losses in the group’s subprime mortgages were dismissed, OceanFirst said.”
“About 41 percent of the $728.3 million in mortgages that Columbia originated last year for OceanFirst were considered subprime. Because of early defaults by consumers, Columbia was forced to buy back a significant portion of its subprime portfolio from investors to whom it had sold the loans.”
From Reuters. “Homebuilder shares fell sharply Wednesday as credit concerns mounted due to the widening effect of the crumbling U.S. housing market.”
“According to several sources, there were rumors in the market earlier in the day that Beazer Homes USA Inc. was facing a possible bankruptcy or that an SEC investigation into Beazer was becoming more serious than expected. Beazer issued a statement denying the rumors.”
From the Age. “An announcement from Macquarie Fortress Investments, which said the ’spill-over’ from the low-quality subprime mortgage market had affected the senior loan market, seemed to set off a domino effect.”
“The first two funds had invested heavily in packaged-up mortgages that were offered to people with low credit ratings, but the third fund has less than 1 per cent of its investment allocated to the sector.”
“Bell Potter Securities’ director of research, Peter Quinton, confirmed the ‘turmoil’ had spread to the broader mortgage market in the US, and to non-investment-grade corporate bonds. But he said only 6 per cent of the S&P 500’s market capitalisation was exposed to that sector and had the potential to ‘blow up.’”
“‘There is little or no evidence of any impact on investment-grade corporate bonds,’ Mr Quinton said. ‘But we’re still stuck with the problem that there will be companies that are exposed to that end of the market and until they tell us (about it), we don’t know.’”
“Treasurer Peter Costello, speaking from the Asia-Pacific Economic Co-operation forum meeting in Queensland, acknowledged the ‘very high level of defaults’ in the US subprime market. ‘Players in that market will therefore have to suffer the consequences of those defaults,’ he said.”
From MarketWatch. “Financial markets understand that the Federal Reserve won’t respond quickly to a typical market upset such as last week’s sharp stock sell-off, St. Louis Fed President William Poole said Tuesday.”
“The Fed should only act “in due time” if evidence accumulates that the market drops could undo price stability or low unemployment, or when financial market developments threaten market processes themselves, Poole said.”
“In his speech, Poole said the best policy for the Fed is to be cautious and try to understand the reasons for the market turmoil. If the Fed is ‘overactive’ in responding to market developments, this would set precedents to destabilize markets in the future, he said.”
“‘If the market believes that the Fed is always primed to adjust policy, then market participants will spend more time trying to second-guess the Fed than trying to understand what is happening to business and household behavior,’ Poole said in a speech.”
“Poole said he was speaking only for himself, but his views add to the growing sense that the Fed under new chairman, Ben Bernanke, is trying to move away from the so-called ‘Greenspan Put.’”
“Poole said last week’s volatile trading ‘was a perfect illustration’ for the market. ‘The Fed doesn’t know, and market participants do not know either, the full implications of last week’s stock market declines and increases in risk spreads,’ Poole said.”
I said it before, but how do sales pass a bottom?
My previous boss recorded negative sales for a year. I bet that that got a nice chuckle or two from the IRS.
BTW, a MASS DOR auditor dropped by personally to have a chat with him, and left him his card.
I think he meant “pass wind.”
I suppose they mean the lowest point. I would say yes if the following conditions exist :
1. Credit is easing up
2. Housing is affordable to buyers based on income
3. Foreclosures are easing up
4. Sufficient buyers have saved a good down payment.
Last I heard, credit is getting tighter by the day, savings are at a record low, prices are still astronomical and salaries are static. Based on this I would definitely say it is too early to call a bottom to the market. Perhaps in 2010- 2012?
I always liked the phrase “overshooting the bottom”. I’m not sure in this context, people understand what “bottom” means. Almost like all the knuckleheads out there refusing to sell for “less than market value”.
Forgive the OT addition, but it reminds me of Spinal Tap–one of the classic conversations:
Nigel Tufnel: The numbers all go to eleven. Look, right across the board, eleven, eleven, eleven and…
Marty DiBergi: Oh, I see. And most amps go up to ten?
Nigel Tufnel: Exactly.
Marty DiBergi: Does that mean it’s louder? Is it any louder?
Nigel Tufnel: Well, it’s one louder, isn’t it? It’s not ten. You see, most blokes, you know, will be playing at ten. You’re on ten here, all the way up, all the way up, all the way up, you’re on ten on your guitar. Where can you go from there? Where?
Marty DiBergi: I don’t know.
Nigel Tufnel: Nowhere. Exactly. What we do is, if we need that extra push over the cliff, you know what we do?
Marty DiBergi: Put it up to eleven.
Nigel Tufnel: Eleven. Exactly. One louder.
Marty DiBergi: Why don’t you just make ten louder and make ten be the top number and make that a little louder?
Nigel Tufnel: [pause] These go to eleven.
So for months, over and over we heard how this was “contained” dont worry it’s “contained”….now they say it is “not contained” why are people in positions of influence not held responsible?
And why is YTun not calling a bottom when that is what he has been doing all along????
‘It is too early to say if home sales have already passed bottom,’ said Lawrence Yun, National Association of Realtors senior economist
Yun is always careful to call a bottom in the near future. Then he just adjusts the near future forward every month. He knows very well that with this credit contraction things are going to get MUCH worse in the coming months so he would look like a complete idiot to call May 2007 the bottom only to have August sales decline by 10%.
Yun = serial bottom caller
Yun = serial bottom caller
I think I’d rather be a bottom-pincher
For Yun to say it is too early to say if home sales have already bottomed, translates into “Sales are still dropping and this has a long way to go until we hit bottom”.
Essentially when you have the NAR’s biggest cheerleader stating something other than postive, we are in big trouble.
I bet Bush would understand what Yun meant.
“Poole said last week’s volatile trading ‘was a perfect illustration’ for the market. ‘The Fed doesn’t know, and market participants do not know either, the full implications of last week’s stock market declines and increases in risk spreads,’ Poole said.”
Set up for beginning of rate cuts?
Opposite. Promise to stand firm. Everyone is blaming yesterday’s late session sell off to AHM reopening. No way! AHM was a Monday story. Monday was full of bad news and the marekt went up.
The fed saying they aren’t going to cut rates to save stocks is what I think triggered the late in the day sell off.
Remember the last 15 years (excluding 1997-2001 tech bubble) how bad news made stocks go up and good news made it go down? The fed became the tail wagging the dog. Bad news means the fed will cut, so stocks go up.
The fed is telling the stock market to stop it. We’re not going to adjust rates to the whim of the stock market.
For the last 6 months the fed has been saying this, but the message may FINALLY be getting through to the traders. Greenspan is gone. Bad news is bad, not good!
What? No more Greenspan Puts?
The new Greenspan Putt is a do or die shot from the edge of the green, 86 feet from the cup…
I’m not sure Greenspan could sink that one
The new guy is far more accurate. Is there anything Bush hasn’t completely messed up?
i’m a little tired of listening to people whine about being denied the superior leadership abilities of algore and/or the lurch.. and how wonderful life would be if only.. if only..
Don’t blame me, I voted 3rd party.
Joey your problem is you need to eat some tofu and hug a tree, then and only then will you have a true understanding…on second thought maybe take a bong hit as well
yer right FW.. i’m way too uptight and need to mellow out..
There’s gotta be a protest march for something somewhere this weekend. I’m gonna go.
Don’t blame me, I voted for Kodos
…algore and/or the lurch..
I dunno. I think I would have preferred Miserable President instead of Worst President Ever.
…lurch
That is pretty funny…
I take William Poole’s clarifying remarks as the signal of a major policy shift at the Fed.
Yep… They keep pretending they are standing pat due to continued inflation concerns. The more “flat inflation” numbers get reported, the more preasure to drop rates to create another stock bubble.
Bernanke has said NO. Not raising rates to inflate the next bubble. Go get real jobs you bubble boys!
I’m not sure if Bernanke is on board. Poole did say his comments were only speaking for himself, not the whole OMC. But Bernanke hasn’t contradicted Poole so you may be right. I certainly hope so.
That’s what I got from that also Stucco, thanks for your thoughts.
“‘If the market believes that the Fed is always primed to adjust policy, then market participants will spend more time trying to second-guess the Fed than trying to understand what is happening to business and household behavior,’ Poole said in a speech.”
Um, isn’t this a perfect description of what people have been doing to Greenspan’s and, now, Bernanke’s statements ever since anyone can remember?
“blocked investors from pulling money out of a third fund as losses in the credit markets expand beyond securities related to subprime mortgages.”
“Bear Stearns yesterday froze its $900 million Asset-Backed Securities Fund. Less than 0.5 percent was invested in debt linked to subprime mortgages.”
LOl. Gotta lov it. BS version (ivy league) of risk management plan in place.
Oh yeah, well let me know when I can pull money out, ok? Next week? ok, then let me pull out 1 Billion then please.
Nice way to bite the hand that feeds you.
blocked” not ethical - is it legal ?
wow , read those docs carefully
Unfortunately, it’s perfectly legal. Most hedge funds have these restrictions written into the offering docs. It usually gives them a 90 day window where they can stop redemptions entirely and they can draw them out after that. United Capital (Aspen mansion and yacht selling guy) invoked similar provisions last month.
Tom
As you might imagine, this is not a popular move with investors. It’s usually a last-ditch effort to keep the fund from imploding. You don’t do it unless you’re really desperate since nobody is going to trust you again if you lock them into something they don’t want to be part of.
“nobody is going to trust you again”
That housing thing back in ‘05 was a fluke. It’ll be different this time .. trust me.
LOL
Having been raised a Catholic, married a Baptist and then realized I was Jewish.
How do you say F**k you in Yiddish? Trust me!
LOL I said about a month or 2 back this UCAM guy was the poster child for the CDO slam coming. He’s not long for this game I bet. He’s all sub prime, credit card, high ltv etc.
Is it just me or does the Dow look like a bi-polar erection this morning? it’s up, it’s down, no it’s up…
Yep, it is quite a day of ups and downs.People aren’t sure what to do. Sales at gm were down 18% last month and blame housing.
Beazer home is in big trouble.Did you start the rumor about bankruptcy this morning? As far as the depressed soldier goes, what goes up eventually has to come down.
Futures pointed down and it opened up. The CNBC commentators said, wow, I’ve never seen that before. Just makes you wonder about “phantom” forces at work. Plunge Protection Team
Yeah they also just said they’re coming back from the commercial break with the truth about prime loans, from one of the biggest providers of prime loans. Ha!
What did they say?
The Fed now has plausible deniability in play:
“Financial markets understand that the Federal Reserve won’t respond quickly to a typical market upset such as last week’s sharp stock sell-off, St. Louis Fed President William Poole said Tuesday.”
Charlie Brown understand that Lucy won’t pull that football away when he try to kick it.
Futures pointed down and it opened up. The CNBC commentators said, wow, I’ve never seen that before. Just makes you wonder about “phantom” forces at work. Plunge Protection Team
It is the “phantom forces at work to fool the general public that everything is fine. Sheeple will always be fooled into thinking everything is fine and that is the game played by Wall Street and associations such as the NAR.
“Is it just me or does the Dow look like a bi-polar erection this morning? it’s up, it’s down, no it’s up… ”
That would lead me to believe that the stock of whomever makes Viagra and Cialis should be up?
Maalox
Next thing you know it’s going to put a gun to its head and threaten to jump off a 35 story building…
As he hurtled past the 20th floor, Mr. Yun called out that it was probably too early to know whether he’d passed the bottom.
““About $400 billion in Alt A mortgages were packaged into bonds in 2006 with about $40 billion of those mortgages sharing subprime characteristics, Moody’s said.””
Someone help me out here…I thought that 100% of “Alt-A” loans were loans that would have been prime, except for the fact that they *all* shared sub-prime characteristics (100% financing, stated income, etc.)
Otherwise, they’d be classified as “prime”. Is there something I’m missing? Moody’s is saying that only 10% have “subprime characteristics”. Isn’t it closer to 100%?
Subprime = Alt-A now…..thanks Moody’s. Lock the barn after the horse is out.
This ride is getting more and more interesting.
I get that 10% of the alt-A’s were functionally sub-prime, due to poor or fraudulent underwritng.
“More than $800 billion of subprime mortgage bonds and $700 billion of Alt A bonds are outstanding, according to a March report by Zurich-based Credit Suisse Group. Of the Alt A bonds, more than $200 billion are backed by option ARM bonds.”
It’s contained; keep moving folks, nothing to see here.
Subprime ratings are based on the FICO score of the borrower - and ONLY the FICO score.
What’s happening is that other things, like LTV, are proving to be more important than FICO score. Go read the Ubernerd postings on Calculated Risk for the full skinny - it’s good stuff.
Oh, and anyone able to fog a mirror could have seen this coming. Still remember all the people in ‘05 saying how smart those hedgies were. Idiots.
Okay, what is happening to HOV, BZH and WCI? (I mean besides the fact that they are companies that should be thrown to the sharks).
They (and many other HB’s) are down HUGE today!
Beazer Shares Plunge; Company Denies Bankruptcy Rumor
http://bloomberg.com/apps/news?pid=20601087&sid=as0tW6Fr8gTM&refer=home
Que Kevin Bacon: “All is well stay calm”
Rumor Beazer is filing for bankruptcy, which Beazer denies.
C’mon baby, don’t fear the Beazer………:)
One of the stories on the Sac Landing site was “Foreclosed housing loan sucks profits from Capital Corp of the West”.
‘It’s due to a previously disclosed $12.9 million residential construction project located in Rocklin that the bank foreclosed on July 25. The developer was not identified by the bank.’
Even though that’s pretty small, I’m trying to figure out who it was.
HOV, BZH & WCI?
3 not so little pigs, that built their houses out of thin air, straw and sticks…
What’s eatin’ the homeboyz today? Did sharks invade the mainland or something?
http://finance.yahoo.com/q/bc?s=BX&t=3m
First trade of Blackstone was $36.45, right? Now at 23.85. Off 35% and continues to fall like a rock.
I feel so bad for those people that bought opening day….. NOT
TxChick got rich off shorting Blackstone
Bad Chick. Bad, bad bad. (I’m just kidding, of course.)
Geez, how is that “company” still worth almost $6 Billion??? They produce nothing, they add nothing to the economy, they are a bunch of freakin’ parasites.
The power of anonymous rumors:
“According to several sources, there were rumors in the market earlier in the day that Beazer Homes USA Inc. was facing a possible bankruptcy or that an SEC investigation into Beazer was becoming more serious than expected. Beazer issued a statement denying the rumors.”
Reuters quotes unnamed sources and then gives you a choice of rumors to chew on. Great reporting job, bloke.
Just explainng the 40% drop in stock price, which has mostly recovered.
The rumors would have no relevance whatsoever if management had any credibility. They got themselves into this position with shady practices that triggered the SEC and class-action stuff. They blew their business credibility with bullish nonsense instead of straight talk. Now, rumors are credible - largely because management is not. The same can be said to some extent of the whole financial system.
look for another big finish down today.. dow -140
This may yet turn out to be the mother of all black swan dives, especially since the Fed has clarified their intent to let market forces decide the level of the U.S. stock market from now on.
Am I looking at the same DOW (as in the industrial average) that you guys are? I’m not defending stocks, but I sure don’t see what you guys are seeing…
Finally the DJIA rockets up towards day’s end on the terrible news from the automakers. But this is not because of Fed intervention — Poole said as much.
http://www.marketwatch.com/tools/marketsummary/
PPT is workin’ their ole’ black magic again I see….bad news all around…lets go on a buying spree…..why not darling….kiisy…kissy…smooch…..let buy GM, Ford, etc. and suck in a few more hamsters.
Pump and dump comin’
“Finally the DJIA rockets up”
Rockets up? Again, I don’t see what you guys are seeing…looks like volatility noise to me. But what do I know…
Arroyo –
I am seeing a mysterious 150 pt rally on the DJIA in the last hour of trading after a rather flat day, which was curiously timed with the release of really terrible news from the auto and airline sectors.
Maybe you could explain what you are seeing so we could reconcile the conflicting information?
Just took a look again, I had a (fifteen minute) old chart up…interesting.
And about volatility: Don’t you find it a wee bit curious how often up-side volatility coincides with what looks to be utterly devastating news for the U.S. stock market? This does not prove that market manipulation is in play, but there sure is a smoking gun, IMO…
August 1, 2007 5:28 P.M.ET
BULLETIN
Surge in final trading stretch
Late bout of bargain-hunting leads to dramatic 150-point spike
Analysts say buyers jump all over “deeply oversold” stocks.
• Corporate- bond market stabilizes after recent rout
• International stocks hit by credit-market jitters
http://www.marketwatch.com/
I do not know what you’re smoking, but this is a down day.
Advancing Issues 1,394 (42%) 488 (36%) 1,262 (40%) 507 (26%)
Declining Issues 1,889 (56%) 787 (58%) 1,809 (57%) 1,003 (51%)
Unchanged Issues 74 (2%) 89 (7%) 112 (4%) 464 (24%
New Lows 499 130 375 267
Up Volume 2,670,807,656 (278%) 1,020,081,178 (70%) 1,579,668,350 (53%) 157,197,581 (10%)
Down Volume 2,549,415,021 (265%) 420,823,400 (29%) 1,267,150,634 (42%) 1,023,438,122 (65%)
Ignore indices and look at the market. Deterioration occurs in the smaller companies first and as they continue to decline , the big stocks get hit.
This is whack - a - mole at its best. Any time one of these ugly stocks rears its head, whack.
Hoz
Those numbers are for the NYSE, correct?
If so those look a lot like last Monday and Wednesday as well as the day the Dow closed at 14k. Indexes up, combined with extreme technical weakness - decliners outnumber advancers. Secondary indexes weaker than the Dow, etc.
Numbers are for all US exchanges. Just todays advance/declines
and volume
Actually, it must have been the combination of good news from the automotive and airline sectors that sparked today’s last minute rocket rally on the DJIA. This market is so cleverly contrarian and utterly bullet-proof that bad news is good news, up is down, foul is fair and fair is foul.
————————————————————————–
AIRLINE STOCKS
Airlines’ losing streak headed toward six
British Air to pay price-fixing charges; Continental July traffic awaited
By Laura Mandaro, MarketWatch
Last Update: 3:55 PM ET Aug 1, 2007
SAN FRANCISCO (MarketWatch) — Airline shares held out for their sixth straight loss on Wednesday, as rising oil prices continued to overshadow the sector’s improving profitability.
http://www.marketwatch.com/news/story/airline-stocks-airlines-head-sixth/story.aspx?guid=%7B22D5FBA3%2D43CB%2D4D1E%2D9BD8%2D076553BFA45B%7D&dist=hplatest
———————————————————————–
Auto sector rattled by brutal July U.S. sales decline
Toyota, Honda sales drift lower while Nissan bucks the downtrend
By Shawn Langlois, MarketWatch
Last Update: 3:54 PM ET Aug 1, 2007
SAN FRANCISCO (MarketWatch) - General Motors Corp. completed an ugly trifecta of steep July U.S. sales declines for domestic automakers on Wednesday, as the housing slump and stubbornly high gasoline prices kept potential car buyers away from the showrooms.
DaimlerChrysler was the first to report with a 9.1% dip, followed by a 19.1% drop from Ford and finally GM’s 22.3% plunge in light vehicle sales. There were 24 selling days this month compared with 25 a year ago. The numbers used in this report are unadjusted.
“This really was a tough month, much worse than we had expected,” said Edmunds.com industry analyst Alex Rosten. “The automakers are really trying to resist the big summer blowout promotions, but they’re going to have to bump up the spending to move metal.”
http://www.marketwatch.com/news/story/auto-sector-rattled-brutal-july/story.aspx?guid=%7BE488A84A%2D17F6%2D4C3C%2D9A51%2D4F924AE4F7D4%7D&dist=hplatest
Ben-
You’re the best…my FED puts are way up today…will send donation soon, once I’m out of the market.
By the way everyone, FED is a subslime neg am mortgage broker masquerading as a bank, with no growing business, it’s PE of 6 is BS considering they’ve been counting the neg am accruals as income, there’s still downside on this one.
Good for you. I had FED puts last year - too early - oh well. Keep in mind almost half the float is short - when the covering starts I bet it snaps hard - dead cat bounce.
Is it really the worst single day ‘ever’ for builders?! Packman said so, last thread. Oh, please, yes. Those evil greedy fetid bastards. Look what they’ve done to us. I get to see what they do every single day, and it would turn your stomach. Turn it like a Rotorooter waved by a drunk plumber.
I have even resorted to earnestly praying to Jebus for this carnage. Like this: ‘ Dear Baby Jebus, please speedily teleport all builders to Hell, or else just vaporize them, but not quickly, do it in a painful fashion, like from the bottom up and in front of their Dodge Ram truck, leaving only the keys smoking in the mud. You know they deserve it. If You must work instead with wild market upheaval and massive credit contraction that too will be acceptable. Oh, and help me find a really good clearance shoe sale this weekend with some gaudy high heels with rhinestones, if You can work it out, thank you Baby Jebus, Amen.’
That’s exactly how I prayed just a short while ago, and He heard! Alright! Baby Jebus DOES listen!
I bet I get the shoes, too.
It was. They recovered after Beaxer said it wasn’t on the brink.
It was. They recovered after Beaxer said it wasn’t on the brink.
Darn, you didn’t pray for anything for me?
I saw this on the Broker Outpost. It started on Calc Risk and spread over.
http://forum.brokeroutpost.com/loans/forum/2/147997.htm
“Oh, it gets worse than that. According to my derivatives-analyst source, Merrill-Lynch is rumored to have cut off *all* warehouse loans to *all* mortgage originators.”
Might(probably is)be BS–but? Anyone here have their Merrill lines “yanked” today?
If true, ouch
I know it’s just a rumor, but if true…really would make things “interesting”.
Then there is this rumor from Broker Outpost’s forum:
http://forum.brokeroutpost.com/loans/forum/2/148088.htm
jpapa: “A L/O I work with claims he just got off the phone with an indymac rep.
According to the rep wallstreet will no longer be trading option arm securities on wallstreet. Thus no more YSP on pay option arms.
Has anyone else heard of this today?”
lucky1s: “First Horizon cancelled their OPtion Arms roday.”
Rumors, delicious rumors…
“Turn it like a Rotorooter waved by a drunk plumber.”
Best line I’ve read anywhere all day. Thank you!
I feel my stomach churning… Might need some pepto.
He he, good one! (Btw, I’m pretty sure you’re going to hell. See ya there)
Nonsense. Baby Jebus likes pretty shoes as much as I do, even if He does always wear those dorky sandals.
LMAO!!!
Hey, how did theat post twice, and WHO put the x where the z should be on my keyboard? Oh, look, they’re back. Now people are just messin’ with me.
Oh look, they made a grammer error….
“Too Early To Say If Sales Have Passed Bottom”
Too Early To Say THAT Sales Have Passed Bottom
We can easily say if they have. Look:
Have sales passed bottom yet? NO!!!!
Easy to say IF they have passed bottom. We just can’t honestly say that sales HAVE passed bottom.
Hi All- First time poster, long time reader hoping to add some info on NM, where our prices are still going up, because everyone wants to live here!
yeah Stan that’s just what I see in Carlsbad, everyone wants to live here so prices go up, up, up. Go figure!
They’re called equity locusts.
“passed bottom” sounds so, so….fetid.
Mangled English, for sure. One can hit bottom, or bounce back from a bottom, but passing a bottom, I don’t know how that works, unless you’re passing it down the table to the guy a couple seats away.
Maybe it’s Yun’s second language?
Yun is mixing metaphors; he likely thought “has the storm passed?” and “have we hit bottom?”.
Hence “we haven’t passed the bottom”.
And he’s probably trying to avoid saying either because; the storm HASN’T passed and, no, we haven’t hit bottom and Yun knows (but can’t possibly SAY) it.
“Maybe it’s Yun’s second language?”
Yes, just like when he exceeded the maximum. It’s absolutely relative.
NO CONTAGION
Auto sales tumble in July on housing weakness
Flapping heads on CNBC…. Okay it isn’t contained to sub-prime, but it is a Wall Street event. It hasn’t spilled over to the consumers or the broader economy…
Helllo!!!!!! Did you not hear the auto makers and auto dealers? How about the cable companies? How about retailers?
It hasn’t spilled in full force “YET” but there are clear signs if is spilling.
It hasn’t spilled in full force yet into the brains of moronic MSM financial journalists.
“Bear Stearns Cos., the manager of two hedge funds that collapsed last month, blocked investors from pulling money out of a third fund as losses in the credit markets expand beyond securities related to subprime mortgages.”
“The latest developments signal that the slump in the subprime mortgage market may not be ‘contained,’ as officials including Treasury Secretary Henry Paulson have said.”
Subprime is contained — to bagholders trapped in collapsed hedge funds.
“Bear Stearns yesterday froze its $900 million Asset-Backed Securities Fund. Less than 0.5 percent was invested in debt linked to subprime mortgages.”
There ya go — subprime is contained to less than 0.5 percent of this frozen shrub row.
Sowood did a nice job of blowing itself up with zero subprime exposure.
Note from calculated risk, the 2 hedge funds from Bear that blew up last week have filed Chapter 15 bankruptcy which covers cross border bankruptcy, because they are registered in the Cayman Islands…
Did ZipRealty stop keeping count of the number of homes for sale? I went to their website and it’s gone.
just looked up some Uhaul rates. Haven’t done this in a while.
From Tampa, FL to Columbia, SC
26′ Truck is $1,139.00
From Columbia, SC to Tampa, FL
26′ Truck is $225.00
I thought 1000 people a day were moving to FL? So that would mean the Uhaul to SC should be cheaper. Instead this shows the migration of people out of Florida.
I thought 1000 people a day were moving to FL? So that would mean the Uhaul to SC should be cheaper. Instead this shows the migration of people out of Florida.
I have lived in Tampa 22 years and it has always been more expensive to move into Florida than to move out. The new stats from the moving companies are clearly showing more moves out than into Florida.
NYSE is up a 100 before the close….diaster all about but they party on.
Any comments on the stock markets huge rally in the last 15 or 20 minutes?
PPT or its equivalent at it again.
CNBC explaination… 20 minutes to close they post market imbalance orders…(mark on close) and they’ve been big. Today, there were no market imbalances. Traders were surprised, so issued BUYs.
Guess that makes sense.
What are “market imbalance orders”? TIA
Since most of the volume in the stock markets takes place around the open and the close, buyers and sellers of big blocks of stock tend to enter orders at those times. So the orders can accumulate during the mid-day for execution around the close. Sometimes, those block trades can become quite imbalanced, which leads to big moves at the end of the day.
We used to mark some trade tickets MOC for “market on close.” We used to joke that it meant “murder on close” if you’re on the wrong side of the trade, especially on days like today.
LOL
I gather that today is not a “Mark it for my bonus day”.
Might be that the market makers themselves were short, anticipating negative imbalance. When it went the other way, they had to cover and went long.
originally on the bitbuckets thread
Looks like the money to support the indexes today came from debt. After all where else would it come from? It’s not like mutual funds have any cash and institutions are pretty much fully invested as well.
It looks like there was a big pickup in Yen carry trades today. Overnight it was trading in Asia as strong as Y117.5 to the dollar. By the open in NY, it had weakened to Y118.5 and by the close was approaching Y119.
The carry trade involves borrowing in Japan (in Yen) then converting to other currencies to invest overseas. In the process, US dollars (in this case) would get bought and Yen sold - pushing the Yen’s value down against the dollar. The size of the Yen’s decline today strongly suggests that there was a lot of it being borrowed and converted.
http://finance.yahoo.com/q/bc?s=USDJPY=X&t=1d
This especially makes sense in light of the fact that many big US banks are overcommitted to LBOs. They wouldn’t want more exposure to the equity market just now. Whereas the Japanese banks have no such concerns.
Deron, there are enormous positions on the Yen as well as on the 118s (puts and calls). Several countries have hedged their international transactions on this contract, these countries will keep it higher than 118.
For the most part the “carry trade” does not go into dollars, the conversion is to Euros. 5 day chart of EuroYen vs DJIA
http://tinyurl.com/2c7khc
The question isn’t the correlation, it is which is leading whom?
If the DJIA/SP500 are leading it is a lot cheaper to move the stock market than the currency market.
(For non traders, there is more dollar value traded in one minute in the currency markets than the dollar value of all the US stocks trades in one day.)
Hoz
I use the NZ dollar as my Yen carry trade indicator. Small float and very heavily targeted by carry traders due to high NZ govt yields. Should have the highest sensitivity to the carry trades. Kiwi/Yen cross rates have fallen dramatically the last few weeks and recovered strongly today.
You are correct that US dollar is not as heavy a target for Yen carry but the credit to pop stocks today had to come from somewhere and it’s a reasonable answer where I can’t find an alternative explanation.
Having played the “carry trade”, I go for size and stability. NZ does not have enough size to make me feel comfortable with my small positions.
A projected “carry trade” to be balanced - (do not use 1:1)
Should include the following positions.
long/short
AUD/USD
GBP/USD
USD/CHF
USD/HKD
USD/JPY
The annual return on this position will be 10.75%. Not worth the risk. When the Euro goes back down to 1.32 then the basket will include the Euro and the risk ratio rises to 1.25 (worth doing).
GBP is important, this allows you to buy Gilts and trade US stocks on CSE margins.
Hoz
I agree that series is much smarter and more stable than the NZD/JPY carry. But that one still seems to be quite popular nevertheless. I don’t trade currencies myself but know of several smaller institutions naked long that pair with the proceeds in NZ govts. That’s what caused me to look into it. Definitely not a prudent pair but seems to be pretty heavily used even so.
Then again, I’m looking for a shorthand indicator, not trying to construct a smart carry trade portfolio. The lack of size and stability actually make it more sensitive as an indicator. The things that cause you to avoid it make it attractive for me.
FWIW, I’ve closed all my spec shorts and gone long.
“Poole said he was speaking only for himself, but his views add to the growing sense that the Fed under new chairman, Ben Bernanke, is trying to move away from the so-called ‘Greenspan Put.’”
Sounds about as easy as getting an alcoholic to move away from his bottle.
Add this to the Contained-o-meter:
Aug. 1 (Bloomberg) — American International Group Inc., the world’s biggest insurer, may be sitting on losses of as much as $2.3 billion from its holdings of securities linked to subprime mortgages, analysts said….
AIG, which hasn’t formally disclosed its holdings, owned about $33 billion of securities linked to U.S. subprime mortgages at the end of March, spokesman Chris Winans wrote in a July 23 e-mailed statement to Bloomberg News….
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGuw9h.w2Ksc&refer=home
the 2.3 billion loss is attributed to a “worst case scenario”, which means that it’s really a ‘middle-of-the-road’ scenario and the actual loss will be far, far more.