Unemployment biggest rise in over 20 years from 5 to 5.5% - in ONE month. This will ramp.
Oil has biggest one-day gain ever by jumping $5.50.
Oil has biggest one-day gain ever by jumping over $10 (the next flippin’ day!!!). Morgan Stanley analyst says $150 by 4th of July. These predictions are usually 12-18 months out – not 3 weeks.
*******
A picture that tells the story pretty well
http://tinyurl.com/5flymk
*******
Peoples equity in their homes dropped to 46.2% - the lowest level ever. That had never even went under 50% until a couple months ago, it’s dropping quick. Foreclosures come in at their highest rate ever as well.
Every article is quick to point out that oversupply is the problem (and that stopping foreclosures is then the answer) – how about QUIT BUILDING houses without buyers. That’s what builders do. You should be writing your reps (congress.org) reminding them that a tax break for builders adds to this problem.
*******
The monolines get downgraded. This is most certainly not priced in - this will cause serious problems! Meredith Whitney (the one analyst you can trust) expects another $40B in just bank write-downs due to this.
*******
Interest rates are spiking before Ben’s eyes. Here is the mortgage rates for the past 6 months. How those rate cuts working now. Imagine what happens now that he is going to have to raise rates??? EXACTLY what happens when you have to bail out Wall Street for being stupid. The fun is just beginning for Joe 6-pack. Ten year rates up to 4.2% - not gonna be pretty...
http://tinyurl.com/65hy6h
********
Go look at my statements about who the next Investment Bank to go would be the day after Bear Stearns went down. These aren’t penny-stocks that are going away either…
Just look at the trend in their ratio of Non-Performing Assets (NPA) to Equity over the last couple years…
http://tinyurl.com/65hy6h
Erick provides the definition of NPA’s:
"A loan or lease that is not meeting its stated principal and interest payments. Banks usually classify as nonperforming assets any commercial loans which are more than 90 days overdue and any consumer loans which are more than 180 days overdue. More generally, an asset which is not producing income."
And they are buying back shares with all that "spare" money to try to stop the bleeding and make themselves look worthy of investment (foreign or otherwise). Problem is, you can’t buy back your own shares in the last 30 minutes of trading. Look at their chart at that time the last week...
Of course now they say they are raising another $6B in capital – best put:
"Lehman is raising capital it said it didn't need to replace losses it said it didn't have."
UPDATE: Stock now trading near $22 – why would the deal will go through at $28 now? Could see that Bear Stearns repeat quicker than you think unless something drastic happens very soon. Don’t you hate when “one-time isolated” events happen 3 months apart...
UPDATE part 2: Deal went through. Word on the street is they are being shopped somewhere in the teens....
***********
A Fed governor resigns (thankfully, he lived for bailouts and rate-cuts), another former one rips the system, the Mpls Fed president prepares the markets for rate increases. That one’s funny, as rates are increasing already. It’s becoming more and more clear that the Fed actually tries to give the illusion of control, but the market sets the rates, the Fed just follows. Never knew that before.
***********
Epic. That will describe the number of voters come November. Drove past the Excel before the Obama visit last night and the line was 3 deep for 20 blocks (1.6 miles). I talked to people near where I was going – they had about 15 blocks to go still – they had already been there for an hour and a half. My prediction is between now and November this race will turn into a landslide for Obama. (Then our taxes will go through the roof, ouch)
************
A clip I found interesting because of the numbers in the section I highlighted:
Banks know that they are too big for the government to allow them to fail. The moral hazard that is created will be reflected in their continuing to take on high degrees of debt and financial leverage and invest in risky assets with no concern for the consequences. And much of the activity in the derivatives market is nothing more than mere speculation. When Bear Stearns was saved from bankruptcy it had $120 billion of debt outstanding, but for some crazy reason there were $2.8 trillion of credit derivative contracts written guaranteeing that small amount of Bear Stearns debt. If Bear had gone bankrupt and these counterparties had to actually pay, it would have caused massive bankruptcies of hedge funds and other financial institutions, not to mention the fact that Bear itself was also a counterparty to tens of trillions of derivative contracts and their prime brokerage business financed trillions more of derivative positions at their hedge fund clients.
Credit Default Swaps are a mess. There are now $45 Trillion of them. A nine-fold increase in THREE years. Triple the size of the US GDP. Yep, that’ll end well...
************
California out of money by August? 8th largest world economy.
http://tinyurl.com/5tws6g
************
Turns out it’s not even easy being less rich. Yep, it’s just subprime – everyone else is fine. Read this to forever extract that thought from your mind.
http://tinyurl.com/6s4l45
Oh, and as a refresher of what the resident “genius” Bernanke said last year:
"We believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system."
************
Think this will have repercussions across the economy?
General Motors Corp. on Tuesday reported a 27.5% drop in May U.S. light vehicle sales to 268,892 cars and trucks from 371,056 a year ago. Cars fell 13.8% while trucks plunged 36.9%.
************
My favorite description of the balancing act between interest rates and the equity markets:
"Bernanke has a choice - he can allow the interest rate curve to ramp which will kill what's left of housing, or he can crash equities to drive the 10-year rate back down.
But he can't have it both ways, and that, for him, sucks.
He's trying to "manage" the process. That's kinda like trying to juggle plates - it looks really cool until a wasp flies up your pants and stings your wiener, at which point it all comes crashing down around you."
*****************
Well First Federal's (FED) run from the $30’s is about to make it into single digits – let me know if you are looking for advice on an exit point for those who played the ba-bye game a few months back.
*****************
Just paid $68 to fill up my tank. That was fun. Guess it could be worse if I didn’t get 24mpg though.
**************
Not sure how he gets this info before it hits the presses – but here is the May California foreclosure data and it’s UGLY.
http://tinyurl.com/4n3v9e
"California broke a major foreclosure record in May with $10.4 BILLION in loans going back to lender’s balance sheets. This was a near 9% increase month-over-month. Last month $9.237 Billion went back to the bank. See my April CA Foreclosure Report. It is obvious that the foreclosure crisis is continuing to worsen. If the banks are lucky and sell the homes for 60% of the new appraised value or BPO, this represents another $6 Billion+ in losses for the nations largest banks in one state for one month!"
*********************
Want to hedge against the price of your house???
http://tinyurl.com/6gyo7u
*********************
Again, what happened to all the rate cuts? This will soon blow in Ben’s face. Jumbo rates already blowing through their 5-year highs in this chart.
http://tinyurl.com/3dyztj
********************
When they say how great “pending home sales” are looking every month – this tells you why to not even bother listening.
http://tinyurl.com/6lfhur
2/3rds of the sales...ouch.
############################################
Non-required:
Year over year chart of Case Shiller house prices
http://tinyurl.com/69mrz2
New home months of supply. Don't be alarmed, the blue section on the right is only a "probable" recession - they are still trying to figure out if we are in one. This chart wouldn't help them at all...
http://tinyurl.com/67awlc
Happy 1st birthday to the WaMu pool of loans. 31% is 60-day delinquent or worse. 23% foreclosed or bank-owned. 93% of it was rated AAA.
http://tinyurl.com/5kecyw
Just because it’s so funny to hear him completely rag on the idiocy that is our Fed (I don’t even bother to read the article, just his comments tell me enough).
http://tinyurl.com/3kgxgd
The sham that is government statistics. The GDP deflator.
http://tinyurl.com/5egpow
Over a million homes in foreclosure for the first time ever.
http://tinyurl.com/6hwchw
Another $20B comes off the banks non-borrowed reserves (column 3). You can still see the +43B that we were at every month before this started. How ugly is this?
http://tinyurl.com/2fykqe
The 5.5% unemployment really is 9.7% per the government numbers in this chart – which are of course still flawed...
http://tinyurl.com/6zou24
I think Mish is going easy on some of the predictions here – namely unemployment. Regardless, Paulson and Bernanke are publicly proving to be the buffoons we predicted long ago.
http://tinyurl.com/65zkw3
States fiscal years don't start until July 1 - they are still funneling money into the system until then. Funny how many different things are eating up the entire stimulus check - it did nothing.
http://tinyurl.com/5lsamu
What's scarier - the banks having to bring 5 TRILLION dollars back on to their balance sheets - or the fact that they were allowed to do something that INCREDIBLY stupid in the first place?
http://tinyurl.com/4xgqj3
Nobody has described the true situation of housing better than Mike Morgan (esp. Florida) - paints a VERY grim picture here based on that.
http://tinyurl.com/6oe7uj
Maybe wishful thinking on my part, but after reading this quote from John Hussman, and then seeing the article in the link below - might they do the right thing???
"As a side note, with all of that said, Senator Richard Shelby made an important observation last week that the Federal Reserve's intervention in the Bear Stearns' wipeout dangerously crossed the line from monetary policy to fiscal policy. I couldn't agree more. The Fed's actions in that case were outside of its mandate precisely because by taking Bear's assets into its own portfolio, the Fed effectively provided public funds to a private corporation without recourse if the collateral goes bad. Only Congress has that power. It was literally an illegal act, but it was also done so quickly that it was presented as an irreversible fait accompli. My impression is that there is less of a “Fed backstop” for other financial companies than investors believe, because the Fed is essentially on notice from Congress that the Bear deal went over the line."
http://tinyurl.com/6f4f93
Removing that "backstop" would force the hand of the IB's big time. I still say JPM and GS are "safe", the rest could go away (MS, MER, LEH...)
Another quote worth reading:
The downturn has sapped the morale of industry survivors, who often resort to gallows humor to describe the mood. "You want to know how morale is?" said a high-yield investor. "How should I know? Everone I could have asked is gone."
Just as gloomy as Mike Morgan, but not as recodnized of an "authority". 12 to 22 years until housing bottom...
http://tinyurl.com/5ab35z
Zilliow banned in AZ - oh no, information is evil.
"Relying on the experts is how many Realtors thrive, so tools that aim to level the disparity of knowledge are seen as bad; in this case, illegal."Piss off.
http://tinyurl.com/6ow2aa
1 comment:
Bitchin' site dude.
Post a Comment