Disjoint, likely out of order after the first few paragraphs, likely to be thought insane at parts, with some much needed comedy at the end. Time will tell.
Foreclosures hit another record.5.82% of all mortgages in delinquency. Subprime problem? More than 1 out of every 20 mortgages in this country is delinquent. Contained.For the first time today in history, American home equity in their houses fell below 50%. Add that to our great list of firsts.Dollar getting absolutely destroyed. Europe/GB didn't cut rates today. Australia actually raised them again last week.Yesterday: 5.8% for a 790 FICO 20% down mortgage, today it suddenly jumped to 6.3%. Rate cuts working like a charm.
For those who care about technicals....I've been waiting to say this for a while. We are sitting on the cusp, and any sort of a down day tomorrow basically triggers a "short the phonebook". The key spots have been 1310 on the S&P and 12100 on the Dow - both were breached today. A rate cut or some other sort of serious intervention would not surprise me tomorrow and that's why I'm waiting for slightly lower still to make the full call. Otherwise a series of cascading "head and shoulders" are about to take us much lower. Here are the targets to watch for if we don't break back above the above listed levels: Dow 11,400. If we crack that, Dow 9000 is in play. (Dow 10,700 will likely provide a bounce for a while though.) All that happens and you'll also be looking at S&P 1000, Nas 1200 and Russell 450's.It was just a few months ago that I told you that cracking 800 on the Russell was the sign that the bull market was done, seems like forever ago.Are we there yet, no. Do things go in a straight line, no. Scary numbers, yes. More likely than not, yes.Unemployment numbers in the morning will be make or break. Unless the Fed steps in.
UPDATE: Fed steps in 10 minutes before the jobs number and increases the TAF auction amounts as well as what they'll accept as collateral. Which tells you what happened next. Jobs expected to come in flat, were down 63k. January and December were also revised downward. How so many people still think we will avoid a recession baffles me. Expect the markets to try to pull rabbits out of every hat today - otherwise just type random letters into the keyboard, and sell it.
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I won't get too deep into the numerous rumors I'm hearing, but massive liquidation is happening left and right. Hedge funds are in a world of hurt. When I say world of hurt, I mean good bye fund.
Speaking of which - The Ambac bailout that was saving the markets every time they were about to break - turns out they are doing a stock deal. Seriously????? Wow, they are screwed, and the muni-market with them. $1.5B - that will buy them time, and that's about it. Yep, they are AAA.
Ambac thud
https://mail.us.benfieldgroup.com/exchweb/bin/redir.asp?URL=http://tinyurl.com/37m4ro
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Buffet gets it:
"By any common sense definition, we are in a recession".
What does he think about the bailouts?
Q: Any of the intervention plans we've seen from the government strike you as being a good idea?
BUFFETT: Well, that--I haven't seen the details on many of them, but I think it's very hard to start interfering with markets without having a whole lot of unintended consequences.
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Want a $100 house? Just move to Detroit.
http://tinyurl.com/2qaxyg
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So, the big news as far as I'm concerned is the lifting of the caps on the amount of mortgages Fannie Mae can take on. They just announced that they lost $3.6 BILLION last quarter - they managed to do that by buying the "good stuff" (the day after Freddie Mac reports a loss of $2.5B). Their CEO’s both said how challenging the future looks, and now they get to take on all sorts more of the same stuff that is bringing them down. Good plan. One that Bush and
Bernanke were extremely opposed to just a month ago. Since then the size of mortgage they can take went from $416k to over $700k, and now they can take more on. Which means an even larger bailout by the government. And laugh at how crazy it sounds now, but the steps towards socialism are slowly kicking in. It was a nice 200+ year run for this country trying capitalism, why not switch sides just as China decides to do the same to keep things balanced?Seriously - raising those caps could be one of the dumbest in a long series of bad moves.
http://tinyurl.com/2svhmj
Talk is already growing of a complete mortgage bailout by the government being needed. Welcome to the first steps of Communism. Am I saying that will happen, no - but it tells you how big the problem really is behind the scenes. Very drastic measures are about to become needed.
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Obviously priorities aren't at the forefront of our leaders minds. They'd rather waste their time asking who used steroids. And now the FBI is investigating Roger Clemens. There is a list of about 10 CEO's I could give them that did things to the people of this country that were considerably more illegal than anything he has done.
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Hearing about 9 and 12 year car loans now just to get the financing to work. That's gonna be good. But if you choose to buy a new car, add 1.25% to the price as part of that gas tax increase from a couple days ago. Actually, if you need a car, just go to craigslist – just typing 2007 in gets page after page of results. Not all appear to be 2007 vehicles – but an unreal amount are!
http://tinyurl.com/3yn6d9
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New Monkey, same backs. Title alone made the article worth it.
http://tinyurl.com/2rq7ts
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Oil hits a new all-time high. Even breaks the inflation-adjusted record from a few decades ago. Gold at a new all-time high at just under $1000. 20-year high in the price of rice. Pork up 39% in the last 2 months. Not sure what triggered this food thing in the past year, but suddenly the word “shortage” is starting to lurk.
Remember when wheat had made that astounding run to $16 about a week ago. It's at $24 now. (that was last week, last I saw it was around $18.)
And to top it off – the local bakery this morning said business was so slow that they no longer make donuts with sprinkles. And WCCO isn't sending Rosen down to spring training to cover the Twins for the first time in 21 years due to budget constraints. And local company ADC Telecommunications had to take a $50M write-off due to subprime this quarter.
Telecommunications - now those companies have subprime worries????
Feel free to send me any similar observations as you come across them.
And Cramer says we need a rate cut over the weekend. Heroine is tough to kick when you need more to get the same affect…
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https://mail.us.benfieldgroup.com/exchweb/bin/redir.asp?URL=http://tinyurl.com/2p4n8p
Getting worse and worse out there for the public
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https://mail.us.benfieldgroup.com/exchweb/bin/redir.asp?URL=http://tinyurl.com/3cy7yv
71% of Countrywide’s $28B in option-arms are paying the minimum – i.e. just the interest, not the principal - i.e. the loans are growing. Only 20% of these people provided documentation of income when getting the loan. Payments 90+ days overdue is up nearly 10–fold since last year. Half of their $87B in loans is CA and FL. Yes, it makes complete sense for BAC to buy them. Like I said, making BAC one of the 30 DOW components will eventually prove to bring it down farther and faster than anyone was thinking.
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I couldn’t agree more with everything said in here. When people do it, Paulson calls it speculation. When Goldman Sachs does it, it’s investing. F him and his “non”-bailouts.
https://mail.us.benfieldgroup.com/exchweb/bin/redir.asp?URL=http://tinyurl.com/2u7fr6
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Unrelated stuff to inject some fun in here:
Jimmy K responded this week, but in case you are one of the few who hasn’t seen it yet, I think his wife’s first shot across the bow was better. (warning: you don’t want to play these out loud at work)
http://tinyurl.com/2adjwv
And the response:
https://mail.us.benfieldgroup.com/exchweb/bin/redir.asp?URL=http://tinyurl.com/3akff8
60 minutes ray gun video – very interesting.
https://mail.us.benfieldgroup.com/exchweb/bin/redir.asp?URL=http://tinyurl.com/2sbfn8
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