Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics
| Last | Change | Percent | |
| S&P Futures | 1352.7 | 5.0 | 0.37% |
| Eurostoxx Index | 2504.6 | 16.3 | 0.65% |
| Oil (WTI) | 101.52 | 0.8 | 0.77% |
| LIBOR | 0.4951 | -0.003 | -0.50% |
| US Dollar Index (DXY) | 79.543 | 0.159 | 0.20% |
| 10 Year Govt Bond Yield | 1.93% | -0.01% |
Markets are higher this morning on statements from the Bank of China regarding support for the European bailout and its willingness to help. Concerns about an eventual Greek deal are offsetting some of these gains. Bonds and mortgage backed securities are flat.
Mortgage Loan Delinquencies are increasing again, according to TransUnion. 64% of MSAs reported increases, which was flat compared to Q3, but much higher than Q2. There are seasonal factors at work here, and the continuing decline in real estate prices are certainly playing a part, but that is not an encouraging data point economically. As if the foreclosure pipeline wasn’t big enough already.
Not that the markets really care, but it looks like we have a payroll tax deal.
The Empire State Manufacturing Index came in at stronger than expected. This is a touchy-feely indicator of general business conditions put out by the New York Fed. This index is notoriously volatile, so big moves should be taken with a grain of salt, but it shows that the expansion is gaining momentum in New York State. Separately, industrial production was flat and capacity utilization unexpectedly fell.
The National Association of Home Builders will release their market index at 10:00 am. Residential construction has been the missing piece of the recovery, but has been showing signs of life lately. Earnings reports from the homebuilders have been constructive.
The FOMC minutes will be released this afternoon. I am very curious to see why the Fed is behaving as if the economy is rolling over, while the data suggest otherwise.
Last, Ezra Klein at the Washington Post has a story on how the World Cup affects trading. I can attest to this personally, having been a block trader at Bear Stearns in London for a number of years. When England was playing a match, the phones would stop ringing and everyone had their backs to their screens, watching the match. You could actually see major stocks like British Petroleum and Vodafone stop trading. As an American, it was strange to watch.
****EDIT
The National Association of Homebuilders released their market index at 10:00 am. The index came in better than expected and it looks like conditions are improving at an accelerating rate.
Chart: NAHB Market Index:
Filed under: Economic data, Federal Reserve, Homebuilding, stock market |
All Things in Moderation 
When England was playing a match, the phones would stop ringing and everyone had their backs to their screens, watching the match.
Perfectly understandable. In
SeptemberOctober, 1956, at the beginning of my freshman year in HS, a really cute girl invited me over to her house after school. I was already dating, so this was not an intimidating idea – in fact, it would have been the best thing that ever happened to me that month, except that I was huddled with a bunch of guys around a transistor radio listening to Don Larsen pitching a perfect game in the World Series. Somehow that seemed so much more important to me. Perfectly understandable.LikeLike
When England was playing a match, the phones would stop ringing and everyone had their backs to their screens, watching the match. You could actually see major stocks like British Petroleum and Vodafone stop trading.
Sounds like there needs to be another chapter in the book How Soccer Explains the World. That was actually a very interesting book.
Mark- Somehow that seemed so much more important to me. Perfectly understandable.
Your date with the cute girl was unlikely to be a once in a lifetime event. The same cannot be said of listening to Larsen’s perfect game.
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Ashot – it might have become a twice a week event, but she was so pissed she never gave me the time of day the next three+ years.
I do not know at what age I would have given up listening to or watching Larsen’s perfect game. Perhaps not yet…
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I do not know at what age I would have given up listening to or watching Larsen’s perfect game. Perhaps not yet…
It’s a rare gentleman who lives their entire life with the priorities in the correct order. Yet I think you have achieved it, at least so far. 🙂
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ash — have you seen anything re: the contraception mandate and self-insured plans? last i heard that aspect was TBD.
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have you seen anything re: the contraception mandate and self-insured plans?
Nope, but I have been completely obsessed with a hospital admin hearing I had last night so I haven’t been paying much attention. I’ll look to see if the AHLA has put anything out. Speaking of would there be interses in me putting together a weekly list of health care related links? I get a daily email from the AHLA and a weekly email from them too. I also get internal stuff from my firm all the time. I just thought it woudl be like the morning report for health care and obviously NoVa, you could add stuff too.
Also, NoVa, did your priest give a speech on the BC issue at the end of mass on Sunday?
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In September 1956 … Don Larsen pitching a perfect game in the World Series.
Hmm. I thought the World Series was always in October … 🙂
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Early October, OK?
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“I was huddled with a bunch of guys around a transistor radio listening to Don Larsen pitching a perfect game in the World Series. Somehow that seemed so much more important to me.”
But you didn’t know it would be a no-hitter when you started listening…
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“But you didn’t know it would be a no-hitter when you started listening…”
But you can be pretty sure it would have been a no-hitter with the girl.
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Seems like the word got around at the end of school that he was 5 innings into a no-hitter. Clusters of guys around transistor radios, milling about from about 3:00 pm.
jnc, 2d base with a girl then was an extra base hit, and hope ALWAYS sprang, such as it was.
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Speaking of would there be interses in me putting together a weekly list of health care related links?
Definitely yes from me.
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brent:
“There are seasonal factors at work here, and the continuing decline in real estate prices are certainly playing a part, but that is not an encouraging data point economically”
How do you think that declining prices are influencing mortgage delinquencies? Do you think more underwater homeowners have decided to choose strategic default?
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John, that’s basically it. Homeowners become underwater and decide to stop paying. TransUnion doesn’t specifically quantify that effect, but the report does note it.
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thanks Ash — I missed Mass this weekend. But the church posts the homily as podcasts (who says we’re out of touch!). so I’ll have to give a listen to see
but I do know the archdiocese is circulating a letter.
http://site.adw.org/pdfs/CardinalWuerl_e-Letters/HHS-Mandate-Nothing-Has-Changed.html
and there was an insert in the bulletin from the USCCB back in Sept.
Anecdotally, this whole debacle has just crushed a lot of my family — Catholic Democrats — from PA.
I know its tough to understand — and it has nothing whatsoever to do with BC — but the feeling is that Obama just left a floater in the baptismal font. But the commentary that you’re seeing that the hospitals, schools, etc. are somehow secular is just 100% wrong. It’s like they don’t get it. Being a Catholic hospital just doesn’t mean there’s a just chapel on site and a bunch of crucifixes in the gift shop.
And it’s the “why” aspect that has everyone confused.
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It’s like they don’t get it. Being a Catholic hospital just doesn’t mean there’s a just chapel on site and a bunch of crucifixes in the gift shop.
Agreed. My firm’s biggest client is a Catholic health system. They have nuns working at virtually every level of the organization and that have a strong say in corporate decisions. We have to include specific provisions in all of the contracts addressing aspects of Catholic beliefs. Prayers are said before committee meetings. I could go on and on.
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Jeremy Lin proves that Larry Summers career has been no accident. All Harvard trained economists shoot about 45% from the field
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nova:
Tell them not to worry. Blunt-Rubio would enable ANY employer, not just religious institutions to stop offering contraception on the grounds of “moral convictions.”
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I was huddled with a bunch of guys around a transistor radio listening to Don Larsen pitching a perfect game in the World Series.
Your priorities were in order Mark. Unless you felt you and that young lady had the chance to make history!
I remember watching that game on a little black and white TV in our basement. I had arranged three trash cans in a line so I could dribble the basketball around them while switching hands…trying to learn to be a ball handler…but by the end of the game I was definitely glued to the TV screen, basketball practice took a back seat to history!!!
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The only graph you’ll ever need to explain why we don’t need to “spur” the housing market, and why in some areas prices haven’t fallen enough yet:
http://www.jparsons.net/housingbubble/
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John, you’re not going to get an argument out of me on that. I just finished a white paper on house prices and our strategy of buying distressed mortgage pools. I argue that housing has more or less returned back to historical valuations, and is not “too cheap” by any stretch of the imagination. Our analysis is not the same, but it rhymes.
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Excellent info, john.
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brent:
In some areas, it’s still too high considering unemployemnt and economic condtions, Las Vegas comes immediately to mind.
I have seen the data before, but that graph is hellaciously representative.
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My analysis does show housing is very cheap compared to renting, at least going back to 1988. The 30 year fixed rate conforming mortgage payment on the national median house with 10% down is 20% lower than the median asking rent nationwide. Historically, the rent was 20% less. The last time they were equal was 1993. So on that basis, housing is cheap, but that will change once interest rates start rising.
And you are correct that incomes drive house prices long term and that some localities are stlll out of whack.
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it’s that 10% down that’s the killer in some areas.
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brent:
Have you matched that to the general rate of home ownership in the US? I think we have created a severe imbalance by promoting home ownership at the expense of rental stock in the last 20+ years.
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Also the current subsidization of rates by the Fed greatly distorts historical data for comparison purposes..
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To paraphrase PL’s skipsailing (who should be here, btw), I guess we’re all nipple suckers now.
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Troll,
People like money in the mail. Once politicians discovered this elusive truth, they began cutting checks with voter ballots attached. 😉
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BTW, Skip can come and post a comment, as can anybody, but should probably read the Rules of Engagement first. He can be quite the firebrand. 😉
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Well, the last time the rent and mortgage payment lines touched was in 1993, right before homeownership started taking off. The homeownership rate in 1993 was 64%, and it reached 69% + during the bubble. It is back to 66%.
We did have a small housing bust at the end of the 80s, and 1993 was at the tail end of that bust.
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See. Social Security Act buys more votes that any SuperPAC could possibly imagine.
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My question is why are we taxing ourselves to give to our selves? Reminds me of an old SNL commercial about a bank that just makes change. How do they make money you ask?
Volume.
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Meanwhile back at the ranch, the neocons disinformation campaign about Iran continues with new polls that you can find in Rubin’s column.
What you should really worry about is that options action has been recently moving in the direction that favors equities that would most benefit from war with Iran. This means that the people most involved in the process are preparing to make money from it.
You have been warned.
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“This means that the people most involved in the process are preparing to make money from it.”
Who are “the people most involved”?
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Major investors, hedge funds, etc, the people who actually have the most inside information on the likely outcomes. There’s relatively little open interest in selling calls and the open bids keep moving upi.
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BURNS: “Smithers, We’re At War!”
SMITHERS: I’ll begin profiteering, sir.
BURNS: And hoarding. Leave it to the Democrats to let the Spaniards back in the pantry.
I’m out for the rest of the day. catch you all later.
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Skip sailing’s here? I’ll have to check that out.
On the topic of football, the Champion’s League match between Arsenal and AC Milan is about to start. I’ll be settling back with a drink from the free minibar. Gotta like this hotel.
I’ll plan on getting a Scotland post going. Had a dinner tonight that was generally great, with one odd note. It’s a high end fish restaurant (Gamba). The starter was quite good, a seabass tartare with goat’s cheese and some nice, black caviar. I’m not much for caviar, but this was almost like someone had taken a blackberry and separated out the individual bulbs. I ordered some steamed sea bream and scallops for the main course. The waiter suggested that I get a side as the main course is just fish. It’s a bit of a shame as some sticky rice would have been sensational with the dish.
Having a side of chips, even well made ones, seemed odd. The other odd bit is the limited wine list. Only about 8 wines by the glass–3 whites, 3 reds, 1 rosé and 1 sparkling. Given that my tab came to about $80 (I went with a Chablis, then a Sancerre), one would expect a little more variety.
BB
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Judging from the calls on oil, I would place the greatest likelihod of a miltary action between the beginning of April and July.
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I stayed at Loch Torridan about 10 years ago. Very nice. Good hiking up there, but you have to watch out for the midges once the sun goes down.
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troll:
More on your last:
“In early February, The Washington Post reported that Defense Secretary Leon E. Panetta believed there was a “strong likelihood” that Israel would strike Iran in April, May or June.”
I’m sure it’s just a coincidence.
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Banned,
Panetta’s statement was public and widely distributed. It also occurred last week or the week before. This movement by these “Major investors, hedge funds, etc, the people who actually have the most inside information on the likely outcomes.” would have had to occurred earlier than that. My question is, did it?
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Banned,
If I’m not clear, did these neocons that will benefit most make these trades prior to Panetta’s public statement? If they had access to inside information, they’d have had to have done so months ago, no? Prior to this “neocon disinformation campaign”?
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Yes, the bids keep climbing, and the open interest keeps declining. (that is the number of investors who are confident enough that oil will fall or trade sideways such that they are willing to sell covered calls to raise cash)
yes, I know the Panetta statment was last week or more, but today I went back and looked at the recent history, trying to decide when to jump in . The correlation is pretty striking in how the ask jumps from April though July.
Now this is of course a chicken and egg thing. But this is people placing actual dollars behind their theories
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Considering that the $ has been heavily devalued by Teh Bernake and if you consider that the inflation rate would be much higher if they included gas and food and the fact that gas always goes up in the spring and summer, wouldnt it make sense to bet that fuel prices will go up in the spring and summer?
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troll:
It’s not just neocons that will benefit. If I implied that, it was bad wirting on my part. I used to invest in tobacco companies though I’ve never had a cigarettte in my life. If I can’t stop it from happening, I see no reason to go down with the ship as it were if the market tanks on an oil spike.
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troll:
Ah that’s where you have to do further research for instance checking the options for WTI versus brent and the ones for the oil companies who do the most business with iran versus the ones who have little or none. It’s attempting to cancel out the background noise that you point out.
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scott and brent:
don’t know if you saw this:
“The bond market’s inability to reform the market where Wall Street goes to borrow and lend fixed-income securities is leading to more direct involvement from the Federal Reserve Bank of New York.
At issue is the state of the triparty repo market. This sector is the backbone of bond trading and its high-volume trades are very short term in nature. Since the financial crisis, the market has been beset by problems, among them issues with the documentation of trades. And because the market is dominated by short-term activity, a loss of confidence in a particular firm can kill its access to credit and potentially kill the institution, which can, in turn, create problems for the broader functioning of financial markets.
The effort to repair the market came to a head Wednesday with the release of a report by the Tri-Party Repo Infrastructure Reform Task Force, a private industry group operating with the support of the New York Fed. The report was to offer the group’s final recommendations, but that was evidently more than participants could manage.
Although the task force has made recommendations to improve trading in the repo market, the implementation of them “will require more time and technical implementation than the Task Force originally estimated and will constitute a multiyear project,” the report said.
The report said the work of clearing banks Bank of New York Mellon Corp. (BK) and J.P. Morgan Chase & Co. (JPM), along with the Fixed Income Clearing Corporation and other market participants “requires firm-specific actions, rather than the idea generation and vetting that the Task Force provided.”
The group said that its primary goal is “the practical elimination of intraday credit associated with the settlement of triparty repo transactions.”
In a related release, the New York Fed was clearly disappointed by the lack of traction the industry’s effort at self-reform had achieved.
“Despite these accomplishments, the amount of intraday credit provided by clearing banks has not yet been meaningfully reduced, and therefore, the systemic risk associated with this market remains unchanged,” the New York Fed said in a statement.
As a result, the bank said it “will intensify its direct oversight” of the triparty repo market.
“While the Task Force has been an essential forum for generating and developing ideas, it has not proved to be an effective mechanism for managing individual firms’ implementation of process changes,” the New York Fed said.”
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Given my previous, if you accept it, then how much lower would it be w/out the “neocon disinformation campaign? I.e., what percent of the regular, seasonal increase is because of the the Israeli attack concern?
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troll:
That’s a guess work number. One way to clear it out, is to try to match the options activity versus the day/week’s headline on Europe. for instance, given GDP estimates, brent should be trading lower than it is, and than WTI is.
“Oil Settles Near 6-Month High on Supply Fears”
http://www.cnbc.com/id/46388876
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QE3 is off the table?
“Fresh Asset Purchases Unlikely, Fed Minutes Show
By BINYAMIN APPELBAUM
Published: February 15, 2012
WASHINGTON – The Federal Reserve is not inclined to launch a new round of asset purchases unless economic conditions deteriorate, according to the minutes of the most recent meeting of its policy-making committee.
The Fed’s leaders did not number among the burgeoning ranks of optimists who see evidence that growth is accelerating, according to the minutes of the committee’s Jan. 24-25 meeting, released Wednesday. The central bank continued to forecast the economy in the United States will grow only modestly over the next year.
But most members of the Fed’s policy-making committee agreed at the meeting that slow growth is not a sufficient reason to expand the Fed’s economic aid campaign. ”
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Banned, what’s your gut feeling, given the regular, seasonal price spike plus the massive currency devaluation out of the industrialized world? Israel attack premium = 10%? 25%? 50%? Higher?
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On brent it’s at least 12-15%, given the troubles in the European economy. Remember seasonality is often more a manifestation of pump prices, not crude prices. There is some correlation but nothing like we’re seeing.
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jnc:
Saw that. the unemployment report put a hurting on that.
BTW, that’s the longest opposing exchange I’ve ever seen Greg have with a poster.
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“Risks to Global Oil Supply Rival Late 1970s: Report”
http://www.cnbc.com/id/46401693
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