Bits & Pieces (Thursday Night Open Mic)

Posted on February 23, 2012 by Kevin S. Willis

"Hey, are you in there? Hello? I'm feeling better now. Really."

This is a great blog about The Overlook Hotel from Kubrick’s The Shining. It’s where I got the image above, and where I first ran across the image below:

A children's menu from The Overlook Hotel, re: Kubrick's The Shining.

The U.N. wants control over the Internet. I’m sure that’s going to go over well!

DRM in HTML5. That sounds like a great idea!

Thiotimoline is a substance so water-soluble, it actually dissolves before it comes in contact with water.

A Sci-Fi Horror movie shot i and around Chernobyl:

That’s it for me — KW

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Morning Report

Posted on February 23, 2012 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1355.9 0.0 0.00%
Eurostoxx Index 2513.0 -6.0 -0.24%
Oil (WTI) 106.31 0.0 0.03%
LIBOR 0.4906 -0.001 -0.20%
US Dollar Index (DXY) 78.971 -0.254 -0.32%
10 Year Govt Bond Yield 2.03% 0.02%

Markets are flat on a better than expected jobs report. Initial Jobless claims were 351k vs 355k expected, and continuing claims dropped to 3,392k vs 3,455k expected. The FHFA House Price Index will be released at 10:00 am and the Kansas City Fed Manufacturing Activity Index will be released at 11:00. Bonds and MBS are flat-to-slightly lower.

Freddie Mac released its February Economic Outlook yesterday. Punch line: Housing is recovering gradually. Interesting statistic from the report regarding affordability:  “At the end of 2011, a family earning the median family income had almost double the income necessary to qualify for a conventional loan covering 80% of a median-priced existing singly-family home.” Mortgage applications rose by 4.1% in January, and 80% of those were for refinancings. We are entering a seasonally strong period for house prices – it will be interesting to see if low rates and low prices finally pull people off the sidelines.

For a glass-half empty view, look here. Mark Hanson makes a very good point – that when a stock doesn’t do what it is supposed to do in response to news or events traders will key on that and position accordingly. A market darling that “beats” earnings expectations but doesn’t go up is a great short candidate. Mark makes the same point with housing – we have record low interest rates and affordability, yet housing isn’t going up. Which means it is going lower.

A few years ago, everyone was talking about the yen carry trade. Japanese companies would borrow yen for basically nothing and invest in higher yielding assets overseas, typically in Europe. Traders would watch the Euro / Yen cross rate like hawks, and every time the euro weakened against the yen, world markets would roll over. After the financial crisis drove everyone into Treasuries, people have been wondering when the dollar carry trade would take over. Well, it looks like that day has come. J.P. Morgan has been picking up European MBS to find some yield. While a $72 billion bet on foreign MBS is a drop in the bucket, if JPM is doing it, so is everyone else.

 

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