Morning Report

Vital Statistics:

  Last Change Percent
S&P Futures  1394.8 -3.7 -0.26%
Eurostoxx Index 2318.5 -25.6 -1.09%
Oil (WTI) 104.2 -0.8 -0.71%
LIBOR 0.466 0.000 0.00%
US Dollar Index (DXY) 78.91 0.199 0.25%
10 Year Govt Bond Yield 1.91% -0.02%  
RPX Composite Real Estate Index 173 -0.4  


World equity markets are down slightly this morning as Spain officially entered a recession, although the GDP report was better than expected. Merger Monday is back, with a deal in the energy space (Sunoco) and the healthcare space (Gen-Probe). Bonds and MBS are up small.


Personal income came in at +.4%, and personal consumption came in at +.3%.  The Personal Consumption Expenditure (PCE) indices indicate inflation is well under control. The National Association of Purchasing Managers – Milwaukee showed business conditions are improving slightly overall for companies in the Northern Midwest. 


No, they didn’t just do a reverse split. Barnes and Noble has doubled this morning on a strategic deal with Microsoft. The new company (NewCo – clever name) will involve the digital and College businesses of B&N and involve a Nook application for Windows 8. This looks like the culmination of B&N’s strategic alternative review announced earlier this year.


Tomorrow (May 1) is New Year’s Eve for the Left. Expect disruptions in the City and overseas.


No M.R. tomorrow as I will be traveling. Wed and Thurs MRs will be late.

We Finally Met our First Hoarder

There are very few things that shock me but when my husband came home Friday from the lockout of our tenant by the sheriff’s department he began preparing me for the shock I was about to experience.

Some of you may remember we’ve been involved in an eviction process on our rental property (the bulk of our retirement income) since January and even hired some legally challenged lawyers to represent us in the misadventure.  I call it a misadventure because it feels like a miracle to us that we finally got our home back.

The lockout would have occurred a month earlier but the city recently decided that our street was one of the ones that needed a new street sign.  A problem arose when the sheriffs attempted to post the final eviction notice about six weeks ago and the spelling on the street sign didn’t match the spelling on our legal documents.  The city had changed an “e” to an “o” and so we had to wait two weeks for a new sign and another two weeks for the city workers to install it.  Cha-ching, another $1600 down the drain.  Of course our lawyers thought it would have been better to change all the paperwork to the incorrect spelling………………………idiots.

Anyway, my husband met the officer and the locksmith at the house Friday morning and originally told our tenant she could have 1/2 hour to vacate.  The sheriff informed him that we had to store whatever was left at the house for 15 days, either at the house or a storage facility, charging her reasonable rates, and then could either sell it or trash it.  Then my husband went inside.  Needless to say, when she said her boyfriend was on the way with a big truck to move some stuff, he gave her the rest of the day to vacate.

Every room, save one, looks exactly like the pictures below, and that one room is pristine…………………….bizarre.

All of this was left after two big truckloads had already carted away some of her belongings.  So now our house is a storage facility for another 12 days and we’re hoping they’re coming back for more although they already cancelled the appointment to meet my husband over there today.

I feel sorry for anyone who is for some reason compelled to live like this, but right now I feel more sorry for us, because we’re going to be stuck with the cleanup………………………………….yuck.

Bites & Pieces OR Do Alpha Males Eat Quiche?

I have a basic quiche recipe that can be adapted for all sorts of dietary restrictions and preferences.  I’m trying to gradually add a few pounds back on that I misplaced this year and I can make this once a week and add a few calories to my diet.  On the other hand, it can be made with lower fat/calorie ingredients and still be delicious.

Basic Ingredients:

3 whole eggs, you can substitute egg whites for part of them or all, two egg whites equals one whole egg

1 can evaporated milk, you can use low fat or non fat and honestly you won’t be able to tell the difference

2 1/2 TBS of flour

Salt, pepper and other spices depending on the rest of your ingredients.  I use thyme, parsley, basil and herbs de provence  pretty frequently, but please experiment.

Additional Ingredients:

1 1/2 cups cheese, again low fat versions are fine and I frequently use a combination of mozzarella, parmesan and feta.  Of course you can use cheddar, swiss or really any kind of cheese.

5 to 6 diced green onions

2 tomatoes, seeded and chopped

1 to 2  cups of veggies.  I generally use a combination of broccoli/cauliflower or a variety of summer squash.  Experiment.

1 cup of  meat (cooked).  If you use meat, cut back on the veggies.  For a breakfast quiche the obvious meats are ham, bacon or sausage.  For dinner, chicken would probably work fine.


Beat the eggs, milk, flour and spices until well blended.  Sir in the other ingredients, adding the cheeses last and pour into greased 9″X9″ baking dish and bake for about 45 minutes at 350 or until center is set.

By the way, my husband loves this recipe.


And from okiegirl, who is still finding gorgeous asparagus at an even more gorgeous price, a couple of faves.

Asparagus with Curry Butter


2 teaspoons butter, melted

1 teaspoon curry powder

1/2 teaspoon lemon juice

1/4 teaspoon salt, or to taste

2 teaspoons extra-virgin olive oil

1 shallot, finely diced

1 bunch asparagus, (about 1 pound), trimmed and cut into 1-inch pieces


Combine butter, curry powder, lemon juice and salt in a small bowl.  Omit salt if your curry powder has salt in it already.

Heat oil in a large nonstick skillet over medium heat. Add shallot and cook, stirring, until softened, about 2 minutes. Add asparagus and cook, stirring, until just tender, 3 to 5 minutes. Stir the curry butter into the asparagus; toss to coat.

Yummy with grilled salmon!

Spring Pizza


3 tablespoons extra-virgin olive oil, divided

3 cloves garlic, minced (or to taste — this is a lot of garlic)

2 medium tomatoes, sliced

1 bunch asparagus (about 1 pound)

1/2 cup snipped fresh chives, divided

1/4 teaspoon salt

1/4 teaspoon freshly ground pepper

1 pound whole-wheat pizza dough

1 cup shredded fontina or mozzarella cheese


Position rack in lower third of oven, place a pizza stone or large pizza pan on the rack and preheat oven to 450°F for at least 15 minutes.

Meanwhile, combine 2 tablespoons oil and garlic in a small bowl; set aside. Trim asparagus spears to about 6 inches long; slice any thicker stalks in half lengthwise. Toss in a bowl with the remaining 1 tablespoon oil, 1/4 cup chives, salt and pepper.

Roll out dough on a lightly floured surface to about a 14-inch circle.  (I cheat and buy ready made pizza crust.)

Carefully remove the pizza stone or pan from the oven and set on a heatproof surface, such as your stovetop. Place the dough on the stone or pan and brush with the reserved garlic-oil mixture. Cover with a layer of tomato slices.  Arrange the asparagus in a circular pattern on the dough with the tips facing out (like spokes). Top with cheese and the remaining chives.

Carefully return the stone or pan to the oven and bake the pizza on the lower rack until crispy and golden and the cheese is melted, about 15 minutes.

This makes a lovely spring supper, but also is a nice (if unusual) side dish.

Walking Up The Laffer Curve

A Financial Times article posits that we are undertaxing the rich.

Another reason advanced for not raising taxes on the highest incomes is that it would not make much of a difference. In fact, the income shares at the top are so high that this is no longer true. Thus, raising the average income tax rate on the top percentile to 43.5 per cent from the low level of 22.4 per cent in 2007 would raise revenue by 3 per cent of GDP, closing much of the structural fiscal deficit, while still leaving the after-tax income share of the top percentile more than twice as high as in 1970.

However this assumes that capital gains are taxed at the same rate as wages, otherwise the income is just renamed and the effect of the higher rate is nullified.

Morning Report

Vital Statistics:


  Last Change Percent
S&P Futures  1397.6 0.8 0.06%
Eurostoxx Index 2339.0 16.3 0.70%
Oil (WTI) 104.3 -0.2 -0.20%
LIBOR 0.466 0.000 0.00%
US Dollar Index (DXY) 78.87 -0.046 -0.06%
10 Year Govt Bond Yield 1.92% -0.02%  
RPX Composite Real Estate Index 173.4 0.1  


Markets are generally flat this morning after the release of Q1 GDP, which came in light. The economy expanded at a 2.2% annual rate in Q1 vs expectations of 2.5% and lower than the 3% number in Q4. This more or less confirms the slowdown we have been seeing in other data as well. Yesterday, initial jobless claims came in at 388k.


Yesterday, the National Association of Realtors released their March Pending Home Sales Index, which is a forward-looking index of housing activity based on contract signings. The first quarter’s activity was the highest in five years. Supply and demand are becoming more balanced.  It will be interesting to see whether the banks start letting more REO go to meet the increased demand of if they continue to drip out inventory gradually.


Bill Gross continues to bet that Operation Twist continues as a mortgage play. Further, he believes that QEIII is a possibility, especially if the employment numbers weaken. Interestingly, he is also looking at this trade as a volatility bet – if you are long mortgages, you are short bond volatility – and is betting that the 10 year has more or less found its level for the next couple of years. 


A pet peeve of mine is this whole idea that the repeal of Glass-Steagall somehow caused the financial crisis. It turns out that Tim Geithner agrees with me that GS didn’t play a material role. No other country in the world (EU, Japan, UK, Canada) separates commercial and investment banking, or even draws a distinction between the two for that matter. Glass-Steagall was instituted because investment banks were stuffing their sister commercial banks with poorly underwritten bonds after the market crashed in 1929. If the investment bank couldn’t sell the paper to public at par (or close to it), they sold it to their captive banks who bought it at par and marked it there until bank runs exposed the fact that these bonds were worthless. The investment banks did the same thing with the insurance companies, which is why insurance companies were included. The point of G-S was to prevent this sort of thing and to ensure that these transactions would be arm’s length.


The financial crisis didn’t occur because JP Morgan was selling suspect bonds to Chase at the end of a gun barrel. Or Citi selling worthless paper to Travelers for that matter. The cause of the financial crisis was a deflating real estate bubble, which hit banks with large derivatives exposure (Bank of America and Citi) as well as small community banks that were in the very ordinary business of making mortgages, car loans, and business loans. It turns out that the smaller banks are the ones who can’t repay TARPIf we didn’t have a real estate bubble, we wouldn’t be having this conversation.Why did we have a real estate bubble?  There were a lot of contributing factors, but the biggest was the Fed and a psychological belief on the part of the public that real estate was a one-way bet.


People forget the reason why we repealed Glass-Steagall in the first place. The main reason was that the big international investment banks like UBS and Deutsche Bank were able to undercut the US investment banks because they were able to borrow at zero, while Goldman and Merrill had to fund their balance sheets at LIBOR. “Wall Street” was turning into Nomura, Barclay’s, Credit Suisse, and ING. Second, there were a couple of commercial banks who had become hybrids – JP Morgan and Bankers Trust – with Citi and Bank of America close behind. Glass-Steagall was becoming irrelevant anyway and the repeal was more or less an acknowledgment what had already happened.

Speaking of Joe Biden . . .

Bad Lip Reading did this . . .

Coding a Better Government

It seems to me what she’s talking about is, though, crowd-sourced infrastructure that dynamically accomplishes many of the goals of government (especially at the local level) with the easier distribution of information and the encouragement of involved citizenship.

Sort of a bottom-up socialism. One that completely decentralizes the entire process of “getting things done” in the community.

Morning Report

Vital Statistics:

  Last Change Percent
S&P Futures  1378.8 8.7 0.63%
Eurostoxx Index 2319.8 35.8 1.57%
Oil (WTI) 104.4 0.8 0.77%
LIBOR 0.466 0.000 0.00%
US Dollar Index (DXY) 79.16 -0.068 -0.09%
10 Year Govt Bond Yield 1.99% 0.01%  
RPX Composite Real Estate Index 173.5 -0.3  


Markets are higher this morning on Apple’s earnings. Hard to believe a half-a-trillion dollar company could move up 10% in a day, but there you go. Bonds and MBS are lower as we await the FOMC decision this afternoon. No one anticipates a change in policy, but the market will focus on clues about QEIII. 


Speaking of the Fed, Krugman has some advice for Ben Bernake. Hint:  He’s not doing enough.


Durable Goods orders fell 4.2% YOY in March, the biggest drop in 3 years. Ex transportation, they fell 1.1%. This was far below expectations. There was also a marked buildup in inventories in the last 6 months, which portends a manufacturing slowdown. There has been nothing in the economic data in the last couple of months that indicates the economy is accelerating – everything points to a deceleration. This is mainly due to overseas weakness. The UK is officially in recession, while Europe and China are slowing.


Mortgage applications fell last week after a huge jump the week before. The 10-year spent all of last week below 2%, so maybe the refi activity is starting to dry up – meaning everyone who can refi at 3.75% has already done so.


Lender Processing Services has released its first look for March foreclosures and delinquencies. The total US loan delinquency rate is just over 7%, which is down almost 9% YOY. The number of properties in foreclosure totaled 2.06MM, the number 90D+ was 1.6MM and 30D+ was 3.5MM, for a total of 5.6MM delinquent. The full report will be released on May 1.


FWIW, Mark Zandi thinks the bottom in real estate is in. Bob Schiller isn’t so sure.

Morning Report

Vital Statistics:







S&P Futures 




Eurostoxx Index




Oil (WTI)








US Dollar Index (DXY)




10 Year Govt Bond Yield




RPX Composite Real Estate Index






World equity markets are recovering slightly after yesterday’s sell-off on the back of a couple of good bond sales out of Spain and the Netherlands. The Netherlands is another potential worry spot, as Prime Minister Rutte’s ruling coalition collapsed over austerity disagreements. Bonds and MBS are down slightly.


The S&P / Case-Schiller index fell to new post-bubble lows, with the index dropping 3.5% YOY. Five of the 20 MSAs showed increases – Detroit, Denver, Miami, Minneapolis, and Phoenix. Remember, Case-Schiller is a very lagged index, as the number reflects the market in December ’11 – February ’12. We are seeing the correlation between different MSAs break down, which should be good news for the homebuilders. Overall punch line of the report: Prices are still falling, albeit at a slower rate.


Shelia Bair warns of a bond bubble in the US. She raises an interesting question – Are we Europe?  Or Japan? She thinks we are Europe. I think we are Japan, personally.


United Technologies, 3M, and AT&T all reported better than expected earnings. Former highflyer Netflix is down 15% on future growth worries despite a better than expected quarter. Apple reports after the close.


Lawrence Yun of the National Association of Realtors weighs in on the future of Fan and Fred. Punch line:  Privatizing Fan and Fred in the 1970s created an untenable situation, where management took risks to maximize shareholder return with an implicit government backstop. This was an untenable situation, and almost guaranteed to end badly. It did. The question is what to do now. If you fully privatize Fan and Fred, you can expect volatility in mortgage rates and occasional market freezes. Say goodbye to the low-cost 30 year fixed rate mortgage, a uniquely American product that we almost consider our birthright. Pre-privatization, Fan and Fred performed a boring job very well. Perhaps it is time to make it official and fully nationalize them.


Chart:  S&P / Case-Schiller 20-city index:


Morning links

A few links that may be of interest…

Climate alarmist James Lovelock admits to being, well, a bit alarmist.

Voter ID laws? We don’t need no stinkin’ voter ID laws.

A Chinese company markets a new pair of sunglasses by naming them after Helen Keller.

The Obama admin embraces the implied racism of disparate impact laws.

Cool time lapse video of girl growing up, from infant to 12 years old.

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