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 | 1370.2 | 6.3 | 0.46% |
| Eurostoxx Index | 2334.3 | 33.1 | 1.44% |
| Oil (WTI) | 103.8 | 0.9 | 0.85% |
| LIBOR | 0.466 | 0.000 | 0.00% |
| US Dollar Index (DXY) | 79.54 | -0.018 | -0.02% |
| 10 Year Govt Bond Yield | 1.99% | 0.01% | |
| RPX Composite Real Estate Index | 172.3 | 0.3 |
Markets are higher this morning on a better than expected German investor confidence data and a decline in Spanish bond yields. Bonds and MBS are lower. After falling out its narrow 140 -144 trading range, June 10 year bond futures are back in it again, driving mortgage rates back to February levels.
Johnny John reported better than expected numbers, as did Goldman, who also bumped up their dividend. Ex-highflyer First Solar is cutting 30% of its workforce.
Housing starts missed estimates by a wide margin, falling sharply from 694k in February to 654k in March. Remember, 1.5 million is more or less “normalcy,” and having starts heading downwards for two months in a row this late in an expansion is not a good sign. Optimists will point to the unexpected increase in permits. Nevertheless, forward-looking economic indicators are starting to turn down, indicating the economy is slowing. Remember, the Bush tax cuts expire Jan 1, and that will provide a large fiscal drag. Business (and the markets) are going to start handicapping the possibility of an early 2013 recession, which should mean a slowing economy this summer and into the fall.
Industrial Production was flat in March, vs a .3% increase. Capacity utilization ticked up .1% to 78.6%, still below the historic 80% average. This shows there is still a lot of slack in the economy, which bodes well for the inflation numbers.
The rental market continues to outshine the purchase market, according to Zillow. The rent index increased 2% YOY in February, while the Zillow home value index dropped 4.5%. The huge backlog of foreclosures remains a wet blanket on the home value index, while ex-homeowners are driving rental prices higher. Localities like Chicago and Philadelphia showed huge divergences.
As if Spain didn’t have enough headaches, Argentina is expropriating Repsol’s 51% stake in YPF. Latin America has been one of the bright spots for Spanish banks, so if money starts fleeing the area, it will put further pressure on the Spanish economy. Granted, Brazil and commodity prices are going to be the main factor, but forced nationalization tends to make emerging markets investors nervous.
Are you trading gasoline futures? If so, the Obama administration is taking aim at you. Worried that high prices at the pump may endanger his re-election campaign, the administration has announced a series of measures aimed at reducing speculation in the gasoline futures market. The most significant measure would allow the CFTC to increase margin requirements (never mind that the exchanges can do this already..)
Filed under: Morning Report |
All Things in Moderation 
For the worst column you will ever read by someone posing as an economic journalist, read Yglesias today:
http://www.slate.com/articles/business/moneybox/2012/04/grover_norquist_and_h_r_block_the_unholy_alliance_of_tax_prep_firms_and_conservative_activists_to_make_your_taxes_even_more_complicated_.html
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Regarding the Obama speculators road show, I noted elsewhere that these people are currently unemployed and can probably help him:
“We will also establish a financial crimes unit of highly trained investigators to crack down on large-scale fraud and protect people’s investments,” Obama said. “I am asking my attorney general to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans.”
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expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis
I wonder if Bill Black might be looking for something to sink his teeth into.
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hey lady, good to chat again.
They would only hire Black if they wanted results, not a dog and pony show.
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Hi John,
So Black’s phone won’t be ringing I guess.
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can he be cross-trained for “oil speculation”?
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Space shuttle Discovery just flew right over NRL, twice!
It’s headed to the Air and Space Museum near Dulles and was given a tour of the area before its final landing.
BB
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in another place, I asked my usual question about oil speculators, who are they making money FROM, and got my usual answer crickets chirping.
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banned:
I asked my usual question about oil speculators, who are they making money FROM…
Other market participants, ie other speculators, hedgers, oil producers, etc.
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I think most of DC was on the roofs — buzzed by Discovery too.
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scott;
Don’t be silly, it comes from the people somehow. We must collectively be going short oil. Stupid American people!
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I think many speculators who are buying futures betting on the continued upturn will get burned.
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mark:
That can’t happen, “Everybody” knows that oil speculators make money by forcing the price up!
How could they possibly make money on the way down?
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banned:
Can you be a bit more explicit about what point you are making? I’m a bit slow.
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I am sure obama will go after the speculators that are sitting on the price of natural gas with the same vigor…
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scott:
Following the conventional wisdom today, oil speculators make money by forcing the price of oil up. Now exactly who they make that bet against is a bit of a puzzle, because “everybody” seems to be taking one side of the bet. Who is on the other side betting against?
Well every time I ask that question, I get silence or I get a response like the people. As if Wall Street financial institutions are forcing citizens to bet short on the price of oil at gunpoint somehow.
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banned:
I got you. I couldn’t tell whether you were being facetious or not. I guess I am too used to hearing what “everybody” knows being said seriously.
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In simplest terms, the hedge funds are buying contracts from other funds that don’t think the price will continue up, or they would have no reason to sell.
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” . As if Wall Street financial institutions are forcing citizens to bet short on the price of oil at gunpoint somehow.”
Maybe I’m just stupid, but… when I buy gas, I pay the price marked on the pump. That’s not a short bet. If speculators are bidding the price up, but consumers keep buying, where’s the short bet? Perhaps by the seller, whole chose to sell at a known price rather than gamble on a better price if they hold out to sell later. Would you characterize that as a ‘short’ bet?
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over in that other place, it was a tough morning for econ 101. I got carpal tunnel just trying to explain about the difference between net profits and profit margins. (no I didn’t succeed)
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John –
I understood. I tried to help. It is so hard being your wingman.
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bsimon:
Forgive me that was sarcasm. If the speculators are “bidding the price up” there is someone selling that contract who is betting it won’t
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mark:
Some days I try to light one candle but most days I curse the darkness.
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” Forgive me that was sarcasm. If the speculators are “bidding the price up” there is someone selling that contract who is betting it won’t”
I get that & I got the sarcasm. Perhaps I’m missing the necessary context by not visiting the PL.
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What percent of the increase in the cost of oil has to do with Bernake’s currency devaluation do you think?
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@troll.
just for fun, i regressed WTI vs DXY for the past 10 years. The beta coefficient is -1.34, which means if the dollar drops 1%, oil increases 1.3%. Now, that said, the r-squared is .093, which means the moves of the dollar explain about 9% of the movement of the price of oil, and 91% of the movement is explained elsewhere…
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Thanks Brent. I had no idea what you just wrote but it looks smart, used words I don’t know and doesn’t end up with a rounded sounding number, ergo, I rate it the truth! 😉
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troll:
there’s actually some disagreement about this effect
If you want to get wonky:
http://www.econbrowser.com/archives/2007/10/does_dollar_wea_1.html
In other news Brent just pulled a Greenspan on you!
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@troll.
In a nutshell, yes the price of oil is negatively correlated with the dollar, but other things matter a lot more.
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and my formula was just pulled off of a quick and dirty bloomberg linear regression, so it isn’t like i wrote a paper on it.
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“Some days I try to light one candle but most days I curse the darkness.”
Scott can you make this the quote of the day tomorrow?
I have enjoyed your, largely over my head, discussion today all. I’ll take solace in knowing my presenation on the proposed rule for the 60 day overpayment rule from earlier today would be over your heads. Nova, you’ll have to trust me it was compelling.
Also, I’m glad to see nova is still around after the beating his Pens have taken so far in their series.
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Brent:
You should have done the full Greenspan and told him it was a conundrum.
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so Obama threatened to kill oil speculation and WTI went up 1.25%
If only I could figure out what he was going to threaten next.
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Ashot, my favorite candidate for quote of the day comes from, I think, Mencken: Sometimes you have to flog a dead horse.
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Sometimes you have to flog a dead horse.
Ha…I like that, too.
so Obama threatened to kill oil speculation and WTI went up 1.25%
If only I could figure out what he was going to threaten next.
That would make a nice political ad. If you do figure it out would you let the rest of us know?
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McWing:
On an differnt note, Ramesh seems to be channeling you by hammering Romney for accepting the mythical assumptions underlying the whole “War on Women” theme.
I particularly liked his conclusion:
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“Also, I’m glad to see nova is still around after the beating his Pens have taken so far in their series.”
beating. that’s one way to look at it.
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Mizzou were the Penguins of the NCAA tourney. This collapse has been breathtaking.
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NoVA:
Since you may be looking at a longer off-season than you thought, maybe you could weigh in on the “resource use reports” that Medicare is starting to send out to the docs.
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scott:
No way! It’s like Gekko, either you bring me info or you’re not in the game
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banned:
Blue Horseshoe says sell the 10yr note at 1.97%
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Dammit! I’m gonna lose my ass on Anacot steal!
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what cracked me up most about that movie was that Oliver Stone had no sense of scale. Gekko opens up a $1 million account to go do corporate raiding. The specialist sells 2,000 shares to the floor broker and moves his price up a quarter. Gekko’s first trade is in a couple hundred Anacott Steel 40 calls.
He’s flowing Gordon… We got half a million shares…. In the bag!
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Speaking of polling and gender, NBC’s Chuck Todd just Tweeted: @chucktodd: Pew does a TERRIFIC job of presenting their crosstabs. Dig in junkies. http://t.co/7DqLPsDq // be sure to look at the demos BY gender”
I thought there wasn’t supposed to be any difference between men and women. 🙂
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Goddamit no more Treasuries! (or wire hangars either)
I winced when I saw what I lost on interest rate directional bets last year on my return.
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banned:
I winced when I saw what I lost on interest rate directional bets last year on my return.
I believe your only trade on my recommendation was a winner, no? Or was it just a cut-loss trade?
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Mike — was just reading about that. I’ll get back to you tomorrow.
also, Pens in 7. have to believe.
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Just to rub a little salt in the wound. I liked this line on Crosby:
“There’s funny ha-ha, funny yikes, and sometimes there’s funny Sidney Crosby petulantly pushing Jakub Voracek’s glove away with his stick. (For his next trick, he offered his hand to help Voracek out of the pool, and then let go at the last second.)”
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NoVA:
Thanks.
‘Hawks almost came back from 0-3 down last year, losing Game 7 in OT (Cucking Fanucks). No reason the Pens can’t win 4 in a row. Believe.
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scott
yes, unfortuantely, it was not my only trade LOL
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Kings were my upset pick.
Game 3 was just embarrassing. I really don’t think they get swept — beyond that — it’s pure fan-speak
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Some things even the 1% can’t have. No such thing as Kobe beef in the U.S.
http://www.forbes.com/sites/larryolmsted/2012/04/12/foods-biggest-scam-the-great-kobe-beef-lie/
I knew this at one time, I think.
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“Some things even the 1% can’t have. No such thing as Kobe beef in the U.S.”
It’s like evevrything I was led to believe to be true was a lie!
KAAAAAAAAAAAHHHHHHHHHHNNNNNNNNNNNN!!!!!!!!!
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It is a shattering realization, indeed.
Whatever they sell in some of the US restaurants as Kobe is still dang good.
But over the weeken I saw a TV spot about a newer Japanese place in NYC (started with an M) that looked so legit and tasty (and $$$$). Sad to think the Kobe isn’t.
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Speaking of meat, who thinks Obama’s self-admitted dog eating will get more publicity than Romney’s dog on the car roof?
Me neither.
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You can only get Kobe beef in Japan. What they sell as Kobe beef in the US is more accurately called waygu. It is much more finely marbled than even Angus beef.
I took a tour of a butcher in the Meatpacking District a few years ago and they explained the different levels of grading. The piece on the left is waygu and the one on the right is standard beef.
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We treated ourselves to Akaushi burgers on Monday night — burger place up the street only sells Akaushi burgers (Burger Monger). I’m with QB — that is good meat. Apparently, the only Akaushi herd outside of Japan is in TX. Here.
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