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 | 1327.5 | -8.8 | -0.66% |
| Eurostoxx Index | 2230.1 | -16.1 | -0.72% |
| Oil (WTI) | 84.73 | -1.1 | -1.26% |
| LIBOR | 0.455 | -0.001 | -0.22% |
| US Dollar Index (DXY) | 83.75 | 0.185 | 0.22% |
| 10 Year Govt Bond Yield | 1.49% | -0.02% | |
| RPX Composite Real Estate Index | 183.8 | 0.2 |
Markets are lower this morning on global slowdown fears. There was no real catalyst for the sell-off, just general malaise. The 10-year is yielding below 1.5% and MBS are up a couple of ticks.
Initial Jobless claims came in lower than expected, at 350k vs 372k. The Labor Department noted that the typical temporary seasonal factory shutdowns haven’t happened this year as the automakers fulfill demand and replenish inventories. A Labor Department spokesman refers to it as a “distortion”, so don’t read too much into the number.
There was nothing really earth-shattering in the minutes from the last FOMC meeting released yesterday. People looking for more aggressive action out of the Fed were disappointed. Operation Twist will continue through the end of the year, and the Fed will take further action if the economy deteriorates. The minutes did discuss Taxmageddon and also noted that defense contractors were already laying off people if the sequestration spending cuts kick in. Surprisingly, they mentioned the Facebook fiasco as well.
RealtyTrac reported that foreclosure activity increased 9% sequentially in May, but is still down 4% on an annual basis. Pre-foreclosure sales are rising as banks focus more on short sales. Pre-foreclosure home sales have an average $27,000 price than the average bank-owned home. Since distressed sales are still driving the market, this could account for some of the increases we are seeing in the overall home price indices. Another interesting tidbit: Judicial states posted a 26% year-over-year increase in overall foreclosure activity, while non-judicial states posted a 20% decrease.
The House Committee on Financial Services held a hearing yesterday on Dodd-Frank, mortgages, and the CFPB. It was a mix of industry groups and consumer advocates. The fault lines appeared at the definition of a qualified mortgage, where industry groups wanted bright lines and safe harbor provisions while consumer advocates disagreed.
Finally, Paul Krugman isn’t too happy with CNBC.
Filed under: Morning Report |
All Things in Moderation 
I’m no fan of Mitt, but I did predict that the left would brand him a racist.
http://www.thedailybeast.com/articles/2012/07/12/michael-tomasky-on-mitt-romney-the-race-baiter-at-the-naacp.html
Musta been channeling his inner Robert “The Conscience of the Senate” Byrd.
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There was absolutely nothing Mitt could say that would not be turned into a charge of racism.
The fact that Eugene Robinson has yet to weigh in at WaPo makes me think he is working on a masterpiece of outrage.
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Holy moly. I’m not a fan of Mitt, as I may have mentioned, but that’s just nonsense.
The use of the term “Obamacare” is racism. Wow.
Really? I must confess, I am not a fan of Tomasky’s writing.
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Ok, how do you guys bold and purple stuff in your responses?
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Uh oh, this racism has got to stop.
https://store.barackobama.com/featured-15/obamacare-tee.html
Waiting for Media Matters and Think Progress outarage to start in 3, 2, 1, …
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Yeah Kevin, I know how to bold and insert links (I’m just usually to lazy) but how’d you get the quotes in such a pretty fashion?
Brent, here’s is an HTML cheat sheet. If I find an easier one (or if anybody had one, let me know) I’ll drop it in.
http://www.webmonkey.com/2010/02/html_cheatsheet/
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Ok, how do you guys bold and purple stuff in your responses?
Use the the blockquote tags (with the word in brackets and with a / to close it).
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As you know, no Krugman fan here, but Joe Kernan was his usual complete ass yesterday. I watch Bloomberg in the morning now, but try to make sure I see Fast Money at the end of the day.
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I rarely talk about racism, but in truth I’m a big fan of Jeremiah Wright because if I had been born a black American, I sure as held would be mad about something too!
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John–have you been lurking over at PL this morning?
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No, front page link, so I have been playing with Ezra’s mind and his usual borrow a gzaillion dollars now because rates are so low columns.
Say whatever happened to the new debt ceiling crisis we were going to have? LOL
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I watch Bloomberg in the morning now, but try to make sure I see Fast Money at the end of the day.
Once CNBC turned into “Today” I quit watching. The quibble I always had with Fast Money (aside from the cheesy nicknames they give each other) was when the Skullet would talk about arb situations while the actual arb (Finerman) sits by quietly.
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brent :
Ah you expect too much!
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One of you financial guys might want to come over and weigh in on the Bain thread. I know nothing about SEC filings (and neither, of course, do any of the other people other than sue AFAICT) and you might be able to bring some clarity to the thread. . .
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I weighed in (fwiw)
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Brent–and right about then it got front paged. . . ah, well.
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<blockquote> I am quoting something </blockquote> . . . and that’s how you do it. 😉
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Sigh:
http://www.washingtonpost.com/politics/in-appeal-to-naacp-biden-warns-of-refighting-civil-rights-battles-under-romney/2012/07/12/gJQAu9lgfW_story.html?hpid=z2
If you are going to call Republicans racists who will roll back the clock on civil rights, have the guts to stand by your assertion. Skip the “These guys aren’t bad guys, they just have a fundamentally different view” disclaimer. Perhaps replace it with “Just Sayin”.
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“These guys aren’t bad guys, they’re just drawn that way.”
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Don’t most partisans see everything under their opponent is being full of fascist-racists/totalitarian-nanny-staters, depending on their own ideological bent?
Yet, every election cycle, we get this same boilerplate. “Imaging what X will look like if Y is elected! Oooo, scary.”
Very little campaigning is spent trying to win over converts or even influence fence-sitters. Almost all of it is red meat for the base, almost all of it is preaching to the choir.
Tangent: As far as influencing the outcome of elections, I think unlimited spending and money in elections makes very little difference (and the outcomes of recent elections, where certain wealthy people spent more on their campaigns than ever in history, still lost their bids, tends to bear this out).
Huge donations may buy favors from politicians or build undue empathy to donor causes. But spending gazillions on the sorts of adverts I see seems likely to me to be markedly ineffective in influencing the electorate.
I may not be typical, but I find most of it hyperbolic and alienating. And there have been campaign analysis that indicate over-saturation of a candidate is actually counterproductive, driving down their numbers when they plaster themselves over radio and television, 24/7.
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Brent:
If I understood your PL comment correctly, it doesn’t matter that he was listed as the CEO (etc.) if he wasn’t listed as the Manager, since the Manager is the person doing the actual day-to-day operations?
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“These guys aren’t bad guys, they’re just drawn that way.”
I love Roger Rabbit. There have been a dozen false starts for a sequel (and even test footage), but its never happen, even though more of a few completed scripts were commissioned.
Free Jessica Rabbit!
I read the book the movie was based on, Who Censored Roger Rabbit? . . . It was interesting, but a very different story. It starts out with Roger Rabbit having been killed, but because Toons can spawn dopplegangers (like clones to have the anvils fall on them), Roger’s doppleganger is still around, and able to help the PI find his killer.
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I’m not sure how the Justice Dept. could be worse under Romney than it has been under Holder unless they bring back Janet Reno. We’re still zero for zero on financial crisis prosecutions.
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I’m not sure how the Justice Dept. could be worse under Romney than it has been under Holder
A Romney Justice Department would engage in minority voter suppression and start internment camps for persons of Arab descent. This is known.
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Michigoose:
Yes, in a nutshell. Here is how (I think) it works. Bain sets up private equity funds where they raise money from investors (say pension funds and endowments) and names a manager for that fund. The fund manager then takes that capital and invests it. The fund typically buys entire companies or is part of a consortium that buys a company. The fund might be called “Bain Alpha Fund 1998-1” The companies are bought, restructured, and taken public (or sold to another fund). Once the investments have been liquidated, the money is returned to the investors. Bain (the holding company) would probably have a co-investment interest in the fund and receives management fees, which pay the salaries of the fund manager and analytical team and other expenses (audit, etc). The investors get some or all of the upside (with the fund manager / Bain getting an incentive fee, maybe 10% or 20% of the return of the fund, subject to a high water mark). The fund manager is the one who is actively managing these companies and is paid based on management and incentive fees. Those fees largely go to the manager, though some get kicked up to Bain the holding company.
Bain the holding company sets up the funds, raises the capital, and handles the investor relations / accounting / legal / SEC issues that arise. Romney ran the holding company and signed docs as CEO etc.
I am speculating, of course. But it isn’t inconsistent with Romney’s statements that he had no active involvement in the company. At that point, he was negotiating his exit with the company, which would take time since he owned the company.
But it was the fund manager of Bain Alpha Fund IV that would make decisions over whether to close a plant here or open another one there, not the CEO of Bain Capital. Now, if there is a Bain Alpha Fund out there with Mitt Romney as a fund manager after 1999, then you are right, he does have an issue. But if he wasn’t going to work every day at Bain and had an office in Salt Lake where he worked on the Olympics and negotiated his exit from Bain, I think he was largely telling the truth.
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brent :
your answer to mich is longer than 100 words which means that categorically it cannot be true
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“Huge donations may buy favors from politicians or build undue empathy to donor causes”
mabye. but those guys can’t even stay bought.
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And just one other thing to point out – people love to say that “Bain made money by bankrupting companies.”
Bain the holding company would still get a management fee (typically 1% – 2% of assets) even if the fund loses money. Of course they won’t get an incentive fee, and the management fee basically covers day-do-day expenses and that’s it. The money is made in the performance fee.
Now if Bain Alpha Fund 1998-1 buys a steel company and it goes bankrupt, Bain Alpha Fund 1998-1 loses everything, except for any dividends it may have gotten in the interim. If Bain had a co-investment interest in the fund, that would be wiped out along with the investors’ money.
So that is how Bain can “make money” bankrupting companies. It is a myth – it doesn’t really.
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Brent:
Thanks! That makes perfect sense, and is along the lines of what I suspect; I highly doubt that Mitt has done anything illegal but it’s just that you can’t explain this stuff in a sound bite, so he has (stupidly, IMO) been hoping to avoid making that explanation. He needs an Austan Goolsbee and a white board or something. 🙂
Of course, since it can’t be explained as a sound bite, as John points out it can’t be true. So sad!
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Hit-and-run as today’s grant submission is calling me, but
Kevin, I’ve read the PL comments the last couple of days, and you have made me laugh out loud so hard it scared my cats. My only complaint is skippy using one of your one-liners (and without attribution BTW) over and over and over and . . . you get the point.
Like michi, thanks guys for the elucidation on the SEC filings.
Later all.
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He mentioned he stole it the first time. I’m okay with it.
Okie, once I get you to snort coffee out your nose, I will consider my mission accomplished.
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mabye. but those guys can’t even stay bought.
Just more evidence that politicians are, at the end of the day, literally good for nothing. They can’t even get bribed right.
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WSJ weighs in on eminent domain and mortgages:
“An Eminently Bad Idea
Seizing private mortgages to sell to other private investors.
July 11, 2012, 7:50 p.m. ET ”
http://online.wsj.com/article/SB10001424052702304299704577504631625599136.html?mod=googlenews_wsj
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jnc:
bring that one up tomorrow because everybody is pretty much gone
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“A report from the Federal Reserve Bank of New York suggests that the bulk of equity returns for more than a decade are due to actions by the US central bank.
Theoretically, the S&P 500 [.SPX 1334.76 -6.69 (-0.5%) ] would be more than 50 percent lower—at the 600 level—if the bullish price action preceding Fed announcements was excluded, the study showed.
Posted on the New York Fed’s web site Wednesday, the study sought out to explain why equities receive such a high premium over less risky assets such as bonds.
What they found was that the Federal Reserve has had an outsized impact on equities relative to other asset classes.
For example, the market has a tendency to rise in the 24-hour period before the release of the Fed’s statement on interest rates and the economy, presumably on expectations Chairman Ben Bernanke and his predecessor, Alan Greenspan, would discuss or implement a stimulus measure to lift asset prices.”
http://www.cnbc.com/id/48165921
This is the disparate impact of dollar creation on the economy or in other words its the Higgs Boson that the libertarians, gold bugs and fiat currency people search for. (not that is isn’t obvious to investors)
It also is an example of why talk of Romney or Obama as a job creator is uninformed. It’s the Fed, or nobody.
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Simon Johnson may not have the same sort of panache as Matt Taibbi or the same “flair” with words but he’s every bit as pissed off. I think he sees the Barclay’s Libor fixing, which he naturally believes involves other banks, here and elsewhere, as the straw that broke the camel’s back. If we don’t get this right as far as criminalization goes we’re in a pretty bad state. It’s so damned obvious.
Once the global financial crisis began to bite, there appears to have been a more systematic manipulation of Libor reporting by Barclays management in a particular direction – downward, to make it seem that the bank was healthier and therefore able to borrow from other banks at a cheaper rate.
George Osborne, Britain’s Chancellor of the Exchequer (the equivalent position to the Secretary of the Treasury) and a Conservative Party member, said recently, “Fraud is a crime in ordinary business; why shouldn’t it be so in banking?” The answer, of course, is that fraud is not allowed in any well-run country.
Anyone who takes personal responsibility seriously should want all those involved to be held accountable – to the full extent of the law in all jurisdictions. Anything that lets individuals escape consequences will further undermine the legitimacy that underpins all markets. Bankers should be leading the charge to clean up their industry.
He goes on to talk about the five “excuses”.
Fifth, the weakest argument is, “It was only a few basis points, here and there” (where a basis point is a hundredth of a percentage point, i.e., 0.01 percent). Either the Libor reporting process and, consequently, the pricing of derivatives has been corrupted by a criminal conspiracy, or it has not. There is no “just a little” in this context for the enormous global securities market.
I’m out for a few more days but had to leave this for Scott and jnc to read. I’m curious about what they think so will check back in eventually.
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Thanks, Lulu.
Who will make our 25000th comment? I think we should define it as 25000 approved comments.
About 50 to go…
I’m still making the move. The goal is to be done Monday. Or Tuesday.
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