Why I Love Mark,

Posted on July 14, 2012 by lmsinca

even though he’s clearly too old for me, he and I are both happily married to other people and he lives in Frickin’ Texas.  Here’s part of a comment he made at the PL that didn’t get enough coverage.  We can still be friends though.

I sometimes come here just to read Shrink’s links, or john’s, or jncp’s, or suek’s. When I see a substantive discussion, if I have time I might join in. But this place bogs down if it celebrates the momentary gain from political low blows which is always followed by a further obfuscation of the real discussions that could be had here, if not by the nominees. 
 
Which is why I want Gary Johnson to do better in the polls. We need another voice in the TV debates or they will sound like…”Obamacare”…”Romneycare”…”Bain”…”tax and spend”…”tax cuts for the rich”…and no one will even mention that CONGRESS HAS NOT DONE ITS JOB< EITHER D, R, OR MIXED, IN YEARS and the American people will go on being told by the challenger that the POTUS can do everything while the incumbent is bound by the fact that the POTUS can do little [after having campaigned saying the POTUS can do it all].  
 
But here, we could agree that POTUS cannot do what any nominee promises, and then talk about what should be done by Congress and by POTUS. No matter what we say here about the horse race of politics it will happen. It would be more difficult but more rewarding to focus on issues, here.

Filed under: Trivia | 9 Comments »

Good Golly! Quantum Locking Is Crazy Cool

Posted on July 13, 2012 by Kevin S. Willis

I don’t know how they’ll get around the whole problem having to supercool the components, but it’s amazing to think what might be possible in the future.

Just think of the roller coasters.

When you think of far-in-the future hard scifi, much technology is already in place and taken for granted. But to get to such far flung technology would have taken long development and many baby steps, and this sort of stuff strikes me as one of those baby steps.

Good golly.

Filed under: TED Talks | 3 Comments »

Drones because we can?

Posted on July 13, 2012 by novahockey

Esquire on the interrogate vs. Drone issue.

This kind of picks up on the video that Kevin posted. Technology and it’s use. Here, it seems to be driving our decisions. This makes that case that we’re not targeting people with drones to avoid interrogating them, but that the technology is allowing us to target people we previously never would have bothered with.

“It’s not at all clear that we’d be sending our people into Yemen to capture the people we’re targeting. But it’s not at all clear that we’d be targeting them if the technology wasn’t so advanced. What’s happening is that we’re using the technology to target people we never would have bothered to capture.”

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Morning Report 7/13/12

Posted on July 13, 2012 by Brent Nyitray

Vital Statistics:

  Last Change Percent
S&P Futures  1331.8 2.6 0.20%
Eurostoxx Index 2234.7 6.7 0.30%
Oil (WTI) 86.72 0.6 0.74%
LIBOR 0.455 0.000 0.00%
US Dollar Index (DXY) 83.66 -0.002 0.00%
10 Year Govt Bond Yield 1.48% 0.01%  
RPX Composite Real Estate Index 183.8 0.2  

Happy Friday the 13th.  Markets are slightly higher this morning on no real news. The Producer Price Index showed inflation is being contained.  Bonds and MBS are down slightly.

JP Morgan and Wells Fargo announced earnings this morning. JPM is going to restate Q1 earnings, and is laying the groundwork for claiming the huge prop loss was a rogue trader problem. Good luck with that one, Jamie. Wells announced a settlement with the regulators over redlining and announced it is exiting the wholesale mortgage business. Last one out, please shut off the lights.

Rep. David Schweikert weighs in on San Bernardino’s Eminent Domain proposal. He makes the point that whatever intrepid capital has waded back into the mortgage market will probably flee if the government starts seizing underwater mortgages.  No kidding. I am surprised President Obama has not seized upon this opportunity to establish his capitalist bona-fides. It could be his “Sister Soulja” moment.

Documents suggest that Tim Geithner was aware of the LIBOR-rigging scandal in 2007 and tried to do something about it. 

CoreLogic reported that 11.4 million homes were in negative equity in Q1, down from 12.1 million in Q411. Negative Equity and near-negative equity (< 5%) accounted for 29% of all residential properties with a mortgage.

Filed under: Morning Report | 18 Comments »

Let’s All Get Scared!

Posted on July 12, 2012 by Kevin S. Willis

This particular TED talk is disturbing. Printing guns? Printing ebola viruses? Crime networks setting up their own encrypted cell phone networks?

Ugh.

Is the answer a global police force? Hmmm.

 

Filed under: TED Talks | 4 Comments »

Morning Report 7/12/12

Posted on July 12, 2012 by Brent Nyitray

Vital 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 | 37 Comments »

Morning Report 7/11/12

Posted on July 11, 2012 by Brent Nyitray

Vital Statistics:

  Last Change Percent
S&P Futures  1337.7 2.2 0.16%
Eurostoxx Index 2246.3 4.4 0.20%
Oil (WTI) 84.94 1.0 1.23%
LIBOR 0.456 -0.002 -0.33%
US Dollar Index (DXY) 83.24 -0.161 -0.19%
10 Year Govt Bond Yield 1.51% 0.01%  
RPX Composite Real Estate Index 183.7 0.1  

Markets are rebounding after yesterday’s bloodbath. Market participants await the minutes of the FOMC meeting later this afternoon and will look for more granularity regarding the economic outlook for 2H and the possibility for further quantitative easing. Bonds are down 1/4 point while MBS are flat. 

On the way into work, Bloomberg had a depressing interview with TCW strategist Komal Sri-Kumar. He is predicting a recession in 2H, driven by Europe, political uncertainty over the election, and fears of taxmageddon. His forecast is a 15% to 20% drop in the S&P 500 and a 10-year bond yield of 1.25%. 

Earnings season has started out as a mixed bag.  Alcoa beat estimates, while Applied Materials, Advanced Micro and Cummins missed. Later this week we have some financials with JPM, Wells, and Citi reporting.  The season gets into full gear next week.

CNBC points out that the overall increase in house prices has been driven by dynamics in the distressed market that make the growth somewhat artificial. The demand has been coming from the most fickle of investors – pros and the first time homebuyer – and one characteristic of these transactions is they are one-sided – investors and first time homebuyers aren’t selling one home to buy another, they are just buying. This effect, along with the fact that the banks are dragging their feet releasing inventory into the market, is driving price increases at the low end which is masking weakness in the non-distressed end. FWIW, I believe housing is fundamentally cheap and pent-up demand is building, however housing cycles are very long and markets can remain fundamentally cheap or expensive for a very long time. 

San Bernardino County (the ones taking an expansive view of eminent domain) has filed for BK.

Filed under: Morning Report | 37 Comments »

Conscripting High School Graduates

Posted on July 10, 2012 by novahockey

Bringing back a type of draft in today’s NYT

A revived draft, including both males and females, should include three options for new conscripts coming out of high school. Some could choose 18 months of military service with low pay but excellent post-service benefits, including free college tuition. These conscripts would not be deployed but could perform tasks currently outsourced at great cost to the Pentagon: paperwork, painting barracks, mowing lawns, driving generals around, and generally doing lower-skills tasks so professional soldiers don’t have to. If they want to stay, they could move into the professional force and receive weapons training, higher pay and better benefits.

Those who don’t want to serve in the army could perform civilian national service for a slightly longer period and equally low pay — teaching in low-income areas, cleaning parks, rebuilding crumbling infrastructure, or aiding the elderly. After two years, they would receive similar benefits like tuition aid.

And libertarians who object to a draft could opt out. Those who declined to help Uncle Sam would in return pledge to ask nothing from him — no Medicare, no subsidized college loans and no mortgage guarantees. Those who want minimal government can have it.

It doesn’t say, but I’d imagine it would not be a true opt out, as I’m sure I’d still have to pay for Medicare, college loans and mortgage guarantees.

Filed under: Uncategorized | Tagged: | 15 Comments »

Morning Report 7/10/12

Posted on July 10, 2012 by Brent Nyitray

Vital Statistics:

  Last Change Percent
S&P Futures  1351.5 2.3 0.17%
Eurostoxx Index 2253.9 26.0 1.17%
Oil (WTI) 85.39 -0.6 -0.70%
LIBOR 0.458 0.000 0.00%
US Dollar Index (DXY) 83.18 0.023 0.03%
10 Year Govt Bond Yield 1.52% 0.01%  
RPX Composite Real Estate Index 183.6 0.3  

Markets are slightly higher this morning on moves by European Finance Minsters to lend to Spanish banks and a positive surprise in UK factory output.  Alcoa reported better than expected sales and profits last night. Bonds are down a couple ticks. 

The National Federation of Independent Businesses reported a 3 point drop in their Small Business Optimism Index in June. The only bright spot in the report is that small businesses expect credit conditions to continue to improve, but all other components were down. On the employment front, 9% of firms added 2.6 workers, while 12% cut employment by 2.8 workers.  The rest were unchd.  Punch line:  The economy slowed, but so far it doesn’t appear that we are headed into a recession.  Political uncertainty remains at historic highs. Note the SC decision on obamacare was not reflected in this report. 

Fannie Mae’s National Housing Survey reports that consumer optimism in the housing sector continues to improve, even in the face of weakness in other areas. But is the optimism being artificially driven by tight inventories which is primarily due to negative equity?

The Consumer Financial Protection Bureau has put out a 2000 page phonebook on how to address high cost mortgages.  It plans to ban balloon payments and prepayment penalties. Of course, prepayment penalties merely make the cost of the embedded prepayment option explicit, as opposed to being hidden in the interest rate. This would be the equivalent of the SEC decreeing that all mutual funds must be no-load. They also cut the size of permissible late payments and an assortment of other things. By ending balloon payments, the CFPB is effectively ending the hard money mortgage market, leaving those that can’t qualify for a normal mortgage unable to borrow. 

Filed under: Morning Report | 14 Comments »

Morning Report 7/9/12

Posted on July 9, 2012 by Brent Nyitray

Vital Statistics:

  Last Change Percent
S&P Futures  1347.7 -4.1 -0.30%
Eurostoxx Index 2232.2 -3.3 -0.15%
Oil (WTI) 84.93 0.5 0.57%
LIBOR 0.458 0.000 0.00%
US Dollar Index (DXY) 83.21 -0.169 -0.20%
10 Year Govt Bond Yield 1.52% -0.03%  
RPX Composite Real Estate Index 183.3 0.5  

Markets are down slightly as we kick off earnings season and Spanish yields top 7%. European finance ministers will meet in Brussels this morning, although no one expects much out of it. Bonds are up about half a point, while MBS are up a quarter. 

Earnings season starts tonight with Alcoa’s report. While the Street is somewhat pessimistic about Q2 numbers, I would point out that we coasted through the pre-announcement season with few misses.  The Street is estimating the S&P 500 will earn $25.23 this quarter, vs $24.06 last quarter and $25.16 a year ago. So for all intents and purposes the Street is looking at flat YOY earnings.

A couple positive data points with the markets:  we have couple big mergers this morning as well as some IPO filings. 

In an attempt to ease the credit crunch, the Federal Government is looking at how to address the problem of overlays – which is the layering of more stringent credit standards than the agencies require on Fannie, Freddie, and FHA loans. The government is keeping quiet about what potential remedies they are examining. Originators would love to see some sort of safe-harbor provision for lending which will lower or eliminate putback risk, which is the risk that the government will force an originator to buy back a loan after the fact if becomes non-performing. 

Filed under: Morning Report | 79 Comments »

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