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 | 1419.6 | 4.9 | 0.35% |
| Eurostoxx Index | 2477.1 | 10.8 | 0.44% |
| Oil (WTI) | 97.13 | 1.2 | 1.21% |
| LIBOR | 0.434 | 0.000 | 0.00% |
| US Dollar Index (DXY) | 82.03 | -0.422 | -0.51% |
| 10 Year Govt Bond Yield | 1.84% | 0.03% | |
| RPX Composite Real Estate Index | 191.8 | 0.4 |
Markets are stronger this morning on no real news. There are very no meaningful economic releases this week, except for perhaps the FOMC minutes which come out tomorrow. The lack of news out of Europe has led to a benign environment for equities, which means that the 10-year continues its sell-off. MBS are down 6 ticks as well.
HUD is doing another auction of distressed single family loans – $1.7 billion. These are loans primarily in Phoenix, Chicago, Tampa, and Newark. Given the amount of money that’s being raised for distressed real estate, HUD should be shoveling this stuff out the door. When the ducks are quacking, you gotta feed ’em.
Dick Bove of Rochdale Securities points out that the government’s regulation of the banks is creating an opportunity for the shadow banking system – the firms who operate outside of the banking system (that would be us, for example). While he does worry about this laying the groundwork for the next crisis, in the meantime winners will emerge in the disarray. Take a look at the charts of Nationstar Mortgage (NSM), Impac (IMH), and Redwood Trust (RWT). These stocks have been screaming. This is actually a very bullish sign for real estate – since the crisis began, the market has been dominated by Ginnie / Fannie loans. A bottom in real estate is the single most important factor to turn things around. The private label securitization market is the second.
The era of frothiness is over (at least according to the Economist). What is interesting is that real estate is the cheapest relative to incomes in Japan, followed by Germany and the US. The Canadian real estate bubble still has yet to burst. It will be interesting to see how their banking system handles it.
Filed under: Morning Report |
All Things in Moderation 
“Clothes make the man. Naked people have little or no influence on society.” – Mark Twain.
Clearly never lived with 3-year-old. Who new a nude 3-year-old could derail an entire morning. learned something today.
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OT, but wow. I’ve done some local long distance swimming in the ocean and it’s really hard. Swimming miles and miles in a pool is child’s play comparatively. I’ve also been stung numerous times by jelly fish, not fun. This woman must be slightly crazy at 63, but I sure do admire her.
Endurance swimmer Diana Nyad was pulled from the water this morning, ending her historic Cuba-to-Florida swim.
Nyad was attempting to become the first person to swim from Cuba to Florida without a shark cage. Wednesday is her 63rd birthday.
Support crews pulled Nyad out of the water as they gave a phone interview to “Good Morning America.”
“We pulled her out of the water,” Steve Munatones told Robin Roberts. “The dangers were so great that we couldn’t risk anyone’s life, including her own.”
Munatones was the official observer of the swim and the editor in chief of the Daily News of Open Water Swimming.
It was Nyad’s fourth attempt to complete the swim.
Support crews monitoring Nyad told “GMA” that Nyad had severe sunburn, a strained bicep muscle and could barely walk. Nyad and her crew are on their way to Oceanside Marina in Stock Island, Key West, so she can receive medical care for non life-threatening injuries.
Nyad’s lips and tongue had become increasingly swollen overnight, puffing up because of salt water. Members of her support crew of 63, which included multiple boats, had slathered her face and full-body wetsuit with black-tinted lanolin to keep the jellyfish and the cold at bay.
Team members said she had been struck at least four times by jellyfish during her voyage. Jellyfish stings cut short her attempt to make the crossing last year. This was Nyad’s third attempt to complete the swim in less than a year. Nyad was not allowed to touch or be touched by any of the support crews or vessels.
Nyad began the arduous journey late Saturday night. At a pace of 50 strokes a minute, the journey was expected to take 60 hours. A squall with winds of 14 knots hit the flotilla Sunday and stayed “nearly stationary over” Nyad, forcing her to move northwest in order to try to find a way out of the storm.
Nyad ended her last attempt in September 2011 after more than 40 hours, 67 nautical miles of swimming, and two Portuguese man o’ war stings.
http://gma.yahoo.com/diana-nyad-pulled-water-ending-historic-swim-082155143–abc-news-topstories.html
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I’m surprised that China is next, after the US, among nations with real estate cheapest relative to income. But that is perhaps because I’ve only been in the big cities, where real estate prices can be astronomical.
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Wow, I just had a comment disappear for the first time I think. Probably because Mike and I were posting at the same time.
I’ll try again. Michael Olenick isn’t so sure we’ve hit the bottom in housing.
Every day a growing crescendo of housing cheerleaders posit the end of the foreclosure crisis. We’re flipping our way out of the mess that we flipped ourselves into, is their usual line of reasoning. I’ve looked at national data, local data, and even data on my own block here in Florida. I tried to make the evidence prove the market has found a genuine, sustainable bottom. There are clearly gimmicks giving a temporary boost, a great PR campaign that may or may not be coordinated, and some foreclosure flippers that may do well, until they don’t. But the evidence is overwhelming: home prices are anything but stable.
For background, a chorus of the same people that created the housing crisis have been predicting a housing bottom every year or so. They’ve always been right for anywhere from a few days to a few months, then the cycle of foreclosures and lowered home values restarts and causes prices to spiral downwards. This time though, especially in certain micro-markets, there does seem to be measured home price appreciation.
Two trends are apparent. One is that banks are delaying foreclosures, or not foreclosing at all despite long-term delinquencies. The other is that private equity firms – flush with cash thanks to Tim Geithner’s religious devotion to trickle-down economics and the resulting cascade of corporate welfare – have been bidding up and holding foreclosed houses off the market. These two factors have artificially limited supply and, combined with cheap mortgages rates, driven up prices. While we can debate whether these strategies represent the best public policy, these policies are obviously not long-term sustainable.
Read more at http://www.nakedcapitalism.com/2012/08/michael-olenick-looking-for-a-housing-bottom.html#pdL3tTuVORjrjHSh.99
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“these policies are obviously not long-term sustainable.”
Since when did we care about that?
“Recession-Plagued Nation Demands New Bubble To Invest In
July 14, 2008 | ISSUE 44•29”
http://www.theonion.com/articles/recessionplagued-nation-demands-new-bubble-to-inve,2486/
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lms, Needless to say, I am bullish on real estate and have a couple of points from his article.
Some of the rise in prices we have seen since winter has been driven by seasonality – that is normal. However, the price appreciation has been higher than the seasonal boost we have seen in the past few years. That is why many people are hopeful we have turned the corner.
Second, his argument that private equity firms are buying these properties and they will just flip them doesn’t acknowledge the fact that the government has insisted on long holding periods from bidders in order to discourage just that. Not only that, but buyers are prohibited from instituting the foreclosure process for 6 months. So the government is going all-out to ensure they aren’t selling to flippers. Think about it this way – what are investors clamoring for above all else? Yield. Rental yields are in the high single digits. You can raise money all day for that kind of return.
People that are hoping for a cataclysmic sell-off may be waiting forever. Cataclysmic sell-offs happen when weak holders dump an asset into strong hands en-masse. If you have lugged an asset for 6 years, by definition you have strong hands. IMO that train has left the station.
Finally, he glosses over the fact that housing IS cheap by historical standards. The median house price to median income ratio is the lowest it has been since the 70s. http://thenadtearsheet.blogspot.com/2012/05/morning-report_10.html
Household formation has been at historical lows as unemployed college kids move back in with their parents and have roommates. And that is a temporary phenomenon. People eventually get married, and leave their roommates to have their own place.
We have underbuilt for the past 10 years, and when you consider population growth, it is even more dramatic.
So, FWIW, I think housing bottomed in February.
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Brent and Lulu –
The Houston and Austin papers are today reporting booming housing sales in the respective cities.
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“So, FWIW, I think housing bottomed in February.”
I assume that’s independent of Europe blowing up and another recession?
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I assume that’s independent of Europe blowing up and another recession?
I am going to go out on a limb and say it has.
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Thanks for your perspective Brent. I hope you’re right. We live in an upscale community in the IE and prices are creeping up here already but it’s not very universal across the board in CA. I think we’re all a little gun shy here and still waiting for the other shoe to drop. I haven’t noticed the rental market setting the world on fire out here either but I do think it’s a great investment still for people with a little extra cash. Low interest rates and low prices can give you a positive cash flow right off the bat even with a mortgage, and just a modest down payment. That wasn’t always the case here. We keep thinking about it ourselves once we get our savings built back up after the year we’ve had. I think we’re a little old and probably too close to retirement but it’s an idea worthy of pursuing.
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Nomura really knows how to kill a day:
“S&P 500 Facing 25% Drop Before US Election: Janjuah”
http://www.cnbc.com/id/48735251
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“S&P 500 Facing 25% Drop Before US Election: Janjuah”
Gutsy call.
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Greg is just a complete idiot on the economics of education:
http://www.washingtonpost.com/blogs/plum-line/post/another-paul-ryan-vulnernability-education-cuts/2012/08/21/8bc38786-ebab-11e1-a80b-9f898562d010_blog.html
or maybe he’s just following the lead of his readers, who are in fact the idiots on education.
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brent
the guy is a perma bear, BUT that doesn’t mean he’s wrong of course.
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Jennifer Rubin is trying to beat the drums for war with Iran again. I really think right now that’s about the only way Obama could lose this election, by supporting the Israelis with military action. Of course Netanyahu may think the only way he can get Romney as president is by attacking Iran and handing the US a fait accompli.
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If I recall, Texas (aka “Flatland” in Krugmanspeak) didn’t experience the housing bubble to the extent of the rest of the country due to a combination of tougher lending regulations and lax zoning laws.
http://krugman.blogs.nytimes.com/2007/10/20/the-two-americas/
http://krugman.blogs.nytimes.com/2010/01/06/bernanke-and-the-bubble/
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“bannedagain5446, on August 21, 2012 at 12:10 pm said:
Jennifer Rubin is trying to beat the drums for war with Iran again. I really think right now that’s about the only way Obama could lose this election, by supporting the Israelis with military action. Of course Netanyahu may think the only way he can get Romney as president is by attacking Iran and handing the US a fait accompli.”
I truly see no evidence for your apparent belief that President Obama wouldn’t take unilateral military action in Iran if he felt the need to. When it comes to Israel, both parties are hawks.
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“bannedagain5446, on August 21, 2012 at 11:47 am said:
Greg is just a complete idiot on the economics of education:
http://www.washingtonpost.com/blogs/plum-line/post/another-paul-ryan-vulnernability-education-cuts/2012/08/21/8bc38786-ebab-11e1-a80b-9f898562d010_blog.html
or maybe he’s just following the lead of his readers, who are in fact the idiots on education.”
Remember, all the education cost inflation is caused by sports programs, for profit college, or nefarious lenders. Clearly the solution is to have education lending mostly provided by the government and convert higher education into a mostly non-profit system. Oh wait.
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jnc:
The real problem is apparently that not enough people are borrowing enough money for education so that we can’t rehire the 367 teachers unlucky to get laid off and thus jump start the whole economy.
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“I truly see no evidence for your apparent belief that President Obama wouldn’t take unilateral military action in Iran if he felt the need to. When it comes to Israel, both parties are hawks.”
you know I agree that Obama with the military is a typical kid with a new toy, but I think he would be very reluctant to get involved with Iran until after the elction is over.
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Brent/lulu/Mark:
Housing inventories in Tampa are at a six-year low.
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Their multiplier effect is huge. Enough firepower to destroy an entire star system.
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What’s the only difference between Tony Scott and the GOP campaign?
Speed
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“bannedagain5446, on August 21, 2012 at 12:48 pm said:
“I truly see no evidence for your apparent belief that President Obama wouldn’t take unilateral military action in Iran if he felt the need to. When it comes to Israel, both parties are hawks.”
you know I agree that Obama with the military is a typical kid with a new toy, but I think he would be very reluctant to get involved with Iran until after the elction is over.”
Neither Romney or Obama will do anything in Iran that involves ground troops (except perhaps for a special forces team to illuminate targets). Both will easily support bombing or drone strikes if they believe it to be necessary.
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The Iran thing could very easily get out of hand. Neither we nor the Israelis have anywhere near the control we think.
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Anyone think Americans will really care one way or another overall if we get embroiled with Iran? No one even talks about Afghanistan any more and we have troops on the ground there dying.
The Afghan conflict generates barely a whisper on the U.S. presidential campaign trail. It’s not a hot topic at the office water cooler or in the halls of Congress — even though more than 80,000 American troops are still fighting here and dying at a rate of one a day.
Americans show more interest in the economy and taxes than the latest suicide bombings in a different, distant land. They’re more tuned in to the political ad war playing out on television than the deadly fight still raging against the Taliban. Earlier this month, protesters at the Iowa State Fair chanted “Stop the war!” They were referring to one purportedly being waged against the middle class.
By the time voters go to the polls Nov. 6 to choose between Obama and presumptive Republican nominee Mitt Romney, the war will be in its 12th year. For most Americans, that’s long enough.
Public opinion remains largely negative toward the war, with 66 percent opposed to it and just 27 percent in favor in a May AP-GfK poll. More recently, a Quinnipiac University poll found that 60 percent of registered voters felt the U.S. should no longer be involved in Afghanistan. Just 31 percent said the U.S. is doing the right thing by fighting there now.
Not since the Korean War of the early 1950s — a much shorter but more intense fight — has an armed conflict involving America’s sons and daughters captured so little public attention.
http://news.yahoo.com/americans-tune-afghan-war-fighting-rages-185225577.html
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FYI lmsinca, an analysis of the troop deaths and a photo essay did make the front of the NY Times web site today:
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lms:
That’s because the press has given Obama a free pass on this and on his war on our Constitutional rights. They see Romney as a bigger threat, and so they look the other way.
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The fact that continuing the ethanol subsidies is even being debated instead of permanently repealed immediately shows the entrenched power of crony capitalism.
“Study: U.S. could put a big dent in food prices by relaxing ethanol rules
Posted by Brad Plumer on August 21, 2012 at 3:59 pm”
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/08/21/study-u-s-could-put-a-big-dent-in-food-prices-by-relaxing-ethanol-rules/
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Thanks jnc, I hadn’t seen that. We have friends whose son has done three tours over there as a helicopter mechanic but he’s out now thank goodness.
John, do you think it would really be any different with Iran, even after the election? I don’t. It’s almost our destiny in some ways or a fait accompli.
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BTW
How crazy is it that we have been at war in Afghanistan for 11 years when the 9/11 hijackers were from Saudi Arabia, lived in the US for over a year and TRAINED for their mission here, not in AF. At best they lived there for a time in training camps but in Pakistan as well. .
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oh the financing came from the UAE, not Afghanistan either.
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banned:
How crazy is it that we engaged in a land war in Afghanistan in the first place, knowing full well that the mujahedin had already beaten back the USSR? I mean, doesn’t any of this look familiar? Heck, we’ve been in Afghanistan longer than the Soviets were. Apparently, we don’t learn very well.
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The original land war with proxies aided by special forces and the CIA worked out very well. It’s the nation building that has gotten the United States bogged down, as it always does. We would have been much better served to have stuck with the proxies rather than introduce a large ground footprint, despite their shortcomings. The other key event that could have made things turn out differently is if Ahmad Shah Massoud hadn’t been assassinated by Al-Queda two days prior to 9/11/2001.
http://en.wikipedia.org/wiki/Ahmad_Shah_Massoud
I will give Joe Biden credit for recommending against the Afghanistan surge and instead transforming the Afghanistan mission from counter insurgency to counter terrorism with a much smaller footprint.
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the terrorism is neither financed nor begun in Afghanistan.
By being there, we make ourselves the target.
It’s makes as much sense as if France and Great Britain had vowed to invade Poland in 1939 instead of Germany
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Yes but that is where the terrorists were at one point and it made sense to go in and kill them and chase them out. That however was a three month operation.
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jnc
yes
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Is there any way possible the GOP leadership could have designed a worse campaign?
Maybe if they have Rush join Trump on stage at the first day of the convention?
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mike:
in maddow, somebody made reference to the catch phrase for Afghanistan “clear-hold-build”
so I immediately sent them a link to the “strategic hamlets program” from Vietnam and said we already know how this movie ends.
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banned:
Karzai = Diem? Karzai is a crook with a crooked brother. He’d better watch out for his armed guards.
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banned:
Maybe if they have Rush join Trump on stage at the first day of the convention?
Maybe Hurricane Isaac will be joining them too ….
For obvious personal reasons, I hope Isaac stays away.
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In fact checking the NIall Ferguson Newsweek piece, Matt O’Brien inadvertently blows a repeated point about Romney’s taxes all to hell.
We have often been told the nonsensical point that Romney pays less taxes than the average American. (if you believe at all the 14% figure which in fairness, many don’t) However as O’Brien writes:
“It is true that 46 percent of households did not pay federal income tax in 2011. It is not true that they pay no taxes. Federal income taxes account barely account for half of federal taxes, and much less of total taxes, if you count the state and local level. Many of those other taxes can be regressive. If you take all taxes into account, our system is barely progressive at all.
But why do almost half of all households pay no federal income tax? Because they don’t have much money to tax. Here’s the breakdown from the nonpartisan Tax Policy Center. Half of these households are simply too poor — they make under $20,000 — to have any liability. Another quarter are retirees on tax-exempt Social Security benefits. The remaining households have no liability because of tax expenditures like the earned-income tax credit or the child credit.”
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mike:
Maybe when they shot at Dempsey’s plane, they thought it was one that Karzai has on standby with much of his loot loaded and ready to take off at any time.
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“Is there any way possible the GOP leadership could have designed a worse campaign?
Maybe if they have Rush join Trump on stage at the first day of the convention?”
I’ve stated my reasons as to why Romney will lose this election, but what about the campaign in particular is “worse” ?
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george
Akin, no matter how isolated they attempt to make him, damages the brand, wouldn’t you agree?
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banned:
Yeah, one C-17 looks just like any other C-17. Hey, does the CIA fly C-17s?
But these “insider” attacks seem to be getting more frequent in Afghanistan.
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Banned, that’s not the issue I think you were referring to with your initial comment. But in answer to your question, no, not in the long term.
Were you referring to Trump / R convention in your initial comment?
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For don juan and jnc – Iran on the ground:
http://www.economist.com/node/21560596
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george
It’s going from bad to worse, something’s in the control of GOP leadership like Trump and some unforseen like Akin.
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What about Trump is “worse?”
As for Akin, the D’s are more responsible for him than the R leadership. The D’s spent $1.5 million on ads in behalf of Akin to help him secure the nomination.
What is the evidence that the GOP leadership doing “worse?”
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NoVA:
I’m still waiting to hear the story about the nude 3 YO! 🙂
lms:
You might be interested in Lynne Cox’s autobiography, “Swimming to Antarctica”. We read it in my book group a few years ago and it’s interesting from a long-distance swimming POV, although we came to the conclusion that she, as a person, was fairly awful. Supremely self-centered and selfish. . . although maybe that’s what you have to be to do that kind of extreme swimming.
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Michi — I’ve never seen someone so opposed to putting pants on. I’ve seen drunks and drugs addicts who were more cooperative. It was equally infuriating and hilarious to have a 3 foot person scream at you that’s he’s never wearing clothes again. and then get indignant when the dog tried to lick his butt.
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Thanks michi, I remember her but haven’t ready her biography. I was born a few years too early to become a female lifeguard at the beach, but trained with a few lifeguard buddies while I was still in high school and did quite a bit of swimming up and down the coast. I did spend summers as a pool lifeguard, we were allowed to do that, but it wasn’t nearly as interesting to me.
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“unforseen like Akin”
this guy is scoring about a 2 on the bubble test.
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