Morning Report 8/22/12

Posted on August 22, 2012 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1409.1 -3.4 -0.24%
Eurostoxx Index 2469.1 -21.2 -0.85%
Oil (WTI) 96.73 -0.1 -0.11%
LIBOR 0.431 -0.003 -0.63%
US Dollar Index (DXY) 82.02 0.108 0.13%
10 Year Govt Bond Yield 1.77% -0.02%
RPX Composite Real Estate Index 192 0.2

Stocks are lower this morning on no real news. Dell missed.  Existing Home Sales are scheduled to be released at 10:00 am EST. The minutes of the last FOMC meeting are scheduled for 2:00pm EST. Bonds are up a half a point and MBS are flat.

Mortgage Applications fell 7.4% last week as refis slowed.

Greece needs some breathing room to pay its debts.

FHFA has revised their short sale guidelines to allow homeowners who are current on their mortgage (and have an eligible hardship) to sell their home in a short sale. Importantly, job relocation qualifies, which should help people who are stuck with underwater homes in places with no jobs to leave. Second Lien holders will be given $6,000 to expedite a short sale.

Toll Brothers reported better than expected earnings, with a 41% increase in revenues, 59% increase in backlog, and 66% increase in contract signings.  Toll is in the McMansion business, so it isn’t necessarily representative of the whole market, but it is another positive data point, especially for the jumbo part of the space.  The stock is up a few percent pre-open.

Fannie Mae’s economic outlook for the rest of the year is generally gloomy, although it does predict that housing activity will be a net positive to GDP for the first time since 2005.

Filed under: Morning Report | 118 Comments »

Morning Report 8/21/12

Posted on August 21, 2012 by Brent Nyitray

Vital 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 | 54 Comments »

Morning Report 8/20/12

Posted on August 20, 2012 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1412.7 -2.5 -0.18%
Eurostoxx Index 2468.5 -3.1 -0.12%
Oil (WTI) 95.73 -0.3 -0.29%
LIBOR 0.434 -0.001 -0.23%
US Dollar Index (DXY) 82.64 0.040 0.05%
10 Year Govt Bond Yield 1.82% 0.01%
RPX Composite Real Estate Index 191.8 0.4

Markets are weaker this morning on no real news.  The next two weeks should be pretty quiet as August winds down. There are no real market-moving economic releases this week, except possibly the FOMC minutes, which will be released Wednesday afternoon. Bonds and MBS are flat.

The Chicago Fed National Activity index improved slightly in July to -.13, but is still below zero, meaning the economy is growing below trend. June was revised downward. The plus is that the index is still above -.7, the level that starts indicating a recession.

Has Mario Draghi picked up Hank Paulson’s bazooka?  The Bundesbank and the ECB are reacting to a Der Spiegel story which says the ECB is looking to “cap” sovereign interest rates.  Which means they have to be willing to buy any and all government bonds at a set price. The ECB has characterized the article as “misleading.” Paging Mr. Soros…

The latest in the San Bernardino Eminent Domain saga.

Filed under: Morning Report | 22 Comments »

The Generation Game-Sunday Open Thread

Posted on August 19, 2012 by lmsinca

I’ve been looking around all afternoon for something to begin a new thread with and found this piece from Crooked Timber fairly interesting.  We keep hearing a lot about Baby Boomers and Gen X and Y or whatnot and so I thought this might be a conversation starter.  While I was reading the comments I came across one guy who was insistent that the boomers were the worst generation ever and a bunch of narcissistic destructive dolts or something along those lines.

One of the standard ploys in journalism, marketing and political commentary is the generation game. The basic idea is to label a generation ‘X’ or ‘Y’, then dissect its attitudes, culture, and relationship with other generations. The most famous generation, of course, is that of the Baby Boomers, born between the end of World War II and the early 1960s, and their most enduring contribution to the generation gap is the ‘Generation Gap’ between children and their parents.

The generation game is played with particular vigour in cultural commentary, but its reach seems to be extending all the time. No US Presidential election would now be complete without voluminous commentary on the generational backgrounds of the contenders. There is even a branch of economics called generational accounting, which is supposed to show whether one generation is subsidising another through the tax and welfare system.

Once we strip out the more-or-less constant social distinctions associated with membership of a given age-group, the idea that we can say much about any particular cohort becomes far more dubious. In fact, cohort effects are only of much importance between the ages of 16 and about 25. The experience of childhood is dominated by family and school, and, while both families and schools have changed since the 1950s, the rate of change from one decade to the next has been quite slow.

On the other hand, by the time the members of a given cohort reach their late twenties, their live courses have diverged so much that they cease to form a well-defined group with common experiences. The differences between men and women, rich and poor, workers and bosses, married and single, parents and nonparents count for much more than the commonality that comes from sharing a date on a birth certificate.

For the crucial decade from 16 to 25, however, common experiences related to growing up at a particular time can be very important. Whether the labour market is in a boom or a slump when you finish school can make a big difference to your subsequent career. For males, an even more important question is whether the years of military age coincide with a major war. Peacetime and wartime generations, or boom and slump generations, can be very different.

This is a re-publication of a piece written prior to this recession but I thought this was interesting and I think we all know how both the 16-25 and the over 50 crowds are suffering this time.

It was not until the recession we had to have, from 1989 to 1992, and the waves of downsizing in the 1990s, that the end of postwar prosperity really hit the Vietnam generation and the baby bust cohort. Although the focus of policy attention remained firmly on youth unemployment, the real story of the 1990s was the disappearance of jobs for workers over 50, and particularly for men over 50. The employment rate for this group has fallen from nearly 100 per cent during the postwar boom to around 50 per cent today.

Filed under: 2012 | Tagged: | 6 Comments »

I, Judas – A Book Review

Posted on August 18, 2012 by lmsinca

James Reich is both novelist and poet.  If you accept that he has the soul of a poet, then I, Judas is one of the most difficult and lengthy poems you’ll ever read.  I say difficult not in an “oh my God, what lousy poetry” way, but in the sense of being “uncomfortable while reading” way.  I felt, while I was reading, as if I were a child being allowed to sit at the adult’s dinner table for the first time and discovering that it was much more fun at the children’s table.

Perhaps you disagree that he is a poet, then I offer this passage about that fateful morning in Dallas in November of 1963:

“jackals careened about the passenger door. Scarlet broth ran down her sunglasses. His back brace held him corseted to his cross, and the shot pealed again.”

Judas pops up in numerous momentous, and not so momentous, occasions like a modern day Lucifer peddling his influence as he skips around the globe and history.

I was raised by atheists to be a Christian.  As such I’ve always had great difficulty accepting Jesus as the Son of God but even I, perhaps because I still attend church for inspiration and solace, was shocked to contemplate biblical characters in such brazen terms.  For example, Mary Magdalene as the reckless whore and Joseph crafting the rude cross of his own son’s crucifixion, in the hopes that his wife’s lover will one day hang from one.

Recently, I was discussing the Lochness Monster with my six year old grandson as he has been doing research on Nessy lately.  I asked him if he believed the Lochness Monster was real or not and he said “I believe in all the legends Grandma”.  Reading I, Judas would cure him of that……………………….luckily he’s too young still.  I sort of wished I hadn’t read the book, if you know what I mean.

Please add your comments below if you’ve read the book.  If anyone misunderstands my comments above, I enjoyed the book, in a rather painful way.

Filed under: 2012, Book Review | Tagged: | 74 Comments »

Discrimination in Public Accommodations

Posted on August 17, 2012 by Mike

A post by Eugene Volokh on VC talks about a recent jury award under the CA public accommodations anti-discrimination statute against a (Muslim) hotel owner that kicked out a Friends of the IDF gathering. I think the major issue is whether property owners are free to discriminate on the basis of non-religious (or religious) beliefs. A secondary issue is whether property owners can discriminate on the basis of speech (Note: it is not clear to me whether the Friends of the IDF gathering was just a party or a fundraiser with speeches, etc.).

The link to the LA Times article has a little more information on the background.

So, an additional question is: should we have different rules for property owners in different states? Volokh makes it sound as if this result is specific to CA.

Filed under: First Amendment, law | 50 Comments »

Friday Open Thread: 8/17/2012

Posted on August 17, 2012 by jnc4p

Since we don’t have a Morning Report, I’ll start a new thread. If anyone has the Vital Statistics, feel free to add them.

This is worth a read:

Old Obama acquaintance voices South Side’s disillusionment with his former ally

Makes me wish Jack Kemp was still around.

Filed under: 2012 | 35 Comments »

Morning Report 8/16/12

Posted on August 16, 2012 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1407.1 3.6 0.26%
Eurostoxx Index 2429.5 -0.9 -0.04%
Oil (WTI) 94.65 0.3 0.34%
LIBOR 0.434 -0.001 -0.23%
US Dollar Index (DXY) 82.72 0.077 0.09%
10 Year Govt Bond Yield 1.81% -0.01%
RPX Composite Real Estate Index 190.4 0.3

Stocks are ticking higher this morning in spite of earnings misses by Wal Mart and Sears and some disappointing housing data. Bonds are more or less flat, while MBS are up a tick or two.

Weekly Initial Jobless Claims came in at 366k, more or less in line with expectations and recent history. Housing starts were disappointing at 746k, but an upside surprise in building permits offset that. Housing starts are recovering, but we are still running at half our historical rate, and have averaged a couple hundred units below average over the last 10 years.

Looks like Corzine is going to skate..

The backup in yields over the last few weeks has been dramatic (a range of 50 basis points or so). How have mortgages fared?  Actually, MBS have held up better than long bonds over the past month or so.  Since they underperformed on the the way up, they are outperforming on the way down.  Here is a chart of both securities indexed over the past month:  Note: These are NOT bond prices, they are indices.

Filed under: Morning Report | 176 Comments »

Bites & Pieces, Fresh Tomatoes Edition

Posted on August 15, 2012 by Michigoose

I picked up my CSA bags this afternoon and found inside the most amazing beefsteak tomatoes.  This is one of the things I miss most about not having a garden–the tomatoes.  So along the way I stopped at a roadside stand and picked up some basil, and ran home to make myself an Insalta Caprese with the fresh mozzarella that I’d gotten over the weekend in just such hopes.  Ahhhhhhhhhh. . . the first tomato (4″ in diameter!) was as heavenly as hoped!

But what to do with the rest?  Here are three more of my favorite things to do with fresh-off-the-vine tomatoes, and will be dinner at Chez Michigoose for the next few days.

Tomatoes à la Provençale (the original, from Julia Child’s “Mastering the Art of French Cooking”)

Tomatoes about 3″ in diameter

Salt and pepper

1 – 2 cloves mashed garlic

3 Tbl minced shallots

4 Tbl minced basil and parsley (or parsley alone)

1/8 tsp thyme

1/4 tsp salt

Big pinch of pepper

1/4 cup EVOO

1/2 cup bread crumbs

1.  Cut the tomatoes in half and gently remove the juice and seeds.  Sprinkle the halves lightly with salt and pepper.

2.  Blend the remaining ingredients and correct seasoning.  Fill each half with a spoonful or two of filling, and drizzle a bit of olive oil over the top.

3.  Arrange the tomatoes in a shallow, oiled roasting pan large enough to hold them in a single layer without crowding.  Place them in the upper third of an oven preheated to 400 degrees and roast for 10 to 15 minutes, or until the tomatoes are tender but hold their shape and the bread crumb filling has browned lightly.

Tomatoes Stuffed with Herbs and Cheese (basically the above as modified by Karen Lee in “The Occasional Vegetarian”)

Tomatoes

EVOO

2 t chopped fresh oregano

2 t chopped fresh thyme

1/4 cup chopped fresh parsley

1/2 cup bread crumbs

1/4 cup shredded gruyere or cheddar cheese (I usually use a tad more than this)

Salt and pepper

1.  Prep the tomatoes as above, and combine the rest of the ingredients.  Drizzle 1/2 teaspoon olive oil into each of the tomatoes halves, and then lightly fill the tomatoes.  I like to put extra cheese over the top, or you can simply spoon any extra filling over the top.  Drizzle the remaining olive oil over the tops of the tomatoes.

2.  Place the tomatoes on a lightly oiled baking sheet and place in an oven preheated to 350 degrees for about 10 minutes, until the tomatoes are soft and the cheese has melted, and then run under a broiler for about 30 seconds to brown the tops.

Tomatoes Stuffed with Swiss Chard, Rice, and Cheese (another Karen Lee recipe)

Especially for lms, since I know she loves her some Swiss chard

Tomatoes

salt

1 Tbl EVOO

1/4 cup chpped shallots

1 cup washed and chopped Swiss chard, tightly packed

1 1/2 cups cooked white rice (although recently I tried black rice with this and that’s also good)

1 Tbl soy sauce

2 Tbl oven-roasted pine nuts

1 Tbl chopped fresh oregano

1/2 cup grated cheddar cheese

1.  Preheat the oven to 350 degrees.

2.  Cut a thin slice from the top of each tomato and scoop out the seeds and pulp.  Sprinkle the insides of the tomatoes with salt and turn them upside down on a roasting rack to drain while you make the stuffing.

3.  Heat a wok or cast-iron skillet over high heat for one minute and add the oil and shallots, turning the heat to low immediately.  Saute until the shallots are soft, 2 – 3 minutes.  Add the chard and saute until wilted, 2 to 3 minutes more.  Add the rice, soy sauce, pine nuts and oregano, stir to mix and remove from the heat.

4.  Stuff the tomatoes and place them in a shallow greased roasting pan with a little space between them.  Bake uncovered until the tomatoes are cooked through, 10 to 12 minutes.

5.  Remove the pan from the oven and turn the oven to broil.  Sprinkle the cheese of the tops of the tomatoes and broil until the cheese has melted, 1 to 2 minutes.

Baked Tomato Slices with Goat Cheese (another Karen Lee, and my absolute favorite way to eat really excellent tomatoes other than just out of my hand off the vine)

Tomatoes

1 t EVOO

1/4 cup (or more) fresh goat cheese

1 – 2 Tbl skim milk

1 Tbl shredded fresh basil

1/4 t black pepper

1.  Take a thin slice off of the top and bottom of the tomatoes and set aside to snack on as you cook.  Cut each tomato into thick slices (1/2″ or so).  Place the slices on a baking pan lightly coated with the olive oil.

2.  Mash the cheese with enough milk to make a creamy mixture.  Mix in the basil, pepper, and salt to taste.

3.  Top the tomato slices with a heaping spoonful of the cheese mixture and spread slightly.  Bake until the cheese begins to turn golden and spread.

4.  Serve the tomatoes as they are, or place on a bed of watercress or (if you’re a good Liberal) arugula.  Optional:  sprinkle with roasted sesame seeds.  Can be served either warm or at room temperature.

Enjoy those garden-fresh tomatoes while they last–one of my favorite parts of summer!

Filed under: Bites and Pieces, Summer | Tagged: | 7 Comments »

Morning Report 8/15/12

Posted on August 15, 2012 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1399.7 -1.9 -0.14%
Eurostoxx Index 2425.9 -6.4 -0.26%
Oil (WTI) 92.93 -0.5 -0.54%
LIBOR 0.435 -0.002 -0.46%
US Dollar Index (DXY) 82.68 0.199 0.24%
10 Year Govt Bond Yield 1.76% 0.02%
RPX Composite Real Estate Index 190.4 0.3

Another ho-hum market day with a lot of economic data, but not much action. The CPI showed inflation remains in check, and we had a mixed bag of industrial reports – with positive industrial production and capacity utilization numbers offset by a disappointing Empire State Manufacturing Survey. The bond market continues to sell off and the 10-year bond futures appear to have fallen below the 147 – 153 range they have been stuck in since late May. MBS are down 4 or 5 ticks.

Funds are releasing their 13-Fs right now, which is the list of their holdings. One filing that is always popular is Berkshire Hathaway’s because a lot of investors like the idea of piggybacking Warren’s trades, and also changes can give insight into what Warren is thinking.  In the latest filing, he reduced his exposure to defensive names, like Proctor and Gamble, Kraft, and Johnny John. He increased his holding in Wells and initiated stakes in a couple names in the energy sector – National Oilwell Varco and Phillips 66. It is hard to read much into the report – net equity exposure dropped, but they seem to be taking a more constructive posture towards the economy.

If you are a property seller, Taxmageddon may have some nasty surprises for you. Theoretically, this should pull some sales from 2013 back into 2012. Which means that Fall could be a little better, while the Spring selling season could be a little weaker.

Finally, the National Association of Homebuilders Confidence Index increased in August as the hot rental market is brightening the spirits of the homebuilders. While absolute levels are still depressed relative to historical standards, the rebound has been swift.

Chart:  NAHB Market Index:

Filed under: Morning Report | 137 Comments »

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