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 | 1403.6 | -2.4 | -0.17% |
| Eurostoxx Index | 2439.2 | 2.6 | 0.11% |
| Oil (WTI) | 95.58 | 0.3 | 0.29% |
| LIBOR | 0.41 | -0.002 | -0.49% |
| US Dollar Index (DXY) | 81.21 | -0.105 | -0.13% |
| 10 Year Govt Bond Yield | 1.58% | 0.01% | |
| RPX Composite Real Estate Index | 192.1 | -1.0 |
Stock index futures are lower after the ECB released its blueprint for unlimited bond purchases and FedEx warned. A positive surprise in productivity was offset by higher unit labor costs. Bonds and MBS are flat.
The ECB has declined to put a cap on yields and will sterilize bond purchases to prevent inflation. The plan will also focus on short term government debt with maturities up to 3 years. Bill Gross must have gotten the advance word, as he tweeted yesterday “Draghi appears willing to write 2-3 year “checks” to peripherals. Very relationary. Buy gold, TIPS, real assets.” The Bundesbank is anticipated to be the only objection.
The CoreLogic Home Price Index grew at 3.8% and the early indication for August is + 4.6%. Excluding distressed sales, August is expected to come in + 6%. While they anticipate a seasonal slowdown in the growth rate, they are forecasting a gain for the full year 2012.
Toll Brothers just priced a convertible bond issue. $250MM, 20 year senior debt, 50 basis point coupon, 50% premium. Japanese coupon, American premium. Old school convertible arbs are shaking their heads at that one. Credit Crunch? What Credit Crunch? Arbs better hope the company never institutes a dividend because that bond will get smoked.
Ally is auctioning off 4 billion of subprime loans. There has been a lot of money raised for distressed mortgage purchases in the last year, and Nationstar, Fortress, and Berkshire Hathaway are some of the high profile bidders. GMAC expects to emerge from Chapter 11 sometime in Q113.
Filed under: Morning Report |
All Things in Moderation 
The ECB has declined to put a cap on yields and will sterilize bond purchases to prevent inflation. The plan will also focus on short term government debt with maturities up to 3 years.”
Too late to stop the recession, but not perhaps to stop the banking crisis?
“The euro zone is likely to have slipped back into recession in the current quarter, according to a survey published on Wednesday that showed a seventh month of contraction for the bloc’s private sector as new orders dwindled.
The Purchasing Managers’ Index (PMI), published by Markit, showed the economic rot that began in smaller periphery members of the 17-nation bloc is now taking hold even in Germany, the region’s largest and strongest economy.
August’s composite PMI, which measures manufacturing and services together, fell to 46.3, revised down from a flash reading of 46.6 and below July’s 46.5.”
http://www.cnbc.com/id/48907167
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“UK. and German government bonds sold off on Wednesday after weak government bond auctions in both countries initially spooked investors, though analysts said it was more likely a sign of investor caution ahead of the European Central Bank (ECB) meeting on Thursday.
Germany sold just 3.61 billion euros in 10 year Bunds, less than the 5 billion euros that it had planned, signaling weak demand from investors for debt issued by one of Europe’s strongest economies.
The sale drew bids worth just 1.1 times the amount allotted to investors, less than the 1.8 times achieved at a similar sale in August.”
http://www.cnbc.com/id/48907464
Given a choice between believing that the stock market is getting it right, or the bond market, most times I will choose the bond market.
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As you noted:
“The euro gained versus the dollar and European stocks got a short-lived boost after a report that Mario Draghi, the European Central Bank (ECB) chief, would propose unlimited bond buying at a meeting on Thursday.
The bond buying would be sterilized and would focus on government bonds of maturities up to three years but the plan would refrain from capping borrowing costs for troubled euro zone countries, Bloomberg reported, citing anonymous central bank officials.”
http://www.cnbc.com/id/48884527
Fiscal policy is so quaint and 20th century!
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Me and Bill Gross, twin sons of different mothers:
“Pimco’s Bill Gross has suggested that the Federal Reserve’s current zero percent interest rates are harming the economy rather than helping it.
“In his latest investment outlook, the co-chief investment officer of Pimco said the level of “carry” or spreads that banks and investors can make has fallen to such lows that it was now hurting investments, exacerbating the deleveraging process already underway in the economy.
“A lender will not easily lend money to an obese over-indebted borrower — that much is clear — but she will also not extend a check when the yield, carry and return on investment is so low that it cannot compensate for historic business model overheads,” Gross, who is also the manager of the world’s biggest bond fund said.”
http://www.cnbc.com/id/48909928
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Heresy. There are no unintended consequences of ZIRP. Only a Ron-Paul worshipping, Ayn Rand loving, survivalist gold bug with Krugerrands buried in his backyard could think that.
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May I offer you instead a capital allocation problem, with too much emphasis on shorter term higher return loans to the detriment of longer lower mortgages?
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Or perhaps you might like to try on a negative rate of return for pension funds on the most safe investments, requiring them to either seek beta, or require more revenues from taxpayers in local and state budgets.
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seek beta
???
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mark
Investments with greater volatility, the opposite of what you want in a pension fund (presumably)
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I thought you weren’t into the purple prose today, Don Juan?!
You sound like a sommelier talking an anxious customer into a pretentious domestic white. 🙂
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investing shorthand.
what’s the point of being a capiltalist if you don’t have a language all your own?
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what’s the point of being a capiltalist if you don’t have a language all your own?
[he said as he rubbed his hands together and chuckled evilly. . .]
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“In an unusual move, Israeli Prime Minister Benjamin Netanyahu abruptly adjourned a meeting of his security cabinet Wednesday, citing leaks of its classified discussions on the Iranian nuclear program.
The move followed a report in Yediot Ahronot, Israel’s most widely read newspaper, that in the first session of the meeting Tuesday, disagreement emerged among Israeli intelligence agencies over the point at which Iranian nuclear facilities would be beyond the reach of an Israeli military strike.”
http://www.washingtonpost.com/world/middle_east/is…
You KNOW it’s bad, when even neocon head cheerleader Fred Hiatt HAS to put something like that in the paper.
Time to start getting rid of cabinet members until you find a group that agrees with you
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banned:
…when even neocon head cheerleader Fred Hiatt…
What qualifies one as a neocon these days?
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I would suggest that a VIX under 18 means that everything has to go just perfectly over the next month or we’re going to get our butts kicked in the market.
If you take a look at the 5 year chart, we seem to be hitting another inlfection point
http://data.cnbc.com/quotes/VIX/tab/2
I’m no chartist, but it worries me, when not enough people are worried!
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“What qualifies one as a neocon these days?”
Membership is for life. I don’t know of any 12-step program.
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banned:
I guess you don’t know what it means either.
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