Morning Report 10/10/12

Posted on October 10, 2012 by Brent Nyitray

Vital Statistics:

  Last Change Percent
S&P Futures  1437.2 1.3 0.09%
Eurostoxx Index 2467.5 -4.8 -0.19%
Oil (WTI) 92.42 0.0 0.03%
LIBOR 0.343 -0.004 -1.15%
US Dollar Index (DXY) 79.93 -0.018 -0.02%
10 Year Govt Bond Yield 1.75% 0.03%  
RPX Composite Real Estate Index 194.8 0.1  

Markets are flattish after Alcoa cut its forecast for global aluminum demand in its earnings release.  Earnings were better than expected, but the forecast is weighing on the stock, which is down a couple of percent pre-open. Analysts are predicting a 2% drop in Q3 earnings for the S&P 500.  Mortgage applications fell. Bonds and MBS are down small.

Corelogic reported a 10% decline in shadow inventory down to 2.3 million units in July. This represents six month’s supply.  Geographically, Florida, California, Illinois, New York, and New Jersey account for 45% of all distressed properties. Currently, the flow of properties into shadow inventory is more or less equal to outflows. Remember that shadow inventory does not count properties currently listed on MLSs so it isn’t a full picture of housing inventory.

The government is going after Wells for reckless lending on FHA loans. Prosecutors say the bank claimed over 100,000 loans were FHA compliant when it knew they were not. Wells notes that its FHA delinquency rates are half the industry average. Meanwhile, revenues are up 37%  for mortgage bankers and Wells is the biggest.  The government giveth, the government taketh away…

Issuers of MBS are going to be watching the outcome of the lawsuit against Flagstar closely.  Judge Rakoff is no friend of the securities industry…

FHFA has released its new strategic plan for the mortgage market. Housing advocates will dislike two portions of this – first the fact that there remains no interest in principal reductions, and second, that FHA remains interested in varying guarantee fees by state.  Which means that judicial states will have higher mortgage rates than non-judicial states. They also intend to review the servicing compensation model.

Fannie Mae has a touchy-feely survey of attitudes about homeownership and the economy.

Filed under: Morning Report | 37 Comments »

How The Internet Will Transform Government

Posted on October 9, 2012 by Kevin S. Willis

Although I think the application is a little broader: the Internet is already transforming everything. The first example Clay Shirky cites is that of a girl who took pictures of her school lunch every day, and then was told she had to take it down.

As he points out: why did the school think they could get away with it? Because for the entire history of humanity up until this point, they pretty much could.

Doesn’t make me optimistic about the possibility that the Internet will lead to world peace, however.

Filed under: TED Talks | Tagged: , , | 3 Comments »

Morning Report 10/9/12

Posted on October 9, 2012 by Brent Nyitray

Vital Statistics:

  Last Change Percent
S&P Futures  1452.0 2.2 0.15%
Eurostoxx Index 2493.4 -2.7 -0.11%
Oil (WTI) 90.29 1.0 1.07%
LIBOR 0.347 -0.004 -1.00%
US Dollar Index (DXY) 79.64 0.098 0.12%
10 Year Govt Bond Yield 1.72% -0.02%  
RPX Composite Real Estate Index 194.6 0.3  

Markets are slightly higher this morning in spite of the fact that the IMF cut its global growth forecast. Alcoa kicks off earnings season after the close tonight.  S&P expects earnings to drop by 2% this quarter. Bonds are down slightly while MBS are up.

The National Federation of Independent Businesses reported small business optimism dropped slightly in September.  Overall, the mood is one of “uncertainty” and the outlook remains glum.  Topping the list of concerns was the rising cost of health care insurance, followed by economic conditions, energy costs, and taxes & regulation. Access to credit is not an issue anymore. 

 

 

FBR banking analyst Paul Miller says its time to start falling in love with mortgage banks again. Of course virtually all of the publicly traded mortgage banks went under during the crisis. He makes an aggressive interest rate forecast – mortgage rates dropping to 3% over the next quarter or two.  As a result, he sees the refi boom lasting until late 2013. Ben Bernake’s Refi Nation continues…

The battle over last Friday’s surprising payroll continues with a novel angle:  the payroll employment survey numbers were too low. Needless to say, the interpretation of the jobs report has fallen along partisan lines, with those who doubt the numbers being compared to the black helicopter crowd.  Jack Welch opened up a hornet’s nest with that tweet calling B.S. on the B.L.S. Is there an election coming up or something?

Filed under: Morning Report | 53 Comments »

Morning Report 10/8/12

Posted on October 8, 2012 by Brent Nyitray

Vital Statistics:

  Last Change Percent
S&P Futures  1449.8 -5.7 -0.39%
Eurostoxx Index 2501.7 -29.5 -1.16%
Oil (WTI) 88.55 -1.3 -1.48%
LIBOR 0.35 -0.001 -0.28%
US Dollar Index (DXY) 79.62 0.281 0.35%
10 Year Govt Bond Yield 1.74% 0.00%  
RPX Composite Real Estate Index 194.6 0.3  

Stocks are lower this morning on no real news. There is no economic data this morning and the bond market is closed for Columbus Day. Alcoa kicks off the earnings season tomorrow.

Treasury and HUD released their monthly Housing Scorecard, which shows that the number of underwater homeowners fell from 12.1 million in Q411 to 10.8 million in Q212.  The report doesn’t really delve into what caused the drop – was driven by home appreciation, or was it driven by foreclosures and short sales? Most of the report focuses on the Administration’s efforts regarding aid to distressed borrowers. 

Bob Schiller has an interesting article on the psychology of the housing market during the bubble years and now. He makes an interesting observation – “In 2004, there was little about the economic climate that would explain why a housing peak should be coming soon.  The world was widely believed to be slowly emerging from the early-2000s recession, which had been associated with the bursting of the stock market bubble of the 1990s.  The stock market was just starting to recover.  It seemed a time of healing.”  The real estate market will surely recover, and while we are breathing a sigh of relief, some other bubble may be forming.  That is the problem when you have a Federal Reserve which keeps trying to put the wealth-effect genie back in the bottle.

The latest “selling you the Brooklyn Bridge” scam – advertising REO as rentals.  Pretty brazen stuff.

Commercial real estate pricing has almost returned to its 2007 peak.

Filed under: Morning Report | 27 Comments »

Sunday Links

Posted on October 7, 2012 by jnc4p

Some reading material from the Internet today:

1. Interesting profile of Romney’s governorship of Massachusetts in the NYT:

“The Mitt Romney Who Might Have Been
By ROBERT DRAPER
Published: October 2, 2012

http://www.nytimes.com/2012/10/07/magazine/mitt-romney.html?hp

It appears to have been written prior to the debate.

2. I’m shocked that businesses would figure out how to circumvent the ACA’s mandates by self insuring.

http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/10/07/could-small-businesses-skirt-obamacares-mandates/

http://healthpolicyandmarket.blogspot.com/2012/10/will-smallest-employers-circumvent.html

3. Steve Pearlstein on job creators:

http://www.washingtonpost.com/business/i-am-a-job-creator-a-manifesto-for-the-entitled/2012/09/28/756f2e90-07ee-11e2-858a-5311df86ab04_story.html

and the side effects of cost reduction in non-labor intensive industries

http://www.washingtonpost.com/business/steven-pearlstein-why-cheaper-computers-lead-to-higher-tuition/2012/10/05/5dced2a0-0fd6-11e2-acc1-e927767f41cd_story.html

Filed under: Bits and Pieces | 5 Comments »

Saturday Football Open Thread (Week 6)

Posted on October 6, 2012 by Michigoose

The weather is changing–here in SLC we had our first dip into the 30s last night for the overnight low.  Leaves are starting to turn, the presidential debates have started, and in 31 days we’ll be voting. . . time for the football to get serious!  First up this week, Utah lost to USC here in Salt Lake Thursday night; after a fluky start in which the Utes scored 14 points in the first 2:15 or so, the Trojans went on to dominate 38 – 28.  Last night Syracuse beat Pitt 14 – 13–Scott, was it a good game or just close?  Incidentally, BYU beat USU 6 – 3 in what, from the last five minutes of the game that I saw, had to be two of the most inept offenses on display this week.  Up for us in ATiM-world today:

MSU is at Indiana (line: MSU, spread 16).  Maybe we could win one this week, guys?  Go Green Go White!

Northwestern is playing Penn State (line: Northwestern, spread 3).  Northwestern is 6 – 0 on the season so far, so this should be a good game to watch (noon EDT on ESPN).

Unless you’re watching USF at Temple (line: USF, spread 4.5).  This one you’ll probably have to stream to watch–Go Bulls!

BC is at Army (line: BC, spread 9.5) also at the same time on CBS.  That’s going to be a busy time for remote controls!  Go, Eagles!

Arizona plays at Stanford (line: Stanford, spread 9.5).  Despite the prediction, everybody is talking about Stanford’s problems with their quarterback. . . maybe the ‘Cats can sneak one in.  Go, Wildcats!

Georgia Tech is at Clemson (line: Clemson, spread 10.0).  The Yellow Jackets are 4 – 1 against Clemson since 2008–yello?  Will they go 5-1 today?

Wisconsin is hosting Illinois (line: UW, spread 11.5).  Go, Badgers!

Oklahoma takes on Texas Tech (line: OU, spread 4.0).  Can I hear a Sooner cheer here, okie?!?

Michigan is at Purdue (line: UM, spread 3.0).  M Go Blue!

Texas hosts West Virginia (line: UT, spread 7.0) in what promises to be an outstanding game.  It’ll be on FOX at 7:00 pm EDT.  Hook ’em, ‘Horns!

Nebraska is at osu (line: osu, spread 3.0).  This game will be on ABC at 8:00 EDT, and the Cornhuskers are my favorite team playing this evening.  Go, ‘Huskers!

Happy football Saturday to all!

Filed under: Fall, Football, Open Thread | 4 Comments »

“Unbroken” – A Book Review

Posted on October 6, 2012 by lmsinca

Interestingly enough this was a difficult book for me to read. Next month will be the five year anniversary of my father’s death. He was a bombardier (First Lieutenant) in WWII and flew over Germany in support of Patton’s Army. Their B17 suffered from structural problems, not unlike the B24.

Part of a passage from my father’s diary reminds me how dangerous their mission was:

Al and I were looking up records of previous missions of the Group. Since they started B-17’s they have had three times as many “major aircraft damage” in half as many missions. Ratio-six to one. That isn’t good.

A couple of years ago I received a copy of a letter my father wrote to one of his buddies after arriving in Europe that never reached his friend. He went down with the plane and the pilot during a terrible fire on the plane, originating in the bomb bay, while most of the crew was able to abandon ship. His nephew tracked me down and I sent him a copy of my dad’s diary and he sent me a copy of the letter my father wrote to his uncle.

My father was also raised in Southern California, not far from Torrance, and graduated from USC. He attended college after the war however, taking advantage of the GI Bill. Reading Louie’s story occupied my time with a lot of reflection and comparing and contrasting stories. It was very strange for me. I kept wishing I could ask my dad what he knew about Louie, if anything.

My father was also an athlete, although not in the same league as Louie (football and swimming), and always stressed participation in athletics as a character building exercise and that the discipline needed to succeed in sports would be useful in fighting life’s adversities. It’s one of the lessons I tried to pass on to our children. Reading Unbroken, I couldn’t help but believe that Louie’s passion for, and commitment to running taught him how to survive in some of the worst circumstances we can imagine.

Anyway, it was an odd experience for me reading the book, even down to the description of the crew flying the Enola Gay and dropping the bomb over Hiroshima. One of my father’s best friends, Rick Nelson, was the radio man on that flight. Reading how the pilot desperately tried to maneuver the plane away from the blast and how the fillings in his teeth tingled gave me chills. I sat around a dining room table on many occasions listening to that story and more.

Luckily my father had a much different experience than Louie. Even though there were bomb bay door fires, feathered engines, blown tires, damaged landing gear, hot flak breaking through the skin of the airplane, and even one emergency landing in Belgium, he flew his 36 missions and came home without suffering the terrible conditions many of these young men did, if they were lucky enough to survive at all.

Another reason I had trouble reading the book was because of the awful conditions the POW’s suffered from. It was a very vivid reminder of why we used to be so careful in our treatment of enemy combatants, at least I thought we were. That kind of brutality and suffering is difficult for me to read about.

This passage from the book really resonated with me.

Few societies treasured dignity, and feared humiliation, as did the Japanese, for whom a loss of honor could merit suicide. This is likely one of the reasons why Japanese soldiers in World War II debased their prisoners with such zeal, seeking to take from them that which was most painful and destructive to lose. On Kwajalein, Louie and Phil learned a dark truth known to the doomed in Hitler’s death camps, the slaves of the American South, and a hundred other generations of betrayed people. Dignity is as essential to human life as water, food, and oxygen. The stubborn retention of it, even in the face of extreme physical hardship, can hold a man’s soul in his body long past the point at which the body should have surrendered it. The loss can carry a man off as surely as thirst, hunger, exposure, and asphyxiation, and with greater cruelty.

I’ll be curious to hear what the rest of you thought of the book.

Filed under: 2012, Book Review, Unbroken, WWII | 85 Comments »

I’m Leaving

Posted on October 5, 2012 by lmsinca

So, I think it’s time for me to leave y’all to your own devices. I’ve had some inklings lately that I’m not suited to the atmosphere here anymore (my own fault) and I really need to spend some time working on a few other projects. You’re all in capable hands (your own) and will hopefully carry on just fine. One suggestion I have is I think ATiM works best if you put the time in to create posts, at least two or three a day on various subjects………..so man up! Hahahahahaha

Seriously, I’ll try to check in on you once in awhile and you know where to find me via email, but please don’t worry if I don’t respond right away. It’s been a tough year for me and I need to change the direction of my life a little and spend a little less time on the internet, while I still have time for other things. I have about six quilts I need to finish, that’s number one.

Love all of you!!!!!!!!!

PS the book review post is scheduled for tomorrow. If you don’t want to carry on with that feature would someone delete the widget after this weekend. I’ll be gone tomorrow so won’t be able to participate.

Sorry for the Friday post but it’s a good dump day for news…lol

Filed under: administrative | 5 Comments »

How I Will Celebrate the Racist Mass Murderer Columbus

Posted on October 5, 2012 by Dave!

Never been a big fan of this holiday – not because I really care if CC really “discovered” America  or was good, bad or ugly.  It just does not rise to the importance of most of the other holidays, at least for me.  That won’t stop me from taking the day off, mind you.  My plans for the weekend are to head to a house we have rented with another family near the Shenendoah River, in the mountains, for a weekend of R&R.  Weather is supposed to turn crappy here so I am not sure exactly what we will be doing but it won’t be work.

Fortunately the place is wired and I won’t miss the news of day on Monday….which is Austrian daredevil Felix Baumgartner and his attempted record skydive from almost 23 miles and probably be the first human to break the sound barrier without a craft.  I love this guy.  I love that the current record holder is on his team.  I love that it is a private sector enterprise.  And I think that the one thing I do admire about CC is that he did have a spirit of adventure, just like Felix.  Well…maybe not quite that adventurous…  Here is the story:

On Monday morning (Oct. 8), Austrian daredevil Felix Baumgartner will attempt to break the world record for highest-ever skydive, leaping from a balloon nearly 23 miles above Earth’s surface.  If all goes according to plan, Baumgartner will step into the void 120,000 feet (36,576 meters) above southeastern New Mexico early Monday, then plummet to Earth in a harrowing freefall that will see him become the first skydiver to break the sound barrier.

After Baumgartner deploys his parachute and floats safely to the desert floor, he and the other architects of his mission — which is known as Red Bull Stratos — can celebrate breaking a skydiving record that has stood for more than 50 years.

One of those congratulating Baumgartner will likely be Joe Kittinger, who set the current record of 102,800 feet (31,333 m) back in 1960 while a captain in the U.S. Air Force. Kittinger serves as a Red Bull Stratos adviser. If everything works out on Monday, Baumgartner will also shatter the marks for fastest freefall, longest-duration freefall and highest manned balloon flight. But the daredevil says his leap is about more than just etching his name in the record books.

“Red Bull Stratos is an opportunity to gather information that could contribute to the development of life-saving measures for astronauts and pilots — and maybe for the space tourists of tomorrow,” Baumgartner said in a statement. “Proving that a human can break the speed of sound in the stratosphere and return to Earth would be a step toward creating near-space bailout procedures that currently don’t exist.”

Baumgartner’s 55-story-high balloon is slated to launch from Roswell, N.M. at dawn Monday, weather permitting. Winds must not exceed 2 mph (3.2 kph) at liftoff to ensure that the balloon — whose material is 10 times thinner than a plastic sandwich bag — isn’t damaged, Red Bull Stratos officials said.

Baumgartner will ride aboard a custom-built pressurized capsule that weighs about 2,900 pounds (1,315 kilograms). A hard landing during a July 25 practice jump from 97,146 feet (29,610 m) damaged the capsule, and the daredevil’s record-breaking attempt was delayed while his team made the necessary repairs.

During the July 25 jump, Baumgartner reached a top freefall speed of 537 mph (864 kph) — about as fast as a commercial airliner. But while his capsule got knocked around a bit, the skydiver landed safe and sound.

Baumgartner said he is nervous about Monday’s leap from the stratosphere. But the 43-year-old daredevil — who has jumped from some of the world’s tallest buildings and soared across the English Channel in freefall using a carbon wing — regards a tinge of fear as a good thing.

“Having been involved in extreme endeavors for so long, I’ve learned to use my fear to my advantage,” Baumgartner said. “Fear has become a friend of mine. It’s what prevents me from stepping too far over the line.”

Red Bull Stratos has described the Oct. 8 attempt as a jump from the edge of space. However, space is generally considered to begin at an altitude of 62 miles (100 km), or 327,000 feet.

 

Filed under: fun stuff | 13 Comments »

Morning Report 10/5/12

Posted on October 5, 2012 by Brent Nyitray

Vital Statistics:

  Last Change Percent
S&P Futures  1463.6 7.8 0.54%
Eurostoxx Index 2523.8 38.1 1.53%
Oil (WTI) 91.12 -0.6 -0.64%
LIBOR 0.351 -0.001 -0.28%
US Dollar Index (DXY) 79.3 -0.050 -0.06%
10 Year Govt Bond Yield 1.73% 0.06%  
RPX Composite Real Estate Index 194.3 -0.1  

Markets are higher this morning after a surprisingly good employment report. Stock index futures initially jumped on the number and now have given back the gains. Bonds are down a point and MBS are down 6 ticks on the number.

The unemployment rate dropped to 7.8% from 8.1% in September and total nonfarm payrolls rose by 114k.    The Street was expecting an 8.1% rate.  U6 (the underemployment rate) didn’t change at 14.7%.  873k people became employed in September and the participation rate ticked up to 63.6% from a 30 year low of 63.5%.  It looks like the job gains were largely part time, as that sector increased 582k.  Average weekly hours ticked up to 34.5, and earnings increased .3%.  This report does seem at odds with other economic reports showing the economy is slowing.  It certainly makes you wonder what the Fed was looking at when it announced QEIII.

 

In response to the numbers, Jack Welch tweeted: “Unbelievable jobs numbers…these Chicago guys will do anything… can’t debate so changes numbers.”  Unsurprisingly the left blogosphere is swarming.  That said, Jack (We always beat by a penny) Welch should be the last person throwing stones about massaging the data.  Given that BLS magically found half a million jobs in the sofa cushions, which allows Obama to claim that the economy has reclaimed all the jobs it lost since he took office, we are going to see some predictable partisan doubt on the economic numbers coming out of Washington.

The minutes from the 9/13 FOMC meeting didn’t have anything groundbreaking in it. Some of the regional presidents are doubting how much of an effect further QE can really have.  Certainly there is nothing in the minutes that suggests that the Fed is seeing more strength in the labor market; if anything they note decreases in hiring plans.

Larry Fink of Blackrock told Maria Bartiromo that “we are about a year away from a full rebound in American housing.”  He is worried about the fiscal cliff:  “The fiscal cliff is probably the biggest problem facing us.  We are already seeing a slowdown in the U.S. economy.  I know many CEOs who are sitting with large sums of cash.  If the government comes up with a comprehensive plan to handle it, we would see a huge rally.”

FHFA has a new white paper out for comment regarding a new infrastructure for the secondary mortgage market.  It envisions a platform that could be used by multiple issuers – which could be laying the groundwork for an MBS exchange where issuers can sell new issues electronically instead of over-the-counter.  

Filed under: Morning Report | 78 Comments »

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