Morning Report 11/21/12

Vital Statistics:

  Last Change Percent
S&P Futures  1387.4 1.1 0.08%
Eurostoxx Index 2513.7 4.1 0.16%
Oil (WTI) 87.83 1.1 1.24%
LIBOR 0.312 0.001 0.32%
US Dollar Index (DXY) 81.03 0.070 0.09%
10 Year Govt Bond Yield 1.67% 0.00%  
RPX Composite Real Estate Index 191 -0.4  

Markets are flattish this morning after a earning miss from Deere and Greek debt negotiation efforts hit a snag.  Expect low volume today as investors pack up and head to Grandma’s. Bonds are and MBS are down small.

Initial Jobless Claims came in at 410k.  Like last week, this is a Sandy-affected number and should be viewed accordingly. Mortgage applications fell 2.2%. University of Michigan Consumer Confidence dropped, and the index of leading economic indicators increased .2%.  Rising real estate prices are the driver of this.

Here are the highlights of the HUD report to Congress.  Aside from telling us what we already know (FHA is in deep trouble), there are also changes to the mortgage insurance program.  Insurance rates on FHA loans are going up, and borrowers will soon be charged mortgage insurance for the entire life of the loan, not just they typical 10-year period  L.Os take note – here is a good argument to get those borrowers off the fence – start the process now and get in under with wire.

Looks like the Feds are closing in on Stevie Cohen.  His healthcare PM allegedly made a quarter of a billion shorting Elan and Wyeth.  SAC Capital pays the highest commissions on the Street, by far.  They aren’t doing it out of the kindness of their hearts. Of course his investors don’t care – they know he is trading on inside information, but they are protected because they are limited partners. 

Two arguments about the proper size of government and its effect on prosperity.

The negotiation between the baker’s union and Hostess didn’t last long.  Hostess is headed for liquidation.

Have a happy Thanksgiving.

Cutting Waste at DOD – Really!

Department of Everything

Morning Report 11/20/12

Vital Statistics:

 
  Last Change Percent
S&P Futures  1381.7 -0.8 -0.06%
Eurostoxx Index 2487.6 -7.6 -0.30%
Oil (WTI) 88.79 -0.5 -0.55%
LIBOR 0.311 -0.001 -0.32%
US Dollar Index (DXY) 80.92 0.050 0.06%
10 Year Govt Bond Yield 1.62% 0.01%  
RPX Composite Real Estate Index 191.4 0.0  
Futures are lower this morning after Hewlett Packard announced accounting problems at its Autonomy unit. The company has taken an $8.8 billion charge on the Autonomy unit, which is shocking when you consider it only paid $7 billion for the company in the first place. Best Buy also missed. Bonds are down slightly, while MBS are flat.
 
Housing starts rose to an annualized pace of 894k, well ahead of the 840k estimate.  Sep through July numbers were revised downward. While the rest of the economy seems to be turning down, housing is turning into a bright spot. That said, 894k is still far away from “normalcy,” which is 1.5 million units per year. Yesterday’s builder confidence index from the NAHB posted another gain, although it is still reflects “unfavorable” conditions, but just barely.
 
Chart:  Housing Starts
 

 

Chart:  NAHB Sentiment Index:

 

 

 
 
The Bernank is speaking at the Economic Club of NY this afternoon. The market will be looking for clues regarding life after Operation Twist.  Expect Bernake to warn Washington that it won’t be able to offset the damage to the economy if we go over the fiscal cliff. 
 
Hostess and the Baker’s union have been asked to enter mediation.  This is a last-ditch attempt to see if the company can continue as a going concern.  One of the biggest issues is the defined benefit pension plan.  In an environment of zero percent interest rates, most, if not all, pension plans will be insolvent as there is no way to earn enough on the assets of the plan to cover healthcare inflation costs. Of course many companies choose to assume unrealistic rates of return on plan assets or unrealistic cost inflation assumptions to make the plans solvent.  By the way, this phenomenon affects insurance companies as well.  One of the (many) unintended consequences of ZIRP.
 
The recent downturn in the markets has brought out the perma-bears.  Marc Faber and Nouriel Roubini are warning about a tough 2013. Morgan Stanley is also warning of a recession in 2013 if we go over the fiscal cliff.  Even if we don’t they are forecasting flat GDP growth next year. That said, after this sell-off, I would be aware of the potential for a face-melting rally if we get a deal on the fiscal cliff. For those who focus on technicals, the S&P 500 is right at the 200 day moving average.
 
One possible piece of a deal would be a cap on deductions – one current number being bandied about is $35,000.  Needless to say, this will have a negative effect on the high end of the housing market, especially in high cost areas like Coastal California and the NYC area. Moody’s estimates that this could cut national home price growth from 4% to 3.5% from 2015 to 2019.  

How to Petition for the Redress of Grievances

The Post ran a Style-section article on lobbying.

I thought I’d pass this along. The key point is the importance of understanding the Hill’s culture and developing relationships. That’s tough for someone like me, as I’m such an introvert that it doesn’t come naturally. Not shy (necessarily) but the ability work a room full of strangers is draining. Others I know just feed off that. I’m much better at going into an office and talking policy and proposed solutions. But even that’s tough, until I realized, that “oh crap, I know this stuff better than anybody here. And I don’t know shit!”

But it’s relationships and trust that make this work or not, and if I can’t do that I wonder if this is the best fit for me. But the strategy, and the rules and knowing what’s happening is a lot of fun.

K street

Morning Report 11/19/12

Vital Statistics:

 

Last

Change

Percent

S&P Futures 

1368.0

8.2

0.60%

Eurostoxx Index

2461.2

33.8

1.39%

Oil (WTI)

88

1.1

1.24%

LIBOR

0.312

0.000

0.00%

US Dollar Index (DXY)

81.06

-0.193

-0.24%

10 Year Govt Bond Yield

1.61%

0.03%

 

RPX Composite Real Estate Index

191.4

-0.4

 

 

Stocks are higher this morning on optimism the fiscal cliff can be averted.  The new buzzword in Washington is “constructive” The pattern lately has been a strong opening, and then a late-day sell-off. This is a holiday-shortened week, so you can expect lower volumes and not much activity.  We have a sparse economic calendar as well.  Bonds and MBS are down.

Even if we reach a deal with the fiscal cliff, taxes are going up next year.  Hurricane Sandy has been expected to lop a point or so off of 4Q GDP.  Between the two, we are probably looking at a flat-to slight GDP growth in Q113.  To add insult to injury, businesses are halting capital expenditures. While “constructive” is the operative word for Washington, “Uncertainty’ is the buzzword for business. While it is certainly possible that a deal in Washington will remove the uncertainty, it feels like the business will simply find something else to fret about. The stock market is telling you that as well.  FWIW, Elmer Fudd is sanguine about the whole thing, saying a recession is a small price to pay to get our fiscal house in order.

HUD has announced some changes to help FHA get through its rough patch – the punch line is that FHA loans are about to get more expensive.  Fun fact:  FHA loans were about 2% of the market pre-boom.  Now they are 40%. The biggest changes involving borrowers will be an increase in the insurance premium, and removing the insurance cancellation program.

Redwood sold another $300 million of high quality jumbos last week, their sixth this year.  Two Harbors apparently is close to a securitization as well.  In the past two years, Redwood has securitized $900 million of jumbo mortgages.  To put that in perspective, in 2005 and 2006, private label issuance was $1.2 trillion. That said, the private label securitization market is coming back, slowly but surely.

Leave it to Paul Krugman to link Twinkies and marginal tax rates.

Bites & Pieces: Open Thanksgiving Thread

Today has been all about cranberries for me.  I’ve made and canned both cranberry chutney and cranberry salsa.  The chutney is a great condiment with Thanksgiving turkey, or for that matter with almost any other meat.  The salsa is an unusual treat if your tastebuds  like tart.

I’m way pumped about Thanksgiving (I’ve posted before that Thanksgiving is THE holiday in my family), but I really can’t do my other food assignments this far in advance.  My big flurry of activity will be next week.  Sigh, still experimenting with baked apple recipes.  Does anybody recommend a particularly good cinnamon?  I’m planning to visit the spice store on Monday.

What are everybody’s plans for the holiday?  And who has some good recipes to share?

Cranberry Chutney*

 Ingredients

  • 6 cups fresh or frozen cranberries, (1 1/2 pounds)
  • 2 cups raspberries and/or chopped apples
  • 2 shallots, minced
  • 2 jalapeno peppers, seeded and minced
  • 2 cloves garlic, minced
  • 1 1/2 cups packed light brown sugar
  • 1 1/2 cups granulated sugar
  • 1 1/2 cups red-wine vinegar
  • 2 tablespoons minced fresh ginger
  • 2 tablespoons whole mustard seeds
  • 1 tablespoon freshly grated orange zest
  • 1 tablespoon freshly grated lemon zest
  • 2 teaspoons salt

Preparation

Combine all ingredients except tender fruits or berries, e.g., raspberries, in a large saucepan; bring to a boil over high heat. Reduce heat and simmer, uncovered, stirring often, until the cranberries have broken down and the mixture has thickened somewhat, 10 to 15 minutes.  When reduced to a simmer, add tender fruits or berries.  Let cool completely. Ladle the chutney into clean jars and refrigerate.

Nutrition

Per tablespoon : 35 Calories; 0 g Fat; 0 g Sat; 0 g Mono; 0 mg Cholesterol; 9 g Carbohydrates; 0 g Protein; 1 g Fiber; 58 mg Sodium; 15 mg Potassium

Exchanges: 1/2 other carbohydrate

 Makes about 5 C.  Refrigerate chutney in an airtight container for up to 1 month.

* Source:  Modified from www.eatingwell.com

Vickie’s Cranberry Salsa**

Ingredients

1 pkg fresh cranberries, chopped (use food processor)

1 8-oz can crushed pineapple, drained

2/3 cup sugar

2 T finely chopped onion

1 jalapeno pepper, seeded and chopped

¼ t salt

¼ t fresh cilantro, chopped (optional)

Preparation

Combine all ingredients in large bowl.  Cover and chill for 2 hours to let flavors blend.  Store in refrigerator in jars.

**Source:  Physical therapist clinician in Oklahoma.

___________________________________________________________________________________________________

Brent’s Turkey on the Grill

Turkey in the Weber Kettle: While this will not work with stuffing inside the bird, and you won’t get gravy from it, the turkey comes out juicy and there is a great smoky flavor.  The best part is that it frees up the kitchen for other stuff.

Here is how we do it.  Basically the recipe from Weber.

Turkey preparation is easy – take out the neck and giblets ad.  Rub the outside with olive oil and then sprinkle with kosher salt and coarse black pepper.

Put a foil pan from the supermarket in the center of the grill. Put around 20 briquettes of charcoal on each side and light.  Be sure to place the grate such that the spaces on each side are over the charcoal.  Take a paper towel and pour some olive oil on it and oil the grate.  Once the coals are gray, put the turkey on the grate and place the cover over the grill.  Open the vents.  Add 8 briquettes per side every 45 minutes until the turkey is done (180 degrees in the thigh).  You should have a nice crispy skin, with a tender, smoky inside.


Spiced Cranberry Sauce with Zinfandel

I once had an open-minded Mormon ask me for this recipe when I assured him that most of the alcohol cooks off.  You’ve inspired me to make if for our Thanksgiving feast this year, okie!

  • 1 3/4 cups Zinfandel
  • 1 cup sugar
  • 1 cup (packed) golden brown sugar
  • 6 whole cloves
  • 6 whole allspice
  • 2 cinnamon sticks
  • 1 3X1-inch strip orange peel
  • 1 12-oz bag cranberries

Combine all ingredients except cranberries in medium saucepan.  Bring to a boil over medium high heat, stirring until sugar dissolves.  Reduce heat and simmer until reduced to 1 3/4 cups, about 10 minutes.  Strain syrup into large saucepan.  Add cranberries to syrup and cook over medium heat until berries burst, about 6 minutes.  Cool.  Transfer sauce to medium bowl.  Cover and refrigerate until cold.  Can be made up to 1 week ahead.  Keep refrigerated.  Makes about 3 cups.

–Michigoose


Betty Crocker’s Very Basic Stuffing

You remember that cookbook I told you about?  This is the stuffing recipe from it, and it’s still my favorite.  I add more sage than the recipe calls for, but other than that haven’t changed a thing.

  • 2 loaves of bread, cubed
  • 1 cup butter
  • 3/4 cup finely minced onion
  • 1 1/2 cups chopped celery (leaves and stalks)
  • 2 tbl salt
  • 1 tsp pepper
  • 1 tbl sage

Use 2  – 4 day old bread and cut off the crusts.  Melt the butter in a large heavy skillet, then add the onion and cook until yellow, stirring occasionally.  Stir in some of the bread to soak up the butter, then turn into a bowl and mix with the rest of the ingredients.  Add turkey broth to desired moistness; at this point you can either stuff the turkey or cover and cook in a 350 degree oven.

–Michigoose


MiA’s annual TG contribution – I think I posted here last year – but here it is:

Mark’s Apple Cranberry Currant Pie

PREP AND COOK TIME: About 1 1/2 hours, plus at least 1 hour to cool
MAKES: 8 [adult male or teenager] servings

1/4 cup Gran Marnier [or brandy, if you are short on the good stuff]
1/4 cup currants [look like tiny raisins – you could use raisins in a pinch but they are not the same]
1 cup fresh [or thawed frozen] cranberries [I find fresh make a tarter pie – I am OK with tart]
About 3/4 cup granulated FRUCTOSE [a lot of apple pie recipes call for a cup or more of sugar – fructose is sweeter and way lower on the glycemic index]
1/2 cup tapioca flour [I never use cornstarch in a fruit pie]
1/2 teaspoon ground nutmeg
1/2 teaspoon ground cinnamon
1/4 teaspoon salt
2 oz 1/2+1/2
6 cups sliced/chopped Granny Smith apples [about 2 1/4 lb]. I like the skin on for this pie – it’s more “rustic”.
2×9-inch pie pastry shells – I either make my own or buy really great shells at Central Market. When I make my own it is in no way unusual.

1. In a small bowl, combine Gran Marnier and currants. Cover and let stand until currants are plump, at least 1 hour. [Sometimes I cheat and do not soak this long. No biggie. The plumpness of currants is mainly a texture deal]

2. Chop/slice apples, skin on, using a mix of techniques for slices and chunks. If there will be a delay between prep and oven, put the 6 cups of apples in a big bowl and add a little OJ to keep them from browning. LATER YOU MUST THOROUGHLY DRAIN AND PAT DRY THE APPLES! My grandmother taught me the OJ instead of lemon juice trick about 52 years ago.

3. Sort cranberries and discard any that are bruised or decayed. Rinse and drain berries.

4. In a large bowl, mix fructose, tapioca flour, nutmeg, and salt. With a slotted spoon, lift currants from Gran Marnier ; reserve Gran Marnier. Add currants, cranberries, and chopped apples to fructose mixture and mix well. Taste and add more fructose if desired. Pour filling into unbaked pie pastry in pan. Cut hole pattern in top crust. Mix 1/2+1/2 with reserved Gran Marnier and cinnamon and brush liberally on pie crust. Carefully braid foil around pie’s edge to keep pie from from crisping-burning on crust edge that overlaps the pan during baking. [Later, pass off the tiny pieces of foil that some guest finds in the crust edge as “healthy mineral”. :-)]

5. Bake on the bottom rack of a 375° oven until juices bubble around edges and through top holes, 55 to 65 minutes. If pie browns too quickly – check after 30 minutes – cover loosely with foil.

6. Set pie, uncovered, on a rack until cool to touch, at least 1 hour.

Two Contributions by the Fairlington Blade

Mushroom Thyme Gravy

Note: this came from the Food52 website. Good enough that I didn’t bother bringing out the regular gravy. That’s all for me. Muahahahaha

1/3 cup dried mushrooms
2 cups vegetable stock
3 tablespoons butter
1 ½ tablespoon minced shallot
3 tablespoons flour
3 tablespoons soy sauce
½ cup light cream
1 tablespoon sherry
1 tablespoon minced fresh thyme
salt & pepper

1. Bring vegetable stock to a boil. In a small bowl pour stock over mushrooms. Let soak for 20 minutes.
2. Remove mushrooms from bowl, setting the stock aside for later. Mince or thinly slice the mushrooms.
3. In a medium saucepan melt the butter. Add the minced shallot and saute for 5 minutes over medium heat until softened.
4. Add the flour to the butter/shallot mixture stirring constantly. Cook for a 2 minutes.
5. Gradually add the reserved vegetable stock, atirring well to incorporate. Cook over medium heat until thickened.
6. Add the reserved mushrooms, soy sauce, cream, sherry & thyme. Cook for a few more minutes until heated through and thickened to desired consistency. Season to taste with salt & pepper.

Roasted Beets with Grapefruit Glaze

The glaze is sourced from Mollie Katzen’s Vegetable Dishes I Can’t Live Without. I prefer using bunches of beets with the greens still attached. This is a particularly colorful dish if you use a few different colors.

2 – 3 pounds of beets
2 large pink grapefruit
3 tablespoons maple syrup
1 tablespoon rice wine vinegar
1 tablespoon cornstarch or arrowroot

1. Spray small roasting pan or bread pan with vegetable oil (or toss beets with vegetable oil). Rinse beets, cut off leaves (but leave stem on), and put in pan. Cover with aluminum foil and put in 350 degree oven for about an hour. The cooking time depends upon the size.
2. Take out the beets and let them cool. Remove skins with your hands. Cut into 1 inch chunks. Set aside.
3. Juice grapefruit and strain to get one cup of juice.
4. Add maple syrup and vinegar to juice
5. Put cornstarch in a small saucepan over medium heat. Gradually add juice mixture and cook until thickened.
6. Combine beets with glaze. If using multicolored beets, keep them separate and then add everything together when serving.

Saturday Football Open Thread (Week 12)

By now most teams are in survival mode–keep enough key players healthy to finish out the season where you are and make it into a bowl game, or get key players experience so that next year is better than this one was.  Just four weeks to go after this. . . although there will be some grudge matches coming up.

Early games this week: UNC beat Virginia on Thursday 37 – 13, while yesterday Florida International beat Florida Atlantic 34 – 24 (what’s up with Florida, Mike, are you guys trying to rival Texas and California for number of schools with football teams?) and Air Force beat Hawaii 21 – 7.  Today’s games:

Northwestern is at MSU as we try to become bowl-eligible (and avoid a losing season) (line: Northwestern, spread 6.5)  I hope they’re wrong, but I’d have to go with the betting line on this one, dang it.

Iowa gets its turn in The Big House this weekend (line: UM, spread 17).  Let’s Go Blue!

Indiana plays Penn State (line: PSU, spread 14).  Comeback time for the Nittany Lions.

Virginia Tech is at Boston College (line: VT, spread 8.5).  That doesn’t seem very realistic to me.

USF is at Miami (line: Miami, spread 7).  Mike?  Could they do it?

Dook is playing Georgia Tech (line: Duke, spread 11.5).  Really?  Duke is turning into a football school, too?  Really??

Wake Forest goes up against Notre Dame (line: WF spread 22).  How?  What????  Wake Forest over ND in South Bend by 22?  Methinks my betting line website has been hacked on this one.

Minnesota is playing Nebraska in a Big Ten battle (line: Nebraska spread 19).  Brian and Paul get to duke it out this weekend!

osu is at Wisconsin (line: osu, spread 2.5).  Go Badgers, Go Badgers, Go Badgers!!!!

Syracuse is playing Mizzo (line: Missouri, spread 6.5).  A question here: how did this game get scheduled?  Shouldn’t both of these teams be in the hunt in their conferences?

Oklahoma is at West Virginia (line: OU, spread 10.5).  Boomer Sooner!

And Arizona is here in Utah (line: Arizona, spread 3).  We’ll freeze them, it’s only 48 degrees here right now.  Go Utes!

Texas gets to rest this week.  So what are you doing with your weekend, Mark?  May the right teams win, and the floor is open for commentary!

Being a Muslim in America

I thought that this piece by Rany Jazayerli was amazing. I usually balk at web pieces that make me click through five pages to read it (just put it all on one page, dammit, or do what Salon does and give me the option of seeing it on multiple pages or scrolling down one), but his writing is excellent and I think his point resonates.

It was with some reservation that I voted for Obama last Tuesday. I have found his presidency to be a disappointment in many ways. He wasn’t nearly aggressive enough about addressing the financial crisis he inherited, nor did he press for a public airing of what caused the crisis in the first place. His sustained use of drones to fight the war on terror has been both utterly immoral – an inordinate number of innocent victims, including children, have been killed – and completely counterproductive, because the obvious immorality of these attacks has ignited more terrorists than it has killed. Obama’s weak and unfocused response to the horrors being committed every day by the Syrian government is appalling.

But — third parties aside — the alternative was Mitt Romney, and I could not vote for Romney. There was simply no way that I could justify voting for a party that denies the very legitimacy of my identity as an American. And there was no way that I could justify voting for any member of that party that does not, in the strongest possible terms, denounce that view. Nor could most other members of the American Muslim community, who just happen to be clustered in swing states like Ohio, Virginia and Florida.

As it turned out, with the Muslim community voting overwhelmingly against him, Romney lost Ohio, Virginia and Florida by narrow margins, and lost the election. Joe Walsh lost his bid for reelection in Illinois’ 8th district, which frees up his schedule to start looking for the terrorists in Elk Grove and Addison. Also losing his bid for reelection was Florida congressman Allen West, who claims that “Islam is a totalitarian theocratic political ideology, it is not a religion.” Well, that’s one way to get around that pesky 1st amendment.

It doesn’t have to be this way. The Muslim community still shares many core values with Republicans, the same core issues that attracted most Muslims to the Republican Party in the first place. Muslims haven’t changed their views on limited government, or the superiority of the traditional nuclear family, or the importance of encouraging entrepreneurship. A Republican Party that focused on its core principles rather than on demonizing a minority as a way to score cheap political points would find support among the American Muslim community again.

Look, I don’t want to be a party-line voter. It does Muslims no good to be identified with a single political party – we run the risk of being taken advantage of by the Democratic Party, while having our needs completely ignored by the Republicans. And I look forward to the day, hopefully in the near future, when I once again vote for a Republican candidate. If Chris Christie — who unlike Romney has forcefully denounced “the crazies” (his term, not mine) — runs for president, I’ll give him full consideration.

But first, the Republicans have to stop insinuating that I’m alien to this nation. They have to stop implying that I support terrorists. They have to stop accusing me of being anti-American. And they need to denounce anyone in their ranks who does those things. That, I’m afraid, is not negotiable.

Morning Report

(posted for Brent)

Vital Statistics:

Last Change Percent
S&P Futures 1354.8 3.5 0.26%
Eurostoxx Index 2457.6 -4.1 -0.17%
Oil (WTI) 86.49 1.0 1.22%
LIBOR 0.312 0.001 0.16%
US Dollar Index (DXY) 81.19 0.114 0.14%
10 Year Govt Bond Yield 1.59% 0.00%
RPX Composite Real Estate Index 191.4 -0.4

Markets are slightly higher this morning on no real news. The Gap and Foot Locker reported better than expected earnings. Industrial Production and Capacity Utilization both fell and were below expectations. Those are warning flags. Bonds are down a few points and MBS are up.

The WSJ is reporting that the White House is in talks to replace the sequester with a smaller package of spending cuts and tax increases. They are looking at cutting spending by $100 billion next year. This would take the pressure off and allow a more comprehensive deal in mid 2013.

FHA is almost broke. They are hoping that an improving housing market and pending changes in its reserve fund will help it weather the storm without needing additional taxpayer funds. I wouldn’t rule out an increase in the G-fee at some point.

Bye-bye Twinkies, Ding Dongs and Ho Ho’s. Hostess has decided to liquidate instead of re-organize after a strike crippled operations. 18,500 workers will be let go.

The banking system continues to hemmorage jobs. Over 160,000 in the last two years, and the fire / hire ratio is around 2.0. I keep thinking that Wall Street tends to over-hire and over-fire, but they have been over-firing for years now. As we have noted, there are capacity constraints. Anecdotally, I have heard of one large bank that is refusing to take new customers on the trading side.

Last Call for Twinkies

“Hostess Brands Says It Will Liquidate”

By MICHAEL J. DE LA MERCED