Bits & Pieces (Thursday, March 28th, 2013)

Posted on March 28, 2013 by Kevin S. Willis

The Ukelele Orchestra does Nirvana’s “Smells Like Teen Spirit”. A great cover. BTW, it’s my opinion that “Smells Like Teen Spirit” is probably the most covered song of the 90s, and if it isn’t yet, it will be.

I liked the literal video phenomenon. A while back, I posted a literal video of Tears for Fears “Head over Heels”, which was hilarious and wonderful, and based on a song and a video that’s like 28 years old and has very little commercial value, especially when it comes to doing takedown notices on parodies . . . yet that’s what EMI did, so that awesome video is no longer available. Which is crazy. I understand copyright law, and, yes, it was using the music and video (set to different lyrics) . . . but it was an awesome parody that, at worst, might make people think about Tears for Fears when they hadn’t for 30 years. But whatever. This video parody of Creed’s much more recent “Arms Wide Open” is still up, for now, a feat accomplished by taking their original posting of the video (which was automatically removed), and flipping it horizontally so it doesn’t trigger YouTube’s automagic copyright violation detector.

Although I’m sure it’s just a matter of time before YouTube starts detecting backwards and reversed video and pulling that stuff down automatically as well.

•••

Massachusetts wants to tax you for having a computer and using it to access stuff. Well, actually, they want to tax the people who make that possible for you. Whether the company makes money on the data processing service they are providing or not. Really? A tax on “the cloud”? That’s just stupid.

Some people blame Wal-Mart’s crappy store management on a shortage of cheap labor. Or the minimum wage. Or whatever. However, I tend to suspect there is less a shortage of cheap labor than there is of people who want to labor cheaply at Wal-Mart. When you don’t pay much, having a crappy work environment or poorly managed stores isn’t going to attract the cheap labor that might find more amenable work environments for the same low price.

Also, some of the issue is likely bare bones staffing: underperforming stores don’t hire folks because the sales aren’t there, and the sales don’t come because no one is checking folks out or restocking the shelves or cleaning the aisles.

Dunno. Seems like the free market has an answer: hire a few more folks, maybe pay a little more, get your shelves stocked and stores cleaned and people in the checkout lines, and the sales come, and the profits follow. Not that Wal-Mart is in any danger of declaring bankruptcy.

•••

Apparently George Lucas intended for Indiana Jones to be a pedophile. That adds a new perspective to the character. Who knew?

•••

When blogs become ghost towns . . .

Now, I’ve done it myself, but I never had a huge following. I will occasionally pop back and announce I’ve moved here or there. Or not. Occasionally nurse ideas of going back to the blog, if it’s still there, and just start posting again. Then don’t.

But sometimes fairly popular blogs just stop, or seem to, without a word. I’m a big fan of Blue Sky Disney, which hasn’t had an update in over a month. Nearly two months now. Long delays have happened, but never quite so long, and never without some sort of post. He hasn’t even stopped by to update the comments, and he blogs anonymously so you have no idea if the dude got arrested, was assassinated by the Mickey Mouse Mafia, or just got hit by a truck or had a sudden heart attack. We may never know, and I find that a little disturbing. Anybody else ever had a blog you followed that disappeared, or just stopped, with no explanation?

•••

I was going to post this yesterday, but got distracted. Turns out, the current plan with the unified school system I’m working in (for those interested) is to basically erase all the old jobs under the already determined assistant superintendent positions, and make everybody apply for the new jobs. I believe the CIO, CFO and other similar positions are also already locked in, but everybody else has to reapply for new jobs that won’t necessarily be their old jobs and will likely pay less. Yay! Who says government can’t work like the private sector? 😉

BTW, they still haven’t come up with a name for the new unified school district. And it will open for business as a unified school system next year.

This is going to be a mess.

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Morning Report – Undiversified Bond Investment? 03/28/13

Posted on March 28, 2013 by Brent Nyitray

Vital Statistics:

  Last Change Percent
S&P Futures  1558.1 1.3 0.08%
Eurostoxx Index 2633.5 21.0 0.80%
Oil (WTI) 96.39 -0.2 -0.20%
LIBOR 0.283 -0.001 -0.35%
US Dollar Index (DXY) 83.07 -0.148 -0.18%
10 Year Govt Bond Yield 1.85% 0.01%  
RPX Composite Real Estate Index 190.5 -0.3  

Markets are flattish on the last trading day of the quarter. 4Q GDP was revised upward from + .1% to + .4%. Personal consumption was revised downward as well.  Initial Jobless Claims rose last week to 357k. Bonds and MBS are flat.

The bond markets close at 1:00 pm EST today. Expect very little action today as traders will probably flatten positions ahead of quarter end.

The Office of Comptroller of the Currency has released the 4Q mortgage performance metrics. 89.4% of all mortgages are current, up from 88.6% last year. Delinquencies and foreclosures are down as the pipeline gets cleared and real estate prices start rebounding. More and more servicers are turning to mods as opposed to foreclosure initiations. The recidivism rate on these mods is around 17%.

The Private Label Securitization market is returning faster than people thought. Prior to this year, the only deals were the occasional Redwood Trust jumbo deal.  JP Morgan recently announced a deal, and now Springleaf plans a $1 billion subprime deal. The palette of products originators can offer is expanding in a big way.

FHFA has made mods easier to do on delinquent mortgages – anyone who is more than 90 days delinquent is automatically eligible for a loan mod. Borrowers do not have to show a financial hardship any more. This will only apply to Fan and Fred loans, and mods will be rate / term, not principal reductions. So this begs the question:  Why won’t everyone stop paying their mortgage in order to get a mod?  FHFA said they would use existing “screening measures to prevent strategic defaulters.”  Whatever that means. 

Is your house an undiversified bond investment? Was house price appreciation driven by falling interest rates? And does that mean that when rates start rising house prices will fall again? I would point out that interest rates aren’t the only factors affecting home prices – population growth, incomes, the availability of credit, and even global capital flows play a role. He does have a point, which is that a rapid rise in home prices like we saw from the early 90’s to 2007 is unlikely to be repeated given that we won’t have the tailwind of falling interest rates to increase affordability. That said, low interest rates can last a long time – from the end of WWI to the mid 60’s, short-term rates were 5% or lower. From 1932 to the mid 50’s, short term rates were under 2.5%.  I would also point out that real estate prices increased during the 1970s, even as short term rates moved up to 15%. 

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