Get ready for Round 2 of thrashing... perhaps the SHORTISTS on NYSE know something we don't.
The one year credit default swap premiums for the investment banks are increasing very sharply in the last 3 weeks.... Buckle your seat belts for another wild ride..
http://www.economist.com/finance/displa ... d=11504792
Recovery? What recovery?
Jun 5th 2008
From The Economist print edition
The credit crunch looks far from over
Illustration by Satoshi KambayashiIN MAY many investors took comfort in the view that the worst of the credit crisis may be over. But, as in 1939-40, says one hedge-fund manager, it was just “the phoney war. The tanks are about to roll into France.â€
The gunners have certainly had plenty to aim at this week. Whether it was the downgrading of investment-bank debt, the purging of top brass at Wachovia and Washington Mutual, two large American banks, or the reconfigured rights issue at Bradford & Bingley, a troubled British mortgage lender, the news on both sides of the Atlantic has been grim.
Many hoped that the Bear Stearns bail-out in mid-March would prove the climactic event of the subprime crisis. After all, it seemed to imply that the Federal Reserve was standing behind the banks to prevent any systemic collapse. The cost of insuring banks against credit defaults fell sharply. But that trend reached its limit in mid-May and since then, according to one index, the price of insuring against default has risen by more than a third.
In any case, stockmarket movements suggest that bank shareholders were far less enthused by the Bear Stearns news. That is partly because investors fear the banks will have to follow Bradford & Bingley and Royal Bank of Scotland, a big British bank, and tap shareholders for additional capital.
Another sign of strain is the gap between money-market rates and official rates, which is still much wider than the historical average. Matt King, a strategist at Citigroup, says that this is not so much the banks' fear for the health of their competitors, as their reluctance to lend altogether.
Ever since last summer, the cost of funding for banks in the bond market has been higher than the cost of borrowing by non-financial companies. That makes bank lending unprofitable. In addition, the breakdown of the securitisation market makes it hard to get rid of loans. Worst of all, a forthcoming accounting change known as FAS 140 may force banks to take previous securitisations back onto their books; Mr King reckons some $5 trillion of assets will return to banks' balance sheets.
There has been, as yet, not much sign of a slowdown in lending. But that is because borrowers are taking advantage of the loan commitments made by banks during the boom years; some $6 trillion of these are still to be drawn down, double the level of five years ago. When it comes to new loans, the trend is clear. Surveys in both Europe and America show that banks are tightening their standards. In Britain the number of home mortgages taken out in April was just 58,000, down from 73,000 at the start of the year; in the euro zone bank lending to households is rising at its slowest rate since 2001.
The squeeze comes at an awkward time for consumers, hit as they have been by rising food and fuel prices and by (in America, at least) a softening labour market. Measures of consumer confidence have fallen sharply, although actual spending has not yet weakened to the same extent.
But consumer-default rates have started to climb sharply, as Bradford & Bingley's results revealed. And there will be write-offs on business loans as the year goes on. This bad news may already be reflected in the general level of corporate-debt spreads. But specific failures will still come as a nasty surprise to investors and institutions, and add to the malaise.
Of enduring concern are the monoline insurers, the institutions that agreed to guarantee some classes of debt against default. On June 4th Moody's, a rating agency, said it was thinking again about downgrading the AAA ratings of MBIA and Ambac, two of the main monolines. The pessimists (who are betting on a further fall in the price of the shares) reckon their losses on subprime-related debt will turn out to be many times bigger than the monolines' present capital.
If the theme of last year was turmoil in financial services, then 2008 could be the year when financial stress goes on to harm the economy. And it is not too fanciful to imagine a vicious circle: as the economic downturn causes more financial pain, so confidence will crumble further.
It seems far too early to say the financial world has seen “the beginning of the end†of the credit crunch. Indeed, the rest of Winston Churchill's quote about the progress of the war may even be too optimistic. The world may not even have seen “the end of the beginningâ€.
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US - Economic Data & News 01 (May 08 - Jul 08)
Re: US Economic Data & News
by millionairemind » Sun Jun 08, 2008 2:19 pm
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch
Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: US Economic Data & News
by winston » Sun Jun 08, 2008 6:31 pm
Bill King (The King Report): Spiraling inflation is alive and kicking hard
“The scheme of mitigating inflationary expectations even when inflation reality is drastically different by crafting fraudulent CPI and Core is ending. Few people cared or paid attention to the various ways and means that fraudulent economic data was manufactured for most of the past two decades. But over the past few years, roaring food and energy inflation has enlightened many people.
“Barron’s Alan Abelson: ‘A vivid example of spin is the response to inflation. With gasoline prices now around $4 a gallon and pointed higher, the cost of food levitating to dauntingly high levels and a passel of other items large and small spiraling upward, inflation is alive and kicking hard – as anyone who fills up his car or wanders into a supermarket knows. But, much like those Krishna kids who used to shuffle the streets decked out in robes and moaning their incantations, a surprising number of economists in the Street keep uttering their mantra, ‘there is no inflation’.
“‘By way of proof, they cite a concoction deliberately created by the Federal Reserve under Arthur Burns, seeking to mollify political pressures – and refined several times subsequently – that eliminated food and energy, supposedly because they were too volatile. Which is how some misbegotten monstrosity called ‘core inflation’ was born.
“‘It’s also why the core-ists sound so cheerful about current inflation, which might range as high as 11% if it were measured by the more stringent standards in effect before Burns puffed his pipe and ordained the end of food and energy as components of the inflation yardstick …’â€
Source: Bill King, The King Report, June 2, 2008.
“The scheme of mitigating inflationary expectations even when inflation reality is drastically different by crafting fraudulent CPI and Core is ending. Few people cared or paid attention to the various ways and means that fraudulent economic data was manufactured for most of the past two decades. But over the past few years, roaring food and energy inflation has enlightened many people.
“Barron’s Alan Abelson: ‘A vivid example of spin is the response to inflation. With gasoline prices now around $4 a gallon and pointed higher, the cost of food levitating to dauntingly high levels and a passel of other items large and small spiraling upward, inflation is alive and kicking hard – as anyone who fills up his car or wanders into a supermarket knows. But, much like those Krishna kids who used to shuffle the streets decked out in robes and moaning their incantations, a surprising number of economists in the Street keep uttering their mantra, ‘there is no inflation’.
“‘By way of proof, they cite a concoction deliberately created by the Federal Reserve under Arthur Burns, seeking to mollify political pressures – and refined several times subsequently – that eliminated food and energy, supposedly because they were too volatile. Which is how some misbegotten monstrosity called ‘core inflation’ was born.
“‘It’s also why the core-ists sound so cheerful about current inflation, which might range as high as 11% if it were measured by the more stringent standards in effect before Burns puffed his pipe and ordained the end of food and energy as components of the inflation yardstick …’â€
Source: Bill King, The King Report, June 2, 2008.
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Re: US Economic Data & News
by winston » Sun Jun 08, 2008 6:38 pm
Bill King (The King Report): David Rosenberg – recession in discretionary spending
“Merrill’s David Rosenberg: ‘Today’s consumer spending and personal income report for April was a real eye-opener – not to mention a splash of cold water on the view that we have dodged the bullet on the recession scenario.
“‘First, wages and salaries in nominal terms fell 0.2% in April as the labor market contracted – too many pundits focused exclusively on the modest 20,000 payroll decline instead of the fact that the other 135 million of us in the workforce saw their hours cut during the month. Basically, a decline in nominal wages is a 1-in-15 event in the context of an expanding economy but a 3-in-4 event in the context of a recessionary economy …
“‘Recession in discretionary spending has already arrived … The only thing preventing consumer spending from contracting outright at the current time are the usual outlays on non-cyclical services such as medical care and education that don’t go away necessarily in a recession, but make no mistake, the recession in discretionary spending has already arrived and is very likely going to rival the steep and prolonged consumer-led downturn of 1973 to 75 …’
“David warns that the 0.2% decline in real spending on durables and semi-durables was the sixth decline in a row, which is unprecedented (data back to 1959). In the past 50 years, there has never been a time – nada – that real consumer spending on durables and semi-durables contracted in back-to-back quarters without the economy being in a technical recession.â€
Source: Bill King, The King Report, June 2, 2008.
“Merrill’s David Rosenberg: ‘Today’s consumer spending and personal income report for April was a real eye-opener – not to mention a splash of cold water on the view that we have dodged the bullet on the recession scenario.
“‘First, wages and salaries in nominal terms fell 0.2% in April as the labor market contracted – too many pundits focused exclusively on the modest 20,000 payroll decline instead of the fact that the other 135 million of us in the workforce saw their hours cut during the month. Basically, a decline in nominal wages is a 1-in-15 event in the context of an expanding economy but a 3-in-4 event in the context of a recessionary economy …
“‘Recession in discretionary spending has already arrived … The only thing preventing consumer spending from contracting outright at the current time are the usual outlays on non-cyclical services such as medical care and education that don’t go away necessarily in a recession, but make no mistake, the recession in discretionary spending has already arrived and is very likely going to rival the steep and prolonged consumer-led downturn of 1973 to 75 …’
“David warns that the 0.2% decline in real spending on durables and semi-durables was the sixth decline in a row, which is unprecedented (data back to 1959). In the past 50 years, there has never been a time – nada – that real consumer spending on durables and semi-durables contracted in back-to-back quarters without the economy being in a technical recession.â€
Source: Bill King, The King Report, June 2, 2008.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: US Economic Data & News
by millionairemind » Mon Jun 09, 2008 7:30 pm
http://www.marketwatch.com/news/story/a ... dist=msr_6
Ambac, MBIA lose AAA ratings from S&P
More than $1 trillion of muni debt faces downgrades now too, analyst says
By Alistair Barr, MarketWatch
Last update: 4:15 p.m. EDT June 5, 2008Comments: 2SAN FRANCISCO (MarketWatch) - Ambac Financial and MBIA Inc. lost their crucial AAA ratings from Standard & Poor's on Thursday, leaving the largest bond insurers with little ability to generate new business in future.
Standard & Poor's Rating Services said on Thursday that it downgraded the bond insurance units of Ambac to AA from AAA.
The insurers will generate less new business, have less financial flexibility and capital levels will be pressured by continued deterioration in the U.S. market for residential mortgage-backed securities and related collateralized debt obligations, S&P explained.
The AA ratings were placed on CreditWatch with negative implications, the agency added.
Ambac shares climbed 4% to $2.59 and MBIA jumped 5.5% to $5.94 after the release. The stocks had fallen sharply on Wednesday after Moody's Investors Service warned that it may cut the companies' triple-A ratings. See full story.
Bond insurers essentially sell their AAA ratings to borrowers that aren't rated that highly. Without such top ratings, bond insurers are left with little else to sell.
Bond insurers are important because they guarantee trillions of dollars of debt, including more than $1 trillion of municipal bonds. When they're downgraded, all the ratings on this debt are downgraded too.
Investors have been worried about bond insurers since late last year, when the subprime mortgage crisis deepened and spread into a global credit crunch. Fitch Ratings downgraded Ambac and MBIA several months ago. This means the impact of S&P's downgrade on Thursday may be more muted.
"A downgrade which affects over $1 trillion of municipal bonds is a significant event, no matter how much it may have been anticipated, so there may be some recurrence of volatility in the muni credit markets as this news is digested," said d**k Larkin, director of research at Herbert J. Sims & Co.
Ambac said it disagreed with S&P's downgrade and complained that the criteria for AAA ratings keeps changing.
The company said it's been working on launching a new bond insurer by pumping spare capital into Connie Lee, a unit of Ambac Assurance Corp.
"We believe there would be strong demand for a stable AAA financial guarantor focused solely on guaranteeing the obligations of both municipal and global public finance," said Michael Callen, chief executive of Ambac, in a statement.
Still, regulators may be wary of approving new bond insurers that are owned by existing companies in the industry that may have big claims to pay from older mortgage-related exposures.
On Thursday, MBIA said it may consider using $900 million of the capital it raised earlier this year to start a new bond insurance unit.
However, New York State Insurance Commissioner Eric Dinallo said he was in active talks with MBIA about the company fulfilling a commitment to funnel that $900 million into its current bond insurance unit. See full story.
Other companies - without the legacy problems of Ambac and MBIA - may be better placed to start new AAA bond insurers.
Berkshire Hathaway , run by Warren Buffett, entered the market earlier this year.
Now Macquarie Group, an Australian infrastructure specialist, is planning its own new bond insurer, the Wall Street Journal reported on Thursday, citing unidentified people familiar with the situation.
Ambac, MBIA lose AAA ratings from S&P
More than $1 trillion of muni debt faces downgrades now too, analyst says
By Alistair Barr, MarketWatch
Last update: 4:15 p.m. EDT June 5, 2008Comments: 2SAN FRANCISCO (MarketWatch) - Ambac Financial and MBIA Inc. lost their crucial AAA ratings from Standard & Poor's on Thursday, leaving the largest bond insurers with little ability to generate new business in future.
Standard & Poor's Rating Services said on Thursday that it downgraded the bond insurance units of Ambac to AA from AAA.
The insurers will generate less new business, have less financial flexibility and capital levels will be pressured by continued deterioration in the U.S. market for residential mortgage-backed securities and related collateralized debt obligations, S&P explained.
The AA ratings were placed on CreditWatch with negative implications, the agency added.
Ambac shares climbed 4% to $2.59 and MBIA jumped 5.5% to $5.94 after the release. The stocks had fallen sharply on Wednesday after Moody's Investors Service warned that it may cut the companies' triple-A ratings. See full story.
Bond insurers essentially sell their AAA ratings to borrowers that aren't rated that highly. Without such top ratings, bond insurers are left with little else to sell.
Bond insurers are important because they guarantee trillions of dollars of debt, including more than $1 trillion of municipal bonds. When they're downgraded, all the ratings on this debt are downgraded too.
Investors have been worried about bond insurers since late last year, when the subprime mortgage crisis deepened and spread into a global credit crunch. Fitch Ratings downgraded Ambac and MBIA several months ago. This means the impact of S&P's downgrade on Thursday may be more muted.
"A downgrade which affects over $1 trillion of municipal bonds is a significant event, no matter how much it may have been anticipated, so there may be some recurrence of volatility in the muni credit markets as this news is digested," said d**k Larkin, director of research at Herbert J. Sims & Co.
Ambac said it disagreed with S&P's downgrade and complained that the criteria for AAA ratings keeps changing.
The company said it's been working on launching a new bond insurer by pumping spare capital into Connie Lee, a unit of Ambac Assurance Corp.
"We believe there would be strong demand for a stable AAA financial guarantor focused solely on guaranteeing the obligations of both municipal and global public finance," said Michael Callen, chief executive of Ambac, in a statement.
Still, regulators may be wary of approving new bond insurers that are owned by existing companies in the industry that may have big claims to pay from older mortgage-related exposures.
On Thursday, MBIA said it may consider using $900 million of the capital it raised earlier this year to start a new bond insurance unit.
However, New York State Insurance Commissioner Eric Dinallo said he was in active talks with MBIA about the company fulfilling a commitment to funnel that $900 million into its current bond insurance unit. See full story.
Other companies - without the legacy problems of Ambac and MBIA - may be better placed to start new AAA bond insurers.
Berkshire Hathaway , run by Warren Buffett, entered the market earlier this year.
Now Macquarie Group, an Australian infrastructure specialist, is planning its own new bond insurer, the Wall Street Journal reported on Thursday, citing unidentified people familiar with the situation.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch
Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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millionairemind - Big Boss
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Re: US Economic Data & News
by winston » Tue Jun 10, 2008 5:45 pm
BlackRock's Doll says Fed on hold for indefinite future
HONG KONG, June 10 (Reuters) - One of the biggest U.S. money managers said on Tuesday that the U.S. Federal Reserve was unlikely to raise interest rates in the near term, with the U.S. economy continuing to give off mixed signals.
"We don't think the Fed will be raising interest rates anytime soon," said Bob Doll, chief investment officer for equities and also vice chairman of BlackRock (BLK.N: Quote, Profile, Research), which managed $1.36 trillion in assets at the end of March.
"The Fed is on hold for the indefinite future," Doll said during a Hong Kong news conference, adding that it was possible that the European Central Bank could lower rates.
HONG KONG, June 10 (Reuters) - One of the biggest U.S. money managers said on Tuesday that the U.S. Federal Reserve was unlikely to raise interest rates in the near term, with the U.S. economy continuing to give off mixed signals.
"We don't think the Fed will be raising interest rates anytime soon," said Bob Doll, chief investment officer for equities and also vice chairman of BlackRock (BLK.N: Quote, Profile, Research), which managed $1.36 trillion in assets at the end of March.
"The Fed is on hold for the indefinite future," Doll said during a Hong Kong news conference, adding that it was possible that the European Central Bank could lower rates.
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Re: US Economic Data & News
by kennynah » Tue Jun 10, 2008 5:59 pm
Doll said during a Hong Kong news conference, adding that it was possible that the European Central Bank could lower rates.
i wont bet on this...
i wont bet on this...
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Re: US Economic Data & News
by kennynah » Tue Jun 10, 2008 8:39 pm
US trade deificit (april) came in at $60.9 billion.....oil cheonged.... 
10 Jun 2008 12:30 GMT
US DATA: Apr trade bal -$60.9b as imports +$9.4b (oil & related +$5.4b, autos +$1b as a parts strike ended, consumer goods +$1.25b) and exports +$5.0b (civ aircraft +$769m, other machines +$0.8b).
Commerce Dept pointed out Apr oil deficit was -$34.5b, the second highest on record (worst was Jan-08).
Both price & volume of oil imports surged to records, so the move is really an energy story.
Real trade bal is about 5% better than the Q1 avg -- will add 0.1 to GDP. Reason is oil prices
got deflated and US exported real goods.
Trade by country: NSA bal with
China -$20.2b vs -$16.1b Mar;
Japan -$7.6b vs -$7.5b,
OPEC a record -$15.6b vs -$14.1b,
NICs +$0.6b vs +$1.6b,
Canada -$7.6b (high since Jan-06) vs -$6.4b.
Commerce Dept also released 2007 annual trade revision showing the full year's bal at -$711.6b or avg about -$59b/mo.
10 Jun 2008 12:30 GMT
US DATA: Apr trade bal -$60.9b as imports +$9.4b (oil & related +$5.4b, autos +$1b as a parts strike ended, consumer goods +$1.25b) and exports +$5.0b (civ aircraft +$769m, other machines +$0.8b).
Commerce Dept pointed out Apr oil deficit was -$34.5b, the second highest on record (worst was Jan-08).
Both price & volume of oil imports surged to records, so the move is really an energy story.
Real trade bal is about 5% better than the Q1 avg -- will add 0.1 to GDP. Reason is oil prices
got deflated and US exported real goods.
Trade by country: NSA bal with
China -$20.2b vs -$16.1b Mar;
Japan -$7.6b vs -$7.5b,
OPEC a record -$15.6b vs -$14.1b,
NICs +$0.6b vs +$1.6b,
Canada -$7.6b (high since Jan-06) vs -$6.4b.
Commerce Dept also released 2007 annual trade revision showing the full year's bal at -$711.6b or avg about -$59b/mo.
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Re: US Economic Data & News
by kennynah » Wed Jun 11, 2008 3:54 am
10 Jun 2008 19:05 GMT
OUTLOOK: ML Puts Q2 GDP est at -0.4% after considering trade data.
Provided by: Market News International
OUTLOOK: ML Puts Q2 GDP est at -0.4% after considering trade data.
Provided by: Market News International
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Re: US Economic Data & News
by kennynah » Wed Jun 11, 2008 12:43 pm
11 Jun 2008 04:00 GMT
BULLET: G7: G8 Fin Mins may debate foreign exchange at their..
G7: G8 FinMins may debate foreign exchange at their weekend meeting, but it won't be their main focus and the chances of their final statement mentioning currencies are low, a senior Japan finance ministry official said Wednesday, wires reported.
BULLET: G7: G8 Fin Mins may debate foreign exchange at their..
G7: G8 FinMins may debate foreign exchange at their weekend meeting, but it won't be their main focus and the chances of their final statement mentioning currencies are low, a senior Japan finance ministry official said Wednesday, wires reported.
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Re: US Economic Data & News
by kennynah » Wed Jun 11, 2008 7:34 pm
11 Jun 2008 11:29 GMT
Mortgage application volume rises 10.9 percent
WASHINGTON (AP) - Mortgage application volume rose 10.9 percent during the week ending June 6, rebounding from a sharp decline one week earlier, according to the Mortgage Bankers Association's weekly application survey.
The MBA's mortgage application index rose to 557.1 during the week, from 502.3 the previous week when volume fell 15.3 percent.
Refinance application volume increased 8.4 percent during the week ending June 6, while purchase application volume jumped 12.8 percent. Refinance applications accounted for 39.8 percent of total applications.
The index peaked at 1,856.7 during the week ending May 30, 2003, at the height of the housing boom.
An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume. A reading of 557.1 means mortgage application activity is 5.571 times higher than it was when the MBA began tracking the data.
The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50 percent of all residential retail mortgage originations each week.
Application volume rose despite a rise in interest rates. The average interest rate for a traditional, 30-year fixed-rate mortgage rose to 6.24 percent from 6.17 percent.
The average rate for 15-year fixed-rate mortgages, a popular option for refinancing a home, rose to 5.78 percent from 5.7 percent.
Rates for one-year adjustable-rate mortgages rose to 6.87 percent from 6.8 percent.
Mortgage application volume rises 10.9 percent
WASHINGTON (AP) - Mortgage application volume rose 10.9 percent during the week ending June 6, rebounding from a sharp decline one week earlier, according to the Mortgage Bankers Association's weekly application survey.
The MBA's mortgage application index rose to 557.1 during the week, from 502.3 the previous week when volume fell 15.3 percent.
Refinance application volume increased 8.4 percent during the week ending June 6, while purchase application volume jumped 12.8 percent. Refinance applications accounted for 39.8 percent of total applications.
The index peaked at 1,856.7 during the week ending May 30, 2003, at the height of the housing boom.
An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume. A reading of 557.1 means mortgage application activity is 5.571 times higher than it was when the MBA began tracking the data.
The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50 percent of all residential retail mortgage originations each week.
Application volume rose despite a rise in interest rates. The average interest rate for a traditional, 30-year fixed-rate mortgage rose to 6.24 percent from 6.17 percent.
The average rate for 15-year fixed-rate mortgages, a popular option for refinancing a home, rose to 5.78 percent from 5.7 percent.
Rates for one-year adjustable-rate mortgages rose to 6.87 percent from 6.8 percent.
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