Archive - Oct 2009
October 29th
Moody's To Hike RMBS Loss Severity Assumptions, Extends Expected Trough For Housing Prices
Submitted by Tyler Durden on 10/29/2009 15:25 -0500"Moody's now expects that a trough in home prices will not be reached until the middle of 2010. In addition, based on recent loan loss severities, Moody's will increase its projected lifetime loan losses for pools backing U.S. Jumbo, Alt-A, Option ARM, and Subprime RMBS issued between 2005 and 2008." - Moody's Investors Services
Another Goldman Sachs "PigMan Shakeout"
Submitted by RobotTrader on 10/29/2009 15:21 -0500Mark the last 3 days down. Yet another classic. Goldman lowballs the GDP and panicked deflationists sell anything and everything "risk" related and pile into dollars and Treasuries. Then the "inflated" GDP is released, and suddenly risk assets of every race, gender, stripe, color, and ethnic origin are once again embraced.
That's How You Bounce On Support
Submitted by Tyler Durden on 10/29/2009 15:00 -0500I shall not comment on the GDP number, nor the fact that estimates were revised down yesterday. Anybody who pays half attention to the market knows that it is an old trick used on a down day ahead of numbers to suck the last sellers in before the bounce. Last NFP day is a good example that should be fresh enough to most traders' memories. Let's focus on where we are now after this rally.
Joe Saluzzi On The Economy, Transaction Taxes, Fund Flows And Other Topics
Submitted by Tyler Durden on 10/29/2009 13:47 -0500"You can not fight the government, you can not fight the Fed" - Joe Saluzzi
Who knows, maybe he is wrong
Conservatives and Liberals Agree: Proposed Bank Oversight Bill Will Make Things Worse
Submitted by George Washington on 10/29/2009 13:44 -0500When a liberal labor leader and a conservative financial policy
analyst unite against something, you know that something is really bad (actually, I don't believe in the whole fake left-right dichotomy; I think its Americans versus those trying to steal our wallets and our rights, but that's another story).
Reading Between The Lines Of Today's GDP Report
Submitted by Tyler Durden on 10/29/2009 13:39 -0500"As the Fed approaches the end of its Treasury purchase programme - the 59 reverse auctions to date total $298.064bn - and while new supply rises apace, there is already significant upside pressure on US benchmark yields. As long positioning in risk assets looks crowded, as it does, the prospect of early tightening from the Fed could prove to be a catalyst for unwinds. As such, while a positive GDP result may be good news for the economy, it could also stoke interest rate expectations and put further upside pressure on yields. It could shift the Fed's overall monetary policy profile as well. We look at some of the linkages between growth-positive economic data and interest rate expectations and note that in the current economic and policy context, better growth figures may prove more harmful than helpful for risk." - UBS
"Money Multipliers Have Collapsed Everywhere...Confidence Is Missing. I Don't See Any Way To Stabilise M3 In Such Circumstances"
Submitted by George Washington on 10/29/2009 13:37 -0500Why is M3 falling?
Hotel Hell: Reggie Middleton's Review of CRE and Starwood's Q3-09
Submitted by Reggie Middleton on 10/29/2009 13:22 -0500How bad will the luxury hotel market get? Well,,, Pretty bad. All of those BS, "better than expected" earnings surprises off of severely lowered estimates stem not from top line revenue gains or economic progress, but from hacking jobs and cost cutting. Ya' think those Four Seasons', et. al. hyper-luxury executive suites are included in those cuts somewhere??? Here are all of those pretty graphs and interconnected hyperlinks to help tell the story...
Volume
Submitted by Tyler Durden on 10/29/2009 13:09 -0500
Not much commentary needed here. Algorithms have succeeded in creaing another bear trap, as a function of a low-volume short squeeze, as all those who sold yesterday, remain out.
A Glance At The Developing Political Crisis In Russia
Submitted by Tyler Durden on 10/29/2009 12:23 -0500The following video clip, courtesy of Stratfor, provides a quick glimpse into the ongoing power struggle between Russia's two key political factions. As Russia is now the world's largest exporter of petroleum and proven to be one not likely to comply with OPEC's onerous quotas, the political situtation in Russia has substantial bearing for global commodity prices, in addition to various impact on local capital markets (although after last's year performance those have been mostly deserted by foreign investors).
$31 Billion 7 Year Auction Closes At 3.141% High Yield, 46.79% Allotted At High
Submitted by Tyler Durden on 10/29/2009 12:09 -0500- Yields 3.141%% vs. Exp. 3.120%
- Bid-To-Cover 2.65 vs. Avg. 2.65 (Prev. 2.79)
- Indirects 59.3% vs. Avg. 57.17% (Prev. 61.72%)
- Indirect Bid-To-Cover 1.20
- Allotted high 46.79%
AFL-CIO Blasts Proposals To Give Federal Reserve Excess Powers, Questions Fed Governance Structure
Submitted by Tyler Durden on 10/29/2009 11:55 -0500In a surprisingly aggressive piece of prepared testimony before the House Financial Services Committee by AFL-CIO president Richard L. Trumka, the labor union, which represents over 11 million working members, shares some very harsh words with regard to the proposed regulatory reform in general, and the continue functioning of the Federal Reserve in particular. Notable is that many of the concerns voiced by the AFL-CIO are precisely those that should be highlighted by many other presumably much more sophisticated entities which are expected to carefully consider all potential impacts of future regulatory reform, yet which have expressed a surprising interest in perpetuating the status quo except for a few minor cosmetic changes.
Intraday Major Yen Divergence; Parallel Derisking In Process
Submitted by Tyler Durden on 10/29/2009 10:55 -0500
While the logic of how a US economy equates to a weaker dollar escapes those who think before pushing buttons and chasing trends, a glance at intraday currency performance indicate a substantial divergence in then Yen relative to the global "short-dollar" complex. Even as the euro, cable and OZ are powering higher, the yen has been caught in a weak zone, and has been declining all day long despite a stronger than expected US economy (yes, it does make sense...but don't think about it too hard). The oddity in the FX market is compounded when juxtaposed with Japan CDS levels: as of several minutes ago, Japan CDS was trading around 63 (white line on the chart below): a level last seen in April. This begs the question: what does someone know about Japan, and will this weakness translate into weaknesses for other non-US currencies?
Last POMO Purchases $1.9 Billion Of 2009 5 Year Note Issuances
Submitted by Tyler Durden on 10/29/2009 10:24 -0500The last POMO is now history, with $1.936 billion prudently injected by the Fed to liquefy the market and make sure that the big GDP surprise beat (thank you Goldman) cements the President's efforts to pronounce on national TV that the recession is over later today (whether consumers are expected to max out their credit cards in order to be eligible to vote in the next presidential elections is as of yet unknown). Virtually the entire amount of money released by the Fed was used to purchase 2009 auctioned 5 Year Treasurys.
18.8 Million Vacant Homes In Q3, Seasonally Adjusted Homeownership Rate At Decade Low
Submitted by Tyler Durden on 10/29/2009 10:10 -0500
The US Census Bureau has released its Third Quarter report on Residential Vacancies and Homeownership. As can be seen from the attached chart, the number of vacant homes in Q3 has started increasing once again after posting moderate improvements over the prior two quarters, and is now at 18.8 million units, rising from 18.4 million in the prior year. With new home sales surprising to the downside, look for this number to continue increasing into the fourth quarter. Notable is that the rental vacancy rate stood at an all time high of 11.1%. As James Lockhart, former director of the FHFA which he singlehandedly managed to destroy said: "We are bumping along the bottom of the housing market. There is the potential for another swing down." Don't tell that to the GDP numbers.





