Archive - Aug 7, 2009

Fannie reports on its loan book. 32% of its total is 'trouble' classes. Big losses to come.

One entertaining side effect of soon paying $4.00 for gas again while housing prices keep crashing is that bond prices will soon be very amusing. But no worries, at least that paper profit in the 401(k) which the baby boomers will soon need to start extracting is up for the day - Bernanke's Friday mission - accomplised. In the meantime, better get a whole lot of those OMO actions ready on deck.

From Goldman Sachs:

• Residential housing market continues to weaken
• Commercial real estate beginning to take center stage
• CRE equity may have further to fall or be completely wiped out
• Equity valuations driven by the consumer, with the cryptic proviso that "equity value might have downside" - no kidding
• And the best - REIT equity prices have risen... but property values continue to fall

Foreign holdings of USTs and Agencies increased by $23.5 billion monthly to $2,810 billion from $2,787 billion in the prior month. This is now less than 20% of the comparable increase in Securities Held Outright by the Federal Reserve, implying foreign purchasers are starting to fall far behind in their purchases of US securities relative to the Fed's monetization rate.

• Nonfarm payrolls down 247,000, right on top of Goldman's whisper estimate, unemployment rate now 9.4%, bonds yields explode (BLS, AP)
• Insider trading probe at SocGen cost former IB chief his job, TCW co-founder Robert Day also under investigation (Bloomberg)
• Australian workers cut work hours instead of firing (Bloomberg, h/t Aditiya)
• Jonathan Weil: Blowing up your company gets raised to art form (Bloomberg)
• It's not all golden at Goldman (Reuters)
• Goldman Sachs is (not) ripping you off (Ritholtz)

• Most major Asian stock markets move lower ahead of US jobs data.
• BoE to inject an addln $85B in new money into the U.K. economy.
• Car shoppers can purchase via $2B 'cash-for-clunkers' program through Aug.
• Initial claims for jobless benefits fell by 38,000 to 550,000 last week.
• Fewer layoffs expected in July as recession winds down, but few new hires.