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Financials Underperform As Flight To 30 Year "Quality" Becomes Sprint
XLF dropping on relative basis to rest of market on accelerating volume, just in time for a notable flight to 30 Year UST bonds: yields have plunged from 4.42% to 4.29% intraday, a major move from a marginal buyer perspective.
Notably, the index and single name put/call ratio has been ramping higher, indicating big players are starting to hedge aggressively against a material drop. However, this is certainly not the first time, and on most prior occassions this move ended up being a headfake. Then again, on prior occassions the market was never as massively overbought as it has become now.
And guess what - cum average volume just went green as the market started to tank. Shocker.
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Ramp time!
Look at DBB (base metals ETF) intraday. Wow.
Gold & Silver @ 1pm - quite a move in reaction to a 0.1% gain in the DXY.
quite a move in reaction to massive shorting
by jpm, gs, ms, db
You are referring to the volume ticking in like 900, 1050, 664, 124,000. Oops. Yes, I think there was a bit of an anomaly there. That seemed to have a non trivial impact on prices for a short time.
LQD:JNK(or HYG) is interesting again today. But this is before the E.O.D. ramp - all bets off, or ON to be more accurate.
My junk (VWEHX) tired out on Aug-12 -- red shoot. These EOD ramps are becoming less effective -- another red shoot.
Daily ramp job seems to be finally starting, maybe it really was a very short-lived headfake. I'd expect them to try harder to prop up the dollar later in the week, with the later maturity auctions
From Chris Martenson
House Sales and Mortgage Applications - Something Doesn't Add UpSunday, August 23, 2009, 7:40 pm, by cmartenson
I was not a good father today.
Instead, I engaged in laboriously hand-entering data to satisfy a question that has been bothering me for a while.
The issue that was worrying at me was the apparent discrepancy I'd mentally noted between the happy-happy increase in existing home sales, as reported by the NAR last week, and what I remembered from the MBS mortgage application releases.
But who could be sure?
Perceptions can be tricked and need to be tested and subjected to fact-based inquiry.
Confounding things, the Mortgage Banker Association (MBA) application reports are notorious for changing their reporting methodology, most recently (during the past 3 weeks) dispensing with reporting of an absolute number in favor of a simple percentage change. Where, for example, the number used to change from 1000 to 1100, it is now only reported as having changed +10%.
After a few weeks, who can remember what +10%, -4%, -3%, +12% is supposed to mean? I certainly can't.
At any rate, this shift to a percentage basis altered a convention that went back several years. Now we only get to read the weekly percentage and yearly changes, without the confusing benefit of an absolute number to guide our perceptions. So for those without the time or the inclination to dig through the data, it is what it is.
For me? The only way to resolve this was to obtain all the base data, hand-enter it into a spreadsheet, and see what was up.
Well, this is what's up:
Where the NAR recently reported a gain of +5% in existing home sales for July09/July08, the reconstructed MBA report shows a -22% decline in purchase applications over the same period (in stark contrast to their misleading recent release, which spoke of a yr/yr gain, but was actually referring to a blended gain that included the highly volatile refi apps):
Where the MBA most recently said that purchase applications have been "trending up," I am at a loss to see the period of time to which they are referring. I've boxed in 2009 for reference, but it is difficult to make a case for "trending up" unless one decides to begin randomly at some point after March.
Note that the data I have is all seasonally adjusted and straight from the MBA, so I doubt we are referring to different data.
At any rate, I am simply not in a position to believe that purchase applications are down 22% yr/yr while total sales are up 5%+. This would imply that nearly a third of all national sales are cash-on-the-barrel.
Sorry. No way. Somebody here is lying.
Somebody Not At all Reliable. However, I will retain my judgments - for now.
Depends, do you need a mortgage for a 1000$ house ? If enough foreclosures are selling at low enough prices, that could be the reason :)
If I understand the data correctly, there is a lag between the two. Home sales data are purchases closed in July. Mortgage applications are homes that went into contract in July - and will close, if at all, around September.
Additionally, the mortgage applications always have and always will represent a much broader slice of the population than completed transactions - so disrepancies in numbers are to be expected.
The "trending higher" phrase clearly refers to month-to-month delta, rather than the lower YOY numbers that we will continue to see for a while. GDP may also be "trending higher" (at a crawl), but given the absolute decline by half a trillion or so, it won't be Q2 of next year that we'd see a YOY increase, even if we avoid the double-dip.
I checked out the numbers for Phoenix last month. Metrowide, approximately 33% of all sales were cash sales. That's much higher than normal but it makes sense, since the only real buyers are bottom fishers buying foreclosures for cash. Boy are they gonna be surprised when they figure out it's not the bottom.
I checked out the numbers for Phoenix last month. Metrowide, approximately 33% of all sales were cash sales. That's much higher than normal but it makes sense, since the only real buyers are bottom fishers buying foreclosures for cash. Boy are they gonna be surprised when they figure out it's not the bottom.
it doesn't matter if a single or even 10 data
points are higher than some reference point...
the real question is are the data points
statistically significant....
the economy is a system - outliers and variation
will always exist....change can often be nothing
more than system variability without having
a shred of statistical significance or causation
from exogenous factors....
so folks, please apply your stats 101 before
even wasting time bewailing false or true
green shoots...
They want the known to lure follow-up. A of are chasing ramps and because they know the is in.
.good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
I'll tell you all what I'd really like to see, and I know damned well I ain't gonna get it from the MSM, and I suspect I couldn't put the data together from where I sit: I'd like to see a line chart of the dollar value of all home purchases for the past 9 years, excluding REO's and the like. Home sales, measured by number of closings, might be ticking up slightly, but the dollar volume has gotta suck compared to 3 years ago.
and now for your regularly scheduled end-of-the-day ramp...
anyone know what's up with the 30 year futures after hours? futures floor trading closed on a spike higher on the most volume of the session, predictably ebbed a bit after the close, and then ~10 minutes later shot higher (~50/320ths) on immaterial volume, and stayed there (till now, at least). what gives? is it just some random big fish who didn't eat his fill during floor trading, or did is there news that would explain this?
House Sales and Mortgage Applications - Something Doesn't Add UpSunday, August 23, 2009, 7:40 pm, by cmartenson
I was not a good father today.
Instead, I engaged in laboriously hand-entering data to satisfy a question that has been bothering me for a while.
The issue that was worrying at me was the apparent discrepancy I'd mentally noted between the happy-happy increase in existing home sales, as reported by the NAR last week, and what I remembered from the MBS mortgage application releases.
But who could be sure?
Perceptions can be tricked and need to be tested and subjected to fact-based inquiry.
Confounding things, the Mortgage Banker Association (MBA) application reports are notorious for changing their reporting methodology, most recently (during the past 3 weeks) dispensing with reporting of an absolute number in favor of a simple percentage change. Where, for example, the number used to change from 1000 to 1100, it is now only reported as having changed +10%.
After a few weeks, who can remember what +10%, -4%, -3%, +12% is supposed to mean? I certainly can't.
At any rate, this shift to a percentage basis altered a convention that went back several years. Now we only get to read the weekly percentage and yearly changes, without the confusing benefit of an absolute number to guide our perceptions. So for those without the time or the inclination to dig through the data, it is what it is.
For me? The only way to resolve this was to obtain all the base data, hand-enter it into a spreadsheet, and see what was up.
Well, this is what's up:
Where the NAR recently reported a gain of +5% in existing home sales for July09/July08, the reconstructed MBA report shows a -22% decline in purchase applications over the same period (in stark contrast to their misleading recent release, which spoke of a yr/yr gain, but was actually referring to a blended gain that included the highly volatile refi apps):
Where the MBA most recently said that purchase applications have been "trending up," I am at a loss to see the period of time to which they are referring. I've boxed in 2009 for reference, but it is difficult to make a case for "trending up" unless one decides to begin randomly at some point after March.
Note that the data I have is all seasonally adjusted and straight from the MBA, so I doubt we are referring to different data.
At any rate, I am simply not in a position to believe that purchase applications are down 22% yr/yr while total sales are up 5%+. This would imply that nearly a third of all national sales are cash-on-the-barrel.
Sorry. No way. Somebody here is lying.
Somebody Not At all Reliable. However, I will retain my judgments - for now.
House Sales and Mortgage Applications - Something Doesn't Add UpSunday, August 23, 2009, 7:40 pm, by cmartenson
I was not a good father today.
Instead, I engaged in laboriously hand-entering data to satisfy a question that has been bothering me for a while.
The issue that was worrying at me was the apparent discrepancy I'd mentally noted between the happy-happy increase in existing home sales, as reported by the NAR last week, and what I remembered from the MBS mortgage application releases.
But who could be sure?
Perceptions can be tricked and need to be tested and subjected to fact-based inquiry.
Confounding things, the Mortgage Banker Association (MBA) application reports are notorious for changing their reporting methodology, most recently (during the past 3 weeks) dispensing with reporting of an absolute number in favor of a simple percentage change. Where, for example, the number used to change from 1000 to 1100, it is now only reported as having changed +10%.
After a few weeks, who can remember what +10%, -4%, -3%, +12% is supposed to mean? I certainly can't.
At any rate, this shift to a percentage basis altered a convention that went back several years. Now we only get to read the weekly percentage and yearly changes, without the confusing benefit of an absolute number to guide our perceptions. So for those without the time or the inclination to dig through the data, it is what it is.
For me? The only way to resolve this was to obtain all the base data, hand-enter it into a spreadsheet, and see what was up.
Well, this is what's up:
Where the NAR recently reported a gain of +5% in existing home sales for July09/July08, the reconstructed MBA report shows a -22% decline in purchase applications over the same period (in stark contrast to their misleading recent release, which spoke of a yr/yr gain, but was actually referring to a blended gain that included the highly volatile refi apps):
Where the MBA most recently said that purchase applications have been "trending up," I am at a loss to see the period of time to which they are referring. I've boxed in 2009 for reference, but it is difficult to make a case for "trending up" unless one decides to begin randomly at some point after March.
Note that the data I have is all seasonally adjusted and straight from the MBA, so I doubt we are referring to different data.
At any rate, I am simply not in a position to believe that purchase applications are down 22% yr/yr while total sales are up 5%+. This would imply that nearly a third of all national sales are cash-on-the-barrel.
Sorry. No way. Somebody here is lying.
Somebody Not At all Reliable. However, I will retain my judgments - for now.
Check out the action in BMO. "There appears to be an event happening."
Check this out. Don't know whether it's been reported here. If so, I apologize...
http://whispersfromtheedgeoftherainforest.blogspot.com/
interesting - amoss is not a quack - if indeed
the claims made for him are true....
daily reckoning published a short piece about
the coming banking crisis - this was probably
a teaser for amoss who writes for them....
we'll see....at the very least it looks like they
will need to suspend dividend payment....but
my suspicions are that it is much more ominous.
thanks much for the BMO info ZHers. It will be wise to watch this one.
If you are interested in Canadian banks, take a look at this chart on Barry Ritholtz's The Big Picture.
http://tinyurl.com/kthkwt
Looks like TDBanknorth ranks 9th overall in terms of commercial real estate loan exposure! That exposure has also increased by nearly 20% in the last year. Scary stuff..
Sorry for double post...
What does cumulative average volume mean exactly?
http://www.finanznachrichten.de/nachrichten-2009-08/14763505-update-1-deutsche-bank-plans-tier-1-issue-reopening-market-020.htm
9-10% yield in new bond issues at Deustche Bank
I guess the yield is 9-10% because nobody can tell what it is ...
So ... the issuer can suspend the coupon at any time and it not be a default ... excuse me, how do you hedge this? How do you protect yourself?
Aimed for the 'retail investor', indeed. Banks shouldn't be allowed to raise capital this way.
They keep talking about all of thebeing used to up this junk properties.
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
ARE U SURE THIS IS DUE TO SOME SELLOFF OR TO CHANGING DIRECTION BY THE MARKET KEEPER?THE 10 YEARS WERE DANGEROUSLY CLOSE TO THEIR 3.55 YIELD AND I WAS AMAZED THAT THE FUTURES WERE UP OVERNIGHT.AND SURE ENOUGH THE MARKET DID FINALLY MANAGE TO DROP. SO NOW WE HAVE A COMPLEX FORMULA IN FRONT OF BB:HOW TO GET THE SPX TO 1200 AND UP WITHOUT THE 10 YEARS GETTING BACK TO ABOVE 4%?I AM SURE SOME OF ZEROHEDGE VISITORS CAN COME UP WITH A MATHEMATICAL FORMULA THAT CAN ACHIEVE THAT GOAL. AND SINCE THE FED IS PLANNING TO BECOME THE AIG OF TH COUNTRY,IT IS O.K. IF THAT FORMULA CONTAIN SOME OF BLACK-SCHOLES MODELS AND IT IS O.K TO USE DELTA,BETA GAMMA AND ALL THE GREEK LETTERS. SINCE THE FED GUARANTEES ARE ONLY LIMITED BY THE DEPOSITE RESERVE REQUIREMENT(ITS BEEN LONG SINCE ECON 101,SO PARDON THE MISTAKES IF THERE ARE ANY)WHICH THEY CAN ALWAYS DROP TO ZERO
An interesting BBC programme.
Documentary following two ex-bankers who, until recently, earned huge salaries and enjoyed all the trappings of a high-flying lifestyle. The bankers spend a week working with a struggling business that has been on the receiving end of the credit crunch. The pair, one banker who was made redundant and another that resigned, see first hand the human cost of economic meltdown.
http://www.bbc.co.uk/iplayer/episode/b00mf3g6/Can_You_Bank_on_Me/
IMO This recession won't end soon because the banksters are still too busy playing/gambling on the stock market casino where they win all the time and when they lose they still win!
David Rosenberg:
“The Fed’s balance sheet, contrary to popular opinion, has not expanded at all this year. M2 over the past 13 weeks has contracted fractionally (-0.7% at an annual rate) for the first time in six years. Ditto for MZM (-0.3%). The Fed has allowed the monetary base to shrink at a 30% annual rate on a 13-week rate of change basis too — and is now flat compared to where the level was five-months ago. Combine all this with a -0.6% YoY trend in unit labor costs and it would seem that the near 2.0% inflation rate embedded in 10-year
TIPS securities is too high.”
Sorry, I would't hedge this time...
http://www.geldanlagen-fest.de