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NFP Report - "It Sucked"
I suppose that the Non Farm Payroll report could have been worse than it was. But not much worse. Some
of the talking heads are calling the latest news a “soft patch”. Maybe
so. We shall see. My read is that the report was (more) clear evidence
that the economy is grinding down. The second half of this year is
likely to show only marginal growth. The June NFP was the tip off.
As is often the case, pictures tell the story better than words.
A recap of the NFP data. Note that there is no category that was not
under street expectations. Things are much worse in employment land than
anyone thought.
Labor force participation is now at levels not seen in a decade. A look
at this chart confirms that as of Friday it hit a new record low.
So why no jobs? Easy, we are not making as much “stuff”. Follows are
some regional indicators of economic performance. Yes, there are a few
“plusses” on the list but mostly it is flat to down. This chart and the
key underneath tells the story of the decline.
The best single gauge of manufacturing comes from the ISM. This is now
at 55. A fall below 50 would signal a contraction. Are we going to get
to that magic number? This chart suggests we might:
There are some conflicting signals in the credit market. If you believed that the Leading Indicators Index gives
a clue to the future you might get a “warm” feeling looking at the
following chart. The yield curve is now as steep as its been in a very
long time. Some economists will tell you that a steep curve is a sign of
an expanding economy. I take a different view. To me this
steepness is just a reflection 0f the fact that short-term rates are
stuck at zero because of continued Fed efforts to stimulate the economy.
I don’t see this chart as something to cheer about. To me it is
evidence that the bond market is becoming unglued.
This final chart poses an important question. It is very clear that the
correlation between stocks and bonds has broken down in the past few
months. Bonds have been (correctly) signaling a slowdown. Stocks, on the
other hand, have been oblivious to what the bond market is worrying
about. That can’t last in my opinion. Something will have to give.
Either stocks or bonds are mispricing what is going on in the summer of
2011. That, or another QE is right around the corner.
I'm in the camp that says, "the Fed’s hands are tied". There will
not be another big effort on the monetary front for the rest of the
year. The Fed has shot its wad and they have nothing left to shoot but
blanks. For me, the weak side of the equation is stocks.
We have three weeks left until 8/2 and the world blows up. The latest
NFP report might be the ticket to get a handshake deal between the
warring factions. I see a package coming that will include another big cut in FICA taxes.
The existing 2% reduction for workers will be extended for another
year. It is possible that it will be cut by another point or two. We
will also see a reduction in the rate that employers pay. They could get
a 2% break in a desperate effort to create some jobs.
It will be the ultimate joke if the biggest deficit reduction effort in
history results in an increase in the 2012 red ink by about $300 billion
due to the new cuts in payroll taxes. The joke will be on us. Minor/temporary
cuts in payroll taxes are not going to change the structural problems
the country faces. More debt (and bad faith) are not what the global
markets (and bond raters) are looking for.
Hulath concludes:
After
QE2, The Fed’s UST demand will be replaced by UST demand of market
participants who, again, and to their general surprise, find themselves
back in a deflationary, consumer deleveraging environment.
I disagree. If the big Deficit Reduction Plan of 2011 brings us a $2 trillion deficit (an increase of 300-400b versus current budget) for 2012, then all bets are off. I think bond buyers will go on strike if that is what we get.
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'Warren Buffet is right when he says we'll see better employment numbers when the housing market improves."
Hate to "copy and paste" but I just quit laughing long enough to type the response that this bullshit needs!
It's a truism, like "It'll quite hurting when the pain stops..."
Our government is running the entire mortgage complex right now. Until Uncle Salami gets his head out of the 5th point of contact (or is it first? been a while) and starts liquidating...so to speak...the sector then i would argue the Fed's are standing in the way of recovery. The irony of course is that nothing will immediatly provide liquidity to the consumer more than a housing market truly marked to market.
http://www.youtube.com/watch?v=fQWR5DSub8Q&feature=player_detailpage
According to NAR, now is the time to buy, buy, buy!
On top of the twenty percent down, pristine credit - and oh yeah - two or three jobs, prospective buyers AND sellers will have to factor in the cost of being sued.
MERS and Fannie Mae sue Short Sale Seller and Buyer
$nip>
Duane DeSalvo
Licensed Real Estate Agent
Camarillo, CA
July 04, 2011
OMG! Just when you think you've seen it all, along comes a new horror story that makes the thought of doing short sales even more disgusting than before!!
Because of our intense hatred of all banks (BofA and Chase head the top of the list) we decided to stop doing short sales, and most conventional real estate transaction last summer and have been buying and flipping properties instead!
The last short sale we did was one we were referred to in October of 2009 (no good deed goes unpunished!!). The client (Tom) had recently lost his job due to downsizing and, to make matters worse, his mother had been diagnosed with a life threatening disease. There was no way we could turn this opportunity down to assist him so we took the listing on his one bedroom condo in southern California. He had purchase it in 2007 for $224K and we figured the current value was about $125K. We put it on the market and got an offer for $130K within a couple of weeks! Tom moved out of state to assist his mother in her remaining days on earth and we were happy to have an offer. After 5 months of negotiating with BofA (loan servicer) with 2 different negotiators, we finally got approval for a sale price of $123k!! (First negotiator said it was worth $180K!!!- Surprise)!
We closed the deal in April, 2010 and both the Seller and Buyer were ecstatic! All was right with the world!
Fast forward to July 2011! Last week, we received a document from our Seller that he had received. Are you sitting down? It was a LAW SUIT on behalf of MERS and Fannie Mae (Plaintiffs) against the Seller and Buyer (Defendants) and a possible 23 other defendants, (Does) who are at this point unnamed!
The Law Suit maintains that: ------------"The Substitution of Trustee and Full Reconveyance on the County records which purports to reconvey MERS's interest in the property is a mistake and was not properly prepared or recorded by ReconTrust. An actual controversy has arisen and now exists between Plaintiffs and Defendants concerning their respective rights and duties in that Plaintiffs contend that the Substitution of Trustee and Full Reconveyance is a mistake and, therefore, of no force or effect which should be stricken from the public records and that Fannie Mae's Deed of Trust is valid and enforceable.!"
WTF!!!! I thought that the movie Too Big To Fail was unbelievable but this is ABSOLUTELY INCREDIBLE!!! Here is MERS (those bastards who were identified on 60 minutes as putting phony signatures on thousands of mortgage documents) maintaining that Recon Trust (not a party to the suit) MADE A FRIGGIN MISTAKE? They did not properly prepare or record the reconveyance of the loan!!!
To top it off, the scum sucking lawyers (and I apologize to any scum out there that may be offended by the comparison) have filed a LIS PENDENS on the property such that the new buyer could not sell the property if she wanted to!!!!!
This lawsuit FAILS to mention that monetary consideration of $123K was ACCEPTED by BofA for the purchase of the property!!
I have to stop because my blood pressure is getting dangerously high!!!!
Has anyone EVER seen this before!!! I suspect that Fannie and MERS are probably putting these lawsuits out en masse in the hope that- WHAT- they get the property BACK so they can sell it now for $89K?
ABSOLUTELY AMAZING!!!!
$nip>
Of course, this only happens to "deadbeats"...lol. If you find yourself in this position you can always cite your worthless "Moral Contract".
Like that'll be a big help...
Fuckin A!
I was tuned in to that broadcast, too.