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Bernanke urges more to be done on housing crisis

Quite a punchy speech from the Fed Chairman, especially the conclusion, which suggests big support ahead for housing:

In this regard, reducing the number of preventable foreclosures would not only help families stay in their homes, it would confer much wider benefits. Significant efforts have been taken in this direction, but more can be done.

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More on California Housing data

Marshall here, as Ed is busy sunning himself in the Bahamas, whilst I am stuck in snowy Denver! It sounds as if JMP Securities has also read the California report that I discussed recently. This is the first outside source that I have seen respond to that report.

It is so ironic. I think that the blue collar areas that were the most in danger financially have been corrected, perhaps even over corrected and yet the markets are focused on other things even though, housing was always what America’s monetary and fiscal authorities were looking to cure for the financial system to stabilize.

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Jobless claims data tell a mixed story

Jobless claims data tell a mixed story

U.S. Jobless claims are out again and the data are mixed. The past week saw a drop in seasonally-adjusted claims from 530,000 to 509,000. Meanwhile, continuing claims rose on a seasonally-adjusted basis from 3,962,000 to 4,087,000. While the data are mixed, we should still expect a large job loss when the unemployment number is released at 8:30AM ET tomorrow. Many are expecting upwards of 300,00 job losses and an unemployment rate of 6.8% or higher.

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Links: 2008-12-04

I wanted to leave you all with a few links to interesting articles while I am away on holiday.

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Treasury to Consider Further Measures to Halt Housing Slide

The Treasury Department is considering a plan to halt the slide in home prices that would lower mortgage rates using Fannie Mae and Freddie Mac. The plan could reduce rates for newly issued loans to as low as 4.5%. Slowly, but surely, the government is moving in the right direction. It is beginning to dawn on Treasury (albeit, belatedly) that a prerequisite for economic recovery is not just the stabilisation of the banking system, but some sort of program which provides mortgage relief for home owners. This plan is a small start.

I have a problem with this though. It is “trickle down”.

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Chart of the day: Excess Reserves

Chart of the day: Excess Reserves

One feature that is peculiar to the present downturn is the accumulation of reserves at the U.S. Federal Reserve. I imagine it is no different at other central banks, though I have not seen the data. Let me tell you what this reserve accumulation means and show you a chart of excess reserves compiled by the St. Louis Fed.

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Why I am bearish on the U.S. Dollar

Why I am bearish on the U.S. Dollar

The U.S. Dollar has been holding up quite nicely during this credit crisis. In fact, it rallied significantly from deeply oversold levels against the Euro and British Pound (remember Dollar-Euro at 1.60 and Dollar-Pound at 2.10?). However, America has a number of structural problems which will inhibit further appreciation. Moreover, former buyers of U.S. Treasuries in the Middle East and Asia are going to have domestic economic worries of their own very shortly and will not be supporting U.S. assets. This means that the Dollar will be a weak currency in the not too distant future.

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More on Fannie and Freddie – Signs of life in the Refi Market?

Below is a chart of variable rate loan applications as per cent of total. This can be looked at from a contrary opinion point of view, that is people are afraid of variable rate loans after they got burned on the upside in the last several years and thus they are moving to fix rate loans or refi’s but this […]

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Links: 2008-12-03

Yesterday was a good day in the markets, all in all. However, a number of anomalies still exist which we hope to cover in the coming days. Fist, there has bee an unprecedented rally in U.S. Treasury securities which some are calling a bubble. Simultaneously, you have a large spread to Treasuries in the corporate bond market (with corporate bonds yielding significantly more). High yield corporate binds are at record high yields (and record low prices since price and yield move in opposite direction). Since half of corporates are high-yield (so-called junk) bonds, one would think there is more value in corporates than Treasuries, but that is not how investors are behaving.

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Application for the Federal Bail Out Program, 2008-2009

Application for the Federal Bail Out Program, 2008-2009

A friend sent me a mock-up of an application for the free money the U.S. government is handing out in its bailout program.

Very funny. Sign up for the EZ-Cash. (Hat-tip Scott)

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Turning Japanese

Back in September, during the depressing days after Lehman collapsed, I posted a few mindless videos as distractions of the day to get your mind off of Finance.

I’m a day late because the markets rallied pretty nicely today. But, in honor of all the chatter about quantitative easing and America going they way of Japan, here is the distraction of the day: The Vapours singing “Turning Japanese,” another classicly absurd ’80s song and video.

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Roubini: How to avoid the horrors of ‘stag-deflation’

The US and the global economy are at risk of a severe stag-deflation, a deadly combination of economic stagnation/recession and deflation. Only very aggressive and co-ordinated policy actions will ensure the global economy recovers in 2010 rather than facing protracted stagnation and deflation.

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