Uh-Oh: That was a helluva week
Barron’s Trader column called it a "push-me-pull-me week as conflicting economic data made for choppy trading, and shares finished on a sour note Friday despite a late rally." Most of the economic data we saw this week was consistent with a economic slowdown, and a possible recession — neither of which tend to be ideal for equities. The Industrials slipped about ~1%, closing at 12,194.13. The S&P 500 lost even less — 0.3%, ending at 1396.71. Of the major indices, Nasdaq took the biggest hit, down 2% to close at 2413.21. (This was the first week we put on shorts since the rally began).
But as Cramer says, there’s always a Bull Market somewhere — and this week it was in fixed income. Bonds rallied, driving yields back down. The 10 Year was trading at a low low price of 4.45% yield.
Where to begin this week? The Dollar? Retail Sales? Yields? Housing? The 1st 1% down day in 6 months? No matter — we got it all covered:
INVESTING & TRADING
• The Dollar Tumbles to 20-Month Low Against Euro, concerning investors this week. The argument is made that the Dollar Downdraft will Resume ; There’s a broad discussion of what the Dollar drop means at RGE; Meanwhile, Volatile Dollar May Not Be Scary to Washington; Meanwhile, Hank Paulson may face Disappointment in China
• Dollar, shmollar: The utility average just hit new high
• What a joke: The report of the Committee on Capital Markets Regulations came out this week — claiming "Wall Street is losing its edge because of over-regulation." Nonsense, says the analysts at Breakingviews.com. They called the recommendations a “sop” to the industry, noting most of these recs would roll back investor protections, and eliminate the SEC’s watchdog role.
And months ago, Slate observed that IPO fees in the US are more than double those in London — something strangely omitted from the Committee’s report. (what hacks)
• The NYT’s Floyd Norris took a differnt tack. He asks: Who Paid for Anti-Regulation Report? Columbia University’s Jeffrey Gordon notes the Hubbard report "overstates the case for weakening rules"
• What’s been driving the rally? According to Dresdner Kleinwort’s James Montier,its been the “Fully Invested Bears and rampant complacency"
• Excellent list — 10 Common Trading Errors
• What does the merger of NYSE and NASD regulatory agencies mean to investors? Its a Nice Deal for Wall Street, but a Bummer on Main Street
• Is the stock market rational?
• A Street.com Video two-fer:
-Beware of The Bear Hugh Moore, portfolio manager for Guerite Advisors, tells Gregg Greenberg why his firm’s stock market indicator is flashing the "Sell" signal.
–Long-Term Investing In A Short-Term World Michael Mauboussin, chief investment strategist for Legg Mason Capital Management, talks about the value of long-term investing.
• Fortune Magazone observes: Sleazy CEOs have even more options tricks; See also EXITING UNDER A CLOUD, WITH $175 MILLION
• Interesting discussion: The Ten Best — and the Ten Worst — Internet Acquisitions Ever (note Hotmail is on both lists)
• I hate these forecasts: Harry Schultz sees $1,500 for yellow metal
• Screw you guys, Rick!: Kerkorian takes his chips and goes home
• Dilbert on Restating Earnings
ECONOMY
The Wall of worry continues to build:
• PMI, ISM, GDP: Seems like a soft landing is looking ever less likely: Buh-Bye Goldilocks
• The Recession of 2007?
• Where costs will rise (or fall) in 2007
• Bill Gross asks: Has the leverage potency of recent years reached a peak? Reality Check
• Factory activity posts surprise contraction
• Merrill Lynch calls ATA tonnage index for October "borderline recessionary"
RETAIL/SHOPPING
A lot of retail data came out this week, and was a bit disappointing.
• In an interesting twist, some stores blamed the warm weather — a welcome change from most years, when they blame ot on the snow: Blaming Soft Retail on all the Wrong Things
• Every year, the National Retail Federation puts out cheery survey data, and every year, the media mis-report it: More Bad Data from the NRF?
• Amazon is making a major push into Gift Certificates this year;
• Retailers’ Massive Discounting
• Blogger’s Take: Holiday Retail Sales
• Lastly, see these trio:
–Shoppers slow pace after early frenzy
–Not as many Black Friday shoppers, but spending is up
Retail sales mixed at start of US holiday season; Car sales forecast to fall in 2007 to lowest since 1998
HOUSING• Existing Home Sales & Prices came out this week, and it was record setting ugly
• Housing’s Woes May STILL Be in Early Innings (if no Barron’s, go here)
• The WSJ on Distressed Real-Estate: Priced to Sell in 2007 (free)
• This week’s data showed Fewer New-Home Sales, But Median Price Rises (by now, we all know the pricing data is a fantasy)
• Gary Shilling gets all Medieval on Housing
FEDERAL RESERVE
Lots of Fed speak this week, and commentary also:
• Caroline Baum: The Fed Cries Wolf (Mr. Market Isn’t Listening)
• Fed’s Plosser, Bernanke in Their Own Words (video)
• An email from Bernanke (funny!)
• Interesting tracking of the Fed Chairman Ben Bernanke’s Political Meetings
• Fed’s Kohn says Economy hard to figure out at present
• Will Bernanke’s Programs Dilute Greenspan’s "Intuition?"
• Greenspan Legacy Submits to Its First Review
• Fed’s big worry gets revised away
Sentiment/Psychology
• Why We Worry About The Things We Shouldn’t . . . And Ignore The Things We Should
War/Media/Politics/Energy
• General Abizaid’s presentation (video)
• The 117? File this under WTF! Stealth plane set for mothballing by Air Force
• WSJ: Majority of Americans Believe Iraq Is in ‘Civil War’ (free)
• Who is worse for Free Trade, Dems or GOP? Answer: Both of them
• The International Herald Tribune is the latest MSM to start blogging
• Nicholas D. Kristof, displaying the crusading spirit of journalism at its finest, is Media Web’s Print Journalist of the Year
• Why we are overweight in OIL!
• How Much Is Your Car Worth? Acura, Honda Pass BMW in Resale Value
Technology & Science
• Beatles go digital: only on iPod? (About time!)
• I like a good quantum paradox as much as the next guy — but retrocausality? Makes the head spin: sending photons back in time
(yes, that was a bad quantum physics pun)• Microsoft ‘may need a rethink’ on Zune
• Ancient ‘Jaws’ had monster bite
• Time Magazine Best Inventions for 2006
• Mysteries of computer from 65 BC are solved
Music Books Movies TV Fun!• If you are like me, you are just about sick death of the sacchrine holiday music in too many stores and radio stations. My solution? Favorite Holiday CDs
• My wish list Box Set: Sinatra in Vegas, baby!
• The NYT’s 10 Best Books of 2006
• On the Edge of Blade Runner (or, was Deckard a replicant?)
• Sonya Kitchell’s new CD, Words Came Back to Me, has a nice easy going flavor to it. You can stream most of it here.
• Composite photo of a busy airport
•
It is a little known fact that Britney Spears is an expert in semiconductor
physics. Not content with just singing and acting, she
will guide you in the fundamentals of the vital laser components that have made
it possible to hear her super music in a digital format.• Seinfeld, the lost episode: National Lampoon absolutely trashes Kramer via clips of Seinfeld. Its the most clever response I’ve seen yet to Michael Richards’ tirade.
That’s all from what may very well be the last temperate weekend in the NorthEast, where snow is expected this coming week. Safe Shopping!
Loan Buybacks Remain the Talk of the Industry
National Mortgage News
2006-11-13
By Paul Muolo
It appears that the tidal wave of loan buyback requests plaguing the nonconforming sector is showing no signs of slowing down.
According to interviews with investment bankers, due diligence executives, warehousers and others, buyback requests are still a huge headache for the industry, playing a key role in the pickup of merger activity.
One investment banker, requesting his name not be used, said he has a small deal ‘that may or may not close because’ of buybacks. He noted, however, that at the same time he has several transactions pending ‘because the firm has to sell.’ Why? Because the originators are so overwhelmed by buybacks they need the money.
Meanwhile, buyback disclosures are becoming commonplace in the earnings reports of publicly traded nonconforming originators.
New Century Financial Corp., Irvine, Calif., the nation’s second largest subprime funder, reported in its third-quarter earnings statement, ‘Higher loan repurchases and discounted mortgage loan sales reduced the gain-on-sale margin by 48 basis points.’
Company EVP of secondary marketing, Kevin M. Cloyd noted, ‘We expect the volume of discounted loan sales and the severity of the discount to continue to challenge originators in this industry.’
He added, ‘Loan buyers have become more vigilant, increasing the number of loan files reviewed in their due diligence process and decreasing the percentage of loans they ultimately purchase.’
NetBank of Atlanta, which posted a $73 million third-quarter loss last week, noted, ‘Although repurchase demands improved from last quarter, they remained at an elevated level.’
A company spokesman told National Mortgage News the bank has been hurt by both prime and nonprime buybacks, adding that most of the trouble comes from mortgages sourced through third-party brokers and correspondents.
Last week, NetBank revealed that it was closing its subprime division. (See related story.)
Even though buybacks spell trouble for lenders, it has created opportunities elsewhere in the industry. Firms that peddle due diligence and fraud review services report they are overwhelmed by demand.
As for lenders reporting that buybacks are improving, one banker said it could be a façade.
‘Many of these companies that say they have resolved their buyback issues really haven’t,’ said the banker. ‘They’ve simply become indentured servants’ to their secondary market investors.
(c) 2006 National Mortgage News and SourceMedia, Inc. All Rights Reserved. http://www.nationalmortgagenews.com
Uh-Oh: That was a helluva week
it really doesn’t matter what the news is, does it? The stock, futures, bond, and FX markets are dominated by government agendas that are catoring to speculative, big money interests.
My guess is that the charade will continue until after the new year. When, by prior agreement with the federal reserve and the treasury department, speculative profit taking will commence for a set period of time followed by another rally like the last six months.
The markets are much to dangerous to function without assistance. So much for capitalism. This is a managed economy. The only ones not invited to the party are the 99.999 % of the citizens not on the Bush/Cheney christmas card list.