Don’t leave home without it . . .
Hat tip: Thanks, G!
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July 31, 2007 4:09pm by Barry Ritholtz
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From your fishing trip, I suppose.
The entire US economy might be facing a margin call. =(
LOL
Yes very appropriate – the market related at the end of the day it was “up shits creek”
gawd that is good. about half-way up the creek they’re gonna hear that tune from Deliverance. that’s how you know IT’S OVER
Here’s a photo I took Saturday of a Bear Stearns manager in said creek.
about half-way up the creek they’re gonna hear that tune from Deliverance
…and a hand sticking out of the water.
Surprise, known issues have indeed affected the market! Everyone and their brother said that if the market declined it would be because of some unknown. Everyone also knew that bad lending was/is rampant (but clearly thought the market knows all and would have already discounted this). Unfortunately, market participants chose to ignore this problem until it bit them in the ass. Economic fundamentals have been bad for quite some time. Perhaps those of us waiting for value in the stock market will soon find it again.
A more technical/logical question for the seasoned go get ’ems. Since volatility is and has been up, doesn’t a good manager place his/her stops lower down the ladder? If so, then the 500+ point shake out last week might not have broken through the “red rover” line… and I don’t know how many money managers had the stones to bump down after last weeks sell off… so, would it be conceivable that the break through is getting closer, maybe even within a single days trading range? (by the way, what is that report/document called that only a select few get to see showing the stop positions)
…or to be closer to the point, are the paddles being used on this poo creek made of TP…
More containment news from Bloomberg…
“The gains in the U.S. were erased after American Home Mortgage, a provider of loans to borrowers without top-rated credit, said $450 million to $500 million of loans probably won’t get funded.”
“Oil’s climb to a one-year high above $78 a barrel and a report that showed the biggest drop in home prices in at least six years also drove the retreat.”
“Financial shares also turned lower after investor Jeremy Grantham said up to half of all hedge funds may close in the next five years.”
“American Home Mortgage plummeted $9.43, or 90 percent, to $1.04. The lender, whose shares stopped trading at $10.47 yesterday after it disclosed a cash shortage, has been cut off from credit and didn’t have money yesterday to make $300 million of mortgages it had already agreed to provide, the Melville, New York-based company said today in a statement.”
Nothing to worry about here folks… We got it all under control….
Best regards,
Econolicious
THE big event: Ron Paul winning the 2008 presidential election on write-in ballots.
James B. Stewart calls time of death.
THE GREAT ASSET boom is over.
Not sure where Bloomberg’s description of American Home Mortgage comes from. They’re primarily known as a conventional conforming, FHA/VA, prime jumbo loan producer. They do produce Alt-A some of which is low enough on the totem pole that Moody’s would probably model it as subprime under its new guidelines but that’s about as far down as AHC goes AFAIK.
Assuming this downdraft is driven by some discreet event in the mortgage credit space I’d be more concerned with what’s happening with mortgage insurers such as PMI and MGIC (and their C-BASS operation).
Correction: American Home Mortgage ticker is AHM
Correction 2: D@mn I’m getting sloppy, forgot the hat tip to Calculated Risk.
Might as well take the opportunity to add that MGIC/C-BASS & PMI are of more concern, at least to me, because they’re (a) direct indicators of accelerating default rates and (b) by reputation well run operations so it’s a fairly good bet ‘contagion’ is not simply a function of sloppy and/or criminal business operations.
BR
i used to ride the 3rd ave el with a young man with a last nmae of Ritholtz. could that be any relation to you? that was quite a number of years ago.
Anyone re-reading Galbraith’s The Great Crash?
He’s especially timely on the mechanisms of market leverage and on how leverage can suddenly go into reverse when asset values begin to drop. In the late 20s the means for creating leverage were investment trusts and public utility holding companies (see Sam Insull regarding the latter). But the dynamic was basically the same as what we’re seeing today.
Well, BR, this is a rather ominous post…
Could Hank Paulson be in China right now to get more paddles?
Is this the right room for an argument?
Winston:
“I told you once…”
Chief,
I’m afraid the Chinese are gonna need those paddles themselves,
Asian markets are currently down as much as 4%.
Is the American Flu catching?