As foreclosures surge, we also learn today vacant U.S. houses have reached a record high. According to the Census Bureau, over 18.6 million houses are empty -- up 1 million properties from a year ago.
That’s the biggest glut of vacant homes since the Census Bureau started keeping track in 1956. Most likely, this many homes haven’t sat empty since the Great Depression.
Our friend Kurt Richebacher rolled over in his grave so hard this morning he likely pulled a muscle.
But the crumbling housing market is old news, right? Gasoline prices are now the No. 1 economic concern among U.S. consumers.
Tuesday, April 29, 2008
Friday, April 25, 2008
What we can do for rice crisis?
Rice prices all over the world set record highs yesterday and overnight… again. Futures in Chicago punched through the $25 level in yesterday’s session. Now up 26% in April alone, Chicago rice is climbing at its fastest monthly pace since 1993.
Then, as we slept, Thai rice (the world’s most traded rice) shot up to $1,000 a ton. We got our hands on a chart of this stuff… unbelievable:
Your eyes do not deceive you… prices have tripled since the New Year. A month ago, when we were shocked at the $720 sticker price. Now $1,000? Oy…
People of the world’s poorer nations are thrilled. Here’s a Bangladeshi man expressing his excitement to a policeman. About 20,000 of his friends joined him in the latest food riot there.
A U.N. “peacekeeper” was dragged out of his car and shot in Haiti, where riots over the price of food occur almost daily. In the Ivory Coast, a mob of 1,500 overturned cars and burnt tires while chanting, “We are hungry.”
Senegal, Kenya, Egypt, Cameroon, Jordan, Yemen, Pakistan, India, Mexico, Mozambique, Zimbabwe….
Several stocks related to rice include MOS or you can just play with commodity.
Then, as we slept, Thai rice (the world’s most traded rice) shot up to $1,000 a ton. We got our hands on a chart of this stuff… unbelievable:
Your eyes do not deceive you… prices have tripled since the New Year. A month ago, when we were shocked at the $720 sticker price. Now $1,000? Oy…
People of the world’s poorer nations are thrilled. Here’s a Bangladeshi man expressing his excitement to a policeman. About 20,000 of his friends joined him in the latest food riot there.
A U.N. “peacekeeper” was dragged out of his car and shot in Haiti, where riots over the price of food occur almost daily. In the Ivory Coast, a mob of 1,500 overturned cars and burnt tires while chanting, “We are hungry.”
Senegal, Kenya, Egypt, Cameroon, Jordan, Yemen, Pakistan, India, Mexico, Mozambique, Zimbabwe….
Several stocks related to rice include MOS or you can just play with commodity.
Wednesday, March 26, 2008
too bad for job market
very bad for me:(
But here’s the rub. Unlike the tech bust, during the mortgage crisis fallout, it won’t be just Wall Street scions and their New York dependents struggling to find employment.
Today, given the slowdown in the housing and mortgage markets, only 59% of American employers plan to hire 2008 college gradates this year, down 17% from 2007. What’s more, according to Monster Worldwide’s annual survey, 29% of employers say they are “unsure” about hiring new grads -- twice as many as responded this way last year.
Pollsters at Monster say about half of all 2008 college grads plan on moving back home after graduation -- more than double the 22% who had the same plan in 2007. That can’t be good for family balance sheets already strapped preparing for retirement.
But here’s the rub. Unlike the tech bust, during the mortgage crisis fallout, it won’t be just Wall Street scions and their New York dependents struggling to find employment.
Today, given the slowdown in the housing and mortgage markets, only 59% of American employers plan to hire 2008 college gradates this year, down 17% from 2007. What’s more, according to Monster Worldwide’s annual survey, 29% of employers say they are “unsure” about hiring new grads -- twice as many as responded this way last year.
Pollsters at Monster say about half of all 2008 college grads plan on moving back home after graduation -- more than double the 22% who had the same plan in 2007. That can’t be good for family balance sheets already strapped preparing for retirement.
Monday, March 24, 2008
S&P 1350 is the support for new bull market
It seems we get it today . Now the question is whether it can hold for 3 days.
Monday, March 17, 2008
the lesson we learn from BSC melting down
You will recognize that line, dear reader. It describes what happened to Julius Ceasar after he was stabbed to death by a group of rivals on the Ides of March in the year
The Ides of March came this past Saturday. When it had gone, the bloody corpse on the ground was that of one of Wall Street’s biggest players – Bear Stearns.
Last week, we reported a rumor. That a large Wall Street firm was in trouble – which was said to be the real reason that the Fed announced its new $200 billion of loans.
By week’s end the news was out: the Bear had gotten the ‘Margin Call from Hell.’
The Fed and J.P. Morgan Chase rushed in to give aid and comfort. But officials were very worried that if a deal to rescue Bear Stearns were not completed before Asian markets opened this morning, there could be a financial meltdown.
“I’ve been on the phone for a couple of days straight, throughout the weekend,” said U.S. Treasury Secretary Hank Paulson on television...”but I’m not going to project right now what the outcome of that situation is...”
“That situation” of course, was the situation at Bear Stearns. Early reports here in London say that a deal was finally struck with J.P. Morgan Chase to buy out the Bear for a reported $2 a share.
The background for this latest crisis is what we’ve been reckoning with in these Daily Reckonings for so many months. The geniuses at Bear Stearns had their calculators...their Black Sholes Option Pricing Model...their mathematicians...their risk figures... They had some of the finest minds in the country – or at least, some of the finest minds money could buy on Wall Street.
And yet, a year ago they also had a stock trading for $150. Now, it is down to $2...the shareholders have been largely wiped out.
When Wall Street got the news of the Bear’s predicament, stocks were sold off – driving the Dow down 300 points. Then came word that the Fed and JP Morgan Chase were on the case, and the index bounced back, closing down 194 points. Hardest hit, (this will come as no surprise) was Bearn Stearns itself – down 47%. Other financial stocks took a beating too.
We began last week worrying that we might be wrong. We begin this one worrying that we are probably right. At the beginning of the week, U.S. stocks seemed to be rising more than gold. By week’s end, things were happening as they should: God was in his heaven. The queen was on her throne. Gold was rising...and stocks were going down. All is right with the world...or as right as it can be after a 27-year credit expansion.
Little noticed in the Bear affair is the role of Chinese investment firm, Citic. The Chinese were going to put up some money to prop up Bear Stearns. There might be many explanations for why the Citic deal didn’t go forward, but here we suggest one that is the most far-reaching: the foreigners are growing wary of the United States. You will recall our friend in Geneva told us to “Sell the United States...sell its money...sell its stocks...sell its debt.” That attitude is spreading – the belief that the United States is a short sale.
“For years,” begins a report in the Wall Street Journal , “the US economy has been borrowing from cash-rich lenders from Asia to the Middle East. American firms and households have enjoyed readily available credit at easy terms, even for risky bets. No longer.”
“Clearly, the whole world is focused on the financial crisis and the US is really the epicenter of the tension,” the paper quotes Carlos Asills, at Globista Investments. “As a result, we’re seeing the capital flow out of the US.”“The Fed’s rescue of Bear increases the odds of a generalized, taxpayer-funded financial bailout. Combined with superlow rates, that will add to pressure on the beleaguered dollar. Bear is the biggest firm so far to hit the wall this time around. But the biggest name in financial distress could eventually be the US.”
*** How do you like those foreigners? We were nice enough to take their money...spend it on stuff they sent over...and ruin our own economy and our own balance sheets so theirs could grow at breakneck speed. And this is the thanks we get! Now that we really need their money, instead of opening their wallets, they ask questions: what’s that paper really worth, they want to know?
The United States emits a lot of paper – bonds, notes, SIVs, MBS, securities, repos, you name it – but one piece of paper is the one emitted most and the one the foreigners are probably most concerned about: the paper with pictures of dead presidents.
The Ides of March came this past Saturday. When it had gone, the bloody corpse on the ground was that of one of Wall Street’s biggest players – Bear Stearns.
Last week, we reported a rumor. That a large Wall Street firm was in trouble – which was said to be the real reason that the Fed announced its new $200 billion of loans.
By week’s end the news was out: the Bear had gotten the ‘Margin Call from Hell.’
The Fed and J.P. Morgan Chase rushed in to give aid and comfort. But officials were very worried that if a deal to rescue Bear Stearns were not completed before Asian markets opened this morning, there could be a financial meltdown.
“I’ve been on the phone for a couple of days straight, throughout the weekend,” said U.S. Treasury Secretary Hank Paulson on television...”but I’m not going to project right now what the outcome of that situation is...”
“That situation” of course, was the situation at Bear Stearns. Early reports here in London say that a deal was finally struck with J.P. Morgan Chase to buy out the Bear for a reported $2 a share.
The background for this latest crisis is what we’ve been reckoning with in these Daily Reckonings for so many months. The geniuses at Bear Stearns had their calculators...their Black Sholes Option Pricing Model...their mathematicians...their risk figures... They had some of the finest minds in the country – or at least, some of the finest minds money could buy on Wall Street.
And yet, a year ago they also had a stock trading for $150. Now, it is down to $2...the shareholders have been largely wiped out.
When Wall Street got the news of the Bear’s predicament, stocks were sold off – driving the Dow down 300 points. Then came word that the Fed and JP Morgan Chase were on the case, and the index bounced back, closing down 194 points. Hardest hit, (this will come as no surprise) was Bearn Stearns itself – down 47%. Other financial stocks took a beating too.
We began last week worrying that we might be wrong. We begin this one worrying that we are probably right. At the beginning of the week, U.S. stocks seemed to be rising more than gold. By week’s end, things were happening as they should: God was in his heaven. The queen was on her throne. Gold was rising...and stocks were going down. All is right with the world...or as right as it can be after a 27-year credit expansion.
Little noticed in the Bear affair is the role of Chinese investment firm, Citic. The Chinese were going to put up some money to prop up Bear Stearns. There might be many explanations for why the Citic deal didn’t go forward, but here we suggest one that is the most far-reaching: the foreigners are growing wary of the United States. You will recall our friend in Geneva told us to “Sell the United States...sell its money...sell its stocks...sell its debt.” That attitude is spreading – the belief that the United States is a short sale.
“For years,” begins a report in the Wall Street Journal , “the US economy has been borrowing from cash-rich lenders from Asia to the Middle East. American firms and households have enjoyed readily available credit at easy terms, even for risky bets. No longer.”
“Clearly, the whole world is focused on the financial crisis and the US is really the epicenter of the tension,” the paper quotes Carlos Asills, at Globista Investments. “As a result, we’re seeing the capital flow out of the US.”“The Fed’s rescue of Bear increases the odds of a generalized, taxpayer-funded financial bailout. Combined with superlow rates, that will add to pressure on the beleaguered dollar. Bear is the biggest firm so far to hit the wall this time around. But the biggest name in financial distress could eventually be the US.”
*** How do you like those foreigners? We were nice enough to take their money...spend it on stuff they sent over...and ruin our own economy and our own balance sheets so theirs could grow at breakneck speed. And this is the thanks we get! Now that we really need their money, instead of opening their wallets, they ask questions: what’s that paper really worth, they want to know?
The United States emits a lot of paper – bonds, notes, SIVs, MBS, securities, repos, you name it – but one piece of paper is the one emitted most and the one the foreigners are probably most concerned about: the paper with pictures of dead presidents.
Thursday, March 13, 2008
Wednesday, March 12, 2008
Wow, the Fed acts again as an irresponsible person
The Fed’s new TSLF -- a promise to swap Treasuries for mortgage-backed securities -- kicked off the best day for U.S. stocks in five years.
The Dow shot up 417 points, or 3.5%, its best percentage gain since March 2003. The Nasdaq also had its biggest percentage gain since spring ’03, up nearly 4%. The S&P hasn’t seen a day this good since May 2002… it popped 3.7%.
“The Federal Reserve’s announcement,” John Williams, “that it will be providing an added $200 billion in liquidity to the system in a coordinated action with other central banks, on top of the $200 billion emergency funding announced by the Fed on Friday (March 7), again highlights the depth of and the ongoing deterioration in the banking system’s solvency crisis.
“The good news is the Fed will create whatever dollars it needs to keep the system from imploding. The bad news is the price that will be paid in higher inflation. Despite any relief rallies that seem to be taking place in the equity and dollar markets, the news here has horrendous implications for the dollar and inflation, corresponding positive implications for gold and likely continued trouble for equities.”
Stock markets in Asia rallied big on the Fed bailout plan too. Markets in Australia, Hong Kong, Malaysia and Singapore all surged about 3%. Indian and Japanese markets gained 1% apiece.
In classic form, whatever America did, China did not. The Shanghai Composite fell 2.3% on rumors the Chinese central bank is planning to hike rates again… and the government is devising more ingenious ways to stymie inflation in their fledgling capitalist economy.
The Dow shot up 417 points, or 3.5%, its best percentage gain since March 2003. The Nasdaq also had its biggest percentage gain since spring ’03, up nearly 4%. The S&P hasn’t seen a day this good since May 2002… it popped 3.7%.
“The Federal Reserve’s announcement,” John Williams, “that it will be providing an added $200 billion in liquidity to the system in a coordinated action with other central banks, on top of the $200 billion emergency funding announced by the Fed on Friday (March 7), again highlights the depth of and the ongoing deterioration in the banking system’s solvency crisis.
“The good news is the Fed will create whatever dollars it needs to keep the system from imploding. The bad news is the price that will be paid in higher inflation. Despite any relief rallies that seem to be taking place in the equity and dollar markets, the news here has horrendous implications for the dollar and inflation, corresponding positive implications for gold and likely continued trouble for equities.”
Stock markets in Asia rallied big on the Fed bailout plan too. Markets in Australia, Hong Kong, Malaysia and Singapore all surged about 3%. Indian and Japanese markets gained 1% apiece.
In classic form, whatever America did, China did not. The Shanghai Composite fell 2.3% on rumors the Chinese central bank is planning to hike rates again… and the government is devising more ingenious ways to stymie inflation in their fledgling capitalist economy.
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