Empiric Student Property Share Discussion Threads

[briarberry] 27/8/2007 02:13

interesting background info, points of view...

[briarberry] 27/8/2007 02:07

Federal Reserve data shows that the outstanding stock of US commercial paper has fallen by $255bn over the last three weeks, a sign that borrowers have been unable to roll over huge amounts of debt. The fall is comparable to the sudden shrinkage that occurred at the onset of the dotcom bust, and may have the effect of draining liquidity.

[briarberry] 24/8/2007 21:13

Banks - lending their insolvent brokerage arms all that money - no wonder the panic selling & volatility stopped...



Fed bends rules to help two big banks

If the Federal Reserve is waiving a fundamental principle in banking regulation, the credit crunch must still be sapping the strength of America's biggest banks.

Fortune's Peter Eavis documents an unusual Fed move.

August 24 2007: 3:37 PM EDT

NEW YORK (Fortune) -- In the clear sign that the credit crunch is still affecting the nation's largest financial institutions, the Federal Reserve agreed this week to bend key banking regulations to help out Citigroup (Charts, Fortune 500), according to a document posted Friday on the Fed's web site.

An Aug. 20 letter from the Fed to Citigroup states that the Fed, which regulates large parts of the U.S. financial system, has agreed to exempt Citigroup from rules that effectively limit the amount of lending that its federally-insured bank can do with its brokerage affiliate. The exemption, which is temporary, means that Citigroup's Citibank entity can substantially increase funding to Citigroup Global Markets, its brokerage subsidiary. Citigroup requested the exemption, according to the letter.

[briarberry] 24/8/2007 13:03

M3 growth looking a bit flat - still above 12% - will it fall ???

[briarberry] 24/8/2007 12:57

UK personal debt now higher than annual UK GDP

It was on BBC News 24 yesterday

[briarberry] 24/8/2007 00:00

Brace yourself for the insolvency crunch
Posted by Ambrose Evans-Pritchard on 23 Aug 2007 at 17:38

Global junk bond issuance has been frozen for two months. Fresh sales of collateralized debt obligations – the CDOs of subprime notoriety: a $1 trillion sold last year - have all but stopped. Banks have yet to off-load $300bn of debt from leveraged buy-out deals, forcing them to keep the liabilities on their books. They are all snake-bitten now.

Ben Bernanke is looking hawkish to me, given the shock of what happened on Monday when yields on 3-month US Treasury notes plunged at the fastest pace ever recorded, a panic flight to safety that no living trader had ever seen before.

Why? Because trust had collapsed to such a degree that players with a lot of cash no longer believed it safe to leave wealth in bank accounts, or the money market funds of brokerage companies - (exposed as they are to short-term commercial paper and subprime CDOs). This did not occur after 9/11, or in the heat of the October 1987 crash. Nor did was there such a banking panic in October 1929. (it hit in August 1931). If you think this is of no importance, or that this will pass swiftly, you have a strong nerve.

[briarberry] 23/8/2007 16:50

bail-outs can only lead to larger budget deficits, more $US printed and more risk in the future

[briarberry] 23/8/2007 16:31

The following commentary is from Justin Oliver at Canaccord Adams.)

The unprecedented spread between US TBill and LIBOR rates is suggesting a heretofore unseen attack on the global financial system. There is clearly something going on that the large banks are privy to, that we are not as they are clearly not willing to lend to each other without a massive risk premium. It is inconceivable that equities can continue to trade relatively unaffected by a complete backing up of the credit markets.

Watch that $80 U.S. dollar level (support for 30 years) for DXY, if the dollar falls, Long rates will go up and this will be a huge negative for the market.

Short Retail/Banks and Long Gold and Monetary Metals

If there is no money to lend there is no money to spend – Hand in hand with the 3% increase in same story sales yet 17% increase in credit card sales by Walmart!

Justin Oliver CA
Institutional Equity Sales
CanaccordAdams

[briarberry] 23/8/2007 15:44

banks borrow short and lend long, and take the spread as profit

[briarberry] 23/8/2007 15:35

makes you wonder ?

quote

The Fed is now aggressively pushing the fed funds rate lower. much lower. They have essentially cut without announcing it. Treasury backed collateral is bringing only in the 3s while MBS collateral is only around 5. Incredible spread there.

[briarberry] 22/8/2007 23:57

Wells Fargo Gorges on Mark-to-Make-Believe Gains: Jonathan Weil

Aug. 22 (Bloomberg) -- There's the kind of earnings investors can take to the bank. And then there's the kind the bank can show to investors.

Word to Wells Fargo & Co. investors: Beware the second kind.

Last quarter Wells Fargo reported record net income of $2.28 billion, up 9 percent from a year earlier. Read the footnotes to its latest quarterly report, though, and you will see a new term in accounting lingo called ``Level 3'' gains. Without these, the financial-services company's earnings would have declined.

So what are Level 3 gains? Pretty much whatever companies want them to be.



The Rub

Here's the rub: The footnotes show the vast majority of the $2.24 billion in derivative losses were Level 1 or Level 2, while the $2.01 billion in MSR gains were all Level 3.

In other words, it's a safe bet the losses were real, while the gains had all the substance of a prayer. Indeed, Wells Fargo said in its Aug. 6 quarterly report that ``the valuation of MSRs can be highly subjective and involve complex judgments by management about matters that are inherently unpredictable.''

[briarberry] 22/8/2007 23:02

Cantarell - still waiting for the helicopter rig reports ?

I guess oil rigs are designed to cope with 100mph gusts - it sounds like Dean did slow a lot

[briarberry] 22/8/2007 22:58

unemployment - there's so much bad news but I think this is the worst...


John Challenger, the chief executive of Challenger, Gray Christmas, a private firm that monitors America's job market, said over 11,000 layoffs have been announced since Friday, including employment losses at financial companies impacted by housing- and credit-related woes.

"What's remarkable about these job cuts is just how quickly they've come. Many of these companies have just turned on a dime," Challenger said.

He compared the job losses roiling the mortgage industry to technology industry layoffs after the dot.com bubble burst in 2000, and other deep job cuts during the 1991-1992 recession.

Employment losses sweeping the mortgage industry have accelerated rapidly this month

[briarberry] 21/8/2007 15:58

Hurricane Dean - almost direct hit on Cantarell oil complex - although it's slowed to Cat2





ALTHOUGH CONTINUED WEAKENING IS FORECAST AS DEAN CROSSES THE YUCATAN PENINSULA...DEAN IS EXPECTED TO STILL BE A HURRICANE WHEN IT REACHES THE BAY OF CAMPECHE.

[briarberry] 20/8/2007 23:15

Hurricane Dean headed for Cantarell...

Pemex Shuts Down 2.65 million barrels a day of crude oil and 2.634 billion cubic feet a day of natural gas.

In the first half of this year, Pemex's overall crude production averaged 3.16 million barrels a day, and its natural gas production averaged 5.925 billion cubic feet a day.

Pemex, one of the top foreign suppliers of crude oil to the U.S., said whether or not it declares "force majeure" on shipments will depend on the effects of the storm.

Pemex exports approximately 1.7 million barrels a day of crude oil, of which about 80% goes to the U.S.

[briarberry] 20/8/2007 23:01

Central banks are stealing from the average citizen

What happens when fiscal irresponsibility gets rewarded with bailouts? You get more fiscal irresponsibility. Let's stop rescuing greedy financiers and investors.

Now is the time to act. Let the crooks go bankrupt. Central banks should bury the Greenspan 'put' for good."

By Bill Fleckenstein



Illiquid versus insolvent
Similarly, folks should read what Nouriel Roubini says at RGE Monitor about the current crisis, because I think he hits the nail on the head.

Rather than being a liquidity crisis like the 1998 failure of Long-Term Capital Management -- which was more like a run on the bank and was stemmed by the powers that be -- Roubini describes the current situation as a "liquidity crisis that signals a more fundamental debt, credit and insolvency crisis among many economic agents in the U.S. and global economy."

For folks in a hurry, the last paragraph of Roubini's piece captures the essence of the problem. In the meantime, the last few lines nicely sum it up:

"We are indeed at a 'Minsky Moment' and this recent financial turmoil is the beginning of a much more serious and protracted U.S. and global credit crunch. The risks of a systemic crisis are rising: Liquidity injections and lender-of-last-resort bailout of insolvent borrowers -- however necessary and unavoidable during a liquidity panic -- will not work; they will only postpone and exacerbate the eventual and unavoidable insolvencies."

[briarberry] 20/8/2007 21:15

Treasury Bill Yields Fall Most Since 1987 on Money Fund Demand

By Deborah Finestone and Elizabeth Stanton

Aug. 20 (Bloomberg) -- Yields on U.S. Treasury bills fell the most in two decades on demand for the safest securities amid concern over a widening credit crunch.

Bill yields have fallen five straight days as money market funds dumped asset-backed commercial paper in favor of the shortest-maturity government debt. Three-month yields dropped the most since the stock market crash of 1987 and more than in the wake of the Sept. 11, 2001, terror attacks in the U.S, as funds shunned assets that may be linked to a weakening mortgage market.

[briarberry] 20/8/2007 20:36

Friday's opex - if anyone's still interested...

On Thursday, when stocks were in free-fall, S&P August puts that would have paid off if the contract opened at or below 1450 were at times changing hands for nearly $80 a piece, according to OptionMonster.com. Since roughly 110,000 of those contracts were still open at the start of trading Friday, that represents a theoretical loss of about $800 million for that single contract.

[ian56] 18/8/2007 23:40

It would seem that redemption requests for end of qtr are high, if Sentinel is anything to go by.

Do you like da boyz scheming?
Financials were one of the strongest sectors on the recovery Thursday.
Bear Stearns up 13% Thursday (and up Fri) Goldman Sachs up nicely on Thurs and Fri.

If I wasn't so slow I cud have put 2 and 2 together before the news was announced.

Regards,
Ian

[briarberry] 18/8/2007 13:57

Sentinel Management Files for Chapter 11 Bankruptcy - By Joel Rosenblatt

Aug. 17 (Bloomberg) -- Sentinel Management Group Inc., a cash-management firm which froze client withdrawals three days ago, filed for bankruptcy after a judge sought to block it from selling assets to hedge fund company Citadel Investment Group LLC.

Sentinel, a Northbrook, Illinois-based firm that oversees $1.6 billion, stopped the withdrawals Aug. 14, causing brokers Farr Financial Inc. and Velocity Futures LP to sue.

[briarberry] 17/8/2007 23:16

yeah rates appear to have risen despite the Fed's action and they're still bleeting for a proper rate cut...


Yields on asset-backed commercial paper rated A1, the second-highest at Standard & Poor's, and maturing the next day rose 39 basis points to 6.01 percent, the highest since January 2001, according to data compiled by Bloomberg. The increase is also the biggest since September 2001.

[ian56] 17/8/2007 23:05

The Fed painted liptick on the pig today and as expected the mkt bought it.

A lower hi will be seen 5th or 8th Oct.
And no amount of rate cuts will save it after that, though there will be rallies when they do cut rates.

Regards,
Ian

[briarberry] 17/8/2007 13:37

quote

THE FED DID NOT CUT THE FED FUNDS TARGET!

The discount window is a little used facility for banks who can't get financing in the regular market.

If you're a bank, and your depositors are making a run at you, what the hell difference does it make whether you pay 6.25% or 5.75% when you just don't have the cash to pay them.

Meaningless gesture by the Fed with the intent of manipulating the market. In about 30 minutes a few smart cookies in the mainstream will be out there explaining this. And the smart cookies at the institutional trading desks know this very very well. They are getting out now while the getting is good.

.

The FOMC left the overnight federal funds target rate unchanged at 5.25 percent.

[briarberry] 17/8/2007 13:25

even the Fed is worried !

[briarberry] 17/8/2007 13:24

FED CUTS DISCOUNT RATE 50BPS TO 5.75%

FED SAYS FOMC PREPARED TO ACT AS NEEDED TO HELP ECONOMY