Empiric Student Property Share Discussion Threads

[briarberry] 23/7/2008 22:35

DJ Details Of Housing Package Passed By US House

The U.S. House passed a sweeping package of housing
legislation Wednesday that looms large both in size (694 pages in all) and its
potential impact on an economy roiled by a distressed housing market and a
wave of recent foreclosures.

The bill combines provisions from housing bills recently passed in the House
and Senate with a Treasury Department proposal for temporary "backstop"
authority for a possible rescue of Fannie Mae (FNM) and Freddie Mac (FRE).
.
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[briarberry] 23/7/2008 19:23

It's no wonder Freddie & Fanny need a bail out...


Fannie Mae acquired twice as many homes through foreclosure in the first quarter as it sold, regulatory filings show. ... Late payments on the company's home loans, a harbinger of foreclosures, almost doubled in the past year.

Together, Fannie Mae and Freddie Mac, the two biggest U.S. mortgage finance companies, owned a record $6.9 billion of foreclosed homes on March 31, compared with $8.56 billion held by all 8,500 U.S. commercial banks and savings and loans.

[briarberry] 23/7/2008 19:15

construction loans are next


Foresight Analytics ... estimates that construction-loan delinquencies among all property types reached 9% in the quarter, up from 7.2% in the first quarter and 2.4% in the year-earlier period. ...

Among loans to single-family-housing developers, an estimated 12% of the loans were at least 30 days past due, compared with 10.8% in the previous quarter and 3.1% a year earlier.

Matthew Anderson, partner at Foresight Analytics, says that an early read on the data shows the pain is spreading to nonresidential projects. He says the weakening economy has put pressure on developers of shopping malls

[briarberry] 23/7/2008 18:40

Citigroup has the most off-balance-sheet assets among U.S. banks, totaling about $1.1 trillion at the end of March, based on first-quarter regulatory filings. Since last September, at least $100 billion of assets have flooded back onto Citigroup's balance sheet, accompanied by more than $7 billion of losses, making investors wary of unknown obligations.

[briarberry] 23/7/2008 16:27

To understand leverage, just look at one of the WSJ articles from last Wednesday (7/16). Lehman's (LEH) market cap of $9B is only 40% of their book value of $23B, and it sounds very cheap. But then look at their assets: They have $160B hard-to-value Level 2 assets and $41B impossible-to-value Level 3 assets. The WSJ article applies a 5% haircut on Level 2 and 25% on Level 3 to come up with $19B future write-offs. However, based on analysis from many other public sources, most of the Level 3 assets are MBS CDOs, even if they are AAA rated, the recovery rate is only about 50%. And anything under AAA rating is pretty much wiped out. For Level 2 assets, it would be very lucky if only 10% haircut is true. The combination of both more realistic haircuts will result in $36B additional losses, which would more than wipe out their book value of $23B plus their market cap of $9B. This is leverage in the working, unfortunately at the downside.

[briarberry] 23/7/2008 15:05

July 23 (Bloomberg) -- Fannie Mae and Freddie Mac rose after U.S. lawmakers reached a deal on legislation that authorizes Treasury Secretary Henry Paulson to bail out the mortgage-finance providers while placing few restrictions on the companies.

The House of Representatives is set to vote today on the rescue plan

The agreement increases the likelihood Paulson will get the authority this week, after he lobbied lawmakers to overcome concerns about taxpayer liability. The Treasury chief argued that the backstop for the beleaguered mortgage companies was critical to help safeguard U.S. financial market stability.

[briarberry] 23/7/2008 14:27

inflation/deflation = one scenario for you all to ponder...


U.S. Bankruptcy To Become A Foregone Conclusion?
Paulson, Plosser, Bernanke and Bush would do well to study the report published by the Federal Reserve Bank of St. Louis in July/August 2006, which states that "Unless the United States moves quickly to fundamentally change and restrain its fiscal behavior, its bankruptcy will become a foregone conclusion."

The Federal Reserve Bank Report continues "Given the reluctance of our politicians to raise taxes, cut benefits, or even limit the growth in benefits, the most likely scenario is that the government will start printing money to pay its bills. This could arise in the context of the Federal Reserve "being forced" to buy Treasury bills and bonds to reduce interest rates. Specifically, once the financial markets begin to understand the depth and extent of the country's financial insolvency, they will start worrying about inflation and about being paid back in watered-down dollars. This concern will lead them to start dumping their holdings of U.S. Treasuries. In so doing, they'll drive up interest rates, which will lead the Fed to print money to buy up those bonds. The consequence will be more money creation-exactly what the bond traders will have come to fear. This could lead to spiraling expectations of higher inflation, with the process eventuating in hyperinflation ."



US taxpayers liability to Fannie and Freddie to be 'limited' to $10.6trillion :) :)

[briarberry] 23/7/2008 13:47

Don't write off the U.S. consumer, right? Wrong. On a year-over-year basis there has been a sharp deceleration in nominal retail sales growth. On a year-over-year basis, there has been a sharp contraction in price-adjusted retail sales. The chart below using quarterly average data illustrates this. Growth in nominal retail sales peaked back in the first quarter of 2006 at 7.6% in this cycle. In the second quarter of this year, nominal retail sales growth had slowed to just 2.6%. Adjusted by the goods or commodities component of the CPI, retail sales on a year-over-year basis have been declining for three quarters running, contracting by 2.6% in the second quarter of this year. Notice that in the recession of 2001, although price-adjusted retail sales experienced slower year-over-year growth, they never outright contracted. In this recession – yes, despite all the happy talk, we are in a recession – real retail sales are contracting.

(with chart, pdf file)

[briarberry] 23/7/2008 13:43

might be a sign...


Volvo received orders for 53,791 trucks in the second quarter, down from 74,517 orders a year earlier, the Gothenburg, Sweden-based company said today. Orders tumbled 54 percent in Europe, its biggest market, and declined 6 percent in Asia.

[briarberry] 23/7/2008 11:08

The House of Representatives is set to vote today on a rescue plan for Fannie Mae and Freddie Mac after U.S. lawmakers reached a deal on legislation aimed at alleviating the worst housing recession in a quarter century. "

"The agreement increases the likelihood Paulson will get the authority this week, after he lobbied lawmakers to overcome concerns about taxpayer liability.

[briarberry] 23/7/2008 10:47

The Federal Housing Administration, generally known as "FHA"...

The FHA Delinquency Crisis: 1 in 6 Borrowers in Default

At a time when borrowers, lenders, regulators, and lawmakers are scurrying for cover from the subprime lending crisis, a new crisis appears to be emerging with FHA.

[briarberry] 23/7/2008 01:27

Tracks the movement of foreclosures in San Diego County

It's certainly worse this time, this was one of the hottest places during the boom

[briarberry] 23/7/2008 01:22

might be worth reading, if you've not already...



In 1990-91 at the height of that recession and banking crisis many major banks – in addition to 1000 plus S&L's that went bust – were effectively insolvent, including, as it was well known at that time, Citibank. At that time the Fed and regulators used instruments similar to those used today – easy money and steepening of the intermediation yield curve, aggressive forbearance, creative – i.e. liar – accounting, etc. – to rescue these major financial institutions from formal bankruptcy. But at that time the housing bust and the ensuing decline in home prices was much smaller than today: during that recession home prices – as measured by the Case-Shiller/S&P index – fell less than 5% from their peak. This time around instead such an index has already fallen 18% from its peak and it will most likely fall by a cumulative 30% before it bottoms sometime in 2010. If a 5% fall in home prices was enough to make Citi effectively insolvent in 1991 what will a 30% fall in home prices – and massive defaults on many other forms of credit (commercial real estate loans, credit cards, auto loans, student loans, home equity loans, leveraged loans, muni bonds, industrial and commercial loans, corporate bonds, CDS) - do to these financial institutions? It challenges the credulity of even spin masters to argue that financial firms are not in worse shape today than they were in 1990-91 when a significant number of major banks were technically insolvent. So, not only hundreds of small banks and a significant fraction of regional banks but also some major money center banks will become effectively insolvent during this crisis.

[briarberry] 22/7/2008 23:42

3 US airlines, between them they lost over $3 bn...


UAL Corp.'s United Airlines posted the biggest loss -- $2.73 billion or $21.74 per share. United also expanded the number of jobs it plans to eliminate by the end of the year from 3,800 to 7,000

US Airways rolled up a $567 million loss -- $6.16 per share. Revenue rose 3 percent, but CEO Doug Parker also pointed to soaring fuel costs for most of his company's financial woes.

JetBlue Airways Corp. posted the smallest loss -- $7 million or 3 cents a share, as revenue climbed 18 percent. JetBlue will shut down its operations in Ontario, Calif., because of rising costs.



UPS says profit fell nearly 21 percent in second quarter, lowers outlook for year
ATLANTA (AP) -- Customers are using UPS shipping services within the U.S. less amid a slumping U.S. economy and soaring fuel prices. The company's international business was affected as imports into the country declined in the second quarter.



SAN FRANCISCO (AP) -- Yahoo Inc.'s second-quarter profit fell 18 percent, the latest sign of the financial decay that has frustrated shareholders and raised doubts about the Internet company's future.

[briarberry] 22/7/2008 23:17

This graph shows the number of Notice of Defaults (NODs) filed in California by year since 1992. The 2008 estimate is twice the first half rate.



Mortgage servicers recorded 121,341 "notices of default" during the April-through-June period. That was up 6.6 percent from a revised 113,809 for this year's first quarter, and up 124.9 percent from 53,943 in second-quarter 2007, according to DataQuick Information Systems.

Last quarter's number of defaults was the highest in DataQuick's statistics, which go back to 1992.




There are several key points:

This is a new record for NODs.

A very large percentage of NODs go through foreclosure. Only 22% "emerge from the foreclosure process". That is a historic low.

40% of all sales activity in California are foreclosure resales.

[briarberry] 22/7/2008 22:20

Washington Mutual Inc. said Tuesday it lost a staggering $3 billion during the second quarter as it increased its loss reserves to more than $8 billion to cover souring loans in its mortgage portfolio.

[briarberry] 22/7/2008 13:43

published capital ratios may not be right (yeah they're all lying!)



James Dimon is known for being outspoken. But the J.P. Morgan Chase chief executive outdid himself last week by calling into question the legitimacy of investment banks' newly published capital ratios.

"I challenge those numbers," Mr. Dimon said, throwing a verbal roundhouse at rivals Goldman Sachs Group, Morgan Stanley, Merrill Lynch and Lehman Brothers.

He went on to question whether the methods the investment banks used to calculate a measure of financial strength known as the Tier 1 ratio were the same as those used by commercial banks.

The investment banks were left fuming.

[briarberry] 22/7/2008 13:21

Wachovia 2Q loss $8.9 billion; cuts dividend to 5C from 37.5C

NEW YORK (Thomson Financial) - Wachovia Corp. Tuesday reported a second-quarter loss of $8.9 billion, or $4.20 a share, which includes a $6.1 billion noncash goodwill impairment charge.

cut its quarterly dividend to 5 cents from 37.5 cents.

Wachovia also said it plans to exit the general bank wholesale mortgage origination channel.

[briarberry] 21/7/2008 21:56

It seems that bear markets love good news just like bull markets love bad news

Apple Inc. says its most recent quarterly profit jumped 31

futures just took a dump & the dollar down too

sea of red on laughter hours

[briarberry] 18/7/2008 16:58

Citigroup Inc., the biggest U.S. bank by assets, reported its third straight quarterly loss after at least $7 billion of credit-market writedowns.

The second-quarter net loss of $2.5 billion, or 54 cents a share, compared with earnings of $6.23 billion, or $1.24, a year earlier, the New York-based company said today in a statement. Analysts estimated the loss would be $3.67 billion, according to a Bloomberg survey.



(yeah they must be lying)

[briarberry] 17/7/2008 22:13

Tech earnings increased (I confess I didn't think tech earnings would still be OK at this stage)...


SEATTLE (AP) -- Microsoft Corp. said Thursday its fiscal fourth-quarter profit jumped 42 percent, helped by strong sales of its Office and Windows software.

For the full fiscal year, Microsoft's earnings rose 26 percent to $17.7 billion, or $1.87 per share, from $14.1 billion, or $1.42 per share in fiscal 2007.




SAN FRANCISCO (AP) -- IBM Corp.'s second-quarter profit leaped 22 percent, blowing past Wall Street's estimates as the technology company's bread-and-butter services division continued to thrive despite economic malaise in the U.S.

IBM said Thursday it earned $2.77 billion, or $1.98 per share, in the three-month period ended June 30. That's 16 cents per share higher than the average estimate of analysts polled by Thomson Financial.

Last year IBM earned $2.26 billion, or $1.55 per share, for the same period.




Google second-quarter profit rises 35 percent to $1.25B, but falls below analyst views

SAN FRANCISCO (AP) -- Google Inc.'s earnings growth slowed more than investors anticipated during the second quarter -- an indication that sluggish U.S. economy is starting to weigh on the Internet search leader.

[briarberry] 17/7/2008 22:09

NEW YORK (AP) -- Merrill Lynch & Co. on Thursday reported a $4.9 billion loss amid massive write-downs from soured mortgage positions and other risky investments, and unveiled plans to raise money by unloading assets.