Are Short Sales Shorting the Real Estate Market?
July 18, 2008
A few weeks ago, I wrote an article about my 300-mile trip to buy an investment property because I felt that, in the particular area where the property was located, the prices have declined to the point where it was reasonable for an investor to become active again.
But we still have lots of difficulties in the Real Estate market on a national level. Today I would like to talk about the myth of "Short Sales" as a way to help homeowners save their homes from foreclosure, and as a means for buyers to make a lot of money. In fact, short sales are actually hurting the Real Estate market by artificially increasing the inventory numbers with excess homes that aren’t selling. But before I address all that, I want to briefly touch on the Fannie Mae (FNM)/Freddie Mac (FRE) problem.
Are Short Sales Shorting the Real Estate Market?
Can We Short the SEC?
July 18, 2008
Todd Chalem submits:
A friend of mine asked me about the SEC’s new shorting rules, set to commence Monday. He’s not in the investing business but with a family, a house, a business and a portfolio you might say he’s at least tangentially interested in American free market capitalism and was curious if this was a sign that the world is actually ending or if it only looks that way (readers already know my opinion).
The SEC is taking the stocks of 19 firms and putting a wall around them, allowing short sales only when the shares are confirmed to have been borrowed. I can say without reservation that in all the years I traded equities and options as a market maker, the number of times I could short a stock when my clearing firm was unable to borrow it was exactly zero. None. Never. Maybe some other traders had a different experience, and if any did I’d love to hear about it.
How the U.S. Financial Crisis Resembles Japan’s ‘Lost Decade’ - And How to Play it
July 18, 2008
William Patalon III submits:
If you think the "Lost Decade" Japan endured during the 1990s was deep and painful, stick around: As the global financial crisis that was jump-started by the meltdown of the subprime mortgage market continues to unwind, the U.S. economy is headed for a financial Ice Age that will make Japan’s 10 wasted years seem like a single chilly night.
The two meltdowns started in much the same way - with busted stock-and- real-estate bubbles. With both the United States and Japan, the market manias were ignited by laughably loose credit policies, smoldered under a lack of oversight from government regulators, market analysts or such private-sector sentinels as credit-rating agencies, and were finally fanned into a frenzied financial conflagration by the promise of easy profits.
How the U.S. Financial Crisis Resembles Japan’s ‘Lost Decade’ - And How to Play it
How the U.S. Financial Crisis Resembles Japan’s ‘Lost Decade’ - And How to Play It, Part II
July 18, 2008
William Patalon III submits:
And history shows that such periods can be the worst for investors to navigate - especially when they follow a record stock-market run, such as the all-time-highs that U.S. share prices reached last fall.
From the Great Crash, fast-forward 60 years, to 1989 Japan. On Dec. 29 of that year, the Nikkei 225 Index topped out at 38,957.44, before closing at 38,915.87. By the following September, stock prices had nearly been halved - and there was still much more bloodletting to go. (Despite several subsequent rallies up over the 20,000 threshold, the Nikkei ultimately bottomed at 7,830 in April 2003. It closed yesterday - Thursday - at 12,887.95, still down 67% from its trading high 19 years ago).
How the U.S. Financial Crisis Resembles Japan’s ‘Lost Decade’ - And How to Play It, Part II
Dollar and Euro: Different Week, Same Drivers
July 18, 2008
Kathy Lien submits:
It has been a very volatile week for the US dollar, even though compared to the beginning of the week, the exchange rate for the EUR/USD and USD/JPY has remained virtually unchanged.
On Monday, the EUR/USD was trading at 1.5922 while USD/JPY was trading at 106.26, not far from current levels, but of course these rates masks what can only be likened to a rollercoaster ride in the financial markets. There were a number of event risks and economic data released over the past week, yet the drivers of the financial market volatility can be boiled down to 2 things: the health of the financial sector and oil prices.
Dollar and Euro: Different Week, Same Drivers
Friday Options Update: MSFT, BAC, MIR, OSTK, GILD, BRL, MAT
July 18, 2008
Rebecca Engmann Darst contributed to this report.
Microsoft (MSFT) – Heading into Microsoft’s earnings yesterday, we were mindful that long volatility positions hadn’t paid off particularly well for Microsoft traders. While January options had priced in nearly an 8% move, the actual move fell short of 1%. Again in April we saw option traders looking for a 6.6% move and only got about 5.9%. Traders were pricing in about a 5% move heading into the numbers this week and the implied volatility reading on all Microsoft options actually fell below the historic reading on the stock prior to the report – a very unusual setup ahead of earnings. So with today’s 7.7% decline to $25.40 it’s clear that it paid to go against the grain and long of volatility – and that downside disparity in implied volatility, coupled with the low time value of the July options ahead of the release – likely made it cheap for contrarian bets. Today’s heaviest volume is in July 25 and 36-strike calls, which have lost about 98% of their value overnight Earnings misses by Microsoft and its search-rival and Nasdaq cohort Google sent Nasdaq Volatility as reflected in the VXN 1.4% higher at 30.31.
Friday Options Update: MSFT, BAC, MIR, OSTK, GILD, BRL, MAT
Bond Expert: Update on the Friday Rout
July 18, 2008
John Jansen submits:
Benchmark treasury coupon yields are rising sharply today. Several factors have combined to result in a bit of a rout. Benchmark rates have jumped nearly 10 basis points in the 2 year through 10 year sector and 5 basis points for the Long BondThe bund market has taken a drubbing of its own as German inflation touched a 26 year high. Additionally, Mr Trichet made some comments which one might construe as meaning that he has not finished hiking rates. Consequently, some of the mess in the Treasury market is in sympathy with the European fixed income market.
The mortgage market has also contributed to the treasury sell off. There has been significant selling by mortgage servicers over the last several days. Slowing prepay speeds has lengthened durations and forced some selling. There is also some deleveraging by prop desks and speculators. . And the fragile condition of regional backs has conjured up images of portfolio liquidation from that sector.
Bond Expert: Update on the Friday Rout
Weakn Economy Likely To Boost State Debt Issuance
July 18, 2008
Research Recap submits:
States will likely need to step up their borrowing while the US economy remains weak, according to Standard & Poor’s.
States have not been impervious to disruptions in the credit markets in the past year despite their generally solid credit profiles, S&P says in a new Public Finance Report Card. “Many states with auction-rate securities have had to reposition or restructure their outstanding debt as demand in that market evaporated. More than $10 billion of state-related debt has been restructured.”
Weakn Economy Likely To Boost State Debt Issuance
Where would we be without PC parity (AMD, rated BUY)
July 18, 2008
Now that AMD has just annouced their CEO swallowed more than he can chew. What next?
bigtech.blogs.fortune.cnn.com/2008/07/17/new-amd-chief-likes-getting-his-hands-dirty/
Will AMD become the nex PC Dinosaur? I hope not. We need another PC company to keep Intel honest. Where would Coke be without Pepsi? Boeing without Airbus? Visa without MasterCard? Heck even DC versus Marvel Comics!
How low can AMD go? Sure they could go to Zero in the next two years. Their Finacials are a mess, they are losing more money than they are making, but at least they still have innovation on their side (which is more than I can say for YHOO). AMD has been making some good chips for awhile. They did a little over reaching buying ATI and their promises with "true quad core technology", but they have managed to stay on top of the design game.
Intel would be lost without its little brother to pick on. Most of Intels great innovative achievments of the past 10 years has seem to focus "one uping" AMD’s ideas, and then use savvy marketing to polish their chips. Hopefully soon, AMD will finish retooling and be able to integrate the ATI technology with their chipsets to reclaim some more of the PC market share. Who knows, IF it works the way AMD say it’s supposed to work, maybe Intel will one up them by fbuying Nvidia (what a fall from grace that has been!)
Where would we be without PC parity (AMD, rated BUY)
Higher Highs, Higher Lows (PFE, rated BUY)
July 18, 2008
Believe that PFE bottomed on June 26 at $17.17. Since then, over the past month, PFE has consistently made higher highs with higher lows. Both the 10-day and 21 day moving averages are UP. I look for this trend to continue and have been buying on this prediction. PFE has a lot of cash and a decent dividend. I’m more interested in the cash; looking for PFE to make an acquisition(s) to improve pipeline and growth. Dividend is nice but considered a trap by many.
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