C.M.O. 3.24.2009
Credit Market Overview
March 24, 2009
Steve Kroft admonished President Obama while interviewing him this past Sunday evening on 60 Minutes for mixing laughter with his discussion of a financial system that, even with the market’s latest run up from its March 6th lows, is still in precarious shape at best. “Are you punch drunk?” Kroft asked the President at one point. “No, No. There’s got to be a little gallows humor to get you through the day.” The President chuckled.
If there are laughs to spare someone should share one with Barney Frank whose latest solution to recovering the 0.0001th of the money the government has pumped into AIG is to sue the firm as a shareholder. If there is one thing Mr. Frank should know it’s that getting lawyers involved costs both time and money; neither of which AIG seems to have enough to spare at the moment. It brings to mind the line in Hamlet that ends “doth protest too much, methinks”.
Secretary Geithner did not spend any time on the lighter side of things during his interview with the Wall Street Journal on Sunday. He did, however, out line his plan (this time with specifics) for introducing private capital into the process for alleviating toxic assets from the balance sheets of the countries weakened banks. The market voted in favor of the plan, at least for one session, as the S&P index racked up gains that put a “7” handle on the percentage change number.
Accentuating the positive yesterday was the MoM change number for Existing Home Sales which increased 5.1% between January and February vs. an expected decrease of -0.9%.
While well aware that care must be taken when examining existing home sales numbers because of the foreclosure issue a look at the recent housing situation in Mountain House California by the Wall Street Journal might provide some clues as to what kind of progress is being made out where real people live in real homes.
At one point last year 90% of the mortgage holders in this 2,600 unit master-planned community owed more on their homes than the homes would sell for. 2009 has seen a bit of a turn around however as sales by one builder are already 30% over the run rate for all of 2008.
A couple bid on a house listed for $299,000 with hopes of taking advantage of the depressed housing market only to find they were one of 12 bidding on the home which ultimately sold for $330,000. There is no getting around the fact that the house in question here sold for $781,900 in 2007 but with 48 homes sold and another 59 in escrow vs. 19 sales in the year-earlier period, per MetroList Services Inc. there could be a glimmer of hope that, if nothing else, at least the rate of decline might be slowing.
Problems still exist and California’s unemployment rate of 10.5% in February is one of the highest in the Nation. Foreclosures rose 5% last month in the state so it would be foolish to believe that all of the problems are in the past but with the Mountain House Little League roster growing to 220 from 178 last year there might be specks of light on the horizon. The principal of the local elementary school recently remarked; “People I see here have as much hope as I’ve seen in a long time.”
We know from the movies that “Hope Floats” now let’s see if it can grow.
Enjoy the week.
Jim Delaney
March 24, 2009
Steve Kroft admonished President Obama while interviewing him this past Sunday evening on 60 Minutes for mixing laughter with his discussion of a financial system that, even with the market’s latest run up from its March 6th lows, is still in precarious shape at best. “Are you punch drunk?” Kroft asked the President at one point. “No, No. There’s got to be a little gallows humor to get you through the day.” The President chuckled.
If there are laughs to spare someone should share one with Barney Frank whose latest solution to recovering the 0.0001th of the money the government has pumped into AIG is to sue the firm as a shareholder. If there is one thing Mr. Frank should know it’s that getting lawyers involved costs both time and money; neither of which AIG seems to have enough to spare at the moment. It brings to mind the line in Hamlet that ends “doth protest too much, methinks”.
Secretary Geithner did not spend any time on the lighter side of things during his interview with the Wall Street Journal on Sunday. He did, however, out line his plan (this time with specifics) for introducing private capital into the process for alleviating toxic assets from the balance sheets of the countries weakened banks. The market voted in favor of the plan, at least for one session, as the S&P index racked up gains that put a “7” handle on the percentage change number.
Accentuating the positive yesterday was the MoM change number for Existing Home Sales which increased 5.1% between January and February vs. an expected decrease of -0.9%.
While well aware that care must be taken when examining existing home sales numbers because of the foreclosure issue a look at the recent housing situation in Mountain House California by the Wall Street Journal might provide some clues as to what kind of progress is being made out where real people live in real homes.
At one point last year 90% of the mortgage holders in this 2,600 unit master-planned community owed more on their homes than the homes would sell for. 2009 has seen a bit of a turn around however as sales by one builder are already 30% over the run rate for all of 2008.
A couple bid on a house listed for $299,000 with hopes of taking advantage of the depressed housing market only to find they were one of 12 bidding on the home which ultimately sold for $330,000. There is no getting around the fact that the house in question here sold for $781,900 in 2007 but with 48 homes sold and another 59 in escrow vs. 19 sales in the year-earlier period, per MetroList Services Inc. there could be a glimmer of hope that, if nothing else, at least the rate of decline might be slowing.
Problems still exist and California’s unemployment rate of 10.5% in February is one of the highest in the Nation. Foreclosures rose 5% last month in the state so it would be foolish to believe that all of the problems are in the past but with the Mountain House Little League roster growing to 220 from 178 last year there might be specks of light on the horizon. The principal of the local elementary school recently remarked; “People I see here have as much hope as I’ve seen in a long time.”
We know from the movies that “Hope Floats” now let’s see if it can grow.
Enjoy the week.
Jim Delaney
Labels: CDS, CEC Strategy, correlation, credit, cross asset, equity, Jim Delaney
posted by Jim Delaney at
4:04 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home