New home sales fall sharply http://www.newsrightnow.org/articles/2857/1/298... Sales of new homes fell 9% in November to lowest pace in more than 12 years.
New home sales fall sharply http://www.newsrightnow.org/articles/2857/1/298... Sales of new homes fell 9% in November to lowest pace in more than 12 years.
Economists React: Buying Lots of Aspirin http://blogs.wsj.com/economics/2008/01/15/econo... - Weaker then expected US retail sales for December indicates that holiday shopping was taken care of in November and hints even more at economic slowdown as rising energy and food prices take their toll on discretionary spending.
Stepping Beyond Subprime http://www.economist.com/finance/displaystory.c... - Large exposure to sub prime loans still exists (analysts think roughly 2/3 done with write downs) and there are still a lot of unsold loans on B/S.- Credit Default Swaps (JP Morgan big player) have not been under fire because of small corporate defaults; however, defaults should rise.- Deposit rates are rising and thus reducing the interest margin.- Going forward banks will want to add capital by reducing dividends, share issues, and asset selling while at that same time taking on SIVs and reducing leverage.- Futures markets are predicting a 30% further fall in property values.
Broad Market Still Worried http://online.wsj.com/article/SB120046116264994... - Investors are flocking to safety (Treasuries and the Yen were up) as many investors are being more risk averse (the Yen is driven by risk aversion).- Liquidity may be a problem for banks; however, it appears many other parts of the economy are also feeling the pain (tech and retail).- Worries about US recession sent global markets and oil futures down.
Bond Yields Defy Wisdom on Inflation http://online.wsj.com/article/SB120044943464493... - While inflation fears are abound, the yield on Treasuries is going down. Typically, if we were in an inflationary environment the reverse would be true.
- The 10-Year TIPS spread is also only around 2.25%.
- Another item driving up the CPI is owners equivalent rent, which makes up 1/4 of CPI. As the economy worsens, home inventories rise more, and employment goes up, this number should come down (Note: article not in this link).
Economists React: Bigger Fed Move ”˜Best Bet’ http://blogs.wsj.com/economics/2008/01/16/econo... - While CPI is up, when removing energy and food and it is only around 2.40%. Thus, core inflation is not moving up all that much. That being said, energy, food, and commodity prices are not set to ease in the near future.
- The Fed appears to be emphasizing the economy, not inflation. Thus lowering the Fed funds rate seems by 50 or bp seems more and more likely.
The Fed Gets This Part Right http://online.wsj.com/article/SB120062229410299... - Libor rates are coming down, making resetting ARMs less painful. Still, tightening credit for borrowers remains.
GE, a Global Bellwether, Gives a Reading Today - http://online.wsj.com/article/SB1200622294102... - GEs earnings are a barometer for global output. If there are hints that some of the poor earnings are due to slowing global growth, it could be a signal the world economy is slowing.
More Zeroes for Investors http://online.wsj.com/article/SB120062592220899... - Mortgage related losses are currently at 100b (01/18) and expected to continue.
- Merrill's write downs are due to insurance on mortgage related securities becoming worthless.
- Both Merrill and Citi are turning their focus to less risky aspects of their business.
Flirting with Armageddon http://ftalphaville.ft.com/blog/2008/01/18/1028... - Asia is in a structural bull market, while the opposite may be true in the West where as increased regulation would slow western economies; however in Asia deregulation is taking place.
- While inflation concerns from the rising price of energy and food may be long-term, at least in the short-term it will be outweighed by deflationary pressures from the credit crunch.
- Increased fallout will hurt the US economy as the same structured finance that caused the subprime has yet to hit credit cards, auto loans, commercial real estate, etc”¦ This will become clearer if unemployment continues to rise.
Wind, Solar Power Gain Users http://online.wsj.com/article/SB120062633529299... - Wind and solar power grew by almost 50% in 2007 (with wind being the more predominant choice).- This growth is fueled by tax credit, government policies, and government incentives. Part of which require utilities to use more renewable energy.- Many tax credits that have fueled this growth expire in 2008 and have not been renewed yet.
