Well if JP Morgan picks up Bear Stearns for $2 a share there will be a few rather pissed off billionaires who have just lost a couple hundred billion dollars.
I am expecting crash levels of:
1249
1212.50
1182.50
This is quite a volital time, be prepared to see big swings on News.
Trade what you see.
Sunday, March 16, 2008
Friday, March 14, 2008
Please save our company Mr. Bernanke, Please
Monday I expect to see the market plummet.
U.S. stocks plunged for a third day, the dollar sank to the weakest level ever against the euro and to a 12-year low versus the yen and gold surged to a record $1,009 an ounce. Crude oil for April delivery fell after touching $111 a barrel yesterday, the highest since trading began in 1983. As mentioned earlier.....inflation, inflation, inflation.
JPMorgan Chase and the New York Fed agreed to provide funding to Bear Stearns as the securities firm said its cash position has ``significantly deteriorated.'' Bear said it was in talks with New York-based JPMorgan Chase ``regarding permanent funding or other alternatives.'' The Fed agreed to provide financing through JPMorgan for up to 28 days. A collapse of Bear Stearns would be the biggest failure of a U.S. financial institution since the insolvency of Continental Illinois National Bank and Trust Co. in 1984. LET EM GO! get a correction in here and lets end this pain.
Falling property values has made it difficult for homeowners to refinance even as Fed policy makers slashed the target rate for overnight bank lending by 2.25 percentage points since September to stimulate economic growth and bank lending. Expect the criteria for underwriting to be severe. Bye bye to stated loans.
U.S. stocks plunged for a third day, the dollar sank to the weakest level ever against the euro and to a 12-year low versus the yen and gold surged to a record $1,009 an ounce. Crude oil for April delivery fell after touching $111 a barrel yesterday, the highest since trading began in 1983. As mentioned earlier.....inflation, inflation, inflation.
JPMorgan Chase and the New York Fed agreed to provide funding to Bear Stearns as the securities firm said its cash position has ``significantly deteriorated.'' Bear said it was in talks with New York-based JPMorgan Chase ``regarding permanent funding or other alternatives.'' The Fed agreed to provide financing through JPMorgan for up to 28 days. A collapse of Bear Stearns would be the biggest failure of a U.S. financial institution since the insolvency of Continental Illinois National Bank and Trust Co. in 1984. LET EM GO! get a correction in here and lets end this pain.
Falling property values has made it difficult for homeowners to refinance even as Fed policy makers slashed the target rate for overnight bank lending by 2.25 percentage points since September to stimulate economic growth and bank lending. Expect the criteria for underwriting to be severe. Bye bye to stated loans.
Monday, March 10, 2008
When will rates get better? S&P 500 is starting to fall.
Looking back to Friday, we had a nice improvement in both Treasury rates and mortgage prices after the payroll numbers indicated that labor is indeed slowing. The market believes that the Fed will lower overnight interest rates by 75 bps at the FOMC meeting next Tuesday, and some think that Fed Funds may eventually hit 2.0%. Friday's job report had very little "good" news for the economy, as NonFarm payrolls dropped for the second consecutive month, with back-month revisions downward, and most industries showed job losses.
This week we'll see the US trade deficit report tomorrow (expected -$59 billion), Thursday's weekly jobless claims (expected +4k to 355k), February Retail Sales (expected +0.8%), and then on Friday the Consumer Price Index for February (expected +0.3%) and the University of Michigan's Consumer Confidence report (expected -0.4). Currently the 10-yr is at 3.53% and mortgages are roughly unchanged from Friday.
So here's the $100 million question.... When the heck are mortgage prices going to improve? Why is the 10-yr Treasury down into the 3.5% range, yet conforming/conventional 30-yr loans, eligible for FNMA & FHLMC, back up into the 6% range? The widening that is occurring out to these levels, which statistically speaking happens once every 4,000 years, is a combination of several factors.
First, investors and money managers feel safer putting their money into Treasury securities rather than mortgage-related securities (right now, that seems like a "no brainer") Subjecting their money to the potential of borrowers defaulting and property depreciation is something that many prefer not to do. These two factors have led to losses for FNMA & FHLMC, along with others, and some investors have been selling mortgage securities in order to meet capital requirements. And selling has led to lower prices, and thus higher rates. That's it in a nut shell.
This week we'll see the US trade deficit report tomorrow (expected -$59 billion), Thursday's weekly jobless claims (expected +4k to 355k), February Retail Sales (expected +0.8%), and then on Friday the Consumer Price Index for February (expected +0.3%) and the University of Michigan's Consumer Confidence report (expected -0.4). Currently the 10-yr is at 3.53% and mortgages are roughly unchanged from Friday.
So here's the $100 million question.... When the heck are mortgage prices going to improve? Why is the 10-yr Treasury down into the 3.5% range, yet conforming/conventional 30-yr loans, eligible for FNMA & FHLMC, back up into the 6% range? The widening that is occurring out to these levels, which statistically speaking happens once every 4,000 years, is a combination of several factors.
First, investors and money managers feel safer putting their money into Treasury securities rather than mortgage-related securities (right now, that seems like a "no brainer") Subjecting their money to the potential of borrowers defaulting and property depreciation is something that many prefer not to do. These two factors have led to losses for FNMA & FHLMC, along with others, and some investors have been selling mortgage securities in order to meet capital requirements. And selling has led to lower prices, and thus higher rates. That's it in a nut shell.
Tuesday, March 4, 2008
Treasuries were little changed with two-year note yields near the lowest in almost four years deterring investors and Federal Reserve officials indicating the U.S. economy remains under pressure from the housing slowdown, credit debt, bonds and bond insurers.
Fed Chairman Ben S. Bernanke urged lenders to forgive portions of mortgages for more borrowers whose home values have declined, and Vice Chairman Donald Kohn said U.S. banks face ``challenging market conditions.'' Bernanke, in remarks at a conference in Orlando, Florida, said more must be done to stem foreclosures. ``Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,'' he said. ``Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.''
In a sign the U.S. economic slowdown is spreading, the Bank of Canada cut its benchmark lending rate by a half-percentage point and signaled it will have to act again to offset a slump in exports to the U.S. The slowdown in the U.S. is beginning to have a greater effect on the rest of the world. Citigroup Inc., the biggest U.S. bank, may need additional capital from outside investors as losses stemming from the collapse of the U.S. subprime mortgage market increase.
First it will hit America/Canada, next will be Britan then Europe. Expect to see new high against the dollar across the board.
$4.20 a gallon gas could be coming for this summer.
We shall see.
Fed Chairman Ben S. Bernanke urged lenders to forgive portions of mortgages for more borrowers whose home values have declined, and Vice Chairman Donald Kohn said U.S. banks face ``challenging market conditions.'' Bernanke, in remarks at a conference in Orlando, Florida, said more must be done to stem foreclosures. ``Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,'' he said. ``Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.''
In a sign the U.S. economic slowdown is spreading, the Bank of Canada cut its benchmark lending rate by a half-percentage point and signaled it will have to act again to offset a slump in exports to the U.S. The slowdown in the U.S. is beginning to have a greater effect on the rest of the world. Citigroup Inc., the biggest U.S. bank, may need additional capital from outside investors as losses stemming from the collapse of the U.S. subprime mortgage market increase.
First it will hit America/Canada, next will be Britan then Europe. Expect to see new high against the dollar across the board.
$4.20 a gallon gas could be coming for this summer.
We shall see.
Monday, March 3, 2008
Treasuries fell, with the difference between the 10-year note's yield and the two-year rate increasing to near the widest in more than 3 1/2 years, on bets Federal Reserve interest-rate cuts will stoke inflation. Bonds slumped as oil traded above $100 a barrel and gold futures rose to a record high. Treasuries pared earlier gains as speculation eased that policy makers are considering a cut in the discount rate at a meeting of the board of governors today.
A posting on the Fed's Web site said that a board meeting today would include the ``review and determination by the board of governors of the advance and discount rates to be charged by Federal Reserve banks.''
The Fed's first interest-rate response to the August credit collapse was to lower the discount rate, rather than the benchmark federal funds rate target. The market is hyper-sensitive to anything the Fed does.
A posting on the Fed's Web site said that a board meeting today would include the ``review and determination by the board of governors of the advance and discount rates to be charged by Federal Reserve banks.''
The Fed's first interest-rate response to the August credit collapse was to lower the discount rate, rather than the benchmark federal funds rate target. The market is hyper-sensitive to anything the Fed does.
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