July 2008
The first two readers to submit a correct response to the following question each win a copy of Robert Shiller's new book, The Subprime Solution. Question: Which OECD country has had the highest percentage housing price gain since the U.S....
I am eager to see the new documentary about a hero of mine, high-wire artist Phillippe Petit. Called Man on Wire, early reviews have been raves, and the 1080p trailer has been on permanent rotation this afternoon here at Casa...
A collection of Bloomberg articles today on the collective suck-itude of housing here, there and pretty much everywhere. Interestingly, the sole semi-positive news was on -- wait for it -- California housing. You have to know things are seriously surreal...
This morning on CNBC I was on a peak oil panel with Matthew Simmons. I'm a fan of his, even if I don't always agree with some of his comments, but I thought this morning wasn't one of his best...
The bearer of the bad tidings today is money manager Jeremy Grantham, chairman of GMO, who has just published the July edition of his quarterly newsletter entitled "Meltdown! The Global Competence Crisis". In short, Grantham opines: "Events must now be disturbing to everyone, and I for one am officially scared!"
With Imclone stock raging higher today on the Bristol-Meyers takeout offer, I'm think that we need an incarcerated ex-CEOs ETF. After all, Imclone ex-CEO Sam Waksal has been in jail for five years, and is getting out in August. Nice...
Hanging on CNBC right now (11am EST) and for the next hour....
In yammering with friends today about the merits of equity technical analysis I got to thinking about earthquakes and seismographs. Why? Because it is less well know than it should be, but seismographs cause earthquakes. Number of earthquakes reported worldwide...
There's further evidence today why SWFs (sovereign wealth funds) aren't exactly seen as smart money: Using an event study parameter approach, we find the short-run market reaction to be statistically insignificant in 11 out of 12 announcements of SWF investments;...
I'm glad it wasn't me who wrote the paper, but I was amused to see the following today. Nothing like definitely proving something doesn't work everywhere, as opposed to proving it in just a few places. Technical Analysis Around the...
I'm back from holidays. A big thanks to everyone who has been holding the fort here, and I'll have more on that later, plus some posts. Digging out for now....
From the latest Stanford Securities Clearinghouse report, some new data on class-action filings -- complete with an impressive 400% y-o-y spike in subprime-related suits: [via Stanord Securities Clearinghouse]...
You see? Running a record half-trillion dollar U.S. budget deficit isn't as bad as you thought. It's all a matter of perspective. [via Bloomberg] And by the way, I'm back later this week....
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I'm not back from holidays yet, but during breakfast this morning I put together a summer edition of my weekly Weekend Reading column for TheStreet.com. Here is a sneak peek at some of the links: Optimists buy iPhones, while pessimists...
Financial markets witnessed another roller-coaster week as renewed concerns about the global economy and the health of the financial sector surfaced, resulting in a mixed week for world stock and bond markets, an improved US dollar and continued weakness in oil and commodities. Read all about this in guest blogger Prieur du Plessis's weekly review.
This post is a guest contribution by John S. Boyd, writer of the BlindReason blog.This piece about Ford's just announced $8.7 billion loss was interesting via the FT here with an excerpt below:Ford has unveiled an ambitious facelift for its troubled North American operations...
Well, here we are on Friday again and I'm trying to figure out how to summarize all that's been happening in the mortgage and financial worlds. I could write a book about it, but I won't (at least not today....)...
Albert Einstein described compound growth as the eighth wonder of the world. Although he may have passed away in 1955, the concept of compounding remains the single most important principle governing investment. This post provides the empirical evidence.
Full marks for eBay entrepreneurs for stepping in where forex traders have lost count of the zeros being added to the Zim dollar every few days. How about paying US$83 for the new Z$100 billion bank note! Although the novelty value of the Zim note is surging, the sad truth is that the note is not worth enough to buy a loaf of bread.
The Top 7 things Every Home Buyer Should Know
Late today the U.S. House of Representatives okayed Treasury Secretary Paulson's aid plan for beleaguered mortgage financing duopoly Freddie Mac and Fannie Mae. My favorite part? The plan includes, as requested, an unlimited line of credit for Paulson to exercise...
Once again, Tom Vanderwell here with some thoughts about moral hazard....Barry Ritholz at The Big Picture had these two comics that brought to the forefront again the issue of moral hazard. Check out the comics and then we'll talk "on...
Another guest postThe folks over at Valleywag are having fun with a Craigslist posting for a hedge fund job. In addition to looking for someone with all the typical quant skills, the ad asks applicants to do the following 1)...
Nifty new data out showing fairly dramatic traffic declines on San Diego County freeways. These kind of reductions are historically unprecedented, and are a function of higher gas prices and reduced employment. Note: I'm not here yet. [via SOSD]...
Factoring in last week's stock market rebound, I have put together a table of global stock markets' performances over various measurement periods. The numbers speak for themselves and can best be summarized in a single sentence: Despite the variation in the economic impact of the credit crunch, stock markets have by and large been dancing to the same tune.
The SEC's announcement to curb naked short selling, together with a dramatic drop in oil prices and a series of better-than-feared earnings announcements from US banks, triggered a recovery in investors' risk appetite, resulting in a strong stock market rebound. Although the near-term outlook has improved and the long-awaited technical rally has probably commenced, it is premature to cast caution to the wind. Read all about this in this guest post by Prieur du Plessis, highlighting some thought-provoking news items and quotes from market commentators during the past week.
Tom Vanderwell here, and I'm taking the liberty of reposting my Mortgage Market Week in Review that normally appears at my blog at www.straighttalkaboutmortgages.com. I'll have more thoughts about the mortgage world next week and thanks to Paul for...
From John S. Boyd who blogs at BlindReason.org There is a big debate in Congress now about another stimulus package as fears about another potential downturn in the economy via Bloomberg here (insert link) http://www.bloomberg.com/apps/news?pid=20601070&sid=a5P_x5HfhQA0&refer=home with an excerpt below. ``We...
Pakistan is busily putting down riots at its stock exchange. After leading the world over the past decade, soaring by almost a factor of 10, it has dropped 35% since April, and traded down 15 of the last 18 days....
My friend, columnist Joe Nocera at the NY Times is newly blogging. Unsurprisingly, the blog is bruising, funny and irreverent. Good reading, and a fun complement to his Times columns. Check it here....
by Guest Author: Tim Sykes--------------------------------------------------In true contrarian style, it's great when analysts downgrade stocks due to problems stemming from the credit crunch (smart) but only after they've fallen 80% (not so smart). Like Wachovia downgrading AIG yesterday?!?!?! [via Yahoo!...
All the previously broken SE Asian currencies have now all flipped and are running ahead of the U.S. dollar. Only the Vietnamese Dong and the Indian Rupee are still down over the last few weeks against the dollar. Mean reversion...
This from my friends at Terapeak shows some interesting post-iPhone 3G trends in the used iPhone market. The used market is crumbling for iPhone 1.0 for some reason spiked around the iPhone 2.0 launch, and is now trailing off. Interesting,...
This isn't me. I'm not here right now. So, I see that we have had a barrage of wacky subprime news, and couldn't bear not commenting. Wells Fargo, the company that dominates the California market where broken mortgages are only...
From another one of Paul's guest bloggers for the next two weeks...There was a fair amount of of blog-borne back-and forth today over Adam Lashinksy's piece in Fortune on Kleiner Perkins, and its pursuit of clean tech and other energy...
Quantifiable Edges has an interesting little statistic on 52 week lows.
Basically, 1/3 of all the stocks on the NYSE hit a 52 week low yesterday. The last time this has happened was in 1990.
This has only happened a few times since 1971 (5) and in all 5 instances the market was higher 4 days later and 20 days later. Not enough data to make any reasonable conclusion. Whats interesting is that if you go one further year back, 1970, there's three more occurrences and they were all negative 4 days later. Again, not interesting (too few examples) but its
A) another example of the extreme level this market has taken a beating, even when compared with 2000-2002 (which is somewhat striking if you think about what was going on then: Internet bust, enron/wcom, 911, recession, etc).
B) another example where people are comparing this year to the 70s. I disagree with this. I don't think we are in stagflation. I'm more worried about eventual serious deflation a la what "Helicopter Ben" was worried about in 2002. But I'm hoping at least over the next 4 days (and over the next decade), that 2008 isn't the new 1970 but the new 1990.
-James Altucher
Okay, that's really it. To paraphrase Keyser Söze, pfff .... I'm gone (on holidays). There'll be some other folks around here over the next two weeks. An eclectic and interesting group of people will be coming by, so stick around...
I must be tired. Just finished packing for holidays, and I spotted this new paper: How Many Alternatives Should You Put in Your Investment Basket? Andrew Clare and Nick Motson City University London - Sir John Cass Business School and...
If you haven't read it, you really should wade into Frank Partnoy's (and co-author David Skeel's) recent paper on credit derivatives. It's long and detailed, but Partnoy is a felicitous and smart writer, and so it's worth it. ... we...
After my post mentioning Dr. Strangelove earlier today, late tonight I got to re-reading actor Sterling Hayden's classic (and controversial) seafaring book Wanderer. Hayden, who was a top Hollywood star at the time, suddenly up and quit, abandoning a career,...
Hedge fund manager -- and Fannie Mae short-seller -- Bill Ackman's presentation on "saving" wildly wayward mortgage finance company Fannie Mae. | View | Upload your own...
Great stat from the good folks at Bespoke today: Looking at the [$5-billion] market cap requirement [for S&P 500 membership], there are currently 126 companies (25.2% of the index) in the S&P 500 which would not be large enough to...
Today's news that SEC Chair Chris Cox is trying to create a kinder stock market by announcing a rule that already exists -- you must pre-borrow stock before you can short it -- reminded me of something straight out of...
Today's pick for bad financial jargon is the expression "terminal wealth". It sounds, of course, like what happens to some rich guy who gets nailed by a bus: You were wealthy, but now you've been terminated. Instead, however, it refers...
Just 'cause I know most readers of this site can't bear Congressional testimony any more than I can, here is a tag cloud of Ben Bernanke's closely-watched speech this morning on monetary policy. authority bank board commodities conditions consumer continue...
My friend Doug Kass at RealMoney has an interesting catch today: A Buy Signal? 7/15/2008 9:11 AM EDT Short seller David Tice (Prudent Bear Fund and Behind the Numbers) is selling his firm to Federated Investors. If you are looking...
Just so folks know, I'm heading out on holidays for almost two weeks starting tomorrow. While I may show up here now and then, I'm going to try really hard not to. I'm also going to try to stay off...
I had someone recently tell me that they were seeing more and Google people exiting the company after shorter periods of time. Assuming that's true, and it is anecdotal empiricism, has it gotten that much worse to work at Google,...
Last week was the sixth consecutive week during which the U.S. market declined. The longest consecutive-week decline in U.S. history was 8 weeks, which has happened twice, as has a 7-week decline. Anyone care to guess when we had the...
By my calculation, the two largest U.S. banks, Citi and Bank of America, have over the last year lost roughly as much in market capitalization as is the current value of the other six U.S. banks combined. To be specific,...
This live map I created of the first batch of Starbucks closures represents an interesting cross-section of the subprime-struck, plus a swath of middle America. View Larger Map[via Consumerist]...
The Seattle Times gets the award for best newspaper front page today for this timely juxtaposition: mortgages and mudslides. [via Gregor]...
Catching up on oodles of good reading today: Solar's hot real estate market (Fortune) Jet fuel premium to fall as air travel industry contracts radically (Bloomberg) Lehman should go private (Bloomberg) Waiting in line: Condos back then, bank run today...
Fascinating data points from an ATA document on how airlines are trying to slim down to save weight and stay in business given jet fuel at record levels: One airline saved over 17 gallons/year per pound of weight per airplane...
A popular bumper sticker after the dot-com collapse of almost a decade ago said something like this: "Please God, just one more bubble." Leaving aside that we had one more -- make that two more -- bubbles, and most...
Meant to mention this sooner, but one of my favorite morning spots to check is RMS's new-ish Current Cat Activity. Keep in mind, of course, that "cat" is short for "catastrophe", and so it's not a tracker for deranged felines....
There is a new Africa ETF out and trading, courtesy of the people at Van Eck Global. Modeled on the Dow Jones Africa Titans 50 Index, the Africa Index ETF is intended to give investors direct exposure to African economies...
Google Finance made a Freudian algorithmic slip earlier today when slapping some artwork beside a story on Freddie & Fannie's problems. Check the company name in the following screen grab (courtesy of reader Daniel):...
Sad day for CNBC, and for me as well: My good friend, neighbor, and sometime CNBC sparring partner friend Herb Greenberg is exiting, stage left. He departed Marketwatch earlier this year -- where he was the site's most consistently interesting...
Peter Wallison at AEI has a missive out applauding the government's move in supporting Freddie/Fannie, but scolding them for fuzziness about their equity purchase plans. If/when they decide to purchase shares they need to wipe out Freddie/Fannie shareholders -- or...
Lots of U.S. residents undoubtedly spent the weekend, post the IndyBank takeover by the FDIC, checking to see if their desposits are FDIC-insured. The upshot: You are, of course, so long as you are with an FDIC-insured bank, and so...
Before I forget and get into other things, here is the Treasury statement on Fannie/Freddie: Treasury Secretary Henry M. Paulson, Jr. issued the following statement: Fannie Mae and Freddie Mac play a central role in our housing finance system and...
FannieMae CEO Daniel Mudd is already out with a statement on the U.S. government bailout proposal. I'm particularly fond of the part where Mudd thanks Treasury for bailing him out, but then goes on to insist he doesn't need to...
According to the NYT, the Bush administration is going to announce shortly that it is taking to Congress a multi-billion dollar deal to shore up failing mortgage financing firms Freddie Mac and Fannie Mae. The key points are allegedly the...
So much for the rumored $15b Treasury infusion into Fannie Mae and Freddie Mac. That is one message you could take from a story on the WSJ front page right now, essentially saying that later today Treasury will instead...
Interesting EIA chart showing how commercial jet fuel consumption has responded to price changes over the last decade. Will the pre-9/11 peak every be reached again? Hard not to think that may have marked the top....
Here is a sneak peek at some links from my weekly weekend reading column over at TheStreet.com: Magazines report dwindling ad-page numbers (Advertising Age) Ratings in structured finance: what went wrong and what can be done to address shortcomings? (BIS)...
According to the Times of London -- in a very thinly-sourced story today -- Treasury Secretary Paulson is considering (or is that planning?) a $15-billion Federal Government cash injection into troubled U.S. mortgage firms Freddie Mac and Fannie Mae. The...
Peak oil guy Matt Simmons -- despite sounding particularly apocalyptic -- makes a good point, and echoes one I made here earlier: At what point does a decline in oil price become a bigger issue than an oil price advance?...
You may not have heard of this "iPhone" thing. It's somewhat obscure, with a vanishingly small share of the "smart phone" market, and it has an expensive data plan, but it is still useful. And it is even more...
According to a Reuters report floating around, China is the largest foreign holder of Freddie Mac and Fannie Mae bonds. That'll teach China to mess with the U.S. You may sell us toxic toys, but we'll sell you toxic paper....
Henry Paulson is out with an over-parsable statement on Freddie/Fannie worries this morning: Today our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission. We appreciate Congress' important efforts...
My trader friend Jeff is still hanging in at the current World Series of Poker no-limit hold'em event in Las Vegas. Matter of fact, he is almost in the money -- only a few more people need to to get...
According to the NY Times late tonight, discussions among senior U.S. government officials have heated up with respect to the U.S. taking over mortgage giants Freddie Mac and Fannie Mae. The structure being contemplated is a conservatorship, which is permitted...
I have of late,—but wherefore I know not,—lost all my mirth, forgone all custom of exercises; and indeed, it goes so heavily with my disposition that this goodly frame, the earth, seems to me a sterile promontory -- Hamlet,...
I don't know if it's the $5/gallon gas prices, but freeway life here in southern California has become more surreal of late. Granted, traffic volumes are down, at least a little, so freeways are no longer in that perpetual...
As I have said before, [Fannie and Freddie] are adequately capitalized, holding capital well in excess of the OFHEO-directed requirement, which exceeds the statutory minimums. -- Jim Lockhart, OFHEO, July 10/08 I love the expression "adequately capitalized". It's one...
This is staggeringly typical stuff in one homeowner's home equity line of credit abuses related to a now foreclosed SoCal home: On 1/8/2004 the property was purchased for $465,000 with a $372,000 first mortgage, a $46,500 second mortgage and a...
First Apple 3G iPhone teardown has been done already. Someone flew to New Zealand to do it ... tomorrow, sort of. More here....
Some interesting results in a new study into how people behave in the presence of money. The gist: When money is visible and supervision intermittent, people change their participation for the worst in a hurry. The Abundance Effect: Unethical Behavior...
You have to love the three-day adventure in Freddie Mac stock this week. The federal financier is getting alternately hugged and kicked by the markets. Today it was kicked. Hard. There are a lot of people out there who simply...
I'm a big fan of those trading days, like today, when the only things that do well are the drug stocks. So deliriously self-reinforcing....
Today's chart of the day shows how loan standards and costs have climbed together over the last 2.5 years, making it tougher to get credit than it has been in a decade. Apparently Earth loans aren't easy. [via Bloomberg]...
Must watch: Charlie Rose in an hour-long discussion with JPMorgan CEO Jamie Dimon. After watching it, go read selectively from the viewer posts -- including some scathing stuff from at least one ex-JPM employee -- on the Charlie Rose site....
Tech's two big hitters -- the NYT's David Pogue and the WSJ's Walt Mossberg -- have out their reviews for the new iPhone 3G, and they're surprisingly so-so about Apple's upgrade. To be released Friday, the iPhone 3G is supposed...
A question for people to ponder: Say you were 22-years-old, unattached, and recently graduated and looking for your first job. You want to be part of something big and dynamic, a truly dynamic economy where you're going to be able...
I had an interesting conversation with an executive yesterday. We got talking about his stock options, and when he should sell them. I started in the usual place, talking about time value and strike value of the things, with the...
Leave it to a San Diego paper to find a connection between high oil prices and surfing. Higher prices are apparently raising resin costs, thus hurting surfboard makers, and gas prices are keeping some people from making long drives to...
In looking at the wall-to-wall sell-off in financials today it feels like the market is essentially saying "More than one of you major banks and brokers is going under, so until we know which one, you're all being sold". How...
Now I've got that feeling once again I can't explain, you would not understand This is not how I am I have become comfortably numb -- "Comfortably Numb," by Pink Floyd Media entrepreneur Felix Dennis's new book How...
The Starbucks boom across the U.S. (and worldwide) has added hugely to the list of public restrooms. With cities building fewer of the things, and even closing some, and with many restaurants making it only slightly less difficult finding them...
There is little question one of the driving forces behind the rise in commodities prices has been the Swensification of the stuff. After the dot-com crash investors began looking everywhere for uncorrelated asset classes -- stuff that didn't go down...
My favorite part of the latest Carl Icahn love letter to Yahoo shareholders comes early in the note. Here are the first two sentences: Dear Yahoo! Shareholders: During the past week I have spoken frequently with Steve Ballmer, CEO of...
Downbeat story in the WSJ & Reuters tonight on GM's plans for massive layoffs, etc. And not to diminish the awfulness of GM's plight -- okay, to diminish it a little -- I was struck by the story plopped adjacent...
Chief: Now listen carefully: [gives a series of complex instructions] Did you get that? Max: Not all of it. Chief: Which part didn't you get? Max: The part after 'Now listen carefully'. From Get Smart (1965-1970) You had...
Ted Forstmann says we're all going to hell. That's the message I got from a cheerfully apocalyptic interview with financier Forstmann that appears in Monday's WSJ. Granted, Fortsmann's never been a fan of current financial markets, right back to the...
Lots of people, myself included, arguing that speculation -- at least in the sense in which we understand that sort of thing -- in commodities markets is playing only a minor role in the run-up in oil prices. That, of...
According to a Bridgewater study leaked by a Swiss paper today, total financial losses from the the current credit crisis will hit $1.6-trillion, well above most current estimates. Here is the German/English translation: Explosive Study: The banking crisis will be...
Great 10,000-word read in the August Vanity Fair from Bryan "Barbarians at the Gate" Burrough about the collapse of Bear Stearns. On Monday, March 10, the rumor started: Bear Stearns was having liquidity problems. In fact, the maverick investment bank...
Here is a sneak peek at some links from my weekly Weekend Reading column over at TheStreet.com. More than 40% of investors in structured products don't understand them (Risk) Credit default swaps suggest both Ford and GM will declare Chapter...
It's currently better to be a toy car maker than a real car maker: Mattel's market cap just surpassed that of GM. The maker of Hot Wheels and Matchbox now has a market cap of $6.22B versus the $5.76b cap...
People seem to be in a historical frame of market mind this weekend, so here is a chart of Dow Jones index returns by U.S. president since Herbert Hoover obtained office in 1929. Note that I have given this result...
Having said a few unhappy things about Predictably Irrational earlier this week, here are notes on a few books, new and old, I've liked recently: Profit from the Peak: The End of Oil and the Greatest Investment Event of the...
This quote from a Deutsche Bank report on the differing approaches to rate-setting in the EU and in the U.S. is fascinating and instructive: Recent and prospective differences between the Fed and the ECB in the conduct of monetary policy...
A laugh is good on a day like today, so here is writer Michael Lewis on how Wall Street-ers can survive the current market mess: Rule No. 3: Hide your motives. Or, specifically, minimize the appearance of financial interest. Don't...
In 1971 the city of Bolinas, California, stopped growing. Why? Because that was the year the city decided to stop allowing new water meters to connect to the city supply. And no new water meters means, for practical purposes,...
Some new data out from Hitwise showing the traffic patterns that Google/Yahoo are having during the current market misadventures. Turns out that panicky investors are compulsively checking out what's up in markets via their favorite money & finance sites, like...
What price will cause global oil demand to finally fall? While OECD demand looks set to drop, according to the latest IEA report, demand elsewhere is another story. Because in a sense, oil markets can be thought of as trying...
On a plane yesterday I read Dan Ariely's bestselling behavioral economics book Predictably Irrational. It is Yet Another Humans Don't Act Like Economists Think They Should (YAHDALETTS)book, up there with Freakonomics, Undercover Economist, and the rest of that sort of...
According to the WSJ tonight -- and I can almost not bear to type these irritating words -- Microsoft is messing with Yahoo again. The story says that Microsoft is working at pulling together a consortium of folks who...
Many moons ago I wrote a piece for Men's Journal -- yes, that's just the kind of renaissance guy I am -- on the joys of cycle-climbing. I had originally planned on chronicling my effort to do the equivalent...
I like this quote from Andy Rappaport of August Capital about social investing -- the idea that you can do good via investing in social funds: A lot of socially responsible funds have this idea that they’ll provide a social...
So, the venture capital "asset class" is in crisis. Or at least that's what the NVCA is saying today as it rings the alarm bell asking for politicians, regulators, venture capitalists, entrepreneurs, dogcatchers, presidential candidates, philatelists, etc., to do something...
I have various proprietary tools I have created to track layoffs, and they are all through the roof right now. Admittedly the tools have only been around for one economic cycle, but the explosion in layoffs I've been observing over...
Congress has a mind to save us all from speculators and their evil-doing ways in commodities markets. Trouble is, as the following Bloomberg figure shows, oil prices have ramped hugely over the last year despite the number of open contracts...
It's newly good to live in places like Williston, North Dakota. About one homeowner a day in such places is becoming a millionaire at current oil hyper-prices. They are, of course, the people whose houses sit over the newly...
