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Trading Now

Wednesday, September 9, 2009


*Does it ever end?
Foreclosures could soar as some home loans reset, Fitch warns
Another round of residential foreclosures is on the verge of sweeping through the U.S. housing market, Fitch Ratings said. Many homeowners might be unable to cope with higher monthly payments after hundreds of thousands of option adjustable-rate mortgages reset, the credit rating agency said. Between now and 2011, roughly 70% of option ARMs, with a total value of about $189 billion, will reset. "It's a ticking time bomb for some people," said Brian Bethune, an economist at IHS Global Insight. The Washington Post (09 Sep.)

*See why you can't trust Moody's or the rating agencies any longer? Spain is practically bankrupt but they will still get a good rating. It's outrageous and they deserve to be sued.
Moody's: Crisis unlikely to cause U.K., Spain to lose top rating
Moody's Investors Service said although Spain and the U.K. have been "severely hit" by the financial crisis, they will likely retain their Aaa credit rating. Meanwhile, Germany and France, which also have Aaa ratings, remain "resistant," said Moody's executive Pierre Cailleteau. "Almost all Aaa-rated sovereigns have been hit more severely by the global downturn than we expected earlier this year," Moody's said. "Nevertheless, all Aaa countries now have stable outlooks, indicating that we do not expect rating downgrades over the near term." Bloomberg (09 Sep.)

*A clearinghouse is a great start....but....see next brief
Banks agree to route more derivatives through clearinghouses
JPMorgan Chase, Barclays, UBS, Citigroup and several other major financial institutions agreed to accelerate their use of central clearinghouses for over-the-counter derivatives. The banks said they will start sending more credit default swaps and interest-rate derivatives through clearinghouses in October and December, respectively. The move comes as regulators in Europe and the U.S. aim to clamp down on the $450 trillion market. The Wall Street Journal (09 Sep.)

Financial industry rebounds as regulatory overhaul stalls
As the financial industry is about to mark the first anniversary of Lehman Brothers' collapse, financial institutions appear to be nearly back to business as usual, while lawmakers quibble about regulation. "There's no fundamental change in the way the banks are run or regulated," said Peter J. Solomon, who runs an eponymous New York investment bank. "There's just fewer of them." While some authorities said the regulatory revamp is necessary, analysts and other industry insiders said Congress will be hard-pressed to implement changes by the end of the year, a deadline imposed by the White House months ago. The Wall Street Journal (9/9)

*I keep thinking that the federal reserve will just keep buying more of this so we aren't really likely to see how bad this could become. Either that or they really are just the stupidest ffers on the planet, oh right, they are! And they don't see the perfect storm of commercial real estate barreling ahead.
CRE threatens recovery outlook for banks
Investors should avoid banks with heavy commercial real estate exposure, according to a research note released Tuesday by Morgan Stanley analysts. "So far, we estimate the mid and large-cap banks are 32% and 49% of the way through their total commercial real estate losses, less than most other loan categories," Morgan Stanley said. "We are most concerned with retail and office, given long lease terms, consumer deleveraging, and elevated unemployment, whereas hotel and multifamily tend to be earlier cycle, but still a headwind." MarketWatch (9/8)

*he has lost money in 2008 from options derivative trades and also by getting in to the market before a relative bottom. He has been insuring 5% of the municipal bond market since 2008 and if you think municipal bonds don't default, guess again. So here he is again thinking he can make oodles of money on insuring foreclosed homes for banks. GOOD LUCK!
Berkshire's insurance unit to cover distressed homes
The insurance arm of billionaire investor Warren Buffett's Berkshire Hathaway will offer policies for homeowners facing foreclosure, homes already foreclosed and other distressed residential properties. A number of major insurers are moving into this growing but risky market. Bloomberg (09 Sep.)

*No more credit fairy? No more piggy bank?
U.S. consumer credit sees record drop
The Federal Reserve said U.S. consumer credit fell for the sixth straight month in July, plunging a record $21.6 billion, compared with a $15.5 billion drop in June. The annualized rate of decline in July was 10.4%, and nonrevolving credit dropped at an annualized rate of 11.7%. Reuters (08 Sep.)

*yeah right. Have you ever been to Switzerland? It's costs you a fortune for an ice cream cone.
Switzerland replaces U.S. as most competitive economy
Switzerland has become the world's most competitive economy, with the U.S. slipping to second place for the first time, according to a report by the World Economic Forum. Economies that earn a large percentage of GDP from financial services, such as the U.K. and the U.S., were hurt in the crisis, according to the report. The BRIC countries -- Brazil, Russia, India and China -- all moved higher in the ranking, while trust for banks in both Switzerland and the U.S. fell to record lows. Reuters (08 Sep.)

*Now Japan is in their 3rd decade of doom.
Japanese unemployment reaches record-high 5.7%
Despite signs of economic improvement in Japan, unemployment climbed to a record high of 5.7% in July, the Cabinet Office said. The office's overall view of the economy remains unchanged. "The rising jobless rate may exert downward pressure on wages in the future and is a risk factor for the economy," an official of the Cabinet Office said. Forbes/Reuters (08 Sep.)

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