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Trading Now

Wednesday, October 28, 2009


Durable Goods for September 1% - consensus was 1.5%
COP Conoco Phillips 3Q profit on its refining business is down a WHOPPING 71%
Obama Administration has applied a 12% Duty against Chinese steel
SWAP spreads are mixed

Mortgage Applications Decrease in Latest MBA Weekly Survey
WASHINGTON, D.C. (October 28, 2009) — The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending October 23, 2009. The Market Composite Index, a measure of mortgage loan application volume, decreased 12.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2.8 percent compared with the previous week, which included the Columbus Day holiday.
The Refinance Index decreased 16.2 percent from the previous week and the seasonally adjusted Purchase Index decreased 5.2 percent from one week earlier. The unadjusted Purchase Index increased 4.8 percent compared with the previous week, which was a holiday shortened week, and was 15.4 percent lower than the same week one year ago.

Blast Rocks Pakistan Amid Clinton Visit
A powerful blast ripped through a market in Peshawar, killing dozens of people hours after Secretary of State Clinton arrived in Pakistan to smooth relations with the South Asian ally.

Consumer (Lack of) Confidence
The Conference Board details:
Says Lynn Franco, Director of The Conference Board Consumer Research Center: "Consumers' assessment of present-day conditions has grown less favorable, with labor market conditions playing a major role in this grimmer assessment. In fact, the Present Situation Index is now at its lowest reading in 26 years (Index 17.5, Feb. 1983). The short-term outlook has also grown more negative, as a greater proportion of consumers anticipate business and labor market conditions will worsen in the months ahead. Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays."

from TheBigPicture
Interesting Miami Herald look at the rising trend of strategic defaults in Florida. Thanks to the eroding “social stigma of foreclosure,” such purely economic/business decisions (as opposed to moral or ethical choices) are increasing.

Some of the Herald’s Florida data points are amazing:

• Property values have plummeted by an average of 50%
• In Q4 2008, strategic defaults were 28% of defaults (Miami-Dade and Broward Counties)
• Same locations, Q4 2006: Strategic defaults were 20%;
• In September ‘09, homeowners owed $62.7 billion more than their homes were worth (CoreLogic)
• Broward County 2006 purchases had a median negative equity = $75,000
• Miami-Dade 2006 purchases had a median negative equity = $63,000,
• Nationally, estimated 588,000 strategically defaulted in 2008 (Experian)
• Strategic defaulters with good credit scores (who remain current on other credit lines) can rehabilitate their FICO scores within 24 months after foreclosure.


U.S. new home sales in September fell 3.6% from August, and were down 7.8% year-over-year.
This is the first decline in monthly new home sales after five consecutive monthly gains.
Note that this data series is particularly noisy, and often mean reverts every 2 months.
Median sales prices have fallen 9.1% in the past year to $204,800
Best news in the release: The supply of homes on the market fell to 251,000 in September, which is the lowest level since November 1982.

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